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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 18, 1998 (May 2, 1998)
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BANCORPSOUTH, INC.
(Exact name of registrant as specified in its charter)
Mississippi 0-10826 64-0659571
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification
Number)
One Mississippi Plaza
Tupelo, Mississippi 38801
(Address of principal executive offices) (Zip Code)
(601) 680-2000
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 2, 1998, BancorpSouth, Inc. (the "Company") announced that it
had entered into a definitive agreement to acquire Merchants Capital
Corporation, Vicksburg, Mississippi ("Merchants"), subject to the satisfaction
of certain conditions precedent. The acquisition will be structured as a merger
with Merchants being merged with and into the Company, subject to the approval
of the shareholders of Merchants and federal and state regulatory authorities.
The Company is the holding company of BancorpSouth Bank, which operates as Bank
of Mississippi in Mississippi and Volunteer Bank in Tennessee. Merchants is the
holding company of Merchants Bank. In connection with the merger of the two
holding companies, Merchants Bank will be merged with and into Bank of
Mississippi.
Under the terms of the merger agreement, shareholders of Merchants will
receive 1.884 shares of the Company in exchange for each share of Merchants
common stock owned. The exchange rate will be adjusted to reflect the Company's
previously announced two-for-one stock split effected in the form of a 1:1 stock
dividend which was issued on May 15, 1998 (or 3.768 shares of the Company for
each Merchants share, split adjusted). Based on the closing price of the
Company's common stock as traded on the New York Stock Exchange on May 1, 1998,
the transaction is valued at $63,136,000.
In connection with the transaction, the Company has been granted an
option to acquire up to 19.9% of the common stock of Merchants, subject to
certain limitations, terms and conditions set forth in a stock option agreement
between Merchants and the Company.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Exhibits:
2.1 Merger Agreement, dated as of May 2, 1998, between
BancorpSouth, Inc. and Merchants Capital Corporation.
4.1 Stock Option Agreement, dated as of May 2, 1998, between
BancorpSouth, Inc. and Merchants Capital Corporation.
20.1 Copy of the press release, dated May 4, 1998 relating to
the merger of BancorpSouth, Inc. and Merchants Capital Corporation.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
By: /s/ AUBREY B. PATTERSON
--------------------------------
Aubrey B. Patterson
Chairman and CEO
Date: May 18, 1998
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Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 2, 1998 (this
"Agreement"), between BancorpSouth, Inc., a Mississippi corporation (the
"Parent") and Merchants Capital Corporation, a Mississippi corporation (the
"Company" and collectively with Parent, the "Holding Companies").
WHEREAS, Parent is the parent corporation of BancorpSouth
Bank, a Mississippi state bank ("BancorpSouth Bank"), and the Company is the
parent corporation of Merchants Bank, a Mississippi state bank ("Merchants Bank"
and together with BancorpSouth Bank, the "Banks");
WHEREAS, the Boards of Directors of Parent and the Company
have determined that it is in the best interests of their respective companies
and their shareholders to consummate the business combination transaction
provided for herein in which (i) the Company will merge with and into Parent
(the "Holding Company Merger") and (ii) Merchants Bank will merge with and into
BancorpSouth Bank (the "Bank Merger"), each subject to the terms and conditions
set forth herein (collectively, the "Merger"); and
WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger.
(a) Subject to the terms and conditions of this
Agreement, in accordance with the Mississippi Business Corporation Act
(the "MBCA"), at the Effective Time (as defined in Section 1.2 hereof),
the Company shall merge with and into Parent. Parent shall be the
surviving corporation (hereinafter sometimes called the "Surviving
Corporation") in the Holding Company Merger, and shall continue its
corporate existence under the laws of the State of Mississippi. The
name of the Surviving Corporation shall continue to be BancorpSouth,
Inc. Upon consummation of the Holding Company Merger, the separate
corporate existence of the Company shall terminate.
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(b) Subject to the terms and conditions of this
Agreement, in accordance with the Mississippi Banking Act (the "MBA"),
at the Effective Time (as defined in Section 1.2 hereof), Merchants
Bank shall merge with and into BancorpSouth Bank. BancorpSouth Bank
shall be the surviving banking corporation (hereinafter sometimes
called the "Surviving Bank") in the Bank Merger, and shall continue its
corporate existence under the laws of the State of Mississippi. The
name of the Surviving Bank shall continue to be BancorpSouth Bank. Upon
consummation of the Bank Merger, the separate corporate existence of
Merchants Bank shall terminate.
1.2. Effective Time. The Merger shall become effective as
set forth in the articles of merger (the "Articles of Merger") which shall be
filed with the Secretary of State of the State of Mississippi (the "Mississippi
Secretary") with respect to the Holding Company Merger, and the Mississippi
Department of Banking and Consumer Finance (the "Mississippi Department") with
respect to the Bank Merger, each on the Closing Date (as defined in Section 10.1
hereof). The term "Effective Time" shall be the date and time when the Merger
becomes effective, as set forth in the Articles of Merger.
1.3. Effects of the Merger. At and after the Effective Time,
the Merger shall have the effects set forth in Sections 79-4-11.01 and 81-5-85
of the Mississippi Code.
1.4. Conversion of Company Common Stock.
(a) At the Effective Time, subject to Section 2.2(e)
and Section 9.1(g) hereof, each share of the common stock, par value
$5.00, of the Company (the "Company Common Stock") issued and
outstanding immediately prior to the Effective Time (other than
Dissenting Shares (as defined herein) and other than shares of Company
Common Stock held directly or indirectly by Parent or the Company or
any of their respective Subsidiaries (as defined below) (except for
Trust Account Shares and DPC shares, as such terms are defined in
Section 1.4(b) hereof)) shall, by virtue of this Agreement and without
any action on the part of the holder thereof, be converted into and
exchangeable for 3.768 shares (the "Exchange Ratio") of the common
stock, par value $2.50 per share, of Parent ("Parent Common Stock")
(together with the number of Parent Rights (as defined in Section 5.2
hereof) associated therewith). All of the shares of Company Common
Stock converted into Parent Common Stock pursuant to this Article I
shall no longer be outstanding and shall automatically be cancelled and
shall cease to exist, and each certificate (each a "Certificate")
previously representing any such shares of Company Common Stock shall
thereafter only represent the right to receive (i) the number of whole
shares of Parent Common Stock and (ii) the cash in lieu of fractional
shares into which the shares of Company Common Stock represented by
such Certificate have been converted pursuant
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to this Section 1.4(a) and Section 2.2(e) hereof. Certificates
previously representing shares of Company Common Stock shall be
exchanged for certificates representing whole shares of Parent Common
Stock and cash in lieu of fractional shares issued in consideration
therefor upon the surrender of such Certificates in accordance with
Section 2.2 hereof, without any interest thereon. If, between the date
of this Agreement and the Effective Time, the shares of Parent Common
Stock shall be changed into a different number or class of shares by
reason of any reclassification, recapitalization, split-up,
combination, exchange of shares or readjustment, or a stock dividend
thereon shall be declared with a record date within said period other
than any stock dividend due to be paid to the Parent shareholders on
May 15, 1998, the Exchange Ratio shall be adjusted accordingly.
(b) At the Effective Time, all shares of Company
Common Stock that are owned directly or indirectly by Parent or the
Company or any of their respective Subsidiaries (other than shares of
Company Common Stock (x) held directly or indirectly in trust accounts,
managed accounts and the like or otherwise held in a fiduciary capacity
for the benefit of third parties (any such shares, and shares of Parent
Common Stock which are similarly held, whether held directly or
indirectly by Parent or the Company, as the case may be, being referred
to herein as "Trust Account Shares") and (y) held by Parent or the
Company or any of their respective Subsidiaries in respect of a debt
previously contracted (any such shares of Company Common Stock, and
shares of Parent Common Stock which are similarly held, whether held
directly or indirectly by Parent or the Company, being referred to
herein as "DPC Shares")) shall be cancelled and shall cease to exist
and no stock of Parent or other consideration shall be delivered in
exchange therefor. All shares of Parent Common Stock that are owned by
the Company or any of its Subsidiaries (other than Trust Account Shares
and DPC Shares) shall become treasury stock of Parent.
(c) Notwithstanding anything in this Agreement to the
contrary, shares of Company Common Stock which are outstanding
immediately prior to the Effective Time and with respect to which
dissenters' rights shall have been properly demanded in accordance with
Article 13 of the MBCA ("Dissenting Shares") shall not be converted
into the right to receive, or be exchangeable for, Parent Common Stock
or cash in lieu of fractional shares but, instead, the holders thereof
shall be entitled to payment of the appraised value of such Dissenting
Shares in accordance with the provisions of Article 13 of the MBCA;
provided, however, that (i) if any holder of Dissenting Shares shall
subsequently deliver a written withdrawal of his demand for appraisal
of such shares, or (ii) if any holder fails to establish his
entitlement to dissenters' rights as provided in Article 13 of the
MBCA, such holder or holders (as the case may be) shall forfeit the
right to appraisal of such shares of Company Common Stock and each of
such shares shall thereupon be deemed to have been converted into the
right to receive,
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and to have become exchangeable for, as of the Effective Time, Parent
Common Stock and/or cash in lieu of fractional shares, without any
interest thereon, as provided in Section 1.4(a) and Article II hereof.
(d) The Parent may terminate this Agreement if cash
payments in respect of fractional shares or dissenter's rights exceed
the amount permissible for the utilization of pooling of interests
accounting treatment.
(e) At the Effective Time, all shares of Merchants
Bank common stock, par value $15.00 per share ("Merchants Bank Common
Stock"), shall be cancelled and shall cease to exist and no stock of
Parent, BancorpSouth Bank, or other consideration shall be delivered in
exchange therefor.
1.5. Stock Options.
(a) At the Effective Time, each option granted by the
Company to purchase shares of Company Common Stock (each a "Company
Option") which is outstanding and unexercised immediately prior thereto
shall cease to represent a right to acquire shares of Company Common
Stock and shall be replaced by an option issued under the appropriate
stock option plan of the Parent:
(1) the number of shares of Parent Common
Stock to be subject to the new option shall be equal to the
product of the number of shares of Company Common Stock
subject to the original option and the Exchange Ratio,
provided that any fractional shares of Parent Common Stock
resulting from such multiplication shall be rounded down to
the nearest whole share; and
(2) the exercise price per share of Parent
Common Stock under the new option shall be equal to the
exercise price per share of Company Common Stock under the
original option divided by the Exchange Ratio, provided that
such exercise price shall be rounded up to the nearest cent.
The adjustment provided herein with respect to any options
which are incentive stock options" (as defined in Section 422
of the Internal Revenue Code of 1986, as amended (the "Code"))
shall be and is intended to be effected in a manner which is
consistent with Section 424(a) of the Code and, to the extent
it is not so consistent, such Section 424(a) shall override
anything to the contrary contained herein. The duration and
other terms of the new option shall be the same as the
original option except that all references to the Company
shall be deemed to be references to Parent.
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(b) Prior to the Effective Time, Parent shall reserve
for issuance the number of shares of Parent Common Stock necessary to
satisfy Parent's obligations under this Section 1.5.
1.6. Parent Common Stock. Except for shares of Parent
Common Stock owned by the Company or any of its Subsidiaries (other than Trust
Account Shares and DPC Shares), which shall be converted into treasury stock of
Parent as contemplated by Section 1.4 hereof, the shares of Parent Common Stock
issued and outstanding immediately prior to the Effective Time shall be
unaffected by the Merger and such shares shall remain issued and outstanding.
1.7. Articles. At the Effective Time, the Amended and
Restated Articles of Incorporation of Parent, as in effect at the Effective
Time, shall be the articles of incorporation of the Surviving Corporation. At
the Effective Time, the Amended and Restated Articles of Association of
BancorpSouth Bank, as in effect at the Effective Time, shall be the articles of
association of the Surviving Bank.
1.8. By-Laws. At the Effective Time, the By-Laws of Parent, as
in effect immediately prior to the Effective Time, shall be the By-Laws of the
Surviving Corporation until thereafter amended in accordance with applicable
law.
1.9. Directors and Officers. The directors and officers of
Parent immediately prior to the Effective Time shall be the directors and
officers of the Surviving Corporation, each to hold office in accordance with
the Restated Articles of Incorporation and By-Laws of the Surviving Corporation
until their respective successors are duly elected or appointed and qualified.
The directors and officers of BancorpSouth Bank immediately prior to the
Effective Time shall be the directors and officers of the Surviving Bank, each
to hold office in accordance with the Restated Articles of Association and
By-Laws of the Surviving Bank until their respective successors are duly elected
or appointed and qualified.
1.10. Tax Consequences; Accounting Treatment. It is
intended that the Merger shall (i) constitute a reorganization within the
meaning of Section 368(a) of the Code and that this Agreement shall constitute a
"plan of reorganization" for the purposes of Section 368 of the Code, and (ii)
be accounted for as a "pooling of interests" under GAAP (as defined herein).
ARTICLE II
EXCHANGE OF SHARES
2.1. Parent to Make Shares Available. At or prior to the
Effective Time, Parent shall deposit, or shall cause to be deposited, with a
bank or trust company (the "Exchange Agent") selected by Parent and reasonably
satisfactory to the Company, for the benefit of the holders of Certificates, for
exchange in accordance with this Article II, certificates representing the
shares of Parent Common Stock and the cash in lieu of fractional shares (such
cash and certificates
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for shares of Parent Common Stock, together with any dividends or distributions
with respect thereto, being hereinafter referred to as the "Exchange Fund") to
be issued pursuant to Section 1.4 and paid pursuant to Section 2.2(a) in
exchange for outstanding shares of Company Common Stock.
2.2. Exchange of Shares.
(a) As soon as practicable after the Effective Time,
and in no event more than three business days thereafter, the Exchange
Agent shall mail to each holder of record of a Certificate or
Certificates a form letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent) and instructions for use in effecting the surrender of
the Certificates in exchange for certificates representing the shares
of Parent Common Stock and the cash in lieu of fractional shares into
which the shares of Company Common Stock represented by such
Certificate or Certificates shall have been converted pursuant to this
Agreement. The Company shall have the right to review both the letter
of transmittal and the instructions prior to the Effective Time and
provide reasonable comments thereon. Upon surrender of a Certificate
for exchange and cancellation to the Exchange Agent, together with such
letter of transmittal, duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor (x) a certificate
representing that number of whole shares of Parent Common Stock to
which such holder of Company Common Stock shall have become entitled
pursuant to the provisions of Article I hereof and (y) a check
representing the amount of cash in lieu of fractional shares, if any,
which such holder has the right to receive in respect of the
Certificate surrendered pursuant to the provisions of this Article II,
and the Certificate so surrendered shall forthwith be cancelled. No
interest will be paid or accrued on the cash in lieu of fractional
shares and unpaid dividends and distributions, if any, payable to
holders of Certificates.
(b) No dividends or other distributions declared
after the Effective Time with respect to Parent Common Stock and
payable to the holders of record thereof shall be paid to the holder of
any unsurrendered Certificate until the holder thereof shall surrender
such Certificate in accordance with this Article II. After the
surrender of a Certificate in accordance with this Article II, the
record holder thereof shall be entitled to receive any such dividends
or other distributions, without any interest thereon, which theretofore
had become payable with respect to shares of Parent Common Stock
represented by such Certificate.
(c) If any certificate representing shares of Parent
Common Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it shall be
a condition of the
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issuance thereof that the Certificate so surrendered shall be properly
endorsed (or accompanied by an appropriate instrument of transfer) and
otherwise in proper form for transfer, and that the person requesting
such exchange shall pay to the Exchange Agent in advance any transfer
or other taxes required by reason of the issuance of a certificate
representing shares of Parent Common Stock in any name other than that
of the registered holder of the Certificate surrendered, or required
for any other reason, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
(d) After the Effective Time, there shall be no
transfers on the stock transfer books of the Company of the shares of
Company Common Stock which were issued and outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates
representing such shares are presented for transfer to the Exchange
Agent, they shall be cancelled and exchanged for certificates
representing shares of Parent Common Stock as provided in this Article
II.
(e) Notwithstanding anything to the contrary
contained herein, no certificates or scrip representing fractional
shares of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates, no dividend or distribution with respect to
Parent Common Stock shall be payable on or with respect to any
fractional share, and such fractional share interests shall not entitle
the owner thereof to vote or to any other rights of a shareholder of
Parent. In lieu of the issuance of any such fractional share, Parent
shall pay to each former stockholder of the Company who otherwise would
be entitled to receive a fractional share of Parent Common Stock an
amount in cash determined by multiplying (i) $22.5625 (the
"BancorpSouth Price") by (ii) the fraction of a share of Parent Common
Stock which such holder would otherwise be entitled to receive pursuant
to Section 1.4 hereof.
(f) Any portion of the Exchange Fund that remains
unclaimed by the shareholders of the Company for twelve months after
the Effective Time shall be paid to Parent. Any shareholders of the
Company who have not theretofore complied with this Article II shall
thereafter look only to Parent for payment of their shares of Parent
Common Stock, cash in lieu of fractional shares and unpaid dividends
and distributions on Parent Common Stock deliverable in respect of each
share of Company Common Stock such stockholder holds as determined
pursuant to this Agreement, in each case, without any interest thereon.
Notwithstanding the foregoing, none of Parent, the Company, the
Exchange Agent or any other person shall be liable to any former holder
of shares of Company Common Stock for any amount properly delivered to
a public official pursuant to applicable abandoned property, escheat or
similar laws.
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(g) In the event any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact
by the person claiming such Certificate to be lost, stolen or destroyed
and, if required by Parent, the posting by such person of a bond in
such amount as Parent may direct as indemnity against any claim that
may be made against it with respect to such Certificate, the Exchange
Agent will issue in exchange for such lost, stolen or destroyed
Certificate the shares of Parent Common Stock and cash in lieu of
fractional shares deliverable in respect thereof pursuant to this
Agreement.
ARTICLE III
DISCLOSURE SCHEDULES; STANDARDS
FOR REPRESENTATIONS AND WARRANTIES
3.1. Disclosure Schedules. The parties acknowledge that as
of the date of this Agreement, the Company has delivered those portions of the
Company Disclosure Schedule specifically referred to herein, and the Parent has
delivered those portions of the Parent Disclosure Schedule (and, with the
Company Disclosure Schedule, the "Disclosure Schedules") specifically referred
to herein. Notwithstanding anything in this Agreement to the contrary, the mere
inclusion of an item in a Disclosure Schedule as an exception to a
representation or warranty shall not be deemed an admission by a party that such
item represents a material exception or material fact, event or circumstance or
that such item has had or could be reasonably expected to have a Material
Adverse Effect (as defined herein) with respect to either the Company or Parent,
respectively.
3.2. Standards.
(a) No representation or warranty of the Company
contained in Article IV or of Parent contained in Article V shall be
deemed untrue or incorrect for any purpose under this Agreement as a
consequence of the existence or absence of any fact, circumstance or
event, unless such fact, circumstance or event, individually or when
taken together with all other facts, circumstances or events
inconsistent with such representation or warranty contained in Article
IV, in the case of the Company, or Article V, in the case of Parent,
has had or could be reasonably expected to have a Material Adverse
Effect with respect to the Company or Parent, respectively.
(b) As used in this Agreement, the term "Material
Adverse Effect" means, with respect to Parent or the Company, as the
case may be, a material adverse effect on (i) the business, results of
operations or financial condition of such party and its Subsidiaries
taken as a whole, other than any such effect attributable to or
resulting from (w) any change in banking or similar laws, rules or
regulations of general applicability or interpretations thereof by
courts or governmental authorities, (x) any change in GAAP or
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regulatory accounting principles applicable to banks or their holding
companies generally, (y) any action or omission of the Company or
Parent or any Subsidiary of either of them taken with the express prior
written consent of the other party hereto, or (z) any expenses incurred
by such party which such expenses are contemplated by or reasonably
incurred in connection with this Agreement or the transactions
contemplated hereby or (ii) the ability of such party and its
Subsidiaries to consummate the transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to Article III, the Company hereby represents and
warrants to Parent as follows:
4.1. Corporate Organization.
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Mississippi. The Company has the corporate power and authority to own
or lease all of its properties and assets and to carry on its business
as it is now being conducted, and is duly licensed or qualified to do
business in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification
necessary. The Company is duly registered as a bank holding company
under the Bank Holding Company Act of 1956, as amended (the "BHC Act").
The Articles of Incorporation and By-laws of the Company, copies of
which have previously been made available to Parent, are true and
correct copies of such documents as in effect as of the date of this
Agreement. As used in this Agreement, the word "Subsidiary" when used
with respect to any party means any corporation, partnership or other
organization, whether incorporated or unincorporated, which is
consolidated with such party for financial reporting purposes.
(b) Merchants Bank is a Mississippi state bank duly
organized, validly existing and in good standing under the laws of the
State of Mississippi. The deposit accounts of Merchants Bank are
insured by the Federal Deposit Insurance Corporation (the "FDIC")
through the Bank Insurance Fund and the Savings Association Insurance
Fund to the fullest extent permitted by law, and all premiums and
assessments required to be paid in connection therewith have been paid
when due. Each of the Company's other Subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of
its jurisdiction of incorporation or organization. Each of the
Company's Subsidiaries has the corporate power and authority to own or
lease all of its properties and assets
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and to carry on its business as it is now being conducted and is duly
licensed or qualified to do business in each jurisdiction in which the
nature of the business conducted by it or the character or the location
of the properties and assets owned or leased by it makes such licensing
or qualification necessary. The articles of incorporation, by-laws and
similar governing documents of each Subsidiary of the Company, copies
of which have previously been made available to Parent, are true and
correct copies of such documents as in effect as of the date of this
Agreement.
(c) The minute books of the Company and each of its
Subsidiaries contain true and correct records of all meetings and other
corporate actions held or taken since December 31, 1996 of their
respective shareholders and Boards of Directors (including committees
of their respective Boards of Directors).
4.2. Capitalization.
(a) The authorized capital stock of the Company
consists of 1,000,000 shares of Company Common Stock. As of December
31, 1997, there were 742,651 shares of Company Common Stock outstanding
and no shares of Company Common Stock held by the Company as treasury
stock. There are (i) no shares of Company Common Stock reserved for
issuance upon exercise of outstanding stock options or otherwise except
for (x) 26,250 shares of Company Common Stock reserved for issuance
pursuant to the Company Option Plans under which options to acquire
2,050 shares of Company Common Stock are outstanding, and (y) 148,450
shares of Company Common Stock reserved for issuance upon exercise of
the option (the "Option") to be issued to Parent pursuant to the Stock
Option Agreement, to be entered into on the date hereof, between Parent
and Company (the "Stock Option Agreement). All of the issued and
outstanding shares of Company Common Stock have been duly authorized
and validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the
ownership thereof. Except for options outstanding under the Company
Option Plan, the Company does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any
shares of Company Common Stock or any other equity security of the
Company or any securities representing the right to purchase or
otherwise receive any shares of Company Common Stock or any other
equity security of the Company. The names of the optionees, the date of
each option to purchase Company Common Stock granted, the number of
shares subject to each such option, the expiration date of each such
option, and the price at which each such option may be exercised under
the Company Option Plans, if any, shall be set forth in Section 4.2(a)
of the Company Disclosure Schedule.
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(b) Section 4.2(b) of the Company Disclosure Schedule
sets forth a true and correct list of all of the Subsidiaries of the
Company. Except as set forth in Section 4.2(a) of the Company
Disclosure Schedule, the Company owns, directly or indirectly, all of
the issued and outstanding shares of the capital stock of each of such
Subsidiaries, free and clear of all liens, charges, encumbrances and
security interests whatsoever, and all of such shares are duly
authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights, with no personal liability attaching to the
ownership thereof. No Subsidiary of the Company has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any
shares of capital stock or any other equity security of such Subsidiary
or any securities representing the right to purchase or otherwise
receive any shares of capital stock or any other equity security of
such Subsidiary. Assuming compliance by Parent with Section 1.5 hereof,
and except as provided in Section 4.2(b) of the Company Disclosure
Schedule, at the Effective Time, there will not be any outstanding
subscriptions, options, warrants, calls, commitments or agreements of
any character by which the Company or any of its Subsidiaries will be
bound calling for the purchase or issuance of any shares of the capital
stock of the Company or any of its Subsidiaries. Except for its
Subsidiaries, the Company does not own (other than in a bona fide
fiduciary capacity or in satisfaction of a debt previously contracted)
beneficially, directly or indirectly, any shares of any equity
securities or similar interests of any person, or any interest in a
partnership or joint venture of any kind.
4.3. Authority; No Violation.
(a) The Company has full corporate power and
authority to execute and deliver this Agreement and the Stock Option
Agreement and, upon the receipt of shareholder approval of the
Agreement, to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the Stock
Option Agreement and the consummation of the transactions contemplated
hereby and thereby have been duly and validly approved by the Board of
Directors of the Company. The Board of Directors of the Company has
directed that this Agreement and the transactions contemplated hereby
be submitted to the Company's shareholders for approval at a meeting of
such shareholders and, except for the adoption of this Agreement by the
requisite vote of the Company's shareholders, no other corporate
proceedings on the part of the Company are necessary to approve this
Agreement and the Stock Option Agreement and to consummate the
transactions contemplated hereby and thereby. This Agreement has been,
and the Stock Option Agreement will be, duly and validly executed and
delivered by the Company and (assuming due authorization, execution and
delivery by Parent) this Agreement constitutes
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a valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as enforcement may be
limited by general principles of equity whether applied in a court of
law or a court of equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally.
(b) Neither the execution and delivery of this
Agreement or the Stock Option Agreement by the Company, nor the
consummation by the Company of the transactions contemplated hereby or
thereby, nor compliance by the Company with any of the terms or
provisions hereof or thereof, will (i) violate any provision of the
Articles of Incorporation or By-Laws of the Company or the certificate
of incorporation, by-laws or similar governing documents of any of its
Subsidiaries, or (ii) assuming that the consents and approvals referred
to in Section 4.4 hereof are duly obtained, (x) violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to the Company or any of its Subsidiaries, or any
of their respective properties or assets, or (y) violate, conflict
with, result in a breach of any provision of or the loss of any benefit
under, constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, result in the
termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of
any lien, pledge, security interest, charge or other encumbrance upon
any of the respective properties or assets of the Company or any of its
Subsidiaries under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which the Company or any
of its Subsidiaries is a party, or by which they or any of their
respective properties or assets may be bound or affected.
4.4. Consents and Approvals. Except for (a) the filing of
applications and notices, as applicable, with the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board") under the BHC Act, and with
the FDIC under the Federal Deposit Insurance Act, as amended (the "FDIA"), and
approval of such applications and notices, (b) the filing of such applications,
filings, authorizations, orders and approvals as may be required under
applicable state law, (c) the filing with the SEC of a proxy statement in
definitive form relating to the meetings of the Company's shareholders to be
held in connection with this Agreement and the transactions contemplated hereby
(the "Proxy Statement") and the filing and declaration of effectiveness of a
post-effective amendment to the shelf registration statement on Form S-4 (such
shelf registration statement and any post-effective amendment thereto relating
to this transaction, the "S-4") in which the Proxy Statement will be included as
a prospectus, (d) the approval of this Agreement by the requisite vote of the
shareholders of the Company, (e) the filing of the Articles of Merger with the
Mississippi Secretary and the Mississippi Department and (f) approval for
listing of the Parent Common Stock to be issued in the Merger on the
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New York Stock Exchange ("NYSE"), no consents or approvals of or filings or
registrations with any court, administrative agency or commission or other
governmental authority or instrumentality (each a "Governmental Entity") or with
any third party are necessary in connection with (1) the execution and delivery
by the Company of this Agreement and the Stock Option Agreement and (2) the
consummation by the Company of the Merger and the other transactions
contemplated hereby and thereby.
4.5. Reports. The Company and each of its Subsidiaries
have timely filed all reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they were required to
file since December 31, 1995 with (i) the Federal Reserve Board, (ii) the FDIC,
(iii) any Federal Reserve Bank, (iv) any state banking commissions or any other
state regulatory authority (each a "State Regulator") and (v) any other
self-regulatory organization ("SRO") (collectively, the "Regulatory Agencies"),
and have paid all fees and assessments due and payable in connection therewith.
Except for normal examinations conducted by a Regulatory Agency in the regular
course of the business of the Company and its Subsidiaries, no Regulatory Agency
has initiated any proceeding or, to the knowledge of the Company, investigation
into the business or operations of the Company or any of its Subsidiaries since
December 31, 1995. Except as set forth in Section 4.5 of the Company Disclosure
Schedule, there is no unresolved violation, criticism, or exception by any
Regulatory Agency with respect to any report or statement relating to any
examinations of the Company or any of its Subsidiaries.
4.6. Financial Statements. The Company has previously made
available to Parent copies of (a) the consolidated statements of condition of
the Company and its Subsidiaries as of December 31 for the fiscal years 1996 and
1997, and the related consolidated statements of earnings, changes in
shareholders' equity and cash flows for the fiscal years 1996 through 1997,
inclusive, as reported in the Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1997 filed with the SEC under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), in each case accompanied
by the audit report of May & Company, independent public accountants with
respect to the Company. The December 31, 1997 consolidated statement of
condition of the Company (including the related notes, where applicable) fairly
presents the consolidated financial position of the Company and its Subsidiaries
as of the date thereof, and the other financial statements referred to in this
Section 4.6 (including the related notes, where applicable) fairly present, and
the financial statements to be filed with the SEC after the date hereof will
fairly present (subject, in the case of the unaudited statements, to recurring
audit adjustments normal in nature and amount), the results of the consolidated
operations and consolidated financial position of the Company and its
Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth; each of such statements (including the related notes, where
applicable) complies, and the financial statements to be filed with the SEC
after the
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<PAGE> 14
date hereof will comply, with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto; and each of
such statements (including the related notes, where applicable) has been, and
the financial statements to be filed with the SEC after the date hereof will be,
prepared in accordance with generally accepted accounting principles ("GAAP")
consistently applied during the periods involved, except as indicated in the
notes thereto or, in the case of unaudited statements, as permitted by Form
10-QSB. The books and records of the Company and its Subsidiaries have been, and
are being, maintained in accordance with GAAP and any other applicable legal and
accounting requirements.
4.7. Broker's Fees. Neither the Company nor any Subsidiary
of the Company nor any of their respective officers or directors has employed
any broker or finder or incurred any liability for any broker's fees,
commissions or finder's fees in connection with any of the transactions
contemplated by this Agreement or the Stock Option Agreement.
4.8. Absence of Certain Changes or Events.
(a) Since December 31, 1997, except as set forth in
Section 4.8 of the Company Disclosure Schedule, (i) there has been no
change or development or combination of changes or developments which,
individually or in the aggregate, has had a Material Adverse Effect on
the Company and (ii) the Company and its Subsidiaries have carried on
their respective businesses in the ordinary course consistent with
their past practices.
(b) Neither the Company nor any of its Subsidiaries
has, except as set forth in Section 4.8 of the Company Disclosure
Schedule, (i) increased the wages, salaries, compensation, pension, or
other fringe benefits or perquisites payable to any executive officer,
employee, or director from the amount thereof in effect as of December
31, 1997 (which amounts have been previously disclosed to Parent),
granted any severance or termination pay, entered into any contract to
make or grant any severance or termination pay, or paid any bonus
(except for salary increases and bonus payments made in the ordinary
course of business consistent with past practices, (ii) suffered any
strike, work stoppage, slow-down, or other labor disturbance, (iii)
been a party to a collective bargaining agreement, contract or other
agreement or understanding with a labor union or organization, or (iv)
had any union organizing activities.
4.9. Legal Proceedings.
(a) Neither the Company nor any of its Subsidiaries
is a party to any, and there are no pending or, to the Company's
knowledge, threatened, legal, administrative, arbitral or other
proceedings, claims, actions or governmental or regulatory
investigations of any nature against
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<PAGE> 15
the Company or any of its Subsidiaries or challenging the validity or
propriety of the transactions contemplated by this Agreement.
(b) There is no injunction, order, judgment, decree,
or regulatory restriction imposed upon the Company, any of its
Subsidiaries or the assets of the Company or any of its Subsidiaries.
4.10. Taxes.
(a) Each of the Company and its Subsidiaries has (i)
duly and timely filed (including applicable extensions granted without
penalty) all Tax Returns (as hereinafter defined) required to be filed
at or prior to the Effective Time, and such Tax Returns are true and
correct, and (ii) paid in full or made adequate provision in the
financial statements of the Company (in accordance with GAAP) for all
Taxes (as hereinafter defined) shown to be due on such Tax Returns.
Except as set forth in Section 4.10 of the Company Disclosure Schedule,
as of the date hereof neither the Company nor any of its Subsidiaries
has requested any extension of time within which to file any Tax
Returns in respect of any fiscal year which have not since been filed
and no request for waivers of the time to assess any Taxes are pending
or outstanding, and as of the date hereof, with respect to each taxable
period of the Company and its Subsidiaries, the federal and state
income Tax Returns of the Company and its Subsidiaries have been
audited by the Internal Revenue Service or appropriate state tax
authorities or the time for assessing and collecting income Tax with
respect to such taxable period has closed and such taxable period is
not subject to review.
(b) For the purposes of this Agreement, "Taxes" shall
mean all taxes, charges, fees, levies, penalties or other assessments
imposed by any United States federal, state, local or foreign taxing
authority, including, but not limited to income, excise, property,
sales, transfer, franchise, payroll, withholding, social security or
other taxes, including any interest, penalties or additions
attributable thereto. For purposes of this Agreement, "Tax Return"
shall mean any return, report, information return or other document
(including any related or supporting information) with respect to
Taxes.
4.11. Employees.
(a) Section 4.11(a) of the Company Disclosure
Schedule sets forth a true and correct list of each deferred
compensation plan, incentive compensation plan, equity compensation
plan, "welfare" plan, fund or program (within the meaning of section
3(l) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")); "pension" plan, fund or program (within the meaning of
section 3(2) of ERISA); each employment, termination or severance
agreement; and each other employee benefit plan, fund, program,
agreement or arrangement, in each case, that is sponsored,
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maintained or contributed to or required to be contributed to (the
"Plans") by the Company, any of its Subsidiaries or by any trade or
business, whether or not incorporated (an "ERISA Affiliate"), all of
which together with the Company would be deemed a "single employer"
within the meaning of Section 4001 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or Section 414(b), (c), (m)
or (o) of the Code, for the benefit of any employee or former employee
of the Company, any Subsidiary or any ERISA Affiliate.
(b) The Company has heretofore made available to
Parent with respect to each of the Plans true and correct copies of
each of the following documents if applicable: (i) the Plan document;
(ii) the actuarial report for such Plan for each of the last two years,
(iii) the most recent determination letter from the Internal Revenue
Service for such Plan and (iv) the most recent summary plan description
and related summaries of material modifications.
(c) Except as set forth in Section 4.11(c) of the
Company Disclosure Schedule, each of the Plans are in compliance with
the applicable provisions of the Code and ERISA; each of the Plans
intended to be "qualified" within the meaning of section 401(a) of the
Code has received a favorable determination letter from the IRS and to
the knowledge of the Company, nothing has occurred which could
reasonably be expected to result in the revocation of such letter; no
Plan has an accumulated or waived funding deficiency within the meaning
of section 412 of the Code; neither the Company nor any ERISA Affiliate
has incurred, directly or indirectly, any liability to or on account of
a Plan pursuant to Title IV of ERISA (other than PBGC premiums); to the
knowledge of the Company no proceedings have been instituted to
terminate any Plan that is subject to Title IV of ERISA; no "reportable
event," as such term is defined in section 4043(c) of ERISA, has
occurred with respect to any Plan (other than a reportable event with
respect to which the thirty day notice period has been waived); no
condition exists that presents a material risk to the Company of
incurring a liability to or on account of a Plan pursuant to Title IV
of ERISA; no Plan is a multiemployer plan (within the meaning of
section 4001(a)(3) of ERISA) and no Plan is a multiple employer plan as
defined in Section 413 of the Code; and there are no pending, or to the
knowledge of the Company, threatened or anticipated claims (other than
routine claims for benefits) by, on behalf of or against any of the
Plans or any trusts related thereto.
(d) Except as set forth in Section 4.11(d) of the
Company Disclosure Schedule or as otherwise contemplated by this
Agreement or any other agreements entered into by any party hereto in
connection with the execution hereof, neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby will (either alone
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or in conjunction with any other event) (i) result in any payment
(including, without limitation, severance, unemployment compensation,
"excess parachute payment" within the meaning of Section 280G of the
Code, forgiveness of indebtedness or otherwise) becoming due to any
officer, director or employee of the Company or any of its Subsidiaries
under any Plan or otherwise, (ii) increase any benefits payable under
any Plan or (iii) result in any acceleration of the time of payment or
vesting of any such benefits.
4.12. SEC Reports. The Company has previously made
available to Parent a true and correct copy of each (a) final registration
statement, prospectus, report, schedule and definitive proxy statement filed
since December 31, 1996 by the Company with the SEC pursuant to the Securities
Act or the Exchange Act (the "Company Reports"), if any, and (b) communication
sent by the Company to its shareholders since December 31, 1996, and no such
registration statement, prospectus, report, schedule, proxy statement or
communication contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances in which they were
made, not misleading, except that information contained in the Company Reports
as of a later date shall be deemed to modify information contained in the
Company Reports as of an earlier date. The Company has timely filed all Company
Reports and other documents required to be filed by it under the Securities Act
and the Exchange Act, and, as of their respective dates, all Company Reports
complied with the published rules and regulations of the SEC with respect
thereto.
4.13. Company Information. The information relating to the
Company and its Subsidiaries which is provided to Parent by the Company or its
representatives for inclusion in the Proxy Statement and the S-4, or in any
other document filed with any other regulatory agency in connection herewith,
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading. The Proxy Statement
(except for such portions thereof that relate only to Parent or any of its
Subsidiaries) will comply with the provisions of the Exchange Act and the rules
and regulations thereunder.
4.14. Compliance with Applicable Law. Except as disclosed
in connection with Section 4.5, the Company and each of its Subsidiaries hold,
and have at all times held, all licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses under and
pursuant to all, and have complied with and are not in default in any respect
under any, applicable law, statute, order, rule, regulation, policy and/or
guideline of any Governmental Entity relating to the Company or any of its
Subsidiaries, and neither the Company nor any of its Subsidiaries has received
notice of any violations of any of the above.
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4.15. Certain Contracts.
(a) Except as set forth in Section 4.15 of the
Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries is a party to or bound by any contract (whether written or
oral) (i) with respect to the employment of any directors or
consultants, (ii) which, upon the consummation of the transactions
contemplated by this Agreement, will (either alone or upon the
occurrence of any additional acts or events) result in any payment or
benefits (whether of severance pay or otherwise) becoming due, or the
acceleration or vesting of any rights to any payment or benefits, from
Parent, the Company, the Surviving Corporation or any of their
respective Subsidiaries to any director or consultant thereof, (iii)
which is a material contract (as defined in Item 601(b)(10) of
Regulation S-K of the SEC) to be performed after the date of this
Agreement that has not been filed or incorporated by reference in the
Company Reports, (iv) which is a consulting agreement (including data
processing, software programming and licensing contracts) not
terminable on 90 days or less notice involving the payment of more than
$50,000 per annum, or (v) which materially restricts the conduct of any
line of business by the Company or any of its Subsidiaries. Each
contract, arrangement, commitment or understanding of the type
described in this Section 4.15(a) is referred to herein as a "Company
Contract". The Company has previously delivered or made available to
Parent true and correct copies of each Company Contract.
(b) (i) Each Company Contract described in clause
(iii) of Section 4.15(a) is valid and binding and in full force and
effect, (ii) the Company and each of its Subsidiaries has performed all
obligations required to be performed by it to date under each Company
Contract described in clause (iii) of Section 4.15(a), (iii) no event
or condition exists which constitutes or, after notice or lapse of time
or both, would constitute, a default on the part of the Company or any
of its Subsidiaries under any Company Contract described in clause
(iii) of Section 4.15(a), and (iv) no other party to any Company
Contract described in clause (iii) of Section 4.15(a) is, to the
knowledge of the Company, in default in any respect thereunder.
4.16. Agreements with Regulatory Agencies. Neither the
Company nor any of its Subsidiaries is subject to any cease-and-desist or other
order issued by, or is a party to any written agreement, consent agreement or
memorandum of understanding with, or is a party to any commitment letter or
similar undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from, or has adopted any board
resolutions at the request of (each, a "Regulatory Agreement"), any Regulatory
Agency or other Governmental Entity that restricts the conduct of its business
or that in any manner relates to its capital adequacy, its credit policies, its
management or its business, nor has the Company or any of its Subsidiaries been
advised by any Regulatory Agency or other
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Governmental Entity that it is considering issuing or requesting any Regulatory
Agreement.
4.17. Business Combination Provision; Takeover Laws. The
Company has taken all action required to be taken by it in order to exempt this
Agreement and the Stock Option Agreement and the transactions contemplated
hereby and thereby from, and this Agreement and the Stock Option Agreement and
the transactions contemplated hereby and thereby are exempt from, the
requirements of any "moratorium", "control share", "fair price" or other
anti-takeover laws and regulations (collectively, "Takeover Laws") of the State
of Mississippi, including the Mississippi Shareholder Protection Act and the
Mississippi Control Share Act.
4.18. Administration of Fiduciary Accounts. The Company and
each of its Subsidiaries has properly administered all accounts for which it
acts as a fiduciary, including but not limited to accounts for which it serves
as a trustee, agent, custodian, personal representative, guardian, conservator
or investment advisor, in accordance with the terms of the governing documents
and applicable state and federal law and regulation and common law. Neither the
Company nor any of its Subsidiaries nor any of their respective directors,
officers or employees has committed any breach of trust with respect to any such
fiduciary account, and the accountings for each such fiduciary account are true
and correct and accurately reflect the assets of such fiduciary account.
4.19. Environmental Matters.
(a) Except as set forth in Section 4.19 of the
Company Disclosure Schedule, each of the Company and its Subsidiaries
and, to the knowledge of the Company, each of the Participation
Facilities and the Loan Properties (each as hereinafter defined), are
in compliance with all applicable federal, state and local laws,
including common law, regulations and ordinances, and with all
applicable decrees, orders and contractual obligations relating to
pollution or the discharge of, or exposure to, Hazardous Materials (as
hereinafter defined) in the environment or workplace ("Environmental
Laws");
(b) There is no suit, claim, action or proceeding,
pending or, to the knowledge of the Company, threatened, before any
Governmental Entity or other forum in which the Company, any of its
Subsidiaries, any Participation Facility or any Loan Property, has been
or, with respect to threatened proceedings, may be, named as a
defendant (x) for alleged noncompliance (including by any predecessor)
with any Environmental Laws, or (y) relating to the release, threatened
release or exposure to any Hazardous Material whether or not occurring
at or on a site owned, leased or operated by the Company or any of its
Subsidiaries, any Participation Facility or any Loan Property;
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(c) Except as set forth in Section 4.19 of the
Company Disclosure Schedule, to the knowledge of the Company, during
the period of (x) the Company's or any of its Subsidiaries' ownership
or operation of any of their respective current or former properties,
(y) the Company's or any of its Subsidiaries' participation in the
management of any Participation Facility, or (z) the Company's or any
of its Subsidiaries' interest in a Loan Property, there has been no
release of Hazardous Materials in, on, under or affecting any such
property. To the knowledge of the Company, prior to the period of (x)
the Company's or any of its Subsidiaries' ownership or operation of any
of their respective current or former properties, (y) the Company's or
any of its Subsidiaries' participation in the management of any
Participation Facility, or (z) the Company's or any of its
Subsidiaries' interest in a Loan Property, there was no release of
Hazardous Materials in, on, under or affecting any such property,
Participation Facility or Loan Property; and
(d) The following definitions apply for purposes of
this Section 4.19: (x) "Hazardous Materials" means any chemicals,
pollutants, contaminants, wastes, toxic substances, petroleum or other
regulated substances or materials, (y) "Loan Property" means any
property in which the Company or any of its Subsidiaries holds a
security interest, and, where required by the context, said term means
the owner or operator of such property; and (z) "Participation
Facility" means any facility in which the Company or any of its
Subsidiaries participates in the management and, where required by the
context, said term means the owner or operator of such property.
4.20. Approvals. As of the date of this Agreement, the
Company knows of no reason why all regulatory approvals required for the
consummation of the transactions contemplated hereby (including, without
limitation, the Merger) should not be obtained.
4.21. Loan Portfolio.
(a) Except as set forth in Section 4.21 of the
Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries is a party to any written or oral loan agreement, note or
borrowing arrangement (including, without limitation, leases, credit
enhancements, commitments, guarantees and interest-bearing assets)
(collectively, "Loans"), other than Loans the unpaid principal balance
of which does not exceed $100,000, under the terms of which the obligor
was, as of March 31, 1998, over 90 days delinquent in payment of
principal or interest or in default of any other provision. Section
4.21 of the Company Disclosure Schedule sets forth all of the Loans in
original principal amount in excess of $100,000 of the Company or any
of its Subsidiaries that as of March 31, 1998, were classified as
"Doubtful" or "Loss", or words of similar import, together with the
principal
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amount of and accrued and unpaid interest on each such Loan and the
identity of the borrower thereunder.
(b) Each Loan in original principal amount in excess
of $100,000 (i) is evidenced by notes, agreements or other evidences of
indebtedness which are true, genuine and what they purport to be, (ii)
to the extent secured, has been secured by valid liens and security
interests which have been perfected and (iii) is the legal, valid and
binding obligation of the obligor named therein, enforceable in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance and other laws of general applicability relating
to or affecting creditors' rights and to general equity principles.
4.22. Property. Each of the Company and its Subsidiaries
has good and marketable title free and clear of all liens, encumbrances,
mortgages, pledges, charges, defaults or equitable interests to all of the
properties and assets, real and personal, tangible or intangible, which are
reflected on the consolidated statement of financial condition of the Company as
of December 31, 1997 or acquired after such date, except (i) liens for taxes not
yet due and payable or contested in good faith by appropriate proceedings, (ii)
pledges to secure deposits and other liens incurred in the ordinary course of
business, (iii) such imperfections of title, easements and encumbrances, if any,
as do not interfere with the use of the respective property as such property is
used on the date of this Agreement, (iv) for dispositions and encumbrances of,
or on, such properties or assets in the ordinary course of business or (v)
mechanics', materialmen's, workmen's, repairmen's, warehousemen's, carrier's and
other similar liens and encumbrances arising in the ordinary course of business.
All leases pursuant to which the Company or any Subsidiary of the Company, as
lessee, leases real or personal property are valid and enforceable in accordance
with their respective terms and neither the Company nor any of its Subsidiaries
nor, to the knowledge of the Company, any other party thereto, is in default
thereunder.
4.23. Accounting for the Merger; Reorganization. As of the
date of this Agreement, the Company has no reason to believe that the Merger
will fail to qualify (i) for pooling-of-interests treatment under GAAP or (ii)
as a reorganization under Section 368(a) of the Code.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Subject to Article III, Parent hereby represents and warrants
to the Company as follows:
5.1. Corporate Organization.
(a) Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Mississippi. Parent has the corporate power and authority to own or
lease all of its properties and assets and to carry on its business as
it is now being conducted, and is duly licensed or qualified to do
business in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification
necessary. Parent is duly registered as a bank holding company under
the BHC Act. The Amended and Restated Articles of Incorporation and
By-laws of Parent, copies of which have previously been made available
to the Company, are true and correct copies of such documents as in
effect as of the date of this Agreement.
(b) BancorpSouth Bank is a Mississippi state bank
validly existing and in good standing. The deposit accounts of
BancorpSouth Bank are insured by the FDIC through the Bank Insurance
Fund or Savings Association Insurance Fund to the fullest extent
permitted by law, and all premiums and assessments required in
connection therewith have been paid when due. Each of Parent's other
Subsidiaries is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation. Each
Subsidiary of Parent has the corporate power and authority to own or
lease all of its properties and assets and to carry on its business as
it is now being conducted, and is duly licensed or qualified to do
business in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification
necessary. The Articles of Association, by-laws and similar governing
documents of the BancorpSouth Bank, copies of which have previously
been made available to the Company, are true and correct copies of such
documents as in effect as of the date of this Agreement.
(c) The minute books of Parent and each of its
Subsidiaries contain true and correct records of all meetings and other
corporate actions held or taken since December 31, 1996 of their
respective shareholders and Boards of Directors (including committees
of their respective Boards of Directors).
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5.2. Capitalization.
(a) The authorized capital stock of Parent consists
of 500,000,000 shares of Parent Common Stock. As of March 6, 1998,
there were 22,329,777 shares of Parent Common Stock issued and
outstanding, and as of December 31, 1997, 125,350 shares of Parent
Common Stock were held in Parent's treasury. As of the date of this
Agreement, no shares of Parent Common Stock were reserved for issuance,
except with respect to employee benefit plans, stock option plans, the
Parent's rights plan, and the stock dividend payable on May 15, 1998.
All of the issued and outstanding shares of Parent Common Stock have
been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. Except as referred to above with
respect to reserved shares and for the Parent's dividend reinvestment
plan, Parent does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of
any character calling for the purchase or issuance of any shares of
Parent Common Stock or any other equity securities of Parent or any
securities representing the right to purchase or otherwise receive any
shares of Parent Common Stock. The shares of Parent Common Stock to be
issued pursuant to the Merger will be duly authorized and validly
issued and, at the Effective Time, all such shares will be fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof.
(b) Section 5.2(b) of the Parent Disclosure Schedule
sets forth a true and correct list of all of the Parent Subsidiaries as
of the date of this Agreement. Parent owns, directly or indirectly, all
of the issued and outstanding shares of capital stock of each of the
Subsidiaries of Parent, free and clear of all liens, charges,
encumbrances and security interests whatsoever, and all of such shares
are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. As of the date of this Agreement,
no Subsidiary of Parent has or is bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of
any character with any party that is not a direct or indirect
Subsidiary of Parent calling for the purchase or issuance of any shares
of capital stock or any other equity security of such Subsidiary or any
securities representing the right to purchase or otherwise receive any
shares of capital stock or any other equity security of such
Subsidiary.
5.3. Authority; No Violation.
(a) Parent has full corporate power and authority to
execute and deliver this Agreement and the Stock Option Agreement and
to consummate the transactions contemplated hereby and thereby. The
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execution and delivery of this Agreement and the Stock Option
Agreement and the consummation of the transactions contemplated hereby
and thereby have been duly and validly approved by the Board of
Directors of Parent, and no other corporate proceedings on the part of
Parent are necessary to approve this Agreement and the Stock Option
Agreement and to consummate the transactions contemplated hereby and
thereby. Each of this Agreement and the Stock Option Agreement has been
duly and validly executed and delivered by Parent and (assuming due
authorization, execution and delivery by the Company) this Agreement
constitutes a valid and binding obligation of Parent, enforceable
against Parent in accordance with its terms, except as enforcement may
be limited by general principles of equity whether applied in a court
of law or a court of equity and by bankruptcy, insolvency and similar
laws affecting creditors' rights and remedies generally.
(b) Neither the execution and delivery of this
Agreement or the Stock Option Agreement by Parent, nor the consummation
by Parent of the transactions contemplated hereby or thereby, nor
compliance by Parent with any of the terms or provisions hereof or
thereof, will (i) violate any provision of the Amended and Restated
Articles of Incorporation or By-Laws of Parent, or the articles of
incorporation or by-laws or similar governing documents of any of its
Subsidiaries or (ii) assuming that the consents and approvals referred
to in Section 5.4 are duly obtained, (x) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Parent or any of its Subsidiaries or any of
their respective properties or assets, or (y) violate, conflict with,
result in a breach of any provision of or the loss of any benefit
under, constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, result in the
termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of
any lien, pledge, security interest, charge or other encumbrance upon
any of the respective properties or assets of Parent or any of its
Subsidiaries under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which Parent or any of
its Subsidiaries is a party, or by which they or any of their
respective properties or assets may be bound or affected.
5.4. Consents and Approvals. Except for (a) the filing of
applications and notices, as applicable, with the Federal Reserve Board under
the BHC Act and the FDIC under the FDIA, and approval of such applications and
notices, (b) such applications, filings, authorizations, orders and approvals as
may be required under applicable state law, (c) the filing with the SEC of the
Proxy Statement and the filing and declaration of effectiveness of the S-4, (d)
the filing of the Articles of Merger with the Mississippi Secretary and the
Mississippi Department, (e) such filings and approvals as are required to be
made or obtained under the securities or "Blue Sky" laws of various states in
connection with the issuance of the shares of
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Parent Common Stock pursuant to this Agreement and (f) approval for listing of
the Parent Common Stock to be issued in the Merger on the NYSE, no consents or
approvals of or filings or registrations with any Governmental Entity or with
any third party are necessary in connection with (1) the execution and delivery
by Parent of this Agreement and (2) the consummation by Parent of the Merger and
the other transactions contemplated hereby.
5.5. Reports. Parent and each of its Subsidiaries have
timely filed all reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they were required to
file since December 31, 1996 with any Regulatory Agency, and have paid all fees
and assessments due and payable in connection therewith. Except for normal
examinations conducted by a Regulatory Agency in the regular course of the
business of Parent and its Subsidiaries, no Regulatory Agency has initiated any
proceeding or, to the knowledge of Parent, investigation into the business or
operations of Parent or any of its Subsidiaries since December 31, 1996. There
is no unresolved violation, criticism, or exception by any Regulatory Agency
with respect to any report or statement relating to any examinations of Parent
or any of its Subsidiaries.
5.6. Financial Statements. Parent has previously made
available to the Company copies of the consolidated balance sheets of Parent and
its Subsidiaries as of December 31 for the fiscal years 1996 and 1997 and the
related consolidated statements of income, changes in shareholders' equity and
cash flows for the fiscal years 1996 through 1997, inclusive, as reported in
Parent's Annual Report on Form 10-K for the fiscal year ended December 31, 1996,
filed with the SEC under the Exchange Act, in each case accompanied by the audit
report of KPMG Peat Marwick LLP, independent public accountants with respect to
Parent. The December 31, 1997 consolidated balance sheet of Parent (including
the related notes, where applicable) fairly presents the consolidated financial
position of Parent and its Subsidiaries as of the date thereof, and the other
financial statements referred to in this Section 5.6 (including the related
notes, where applicable) fairly present and the financial statements to be filed
with the SEC after the date hereof will fairly present (subject, in the case of
the unaudited statements, to recurring audit adjustments normal in nature and
amount), the results of the consolidated operations and changes in shareholders'
equity and consolidated financial position of Parent and its Subsidiaries for
the respective fiscal periods or as of the respective dates therein set forth;
each of such statements (including the related notes, where applicable)
complies, and the financial statements to be filed with the SEC after the date
hereof will comply, with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto; and each of
such statements (including the related notes, where applicable) has been, and
the financial statements to be filed with the SEC after the date hereof will be,
prepared in accordance with GAAP consistently applied during the periods
involved, except as indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Form 10-Q. The books and records of Parent and its
Subsidiaries have
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been, and are being, maintained in accordance with GAAP and any other applicable
legal and accounting requirements.
5.7. Broker's Fees. Neither Parent nor any Subsidiary of
Parent, nor any of their respective officers or directors, has employed any
broker or finder or incurred any liability for any broker's fees, commissions or
finder's fees in connection with any of the transactions contemplated by this
Agreement or the Stock Option Agreement.
5.8. Absence of Certain Changes or Events. Except as may
be disclosed in any Parent Report (as defined in Section 5.12) filed with the
SEC prior to the date of this Agreement, since December 31, 1997, there has been
no change or development or combination of changes or developments which,
individually or in the aggregate, has had a Material Adverse Effect on Parent.
5.9. Legal Proceedings.
(a) Except as set forth in the Company's annual
report on Form 10-K for the year ended December 31, 1997 or as
disclosed pursuant to Section 5.16 hereto, neither Parent nor any of
its Subsidiaries is a party to any and there are no pending or, to
Parent's knowledge, threatened, legal, administrative, arbitral or
other proceedings, claims, actions or governmental or regulatory
investigations of any nature against Parent or any of its Subsidiaries
or challenging the validity or propriety of the transactions
contemplated by this Agreement.
(b) There is no injunction, order, judgment, decree,
or regulatory restriction imposed upon Parent, any of its Subsidiaries
or the assets of Parent or any of its Subsidiaries.
5.10. Taxes. Except as set forth in Section 5.10 of the
Parent Disclosure Schedule, each of Parent and its Subsidiaries has (i) duly and
timely filed (including applicable extensions granted without penalty) all Tax
Returns required to be filed at or prior to the Effective Time, and such Tax
Returns are true and correct, and (ii) paid in full or made adequate provision
in the financial statements of Parent (in accordance with GAAP) for all Taxes
shown to be due on such Tax Returns. Except as set forth in Section 5.10 of the
Parent Disclosure Schedule, as of the date hereof, neither Parent nor any of its
Subsidiaries has requested any extension of time within which to file any Tax
Returns in respect of any fiscal year which have not since been filed and no
request for waivers of the time to assess any Taxes are pending or outstanding,
and as of the date hereof, with respect to each taxable period of Parent and its
Subsidiaries, the federal and state income Tax Returns of Parent and its
Subsidiaries have been audited by the Internal Revenue Service or appropriate
state tax authorities or the time for assessing and collecting income Tax with
respect to such taxable period has closed and such taxable period is not subject
to review.
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5.11. Employees.
(a) Section 5.11(a) of the Parent Disclosure Schedule
sets forth a true and correct list of each deferred compensation plan,
incentive compensation plan, equity compensation plan, "welfare" plan,
fund or program (within the meaning of section 3(1) of the ERISA);
"pension" plan, fund or program (within the meaning of section 3(2) of
ERISA); each employment, termination or severance agreement; and each
other employee benefit plan, fund, program, agreement or arrangement,
in each case, that is sponsored, maintained or contributed to or
required to be contributed to as of the date of this Agreement (the
"Parent Plans") by Parent, any of its Subsidiaries or by any trade or
business, whether or not incorporated (a "Parent ERISA Affiliate"), all
of which together with Parent would be deemed a "single employer"
within the meaning of Section 4001 of ERISA, for the benefit of any
employee or former employee of Parent, any Subsidiary or any Parent
ERISA Affiliate.
(b) Each of the Parent Plans is in compliance with
the applicable provisions of the Code and ERISA; each of the Parent
Plans intended to be "qualified" within the meaning of section 401(a)
of the Code has received a favorable determination letter from the IRS
and to the knowledge of the Parent, nothing has occurred which could
reasonably be expected to result in the revocation of such letter; no
Parent Plan has an accumulated or waived funding deficiency within the
meaning of section 412 of the Code; neither Parent nor any Parent ERISA
Affiliate has incurred, directly or indirectly, any liability to or on
account of a Parent Plan pursuant to Title IV of ERISA (other than PBGC
premiums); to the knowledge of Parent no proceedings have been
instituted to terminate any Parent Plan that is subject to Title IV of
ERISA; no "reportable event," as such term is defined in section
4043(c) of ERISA, has occurred with respect to any Parent Plan (other
than a reportable event with respect to which the thirty day notice
period has been waived); no condition exists that presents a material
risk to Parent of incurring a liability to or on account of a Parent
Plan pursuant to Title IV of ERISA; no Parent Plan is a multiemployer
plan (within the meaning of section 4001(a)(3) of ERISA) and no Parent
Plan is a multiple employer plan as defined in Section 413 of the Code;
and there are no pending, or, to the knowledge of Parent, threatened or
anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the Parent Plans or any trusts related
thereto.
5.12. SEC Reports. Parent has previously made available to
the Company a true and correct copy of each (a) final registration statement,
prospectus, report, schedule and definitive proxy statement filed since December
31, 1996 by Parent with the SEC pursuant to the Securities Act or the Exchange
Act (the "Parent Reports") and (b) communication mailed by Parent to its
shareholders
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since December 31, 1996, and no such registration statement, prospectus, report,
schedule, proxy statement or communication contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading, except that information
as of a later date shall be deemed to modify information as of an earlier date.
Parent has timely filed all Parent Reports and other documents required to be
filed by it under the Securities Act and the Exchange Act, and, as of their
respective dates, all Parent Reports complied with the published rules and
regulations of the SEC with respect thereto.
5.13. Parent Information. The information relating to
Parent and its Subsidiaries to be contained in the Proxy Statement and the S-4,
or in any other document filed with any other regulatory agency in connection
herewith, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading. The Proxy Statement
(except for such portions thereof that relate only to the Company or any of its
Subsidiaries) will comply with the provisions of the Exchange Act and the rules
and regulations thereunder. The S-4 will comply with the provisions of the
Securities Act and the rules and regulations thereunder.
5.14. Compliance with Applicable Law. Parent and each of
its Subsidiaries holds, and has at all times held, all licenses, franchises,
permits and authorizations necessary for the lawful conduct of their respective
businesses under and pursuant to all, and other than matters addressed by
Section 5.16 have complied with and are not in default in any respect under any,
applicable law, statute, order, rule, regulation, policy and/or guideline of any
Governmental Entity relating to Parent or any of its Subsidiaries and neither
Parent nor any of its Subsidiaries knows of, or has received notice of violation
of, any violations of any of the above.
5.15. Ownership of Company Common Stock; Affiliates and
Associates. As of the date hereof, neither Parent nor any of its affiliates or
associates (as such terms are defined under the Exchange Act) (i) beneficially
owns, directly or indirectly, or (ii) is a party to any agreement, arrangement
or understanding for the purpose of acquiring, holding, voting or disposing of
any shares of capital stock of the Company (other than Trust Account Shares and
DPC Shares).
5.16. Agreements with Regulatory Agencies. Except as
disclosed to the Company orally or in writing, neither Parent nor any of its
Subsidiaries is subject to any cease-and-desist or other order issued by, or is
a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or
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directive by, or is a recipient of any extraordinary supervisory letter from, or
has adopted any board resolutions at the request of (each, a "Parent Regulatory
Agreement"), any Regulatory Agency or other Governmental Entity that restricts
the conduct of its business or that in any manner relates to its capital
adequacy, its credit policies, its management or its business, nor has Parent or
any of its Subsidiaries been advised by any Regulatory Agency or other
Governmental Entity that it is considering issuing or requesting any Parent
Regulatory Agreement.
5.17. Environmental Matters.
(a) Each of Parent and its Subsidiaries and, to the
knowledge of Parent, each of the Participation Facilities and the Loan
Properties (each as hereinafter defined), are in compliance with all
Environmental Laws;
(b) There is no suit, claim, action or proceeding,
pending or, to the knowledge of Parent, threatened, before any
Governmental Entity or other forum in which Parent, any of its
Subsidiaries, any Participation Facility or any Loan Property, has been
or, with respect to threatened proceedings, may be, named as a
defendant (x) for alleged noncompliance (including by any predecessor)
with any Environmental Laws, or (y) relating to the release, threatened
release or exposure to any Hazardous Material whether or not occurring
at or on a site owned, leased or operated by Parent or any of its
Subsidiaries, any Participation Facility or any Loan Property;
(c) To the knowledge of Parent during the period of
(x) Parent's or any of its Subsidiaries' ownership or operation of any
of their respective current or former properties, (y) Parent's or any
of its Subsidiaries' participation in the management of any
Participation Facility, or (z) Parent's or any of its Subsidiaries'
interest in a Loan Property, there has been no release of Hazardous
Materials in, on, under or affecting any such property. To the
knowledge of Parent, prior to the period of (x) Parent's or any of its
Subsidiaries' ownership or operation of any of their respective current
or former properties, (y) Parent's or any of its Subsidiaries'
participation in the management of any Participation Facility, or (z)
Parent's or any of its Subsidiaries' interest in a Loan Property, there
was no release of Hazardous Materials in, on, under or affecting any
such property, Participation Facility or Loan Property; and
(d) The following definitions apply for purposes of
this Section 5.17: (x) "Loan Property" means any property in which
Parent or any of its Subsidiaries holds a security interest, and, where
required by the context, said term means the owner or operator of such
property; and (y) "Participation Facility" means any facility in which
Parent or any of its Subsidiaries participates in the management and,
where required by the context, said term means the owner or operator of
such property.
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5.18. Approvals. As of the date of this Agreement, Parent
knows of no reason why all regulatory approvals required for the consummation of
the transactions contemplated hereby (including, without limitation, the Merger)
should not be obtained.
5.19. Loan Portfolio.
(a) Except as set forth in Section 5.19 of the Parent
Disclosure Schedule, neither Parent nor any of its Subsidiaries is a
party to any written or oral Loan, other than Loans the unpaid
principal balance of which does not exceed $100,000, under the terms of
which the obligor was, as of March 31, 1998, over 90 days delinquent in
payment of principal or interest or in default of any other provision.
Section 5.19 of the Parent Disclosure Schedule sets forth all Loans in
original principal amounts in excess of $100,000 of Parent or any of
its Subsidiaries that were as of March 31, 1998, classified as
"Doubtful" or "Loss", or words of similar import, together with the
principal amount of and accrued and unpaid interest on each such Loan
and the identity of the borrower thereunder.
(b) Each Loan in original principal amount in excess
of $100,000 (i) is evidenced by notes, agreements or other evidences of
indebtedness which are true, genuine and what they purport to be, (ii)
to the extent secured, has been secured by valid liens and security
interests which have been perfected and (iii) is the legal, valid and
binding obligation of the obligor named therein, enforceable in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance and other laws of general applicability relating
to or affecting creditors' rights and to general equity principles.
5.20. Property. Each of Parent and its Subsidiaries has
good and marketable title free and clear of all liens, encumbrances, mortgages,
pledges, charges, defaults or equitable interests to all of the properties and
assets, real and personal, tangible or intangible, and which are reflected on
the consolidated statement of financial condition of Parent as of December 31,
1997 or acquired after such date, except (i) liens for taxes not yet due and
payable or contested in good faith by appropriate proceedings, (ii) pledges to
secure deposits and other liens incurred in the ordinary course of business,
(iii) such imperfections of title, easements and encumbrances, if any, as do not
interfere with the use of the respective property as such property is used on
the date of this Agreement, (iv) for dispositions and encumbrances of, or on,
such properties or assets in the ordinary course of business or (v) mechanics',
materialmen's, workmen's, repairmen's, warehousemen's, carrier's and other
similar liens and encumbrances arising in the ordinary course of business. All
leases pursuant to which Parent or any Subsidiary of Parent, as lessee, leases
real or personal property are valid and enforceable in accordance with their
respective terms and neither Parent nor any of its
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Subsidiaries nor, to the knowledge of Parent, any other party thereto is in
default thereunder.
5.21. Accounting for the Merger; Reorganization. As of the
date of this Agreement, Parent has no reason to believe that the Merger will
fail to qualify (i) for pooling-of-interests treatment under GAAP or (ii) as a
reorganization under Section 368(a) of the Code.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1. Covenants of the Company. During the period from the
date of this Agreement and continuing until the Effective Time, except as
expressly contemplated or permitted by this Agreement, the Stock Option
Agreement or with the prior written consent of Parent, the Company and its
Subsidiaries shall carry on their respective businesses in the ordinary course
consistent with past practice. Without limiting the generality of the foregoing,
and except as set forth in Section 6.1 of the Company Disclosure Schedule or as
otherwise contemplated by this Agreement, the Stock Option Agreement or as
consented to in writing by Parent, the Company shall not, and shall not permit
any of its Subsidiaries to:
(a) with respect to the Company only, declare or pay
any dividends on, or make other distributions in respect of any of its
capital stock during any period, at a rate in excess of $0.325 per
share per quarter; provided, that if the aggregate dividends so paid
expressed as a percentage of Company's net income is less than the
amount paid in dividends by Parent expressed as a percentage of
Parent's net income, Company shall be permitted to pay a special
dividend equal to the difference between the two percentages;
(b) (i) repurchase, redeem or otherwise acquire
(except for the acquisition of Trust Account Shares and DPC Shares, as
such terms are defined in Section 1.4(b) hereof) any shares of the
capital stock of the Company or any Subsidiary of the Company, or any
securities convertible into or exercisable for any shares of the
capital stock of the Company or any Subsidiary of the Company, (ii)
split, combine or reclassify any shares of its capital stock or issue
or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock, or
(iii) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or any securities
convertible into or exercisable for, or any rights, warrants or options
to acquire, any such shares, or enter into any agreement with respect
to any of the foregoing, except, in the case of clauses (ii) and (iii),
for the issuance of Company Common Stock (x) upon the exercise or
fulfillment of rights or options issued
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or existing pursuant to employee benefit plans, programs or
arrangements, all to the extent outstanding and in existence on the
date of this Agreement and in accordance with their present terms or
(y) pursuant to the Stock Option Agreement;
(c) amend its Articles of Incorporation, By-laws or
other similar governing documents;
(d) authorize or permit any of its officers,
directors, employees or agents to directly or indirectly solicit,
initiate, facilitate or encourage any inquiries relating to, or the
making of any proposal which constitutes, a "takeover proposal" (as
defined below), or participate in any discussions or negotiations, or
provide third parties with any nonpublic information, relating to any
such inquiry or proposal or otherwise facilitate any effort or attempt
to make a takeover proposal; provided, however, that the Company may
communicate information about any such takeover proposal to its
shareholders if, in the judgment of the Company's Board of Directors,
based upon the advice of outside counsel, such communication is
required under applicable law, provided further, however, that the
Company may, and may authorize and permit its officers, directors,
employees or agents to, (i) provide or cause to be provided such
information, and (ii) participate in such discussions or negotiations,
if the Board of Directors of the Company, after having consulted with
and considered the advice of outside counsel, has determined that the
failure to do so could cause the members of such Board of Directors to
breach their fiduciary duties under applicable laws. The Company will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations previously conducted with any parties other
than Parent with respect to any of the foregoing. The Company will take
all actions necessary or advisable to inform the appropriate
individuals or entities referred to in the first sentence hereof of the
obligations undertaken in this Section 6.1(d). The Company will notify
Parent immediately if any such inquiries or takeover proposals are
received by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or continued
with, the Company, and the Company will promptly (within 24 hours)
inform Parent in writing of all of the relevant details with respect to
the foregoing including the material terms and conditions of such
request or takeover proposal and the identity of the person or group
making such request or proposal. The Company will keep Parent fully
informed of the status and details (including amendments or proposed
amendments) of any such request or takeover proposal. As used in this
Agreement, "takeover proposal" shall mean any tender or exchange offer,
proposal for a merger, consolidation or other business combination
involving the Company or any Subsidiary of the Company or any proposal
or offer to acquire in any manner a substantial equity interest in, or
a substantial portion of the assets of, the Company or any Subsidiary
of the Company other
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than the transactions contemplated or permitted by this Agreement and
the Stock Option Agreement;
(e) make any capital expenditures other than those
which are set forth in Section 6.1 of the Company Disclosure Schedule
or (i) are made in the ordinary course of business or are necessary to
maintain existing assets in good repair and (ii) in any event are in an
amount of no more than $100,000 in the aggregate;
(f) enter into any new line of business other than
the sale of annuities;
(g) acquire or agree to acquire, by merging or
consolidating with, or by purchasing a substantial equity interest in
or a substantial portion of the assets of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof or otherwise acquire any assets, which
would be material, individually or in the aggregate, to the Company, or
which could reasonably be expected to impede or delay consummation of
the Merger, other than in connection with foreclosures, settlements in
lieu of foreclosure or troubled loan or debt restructurings in the
ordinary course of business consistent with past practices;
(h) except as contemplated by Article III hereto,
take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this
Agreement being or becoming untrue, or in any of the conditions to the
Merger set forth in Article VIII not being satisfied;
(i) change its methods of accounting in effect
December 31, 1997, except as required by changes in GAAP or regulatory
accounting principles as concurred to by the Company's independent
auditors;
(j) except as set forth in Section 7.7 hereof, as
required by applicable law or as required to maintain qualification
pursuant to the Code, (i) adopt, amend, or terminate any employee
benefit plan (including, without limitation, any Plan) or any
agreement, arrangement, plan or policy between the Company or any
Subsidiary of the Company and one or more of its current or former
directors, officers or (ii) except for normal increases in the ordinary
course of business consistent with past practice or except as required
by applicable law, increase in any manner the compensation or fringe
benefits of any director, officer or employee or pay any benefit not
required by any Plan or agreement as in effect as of the date hereof
(including, without limitation, the granting of stock options, stock
appreciation rights, restricted stock, restricted stock units or
performance units or shares).
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(k) take or permit to be taken any action which would
disqualify the Merger as a "pooling of interests" for accounting
purposes or a reorganization under Section 368(a) of the Code;
(l) other than activities in the ordinary course of
business consistent with past practice, sell, lease, encumber, assign
or otherwise dispose of, or agree to sell, lease, encumber, assign or
otherwise dispose of, any of its material assets, properties or other
rights or agreements;
(m) other than in the ordinary course of business
consistent with past practice, incur any indebtedness for borrowed
money or assume, guarantee, endorse or otherwise as an accommodation
become responsible for the obligations of any other individual,
corporation or other entity;
(n) file any application to relocate or terminate the
operations of any banking office of it or any of its Subsidiaries;
(o) create, renew, amend or terminate or give notice
of a proposed renewal, amendment or termination of, any material
contract, agreement or lease for goods, services or office space to
which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries or their respective properties is
bound, other than the renewal in the ordinary course of business of any
lease the term of which expires prior to the Closing Date, or amend or
waive the provisions of any confidentiality or standstill agreement to
which the Company or any of its affiliates is a party as of the date
hereof;
(p) take any action or enter into any agreement that
could reasonably be expected to jeopardize or materially delay the
receipt of any Requisite Regulatory Approval (as defined in Section
8.1(c)); or
(q) agree or commit to do any of the foregoing.
6.2. Covenants of Parent. Except as otherwise contemplated by
this Agreement or consented to in writing by the Company, Parent shall not, and
shall not permit any of its Subsidiaries to:
(a) except as contemplated by Article III hereto,
take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this
Agreement being or becoming untrue, or in any of the conditions to the
Merger set forth in Article VIII not being satisfied;
(b) take any action or enter into any agreement that
could reasonably be expected to jeopardize or materially delay the
receipt of any Requisite Regulatory Approval;
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(c) change its methods of accounting in effect at
December 31, 1997, except in accordance with changes in GAAP or
regulatory accounting principles as concurred to by Parent's
independent auditors;
(d) take or permit to be taken any action which would
disqualify the Merger as a "pooling of interests" for accounting
purposes or a reorganization under Section 368(a) of the Code; or
(e) agree or commit to do any of the foregoing.
6.3. Conduct of Parent's Business. During the period from
the date of this Agreement and continuing until the Effective Time, except as
expressly contemplated or permitted by this Agreement, or with the prior written
consent of the Company, Parent shall, and shall cause its Subsidiaries to, carry
on their respective businesses in the ordinary course consistent with past
practice.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1. Regulatory Matters.
(a) Parent and the Company shall promptly prepare and
file with the SEC the Proxy Statement, and Parent shall promptly
prepare and file with the SEC the S-4, in which the Proxy Statement
will be included as a prospectus. Each of the Company and Parent shall
use its reasonable best efforts to have the S-4 declared effective
under the Securities Act as promptly as practicable after such filing,
and the Company shall thereafter mail the Proxy Statement to its
shareholders. Parent shall also use its reasonable best efforts to
obtain all necessary state securities law or "Blue Sky" permits and
approvals required to carry out the transactions contemplated by this
Agreement.
(b) The parties hereto shall cooperate with each
other and use their reasonable best efforts to promptly prepare and
file all necessary documentation, to effect all applications, notices,
petitions and filings, and to obtain as promptly as practicable all
permits, consents, approvals and authorizations of all third parties
and Governmental Entities which are necessary or advisable to
consummate the transactions contemplated by this Agreement (including,
without limitation, the Merger). The Company and Parent shall have the
right to review in advance, and to the extent practicable each will
consult the other on, in each case subject to applicable laws relating
to the exchange of information, all the information relating to the
Company or Parent, as the case may be, and any of their respective
Subsidiaries, which appears in any filing made with, or written
materials submitted to, any third party or any Governmental Entity in
connection with the transactions contemplated by this Agreement. In
exercising the foregoing
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right, each of the parties hereto shall act reasonably and as promptly
as practicable. The parties hereto agree that they will consult with
each other with respect to the obtaining of all permits, consents,
approvals and authorizations of all third parties and Governmental
Entities necessary or advisable to consummate the transactions
contemplated by this Agreement and each party will keep the other
apprised of the status of matters relating to completion of the
transactions contemplated herein.
(c) Parent and the Company shall, upon request,
furnish each other with all information concerning themselves, their
Subsidiaries, directors, officers and shareholders and such other
matters as may be reasonably necessary or advisable in connection with
the Proxy Statement, the S-4 or any other statement, filing, notice or
application made by or on behalf of Parent, the Company or any of their
respective Subsidiaries to any Governmental Entity in connection with
the Merger and the other transactions contemplated by this Agreement.
(d) Parent and the Company shall promptly furnish
each other with copies of written communications received by Parent or
the Company, as the case may be, or any of their respective
Subsidiaries, Affiliates or Associates (as such terms are defined in
Rule 12b-2 under the Exchange Act as in effect on the date of this
Agreement) from, or delivered by any of the foregoing to, any
Governmental Entity in respect of the transactions contemplated hereby.
7.2. Access to Information.
(a) Upon reasonable notice and subject to applicable
laws relating to the exchange of information, each party shall, and
shall cause each of its Subsidiaries to, afford to the officers,
employees, accountants, counsel and other representatives of the other
party, access during normal business hours during the period prior to
the Effective Time to all its properties, books, contracts,
commitments, records, officers, employees, accountants, counsel and
other representatives and, during such period, it shall, and shall
cause its Subsidiaries to, make available to the other party all
information concerning its business, properties and personnel as the
other party may reasonably request. Neither party nor any of its
Subsidiaries shall be required to provide access to or to disclose
information where such access or disclosure would violate or prejudice
the rights of its customers, jeopardize any attorney-client privilege
or contravene any law, rule, regulation, order, judgment, decree,
fiduciary duty or binding agreement entered into prior to the date of
this Agreement. Such party shall identify the nature of the limitation
on access and disclosure, and the parties hereto will make appropriate
substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply.
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(b) All information furnished to Parent pursuant to
Section 7.2(a) shall be subject to, and Parent shall hold all such
information in confidence in accordance with, the provisions of the
confidentiality agreement dated February 4, 1998 (the "Confidentiality
Agreement"), between Parent and the Company. The Company shall have the
same obligations to Parent under the Confidentiality Agreement with
respect to information furnished to the Company pursuant to Section
7.2(a) as if the Company were the receiving party under such
Confidentiality Agreement.
(c) Notwithstanding anything in the Confidentiality
Agreement or any other agreement to the contrary, no investigation by
either of the parties or their respective representatives shall affect
the representations, warranties, covenants or agreements of the other
set forth herein and the parties shall remain responsible for the same.
7.3. Shareholder Meeting. The Company shall take all steps
necessary to duly call, give notice of, convene and hold a meeting of its
shareholders to be held as soon as is reasonably practicable after the date on
which the S-4 becomes effective for the purpose of voting upon the approval and
adoption of this Agreement. The Company will, through its Board of Directors,
recommend to its shareholders approval of this Agreement and the transactions
contemplated hereby and such other matters as may be submitted to its
shareholders in connection with this Agreement.
7.4. Legal Conditions to Merger. Each of Parent and the
Company shall, and shall cause its Subsidiaries to, use their reasonable best
efforts (a) to take, or cause to be taken, all actions necessary, proper or
advisable to comply promptly with all legal requirements which may be imposed on
such party or its Subsidiaries with respect to the Merger and, subject to the
conditions set forth in Article VIII hereof, to consummate the transactions
contemplated by this Agreement and (b) to obtain (and to cooperate with the
other party to obtain) any consent, authorization, order or approval of, or any
exemption by, any Governmental Entity and any other third party which is
required to be obtained by the Company or Parent or any of their respective
Subsidiaries in connection with the Merger and the other transactions
contemplated by this Agreement, and to comply with the terms and conditions of
such consent, authorization, order or approval.
7.5. Affiliates. Each of Parent and the Company shall use
its reasonable best efforts to cause each director, executive officer and other
person who is an "affiliate" (for purposes of Rule 145 under the Securities Act
and for purposes of qualifying the Merger for "pooling-of-interests" accounting
treatment) of such party to deliver to the other party hereto, as soon as
practicable after the date of this Agreement, a written agreement, in the form
of Exhibit 7.5(a) hereto (in the
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case of affiliates of Parent) or Exhibit 7.5(b) hereto (in the case of
affiliates of the Company).
7.6. Stock Exchange Listing. Parent shall use its
reasonable best efforts to cause the shares of Parent Common Stock to be issued
in the Merger to be approved for listing on the NYSE, subject to official notice
of issuance, as of the Effective Time.
7.7. Employee Benefit Plans; Existing Agreements.
(a) As of the Effective Time, the employees of the
Company and its Subsidiaries (the "Company Employees") shall be
eligible to participate in Parent's employee benefit plans in which
similarly situated employees of Parent or BancorpSouth Bank
participate, to the same extent as similarly situated employees of
Parent or BancorpSouth Bank (it being understood that inclusion of
Company Employees in Parent's employee benefit plans may occur at
different times with respect to different plans).
(b) With respect to each Parent Plan that is an
"employee benefit plan," as defined in Section 3(3)of ERISA, for
purposes of determining eligibility to participate, vesting, and
entitlement to benefits, including for severance benefits and vacation
entitlement (but not for accrual of pension benefits or 401(K)
eligibility), service with the Company (or predecessor employers to the
extent the Company provides past service credit) shall be treated as
service with Parent; provided; however, that such service shall not be
recognized to the extent that such recognition would result in a
duplication or increase of benefits. Such service also shall apply for
purposes of satisfying any waiting periods, evidence of insurability
requirements, or the application of any preexisting condition
limitations. Each Parent Plan shall waive pre-existing condition
limitations to the same extent waived under the applicable Company
Plan. Company Employees shall be given credit for amounts paid under a
corresponding benefit plan during the same period for purposes of
applying deductibles, copayments and out-of-pocket maximums as though
such amounts had been paid in accordance with the terms and conditions
of the Parent Plan.
(c) As of the Effective Time, Parent shall assume and
honor and shall cause the appropriate Subsidiaries of Parent to assume
and to honor in accordance with their terms all employment, severance
and other compensation agreements and arrangements existing prior to
the execution of this Agreement which are between the Company or any of
its Subsidiaries and any director, officer or employee thereof and
which have been disclosed in the Company Disclosure Schedule.
(d) Parent and the Company agree to cooperate and
take all reasonable actions to effect the merger of any employee
benefit plan that is
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intended to be qualified under Section 401(a) of the Code into the
appropriate tax-qualified retirement plan of Parent after the Merger is
completed, so that such plan merger satisfies the requirements of
Section 414(l) of the Code; provided, however, that Parent shall not be
obligated to effect such a merger of a plan unless such plan is fully
funded under Section 412 of the Code and Section 302 of ERISA, to the
extent applicable, and the merger would not jeopardize the
tax-qualified status of any Parent Plan.
7.8. Indemnification.
(a) In the event of any threatened or actual claim,
action, suit, proceeding or investigation, whether civil, criminal or
administrative, including, without limitation, any such claim, action,
suit, proceeding or investigation in which any person who is now, or
has been at any time prior to the date of this Agreement, or who
becomes prior to the Effective Time, a director, officer or employee of
the Company or any of its Subsidiaries (the "Indemnified Parties") is,
or is threatened to be, made a party based in whole or in part on, or
arising in whole or in part out of, or pertaining to (i) the fact that
he is or was a director, officer or employee of the Company, any of the
Subsidiaries of the Company or any of their respective predecessors or
affiliates or (ii) this Agreement or any of the transactions
contemplated hereby, whether in any case asserted or arising before or
after the Effective Time, the parties hereto agree to cooperate and use
their best efforts to defend against and respond thereto. It is
understood and agreed that after the Effective Time, Parent shall
indemnify and hold harmless, as and to the extent permitted by law,
each such Indemnified Party against any losses, claims, damages,
liabilities, costs, expenses (including reasonable attorney's fees and
expenses in advance of the final disposition of any claim, suit,
proceeding or investigation to each Indemnified Party to the fullest
extent permitted by law upon receipt of any undertaking required by
applicable law), judgments, fines and amounts paid in settlement in
connection with any such threatened or actual claim, action, suit,
proceeding or investigation, and in the event of any such threatened or
actual claim, action, suit, proceeding or investigation (whether
asserted or arising before or after the Effective Time), the
Indemnified Parties may retain counsel reasonably satisfactory to them
after consultation with Parent; provided, however, that (1) Parent
shall have the right to assume the defense thereof and upon such
assumption Parent shall not be liable to any Indemnified Party for any
legal expenses of other counsel or any other expenses subsequently
incurred by any Indemnified Party in connection with the defense
thereof, except that if Parent elects not to assume such defense or
counsel for the Indemnified Parties reasonably advises that there are
issues which raise conflicts of interest between Parent and the
Indemnified Parties, the Indemnified Parties may retain counsel
reasonably satisfactory to them after consultation with Parent, and
Parent shall pay the reasonable fees and expenses of such
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counsel for the Indemnified Parties, (2) Parent shall in all cases be
obligated pursuant to this paragraph to pay for only one firm of
counsel for all Indemnified Parties, (3) Parent shall not be liable for
any settlement effected without its prior written consent (which
consent shall not be unreasonably withheld) and (4) Parent shall have
no obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such
determination shall have become final and nonappealable, that
indemnification of such Indemnified Party in the manner contemplated
hereby is prohibited by applicable law. Any Indemnified Party wishing
to claim Indemnification under this Section 7.8, upon learning of any
such claim, action, suit, proceeding or investigation, shall promptly
notify Parent thereof, provided that the failure to so notify shall not
affect the obligations of Parent under this Section 7.8 except to the
extent such failure to notify materially prejudices Parent. Parent's
obligations under this Section 7.8 shall continue in full force and
effect without time limit from and after the Effective Time.
(b) Parent shall cause the persons serving as
officers and directors of the Company immediately prior to the
Effective Time to be covered for a period of three years from the
Effective Time by the directors' and officers' liability insurance
policy maintained by the Company (provided that Parent may substitute
therefor policies of at least the same coverage and amounts containing
terms and conditions which are not less advantageous than such policy)
with respect to acts or omissions occurring prior to the Effective Time
which were committed by such officers and directors in their capacity
as such; provided, however, that in no event shall Parent be required
to expend on an annual basis more than 125% of the current amount
expended by the Company (the "Insurance Amount") to maintain or procure
insurance coverage, and further provided that if Parent is unable to
maintain or obtain the insurance called for by this Section 7.8(b),
Parent shall use all reasonable efforts to obtain as much comparable
insurance as is available for the Insurance Amount.
(c) In the event Parent or any of its successors or
assigns (i) consolidates with or merges into any other person and shall
not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers or conveys all or
substantially all of its properties and assets to any person, then, and
in each such case, to the extent necessary, proper provision shall be
made so that the successors and assigns of Parent assume the
obligations set forth in this section.
(d) The provisions of this Section 7.8 are intended
to be for the benefit of, and shall be enforceable by, each Indemnified
Party and his or her heirs and representatives.
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7.9. Additional Agreements. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation with full title
to all properties, assets, rights, approvals, immunities and franchises of any
of the parties to the Merger, the proper officers and directors of each party to
this Agreement and their respective Subsidiaries shall take all such necessary
action as may be reasonably requested by Parent.
7.10. Coordination of Dividends. After the date of this
Agreement each of Parent and the Company shall coordinate with the other the
declaration of any dividends in respect of the Company Common Stock and the
record dates and payments dates relating thereto, it being the intention of the
parties that the holders of Company Common Stock may (to the extent allowed by
law and declared) receive one, but not more than one, dividend for any single
calendar quarter with respect to their shares of Company Common Stock and any
shares of Parent Common Stock any holder of Company Common Stock receives in
exchange therefor in the Merger.
7.11. Employment Agreements. [INTENTIONALLY OMITTED].
7.12. Year 2000. In the event the transactions contemplated
hereby are not consummated by March 31, 1999 or this Agreement is terminated
pursuant to Article IX hereof, Parent hereby agrees to provide on an arms-length
basis at fair market value consulting services, data processing, and related
computer support to Company in connection with its Year 2000 compliance program
through December 31, 2000.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1. Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Shareholder Approvals. This Agreement shall have
been approved and adopted by the requisite vote of the shareholders of
the Company under applicable law.
(b) Listing of Shares. The shares of Parent Common
Stock which shall be issued to the shareholders of the Company upon
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consummation of the Merger shall have been authorized for listing on
the NYSE, subject to official notice of issuance.
(c) Other Approvals. All regulatory approvals
required to consummate the transactions contemplated hereby (including
the Merger) shall have been obtained and shall remain in full force and
effect and all statutory waiting periods in respect thereof shall have
expired (all such approvals and the expiration of all such waiting
periods being referred to herein as the "Requisite Regulatory
Approvals").
(d) S-4. The S-4 shall have become effective under
the Securities Act and no stop order suspending the effectiveness of
the S-4 shall have been issued and no proceedings for that purpose
shall have been initiated or threatened by the SEC.
(e) No Injunctions or Restraints; Illegality. No
order, injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the Merger shall be in effect. No
statute, rule, regulation, order, injunction or decree shall have been
enacted, entered, promulgated or enforced by any Governmental Entity
which prohibits, restricts or makes illegal consummation of the Merger.
8.2. Conditions to Obligations of Parent. The obligation of
Parent to effect the Merger is also subject to the satisfaction or waiver by
Parent at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. (i) Subject to
Section 3.2, the representations and warranties of the Company set
forth in this Agreement (other than those set forth in Section 4.2)
shall be true and correct 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; and (ii) the representations and warranties of the
Company set forth in Section 4.2 of this Agreement shall be true and
correct in all material respects (without giving effect to Section 3.2
of this Agreement) 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.
Parent shall have received a certificate signed on behalf of the
Company by the Chief Executive Officer and the Chief Financial Officer
of the Company to the foregoing effect.
(b) Performance of Obligations of the Company. The
Company shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the
Closing Date, and Parent shall have received a certificate signed on
behalf of the
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Company by the Chief Executive Officer and the Chief Financial Officer
of the Company to such effect.
(c) No Pending Governmental Actions. No proceeding
initiated by any Governmental Entity seeking an Injunction shall be
pending.
(d) Federal Tax Opinion. Parent shall have received
an opinion from Waller Lansden Dortch & Davis, PLLC, counsel to Parent
("Parent's Counsel"), in form and substance reasonably satisfactory to
Parent, dated the Effective Time, substantially to the effect that, on
the basis of facts, representations and assumptions set forth in such
opinion which are consistent with the state of facts existing at the
Effective Time, the Merger will be treated as a reorganization within
the meaning of Section 368(a) of the Code and that, accordingly, for
federal income tax purposes:
(i) No gain or loss will be recognized by
Parent or the Company as a result of the Merger;
(ii) No gain or loss will be recognized by
the shareholders of the Company who exchange all of their
Company Common Stock solely for Parent Common Stock pursuant
to the Merger (except with respect to cash received in lieu of
a fractional share interest in Parent Common Stock); and
(iii) The aggregate tax basis of the Parent
Common Stock received by shareholders who exchange all of
their Company Common Stock solely for Parent Common Stock
pursuant to the Merger will be the same as the aggregate tax
basis of the Company Common Stock surrendered in exchange
therefor (reduced by any amount allocable to a fractional
share interest for which cash is received).
In rendering such opinion, Parent's Counsel may require and
rely upon representations and covenants, including those contained in
certificates of officers of Parent, the Company and others, reasonably
satisfactory in form and substance to such counsel.
(e) Employment Agreements. Each of Howell N. Gage,
Jr. and Joel Horton shall have entered into written employment
agreements with Parent containing non-competition provisions
satisfactory to the Parent in its reasonable discretion.
8.3. Conditions to Obligations of the Company. The obligation
of the Company to effect the Merger is also subject to the satisfaction or
waiver by the Company at or prior to the Effective Time of the following
conditions:
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(a) Representations and Warranties. (i) Subject to
Section 3.2, the representations and warranties of Parent set forth in
this Agreement (other than those set forth in Section 5.2) shall be
true and correct 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;
and (ii) the representations and warranties of Parent set forth in
Section 5.2 of this Agreement shall be true and correct in all material
respects (without giving effect to Section 3.2 of this Agreement) 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. The Company
shall have received a certificate signed on behalf of Parent by the
Chief Executive Officer and the principal financial officer of Parent
to the foregoing effect.
(b) Performance of Obligations of Parent. Parent
shall have performed in all material respects all obligations required
to be performed by it under this Agreement at or prior to the Closing
Date, and the Company shall have received a certificate signed on
behalf of Parent by the Chief Executive Officer and the principal
financial officer of Parent to such effect.
(c) No Pending Governmental Actions. No proceeding
initiated by any Governmental Entity seeking an Injunction shall be
pending.
(d) Federal Tax Opinion. The Company shall have
received an opinion from Gerrish & McCreary, P.C. (the "Company's
Counsel"), in form and substance reasonably satisfactory to the
Company, dated the Effective Time, substantially to the effect that, on
the basis of facts, representations and assumptions set forth in such
opinion which are consistent with the state of facts existing at the
Effective Time, the Merger will be treated as a reorganization within
the meaning of Section 368(a) of the Code and that, accordingly, for
federal income tax purposes:
(i) No gain or loss will be recognized by
Parent or the Company as a result of the Merger;
(ii) No gain or loss will be recognized by
the shareholders of the Company who exchange all of their
Company Common Stock solely for Parent Common Stock pursuant
to the Merger (except with respect to cash received in lieu of
a fractional share interest in Parent Common Stock); and
(iii) The aggregate tax basis of the Parent
Common Stock received by shareholders who exchange all of
their Company Common Stock solely for Parent Common Stock
pursuant to the Merger will be the same as the aggregate tax
basis of the Company
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Common Stock surrendered in exchange therefor (reduced by any amount
allocable to a fractional share interest for which cash is received).
In rendering such opinion, the Company's Counsel may require
and rely upon representations and covenants, including those contained in
certificates of officers of Parent, the Company and others, reasonably
satisfactory in form and substance to such counsel.
(e) Fairness Opinion. Prior to the mailing of the
Company proxy statement, the Company shall have received an opinion
from Southard Financial to the effect that as of the date thereof and
based upon and subject to the matters set forth therein, the Merger is
fair to the shareholders of the Company from a financial point of view.
ARTICLE IX
TERMINATION AND AMENDMENT
9.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the matters
presented in connection with the Merger by the shareholders of both the Company
and Parent:
(a) by mutual consent of the Company and Parent in a
written instrument, if the Board of Directors of each so determines by
a vote of a majority of the members of its entire Board;
(b) By either Parent or the Company upon written
notice to the other party (i) 60 days after the date on which any
request or application for a Requisite Regulatory Approval shall have
been denied or withdrawn at the request or recommendation of the
Governmental Entity which must grant such Requisite Regulatory
Approval, unless within the 60-day period following such denial or
withdrawal a petition for rehearing or an amended application has been
filed with the applicable Governmental Entity, provided, however, that
no party shall have the right to terminate this Agreement pursuant to
this Section 9.1(b)(i) if such denial or request or recommendation for
withdrawal shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe the covenants and
agreements of such party set forth herein or (ii) if any Governmental
Entity of competent jurisdiction shall have issued a final
nonappealable order enjoining or otherwise prohibiting the Merger;
(c) by either Parent or the Company if the Merger
shall not have been consummated on or before March 31, 1999, unless the
failure of the Closing to occur by such date shall be due to the
failure of the party
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seeking to terminate this Agreement to perform or observe the covenants
and agreements of such party set forth herein;
(d) by either Parent or the Company (provided that
the Company may not terminate if it is in material breach of any of its
obligations under Section 7.3) if any approval of the shareholders of
the Company required for the consummation of the Merger shall not have
been obtained by reason of the failure to obtain the required vote at a
duly held meeting of such shareholders or at any adjournment or
postponement thereof;
(e) by either Parent or the Company (provided that
the terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained herein)
if any of the representations or warranties set forth in this Agreement
on the part of the other party shall be untrue or incorrect in any
material respect, which is not cured within thirty days following
written notice to the party making such representation, or which, by
its nature, cannot be cured prior to the Closing; provided, however,
that neither party shall have the right to terminate this Agreement
pursuant to this Section 9.1(e) unless the representation or warranty,
together with all other representations and warranties that are untrue
or incorrect, would entitle the party receiving such representation not
to consummate the transactions contemplated hereby under Section 8.2(a)
(in the case of a representation or warranty by the Company) or Section
8.3(a) (in the case of a representation or warranty by Parent);
(f) by either Parent or the Company (provided that
the terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained herein)
if there shall have been a material breach of any of the covenants or
agreements set forth in this Agreement on the part of the other party,
which breach shall not have been cured within thirty days following
receipt by the breaching party of written notice of such breach from
the other party hereto, or which breach, by its nature, cannot be cured
prior to the Closing; or
(g) by the Board of Directors of Parent, if the Board
of Directors of the Company shall have failed to recommend in the Proxy
Statement that the Company's shareholders approve and adopt this
Agreement, or shall have withdrawn, modified or changed in a manner
adverse to Parent its approval or recommendation of this Agreement and
the transactions contemplated hereby.
9.2. Effect of Termination. In the event of termination of
this Agreement by either Parent or the Company as provided in Section 9.1, this
Agreement shall forthwith become void and have no effect except (i) Sections
7.2(b),
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9.2 and 10.3 shall survive any termination of this Agreement and (ii) that
notwithstanding anything to the contrary contained in this Agreement, no party
shall be relieved or released from any liabilities or damages arising out of its
willful breach of any provision of this Agreement.
9.3. Amendment. Subject to compliance with applicable law,
this Agreement may be amended by the parties hereto, by action taken or
authorized by their respective Boards of Directors, at any time before or after
approval of the matters presented in connection with the Merger by the
shareholders of the Company; provided, however, that after any approval of the
transactions contemplated by this Agreement by the Company's shareholders, there
may not be, without further approval of such shareholders, any amendment of this
Agreement which reduces the amount or changes the form of the consideration to
be delivered to the Company shareholders hereunder other than as contemplated by
this Agreement. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
9.4. Extension; Waiver. At any time prior to the Effective
Time, each of the parties hereto, by action taken or authorized by its Board of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other party hereto,
(b) waive any inaccuracies in the representations and warranties of the other
party contained herein or in any document delivered pursuant hereto and (c)
waive compliance with any of the agreements or conditions of the other party
contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written instrument
signed on behalf of such party, but such extension or waiver or failure to
insist on strict compliance with an obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure.
ARTICLE X
GENERAL PROVISIONS
10.1. Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") will take place at 10:00
a.m. (Central Standard Time) on the first day which is (a) the last business day
of month and (b) at least two business days after the satisfaction or waiver
(subject to applicable law) of the last to occur of the conditions set forth in
Article VIII hereof (other than those conditions which relate to actions to be
taken at the Closing) (the "Closing Date"), at Waller Lansden Dortch & Davis,
PLLC, 511 Union Street, Suite 2100, Nashville, Tennessee 37219, or at such other
time, date and place as is agreed to by the parties hereto.
10.2. Nonsurvival of Representations, Warranties and
Agreements. None of the representations, warranties, covenants and agreements in
this
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<PAGE> 48
Agreement or in any instrument delivered pursuant to this Agreement (other than
pursuant to the Stock Option Agreement which shall terminate in accordance with
its terms) shall survive the Effective Time, except for those covenants and
agreements contained herein and therein which by their terms apply in whole or
in part after the Effective Time.
10.3. Expenses. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such costs and expenses.
10.4. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation), mailed by registered or certified mail (return
receipt requested) or delivered by an express courier (with confirmation) 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 Parent, to:
BancorpSouth, Inc.
One Mississippi Plaza
Tupelo, Mississippi 38801
Attention: Aubrey B. Patterson
with a copy (which shall not constitute
notice) to:
Waller Lansden Dortch & Davis
A Professional Limited Liability Company
511 Union Street, Suite 2100
Nashville, Tennessee 37219
Attention: Ralph W. Davis, Esq.
and
(b) if to the Company, to:
Merchants Capital Corporation
820 South Street
Vicksburg, Mississippi 39180
Attention: Howell N. Gage, Jr.
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<PAGE> 49
with a copy (which shall not constitute
notice) to:
Gerrish & McCreary, P.C.
700 Colonial Road
Suite 200
Memphis, Tennessee 38117
Attn: Jeffrey C. Gerrish, Esq.
10.5. Interpretation. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall be to a
Section of or Exhibit or Schedule to this Agreement unless otherwise indicated
in such specific provision. 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 phrases "the date of this
Agreement", "the date hereof" and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to May 2, 1998.
10.6. Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same instrument and
shall become effective when 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.
10.7. Entire Agreement. This Agreement (including the
documents and the instruments referred to herein) constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof, other
than the Stock Option Agreement and the Confidentiality Agreement.
10.8. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Mississippi, without
regard to its principles of conflicts of laws.
10.9. Enforcement of Agreement. The parties hereto agree
that irreparable damage would occur in the event that the provisions contained
in 7.2(b) of this Agreement were not performed in accordance with its specific
terms or were otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent breaches of Section
7.2(b) of this Agreement and to enforce specifically the terms and provisions
thereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
10.10. Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be
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<PAGE> 50
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
10.11. Publicity. Except as otherwise required by law or the
rules of the NYSE, so long as this Agreement is in effect, neither Parent nor
the Company shall, or shall permit any of its Subsidiaries to, issue or cause
the publication of any press release or other public announcement with respect
to, or otherwise make any public statement concerning, the transactions
contemplated by this Agreement without the consent of the other party, which
such consent shall not be unreasonably withheld.
10.12. Assignment; Third Party Beneficiaries. 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. Except
as otherwise expressly provided herein, this Agreement (including the documents
and instruments referred to herein) is not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder.
[NEXT PAGE IS SIGNATURE PAGE.]
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IN WITNESS WHEREOF, Parent and the Company have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first above written.
BANCORPSOUTH, INC.
By: /s/ AUBREY B. PATTERSON
---------------------------------------
Name: Aubrey B. Patterson
-------------------------------------
Title: Chairman and Chief Executive Officer
------------------------------------
MERCHANTS CAPITAL CORPORATION
By: /s/ HOWELL N. GAGE
---------------------------------------
Name: Howell N. Gage
-------------------------------------
Title: Chairman
------------------------------------
51
<PAGE> 1
Exhibit 4.1
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO CERTAIN
PROVISIONS CONTAINED HEREIN AND TO RESALE RESTRICTIONS UNDER THE SECURITIES ACT
OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated May 2, 1998, between Merchants
Capital Corporation, a Mississippi corporation ("Issuer"), and BancorpSouth,
Inc., a Mississippi corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and
Plan of Merger of even date herewith (the "Merger Agreement"), which agreement
has been executed by the parties hereto immediately prior to this Stock Option
Agreement (the "Agreement"); and
WHEREAS, as a condition to Grantee's entering into the Merger
Agreement and in consideration therefor, Issuer has agreed to grant Grantee the
Option (as hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein and in the Merger Agreement,
the parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 148,150 fully paid and nonassessable shares of Issuer's Common Stock, $5.00
par value ("Common Stock"), at a price of $63.00 per share (the "Option Price");
provided, however, that in no event shall the number of shares of Common Stock
for which this Option is exercisable exceed 19.9% of the Issuer's issued and
outstanding shares of Common Stock without giving effect to any shares subject
to or issued pursuant to the Option. The number of shares of Common Stock that
may be received upon the exercise of the Option and the Option Price are subject
to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock
are either (i) issued or otherwise become outstanding after the date of this
Agreement (other than pursuant to this Agreement) or (ii) redeemed, repurchased,
retired or otherwise cease to be outstanding after the date of the Agreement,
the number of shares of Common Stock subject to the Option shall be increased or
decreased, as appropriate, so that, after such issuance, such number equals
19.9% of the number of shares of Common Stock then issued and outstanding
without giving effect to any shares subject or issued pursuant to the Option.
Nothing contained in this Section
<PAGE> 2
1(b) or elsewhere in this Agreement shall be deemed to authorize Issuer or
Grantee to breach any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the
Option, in whole or part, and from time to time, if, but only if, both an
Initial Triggering Event (as hereinafter defined) and a Subsequent Triggering
Event (as hereinafter defined) shall have occurred prior to the occurrence of an
Exercise Termination Event (as hereinafter defined), provided that the Holder
shall have sent the written notice of such exercise (as provided in subsection
(e) of this Section 2) within 90 days following such Subsequent Triggering
Event. Each of the following shall be an "Exercise Termination Event": (i) the
Effective Time (as defined in the Merger Agreement) of the Merger; (ii)
termination of the Merger Agreement in accordance with the provisions thereof if
such termination occurs prior to the occurrence of an Initial Triggering Event
except a termination by Grantee pursuant to Section 9.1(f) of the Merger
Agreement (unless the breach by Issuer giving rise to such right of termination
is non-volitional) or Section 9.1(g) of the Merger Agreement; or (iii) the
passage of 12 months after termination of the Merger Agreement if such
termination follows the occurrence of an Initial Triggering Event or is a
termination by Grantee pursuant to Section 9.1(f) of the Merger Agreement
(unless the breach by Issuer giving rise to such right of termination is
non-volitional) or Section 9.1(g) of the Merger Agreement. The term "Holder"
shall mean the Grantee or any future holder or holders of the Option.
(b) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Issuer or any of its Subsidiaries (each
an "Issuer Subsidiary"), without having received Grantee's
prior written consent, shall have entered into an agreement to
engage in an Acquisition Transaction (as hereinafter defined)
with any person (the term "person" for purposes of this
Agreement having the meaning assigned thereto in Sections
3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934,
as amended (the "1934 Act"), and the rules and regulations
thereunder) other than Grantee or any of its Subsidiaries
(each a "Grantee Subsidiary") or the Board of Directors of
Issuer shall have recommended that the shareholders of Issuer
approve or accept any Acquisition Transaction. For purposes of
this Agreement, "Acquisition Transaction" shall mean with
respect to any person except Grantee or any Grantee subsidiary
(w) a merger or consolidation, or any similar transaction,
involving Issuer or any Significant Subsidiary (as defined in
Rule 1-02 of Regulation S-X promulgated by the Securities and
Exchange Commission (the "SEC")) of Issuer, (x) a purchase,
lease or other acquisition or assumption of all or a
substantial portion of the
2
<PAGE> 3
assets or deposits of Issuer or any Significant Subsidiary of
Issuer, (y) a purchase or other acquisition (including by way
of merger, consolidation, share exchange or otherwise) of
securities representing 10% or more of the voting power of
Issuer, or (z) any substantially similar transaction;
(ii) Issuer or any Issuer Subsidiary,
without having received Grantee's prior written consent, shall
have authorized, recommended, proposed or publicly announced
its intention to authorize, recommend or propose, to engage in
an Acquisition Transaction with any person other than Grantee
or a Grantee Subsidiary, or the Board of Directors of Issuer
shall have publicly withdrawn or modified, or publicly
announced its intention to withdraw or modify, in any manner
adverse to Grantee, its recommendation that the shareholders
of Issuer approve the transactions contemplated by the Merger
Agreement in anticipation of engaging in an Acquisition
Transaction;
(iii) Any person other than Grantee, any
Grantee Subsidiary or any Issuer Subsidiary acting in a
fiduciary capacity in the ordinary course of its business
shall have acquired beneficial ownership or the right to
acquire beneficial ownership of 10% or more of the outstanding
shares of Common Stock (the term "beneficial ownership" for
purposes of this Agreement having the meaning assigned thereto
in Section 13(d) of the 1934 Act, and the rules and
regulations thereunder);
(iv) Any person other than Grantee or any
Grantee Subsidiary shall have made a bona fide proposal to
Issuer or its shareholders by public announcement or written
communication that is or becomes the subject of public
disclosure to engage in an Acquisition Transaction;
(v) After an overture is made by a third
party to Issuer or its shareholders to engage in an
Acquisition Transaction, Issuer shall have breached any
covenant or obligation contained in the Merger Agreement and
such breach (x) would entitle Grantee to terminate the Merger
Agreement and (y) shall not have been cured prior to the
Notice Date (as defined below); or
(vi) Any person other than Grantee or any
Grantee Subsidiary, other than in connection with a
transaction to which Grantee has given its prior written
consent, shall have filed an application or notice with the
Federal Reserve Board, or other federal or state bank
regulatory authority, which application or notice has
3
<PAGE> 4
been accepted for processing, for approval to engage in an
Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean either
of the following events or transactions occurring after the date hereof:
(i) The acquisition by any person of
beneficial ownership of 25% or more of the then outstanding
Common Stock; or
(ii) The occurrence of the Initial
Triggering Event described in paragraph (i) of subsection (b)
of this Section 2, except that the percentage referred to in
clause (y) shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event of
which it has notice (together, a "Triggering Event"), it being understood that
the giving of such notice by Issuer shall not be a condition to the right of the
Holder to exercise the Option.
(e) In the event the Holder is entitled to and wishes to
exercise the Option, it shall send to Issuer a written notice (the date of which
being herein referred to as the "Notice Date") specifying (i) the total number
of shares it will purchase pursuant to such exercise and (ii) a place and date
not earlier than three business days nor later than 60 business days from the
Notice Date for the closing of such purchase (the "Closing Date"); provided that
if prior notification to or approval of the Federal Reserve Board or any other
regulatory agency is required in connection with such purchase, the Holder shall
promptly file the required notice or application for approval and shall
expeditiously process the same and the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which any required
notification periods have expired or been terminated or such approvals have been
obtained and any requisite waiting period or periods shall have passed. Any
exercise of the Option shall be deemed to occur on the Notice Date relating
thereto.
(f) At the closing referred to in subsection (e) of this
Section 2, the Holder shall pay to Issuer the aggregate purchase price for the
shares of Common Stock purchased pursuant to the exercise of the Option in
immediately available funds by wire transfer to a bank account designated by
Issuer, provided that failure or refusal of Issuer to designate such a bank
account shall not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in subsection (f) of this Section 2,
Issuer shall deliver to the Holder a certificate or certificates representing
the number of shares of Common Stock purchased by the Holder and, if the
4
<PAGE> 5
Option should be exercised in part only, a new Option evidencing the rights of
the Holder thereof to purchase the balance of the shares purchasable hereunder,
and the Holder shall deliver to Issuer this Agreement and a letter agreeing that
the Holder will not offer to sell or otherwise dispose of such shares in
violation of applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing
hereunder may be endorsed with a restrictive legend that shall read
substantially as follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the registered holder
hereof and Issuer and to resale restrictions arising under the Securities Act of
1933, as amended. A copy of such agreement is on file at the principal office of
Issuer and will be provided to the holder hereof without charge upon receipt by
Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the
resale restrictions of the Securities Act of 1933, as amended (the "1933 Act"),
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the Holder shall have delivered to Issuer a copy of a
letter from the staff of the SEC, or an opinion of counsel, in form and
substance reasonably satisfactory to Issuer, to the effect that such legend is
not required for purposes of the 1933 Act; (ii) the reference to the provisions
to this Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference; and (iii) the
legend shall be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such certificates shall
bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written
notice of exercise of the Option provided for under subsection (e) of this
Section 2 and the tender of the applicable purchase price in immediately
available funds, the Holder shall be deemed to be the holder of record of the
shares of Common Stock issuable upon such exercise, notwithstanding that the
stock transfer books of Issuer shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered to
the Holder. Issuer shall pay all expenses, and any and all United States
federal, state and local taxes and other charges that may be payable in
connection with the preparation, issue and delivery of stock certificates under
this Section 2 in the name of the Holder or its assignee, transferee or
designee.
5
<PAGE> 6
3. Issuer agrees: (i) that it shall at all times maintain,
free from preemptive rights, sufficient authorized but unissued shares of Common
Stock so that the Option may be exercised without additional authorization of
Common Stock after giving effect to all other options, warrants, convertible
securities and other rights to purchase Common Stock; (ii) that it will not, by
charter amendment or through reorganization, consolidation, merger, dissolution
or sale of assets, or by any other voluntary act, avoid or seek to avoid the
observance or performance of any of the covenants, stipulations or conditions to
be observed or performed hereunder by Issuer; (iii) promptly to take all action
as may from time to time be required (including (x) complying with all premerger
notification, reporting and waiting period requirements specified in 15 U.S.C.
ss.ss. 18a and regulations promulgated thereunder and (y) in the event, under
the Bank Holding Company Act of 1956, as amended (the "BHCA"), or the Change in
Bank Control Act of 1978, as amended, or any state banking law, prior approval
of or notice to the Federal Reserve Board or to any state regulatory authority
is necessary before the Option may be exercised, cooperating fully with the
Holder in preparing such applications or notices and providing such information
to the Federal Reserve Board or such state regulatory authority as they may
require) in order to permit the Holder to exercise the Option and Issuer duly
and effectively to issue shares of Common Stock pursuant hereto; and (iv)
promptly to take all action provided herein to protect the rights of the Holder
against dilution.
4. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender of this Agreement at the principal office of Issuer, for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase, on the same terms and subject to the same conditions as are
set forth herein, in the aggregate the same number of shares of Common Stock
purchasable hereunder. The terms "Agreement" and "Option" as used herein include
any Stock Option Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
5. In addition to the adjustment in the number of shares of
Common Stock that are purchasable upon exercise of the Option pursuant to
Section 1 of this Agreement, the number of shares of Common Stock purchasable
upon the exercise of the Option and the Option Price shall be subject to
adjustment from time to time as provided in this Section 5. In the event of any
change in, or distributions in respect of, the Common Stock by reason of stock
dividends,
6
<PAGE> 7
split-ups, mergers, recapitalizations, combinations, subdivisions, conversions,
exchanges of shares, distributions on or in respect of the Common Stock that
would be prohibited under the terms of the Merger Agreement, or the like, the
type and number of shares of Common Stock purchasable upon exercise hereof and
the Option Price shall be appropriately adjusted in such manner as shall fully
preserve the economic benefits provided hereunder and proper provision shall be
made in any agreement governing any such transaction to provide for such proper
adjustment and the full satisfaction of the Issuer's obligations hereunder.
6. Upon the occurrence of a Subsequent Triggering Event that
occurs prior to an Exercise Termination Event, Issuer shall, at the request of
Grantee delivered within 90 days of such Subsequent Triggering Event (whether on
its own behalf or on behalf of any subsequent holder of this Option (or part
thereof) or any of the shares of Common Stock issued pursuant hereto), promptly
prepare, file and keep current a shelf registration statement under the 1933 Act
covering this Option and any shares issued and issuable pursuant to this Option
and shall use its reasonable best efforts to cause such registration statement
to become effective and remain current in order to permit the sale or other
disposition of this Option and any shares of Common Stock issued upon total or
partial exercise of this Option ("Option Shares") in accordance with any plan of
disposition requested by Grantee. Issuer will use its reasonable best efforts to
cause such registration statement first to become effective and then to remain
effective for such period not in excess of 180 days from the day such
registration statement first becomes effective or such shorter time as may be
reasonably necessary to effect such sales or other dispositions. Grantee shall
have the right to demand two such registrations. The foregoing notwithstanding,
if, at the time of any request by Grantee for registration of the Option or
Option Shares as provided above, Issuer is in registration with respect to an
underwritten public offering of shares of Common Stock, and if in the good faith
judgment of the managing underwriter or managing underwriters, or, if none, the
sole underwriter or underwriters, of such offering the inclusion of the Holder's
Option or Option Shares would interfere with the successful marketing of the
shares of Common Stock offered by Issuer, the number of Option Shares otherwise
to be covered in the registration statement contemplated hereby may be reduced;
provided, however, that after any such required reduction the number of Option
Shares to be included in such offering for the account of the Holder shall
constitute at least 25% of the total number of shares to be sold by the Holder
and Issuer in the aggregate; and provided further, however, that if such
reduction occurs, then the Issuer shall file a registration statement for the
balance as promptly as practicable and no reduction shall thereafter occur. Each
such Holder shall provide all information reasonably requested by Issuer for
inclusion in any registration statement to be filed hereunder. If requested by
any such Holder in connection with such registration, Issuer shall become a
party to any underwriting agreement relating to the sale of such shares, but
only to the extent of obligating itself in respect of representations,
warranties, indemnities and other agreements customarily included in secondary
offering underwriting agreements for
7
<PAGE> 8
the Issuer. Upon receiving any request under this Section 6 from any Holder,
Issuer agrees to send a copy thereof to any other person known to Issuer to be
entitled to registration rights under this Section 6, in each case by promptly
mailing the same, postage prepaid, to the address of record of the persons
entitled to receive such copies. Notwithstanding anything to the contrary
contained herein, in no event shall Issuer be obligated to effect more than two
registrations pursuant to this Section 6 by reason of the fact that there shall
be more than one Grantee as a result of any assignment or division of this
Agreement.
7. (a) Immediately prior to the occurrence of a Repurchase
Event (as defined below), (i) following a request of the Holder, delivered prior
to an Exercise Termination Event, Issuer (or any successor thereto) shall
repurchase the Option from the Holder at a price (the "Option Repurchase Price")
equal to the amount by which (A) the Market/Offer Price (as defined below)
exceeds (B) the Option Price, multiplied by the number of shares for which this
Option may then be exercised and (ii) at the request of the owner of Option
Shares from time to time (the "Owner"), delivered within 90 days of such
occurrence (or such later period as provided in Section 10), Issuer shall
repurchase such number of the Option Shares from the Owner as the Owner shall
designate at a price (the "Option Share Repurchase Price") equal to the
Market/Offer Price multiplied by the number of Option Shares so designated. The
term "Market/Offer Price" shall mean the highest of (i) the price per share of
Common Stock at which a tender offer or exchange offer therefor has been made,
(ii) the price per share of Common Stock to be paid by any third party pursuant
to an agreement with Issuer, (iii) the highest closing price for shares of
Common Stock within the six-month period immediately preceding the date the
Holder gives notice of the required repurchase of this Option or the Owner gives
notice of the required repurchase of Option Shares, as the case may be, or (iv)
in the event of a sale of all or a substantial portion of Issuer's assets, the
sum of the price paid in such sale for such assets and the current market value
of the remaining assets of Issuer as determined by a nationally recognized
investment banking firm selected by the Holder or the Owner, as the case may be,
and reasonably acceptable to the Issuer, divided by the number of shares of
Common Stock of Issuer outstanding at the time of such sale. In determining the
Market/Offer Price, the value of consideration other than cash shall be
determined by a nationally recognized investment banking firm selected by the
Holder or Owner, as the case may be, and reasonably acceptable to the Issuer.
(b) The Holder and the Owner, as the case may be, may exercise
its right to require Issuer to repurchase the Option and any Option Shares
pursuant to this Section 7 by surrendering for such purpose to Issuer, at its
principal office, this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to repurchase this
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<PAGE> 9
Option and/or the Option Shares in accordance with the provisions of this
Section 7. Within the latter to occur of (x) five business days after the
surrender of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto and (y) the time that is
immediately prior to the occurrence of a Repurchase Event, Issuer shall deliver
or cause to be delivered to the Holder the Option Repurchase Price and/or to the
Owner the Option Share Repurchase Price therefor or the portion thereof, if any,
that Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that Issuer is prohibited under applicable
law or regulation from repurchasing the Option and/or the Option Shares in full,
Issuer shall immediately so notify the Holder and/or the Owner and thereafter
deliver or cause to be delivered, from time to time, to the Holder and/or the
Owner, as appropriate, the portion of the Option Repurchase Price and the Option
Share Repurchase Price, respectively, that it is no longer prohibited from
delivering, within five business days after the date on which Issuer is no
longer so prohibited; provided, however, that if Issuer at any time after
delivery of a notice of repurchase pursuant to paragraph (b) of this Section 7
is prohibited under applicable law or regulation from delivering to the Holder
and/or the Owner, as appropriate, the Option Repurchase Price and the Option
Share Repurchase Price, respectively, in full (and Issuer hereby undertakes to
use its best efforts to obtain all required regulatory and legal approvals and
to file any required notices as promptly as practicable in order to accomplish
such repurchase), the Holder or Owner may revoke its notice of repurchase of the
Option or the Option Shares either in whole or to the extent of the prohibition,
whereupon, in the latter case, Issuer shall promptly (i) deliver to the Holder
and/or the Owner, as appropriate, that portion of the Option Repurchase Price or
the Option Share Repurchase Price that Issuer is not prohibited from delivering;
and (ii) deliver, as appropriate, either (A) to the Holder, a new Stock Option
Agreement evidencing the right of the Holder to purchase that number of shares
of Common Stock obtained by multiplying the number of shares of Common Stock for
which the surrendered Stock Option Agreement was exercisable at the time of
delivery of the notice of repurchase by a fraction, the numerator of which is
the Option Repurchase Price less the portion thereof theretofore delivered to
the Holder and the denominator of which is the Option Repurchase Price, or (B)
to the Owner, a certificate for the Option Shares it is then so prohibited from
repurchasing
(d) For purposes of this Section 7, a Repurchase Event shall
be deemed to have occurred (i) upon the consummation of any merger,
consolidation or similar transaction involving Issuer or any purchase, lease or
other acquisition of all or a substantial portion of the assets of Issuer, other
than any such transaction which would not constitute an Acquisition
9
<PAGE> 10
Transaction pursuant to the provisos to Section 2(b)(i) hereof or (ii) upon the
acquisition by any person of beneficial ownership of 50% or more of the then
outstanding shares of Common Stock, provided that no such event shall constitute
a Repurchase Event unless a Subsequent Triggering Event shall have occurred
prior to an Exercise Termination Event. The parties hereto agree that Issuer's
obligations to repurchase the Option or Option Shares under this Section 7 shall
not terminate upon the occurrence of an Exercise Termination Event unless no
Subsequent Triggering Event shall have occurred prior to the occurrence of an
Exercise Termination Event.
8. (a) In the event that prior to an Exercise Termination
Event, Issuer shall enter into an agreement (i) to consolidate with or merge
into any person, other than Grantee or one of its Subsidiaries, and shall not be
the continuing or surviving corporation of such consolidation or merger, (ii) to
permit any person, other than Grantee or one of its Subsidiaries, to merge into
Issuer and Issuer shall be the continuing or surviving corporation, but, in
connection with such merger, the then outstanding shares of Common Stock shall
be changed into or exchanged for stock or other securities of any other person
or cash or any other property or the then outstanding shares of Common Stock
shall after such merger represent less than 50% of the outstanding voting shares
and voting share equivalents of the merged company, or (iii) to sell or
otherwise transfer all or substantially all of its assets to any person, other
than Grantee or one of its Subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provision so that the
Option shall, upon the consummation of any such transaction and upon the terms
and conditions set forth herein, be converted into, or exchanged for, an option
(the "Substitute Option"), at the election of the Holder, of either (x) the
Acquiring Corporation (as hereinafter defined) or (y) any person that controls
the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i)
the continuing or surviving corporation of a consolidation or
merger with Issuer (if other than Issuer), (ii) Issuer in a
merger in which Issuer is the continuing or surviving person,
and (iii) the transferee of all or substantially all of
Issuer's assets.
(2) "Substitute Common Stock" shall mean the
common stock issued by the issuer of the Substitute Option
upon exercise of the Substitute Option.
(3) "Assigned Value" shall mean the
Market/Offer Price, as defined in Section 7.
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<PAGE> 11
(4) "Average Price" shall mean the average
closing price of a share of the Substitute Common Stock for
the one year immediately preceding the consolidation, merger
or sale in question, but in no event higher than the closing
price of the shares of Substitute Common Stock on the day
preceding such consolidation, merger or sale; provided that if
Issuer is the issuer of the Substitute Option, the Average
Price shall be computed with respect to a share of common
stock issued by the person merging into Issuer or by any
company which controls or is controlled by such person, as the
Holder may elect.
(c) The Substitute Option shall have the same terms as the
Option, provided, that if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
and in no event less advantageous to the Holder. The issuer of the Substitute
Option shall also enter into an agreement with the then Holder or Holders of the
Substitute Option in substantially the same form as this Agreement, which shall
be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of Substitute Common Stock as is equal to the Assigned Value
multiplied by the number of shares of Common Stock for which the Option is then
exercisable, divided by the Average Price. The exercise price of the Substitute
Option per share of Substitute Common Stock shall then be equal to the Option
Price multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock for which the Option is then exercisable and the
denominator of which shall be the number of shares of Substitute Common Stock
for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than 19.9%
of the shares of Substitute Common Stock outstanding prior to exercise but for
this clause (e), the issuer of the Substitute Option (the "Substitute Option
Issuer") shall make a cash payment to Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in this
clause (e) over (ii) the value of the Substitute Option after giving effect to
the limitation in this clause (e). This difference in value shall be determined
by a nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be, and reasonably acceptable to the Acquiring
Corporation.
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<PAGE> 12
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option
(the "Substitute Option Holder"), the Substitute Option Issuer shall repurchase
the Substitute Option from the Substitute Option Holder at a price (the
"Substitute Option Repurchase Price") equal to the amount by which (i) the
Highest Closing Price (as hereinafter defined) exceeds (ii) the exercise price
of the Substitute Option, multiplied by the number of shares of Substitute
Common Stock for which the Substitute Option may then be exercised and at the
request of the owner (the "Substitute Share Owner") of shares of Substitute
Common Stock (the "Substitute Shares"), the Substitute Option Issuer shall
repurchase the Substitute Shares at a price (the "Substitute Share Repurchase
Price") equal to the Highest Closing Price multiplied by the number of
Substitute Shares so designated. The term "Highest Closing Price" shall mean the
highest closing price for shares of Substitute Common Stock within the six-month
period immediately preceding the date the Substitute Option Holder gives notice
of the required repurchase of the Substitute Option or the Substitute Share
Owner gives notice of the required repurchase of the Substitute Shares, as
applicable.
(b) The Substitute Option Holder and the Substitute Share
Owner, as the case may be, may exercise its respective right to require the
Substitute Option Issuer to repurchase the Substitute Option and the Substitute
Shares pursuant to this Section 9 by surrendering for such purpose to the
Substitute Option Issuer, at its principal office, the agreement for such
Substitute Option (or, in the absence of such an agreement, a copy of this
Agreement) and certificates for Substitute Shares accompanied by a written
notice or notices stating that the Substitute Option Holder or the Substitute
Share Owner, as the case may be, elects to require the Substitute Option Issuer
to repurchase the Substitute Option and/or the Substitute Shares in accordance
with the provisions of this Section 9. As promptly as practicable, and in any
event within five business days after the surrender of the Substitute Option
and/or certificates representing Substitute Shares and the receipt of such
notice or notices relating thereto, the Substitute Option Issuer shall deliver
or cause to be delivered to the Substitute Option Holder the Substitute Option
Repurchase Price and/or to the Substitute Share Owner the Substitute Share
Repurchase Price therefor or, in either case, the portion thereof which the
Substitute Option Issuer is not then prohibited under applicable law and
regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation from repurchasing the
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<PAGE> 13
Substitute Option and/or the Substitute Shares in part or in full, the
Substitute Option Issuer following a request for repurchase pursuant to this
Section 9 shall immediately so notify the Substitute Option Holder and/or the
Substitute Share Owner and thereafter deliver or cause to be delivered, from
time to time, to the Substitute Option Holder and/or the Substitute Share Owner,
as appropriate, the portion of the Substitute Share Repurchase Price,
respectively, which it is no longer prohibited from delivering, within five
business days after the date on which the Substitute Option Issuer is no longer
so prohibited; provided, however, that if the Substitute Option Issuer is at any
time after delivery of a notice of repurchase pursuant to subsection (b) of this
Section 9 prohibited under applicable law or regulation from delivering to the
Substitute Option Holder and/or the Substitute Share Owner, as appropriate, the
Substitute Option Repurchase Price and the Substitute Share Repurchase Price,
respectively, in full (and the Substitute Option Issuer shall use its best
efforts to obtain all required regulatory and legal approvals as promptly as
practicable in order to accomplish such repurchase), the Substitute Option
Holder or Substitute Share Owner may revoke its notice of repurchase of the
Substitute Option or the Substitute Shares either in whole or to the extent of
the prohibition, whereupon, in the latter case, the Substitute Option Issuer
shall promptly (i) deliver to the Substitute Option Holder or Substitute Share
Owner, as appropriate, that portion of the Substitute Option Repurchase Price or
the Substitute Share Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the denominator of
which is the Substitute Option Repurchase Price, or (B) to the Substitute Share
Owner, a certificate for the Substitute Common Shares it is then so prohibited
from repurchasing.
10. The 90-day period for exercise of certain rights under
Sections 2, 6, 7 and 13 shall be extended: (i) to the extent necessary to obtain
all regulatory approvals for the exercise of such rights and for the expiration
of all statutory waiting periods; and (ii) to the extent necessary to avoid
liability under Section 16(b) of the 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as
follows:
(a) Issuer has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
13
<PAGE> 14
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
and validly authorized by the Board of Directors of Issuer and no other
corporate proceedings on the part of Issuer are necessary to authorize
this Agreement or to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by Issuer
and is enforceable against Issuer in accordance with its terms.
(b) Issuer has taken all necessary corporate action
to authorize and reserve and to permit it to issue, and at all times
from the date hereof through the termination of this Agreement in
accordance with its terms will have reserved for issuance upon the
exercise of the Option, that number of shares of Common Stock equal to
the maximum number of shares of Common Stock at any time and from time
to time issuable hereunder, and all such shares, upon issuance pursuant
hereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims,
liens, encumbrance and security interests and not subject to any
preemptive rights.
12. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and
authority to enter into this Agreement and, subject to any approvals or
consents referred to herein, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Grantee.
This Agreement has been duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of Common
Stock or other securities acquired by Grantee upon exercise of the
Option will not be, acquired with a view to the public distribution
thereof and will not be transferred or otherwise disposed of except in
a transaction registered or exempt from registration under the 1933
Act.
13. Neither of the parties hereto may assign any of its rights
or obligations under this Option Agreement or the Option created hereunder to
any other person, without the express written consent of the other party, except
that in the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express provisions hereof,
may assign in whole or in part its rights and obligations hereunder within 90
days following such Subsequent Triggering Event (or such later period as
provided in Section 10); provided, however, that until the date 15 days
following the date on which the Federal Reserve Board approves an application by
Grantee under the BHCA to acquire the shares of Common Stock subject to the
Option, Grantee may not assign
14
<PAGE> 15
its rights under the Option except in (i) a widely dispersed public
distribution, (ii) a private placement in which no one party acquires the right
to purchase in excess of 2% of the voting shares of Issuer, (iii) an assignment
to a single party (e.g., a broker or investment banker) for the purpose of
conducting a widely dispersed public distribution on Grantee's behalf, or (iv)
any other manner approved by the Federal Reserve Board.
14. Each of Grantee and Issuer will use its best efforts to
make all filings with, and to obtain consents of, all third parties and
governmental authorities necessary to the consummation of the transactions
contemplated by this Agreement, including without limitation making application
to authorize for quotation the shares of Common Stock issuable hereunder on any
exchange or market on which the shares of Issuer may be listed upon official
notice of issuance and applying to the Federal Reserve Board under the BHCA for
approval to acquire the shares issuable hereunder, but Grantee shall not be
obligated to apply to state banking authorities for approval to acquire the
shares of Common Stock issuable hereunder until such time, if ever, as it deems
appropriate to do so.
15. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party hereto and that
the obligations of the parties hereto shall be enforceable by either party
hereto through injunctive or other equitable relief.
16. If any term, provision, covenant or restriction contained
in this Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 7, the full number of shares of Common Stock
provided in Section 1(a) hereof (as adjusted pursuant to Section 1(b) or 5
hereof), it is the express intention of Issuer to allow the Holder to acquire or
to require Issuer to repurchase such lesser number of shares as may be
permissible, without any amendment or modification hereof.
17. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by cable, telegram, telecopy or telex, or by registered or certified
mail (postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Merger Agreement.
18. This Agreement shall be governed by and construed in
accordance with the laws of the State of Mississippi, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof.
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19. This Agreement may be executed in two counterparts, each
of which shall be deemed to be an original, but all of which shall constitute
one and the same agreement.
20. Except as otherwise expressly provided herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
21. Except as otherwise expressly provided herein or in the
Merger Agreement, this Agreement contains the entire agreement between the
parties with respect to the transactions contemplated hereunder and supersedes
all prior arrangements or understandings with respect thereof, written or oral.
The terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns. Nothing in this Agreement, expressed or implied, is intended to confer
upon any party, other than the parties hereto, and their respective successors
and permitted assigns, any rights, remedies, obligations or liabilities under or
by reason of this Agreement, except as expressly provided herein.
22. Capitalized terms used in this Agreement and not defined
herein shall have the meanings assigned thereto in the Merger Agreement.
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the date first above written.
MERCHANTS CAPITAL CORPORATION
BY: /s/ HOWELL N. GAGE
------------------------------------------
Name: Howell N. Gage
Title: Chairman
BANCORPSOUTH, INC.
BY: /s/ AUBREY B. PATTERSON
------------------------------------------
Name: Aubrey B. Patterson
Title: Chairman and Chief Executive Officer
16
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Exhibit 20.1
FOR RELEASE MONDAY, MAY 4, 1998
CONTACT: Harry Baxter 601-680-2410
BancorpSouth
Howell N. Gage 601-630-2211
Merchants
Tupelo, Miss. -- The holding companies of Bank of Mississippi,
headquartered in Tupelo, and Merchants Bank of Vicksburg have entered into a
binding agreement to merge.
BancorpSouth, Inc., (NYSE/BXS) holding company of BancorpSouth Bank which
does business in Mississippi as Bank of Mississippi, and Merchants Capital
Corporation, holding company of Merchants Bank, today announced the signing of a
definitive agreement to merge Merchants Capital Corporation into BancorpSouth,
subject to approval of the shareholders of Merchants Capital Corporation and
federal and state regulatory authorities.
Under the terms of the agreement, shareholders of Merchants Capital will
receive 1.884 shares of BancorpSouth, Inc. common stock in exchange for each
share of Merchants Capital Corporation common stock. The
<PAGE> 2
2
exchange rate will be adjusted to reflect BancorpSouth's previously announced
two-for-one stock split effected in the form of a 100% stock dividend that will
be issued on May 15, 1998.
On a post-split basis, Merchants' shareholders will receive 3.768 shares of
BancorpSouth stock for each share of Merchants' Capital Corporation common
stock. The subsidiary banks of the two bank holding companies will also be
merged.
The transaction will be structured as a pooling of interests and as a
tax-free exchange to the shareholders Merchants Capital. In connection with the
transaction, BancorpSouth has been granted an option to acquire up to 19% of the
common stock of Merchants, subject to certain limitations, terms, and conditions
set forth in a stock option agreement between Merchants and BancorpSouth.
The merger represents an in-market transaction between BancorpSouth and
Merchants. The combination of the two banks will give Bank of Mississippi a more
significant share of the Vicksburg and Warren County banking market. Bank of
Mississippi currently operates two branch offices in Vicksburg while Merchants
operates four Vicksburg locations. Merchants also operates two additional branch
offices in Utica and Edwards in Hinds County and a loan production office in
Jackson, Miss.
<PAGE> 3
3
As of March 31, 1998, BancorpSouth's total assets were $4.4 billion while
Merchants Capital Corporation assets totaled $222.2 million. The combining of
the two banks is expected to result in a reduction of duplicative operating
expenses. The merger is expected to be slightly dilutive to BancorpSouth's 1998
earnings per share but antidilutive in 1999.
Based on the closing price of BancorpSouth's common stock as traded on the
New York Stock Exchange, the transaction is valued at $63,136,000.
BancorpSouth has a total of 134 offices serving 55 Mississippi and
Tennessee communities.
BancorpSouth Chairman and CEO Aubrey B. Patterson said "Merchants Bank is a
truly outstanding institution. It is a bulwark of the Vicksburg business
community, and Merchants' philosophy of planting deep roots in the Vicksburg
market mirrors that of Bank of Mississippi. Like us, they have strong ties to
the state and local economy, and they will bring great strength to our Company.
Together, we can lend a higher level of service to the Vicksburg, Edwards and
Utica markets."
Merchants' Chairman and CEO Gage said, "Merchants is quite pleased to
affiliate with such a fine company and such capable people. Bank of Mississippi
is an extremely well run bank which shares our commitments of service to
customers, concern for employees and development of the
<PAGE> 4
communities we serve. This merger will allow us to carry forward these
commitments while remaining viable and competitive in the rapidly changing
financial services industry."
STATEMENTS ARE CONSIDERED TO BE FORWARD-LOOKING STATEMENTS WITHIN THE
MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH STATEMENTS
ARE BASED ON MANAGEMENTS CURRENT EXPECTATIONS AND THE CURRENT ECONOMIC
ENVIRONMENT. ACTUAL STRATEGIES AND RESULTS IN FUTURE PERIODS MAY DIFFER
MATERIALLY FROM THOSE CURRENTLY EXPECTED DUE TO VARIOUS RISKS AND UNCERTANTIES.
ADDITIONAL DISCUSSIONS OF FACTORS AFFECTING BANCORPSOUTH, INC.'S BUSINESS AND
PROSPECTS IS CONTAINED IN THE COMPANY'S PERIODIC FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION.
