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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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FIRST UNITED BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
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ARKANSAS 6021 71-0538646
(State or other jurisdiction of (Primary Standard Industrial) (I.R.S. Employer
incorporation or organization) Classification Code) Identification No.)
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MAIN AND WASHINGTON STREETS
EL DORADO, ARKANSAS 71730
(501) 863-3181
(Address, including ZIP Code, and telephone number,
including area code, of registrant's principal executive offices)
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JOHN E. BURNS
MAIN AND WASHINGTON STREETS
EL DORADO, ARKANSAS 71730
(501) 863-3181
(Name, address, including ZIP Code, and telephone number,
including area code, of agent for service)
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Copies to:
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S. SCOTT LUTON JOHN E. BURNS
IVESTER, SKINNER & CAMP, P.A. CHIEF FINANCIAL OFFICER
111 CENTER STREET, SUITE 1200 FIRST UNITED BANCSHARES, INC.
LITTLE ROCK, ARKANSAS 72201 MAIN AND WASHINGTON ST.
EL DORADO, AR 71730
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
IF THE SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED IN
CONNECTION WITH THE FORMATION OF A HOLDING COMPANY AND THERE IS COMPLIANCE WITH
GENERAL INSTRUCTION G, CHECK THE FOLLOWING BOX. / /
CALCULATION OF REGISTRATION FEE
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PROPOSED
TITLE OF EACH CLASS PROPOSED MAXIMUM OFFERING AGGREGATE
OF SECURITIES AMOUNT TO BE PRICE PER OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED(1) UNIT(2) PRICE REGISTRATION FEE
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Common Stock...................... 985,849 $26.50 $26,125,000 $9,010.00
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(1) Estimated based on the maximum number of shares to be registered.
(2) Estimated solely for the purpose of calculating the registration fee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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FIRST UNITED BANCSHARES, INC.
CROSS REFERENCE SHEET SHOWING LOCATION IN PROSPECTUS OF INFORMATION
REQUIRED BY ITEM 501(B) OF REGULATION S-K
A. INFORMATION ABOUT THE TRANSACTION
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LOCATION IN PROSPECTUS AND PROXY
REGISTRATION STATEMENT ITEM AND HEADING STATEMENT
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1. Forepart of Registration Statement and Outside Front
Cover Page of Prospectus............................ Facing Page of Registration
Statement; Cross Reference
Sheet, Cover Page of Proxy
Statement
2. Inside Front and Outside Back Cover Pages of
Prospectus.......................................... Available Information;
Incorporation of Certain
Documents by Reference; Table
of Contents
3. Risk Factors, Ratio of Earnings to Fixed Charges and
Other Information................................... Summary; Financial Information
4. Terms of the Transaction.............................. The Merger
5. Pro Forma Financial Information....................... Summary -- Selected Financial
Data; Financial Information
6. Material Contacts with the Company Being Acquired..... The Merger -- Background of the
Merger; InvestArk Bankshares,
Inc. -- Resulting Ownership in
First United
7. Additional Information Required for Reoffering by
Persons and Parties Deemed to be Underwriters....... Not Applicable
8. Interests of Named Experts and Counsel................ Legal Matters and Experts
9. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities...................... Not Applicable
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3 Registrants........... First United Bancshares, Inc.
11. Incorporation of Certain Information by Reference..... Incorporation of Certain
Documents by Reference
12. Information with Respect to S-2 or S-3 Registrants.... Not Applicable
13. Incorporation of Certain Information by Reference..... Not Applicable
14. Information with Respect to Registrants Other than S-3
or S-2 Registrants.................................. Not Applicable
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to S-3 Companies............. Not Applicable
16. Information with Respect to S-2 or S-3 Companies...... Not Applicable
17. Information with Respect to Companies Other than S-3
or S-2 Companies
(1) Description of Business........................... InvestArk Bankshares, Inc. --
Description of Business
(2) Market Price of and Dividends on the Registrant's
Common Equity..................................... Summary -- Comparative Per Share
Data; InvestArk Bankshares,
Inc. -- Principal Stockholders
of InvestArk and Related
Stockholder Matters
(3) Selected Financial Data........................... Summary -- Selected Financial
Data
(4) Supplementary Financial Information............... Not Applicable
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LOCATION IN PROSPECTUS AND PROXY
REGISTRATION STATEMENT ITEM AND HEADING STATEMENT
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(5) Management's Discussion and Analysis of Financial
Condition and Results of Operations............... InvestArk Bankshares, Inc. --
Management Discussion and
Analysis
(6) Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure............... Not Applicable
(7) Financial Statements.............................. Financial Information
(8) Quarterly Financial Information................... Financial Information
(9) Financial Statement Schedules..................... Not Applicable
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or Authorizations Are
to be Solicited
(1) Date, Time and Place of Information............... Cover Page of Proxy
(2) Revocability of Proxy............................. The InvestArk Special Meeting --
Voting; Solicitation of
Proxies; The First United
Special Meeting -- Voting;
Solicitation of Proxies
(3) Dissenters' Rights of Appraisal................... The Merger -- Right of Dissent
under the 1965 Act; Right of
Dissent under the 1987 Act
(4) Persons Making the Solicitation................... The InvestArk Special Meeting --
Voting; Solicitation of
Proxies; The First United
Special Meeting -- Voting;
Solicitation of Proxies
(5) Interest of Affiliates of the Registrant in the
Proposed Transaction; Voting Securities and
Principal Holders................................. The Merger -- Interest of
Management in Merger; InvestArk
Bankshares, Inc. -- Principal
Stockholders of InvestArk; The
Merger -- Background of the
Merger
(6) Vote Required for Approval........................ The InvestArk Special Meeting --
Vote Required; The First United
Special Meeting -- Vote
Required
(7) (i) Directors and Executive Officers............ Incorporation of Certain
Documents by Reference
(ii) Executive Compensation...................... Incorporation of Certain
Documents by Reference
(iii) Certain Relationships and Related
Transactions................................ Incorporation of Certain
Documents by Reference
19. Information if Proxies, Consents or Authorizations Are
Not to be Solicited or in an Exchange Offer......... Not Applicable
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FIRST UNITED BANCSHARES, INC.
To the Stockholders of
First United Bancshares, Inc.
Enclosed is a Notice of Special Meeting of Stockholders of First United
Bancshares, Inc. ("First United") which will be held at the main office of First
National Bank of El Dorado at Main and Washington Streets, El Dorado, Arkansas
on March 30, 1994 at 2:00 P.M.
At a Special Meeting, Stockholders of First United will consider and vote
upon the merger of First United and InvestArk Bankshares, Inc. ("InvestArk")
whereby InvestArk will be merged with and into First United. If the merger
becomes effective, Stockholders of InvestArk will be entitled to receive total
consideration of $26,125,000 consisting of fully paid and nonassessable shares
of voting common stock, $1.00 par value of First United. The number of shares of
common stock of First United to be exchanged will be determined by dividing
$26,125,000 by the average sales price per share of First United common stock
for all trades occurring during the period of 10 trading days on which one or
more trades actually takes place and which ends immediately prior to the second
trading day preceding the closing date of the merger. Notwithstanding the
foregoing, the number of shares of First United common stock to be exchanged
shall not be less than 885,593 and shall not be greater than 985,849. Each
stockholder of InvestArk common stock shall be entitled to receive a pro rata
portion of First United common stock based on each stockholder's pro rata
ownership of the issued and outstanding shares of InvestArk.
InvestArk is a bank holding company which is primarily engaged in the
business of banking through its two wholly-owned bank subsidiaries, with branch
offices in Izard and Arkansas counties which provide a full range of banking
services to its customers.
The Board of Directors believes that the proposed merger upon the terms and
conditions set forth in the accompanying Proxy Statement is in the best
interests of our Stockholders and therefore recommends that you vote in favor of
the merger. Additional information regarding the proposed merger, InvestArk and
the rights of dissenting Stockholders is set forth in the enclosed Proxy
Statement and I urge you to read this material carefully.
You are cordially invited to attend the meeting in person. Whether or not
you plan to attend the Special Meeting, please sign, date and return as soon as
possible the enclosed proxy in the enclosed self-addressed and stamped envelope.
If you attend the meeting, you may vote in person if you wish, even though you
previously returned your proxy.
Very truly yours,
/s/ JAMES V. KELLEY
James V. Kelley
Chairman of the Board
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FIRST UNITED BANCSHARES, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
March 30, 1994
NOTICE is hereby given that a Special Meeting of Stockholders of First
United Bancshares, Inc. has been called by the Board of Directors and will be
held at the main office of First National Bank Building, Main and Washington
Streets, El Dorado, Arkansas on March 30, 1994 at 2:00 p.m. for the following
purposes:
1. To consider and vote upon an Agreement and Plan of Reorganization dated
as of December 17, 1993 which provides for the merger of InvestArk
Bankshares, Inc. into First United Bancshares, Inc. of El Dorado,
Arkansas.
2. To transact such other business as may properly come before the meeting
or any adjournment thereof.
All Stockholders of record at the close of business on February 22, 1994
are entitled to vote at the meeting. The proposal 1 above requires the
affirmative vote of two-thirds of shares entitled to vote for approval.
Whether or not you plan to attend, please sign the enclosed Proxy and
return it at once in the stamped return envelope in order to insure that your
shares will be represented at the meeting. If you attend in person, the proxy
can be disregarded, if you wish, and you may vote your own shares.
By Order of the Board of Directors
/s/ ROBERT G. DUDLEY
Robert G. Dudley, Secretary
Dated: February 28, 1994
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INVESTARK BANKSHARES, INC.
To the Stockholders of
InvestArk Bankshares, Inc.
Enclosed is a Notice of Annual Meeting of Stockholders of InvestArk
Bankshares, Inc. ("InvestArk") which will be held at the main office of First
Stuttgart Bank and Trust Company at 412 South Main Street, Stuttgart, Arkansas
on March 30, 1994 at 10:00 A.M.
At an Annual Meeting, Stockholders of InvestArk will consider and vote upon
the merger of InvestArk with and into First United Bancshares, Inc. ("First
United"). If the merger becomes effective, stockholders of InvestArk will
exchange their InvestArk shares for fully paid and nonassessable shares of First
United voting common stock, $1.00 par value, having a value of $26,125,000. The
number of shares of common stock of First United to be exchanged will be
determined by dividing $26,125,000 by the average sales price per share of First
United common stock for all trades occurring during the period of 10 trading
days on which one or more trades actually takes place and which ends immediately
prior to the second trading day preceding the closing date of the merger.
Notwithstanding the foregoing, the number of shares of First United common stock
to be exchanged shall not be less than 885,593 and shall not be greater than
985,849. Each stockholder of InvestArk common stock shall be entitled to receive
a pro rata portion of First United common stock based on each stockholder's pro
rata ownership of the issued and outstanding shares of InvestArk. InvestArk
expects to receive a legal opinion, dated as of the effective date of the
Merger, that no gain or loss will be recognized by InvestArk stockholders upon
receipt of First United common stock in exchange for InvestArk common stock.
Stockholders of InvestArk will also consider and vote upon the election by
InvestArk to be governed by the Arkansas Business Corporation Act of 1987. This
vote will be incidental to the vote on the merger in that the election will only
be made in order to facilitate compliance with statutory law in consummating the
merger and no election will be made unless the merger is approved.
First United is a bank holding company which is engaged in the business of
banking through its five wholly-owned bank subsidiaries, with branch offices in
Union, Van Buren, Columbia, Ouachita, and Crawford counties which provide a full
range of banking services to its customers.
The Board of Directors believes that the proposed merger upon the terms and
conditions set forth in the accompanying Proxy Statement is in the best
interests of our stockholders and therefore recommends that you vote in favor of
the merger and the election to be governed by the 1987 Act. Additional
information regarding the proposed merger, the above-referenced election, First
United and the rights of dissenting stockholders is set forth in the enclosed
Proxy Statement and I urge you to read this material carefully.
You are cordially invited to attend the meeting in person. Whether or not
you plan to attend the Annual Meeting, please sign, date and return as soon as
possible the enclosed proxy in the enclosed self-addressed and stamped envelope.
If you attend the meeting, you may vote in person if you wish, even though you
previously returned your proxy.
Very truly yours,
/s/ HARRY C. ERWIN
Harry C. Erwin
Chairman of the Board
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INVESTARK BANKSHARES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
March 30, 1994
NOTICE is hereby given that the Annual Meeting of Stockholders of InvestArk
Bankshares, Inc. has been called by the Board of Directors and will be held at
the main office of First Stuttgart Bank and Trust Company located at 412 South
Main Street, Stuttgart, Arkansas on March 30, 1994 at 10:00 a.m. for the
following purposes:
1. To consider and vote upon an Agreement and Plan of Reorganization
("Agreement") dated as of December 17, 1993 which provides for the
merger of InvestArk Bankshares, Inc. into First United Bancshares, Inc.
of El Dorado, Arkansas.
2. To consider and vote upon an election to be governed by the Arkansas
Business Corporation Act of 1987. This vote will be incidental to the
vote upon the Agreement and will only be effective if the Agreement is
approved.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
All stockholders of record at the close of business on February 22, 1994
are entitled to vote at the meeting. Both proposals 1 and 2 above require the
affirmative vote of two-thirds of shares entitled to vote for approval.
Whether or not you plan to attend, please sign the enclosed Proxy and
return it at once in the stamped return envelope in order to insure that your
shares will be represented at the meeting. If you attend in person, the proxy
can be disregarded, if you wish, and you may vote your own shares.
By Order of the Board of Directors
/s/ HARRY C. ERWIN
Harry C. Erwin
Chairman of the Board
Dated: February 28, 1994
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FIRST UNITED BANCSHARES, INC.
AND
INVESTARK BANKSHARES, INC.
JOINT PROXY STATEMENT
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FIRST UNITED BANCSHARES, INC.
PROSPECTUS
985,849 SHARES OF COMMON STOCK
PAR VALUE $1.00
This Proxy Statement and Prospectus ("Proxy Statement") is being furnished
to the stockholders of InvestArk Bankshares, Inc. ("InvestArk") and First United
Bancshares, Inc. ("First United or the Company") in connection with the
solicitation of proxies by the Board of Directors of InvestArk and First United,
respectively, for use at the annual meeting of stockholders of InvestArk to be
held on March 30, 1994, including any adjournments or postponements of the
meeting, and for use at a special meeting of stockholders of First United to be
held on March 30, 1994, including any adjournments or postponements of the
meeting. At the meetings or any adjournments or postponements thereof, the
stockholders of InvestArk and First United will be asked to consider and vote on
a proposal to authorize and approve the transactions contemplated by the
Agreement and Plan of Reorganization between First United and InvestArk, dated
December 17, 1993 (the "Agreement"), and incidental thereto the stockholders of
InvestArk will be asked to consider and vote on a proposal to elect to have
InvestArk governed by the Arkansas Business Corporation Act of 1987. Pursuant to
the Agreement and the Plan of Merger ("Plan of Merger") which is Exhibit A to
the Agreement, First United would acquire all of the issued and outstanding
stock of InvestArk through a merger transaction (the "Merger") in which
InvestArk would merge with and into First United in exchange for the issuance to
the stockholders of InvestArk of up to 985,849 shares of First United common
stock, par value $1.00 ("Common Stock").
First United has agreed to register under the Securities Act of 1933, as
amended (the "Securities Act") the 985,849 shares of First United Common Stock
that may be issued to stockholders of InvestArk in exchange for their stock in
InvestArk. Consequently, this Proxy Statement serves as a Prospectus of First
United under the Securities Act for the issuance of shares of First United
Common Stock to stockholders of InvestArk.
This Proxy Statement and the accompanying forms of proxy are first being
mailed to stockholders of InvestArk and First United on or about February 28,
1994. On February 16, 1994, the closing price on the National Association of
Securities Dealers Automatic Quotation System of a share of First United Common
Stock was $29.50.
THE ABOVE MATTERS ARE DISCUSSED IN DETAIL IN THIS PROXY STATEMENT.
STOCKHOLDERS ARE STRONGLY URGED TO READ AND CONSIDER CAREFULLY THIS
PROXY STATEMENT IN ITS ENTIRETY.
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THE SECURITIES TO BE ISSUED IN THE PROPOSED TRANSACTION HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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THE DATE OF THIS PROXY STATEMENT IS FEBRUARY 28, 1994.
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NO PERSON IS AUTHORIZED BY FIRST UNITED OR INVESTARK TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION, OTHER THAN THOSE CONTAINED IN THIS
PROXY STATEMENT, IN CONNECTION WITH THE SOLICITATION AND THE OFFERING MADE BY
THIS PROXY STATEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROXY STATEMENT DOES
NOT CONSTITUTE THE SOLICITATION OF A PROXY OR AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO PURCHASE, ANY SECURITIES IN ANY JURISDICTION IN
WHICH SUCH SOLICITATION OR OFFERING MAY NOT LAWFULLY BE MADE.
NEITHER THE DELIVERY OF THIS PROXY STATEMENT NOR ANY DISTRIBUTION OF
SECURITIES MADE HEREUNDER SHALL IMPLY THAT THERE HAS BEEN NO CHANGE IN THE
INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF FIRST UNITED OR INVESTARK
SINCE THE DATE HEREOF.
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AVAILABLE INFORMATION
First United is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), and, in accordance therewith,
files proxy statements, reports and other information with the Securities and
Exchange Commission ("Commission"). This filed material can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
Regional Offices in Chicago (500 West Madison, Northwestern Atrium Center, 14th
Floor, Chicago, Illinois 60661) and in New York (75 Park Place, New York, New
York 10007) and copies of such material can be obtained by mail from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. First United's Common Stock is traded on the
National Association of Securities Dealers Automated Quotation National Market
System and the Company's Exchange Act reports and other information can be
inspected and copied at the National Association of Securities Dealers, 1735 "K"
Street, N.W., Washington, D.C. 20006.
First United has filed with the Commission a Registration Statement on Form
S-4 (together with any amendments thereto, the "Registration Statement") under
the Securities Act with respect to a maximum 985,849 shares of First United
Common Stock to be issued upon consummation of the transactions contemplated by
the Agreement. This Proxy Statement does not contain all the information set
forth in the Registration Statement and the exhibits thereto, certain portions
of which have been omitted as permitted by rules and regulations of the
Commission. Copies of the Registration Statement are available from the
Commission, upon payment of prescribed rates. For further information, reference
is made to the Registration Statement and the exhibits filed therewith.
Statements contained in this Proxy Statement or any document incorporated by
reference in this Proxy Statement relating to the contents of any contract or
other document referred to herein or therein are not necessarily complete, and
in each instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement or such other
document, each such statement being qualified in all respects by such reference.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
THIS PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON
REQUEST FROM MR. JOHN E. BURNS, VICE PRESIDENT AND CHIEF FINANCIAL OFFICER,
FIRST UNITED BANCSHARES, INC., MAIN AND WASHINGTON STREETS, EL DORADO, ARKANSAS
71730, (501) 863-3181. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY
REQUEST, ALTHOUGH NOT REQUIRED, SHOULD BE MADE, BY CERTIFIED MAIL, ON OR BEFORE
MARCH 25, 1994.
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The following documents of First United, which have been filed with the
Commission under the Exchange Act, are incorporated by reference into this Proxy
Statement:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1992, filed with the Commission on March 31, 1993.
2. The Company's most recent Current Report on Form 8-K filed with the
Commission on January 5, 1994.
3. The Company's Current Report on Form 8-K filed with the Commission
on December 10, 1993.
4. The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993.
Each document filed subsequent to the date of this Proxy Statement pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the holding of
the Special Meeting of the Stockholders of InvestArk and First United,
respectively, shall be deemed to be incorporated by reference in this Proxy
Statement and shall be part hereof from the date of filing of such document. Any
statement contained in a document incorporated or deemed to be incorporated in
this Proxy Statement shall be deemed to be modified or superseded for purposes
of this Proxy Statement to the extent that a statement contained herein or in
any other subsequently filed document which also is or is deemed to be
incorporated by reference modifies or supersedes such document.
All information contained in this Proxy Statement relating to First United
has been supplied by First United and all information relating to InvestArk has
been supplied by InvestArk.
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TABLE OF CONTENTS
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SUMMARY
The Company.........................................................................
InvestArk...........................................................................
The Merger..........................................................................
No Fairness Opinion.................................................................
Election by InvestArk Stockholders Under the 1987 Act...............................
The First United Special Meeting....................................................
The InvestArk Annual Meeting........................................................
Certain Federal Income Tax Consequences.............................................
Dissenters' Rights..................................................................
Regulatory Approvals................................................................
Accounting Treatment................................................................
Market Prices.......................................................................
Comparative Per Share Data..........................................................
Selected Financial Data.............................................................
THE INVESTARK SPECIAL MEETING
Date, Time and Place................................................................
Purpose of Meeting..................................................................
Shares Outstanding and Entitled to Vote; Record Date................................
Vote Required.......................................................................
Voting; Solicitation of Proxies.....................................................
THE FIRST UNITED SPECIAL MEETING
Date, Time and Place................................................................
Purpose of Meeting..................................................................
Shares Outstanding and Entitled to Vote; Record Date................................
Vote Required.......................................................................
Voting; Solicitation of Proxies.....................................................
THE MERGER
Background of the Merger............................................................
Reason for the Merger...............................................................
Fairness of the Transaction.........................................................
The Agreement.......................................................................
Regulatory Approvals................................................................
Antitrust Matters...................................................................
Certain Federal Income Tax Consequences.............................................
Accounting Treatment................................................................
Right of Dissent Under the 1965 Act.................................................
Right of Dissent under the 1987 Act.................................................
Exchange Ratio for the Merger.......................................................
Expenses of the Merger..............................................................
FINANCIAL INFORMATION
Pro Forma Combining Balance Sheet...................................................
Pro Forma Combining Statements of Income............................................
Notes to Pro Forma Combining Financial Statements...................................
ELECTION BY INVESTARK STOCKHOLDERS UNDER THE 1987 ACT
Election Incidental to the Merger...................................................
Reason for the Election.............................................................
Result of the Election..............................................................
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FIRST UNITED BANCSHARES, INC.
General.............................................................................
Offices.............................................................................
Employees...........................................................................
Description of First United Common Stock............................................
Recent Acquisition..................................................................
INVESTARK BANKSHARES, INC.
Description of Business.............................................................
Management Discussion and Analysis..................................................
Directors and Executive Officers....................................................
Transactions with Management........................................................
Principal Stockholders of InvestArk.................................................
Federal Reserve Board Investigations................................................
Resulting Ownership in First United.................................................
Registration Rights.................................................................
Competition.........................................................................
Litigation..........................................................................
Offices.............................................................................
Employees...........................................................................
Description of InvestArk Stock......................................................
Comparison of Rights of Holders of InvestArk Stock and First United Stock...........
LEGAL MATTERS AND EXPERTS
Legal Opinions......................................................................
Experts.............................................................................
General.............................................................................
INDEX TO INVESTARK FINANCIAL STATEMENTS...............................................
ANNEXES
I - Agreement and Plan of Reorganization I-1
II - Arkansas Business Corporation Act of 1965 sec. 4-26-1007 II-1
III- Arkansas Business Corporation Act of 1987 sec. 4-27-1301 et. seq. III-1
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5
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SUMMARY
The following is a summary of certain information contained elsewhere in
this Proxy Statement. Reference is made to, and this summary is qualified in its
entirety by, the more detailed information contained elsewhere in this Proxy
Statement, in the attached Annexes and in the documents incorporated by
reference. Stockholders are urged to read carefully this Proxy Statement and the
attached Annexes in their entirety.
THE COMPANY
The Company is a multi-bank holding company located in El Dorado, Arkansas
with five wholly-owned subsidiary banks operating in over 28 locations in seven
communities throughout the State of Arkansas. The Company's subsidiary banks
consist of First National Bank of El Dorado, El Dorado, Arkansas; First National
Bank of Magnolia, Magnolia, Arkansas; City National Bank of Fort Smith, Fort
Smith, Arkansas; Merchants and Planters Bank, N.A., Camden, Arkansas; and
Commercial Bank at Alma, Alma, Arkansas (collectively called the "Subsidiary
Banks"). The Company had consolidated assets of $887,749,000, and stockholders'
equity of $89,247,000 as of September 30, 1993.
The Company's Common Stock is traded on the National Association of
Securities Dealers Automated Quotation National Market System Over-the-Counter
Market (NASDAQ-NMS) under the symbol "UNTD". The Company's principal executive
offices are located at Main and Washington Streets, El Dorado, Arkansas, 71730,
and its telephone number is (501) 863-3181.
INVESTARK
InvestArk is a privately-owned Arkansas bank holding company which owns
99.7% of Bank of North Arkansas, Melbourne, Arkansas ("North Arkansas") and 100%
of First Stuttgart Bank and Trust Company, Stuttgart, Arkansas ("First Bank").
InvestArk had consolidated assets of $192,337,000 and stockholders' equity of
$17,130,000 as of September 30, 1993.
There is no public market for shares of InvestArk's outstanding capital
stock. InvestArk's principal executive offices are located at 412 South Main
Street, Stuttgart, Arkansas, 72021; its telephone number is (501) 673-3545.
THE MERGER
On December 17, 1993, the Company and InvestArk entered into a definitive
agreement pursuant to which the Company proposes to acquire all of the issued
and outstanding stock of InvestArk by merger of InvestArk with and into First
United. The acquisition of InvestArk will be consummated through the issuance to
InvestArk's stockholders of up to 985,849 shares of First United Common Stock.
The reason for the Merger is to expand the markets of the Company and thereby
increase the earning potential of the Company. The Agreement requires that the
merger be accounted for as a pooling of interests. See "The Merger -- The
Agreement."
On October 21, 1993, the date immediately prior to the announcement of the
agreement in principle, shares of First United Common Stock traded on the
NASDAQ-NMS at a closing sales price of $29.50. There is no established market
value for the stock of InvestArk.
THE BOARD OF DIRECTORS OF FIRST UNITED AND INVESTARK RECOMMEND THAT FIRST
UNITED AND INVESTARK STOCKHOLDERS, RESPECTIVELY, VOTE IN FAVOR OF THE ADOPTION
OF THE AGREEMENT.
NO FAIRNESS OPINION
No fairness opinion will be rendered in connection with this transaction.
6
<PAGE> 14
ELECTION BY INVESTARK STOCKHOLDERS UNDER THE 1987 ACT
The Election by the stockholders of InvestArk to be governed by the
Arkansas Business Corporation Act of 1987 codified at Ark. Code Ann. sec.
4-27-101 et. seq. (the "1987 Act") is incidental to and a condition of the
Merger proposal and approval of such election will have no force or effect
unless the Merger is likewise approved.
InvestArk is a corporation organized under the Arkansas Business
Corporation Act of 1965, codified at Ark. Code Ann. sec. 4-26-101 et.seq. (the
"1965 Act"). The 1987 Act is applicable to those corporations that were
incorporated on or after January 1, 1988 or those "1965 Act" corporations that
elect to be governed by the 1987 Act by amending their Articles of Incorporation
to so state. The stockholders of First United elected to be governed by the 1987
Act by amending its Articles of Incorporation.
The 1965 Act and 1987 Act have statutory merger procedures that must be
complied with in order to legally consummate a merger. Although both Acts
contain similar provisions, InvestArk must elect to be governed by the 1987 Act
in order to facilitate compliance with the applicable statutory procedures.
THE FIRST UNITED SPECIAL MEETING
Approval of the Merger by the stockholders of First United will be
considered at a Special Meeting to be held at the First National Bank Building,
El Dorado, Arkansas on March 30, 1994 at 2:00 p.m. Central Daylight Time.
The affirmative vote of the holders of two-thirds of the outstanding shares
of First United Common Stock is required for approval of the Merger. Directors,
executive officers and their affiliates hold a total of approximately 26.50% of
the outstanding Common Stock of First United. Stockholders of First United are
entitled to dissenters' rights. See "The Merger -- Right of Dissent under the
1987 Act."
THE INVESTARK ANNUAL MEETING
Approval of the Merger by the stockholders of InvestArk will be considered
at an Annual Meeting to be held at 412 South Main Street, Stuttgart, Arkansas on
March 30, 1994, at 10:00 a.m. Central Daylight Time.
The affirmative vote of the holders of a two-thirds of the outstanding
shares of InvestArk common stock is required for the approval of the Merger and
the Election to be governed by the 1987 Act. Directors, executive officers and
their affiliates hold a total of 6.30% of the outstanding stock of InvestArk. In
addition, stockholders who in the aggregate own 65.99% of the issued and
outstanding shares of InvestArk common stock have contractually committed to
vote their shares in favor of the Merger. Stockholders of InvestArk are entitled
to dissenters' rights. See "The Merger -- Right of Dissent under the 1965 Act;
Right of Dissent under the 1987 Act."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
It is intended that for federal income tax purposes the Merger will be
treated as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), and, accordingly, for federal
income tax purposes, no gain or loss will be recognized by either First United
or InvestArk as a result of the Merger and InvestArk's stockholders will not
recognize gain or loss upon the receipt of First United Common Stock in exchange
for InvestArk common stock. InvestArk expects to receive an opinion of counsel,
dated as of the effective date of the Merger, opining that no gain or loss will
be recognized by the InvestArk stockholders upon the receipt of First United
Common Stock in exchange for InvestArk common stock in connection with the
Merger. The parties to this transaction will not request a ruling from the
Internal Revenue Service concerning the taxability of this transaction. See "The
Merger -- Certain Federal Income Tax Consequences."
7
<PAGE> 15
DISSENTERS' RIGHTS
Holders of both First United Common Stock and InvestArk common stock are
entitled to dissenter's rights with respect to the Merger. Holders of First
United Common Stock may exercise their right of dissent under the 1987 Act,
while Holders of InvestArk Common Stock may exercise their right of dissent
under either the 1965 Act or the 1987 Act. See "The Merger -- Right of Dissent
under the 1965 Act; Right of Dissent under the 1987 Act."
REGULATORY APPROVALS
At this time, First United expects to receive the approval of the Board of
Governors of the Federal Reserve to merge InvestArk into First United. First
United also expects to receive the approval of the Arkansas Bank Commissioner to
consummate the Merger. See "The Merger -- Regulatory Approvals."
ACCOUNTING TREATMENT
First United intends to treat the Merger as a pooling of interests for
accounting purposes. Consummation of the Merger is conditioned upon the receipt
of the opinion of Arthur Andersen & Co. that the Merger will qualify for the
pooling of interests accounting treatment. See "The Merger -- Accounting
Treatment."
MARKET PRICES
First United Common Stock is traded over-the-counter in the NASDAQ National
Market System. InvestArk common stock is not traded publicly and there is no
quoted market for the stock. The table below shows the high and low closing
sales prices for First United Common Stock.
<TABLE>
<CAPTION>
FIRST UNITED
COMMON STOCK(1)
--------------------
1 SHARE
--------------------
HIGH LOW
------ -------
<S> <C> <C>
1991............................................ $13.50 $ 11.75
1992............................................ $26.00 $13.375
1993............................................ $29.50 $ 23.00
</TABLE>
- ---------------
(1) All share prices have been adjusted for a two-for-one stock split which was
declared July 27, 1992.
On October 21, 1993, immediately prior to the public announcement of the
agreement in principle between First United and InvestArk as to the proposed
merger transaction, the closing sales price for First United Common Stock was
$29.50. On February 16, 1994, the closing sales price for First United Common
Stock was $29.50.
COMPARATIVE PER SHARE DATA
The following table sets forth for the periods indicated selected
historical per share data of First United and InvestArk and the corresponding
pro forma and pro forma equivalent per share amounts giving effect to the
proposed Merger. The data presented are based upon the consolidated financial
statements and related notes of First United which are incorporated by reference
in this Proxy Statement, and the consolidated financial statements and related
notes of InvestArk and the pro forma combining balance sheet and income
statements, including the notes thereto, appearing elsewhere herein. This
information should be read in conjunction with such historical and pro forma
financial statements and related notes thereto. The assumptions used in the
preparation of this table appear elsewhere in this Proxy Statement. See
"Financial Information." These data are not necessarily indicative of the
results of the future operations of the combined
8
<PAGE> 16
organization or the actual results that would have occurred if the Merger had
been consummated prior to the periods indicated.
<TABLE>
<CAPTION>
INVESTARK
FIRST UNITED/ PRO FORMA
FIRST INVESTARK EQUIVALENT(2)
UNITED INVESTARK PRO FORMA ------------------------
HISTORICAL HISTORICAL COMBINED(1) $26.50 $29.00 $29.50
---------- ---------- ------------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Book value per common share:
December 31, 1992...................... $18.64 $73.08 $ 18.44 $82.59 $76.71 $75.67
September 30, 1993..................... 20.89 79.54 20.54 91.96 85.45 84.27
Cash dividends per common share:
Year ended December 31, 1990........... .50 .60 .44 1.97 1.83 1.80
Year ended December 31, 1991........... .50 .90 .45 2.01 1.87 1.85
Year ended December 31, 1992........... .60 .95 .54 2.42 2.25 2.21
Nine months ended September 30, 1992... .45 .55 .39 1.75 1.62 1.60
Nine months ended September 30, 1993... .49 .65 .43 1.92 1.79 1.76
Income per share from continuing
operations:
Year ended December 31, 1990........... 1.74 1.32 1.49 6.69 6.11 6.14
Year ended December 31, 1991........... 1.77 4.19 1.63 7.32 6.78 6.71
Year ended December 31, 1992........... 2.44 10.34 2.45 10.97 10.19 10.06
Nine months ended September 30, 1992... 1.84 7.77 1.85 8.26 7.70 7.57
Nine months ended September 30, 1993... 2.15 6.73 2.06 9.22 8.57 8.43
</TABLE>
- ---------------
(1) See "Financial Information."
(2) The InvestArk pro forma equivalents represent the respective First
United/InvestArk pro forma combined earnings, dividends and book value per
common share multiplied by the applicable exchange ratio of 4.55 ($26.50
First United stock value), 4.10 ($29.00 First United stock value) or 4.09
($29.50 First United stock value) shares of First United Common Stock for
each share of InvestArk Common Stock so that the First United/InvestArk pro
forma equivalent amounts are equated to the respective values for one share
of InvestArk Common Stock. The exchange ratio is determined by dividing
First United common stock to be received by the InvestArk stockholders by
the 216,464 shares of InvestArk Common Stock currently outstanding.
SELECTED FINANCIAL DATA
The table on the following page presents selected historical financial data
of First United and InvestArk and selected unaudited pro forma financial data
after giving effect to the Merger as a pooling of interests for accounting
purposes, assuming the Merger had occurred at the beginning of the earliest
period presented, but without giving effect to costs associated with the
consummation of the Merger, which currently are estimated to total $175,000.00.
The First United historical data for each of the years in the five-year period
ended December 31, 1992 are based on the historical financial statements of
First United as audited by Arthur Andersen & Co., independent public
accountants. The InvestArk historical data for each of the years in the
five-year period ended December 31, 1992 are based on the historical financial
statements of InvestArk as audited by Martin and Company, independent auditors.
The selected financial data for First United and InvestArk for the nine-month
periods ended September 30, 1992 and 1993 have been obtained from unaudited
financial statements and, in the opinion of the respective management of First
United and InvestArk, include all adjustments necessary to present fairly the
data for such periods. The pro forma data is not necessarily indicative of the
results of operations or the financial condition that would have been reported
had the Merger been in effect during those periods, or as of those dates, or
that may be reported in the future. Pro forma combined per share data of First
United and InvestArk give effect to the exchange of each share of InvestArk
common stock for 4.10 shares of First United Common Stock.
9
<PAGE> 17
These data should be read in conjunction with the consolidated financial
statements of each of First United and InvestArk, and the related notes thereto,
incorporated by reference herein and in conjunction with the unaudited pro forma
financial information, including the notes thereto, appearing elsewhere in this
Proxy Statement. See "Incorporation of Certain Documents by Reference" and
"Financial Information."
SUMMARY FINANCIAL DATA
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------------------------------- ------------------------
1988 1989 1990 1991 1992 1992 1993
--------- --------- --------- ----------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
FIRST UNITED -- HISTORICAL
Operating Data
Total interest income.................... $ 49,938 $ 65,903 $ 68,212 $ 68,796 $ 63,381 $ 48,311 $ 44,500
Net interest income...................... 20,082 24,825 26,913 29,933 34,691 26,039 26,598
Provision for possible loan losses....... 1,755 3,837 2,122 3,250 2,422 1,867 1,115
Income from continuing operations...... 6,867 6,201 7,438 7,546 10,443 7,866 9,201
Per Share Data
Income from continuing operations........ 1.61 1.45 1.74 1.77 2.44 1.84 2.15
Cash dividend paid....................... 0.50 0.50 0.50 0.50 0.60 0.45 0.49
Selected Balance Sheet Items
Total assets............................. 747,597 765,338 797,242 848,582 895,527 895,527 887,749
Total securities......................... 257,048 261,600 294,366 373,824 427,000 427,090 425,718
Net loans................................ 386,686 374,136 376,544 369,726 363,655 356,756 376,012
Total deposits........................... 649,426 660,851 689,713 743,631 772,995 772,995 762,861
Long-term debt........................... 12,750 11,643 10,536 9,429 8,321 8,321 7,214
Capital accounts......................... 56,960 61,025 66,327 71,737 79,618 79,618 89,247
INVESTARK -- HISTORICAL
Operating Data
Total interest income.................... $ 12,770 $ 14,756 $ 15,786 $ 15,960 $ 14,188 $ 10,828 $ 9,543
Net interest income...................... 5,528 5,942 6,171 6,777 7,819 5,833 5,665
Provision for possible loan losses....... 1,000 448 1,576 1,463 64 39 0
Income from continuing operations...... 1,194 1,435 286 907 2,233 1,681 1,450
Per Share Data
Income from continuing operations........ 5.52 6.64 1.32 4.19 10.34 7.77 6.73
Cash dividend paid....................... 0.63 0.63 0.60 0.90 0.95 0.55 0.65
Selected Balance Sheet Items
Total assets............................. 154,060 164,535 183,114 189,738 190,933 201,163 192,236
Total securities......................... 53,532 60,956 74,690 72,239 82,462 78,669 84,719
Net loans................................ 79,152 81,409 87,621 86,745 85,906 84,206 82,237
Total deposits........................... 135,347 143,135 159,936 166,072 170,102 179,112 170,525
Long-term debt........................... 1,652 1,100 890 870 500 755 0
Capital accounts......................... 11,669 12,908 13,102 13,833 15,820 15,367 17,130
PRO FORMA -- COMBINED
Operating Data
Total interest income.................... $ 62,708 $ 80,659 $ 83,999 $ 84,936 $ 77,569 $ 59,139 $ 54,043
Net interest income...................... 25,610 30,767 33,084 36,711 42,510 31,872 32,263
Provision for possible loan losses....... 2,755 4,285 3,698 4,714 2,486 1,906 1,115
Income from continuing operations...... 8,061 7,636 7,724 8,458 12,676 9,547 10,651
Per Share Data
Income from continuing operations........ 1.56 1.48 1.49 1.63 2.45 1.85 2.06
Cash dividend paid....................... 0.44 0.44 0.44 0.45 0.54 0.39 0.43
Selected Balance Sheet Items
Total assets............................. 901,657 929,873 980,356 1,038,320 1,086,460 1,096,690 1,080,085
Total securities......................... 310,580 322,556 369,056 446,063 509,462 505,759 510,437
Net loans................................ 465,838 455,545 464,165 456,471 449,561 440,962 458,249
Total deposits........................... 784,773 803,986 849,649 909,703 943,097 952,107 933,386
Long-term debt........................... 14,402 12,743 11,406 10,299 8,821 9,076 7,214
Capital accounts......................... 68,629 73,933 79,429 85,570 95,438 94,985 106,277
</TABLE>
10
<PAGE> 18
THE INVESTARK ANNUAL MEETING
DATE, TIME AND PLACE
The InvestArk Annual Meeting will be held on March 30, 1994, commencing at
10:00 a.m. Central Daylight Time, at the offices of InvestArk, 412 South Main
Street, Stuttgart, Arkansas.
PURPOSE OF MEETING
The purpose of the InvestArk Annual Meeting is to consider and vote upon
the adoption of the Agreement between InvestArk and First United and to consider
and vote upon the election of InvestArk to be governed by the Arkansas Business
Corporation Act of 1987 (the "Election").
SHARES OUTSTANDING AND ENTITLED TO VOTE; RECORD DATE
The close of business on February 22, 1994 has been fixed by the Board of
Directors of InvestArk as the record date for the determination of holders of
InvestArk common stock entitled to notice of and to vote at the InvestArk Annual
Meeting. At the close of business on February 22, 1994, there were 216,464
shares of InvestArk common stock issued and outstanding held by 159 shareholders
of record. Holders of record of InvestArk common stock on the record date are
entitled to one vote per share and are entitled to dissenters' rights. See "The
Merger -- Right of Dissent under the 1965 Act; Right of Dissent under the 1987
Act."
VOTE REQUIRED
The affirmative vote of two-thirds of all the shares of InvestArk common
stock outstanding on the record date is required to adopt the Agreement and the
Election.
As of January 1, 1994, directors, executive officers and their affiliates
own 6.30% of the outstanding stock of InvestArk. In addition, other stockholders
who in the aggregate own 65.99% of the outstanding shares of InvestArk common
stock, have contractually committed to vote their shares in favor of the Merger.
VOTING; SOLICITATION OF PROXIES
Proxies for use at the InvestArk Annual Meeting accompany copies of this
Proxy Statement delivered to record holders of InvestArk common stock and such
proxies are solicited on behalf of the Board of Directors of InvestArk. A holder
of InvestArk common stock may use his proxy if he is unable to attend the
InvestArk Annual Meeting in person or wishes to have his shares voted by proxy
even if he does attend the meeting. The proxy may be revoked in writing by the
person giving it at any time before it is exercised by notice of such revocation
to the secretary of InvestArk, or by submitting a proxy having a later date, or
by such person appearing at the InvestArk meeting and electing to vote in
person. All proxies validly submitted and not revoked will be voted in the
manner specified therein. If no specification is made, the proxies will be voted
in favor of the Merger and the Election.
InvestArk will bear the cost of solicitation of proxies from its
stockholders. In addition to using the mails, proxies may be solicited by
personal interview. Officers and other employees of InvestArk acting on
InvestArk's behalf, may solicit proxies personally.
11
<PAGE> 19
THE FIRST UNITED SPECIAL MEETING
DATE, TIME AND PLACE
The First United Special Meeting will be held on March 30, 1994, commencing
at 2:00 p.m. Central Daylight Time at the First National Bank Building, Main and
Washington Streets, El Dorado, Arkansas.
PURPOSE OF MEETING
The purpose of the First United Special Meeting is to consider and vote
upon the adoption of the Agreement between InvestArk and First United.
SHARES OUTSTANDING AND ENTITLED TO VOTE; RECORD DATE
The close of business on February 22, 1994 has been fixed by the Board of
Directors of First United as the record date for determination of holders of
First United Common Stock entitled to notice of and to vote at the First United
Special Meeting. At the close of business on February 22, 1994, there were
4,272,276 shares of First United Common Stock issued and outstanding held by
approximately 800 stockholders of record. Holders of record of First United
Common Stock on the record date are entitled to one vote per share, and are
entitled to Dissenter's Rights. See "The Merger -- Right of Dissent under the
1987 Act."
VOTE REQUIRED
The affirmative vote of two-thirds of all the shares of First United Common
Stock outstanding on the record date is required to adopt the Agreement. As of
January 1, 1994, directors, executive officers and their affiliates own
approximately 26.50% of the outstanding Common Stock of First United.
VOTING; SOLICITATION OF PROXIES
Proxies for use at the First United Special Meeting accompany copies of
this Proxy Statement delivered to record holders of First United Common Stock. A
holder of First United Common Stock may use his proxy if he is unable to attend
the First United Special Meeting in person or wishes to have his shares voted by
proxy even if he does attend the meeting. The proxy may be revoked in writing by
the person giving it at any time before it is exercised by notice of such
revocation to the secretary of First United, or by submitting a proxy having a
later date, or by such person appearing at the First United Special Meeting and
electing to vote in person. All proxies validly submitted and not revoked will
be voted in the manner specified therein. If no specification is made, the
proxies will be voted in favor of the Merger.
First United will bear the cost of solicitation of proxies from its
stockholders. In addition to using the mails, proxies may be solicited by
personal interview. Officers and other employees of First United, acting on
First United's behalf, may solicit proxies personally.
THE MERGER
BACKGROUND FOR THE MERGER
From time to time, the Board of Directors and management of InvestArk have
considered various strategies for InvestArk, including merging with a larger
company. Representatives of Stephens Inc. of Little Rock, Arkansas, InvestArk's
financial advisers, were authorized to solicit potential merger partners. A list
of potential merger partners including First United, was then compiled on the
basis of various criteria, including compatibility with InvestArk's business,
ability to provide satisfactory terms, business and financial prospects.
A limited number of companies from the list, including First United, were
contacted on a confidential basis concerning the possible merger and asked to
make a bid for InvestArk. After numerous negotiating sessions First United's bid
was accepted by the Board of Directors of InvestArk and InvestArk signed a
letter of intent on October 21, 1993 and the Agreement on December 17, 1993.
12
<PAGE> 20
For its role as financial advisor to InvestArk, Stephens Inc. is to receive
$100,000 cash payment from InvestArk plus reasonable expenses which are expected
to be minimal at the closing of the Merger. Stephens Inc. is controlled by
certain members of the families of Wilton R. Stephens and Jackson T. Stephens
who are also affiliates of InvestArk. Various Stephens family members and trusts
own in the aggregate 65.81% of the outstanding shares of InvestArk common stock
and have entered into an Agreement with First United to vote such shares in
favor of the Merger. In consideration of such voting agreement, First United
granted the Stephens family members and trusts registration rights with respect
to the shares of First United Common Stock they will receive in the Merger. See
"InvestArk Bankshares, Inc. -- Registration Rights".
Stephens Inc. has acted as a market maker for First United Common Stock,
which is traded on the National Association of Securities Dealers Automated
Quotations System National Market System, for many years. However, Stephens Inc.
has temporarily suspended its role as a market maker in First United Common
Stock pending closing of the Merger.
REASON FOR THE MERGER
The acquisition of InvestArk will expand First United's current markets.
The banking subsidiaries of InvestArk are located in Melbourne, Arkansas and
Stuttgart, Arkansas. Currently, there are no banking offices in the First United
system located in Melbourne or Stuttgart. Thus, the acquisition of InvestArk
expands First United's market into new areas.
Management of First United believes that by expanding its markets, it will
increase the range and competitiveness of its banking services to persons
residing in the Melbourne and Stuttgart areas while increasing the earning power
of First United.
FAIRNESS OF THE TRANSACTION
THE BOARD OF DIRECTORS OF FIRST UNITED AND INVESTARK BELIEVE THAT THE
PROPOSED ACQUISITION TERMS ARE FAIR TO THE STOCKHOLDERS OF BOTH FIRST UNITED AND
INVESTARK AND RECOMMEND A VOTE IN FAVOR OF THE ADOPTION OF THE AGREEMENT.
THE AGREEMENT
The following description of certain features of the Agreement is qualified
in its entirety by the full text of the Agreement, which is incorporated herein
by reference and attached hereto by Annex.
Under the terms of the Agreement, InvestArk will be merged with and into
First United in exchange for the issuance by the Company of a maximum of 985,849
newly issued shares of First United Common Stock to the holders of the common
stock of InvestArk.
The Agreement provides that the stockholders of InvestArk will receive
total consideration of $26,125,000 consisting of fully paid and nonassessable
shares of Common Stock, $1.00 par value of First United. The number of shares of
First United common stock to be exchanged for all of the issued and outstanding
shares of InvestArk Common Stock will be determined by dividing $26,125,000 by
the average price of First United Common Stock. The average price of First
United Common Stock is defined as the average sales price per share for all
trades occurring during the period of ten (10) trading days on which one or more
trades actually takes place and which ends immediately prior to the second
trading day preceding the closing date. Notwithstanding the foregoing, the
number of shares of First United Common Stock to be exchanged shall not be less
than 885,593 and shall not be greater than 985,849 which equate to an average
price of First United Common Stock of $29.50 and $26.50, respectively.
Fractional shares of First United Common Stock shall not be issued and any
InvestArk stockholder entitled to receive a fractional share shall receive a
cash payment equal to the value of the fractional share based on the average
price of First United Common Stock.
The Agreement can be terminated by InvestArk if the First United Common
Stock average price is less than $22.00 and the scheduled closing date is more
than 120 days after the date of the Agreement. First
13
<PAGE> 21
United may terminate the Agreement if the First United Common Stock average
price is $35.00 or more and the scheduled closing date is more than 120 days
after the date of the Agreement. However, First United may not terminate the
Agreement based upon the aforementioned ground if: (i) First United has agreed
or announced its intention to be acquired by a third party or merge into a third
party that is the surviving corporation, or (ii) First United has received an
unsolicited offer of proposal to engage in such a transaction. In addition,
either party may terminate the Agreement, if the Merger is not closed on or
before May 31, 1994 provided that the failure to close is not caused by a breach
of the Agreement by the party seeking to terminate it.
First United and InvestArk have agreed, for the period prior to the
consummation of the merger, to operate their respective businesses only in the
usual, regular and ordinary course. In addition, First United and InvestArk will
use reasonable efforts to maintain and keep their respective properties in as
good repair and condition as at present, except for ordinary wear and tear and
to perform all obligations required under all material contracts, leases, and
documents relating to or affecting their respective assets prior to the
consummation of the Merger. First United and InvestArk have further agreed that,
prior to consummation of the Merger, they will not incur any material
liabilities or obligations, except in the ordinary course of business, or take
any action which would or is reasonably likely to adversely affect the ability
of either First United or InvestArk to obtain any necessary approvals, adversely
affect the ability of First United or InvestArk to perform their covenants and
agreements under the Agreement, or result in any of the conditions to the Merger
not being satisfied. InvestArk has further agreed that, unless otherwise
required by applicable law, it shall not initiate, solicit or encourage any
inquiry or proposal which constitutes a competing transaction.
The Agreement requires that certain conditions occur or be waived prior to
the closing date ("conditions precedent"), including (a) approval by InvestArk
stockholders by two-thirds of all outstanding shares; (b) approval by First
United stockholders by two-thirds of all outstanding shares; (c) approval by the
appropriate bank regulatory authorities; (d) receipt by the Company of an
opinion from Arthur Andersen & Co. that the Merger will qualify for pooling of
interests treatment under the applicable accounting principles; and (e)
satisfaction of other normal conditions to closing a merger transaction. It is
also a condition to the Merger that First United have an effective registration
statement on file with the Securities and Exchange Commission covering the
issuance of shares to be exchanged pursuant to the Merger. Prior to the
effective date of the Merger, any condition of the Agreement except, those
required by law may be waived by the party benefited by the condition.
The effective date of the Merger will be the date the Articles of Merger
are filed with the Arkansas Secretary of State, or the date so stated in the
Articles of Merger. The Agreement provides that a closing date will be set by
mutual agreement to occur within a reasonable time following the date on which
the last of all regulatory and other approvals necessary to consummate the
Merger have been received and all necessary time periods imposed by regulatory
authorities have elapsed. The parties may, however, amend the Agreement to
provide a later closing date.
REGULATORY APPROVALS
The Merger is subject to prior approval by the appropriate banking
regulatory authorities. An application has been filed for approval of the Merger
with the Board of Governors of the Federal Reserve ("Board") for First United to
acquire InvestArk. In conjunction with the Board application, the Merger is also
subject to review by the Department of Justice as to its competitive effects. An
application has also been filed with the Arkansas Bank Department ("Department")
for approval of the Merger. The application made to the Board and Department has
not been approved or denied. It cannot be predicted with accuracy when approval
or denial will be received, however, the Company expects regulatory action to be
taken on these applications within sixty (60) days following the date of this
Proxy Statement.
ANTITRUST MATTERS
The Department of Justice has thirty (30) calendar days after approval by
the Board in which to challenge the proposed Merger on anti-trust
considerations. The approval letter or Order from the Board,
14
<PAGE> 22
therefore will provide that the Merger may not be consummated until thirty (30)
calendar days after the effective date of such letter or Order. The letter or
Order will also provide that the transaction must be consummated no later than
ninety (90) calendar days from that effective date unless the period is extended
for good cause by the Board upon request by First United.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General. For federal income tax purposes the law provides that participants
(a "Party" or "Parties") in a transaction, including the transaction
contemplated by the Merger, which meets certain specific statutory and case law
requirements (a "reorganization") are entitled to special tax treatment which
effectively defers the instance of taxation on any gain inherent in a
reorganization. This result is achieved by treating the Parties as if they had
continued substantially unaffected by the reorganization. Under Section 361, no
gain or loss is recognized by a Party as a result of a reorganization (Section
references under this caption are to the Internal Revenue Code of 1986, as
amended (the "Code"). Section 362(b) provides that the tax basis of property
received by a Party in a reorganization is the same as it would be in the hands
of the transferor, increased by any gain recognized by the transferor on such
transfer. The tax basis of the underlying assets of the Parties is not changed.
For the stockholders of corporations which are Parties to a reorganization,
Section 354 provides that no gain or loss shall be recognized to such
stockholders on the exchange of their stock of one Party for the stock of
another Party. Section 358 provides that the basis of the stock received by such
a stockholder shall be the same as the basis of the stock surrendered in the
exchange. Under Section 1223, the holding period of the stock received by a
stockholder of one of the Parties will include the period for which the stock
exchanged by such stockholder was held.
As a result of case law interpreting the special tax treatment available
for reorganizations, there is also (i) a continuity-of-interest concept which
requires that, in the aggregate, stockholders of each of the corporate parties
to a reorganization maintain a minimum level of equity ownership in the
surviving corporate party, (ii) a continuity of business enterprise requirement;
and (iii) a valid business purpose requirement.
Tax Consequences. It is expected that at or prior to the closing date of
the Merger, InvestArk will receive closing tax opinion of tax counsel to
InvestArk that for federal income tax purposes, under current law, assuming that
the Merger and related transactions will take place as described in the Merger
Agreement and that the case law requirements described above, relating to
continuity of stockholder interest, continuity of business enterprise and valid
business purpose, are satisfied, the Merger will constitute a reorganization
within the meaning of Section 368(a)(1)(A) of the Code, and First United and
InvestArk each will be a Party to the reorganization within the meaning of
Section 368(b) of the Code.
If the Merger constitutes such a reorganization, the following will be the
material federal income tax consequences of the Merger in the opinion of Shults,
Ray & Kurrus: (i) no gain or loss will be recognized by the InvestArk
stockholders upon the receipt of First United Common Stock in exchange for
InvestArk common stock in connection with the Merger; (ii) the tax basis of the
First United Common Stock to be received by the InvestArk stockholders in
connection with the Merger will be the same as the basis in the InvestArk Common
Stock surrendered in exchange therefor; (iii) the holding period of the First
United Common Stock to be received by the InvestArk stockholders in connection
with the Merger will include the holding period of the InvestArk common stock
surrendered in exchange therefor, provided that InvestArk common stock is held
as a capital asset at the effective time of the Merger; and (iv) the payment of
cash to stockholders of InvestArk in lieu of the issuing fractional shares of
First United Common Stock will be treated as if the fractional shares were
distributed as part of the exchange and then redeemed by First United for cash
and the payments received will be treated as distributions in redemption of the
fractional shares, subject to the provisions of Section 302 of the Code.
Cash Received by Holders of InvestArk or First United Common Stock Who
Dissent. A stockholder of InvestArk or First United who perfects his dissenter's
rights under the laws of Arkansas and who receives payment of the fair value of
his shares of InvestArk common stock will be treated as having received such
payment in redemption of such stock. Such redemption will be subject to the
conditions and limitations of
15
<PAGE> 23
Section 302 of the Code, including the attribution rules of Section 318. In
general, if the dissenting shares of common stock are held by the holder as a
capital asset at the effective time of the Merger, such holder will recognize
capital gain or loss measured by the difference between the amount of cash
received by such holder and the basis for such shares. Each holder of common
stock who contemplates exercising his dissenter's rights should consult his own
tax adviser as to the possibility that any payment to him will be treated as
dividend income.
THE DISCUSSION SET FORTH ABOVE DOES NOT ADDRESS THE STATE, LOCAL OR FOREIGN
TAX ASPECTS OF THE MERGER. THE DISCUSSION IS BASED ON CURRENTLY EXISTING
PROVISIONS OF THE CODE, EXISTING AND PROPOSED TREASURY REGULATIONS THEREUNDER
AND CURRENT ADMINISTRATIVE RULINGS AND COURT DECISIONS. ALL OF THE FOREGOING ARE
SUBJECT TO CHANGE AND ANY SUCH CHANGE COULD AFFECT THE CONTINUING VALIDITY OF
THIS DISCUSSION. EACH INVESTARK AND FIRST UNITED STOCKHOLDER SHOULD CONSULT HIS
OR HER OWN TAX ADVISOR WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE
MERGER TO HIM OR HER, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND
FOREIGN TAX LAWS.
ACCOUNTING TREATMENT
First United intends to treat the merger as a pooling of interests for
accounting purposes. Consequently, in accordance with generally accepted
accounting principles, First United anticipates that it will restate its
consolidated financial statements to include the assets, liabilities,
stockholders' equity and results of operations of InvestArk as reflected in its
consolidated financial statements, subject to appropriate adjustments, if any,
to conform accounting principles of the two companies.
RIGHT OF DISSENT UNDER THE 1965 ACT
HOLDERS OF INVESTARK COMMON STOCK WILL BE ENTITLED TO EXERCISE DISSENTER'S
RIGHTS EITHER UNDER THE 1965 ACT OR THE 1987 ACT. IF APPROVED, THE ELECTION TO
BE GOVERNED BY THE 1987 ACT BY THE STOCKHOLDERS OF INVESTARK, AS DISCUSSED
BELOW, WILL BE MADE PRIOR TO CONSUMMATION OF THE MERGER BUT SUBSEQUENT TO A VOTE
ON SUCH MERGER. THEREFORE, FIRST UNITED WILL RECOGNIZE COMPLIANCE WITH EITHER
THE 1965 ACT OR THE 1987 ACT AS A VALID EXERCISE OF DISSENTER'S RIGHTS WITH
RESPECT TO SUCH MERGER. FOR A DISCUSSION OF THE PROCEDURE TO BE FOLLOWED UNDER
THE 1987 ACT, SEE "THE MERGER -- RIGHT OF DISSENT UNDER THE 1987 ACT."
Under Arkansas law, holders of InvestArk common stock are entitled to
dissenters' rights pursuant to Ark. Code Ann. sec. 4-26-1007 of the 1965 Act.
However, if a holder of shares of InvestArk common stock chooses to follow the
procedure under the 1965 Act, he shall only be entitled to such rights if he
complies with that statute. The following summary does not purport to be a
complete statement of the method of compliance with Section 4-26-1007 and is
qualified by reference to those statutory sections which are attached, hereto by
Annex.
A holder of InvestArk stock who wishes to perfect his dissenter's rights in
the event that the Merger is adopted must:
(a) File with the corporation, prior to or at the meeting of
stockholders at which the vote on the Agreement is to be made, written
objection to the Agreement; and
(b) Not have voted in favor of the Merger.
Any written notice of objection to the Merger pursuant to clause (a) of the
immediately proceeding paragraph should be mailed or delivered to InvestArk
Bankshares, Inc., 412 South Main Street, Stuttgart, Arkansas 72021, Attention:
Harry C. Erwin, Chief Executive Officer. Because the written objection must be
delivered prior to or at the stockholder vote on the Agreement, it is
recommended, although not required, that
16
<PAGE> 24
a stockholder using the mail should use certified or registered mail, return
receipt requested, to confirm that he has made timely delivery.
Within ten (10) days after the consummation of the Merger, any stockholder
objecting to the Merger must make a written demand on First United for payment
of the fair value of his shares as of the day before the vote on the Agreement
was taken. This second notice should be mailed to First United Bancshares, Inc.,
Main and Washington Streets, El Dorado, Arkansas, 71730, Attention: John E.
Burns, Vice President and Chief Financial Officer. The demand must state the
number and class of shares owned. If a demand is not made within the 10-day
period, the stockholder is bound by the Agreement.
Within ten (10) days after the Merger is effected, First United shall give
notice to each dissenting stockholder who made demand as provided above for the
payment of the value of his shares. If the dissenting stockholder and First
Untied agree upon the value of the shares within thirty (30) days after the date
of the Merger, then payment shall be made within ninety (90) days of the Merger.
Simultaneously with the payment, the dissenting stockholder shall surrender the
certificates representing his shares.
If within the thirty-day period no agreement is reached as to the value of
the dissenting stockholder's shares, the dissenting stockholder must file a
petition in Pulaski County Circuit Court within 60 days after the expiration of
the 30-day period asking for a determination of the fair value of his shares.
The judgment will be final and is payable only upon and simultaneously with the
surrender of the certificates representing the shares to First United. If a
dissenting stockholder fails to file a petition within the 60-day period, he and
all persons claiming under him shall be bound by the terms of the Agreement.
RIGHT OF DISSENT UNDER THE 1987 ACT
HOLDERS OF FIRST UNITED COMMON STOCK OR INVESTARK COMMON STOCK SHALL BE
ENTITLED TO DISSENTER'S RIGHTS PURSUANT TO ARK. CODE ANN. SEC. 4-27-1301 ET.
SEQ. OF THE 1987 ACT WITH RESPECT TO THE MERGER. HOWEVER, A HOLDER OF FIRST
UNITED COMMON STOCK SHALL ONLY BE ENTITLED TO EXERCISE DISSENTER'S RIGHTS UNDER
THE 1987 ACT, WHEREAS A HOLDER OF INVESTARK COMMON STOCK MAY ALSO EXERCISE SUCH
RIGHTS UNDER THE 1965 ACT, SEE "THE MERGER -- RIGHT OF DISSENT UNDER THE 1965
ACT."
The following summary does not purport to be a complete statement of the
method of compliance with the 1987 Act and is qualified by reference to those
statutory sections which are attached hereto by Annex.
A holder of either InvestArk or First United Common Stock who wishes to
perfect his dissenter's rights in the event that the Merger is adopted must:
(a) File with the corporation, prior to or at the meeting of
stockholders at which the vote on the Agreement is to be made, written
objection to the Agreement; and
(b) Not have voted in favor of the Merger.
Any written notice of objection to the Merger pursuant to clause (a) of the
immediately preceding paragraph should be mailed or delivered to InvestArk
Bankshares, Inc., 412 South Main Street, Stuttgart, Arkansas 72021, Attention:
Mr. Harry C. Erwin, Chief Executive Officer (if you are a stockholder of First
United, to First United Bancshares, Inc., Main and Washington Streets, El
Dorado, Arkansas 71730, Attention: John E. Burns, Vice President and Chief
Financial Officer). Because the written objection must be delivered prior to or
at the stockholder vote on the Merger, it is recommended, although not required,
that a stockholder using the mail should use certified or registered mail,
return receipt requested, to confirm that he has made timely delivery.
If the Merger is adopted at the special stockholders meeting, the
corporation must send to the dissenting stockholder, no later than ten (10) days
after the corporate action was taken, a dissenter's notice which will inform the
stockholder where a demand for payment must be sent, where the stockholder's
share certificates must be deposited and provide a form for demanding payment.
The dissenter's notice will also notify the
17
<PAGE> 25
stockholder of a time period within not fewer than thirty (30) nor more than
sixty (60) days which the stockholder must deliver the payment demand form and
stock certificates to the corporation.
As soon as the Merger is consummated, or upon receipt of a payment demand
by the dissenting stockholder, First United must pay the dissenting stockholder
the amount First United estimates to be the fair value of the shares, plus
accrued interest and deliver to the dissenting stockholder the corporation's
balance sheet as of the most recent fiscal year, an income statement for that
year, a statement of changes in stockholder equity for that year, and the latest
available interim financial statement. At this time, First United shall also
deliver to the dissenting stockholder a statement of the corporation's estimate
of fair value of the shares, an explanation of how interest was calculated, a
statement of the dissenter's right to demand a higher value for his shares and a
copy of the appropriate statutory provisions governing the dissenters rights
procedure.
Within thirty (30) days after the dissenting stockholder has received
payment in the amount the corporation estimates to be the fair value of the
shares, the dissenting stockholder must notify the corporation, in writing, of
his own estimate of fair value. If the dissenting stockholder does not notify
the corporation within this thirty (30) day period, he waives his right to
demand a higher payment.
If the demand for payment, as referenced in the immediately preceding
paragraph remains unsettled for sixty (60) days from the date the corporation
receives the dissenting stockholders demand for payment, the corporation must
commence a proceeding and file a petition in Pulaski County Circuit Court to
determine the fair value of the shares and the amount of accrued interest to be
paid.
EXCHANGE RATIO FOR THE MERGER
The number of shares of First United Common Stock to be issued pursuant to
the Merger is calculated by dividing $26,125,000 by the average sales price of
First United Common Stock for all trades occurring during the period of ten (10)
days on which one or more trades actually takes place and which ends immediately
prior to the second trading day preceding the closing date, provided that the
amount of shares of First United Common Stock issued does not exceed the maximum
number of 985,849 or is not the less than the minimum number of 885,593. The
exchange ratio for the Merger is calculated by taking the number of shares of
First United Common Stock to be issued and dividing this number by the total
number of issued and outstanding shares of InvestArk common stock, which is
216,464. The following table illustrates a range of average sales prices for
First United Common Stock and based upon these average sales prices, calculates
the number of shares of First United Common Stock to be issued and the resulting
exchange ratio. This table is for illustration purposes only and should not be
relied upon as the actual amount of shares to be issued, the actual average
sales price, or the exchange ratio.
CALCULATION OF EXCHANGE RATIO
<TABLE>
<S> <C> <C> <C>
First United Average Sales Price.............. $26.50 $28.00 $29.50
First United Common Stock Issued.............. 985,849 933,035 885,593
Exchange Ratio for the Merger(2).............. 4.55 4.31 4.09
</TABLE>
- ---------------
(2) The Exchange Ratio represents the number of shares of First United Common
Stock that a stockholder of InvestArk would receive for one share of
InvestArk common stock. However, as discussed above, fractional shares will
not be issued.
EXPENSES OF THE MERGER
First United and InvestArk will bear their own expenses incident to
preparing for entering into and carrying out the Merger Agreement and the
consummation of the Merger, except that First United will pay all expenses
incident to the preparation of this Proxy Statement and its printing and
distribution and for the filing of necessary applications for approval of the
Merger with the Board and Department.
18
<PAGE> 26
FINANCIAL INFORMATION
The following unaudited Pro Forma Combining Balance Sheet as of September
30, 1993, and Unaudited Pro Forma Combining Income Statements for the nine
months ended September 30, 1993 and 1992 and for the years ended December 31,
1992, 1991, and 1990 illustrate the effect of the proposed Merger as if the
Merger had occurred at the beginning of the earliest period presented.
These Pro Forma Combining Financial Statements should be read in
conjunction with the historical financial statements of First United which are
incorporated by reference herein and InvestArk which are included herein.
The Pro Forma Combining Financial Statements are presented for comparative
purposes only and are not intended to be indicative of actual results had the
transactions occurred as of the dates indicated above nor do they purport to
indicate which may be attained in the future.
19
<PAGE> 27
PRO FORMA COMBINING BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, 1993
-----------------------------------------------------------
PRO FORMA PRO FORMA
FIRST UNITED INVESTARK ADJUSTMENTS COMBINED
------------ --------- ----------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks.................... $ 35,782 $ 17,627 $ $ 53,409
Interest-bearing deposits in other banks... 1,493 1,370 2,863
Short-term investments..................... 22,541 0 22,541
Securities held for sale................... 82,649 0 82,649
Investment securities...................... 343,069 84,719 427,788
Net loans.................................. 376,012 82,237 458,249
Premises and equipment..................... 9,815 2,791 12,606
Goodwill................................... 2,751 0 2,751
Other real estate owned.................... 1,414 278 1,692
Other assets............................... 12,223 3,315 15,538
------------ --------- ----------- ----------
Total Assets..................... $887,749 $ 192,337 $ 0 $1,080,086
------------ --------- ----------- ----------
------------ --------- ----------- ----------
LIABILITIES AND CAPITAL ACCOUNTS
Deposits................................... $762,861 $ 170,525 $ 933,386
Federal funds purchased and securities sold
under agreements to repurchase........... 21,491 3,026 24,517
Other liabilities.......................... 6,936 1,656 8,592
Long-term debt............................. 7,214 0 7,214
------------ --------- ----------
Total Liabilities................ 798,502 175,207 973,709
------------ --------- ----------- ----------
Preferred stock............................ 0 0 0
Common stock............................... 4,272 2,191 (2,191)(2) 5,173
901 (2)
Surplus.................................... 11,125 1,099 (1,099)(2) 13,357
2,232 (2)
Undivided Profits.......................... 73,850 13,997 87,847
Less: Treasury Stock....................... 0 (157) 157 (2) 0
------------ --------- ----------- ----------
Total Capital Accounts........... 89,247 17,130 106,377
------------ --------- ----------- ----------
Total Liabilities and Capital
Accounts....................... $887,749 $ 192,337 $ 0 $1,080,086
------------ --------- ----------- ----------
------------ --------- ----------- ----------
</TABLE>
20
<PAGE> 28
PRO FORMA COMBINING STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1993
-----------------------------------
FIRST PRO FORMA
UNITED INVESTARK COMBINED
--------- ------- ---------
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<S> <C> <C> <C>
Interest income............................................ $ 44,500 $ 9,543 $ 54,043
Interest expense........................................... 17,902 3,878 21,780
---------- -------- ----------
Net interest income........................................ 26,598 5,665 32,263
Provision for loan losses.................................. (1,115) (0) (1,115)
---------- -------- ----------
Net interest income after provision for loan losses........ 25,483 5,665 31,148
Other income
Service charges on deposit accounts...................... 2,203 258 2,461
Trust department income.................................. 716 376 1,092
Security gains........................................... 44 0 44
Other service charges and fees........................... 0 86 86
Other operating income................................... 874 407 1,281
---------- -------- ----------
Total other income............................... 3,837 1,127 4,964
Other expense
Salaries................................................. 6,019 1,615 7,634
Pension and other employee benefits...................... 1,921 395 2,316
Net occupancy expense.................................... 1,299 272 1,571
Equipment expense........................................ 649 412 1,061
Data processing expense.................................. 1,174 134 1,308
Other operating expense.................................. 4,739 2,083 6,822
---------- -------- ----------
Total other expense.............................. 15,801 4,911 20,712
---------- -------- ----------
Income before income taxes................................. 13,519 1,881 15,400
Income tax expense......................................... 4,318 431 4,749
---------- -------- ----------
Income from continuing operations.......................... $ 9,201 $ 1,450 $ 10,651
---------- -------- ----------
---------- -------- ----------
Earnings per share(3)...................................... $ 2.15 $ 6.73 $ 2.06
Weighted average shares outstanding........................ 4,272,276 215,356 5,173,138
</TABLE>
21
<PAGE> 29
PRO FORMA COMBINING INCOME STATEMENT(1)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1992
-----------------------------------
FIRST PRO FORMA
UNITED INVESTARK COMBINED
--------- ------- ---------
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<S> <C> <C> <C>
Interest income............................................ $ 48,311 $ 10,828 $ 59,139
Interest expense........................................... 22,272 4,995 27,267
---------- -------- ----------
Net interest income........................................ 26,039 5,833 31,872
Provision for loan losses.................................. (1,867) (39) (1,906)
---------- -------- ----------
Net interest income after provision for loan losses........ 24,172 5,794 29,966
---------- -------- ----------
Other income
Service charges on deposit accounts...................... 2,083 306 2,389
Trust department income.................................. 624 343 967
Security gains........................................... 377 0 377
Other service charges and fees........................... 0 69 69
Other operating income................................... 821 292 1,113
---------- -------- ----------
Total other income............................... 3,905 1,010 4,915
---------- -------- ----------
Other expense
Salaries................................................. 5,790 1,520 7,310
Pension and other employee benefits...................... 2,091 374 2,465
Net occupancy expense.................................... 1,269 350 1,619
Equipment expense........................................ 678 278 956
Data processing expense.................................. 1,446 134 1,580
Other operating expense.................................. 5,435 1,974 7,409
---------- -------- ----------
Total other expense.............................. 16,709 4,630 21,339
---------- -------- ----------
Income before income taxes................................. 11,368 2,174 13,542
Income tax expense......................................... 3,502 493 3,995
---------- -------- ----------
Income from continuing operations.......................... $ 7,866 $ 1,681 $ 9,547
---------- -------- ----------
---------- -------- ----------
Earnings per share(3)...................................... $ 1.84 $ 7.77 $ 1.85
Weighted average shares outstanding........................ 4,272,276 216,198 5,173,138
</TABLE>
22
<PAGE> 30
PRO FORMA COMBINING INCOME STATEMENT(1)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
1991
-----------------------------------
FIRST PRO FORMA
UNITED INVESTARK COMBINED
--------- ------- ---------
(IN THOUSANDS, EXCEPT FOR SHARE
DATA)
<S> <C> <C> <C>
Interest income............................................ $63,381 $14,188 $77,569
Interest expense........................................... 28,690 6,369 35,059
--------- ------- ---------
Net interest income........................................ 34,691 7,819 42,510
Provision for loan losses.................................. (2,422) (64) (2,486)
--------- ------- ---------
Net interest income after provision for loan losses........ 32,269 7,755 40,024
--------- ------- ---------
Other income
Service charges on deposit accounts...................... 2,831 380 3,211
Trust department income.................................. 919 488 1,407
Security gains............................................. 386 0 386
Other service charges and fees........................... 0 68 68
Other operating income................................... 1,379 568 1,947
--------- ------- ---------
Total other income............................... 5,515 1,504 7,019
--------- ------- ---------
Other expense
Salaries................................................. 7,770 2,088 9,858
Pension and other employee benefits...................... 2,611 454 3,065
Net occupancy expense.................................... 1,881 422 2,303
Equipment expense........................................ 605 433 1,038
Data processing expense.................................. 1,860 0 1,860
Other operating expense.................................. 7,966 3,120 11,086
--------- ------- ---------
Total other expense.............................. 22,693 6,517 29,210
--------- ------- ---------
Income before income tax expense and minority interest in
net earnings of consolidated subsidiaries................ 15,091 2,742 17,833
Income tax expense......................................... 4,648 501 5,149
--------- ------- ---------
Income before minority interest in net earnings of
consolidated subsidiaries................................ 10,443 2,241 12,684
Minority interest in net earnings of consolidated
subsidiaries............................................. 0 8 8
--------- ------- ---------
Income from continuing operations.......................... $10,443 $ 2,233 $12,676
--------- ------- ---------
--------- ------- ---------
Earnings per share(3)...................................... $ 2.44 $ 10.34 $ 2.45
Weighted average shares outstanding........................ 4,272,276 216,014 5,173,138
</TABLE>
23
<PAGE> 31
PRO FORMA COMBINING INCOME STATEMENT(1)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
1991
-----------------------------------
FIRST PRO FORMA
UNITED INVESTARK COMBINED
--------- ------- ---------
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<S> <C> <C> <C>
Interest income............................................ $68,976 $15,960 $84,936
Interest expense........................................... 39,043 9,182 48,225
---------- ------- ----------
Net interest income........................................ 29,933 6,778 36,711
Provision for loan losses.................................. (3,250) (1,464) (4,714)
---------- ------- ----------
Net interest income after provision for loan losses........ 26,683 5,314 31,997
Other income
Service charges on deposit accounts...................... 2,669 397 3,066
Trust department income.................................. 886 470 1,356
Security gains........................................... 254 0 254
Other service charges and fees........................... 0 82 82
Other operating income................................... 1,137 666 1,803
---------- ------- ----------
Total other income............................... 4,946 1,615 6,561
---------- ------- ----------
Other expense
Salaries................................................. 7,566 2,040 9,606
Pension and other employee benefits...................... 2,279 412 2,691
Net occupancy expense.................................... 1,773 461 2,234
Equipment expense........................................ 623 370 993
Data processing expense.................................. 1,570 0 1,570
Other operating expense.................................. 7,285 2,607 9,892
---------- ------- ----------
Total other expense.............................. 21,096 5,890 26,986
---------- ------- ----------
Income before income tax expense and minority interest
in net earnings of consolidated subsidiaries............. 10,533 1,039 11,572
Income tax expense....................................... 2,986 128 3,114
---------- ------- ----------
Income before minority interest in net earnings of
consolidated subsidiaries................................ $ 7,547 $ 911 $ 8,458
Minority interest in net earnings of consolidated
subsidiaries............................................. 0 4 4
---------- ------- ----------
Income from continuing operations.......................... $ 7,547 $ 907 $ 8,454
---------- ------- ----------
---------- ------- ----------
Earnings per share(3)...................................... $ 1.77 $ 4.19 $ 1.63
Weighted average shares outstanding........................ 4,272,276 216,212 5,173,138
</TABLE>
24
<PAGE> 32
PRO FORMA COMBINING INCOME STATEMENT(1)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1990
----------------------------------------
PRO FORMA
FIRST UNITED INVESTARK COMBINED
------------ --------- ---------
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<S> <C> <C> <C>
Interest income............................................ $ 68,212 $15,786 $83,998
Interest expense........................................... 41,299 9,615 50,914
------------ --------- ---------
Net interest income........................................ 26,913 6,171 33,084
Provision for loan losses.................................. (2,122) (1,576) (3,698)
------------ --------- ---------
Net interest income after provision for loan losses........ 24,791 4,595 29,386
------------ --------- ---------
Other income
Service charges on deposit accounts...................... 2,496 367 2,863
Trust department income.................................. 853 371 1,224
Security gains........................................... 49 0 49
Other service charges and fees........................... 0 77 77
Other operating income................................... 1,266 67 1,333
------------ --------- ---------
Total other income............................... 4,664 882 5,546
------------ --------- ---------
Other expense
Salaries................................................. 7,267 1,941 9,208
Pension and other employee benefits...................... 1,969 382 2,351
Net occupancy expense.................................... 1,669 446 2,115
Equipment expense........................................ 697 282 979
Data processing expense.................................. 1,606 0 1,606
Other operating expense.................................. 6,289 1,983 8,272
------------ --------- ---------
Total other expense.............................. 19,497 5,034 24,531
------------ --------- ---------
Income before income taxes and minority interest in net
earnings of consolidated subsidiaries.................... 9,958 443 10,401
Income tax expense......................................... 2,520 155 2,675
------------ --------- ---------
Income before minority interest in net earnings of
consolidated subsidiaries................................ 7,438 288 7,726
Minority interest in net earnings of consolidated
subsidiaries............................................. 0 2 2
------------ --------- ---------
Income from continuing operations.......................... 7,438 $ 286 $ 7,724
------------ --------- ---------
------------ --------- ---------
Earnings per share(3)...................................... $ 1.74 $ 1.32 $ 1.49
Weighted average shares outstanding....................... 4,272,276 216,212 5,173,138
</TABLE>
25
<PAGE> 33
NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS
(1) The adjustments to the Pro Forma Combining Financial Statements do not
include direct expenses related to the Merger, which will be recorded at
the time of the Merger. These adjustments also do not include a fourth
quarter 1993 adjustment made by InvestArk to increase its allowance for
possible loan losses by approximately $590,000 and an adjustment to
increase its reserve against other real estate owned by approximately
$100,000. These additions were made in order to achieve conformity with
the policies followed by the subsidiary banks of First United. The pro
forma data are not necessarily indicative of the operating results or
financial position that would have occurred had the Merger been
consummated at the dates indicated, nor necessarily indicative of future
operating results of financial position.
(2) These adjustments reflect the issuance of approximately 900,862 shares
of First United Common Stock in exchange for all InvestArk common stock
and the retirement of InvestArk common stock held in treasury. The
actual number of shares of First United Common Stock to be issued
pursuant to the Merger will fluctuate based upon the average price of
First United Common Stock assumed to be at 29.00 for these Pro Forma
Combining Financial Statements.
(3) Pro forma per share data are based on the number of shares of First
United Common Stock that would have been outstanding had the Merger
occurred at the beginning of the earliest period presented. The
following table illustrates pro forma earnings per share based upon the
allowable minimum and maximum average price of First United Common Stock
of $26.50 and $29.50, respectively, pursuant to the Agreement.
<TABLE>
<CAPTION>
$26.50 $29.50
------ ------
<S> <C> <C>
Nine months ended September 30, 1993.......................... $ 2.03 $ 2.07
Nine months ended September 30, 1992.......................... 1.82 1.85
Year ended December 31, 1992.................................. 2.41 2.46
Year ended December 31, 1991.................................. 1.61 1.64
Year ended December 31, 1990.................................. 1.47 1.50
</TABLE>
ELECTION BY INVESTARK STOCKHOLDERS UNDER THE 1987 ACT
ELECTION INCIDENTAL TO THE MERGER
THE ELECTION BY THE STOCKHOLDERS OF INVESTARK TO BE GOVERNED BY THE
ARKANSAS BUSINESS CORPORATION ACT OF 1987 IS INCIDENTAL TO THE MERGER PROPOSAL
AND APPROVAL OF SUCH ELECTION WILL HAVE NO FORCE OR EFFECT UNLESS THE MERGER IS
LIKEWISE APPROVED.
REASON FOR THE ELECTION
InvestArk is a corporation that was organized under the Arkansas Business
Corporation Act of 1965, codified at Ark. Code Ann. sec.4-26-101 et.seq. The
1987 Act is applicable to those corporations that were incorporated on or after
January 1, 1988 or those "1965 Act" corporations that elect to be governed by
the 1987 Act by amending their Articles of Incorporation to so state. The
stockholders of First United elected to be governed by the 1987 Act by amending
its Articles of Incorporation.
The 1965 Act and 1987 Act have statutory merger procedures that must be
complied with in order to legally consummate a merger. Although both acts
contain similar provisions, it is advisable for InvestArk to elect to be
governed by the 1987 Act in order to facilitate compliance with the applicable
statutory requirements.
RESULT OF THE ELECTION
The affirmative vote of two-thirds of all outstanding shares of InvestArk
common stock will authorize InvestArk to amend its Articles of Incorporation and
thereby elect to be governed by the 1987 Act. First
26
<PAGE> 34
United is governed by the 1987 Act and shares of First United Common Stock
received by InvestArk stockholders upon consummation of the Merger will entitle
such stockholders rights under the 1987 Act. The following discussion is an
analysis of the material differences between the 1965 and 1987 Act with respect
to Stockholders' rights.
Powers of Directors in Setting Preferences, Rights and Limitation of
Classes and Series of Stocks. The 1965 Act states that the preferences, rights
and limitations of classes of stock must be specified in the Articles, and that
the power to establish certain limited rights and preferences for series may be
delegated to the Board. The 1987 Act, however, allows inclusion of a provision
in the Articles which gives the Board the power to set the preferences, rights
and limitations of any class or series of stock before any shares of the class
or series are issued. This power is exercised by filing with the Secretary of
State Articles of Amendment, adopted without stockholder action.
Preemptive Rights. The 1987 Act denies stockholders preemptive rights
(i.e., the right of existing stockholders to acquire newly-issued shares of
stock on a pro rata basis of current ownership interest) unless the Articles
specifically authorize preemptive rights. In contrast, the 1965 Act grants
certain preemptive rights unless denied by the Articles.
Restrictions On Distributions. The 1987 Act allows a corporation to elect
in its Articles to restrict its ability to make distributions. The 1965 Act has
no such provision.
Quorum. The 1987 Act, like the 1965 Act, provides that a quorum, for
purposes of a stockholders meeting, will be a majority of the shares entitled to
vote unless the Articles provide otherwise. The 1987 Act does not provide a
minimum size for the quorum. The 1965 Act provides that a quorum may not be less
that one-third of the shares entitled to vote.
Cumulative Voting. Cumulative voting is a method of voting for directors
where each share entitled to vote is given as many votes as there are board
positions being voted on; the votes may be "cumulated," or cast for a single
position, rather than spread among the available positions. The 1987 Act does
not allow stockholders to cumulate their votes for election of directors unless
the Articles of Incorporation so provide. This is contrary to the 1965 Act,
which grants stockholders absolute cumulative voting rights.
Removal of Directors. The 1987 Act allows the Articles to provide that
directors may be removed only for cause. The 1965 Act does not allow such a
limitation and provides that directors may be removed with or without cause by a
majority of the shares entitled to vote.
Vacancy on Board of Directors. The 1987 Act provides that unless the
Articles provide otherwise, any vacancy on the board may be filled by either the
stockholders or the remaining directors. This is a change from the 1965 Act,
under which the remaining directors fill vacancies unless the Articles provide
otherwise.
Amendment of By-Laws. The 1987 Act provides that the Articles may reserve
to the stockholders the power to amend a corporation's by-laws. If the power is
not so reserved, the board may amend the by-laws, but stockholders may not be
excluded from the power to amend the by-laws. The 1965 Act provides that the
board of directors alone have the power to amend the by-laws, unless the
Articles reserve that power solely to the stockholders.
By-Law Increasing Quorum or Voting Requirements for Stockholders. The 1987
Act allows the stockholders to adopt a by-law that fixes a greater stockholder
quorum or voting requirement than the statutory requirement if such by-law is
authorized by the Articles of Incorporation. The 1965 Act has no such provision.
Voting to Adopt Merger. The 1987 Act allows the Articles to set a voting
requirement for mergers which is greater than the statutory requirement of a
majority of votes to be cast. The 1965 Act includes a statutory requirement of
two-thirds of the votes entitled to be cast to approve a merger.
Sales of Assets in Regular Course of Business and Mortgage of Assets.
Unless otherwise provided in the Articles, the 1987 Act allows the board to act
without stockholder approval in the sale or other disposition of all, or
substantially all, of the property of the corporation in the usual course of
business and to mortgage all or
27
<PAGE> 35
any of the corporation's property, whether or not in the usual course of
business. However, the 1965 Act contains the same provision.
Notice of Stockholder Meetings. The 1987 Act requires notice of the date,
time, and place of each annual or special meeting of the stockholders. If the
meeting is to consider a proposal to increase the authorized capital stock or in
bonded indebtedness of the corporation, the notice must be given no fewer than
75 days before the meeting period. The 1965 Act has the same provision. Under
the 1987 Act, in all other cases the notice must be given no fewer than 10 and
no more than 60 days before the meeting date. Under the 1965 Act notice cannot
be given fewer than 10 and more than 50 days prior to the meeting.
Proxies. Like the 1965 Act, the 1987 Act allows a stockholder to vote by
proxy. The procedural provisions for the exercise of proxies under the 1987 Act
are the same as under the 1965 Act.
Voting. The 1987 Act, unlike the 1965 Act, does not count abstaining votes
in determining whether there are sufficient affirmative votes to approve a
measure. The 1965 Act states that (unless a greater number is required by
statute or by the Articles) approval by stockholders takes the affirmative vote
of a majority of the shares represented at the meeting and entitled to vote on
the subject matter. The 1987 Act, however, provides that the action is approved
if the votes cast within the voting group favoring the action exceed the votes
cast opposing the action.
Dissenting Stockholders. Those transactions giving rise to dissenters'
rights under the 1965 Act are as follows:
1. Consummation of a sale of all or substantially all of the assets of
a corporation otherwise than in the usual or ordinary course of its
business.
2. Consummation of a merger or consolidation to which the corporation
is a party unless on the date the Articles of Merger are filed the
surviving corporation wholly owns the other corporations that are parties
to the Merger.
Under the 1987 Act, a stockholder is entitled to dissent from the following
corporate actions:
1. Consummation of a plan of merger to which the corporation is a
party if stockholder approval is required or if the corporation is a
subsidiary that is merged with its parent;
2. Consummation of a plan of share exchange to which the corporation
is a party and which requires stockholder approval;
3. Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation other than in the usual and regular course
of business if stockholder approval is required;
4. An amendment of the Articles of Incorporation that materially and
adversely affects the rights of dissenters' shares; or
5. Any other corporate action taken pursuant to a stockholder vote to
the extend the Articles of Incorporation, the By-Laws, or a resolution of
the board of directors provides that stockholders are entitled to dissent.
For a summary of the procedure that would be followed in order to exercise
dissenters' rights under the 1965 Act, See "The Merger -- Right of Dissent under
the 1965 Act." For a summary of the procedure that would be followed in order to
exercise dissenters' rights under the 1987 Act, See "The Merger -- Right of
Dissent under the 1987 Act."
28
<PAGE> 36
FIRST UNITED BANCSHARES, INC.
GENERAL
First United is a multi-bank holding company incorporated in 1980 for the
purpose of holding all of the outstanding stock of The First National Bank of El
Dorado, El Dorado, Arkansas having assets of $286 million, deposits of $244
million, and stockholders' equity of $31 million, as of September 30, 1993.
Between 1981 and 1988, First United acquired three other banks in different
cities within Arkansas. The banks acquired were the First National Bank of
Magnolia, Magnolia, Arkansas, having assets of $201 million, deposits of $176
million, and stockholders' equity of $21 million, as of September 30, 1993;
Merchants and Planters Bank, N.A. of Camden, Camden, Arkansas, having assets of
$90 million, deposits of $81 million, and stockholders' equity of $9 million as
of September 30, 1993; and City National Bank of Fort Smith, Fort Smith,
Arkansas, having assets of $310 million deposits of $271 million and
stockholders' equity of $27 million as of September 30, 1993. Each of the banks
are wholly-owned by First United, and, furthermore, are banks organized under
the laws of the United States and are regulated by the Office of the Comptroller
of the Currency.
On November 30, 1993 First United acquired Commerce Financial Corporation
which wholly-owned Commercial Bank at Alma, Alma, Arkansas. Commerce Financial
Corporation was merged into First United which succeeded to the ownership of
Commercial Bank at Alma which had assets of $45 million, deposits of $40
million, and stockholders' equity of $5.5 million as of the date of closing.
Commercial Bank at Alma is a state-chartered institution and is regulated under
the supervision of the Arkansas Bank Department.
The banks offer customary services of banks of similar size and similar
markets, including interest-bearing and non-interest-bearing deposit accounts,
commercial, real estate and personal loans, trust services, correspondent
banking services and safe deposit box activities.
The banking business is highly competitive. The Subsidiary Banks of First
United compete actively with national and state banks, savings and loan
associations, securities dealers, mortgage bankers, finance companies and
insurance companies.
First United is a registered bank holding company pursuant to the Bank
Holding Company Act of 1956, as amended (the "Act"), and as such, is subject to
regulation and examination by the Federal Reserve Board and is required to file
with the Federal Reserve Board annual reports and other information regarding
the business operations of itself and its subsidiaries. The Act provides that a
bank holding company may be required to obtain Federal Reserve Board approval
for the acquisition of more than 5% of the voting securities of substantially
all of the assets of any bank or bank holding company, unless it already owns a
majority of the voting securities of such bank or bank holding company. The Act
prohibits First United from engaging in any business other than banking or
bank-related activities specifically allowed by the Federal Reserve Board. The
Act also prohibits First United and its subsidiaries from engaging in certain
tie-in arrangements in connection with the extension of credit, the lease of
sale of property or the provision of any services. Under Title VI of the
Financial Institutions, Reform, Recovery and Enforcement Act of 1989, the Act
has been amended to authorize bank holding companies to acquire savings and
thrift institutions without tandem operation restrictions.
First United's Subsidiary Banks are subject to a variety of regulations
concerning the maintenance of reserves against deposits, limitations on the
rates that can be charged on loans or paid on deposits, branching, restrictions
on the nature and amounts of loans and investments that can be made and limits
on daylight overdrafts.
The Subsidiary Banks are limited in the amount of dividends they may
declare. Prior approval must be obtained from the appropriate regulatory
authorities before dividends can be paid by the Banks to First United if the
amount of adjusted capital, surplus and retained earnings is below defined
regulatory limits. The Subsidiary Banks are also restricted from extending
credit or making loans to or investments in First United and certain other
affiliates as defined in the Act. Furthermore, loans and extensions of credit
are subject to certain other collateral requirements.
29
<PAGE> 37
OFFICES
First United's executive offices are located in the offices of First
National Bank of El Dorado at Main and Washington Streets, El Dorado, Arkansas
71730.
EMPLOYEES
As of December 31, 1993, First United and its Subsidiary Banks had
approximately 373 full-time equivalent employees, 100 of whom are located in El
Dorado, 144 of whom are located in Fort Smith, 67 of whom are located in
Magnolia, 37 of whom are located in Camden, and 25 of whom are located in Alma.
DESCRIPTION OF FIRST UNITED COMMON STOCK
The following summary of the terms of First United Common Stock does not
purport to be complete and is qualified in its entirety by reference to the 1987
Act and First United's Amended and Restated Articles of Incorporation. First
United's Amended and Restated Articles of Incorporation authorizes the issuance
of 12,000,000 shares of Common Stock, $1.00 par value. There are 4,272,276 fully
paid and non-assessable shares of First United Common Stock issued and
outstanding.
Each share of First United Common Stock is entitled to one vote on all
matters to be voted on by stockholders, including the right to cumulate votes
for the election of the Board of Directors, and to dividends when and if
declared from time to time by the Board of Directors. There is no right of
preemption associated with the First United Common Stock. Upon liquidation, each
share would be entitled to share pro rata in all of the assets of First United
available for distribution to the holders of Common Stock. The transfer agent
for First United Common Stock is First National Bank of El Dorado, El Dorado,
Arkansas. First United Common Stock is traded on NASDAQ-National Market System
over-the-counter under the symbol of "UNTD."
RESALE OF FIRST UNITED COMMON STOCK
The First United Common Stock issued pursuant to the Merger will be freely
transferable under the Securities Act of 1933 (the "Securities Act"), except for
shares issued to any InvestArk stockholder who may be deemed to be an
"affiliate" of InvestArk for purposes of Rule 145 under the Securities Act. Each
such stockholder has entered into an agreement with First United providing that
such affiliate will not transfer any First United Common Stock received in the
merger except in compliance with the Securities Act and will not sell or
otherwise transfer such Common Stock (or any interest therein) until financial
results of First United and its subsidiaries (including InvestArk) for at least
30 days of combined operations are published. This restrictions expected to
expire by August 15, 1994. See also "InvestArk Bancshares, Inc. -- Resulting
Ownership in First United".
RECENT ACQUISITION
On November 30, 1993, First United acquired Commerce Financial Corporation,
Alma, Arkansas, which wholly-owned Commercial Bank at Alma, Alma, Arkansas.
Commercial Bank at Alma is a state-chartered commercial bank which at the
closing date had approximately $45,000,000 in assets, $40,000,000 in deposits
and $5,500,000 million in stockholder equity. The merger of Commerce Financial
Corporation with and into First United was accounted for under the purchase
method of accounting. Total cash consideration paid by First United in the
acquisition of Commerce Financial Corporation was approximately $5,367,000. See
"Incorporation of Certain Documents By Reference -- First United Current Report
on Form 8-K, dated December 10, 1993".
30
<PAGE> 38
INVESTARK BANKSHARES, INC.
DESCRIPTION OF BUSINESS
InvestArk is a multi-bank holding company which owns 99.7% and 100% of the
common stock of The Bank of North Arkansas, Melbourne, Arkansas ("North
Arkansas") and First Stuttgart Bank and Trust Company, Stuttgart, Arkansas,
("First Bank") respectively. InvestArk may engage, directly or through
subsidiaries, in those activities closely related to banking which are
specifically permitted under the Bank Holding Company Act of 1956, as amended.
InvestArk was organized as an Arkansas bank holding company on July 20,
1984. The sole asset of InvestArk is the stock it holds in its two bank
subsidiaries. The subsidiaries grant commercial, installment and real estate
loans to customers principally in Arkansas County and Izard County, Arkansas. As
of September 30, 1993, these subsidiaries had a total of $83,133,078 of loans
outstanding and a loan loss reserve of $896,091. InvestArk adjusted its
allowance for possible loan losses and reserve against other real estate owned
to add $690,000 in the fourth quarter of 1993. This amount resulted in a
reduction of the same amount in InvestArk's capital account. However, this
reduction in capital was substantially recouped by InvestArk's retention of
fourth quarter earnings. For a more complete discussion regarding the
aforementioned mentioned adjustment, see "InvestArk Bankshares,
Inc. -- Management Discussion and Analysis".
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion and analysis highlights the significant factors
affecting InvestArk's consolidated financial statements. For a more complete
understanding of the following discussion, reference should be made to
InvestArk's consolidated financial statements and related notes thereto
presented elsewhere in this Proxy Statement.
BALANCE SHEET ANALYSIS
Financial Condition. Total assets of InvestArk remained relatively stable
between December 31, 1992 and 1991. At September 30, 1993 assets were
$192,337,000 reflecting modest growth over the December 31, 1992 level of
$189,738,000. InvestArk receives a major portion of its income from earning
assets which consist of interest bearing deposits with other banks, federal
funds sold, investment securities and loans.
InvestArk's loan portfolio represents the largest component of the earning
asset base. However, the loan portfolio continues to experience modest declines
as a result of weakened loan demand. Inherent in InvestArk's loan portfolio is
credit risk. InvestArk maintains an allowance against which loan losses are
charged. Management evaluates the allowance adequacy quarterly. Management's
methodology to determine the adequacy of the allowance considers specific credit
reviews, past loan loss experience, current economic conditions and trends and
the volume and composition of the loan portfolion. See "Earnings Analysis --
Provision for Possible Loan Losses" for information regarding the allowance's
impact upon earnings.
Investment securities, which has the largest impact upon income from
earning assets, continues to grow. At September 30, 1993, investment securities
had a balance of $84,719,000 as compared to December 31, 1992 and 1991 levels of
$82,462,000 and $72,240,000, respectively. The increase from 1991 to 1992
primarily reflects a shift out of cash and due from bank accounts to investment
securities in an effort to maximize earning asset levels.
As the primary source to fund earning assets, deposits have increased
gradually to a level of $170,525,000 at September 30, 1993 as compared to
December 31, 1992 and 1991 levels of $170,102,000 and $166,072,000,
respectively. Although overall levels of deposits have been stable between 1992
and 1993, the deposit mix has changed. Non-interest bearing deposits increased
by $7,654,000 or 29% for the nine months ended September 30, 1993 due to
declining interest rates and the resulting shift from interest bearing deposits
due to depositors shortening their time horizons.
Liquidity and Interest Rate Sensitivity Management. Liquidity is the
ability of the bank to fund the needs of its borrowers, depositors and
creditors. InvestArk anticipates that its liquidity requirements will be met in
the foreseeable future. InvestArk's management is of the opinion that
traditional sources of maturing loans
31
<PAGE> 39
and investment securities, federal funds and the base of core deposits will be
adequate to provide liquidity needs.
The matching of assets and liabilities may be analyzed by examining the
extent to which such assets and liabilities are "interest rate sensitive" and by
monitoring an institution's interest rate sensitivity "gap." An asset or
liability is said to be interest rate sensitive within a specific time period if
it will mature or reprice within that time period. The interest rate sensitivity
gap is defined as the difference between the amount of interest-earning assets
expected to mature or reprice within a specific time period and the amount of
interest-bearing liabilities expected to mature or reprice within that time
period. A gap is considered negative when the amount of interest rate sensitive
liabilities maturing within a specific time frame exceeds the amount of interest
rate sensitive assets maturing within that same time frame. During a period of
falling interest rates, a negative gap tends to result in an increase in net
interest income. Whereas in a rising interest rate environment, an institution
with a negative gap could experience the opposite results.
At September 30, 1993, InvestArk's interest-bearing liabilities maturing or
repricing within one year exceeded the interest-bearing assets maturing or
repricing within the same time period. Based upon its evaluation of the interest
rate market, management feels InvestArk's gap position is proper and in
compliance with its asset/liability management policies.
Capital. The Federal Reserve Board requires banks to maintain capital based
on "risk-adjusted" assets so that categories of assets with potentially higher
risk will require more capital backing than assets with lower risk. In addition,
banks are required to maintain capital to support, on a risk-adjusted basis,
certain off-balance sheet activities such as loan commitments.
At September 30, 1993, InvestArk's Tier 1 capital and total capital as a
percentage of total risk-adjusted assets exceeded the required minimum levels.
EARNINGS ANALYSIS
Net income for the first nine months of 1993 was approximately $1,450,000,
a decrease of $231,000 or 14% over the same period in 1992. For the years ended
December 31, 1992, 1991, and 1990, net income was approximately $2,233,000,
$907,000, and $319,000, respectively. The annualized return on average assets
and return on average equity for the first nine months of 1993 was 1.0% and
11.7%, respectively, compared to 1.2% and 15.5% for the first nine months of
1992. For the years ended December 31, 1992, 1991 and 1990, the return on
average assets was 1.2%, 0.5%, and 0.2%, respectively, while the return on
average equity was 14.1%, 6.5%, and 2.4%, respectively.
The primary components of total income and expense which affect net income
are net interest income, provision for possible loan losses, non-interest
income, non-interest expense and the provision for income taxes. Significant
factors affecting these categories are presented below.
Net Interest Income. Net interest income for the first nine months of 1993
was $5,655,000, a 2% decrease over the same period in 1992. For the first nine
months of 1993, earning assets decreased 1% from $171,610,000 at December 31,
1992, to $169,223,000 at September 30, 1993. Total securities grew $2,258,000
while total loans net of unearned discount decreased $3,893,000. As a percentage
of earning assets at September 30, 1993, loans totaled 49% while securities and
other short-term investments were 50% and 1%, respectively.
For the years ended December 31, 1992, 1991, and 1990, net interest income
was $7,819,000, $6,777,000 and $6,171,000, respectively. These increases in 1992
and 1991 over prior year levels result from increases in earnings assets and a
decrease in interest expense which was the result of falling interest rates.
Provision for Possible Loan Losses. InvestArk made no provision of possible
loan losses for the first nine months of 1993. For the first nine months of 1992
InvestArk provided $39,000 for loan losses. This decrease was primarily the
result of improved economic conditions. However, during the fourth quarter of
1993, InvestArk made an addition to its allowance for possible loan losses of
approximately $590,000 and added $100,000 to its reserve against other real
estate owned. These additions were made in association with the
32
<PAGE> 40
proposed merger and in order to achieve conformity with the policies followed by
the subsidiary banks of First United.
Net charge-offs on loans were $175,000 in 1992, $929,000 in 1991 and
$705,000 in 1990. For the nine months ended September 30, 1993, net charge-offs
totaled $177,000. The allowance for loans and lease losses were $896,000 or 1.1%
of loans at September 30, 1993, compared to $1,073,000 or 1.2% at December 31,
1992, and $1,184,000 or 1.4% at December 31, 1991.
Non-Interest Income. Total non-interest income for the nine months ended
September 30, 1993 and 1992, was $1,128,000 and $1,010,000, respectively. Total
non-interest income for the year ended December 31, 1992 was $1,504,000 as
compared to $1,515,000 for 1991 and $882,000 in 1990. The large increase in 1991
over 1990 was primarily in the category of other operating income. Other
operating income increased primarily because of lease rental income derived from
leveraged lease transactions entered into during 1991. Management believes the
level of non-interest income subsequent to 1990 is more representative of the
levels to be expected in the future.
Non-Interest Expense. Total non-interest expense for the nine months ended
September 30, 1993 and 1992 was $4,912,000 and $4,629,000, respectively. This 6%
increase results from adjustments to salaries and related benefits during 1993.
Total non-interest expense for the year ended December 31, 1992 was
$6,517,000 as compared to $5,890,000 for 1991 and $5,033,000 in 1990. The
increases for each of the years 1992 and 1991 are primarily in the category of
other expense. Other expense increased primarily because of increased annual
FDIC insurance assessments, legal fees and costs attributable to the foreclosure
and subsequent writedowns of other real estate.
Provision for Income Taxes. Income tax expense for the nine months ended
September 30, 1993 and 1992 was $431,000 and $493,000, respectively, or an
effective tax rate of 23%. Income tax expense for the years ended December 31,
1992, 1991 and 1990 was $501,000, $128,000, and $155,000, respectively.
Effective tax rates were 18%, 12%, and 35% for 1992, 1991, 1990, respectively.
Note 7 to the consolidated financial statement provides further details of the
applicable income tax expense.
REGULATORY ISSUES
Pursuant to the Interest Rate Control Amendment to the Constitution of the
State of Arkansas, "consumer loans and credit sales" have a maximum limitation
of 17% per annum and all "general loans" have a maximum limitation of 5% over
the Federal Reserve Discount Rate in effect at the time the loans are made. The
Arkansas Supreme Court has determined that "consumer loans and credit sales" are
"general loans" and are subject to the limitation of 5% over the Federal Reserve
Discount Rate as well as a maximum limitation of 17% per annum. As a general
rule, InvestArk is required to comply with the Arkansas usury laws on loans made
within the State of Arkansas.
ACCOUNTING STANDARDS
During 1993 the Financial Accounting Standards Board (FASB) issued SFAS No.
114 (Accounting by Creditors for Impairment of a Loan) which becomes effective
beginning in 1995. This statement defines the measurement requirements for loans
that are impaired or deemed to be troubled debt restructurings. Management has
not determined the effect that this statement will have upon adoption.
Also during 1993 the FASB issued SFAS No. 115 "Accounting for Certain
Investments in Debt and Equity Securities," which InvestArk will adopt on
January 1, 1994. This statement addresses the accounting and reporting for
investments in debt and certain equity securities. Debt securities not
classified as trading account securities or investment securities expected to be
held to maturity and all equity securities will be classified as
available-for-sale securities and reported at fair value, with net unrealized
gains and losses reported, net of tax, as a separate component of stockholders'
equity. InvestArk believes the impact of adopting this statement will not be
material to its financial position or results of operations as it expects to
hold its investment securities to maturity.
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<PAGE> 41
DIRECTORS AND EXECUTIVE OFFICERS
The Board of Directors of InvestArk will be dissolved and positions held by
executive officers of InvestArk will no longer exist upon the consummation of
the Merger. Executive officers of the InvestArk subsidiaries are expected to
remain in the respective positions with North Arkansas and First Bank. At this
time none of the directors or executive officers of InvestArk are expected to be
on the Board of Directors or an executive officer of First United after
consummation of the Merger. The directors of InvestArk and its subsidiaries are
set forth below:
DIRECTORS OF INVESTARK AND ITS SUBSIDIARIES
<TABLE>
<CAPTION>
SHARES OF INVESTARK
COMMON STOCK OWNED
BENEFICIALLY AS OF
DECEMBER 31, 1993
DIRECTOR (1)PRINCIPAL OCCUPATION AND PERCENT OF
NAME AGE SINCE AND DIRECTORSHIP CLASS IF MORE THAN 1%
- ------------------- --- -------- ------------------------------------ ---------------------
<S> <C> <C> <C> <C>
Wesley Arnold 58 1988 Self-employed Grocer, Director of 100
North Arkansas
Harry C. Erwin 56 1984 Chairman & Chief Executive Officer 4,315(1.99%)
of InvestArk; Chairman & Chief
Executive Officer of First Bank;
Director of North Arkansas
L. Clyde Carter 84 1984 Retired, Director of InvestArk; 5,116(2.36%)
Director of First Bank
Harlin Hames 56 1985 Retired 1985; Director of North 225
Arkansas
Tommy Hillman 57 1979 President, Winrock Farms, Inc. 1,715
Director of InvestArk; Director of
First Bank
Jerry J. Hoskyn 51 1991 Self-employed Farmer; Director of 100
InvestArk; Director of First Bank
Harold Ives 64 1985 President, Terminal Truck Brokers, 996
Inc. Director of InvestArk; Director
of First Bank
Steven M. Keith 38 1992 President, KBX, Inc. -- Grain 100
Brokerage Director of InvestArk;
Director of First Bank
Cole Martin 52 1992 Director of InvestArk; Director of 100
First Bank; President of First Bank;
Chairman of North Arkansas
James E. Miller 58 1988 Owner of G.H. Miller & Sons; 150
Director of North Arkansas
John E. Stephens 45 1988 Self-Employed Farmer; Director of 700
InvestArk, Director of First Bank;
Secretary of InvestArk
</TABLE>
- ---------------
(1) This column represents the year in which the directorship commenced. If a
person serves as director for both InvestArk and one or both of its
subsidiaries, the year disclosed reflects the date the directorship in
InvestArk commenced.
34
<PAGE> 42
EXECUTIVE OFFICERS OF INVESTARK AND ITS SUBSIDIARIES
In addition to Messrs. Harry C. Erwin, Cole Martin, and John E. Stephens,
the executive officers of InvestArk and its subsidiaries are:
<TABLE>
<CAPTION>
SHARES OF
INVESTARK COMMON
STOCK OWNED
BENEFICIALLY AS
EXECUTIVE OF
OFFICER DECEMBER 31,
NAME AGE SINCE POSITION 1993
- -------------------- --- --------- ------------------------------------- ----------------
<S> <C> <C> <C> <C>
Robert M. Koch 48 1989 Senior Vice President of First Bank 0
Lloyd T. Jones, Sr. 52 1986 President and Chief Executive Officer 25
of North Arkansas; Director of North
Arkansas
</TABLE>
During 1993, the Board of Directors of InvestArk held 16 meetings and all
the incumbent directors then in office were in attendance at more than
seventy-five percent of the meetings. The Board of Directors does not have a
nominating, compensation or audit committee.
TRANSACTIONS WITH MANAGEMENT
Directors and executive officers of InvestArk and its subsidiaries, their
associates and members of their immediate families were customers of and had
transactions including loans and commitments to lend with subsidiaries of
InvestArk in the ordinary course of business during 1993. All such loans and
commitments were made by the subsidiaries on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and did not involve more than normal
risk of collectibility or present other unfavorable features. Similar
transactions may be expected to take place in the ordinary course of business in
the future. On September 30, 1993, the aggregate of these related party loans
was approximately $5,956,000 or approximately 7.19% of total loans outstanding
of the subsidiaries.
PRINCIPAL STOCKHOLDERS OF INVESTARK
The following table sets forth, as of December 31, 1993, the only persons
who were known by InvestArk to own of record or beneficially more than five (5%)
of InvestArk Common Stock and the number of shares owned beneficially by each of
them.
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES DIRECTLY OWNED PERCENT OF CLASS
- ------------------------------------------------------------ --------------------- ----------------
<S> <C> <C>
W.R. Stephens, Jr. Trust.................................... 45,200 20.88%
Vernon J. Giss, Trustee
Ernest Butler, Jr., Trustee
W.R. Stephens Trust......................................... 34,158 15.78%
Jackson T. Stephens, Trustee
Vernon J. Giss, Trustee
Bess C. Stephens, Trustee
Jackson T. Stephens......................................... 48,358 22.34%
</TABLE>
Various other Stephens family members and affiliated entities listed on the
chart below own in the aggregate an additional 15,133 shares or 6.99% of the
outstanding shares of InvestArk Common Stock.
All directors and executive officers of InvestArk and its subsidiaries as a
group (12 persons) as of December 31, 1993 owned 13,642 shares or 6.30% of the
outstanding shares of InvestArk Common Stock. No director or executive officer
of InvestArk owns any shares of First United Common Stock. Neither First United
nor any of its subsidiaries nor any director or executive officer of First
United owns any shares of InvestArk Common Stock.
35
<PAGE> 43
FEDERAL RESERVE BOARD INVESTIGATIONS
On March 4, 1993, the Board of Governors of the Federal Reserve System (the
"Board") ordered its staff to commence a formal investigation to review the
ownership and control of Worthen Banking Corporation of Little Rock, Arkansas
("Worthen") for compliance with the control provisions of the Bank Holding
Company Act and the Change in Bank Control Act. This investigation appears to be
focused primarily on whether members of the families of Jackson T. Stephens and
Wilton R. Stephens (deceased) and affiliated entities (collectively, the
Stephens Family), who currently own 26% of Worthen's outstanding common stock,
have exerted control over Worthen in violation of the above-referenced statutes.
First United has been advised by the Stephens Family that the investigation is
continuing, but the Board has not announced any finding or determination that
any violation of law has or has not occurred. The events and transactions which
are the subject of the Worthen investigation do not in any way relate to or
involve InvestArk or First United.
In addition, in February 1993, InvestArk management was advised by the
Federal Reserve Bank of St. Louis (the "St. Louis FED") that the agency had
initiated a review of certain transactions between InvestArk's bank subsidiaries
and Stephens Inc., a registered broker-dealer owned by the Stephens Family.
These transactions involved the purchase and sale of municipal and other
securities; and the purpose of the review, which is still ongoing, is to
determine whether the transactions violated the prohibitions of Sections 23A and
23B of the Federal Reserve Act, which in general place restrictions on
transactions between federally insured banks and their affiliates. The St. Louis
FED has not announced any results of its review. However, First United's
obligation to consummate the Merger is conditioned upon the St. Louis FED not
having notified either of the parties of actual or proposed regulatory action
with respect to the investigation that could reasonably be expected to have an
adverse effect on First United, InvestArk or InvestArk's bank subsidiaries.
InvestArk management has reviewed the transactions under review by the St. Louis
FED and determined that InvestArk's bank subsidiaries have benefitted from
significant appreciation of the securities purchased taken as a whole. InvestArk
and its subsidiary banks have established new policies and procedures to ensure
compliance with Sections 23A and 23B of the Federal Reserve Act with respect to
any future affiliate transactions. InvestArk management has no reason to believe
that the St. Louis FED will take any action with respect to the transactions
under review which would have a material adverse effect on First United,
InvestArk or InvestArk's bank subsidiaries.
RESULTING OWNERSHIP IN FIRST UNITED
The W. R. Stephens Trust beneficially owns 207,884 shares of First United
Common Stock which equals 4.86% of the issued and outstanding shares of First
United. The W.R. Stephens Jr. Trust beneficially owns 2,100 shares of First
United Common Stock which equals .04% of the issued and outstanding shares of
First United. The additional shares of First United Common Stock to be received
by these and other Stephens Family members in the Merger will increase the total
number of shares beneficially owned by the Stephens Family to a maximum of
860,524, or 16.36% of the outstanding shares of First United Common Stock.
Accordingly, the Stephens Family would be required to file a Notice of Change in
Bank Control and receive approval of the Board in order to own and vote these
shares directly. Because of the existence of the Worthen investigation, and in
lieu of making such a filing at this time, the Stephens family has agreed to
place all of the shares of First United Common Stock its members and affiliates
will receive in the Merger in trust with an independent trustee. The
beneficiaries of the Stephens Trust and the number of shares deposited therein
by each of them are set forth in the following table. The agreement governing
the Stephens Trust provides that the Trustee shall have sole authority to vote
the shares deposited by the beneficiaries, and shall vote them in proportion to
the percentage of shares of First United Common Stock voted for or against any
proposal brought before the stockholders of First United. However, any
abstention of First United Common Stock will not be counted in computing the
above described percentage. (The 209,984 shares of Common Stock of First United
beneficially owned by the W.R. Stephens Trust and the W.R. Stephens Jr. Trust
will continue to be owned and voted directly by their respective trustees). The
beneficiaries of the Stephens Trust will retain dispositive power over the
shares of First United Common stock deposited therein; provided that they have
agreed not to sell 5% or more of the outstanding shares of First United Common
Stock to a purchaser or group of purchasers without the prior written approval
of the Board unless the sale is transacted in connection with
36
<PAGE> 44
an acquisition of First United approved by its Board of Directors. The Stephens
Trust will terminate when, and if, the Stephens Family ceases to own 10% or more
of the shares of First United's outstanding Common Stock or the Board grants the
Stephens Family permission to own and vote the shares held therein directly.
Based upon the maximum of 985,849 shares to be issued to the stockholders of
InvestArk, the Stephens Trust will own of record 12.37% of the outstanding
shares of First United Common Stock as reflected by the table below.
STEPHENS FAMILY
FIRST UNITED STOCK OWNERSHIP
<TABLE>
<CAPTION>
FIRST UNITED FIRST UNITED FIRST UNITED % % %
SHARES SHARES TO BE SHARES OWNED SHARES SHARES TOTAL
STEPHENS CURRENTLY ACQUIRED IN AFTER THE DIRECTLY OWNED IN SHARES
SHAREHOLDERS OWNED MERGER(1) MERGER OWNED(2) TRUST(2) OWNED(2)
- ----------------------------------------- ------------ ------------ ------------ -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
W. R. Stephens Trust..................... 207,884(3) 155,566 363,450 3.95% 2.96% 6.91%
Bess C. Stephens,
Jackson T. Stephens and
Vernon J. Giss, Trustee
Jackson T. Stephens...................... 0 220,238 220,238 -- 4.19% 4.19%
W. R. Stephens, Jr. Trust................ 2,100(3) 205,845 207,945 .04% 3.91% 3.95%
Vernon J. Giss and
Ernest Butler, Jr., Trustees
W. R. Stephens, Jr. ..................... 0 1,971 1,971 -- .04% .04%
Revocable Trust
W. R. Stephens, Jr., Trustee
Elizabeth Ann Stephens................... 0 45,644 45,644 -- .87% .87%
Campbell Trust
Vernon J. Giss and
Ernest Butler, Jr., Trustees
Warren A. Stephens....................... 0 15,872 15,872 -- .30% .30%
Stephens Group, Inc. .................... 0 5,422 5,422 -- .10% .10%
------------ ------------ ------------ -------- -------- --------
Total................................ 209,984 650,558 860,542 3.99% 12.37% 16.36%
</TABLE>
- ---------------
(1) Computed based on the maximum number of First United shares (985,849) to be
issued to InvestArk stockholders in connection with the merger, taking into
account cash payments for fractional shares.
(2) Computed based on 5,258,125 shares (4,272,276 shares currently outstanding
plus the maximum number of shares to be issued in the merger.)
(3) These shares will not be deposited in the Stephens Trust.
REGISTRATION RIGHTS
Pursuant to the Shareholders Agreement dated December 17, 1993 by and
between W. R. Stephens, The W. R. Stephens, Jr. Trust, The W. R. Stephens Trust,
Jackson T. Stephens, Warren A. Stephens and The Elizabeth Ann Stephens Trust
(the "Shareholders") and First United, the Shareholders, on or after the
effective date of the Merger, shall have three different types of registration
rights.
Demand Rights on Form Other Than S-3. The Shareholders have the right to
make two requests of First United to register under the Securities Act, in each
case, at least Five Million ($5,000,000) in market value of First United Common
Stock beneficially owned by the Shareholders. First United has agreed to use its
best reasonable efforts to register the shares as soon as practicable if a
request is made. However, First United will be entitled to postpone for a
reasonable period of time the registering of the Common Stock, if, in good
faith, the board of directors of First United determines it is advisable because
registering the Common Stock at such time would be materially detrimental to
First United. If the filing is delayed by 90 days First United shall obtain the
written opinion of a nationally recognized banking firm supporting the
determination to postpone the filing. If the Shareholders exercise their right
of demand, they shall pay all out-of-pocket expenses incurred in connection with
the registration of the securities, except for registration on Form S-3 as
discussed below.
37
<PAGE> 45
Demand Rights on Form S-3. If a demand for registration is made in
accordance with the immediately preceding paragraph and such registration is
filed on Form S-3, the Shareholders shall pay all underwriting discounts and
commissions applicable to the First United Common Stock held by said
Shareholders, the fees and disbursements of their own counsel and accountants
and all other expenses associated with the offering of the Shareholder's stock.
If First United chooses to issue additional shares of common stock concurrently
with the registration of Shareholder's stock, it shall pay all underwriting
discounts and commissions applicable to the additional stock, the fees and
disbursements of its own counsel and accountants and its pro rata share of all
other expenses of the offering.
Piggy-Back Rights. If at any time First United proposes to register any of
its securities under the Securities Act of 1933, other than securities to be
issued pursuant to a stock option or other employee benefit plan, First United
has agreed to give written notice to the Shareholders of such a registration.
If, within five days after receipt of such notice, the Shareholders submit a
written request to First United, First United shall include the First United
Common Stock held by the Shareholders and specified in the Shareholder's request
in such a registration. Notwithstanding the foregoing, if the offering of the
Shareholder's securities is to be made by or through underwriters, First United
shall not be required to include the shares of First United Common Stock of the
Shareholders if the managing or co-managing underwriters reasonably believe in
good faith that such inclusion would materially and adversely affect such
offering. Under the right of "piggy-back" registration, First United shall pay
all expenses incurred in connection with registration of the securities.
COMPETITION
The banking subsidiaries of InvestArk compete actively with national and
state banks, savings and loan associations, securities dealers, mortgage
bankers, finance companies and insurance companies.
LITIGATION
There is no material pending litigation in which InvestArk or its
subsidiaries is a party.
OFFICES
InvestArk's executive offices are located in the offices of First Stuttgart
Bank and Trust Company, Stuttgart, Arkansas, at 412 South Main Street,
Stuttgart, Arkansas 72021.
EMPLOYEES
As of December 31, 1993, InvestArk and its subsidiaries has 108 employees,
32 of whom are located in Melbourne and 76 of whom are located in Stuttgart.
DESCRIPTION OF INVESTARK STOCK
InvestArk has one class of common stock issued and outstanding. As of
December 31, 1993, InvestArk had 5,000,000 shares of authorized common stock,
$10.00 par value, and 216,464 shares issued and outstanding while 2,658 shares
are held in treasury. Currently, approximately 159 stockholders own shares of
the common stock of InvestArk.
<TABLE>
<CAPTION>
DIVIDENDS PAID PER SHARE
-------------------------
1991 1992 1993
----- ----- -----
<S> <C> <C> <C>
Common Stock................................ $0.75 $0.85 $1.05
</TABLE>
COMPARISON OF RIGHTS OF HOLDERS OF INVESTARK COMMON STOCK AND FIRST UNITED
COMMON STOCK
InvestArk is a corporation organized and existing under the laws of the
State of Arkansas, including the Arkansas Business Corporation Act of 1965.
First United is a corporation organized and existing under the laws of the State
of Arkansas, including the Arkansas Business Corporation Act of 1987. Holders of
InvestArk
38
<PAGE> 46
common stock have the rights, privileges and duties provided by the 1965 Act,
while the holders of First United Common Stock have the rights, privileges and
duties provided by the 1987 Act.
Two-thirds of the outstanding shares of InvestArk common stock may
authorize the proposed merger pursuant to the 1965 Act. A simple majority of the
outstanding shares of common stockholders is required to authorize the proposed
merger pursuant to the 1987 Act. However, the Amended and Restated Articles of
Incorporation of First United provides that two-thirds of the outstanding shares
of First United Common Stock must authorize the proposed merger.
The holders of InvestArk common stock and First United Common Stock are
both entitled to cumulative voting for directors. Holders of InvestArk common
stock and First United common stock do not have preemptive rights with respect
to issuance of additional securities.
Both InvestArk and First United have corporate power to indemnify their
officers and directors with respect to certain liabilities. Under the 1987 Act,
the ability to indemnify officers an directors with respect to liabilities
incurred by them in their conduct and good faith of the business of the
corporation is broader than under the 1965 Act. Such power is limited, however,
by applicable federal laws and regulations including federal banking laws and
regulations and the applicable state law.
LEGAL MATTERS AND EXPERTS
LEGAL OPINIONS
The legality of the First United Common Stock to be issued after the Merger
has been consummated by and between First United and InvestArk will be passed
upon for First United by Ivester, Skinner & Camp, P.A., 111 Center Street, Suite
1200, Little Rock, Arkansas 72201. Certain tax matters relating to the Merger
will be passed upon by Shults, Ray & Kurrus, 200 West Capitol Avenue, Suite
1600, Little Rock, Arkansas 72201.
EXPERTS
The consolidated financial statements of First United Bancshares, Inc. as
of December 31, 1992 and 1991 and for each of the years in the three-year period
ended December 31, 1992 are incorporated by reference in this Proxy Statement
and have been audited by Arthur Andersen & Co., independent public accountants,
as indicated in their reports with respect thereto, and such consolidated
financial statements of First United have been incorporated by reference herein
in reliance upon the authority of said firm as experts in accounting and
auditing.
The consolidated financial statements of InvestArk Bankshares, Inc. as of
December 31, 1992, 1991 and 1990 have been audited by Martin and Company,
independent auditors, whose report thereon appear elsewhere herein and in the
Registration Statement and have been so included in reliance upon the report of
Martin and Company given upon their authority of said firm as experts in
accounting and auditing.
GENERAL
As of the date of this Proxy Statement, the board of directors of First
United or InvestArk does not intend to present, and has not been informed that
another person intends to present, any matter for action at either special
meeting of stockholders other than as discussed in this Proxy Statement. If any
other matters properly come before the meeting, it is intended that the holders
of the proxies will act in accordance with their best judgment.
39
<PAGE> 47
INDEX TO INVESTARK FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Financial Statements -- December 31, 1992, 1991 and 1990
Report of Independent Auditors...................................................... F-2
Consolidated Balance Sheets......................................................... F-3
Consolidated Statements of Income................................................... F-4
Consolidated Statements of Stockholder's Equity..................................... F-5
Consolidated Statements of Cash Flows............................................... F-6
Notes to Financial Statements....................................................... F-7
Financial Statements (Unaudited) -- September 30, 1993 and 1992
Consolidated Balance Sheets......................................................... F-18
Consolidated Statements of Income................................................... F-19
Consolidated Statements of Cash Flows............................................... F-20
Notes to Financial Statements....................................................... F-21
</TABLE>
F-1
<PAGE> 48
INDEPENDENT AUDITOR'S REPORT
The Board of Directors
InvestArk Bankshares, Inc.
Stuttgart, Arkansas
We have audited the consolidated balance sheets of InvestArk Bankshares,
Inc. and subsidiaries at December 31, 1992 and 1991 and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the years
in the three year period ended December 31, 1992. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of InvestArk
Bankshares, Inc. and subsidiaries, at December 31, 1992 and 1991 and the
consolidated results of their operations and their cash flows for each of the
years in the three year period ended December 31, 1992, in conformity with
generally accepted accounting principles.
Martin and Company
/s/ MARTIN AND COMPANY
Little Rock, Arkansas
January 29, 1993
F-2
<PAGE> 49
INVESTARK BANKSHARES, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1992 AND 1991
ASSETS
<TABLE>
<CAPTION>
1992 1991
------------ ------------
<S> <C> <C>
Cash and due from banks......................................... $ 12,938,041 $ 17,366,503
Interest bearing deposits with other Banks...................... 1,744,435 2,035,777
Federal funds sold.............................................. 425,000 1,350,000
Investment securities -- at cost (Estimated fair value of
$85,411,000 and $74,639,000 at December 31, 1992 and 1991,
respectively)................................................. 82,461,782 72,239,662
Loans:.......................................................... 87,025,647 87,936,708
Less: Unearned interest....................................... (46,944) (7,344)
Allowance for loan losses..................................... (1,073,186) (1,184,181)
------------ ------------
Net loans....................................................... 85,905,517 86,745,183
------------ ------------
Premises and equipment, less allowance for depreciation......... 2,956,535 3,251,558
Accrued interest receivable and other assets.................... 4,502,136 6,749,472
------------ ------------
$190,933,446 $189,738,155
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand..................................................... $ 26,677,868 $ 24,550,760
Savings and interest bearing demand........................ 62,423,952 47,423,285
Time deposits.............................................. 81,000,303 94,097,808
------------ ------------
170,102,123 166,071,853
Borrowed funds.................................................. 4,215,540 7,950,841
Accrued interest payable and other liabilities.................. 739,600 1,530,259
Capital notes................................................... 300,000
Minority interest in subsidiaries............................... 56,078 51,758
------------ ------------
Total liabilities............................................... 175,113,341 175,904,711
------------ ------------
Commitments and contingencies (Note 11)
Stockholders' equity: Common stock, $10 par value; 5,000,000
shares authorized, 219,122 shares issued...................... 2,191,220 2,191,220
Surplus....................................................... 1,098,929 1,098,929
Retained earnings............................................. 12,690,098 10,661,919
Less: Treasury stock; 3,766 and 2,910 shares at cost.......... (157,144) (118,624)
Net unrealized loss on marketable equity securities........... (2,998)
------------ ------------
Total stockholders' equity...................................... 15,820,105 13,833,444
------------ ------------
$190,933,446 $189,738,155
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 50
INVESTARK BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1992, 1991 AND 1990
<TABLE>
<CAPTION>
1992 1991 1990
---------- ---------- ----------
<S> <C> <C> <C>
Interest income: Loans, including fees.................. $7,873,808 $9,240,762 $9,120,107
U. S. Government obligations.......................... 864,223 658,113 656,781
Obligations of federal agencies and corporations...... 2,194,579 2,156,191 2,268,219
Obligations of states and political subdivisions...... 1,322,492 1,120,763 1,012,570
Other securities...................................... 1,867,193 2,633,943 2,197,929
Federal funds sold and securities purchased under
resell agreements.................................. 65,979 150,115 530,900
---------- ---------- ----------
14,188,274 15,959,887 15,786,506
---------- ---------- ----------
Interest expense:
Deposits.............................................. 6,163,074 8,714,734 9,017,403
Borrowed funds........................................ 206,159 467,660 597,956
---------- ---------- ----------
6,369,233 9,182,394 9,615,359
Net interest income..................................... 7,819,041 6,777,493 6,171,147
Provision for credit losses............................. 64,491 1,463,398 1,576,414
---------- ---------- ----------
Net interest income after provision for credit losses... 7,754,550 5,314,095 4,594,733
---------- ---------- ----------
Other income:
Trust department fees................................. 488,510 469,848 371,259
Service charges -- deposits........................... 380,190 397,121 367,022
Other service charges and fees........................ 67,676 81,570 76,746
Other................................................. 567,535 666,435 67,310
---------- ---------- ----------
1,503,911 1,614,974 882,337
---------- ---------- ----------
Other noninterest expense:
Salaries.............................................. 2,088,131 2,039,672 1,941,190
Employee benefits..................................... 453,918 411,830 381,905
Net occupancy......................................... 422,272 460,821 446,090
Equipment............................................. 432,458 369,521 281,460
Other................................................. 3,119,775 2,608,291 1,982,614
---------- ---------- ----------
6,516,554 5,890,135 5,033,259
---------- ---------- ----------
Income before income taxes, extraordinary item, and
minority interest in net earnings of consolidated
subsidiaries.......................................... 2,741,907 1,038,934 443,811
Provision for income taxes.............................. 500,721 128,271 155,297
Income before extraordinary item and minority interest
in net earnings of consolidated subsidiaries.......... 2,241,186 910,663 288,514
Extraordinary item -- utilization of net operating loss
carry forward......................................... 32,747
---------- ---------- ----------
Income before minority interest in net earnings of
consolidated subsidiaries............................. 2,241,186 910,663 321,261
Minority interest in net earnings of consolidated
subsidiaries.......................................... 7,964 4,097 2,248
---------- ---------- ----------
Net income.............................................. $2,233,222 $ 906,566 $ 319,013
---------- ---------- ----------
---------- ---------- ----------
Net Income per Share.................................... $ 10.34 $ 4.19 $ 1.48
---------- ---------- ----------
---------- ---------- ----------
Average number of shares outstanding during the year.... 216,014 216,212 216,212
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 51
INVESTARK BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1992, 1991 AND 1990
<TABLE>
<CAPTION>
ALLOWANCE FOR
UNREALIZED LOSSES
COMMON RETAINED TREASURY ON MARKETABLE
STOCK SURPLUS EARNINGS STOCK EQUITY SECURITIES TOTAL
--------- --------- ----------- --------- ----------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1989..... $1,095,610 $1,098,929 $10,856,243 $(118,624) $ (24,485) $12,907,673
Net income................... 319,013 319,013
Cash dividends $.60 per
share..................... (129,727) (129,727)
Net unrealized gain on
marketable equity
securities................ 4,896 4,896
100% stock dividend.......... 1,095,610 (1,095,610)
---------- ---------- ----------- --------- ------------- -----------
Balance, December 31, 1990..... 2,191,220 1,098,929 9,949,919 (118,624) (19,589) 13,101,855
Net income................... 906,566 906,566
Cash dividends $.90 per
share..................... (194,566) (194,566)
Sale of marketable equity
securities................ 19,589 19,589
---------- ---------- ----------- --------- ------------- -----------
Balance, December 31, 1991..... 2,191,220 1,098,929 10,661,919 (118,624) 0 13,833,444
Net income................... 2,233,222 2,233,222
Cash dividends $.95 per
share..................... (205,043) (205,043)
Increase in unrealized loss
on marketable equity
securities................ (2,998) (2,998)
Purchase 856 common shares... (38,520) (38,520)
---------- ---------- ----------- --------- ------------- -----------
Balance, December 31, 1992..... $2,191,220 $1,098,929 $12,690,098 $(157,144) $ (2,998) $15,820,105
---------- ---------- ----------- --------- ------------- -----------
---------- ---------- ----------- --------- ------------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 52
INVESTARK BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1992, 1991 AND 1990
<TABLE>
<CAPTION>
1992 1991 1990
----------- ----------- ----------
<S> <C> <C> <C>
Operating activities:
Net income........................................ $ 2,233,222 $ 906,566 $ 319,013
----------- ----------- ----------
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for credit losses.................... 64,491 1,463,398 1,576,414
Depreciation and amortization.................. 529,097 467,406 335,765
Writedown of other real estate and lease
equipment.................................... 454,170 364,236 114,384
Net accretion of investment security
discounts.................................... (3,344) (135,264) (73,356)
Gain on sale of investment securities.......... (15,771) (404,126) (742)
Deferred income tax (benefit) provision........ (6,315) (61,466) 9,346
Minority interest in subsidiaries'
undistributed income......................... 7,964 4,097 2,248
(Increase) decrease in interest receivable and
other assets................................. 687,464 (2,263,412) (1,108,316)
Decrease in interest payable and other
liabilities.................................. (784,344) (334,609) (84,681)
----------- ----------- ----------
Total adjustments.............................. 933,412 (899,740) 771,062
----------- ----------- ----------
Net cash provided by operating activities........... 3,166,634 6,826 1,090,075
----------- ----------- ----------
Cash flows from investing activities:
Proceeds from maturities of CD's -- other banks... 291,342 2,551,737
Proceeds from disposition of investment
securities..................................... 20,440,815 22,433,415 16,185,639
Purchase of investment securities................. (30,646,818) (19,103,182) (30,557,006)
Decrease in short-term investments................ 1,203,766
Net (increase) decrease in loans.................. 775,175 (908,807) (7,071,819)
Proceeds from sale of equipment and other real
estate......................................... 1,104,105 209,686 291,534
Purchase of premises and equipment................ (236,121) (640,334) (555,860)
----------- ----------- ----------
Net cash provided (used) by investing securities.... (8,271,502) 4,542,515 (20,503,746)
----------- ----------- ----------
Cash flows from financing activities:
Net increase in demand, NOW, and savings
deposits....................................... 6,866,620 2,681,621 2,412,285
Net increase (decrease) in certificates of
deposit........................................ (2,836,350) 3,454,392 14,388,385
Repayment of borrowings........................... (369,699) (230,000)
Increase (decrease) in short-term borrowings...... (3,365,602) 116,641 1,927,008
Payment on capital notes.......................... (300,000) (30,000) (30,000)
Purchase Treasury Stock........................... (38,520)
Cash dividends paid............................... (205,043) (194,566) (129,727)
----------- ----------- ----------
Net cash provided (used) by financing activities.... (248,594) 6,028,088 18,337,951
----------- ----------- ----------
Net increase (decrease) in cash and equivalents..... (5,353,462) 10,577,429 (1,075,720)
Cash and cash equivalents at beginning of year...... 18,716,503 8,139,074 9,214,794
----------- ----------- ----------
Cash and cash equivalents at end of year............ $13,363,041 $18,716,503 $8,139,074
----------- ----------- ----------
----------- ----------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 53
INVESTARK BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation
The consolidated financial statements include the accounts of the company
and its subsidiaries, First National Bank in Stuttgart, Stuttgart, Arkansas
(99.6% owned) and of The Bank of North Arkansas, Melbourne, Arkansas (99.7%
owned). All significant intercompany balances and transactions have been
eliminated.
Cash flows
For purposes of reporting cash flows, cash and cash equivalents include
cash and due from banks, and federal funds sold.
Investment securities
Investment securities, except for investments in mutual funds, are stated
at cost adjusted for amortization of premiums and accretion of discounts.
Investments in mutual funds are carried at the lower of cost or market. Gains
and losses on the sale of investment securities are computed using the specific
identification method.
Allowance for loan losses
The allowance for loan losses is established through charges to expense and
is maintained at a level which, in management's judgement, is necessary to
provide for future losses from the current portfolios. This judgement is based
on analysis of the current and expected economic conditions, risk
characteristics of the loan portfolios and prior loan loss experience in
relation to loans outstanding.
Interest on loans
Interest on installment loans is recognized as income over the lives of the
loans by the sum-of-the-months-digits and simple interest methods. Interest on
other loans is recognized based on the principal amounts outstanding. The
accrual of interest on loans is discontinued when, in the opinion of management,
there is doubt as to the ability of the borrower to pay interest or principal.
The balances of non-accrual loans were $415,737 and $763,961 at December 31,
1992 and 1991. Interest previously accrued but uncollected on these loans was
$51,142 and $76,256 at December 31, 1992 and 1991.
Premises and equipment
Premises and equipment are stated at cost, less accumulated depreciation.
Depreciation is computed principally by the straight-line method.
Real estate owned other than premises
Real estate owned other than premises, consisting primarily of real estate
acquired in settlement of loans, is stated at the lower of the investment in the
loan or estimated net realizable value. The amounts included in other assets at
December 31, 1992 and 1991 were $1,232,871 and $2,368,281, respectively.
Income taxes
Provisions for income taxes are based on amount reported in the statements
of income (after exclusion of non-taxable income such as interest on state and
municipal securities) and include deferred taxes on temporary differences in the
recognition of income and expense for tax and liability method as prescribed in
SFAS No. 109, "Accounting for Income Taxes."
F-7
<PAGE> 54
INVESTARK BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Off-balance-sheet financial instruments
In the ordinary course of business the bank subsidiaries have entered into
off-balance-sheet financial instruments consisting of commitments to extend
credit, commitments under credit card arrangements, commercial letters of credit
and standby letters of credit. Such financial instruments are recorded in the
financial statements when then become payable.
Trust Department assets
In accordance with the usual practice of banks, property other than cash
deposits held by the trust departments of subsidiary banks in a fiduciary or
agency capacity for customers, is not included in the consolidated financial
statements.
Reclassification
Certain 1991 and 1990 amounts have been reclassified to conform with the
1992 presentation.
NOTE 2: INVESTMENT SECURITIES
The book and approximate market values of investment securities are
summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1992
------------------------
APPROXIMATE
BOOK UNREALIZED UNREALIZED MARKET
VALUE GAINS LOSSES VALUE
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
U. S. Government........................... $14,742,329 $ 495,362 $ (4,973) $15,232,718
Federal agencies and corporations.......... 20,335,711 411,055 (98,673) 20,648,093
States and political subdivisions.......... 18,440,150 719,055 (39,473) 19,119,732
Other securities........................... 16,612,521 1,065,522 (18,474) 17,659,571
Mortgage-backed securities................. 11,872,671 456,405 (37,059) 12,292,015
----------- ---------- ---------- -----------
Total debt securities...................... 82,003,382 3,147,399 (198,652) 84,952,129
Federal Reserve Bank stock and other equity
securities............................... 458,400 458,400
----------- ---------- ---------- -----------
$82,461,782 $3,147,399 $ (198,652) $85,410,529
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1991
------------------------
APPROXIMATE
BOOK UNREALIZED UNREALIZED MARKET
VALUE GAINS LOSSES VALUE
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
U. S. Government........................... $11,928,306 $ 733,314 $12,661,620
Federal agencies and corporations.......... 14,272,733 781,351 (13,715) 15,040,369
States and political subdivisions.......... 15,900,208 524,788 (14,013) 16,410,983
Other securities........................... 15,405,129 10,561 (95,468) 15,320,222
Mortgage-backed securities................. 14,667,286 584,844 (112,109) 15,140,021
----------- ---------- ---------- -----------
Total debt securities...................... 72,173,662 2,634,858 (235,305) 74,573,215
Federal Reserve Bank stock................. 66,000 66,000
----------- ---------- ---------- -----------
$72,239,662 $2,634,858 $ (235,305) $74,639,215
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>
F-8
<PAGE> 55
INVESTARK BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The book and approximate market values of investment securities at December
31, 1992 and 1991 by contractual maturity, are shown below. Actual maturities
may differ from contractual maturities due to the existence of call or
prepayment options.
<TABLE>
<CAPTION>
DECEMBER 31, 1992 DECEMBER 31, 1991
------------------------ ------------------------
APPROXIMATE APPROXIMATE
MARKET MARKET
BOOK VALUE VALUE BOOK VALUE VALUE
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Due in one year or less..................... $14,794,911 $15,008,930 $ 6,472,793 $ 6,586,105
Due after one year through five years....... 37,230,012 38,798,851 29,109,016 30,314,949
Due after five years through ten years...... 13,483,007 13,984,579 14,542,719 15,041,341
Due after ten years......................... 4,622,783 4,867,753 7,381,848 7,490,799
Mortgage-backed securities.................. 11,872,669 12,292,016 14,667,286 15,140,021
----------- ----------- ----------- -----------
Total debt securities....................... 82,003,382 84,952,129 72,173,662 74,573,215
Equity securities........................... 458,400 458,400 66,000 66,000
----------- ----------- ----------- -----------
$82,461,782 $85,410,529 $72,239,662 $74,639,215
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
Summary of disposition of investment securities:
<TABLE>
<CAPTION>
1992 1991
---------- ----------
<S> <C> <C>
Proceeds from disposition (primarily maturities and
calls) of investment securities....................... $20,440,815 $22,443,415
Gross gains realized.................................... 21,773 485,531
Gross losses realized................................... 6,002 81,405
</TABLE>
The company has the intent and ability to hold securities which may have
book values greater than market values to their maturity date.
Investment securities with a carrying amount of $34,330,551 and $22,366,915
at December 31, 1992 and 1991 respectively, were pledged to secure public
deposits and for other purposes required or permitted by law.
Included in states and political subdivisions in 1991 and 1990 are
securities issued by agencies of several states with an original cost of
$1,896,048 which are backed by Guaranteed Investment Contracts (GIC's) of First
Executive Life Insurance Company. These securities were written down to their
estimated realizable value because, in the opinion of management, there was an
other than temporary decline in their market value. The writedowns on these
securities of $327,991 and $716,247 are included in the provision for credit
losses for 1991 and 1990, respectively. These securities were sold during 1991.
F-9
<PAGE> 56
INVESTARK BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 3: LOANS
Major classifications of loans are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1992 1991
---------- ----------
<S> <C> <C>
Real estate................................................. $35,492,564 $36,733,923
Financial institutions...................................... 1,358,108
Agricultural production..................................... 12,467,213 12,601,432
Commercial.................................................. 24,262,093 24,860,424
Loans to individuals........................................ 12,420,292 11,467,286
Other (including overdrafts)................................ 2,383,485 915,525
---------- ----------
87,025,647 87,936,698
Less: unearned interest..................................... 46,944 7,334
---------- ----------
Net loans................................................... 86,978,703 87,929,364
Less: allowance for possible loan losses.................... 1,073,186 1,184,181
---------- ----------
$85,905,517 $86,745,183
---------- ----------
---------- ----------
</TABLE>
The company's subsidiary banks grant agribusiness, commercial and other
loans throughout their market areas. Although they have diversified loan
portfolios, a substantial portion of their borrowers' ability to honor their
contracts is dependent upon the agribusiness economic sector.
NOTE 4: ALLOWANCE FOR POSSIBLE LOAN LOSSES
Changes in the allowance for possible loan losses were as follows:
<TABLE>
<CAPTION>
1992 1991
---------- ----------
<S> <C> <C>
Balance -- Beginning of year............................... $1,184,181 $ 977,793
Provision charged to operations............................ 64,491 1,135,407
Recoveries................................................. 175,998 44,332
Loans charged-off.......................................... (351,484) (973,351)
---------- ----------
Balance -- End of year..................................... $1,073,186 $1,184,181
---------- ----------
---------- ----------
</TABLE>
NOTE 5: PREMISES AND EQUIPMENT
Major classifications of these assets are summarized as follows:
<TABLE>
<CAPTION>
USEFUL LIVES
1992 1991 (YEARS)
--------- --------- ------------
<S> <C> <C> <C>
Land................................................ $ 627,937 $ 597,937
Buildings and improvements.......................... 3,696,562 3,645,187 5-40
Furniture and equipment............................. 3,219,031 3,125,136 3-15
--------- --------- -----
7,543,530 7,368,260
Less: accumulated depreciation...................... 4,586,995 4,116,702
--------- --------- -----
$2,956,535 $3,251,558
--------- --------- -----
--------- --------- -----
</TABLE>
Depreciation expense was $529,097; $467,406; and $325,705 in 1992, 1991 and
1990 respectively.
F-10
<PAGE> 57
INVESTARK BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 6: LEASES
First National Bank in Stuttgart is lessor of computer equipment under
operating leases which expire during 1994. Minimum future rental payments
receivable under these noncancellable leases are:
<TABLE>
<S> <C>
1993...................................................... $135,056
1994...................................................... 38,368
--------
$173,424
--------
--------
</TABLE>
The lessee is to provide all maintenance on the equipment under the terms
of the leases.
NOTE 7: INCOME TAXES
The income tax provision, including taxes on securities gains and losses
consists of the following:
<TABLE>
<CAPTION>
1992 1991 1990
-------- -------- --------
<S> <C> <C> <C>
Federal income tax
Currently payable.................................... $507,036 $189,737 $145,951
Deferred............................................. (6,315) (61,466) 9,346
-------- -------- --------
$500,721 $128,271 $155,297
-------- -------- --------
-------- -------- --------
</TABLE>
The tax effect of the timing differences which comprise deferred income taxes
are as follows:
<TABLE>
<CAPTION>
1992 1991 1990
-------- -------- --------
<S> <C> <C> <C>
Temporary differences in tax and book reporting of
security transactions.............................. $ (8,868) $(15,632) $102,648
Depreciation expense differences for tax and book
purposes........................................... 6,706 30,049 (60,854)
Temporary differences in tax and book reporting for
other real estate transactions..................... (10,957) (75,883) (32,448)
Other -- net......................................... 6,804
-------- -------- --------
$ (6,315) $(61,466) $ 9,346
-------- -------- --------
-------- -------- --------
</TABLE>
The income tax provision differs from the statutory rate primarily because
of the income tax treatment of exempt income, the provision for loan losses and
use of alternative minimum tax credits.
NOTE 8: EMPLOYEE BENEFIT PLANS
First National Bank in Stuttgart has a defined benefit pension plan which
covers substantially all its employees. The benefits are based on years of
service and the employee's compensation during the last five years of
employment. The funding policy is to contribute annually an amount that does not
exceed the maximum amount deductible for federal income tax purposes.
Contributions are intended to provide not only for benefits attributed to
service to date but also for those expected to be earned in the future.
F-11
<PAGE> 58
INVESTARK BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following tables set forth the plan's funded status and amounts
recognized in the bank's balance sheet at December 31, 1992 and 1991 (amounts in
thousands):
<TABLE>
<CAPTION>
1992 1991
------ -----
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, included vested benefits of $770
and $692...................................................... $ 781 $ 714
------ -----
------ -----
Projected benefit obligation for service rendered to date.......... $ 957 $(863)
Plan assets at fair value.......................................... 1,008 866
------ -----
Plan assets in excess of projected benefit obligation.............. 51 3
Unrecognized prior service cost.................................... (28) (29)
Unrecognized net obligation at January 1, 1992 and 1991, being
recognized over 22 years......................................... (45) (48)
Unrecognized net (gain) or loss.................................... 110 139
------ -----
Prepaid pension cost............................................... $ 88 $ 65
------ -----
------ -----
</TABLE>
Net pension cost for 1992, 1991 and 1990 included the following components:
<TABLE>
<CAPTION>
1992 1991 1990
---- ---- ----
<S> <C> <C> <C>
Service costs-benefits earned during the period............... $ 55 $ 59 $ 44
Interest cost on projected benefit obligation................. 59 53 45
Expected return on plan assets................................ (63) (60) (51)
Amortization of:
Prior service cost.......................................... (1) (1) (1)
Unrecognized net obligation existing at January 1, 1992,
1991 and 1990............................................ (3) (3) (3)
Gain or (loss).............................................. 2 5
---- ---- ----
Net pension cost.............................................. $ 49 $ 53 $ 34
---- ---- ----
---- ---- ----
</TABLE>
The weighted-average discount rate and the rate of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligation were 7.0% and 4.5% respectively. The expected
long-term rate of return on assets was 7.0%.
The Bank of North Arkansas adopted a defined contribution employee benefit
plan, qualified under IRC Section 401(k), effective June 1, 1991, that covers
all employees, with the exception of employees who are highly compensated.
Contributions to the plan are based on the total amount of salary reduction the
employee elects to defer, a discretionary matching contribution equal to a
percentage of the amount the employee elects to defer, which percentage will be
determined each year by the employer, and a discretionary amount determined each
year by the employer. To share in the matching and discretionary contribution,
the employee must complete a year of service and be actively employed on the
last day of the Plan Year. The amount of pension expense was $34,806, and
$10,000 in 1992 and 1991, respectively.
F-12
<PAGE> 59
INVESTARK BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 9: DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:
Cash and due from banks:
For these short-term items, the carrying amount is a
reasonable estimate of fair value.
Investment securities:
Fair values are based on quoted market prices, if
available. If a quoted market price is not available,
fair value is estimated using quoted market prices for
similar securities.
Loans:
The fair value of loans is estimated by discounting the
expected future cash flows using current rates at which
similar loans would be made to borrowers with similar
credit ratings and for similar remaining maturities.
Deposit liabilities:
The fair value of demand deposits, savings accounts and
certain money market deposits is the amount payable on
demand at the reporting date. The fair value of
fixed-maturity certificates of deposit is estimated using
the rates currently offered for deposits with similar
remaining maturities.
Note payable:
This is primarily floating rate debt, and the fair value
approximates the recorded liability.
Commitments to extend credit and letters of credit:
The fair value of commitments is estimated using the fees
currently charged to enter into similar arrangements,
taking into account the remaining terms of the agreements
and the present credit worthiness of the counterparties.
For fixed rate loan commitments, fair value also
considers the difference between current levels of
interest rates and committed rates. The fair value of
letters of credit is based on the fees currently charged
for similar agreements or on the estimated cost to
terminate them or otherwise settle the obligations with
the counterparties at the reporting date.
F-13
<PAGE> 60
INVESTARK BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The estimated fair values of the Company's financial instruments at
December 31, 1992 are as follows (amounts in thousands):
<TABLE>
<CAPTION>
CARRYING FAIR
VALUE VALUE
-------- --------
<S> <C> <C>
Financial assets:
Cash and due from banks................................................ $ 12,398 $ 12,398
Investment securities.................................................. 82,462 85,410
Loans.................................................................. 86,979 88,730
Less: allowance for loan losses........................................ (1,073) (1,073)
-------- --------
$ 85,906 $ 87,657
-------- --------
-------- --------
Financial liabilities:
Deposits............................................................... $170,102 $170,706
Notes payable.......................................................... 500 500
Off-balance-sheet instruments:
Commitments to extend credit........................................... 18,375 18,375
Letters of credit...................................................... 472 472
</TABLE>
NOTE 10: NOTES PAYABLE
Included in borrowed funds on the accompanying consolidated balance sheet
is a note payable in the amount of $500,000 secured by 79,762 shares of stock of
The Bank of North Arkansas with scheduled annual installments of $190,000
through 1995 plus interest at a variable rate (currently 6%). Schedule
maturities of this note are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, AMOUNT
------------ --------
<S> <C>
1993............................................ $190,000
1994............................................ 190,000
1995............................................ 120,000
--------
$500,000
--------
--------
</TABLE>
NOTE 11: COMMITMENTS AND CONTINGENCIES
The consolidated financial statements do not reflect various commitments
and contingent liabilities which arise in the normal course of the banks'
business and which involve elements of credit risk, interest rate risk and
liquidity risk. These commitments and contingent liabilities consist of
commitments to extend credit and letters of credit. A summary of the commitments
and contingent liabilities are summarized below:
<TABLE>
<CAPTION>
1992 1991
---------- ----------
<S> <C> <C>
Commitments to extend credit...................... $18,374,699 $16,302,217
Letters of credit................................. 472,038 542,338
----------- -----------
$18,846,737 $16,844,555
----------- -----------
----------- -----------
</TABLE>
Commitments to extend credit, credit card arrangements and letters of
credit all include exposure to some credit loss in the event of nonperformance
of the customer. The Banks' credit policies and procedures for credit
commitments and financial guarantees are the same as those for extensions of
credit that are recorded in the consolidated financial statements. Because these
instruments have fixed maturity dates, and because many
F-14
<PAGE> 61
INVESTARK BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
of them expire without being drawn upon, they do not generally present any
significant liquidity risk to the Bank.
In the ordinary course of business, there are various legal proceedings
involving the Company and its subsidiaries, most of which are considered
litigation incidental to the conduct of business. These proceedings include,
among other matters, defense of routine corporate, employment, banking and
lender liability related litigation. Management, after consulting with legal
counsel and based on the facts available and proceedings to date, some of which
are preliminary, is of the opinion that the ultimate resolution of these
proceedings will not have a material adverse effect on the consolidated
financial position of the Company.
NOTE 12: CONCENTRATIONS OF CREDIT
Substantially all of the Banks' loans, commitments to loan and letters of
credit have been granted to customers in their trade area who are also
depositors of the Banks. The concentrations of credit by type of loan are set
forth in Note 3. The distribution of commitments to extend credit approximates
the distribution of loans outstanding.
NOTE 13: DIVIDEND RESTRICTIONS
As a National Bank, First National Bank in Stuttgart is subject to dividend
restrictions set forth by the Comptroller of the Currency. Under these
restrictions, the Bank may not, without the prior approval of the Comptroller of
Currency, declare dividends in excess of its current year's retained earnings
plus the retained earnings of the prior two years. The Bank of North Arkansas is
also restricted in the amount of dividends it may pay in any year without prior
permission from the Arkansas Bank Commissioner to fifty percent of its net
income for the year. The Bank's ability to pay dividends is also restricted by
the minimum capital requirement of their regulatory agencies which require them
to maintain at least an 8.25% risk-based capital ratio.
NOTE 14: RELATED PARTY TRANSACTIONS
Some of the directors and officers and the companies in which they had a
significant interest were customers of and had transactions with the subsidiary
banks. Such transactions were made in the ordinary course of the Banks' business
on substantially the same terms and conditions, including interest rates and
collateral as those prevailing at the same time for comparable transactions with
other customers and did not, in the opinion of management, involve more than a
normal credit risk or present other unfavorable features. The aggregate amount
of loans to such related parties amounted to $5,005,939 and $2,505,723 at
December 31, 1992 and 1991, respectively.
NOTE 15: SUPPLEMENTAL CASH FLOW INFORMATION
The Company paid $7,031,918; $9,393,695; and $9,606,385 in interest on
deposits and other borrowings during 1992, 1991 and 1990, respectively, and
income taxes of $470,000; $145,000; and $113,969 for 1992, 1991 and 1990.
NOTE 16: STOCK DIVIDEND
On April 12, 1990 the board of directors approved a 100% stock dividend
payable June 20, 1990.
F-15
<PAGE> 62
INVESTARK BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 17: CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY
The financial position of InvestArk Bankshares, Inc. (parent company only),
its results of operations and cash flows are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1992 1991
---------- ----------
<S> <C> <C>
Condensed financial position:
Assets:
Cash............................................................ $ 94,395 $ 74,366
Investment in subsidiaries...................................... 16,174,658 14,609,204
Other assets.................................................... 137,195 110,766
----------- -----------
Total assets............................................ $16,406,248 $14,794,336
----------- -----------
----------- -----------
Liabilities and capital accounts:
Long-term debt.................................................. 500,000 869,699
Other liabilities............................................... 86,142 91,193
----------- -----------
Total liabilities....................................... 586,142 960,892
----------- -----------
Common stock...................................................... 2,191,220 2,191,220
Surplus........................................................... 1,098,929 1,098,929
Retained earnings................................................. 12,690,099 10,661,919
Treasury stock.................................................... (157,144) (118,624)
Net unrealized loss on marketable equity securities............... (2,998)
----------- -----------
Total capital........................................... 15,820,106 13,833,444
----------- -----------
Total liabilities and capital........................... $16,406,248 $14,794,336
----------- -----------
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1992 1991 1990
--------- --------- ---------
<S> <C> <C> <C>
Condensed operating results:
Dividends from subsidiaries............................. $ 734,746 $ 245,766 $ 584,168
Other income............................................ 2,726 3,790 504
---------- --------- ---------
737,472 249,556 584,672
---------- --------- ---------
Interest................................................ 55,437 73,924 119,267
Other expense........................................... 54,611 29,718 21,508
---------- --------- ---------
110,048 103,642 140,775
---------- --------- ---------
Income before tax benefit and equity in undistributed
income of subsidiaries.................................. 627,424 145,914 443,897
Income tax benefit........................................ (35,412) (46,937) (17,450)
---------- --------- ---------
Income before equity in undistributed income of
subsidiaries............................................ 662,836 192,851 461,347
Equity in undistributed income of subsidiaries............ 1,570,386 713,715 (142,334)
---------- --------- ---------
Net income................................................ $2,233,222 $ 906,566 $ 319,013
---------- --------- ---------
---------- --------- ---------
</TABLE>
F-16
<PAGE> 63
INVESTARK BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1992 1991 1990
--------- --------- ---------
<S> <C> <C> <C>
Condensed statements of cash flows:
Cash flows from operating activities:
Net income........................................... $ 2,233,222 $ 906,566 $ 319,013
Undistributed income................................. (1,570,540) (713,715) 142,334
Gain on sale of stock................................ (1,896)
Amortization......................................... 3,011 2,814 2,715
(Increase) decrease in other assets.................. (25,949) 76,595 10,581
Increase (decrease) in other liabilities............. (13,431) 5,909 (322,079)
----------- --------- ---------
624,417 278,169 152,564
----------- --------- ---------
Cash flows from investing activities:
Purchase Bank of North Arkansas stock................ (923) (13,756)
Proceeds from sale of stock.......................... 9,796
----------- --------- ---------
8,873 (13,756) 0
----------- --------- ---------
Cash flows from financing activities:
Purchase of treasury stock........................... (38,520)
Repayment of borrowings.............................. (369,699) (230,000)
Dividends paid....................................... (205,042) (194,566) (129,727)
----------- --------- ---------
(613,261) (194,566) (359,727)
----------- --------- ---------
Net increase (decrease) in cash...................... 20,029 69,847 (207,163)
Cash beginning of year............................... 74,366 4,519 211,682
----------- --------- ---------
Cash at end of year.................................. $ 94,395 $ 74,366 $ 4,519
----------- --------- ---------
----------- --------- ---------
Supplementary data for cash flows:
Interest paid...................................... $ 55,437 $ 95,607 $ 97,584
</TABLE>
F-17
<PAGE> 64
INVESTARK BANKSHARES, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1993 1992
------------- ------------
<S> <C> <C>
ASSETS
Cash and Due from Banks........................................... $ 17,627,460 $ 12,938,041
Interest Bearing Deposits with Other Banks........................ 1,370,146 1,744,435
------------- ------------
Federal Funds Sold................................................ 0 425,000
------------- ------------
Investment Securities -- at Cost (Estimated Fair Value
of $87,550,000 and $84,411,000 at September 30, 1993 and
December 31, 1992, Respectively)................................ 84,719,400 82,461,782
------------- ------------
Loans............................................................. 83,133,078 87,025,647
Less: Unearned Interest........................................... (26,741) (46,944)
Allowance for Loan Losses......................................... (896,091) (1,073,186)
------------- ------------
Net Loans......................................................... 82,210,246 85,905,517
------------- ------------
Premises and Equipment............................................ 2,791,105 2,956,535
------------- ------------
Other Real Estate Owned........................................... 277,523 1,241,534
------------- ------------
Other Assets...................................................... 3,341,000 3,260,602
------------- ------------
Total Assets............................................ $192,336,880 $190,933,446
------------- ------------
------------- ------------
LIABILITIES
Deposits:
Demand.......................................................... $ 34,331,439 $ 26,677,868
Savings and Interest Bearing
Demand.......................................................... 61,882,537 62,423,952
Time............................................................ 74,310,998 81,000,303
------------- ------------
Total Deposits.......................................... 170,524,974 170,102,123
Federal Funds Purchased and Securities
Sold under Purchase Agreements.................................. 3,025,584 3,715,540
Short-Term Borrowings............................................. 525,832
Other Liabilities................................................. 1,130,346 1,295,678
------------- ------------
Total Liabilities....................................... 175,206,736 175,113,341
------------- ------------
CAPITAL ACCOUNTS
Common Stock (Par Value $10; 5,000,000 Shares Authorized; 219,122
Shares Issued).................................................. 2,191,220 2,191,220
Surplus........................................................... 1,098,929 1,098,929
Retained Earnings................................................. 13,997,139 12,687,100
Less: Treasury Stock -- at Cost................................... (157,144) (157,144)
------------- ------------
Total Capital........................................... 17,130,144 15,820,105
------------- ------------
Total Liabilities and Capital Accounts.................. $192,336,880 $190,933,446
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-18
<PAGE> 65
INVESTARK BANKSHARES, INC. CONSOLIDATED
CONSOLIDATED INCOME STATEMENTS
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1993 1992
------------- -------------
<S> <C> <C>
Interest Income:
Interest and Fees on Loans...................................... $ 4,968,915 $ 6,099,897
Interest on Securities:
Taxable Securities........................................... 3,511,125 3,402,392
Nontaxable Securities........................................ 795,011 929,047
Interest on Federal Funds Sold and Securities Purchased under
Resell Agreements............................................ 16,899 162,408
Interest on Deposits in Banks................................... 250,779 233,798
------------ -------------
Total Interest Income........................................ 9,542,729 10,827,542
------------ -------------
Interest Expense:
Interest on Deposits............................................ 3,776,551 4,774,255
Interest on Fed Funds Purchased and Securities Sold under
Repurchase Agreements........................................ 73,883 152,237
Interest on Borrowings.......................................... 27,270 68,589
------------ -------------
Total Interest Expense....................................... 3,877,704 4,995,081
------------ -------------
Net Interest Income.......................................... 5,665,025 5,832,461
Provision for Loan Losses.................................... 0 38,547
------------ -------------
Net Interest Income after Provision for Loan Losses.......... 5,665,025 5,793,914
------------ -------------
Other Income:
Service Charges on Deposits..................................... 257,952 306,402
Other Fees and Charges.......................................... 85,809 68,868
Trust Department Income......................................... 376,498 342,603
Other Income.................................................... 407,395 291,661
------------ -------------
Total Other Income........................................... 1,127,654 1,009,534
------------ -------------
Other Expense:
Salaries........................................................ 1,615,319 1,520,091
Pension and Other Employee Benefits............................. 394,969 374,189
Net Occupancy Expense........................................... 272,223 350,039
Equipment Expense............................................... 412,514 278,163
Data Processing Expense......................................... 133,603 133,461
Other Operating Expense......................................... 2,083,030 1,973,485
------------ -------------
Total Other Expense.......................................... 4,911,658 4,629,428
------------ -------------
Income Before Income Taxes........................................ 1,881,021 2,174,020
Income Tax Expense.............................................. 431,002 493,310
------------ -------------
Net Income........................................................ $ 1,450,019 $ 1,680,710
------------ -------------
------------ -------------
Net Income per Share.............................................. $6.73 $7.77
Dividends per Share............................................. $ .65 $ .55
Average Number of Shares Outstanding During the Year............ 215,356 216,198
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-19
<PAGE> 66
INVESTARK BANKSHARES, INC. CONSOLIDATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1993 1992
---------- ----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income........................................................ $1,450,019 $1,680,710
Adjustments to Reconcile Net Income to Net Cash Provided By
Operating Activities:
Depreciation and Amortization.................................. 410,475 391,660
Net Accretion on Securities.................................... (6,886) (101,124)
(Gain) Loss on Sale of Investment Securities................... 31,004 (14,855)
Decrease in Other Assets....................................... 863,410 1,429,958
Decrease in Accrued Liabilities................................ (165,332) (748,553)
----------- -----------
Total Adjustments.............................................. 1,132,671 957,086
----------- -----------
Net Cash Provided by Operating Activities......................... 2,582,690 2,637,796
----------- -----------
Cash Flows from Investing Activities:
Proceeds from Sale of Investment Securities....................... 14,803,780 15,948,028
Purchase of Investment Securities................................. (16,711,227) (22,263,099)
Net Decrease in Loans............................................. 3,715,474 2,500,190
Purchase of Premises and Equipment................................ (245,045) (192,351)
----------- -----------
Net Cash Provided (Used) by Investing Activities.................. 1,562,982 (4,007,232)
----------- -----------
Cash Flows from Financing Activities:
Increase in Demand, Now and Savings Accounts...................... 7,112,156 20,818,956
Net Increase in Time Deposits..................................... (6,689,305) (7,779,050)
Net Decrease in Short-Term Borrowings............................. (164,124) (2,541,554)
Purchase of Treasury Stock........................................ (1,890)
Dividends Paid.................................................... (139,980) (118,900)
----------- -----------
Net Cash Provided by Financing Activities......................... 118,747 10,377,562
----------- -----------
Net Increase (Decrease) in Cash and Equivalents..................... 4,264,419 9,008,126
Cash and Equivalents, Beginning of Year............................. 13,363,041 18,716,503
----------- -----------
Cash and Equivalents, End of Year................................... $17,627,460 $27,724,629
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-20
<PAGE> 67
INVESTARK BANKSHARES, INC. CONSOLIDATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: PRINCIPLES OF CONSOLIDATION
The Consolidated Financial Statements of InvestArk Bankshares, Inc. Include
the Accounts of the Parent Company and its Bank Subsidiaries, First National
Bank in Stuttgart, Stuttgart, Arkansas (99.7% Owned) and the Bank of North
Arkansas, Melbourne, Arkansas (99.7% Owned). All Material Intercompany
Transactions Have Been Eliminated.
The Consolidated Statements of Condition as of September 30, 1993 and the
Related Consolidated Income Statements for the Nine Month Periods Ended
September 30, 1993 and 1992 and the Consolidated Statements of Cash Flows for
the Nine Month Periods Ended September 30, 1993 and 1992 Are Unaudited; in the
Opinion of Management, All Adjustments Necessary for a Fair Presentation of the
Financial Statements Are Included.
NOTE 2: RESULTS OF OPERATIONS
The Results of Operations for the Nine Month Period Ended September 30,
1993 Are Not Necessarily Indicative of the Results for the Entire Year of 1993.
During the fourth quarter of 1993, InvestArk made an addition to its allowance
for possible loan losses of approximately $590,000 and an addition to its
reserve against other real estate owned of approximately $100,000. These
additions were made in order to achieve conformity with the policies followed by
the subsidiary banks of First United.
NOTE 3: RECLASSIFICATIONS
Certain Reclassifications of 1992 Amounts Have Been Made to Conform to the
1993 Presentation.
NOTE 4: PENDING TRANSACTION
On October 21, 1993, InvestArk Signed a Letter of Intent to Be Acquired by
First United Bankshares, Inc. El Dorado, Arkansas. Under the Letter of Intent,
InvestArk Shareholders Will Receive $26.1 Million in First United Common Stock
in Exchange for All of the Outstanding Shares of InvestArk.
F-21
<PAGE> 68
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Arkansas Business Corporation Act of 1987 (the "Act") codified at Ark.
Code Ann. sec.4-27-101 et. seq. and more specifically at Ark. Code Ann.
sec.4-27-850 permits an Arkansas Corporation to indemnify directors, officers,
employees and agents under some circumstances, and mandates indemnification
under certain limited circumstances. The Act permits a corporation to indemnify
a director, officer, employee, or agent for expenses (including attorneys'
fees), judgements, fines and amounts paid in settlement actually and reasonably
incurred if such person acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation.
Indemnification against expenses incurred by a director, officer, employee or
agent in connection with his defense of a proceeding against such person for
actions in such capacity is mandatory to the extent that such person has been
successful on the merits. If a director, officer, employee, or agent is
determined to be liable to the corporation, indemnification for expenses is not
allowable, subject to limited exceptions where a court deems the award of
expenses appropriate. The Act grants express power to an Arkansas corporation to
purchase liability insurance for its directors, officers, employees and agents,
regardless of whether any such person is otherwise eligible for indemnification
by the corporation. Advancement of expenses is permitted, but a person receiving
such advances must repay those expenses if it is ultimately determined that he
is not entitled to indemnifications.
The Amended and Restated Articles of Incorporation and the Bylaws of First
United provides that the directors, officers, employees and agents of First
United shall be indemnified as set forth below.
AMENDED AND RESTATED ARTICLES OF INCORPORATION
TWELFTH. The corporation may indemnify any person who was, or is, a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding to the fullest extent permitted by the Arkansas
Business Corporation Act as it now exists or may hereafter be amended.
BY-LAWS
Section 6. INDEMNIFICATION. Every person who was or is a party or is
threatened to be made a party to or is involved in any action, suit, proceeding,
whether civil, criminal, administrative, or investigative, by reason of the fact
that he is or was a director or officer of the Corporation or is or was serving
at the request of the Corporation as a director or officer of another
corporation, or as its representative in a partnership, joint venture, trust, or
other enterprise, shall be indemnified and held harmless to the fullest extent
legally permissible under and pursuant to any procedure specified in the
Arkansas Business Corporation Act of the State of Arkansas, as amended and as
the same may be amended hereafter, against all expenses, liabilities, and losses
(including attorney's fees, judgments, fines and amounts paid or to be paid in
settlement) reasonably incurred or suffered by him in connection therewith. Such
right of indemnification shall be a contract right that may be enforced in any
lawful manner by such person. Such right of indemnification shall not be
exclusive of any other right which such director or officer may have or
hereafter acquire and, without limiting the generality of such statement, he
shall be entitled to his rights of indemnification under any agreement, vote of
stockholders, provisions of law, or otherwise, as well as his rights under this
paragraph.
The board of directors may cause the Corporation to purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director or officer of another corporation, or as its representative in a
partnership, joint venture, trust or other enterprise against any liability
asserted against such person and incurred in any such capacity or arising out of
such status, whether or not the Corporation would have power to indemnify such
person.
II-1
<PAGE> 69
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C>
2 -- Agreement and Plan of Reorganization Between First United Bancshares,
Inc. and InvestArk Bankshares, Inc. and Plan of Merger attached as
Exhibit A thereto.
3(i) -- Articles of Incorporation of InvestArk Bankshares, Inc.
3(ii) -- Bylaws of InvestArk Bankshares, Inc.
5 -- Opinion of Ivester, Skinner & Camp, P.A.
8 -- Tax Opinion of Shults, Ray & Kurrus regarding InvestArk Bankshares,
Inc. Acquisition.
9 -- Trust agreement dated , 1994 by and among Jackson T.
Stephens, the W.R. Stephens Trust, the W.R.Stephens, Jr. Trust, W.R.
Stephens, Jr., Warren A. Stephens, the Elizabeth Ann Stephens
Campbell Trust, Stephens Group, Inc. and the Bank of New York, as
trustee.
10 -- Shareholders Agreement dated December 17, 1993 by and among First
United, W.R. Stephens, Jr., the W.R. Stephens Trust, the W.R.
Stephens Trust, Jackson T. Stephens, Warren A. Stephens and Elizabeth
Ann Stephens Trust.
21 -- Subsidiaries of First United Bancshares, Inc.
23(a) -- Consent of Arthur Andersen & Co.
23(b) -- Consent of Martin and Company
24 -- Power of Attorney -- Signature Page of the Registration Statement
99(a) -- First United Bancshares, Inc. Form of Proxy
99(b) -- InvestArk Bankshares, Inc. Form of Proxy
</TABLE>
ITEM 22. UNDERTAKINGS
(1) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(2) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
(3) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
II-2
<PAGE> 70
(4) The registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (3) immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(6) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(7) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(8) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement.
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3 (sec. 239.13 of this chapter) or
Form S-8 (sec. 239.16b of this chapter), and the information required to
be included in a post-effective amendment by those paragraphs is contained
in periodic reports filed by the registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-3
<PAGE> 71
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of El Dorado, State of
Arkansas, on January 18,1994.
FIRST UNITED BANCSHARES, INC.
/s/ JAMES V. KELLEY
James V. Kelley
Chairman, President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That the undersigned, a Director or
Officer, or both, of First United Bancshares, Inc. (the "Corporation"), acting
pursuant to authorization of the Board of Directors of the Corporation, hereby
appoints James V. Kelley and John E. Burns, attorney-in-fact and agents for me
and in my name and on my behalf, individually and as a Director or Officer, or
both, of the Corporation, to sign a Registration Statement on Form S-4 and any
amendments (including post effective amendments) and supplements thereto, of the
Corporation to be filed with the Securities and Exchange Commission pursuant to
any applicable Rule under the Securities Act of 1933, as amended (the "Act")
with respect to the issue and sale of not more than 985,849 shares of common
stock, par value $1.00 of the Corporation, said shares to be exchanged to the
stockholders of InvestArk Bankshares, Inc. with respect to the merger by and
between InvestArk Bankshares, Inc. and the Corporation whereby InvestArk
Bankshares, Inc. will be merged with and into the Corporation, and generally to
do and perform all things necessary to be done in connection with the foregoing
as fully in all respects as I could do personally.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
IN WITNESS WHEREOF, I have hereunto set my hand this 18th day of January,
1994.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- -----------------
<S> <C> <C>
/s/ JAMES V. KELLEY Chairman, President, Chief January 18, 1994
James V. Kelley Executive Officer and
Director
/s/ JOHN E. BURNS Vice President, Chief January, 18, 1994
John E. Burns Financial Officer and
Principal Accounting
Officer
/s/ E. LARRY BURROW Director January 18, 1994
E. Larry Burrow
/s/ CLAIBORNE P. DEMING Director January 18, 1994
Claiborne P. Deming
/s/ GRADY E. DUPRIEST Director January 18, 1994
Grady E. DuPriest
/s/ WILLIAM A. ECKERT, JR. Director January 18, 1994
William A. Eckert, Jr.
</TABLE>
II-4
<PAGE> 72
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- -----------------
<S> <C> <C>
/s/ ROY E. LEDBETTER Director January 18, 1994
Roy E. Ledbetter
/s/ MICHAEL F. MAHONY Director January 18, 1994
Michael F. Mahony
/s/ RICHARD H. MASON Director January 18, 1994
Richard H. Mason
/s/ JACK W. MCNUTT Director January 18, 1994
Jack W. McNutt
/s/ WILLIAM E. MORGAN, JR. Director January 18, 1994
William E. Morgan, Jr.
/s/ R. MADISON MURPHY Director January 18, 1994
R. Madison Murphy
/s/ ROBERT C. NOLAN Director January 18, 1994
Robert C. Nolan
/s/ PAULA M. O'CONNOR Director January 18, 1994
Paula M. O'Connor
/s/ KATHERINE PATTON OZMENT Director January 18, 1994
Katherine Patton Ozment
/s/ CAL PARTEE, JR. Director January 18, 1994
Cal Partee, Jr.
/s/ W. C. PARTEE Director January 18, 1994
W. C. Partee
/s/ CHESLEY PRUET Director January 18, 1994
Chesley Pruet
/s/ JOHN D. TRIMBLE, JR. Director January 18, 1994
John D. Trimble, Jr.
/s/ RALPH C. WEISER Director January 18, 1994
Ralph C. Weiser
/s/ DAVID M. YOCUM, JR. Director January 18, 1994
David M. Yocum, Jr.
</TABLE>
II-5
<PAGE> 73
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY , 1994
REGISTRATION NO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
EXHIBITS
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
FIRST UNITED BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 74
FIRST UNITED BANCSHARES, INC.
FORM S-4 REGISTRATION STATEMENT
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
2 -- Agreement and Plan of Reorganization Between First United Bancshares,
Inc. and InvestArk Bankshares, Inc. and Plan of Merger attached as
Exhibit A thereto.
3(i) -- Articles of Incorporation of InvestArk Bankshares, Inc.
3(ii) -- Bylaws of InvestArk Bankshares, Inc.
5 -- Opinion of Ivester, Skinner & Camp, P.A.
8 -- Tax Opinion of Shults, Ray & Kurrus regarding InvestArk Bankshares,
Inc. Acquisition.
9 -- Trust agreement dated , 1994 by and among Jackson T.
Stephens, the W.R. Stephens Trust, the W.R.Stephens, Jr. Trust, W.R.
Stephens, Jr., Warren A. Stephens, the Elizabeth Ann Stephens
Campbell Trust, Stephens Group, Inc. and the Bank of New York, as
trustee.
10 -- Shareholders Agreement dated December 17, 1993 by and among First
United, W.R. Stephens, Jr., the W.R. Stephens Trust, the W.R.
Stephens Trust, Jackson T. Stephens, Warren A. Stephens and Elizabeth
Ann Stephens Trust.
21 -- Subsidiaries of First United Bancshares, Inc.
23(a) -- Consent of Arthur Andersen & Co.
23(b) -- Consent of Martin and Company
24 -- Power of Attorney -- Signature Page of the Registration Statement
99(a) -- First United Bancshares, Inc. Form of Proxy
99(b) -- InvestArk Bankshares, Inc. Form of Proxy
</TABLE>
<PAGE> 1
Exhibit 2
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization ("Agreement") is made as of
December 17, 1993 by and between First United Bancshares, Inc. ("United") and
InvestArk Bankshares, Inc. ("InvestArk").
WHEREAS, InvestArk owns ninety nine and seven tenths percent (99.7%)
of the issued and outstanding shares of capital stock of The Bank of North
Arkansas, Melbourne, Arkansas ("North Arkansas") and one hundred percent (100%)
of the issued and outstanding shares of capital stock of First Stuttgart Bank &
Trust Company, Stuttgart, Arkansas ("First Bank"); and
WHEREAS, United desires to acquire one hundred percent (100%) of the
capital stock of InvestArk (the "InvestArk Common Stock") upon the terms and
conditions hereinafter set forth through the merger of InvestArk with and into
United (the "Merger") pursuant to a Plan of Merger in substantially the form
attached hereto as Exhibit A (the "Plan of Merger"); and
WHEREAS, the respective Boards of Directors of United and InvestArk
believe that such proposed Merger and the exchange of shares of United Stock
(as defined in Section 2.01(a) hereof) for the InvestArk Common Stock, pursuant
and subject to the terms of this Agreement and the Plan of Merger (the "Merger
Agreements"), is desirable and in the best short-term and long-term interests
of their respective corporations and shareholders; and
WHEREAS, United and InvestArk 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 promises and the
representations, warranties and agreements herein contained, the parties hereto
agree as follows:
<PAGE> 2
ARTICLE I
The Merger
1.01. The Merger. Subject to the terms and conditions of this
Agreement, United and InvestArk agree to effect the Merger of InvestArk with
and into United in accordance with the Arkansas Business Corporation Act (the
"ABCA").
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 United and InvestArk and thereafter delivered to the
Secretary of State of Arkansas for filing, as provided in the ABCA, as soon as
practicable on or after the Closing Date (as defined in Section 1.03). The
Merger shall become effective upon the filing of the Articles of Merger with
the Secretary of State of Arkansas or at such time within two business days
thereafter as is provided in the Articles of Merger (the "Effective Time").
1.03. Closing. The closing of the Merger (the "Closing") will take
place at the offices of United 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.
ARTICLE II
Effect of the Merger
2.01. Effect on Common Stock. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
InvestArk Common Stock, but subject to the rights of dissenting shareholders of
InvestArk:
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(a) Conversion of InvestArk Common Stock. One hundred
percent of the issued and outstanding shares of InvestArk Common Stock shall be
converted into the right to receive an aggregate amount of fully paid and
nonassessable shares of voting common stock, $1.00 par value, of United
determined by dividing $26,125,000.00 by the United Average Price as defined
below. Notwithstanding the foregoing, the number of shares of United common
stock to be issued shall not be less than 885,593 and shall not be greater than
985,849. The number of shares of common stock of United so determined shall be
referred to as the United Stock. The United Average Price shall be the average
sales price per share of United common stock for all trades occurring during
the period of 10 trading days on which one or more trades actually takes place
and which ends immediately prior to the second trading day preceding the
Closing Date. Each owner of InvestArk Common Stock shall be entitled to
receive a pro rata portion of the United Stock based upon each owner's pro rata
ownership of the total of outstanding shares of InvestArk Common Stock at the
Effective Time. Fractional shares of United Stock shall not be issued. Any
InvestArk shareholder entitled to receive a fractional share shall receive a
cash payment in lieu thereof equal to the value of the fractional share based
on the United Average Price.
(b) Cancellation of Shares. All shares of InvestArk
Common 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 the
right to receive a pro rata number of shares of United Stock to be issued in
consideration therefor upon the surrender of such certificate in accordance
with the Plan of Merger.
(c) Anti-Dilution. If prior to the Effective Time United
shall declare a stock
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dividend or subdivide, split up, reclassify or combine its shares of United
common stock or make a distribution on United common stock of any security,
appropriate adjustment or adjustments will be made in the conversion rate set
forth in subsection (a).
(d) Registration. The United Stock shall when issued be
subject to and covered by an effective registration statement as filed under
the Securities Act of 1933 (the "Securities Act") and such issuance shall
comply with any applicable state "Blue Sky" laws.
(e) Termination of 401(k) Plan and Pension Plan. United
shall have no liability to employees or directors of InvestArk, North Arkansas
or First Bank for benefits of such employees or directors of InvestArk, North
Arkansas or First Bank under the North Arkansas 401(k) plan or the First Bank
pension plan. On or before the Closing Date, InvestArk shall and shall cause
North Arkansas and First Bank to take all action necessary and appropriate to
provide for termination of said plans and distribution of accrued benefits as
of June 30, 1994. Such action shall specifically include, without limitation,
entering into written agreements, in a form and for amounts satisfactory to
United, with all participants in and beneficiaries of said plans in which each
plan participant and beneficiary agrees (1) to accept such distribution in full
satisfaction of all benefits due and rights under said plans; (2) that the
participant's or beneficiary's distribution is equal to the present value of
said participant's or beneficiary's benefits due or rights under the plans, and
(4) to release InvestArk, North Arkansas and First Bank from any further
liability or obligation under said 401(k) or pension plan.
2.02 Approval By Shareholders. Consummation of the Merger shall be
contingent upon its approval by the legally required votes of the shares of
InvestArk Common Stock and United common stock at shareholders meetings duly
called for the purpose of voting on the Merger. In the
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<PAGE> 5
event the number of shares owned by InvestArk shareholders exercising
dissenters' rights would or could, in the written opinion of United's outside
accountants, reasonably be expected to cause the cash consideration paid by
United to dissenters to jeopardize United's ability to account for the Merger
as a pooling of interests then United shall have the right to terminate this
Agreement. The Boards of Directors of InvestArk and United shall recommend
approval of the Merger to their respective shareholders, unless such
recommendation is inconsistent with their fiduciary duties to the shareholders.
ARTICLE III
Representations and Warranties
of InvestArk
InvestArk hereby represents and warrants to United the following:
3.01. Organization, Standing and Power of InvestArk. InvestArk is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Arkansas and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted, except where the failure to have such power or
authority would not have a material adverse effect on the business, operations
or financial condition of InvestArk or any InvestArk Subsidiary (as hereinafter
defined). InvestArk 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, except where such
failure to be so qualified would not have a material adverse effect on the
business, operations or financial condition of InvestArk or any InvestArk
Subsidiary. InvestArk is registered as a bank
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holding company with the Federal Reserve Board under the Bank Holding Company
Act of 1956, as amended (the "BHC Act"). InvestArk has delivered to United
true, accurate and complete copies of its currently effective Articles of
Incorporation and Bylaws, including all amendments thereto.
3.02. Ownership, Organization, Standing and Power of InvestArk
Subsidiaries. InvestArk directly and beneficially owns all of the shares of
the outstanding capital stock of First Bank and 99.7% of the outstanding
capital stock of North Arkansas. North Arkansas and First Bank are hereinafter
called collectively the "InvestArk Subsidiaries" or individually an "InvestArk
Subsidiary". North Arkansas and First Bank are InvestArk's only subsidiaries.
No equity securities of North Arkansas or First Bank are or may become required
to be issued by reason of any option, warrant, call, right or agreement of any
character whatsoever; there are outstanding no securities or rights convertible
into or exchangeable for shares of any capital stock of North Arkansas or First
Bank; and there are no other contracts, commitments, understandings or
arrangements by which either North Arkansas or First Bank is bound to issue
additional shares of its capital stock or options, warrants, calls, rights or
agreements to purchase or acquire any additional shares of its capital stock.
All of the shares of capital stock of North Arkansas and First Bank owned by
InvestArk are fully paid and nonassessable and are owned free and clear of any
claim, lien, encumbrance or agreement with respect thereto. North Arkansas and
First Bank are banking associations duly organized, validly existing and in
good standing under the laws of Arkansas, and have the corporate power and
authority to own or lease their properties and assets and to carry on their
businesses as they are now being conducted, except where the failure to have
such power or authority would not have a material adverse effect on the
business, operations or financial condition of North Arkansas, or First Bank.
The deposits of North Arkansas and First Bank are insured by the Federal
Deposit Insurance
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Corporation ("FDIC") to the extent provided by law. InvestArk has delivered to
United true, accurate and complete copies of the currently effective Articles
of Incorporation and Bylaws of North Arkansas and First Bank, including all
amendments thereto. Except for $406,000.00 in capital stock of the Federal
Home Loan Bank of Dallas owned by First Bank and except for securities held in
their capacities as fiduciaries, North Arkansas and First Bank do not own
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. The authorized capital stock of North Arkansas consists of
100,000 shares of common stock, $25.00 par value, of which 80,000 shares are
outstanding. Of the outstanding shares, 79,762 are owned by InvestArk and 238
are owned by others. The authorized capital stock of First Bank consists of
110,000 shares of common stock, $10.00 par value, of which 110,000 shares are
outstanding and are owned by InvestArk. North Arkansas and First Bank or their
predecessor banks have been chartered as banking institutions for more than 10
years.
3.03. Capital Structure of InvestArk. The authorized capital stock of
InvestArk consists of 5,000,000 shares of common stock, $10.00 par value, of
which 219,626 shares are outstanding, including 3,162 shares held by InvestArk
in its treasury. Neither InvestArk, North Arkansas nor First Bank has issued
and has 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"). All outstanding shares
of InvestArk Common Stock are validly issued, fully paid, nonassessable, and
not subject to preemptive rights. There are no options, warrants, calls,
rights, or agreements of any character whatsoever to which InvestArk, North
Arkansas or First Bank is a party or by which InvestArk, North Arkansas or
First Bank is obligated
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to issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or any voting debt securities or by which InvestArk,
North Arkansas or First Bank is obligated to grant, extend or enter into any
such option, warrant, call, right or agreement. Immediately before and after
the Effective Time there will be no option, warrant, call, right or agreement
obligating InvestArk, North Arkansas or First Bank to issue, deliver or sell,
or cause to be issued, delivered or sold, any shares of capital stock or
obligating InvestArk, North Arkansas or First Bank to grant, extend or enter
into any such option, warrant, call, right or agreement.
3.04. Authority. InvestArk 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
InvestArk and of 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 duly authorized by all necessary
corporate action on the part of InvestArk's board of directors This Agreement
and the Plan of Merger have been duly executed and delivered by InvestArk, and,
subject to such shareholder approval, each constitutes a valid and binding
obligation of InvestArk enforceable in accordance with its terms, except as the
enforceability of the Agreement may be subject to or limited by bankruptcy,
insolvency, reorganization, arrangement, 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). 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
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<PAGE> 9
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 (a) the Articles of Incorporation or Bylaws of
InvestArk, North Arkansas or First Bank or (b) 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 InvestArk, North Arkansas or First
Bank 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 InvestArk or any InvestArk Subsidiary. Other than in
connection or in compliance with the provisions of the ABCA, the Securities Act
and the regulations thereunder, the Securities and Exchange Act of 1934, as
amended, 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 BHC Act,
the National Bank Act, Arkansas banking laws, and from other regulatory
agencies, 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 InvestArk, North
Arkansas or First Bank in connection with the execution and delivery of this
Agreement and the Plan of Merger by InvestArk or the consummation by InvestArk
of the transactions contemplated hereby and thereby.
3.05. InvestArk Financial Statements. (a) The (i) consolidated
balance sheets of InvestArk as of December 31, 1992 and the related
consolidated statements of income, consolidated statements
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<PAGE> 10
of cash flows and consolidated statements of shareholders equity for the twelve
months ended December 31, 1992 certified by Martin and Company, (ii)
consolidated balance sheets of InvestArk as of December 31, 1991 and the
related consolidated statements of income, consolidated statements of cash
flows and consolidated statements of shareholders equity for the twelve months
ended December 31, 1991 certified by Martin and Company, (iii) the unaudited
compilations of the consolidated balance sheets of InvestArk as of September
30, 1993 and the related consolidated statements of income, consolidated
statements of cash flows and consolidated statements of shareholders equity for
the nine months ended September 30, 1993, and (iv) the internally prepared and
unaudited financial statements for North Arkansas and First Bank dated July 30,
1993, (items (i) - (iv) being called collectively the "InvestArk Financial
Statements"), copies of which have been furnished by InvestArk to United, have
been prepared in accordance with generally accepted accounting principles and
practices applied on a consistent basis throughout the periods involved (except
as otherwise noted therein and except for year-end adjustments of the unaudited
financial statements of a non-material nature), and except as reflected in
Section 5.05, present fairly the consolidated financial condition of InvestArk,
at the dates, and the consolidated results of operations and cash flows for the
periods, stated therein. Neither InvestArk, North Arkansas nor First Bank has
any liability of any nature, whether direct, indirect, accrued, absolute,
contingent or otherwise, which is material to InvestArk, North Arkansas or
First Bank, except as provided for or disclosed in the InvestArk Financial
Statements and except for such of the following liabilities as are incurred in
the ordinary course of business:
(i) deposit liabilities and interest payable thereon,
(ii) federal funds purchased and securities sold under
repurchase agreements and
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interest payable thereon,
(iii) other short term borrowings,
(iv) contingent liability upon negotiable instruments
endorsed for the purpose of collection,
(v) taxes,
(vi) accounts payable of the operating business,
(vii) salaries and benefits payable,
(viii) unearned income and premiums,
(ix) abandoned and garnished accounts, and
(x) letters of credit and similar commitments.
(b) Without limitation of the foregoing,
InvestArk has no reserve allowance for self-insured health and dental benefit
claims and knows of no facts which should cause it to create such a reserve.
3.06. InvestArk Reports. InvestArk, North Arkansas and First Bank
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 Federal Reserve Board, (ii) the FDIC, (iii) the
Arkansas State Bank Department (the "ASBD") and (iv) any other applicable
securities, banking or regulatory authorities (all such reports and statements
are collectively referred to herein as the "InvestArk Reports"), except where
such failure to file would not have a material adverse effect on the business
operations or financial condition of InvestArk or any InvestArk Subsidiary. The
InvestArk Reports complied in all material respects with all of the statutes,
rules and regulations enforced or promulgated by the regulatory authority with
which they were filed and did not contain
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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.
3.07. Information Supplied. None of the information supplied or to be
supplied by InvestArk for inclusion or incorporation by reference in any
document to be filed with the Securities and Exchange Commission, the Federal
Reserve Board, or any regulatory agency in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a
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. InvestArk has made available to United all
financial and other information InvestArk reasonably believes necessary to
enable United to make informed judgments concerning the state of the financial
and other conditions and affairs of InvestArk, North Arkansas and First Bank.
3.08. Authorizations; Compliance with Applicable Laws. InvestArk,
North Arkansas and First Bank hold all authorizations, permits, licenses,
variances, exemptions, orders and approvals of all Governmental Entities which
are material to the operations of the businesses of InvestArk, North Arkansas
or First Bank (the "InvestArk Permits"), including appropriate authorizations
from the ASBD. InvestArk, North Arkansas and First Bank are in compliance with
the terms of the InvestArk Permits, except where the failure so to comply would
not have a material adverse effect on InvestArk, North Arkansas or First Bank.
The businesses of InvestArk, North Arkansas and First Bank are not being
conducted in violation of any federal, state or local law, statute, ordinance
or regulation of any Governmental Entity (collectively "Laws"), including,
without limitation, Regulation O of the Federal Reserve Board, except for
possible violations which individually or in
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the aggregate do not and, insofar as reasonably can be foreseen, in the future
will not, have a material adverse effect on InvestArk, North Arkansas or First
Bank. Except for the inquiry by the Federal Reserve Board ("FRB") under
Sections 23A and 23B of the Federal Reserve Act as disclosed in Exhibit 3.08,
no investigation or review by any Governmental Entity with respect to
InvestArk, North Arkansas or First Bank is pending or, to the best of their
knowledge, threatened, nor has any Governmental Entity indicated an intention
to conduct the same. Without limiting the foregoing, there have been no acts
or omissions occurring on or with respect to real estate currently or
previously owned, leased or otherwise used in the ordinary course of business
by InvestArk, North Arkansas or First Bank, or to the best of their knowledge
in which InvestArk, North Arkansas or First Bank has or had an investment or
security interest (by mortgage, deed of trust, or otherwise), including,
without limitation, properties under foreclosure, properties held by InvestArk,
North Arkansas or First Bank in its capacity as a trustee, or properties in
which any venture capital or similar unit of InvestArk, North Arkansas or First
Bank has or had an interest (the "InvestArk Property"), which constitute or
result, or may have constituted or resulted, in the creation of any federal,
state or common law nuisance (whether or not the nuisance condition is, or was,
foreseen or unforeseen) or which do not comply or have not complied with
federal, state or local environmental laws including, without limitation, the
Clean Water Act, the Clean Air Act, the Resource Conservation and Recovery Act,
the Toxic Substances Control Act and the Comprehensive Environmental, Response,
Compensation and Liability Act, as amended, and their state and local law
counterparts, all rules and regulations promulgated thereunder and all other
legal requirements associated with the ownership and use of the InvestArk
Property (collectively, "Environmental Laws"), and as a result of which acts or
omissions InvestArk, North Arkansas or First Bank is
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subject to or reasonably likely to incur a material liability or suffer a
diminution in value of any interest exceeding $100,000.00. Neither InvestArk,
North Arkansas nor First Bank is subject to or reasonably likely to incur a
material liability or suffer a diminution in value of any interest exceeding
$100,000.00 as a result of its ownership, lease, operation, or use of any
InvestArk Property or as a result of its investment or security interest (as
described above) in any InvestArk Property (a) that is contaminated by or
contains any hazardous waste, toxic substances or related materials, including
without limitation asbestos, PCBs, pesticides, herbicides, petroleum products,
substances defined as "hazardous substances" or "toxic substances" in the
Environmental Laws, and any other substances or waste that is hazardous to
human health or the environment (collectively, "Toxic Substances"), or (b) on
which any Toxic Substance has been stored, disposed of, placed, or used in the
construction thereof. No claim, action, suit or proceeding is pending against
InvestArk, North Arkansas or First Bank relating to the InvestArk Property
before any court or other governmental authority or arbitration tribunal
relating to Toxic Substances, pollution or the environment, and there is no
outstanding judgment, order, writ, injunction, decree, or award against or
affecting InvestArk, North Arkansas or First Bank with respect thereto.
3.09. Litigation and Claims. Except as disclosed in Exhibit 3.08 and
3.09 (a) neither InvestArk, North Arkansas nor First Bank 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
InvestArk,
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North Arkansas or First Bank pending or, to the best of their knowledge,
threatened, which will have or can reasonably be expected to have a material
adverse effect on InvestArk, North Arkansas or First Bank 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
InvestArk, North Arkansas or First Bank as a result of the examination by any
bank regulatory authority.
3.10. Taxes. InvestArk, North Arkansas and First Bank 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 InvestArk Financial Statements reflect an
adequate reserve for all taxes payable by InvestArk, North Arkansas and First
Bank accrued through the date of such financial statements. There has been no
examination by the United States Internal Revenue Service ("IRS") of InvestArk,
North Arkansas or First Bank for over seven years. There is no examination
pending by the IRS with respect to InvestArk, North Arkansas or First Bank,
neither InvestArk, North Arkansas nor First Bank has executed or filed with the
IRS any agreement which is still in effect extending the period for assessment
and collection of any federal tax, and there are no existing material disputes
as to federal, state, or local taxes due from InvestArk, North Arkansas or
First Bank. There are no material liens for taxes upon the assets of
InvestArk, North Arkansas or First Bank, except for statutory liens for taxes
not yet delinquent. Neither InvestArk, North Arkansas nor First Bank is a
party to any action or proceeding by any governmental authority 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,
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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. InvestArk, North Arkansas and
First Bank 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).
3.11. Certain Agreements. Except as disclosed in Exhibit 3.11,
neither InvestArk, North Arkansas nor First Bank is a party to any (i)
consulting, professional services , employment or other agreement not
terminable at will providing any term of employment, compensation, guarantee,
or severance or supplemental retirement benefit, (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 plan, restricted stock plan, stock
purchase plan or similar plan granting rights to acquire stock in InvestArk,
North Arkansas or First Bank, or (v) contract containing covenants which limit
the ability of InvestArk, North Arkansas or First Bank 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, InvestArk, North Arkansas or
First Bank may carry on its business (other than as may be required by law or
applicable regulatory authorities). InvestArk, North Arkansas and First Bank
shall terminate all existing consulting, professional services and employment
contracts, other than at will
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employment contracts, and those agreements set forth in Exhibit 3.11, by no
later than the Closing Date.
3.12. Benefit Plans. (a) Exhibit 3.12 hereto lists (i) each employee
bonus, incentive, deferred compensation, stock purchase, stock appreciation
right, stock option and severance pay plan, (ii) each pension, profit sharing,
stock bonus, thrift, savings and employee stock ownership plan, and (iii) every
other employee benefit plan (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") (collectively
"Benefit Plans"), which InvestArk, North Arkansas or First Bank maintains or to
which InvestArk, North Arkansas or First Bank contributes on behalf of current
or former employees. All of the plans and programs listed in Exhibit 3.12
(collectively, "InvestArk Benefit Plans") comply in all material respects with
all applicable requirements of ERISA and all other applicable federal and state
laws, including without limitation the reporting and disclosure requirements of
Part 1 of Title I of ERISA. With respect to the InvestArk Benefit Plans,
individually and in the aggregate, no event has occurred, and there exists no
condition or set of circumstances, in connection with which InvestArk, North
Arkansas or First Bank could be subject to any liability that is reasonably
likely to have a material adverse effect upon InvestArk, North Arkansas or
First Bank (except liability for benefits claims and funding obligations
payable in the ordinary course) under ERISA, the Code or any other applicable
law. Each of the InvestArk Benefit Plans that is intended to be a pension,
profit sharing, stock bonus, thrift, savings or employee stock ownership plan
that is qualified under Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), has been determined by the IRS to qualify under Section
401(a) of the Code, or an application for the determination of such
qualification will be made to the IRS under Section 401(b) of the Code and the
regulations
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thereunder, and there exist no circumstances that would materially adversely
affect the qualified status of any such InvestArk Benefit Plan under that
section. Each InvestArk Benefit Plan that is a defined benefit pension plan
has assets with an aggregate value that exceeds the actuarially present value
of its liability for accrued benefits as determined on the basis of the
actuarial assumptions used for the most recent actuarial valuation of such
Plan, no such Plan has incurred an accumulated funding deficiency within the
meaning of Section 412(a) of the Code, and no such Plan is a "multi-employer
plan" within the meaning of Section 3(37) of ERISA. There is no pending or, to
the best of InvestArk's knowledge, threatened litigation, governmental
proceeding or investigation against or relating to any InvestArk Benefit Plan,
and there is no reasonable basis for any material proceedings, claims, actions
or proceedings against any Plan. No "reportable event" (as defined in Section
4043(b) of ERISA) (other than a "reportable event" for which the 30-day notice
requirement has been waived by the Pension Benefit Guaranty Corporation) has
occurred with respect to any InvestArk Benefit Plan, and no InvestArk Benefit
Plan has engaged in a "prohibited transaction" (as defined in Section 406 of
ERISA and Section 4975(c) of the Code) since the date on which said sections
became applicable to such Plan which could reasonably result in a material
liability.
(b) InvestArk has delivered to United copies of (i) each
InvestArk Benefit Plan, (ii) the most recent summary plan descriptions of each
InvestArk Benefit Plan, (iii) each trust agreement, insurance policy or other
instrument relating to the funding of any InvestArk Benefit Plan, (iv) the most
recent Annual Reports (Form 5500 series) and accompanying schedules filed with
the IRS or United States Department of Labor with respect to each InvestArk
Benefit Plan, (v) the most recent determination letter issued by the IRS with
respect to each InvestArk Benefit Plan that is intended to qualify under
Section 401 of the Code, (vi) the most recent available financial
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statements for each InvestArk Benefit Plan that has assets, (vii) the most
recent actuarial report for any InvestArk Benefit Plan that is a defined
benefit pension plan, and if any such Plan was amended subsequent to the date
of such report, information about the financial effects of such amendment and
(viii) the most recent audited financial statements for each InvestArk Benefit
Plan for which audited financial statements are required by ERISA.
3.13. Insurance. InvestArk has delivered to United correct and
complete copies of all material policies of insurance of InvestArk, North
Arkansas and First Bank currently in effect, including, but not limited to,
directors and officers liability policies and blanket bond policies. Neither
InvestArk, North Arkansas nor First Bank has any liability for unpaid premiums
or premium adjustments not properly reflected on the InvestArk Financial
Statements.
3.14. Conduct of InvestArk to Date. Except as contemplated by this
Agreement and the Plan of Merger, from and after December 31, 1992 through the
date of this Agreement: (a) other than the conversion of First Bank to a state
bank, InvestArk, North Arkansas and First Bank have carried on their respective
businesses in the ordinary and usual course consistent with past practices, (b)
InvestArk, North Arkansas and First Bank have not issued or sold any capital
stock or issued or sold any corporate debt securities which would be classified
as long term debt on the balance sheet of InvestArk, North Arkansas or First
Bank, (c) InvestArk, North Arkansas and First Bank have not granted any option
for the purchase of capital stock (except as referred to in Section 3.03),
effected any stock split, or otherwise changed their capitalization, (d)
InvestArk has not declared, set aside, or paid any cash or stock dividend or
other distribution in respect to its capital stock except for usual quarterly
cash dividends of 20 cents per share for the first and second quarters of 1993
and 25 cents per share for the third quarter of 1993; the dividend declared but
not yet paid for the fourth quarter
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shall be 50 cents per share, (e) neither InvestArk, North Arkansas nor First
Bank 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, except as set forth on Exhibit
3.11 or in conjunction with this Agreement, or mortgaged, pledged, or subjected
to lien, claim, security interest, charge, encumbrance or restriction any of
its assets or properties, (f) neither InvestArk, North Arkansas nor First Bank
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 InvestArk, North Arkansas nor First Bank has
since September 30, 1993, 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
Exhibit 3.14(h), neither InvestArk, North Arkansas nor First Bank has increased
the rate of compensation of, or paid any bonus to, any of its directors,
officers, or other employees, except merit or promotion increases (including
bonuses paid in January, 1993) 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 any InvestArk Benefit
Plan in respect of any of present or former directors, officers or other
employees; or agreed to do any of the foregoing, (i) neither InvestArk, North
Arkansas nor First Bank has suffered any material damage, destruction, or loss,
whether as the result of flood, fire, explosion, earthquake, 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) neither
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InvestArk, North Arkansas nor First Bank has cancelled or compromised any debt
to an extent exceeding $50,000.00 owed to InvestArk, North Arkansas or First
Bank or claim to an extent exceeding $50,000.00 asserted by InvestArk, North
Arkansas or First Bank, (k) neither InvestArk, North Arkansas nor First Bank
has entered into any transaction, contract, or commitment outside the ordinary
course of its business, other than the conversion of First Bank from a national
banking association to a state chartered bank, (1) neither InvestArk, North
Arkansas nor First Bank 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 change in the method of accounting or accounting
practices of InvestArk, North Arkansas and First Bank, and (n) InvestArk, North
Arkansas and First Bank have kept all records substantially in accordance with
all regulatory and statutory requirements and substantially in accordance with
industry standards specified by the American Bankers Association, and have
retained such records for the periods required by statute, regulation or
American Bankers Association industry standards.
3.15. Material Adverse Change. Since December 31, 1992, there has
been no material adverse change in the financial condition, results of
operations or business of InvestArk, North Arkansas or First Bank.
3.16. Properties, Leases and Other Agreements. Except (i) with
respect to debts reflected in the InvestArk 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 InvestArk
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Financial Statements or acquired since the date of such Statements, InvestArk,
North Arkansas and First Bank have good title, free and clear of any liens,
security interests, claims, charges, options or other encumbrances to all of
the personal and real property reflected in the InvestArk Financial Statements,
and all personal and real property acquired since the date of such InvestArk
Financial Statements, except such personal and real property as has been
disposed of in the ordinary course of business. Substantially all of the
buildings and equipment in regular use by InvestArk, North Arkansas and First
Bank have been reasonably maintained and are in good and serviceable condition,
reasonable wear and tear excepted. All leases material to InvestArk, North
Arkansas and First Bank pursuant to which InvestArk, North Arkansas or First
Bank, 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 InvestArk, North Arkansas or First
Bank, or 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 InvestArk, North Arkansas and First Bank.
3.17. Accounting. Neither InvestArk nor any of its affiliates will
take any action that would, in the reasonable opinion of United, prevent the
Merger from qualifying for pooling of interests accounting treatment.
3.18. No Untrue Statements. No representation or warranty hereunder
or information contained in any financial statement or any other document
delivered to United 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.
3.19. Proper Documentation. With respect to all loans to borrowers
which are payable to
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InvestArk, North Arkansas or First Bank either directly or as a participant and
except for such imperfections in documentation which when considered as a whole
would not have a net adverse effect on the business, operations or financial
condition of either InvestArk, North Arkansas or First Bank in excess of
$100,000.00:
(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 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 represented to United 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
loan officer worksheet, loan summary report or similar interoffice loan
documentation is in fact the collateral held by InvestArk, North Arkansas or
First Bank to secure each loan;
(d) InvestArk, North Arkansas or First Bank has
possession of all loan document files and credit files for all loans held by
them containing promissory notes and other
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relevant evidences of indebtedness with original signatures of their borrowers
and guarantors;
(e) InvestArk, North Arkansas and First Bank hold validly
perfected liens or security interests in the collateral granted to them to
secure all loans as referenced in the loan officer worksheets, loan summary
reports or similar interoffice loan documentation 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) Each lien or security interest of InvestArk, North
Arkansas or First Bank in the collateral held for each loan is properly
perfected in the priority described as being held by InvestArk, North Arkansas
or First Bank in the loan officer worksheets, loan summary reports or similar
interoffice loan documentation contained in the loan document or credit files;
(g) InvestArk, North Arkansas and First Bank are in
possession of all collateral that the loan document files or credit files
indicate they have in their possession;
(h) All guaranties granted to InvestArk, North Arkansas
and First Bank 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 InvestArk, North
Arkansas and First Bank
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have sold participation interests to another bank or other
financial institution, none of the buyers of such participation
interests are in default under any participation agreements.
3.20. Not in Default. Neither InvestArk, North Arkansas nor First
Bank 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.
ARTICLE IV
Representations and Warranties of United
United hereby represents and warrants to InvestArk and Sellers as
follows:
4.01. Organization, Standing and Power. United is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Arkansas and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted,
except where the failure to have such power or authority would not have a
material adverse effect on the business, operations or financial condition of
United and its subsidiaries. United is registered as a bank holding company
with the Federal Reserve Board under the BHC Act.
4.02. Authority. Subject to the approval of this Agreement and the
Plan of Merger by the shareholders of United and of applicable regulatory
authorities, United has all requisite 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 United's board of directors. This Agreement and the Plan of
Merger have been duly executed and delivered by United, and,
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subject to such shareholder and regulatory approval, each constitutes a valid
and binding obligation of United enforceable in accordance with its terms,
except as the enforceability of the Agreement may be subject to or limited by
bankruptcy, insolvency, reorganization, arrangement, moratorium or other
similar laws relating to or affecting the rights of creditors. 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 the Articles of
Incorporation or Bylaws of United or any of its subsidiaries or result in any
Violation of 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 United or any of its subsidiaries or their respective properties
or assets. Other than in connection or in compliance with the provisions of
the ABCA, 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 BHC Act, the National Bank Act, Arkansas banking
laws, and from other regulatory authorities, no consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to United in connection with the
execution and delivery of this Agreement and the Plan of Merger by United or
the consummation by United of the transactions contemplated hereby and thereby,
the failure to obtain which would have a material adverse effect on United or
any United subsidiary.
4.03. Capital Structure of United. The authorized capital stock of
United consists of 12,000,000 shares of common stock, $1.00 par value, of which
4,272,276 shares are outstanding. United has no issued and outstanding bonds,
debentures, notes or other indebtedness having the right
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<PAGE> 27
to vote (or convertible into securities having the right to vote) on any
matters on which shareholders may vote. All outstanding shares of United
common stock are validly issued, fully paid, nonassessable, and not subject to
preemptive rights. There are no options, warrants, calls, rights, or
agreements of any character whatsoever to which United is a party or by which
United is obligated to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of capital stock or any voting debt securities or by
which United is obligated to grant, extend or enter into any such option,
warrant, call, right or agreement. Immediately before and after the Effective
Time there will be no option, warrant, call, right or agreement obligating
United to issue, deliver or sell, or cause to be issued, delivered or sold, any
shares of capital stock or obligating United to grant, extend or enter into any
such option, warrant, call, right or agreement.
4.04. United Financial Statements. (a) The (i) consolidated balance
sheets of United as of September 30, 1993 and the related consolidated
statements of income, consolidated statements of cash flows and consolidated
statements of shareholders equity for the nine months ended September 30, 1993
and (ii) consolidated balance sheets of United as of December 31, 1991 and
December 31, 1992 and the related consolidated statements of income,
consolidated statements of cash flows and consolidated statements of
shareholders equity for the twelve months ended December 31, 1991 and December
31, 1992, respectively, certified by Arthur Andersen & Company, (items (i) and
(ii) being called collectively the "United Financial Statements" copies of
which have been furnished by United to InvestArk, have been prepared in
accordance with generally accepted accounting principles and practices applied
on a consistent basis throughout the periods involved (except as other side
noted therein and except for year end adjustments of a non-material nature),
and present fairly the consolidated financial condition of United, at the
dates, and the consolidated results of operations
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<PAGE> 28
and cash flows for the periods, stated therein. Neither United nor any United
subsidiary has any liability of any nature, whether direct, indirect, accrued,
absolute, contingent or otherwise, which is material to United, except as
provided for or disclosed in the United Financial Statements and except for
such of the following liabilities as are incurred in the ordinary course of
business:
(i) deposit liabilities and interest payable thereon,
(ii) federal funds purchased and securities sold under
repurchase agreements and interest payable thereon,
(iii) other short term borrowings,
(iv) contingent liability upon negotiable instruments
endorsed for the purpose of collection,
(v) taxes,
(vi) accounts payable of the operating business,
(vii) salaries and benefits payable,
(viii) unearned income and premiums,
(ix) abandoned and garnished accounts, and
(x) letters of credit and similar commitments.
4.05. United Reports. United and its subsidiaries 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 FRB, (ii) the Office of the Comptroller of the Currency,, (iii) the FDIC,
(iv) the Arkansas State Bank Department (the "ASBD") and (v) any other
applicable securities, banking or regulatory authorities (all such reports and
statements are collectively referred to herein as the "United Reports") except
where such failure to file would not have a material
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<PAGE> 29
adverse effect on the business operations or financial condition of United. The
United Reports complied in all material respects with all of the statutes,
rules and regulations enforced or promulgated by the regulatory authority with
which they were filed and did not contain any untrue statement of a material
fact or omit to state 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.
4.06. Authorizations; Compliance with Applicable Laws. United 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 businesses of United and its subsidiaries (the "United
Permits").United and its subsidiaries are in compliance with the terms of the
United Permits, except where the failure to comply would not have a material
adverse effect on United. The businesses of United 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"),
including, without limitation, Regulation O of the FRB, 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 United. No investigation or review by any Governmental Entity with
respect to United or its subsidiaries is pending or threatened, nor has any
Governmental Entity indicated an intention to conduct the same. Without
limiting the foregoing, there have been no acts or omissions occurring on or
with respect to real estate currently or previously owned, leased or otherwise
used by United or any United subsidiary or in which United or any United
subsidiary has or had an investment or security interest (by mortgage, deed of
trust, or otherwise), including, without limitation, properties under
foreclosure, properties held by United
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or a United subsidiary in its capacity as a trustee, or properties in which any
venture capital or similar unit of United or a United subsidiary has or had an
interest (the "United Property"), which constitute or result, or may have
constituted or resulted, in the creation of any federal, state or common law
nuisance (whether or not the nuisance condition is, or was, foreseen or
unforeseen) or which do not comply or have not complied with federal, state or
local Environmental Laws, and as a result of which acts or omissions United or
a United subsidiary is subject to or reasonably likely to incur a material
liability or suffer a diminution in value of any interest exceeding
$100,000.00. Neither United nor any United subsidiary is subject to or
reasonably likely to incur a material liability or suffer a diminution in
value of any interest exceeding $100,000.00 as a result of its ownership,
lease, operation, or use of any United Property or as a result of its
investment or security interest (as described above) in any United Property (a)
that is contaminated by or contains any hazardous waste, toxic substances or
related materials, including without limitation asbestos, PCBs, pesticides,
herbicides, petroleum products, substances defined as "hazardous substances" or
"toxic substances" in the Environmental Laws, and any other substances or waste
that is hazardous to human health or the environment (collectively, "Toxic
Substances"), or (b) on which any Toxic Substance has been stored, disposed of,
placed, or used in the construction thereof. No claim, action, suit or
proceeding is pending against United or any United subsidiary relating to the
United Property before any court or other governmental authority or arbitration
tribunal relating to Toxic Substances, pollution or the environment, and there
is no outstanding judgment, order, writ, injunction, decree, or award against
or affecting United or any United subsidiary with respect thereto.
4.07. Litigation and Claims. Except as disclosed in this Agreement
(a) neither United nor
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<PAGE> 31
any United subsidiary 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 United or any United subsidiary pending
or threatened, which will have or can reasonably be expected to have a material
adverse effect on United 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 United or any United subsidiary as
a result of the examination by any bank regulatory authority.
4.08. Material Adverse Change. Since September 30, 1993, there has
been no material adverse change in the financial condition, results of
operations or business of United.
4.09. Not in Default. Neither United nor any United subsidiary 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.
ARTICLE V
Covenants of InvestArk
5.01. Affirmative Covenants. InvestArk hereby covenants and agrees
with United that prior to the Effective Time, unless the prior written consent
of United shall have been obtained, and except as otherwise contemplated
herein, InvestArk will and InvestArk will cause North Arkansas and First Bank
to:
(a) operate their businesses only in the usual, regular and
ordinary course
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consistent with past practices;
(b) use reasonable efforts to preserve intact their
business organization and assets, maintain their rights and franchises, retain
the services of their officers and key employees (except that they shall have
the right to lawfully terminate the employment of any officer or key employee if
such termination is in accordance with InvestArk's existing employment
procedures) and maintain their relationships with customers;
(c) use reasonable efforts to maintain and keep their
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; provided, however, that InvestArk shall not be required
to purchase insurance policies for directors' and officers'
liabilities;
(e) perform in all material respects all obligations
required to be performed by them under all material contracts, leases, and
documents relating to or affecting their assets, properties, and business;
(f) comply with and perform in all material respects all
obligations and duties imposed upon them by all Laws; and
(g) give United notice of all boards of directors
meetings, allow United to have a non-voting representative at each such
meeting except to the extent that InvestArk's legal counsel advises the
directors that permitting United's presence would constitute a breach
of their fiduciary duties, and provide United with all written materials and
communications provided to the directors in connection with such
meetings.
5.02. Negative Covenants. Except as specifically contemplated by
this Agreement, from
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the date hereof until the earlier of the termination of the Agreement
or the Effective Time, InvestArk shall not do, and InvestArk will cause North
Arkansas and First Bank not to do, without the prior written consent of United,
any of the following:
(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 Exhibit 3.14(h), 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 InvestArk
Benefit Plan except as provided herein, (iv) terminate the employment or
services of any director or officer, (vi) hire any officer or elect any new
director, or (vii) fix the 1994 rate of compensation for Lloyd Jones, Cole
Martin or Robert Koch;
(c) declare or pay any dividend on, or make any other
distribution in respect of, their outstanding shares of capital stock, except
dividends consistent with past dividend rates; provided, however, that
InvestArk shall not declare or pay any dividends on its common stock in excess
of $1.05 per share paid and $1.15 per share declared in the fiscal year ending
December 31, 1993, and $0.25 per share for the first quarter of 1994, the
50 cents per share dividend declared in the fourth quarter of 1994 being
payable on January 4, 1994;
(d) (i) redeem, purchase or otherwise acquire any shares
of their capital stock or any securities or obligations convertible into or
exchangeable for any shares of their capital stock,
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or any options, warrants, conversion or other rights to acquire any shares of
their capital stock 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
their 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 their
capital stock;
(e) issue, deliver, award, grant or sell, or authorize or
propose the issuance, delivery, award, grant or sale of, any shares of their
capital stock of any class (including shares held in treasury), any Voting
Debt or any securities convertible into, or any rights, warrants or options
to acquire, any such shares, Voting Debt or convertible securities;
(f) except as may be required by applicable law,
initiate, solicit or encourage (including by way of furnishing information or
assistance), or take any other 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 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 their officers, directors or employees or any investment
banker, financial advisor, attorney, accountant or other representative
retained by InvestArk, North Arkansas or First Bank to take any such action
and, upon learning of such action by any representative, shall take
appropriate steps to terminate such action, InvestArk shall promptly notify
United orally and in writing of all of the relevant details relating to all
inquiries and proposals which
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it may receive relating to any of such matters; for purposes of this Agreement,
"Competing Transaction" shall mean any of the following involving
InvestArk, North Arkansas or First Bank; 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);
(g) propose or adopt any amendments to their corporate
charters or bylaws;
(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 United common stock;
(j) change any method of accounting in effect at December
31, 1992, 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 December 31, 1992, except as
may be required by law or generally accepted accounting principles;
(k) take action which would or is reasonably likely to
(i) adversely affect the ability of either of United or InvestArk to obtain
any necessary approvals of governmental authorities required for the
transactions contemplated hereby; (ii) adversely affect InvestArk's ability to
perform its covenants and agreements under this Agreement; or (iii) result in
any of the conditions to the Merger set forth in Article VIII not being
satisfied;
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(l) change the lending, investment, asset/liability
management and other material policies concerning the business of InvestArk,
North Arkansas or First Bank, unless required by Law or order or unless such
change does not cause a material adverse effect on InvestArk, North Arkansas
or First Bank;
(m) agree in writing or otherwise to do any of the
foregoing;
(n) 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 $250,000.00;
(o) 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 Generally Accepted
Accounting Principles for securities classified as "held to maturity"; or
(p) sell or dispose of any real estate or other assets
having a value in excess of $100,000.00.
5.03. Access and Information. Upon reasonable notice, InvestArk
shall (and shall cause North Arkansas and First Bank to) afford to United's
officers, employees, accountants, counsel and other representatives, access,
during normal business hours during the period prior to the Effective Time, to
all its properties, books, contracts, commitments and records. During such
period, InvestArk shall (and shall cause North Arkansas and First Bank to)
furnish promptly to United (i) a copy of each InvestArk Report filed or
received by it during such period pursuant to the requirements of the BHC Act
and any other federal or state banking laws promptly after such documents are
available, (ii) the monthly financial statements of InvestArk, North Arkansas
and First Bank (as prepared in accordance with generally accepted accounting
principles) promptly after
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such financial statements are available, (iii) a summary of any action
taken by the Boards of Directors, or any committee thereof, of InvestArk, North
Arkansas and First Bank, and (iv) all other information concerning its
business, properties and personnel as United may reasonably request. Unless
otherwise required by law, each party will hold any information obtained from
the other in connection with the transaction which is nonpublic in confidence
until 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.
5.04. Update Disclosure; Breaches.
From and after the date hereof until the earlier of the termination of
this Agreement or the Effective Time, InvestArk and United shall provide to the
other party prompt notice of any matters which have occurred from and after the
date hereof which are material to the financial condition or operations of the
disclosing party or which have a material bearing on any matter dealt with
herein.
InvestArk and United shall, in the event either becomes aware of any
existing, impending, or threatened occurrence of any event or condition which
would cause or constitute a material breach (or would have caused or
constituted a breach had such event occurred or been known prior to the date
hereof) of any of the warranties, representations or agreements contained or
referred to herein, give prompt written notice thereof to the other party and
the responsible party shall use its best efforts to prevent or promptly remedy
the same.
5.05 Reserve. InvestArk shall cause North Arkansas by December 31,
1993 to make an addition to its allowance for loan losses in the amount of
$140,000.00 and InvestArk shall cause
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First Bank by December 31, 1993 to make an addition to its allowance
for loan losses in the amount of $450,000.00 and to establish a reserve against
other real estate owned in the amount of $100,000.00. It is expressly
provided, however, that InvestArk, North Arkansas and First Bank shall have no
obligation to make the foregoing additions to reserves unless, after using
their best efforts to obtain such approval and consent, InvestArk, North
Arkansas and First Bank shall have obtained written approval and consent of the
Arkansas State Bank Commissioner to make the additions.
ARTICLE VI
Additional Agreements
6.01. Shareholders Meetings. InvestArk and United shall call meetings
of their shareholders to be held as promptly as practicable for the purpose of
voting upon the Merger Agreements.
6.02. Legal Conditions to Merger. Each of InvestArk and United 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 Federal Reserve Board or in connection with
approvals of or filings with any other Governmental Entity) and will promptly
cooperate with and furnish information to each other in connection with any
such requirements imposed upon any of them or any of their subsidiaries in
connection with the Merger. Each of InvestArk and United 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 United, InvestArk or any of their subsidiaries in
connection with the Merger or the taking of any action contemplated thereby or
by
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this Agreement and the Plan of Merger.
6.03. Reports.
(a) Prior to the Effective Time, InvestArk shall prepare
and file as and when required all InvestArk Reports.
(b) InvestArk shall prepare such InvestArk Reports such
that (i) they comply in all material respects with all of the statutes, rules
and regulations enforced or promulgated by the regulatory authority 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 InvestArk
Reports containing financial information of the type included in the InvestArk
Financial Statements, the financial information (A) is prepared in accordance
with generally accepted accounting principles and practices as utilized in the
InvestArk Financial Statements, applied on a consistent basis (except as stated
therein or in the notes thereto) (B) presents fairly the consolidated financial
condition of InvestArk, 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, reflects all adjustments, consisting only of normal
recurring items necessary for a fair presentation, subject to year-end audit
adjustments.
6.04. Brokers or Finders. Each of United and InvestArk represents,
as to itself, 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; provided, however, InvestArk may pay Stephens
Inc. a reasonable financial advisory fee for services rendered in connection
with the transactions
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contemplated by this Agreement not to exceed $100,000.00 plus
out-of-pocket expenses, such payment to be subject to receipt of any necessary
regulatory approval.
6.05. 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 parties. In case at any time after
the Effective Time any further action is reasonably necessary or desirable to
carry out the purposes of this Agreement or to vest United with full title to
all properties, assets, rights, approvals, immunities and franchises of either
of InvestArk, North Arkansas or First Bank, the proper officers and directors
of each party to this Agreement shall take all such necessary action.
6.06. Governmental and Other Third Party Approvals. InvestArk and
United 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. InvestArk and United 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. InvestArk and United
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. United and InvestArk 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
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consummation of all transactions contemplated by this Agreement.
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 Agreements shall
have been approved and adopted by the legally required votes of the holders of
the outstanding shares of InvestArk and United common stock at shareholders
meetings duly called for the purpose of voting on the Merger.
(b) Federal Reserve Board. The Merger Agreements and the
transactions contemplated hereby shall have been approved by the Federal
Reserve Board without any condition not acceptable to United, 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) Arkansas State Bank Commissioner. The Arkansas State
Bank Commissioner shall have approved the transfer of ownership of North
Arkansas and First Bank to United without any condition not acceptable to
United.
(d) 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.
(e) No Proceeding or Litigation. No material action,
suit or proceeding before
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any court or any governmental or regulatory authority shall have been
commenced against United, InvestArk or any affiliate, 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.
(f) Closing Date. The Closing Date shall occur on or
before May 31, 1994 unless extended by InvestArk and United.
(g) Consents Under Agreements. United, InvestArk 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.
(h) Securities Laws. A registration statement for the
United Stock shall have become effective under the Securities Act and shall
not be the subject of any stop order or proceedings seeking a stop order.
United shall have obtained all securities or "blue sky" permits and other
authorizations necessary under state securities laws for United to issue the
United Stock and consummate the Merger.
7.02. Conditions to Obligations of United. The obligation of United
to effect the Merger is subject to the satisfaction of the following conditions
unless waived in writing by United:
(a) Representations and Warranties. Each of the
representations and warranties of InvestArk set forth in this Agreement shall
be true and correct in all material respects (except that where any statement
in a representation or warranty expressly includes a standard of materiality,
such statement shall be true and correct in all 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
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as though made on and as of the Closing Date, except for changes expressly
contemplated by this Agreement.
(b) Performance of Obligations of InvestArk. InvestArk
shall have performed in all material respects each of the obligations required
to be performed by it under this Agreement and the Plan of Merger at or prior
to the Closing Date, and United shall have received a certificate signed on
behalf of InvestArk by the chief executive officer and by the chief financial
officer of InvestArk to such effect.
(c) Opinion of Counsel. InvestArk shall have delivered
to United an opinion of its counsel, Shults, Ray and Kurrus, dated as of the
Closing Date and in form and substance satisfactory to counsel for United, to
the aggregate effect that: (i) InvestArk has been duly incorporated and
organized and is a corporation validly existing in good standing under the
laws of Arkansas with full corporate power and authority to enter into this
Agreement and the Plan of Merger and to consummate the transactions
contemplated thereby; (ii) all corporate proceedings and other actions on the
part of InvestArk necessary to be taken in connection with the Merger and
(except for the filing of the Articles of Merger) necessary to make same
effective have been duly and validly taken; (iii) this Agreement and the Plan
of Merger have been duly and validly authorized, executed and delivered on
behalf of InvestArk and constitute (subject to standard exceptions to
enforceability arising from the bankruptcy laws and rules of equity) valid and
binding agreements of InvestArk; and (iv) the execution of the Articles of
Merger by InvestArk has been duly and validly authorized.
(d) No Material Adverse Change. There shall have been no
material adverse change since December 31, 1992 in the financial condition,
results of operations or business of
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InvestArk, North Arkansas or First Bank. Material adverse change shall
include commencement or making of any investigation, lawsuit or claim which, if
decided adversely to InvestArk, North Arkansas or First Bank, would have a
material adverse effect on InvestArk, First Bank or North Arkansas.
(e) Environmental Audits. Phase I environmental audits of the
InvestArk Property shall have been conducted at United's expense and shall, to
United's satisfaction, reflect no material problems under Environmental Laws.
(f) Pooling Opinion. United shall have received an opinion from
Arthur Andersen & Co. to the effect that the Merger qualifies for
pooling-of-interests accounting treatment under applicable accounting
principles and that it will be so treated by the SEC if consummated in
accordance with the Merger Agreements.
(g) FRB Inquiry. Neither United nor InvestArk shall have received
notice from the FRB and/or the Federal Reserve Bank of St. Louis of actual or
proposed regulatory action with respect to the inquiry disclosed in Exhibit
3.08 that could reasonably be expected to have an adverse effect on InvestArk,
United and/or the InvestArk Subsidiaries.
(h) Amendment of Articles of Incorporation. InvestArk shall have
perfected an amendment to its articles of incorporation to provide that it
shall be governed by the Arkansas Business Corporation Act of 1987.
(i) Affiliates. Each person who receives a portion of the United
Stock and who might reasonably be considered to be an affiliate of InvestArk,
as defined in paragraph (a) of Rule 144 of the Rules of the Securities and
Exchange Commission under the Securities Act, shall have executed and delivered
at Closing a letter substantially in the form set forth in Exhibit 7.02(i).
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7.03 Conditions to Obligations of InvestArk The obligation of
InvestArk to effect the Merger is subject to the satisfaction of the following
conditions unless waived by InvestArk:
(a) Representations and Warranties. Each of the
representations and warranties of United set forth in this Agreement shall be
true and correct in all material respects (except that where any statement in a
representation or warranty expressly includes a standard of materiality, such
statement shall be true and correct in all 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
InvestArk shall have received a certificate signed on behalf of United by the
chief executive officer and by the chief financial officer of United to such
effect.
(b) Performance of Obligations of United. United shall
have performed in all material respects each of the obligations required to
be performed by it under this Agreement and the Plan of Merger at or prior to
the Closing Date, and InvestArk shall have received a certificate signed on
behalf of United by the chief executive officer and by the chief financial
officer of United to such effect.
(c) Opinion of Counsel. United shall have delivered to
InvestArk an opinion of its counsel, Ivester, Skinner & Camp, P.A., dated as
of the Closing Date and in form and substance satisfactory to counsel for
InvestArk, to the aggregate effect that: (i) United is a corporation validly
existing under the laws Arkansas with full corporate power and authority to
enter into this Agreement and the Plan of Merger and to consummate the
transactions contemplated thereby; (ii) all corporate proceedings and other
actions on the part of United necessary to be taken in connection with the
Merger and (except for the filing of the Articles of Merger) necessary to
make same
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effective have been duly and validly taken; (iii) this Agreement has been
duly and validly authorized, executed and delivered on behalf of United and
constitutes (subject to standard exceptions to enforceability arising from
the bankruptcy laws and rules of equity) a valid and binding agreement of
United; and (iv) the execution of the Articles of Merger by United has been
duly and validly authorized.
(d) No Material Adverse Change. There shall have been no
material adverse change since September 30, 1993 in the financial condition,
results of operations or business of United.
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 Board of Directors of United
and the Board of Directors of InvestArk;
(b) by either United or InvestArk (A) if there has been a
breach in any material respect (except that where any statement in a
representation or warranty expressly includes a standard of materiality, such
statement shall have been breached in any respect) of any representation,
warranty, covenant or agreement on the part of InvestArk, on the one hand, or
United on the other hand, respectively, set forth in this Agreement, or (B)
if any representation or warranty of InvestArk on the one hand, or United on
the other hand, respectively, shall be discovered to have become untrue in any
material respect (except that where any statement in a representation or
warranty expressly includes a standard of materiality, such statement shall have
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become untrue in any respect), in either case which 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;
(c) by either United or InvestArk if any permanent
Injunction preventing the consummation of the Merger shall have become final
and nonappealable;
(d) by either United or InvestArk if the Merger shall not
have been consummated on or before May 31, 1994, for a reason other than the
failure of the terminating party to comply with its obligations under this
Agreement;
(e) by either United or InvestArk if the Federal Reserve
Board has denied approval of the Merger and neither United nor InvestArk has,
within 30 days after the entry of the Federal Reserve Board's order denying
such approval, filed a petition seeking review of such order as provided by
Section 9 of the BHC Act;
(f) by United or InvestArk 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);
(g) by InvestArk if the United Average Price is less than
$22.00 and the scheduled Closing Date is more than 120 days after the date of
this Agreement; or
(h) by United if the United Average Price is $35.00 or
more and the scheduled Closing Date is more than 120 days after the date of
this Agreement; provided, however, that United may not terminate under this
subsection (h) if United has (i) agreed or announced its intention to be
acquired by a third party or merge into a third party that is the surviving
corporation, or (ii) received an unsolicited offer or proposal to engage in
such a transaction;
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(i) by United if, by no later than December 31, 1993 (i)
North Arkansas shall not have made an addition to its allowance for loan
losses in the amount of $140,000.00 and (ii) First Bank shall not have made an
addition to its allowance for loan losses in the amount of $450,000.00 and
shall have established a reserve against other real estate owned in the amount
of $100,000.00; provided, however, that United shall exercise any right to
terminate under this subsection by no later than January 31, 1994.
8.02. Effect of Termination. In the event of termination of this
Agreement by either InvestArk or United 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 InvestArk, 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.
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 respective Boards of Directors of United and
InvestArk at any time prior to the Closing Date. 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,
United, on the one hand, and InvestArk, on the other hand, by action taken or
authorized by their respective Boards 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 parties hereto, (ii) waive any inaccuracies in the
representations and warranties of the other contained herein or in any document
delivered by the other pursuant hereto, and (iii) waive compliance by the other
with any of the agreements or conditions contained
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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 United, to
First United Bancshares, Inc.
Attention: John E. Burns
P. O. Box 751
El Dorado, Arkansas 71731
with a copy to:
Hermann Ivester, Esq.
Ivester, Skinner & Camp, P.A.
111 Center Street, Suite 1200
Little Rock, Arkansas 72201
(b) if to InvestArk, to:
Mr. Harry C. Erwin
Chairman and Chief Executive Officer
InvestArk Bankshares, Inc.
P. O. Box 908
Stuttgart, AR 72160-0908
with a copy to:
H. Baker Kurrus, Esq.
Shults, Ray & Kurrus
200 West Capitol, Suite 1600
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<PAGE> 50
Little Rock, AR 72201-3637
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 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.
9.04. Entire Agreement. This Agreement (including the documents and
the instruments referred to herein, including the Plan of Merger) 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.
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
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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 United 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. 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 successors and assigns.
9.08. Knowledge of the Parties. Wherever in this Agreement any
representation or warranty is made upon the knowledge of a party hereto that is
not an individual, such knowledge shall include the actual knowledge, after due
inquiry, of any executive officer of such party or an executive officer of any
Subsidiary thereof.
9.09. Expenses. Except as otherwise provided herein, all Expenses
incurred by United and InvestArk 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.
9.10 Non-Survival of Representations and Warranties. None of the
representations, warranties and covenants contained in this Agreement shall
survive the Closing or, following Closing, be the basis for any action by any
party; all terms and conditions hereof shall merge in the
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closing documents and shall not survive Closing.
IN WITNESS WHEREOF, InvestArk and United 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
Attest: Chief Executive Officer
/s/ ROBERT G. DUDLEY
Robert G. Dudley, Secretary
INVESTARK BANKSHARES, INC.
By: /s/ HARRY C. ERWIN
Attest: Harry C. Erwin
Chairman, President and
Chief Executive Officer
/s/ JOHN STEPHENS
Secretary
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EXHIBIT 3.08
RESERVE BOARD INQUIRY
The Federal Reserve Board has inquired about certain transactions by
and among InvestArk, First Bank, North Arkansas and Stephens Inc. The Federal
Reserve Board has questioned these transactions under Sections 23A and 23B of
the Federal Reserve Act. The boards of directors of First Stuttgart Bank &
Trust Company and Bank of North Arkansas have received full reports of these
transactions and have provided to The Federal Reserve Board the L.nformation
requested by such Board.
<PAGE> 54
EXHIBIT 3.09
LITIGATION AND CLAIMS
The following matters are disclosed pursuant to Section 3.09:
1. Claim by Charles C. Miller, Estate of Annie Smith and/or
assigns and distributees, and Gwen Lee for payment pursuant to a stock purchase
agreement dated December 27, 1984. All other similarly situated claimants have
accepted the sum of $23.40 per share in payment of the obligations set forth in
such agreement. The amount payable under the stock purchase agreement to the
three claimants is calculated by InvestArk to be $30,771.00.
2. Griffith Farming v. First National Bank in Stuttgart; Circuit
Court of Monroe County, Arkansas; No. CIV-89-3.
<PAGE> 55
EXHIBIT 3.11
1. Agreement with Erwin & Co. for preparation of 1993 tax
returns for InvestArk, First Bank, and North Arkansas.
2. Agreement with Martin and Company for preparation of 1993
audits return for InvestArk, First Bank, and North Arkansas.
3. Supplemental retirement contract dated January 5, 1991,
between Lloyd Jones and North Arkansas.
4. Engagement letter between Stephens Inc. and InvestArk, and
the related indemnity agreement.
5. Leases, maintenance agreements, service contracts and other
similar agreements on miscellaneous fixtures, equipment, software and other
property entered into in the ordinary course of business, such as vault
maintenance contracts, elevator maintenance contracts, cleaning service
contracts, software licenses and maintenance agreements and the like.
6. Agreement regarding life insurance with Cole Martin.
<PAGE> 56
EXHIBIT 3.12
1. Profit Sharing Plan at Bank of North Arkansas.,as.
2. Defined Contribution Qualified Pension Plan at First Bank.
3. Self-Insured Health Care Plan (contract expires 8/1/94).
4. Miscellaneous life and accident policies (expiration last day of each
month).
<PAGE> 57
EXHIBIT 3.14(h)
COMPENSATION INCREASES
There are no bonuses or increases in compensation for employees of
North Arkansas or First Bank other than those bonuses and increases in
compensation which have been authorized in the books and records of the
companies and which have been accrued and budgeted. For First Bank, bonuses
totaling $103,765.44 have been authorized. For North Arkansas, bonuses
totaling $30,000 have been authorized. The weighted average percentage salary
increase for North Arkansas employees from 1993 to 1994, exclusive of
compensation for Lloyd Jones, is approximately 3.7%. The 1994 compensation for
Lloyd Jones has not been fixed.
The 1994 compensation for Cole Martin and Robert M. Koch have not been
determined.
<PAGE> 58
Exhibit 7.02(i)
First United Bancshares, Inc.
Main and Washington Streets
El Dorado, Arkansas 71730
Gentlemen:
I may presently be considered to be an "affiliate", as defined in
paragraph (a) of Rule 144 of the Rules and Regulations of the Securities and
Exchange Commission ("SEC") under the Securities Act of 1933, as amended (the
"Act"), of InvestArk Bankshares, Inc. an Arkansas Corporation ("InvestArk").
Pursuant to the merger (the "Merger") of InvestArk with and into First United
Bancshares, Inc. ("First United"), I will acquire ________shares of the common
stock, par value $1 per share ("Common Stock"), of First United. I represent
and warrant that I (i) am acquiring said shares (as the same may be increased,
decreased or are changed in accordance with the Agreement and Plan of Merger
dated December 17, 1993, relating to the Merger, the ("Shares") for my own
account (or in the capacity indicated hereon) and with no present intention of
dividing my participation with others or otherwise making a distribution of the
Shares and (ii) shall not make any sale, transfer or other disposition of the
Shares in violation of the Act or the General Rules and Regulations promulgated
thereunder by the SEC.
I have been advised that the issuance of the Shares to me pursuant to
the Merger has been registered under the Act in the Registration Statement on
SEC Form 5-4, as amended, Registration No. _______ ("Registration Statement")
as filed with the SEC, receipt of a copy of which Registration Statement is
hereby acknowledged. However, I have also been advised that any public
offering or sale by me of any of the Shares will, under current law, require
either (i) the further registration (by amendment of such Form S-4 or
otherwise) under the Act of the Shares to be sold or (ii) compliance with Rule
145 promulgated under the Act or (iii) the availability of another exemption
from such registration.
I agree not to sell, transfer or dispose of the Shares [ ]nless (i)
there is in effect a registration statement under the Act covering such sale,
transfer, or other disposition, or (ii), such sale, transfer or disposition
complies with Rule 145 or is otherwise exempt from registration. Further, I
will furnish to First United such documentation incident to such sale, transfer
or other disposition as First United shall reasonably request evidencing the
availability of any exemption from registration being claimed. Such
documentation shall be provided to First United prior to any such sale,
transfer or other disposition in order that First United, or its counsel, may
have a reasonable opportunity to review the documentation and form an opinion
as to the validity of any such exemption.
I agree that notwithstanding any provision herein or contained in the
Agreement and Plan of Reorganization that I will not sell, transfer, or
otherwise dispose of the Shares, unless United has made public disclosure of
financial results reflecting 30 days' of post-Merger combined operations of
InvestArk and First United within the meaning of Section 201.01 of the SEC's
Codification of Financial Reporting Policies. In addition, I hereby represent
and warrant to First United that I have
<PAGE> 59
not made any sales of InvestArk or United common stock during the 30-day period
immediately preceding the date hereof and I further agree not to engage in any
such sales prior to the merger, nor have I pledged or will I pledge any United
or InvestArk common stock to secure any obligation during such period.
I represent and warrant to First United that:
I. I have carefully read this letter and discussed its requirements
and other applicable limitations upon the sale, transfer or other disposition
of the Shares, to the extent I felt necessary, with my counsel or counsel for
InvestArk.
2. I have been informed by First United that any distribution by me of
the Shares has not been registered under the Act and that the Shares must be
held by me indefinitely until (i) such distribution of the Shares has been
registered under the Act, (ii) a sale of the Shares is made in conformity with
the volume and other limitations of Rule 145 promulgated by the SEC under the
Act, or (iii) some other exemption from registration is available with respect
to any such proposed sale, transfer or other disposition of the Shares.
3. I have been informed by First United that it is required file
periodic reports with the SEC and the NASDAQ and that certain sales of the
Shares by me may not be required to be registered under the Act by virtue of
Rule 145 promulgated by the SEC under the Act, provided that such sales are
made in accordance with all of the terms and conditions of such Rule, including
among other things the following:
(a) The amount of First United Common Stock sold by me pursuant to Rule
145 during any period of three months cannot exceed the quantity limit of (i)
one percent of the total outstanding First United Common Stock or (ii) the
average reported weekly trading volume on NASDAQ during the four week period
immediately preceding receipt of the order by the broker to execute the
transaction, whichever of (i) or (ii) is greater. In computing the quantity
limit it is necessary to count sales not only by me but also by certain
immediate family members and other related persons and others with whom I may
act in concert.
(b) Sales must be made in brokers' transactions as defined by the SEC
Rule 144 (certain provisions of which are incorporated by reference into Rule
145).
(c) No sales may be made under the Rule unless First United has filed
all SEC reports required to be filed by First: United.
(d) The broker must be given information showing compliance with Rule
145.
4. I understand that First United is under no obligation to [ ]egister
(except to the extent as expressed in that Certain Shareholders Agreement,
dated December l7, 1993) the sale, transfer or other disposition of the Shares
by me or on my behalf or to take any other action necessary in order to make
compliance with an exemption from registration available.
<PAGE> 60
5. I have been informed by First United that if I propose to sell any
of these Shares pursuant to Rule 145, and if such sale would be permitted under
the terms of this letter, First United will, upon my written request, supply me
with the following:
(a) A statement as to whether First United has complied with the
provisions of Rule 145 regarding filing of SEC reports as a condition to sales
made pursuant to that Rule;
(b) A confirmation as to the number of shares of First United Common
Stock outstanding as shown by the most recent report or statement published by
it; and
(c) First United taxpayer identification number and SEC file number.
The information and documents described or referred to above were
furnished to me before my right to acquire the Shares became fixed.
Very truly yours,
<PAGE> 1
Exhibit 3(i)
ARTICLES OF INCORPORATION
OF
INVESTARK BANKSHARES, INC.
The undersigned, a natural person over the age of twenty-one years, acting
as incorporator of a corporation under the Arkansas Business Corporation Act,
adopts the following Articles of Incorporation for such corporation:
FIRST: The name of this corporation is:
INVESTARK BANKSHARES, INC.
SECOND: The period of its duration shall be perpetual.
THIRD: The purposes for which the corporation is organized are: To
engage in any activities which are permissible for bank holding
companies, and to do all things incidental to any such business,
and to do and perform all other things necessary or beneficial to
the Corporation or to the general public which the Board of
Directors may from time to time determine should be done.
To engage in any lawful act or activity as permitted under the
laws of the State of Arkansas.
To do each and every thing necessary, suitable or proper for
the accomplishment of any purpose of the attainment of any one or
more objects which shall at any time appear conducive to or
expedient for the protection or benefit of the corporation.
FOURTH: The aggregate number of shares of Common Stock which the
corporation shall have authority to issue is 5,000,000 Shares
having $10.00 par value per share.
FIFTH: The corporation will not commence business until at least $300 has
been received by it as consideration for the issuance of shares.
SIXTH: No shareholder shall have any preemptive right to acquire
additional or treasury shares of the corporation.
SEVENTH: The internal affairs of the corporation shall be managed by a Board
of directors, which board shall have the power to make, adopt,
alter, amend or repeal the by-laws of the corporation.
EIGHTH: The address of the initial registered office of the corporation is
412 South Main, Stuttgart, Arkansas 72160, and the name of its
initial registered agent at such address is W. Neil Maynard.
<PAGE> 2
NINTH: The number of directors constituting the initial Board of Directors
is seven (7), who will serve in such capacity until the first
annual meeting of shareholders or until their successors shall be
duly elected and qualified.
TENTH: The name and address of the incorporator is:
NAME ADDRESS
---- -------
William H. Kennedy, III 120 East Fourth Street
Little Rock, Arkansas 72201
DATED, this 20th day of July, 1984.
INVESTARK BANKSHARES, INC.
By: /s/ WILLIAM H. KENNEDY, III
William H. Kennedy, III
Incorporator
<PAGE> 1
Exhibit 3(ii)
BYLAWS
OF
INVESTARK BANKSHARES, INC.
ARTICLE I.
Offices
The principal offices of the corporation in the State of Arkansas
shall be located in the City of Stuttgart, County of Arkansas. The corporation
may have such other offices, either within or without the State of Arkansas, as
the Board of Directors may designate or as the business of the corporation may
require from time to time.
The registered office of the corporation required by the Arkansas
Business Corporation Act to be maintained in the State of Arkansas may be, but
need not be, identical with the principal office in the State of Arkansas, and
the address of the registered office may be changed from time to time by the
Board of Directors.
ARTICLE II.
Shareholders
Section 1. Annual Meeting. The annual meeting of the Shareholders
shall be held on the third Tuesday in February in each year, for the purpose of
electing directors and for the transaction of such other business as may come
before the meeting. If the day fixed for the annual meeting shall be a legal
holiday, such meeting shall be held on the next succeeding business day. If
the election of directors shall not be held on the day designated herein for
any annual meeting of Shareholders, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
Shareholders as soon thereafter as may be convenient.
Section 2. Special Meetings. Special meetings of the Shareholders,
for any purpose or purposes, unless otherwise prescribed by statute, may be
called by the President or by the Board of Directors, and shall be called by
the President at the request of the holders of not less than one-tenth of all
the outstanding shares of the corporation entitled to vote at the meeting.
Section 3. Place of Meeting. The Board of Directors may designate any
place, either within or without the State of Arkansas, as the place of meeting
for any annual meeting or for any special meeting called by the Board of
Directors. A waiver of notice signed by all Shareholders entitled to vote at a
meeting may designate any place, either within or without the State of
Arkansas, as the place for the holding of such meeting. If no designation is
made, or if a special meeting be otherwise called, the place of meeting shall
be the registered office of the corporation in the State of Arkansas.
Section 4. Notice of Meeting. Written or printed notice stating the
place, day and hour of the meeting and, in case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not
less than ten nor more than fifty days before the date of the meeting, either
personally or by mail, by or at the direction of the President, to each
Shareholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail,
addressed to the Shareholder at his address as it appears on the stock transfer
books of the corporation, with postage thereon prepaid.
Section 5. Closing of Transfer Books or Fixing of Record Date. For
the purpose of determining Shareholders entitled to notice of or to vote at any
meeting of Shareholders or any adjournment thereof, or Shareholders entitled to
receive payment of any dividend, or in order to make a determination of
Shareholders for any other proper purpose, the
<PAGE> 2
Board of Directors of the corporation may provide that the stock transfer books
shall be closed for a stated period but not to exceed, in any case, fifty days.
If the stock transfer books shall be closed for the purpose of determining
Shareholders entitled to notice of or to vote at a meeting of Shareholders,
such books shall be closed for at least ten days immediately preceding such
meeting. In lieu of closing the stock transfer books, the Board of Directors
may fix in advance a date as the record date for any such determination of
Shareholders, such date in any case to be not more than fifty days prior to the
date on which the particular action, requiring such determination of
Shareholders, is to be taken. If the stock transfer books are not closed and
no record date is fixed for the determination of Shareholders entitled to
notice of or to vote at a meeting of Shareholders, or Shareholders entitled to
receive payment of a dividend, the date on which notice of the meeting is
mailed or the date on which the resolution of the Board of Directors declaring
such dividend is adopted, as the case may be, shall be the record date for such
determination of Shareholders. When a determination of Shareholders entitled
to vote at any meeting of Shareholders has been made as provided in this
section, such determination shall apply to any adjournment thereof except where
the determination has been made through the closing of the stock transfer books
and the stated period of closing has expired.
Section 6. Voting Lists. The officer or agent having charge of the
stock transfer books for shares of the corporation shall make, at least ten
days before each meeting of Shareholders, a complete list of the Shareholders
entitled to vote at such meetings, or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares held by each,
which list, for a period of ten days prior to such meeting, shall be kept on
file at the registered office of the corporation and shall be subject to
inspection by any Shareholder at any time during usual business hours. Such
list shall also be produced and kept open at the time and place of the meeting
and shall be subject to the inspection of any Shareholder during the whole time
of the meeting. The original stock transfer book shall be prima facie evidence
as to who are the Shareholders entitled to examine such list or transfer books
or to vote at any meeting of Shareholders.
Section 7. Quorum. A majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of Shareholders. If less than a majority of
the outstanding shares are represented at a meeting, a majority of the shares
so represented may adjourn the meeting from time to time without further
notice. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. The Shareholders present at a duly
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough Shareholders to leave less than a
quorum.
Section 8. Proxies. At all meetings of Shareholders, a Shareholder
may vote by proxy executed in writing by the Shareholder or by his duly
authorized attorney in fact. Such proxy shall be filed with the Secretary of
the corporation before or at the time of the meeting. No proxy shall be valid
after eleven months from the date of its execution, unless otherwise provided
in the proxy.
Section 9. Voting of Shares. Subject to the provisions of Section 11
of this Article II, each outstanding share entitled to vote shall be entitled
to one vote upon each matter submitted to a vote at a meeting of Shareholders.
Section 10. Voting of Shares by Certain Holders. Shares standing in
the name of another corporation may be voted by such officer, agent or proxy as
the Bylaws of such corporation may prescribe, or, in the absence of such
provision, as the Board of Directors of such corporation may determine.
Shares held by an administrator, executor, guardian or conservator may
be voted by him, either in person or by proxy, without a transfer of such
shares into his name. Shares standing in the name of a trustee may be voted by
him, either in person or by proxy, but no trustee shall be entitled to vote
shares held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name if authority so to do
be contained in an appropriate order of the court by which such receiver was
appointed.
2
<PAGE> 3
A Shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to the corporation or held by it in
a fiduciary capacity shall not be voted, directly or indirectly, at any
meeting, and shall not be counted in determining the total number of
outstanding shares at any given time.
Section 11. Cumulative Voting. At each election for directors every
Shareholder entitled to vote at such election shall have the right to vote, in
person or by proxy, the number of shares owned by him for as many persons as
there are Directors to be elected and for whose election he has a right to
vote, or to cumulate his votes by giving one candidate as many votes as the
number of such Directors multiplied by the number of his shares shall equal, or
by distributing such votes on the same principle among any number of
candidates.
Section 12. Informal Action by Shareholders. Any action required to
be taken at a meeting of the Shareholders, or any other action which may be
taken at a meeting of the Shareholders, may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by all
of the Shareholders entitled to vote with respect to the subject matter
thereof.
ARTICLE III.
Board of Directors
Section 1. General Powers. The business and affairs of the
corporation shall be managed by its Board of Directors.
Section 2. Number, Tenure, and Qualifications. The number of
Directors of the corporation shall be not less than three (3) nor more than ten
(10), the precise number to be determined by a vote of the majority of
Shareholders at any meeting for the election of Directors. Each Director shall
hold office until the next annual meeting of Shareholders and until his
successor shall have been elected and qualified. Directors need not be
residents of the State of Arkansas or Shareholders of the corporation.
Section 3. Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this By-Law immediately
after, and at the same place as, the annual meeting of the Shareholders. The
Board of Directors may provide, by resolution, the time and place, either
within or without the State of Arkansas for the holding of additional regular
meetings without other notice than such resolution.
Section 4. Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the President or any two
Directors. The person or persons authorized to call special meetings of the
Board of Directors may fix any place, either within or without the State of
Arkansas, as the place for holding any special meeting of the Board of
Directors called by them.
Section 5. Notice. Notice of any special meeting shall be given at
least two days previously thereto by written notice delivered personally or
mailed to each Director at his business address, or by telegram. If mailed,
such notice shall be deemed to be delivered when deposited in the United States
mail so addressed, with postage thereon prepaid. If notice be given by
telegram, such notice shall be deemed to be delivered when the telegram is
delivered to the telegraph company. Any Director may waive notice of any
meeting. The attendance of a Director at a meeting shall constitute a waiver
of notice of such meeting, except where a Director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Board
of Directors need be specified in the notice or waiver of notice of such
meeting.
Section 6. Quorum. A majority of the authorized number of Directors
determined pursuant to Section 2 of this Article III shall constitute a quorum
for the transaction of business at any meeting of the Board of Directors, but
if less
3
<PAGE> 4
than such majority is present at a meeting, a majority of the Directors present
may adjourn the meeting from time to time without further notice.
Section 7. Manner of Acting. The act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
Section 8. Vacancies. Any vacancy occurring in the Board of
Directors may be filled by the affirmative vote of a majority of the remaining
Directors though less than a quorum of the Board of Directors. A Director
elected to fill a vacancy shall be elected for the unexpired term of his
predecessor in office. Any directorship to be filled by reason of an increase
in the number of Directors shall be filled by election at any annual meeting or
at a special meeting of Shareholders called for that purpose.
Section 9. Compensation. By resolution of the Board of Directors,
the Directors may be paid their expenses, if any, of attendance at each meeting
of the Board of Directors, and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as director. No such
payment shall preclude any Director from serving the corporation in any other
capacity and receiving compensation therefor.
Section 10. Presumption of Assent. A Director of the corporation who
is present at a meeting of the Board of Directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
taken unless his dissent shall be entered in the minutes of the meeting or
unless he shall file his written dissent to such action with the person acting
as the Secretary of the meeting before the adjournment thereof or shall forward
such dissent by registered mail to the Secretary of the corporation immediately
after the adjournment of the meeting. Such right to dissent shall not apply to
a Director who voted in favor of such action.
Section 12. Informal Action. Action by a majority of the Directors
without a meeting shall be valid Board action if either before or after such
action is taken all members of the Board sign and file with the Secretary, for
inclusion in the corporate minute book, a memorandum showing the nature of the
action therein; also showing that each member of the Board consented to the
Board acting informally in respect to such matter; also showing the names of
the Directors who approved such action taken and the names of those who opposed
it.
ARTICLE IV.
Officers
Section 1. Number. The officers of the corporation shall be a
President, one or more Vice-Presidents (the number thereof to be determined by
the Board of Directors), a Secretary and a Treasurer, each of whom shall be
elected by the Board of Directors. Such other officers and assistant officers
as may be deemed necessary may be elected or appointed by the Board of
Directors. Any two or more offices may be held by the same person, except the
offices of President and Secretary.
Section 2. Election and Term of Office. The officers of the
corporation to be elected by the Board of Directors shall be elected annually
by the Board of Directors at the first meeting of the Board of Directors held
after each annual meeting of the Shareholders. If the election of officers
shall not be held at such meeting, such election shall be held as soon
thereafter as conveniently may be. Each officer shall hold office until his
successor shall have been duly elected and shall have qualified or until his
death or until he shall resign or shall have been removed or in the manner
hereinafter provided.
Section 3. Removal. Any officer or agent elected or appointed by the
Board of Directors may be removed by the Board of Directors whenever in its
judgment the best interests of the corporation would be served thereby, but
such removal shall be without prejudice to the contract rights, if any, of the
person so removed.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
4
<PAGE> 5
Section 5. President. The President shall be the principal Executive
Officer of the corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the corporation. He shall, when present, preside at all meetings of
the Shareholders and of the Board of Directors. He may sign, with the
Secretary or any other proper officer of the corporation thereunto authorized
by the Board of Directors, certificates for shares of the corporation, any
deeds, mortgages, bonds, contracts, or other instruments which the Board of
Directors has authorized to be executed, except in cases where the signing and
execution thereof shall be expressly delegated by the Board of Directors or by
these Bylaws to some other officer or agent of the corporation, or shall be
required by law to be otherwise signed or executed; and in general shall
perform all duties incident to the office of President and such other duties as
may be prescribed by the Board of Directors from time to time.
Section 6. The Vice-Presidents. In the absence of the President or in
the event of his death, inability or refusal to act, the Vice- President (or in
the event there be more than one Vice-President, the Vice-Presidents in the
order designated at the time of their election, or in the absence of any
designation, then in the order of their election) shall perform the duties of
the President, and when so acting, shall have all the powers of and be subject
to all the restrictions upon the President. Any Vice-President may sign, with
the Secretary or an Assistant Secretary, certificates for shares of the
corporation; and shall perform such other duties as from time to time may be
assigned to him by the President or by the Board of Directors.
Section 7. The Secretary. The Secretary shall: (a) keep the minutes
of the Shareholders' and of the Board of Directors' meetings in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these Bylaws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all documents the execution of
which on behalf of the corporation under its seal is duly authorized; (d) keep
a register of the post office address of each Shareholder which shall be
furnished to the Secretary by such Shareholder; (e) sign with the President, or
a Vice- President, certificates for shares of the corporation, the issuance of
which shall have been authorized by resolution of the Board of Directors; (f)
have general charge of the stock transfer books of the corporation; and (g) in
general perform all duties incident to the office of Secretary and such other
duties as from time to time may be assigned to him by the President or by the
Board of Directors.
Section 8. The Treasurer. If required by the Board of Directors, the
Treasurer shall give a bond for the faithful discharge of his duties in such
sum and with such surety or sureties as the Board of Directors shall determine.
He shall: (a) have charge and custody of and be responsible for all funds and
securities of the corporation; receive and give receipts for moneys due and
payable to the corporation from any source whatsoever, and deposit all such
moneys in the name of the corporation in such banks, trust companies or other
depositaries as shall be selected in accordance with the provisions of Article
V of these Bylaws; and (b) in general perform all of the duties incident to the
office of Treasurer and such other duties as from time to time may be assigned
to him by the President or by the Board of Directors.
Section 9. Assistant Secretaries and Assistant Treasurers. The
Assistant Secretaries, when authorized by the Board of Directors, may sign with
the President or a Vice-President certificates for shares of the corporation
the issuance of which shall have been authorized by a resolution of the Board
of Directors. The Assistant Treasurers shall respectively, if required by the
Board of Directors, give bonds for the faithful discharge of their duties in
such sums and with such sureties as the Board of Directors shall determine.
The Assistant Secretaries and Assistant Treasurers, in general, shall perform
such duties as shall be assigned to them by the Secretary or the Treasurer,
respectively, or by the President or the Board of Directors.
Section 10. Salaries. The salaries of the Officers shall be fixed
from time to time by the Board of Directors and no Officer shall be prevented
from receiving such salary by reason of the fact that he is also a director of
the corporation.
Section 11. Voting of Shares in Other Corporations. In the absence
of other arrangements by the Board of Directors, shares of stock issued by any
other corporation and owned or controlled by this corporation may be voted at
any Shareholders' meeting of the other corporation by the President of this
corporation or, if he is not present at the
5
<PAGE> 6
meeting, by the Vice-President of this corporation; and in the event neither
the President nor the Vice-President is to be present at a meeting, the shares
may be voted by such person as the President and Secretary of the corporation
shall by duly elected proxy designate to represent the corporation at the
meeting.
Section 12. Reimbursement of Excessive Compensation. Any payments
made to an officer such as a salary, commission, bonus, interest, or rent, or
entertainment expense incurred by him, which shall be disallowed in whole or in
part as a deductible expense by the Internal Revenue Service, shall be
reimbursed by such officer to the corporation to the full extent of such
disallowance. It shall be the duty of the Board of Directors to enforce
payment of each such amount disallowed. In lieu of payment of the officer,
subject to the determination of the Board of Directors, proportionate amounts
may be withheld from his future compensation payments until the amount owed to
the corporation has been recovered.
ARTICLE V.
Contracts, Loans, Checks and Deposits
Section 1. Contracts. The Board of Directors may authorize any
officer or officers, agent or agents, to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the corporation, and
such authority may be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
Section 3. Checks, Drafts, Etc. All checks, drafts or other orders
for the payment of money, notes or other evidences of indebtedness issued in
the name of the corporation, shall be signed by such officer or officers, agent
or agents of the corporation in such manner as shall from time to time be
determined by resolution of the Board of Directors.
Section 4. Deposits. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such banks, trust companies or other depositaries as the Board of Directors
may select.
ARTICLE VI.
Certificates for Shares and Their Transfer
Section 1. Certificates for Shares. Certificates representing shares
of the corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the President or
Vice-President and by the Secretary or an Assistant Secretary. All
certificates for shares shall be consecutively numbered or otherwise
identified. The name and address of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the stock transfer books of the corporation. All certificates
surrendered to the corporation for transfer shall be cancelled and no new
certificate shall be issued until the former certificate for a like number of
shares shall have been surrendered or cancelled, except that in case of a lost,
destroyed or mutilated certificate a new one may be issued therefor upon such
terms and indemnity to the corporation as the Board of Directors may prescribe.
Section 2. Transfer of Shares. Transfer of shares of the corporation
shall be made only on the stock transfer books of the corporation by the holder
of record thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary of the
corporation, and on surrender for cancellation of the certificate for such
shares. The person in whose name shares stand on the books of the corporation
shall be deemed by the corporation to be the owner thereof for all purposes.
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<PAGE> 7
Section 3. Restriction on Transfer of Shares. The Board of Directors
may place such restrictions on the transfer (whether inter- vivos, by
inheritance, or by testamentary disposition) hypothecation, or other
disposition of shares of capital stock issued by the Company, which, in its
judgment, it deems advisable, and which do not unreasonably restrain
alienation. Such restrictions may, among other things, require that the Company
be furnished with an opinion of counsel, satisfactory to it, that such
transfer, hypothecation, or other disposition will not result in the violation
of any Federal or State law relating to securities transactions, or with a
statement or ruling from the governmental agency administering such law to that
effect. The same restrictions may be placed on previously issued and
outstanding shares of capital stock of the Company if the consent of the
holders thereof is obtained. Any such restrictions placed on the transfer,
hypothecation or other disposition of the shares of capital stock of the
Company shall be conspicuously noted on each certificate covering shares
affected by such restrictions.
ARTICLE VII.
Fiscal Year
The fiscal year of the corporation shall begin on the first day of
January and end on the last day of December in each year.
ARTICLE VIII.
Dividends
The Board of Directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and its Articles of Incorporation.
ARTICLE IX.
Seal
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the corporation
and the state of incorporation and the words, "Corporate Seal."
ARTICLE X.
Waiver of Notice
Whenever any notice is required to be given to any Shareholder or
Director of the corporation under the provisions of these Bylaws or under the
provisions of the Articles of Incorporation or under the provisions of the
Arkansas Business Corporation Act, a waiver thereof in writing, signed by the
person or persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such notice.
ARTICLE XI.
Amendments
These Bylaws may be altered, amended or repealed and new Bylaws may be
adopted by the Board of Directors at any regular or special meeting of the
Board of Directors.
7
<PAGE> 8
ADOPTED this 12th day of December , 1984.
/s/ HARRY C. ERWIN
Harry C. Erwin, Secretary
APPROVED:
/s/ W. NEIL MAYNARD
W. Neil Maynard
Chairman
ARTICLE XII.
Indemnification
Section 1. Any person, his heirs, executors, or administrators, shall
be indemnified or reimbursed by the corporation for reasonable expenses
actually incurred in connection with any action, suit or proceeding, civil or
criminal, to which he or they shall be made a party by reason of his being or
having been a Director, officer, or employee of the corporation, or of any firm
or organization which he served in any such capacity at the request of the
corporation; provided, however, that no person shall be so indemnified or
reimbursed in relation to any matter in such action, suit or proceeding as to
which he shall finally be adjudged to have been guilty of or liable for
negligence or willful misconduct or criminal acts in the performance of his
duties to the corporation; and provided further, that no person shall be so
indemnified or reimbursed in relation to any matter in such action, suit or
proceeding which has been made the subject of a compromise settlement except
with the approval of a court of competent jurisdiction, or the holders of
record of a majority of the outstanding shares of the corporation, or the Board
of Directors, acting by a vote of Directors not parties to the same or
substantially the same action, suit or proceeding, constituting a majority of
the whole number of the Directors. The foregoing right of indemnification or
reimbursement shall not be exclusive of other rights to which such person, his
heirs, executors, or administrators, may be entitled as a matter of law. The
corporation, at its option, may carry such liability insurance as the Board of
Directors may determine for the reimbursement of officers, directors or
employees, or their heirs, executors, administrators of successors in interest.
To the extent that any provision of this paragraph is inconsistent with Ark.
Stat. Ann. Section 64-309 (Repl., 1980), the provisions of such statute shall
supersede and such statute shall govern the rights of the parties.
Section 2. In the event that any officer, director, or advisory
director enters into any business transaction or investment for the benefit of
the corporation or of its affiliates, to the knowledge of and with the consent
of the Board of Directors of the corporation, such officer, director or
advisory director shall be indemnified for any loss or expense incurred in
connection therewith to the extent determined by resolution of the Board of
Directors of the corporation which resolution may be adopted contemporaneously
with the transaction or investment, or thereafter, but no officer, director or
advisory director shall be entitled to indemnification hereunder unless and
except to the extent that such indemnification is covered by the specific
resolution of the Board of Directors.
Approved by the Board of Directors 11-14-85
8
<PAGE> 1
Exhibit 5
<TABLE>
<S> <C> <C>
INVESTER, SKINNER & CAMP, P.A.
ATTORNEYS AT LAW
HERMANN INVESTER* 111 CENTER STREET, SUITE 1200 TELECOPIER
H. EDWARD SKINNER** LITTLE ROCK, ARKANSAS 72201-4442 (501) 376-8536
CHARLES R. CAMP (501) 376-7788
WAYNE B. BALL***(T)
RANDAL R. FRAZIER *ALSO ADMITTED IN THE U.S. PATENT
ROBERT KELLER JACKSON AND TRADEMARK OFFICE
LAURA G. WILTSHIRE **ALSO ADMITTED IN MISSOURI
MILDRED HAVARD HANSEN ***ALSO ADMITTED IN TEXAS
VALERIE F. BOYCE February __, 1994 (T) BOARD RECOGNIZED SPECIALIST
TODD A. LEWELLEN* IN TAX LAW
STANLEY D. SMITH
S. SCOTT LUTON
</TABLE>
First United Bancshares, Inc.
Main and Washington Streets
El Dorado, Arkansas 71730
Gentlemen:
In our opinion, the shares of First United Bancshares,Inc. common
stock, $1.00 par value per share, being registered under Registration Statement
No. 33-_________, filed on February __, 1994, when issued in exchange for the
outstanding common stock of InvestArk Bancshares, Inc., will constitute legally
issued, fully paid, nonassessable shares of First United Bancshares, Inc.
We consent to the inclusion of this opinion in the Registration
Statement and reference to us under the caption "Legal Opinions" in the Proxy
Statement included in the Registration Statement.
IVESTER, SKINNER & CAMP, P.A.
/s/ IVESTER, SKINNER & CAMP, P.A.
<PAGE> 1
Exhibit 8
February __, 1994
InvestArk Bankshares, Inc.
412 South Main Street
Stuttgart, Arkansas 72021
Dear Sirs:
We are special tax counsel to InvestArk Bancshares, Inc. ("InvestArk")
in connection with certain transactions contemplated by the Agreement and Plan
of Reorganization dated as of December 17, 1993, pursuant to which First United
Bancshares, Inc. ("First United") would issue to the stockholders of InvestArk
a minimum of 885,593 and a maximum of 985,849 shares of First United stock in
exchange for all the issued and outstanding stock of InvestArk through a merger
transaction (the "Merger") in which InvestArk would be merged with and into
First United. In that connection, our opinion is as set forth in the section
entitled, "THE MERGER - Certain Federal Income Tax Consequences" in the Proxy
Statement dated March 14, 1994 (the "Proxy Statement").
We hereby consent to the filing of this letter as Exhibit 8 to the
Registration Statement on Form S-4 which the Proxy Statement is a part and to
the reference to us in the section entitled 'THE MERGER - Certain Federal
Income Tax Consequences" in the Proxy Statement.
Very truly yours,
/s/ SHULTS, RAY & KURRUS
Shults, Ray & Kurrus
<PAGE> 1
Exhibit 9
TRUST AGREEMENT
TRUST AGREEMENT dated as of _________, 1994 (the "Agreement"), by and
among Jackson T. Stephens; the W.R. Stephens Trust, Jackson T. Stephens,
Vernon J. Giss and Bess C. Stephens, Trustees; the W.R. Stephens, Jr. Trust, I.
Ernest Butler and Vernon J. Giss, Trustees; W.R. Stephens, Jr.; Warren A.
Stephens; the Elizabeth Ann Stephens Campbell Trust, Vernon J. Giss and I.
Ernest Butler, Trustees; Stephens Group, Inc. (individually, a "Grantor" and,
collectively, the "Grantors",); and The Bank of New York, as trustee (the
"Trustee").
WHEREAS the Grantors have committed to the Board of Governors of the
Federal Reserve System (the "Board") to place in trust, on the terms and
conditions stated in this Agreement, all of the shares (the "Shares") of the
common stock (the "Common Stock") of First United Bancshares, Inc. ("First
United") to be received by the Grantors in connection with the merger of
InvestArk Bankshares, Inc. with and into First United (the "Merger"); and
WHEREAS the Grantors have created the trust arrangement described
herein for such purpose, and the Trustee has agreed to perform the duties
assigned to it herein on the terms and conditions provided.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, it is agreed as follows:
1. Creation and Purpose of Trust.
(a) Subject to the terms and conditions hereof, a
trust with respect to the Shares is hereby created and established
for the purpose of satisfying the commitment described above.
(b) The Trustee accepts the trust created by this
Agreement, and agrees to serve as trustee hereunder, subject to the
terms and conditions hereof and with the express limitation that the
Trustee shall have no power or authority to sell or encumber the
Shares except as expressly provided in Section 3 hereof.
(c) Each Grantor agrees to deposit with the
Trustee, as soon as reasonably practicable following consummation of
the Merger, one or more certificates duly endorsed for transfer to
the Trustee evidencing the number of Shares set forth opposite the
Grantor's signature below, such Shares being all of the Common Stock
received by the Grantor in connection with the Merger.
(d) The certificates for the Shares shall be
surrendered by the Trustee to First United for cancellation, and new
stock certificates therefor promptly shall be issued to and
registered in the name of the Trustee, as trustee under this
Agreement. Each certificate
<PAGE> 2
issued to the Trustee pursuant to this Section shall bear a legend to
the effect that it is held subject to this Agreement.
(e) Promptly upon receipt of the new stock
certificates delivered pursuant to Section 1 (d), the Trustee shall
issue and deliver to the Grantors receipts therefor.
(f) Subject to Sections 4 and 5 hereof, the trust
created hereunder shall be irrevocable.
2. Dividends and Distributions. The Trustee shall receive and hold,
subject to the terms of this Agreement, all dividends and distributions
declared and paid on the Shares deposited with it hereunder. The Trustee shall
distribute to the Grantors all dividends and other distributions of property
(except securities of First United that have voting rights on any matter,
absolute or contingent ("Other Voting Securities") that are declared and paid
on the Shares or Other Voting Securities deposited hereunder. Such
distributions shall be made by the Trustee as soon as practicable after the
receipt of the dividends or other distributions.
3. Sales of Shares by the Grantors.
(a) The Grantors and the Trustee acknowledge and
agree that each Grantor may from time to time direct the Trustee to
sell to any third party unaffiliated with the Grantors all or a
portion of the Shares and/or any Other Voting Securities held
hereunder for the Grantor's benefit (a "Sale"). Upon receipt of such
direction, the Trustee shall use its reasonable best efforts to sell
the subject Shares and/or Other Voting Securities promptly and in the
manner specified by the Grantor; provided that the Grantor shall have
sole responsibility for negotiating the terms and conditions of any
Sale with the purchaser(s) of the Shares and/or any broker-dealer or
other intermediary handling the Sale.
(b) Any Sale shall comply with the requirement of
the Bank Holding Company Act (the "BHCA") and all other applicable
statutory and regulatory requirements.
(c) The Grantor will not sell shares of First
United Common Stock, including the Shares, which in the aggregate
total five percent (5%) or more of First United's outstanding
Common Stock to a purchaser or group of purchasers without first
obtaining the prior written approval of the Board; provided that such
approval need not be obtained if the sale of such Common Stock is
transacted in connection with an acquisition of First United that is
approved by its Board of Directors, whether such acquisition is
effected by merger, consolidation, tender offer, exchange offer or
otherwise. For purpose of this Section 3(c), the term "group shall
have the meaning assigned it under Regulation 13D promulgated under
the Securities Exchange Act of 1934, as amended.
(d) At the closing of any Sale, the Trustee shall
cause the certificates representing the Shares and/or any Other
Voting Securities to be delivered to the purchaser(s)
2
<PAGE> 3
in the Sale, properly endorsed, if necessary, for transfer to such
purchaser(s), and shall take all other actions reasonably necessary
to effectuate the transfer to such purchaser(s) of title thereto
in accordance with any agreement providing for the Sale.
4. Termination of Agreement. This Agreement shall terminate
upon the earlier to occur of either of the following events:
(a) The total number of shares of Common Stock
owned by the Grantors, including but not limited to the Shares, shall
constitute less than ten percent (10%) of the total number of shares
of Common Stock outstanding; provided that the Grantor shall provide
the Board written notice of termination pursuant to this Section 4(a)
prior to effecting distribution of the Trust Assets pursuant to
Section 5 hereof.
(b) The filing and receipt of approval from the
Board of a Notice of Change in Bank Control allowing the Grantors
to own and vote directly the Shares and any Other Voting Securities.
5. Distribution of Trust Assets.
(a) Upon receipt of written notice from the
Grantors of the termination of this Agreement, the Trustee shall
promptly cause the certificates representing the Shares and any Other
Voting Securities registered in its name to be delivered to the
Grantors, properly endorsed, if necessary, for transfer to the
Grantors, and shall take all other actions reasonably necessary to
effectuate the transfer to the Grantors of title thereto.
(b) In the event of the dissolution or total
liquidation of First United, whether voluntary or involuntary, a
merger or consolidation involving a change in control of First
United, a sale of all or substantially all of the assets of First
United, or the sale of the Shares or any Other Voting Securities in
accordance with the terms of Section 3 hereof, the Trustee shall
receive the monies, securities, rights or property to which the
holder of the Shares or any Other Voting Securities are entitled,
and, after paying (or reserving for the payment of) any expenses
incurred pursuant to this Agreement, shall distribute the same, along
with any dividends and distributions of property, and any interest or
dividends paid thereon, received and held by the Trustee in
accordance with Section 2 hereof, to the Grantors.
(c) Upon distribution of all trust assets as
provided in Paragraphs (a) and/or (b) of this Section, all further
obligations or liabilities of the Trustee in respect of such monies,
securities, rights or property so received shall cease and this
Agreement and the trust created hereunder shall terminate. Any
distribution in partial liquidation of First United shall be governed
by Section 2 hereof.
6. Maintenance of Records. The Trustee shall keep records
reflecting (i) the Shares and any Other Voting Securities held by it for the
benefit of each of the Grantors and (ii) any distributions made by it pursuant
to Sections 2 and 5 hereof. Such records shall also reflect the nature
3
<PAGE> 4
and ownership of any other property received by the Trustee pursuant to the
terms of this Agreement. Such records shall be open at all reasonable to the
inspection of Grantors and the Board.
7. Resignation of Trustee. The trustee may at any time resign
by providing to the Grantors and the Board written notice of the registration,
which shall take effect sixty (60) days thereafter or upon the prior acceptance
thereof; provided that such resignation will not be effective until a successor
Trustee has been appointed in conformity with Section 8 hereof.
8. Successor Trustee. In the event of the resignation of the
Trustee the vacancy so occurring shall be filled by the Grantors with the
approval of the Board. The rights, powers and privileges of the Trustee named
hereunder shall be possessed by any successor Trustees (hereinafter a
"Successor Trustee").
9. Voting Rights/Beneficial Interest.
(a) The Trustee shall vote the Shares and any Other
Voting Securities deposited with it hereunder or give written
consents in lieu of voting thereon, in person or by proxy at any and
all meetings of the shareholders of First United, or when such
consents are given in lieu of such meetings, for whatsoever purpose
called or held, and in any and all proceedings, whether at a meeting
of the shareholders or otherwise, wherein the vote or written consent
of shareholders may be required or authorized by law.
(b) The Trustee shall vote the Shares and any Other
Voting Securities "for" and/or "against" any proposal or other matter
submitted to First United shareholders for approval, including the
election of directors, in the same proportion as the votes cast "for"
and "against" such proposal or other matter by all other
shareholders, not counting abstentions. The Trustee shall not abstain
from voting any of the Shares and any Other Voting Securities.
(c) No person other than the Trustee shall have any
voting right in respect of the Shares and any Other Voting Securities
so long as this Agreement is in effect.
(d) The Shares and any Other Voting Securities
shall be held by the Trustee for the benefit of the Grantors subject
to the terms of this Agreement. The Trustee shall have no beneficial
interest in any such securities, which interest shall reside with the
Grantors.
10. Expenses of Trustee. The Trustee shall have the right to
incur and pay such reasonable expenses and charges and to employ such
professional advisors and legal counsel as is appropriate to facilitate the
performance of its duties hereunder. Any such charges or expenses incurred may
be charged to the Grantors. In addition, the Trustee reserves the right to
deduct its fees and expenses associated with this Agreement from any funds held
by the Trustee for the benefit of the Grantors.
4
<PAGE> 5
11. Liability of Trustee. The Trustee shall not be liable by
reason of any matter or thing in any way arising out of or in relation to this
Agreement except for such loss or damage as the Grantors may suffer by reason
of the Trustee's willful misconduct or gross negligence; and the Trustee when
acting hereunder or shall not be required to give a bond or other security for
the faithful performance of its duties as such.
12. Indemnity, Etc. The Trustee shall be indemnified by the
Grantors from and against any and all loss, liability, claim, damage and
expense whatsoever (including, but not limited to, any and all expense
whatsoever reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claims whatsoever) (the
"Indemnified Claims") arising out of or based upon this Agreement or the
actions or failures to act of the Trustee hereunder, except to the extent such
Indemnified Claims are caused by or result from the Trustee's gross negligence
or willful misconduct (as determined by a final and unappealable order of a
court of competent jurisdiction). The Grantors' obligation hereunder shall
survive the transfer of all or any portions of their respective interests in
the trust assets, the termination of the trust, or the resignation or removal
of the Trustee.
The Trustee shall be entitled to the prompt reimbursement by the
Grantors for the Trustee's out-of-pocket expenses (including reasonable
attorneys' fees and expenses) incurred in investigating, preparing or defending
against any litigation, commenced or threatened, arising out of or based upon
this Agreement, or the actions or failures to act of the Trustee hereunder,
without regard to the outcome of such litigation; provided, however, that the
Trustee shall be obligated to return any such reimbursement if it is
subsequently determined by a final and unappealable order of a court of
competent jurisdiction that the Trustee was grossly negligent or engaged in
willful misconduct in the matter in question.
13. Compensation for Services. During the period of its
service as Trustee hereunder, the Trustee shall receive from the Grantors the
fees described in Schedule A hereof, payable in the amounts and on the dates
specified therein. The Grantors hereby unconditionally agree to pay such fees
to the Trustee, which shall be in addition to, and not in lieu of, the
reimbursement of expenses provided for by Section l0 hereof. In addition, the
Trustee reserves the right to deduct its fees and expenses associated with this
Agreement from any funds held by the Trustee for the benefit of the Grantors.
14. Dealings Between Trustee and the Grantors. Nothing herein
contained shall disqualify the Trustee from dealing or contracting with the
Grantors as a lender, borrower or otherwise, nor shall any transaction or
contract be affected or invalidated by reason of the fact that the Trustee is
in any way interested in such transaction or contract; nor shall the Trustee be
liable to account to the Grantors for any profits realized by, from or through
any transaction or contract by reason of the fact that the Trustee is
interested in such transaction or contract.
15. Construction. The term "Trustee" as used herein shall be
deemed to mean the
5
<PAGE> 6
Trustee named herein or any Successor Trustee.
16. Counterparts: Entire Agreement. This Agreement may be
executed in counterparts and shall be deemed to be an original. This Agreement
expresses the entire agreement between the Parties and is irrevocable except as
expressly provided herein.
17. Notices. Any notice to or communication with any of the
Grantors, the Trustee or the Board shall be deemed sufficiently given or made
when received and shall be given in writing, and delivered in person or sent by
certified mail, postage prepaid, or by private courier service or by telecopy
or telex, to such person at its address set forth below or at such other
address as such person may hereafter furnish in writing to the others.
If to the Grantors, to:
Jackson T. Stephens
W.R. Stephens Trust
W.R. Stephens, Jr. Trust
W.R. Stephens, Jr.
Warren A. Stephens
Elizabeth Ann Stephens Campbell Trust
Stephens Group, Inc.
111 Center Street
Little Rock, Arkansas 72201
Attention: David A. Knight
Telephone: (501) 377-2573
Fax: (501) 377-2677
If to the Board, to:
Board of Governors of the
Federal Reserve System
20th & C Streets, N.W.
Washington, D.C. 20551
Attention: J. Virgil Mattingly
Telephone: (212) 452-3430
Fax: (212) 452-3101
If to the Trustee, to:
The Bank of New York 101 Barclay Street
New York, New York 10286
Attention: David Sampson
Telephone: (212) 815-5712
6
<PAGE> 7
Fax: (212) 815-5915 or 5917
18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without
reference to its choice of law provisions.
IN WITNESS WHEREOF, the parties have hereunto set their hands, and in
the case the Grantors set opposite their signatures the number of Shares
initially deposited by them hereunder.
Number of Shares to
be deposited hereunder
------------ JACKSON T. STEPHENS
------------ W.R. STEPHENS TRUST
BY:
----------------------------------
Jackson T. Stephens, Trustee
BY:
----------------------------------
Vernon J. Giss, Trustee
BY:
----------------------------------
Bess C. Stephens, Trustee
------------ W.R. STEPHENS JR. TRUST
BY:
----------------------------------
I. Ernest Butler, Trustee
BY:
----------------------------------
Vernon J. Giss, Trustee
------------ ----------------------------------
W.R. STEPHENS, JR.
7
<PAGE> 8
------------ ----------------------------------
WARREN A. STEPHENS
------------ ELIZABETH ANN STEPHENS
CAMPBELLL TRUST
BY:
----------------------------------
Vernon J. Giss, Trustee
BY:
---------------------------------
I. Ernest Butler, Trustee
------------- STEPHENS GROUP, INC.
BY:
---------------------------------
David A. Knight,
Vice President
THE BANK OF NEW YORK, AS TRUSTEE
BY:
---------------------------------
Name:
Title:
8
<PAGE> 1
Exhibit 10
SHAREHOLDERS AGREEMENT
This Shareholders Agreement ("Agreement") is made as of December 17,
1993 by and between First United Bancshares, Inc. ("United") and W.R. Stephens,
Jr., W.R. Stephens Jr. Trust, W.R. Stephens Trust, Jackson T. Stephens, Warren
A. Stephens, and Elizabeth Ann Stephens Trust (referred to herein as
"Shareholders" or, individually, as "Shareholder").
Shareholders collectively own 142,849 shares of the outstanding shares
of common stock of InvestArk Bancshares, Inc. ("InvestArk"). This Agreement is
entered into in conjunction with the Agreement and Plan of Reorganization
between United and InvestArk of even date herewith (the "Merger Agreement").
In consideration of the foregoing and the respective covenants and
agreements herein, the parties agree as follows:
1. Definitions. Unless otherwise indicated herein, terms used in
this Agreement shall have the meanings given to them in the Merger Agreement.
2. Representations and Warranties. Each Shareholder hereby
represents and warrants to United the following:
A. Each Shareholder owns the shares of InvestArk common
stock set forth below opposite the Shareholder's signature, free and clear of
liens and encumbrances.
B. Each Shareholder, or the Shareholder's duly
authorized representative, has reviewed the representations and warranties made
by InvestArk in Article III of the Merger Agreement, and to the best of the
Shareholder's knowledge, without independent investigation or confirmation,
none
<PAGE> 2
of such representations or warranties contains an untrue statement of a
material fact or omits to state a material fact necessary to make the
statements contained therein not misleading.
C. None of the Shareholders have outstanding loans from,
or funds on deposit with, InvestArk or its bank subsidiaries.
3. Termination of Representations and Warranties. The
representations and warranties contained in paragraph 2 will terminate on the
earlier to occur of (i) termination of the Merger Agreement or (ii) the Closing
Date of the Merger. Said representations and warranties shall not survive the
closing of the Merger and thereafter shall not be the basis for any action by
any party. Any monetary damage claims for breach of the representation and
warranty in subparagraph 2(B) above shall be valued as if such claims were made
against all shareholders of InvestArk, so that any damages paid by the
undersigned Shareholders with respect to such claims shall be reduced to
reflect their proportionate ownership of InvestArk's common stock.
4. Shareholders Vote. The Shareholders agree to vote their
shares of InvestArk common stock in favor of the Merger at the InvestArk
shareholders meeting called to vote on the merger.
5. Registration Rights.
(a) On or after the Effective Date of the Merger, the
Shareholders shall have the right to make two requests of United in writing to
register under the Securities Act of 1933, as amended (the "Securities Act"),
in each case, at least $5,000,000 in market value of United common stock
beneficially owned by the Shareholders (the shares subject to such request
hereunder being referred to as the "Subject Stock"), and United shall use its
reasonable best efforts to cause such shares to be registered under the
Securities Act as soon as reasonably practicable so as to permit promptly the
sale thereof, and in connection therewith, United shall prepare and file, on
such appropriate form
2
<PAGE> 3
as United in its discretion shall determine, a registration statement under the
Securities Act to effect such registration. The Shareholders undertake to
provide all such information and materials and take all such action as may be
required in order to permit United to comply with all applicable requirements
of the Securities and Exchange Commission (the "Commission") and to obtain any
desired acceleration of the effective date of such registration statement.
Notwithstanding the foregoing, United (i) shall not be obligated to cause any
special audit to be undertaken in connection with any such registration, and
(ii) shall be entitled to postpone for a reasonable period of time the filing
of any registration statement otherwise required to be prepared and filed by
United if (A) United's Board of Directors, in good faith, determines that it is
advisable to do so because such filing at such time would be materially
detrimental to United, provided that if such filing is delayed for more than 90
days United shall provide the Shareholders with the written opinion of a
nationally recognized banking firm supporting the Board's determination, or (B)
United is, at such time, conducting or about to conduct an underwritten public
offering of equity securities (or securities convertible into equity
securities) and is advised in writing by its managing underwriter or
underwriters (with a copy to the Shareholders) that such offering would, in its
or their opinion, be materially adversely affected by the registration so
requested.
(b) If, at any time, United proposes to register any of
its securities under the Securities Act (otherwise than pursuant to
subparagraph (a) hereof and other than securities to be issued pursuant to a
stock option or other employee benefit or similar plan or securities to be
issued by another corporation with which United is deemed to be a co-issuer by
the Securities and Exchange Commission), United shall, as promptly as
practicable, give written notice to the Shareholders of United's intention to
effect such registration. If, within five days after receipt of such notice,
the
3
<PAGE> 4
Shareholders submit a written request to United specifying the United common
stock that the Shareholders propose to sell or otherwise dispose of, United
shall include such United common stock specified in the Shareholders' request
in such registration statement and United shall keep such registration
statement in effect and maintain compliance with all federal and state laws and
regulations referred to in clause (c) below. Notwithstanding the foregoing, if
the offering of United's securities pursuant to such registration statement is
to be made by or through underwriters, United shall not be required to include
shares of United's common stock of the Shareholders therein if and to the
extent that the underwriter or underwriters managing the offering reasonably
believe in good faith that such inclusion would materially adversely affect
such offering.
(c) In connection with any offering of shares of Subject
Stock registered pursuant thereto, United (i) shall furnish to the Shareholders
such number of copies of any prospectus (including any preliminary prospectus)
as they reasonably may request in order to effect the offering and sale of the
Subject Stock to be offered and sold, but only while United shall be required
under the provisions hereof to cause the registration statement to remain
current and (ii) take such action as shall be necessary to qualify the shares
covered by such registration statement under such blue sky or other state
securities laws for offer and sale as the Shareholders shall request; provided,
however, that United shall not be obligated to qualify as a foreign corporation
to do business under the laws of any jurisdiction in which it shall not then be
qualified or to file any general consent to service of process in any
jurisdiction in which such a consent has not been previously filed. United
shall enter into an underwriting agreement with a managing underwriter or
underwriters selected by it (and reasonably satisfactory to the Shareholders)
containing representations, warranties, indemnities and agreements then
customarily included by an issuer in underwriting agreements with
4
<PAGE> 5
respect to secondary distributions; provided, however, that such underwriter or
underwriters shall agree to use their best efforts to ensure that the offering
results in a distribution of the Subject Stock sold in accordance with the
terms of this Agreement.
(d) The Shareholders shall pay all out-of-pocket expenses
incurred in connection with any registration statements referred to in
subparagraph (a) (other than those on Form S-3), including, without limitation,
the fees and disbursement of United's counsel and accountants, all underwriting
discounts, commissions and expenses, the fees and disbursements of the
Shareholders' counsel and accountants, all Commission and blue sky registration
and filing fees, printing expenses and transfer agent's and registrar's fees.
With respect to registrations on Form S-3 and registrations referred to in
subparagraph (b), the Shareholders shall pay all underwriting discounts and
commissions applicable to the Subject Stock, the fees and disbursements of
their own counsel and accountants and their pro rata share of all other
expenses of the offering.
(e) In the case of any offering registered pursuant
hereto, United agrees to indemnify and hold the Shareholders, each underwriter
of Subject Stock under such registration and each person who controls any of
the foregoing within the meaning of Section 15 of the Securities Act and the
Shareholders, harmless against any and all losses, claims, damages or
liabilities to which they or any of them may become subject under the
Securities Act or any other statute or common law or otherwise, and to
reimburse them, from time to time upon request, for any legal or other expenses
reasonably incurred by them in connection with investigating any claims and
defending any actions, insofar as any such losses, claims, damages, liabilities
or actions shall arise out of or shall be based upon (i) any untrue statement
or alleged untrue statement of a material fact contained in the registration
statement relating to the sale of such Subject Stock, or the omission or
alleged omission
5
<PAGE> 6
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading or (ii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus (as
amended or supplemented if United shall have filed with the Commission any
amendment thereof or supplement thereto), if used prior to the effective date
of such registration statement, or contained in the prospectus (as amended or
supplemented if United shall have filed with the Commission any amendment
thereof or supplement thereto), or the omission or alleged omission to state
therein a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading;
provided, however, that the indemnification agreement contained in this
subparagraph (e) shall not apply to such losses, claims, damages, liabilities
or actions which shall arise from the sale of Subject Stock if such losses,
claims, damages, liabilities or actions shall arise out of or shall be based
upon any such untrue statement or alleged untrue statement, or any such
omission or alleged omission, if such statement or omission shall have been (y)
made in reliance upon and in conformity with information furnished in writing
to United by the Shareholders or any such underwriter specifically for use in
connection with the preparation of the registration statement or any
preliminary prospectus or prospectus contained in the registration statement or
any such amendment thereof or supplement thereto or (z) made in any preliminary
prospectus, and the prospectus contained in the registration statement in the
form filed by United with the Commission pursuant to Rule 424(b) under the
Securities Act shall have corrected such statement or omission and a copy of
such prospectus shall not have been sent or given to such person at or prior to
the confirmation of such sale to him.
(f) In the case of each offering registered pursuant
hereto, the Shareholders and each
6
<PAGE> 7
underwriter participating therein shall agree in the same manner and to the
same extent as set forth in subparagraph (e) hereof severally to indemnify and
hold harmless United, and each person, if any, who controls United within the
meaning of Section 15 of the Securities Act, and the directors and officers of
United, and in the case of each such underwriter, each Shareholder, each
person, if any, who controls a Shareholder (within the meaning of the
Securities Act), with respect to any statement in or omission from such
registration statement or any preliminary prospectus (as amended or as
supplemented, if amended or supplemented as aforesaid), if such statement or
omission shall have been made in reliance upon and in conformity with
information furnished in writing to United by the Shareholders or such
underwriter specifically for use in connection with the preparation of such
registration statement or any preliminary prospectus or prospectus contained in
such registration statement or any such amendment thereof or supplement
thereto.
(g) Each party indemnified under subparagraph (e) or (f)
hereof shall, promptly after receipt of notice of the commencement of any
action against such indemnified party in respect of which indemnity may be
sought hereunder, notify the indemnifying party in writing of the commencement
thereof. The omission of any indemnified party to so notify an indemnifying
party of any such action shall not relieve the indemnifying party from any
liability in respect of such action which it may have to such indemnified party
on account of the indemnity agreement contained in subparagraph (e) or (f)
hereof, unless the indemnifying party was prejudiced by such omission, and in
no event shall relieve the indemnifying party from any other liability which it
may have to such indemnified party. In case any such action shall be brought
against any indemnified party and it shall notify an indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it may desire, jointly with any
7
<PAGE> 8
other indemnifying party similarly notified, to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under
subparagraph (e) or (f) hereof for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof,
other than reasonable costs of investigation (unless such indemnified party
reasonably objects to such assumption on the grounds that there may be defenses
to it which are different from or in addition to such indemnifying party in
which event the indemnified party shall be reimbursed by the indemnifying party
for the expenses incurred in connection with retaining separate legal counsel).
(h) Upon request from United so to do, the Shareholders
will refrain from publicly selling any security of United for a period
beginning five days before and ending 90 days after the effective date of any
underwritten public offering by United of its securities in which the
Shareholders participate as a selling stockholder.
6. Trust. The Shareholders hereby represent to United that based
on preliminary conversations with the Federal Reserve Board ("FRB"), the FRB
will require as a condition to approving the Merger that the United Stock
issued to the Shareholders under the Merger Agreement be placed in a trust
having certain terms specified by the FRB. The Shareholders anticipate being
willing and able to comply with all requirements relating to establishment of
the trust imposed by the FRB as a condition to approval of the merger.
In Witness Whereof, United and the Shareholders have signed or
caused to be signed by their authorized representatives this Shareholders
Agreement as of the date first written above.
8
<PAGE> 9
FIRST UNITED BANCSHARES, INC.
By: /s/JAMES V. KELLEY
James V. Kelley
Chairman, President and
Chief Executive Officer
Attest:
/s/ ROBERT G. DUDLEY
Robert G. Dudley, Secretary
9
<PAGE> 10
<TABLE>
<CAPTION>
Number of Shares Owned SHAREHOLDERS:
----------------------
<S> <C>
439
W. R. Stephens, Jr.
45,200 W. R. STEPHENS, JR. TRUST
By: /s/ VERNON J. GISS
Vernon J. Giss, Trustee
By /s/ ERNEST BUTLER, JR.
Ernest Butler, Jr., Trustee
34,158 W. R. STEPHENS TRUST
By: /s/ JACKSON T. STEPHENS
Jackson T. Stephens, Trustee
By: /s/ VERNON J. GISS
Vernon J. Giss, Trustee
By: /s/ BESS C. STEPHENS
Bess C. Stephens, Trustee
48,358 By: /s/ JACKSON T. STEPHENS
Jackson T. Stephens
3,480 By: /s/ WARREN A. STEPHENS
Warren A. Stephens
</TABLE>
10
<PAGE> 11
<TABLE>
<S> <C>
10,014 ELIZABETH ANN STEPHENS TRUST
By: /s/ VERNON J. GISS
Vernon J. Giss, Trustee
By: /s/ ERNEST BUTLER, JR.
Ernest Butler, Jr., Trustee
1,200 STEPHENS GROUP, INC.
By: /s/ DAVID A. KNIGHT
David A. Knight
</TABLE>
11
<PAGE> 1
Exhibit 21
FIRST UNITED BANCHSARES, INC.
Subsidiaries
<TABLE>
<CAPTION>
Name Jurisdiction of Incorporation
- ---- -----------------------------
<S> <C>
The First National Bank United States
of El Dorado, El Dorado
Arkansas
City National Bank United States
of Fort Smith, Fort Smith
Arkansas
First National Bank United States
of Magnolia, Magnolia
Arkansas
Merchants and Planters Bank United States
N.A., Camden, Arkansas
Commercial Bank at Alma Arkansas
Alma, Arkansas
</TABLE>
<PAGE> 1
Exhibit 23(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accounts, we hereby consent to the incorporation
by reference in this Registration Statement on Form S-4 of our report dated
January 20, 1993 included in First United Bancshares, Inc.'s Form 10-K for the
year ended December 31, 1992 and to all references to our Firm included in this
Registration Statement.
ARTHUR ANDERSEN & CO.
Jackson, Mississippi
February 18, 1994
<PAGE> 1
Exhibit 23(b)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report dated January 29, 1993 and to all references to our Firm included in
this Registration Statement.
MARTIN & COMPANY
Little Rock, Arkansas
February 18, 1994
<PAGE> 1
Exhibit 99(a)
FIRST UNITED BANCSHARES, INC.
PROXY
The undersigned hereby appoints James V. Kelley and John E. Burns or
both of them acting in the absence of the others, as attorneys and proxies of
the undersigned, to represent the undersigned at the Special Meeting of
Stockholders of First United Banchsares, Inc. ("First United") to be held on
March 30, 1994 at 2:00 p.m. local time at the First National Bank Building,
Main and Washington Streets, El Dorado, Arkansas and at any adjournment or
adjournments thereof and to vote all shares of stock of First United held of
record by the undersigend.
1. Approval of the Agreement and Plan of Reorganization which provides
for the merger of InvestArk Bankshares, Inc. into First United.
FOR ____ AGAINST ____ ABSTAIN ____
2. In their discretion on such other matters as may properly come
before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
(Continued and to be signed on other side)
THIS PROXY WILL BE VOTED AS DIRECTED BUT, WHERE NO DIRECTION IS GIVEN, IT WILL
BE VOTED "FOR" APPROVAL OF THE AGREEMENT AND PLAN OF MERGER. A COPY OF THE
PROXY STATEMENT HAS BEEN RECEIVED BY THE UNDERSIGNED.
DATED: ____________________ ______________________________
Signature
______________________________
Signature
Please sign exactly as name(s) appear(s) heron and return promptly in the
enclosed envelope. When signing as attorney, executor, administrator, trustee,
guardian or corporate official, please give your title as such.
___ PLEASE CHECK IF YOU PLAN TO ATTEND THIS MEETING
<PAGE> 1
Exhibit 99(b)
INVESTARK BANKSHARES, INC.
PROXY
The undersigned hereby appoints Harry C. Erwin acting in the absence of
the others, as attorney and proxy of the undersigned, to represent the
undersigned at the Annual Meeting of Stockholders of InvestArk Bankshares, Inc.
("InvestArk") to be held on March 30, 1994 at 10:00 a.m. local time at the
First Stuttgart Bank and Trust Company building, 412 South Main, Stuttgart,
Arkansas and at any adjournment or adjournments thereof and to vote all shares
of stock of InvestArk held of record by the undersigend.
1. Approval of the Agreement and Plan of Reorganization which provides
for the merger of InvestArk Bankshares, Inc. into First United.
FOR ____ AGAINST ____ ABSTAIN ____
2. Approval of the election by InvestArk to be governed by the
Arkansas Business Corporation Act of 1987.
FOR ____ AGAINST ____ ABSTAIN ____
3. In their discretion on such other matters as may properly come
before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
(Continued and to be signed on other side)
THIS PROXY WILL BE VOTED AS DIRECTED BUT, WHERE NO DIRECTION IS GIVEN, IT WILL
BE VOTED "FOR" APPROVAL OF THE AGREEMENT AND ELECTION. A COPY OF THE PROXY
STATEMENT HAS BEEN RECEIVED BY THE UNDERSIGNED.
DATED: ____________________ ______________________________
Signature
______________________________
Signature
Please sign exactly as name(s) appear(s) heron and return promptly in the
enclosed envelope. When signing as attorney, executor, administrator, trustee,
guardian or corporate official, please give your title as such.
___ PLEASE CHECK IF YOU PLAN TO ATTEND THIS MEETING
