<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 14, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
BANCORPSOUTH, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
MISSISSIPPI 6712 64-0659571
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
<TABLE>
<S> <C>
ONE MISSISSIPPI PLAZA AUBREY B. PATTERSON
TUPELO, MISSISSIPPI 38804 BANCORPSOUTH, INC.
(662) 680-2000 ONE MISSISSIPPI PLAZA
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE TUPELO, MISSISSIPPI 38804
NUMBER, (662) 680-2000
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
EXECUTIVE OFFICES) NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>
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WITH A COPY TO:
<TABLE>
<S> <C>
HOWARD W. HERNDON, ESQ. STAN D. SMITH, ESQ.
WALLER LANSDEN DORTCH & DAVIS, PLLC MITCHELL, WILLIAMS, SELIG, GATES & WOODYARD,
511 UNION STREET, SUITE 2100 P.L.L.C.
NASHVILLE, TENNESSEE 37219 425 WEST CAPITOL AVENUE, SUITE 1800
LITTLE ROCK, ARKANSAS 72201
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this Registration
Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
---------------
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
---------------
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED SHARE AGGREGATE OFFERING PRICE REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common stock, par value $2.50
per share(1)................ 28,926,628 shares(2) $ 15.21875(3) $ 440,227,120 $ 116,220
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</TABLE>
(1) Includes attached rights to purchase shares of the Registrant's common stock
under the Registrant's shareholder rights plan. Prior to the occurrence of
certain events, none of which have occurred as of the date of the filing
hereof, the rights will not be exercisable or evidenced separately from the
Registrant's common stock.
(2) Based upon an estimate of the maximum number of shares of the Registrant's
common stock expected to be issued upon the consummation of the proposed
merger to which this registration statement relates.
(3) Calculated in accordance with Rules 457(f) and 457(c) under the Securities
Act of 1933, the proposed maximum offering price per share is equal to the
average of the high and low prices of the Registrant's common stock as
reported on the New York Stock Exchange on June 13, 2000.
----------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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--------------------------------------------------------------------------------
<PAGE> 2
[BANCORPSOUTH, INC. LOGO] [FIRST UNITED BANCSHARES, INC. LOGO]
MERGER PROPOSED -- YOUR VOTE IS VERY IMPORTANT
BancorpSouth, Inc. and First United Bancshares, Inc. have entered into a
merger agreement which provides that, subject to shareholder and regulatory
approval and other conditions, First United will merge into BancorpSouth. In
connection with that transaction, First United's 11 subsidiary banks and its
subsidiary trust company will merge into BancorpSouth Bank, a subsidiary of
BancorpSouth. The combined company will have banking operations in Mississippi,
Tennessee, Alabama, Arkansas, Louisiana and Texas, and, based upon the
companies' March 31, 2000 balance sheets, total assets of about $8.56 billion,
deposits of about $7.25 billion and shareholders' equity of about $758.2
million.
The merger cannot be completed without the approval of BancorpSouth's
shareholders and First United's shareholders. If the merger is completed,
shareholders of First United will receive 1.125 shares of BancorpSouth common
stock in exchange for each of their shares of First United common stock, except
for First United shareholders who properly exercise their rights to dissent from
the merger.
BANCORPSOUTH SHAREHOLDERS:
BancorpSouth has scheduled a special meeting of its shareholders to vote on the
merger agreement. In order for the merger agreement to be approved, the number
of votes cast in favor of the merger agreement must exceed the number of votes
cast against the merger agreement at the special meeting. The date, time and
place of BancorpSouth's special meeting is as follows:
, 2000
.m. (Central Time)
BancorpSouth, Inc.
One Mississippi Plaza
Tupelo, Mississippi 38804
BancorpSouth's Board of Directors recommends that BancorpSouth shareholders vote
"FOR" approval of the merger agreement.
FIRST UNITED SHAREHOLDERS:
First United has scheduled a special meeting of its shareholders to vote on the
merger agreement. In order for the merger agreement to be approved, at least
two-thirds of the outstanding shares of First United common stock must be voted
in favor of the merger agreement. The date, time and place of First United's
special meeting is as follows:
, 2000
.m. (Central Time)
First National Bank of El Dorado
Main and Washington Streets
El Dorado, Arkansas 71730
First United's Board of Directors recommends that First United shareholders vote
"FOR" approval of the merger agreement.
The attached Joint Proxy Statement/Prospectus provides you with detailed
information about the proposed merger and the companies involved. We encourage
you to read it carefully. You can also obtain information about BancorpSouth and
First United from documents each has filed with the Securities and Exchange
Commission.
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend your
special meeting of shareholders, please take the time to vote your proxy by
completing and mailing the enclosed proxy card to us or, if you are a
BancorpSouth shareholder, by voting by touch-tone telephone as described on the
enclosed proxy card. If your proxy is properly given and not revoked without
indicating how you want to vote, your proxy will be counted as a vote in favor
of the merger agreement. If you attend your shareholders meeting, you may vote
in person if you wish, even though you previously voted your proxy.
Very truly yours,
Aubrey B. Patterson
Chairman and Chief Executive Officer
BancorpSouth, Inc.
, 2000
Very truly yours,
James V. Kelley
Chairman, President and Chief Executive Officer
First United Bancshares, Inc.
<PAGE> 3
[BANCORPSOUTH, INC. LOGO]
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON , 2000
TO THE SHAREHOLDERS OF BANCORPSOUTH, INC.:
This serves as notice to you that a special meeting of shareholders of
BancorpSouth, Inc. will be held on , 2000 at .m., Central
Time, at the offices of BancorpSouth, Inc., One Mississippi Plaza, Tupelo,
Mississippi 38804, for the purpose of considering and voting upon the following:
- Approval and adoption of the Agreement and Plan of Merger, dated as of
April 16, 2000, and amended as of May 15, 2000, between First United
Bancshares, Inc. and BancorpSouth, Inc., which provides for the merger of
First United Bancshares, Inc. with and into BancorpSouth, Inc.
Only holders of record of BancorpSouth common stock at the close of
business on , 2000 are entitled to notice of and to vote at the
special meeting or any adjournments or postponements of the special meeting.
If the agreement is approved and the merger is completed, each share of
First United common stock, other than shares held by First United shareholders
who properly exercise their rights to dissent from the merger, will be converted
into 1.125 shares of BancorpSouth common stock, with cash to be paid in lieu of
any remaining fractional share interest.
PLEASE VOTE YOUR PROXY PROMPTLY BY MARKING, SIGNING, DATING AND RETURNING
THE ENCLOSED PROXY CARD, OR BY VOTING BY TOUCH-TONE TELEPHONE AS DESCRIBED ON
THE ENCLOSED PROXY CARD, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING.
All BancorpSouth shareholders are cordially invited to attend the special
meeting. To ensure your representation at the special meeting, please promptly
vote your proxy by touch-tone telephone or by completing and mailing the
enclosed proxy card in the enclosed return envelope, but NOT by both methods. If
you do vote by both methods, only the last vote that is submitted will be
counted and each previous vote will be disregarded. This will not prevent you
from voting in person, but will help to secure a quorum and avoid added
solicitation costs. You may revoke your proxy at any time before it is
exercised, by written request to BancorpSouth or by voting a proxy at a later
date. Please review the Joint Proxy Statement/Prospectus attached to this notice
for more complete information regarding the proposed merger and the special
meeting.
BY ORDER OF THE BOARD OF DIRECTORS
AUBREY B. PATTERSON
Chairman and Chief Executive Officer
, 2000
THE BOARD OF DIRECTORS OF BANCORPSOUTH RECOMMENDS THAT BANCORPSOUTH SHAREHOLDERS
VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT.
<PAGE> 4
[FIRST UNITED BANCSHARES, INC. LOGO]
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON , 2000
TO THE SHAREHOLDERS OF FIRST UNITED BANCSHARES, INC.:
This serves as notice to you that a special meeting of shareholders of
First United Bancshares, Inc. will be held on , 2000 at .m.,
Central Time, at the main office of First National Bank of El Dorado, Main and
Washington Streets, El Dorado, Arkansas 71730, for the purpose of considering
and voting upon the following:
- Approval and adoption of the Agreement and Plan of Merger, dated as of
April 16, 2000, and amended as of May 15, 2000, between First United
Bancshares, Inc. and BancorpSouth, Inc., which provides for the merger of
First United Bancshares, Inc. with and into BancorpSouth, Inc.
Only holders of record of First United common stock at the close of
business on , 2000 are entitled to notice of and to vote at the
special meeting or any adjournments or postponements of the special meeting.
If the agreement is approved and the merger is completed, each share of
First United common stock, other than shares held by First United shareholders
who properly exercise their rights to dissent from the merger, will be converted
into 1.125 shares of BancorpSouth common stock, with cash to be paid in lieu of
any remaining fractional share interest.
Under the Arkansas Business Corporation Act of 1987, holders of First
United common stock who comply with the requirements of Subchapter 13 of the
Arkansas Business Corporation Act of 1987 will have the right to dissent from
the merger and receive the fair value of their shares in cash. A copy of
Subchapter 13 of the Arkansas Business Corporation Act of 1987 is attached as
Annex B to the attached Joint Proxy Statement/Prospectus. In addition, please
see the section entitled "FIRST UNITED SPECIAL MEETING -- First United
Shareholders Dissenters' Rights" in the attached Joint Proxy
Statement/Prospectus for a discussion of the procedures to be followed in
asserting these dissenters' rights.
PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY,
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING. All First United
shareholders are cordially invited to attend the special meeting. To ensure your
representation at the special meeting, please complete and promptly mail the
enclosed proxy card in the enclosed return envelope. This will not prevent you
from voting in person, but will help to secure a quorum and avoid added
solicitation costs. If you don't vote your proxy, the effect will be the same as
a vote against the merger agreement. You may revoke your proxy at any time
before it is voted. Please review the Joint Proxy Statement/Prospectus attached
to this notice for more complete information regarding the proposed merger and
the special meeting.
BY ORDER OF THE BOARD OF DIRECTORS
JAMES V. KELLEY
Chairman, President and Chief
Executive Officer
, 2000
THE BOARD OF DIRECTORS OF FIRST UNITED RECOMMENDS THAT FIRST UNITED SHAREHOLDERS
VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT.
<PAGE> 5
JOINT PROXY STATEMENT
AND PROSPECTUS
(BANCORPSOUTH, INC. LOGO)
PROSPECTUS AND PROXY STATEMENT
(FIRST UNITED BANCSHARES, INC. LOGO)
PROXY STATEMENT
------------------------
This Joint Proxy Statement/Prospectus provides you with detailed
information about a proposed merger between BancorpSouth, Inc. and First United
Bancshares, Inc. This document also contains information about BancorpSouth and
First United. If the merger is completed, First United will merge into
BancorpSouth and First United shareholders, other than First United shareholders
who properly exercise their rights to dissent from the merger, will be issued
1.125 shares of BancorpSouth common stock in exchange for each of their shares
of First United common stock. In connection with that transaction, First
United's 11 subsidiary banks and subsidiary trust company will merge into
BancorpSouth Bank, a subsidiary of BancorpSouth. We encourage you to carefully
read and consider this Joint Proxy Statement/Prospectus in its entirety.
You can obtain additional information about BancorpSouth and First United
from documents that each has filed with the Securities and Exchange Commission.
For information on how to obtain copies of these documents, you should refer to
the section of this document entitled "WHERE YOU CAN FIND MORE INFORMATION,"
which begins on page 79.
BancorpSouth common stock is listed on the New York Stock Exchange under
the symbol "BXS." First United common stock is quoted on the Nasdaq Stock Market
under the symbol "UNTD." On , 2000, the closing price per share of
BancorpSouth common stock reported on the New York Stock Exchange was
$ and the closing price per share of First United common stock quoted
on the Nasdaq Stock Market was $ .
You should carefully consider the risk factors described in Item 7 of
BancorpSouth's Annual Report on Form 10-K for the year ended December 31, 1999.
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSIONER HAS APPROVED OR DISAPPROVED OF THE SHARES OF BANCORPSOUTH COMMON
STOCK TO BE ISSUED UNDER THIS JOINT PROXY STATEMENT/PROSPECTUS OR DETERMINED IF
THIS JOINT PROXY STATEMENT/PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
SHARES OF BANCORPSOUTH COMMON STOCK ARE NOT SAVINGS OR DEPOSIT ACCOUNTS OR
OTHER OBLIGATIONS OF ANY BANK OR SAVINGS ASSOCIATION, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
------------------------
The date of this Joint Proxy Statement/Prospectus is , 2000.
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
QUESTIONS AND ANSWERS ABOUT THE MERGER...................... 1
SUMMARY..................................................... 3
SELECTED HISTORICAL FINANCIAL DATA AND UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL INFORMATION.............. 13
BANCORPSOUTH SPECIAL MEETING................................ 20
General................................................... 20
Proxies................................................... 20
BancorpSouth's Solicitation Of Proxies.................... 21
BancorpSouth Record Date And Voting Rights................ 21
Recommendation Of BancorpSouth's Board Of Directors....... 22
Lack Of Dissenters' Rights For BancorpSouth
Shareholders........................................... 22
FIRST UNITED SPECIAL MEETING................................ 23
General................................................... 23
Proxies................................................... 23
First United's Solicitation Of Proxies.................... 24
First United Record Date And Voting Rights................ 24
Recommendation Of First United's Board Of Directors....... 24
First United Shareholders Dissenters' Rights.............. 25
THE MERGER.................................................. 28
Description Of The Merger................................. 28
Background Of The Merger.................................. 30
BancorpSouth's Reasons For The Merger; Recommendation Of
BancorpSouth's Board Of Directors...................... 31
First United's Reasons For The Merger; Recommendation Of
First United's Board Of Directors...................... 33
Fairness Opinion Of BancorpSouth's Financial Advisor...... 35
Fairness Opinions Of First United's Financial Advisors.... 44
Regulatory Approval....................................... 54
Accounting Treatment...................................... 55
Certain Federal Income Tax Consequences................... 55
Interests Of Certain Persons In The Merger................ 57
Comparison Of Rights Of Shareholders...................... 58
Restrictions On Resales By Affiliates..................... 58
THE MERGER AGREEMENT........................................ 60
Exchange Of Certificates.................................. 60
Conditions To The Merger.................................. 61
Termination Of The Merger Agreement....................... 61
Conduct Of Business Prior To The Merger And Other
Covenants.............................................. 62
Indemnification........................................... 64
Amendment Of The Merger Agreement......................... 64
</TABLE>
i
<PAGE> 7
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<CAPTION>
PAGE
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Waiver.................................................... 65
Expenses.................................................. 65
Stock Option Agreements................................... 65
MANAGEMENT AND OPERATIONS FOLLOWING THE MERGER.............. 69
Board Of Directors........................................ 69
Management................................................ 69
Employee Benefits......................................... 69
THE COMPANIES............................................... 70
BancorpSouth.............................................. 70
First United.............................................. 72
PRICE RANGE OF COMMON STOCK AND DIVIDENDS................... 74
BancorpSouth.............................................. 74
First United.............................................. 74
COMPARISON OF RIGHTS OF SHAREHOLDERS........................ 75
Voting Rights; Cumulative Voting; Action By Written
Consent................................................ 75
Change Of Control......................................... 75
Shareholder Nominations And Proposals..................... 76
Board Of Directors........................................ 77
Removal Of Directors...................................... 77
Authorized Capital Stock.................................. 77
Rights Of Shareholders To Call Special Meetings........... 77
WHERE YOU CAN FIND MORE INFORMATION......................... 79
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING
INFORMATION............................................... 80
LEGAL MATTERS............................................... 81
EXPERTS..................................................... 82
ANNEX A -- AGREEMENT AND PLAN OF MERGER..................... A-1
ANNEX B -- PROVISIONS OF SUBCHAPTER 13 OF THE ARKANSAS
BUSINESS CORPORATION ACT OF 1987, RELATING TO
DISSENTERS' RIGHTS............................... B-1
ANNEX C -- FAIRNESS OPINION OF SALOMON SMITH BARNEY INC. ... C-1
ANNEX D -- FAIRNESS OPINION OF STEPHENS INC. ............... D-1
ANNEX E -- FAIRNESS OPINION OF STIFEL, NICOLAUS & COMPANY,
INC. ............................................ E-1
ANNEX F -- STOCK OPTION AGREEMENT GRANTING BANCORPSOUTH AN
OPTION TO PURCHASE SHARES OF FIRST UNITED COMMON
STOCK............................................ F-1
ANNEX G -- STOCK OPTION AGREEMENT GRANTING FIRST UNITED AN
OPTION TO PURCHASE SHARES OF BANCORPSOUTH COMMON
STOCK............................................ G-1
</TABLE>
------------------------
THIS JOINT PROXY STATEMENT/PROSPECTUS IS NOT AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO PURCHASE ANY SECURITIES OTHER THAN SHARES OF
BANCORPSOUTH COMMON STOCK TO WHICH IT RELATES OR AN OFFER TO ANY PERSON IN ANY
JURISDICTION WHERE SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE
PERSON MAKING SUCH OFFER IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT
IS UNLAWFUL TO MAKE SUCH AN OFFER.
ii
<PAGE> 8
QUESTIONS AND ANSWERS
ABOUT THE MERGER
Q: WHAT DO I NEED TO DO NOW?
A: Whether or not you plan to attend your special meeting of shareholders,
please vote your proxy promptly by indicating on the enclosed proxy card how
you want to vote, and by signing and mailing the proxy card in the enclosed
return envelope as soon as possible so that your shares may be represented
at your special meeting of shareholders. If you are a BancorpSouth
shareholder, you can instead vote your proxy by touch-tone telephone, as
described in the enclosed proxy card. If your proxy is properly given and
not revoked without indicating how you want to vote, your proxy will be
counted as a vote in favor of the merger agreement between First United and
BancorpSouth.
You are invited to your special meeting of shareholders to vote your shares
in person. If you do vote your proxy, you can take back your proxy at any
time until shareholders vote at your special meeting of shareholders and
either change your vote or attend the special meeting and vote in person.
Regardless of whether you plan to attend your special meeting in person, we
encourage you to vote your proxy promptly. This will help to ensure that a
quorum is present at your special meeting and will help reduce the costs
associated with the solicitation of proxies.
THE BOARD OF DIRECTORS OF BANCORPSOUTH AND THE BOARD OF DIRECTORS OF FIRST
UNITED EACH RECOMMENDS THAT THEIR RESPECTIVE SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE MERGER AGREEMENT.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A: Only if you provide instructions to your broker on how to vote by following
the directions your broker provides. Without instructions from you to your
broker, your shares will not be voted.
Q: WHAT IS THE PURPOSE OF THIS JOINT PROXY STATEMENT/PROSPECTUS?
A: This document serves as BancorpSouth's and First United's proxy statement
and as BancorpSouth's prospectus. As a proxy statement, this document is
being provided to First United shareholders because First United's Board of
Directors is soliciting their proxy to vote to approve the merger agreement,
and it is being provided to BancorpSouth shareholders because BancorpSouth's
Board of Directors is soliciting their proxy to vote to approve the merger
agreement. As a prospectus, this document is being provided to First United
shareholders by BancorpSouth because BancorpSouth is offering them shares of
BancorpSouth common stock in exchange for their shares of First United
common stock if the merger is completed.
Q: IS THERE OTHER INFORMATION I SHOULD CONSIDER?
A: Yes. Much of the business and financial information about BancorpSouth and
First United that may be important to you is not included directly in this
document. Instead, this information is incorporated into this document by
references to documents separately filed by BancorpSouth and First United
with the Securities and Exchange Commission. This means that BancorpSouth
and First United may satisfy their disclosure obligations to you by
referring you to one or more documents separately filed by them with the
SEC. See "WHERE YOU CAN FIND MORE INFORMATION" beginning on page for a
list of documents that BancorpSouth and First United have incorporated by
reference into this Joint Proxy Statement/Prospectus and for instructions on
how to obtain copies of these documents. The documents are available to you
without charge.
Q: WHAT IF I CHOOSE NOT TO READ THE DOCUMENTS INCORPORATED BY REFERENCE?
A: Information contained in a document that is incorporated into this Joint
Proxy Statement/Prospectus by reference is part of this Joint Proxy
Statement/Prospectus, unless it is superseded by information contained
directly in this Joint Proxy Statement/Prospectus or in documents filed by
First United or BancorpSouth with the SEC after the date of this Joint Proxy
Statement/Prospectus. Information
<PAGE> 9
that is incorporated from another document is considered to have been
disclosed to you whether or not you choose to read the document.
Q: SHOULD I SEND IN MY FIRST UNITED STOCK CERTIFICATES NOW?
A: No. After the merger is completed, First United shareholders will receive
written instructions on how to exchange their shares of First United common
stock for shares of BancorpSouth common stock.
Q: WHOM DO I CONTACT IF I HAVE QUESTIONS ABOUT THE MERGER?
A: If you have more questions about the merger, you should contact:
<TABLE>
<S> <C>
If a BancorpSouth shareholder: If a First United shareholder:
BancorpSouth, Inc. First United Bancshares, Inc.
One Mississippi Plaza Main and Washington Streets
Tupelo, Mississippi 38804 El Dorado, Arkansas 71730
Attention: Cathy S. Freeman, Secretary Attention: John G. Copeland, Secretary
Phone Number: (662) 680-2000 Phone Number: (870) 863-3181
</TABLE>
2
<PAGE> 10
SUMMARY
This summary highlights selected information from this document. It does
not contain all of the information that is important to you. You should
carefully read this entire document and the documents to which it refers you in
order to understand fully the merger and to obtain a more complete description
of the companies and the legal terms of the merger. For information on how to
obtain copies of documents referred to in this document, you should read the
section of this document entitled "WHERE YOU CAN FIND MORE INFORMATION." Each
item in this summary includes a page reference that directs you to a more
complete description in this document of the topic discussed.
THE COMPANIES (PAGE 70)
BANCORPSOUTH, INC.
One Mississippi Plaza
Tupelo, Mississippi 38804
(662) 680-2000
BancorpSouth is incorporated in Mississippi and is a registered bank
holding company under the Bank Holding Company Act of 1956. BancorpSouth
conducts its operations through its bank subsidiary, BancorpSouth Bank, and its
banking-related subsidiaries. BancorpSouth Bank conducts a commercial banking,
trust, insurance and investment services business through 167 banking and
mortgage locations and 170 ATM's in 87 communities throughout Mississippi, west
Tennessee and portions of Alabama. Prior to June 20, 1997, BancorpSouth Bank
operated under the trade names "Bank of Mississippi" in Mississippi and
"Volunteer Bank" in Tennessee. As of March 31, 2000, BancorpSouth had total
assets of about $5.84 billion, deposits of about $4.98 billion and shareholders'
equity of about $494.1 million.
FIRST UNITED BANCSHARES, INC.
Main and Washington Streets
El Dorado, Arkansas 71730
(870) 863-3181
First United is incorporated in Arkansas and is a registered bank holding
company under the Bank Holding Company Act of 1956. It is based in El Dorado,
Arkansas and conducts its operations through its 11 subsidiary banks, The First
National Bank of El Dorado, First National Bank of Magnolia, Merchants and
Planters Bank, N.A. of Camden, The City National Bank of Fort Smith, The Bank of
North Arkansas, FirstBank, First United Bank, Fredonia State Bank, City Bank &
Trust of Shreveport, Citizens National Bank of Hope and First Republic Bank, and
through its subsidiary trust company, First United Trust Company, N.A. First
United's subsidiaries conduct a commercial banking, trust and insurance business
through a total of 69 offices in 39 municipalities or communities in 21 counties
and parishes in Arkansas, Louisiana and Texas. As of March 31, 2000, First
United had total assets of about $2.72 billion, deposits of about $2.27 billion
and shareholders' equity of about $264.1 million.
THE MERGER (PAGE 28)
BancorpSouth and First United entered into a merger agreement whereby First
United will merge into BancorpSouth, subject to shareholder and regulatory
approval and other conditions. The merger agreement is attached to this Joint
Proxy Statement/Prospectus as Annex A. You should read it carefully.
If this merger is completed, the businesses and operations of BancorpSouth
and First United will be combined into a single, larger company and First
United's subsidiaries will be combined with BancorpSouth Bank into a single,
larger bank. BancorpSouth and First United hope to complete the merger during
the third quarter of 2000.
WHAT FIRST UNITED SHAREHOLDERS WILL RECEIVE IN THE MERGER (PAGE 28)
If the merger is completed, First United shareholders will receive 1.125
shares of BancorpSouth common stock for each share of First United common stock
they own (which is referred to as the
3
<PAGE> 11
"exchange ratio"), except for the First United shareholders who properly
exercise their right to dissent from the merger.
BancorpSouth will not issue any fractional shares of BancorpSouth common
stock. Instead, a First United shareholder will receive cash equal to the
product of (1) the average of the last reported sale prices per share of
BancorpSouth common stock as reported on the New York Stock Exchange for the
three trading days immediately preceding the date on which the merger is
completed, times (2) the fraction of a share of BancorpSouth common stock to
which the shareholder otherwise would be entitled.
The number of shares of BancorpSouth common stock to be exchanged for each
share of common stock of First United is fixed at 1.125. The exchange ratio will
not be adjusted to reflect any change in the market price of BancorpSouth common
stock or First United common stock.
If the merger is completed, each outstanding and unexercised option to
purchase shares of First United common stock will no longer represent a right to
acquire shares of First United common stock and will be replaced promptly
following the merger by an option to purchase shares of BancorpSouth common
stock. The number of shares underlying each new option, as well as the exercise
price, will be adjusted by the amount of the exchange ratio.
At the effective time of the merger, persons who are BancorpSouth
shareholders immediately prior to the merger would own approximately 67% of the
outstanding shares of common stock of the combined company and persons who are
First United shareholders immediately prior to the merger would own
approximately 33% of the outstanding shares of common stock of the combined
company.
BANCORPSOUTH'S STOCK PRICE WILL FLUCTUATE (PAGE 29)
BancorpSouth expects the market price of its common stock to fluctuate due
to market factors beyond its control before and following the merger. Because
the exchange ratio is fixed and the market price of BancorpSouth common stock
may fluctuate, the value of the shares of BancorpSouth common stock that First
United shareholders will receive in the merger may increase or decrease prior to
completion of the merger. BancorpSouth cannot assure you that the market price
of BancorpSouth common stock will not decrease before or after completion of the
merger. If the price of BancorpSouth common stock substantially decreases below
$15.75 per share, the closing price of BancorpSouth common stock on April 17,
2000, and below that of an index of other similarly situated publicly-held banks
and bank holding companies, as described in Section 9.1(i) of the merger
agreement, then First United's Board of Directors could elect to terminate the
merger agreement. However, BancorpSouth can elect to increase the exchange ratio
as described in Section 9.1(i) of the merger agreement so that the merger
agreement will remain in effect.
SPECIAL MEETINGS (PAGES 20 AND 23)
BANCORPSOUTH. A special meeting of the shareholders of BancorpSouth will
be held on , 2000 at the following time and place:
, 2000
.m. (Central Time)
BancorpSouth, Inc.
One Mississippi Plaza
Tupelo, Mississippi 38804
At the special meeting, shareholders of BancorpSouth will be asked to
approve the merger agreement between First United and BancorpSouth.
4
<PAGE> 12
FIRST UNITED. A special meeting of the shareholders of First United will
be held on , 2000 at the following time and place:
, 2000
.m. (Central Time)
First National Bank of El Dorado
Main and Washington Streets
El Dorado, Arkansas 71730
At the special meeting, shareholders of First United will be asked to
approve the merger agreement between First United and BancorpSouth.
THE BOARDS OF DIRECTORS OF BANCORPSOUTH AND FIRST UNITED EACH RECOMMENDS THAT
THEIR RESPECTIVE SHAREHOLDERS APPROVE THE MERGER AGREEMENT (PAGES 22 AND 24)
BANCORPSOUTH. The Board of Directors of BancorpSouth believes that the
merger between First United and BancorpSouth is in the best interests of
BancorpSouth shareholders, and recommends that BancorpSouth shareholders vote
"FOR" the proposal to approve the merger agreement. This belief is based on a
number of factors described in this document, including the receipt of a
fairness opinion from BancorpSouth's financial advisor.
FIRST UNITED. The Board of Directors of First United believes that the
merger between First United and BancorpSouth is in the best interests of First
United shareholders, and recommends that First United shareholders vote "FOR"
the proposal to approve the merger agreement. This belief is based on a number
of factors described in this document, including the receipt of fairness
opinions from First United's financial advisors.
VOTE REQUIRED TO COMPLETE THE MERGER (PAGES 22 AND 24)
BANCORPSOUTH. In order for the merger to be approved, the number of votes
cast at BancorpSouth's special meeting of shareholders in favor of the merger
agreement must exceed the number of votes cast against the merger agreement.
BancorpSouth expects that its executive officers and directors will vote all of
their shares of BancorpSouth common stock in favor of the merger agreement.
The following chart describes the BancorpSouth shareholder vote required to
approve the merger agreement:
<TABLE>
<S> <C>
Number of shares of BancorpSouth common stock outstanding on
, 2000........................................
Number of votes that executive officers and directors of
BancorpSouth can cast as of , 2000............
Percentage of votes that executive officers and directors of
BancorpSouth can cast as of , 2000............ %
</TABLE>
FIRST UNITED. In order for the merger to be approved, at least two-thirds
of the outstanding shares of First United common stock must be voted in favor of
the merger agreement. First United expects that its executive officers and
directors will vote all of their shares of First United common stock in favor of
the merger agreement.
5
<PAGE> 13
The following chart describes the First United shareholder vote required to
approve the merger agreement:
<TABLE>
<S> <C>
Number of shares of common stock of First United outstanding
on , 2000.....................................
Number of votes necessary to approve the merger agreement...
Percentage of outstanding shares of First United common
stock necessary to approve the merger agreement........... 66.67%
Number of votes that executive officers and directors of
First United can cast as of , 2000............
Percentage of votes that executive officers and directors of
First United can cast as of , 2000............ %
</TABLE>
RECORD DATE; VOTING POWER (PAGES 21 AND 24)
BANCORPSOUTH. You can vote at the special meeting of BancorpSouth
shareholders if you owned BancorpSouth common stock as of the close of business
on , 2000, the record date set by BancorpSouth's Board of Directors.
Each share of BancorpSouth common stock is entitled to one vote. On
, 2000, there were shares of BancorpSouth common
stock outstanding and entitled to vote on the merger agreement.
FIRST UNITED. You can vote at the special meeting of First United
shareholders if you owned First United common stock as of the close of business
on , 2000, the record date set by First United's Board of Directors.
Each share of First United common stock is entitled to one vote.
On , 2000, there were shares of First United
common stock outstanding and entitled to vote on the merger agreement.
BACKGROUND OF THE MERGER (PAGE 30)
In late 1998, BancorpSouth identified First United as a potentially
attractive merger partner. During the following 14 months, Aubrey B. Patterson,
Chairman and Chief Executive Officer of BancorpSouth, and James V. Kelley,
Chairman, President and Chief Executive Officer of First United, had informal
discussions and meetings from time to time regarding their respective companies
and the possibility of entering into negotiations regarding a business
combination. These discussions were general in nature and did not include any
proposals for a business combination.
In January 2000, the boards of directors of BancorpSouth and First United
appointed special board committees to consider the possibility of a strategic
merger between First United and BancorpSouth, and the special board committees
met together on January 25, 2000. In March 2000, following continued discussions
between Mr. Patterson and Mr. Kelley, BancorpSouth's Board of Directors
authorized the engagement of Salomon Smith Barney Inc. as BancorpSouth's
financial advisor and First United's Board of Directors authorized the
engagement of Stephens Inc. as First United's financial advisor. On April 10,
2000, following presentation of a report by Stephens, First United's Board of
Directors authorized First United's management to pursue merger negotiations
with BancorpSouth and to engage Stifel, Nicolaus & Company, Inc. as an
additional financial advisor. From April 11, 2000 to April 16, 2000,
BancorpSouth and First United conducted a due diligence review and negotiated
the terms of a definitive merger agreement and related stock option agreements.
On April 16, 2000, BancorpSouth's Board of Directors and First United's
Board of Directors each met in separate special meetings to consider the
proposed merger between First United and BancorpSouth and the terms of the
proposed merger agreement. Each board of directors received presentations from
its respective financial advisors, legal counsel, accountants and management
regarding the merger. Following these presentations and discussion among the
members of the respective boards of directors, the definitive
6
<PAGE> 14
merger agreement was separately approved by BancorpSouth's Board of Directors
and by First United's Board of Directors.
WHY BANCORPSOUTH AND FIRST UNITED ARE SEEKING TO MERGE (PAGES 31 AND 33)
The merger will combine the strengths of BancorpSouth and First United and
their subsidiary banks. The combined company resulting from the merger should be
able to achieve superior financial performance compared to each company
operating independently. One reason for this is that the combined company is
expected to be able to reduce costs and enhance revenues by eliminating overlap
in the companies' operations, by combining First United's subsidiary banks, by
providing uniform services and financial products through the combined banks and
by applying BancorpSouth's investments in technology to First United's
operations. Another reason is that the combined company should have
opportunities to increase revenue by bringing a larger universe of customers in
contact with a broader range of products and services currently offered by
BancorpSouth. In addition, BancorpSouth and First United share similar markets
in contiguous states. The competitiveness of the financial services industry is
increasing continually, and the greater strength realized through combining the
companies is expected to enable them to provide superior products and services
to their customers and benefits to their shareholders.
BOARD OF DIRECTORS AND MANAGEMENT OF BANCORPSOUTH FOLLOWING THE MERGER (PAGE 69)
If the merger is completed, four of First United's directors will be
appointed to serve as members of BancorpSouth's Board of Directors, in addition
to nine current directors of BancorpSouth. Following the merger, Aubrey B.
Patterson, currently the Chairman, President and Chief Executive Officer of
BancorpSouth, will continue to serve as Chairman and Chief Executive Officer of
BancorpSouth, and James V. Kelley, currently the Chairman of the Board,
President and Chief Executive Officer of First United, will serve as President
and Chief Operating Officer of BancorpSouth.
FEDERAL INCOME TAX CONSEQUENCES (PAGE 55)
We intend that First United, First United shareholders, BancorpSouth and
BancorpSouth shareholders will not recognize any gain or loss for U.S. federal
income tax purposes in the merger, except for First United shareholders who
receive cash instead of fractional shares or First United shareholders who
dissent from the merger under Arkansas law. Determining the actual tax
consequences of the merger to you can be complicated. They will depend on your
specific situation and many variables not within our control. You should consult
your own tax advisor for a full understanding of the merger's tax consequences.
ACCOUNTING TREATMENT (PAGE 55)
We expect that the merger of First United into BancorpSouth will qualify as
a pooling of interests, which means that, for accounting and financial reporting
purposes, BancorpSouth will treat the combined companies as if they had always
been one company.
BANCORPSOUTH'S FINANCIAL ADVISOR SAYS THE EXCHANGE RATIO IS FAIR TO BANCORPSOUTH
FROM A FINANCIAL POINT OF VIEW (PAGE 35)
Salomon Smith Barney Inc. rendered an opinion to the Board of Directors of
BancorpSouth that, as of the date of the opinion, the exchange ratio was fair
from a financial point of view to BancorpSouth. This opinion is attached as
Annex C to this document. You should read it carefully.
FIRST UNITED'S FINANCIAL ADVISORS EACH SAYS THAT THE EXCHANGE RATIO IS FAIR TO
FIRST UNITED SHAREHOLDERS FROM A FINANCIAL POINT OF VIEW (PAGE 44)
Each of Stephens Inc. and Stifel, Nicolaus & Company, Inc. rendered an
opinion to the Board of Directors of First United that, as of the date of the
opinion, the exchange ratio was fair from a financial point of view to the
shareholders of First United. Stephens Inc.'s opinion is attached as Annex D to
this
7
<PAGE> 15
document, and Stifel, Nicolaus & Company, Inc.'s opinion is attached as Annex E
to this document. You should read each of these opinions carefully.
INTERESTS OF FIRST UNITED DIRECTORS AND MANAGEMENT IN THE MERGER (PAGE 57)
Directors and executive officers of First United will be issued shares of
BancorpSouth common stock in the merger on the same basis as other shareholders
of First United. The following chart shows the number of shares of BancorpSouth
common stock that may be issued to directors and executive officers of First
United in the merger:
<TABLE>
<S> <C>
Shares of First United common stock, including stock options
exercisable within 60 days, beneficially owned by First
United executive officers and directors on ,
2000......................................................
----
Shares of BancorpSouth common stock that may be received in
the merger by First United officers and directors based
upon this beneficial ownership............................
----
</TABLE>
James V. Kelley, who is currently Chairman, President and Chief Executive
Officer of First United, will become President and Chief Operating Officer of
BancorpSouth after the merger. Mr. Kelley has entered into a change in control
agreement and stock bonus agreement with BancorpSouth that are effective upon
completion of the merger.
These agreements replace and terminate Mr. Kelley's existing severance
agreement with First United, which provided for severance payments to Mr. Kelley
upon termination of his employment for any reason following a change in control
of First United.
Various other officers of First United, including John G. Copeland, Chief
Financial Officer of First United, and Jim N. Harwood, John Robert Graves and
Gordon R. Lewis, Regional Chairmen of First United, are parties to severance or
employment agreements with First United under which they may be entitled to
severance payments and benefits upon termination of their employment following a
change in control of First United. It is anticipated that the merger would
constitute a change in control for purposes of these agreements.
FIRST UNITED SHAREHOLDERS MAY DISSENT FROM THE MERGER (PAGE 25)
BANCORPSOUTH. BancorpSouth shareholders do not have the right to dissent
from the merger.
FIRST UNITED. Arkansas law permits First United shareholders to dissent
from the merger and to receive the fair value of their shares of First United
common stock in cash. To do this, a First United shareholder must follow certain
procedures, including filing certain notices with First United and refraining
from voting their shares in favor of the merger. If they dissent from the
merger, their shares of First United common stock will not be exchanged for
shares of BancorpSouth common stock in the merger, and their only right will be
to receive the appraised fair value of their shares of First United common stock
in cash. A copy of the Arkansas statutes describing these dissenters' rights and
the procedures for exercising them is attached as Annex B to this Joint Proxy
Statement/Prospectus. First United shareholders who perfect their dissenters'
rights and receive cash in exchange for their shares of First United common
stock may recognize gain or loss for U.S. federal income tax purposes.
BancorpSouth can terminate the merger agreement if the cash it must pay to First
United shareholders for fractional shares and dissenters' rights exceeds the
amount permissible to account for the merger as a pooling of interests.
WE MUST OBTAIN REGULATORY APPROVALS TO COMPLETE THE MERGER (PAGE 54)
We cannot complete the merger unless we obtain the approval of the Federal
Deposit Insurance Corporation. The U.S. Department of Justice has input into the
FDIC's approval process. Once the FDIC has approved the merger, federal law
requires that we wait for 15 to 30 days to complete the merger in order to give
the Department of Justice the opportunity to review and object to the merger.
BancorpSouth
8
<PAGE> 16
obtained approval of the merger from the FDIC on , 2000 and,
according to the specific terms of the FDIC approval, the waiting period will
expire on , 2000, days after receipt of the FDIC approval.
In addition, the merger is subject to the approval of the Mississippi
Department of Banking and Consumer Finance, the Arkansas State Bank Department,
the Texas Department of Banking, the Louisiana Office of Financial Institutions
and the Office of the Comptroller of the Currency. BancorpSouth and First United
have filed all of the required notices and applications, as appropriate, with
these federal and state regulatory authorities, and approval of the merger is
expected to be received following approval of the merger agreement by the
shareholders of BancorpSouth and First United.
While we believe that we will obtain the remaining regulatory approvals in
a timely manner, we cannot be certain if or when we will obtain them.
CONDITIONS TO COMPLETION OF THE MERGER (PAGE 61)
The completion of the merger depends on a number of conditions being met,
including the following:
- Shareholders of BancorpSouth approving the merger;
- Shareholders of First United approving the merger;
- The New York Stock Exchange listing the shares of BancorpSouth common
stock to be issued to First United shareholders;
- Receipt of all required regulatory approvals, including that of the FDIC,
and the expiration of any regulatory waiting periods;
- The absence of any governmental order blocking completion of the merger,
or of any proceedings by a government body trying to block it;
- Receipt of opinions of legal counsel to each company that the U.S.
federal income tax treatment in the merger will generally be as described
in this document;
- Receipt by BancorpSouth of a pooling letter from its certified public
accountants that the merger will qualify for pooling of interests
accounting treatment under applicable accounting standards if the merger
is consummated in accordance with the merger agreement; and
- Receipt by First United of a pooling letter from its certified public
accountants that First United is a poolable entity under applicable
accounting standards.
In cases where the law permits, a party to the merger agreement could elect
to waive a condition that has not been satisfied and complete the merger
although the party is entitled not to complete the merger. We cannot be certain
whether or when any of these conditions will be satisfied (or waived, where
permissible), or that the merger will be completed.
TERMINATION OF THE MERGER AGREEMENT (PAGE 61)
We can agree at any time to terminate the merger agreement without
completing the merger, even if the shareholders of BancorpSouth and/or First
United have already voted to approve it.
BancorpSouth can terminate the merger agreement if First United enters into
any letter of intent, agreement in principle, or acquisition or similar
agreement related to any tender or exchange offer, proposal for a merger,
consolidation or other business combination involving First United or any First
United subsidiary or any proposal, inquiry or offer to acquire in any manner all
or 10% or greater equity interest in, or all or a substantial portion of the
assets of, First United or any First United subsidiary, other than the
transactions described in this Joint Proxy Statement/Prospectus.
9
<PAGE> 17
Moreover, either of us can terminate the merger agreement in the following
circumstances:
- After a final decision by a governmental authority to prohibit the
merger, or 60 days after the rejection of an application for a required
governmental approval;
- If the merger isn't completed by December 31, 2000;
- If the shareholders of BancorpSouth or First United do not approve the
merger;
- If the other party violates, in a significant way, any of its
representations, warranties, covenants or obligations contained in the
merger agreement;
- The Board of Directors of the other party withdraws, or changes in a
manner adverse to the other party, its recommendation that its
shareholders approve the merger;
- BancorpSouth's independent certified public accountants do not deliver a
pooling letter to BancorpSouth; or
- First United's independent certified public accountants do not deliver a
pooling letter to First United.
Generally, a party can only terminate the merger agreement in one of these
situations if that party is not in violation of the merger agreement or if its
violations of the merger agreement are not the cause of the event permitting
termination.
BancorpSouth can terminate the merger agreement if the cash it must pay to
First United shareholders for fractional shares and dissenters' rights exceeds
the amount permissible to account for the merger as a pooling of interests.
In addition, First United's Board of Directors can elect to terminate the
merger agreement if the average closing price of BancorpSouth common stock for
the 20 consecutive full trading days ending at the close of trading on the day
when BancorpSouth receives the last regulatory consent required for consummation
of the merger declines 20% below $15.75, the closing price of BancorpSouth
common stock on April 17, 2000, and 20% below the average market prices of an
index of similarly situated publicly-held banks and bank holding companies.
First United must notify BancorpSouth of its decision to terminate the merger
agreement during the 10 day period commencing two days after BancorpSouth
receives the last regulatory consent. After BancorpSouth receives this
termination notice, it may elect to increase the exchange ratio according to the
formula contained in Section 9.1(i) of the merger agreement. If BancorpSouth
makes a timely election to increase the exchange ratio, it must give prompt
written notice to First United and the merger agreement will remain in effect,
except that all references to the exchange ratio will then mean the new exchange
ratio.
BANCORPSOUTH'S OPTION TO PURCHASE SHARES OF FIRST UNITED COMMON STOCK (PAGE 65)
To induce BancorpSouth to enter into the merger agreement, First United
granted a stock option to BancorpSouth to purchase up to 5,056,959 shares of
First United common stock at a price of $12.625 per share. The number of shares
of First United common stock that may be acquired upon exercise of the stock
option may not exceed 19.9% of the issued and outstanding shares of First United
common stock (without counting shares that are exercisable under the stock
option). First United may, in certain cases, be required to repurchase this
option (and/or any shares purchased under this stock option) for a cash payment
of approximately $22.5 million. BancorpSouth's total profit under this option
may not exceed $22.5 million.
BancorpSouth cannot exercise the stock option unless certain specific
events take place. These events are generally related to a competing transaction
involving a merger, business combination or other acquisition of First United or
its stock or assets. As of the date of this Joint Proxy Statement/Prospectus, we
are not aware that any event of that kind has occurred. The stock option could
have the effect of discouraging other companies that might want to combine with
or acquire First United from doing so. A copy of the stock option agreement is
attached as Annex F to this Joint Proxy Statement/Prospectus.
10
<PAGE> 18
FIRST UNITED'S OPTION TO PURCHASE SHARES OF BANCORPSOUTH COMMON STOCK (PAGE 66)
To induce First United to enter into the merger agreement, BancorpSouth
granted a stock option to First United to purchase up to 11,245,425 shares of
BancorpSouth common stock at a price of $16.00 per share. The number of shares
of BancorpSouth common stock that may be acquired upon exercise of the stock
option may not exceed 19.9% of the issued and outstanding shares of BancorpSouth
common stock (without counting shares that are exercisable under the stock
option). BancorpSouth may in certain cases, be required to repurchase this
option (and/or any shares purchased under this stock option) for a cash payment
of approximately $22.5 million. First United's total profit under this option
may not exceed $22.5 million.
First United cannot exercise the stock option unless certain specific
events take place. These events are generally related to a transaction involving
a merger, business combination or other acquisition of BancorpSouth or its stock
or assets. As of the date of this Joint Proxy Statement/Prospectus, we are not
aware that any event of that kind has occurred. The stock option could have the
effect of discouraging other companies that might want to combine with or
acquire BancorpSouth from doing so. A copy of the stock option agreement is
attached as Annex G to this Joint Proxy Statement/Prospectus.
COMPARATIVE PER SHARE MARKET PRICE INFORMATION (PAGE 74)
Shares of BancorpSouth common stock are listed on the New York Stock
Exchange under the symbol "BXS." On April 14, 2000, the last full trading day
prior to the public announcement of the merger, BancorpSouth common stock closed
at $16.00 per share. On , 2000, BancorpSouth common stock closed at
$ per share. Of course, the market price of BancorpSouth common stock is
expected to fluctuate prior to and after completion of the merger, while the
exchange ratio is fixed. You should obtain current stock price quotations for
BancorpSouth common stock.
Shares of First United common stock are quoted on the Nasdaq Stock Market
under the symbol "UNTD." On April 14, 2000, the last full trading day prior to
the public announcement of the merger, First United common stock closed at
$12.625 per share. On , 2000, First United common stock closed at
$ per share. Of course, the market price of First United common stock is
expected to fluctuate prior to and after completion of the merger, while the
exchange ratio is fixed. You should obtain current stock price quotations for
First United common stock.
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE (PAGE 80)
This document, and other documents to which you are referred in this
document, contain forward-looking statements that are subject to risks and
uncertainties. These forward-looking statements include information about
possible or assumed future results of our operations or the performance of the
combined companies after the merger. Forward-looking statements generally refer
to a future period and/or include any of the words "believes," "expects,"
"anticipates," "should," "will," "estimates," "plans" or "intends" or similar
expressions. Many possible events or factors could affect each of our future
financial results and performance and that of the combined company after the
merger and could cause those results or performance to differ materially from
those expressed in forward-looking statements. These possible events or factors
include the following:
- Problems or delays in bringing us together, either before or after the
merger is completed;
- Legal and regulatory risks and uncertainties;
- Economic, political and competitive forces affecting our businesses,
markets, constituencies or securities; and
- Inaccuracies in our analyses of these risks and forces, and lack of
success of strategies developed to deal with them.
11
<PAGE> 19
COMPARATIVE UNAUDITED PER SHARE DATA
The following table shows information, for the periods indicated, about
BancorpSouth's and First United's historical net income per share, dividends per
share and book value per share. The table also provides similar information that
reflects the merger of BancorpSouth and First United (which is referred to as
"pro forma" information). In presenting the comparative pro forma information
for certain time periods, we have assumed that First United and BancorpSouth had
been merged throughout those periods for accounting and financial reporting
purposes (a method which is referred to as the "pooling of interests" method of
accounting). In addition, the table provides "pro forma equivalent" information
for First United, which was obtained by multiplying the BancorpSouth and First
United pro forma amounts by the exchange ratio. It is intended to reflect the
fact that First United shareholders will be receiving more than one share of
BancorpSouth common stock for each share of First United common stock exchanged
in the merger.
BOOK VALUE PER SHARE:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1999 2000
------------ ---------
<S> <C> <C>
BancorpSouth historical(1).................................. $ 8.70 $ 8.74
First United historical(2).................................. 10.27 10.44
BancorpSouth and First United pro forma(3).................. 8.84 8.92
First United pro forma equivalent(4)........................ 9.94 10.04
</TABLE>
NET INCOME PER SHARE:
<TABLE>
<CAPTION>
THREE-MONTHS
YEAR ENDED DECEMBER 31, ENDED
----------------------- MARCH 31,
1997 1998 1999 2000
----- ----- ----- ------------
<S> <C> <C> <C> <C>
BancorpSouth historical(1)............................ $0.99 $1.01 $1.20 $0.32
First United historical(2)............................ 1.02 1.20 1.32 0.34
BancorpSouth and First United pro forma(3)............ 0.96 1.03 1.19 0.31
First United pro forma equivalent(4).................. 1.08 1.16 1.34 0.35
</TABLE>
CASH DIVIDENDS PER SHARE:
<TABLE>
<CAPTION>
THREE-MONTHS
YEAR ENDED DECEMBER 31, ENDED,
------------------------ MARCH 31,
1997 1998 1999 2000
------ ----- ----- ------------
<S> <C> <C> <C> <C>
BancorpSouth historical(1)........................... $0.395 $0.45 $0.49 $0.130
First United historical(2)........................... 0.390 0.45 0.49 0.125
BancorpSouth and First United pro forma(3)........... 0.395 0.45 0.49 0.130
First United pro forma equivalent(4)................. 0.440 0.51 0.55 0.150
</TABLE>
---------------
(1) Adjusted to reflect a two-for-one stock split of BancorpSouth common stock,
effected in the form of a 100% stock dividend as of May 15, 1998.
(2) Adjusted to reflect a two-for-one stock split of First United common stock,
effected in the form of a 100% stock dividend as of June 30, 1998.
(3) Presented as if the merger of First United into BancorpSouth had been
effective throughout the periods presented.
(4) Calculated by multiplying the BancorpSouth and First United pro forma amount
by the exchange ratio of 1.125.
12
<PAGE> 20
SELECTED HISTORICAL FINANCIAL DATA AND UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
The following tables show summarized unaudited historical consolidated
financial data for BancorpSouth and for First United and also show similar pro
forma information reflecting the merger of the two companies. The pro forma
information reflects the pooling of interests method of accounting for the
merger of First United into BancorpSouth.
We expect to incur merger-related expenses as a result of combining our
companies. We also anticipate that the merger will provide the combined company
with financial benefits such as reduced operating expenses and the opportunity
to earn more revenue. However, none of these anticipated expenses or benefits
have been factored into the pro forma income statement information. For that
reason, the pro forma information, while helpful in illustrating the financial
attributes of the combined company under one set of assumptions, doesn't attempt
to predict or suggest future results. Also, the information set forth for the
three-month period ended March 31, 2000 does not indicate what the results will
be for the full 2000 fiscal year.
The information in the following tables is based on the historical
financial information of BancorpSouth and First United that has been presented
in their prior filings with the Securities and Exchange Commission (and which
have been incorporated by reference into this Joint Proxy Statement/
Prospectus). All of the summary financial information provided in the following
tables should be read in connection with this historical financial information.
For information on how to obtain BancorpSouth's and/or First United's historical
financial information presented in their prior filings, you should refer to the
section of this document captioned "WHERE YOU CAN FIND MORE INFORMATION." The
financial information as of and for the interim periods ended March 31, 2000 and
1999 has not been audited and in the respective opinions of management reflects
all adjustments (consisting only of normal recurring adjustments) necessary to a
fair presentation of such data.
13
<PAGE> 21
BANCORPSOUTH, INC.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
FOR THE YEARS ENDED DECEMBER 31, (UNAUDITED)
-------------------------------------------------------------- -----------------------
1995 1996 1997 1998 1999 1999 2000
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS SUMMARY:
Interest revenue.......... $ 294,901 $ 322,410 $ 353,774 $ 398,003 $ 414,187 $ 99,414 $ 110,557
Interest expense.......... 135,938 148,999 167,606 194,309 196,686 47,109 54,830
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest revenue.... 158,963 173,411 186,168 203,694 217,501 52,305 55,727
Provision for credit
losses.................. 7,183 10,200 10,516 16,080 14,689 3,063 3,313
Other revenue............. 48,485 56,529 59,679 66,242 79,331 23,098 21,492
Other expense............. 136,649 142,039 156,574 166,514 183,000 48,900 46,559
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income
tax................... 63,616 77,701 78,757 87,342 99,143 23,440 27,347
Applicable income taxes... 19,041 26,350 24,891 29,369 30,190 6,575 9,193
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income................ $ 44,575 $ 51,351 $ 53,866 $ 57,973 $ 68,953 $ 16,865 $ 18,154
========== ========== ========== ========== ========== ========== ==========
PER SHARE DATA:
Basic earnings............ $ 0.87 $ 1.00 $ 1.000 $ 1.02 $ 1.21 $ 0.30 $ 0.32
Diluted earnings.......... 0.87 0.99 0.990 1.01 1.20 0.29 0.32
Cash dividends............ 0.31 0.35 0.395 0.45 0.49 0.12 0.13
Book value................ 6.23 6.91 7.450 8.18 8.70 8.25 8.74
BALANCE SHEET DATA
(PERIOD END):
Total assets.............. $3,896,501 $4,226,311 $4,851,950 $5,383,214 $5,776,926 $5,489,231 $5,844,696
Loans, net of unearned
income.................. 2,655,696 2,860,824 3,187,305 3,582,397 4,053,532 3,658,139 4,114,315
Allowance for credit
losses.................. 38,799 41,706 44,238 51,083 55,557 52,264 56,821
Securities................ 853,033 905,214 1,112,387 1,235,321 1,186,038 1,231,276 1,222,197
Deposits.................. 3,384,635 3,694,087 4,112,723 4,587,332 4,815,415 4,701,413 4,975,535
Long-term debt............ N/A N/A N/A 182,720 138,560 168,012 137,903
Total stockholders'
equity.................. 320,674 356,084 404,463 467,527 497,400 472,153 494,112
BALANCE SHEET DATA (AVERAGES):
Total assets.............. $3,711,949 $4,055,489 $4,481,933 $5,177,846 $5,563,010 $5,409,979 $5,814,835
Total stockholders'
equity.................. $ 304,628 $ 335,356 $ 387,675 $ 440,659 $ 476,453 $ 467,513 $ 495,790
Average number of diluted
shares outstanding...... 51,528 51,900 54,544 57,224 57,524 57,524 57,207
SELECTED RATIOS (ANNUALIZED):
Return on average
assets.................. 1.20% 1.27% 1.20% 1.12% 1.24% 1.25% 1.25%
Return on average
stockholders' equity.... 14.63 15.31 13.89 13.16 14.47 14.43 14.65
Net interest margin....... N/A N/A 4.56 4.31 4.28 4.31 4.21
Net charge-offs to average
loans................... 0.21 0.26 0.29 0.30 0.27 0.22 0.20
Tier 1 capital to
risk-weighted assets.... N/A N/A N/A 11.56 11.49 11.45 11.11
Total capital to
risk-weighted assets.... N/A N/A N/A 12.82 12.80 12.71 12.40
Leverage ratio............ N/A N/A N/A 8.38 8.38 8.26 8.22
</TABLE>
---------------
"N/A" -- not available for the period indicated.
14
<PAGE> 22
FIRST UNITED BANCSHARES, INC.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
FOR THE YEARS ENDED DECEMBER 31, (UNAUDITED)
-------------------------------------------------------------- -----------------------
1995 1996 1997 1998 1999 1999 2000
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS SUMMARY:
Interest revenue.......... $ 133,909 $ 154,452 $ 169,996 $ 177,216 $ 184,082 $ 44,355 $ 48,397
Interest expense.......... 63,329 73,807 79,339 82,806 83,485 20,107 22,570
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest revenue.... 70,580 80,645 90,657 94,410 100,597 24,248 25,827
Provision for credit
losses.................. 1,013 1,443 5,166 3,230 3,123 688 1,302
Other revenue............. n/a 14,859 18,156 18,258 19,665 4,778 4,963
Other expense............. n/a 56,321 68,625 66,218 69,140 16,650 17,567
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income
tax................... n/a 37,740 35,022 43,220 47,999 11,688 11,921
Applicable income taxes... n/a 10,681 9,250 12,952 14,541 3,565 3,430
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income................ $ 22,527 $ 27,059 $ 25,772 $ 30,268 $ 33,458 $ 8,123 $ 8,491
========== ========== ========== ========== ========== ========== ==========
PER SHARE DATA:
Basic earnings............ $ 0.96 $ 1.11 $ 1.02 $ 1.20 $ 1.32 $ 0.320 $ 0.340
Diluted earnings.......... 0.96 1.11 1.02 1.20 1.32 0.320 0.340
Cash dividends............ 0.31 0.33 0.39 0.45 0.49 0.115 0.125
Book value................ 7.86 8.60 9.27 10.11 10.27 10.210 10.440
BALANCE SHEET DATA (PERIOD END):
Total assets.............. $1,935,896 $2,172,561 $2,355,255 $2,516,457 $2,666,047 $2,505,516 $2,715,907
Loans, net of unearned
income.................. 928,283 1,048,179 1,213,338 1,353,161 1,488,403 1,346,547 1,506,362
Allowance for credit
losses.................. 15,259 14,951 17,694 17,302 18,675 17,786 19,541
Securities................ 784,512 888,565 901,906 910,745 925,186 902,083 933,039
Deposits.................. 1,645,444 1,859,854 1,990,159 2,133,951 2,251,631 2,131,762 2,270,691
Long-term debt............ 31,314 35,311 30,636 26,367 34,246 22,984 27,642
Total stockholders'
equity.................. 184,364 210,099 234,549 255,633 259,710 258,197 264,070
BALANCE SHEET DATA (AVERAGES):
Total assets.............. $1,792,731 $2,110,673 $2,298,372 $2,399,605 $2,543,247 $2,490,438 $2,692,387
Total stockholders'
equity.................. $ 168,670 $ 195,133 $ 226,430 $ 239,453 $ 259,746 $ 252,964 $ 274,334
Average number of shares
outstanding:
Basic................... 23,428 24,444 25,294 25,294 25,295 25,294 25,296
Diluted................. 23,438 24,482 25,360 25,324 25,336 25,329 25,323
SELECTED RATIOS (ANNUALIZED):
Return on average
assets.................. 1.26% 1.29% 1.12% 1.26% 1.32% 1.32% 1.27%
Return on average
stockholders' equity.... 13.36 13.87 11.38 12.64 12.88 13.02 12.45
Net interest margin....... N/A 4.32 4.43 4.34 4.41 4.40 4.32
Net charge-offs to average
loans................... 0.24 0.29 0.25 0.28 0.20 0.02 0.03
Tier 1 capital to
risk-weighted assets.... N/A 16.54 16.26 16.40 15.81 16.72 15.69
Total capital to
risk-weighted assets.... N/A 17.79 17.51 17.57 16.95 17.97 16.85
Leverage ratio............ N/A 9.34 9.41 9.66 9.73 9.92 9.71
</TABLE>
---------------
"N/A" -- not available for the period indicated.
15
<PAGE> 23
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
----------------------------
BANCORPSOUTH FIRST UNITED ADJUSTMENTS PRO FORMA
------------ ------------ ----------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks................. $ 222,681 $ 113,476 $ 336,157
Held-to-maturity securities............. 840,754 196,407 1,037,161
Available-for-sale securities........... 345,284 728,779 1,074,063
Federal funds sold...................... 65,000 45,875 110,875
Loans and leases........................ 4,131,418 1,492,356 5,623,774
Less: Unearned discount................. 77,886 3,953 81,839
Allowance for credit losses....... 55,557 18,675 74,232
---------- ---------- ------- ----------
Net loans and leases.................... 3,997,975 1,469,728 5,467,703
Mortgages held for sale................. 37,521 -- 37,521
Premises and equipment, net............. 129,054 42,689 171,743
Other assets............................ 138,657 69,093 207,750
---------- ---------- ------- ----------
Total assets....................... $5,776,926 $2,666,047 -- $8,442,973
========== ========== ======= ==========
LIABILITIES
Deposits
Non-interest bearing.................. $ 614,567 $ 352,327 $ 966,894
Interest bearing...................... 4,200,848 1,899,304 6,100,152
---------- ---------- ------- ----------
Total deposits........................ 4,815,415 2,251,631 7,067,046
Short-term borrowings................... 242,989 106,951 349,940
Long-term debt.......................... 138,560 34,246 172,806
Other liabilities....................... 82,562 13,509 96,071
---------- ---------- ------- ----------
Total liabilities.................. 5,279,526 2,406,337 7,685,863
---------- ---------- ------- ----------
STOCKHOLDERS' EQUITY
Common stock............................ 143,261 25,296 $45,849(1) 214,406
Capital surplus......................... 90,990 26,636 (45,849)(1) 71,777
Unrealized gain on available-for-sale
securities............................ (95) (14,054) (14,149)
Retained earnings....................... 264,707 221,832 486,539
Less cost of treasury stock............. (1,463) -- (1,463)
---------- ---------- ------- ----------
Total stockholders' equity......... 497,400 259,710 -- 757,110
---------- ---------- ------- ----------
Total liabilities and stockholders'
equity........................... $5,776,926 $2,666,047 -- $8,442,973
========== ========== ======= ==========
</TABLE>
---------------
(1) Reclassification of capital accounts to reflect the exchange of First United
common stock for BancorpSouth common stock.
16
<PAGE> 24
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
----------------------------
BANCORPSOUTH FIRST UNITED ADJUSTMENTS PRO FORMA
------------ ------------ ----------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks................. $ 188,840 $ 98,620 $ 287,460
Held-to-maturity securities............. 890,083 194,118 1,084,201
Available-for-sale securities........... 331,741 738,921 1,070,662
Federal funds sold...................... 77,000 52,219 129,219
Loans and leases........................ 4,187,382 1,509,760 5,697,142
Less: Unearned discount................. 73,067 3,398 76,465
Allowance for credit losses....... 56,821 19,541 76,362
---------- ---------- ------- ----------
Net loans and leases.................... 4,057,494 1,486,821 5,544,315
Mortgages held for sale................. 31,893 -- 31,893
Premises and equipment, net............. 130,522 42,435 172,957
Other assets............................ 137,123 102,773 239,896
---------- ---------- ------- ----------
Total assets....................... $5,844,696 $2,715,907 -- $8,560,603
========== ========== ======= ==========
LIABILITIES
Deposits
Non-interest bearing.................. $ 641,108 $ 362,321 $1,003,429
Interest bearing...................... 4,334,427 1,908,370 6,242,797
---------- ---------- ------- ----------
Total deposits........................ 4,975,535 2,270,691 7,246,226
Short-term borrowings................... 147,981 139,766 287,747
Long-term debt.......................... 137,903 27,642 165,545
Other liabilities....................... 89,165 13,738 102,903
---------- ---------- ------- ----------
Total liabilities.................. 5,350,584 2,451,837 7,802,421
---------- ---------- ------- ----------
STOCKHOLDERS' EQUITY
Common stock............................ 143,261 25,297 $45,851(1) 214,409
Capital surplus......................... 89,164 26,665 (45,851)(1) 69,978
Unrealized gain on available-for-sale
securities............................ (1,851) (15,053) (16,904)
Retained earnings....................... 275,425 227,161 502,586
Less cost of treasury stock............. (11,887) -- (11,887)
---------- ---------- ------- ----------
Total stockholders' equity......... 494,112 264,070 -- 758,182
---------- ---------- ------- ----------
Total liabilities and stockholders'
equity........................... $5,844,696 $2,715,907 -- $8,560,603
========== ========== ======= ==========
</TABLE>
---------------
(1) Reclassification of capital accounts to reflect the exchange of First United
common stock for BancorpSouth common stock.
17
<PAGE> 25
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------------
1997
---------------------------------------------------
FIRST
BANCORPSOUTH UNITED
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
------------ ---------- ----------- ---------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Interest revenue............ $353,774 $169,996 $523,770
Interest expense............ 167,606 79,339 246,945
-------- -------- -------- --------
Net interest revenue........ 186,168 90,657 276,825
Provision for credit
losses.................... 10,516 5,166 15,682
-------- -------- -------- --------
Net interest revenue, after
provision for credit
losses.................... 175,652 85,491 261,143
Other revenue............... 59,679 18,156 77,835
Other expense............... 156,574 68,625 225,199
-------- -------- -------- --------
Income before income tax.... 78,757 35,022 113,779
Applicable income taxes..... 24,891 9,250 34,141
-------- -------- -------- --------
Net income.................. $ 53,866 $ 25,772 -- $ 79,638
======== ======== ======== ========
EARNINGS PER SHARE
Basic..................... $ 1.00 $ 1.02 $ 0.96
Diluted................... $ 0.99 $ 1.02 $ 0.96
AVERAGE SHARES
Basic..................... 54,122 25,294 82,578
Diluted................... 54,544 25,360 83,074
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------------
1998
---------------------------------------------------
FIRST
BANCORPSOUTH UNITED
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
------------ ---------- ----------- ---------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Interest revenue............ $398,003 $177,216 $575,219
Interest expense............ 194,309 82,806 277,115
-------- -------- -------- --------
Net interest revenue........ 203,694 94,410 298,104
Provision for credit
losses.................... 16,080 3,230 19,310
-------- -------- -------- --------
Net interest revenue, after
provision for credit
losses.................... 187,614 91,180 278,794
Other revenue............... 66,242 18,258 84,500
Other expense............... 166,514 66,218 232,732
-------- -------- -------- --------
Income before income tax.... 87,342 43,220 130,562
Applicable income taxes..... 29,369 12,952 42,321
-------- -------- -------- --------
Net income.................. $ 57,973 $ 30,268 -- $ 88,241
======== ======== ======== ========
EARNINGS PER SHARE
Basic..................... $ 1.02 $ 1.20 $ 1.04
Diluted................... $ 1.01 $ 1.20 $ 1.03
AVERAGE SHARES
Basic..................... 56,638 25,294 85,094
Diluted................... 57,224 25,324 85,714
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1999
---------------------------------------------------
FIRST
BANCORPSOUTH UNITED
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
------------ ---------- ----------- ---------
<S> <C> <C> <C> <C>
Interest revenue............. $414,187 $184,082 $598,269
Interest expense............. 196,686 83,485 280,171
-------- -------- -------- --------
Net interest revenue......... 217,501 100,597 318,098
Provision for credit
losses..................... 14,689 3,123 17,812
-------- -------- -------- --------
Net interest revenue, after
provision for credit
losses..................... 202,812 97,474 300,286
Other revenue................ 79,331 19,665 98,996
Other expense................ 183,000 69,140 252,140
-------- -------- -------- --------
Income before income tax..... 99,143 47,999 147,142
Applicable income taxes...... 30,190 14,541 44,731
-------- -------- -------- --------
Net income................... $ 68,953 $ 33,458 -- $102,411
======== ======== ======== ========
EARNINGS PER SHARE
Basic...................... $ 1.21 $ 1.32 $ 1.20
Diluted.................... $ 1.20 $ 1.32 $ 1.19
AVERAGE SHARES
Basic...................... 57,108 25,295 85,565
Diluted.................... 57,524 25,336 86,027
</TABLE>
18
<PAGE> 26
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31,
---------------------------------------------------
1999
---------------------------------------------------
FIRST
BANCORPSOUTH UNITED
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
------------ ---------- ----------- ---------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Interest revenue.......... $99,414 $44,355 $143,769
Interest expense.......... 47,109 20,107 67,216
------- ------- -------- --------
Net interest revenue...... 52,305 24,248 76,553
Provision for credit
losses.................. 3,063 688 3,751
------- ------- -------- --------
Net interest revenue,
after provision for
credit losses........... 49,242 23,560 72,802
Other revenue............. 23,098 4,778 27,876
Other expense............. 48,900 16,650 65,550
------- ------- -------- --------
Income before income
tax..................... 23,440 11,688 35,128
Applicable income taxes... 6,575 3,565 -- 10,140
------- ------- -------- --------
Net income................ $16,865 $ 8,123 -- $ 24,988
======= ======= ======== ========
EARNINGS PER SHARE
Basic................... $ 0.30 $ 0.32 $ 0.29
Diluted................. $ 0.29 $ 0.32 $ 0.29
AVERAGE SHARES
Basic................... 57,082 25,294 85,538
Diluted................. 57,524 25,329 86,019
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31,
---------------------------------------------------
2000
---------------------------------------------------
FIRST
BANCORPSOUTH UNITED
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
------------ ---------- ----------- ---------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Interest revenue.......... $110,557 $48,397 $158,954
Interest expense.......... 54,830 22,570 77,400
-------- ------- -------- --------
Net interest revenue...... 55,727 25,827 81,544
Provision for credit
losses.................. 3,313 1,302 4,615
-------- ------- -------- --------
Net interest revenue,
after provision for
credit losses........... 52,414 24,525 76,939
Other revenue............. 21,492 4,963 26,455
Other expense............. 46,559 17,567 64,126
-------- ------- -------- --------
Income before income
tax..................... 27,347 11,921 39,268
Applicable income taxes... 9,193 3,430 -- 12,623
-------- ------- -------- --------
Net income................ $ 18,154 $ 8,491 -- $ 26,645
======== ======= ======== ========
EARNINGS PER SHARE
Basic................... $ 0.32 $ 0.34 $ 0.31
Diluted................. $ 0.32 $ 0.34 $ 0.31
AVERAGE SHARES
Basic................... 56,854 25,296 85,312
Diluted................. 57,207 25,323 85,695
</TABLE>
19
<PAGE> 27
BANCORPSOUTH SPECIAL MEETING
GENERAL
This Joint Proxy Statement/Prospectus is first being mailed, on or about
, 2000, to all persons who were BancorpSouth shareholders on
, 2000.
Along with this Joint Proxy Statement/Prospectus, BancorpSouth shareholders
are being provided with a Notice of Special Meeting from, and form of proxy card
that is solicited by, BancorpSouth's Board of Directors for use at the special
meeting of BancorpSouth shareholders and at any adjournments or postponements of
that meeting.
At the BancorpSouth special meeting, BancorpSouth shareholders will
consider and vote upon a proposal to approve and adopt an Agreement and Plan of
Merger, dated as of April 16, 2000, and amended as of May 15, 2000, between
First United and BancorpSouth, which provides for the merger of First United
with and into BancorpSouth.
The special meeting of BancorpSouth shareholders will be held at the
following time and place:
, 2000
.m. (Central Time)
BancorpSouth, Inc.
One Mississippi Plaza
Tupelo, Mississippi 38804
PROXIES
We encourage BancorpSouth shareholders to promptly vote their proxies
either by (1) completing, signing, dating and returning the enclosed proxy card
solicited by BancorpSouth's Board of Directors, or (2) voting by touch-tone
telephone as described in the enclosed proxy card, but NOT by both methods, if
they are unable to attend the BancorpSouth special meeting in person or wish to
have their shares of BancorpSouth common stock voted by proxy even if they do
attend the meeting. If a BancorpSouth shareholder does vote by both methods,
only the last vote that is submitted will be counted and each previous vote will
be disregarded.
In order to vote by touch-tone telephone, BancorpSouth shareholders need
the 10-digit Control Number printed on their enclosed proxy card. To vote by
touch-tone telephone, call , enter the 10-digit Control Number
and follow the simple instructions. This toll-free call can be made at any time
up until p.m. (Central Time) on , 2000, the day prior
to the BancorpSouth special meeting, and should not require more than a few
minutes to complete. To vote your proxy by mail, please complete, sign, date and
return the enclosed proxy card. Under the Mississippi Business Corporation Act
and BancorpSouth's governing documents, a proxy voted by touch-tone telephone
has the same validity as one voted by completing, signing, dating and returning
a proxy card.
A BancorpSouth shareholder may revoke any proxy given in connection with
this solicitation by:
- Delivering to BancorpSouth's corporate Secretary a written notice
revoking the proxy prior to the taking of the vote at the BancorpSouth
special meeting;
- Voting a proxy relating to the same shares bearing a later date; or
- Attending the meeting and voting in person (however, attendance at the
BancorpSouth special meeting without voting at the meeting will not in
and of itself constitute a revocation of a proxy).
20
<PAGE> 28
BancorpSouth shareholders should address all written notices of revocation
and other communications with respect to the revocation of proxies to the
following:
BancorpSouth, Inc.
One Mississippi Plaza
Tupelo, Mississippi 38804
Attention: Cathy S. Freeman, Secretary.
For a notice of revocation or later proxy to be valid, however,
BancorpSouth must actually receive it prior to the vote of BancorpSouth
shareholders at the BancorpSouth special meeting. BancorpSouth will vote all
shares represented by valid proxies received in connection with this
solicitation, and not revoked before they are exercised in the manner described
above. If no specification is made, BancorpSouth will vote the proxies in favor
of approval of the merger agreement.
BancorpSouth is currently unaware of any other matters that may be
presented for action at the BancorpSouth special meeting. If other matters do
properly come before the BancorpSouth special meeting, then shares of
BancorpSouth common stock represented by proxies will be voted (or not voted) by
the persons named in the proxies in their discretion.
BANCORPSOUTH'S SOLICITATION OF PROXIES
In addition to the solicitation of proxies by mail, BancorpSouth will
request banks, brokers and other record holders to send proxy cards and proxy
material to the beneficial owners of BancorpSouth common stock and obtain their
voting instructions, if necessary. BancorpSouth will reimburse these record
holders for their reasonable expenses in so doing. If necessary, BancorpSouth
may also use several of its regular employees, who will not be specially
compensated, to solicit proxies from BancorpSouth shareholders, either
personally or by telephone, telegram, facsimile or special delivery letter.
BANCORPSOUTH RECORD DATE AND VOTING RIGHTS
BancorpSouth's Board of Directors has fixed , 2000 as the
record date for the determination of BancorpSouth shareholders entitled to
receive notice of and to vote at BancorpSouth's special meeting of shareholders.
Accordingly, only BancorpSouth shareholders of record at the close of business
on , 2000 will be entitled to notice of and to vote at the
BancorpSouth special meeting. At the close of business on BancorpSouth's record
date, there were shares of BancorpSouth common stock entitled to vote at
the BancorpSouth special meeting held by approximately holders of
record, and the directors and executive officers of BancorpSouth beneficially
owned % of the outstanding shares of BancorpSouth common stock.
The presence, in person or by proxy, of shares of BancorpSouth common stock
representing two-thirds of the votes entitled to be cast at the BancorpSouth
special meeting is necessary to constitute a quorum. Each share of BancorpSouth
common stock outstanding on BancorpSouth's record date entitles its holder to
one vote as to the approval of the merger agreement or any other proposal that
may properly come before BancorpSouth's special meeting.
For purposes of determining the presence or absence of a quorum for the
transaction of business, BancorpSouth will count shares of BancorpSouth common
stock present in person at the special meeting but not voting, and shares of
BancorpSouth common stock for which it has received proxies but with respect to
which holders of such shares have abstained, as present at the special meeting.
Abstentions are counted as present at the BancorpSouth special meeting for
purposes of determining whether a quorum exists; however, abstentions will not
be counted as a vote "for" or "against" the merger agreement, and therefore will
be disregarded in determining whether or not the merger agreement is approved.
Proxies submitted by brokers that do not indicate a vote for the merger
agreement because the brokers don't have discretionary voting authority and have
not received instructions as to how to vote on that proposal (so-called "broker
non-votes") will be counted as present at the BancorpSouth special meeting for
purposes of determining whether a quorum exists; however, broker non-votes will
not be counted as a vote "for" or
21
<PAGE> 29
"against" the merger agreement, and therefore will be disregarded in determining
whether or not the merger agreement is approved.
Under the Mississippi Business Corporation Act, approval of the merger
agreement requires that the number of votes cast in favor of the merger
agreement must exceed the number of votes cast against the merger agreement at
BancorpSouth's special meeting. BancorpSouth's Board of Directors urges
BancorpSouth shareholders to complete, date and sign the enclosed proxy card and
return it promptly in the enclosed, postage-paid envelope, or to vote by
touch-tone telephone as described on the enclosed proxy card.
RECOMMENDATION OF BANCORPSOUTH'S BOARD OF DIRECTORS
BancorpSouth's Board of Directors has approved the merger agreement.
BancorpSouth's Board of Directors believes that the merger is in the best
interests of BancorpSouth and BancorpSouth shareholders and recommends that
BancorpSouth shareholders vote "FOR" approval and adoption of the merger
agreement. The conclusion of BancorpSouth's Board of Directors with respect to
the merger is based on a number of factors. See "THE MERGER -- BancorpSouth's
Reasons for the Merger; Recommendation of BancorpSouth's Board of Directors."
LACK OF DISSENTERS' RIGHTS FOR BANCORPSOUTH SHAREHOLDERS
Holders of BancorpSouth common stock will NOT be entitled to dissenters'
rights as a result of the merger under the Mississippi Business Corporation Act.
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FIRST UNITED SPECIAL MEETING
GENERAL
This Joint Proxy Statement/Prospectus is first being mailed, on or about
, 2000, to all persons who were First United shareholders on
, 2000.
Along with this Joint Proxy Statement/Prospectus, First United shareholders
are being provided with a Notice of Special Meeting from, and form of proxy card
that is solicited by, First United's Board of Directors for use at the special
meeting of First United shareholders and at any adjournments or postponements of
that meeting.
At the First United special meeting, First United shareholders will
consider and vote upon a proposal to approve and adopt the merger agreement,
dated as of April 16, 2000, and amended as of May 15, 2000, between First United
and BancorpSouth.
The special meeting of First United shareholders will be held at the
following time and place:
, 2000
.m. (Central Time)
First National Bank of El Dorado
Main and Washington Streets
El Dorado, Arkansas 71730
PROXIES
We encourage First United shareholders to promptly vote their proxies by
completing, signing, dating and returning the enclosed proxy card solicited by
First United's Board of Directors if they are unable to attend the First United
special meeting in person or wish to have their shares of First United common
stock voted by proxy even if they do attend the meeting.
A First United shareholder may revoke any proxy given in connection with
this solicitation by:
- Delivering to First United's corporate Secretary a written notice
revoking the proxy prior to the taking of the vote at the First United
special meeting;
- Delivering a duly executed proxy relating to the same shares bearing a
later date; or
- Attending the meeting and voting in person (however, attendance at the
First United special meeting without voting at the meeting will not in
and of itself constitute a revocation of a proxy).
First United shareholders should address all written notices of revocation
and other communications with respect to the revocation of proxies to the
following:
First United Bancshares, Inc.
Main and Washington Streets
El Dorado, Arkansas 71730
Attention: John G. Copeland, Secretary.
For a notice of revocation or later proxy to be valid, however, First
United must actually receive it prior to the vote of First United shareholders
at the First United special meeting. First United will vote all shares of First
United common stock represented by valid proxies received through this
solicitation, and not revoked before they are exercised in the manner described
above. If no specification is made, First United will vote the proxies in favor
of approval of the merger agreement.
First United is currently unaware of any other matters that may be
presented for action at the First United special meeting. If other matters do
properly come before the First United special meeting, then shares of First
United common stock represented by proxies will be voted (or not voted) by the
persons named in the proxies in their discretion.
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FIRST UNITED'S SOLICITATION OF PROXIES
In addition to the solicitation of proxies by mail, First United will
request banks, brokers and other record holders of First United common stock to
send proxy cards and proxy material to the beneficial owners of the stock and
obtain their voting instructions, if necessary. First United will reimburse
these record holders for their reasonable expenses in so doing. If necessary,
First United may also use several of its regular employees, who will not be
specially compensated, to solicit proxies from First United shareholders, either
personally or by telephone, telegram, facsimile or special delivery letter.
FIRST UNITED RECORD DATE AND VOTING RIGHTS
First United's Board of Directors has fixed , 2000 as the
record date for the determination of First United shareholders entitled to
receive notice of and to vote at First United's special meeting of shareholders.
Accordingly, only First United shareholders of record at the close of business
on , 2000 will be entitled to notice of and to vote at the First
United special meeting. At the close of business on First United's record date,
there were shares of First United common stock entitled to vote at the
First United special meeting held by approximately holders of
record, and the directors and executive officers of First United beneficially
owned % of the outstanding shares of First United common stock.
The presence, in person or by proxy, of shares of First United common stock
representing a majority of the votes entitled to be cast at the First United
special meeting is necessary to constitute a quorum. Each share of First United
common stock outstanding on First United's record date entitles its holder to
one vote as to the approval of the merger agreement or any other proposal that
may properly come before First United's special meeting.
For purposes of determining the presence or absence of a quorum for the
transaction of business, First United will count shares of First United common
stock present in person at the special meeting but not voting, and shares of
First United common stock for which it has received proxies but with respect to
which holders of such shares have abstained, as present at the special meeting.
Abstentions are counted as present at the First United special meeting for
purposes of determining whether a quorum exists and have the effect of a vote
"against" any matter as to which they are specified. Proxies submitted by
brokers that do not indicate a vote for some or all of the proposals because
they don't have discretionary voting authority and have not received
instructions as to how to vote on those proposals (so-called "broker non-
votes") will be counted as present at the First United special meeting for
purposes of determining whether a quorum exists and have the effect of a vote
"against" any proposal as to which instructions on how to vote were not
provided.
Under First United's articles of incorporation, approval of the merger
agreement requires the affirmative vote of the holders of two-thirds of all
votes entitled to be cast on the merger agreement. Because approval of the
merger agreement requires the affirmative vote of the holders of two-thirds of
the outstanding shares of First United common stock, abstentions and broker
non-votes will have the same effect as negative votes. Accordingly, First
United's Board of Directors urges First United shareholders to complete, date
and sign the accompanying proxy card and return it promptly in the enclosed,
postage-paid envelope.
RECOMMENDATION OF FIRST UNITED'S BOARD OF DIRECTORS
First United's Board of Directors has approved the merger agreement. First
United's Board of Directors believes that the merger is in the best interests of
First United and First United shareholders and recommends that First United
shareholders vote "FOR" approval and adoption of the merger agreement. The
conclusion of First United's Board of Directors with respect to the merger is
based on a number of factors, including the receipt of fairness opinions from
First United's financial advisors. See "THE MERGER -- First United's Reasons for
the Merger; Recommendation of First United's Board of Directors."
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<PAGE> 32
FIRST UNITED SHAREHOLDERS DISSENTERS' RIGHTS
Holders of First United common stock will be entitled to dissenters' rights
as a result of the merger under Subchapter 13 of the Arkansas Business
Corporation Act of 1987. A person having a beneficial interest in shares of
First United common stock that are held of record in the name of another person,
such as a broker or nominee, must act promptly to cause the record holder to
follow the steps summarized below properly and in a timely manner to perfect
whatever dissenters' rights the beneficial owner may have, or must submit to
First United the record shareholder's written consent to the dissent not later
than the time the beneficial owner asserts dissenters' rights and must do so
with respect to all shares that such person beneficially owns.
The following discussion is not a complete statement of the law pertaining
to dissenters' rights under the Arkansas Business Corporation Act of 1987. Any
First United shareholder who wishes to exercise such dissenters' rights, or who
wishes to preserve his or her right to do so, should review Subchapter 13 of the
Arkansas Business Corporation Act of 1987, a copy of which is attached as Annex
B to this Joint Proxy Statement/Prospectus, and the following discussion
carefully.
The availability of dissenters' rights is conditioned upon full compliance
with a complicated procedure set forth in Subchapter 13 of the Arkansas Business
Corporation Act of 1987. Failure to timely and properly comply with the
procedures specified will result in the complete loss of dissenters' rights.
Accordingly, any First United shareholder who wishes to dissent from the merger
and receive the value of his or her First United common stock in cash should
consult with his or her own legal counsel.
A First United shareholder's failure to vote against the merger agreement
will not constitute a waiver of his or her appraisal or similar rights.
Moreover, a vote against the merger agreement will not be deemed to satisfy all
of the notice requirements under Arkansas law with respect to appraisal rights.
PROCEDURE FOR THE EXERCISE OF FIRST UNITED SHAREHOLDERS DISSENTERS'
RIGHTS. In order to be eligible to exercise the right to dissent, a First
United shareholder must:
- Notify First United in writing prior to the vote on the merger agreement
that such First United shareholder intends to demand payment for his or
her shares of First United common stock if the merger is completed; and
- Not vote such shares of First United common stock in favor of the merger
agreement.
If the merger is approved at the First United special meeting, BancorpSouth
must deliver the dissenters' notice to all dissenting First United shareholders
who satisfied the requirements referred to in the preceding paragraph.
BancorpSouth must deliver the dissenters' notice within 10 days after completion
of the merger. This notice must:
- State where the First United shareholders must send demand for payment of
his or her shares of First United common stock if the merger is completed
and where and when First United common stock certificates must be
deposited;
- Inform holders of uncertificated shares of First United common stock to
what extent transfer of the shares will be restricted after the demand
for payment is received;
- Supply a form for demanding payment that includes the date of the first
announcement of the merger agreement to news media or to shareholders and
requires the dissenting shareholders to certify whether or not he or she
acquired beneficial ownership before that date;
- Set a date by which BancorpSouth must receive the demand for payment,
which date may not be fewer than 30 nor more than 60 days after the date
the dissenters' notice is delivered; and
- Be accompanied by a copy of Subchapter 13 of the Arkansas Business
Corporation Act of 1987.
A First United shareholder who is sent a dissenters' notice must demand
payment in accordance with the terms of the dissenters' notice, certify that he
or she acquired beneficial ownership of the shares of First United common stock
before the date required to be set forth in the dissenters' notice and deposit
his
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<PAGE> 33
or her certificates representing shares of First United common stock in
accordance with the terms of the dissenters' notice.
A First United shareholder who demands payment and deposits his or her
stock certificates in accordance with the previous paragraph retains all other
rights of a First United shareholder until those rights are canceled or modified
by the completion of the merger.
A First United shareholder who does not demand payment or deposit his or
her stock certificates where required, in each case by the date set forth in the
dissenters' notice, is not entitled to payment for his or her shares of First
United common stock.
BANCORPSOUTH'S PAYMENT OR OFFER OF PAYMENT. As soon as the merger is
effective, or upon receipt of a demand for payment, BancorpSouth must pay each
dissenting First United shareholder who has complied with his or her obligations
under Section 4-27-1323 of the Arkansas Business Corporation Act of 1987 the
amount BancorpSouth estimates to be the fair value of the First United
shareholder's shares of First United common stock, plus accrued interest.
BancorpSouth must pay the rate of interest in the manner and amount described in
Section 4-27-1301(4) of the Arkansas Business Corporation Act of 1987. This
offer of payment must be accompanied by the following:
- First United's balance sheet as of the end of a fiscal year ending not
more than 16 months before the date of payment, an income statement for
that year, a statement of changes in shareholders' equity for that year
and the latest available interim financial statements, if any;
- A statement of BancorpSouth's estimate of the fair value of the shares of
First United common stock;
- An explanation of how the interest was calculated;
- A statement of the dissenting shareholder's right to demand payment under
Section 4-27-1328 of the Arkansas Business Corporation Act of 1987; and
- A copy of Subchapter 13 of the Arkansas Business Corporation Act of 1987.
BancorpSouth may elect to withhold payment from a dissenting shareholder
under Section 4-27-1327 of the Arkansas Business Corporation Act of 1987 unless
he or she was the beneficial owner of the shares before the date set forth in
the dissenters' notice as the date of the first announcement to news media or to
shareholders of the merger agreement. To the extent BancorpSouth elects to
withhold payment, it must estimate, after the completion of the merger, the fair
value of the First United shareholder's shares of First United common stock,
plus accrued interest, and must pay this amount to each dissenting shareholder
who agrees to accept it in full satisfaction of his or her demand. BancorpSouth
must send with its offer a statement of its estimate of the fair value of the
shares, an explanation of how the interest was calculated and a statement of the
dissenting shareholder's right to demand payment.
If dissatisfied with BancorpSouth's offer of payment, a dissenting First
United shareholder may notify BancorpSouth in writing of the shareholder's own
estimate of the fair value of his or her shares of First United common stock and
amount of interest due. The dissenting shareholder may demand payment of the
shareholder's estimate (less any payments previously made) or reject
BancorpSouth's offer and demand payment of the fair value of the shareholder's
shares of First United common stock and interest due, if:
- The dissenting shareholder believes that the amount paid under Section
4-27-1325 or offered under Section 4-27-1327 of the Arkansas Business
Corporation Act of 1987 is less than the fair value of the shareholder's
shares of BancorpSouth common stock or that the interest due is
incorrectly calculated;
- BancorpSouth fails to make payment within 60 days after the date set
forth demanding payment; or
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<PAGE> 34
- BancorpSouth, having failed to complete the merger, does not return the
deposited certificates or release the transfer restrictions imposed on
the uncertificated shares of First United common stock within 60 days
after the date set for demanding payment.
However, a dissenting First United shareholder waives the right to demand such
payment unless the shareholder notifies BancorpSouth of such demand in writing
within 30 days after BancorpSouth made or offered payment for the shareholder's
shares of First United common stock.
If BancorpSouth does not complete the merger within 60 days after the date
set for demanding payment and depositing share certificates of a dissenting
First United shareholder's shares of First United common stock, BancorpSouth
must return the deposited certificates and release the transfer restrictions
imposed on the uncertificated shares of First United common stock. If
BancorpSouth, after returning deposited certificates and releasing the transfer
restrictions imposed upon the shareholder's shares of First United common stock,
completes the merger, a new dissenters' notice must be delivered to the
shareholder and the payment demand procedure discussed above must be repeated.
JUDICIAL APPRAISAL OF FIRST UNITED COMMON STOCK. If a demand for payment
under Section 49-27-1328 of the Arkansas Business Corporation Act of 1987
remains unsettled, BancorpSouth must commence a proceeding within 60 days after
receiving the demand for payment and petition the relevant court to determine
the fair value of the shares of First United common stock and accrued interest.
If BancorpSouth does not commence this proceeding within this 60-day period, it
must pay each dissenting First United shareholder whose demand remains unsettled
the amount demanded.
BancorpSouth must commence any such proceeding relating to First United
common stock in the circuit court of Union County, Arkansas. BancorpSouth must
make all dissenting shareholders whose demands remain unsettled, whether or not
residents of Arkansas, parties to the proceeding and must serve all parties with
a copy of the petition. The court may appoint one or more persons as appraisers
to receive evidence and recommend a fair value. The appraisers will have the
powers described in the order appointing them or any amendment to that order.
Dissenting shareholders are entitled to the same discovery rights as parties to
other civil proceedings.
Each dissenting First United shareholder made a party to the proceeding is
entitled to judgment (1) for the amount the court finds as the fair value of
such shareholder's shares of First United common stock, plus interest, exceeds
the amount paid by BancorpSouth, or (2) for the fair value, plus accrued
interest, of such shareholder's after-acquired shared for which BancorpSouth
elected to withhold payment under Section 4-27-1327 of the Arkansas Business
Corporation Act of 1987.
The court, in an appraisal proceeding, must determine all costs of the
proceeding, including the reasonable compensation and expense of appraisers
appointed by the court. The court must assess these costs against BancorpSouth,
except that the court may assess costs against all or some of the dissenting
shareholders in amounts the court finds equitable, to the extent that the court
finds that the dissenting shareholders acted arbitrarily, vexatiously or not in
good faith in demanding payment.
The court may also assess the reasonable fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable, as
follows:
- Against BancorpSouth and in favor of any and all dissenting shareholders
if the court finds that BancorpSouth did not substantially comply with
the requirements of Sections 4-27-1320 through 4-27-1328 of the Arkansas
Business Corporation Act of 1987; or
- Against either BancorpSouth or a dissenting shareholder, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously or not in good faith
with respect to the rights provided by Subchapter 13 of the Arkansas
Business Corporation Act of 1987.
If the court finds that the services of counsel for any dissenting First
United shareholder were of substantial benefit to other dissenting shareholders
similarly situated, and that the fees for those services should not be assessed
against BancorpSouth, the court may award to those counsel reasonable fees to be
paid out of the amounts awarded to the dissenting First United shareholders who
were benefited.
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THE MERGER
The discussion in this Joint Proxy Statement/Prospectus of the merger of
First United into BancorpSouth does not purport to be complete and is qualified
by reference to the full text of the merger agreement and the other annexes
attached to, and incorporated by reference into, this Joint Proxy
Statement/Prospectus.
DESCRIPTION OF THE MERGER
Upon completion of the merger, First United will merge into BancorpSouth,
the separate corporate existence of First United will cease and BancorpSouth
will be the surviving corporation. BancorpSouth will continue to exist as a
Mississippi corporation. In addition, each of First United's wholly-owned
subsidiaries, The First National Bank of El Dorado, First National Bank of
Magnolia, Merchants and Planters Bank, N.A. of Camden, The City National Bank of
Fort Smith, The Bank of North Arkansas, FirstBank, First United Bank, Fredonia
State Bank, City Bank & Trust of Shreveport, Citizens National Bank of Hope,
First Republic Bank and First United Trust Company, N.A., will merge into
BancorpSouth Bank, a Mississippi state banking corporation and a wholly-owned
subsidiary of BancorpSouth, and BancorpSouth Bank will be the surviving bank.
BancorpSouth Bank will continue its existence under the laws of Mississippi.
Subject to the satisfaction or waiver of certain conditions set forth in the
merger agreement, the merger will become effective upon the filing of articles
of merger in the offices of the Secretary of State of the State of Arkansas and
the offices of the Secretary of State of the State of Mississippi in accordance
with the Arkansas Business Corporation Act of 1987 and the Mississippi Business
Corporation Act of 1987. See "THE MERGER AGREEMENT -- Conditions to the Merger."
The merger will have the effects set forth in Section 79-4-11.07 of the
Mississippi Business Corporation Act, Section 81-5-85 of the Mississippi Banking
Act, Section 4-27-1106 of the Arkansas Business Corporation Act of 1987, Section
23-48-604 of the Arkansas Banking Code of 1997, Section 6.355 of the Louisiana
Banking Law, Section 32.301 of the Texas Finance Code and Section 3(e) of the
National Bank Act.
BancorpSouth's articles of incorporation and bylaws as in effect upon
completion of the merger will be those of the surviving corporation, and
BancorpSouth Bank's articles of incorporation and bylaws as in effect upon
completion of the merger will be those of the surviving bank.
At the effective time of the merger, automatically by virtue of the merger
and without any action on the part of any party or shareholder, each share of
First United common stock outstanding immediately prior to the effective time
will become and be converted into the right to receive 1.125 shares of
BancorpSouth common stock. However, shares of First United common stock with
respect to which dissenters' rights have been properly demanded in accordance
with Article 13 of the Arkansas Business Corporation Act of 1987 or held by
First United or any of its subsidiaries, in each case, other than shares held in
a fiduciary capacity or in connection with a debt previously contracted, will
not be converted into BancorpSouth common stock automatically at the effective
time of the merger. At the effective time, all shares of First United common
stock held by First United or its subsidiaries, other than shares held in a
fiduciary capacity or in connection with a debt previously contracted, will be
canceled and will cease to exist, and no BancorpSouth common stock or other
consideration will be delivered in exchange for such shares. Also at the
effective time, all shares of BancorpSouth common stock held by First United or
its subsidiaries, other than shares held in a fiduciary capacity or in
connection with a debt previously contracted, will become treasury stock and all
other shares of BancorpSouth common stock outstanding as of the effective time
will remain outstanding.
Shares of First United common stock as to which dissenters' rights have
been properly demanded will not be converted into the right to receive, or be
exchangeable for, BancorpSouth common stock. Instead, the holders of these
shares will be entitled to cash payment of the value of the shares in accordance
with Subchapter 13 of the Arkansas Business Corporation Act of 1987. However, if
any holder of these shares subsequently delivers a written withdrawal of their
demand for dissenters' rights, or if any holder fails to establish his or her
entitlement to dissenters' rights, the holder will forfeit the right to dissent
from the
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merger and his or her shares of First United common stock will be deemed to have
been converted into the right to receive, and to have become exchangeable for,
the consideration due under the merger agreement. See "FIRST UNITED SPECIAL
MEETING -- First United Shareholders Dissenters' Rights."
At the effective time of the merger, each outstanding and unexercised
option to purchase shares of First United common stock granted by First United
will no longer represent a right to acquire shares of First United common stock
and will be replaced promptly by an option to purchase shares of BancorpSouth
common stock under the appropriate BancorpSouth stock option plan. The number of
shares of BancorpSouth common stock underlying these new options will be equal
to the product of (1) the number of shares of First United common stock
underlying the original options, multiplied times (2) the exchange ratio, with
any fractional shares of BancorpSouth common stock resulting from this
calculation to be rounded down to the nearest whole share. The exercise price
per share of BancorpSouth common stock under these new options will be equal to
the quotient of (1) the exercise price per share of First United common stock
under the original options, divided by (2) the exchange ratio, with the exercise
price resulting from this calculation to be rounded up to the nearest cent.
However, each original option to purchase First United common stock which is an
"incentive stock option" will be adjusted in a manner that is consistent with
the requirements of the Internal Revenue Code and the pooling of interests
accounting rules. The duration of each new option to purchase BancorpSouth
common stock will be the same as the replaced original option to purchase First
United common stock.
At the effective time of the merger, First United shareholders, other than
those who perfect dissenters' rights, will have no further rights as First
United shareholders, other than to receive the consideration to be issued to
them in the merger. After the effective time, there will be no transfers on
First United's stock transfer books of shares of First United common stock. If,
after the effective time, stock certificates representing shares of First United
common stock are presented for transfer to SunTrust Bank, Atlanta, the exchange
agent for the merger, they will be canceled and exchanged for certificates
representing shares of BancorpSouth common stock as provided in the merger
agreement.
The exchange ratio will not be adjusted to reflect any change in the price
of BancorpSouth common stock, except in connection with an election by First
United's Board of Directors to exercise its right to terminate the merger
agreement in accordance with Section 9.1(i) of the merger agreement. See "THE
MERGER AGREEMENT -- Termination of the Merger Agreement." BancorpSouth expects
the market price of BancorpSouth common stock to fluctuate due to market factors
beyond its control between the date of this Joint Proxy Statement/Prospectus and
the date on which the merger is completed and thereafter. Since the exchange
ratio is fixed and the market price of BancorpSouth common stock is expected to
fluctuate and may decrease, the implied market value of BancorpSouth common
stock that First United shareholders will receive in the merger may increase or
decrease prior to completion of the merger. For further information concerning
the historical market prices of BancorpSouth common stock and First United
common stock, see "PRICE RANGE OF COMMON STOCK AND DIVIDENDS." BancorpSouth
cannot assure you that the market price of BancorpSouth common stock will not
decrease before or after the merger. However, First United's Board of Directors
may elect to terminate the merger agreement if the price of BancorpSouth common
stock drops so substantially that it triggers the termination clause in Section
9.1(i) of the merger agreement, subject to BancorpSouth's right to increase the
exchange ratio and continue the effectiveness of the merger agreement (which is
described in this document in the section captioned "THE MERGER AGREEMENT --
Termination of the Merger Agreement").
If, prior to the merger, shares of BancorpSouth common stock are changed
into a different number or class of shares due to any reclassification,
recapitalization, split-up, combination, exchange of shares or readjustment, or
if a stock dividend is declared on the shares of BancorpSouth common stock with
a record date prior to the merger, the exchange ratio will be adjusted
accordingly.
At the effective time of the merger, persons who are BancorpSouth
shareholders immediately prior to the merger would own approximately 67% of the
outstanding shares of common stock of the combined
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company and persons who are First United shareholders immediately prior to the
merger would own approximately 33% of the outstanding shares of common stock of
the combined company.
BACKGROUND OF THE MERGER
In September 1998, management of First United explored the possibility of
pursuing a business combination with another financial institution, and engaged
a financial advisor to identify and contact potential acquirors to determine
their interest in a possible business combination with First United. Eight
financial institutions were contacted to solicit their interest in a business
combination with First United. One institution did not respond to the contact
and the other institutions indicated that they were either not interested or not
in a position to enter into negotiations at that time. Based on these responses,
First United terminated exploration of a potential business combination in
September 1998. Since that time, First United received one unsolicited inquiry
from a representative of a financial institution concerning a possible business
combination with First United. This inquiry did not lead to negotiations because
First United's management did not believe that the financial institution was a
good strategic match for First United in terms of management and operations.
In late 1998, BancorpSouth identified First United as a potentially
attractive merger partner, and Aubrey B. Patterson, Chairman and Chief Executive
Officer of BancorpSouth, contacted James V. Kelley, Chairman, President and
Chief Executive Officer of First United, and expressed general interest in
discussing the possibility of a business combination between BancorpSouth and
First United. On November 16, 1998, Mr. Patterson and Mr. Kelley met at First
United's headquarters in El Dorado, Arkansas to become acquainted and to discuss
the structure, business plans, operating philosophies and future prospects of
their respective companies. These discussions did not include substantive
discussions about a business combination between First United and BancorpSouth.
During the following 14 months, Mr. Patterson and Mr. Kelley had informal
discussions from time to time regarding the progress of their respective
companies and the possibility of entering into negotiations regarding a business
combination. These discussions were general in nature and did not include any
proposals for a business combination.
In January 2000, the board of directors of each company appointed a special
board committee to consider the possibility of a strategic merger between
BancorpSouth and First United.
On January 25, 2000, members of BancorpSouth's special board committee met
in El Dorado, Arkansas with members of First United's special board committee.
At the meeting, Mr. Patterson and Mr. Kelley reviewed the recent operations,
structure, philosophies, strategic goals, direction and future prospects of
their respective companies.
In February 2000, Mr. Patterson and Mr. Kelley had several informal
discussions and meetings regarding the possibility of pursuing a business
combination between BancorpSouth and First United, as well as various financial
and non-financial issues that would need to be resolved in connection with such
a business combination. During February 2000 and March 2000, the special board
committees of each company met separately and discussed the possibility of a
merger and the various issues to be resolved.
In early March 2000, Mr. Patterson and Mr. Kelley discussed possible
valuations of First United based on various assumptions about the financial
structure of a potential merger between First United and BancorpSouth, as well
as exchange ratios and related pricing issues for comparable transactions.
On March 15, 2000, Mr. Patterson called Mr. Kelley and indicated that
BancorpSouth's Board of Directors would be considering the possibility of
submitting a merger proposal to First United, and that BancorpSouth's Board of
Directors had authorized BancorpSouth to engage Salomon Smith Barney Inc. as its
financial advisor.
On March 20, 2000, upon recommendation of First United's special board
committee, First United's Board of Directors authorized First United to engage
Stephens Inc. as First United's financial advisor with respect to any proposed
merger.
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<PAGE> 38
On March 31, 2000, Mr. Kelley and Mr. Patterson discussed various issues
related to the potential merger, including possible financial terms. On April 3,
2000, Mr. Patterson and Mr. Kelley further discussed these issues and a
timetable for negotiations, due diligence and involvement of the companies'
boards of directors.
On April 10, 2000, First United's Board of Directors held a special meeting
to discuss the proposed merger and to receive a report from Stephens that
included a financial analysis of the proposed terms of the merger. First
United's Board of Directors also heard comments from two of First United's
regional chairmen and Mr. Kelley regarding First United's future earnings and
growth prospects. After the presentations, First United's Board of Directors
authorized management of First United to pursue negotiations with BancorpSouth.
First United's Board of Directors also authorized Mr. Kelley to engage a second
independent financial advisor to advise the Board regarding the proposed merger
and, if appropriate, to render a fairness opinion. Later that evening, Mr.
Kelley called Mr. Patterson and informed him of these developments. On April 11,
2000, First United engaged Stifel, Nicolaus & Company, Inc. as First United's
second financial advisor.
Between April 11, 2000 and April 15, 2000, representatives of BancorpSouth
and First United and their respective legal counsel, accountants and financial
advisors met in Little Rock, Arkansas to conduct a due diligence review and to
negotiate the terms of a definitive merger agreement and related stock option
agreements. Representatives of First United, Stephens and Stifel also visited
BancorpSouth's offices in Tupelo, Mississippi to conduct a due diligence review.
The parties and their representatives continued to negotiate the terms of the
definitive merger agreement and related stock option agreements until April 16,
2000.
On April 16, 2000, BancorpSouth's Board of Directors and First United's
Board of Directors each met in separate special meetings to consider the
proposed merger between First United and BancorpSouth and the terms of the
proposed merger agreement. Each board of directors received presentations from
its respective financial advisors, legal counsel, accountants and management
regarding the merger. Following these presentations and discussion among the
members of the respective boards of directors, the definitive merger agreement
was separately approved by BancorpSouth's Board of Directors and by First
United's Board of Directors. Later that evening, the merger agreement and the
stock option agreements were executed by the parties.
From April 17, 2000 to May 8, 2000, First United and BancorpSouth, and
their respective management, legal counsel and accountants, conducted additional
due diligence review of the other party and its operations, financial condition,
assets and liabilities, consistent with Section 9.1(h) of the merger agreement.
Neither BancorpSouth nor First United exercised their right to terminate the
merger agreement based upon their post-signing due diligence review.
BANCORPSOUTH'S REASONS FOR THE MERGER; RECOMMENDATION OF BANCORPSOUTH'S BOARD OF
DIRECTORS
BancorpSouth's Board of Directors believes that First United's market areas
are comparable to those of BancorpSouth. In addition, it believes that economies
of scale and cost savings available through combining administrative functions
at the holding company and bank levels and increased competitiveness resulting
from combined marketing efforts and budgets should significantly enhance the
operations and financial results of the combined companies. In addition,
BancorpSouth's Board of Directors believes that the merger should strengthen the
ability of First United's subsidiaries, as a part of BancorpSouth Bank, to
compete and be successful in their existing markets since BancorpSouth Bank
offers services that are not currently available to First United's customers and
provides uniform services and financial products that are not offered through
each of First United's subsidiaries. In addition, BancorpSouth possesses
computer technology that is not currently possessed by First United.
BancorpSouth's Board of Directors deliberated and approved the merger
agreement at a Board meeting held on April 16, 2000. In reaching its
determination to approve and adopt the merger agreement, BancorpSouth's Board of
Directors consulted with BancorpSouth's management and financial and legal
31
<PAGE> 39
advisors, and considered a number of factors. The following is a discussion of
information and factors considered by BancorpSouth's Board of Directors in
reaching this determination. This discussion is not intended to be exhaustive,
but includes the material factors considered by BancorpSouth's Board of
Directors. In the course of its deliberations with respect to the merger,
BancorpSouth's Board of Directors discussed the anticipated impact of the merger
on BancorpSouth, BancorpSouth's shareholders and various other constituencies.
BancorpSouth's Board of Directors did not identify any material disadvantages
expected to result from the merger during these discussions. In reaching its
determination to approve and recommend the merger agreement, BancorpSouth's
Board of Directors did not assign any relative or specific weights to the
factors considered in reaching such determination, and individual members of
BancorpSouth's Board of Directors may have given differing weights to different
factors.
The following includes the material factors that were considered by
BancorpSouth's Board of Directors:
- Its review, based in part on presentations by BancorpSouth's management,
legal counsel and financial advisor, of:
(1) the business, operations, technology, dividends, financial condition
and earnings of First United on an historical and a prospective basis
and of the combined company on a pro forma basis,
(2) the historical stock price performance of First United common stock,
and
(3) the potential impact on the market value of BancorpSouth common stock
following the merger;
- The resulting relative interests of BancorpSouth shareholders in the
common stock of the combined companies following the merger;
- The fact that the merger would allow BancorpSouth shareholders to become
shareholders in a company with combined assets of approximately $8.5
billion and operations in six mid-south states.
- The opinion of Salomon Smith Barney Inc. that, as of the date of the
opinion and based upon and subject to the considerations provided in that
opinion and the analyses undertaken, the exchange ratio provided in the
merger agreement was fair, from a financial point of view, to
BancorpSouth (see "-- Fairness Opinion of BancorpSouth's Financial
Advisor");
- The similarity of First United's market areas to BancorpSouth's market
areas and the fact that First United's market areas are located in states
that are contiguous to the states in which BancorpSouth currently
operates;
- The terms of the merger agreement, including the amount and form of
consideration to be received by First United shareholders in the merger,
and the expectation that the merger will be a tax-free transaction to
BancorpSouth, BancorpSouth shareholders and First United;
- The general impact that the merger could be expected to have on the
constituencies served by BancorpSouth, including its customers, employees
and communities;
- The anticipated cost savings, operating efficiencies and opportunities
for revenue enhancement available to the combined companies from the
merger, and the likelihood that these would be achieved following the
merger; and
- The terms of the stock option agreements between BancorpSouth and First
United granting the other party the option to purchase shares of the
granting party's common stock if certain events occur, including the risk
that the option granted to First United might discourage third parties
from offering to acquire BancorpSouth by increasing the cost of such an
acquisition and that the option granted to BancorpSouth might discourage
third parties from offering to acquire First United by increasing the
cost of such an acquisition, while recognizing that the execution of the
these options were a condition to the parties' willingness to enter into
the merger agreement (see "THE MERGER AGREEMENT -- Stock Option
Agreements").
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<PAGE> 40
BASED ON A THOROUGH EVALUATION OF THESE FACTORS, BANCORPSOUTH'S BOARD OF
DIRECTORS BELIEVES THE MERGER IS IN THE BEST INTERESTS OF BANCORPSOUTH AND
BANCORPSOUTH SHAREHOLDERS. BANCORPSOUTH'S BOARD OF DIRECTORS RECOMMENDS THAT
BANCORPSOUTH SHAREHOLDERS VOTE "FOR" APPROVAL AND ADOPTION OF THE MERGER
AGREEMENT.
FIRST UNITED'S REASONS FOR THE MERGER; RECOMMENDATION OF FIRST UNITED'S BOARD OF
DIRECTORS
First United's Board of Directors deliberated and approved the merger
agreement at a Board meeting held on April 16, 2000. In reaching its
determination to approve and adopt the merger agreement, First United's Board of
Directors consulted with First United's management and financial and legal
advisors, and considered a number of factors. The following is a discussion of
the information and factors considered by First United's Board of Directors in
reaching this determination. This discussion is not intended to be exhaustive,
but includes the material factors considered by First United's Board of
Directors. In the course of its deliberations with respect to the merger, First
United's Board of Directors discussed the anticipated impact of the merger on
First United, First United's shareholders and various other constituencies.
First United's Board of Directors did not identify any material disadvantages
expected to result from the merger during these discussions. In reaching its
determination to approve and recommend the merger agreement, First United's
Board of Directors did not assign any relative or specific weights to the
factors considered in reaching such determination, and individual members of
First United's Board of Directors may have given differing weights to different
factors.
The following includes the material factors that were considered by First
United's Board of Directors:
- Its familiarity with and review of First United's business, current
operations and financial condition, including First United's capital
position, asset quality and future growth prospects if it were to remain
independent;
- The favorable historical and estimated future growth of BancorpSouth's
markets when compared to the historical and estimated future growth of
First United's markets.
- Its review, based in part on presentations by First United's management,
legal counsel and financial advisors, of:
(1) the business, operations, technology, dividends, financial condition
and earnings of BancorpSouth on an historical and a prospective basis
and of the combined company on a pro forma basis,
(2) the historical stock price performance of BancorpSouth common stock,
and
(3) the potential impact on the market value of BancorpSouth common stock
following the merger;
- The difference between the current cash dividends per share of First
United common stock and the pro forma equivalent dividends per share to
current holders of First United common stock following the merger;
- The resulting relative interests of First United shareholders in the
common stock of the combined companies following the merger;
- The presentations of Stephens Inc. and Stifel, Nicolaus & Company, Inc.
to First United's Board of Directors, and the opinion of each of Stephens
Inc. and Stifel, Nicolaus & Company, Inc. that, as of April 16, 2000 and
based upon and subject to the procedures followed, assumptions made,
matters considered and limitations on the analyses undertaken, the
exchange ratio provided in the merger agreement was fair, from a
financial point of view, to First United shareholders (see "-- Fairness
Opinions of First United's Financial Advisors");
- The terms of the merger agreement, including the amount and form of
consideration to be received by First United shareholders in the merger,
and the expectation that the merger will be a tax-free
33
<PAGE> 41
transaction to BancorpSouth, First United and First United shareholders,
to the extent First United shareholders receive shares of BancorpSouth
common stock;
- The exchange ratio, which, based on the last sale price of $16.00 per
share of BancorpSouth common stock as reported on the New York Stock
Exchange on April 14, 2000, represented an indicated value of $18.00 per
share of First United common stock to First United shareholders and a
corresponding implied premium of 43% above the last reported sale price
of $12.625 per share of First United common stock as quoted on the Nasdaq
Stock Market on April 14, 2000;
- The fact that the fixed exchange ratio would allow holders of First
United common stock to benefit from any increase in the market price of
BancorpSouth common stock prior to the merger while also subjecting them
to the risk of declines in the market price of BancorpSouth common stock
prior to the merger;
- Its perception of the business risk of First United remaining competitive
over the long term and the benefits of increased geographic
diversification. In this regard, First United's Board of Directors noted
that the combined company resulting from the merger would have a
diversified market position, based on total deposits, in a number of
attractive and growing markets in the mid-south region of the United
States, and would possess improved financial resources, depth of
management and economies of scale that should enable the combined company
to compete more effectively in the financial services industry;
- Its belief that First United has limited short term prospects for
utilization of its excess capital in a manner that could be expected to
enhance shareholder returns, and its familiarity with and review of the
factors contributing to these limited prospects, including:
(1) The limited trading volume of First United's common stock and the
anticipated difficulty of effecting a large share repurchase program;
(2) The possibility that a continued acquisition strategy would be
constrained by the relatively low stock market valuation of First
United's common stock; and
(3) The undesirability of engaging in significant acquisitions on a
purchase accounting basis given the amount of goodwill these
acquisitions would be expected to generate based on prevailing
pricing multiples in other financial institution mergers and
acquisitions;
- Its belief that the value of the consideration to be received in the
merger would result in greater value than remaining independent, in light
of First United's likely difficulty generating superior shareholder
returns in the highly competitive conditions in which First United
operates;
- Its belief that BancorpSouth is an attractive strategic merger partner,
given BancorpSouth's markets, operations, technology, management and
prospective ability to compete in the highly competitive financial
services industry and to generate superior shareholder returns;
- The compatibility of First United and BancorpSouth and their opportunity
to enhance their revenue by combining BancorpSouth's loan growth
potential and First United's low-cost deposit-gathering capability, as
well as the anticipated cost savings, operating efficiencies and other
opportunities for revenue enhancement available to the combined companies
from the merger, and the likelihood that these would be achieved
following the merger;
- The fact that James V. Kelley, Chairman, President and Chief Executive
Officer of First United, would serve as President and Chief Operating
Officer of BancorpSouth following the merger, and that the directors and
officers of First United might otherwise be deemed to have interests in
the merger other than their interests generally as First United
shareholders (see "-- Interests of Certain Persons in the Merger"); and
- The terms of the stock option agreements between BancorpSouth and First
United granting the other party the option to purchase shares of the
granting party's common stock if certain events occur, including the risk
that the option granted to First United might discourage third parties
from
34
<PAGE> 42
offering to acquire BancorpSouth by increasing the cost of such an
acquisition and that the option granted to BancorpSouth might discourage
third parties from offering to acquire First United by increasing the
cost of such an acquisition, while recognizing that the execution of
these options were a condition to the parties' willingness to enter into
the merger agreement (see "THE MERGER AGREEMENT -- Stock Option
Agreements").
BASED ON A THOROUGH EVALUATION OF THESE FACTORS, FIRST UNITED'S BOARD OF
DIRECTORS BELIEVES THE MERGER IS IN THE BEST INTERESTS OF FIRST UNITED AND FIRST
UNITED SHAREHOLDERS. FIRST UNITED'S BOARD OF DIRECTORS RECOMMENDS THAT FIRST
UNITED SHAREHOLDERS VOTE "FOR" APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
FAIRNESS OPINION OF BANCORPSOUTH'S FINANCIAL ADVISOR
BancorpSouth retained Salomon Smith Barney to act as financial advisor in
connection with the merger. Salomon Smith Barney rendered a written opinion to
BancorpSouth's Board of Directors on April 16, 2000 to the effect that, based
upon and subject to the considerations set forth in its opinion, Salomon Smith
Barney's experience as investment bankers, its work described below and other
factors it deemed relevant, as of April 16, 2000, the exchange ratio set forth
in the merger agreement was fair from a financial point of view to BancorpSouth.
The full text of Salomon Smith Barney's April 16, 2000 opinion, which sets
forth, among other things, the assumptions made, general procedures followed,
matters considered and limits on the review undertaken, is attached as Appendix
C to this Joint Proxy Statement/Prospectus. The summary of Salomon Smith
Barney's opinion set forth below is qualified in its entirety by reference to
the full text of the opinion. Salomon Smith Barney's opinion is addressed to
BancorpSouth's Board of Directors, and does not constitute a recommendation to
any BancorpSouth shareholder as to how that shareholder should vote at the
BancorpSouth special meeting. BancorpSouth's shareholders are urged to read
Salomon Smith Barney's opinion carefully and in its entirety.
In arriving at its opinion, Salomon Smith Barney:
- Reviewed a draft of the merger agreement;
- Held discussions with senior officers and other representatives and
advisors of BancorpSouth and senior officers and other representatives
and advisors of First United concerning the businesses, operations and
prospects of BancorpSouth and First United;
- Examined publicly available business and financial information relating
to BancorpSouth and First United;
- Examined financial forecasts and other information and data for
BancorpSouth and First United which were provided to, or otherwise
discussed with, Salomon Smith Barney by BancorpSouth's management and
First United's management, including information relating to strategic
implications and operational benefits anticipated to result from the
merger;
- Reviewed the financial terms of the merger as set forth in the merger
agreement in relation to, among other things, current and historical
market prices and trading volumes of the BancorpSouth common stock and
First United common stock, the historical and forecasted earnings and
other operating data of BancorpSouth and First United and the forecasted
capitalization and financial condition of BancorpSouth and First United;
- Considered, to the extent publicly available, the financial terms of
other similar transactions that Salomon Smith Barney considered relevant
in evaluating the exchange ratio;
- Analyzed financial, stock market and other publicly available information
relating to the businesses of other companies whose operations Salomon
Smith Barney considered relevant in evaluating those of BancorpSouth and
First United;
- Evaluated the pro forma financial impact of the merger on BancorpSouth;
and
35
<PAGE> 43
- Conducted other analyses and examinations and considered other
information and financial, economic and market criteria as it deemed
appropriate in arriving at its opinion.
In rendering its opinion, Salomon Smith Barney assumed and relied upon,
without independent verification, the accuracy and completeness of all financial
and other information and data publicly available or furnished to or otherwise
reviewed by or discussed with Salomon Smith Barney and further relied on the
assurances of BancorpSouth's management and First United's management that they
were not aware of any facts that would make any of that information inaccurate
or misleading. With respect to financial forecasts and other information and
data provided to or otherwise reviewed by or discussed with it, including
forecasts of cost savings and operating synergies forecasted by BancorpSouth's
management to result from the merger, Salomon Smith Barney was advised by
BancorpSouth's management and First United's management that the forecasts and
other information and data had been reasonably prepared on bases reflecting the
best currently available estimates and judgments of BancorpSouth's management
and First United's management as to the future financial performance of
BancorpSouth and First United and the strategic implications and operational
benefits anticipated to result from the merger. Salomon Smith Barney expressed
no view with respect to the forecasts and other information and data or the
assumptions on which they were based. Salomon Smith Barney assumed, with the
consent of BancorpSouth's Board of Directors, that the merger will be treated as
a tax-free reorganization for federal income tax purposes and that it qualifies,
and will be accounted for, as a pooling of interests in accordance with
generally accepted accounting principles (or "GAAP").
Salomon Smith Barney has not made or been provided with an independent
evaluation or appraisal of the assets or liabilities, contingent or otherwise,
of BancorpSouth or First United nor has Salomon Smith Barney made any physical
inspection of the properties or assets of BancorpSouth or First United. Salomon
Smith Barney is not an expert in the evaluation of loan or lease portfolios for
purposes of assessing the adequacy of the allowances for losses with respect to
the loan or lease portfolios and Salomon Smith Barney has neither made an
independent evaluation of the adequacy of these allowances of BancorpSouth or
First United, nor has Salomon Smith Barney reviewed any individual credit or
lease files, and, as a result, Salomon Smith Barney has assumed that the
aggregate allowances for these losses for each of BancorpSouth and First United
are in the aggregate adequate to cover such losses. Representatives of
BancorpSouth advised Salomon Smith Barney, and it assumed, that the final terms
of the merger agreement would not vary materially from those set out in the
draft merger agreement delivered to Salomon Smith Barney. Salomon Smith Barney
further assumed that the merger will be completed in a timely fashion and in
accordance with the terms of the merger agreement, without waiver of any of the
conditions to the merger contained in the merger agreement.
Salomon Smith Barney's opinion relates to the relative values of
BancorpSouth and First United. Salomon Smith Barney did not express any opinion
as to what the value of BancorpSouth common stock actually will be when issued
pursuant to the merger or the price at which BancorpSouth common stock will
trade subsequent to the announcement or consummation of the merger. Salomon
Smith Barney was not asked to consider, and Salomon Smith Barney's opinion does
not address, the relative merits of the merger as compared to any alternative
business strategies that might exist for BancorpSouth or the effect of any other
transaction in which BancorpSouth might engage. Salomon Smith Barney's opinion
necessarily was based on information available to it, and financial, stock
market and other conditions and circumstances existing and disclosed to Salomon
Smith Barney as of the date of the opinion. Although subsequent developments
could affect Salomon Smith Barney's opinion, Salomon Smith Barney does not have
any obligation to update or revise its opinion.
Salomon Smith Barney's advisory services and its opinion were provided for
the information of BancorpSouth's Board of Directors in its evaluation of the
proposed merger, and Salomon Smith Barney's opinion is not intended to be and
does not constitute a recommendation to any BancorpSouth shareholder as to how
that shareholder should vote on any matters relating to the proposed merger.
In connection with rendering its opinion, Salomon Smith Barney made a
presentation to BancorpSouth's Board of Directors on April 16, 2000 with respect
to the material analyses performed by
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<PAGE> 44
Salomon Smith Barney in evaluating the fairness to BancorpSouth from a financial
point of view of the exchange ratio in the merger. The following is a summary of
this presentation. The summary includes information presented in tabular format.
In order to understand fully the financial analyses used by Salomon Smith
Barney, these tables must be read together with the text of each summary. The
tables alone do not constitute a complete description of the financial analyses.
The following quantitative information, to the extent it is based on market
data, is, except as otherwise indicated, based on market data as it existed at
or prior to April 16, 2000 and is not necessarily indicative of current or
future market conditions.
CALCULATION OF IMPLIED VALUE OF EXCHANGE RATIO. Salomon Smith Barney noted
that the exchange ratio of 1.125 shares of BancorpSouth common stock for each
share of First United common stock had an implied value of $18.00 per share of
First United common stock based upon the closing price of BancorpSouth common
stock on April 14, 2000, the trading day prior to the presentation by Salomon
Smith Barney to BancorpSouth's Board of Directors, with the aggregate implied
value of the consideration being $455 million.
TRANSACTION PRICING MULTIPLES. Based on the exchange ratio of 1.125 and
the closing price of BancorpSouth common stock on April 14, 2000 of $16.00,
Salomon Smith Barney analyzed the implied per share transaction value of $18.00
as a multiple of First United's fully diluted book value per share, fully
diluted tangible book value per share, earnings per share for 1999 and estimated
earnings per share for the years 2000 and 2001. Salomon Smith Barney also
analyzed the percentage premium to deposits and the per share transaction value
as a premium to the closing market price of First United common stock on April
14, 2000. These analyses indicated the following:
<TABLE>
<CAPTION>
FIRST UNITED TRANSACTION
REFERENCE VALUATION
------------ -----------
(DOLLARS IN MILLIONS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
Price/Fully Diluted Book Value.............................. $10.33 1.74x
Price/Fully Diluted Tangible Book Value..................... 9.71 1.85x
Price/LTM Earnings.......................................... 1.32 13.6x
Price/2000E Earnings........................................ 1.40 12.9x
Price/2001E Earnings........................................ 1.50 12.0x
Premium to Deposits......................................... 2,252 9.4%
Premium to Market Price -- One Day.......................... 42.6%
</TABLE>
Salomon Smith Barney based its analyses of price/fully diluted book value,
price/fully diluted tangible book value, premium to deposits and price/LTM
earnings on reference data at or for the year ended December 31, 1999. The
estimates of earnings per share for 2000 and 2001 were based on median estimates
as reported by Industrial Brokers Estimate System (or "IBES"). IBES is a data
service that monitors and publishes compilations of earning estimates by
selected research analysts regarding companies of interest to institutional
investors.
PRO FORMA MERGER ANALYSIS. Salomon Smith Barney reviewed selected balance
sheet information and income statement information for each of BancorpSouth,
First United and the combined company and performance ratios and capital and
credit quality levels for BancorpSouth and First United as of or for the 12
month period ended December 31, 1999. Salomon Smith Barney also reviewed the
non-interest income and non-interest expense contributions of each of
BancorpSouth, First United and the combined company for the 12 month period
ended December 31, 1999 and the loan and deposit portfolios of each of
BancorpSouth, First United and the combined company as of December 31, 1999.
Salomon Smith Barney reviewed the respective market share, in terms of
deposits, of BancorpSouth for markets in Mississippi, Tennessee and Alabama and
of First United for markets in Arkansas, Texas and Louisiana. Salomon Smith
Barney analyzed the combined company's competitive position in the above markets
which are served by BancorpSouth and First United and concluded that the
combined company
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<PAGE> 45
would have the fourth largest market share of 3.88% of the markets served.
Salomon Smith Barney also analyzed the branch locations of each of BancorpSouth
and First United.
COMPARATIVE OPERATING RATIOS. Salomon Smith Barney reviewed comparative
performance ratios, earnings and revenue growth and capital ratios and credit
statistics ratios for the years 1995 through 1999 for BancorpSouth, First United
and the combined company. Estimated diluted earnings per share growth rates and
revenue per share growth rates were reviewed for the years 1995 through 1999 for
BancorpSouth, First United and the combined company. In each case, Salomon Smith
Barney also reviewed the comparable median statistics of the peer group set out
below.
FIRST UNITED PEER GROUP PUBLIC TRADING LEVELS ANALYSIS. Salomon Smith
Barney determined a range of imputed values per share of First United common
stock by analyzing the multiples of the current trading levels of the common
stock of a number of First United peer institutions and by adjusting such levels
by an assumed 27.2% change of control premium, to the institutions' estimated
2000 earnings per share and estimated 2001 earnings per share, based on IBES
data as of April 14, 2000, fully diluted book value per share and fully diluted
tangible book value per share. The First United peer group consisted of:
- National City Bancshares, Inc.
- Hancock Holding Company
- Republic Security Financial Corporation
- United National Bancorp
- First Busey Corporation
- First Financial Bankshares, Inc.
- Century South Banks, Inc.
- Alabama National BanCorporation
- Corus Bankshares, Inc.
- Chemical Financial Corporation
- Area Bancshares Corporation
- Mid-State Bancshares
- Mid-America Bancorp
- BT Financial Corporation
- First Charter Corporation
- Capital City Bank Group, Inc.
The analysis indicated the following:
<TABLE>
<CAPTION>
RANGE OF MEDIAN VALUE
VALUES PER PER SHARE OF
SHARE OF FIRST FIRST UNITED
RANGE OF UNITED COMMON STOCK
VALUES PER MEDIAN VALUE COMMON STOCK IMPLIED BY
SHARE OF FIRST PER SHARE OF IMPLIED BY RANGES OF PEER
UNITED FIRST UNITED RANGES OF PEER GROUP PUBLIC
COMMON STOCK COMMON STOCK GROUP PUBLIC TRADING
IMPLIED BY IMPLIED BY TRADING LEVELS WITH AN
RANGES OF PEER RANGES OF PEER LEVELS WITH AN ASSUMED
RANGE FOR MEDIAN FOR GROUP PUBLIC GROUP PUBLIC ASSUMED 27.2% 27.2%
PEER GROUP PEER GROUP TRADING LEVELS TRADING LEVELS PREMIUM PREMIUM
------------ ---------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Multiple of market price
to:
2000 EPS............... 9.0x -21.8x 10.7x $12.65-$30.48 $14.97 $16.09-$38.77 $19.04
2001 EPS............... 8.2x -19.4x 10.1x 12.27- 29.06 15.17 15.61- 36.97 19.29
Diluted book value per
share................ 1.04x- 3.19x 1.47x 10.76- 32.92 15.15 13.69- 41.88 19.27
Diluted tangible book
value per share...... 1.06x- 3.86x 1.67x 10.27- 37.48 16.19 13.06- 47.67 20.60
</TABLE>
PRECEDENT TRANSACTIONS ANALYSIS. Salomon Smith Barney analyzed publicly
available financial, operating and stock market information for selected
comparable domestic pooling of interests merger transactions in the banking
industry. Salomon Smith Barney divided these transactions into the following
three groups, in each case the first named company is the acquiror and the
second named company is the acquired company in the transaction:
- Recent Transactions. There were three transactions since January 31,
2000 with transaction values greater than $100 million. The transactions
in this group were Wells Fargo & Company/First
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<PAGE> 46
Security Corporation, National Commerce Bancorporation/CCB Financial
Corporation and BB&T Corporation/One Valley Corporation.
- Regional Transactions. There were 28 transactions since January 1, 1982
with acquired banks operating in Arkansas, Louisiana, Mississippi,
Oklahoma, Tennessee, Missouri and Texas and with transaction values
between $100 million and $1 billion. The transactions in this group were
Wells Fargo & Company/Prime Bancshares, Inc., First American
Corporation/Pioneer Bancshares, Inc., BancFirst Corporation/AmQuest
Financial Corp., Cullen/Frost Bankers Inc./Overton Bancshares, Inc.,
Union Planters Corporation/Merchants Bancshares Inc., Mercantile
Bancorporation, Inc./ Horizon Bancorp, Inc., Hibernia
Corporation/ArgentBank, Banc One Corporation/Liberty Bancorp, Inc., First
Commercial Corporation/Southwest Bancshares, Inc., Mercantile
Bancorporation, Inc./ Mark Twain Bancshares, Inc., Norwest
Corporation/Victoria Bankshares, Union Planters Corporation/Capital
Bancorporation, Inc., First Commerce Corporation/Central Corporation,
Mercantile Bancorporation, Inc./TCBankshares, Inc., Boatmen's Bancshares,
Inc./Worthen Banking Corporation, Union Planters Corporation/Grenada
Sunburst System Corp., First Commercial Corp./State First Financial
Corp., NationsBank Corporation/Corpus Christi National Bank, Boatmen's
Bancshares, Inc./First Amarillo Bancorporation, Banc One
Corporation/Central Banking Group, Banc One Corporation/Team Bancshares,
Inc., Boatmen's Bancshares, Inc./Centerre Bancorporation, Sovran
Financial Corporation/Commerce Union Corporation, SunTrust Banks,
Inc./Third National Corporation, Dominion Bankshares
Corporation/Nashville City Bank & Trust Co., Commerce Union
Corporation/Central South Bancorp, Inc., First Bancshares of Louisiana/
First National Bancorp, Inc. and Interfirst Corporation/First United
Bancorporation, Inc.
- National Transactions. There were nine transactions since January 1,
1999 between banks operating in the United States and with transaction
values between $250 and $750 million. The transactions in this group were
Carolina First Corporation/Anchor Financial Corporation, First Charter
Corporation/Carolina First BancShares, Old Kent Financial
Corporation/Grand Premier Financial, Inc., Centura Banks, Inc./Triangle
Bancorp, BB&T Corporation/Premier Bancshares, Inc., Sky Financial
Group/Mahoning National Bancorp, Inc., Zions Bancorporation/Pioneer
Bancorporation, U.S. Bancorp/Bank of Commerce and Summit Bancorp/Prime
Bancorp, Inc.
Based on an implied transaction price of $18.00 per First United share and
First United's financial data at, and for the year ended, December 31, 1999,
Salomon Smith Barney calculated the following information in its comparability
analysis:
<TABLE>
<CAPTION>
PRECEDENT TRANSACTION
-----------------------------------------
RANGE MEDIAN THE MERGER
----------------- ------ ----------
<S> <C> <C> <C> <C> <C>
RECENT TRANSACTIONS
Ratio of implied offer price to acquired company's:
Latest 12 months earnings per share...................... 11.2x -14.8x 14.7x 13.6x
Diluted Book value per share............................. 1.68x - 2.59x 2.09x 1.74x
Diluted Tangible book value per share.................... 2.29x - 2.66x 2.39x 1.85x
Implied premium of offer price to market price on last
trading day prior to announcement...................... 25.1% -30.1% 27.2% 42.6%
Implied premium of offer price to market price 1 month
prior to announcement.................................. 18.7% -21.8% 20.6% 63.6%
Premium to Deposits...................................... 14.0% -18.3% 15.0% 9.4%
Give-Get Ratio (LTM)..................................... 0.67x - 1.05x 0.86x 1.02x
</TABLE>
39
<PAGE> 47
<TABLE>
<CAPTION>
PRECEDENT TRANSACTION
-----------------------------------------
RANGE MEDIAN THE MERGER
----------------- ------ ----------
<S> <C> <C> <C> <C>
REGIONAL TRANSACTIONS
Ratio of implied offer price to acquired company's:
Latest 12 months earnings per share...................... 7.3x - 29.5x 15.7x 13.6x
Diluted Book value per share............................. 1.38x - 4.90x 2.27x 1.74x
Diluted Tangible book value per share.................... 1.45x - 4.90x 2.29x 1.85x
Implied premium of offer price to market price on last
trading day prior to announcement...................... (5.2)% - 48.2% 20.6% 42.6%
Implied premium of offer price to market price 1 month
prior to announcement.................................. 15.8% - 69.5% 32.2% 63.6%
Premium to Deposits...................................... 4.0% - 29.2% 11.6% 9.4%
Give-Get Ratio (LTM)..................................... 0.59x - 2.00x 1.26x 1.02x
NATIONAL TRANSACTIONS
Ratio of implied offer price to acquired company's:
Latest 12 months earnings per share...................... 12.5x - 28.3x 23.3x 13.6x
Diluted Book value per share............................. 2.08x - 5.05x 3.49x 1.74x
Diluted Tangible book value per share.................... 2.25x - 5.05x 3.99x 1.85x
Implied premium of offer price to market price on last
trading day prior to announcement...................... (7.3)% - 63.5% 39.6% 42.6%
Implied premium of offer price to market price 1 month
prior to announcement.................................. (1.0)% - 70.7% 37.4% 63.6%
Premium to Deposits...................................... 16.6% - 42.0% 30.4% 9.4%
Give-Get Ratio (LTM)..................................... 0.67x - 1.64x 1.37x 1.02x
</TABLE>
The give-get ratio is the ratio of (1) the pro forma ownership stake of
First United's shareholders in the combined company, to (2) First United's
contribution to the combined company's net income for the 12 months period prior
to the merger, in each case, derived before taking into account any cost savings
or other synergies expected to result from the merger.
Salomon Smith Barney applied the median percentage or ratio from each
methodology listed above to the applicable statistics for First United to
determine implied per share values for First United and then took the median of
those results. From this information, Salomon Smith Barney imputed the following
per share values of First United common stock:
<TABLE>
<CAPTION>
RANGE MEDIAN
------------- ------
<S> <C> <C>
RECENT TRANSACTIONS $13.26-$23.19 $18.48
REGIONAL TRANSACTIONS $14.54-$25.11 $20.61
NATIONAL TRANSACTIONS $15.12-$38.72 $29.94
</TABLE>
DISCOUNTED CASH FLOW ANALYSIS. Salomon Smith Barney performed a discounted
cash flow analysis to estimate a range of implied values per share of First
United common stock including synergies and merger related expenses. This range
was determined by adding (1) the present value of the estimated future cash flow
stream that First United could generate based on earnings forecasted for the
period through December 31, 2003 and (2) the present value of a "terminal value"
calculated by applying a terminal multiple to 2003 projected earnings.
In calculating a terminal value of First United common stock at the end of
the period, Salomon Smith Barney applied a range of multiples of 10.0x to 13.0x
to forecasted earnings for 2003. The dividend stream and terminal values were
then discounted back to March 31, 2000 using a discount rate of 11.3%, based on
risk free rate of 5.8%, market risk premium of 5.5% and beta of 1.00, which rate
Salomon Smith Barney viewed as the appropriate discount rate for a company with
First United's risk characteristics.
40
<PAGE> 48
In performing this analysis, Salomon Smith Barney based the forecasted
earnings per share of First United common stock on IBES earnings per share
estimates for 2000 and 2001 and on IBES assumed growth rates for 2002 and 2003
for First United's earnings per share of 8.6%. Earnings were adjusted to reflect
the after-tax cost savings, the after-tax merger related expense and after-tax
revenue enhancement, based on BancorpSouth's management assumptions of synergies
and the opportunity cost of incremental dividends from synergies. Salomon Smith
Barney assumed an asset growth rate of half the earnings rate. Salomon Smith
Barney further assumed that earnings in excess of those necessary to maintain a
constant leverage ratio of 8.3% could be paid out to First United's shareholders
as dividends. Based on these assumptions, the implied present value of First
United common stock derived by Salomon Smith Barney ranged from $18.11 to $22.46
per share. If, instead of assuming an 8.6% net income growth rate in 2002 to
2003, growth as low as 7.5% or as high as 15.0% was assumed, the implied present
value of First United common stock derived by Salomon Smith Barney would range
from $17.92 to $24.13 per share.
FORECASTED PRO FORMA FINANCIAL ANALYSIS. Salomon Smith Barney analyzed, at
and for the years ending December 31, 2000, 2001 and 2002, the pro forma
financial impact of the merger on both BancorpSouth's and First United's diluted
earnings per share on both a GAAP basis and a cash basis, on the fully diluted
book value per share and the fully diluted tangible book value per share,
excluding BancorpSouth's management's estimate for after-tax merger-related
costs in 2000 and 2001. For purposes of these analyses, Salomon Smith Barney
assumed that the merger would close in the fourth quarter of 2000, utilized
median IBES earnings per share estimates for BancorpSouth and First United for
2000 and 2001, and median IBES long-term growth rates for 2002. Salomon Smith
Barney performed this analysis using BancorpSouth's management's assumptions
with respect to after tax cost savings and revenue enhancements. Salomon Smith
Barney's analysis of the merger showed that the merger, compared to the
continued operation of BancorpSouth and First United on a stand alone basis,
would be dilutive to BancorpSouth's estimated earnings per share by 1.7% in 2000
and accretive to BancorpSouth's GAAP estimated earnings per share by 0.9% and
3.8% in 2001 and 2002, respectively, dilutive to BancorpSouth's estimated cash
earnings per share by 1.5% in 2000 and accretive to BancorpSouth's GAAP
estimated cash earnings per share by 1.0% and 3.8% in 2001 and 2002,
respectively, dilutive to BancorpSouth's book value per share by 2.8%, 2.5% and
1.8% at the end of 2000, 2001, and 2002, respectively, dilutive to
BancorpSouth's tangible book value per share by 0.3% and 0.2% at the end of 2000
and 2001, respectively and accretive to BancorpSouth tangible book value per
share by 0.3% starting at the end of 2002.
CONTRIBUTION ANALYSIS. Salomon Smith Barney analyzed the relative
contribution to selected pro forma financial measures that First United and
BancorpSouth would each be making to the combined company and compared this to
the pro forma ownership of the outstanding common stock of the combined company
of First United shareholders and BancorpSouth shareholders. Salomon Smith Barney
based its analyses on financial data at or for the 12 months ended December 31,
1999. Full credit for synergies was attributed to First United in 2002 for
BancorpSouth projections.
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<PAGE> 49
The following table compares the pro forma ownership of BancorpSouth and
First United shareholders in the combined company based upon the information
mentioned in the preceding paragraph:
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
OWNERSHIP OF OWNERSHIP OF FIRST
BANCORPSOUTH UNITED
SHAREHOLDERS IN THE SHAREHOLDERS IN
COMBINED THE COMBINED
COMPANY COMPANY
------------------- ------------------
<S> <C> <C>
IMPLIED PRO FORMA OWNERSHIP................................ 66.8% 33.2%
</TABLE>
<TABLE>
<CAPTION>
BANCORPSOUTH'S FIRST UNITED'S
CONTRIBUTION TO THE CONTRIBUTION TO
COMBINED THE COMBINED
COMPANY COMPANY
------------------- ------------------
<S> <C> <C>
INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 1999
Net interest income...................................... 67.5% 32.5%
Net interest income after provision for loan losses...... 66.6% 33.4%
Total non-interest income................................ 80.1% 19.9%
Net income............................................... 67.3% 32.7%
Net income with synergies................................ 62.0% 38.0%
BALANCE SHEET AS OF DECEMBER 31, 1999
Total assets............................................. 68.4% 31.6%
Total liabilities........................................ 68.7% 31.3%
Total liabilities and equity............................. 68.4% 31.6%
Total equity............................................. 65.7% 34.3%
</TABLE>
HISTORICAL EXCHANGE RATIO ANALYSIS. Salomon Smith Barney analyzed the
historical shareholder returns for each of BancorpSouth and First United for the
last one, three, five and 10 year periods and compared such stock price
appreciation and depreciation to the SSB Midcap Index and the S&P 500 Index.
Salomon Smith Barney also analyzed the stock market performance for each of
BancorpSouth and First United for the period from January 1, 1995 to April 14,
2000 and for each of 1995, 1996, 1997,1998 and 1999, including diluted earnings
per share, diluted book value per share and dividends per share. For each of
such years, Salomon Smith Barney also analyzed the stock price, ratio of price
to last 12 months earnings and the ratio of price to the end of period book
value and compared the median derived from each such analysis to an index of
peer banks.
Based on such analysis, Salomon Smith Barney calculated the ratio of the
closing price per share of First United common stock to the closing price per
share of BancorpSouth common stock for each trading day in the period from
January 1, 1995 to April 14, 2000 and compared those ratios with the exchange
ratio. The results of this calculation showed over this period a high stock
price ratio of 1.5870, a low stock price ratio of 0.6260, median stock price
ratios of 1.1347 and 0.9160 for the last five and one year periods, respectively
and stock price ratio as of April 14, 2000 of 0.7140, compared to the exchange
ratio of 1.1250 used in the merger. Based on this data, the 1.1250 exchange
ratio represents a 29.1% discount to First United shareholders over the high
stock price ratio, a 79.7% premium to First United shareholders over the low
stock price ratio, a 1.0% discount and 22.8% premium to First United
shareholders over the median stock price ratios for the last five and one year
periods, respectively, and a 57.6% premium to First United shareholders over the
stock price ratio as of April 14, 2000.
GENERAL. The preceding discussion is a summary of the material financial
analyses furnished by Salomon Smith Barney to the BancorpSouth Board of
Directors but it does not purport to be a complete description of the analyses
performed by Salomon Smith Barney or of its presentations to the BancorpSouth
Board of Directors. The preparation of financial analyses and fairness opinions
is a complex process involving subjective judgments and is not necessarily
susceptible to partial analysis or summary description. Salomon Smith Barney
made no attempt to assign specific weights to particular analyses or factors
considered, but rather made qualitative judgments as to the significance and
relevance of all the
42
<PAGE> 50
analyses and factors considered and determined to give its fairness opinion as
described above. Accordingly, Salomon Smith Barney believes that its analyses,
and the summary set forth above, must be considered as a whole, and that
selecting portions of the analyses and of the factors considered by Salomon
Smith Barney, without considering all of the analyses and factors, could create
a misleading or incomplete view of the processes underlying the analyses
conducted by Salomon Smith Barney and its opinion.
With regard to the First United peer group public trading levels or
precedent transaction analyses summarized above, Salomon Smith Barney selected
First United's peer group and transactions on the basis of various factors,
including the size and location of the company; however, no company utilized as
a comparison in these analyses, and no transaction utilized as a comparison in
the precedent transaction analysis summarized above, is identical to
BancorpSouth, First United or the merger. As a result, these analyses are not
purely mathematical, but also take into account differences in financial and
operating characteristics of the First United peer group companies and other
factors that could affect the transaction or public trading value of the First
United peer group and transactions to which BancorpSouth and First United and
the merger are being compared. In its analyses, Salomon Smith Barney made
numerous assumptions with respect to BancorpSouth, First United, industry
performance, general business, economic, market and financial conditions and
other matters, many of which are beyond the control of BancorpSouth and First
United. Any estimates contained in Salomon Smith Barney's analyses are not
necessarily indicative of actual values or predictive of future results or
values, which may be significantly more or less favorable than those suggested
by these analyses. Estimates of values of companies do not purport to be
appraisals or necessarily to reflect the prices at which companies may actually
be sold. Because these estimates are inherently subject to uncertainty, none of
BancorpSouth, First United, BancorpSouth's Board of Directors, Salomon Smith
Barney or any other person assumes responsibility if future results or actual
values differ materially from the estimates.
Salomon Smith Barney's analyses were prepared solely as part of Salomon
Smith Barney's analysis of the fairness of the exchange ratio in the merger and
were provided to BancorpSouth's Board of Directors in that connection. The
opinion of Salomon Smith Barney was only one of the many factors taken into
consideration by BancorpSouth's Board of Directors in making its determination
to approve the merger agreement and the merger. See "THE
MERGER -- BancorpSouth's Reasons for the Merger; Recommendation of
BancorpSouth's Board of Directors."
Salomon Smith Barney is an internationally recognized investment banking
firm engaged, among other things, in the valuation of businesses and their
securities in connection with mergers and acquisitions, restructurings,
leveraged buyouts, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. BancorpSouth selected
Salomon Smith Barney to act as its financial advisor on the basis of Salomon
Smith Barney's international reputation. Salomon Smith Barney and its
predecessors and affiliates had previously rendered investment banking services
to BancorpSouth unrelated to the merger, for which Salomon Smith Barney has
received customary compensation.
In the ordinary course of its business, Salomon Smith Barney and its
affiliates may actively trade or hold the securities of both BancorpSouth and
First United for its own account and for the account of customers and,
accordingly, may at any time hold a long or short position in these securities.
Salomon Smith Barney and its affiliates, including Citigroup Inc. and its
affiliates, may maintain other business relationships with BancorpSouth and
First United and their respective affiliates.
In its engagement letter with Salomon Smith Barney, BancorpSouth agreed to
pay Salomon Smith Barney customary fees for its services rendered in connection
with the merger, including the delivery of its opinion. A significant portion of
Salomon Smith Barney's fees is contingent on completion of the merger or the
receipt of a termination fee under the terms of the merger agreement.
BancorpSouth has also agreed to reimburse Salomon Smith Barney for its
reasonable travel and other out-of-pocket expenses incurred in connection with
its engagement, including the reasonable fees and disbursements of its counsel,
and to indemnify Salomon Smith Barney against specific liabilities and expenses
relating to or arising out of its engagement, including liabilities under the
federal securities laws.
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<PAGE> 51
FAIRNESS OPINIONS OF FIRST UNITED'S FINANCIAL ADVISORS
First United retained each of Stephens Inc. and Stifel, Nicolaus & Company,
Inc. to provide its respective opinion of the fairness to First United
shareholders, from a financial viewpoint, of the exchange ratio provided in the
merger agreement. As part of their investment banking business, Stephens and
Stifel each regularly engages in the valuation of securities in connection with
mergers and acquisitions and valuations for estate, corporate and other
purposes. First United's Board of Directors retained each of Stephens and Stifel
based upon its experience as a financial advisor in mergers and acquisitions of
financial institutions and its knowledge of financial institutions. On April 16,
2000, Stephens and Stifel each rendered its opinion that, as of such date, the
exchange ratio under the merger agreement was fair, from a financial point of
view, to First United shareholders.
STEPHENS INC. Stephens Inc. has confirmed and updated its April 16, 2000
opinion in a written opinion dated , 2000 that has been delivered to
First United's Board of Directors. The full text of this opinion, which sets
forth, among other things, assumptions made, procedures followed, matters
considered, and limitations on the review undertaken, is attached as Annex D to
this Joint Proxy Statement/ Prospectus. First United shareholders are urged to
read Stephens' opinion carefully and in its entirety. Stephens' opinion is
addressed to First United's Board of Directors, and does not constitute a
recommendation to any First United shareholder as to how First United's
shareholders should vote at the First United special meeting.
The following summary of Stephens' opinion is qualified in its entirety by
reference to the full text of the opinion. The opinion is directed only to the
fairness to First United shareholders from a financial point of view of the
exchange ratio and does not address any other aspect of the proposed merger or
any related transactions.
In connection with its opinion, Stephens, among other things:
- Reviewed certain publicly available financial statements and reports
regarding BancorpSouth and First United;
- Reviewed certain internal financial statements and other financial and
operating data, including budgeted financial statements, concerning First
United and BancorpSouth, as well as the amount and timing of the cost
savings and related expenses and synergies expected to result from the
merger prepared by BancorpSouth's management;
- Discussed with First United's management and BancorpSouth's management
the operations and future business prospects of First United and
BancorpSouth and the anticipated financial consequences of the merger;
- Reviewed the reported prices and trading activity for First United's
common stock and BancorpSouth's common stock;
- Compared the financial performance of First United and BancorpSouth and
the prices and trading activity of First United's common stock and
BancorpSouth's common stock with that of certain other publicly traded
banking companies;
- Reviewed the financial terms, to the extent publicly available, of
certain other transactions in the banking industry;
- Reviewed the merger agreement; and
- Performed such other analyses and considered such other information as it
deemed appropriate.
Stephens relied on the accuracy and completeness of the information and
financial data that it reviewed. Stephens' opinion is based upon the information
that it reviewed. Stephens inquired into the reliability of such information and
financial data only to the limited extent necessary to provide a reasonable
basis for its opinion, recognizing that Stephens rendered only an informed
opinion and not an appraisal or certification of value. With respect to
forecasts of future performance, Stephens relied on
44
<PAGE> 52
consensus analyst estimates for First United and BancorpSouth published by
Institutional Brokers Estimate System (or "IBES"). Stephens assumed, with First
United's consent, that the expected synergies were reasonably prepared on bases
reflecting the best currently available estimates and judgments of First
United's management and BancorpSouth's management as to the expected future
financial performance of First United and BancorpSouth. Stephens noted that it
is not an expert in the evaluation of loan portfolios for purposes of assessing
the adequacy of the allowance for loan losses, and assumed, with First United's
consent, that allowances for loan losses for each of First United and
BancorpSouth are, in the aggregate, adequate to cover such possible losses. In
addition, Stephens did not assume responsibility for reviewing the liabilities
of either First United or BancorpSouth or any individual credit files of their
customers or making an independent evaluation, appraisal or physical inspection
of the assets or individual properties of First United or BancorpSouth. Stephens
was not furnished with any of these evaluations or appraisals.
Stephens assumed, with First United's consent, that there were no material
changes in First United's or BancorpSouth's assets, liabilities, financial
condition, results of operations, business or prospects since the respective
dates of their last financial statements reviewed by Stephens. Stephens also
assumed, with First United's consent, that any off-balance sheet activities of
First United and BancorpSouth, including derivatives and other similar financial
instruments, if any, would not materially and adversely affect the future
financial condition or results of operations of First United and BancorpSouth.
Stephens further assumed, with First United's consent, that in the course of
obtaining the necessary regulatory and third party consents for the merger, no
restrictions, including any divestiture requirements, amendments or
modifications, would be imposed that would have a material adverse effect on the
contemplated benefits of the merger, and that the merger will be completed in
accordance with the merger agreement and without any waiver by either party of
any of the material conditions to its obligations under the merger agreement.
In arriving at its opinion, Stephens performed a variety of financial
analyses, the material portions of which are summarized below. The summary set
forth below does not purport to be a complete description of the analyses
performed by Stephens. In addition, Stephens believes that its analyses must be
considered as a whole and that selecting portions of its analyses and of the
factors considered by it, without considering all the factors and analyses,
could create a misleading view of the process underlying its analyses. Stephens
did not draw any specific conclusions from or with regard to any one method of
analysis. However, Stephens did not identify any one method of analysis which
failed to support its opinion. The matters considered by Stephens in arriving at
its opinion are based on numerous macroeconomic, operating and financial
assumptions with respect to industry performance, general business and economic
conditions and other matters, many of which are beyond First United's and
BancorpSouth's control. Any estimates incorporated in the analyses performed by
Stephens are not necessarily indicative of actual past or future results or
values, which may be significantly more or less favorable than such estimates.
Estimated values do not purport to be appraisals and do not necessarily reflect
the prices at which businesses or companies may be sold in the future, and these
estimated values are inherently subject to uncertainty. Arriving at a fairness
opinion is a complex process not necessarily susceptible to partial or summary
description. No public company or transaction involving public companies
utilized as a comparison is identical to First United or BancorpSouth.
Accordingly, an analysis of publicly traded comparable companies and comparable
business combinations is not mathematical; rather, it involves complex
consideration and judgments concerning differences in financial and operating
characteristics of the comparable companies utilized in Stephens' analyses.
Stephens did not express any opinion as to the prices at which the
BancorpSouth common stock will trade in the period following the announcement or
completion of the proposed merger.
Set forth below is a summary of the material analyses performed by Stephens
in connection with its opinion delivered to First United on April 16, 2000.
OFFER VALUATION. Stephens reviewed the terms of the proposed merger,
including the exchange ratio and the aggregate transaction value, and also
reviewed the implied value of the consideration offered based upon the last
reported sale price of BancorpSouth's common stock of $16.00 per share on April
14, 2000, which indicated that the implied value of the consideration offered in
the BancorpSouth proposal was $455
45
<PAGE> 53
million. Stephens calculated the ratio of purchase price to First United's last
12 months earnings for the 12 months ended December 31, 1999 and to book value
and tangible book value, which resulted in multiples of 13.6x, 1.75x, and 1.87x,
respectively.
PRO FORMA MERGER ANALYSIS. Stephens reviewed the pro forma impact of the
merger on First United's diluted operating earnings per share and diluted book
value per share from 1995 through 1999 on a historical basis, and for 2000 and
2001 on an estimated basis. Earnings estimates for BancorpSouth were based on
the median of analysts' estimates as published by IBES, which is a leading data
service that monitors and publishes a compilation of earning estimates produced
and provided by participating investment firms. Stephens assumed aggregate net
cost savings and revenue enhancements of $4.5 million in 2001, amounts which
were provided by BancorpSouth's management, resulting from the merger. This
analysis showed that the merger was accretive (dilutive) to First United's
diluted operating earnings per share for 1995, 1996, 1997, 1998 and 1999, by
(0.7%), 0.4%, 5.9%, (3.2%) and 1.3%, respectively, and 3.4% and 8.2% accretive
to First United's estimated pro forma equivalent earnings per share for 2000 and
2001. The analysis also showed that the merger was dilutive to First United's
book value per share at December 31, 1999 by (3.5%).
PRO FORMA CONTRIBUTION ANALYSIS. Stephens computed the contribution of
First United and BancorpSouth to the combined entity's pro forma balance sheet
and income statement at and for the year ended December 31, 1999. These relative
contributions were compared to the pro forma ownership of the combined entity by
shareholders of First United and BancorpSouth as summarized in the table below.
<TABLE>
<CAPTION>
PRO FORMA OWNERSHIP IN THE
COMBINED COMPANY BY:
----------------------------
FIRST UNITED BANCORPSOUTH
SHAREHOLDERS SHAREHOLDERS
------------ ------------
<S> <C> <C>
Implied Pro Forma Ownership (as of 12/31/99)................ 33.1% 66.9%
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA CONTRIBUTION TO THE
COMBINED COMPANY OF:
------------------------------
FIRST UNITED BANCORPSOUTH
------------- -------------
<S> <C> <C>
Income Statement for the Year Ended 12/31/99:
Net interest income....................................... 31.6% 68.4%
Non interest income....................................... 19.9% 80.1%
Net income................................................ 32.7% 67.3%
Balance Sheet as of December 31, 1999:
Total Loans............................................... 26.5% 73.5%
Allowance for loan losses................................. 25.2% 74,8%
Total assets.............................................. 31.6% 68.4%
Total deposits............................................ 31.9% 68.1%
Total equity.............................................. 34.3% 65.7%
</TABLE>
46
<PAGE> 54
ANALYSIS OF RECENT BANK MERGER TRANSACTIONS. Stephens reviewed the
consideration paid in 13 recent bank merger transactions announced between
September 7, 1999 and April 7, 2000, with transaction values between $100
million and $1 billion. Based on BancorpSouth's closing price of $16.00 per
share on April 14, 2000 and an implied transaction price of $18.00 per share of
First United common stock, Stephens calculated the following information in its
comparable transaction analysis.
<TABLE>
<CAPTION>
RECENT BANK TRANSACTIONS
FIRST UNITED/ ------------------------------------
BANCORPSOUTH LOW MEAN MEDIAN HIGH
------------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Transaction Price at Announcement to:
Last Twelve Months E.P.S. ............... 13.60x 12.30x 22.30x 20.40x 42.00x
Book Value Per Share..................... 1.75x 1.58x 2.74x 2.54x 4.09x
Tangible Book Value Per Share............ 1.87x 1.58x 2.87x 2.89x 4.40x
Acquiror Price to Last Twelve Months
E.P.S. .................................. 13.30x 13.20x 16.90x 16.60x 21.70x
Premium to Market Prior to Announcement:
One Day Prior............................ 42.6% (8.7%) 21.5% 17.9% 63.5%
30 day Average........................... 58.0% 4.9% 33.1% 32.9% 70.9%
</TABLE>
In its presentation, Stephens noted that the transaction price to E.P.S.
and transaction price to book value multiples on transactions in this industry
have generally been declining. The decline in average transaction multiples is
due to the recent decline in the number of bank mergers and the decline in bank
stock prices over the past 18 months.
DISCOUNTED CASH FLOW ANALYSIS. Stephens performed a discounted cash flow
analysis to determine a range of present values per share of First United common
stock assuming First United continued to operate as a stand-alone entity. This
range was determined by adding (1) the present value of the estimated future
dividend stream that First United could be expected to generate over the
five-year period from 2000 through 2004, and (2) the present value of the
"terminal value" of First United common stock at the end of the year 2004. To
determine a projected dividend stream, Stephens assumed a dividend payout ratio
of approximately 40%. The earnings projections which formed the bases for the
dividends and the terminal value were adapted from IBES estimates for 2000 and
2001, and annual earnings growth rates of 7.7%, the historical five year
compounded annual earnings per share growth rate for First United, and
alternatively 10%, for estimating earnings for 2002 through 2004. The "terminal
value" of First United common stock at the end of the period was determined by
applying price-to-earnings multiples, ranging from 8x to 15x, to projected
earnings for 2004. The dividend stream and terminal values were discounted to
present values using discount rates of 12% to 14% which Stephens viewed as the
appropriate discount rate range for a company with First United's risk
characteristics. Based on the above assumptions, the fully diluted stand-alone
value of First United common stock ranged from approximately $10 to $19 per
share.
COMPARISON OF SELECTED COMPANIES. Stephens reviewed and compared public
market multiples and selected financial ratios of BancorpSouth to the publicly
available corresponding data for a group of selected banks which Stephens deemed
to be relevant. The group of banks selected consisted of BOK Financial
Corporation, CCB Financial Corporation, Centura Banks, Inc., Cullen/Frost
Bankers, Inc., First Citizens BancShares, Inc., First Virginia Banks, Inc.,
International Bancshares Corporation, National Commerce Bancorporation, Inc.,
One Valley Bancorp, Inc., Provident Bankshares Corporation, Inc., Trustmark
Corporation, UMB Financial Corporation, United Bankshares, Inc. and Whitney
Holding Corporation.
Based on review of such information for the banks deemed comparable to
BancorpSouth, Stephens determined, in each case based on company data as of or
for the year ended December 31, 1999, and closing stock prices as of April 14,
2000:
- That, with respect to the ratio of price to earnings per share for the
year ended December 31, 1999, the banks comparable to BancorpSouth had a
median of 12.2x compared to 13.3x for BancorpSouth;
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<PAGE> 55
- That, with respect to the multiple of stock price to estimated earnings
per share for 2000, the banks comparable to BancorpSouth, based on
estimated earnings per share for 2000 as reported by IBES, had a median
of 12.0x compared to 12.2x for BancorpSouth;
- That, with respect to the multiple of stock price to estimated earnings
per share for 2001, the banks comparable to BancorpSouth, based on
estimated earnings per share for 2001 as reported by IBES, had a median
of 11.1x compared to 11.0x for BancorpSouth;
- That, with respect to the multiple of stock price to book value, the
banks comparable to BancorpSouth had a median of 1.9x compared to 1.8x
for BancorpSouth; and
- That, with respect to the multiple of stock price to tangible book value,
the banks comparable to BancorpSouth had a median of 2.1x compared to
1.9x for BancorpSouth.
Stephens reviewed and compared public market multiples and selected
financial ratios of First United to the publicly available corresponding data
for a group of selected banks which Stephens deemed to be relevant. The group of
banks selected consisted of BancFirst Corporation, Bank of the Ozarks, Inc.,
First Financial Bankshares, Inc., Hancock Holding Company, Peoples Holding
Company, Simmons First National Corporation, Southwest Bancorp, Inc. and Texas
Regional Bancshares, Inc.
Based on review of such information for the banks deemed comparable to
First United, Stephens determined, in each case based on company data as of or
for the year ended December 31, 1999, and closing stock prices as of April 14,
2000:
- That, with respect to the ratio of price to earnings per share for the
year ended December 31, 1999, the banks comparable to First United had a
median of 10.1x compared to 9.6x for First United;
- That, with respect to the multiple of stock price to estimated earnings
per share for 2000, the banks comparable to First United, based on
estimated earnings per share for 2000 as reported by IBES, had a median
of 9.0x compared to 9.0x for First United;
- That, with respect to the multiple of stock price to estimated earnings
per share for 2001, the banks comparable to First United, based on
estimated earnings per share for 2001 as reported by IBES, had a median
of 8.2x compared to 8.4x for First United;
- That, with respect to the multiple of stock price to book value, the
banks comparable to First United had a median of 1.3x compared to 1.2x
for First United; and
- That, with respect to the multiple of stock price to tangible book value,
the banks comparable to First United had a median of 1.4x compared to
1.3x for First United.
In rendering its opinion, Stephens considered certain other factors and
performed other comparative analyses, including, among other things, analyses
of:
- The historical financial results of BancorpSouth and First United;
- The historical trading prices and volume of the stock of BancorpSouth and
First United; and
- The market share and market demographics of BancorpSouth and First
United.
No other company or transaction used in the above analyses as a comparison
is identical to BancorpSouth, First United or the proposed merger. Accordingly,
an analysis of the results of the above analyses is not mathematical; rather, it
involves complex considerations and judgments concerning differences in
financial and operating characteristics of the companies and other factors that
could affect the acquisition or public trading multiples of the companies to
which BancorpSouth, First United and the proposed merger are being compared.
The foregoing is a summary of the material analyses performed by Stephens
in connection with its opinion delivered to First United on April 16, 2000 and
confirmed and updated on , 2000. The summary set forth above does
not purport to be a complete description of the analyses performed by Stephens.
The preparation of a fairness opinion is not necessarily susceptible to partial
analysis or summary
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<PAGE> 56
description. Stephens believes that its analyses and the summary set forth above
must be considered as a whole and that selecting portions of its analyses and of
the factors considered, without considering all analyses and factors, would
create an incomplete view of the process underlying the analyses. In addition,
Stephens may have given various analyses more or less weight than other
analyses, and may have deemed various assumptions more or less probable than
other assumptions, so that the ranges of valuations resulting from any
particular analysis described above should not be taken to be Stephens' view of
the actual values of First United, BancorpSouth or the combined company. The
fact that any specific analysis has been referred to in the summary above is not
meant to indicate that such analysis was given greater weight than any other
analysis.
In performing its analyses, Stephens made numerous assumptions with respect
to industry performance, regulatory, general business and economic conditions
and other matters, many of which are beyond the control of First United and
BancorpSouth. The analyses performed by Stephens are not necessarily indicative
of actual values or actual future results, which may be significantly more or
less favorable than those suggested by such analyses. Such analyses were
prepared solely as part of Stephens' analysis of the fairness of the
consideration to be received from a financial point of view in connection with
the delivery of Stephens' opinion. The analyses do not purport to be appraisals
or to reflect the prices at which a company might actually be sold or the prices
at which any securities may trade at the present time or any time in the future.
COMPENSATION AND INTERESTS OF STEPHENS. Pursuant to the terms of Stephens'
engagement as financial advisor, including rendering its opinion as to the
fairness of the proposed transaction, First United has agreed to pay Stephens a
fee equal to 0.30% of the transaction value determined at the time of the
announcement of the merger, which amounts to a fee of approximately $1.37
million, of which $250,000 was paid upon issuance of the fairness opinion, and
the balance of which is contingent, and payable on completion of the merger.
First United also agreed to reimburse Stephens for its out-of-pocket
expenses, including reasonable fees and disbursements of its outside legal
counsel, incurred in connection with its engagement, and has agreed to indemnify
Stephens, its affiliates and their respective partners, directors, officers,
agents, consultants, employees and controlling persons against certain
liabilities, including liabilities under the federal securities laws.
In the ordinary course of its business, Stephens and its affiliates at any
time may hold long or short positions, and may trade or otherwise effect
transactions as principal or for the accounts of customers, in the equity
securities of First United and/or BancorpSouth. In that regard, Stephens is a
market maker in First United's common stock. As of April 16, 2000, certain
affiliates of Stephens collectively owned 2,391,038 shares of First United
common stock, or approximately 9.5% of the outstanding shares of First United
common stock, and will benefit from the merger in their capacities as a holder
of First United's common stock to the same extent as other holders of First
United's common stock.
STIFEL, NICOLAUS & COMPANY, INC. Stifel has confirmed and updated its April 16,
2000 opinion in a written opinion dated , 2000 that has been
delivered to First United's Board of Directors. The full text of this opinion,
which sets forth, among other things, assumptions made, procedures followed,
matters considered, and limitations or the review undertaken, is attached as
Annex E to this Joint Proxy Statement/Prospectus. First United shareholders are
urged to read Stifel's opinion carefully and in its entirety. Stifel's opinion
is addressed to First United's Board of Directors, and does not constitute a
recommendation to any First United shareholder as to how First United's
shareholders should vote at First United's special meeting.
The following summary of Stifel's opinion is qualified in its entirety by
reference to the full text of such opinion. Stifel's opinion relates only to the
fairness to First United shareholders of the exchange ratio from a financial
point of view and does not address any other aspect of the merger.
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<PAGE> 57
In connection with its April 16, 2000 oral opinion and its written opinion
dated , 2000, Stifel reviewed, among other things:
- The form of the merger agreement;
- The financial statements of First United and BancorpSouth included in
their respective annual reports on Form 10-K for the five years ended
December 31, 1999, and their respective quarterly reports on Form 10-Q
for the quarter ended September 30, 1999; and
- Certain internal financial analyses and forecasts for First United and
BancorpSouth prepared by their respective management.
Stifel conducted conversations with First United's and BancorpSouth's
senior management regarding recent developments and their financial forecasts
for First United and BancorpSouth. In addition, Stifel spoke to members of First
United's and BancorpSouth's senior management regarding factors which affect
each entity's business. Stifel also compared certain financial and securities
data of First United and BancorpSouth with various other companies whose
securities are traded in public markets, reviewed the historical stock prices
and trading volumes of the common stock of First United and BancorpSouth,
reviewed the financial terms of certain other business combinations and
conducted such other financial studies, analyses and investigations as it deemed
appropriate for purposes of its opinion. Stifel also took into account its
assessment of general economic, market and financial conditions, its experience
in other transactions, its experience in securities valuations and its knowledge
of the commercial banking and thrift industries generally.
In rendering its opinion, Stifel relied upon and assumed, without
independent verification, the accuracy and completeness of all of the financial
and other information that was provided to it or that was otherwise reviewed by
it, and did not assume any responsibility for independently verifying any of
this information. With respect to the financial forecasts supplied to Stifel;
including without limitation, projected cost savings and operating synergies
resulting from the merger, Stifel assumed that they were reasonably prepared on
the basis reflecting the best currently available estimates and judgments of
First United's management and BancorpSouth's management as to the future
operating and financial performance of First United and BancorpSouth, that they
would be realized in the amounts and time periods estimated and that they
provided a reasonable basis upon which Stifel could form its opinion. Stifel
also assumed that there were no material changes in the assets, liabilities,
financial condition, results of operations, business or prospects of either
First United or BancorpSouth since the date of the last financial statements
made available to it. Stifel further assumed, without independent verification
and with First United's consent, that the aggregate allowances for loan losses
set forth in the financial statements of First United and BancorpSouth are in
the aggregate adequate to cover all such losses.
Stifel did not make or obtain any independent evaluation, appraisal or
physical inspection of First United's or BancorpSouth's assets or liabilities,
the collateral securing any of such assets or liabilities, or the collectibility
of any such assets. Stifel did not review loan or credit files of First United
or BancorpSouth. Stifel relied on advice of First United's counsel as to all
legal matters with respect to First United and the merger agreement. Stifel
assumed, with First United's consent, that there are no factors that would delay
or subject to any adverse conditions any necessary regulatory or governmental
approval and that all conditions to the merger will be satisfied and not waived.
In rendering its opinion, Stifel assumed that the merger will be
consummated as provided in the merger agreement, will constitute a tax-free
reorganization as contemplated by the merger agreement and will qualify as a
pooling of interests for accounting purposes. Stifel's opinion was necessarily
based on economic, market, financial and other conditions as they existed on,
and on the information made available to it as of April 16, 2000. Stifel's
opinion does not imply any conclusion as to the price or trading range of First
United common stock or BancorpSouth common stock, which may vary depending upon
various factors, including changes in interest rates, dividend rates, market
conditions, economic conditions and other factors that influence the price of
securities. Stifel's opinion also does not address First United's
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<PAGE> 58
underlying business decision to effect the merger. First United did not
authorize Stifel to, nor did Stifel, solicit indications of interest in a
business combination with any other party.
The financial forecasts for First United and BancorpSouth, estimates of
cost savings and operating synergies resulting from the merger that were
furnished to Stifel were prepared by First United's management and
BancorpSouth's management and constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. As a matter of
policy, First United and BancorpSouth do not publicly disclose internal
management forecasts, projections or estimates of the type furnished to Stifel
in connection with its analysis of the financial terms of the merger, and such
forecasts and estimates were not prepared with a view towards public disclosure.
These forecasts and estimates were based on numerous variables and assumptions
which are inherently uncertain and which may not be within the control of the
management of either First United or BancorpSouth, including, without
limitation, factors related to the integration of First United and BancorpSouth
and general economic, regulatory and competitive conditions. Accordingly, actual
results could vary materially from those set forth in such forecasts and
estimates.
In connection with rendering its April 16, 2000 opinion, Stifel performed a
variety of financial analyses that are summarized below. Such summary does not
purport to be a complete description of such analyses. Stifel believes that its
analyses and the summary set forth herein must be considered as a whole and that
selecting portions of such analyses and the factors considered therein, without
considering all factors and analyses, could create an incomplete view of the
analyses and processes underlying its opinions. The preparation of a fairness
opinion is a complex process involving subjective judgments and is not
necessarily susceptible to partial analysis or summary description. In its
analyses, Stifel made numerous assumptions with respect to industry performance,
business and economic conditions, and other matters, many of which are beyond
the control of First United or BancorpSouth. Any estimates contained in Stifel's
analyses are not necessarily indicative of actual future values or results,
which may be significantly more or less favorable than suggested by such
estimates. Estimates of values of companies do not purport to be appraisals or
necessarily reflect the actual prices at which companies or their securities
actually may be sold. No company or transaction utilized in Stifel's analyses
was identical to First United or BancorpSouth or the merger. Accordingly, such
analyses are not based solely on arithmetic calculations; rather, they involve
complex considerations and judgments concerning differences in financial and
operating characteristics of the relevant companies, the timing of the relevant
transactions, and prospective buyer interest, as well as other factors that
could affect the public trading values of the company or companies to which they
are being compared. None of the analyses performed by Stifel was assigned a
greater significance by Stifel than any other.
The following is a summary of the financial analyses performed by Stifel in
connection with providing its opinion on April 16, 2000. In connection with its
written opinion dated , 2000, Stifel performed procedures to update
certain of its analyses and reviewed the assumptions on which such analyses were
based and the factors considered in connection therewith. In updating its
opinion, Stifel did not utilize any methods of analysis in addition to those
described.
PRO FORMA EFFECT OF THE MERGER. Stifel reviewed certain estimated future
operating and financial information developed by First United and BancorpSouth
and certain estimated future operating and financial information for the pro
forma combined entity resulting from the merger for the 12 month periods ending
December 31, 2000 and December 31, 2001. Based on this analysis, Stifel compared
certain of First United's estimated future per share results with such estimated
figures for the pro forma combined entity. Stifel compared First United's
estimated future stand-alone earnings per share with such estimated figures for
the pro forma combined entity. On a pro forma basis, the merger is forecast to
be accretive to First United's earnings per share for the 12 month periods
ending December 31, 2000 and December 31, 2001. Stifel also reviewed certain
historical financial information in order to determine the effect of the merger
on First United's book value and tangible book value. Based on this analysis, at
March 31, 2000, on a pro forma basis the merger is forecast to be dilutive to
First United's book value per share and tangible book value per share. Stifel
also compared First United's stand-alone common stock dividends per
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<PAGE> 59
share with such estimated figures for the pro forma combined entity. On a pro
forma basis, the merger is forecast to be accretive to First United's dividends
per share.
ANALYSIS OF BANK MERGER TRANSACTIONS. Stifel analyzed certain information
relating to recent transactions in the banking industry, consisting of 197
acquisitions announced in the U.S. between April 16, 1999 and April 16, 2000, as
well as a group of 36 acquisitions announced between April 16, 1999 and April
16, 2000, by sellers in Alabama, Arkansas, Louisiana, Mississippi, Tennessee and
Texas. Stifel calculated the following ratios with respect to the merger and the
selected transactions:
<TABLE>
<CAPTION>
U.S. BANKING INDUSTRY
SELECTED TRANSACTIONS
----------------------------------
FIRST UNITED/ 25TH 75TH
RATIOS BANCORPSOUTH PERCENTILE MEDIAN PERCENTILE
------ ------------- ---------- ------ ----------
<S> <C> <C> <C> <C>
Deal Price Per Share/Book Value.................. 173.0% 168.2% 224.2% 274.0%
Deal Price Per Share/Tangible Book Value......... 183.7% 171.9% 229.8% 293.6%
Adjusted Deal Price/6.50% Equity................. 209.3% 192.2% 260.9% 347.5%
Deal Price Per Share/Last 12 Months Earnings Per
Share.......................................... 13.5x 16.1x 20.6x 24.4x
Deal Price/Assets................................ 17.0% 15.8% 20.2% 25.7%
Premium over Tangible Book Value/Deposits........ 9.2% 7.4% 12.8% 19.8%
Deal Price/Deposits.............................. 20.3% 18.3% 23.7% 30.6%
</TABLE>
<TABLE>
<CAPTION>
MID-SOUTH BANKING INDUSTRY
SELECTED TRANSACTIONS
----------------------------------
FIRST UNITED/ 25TH 75TH
RATIOS BANCORPSOUTH PERCENTILE MEDIAN PERCENTILE
------ ------------- ---------- ------ ----------
<S> <C> <C> <C> <C>
Deal Price Per Share/Book Value.................. 173.0% 156.6% 188.2% 259.3%
Deal Price Per Share/Tangible Book Value......... 183.7% 153.7% 203.2% 266.0%
Adjusted Deal Price/6.50% Equity................. 209.3% 187.4% 228.0% 297.8%
Deal Price Per Share/Last 12 Months Earnings Per
Share.......................................... 13.5x 15.2x 18.0x 22.5x
Deal Price/Assets................................ 17.0% 13.3x 17.8% 22.4%
Premium over Tangible Book Value/Deposits........ 9.2% 6.8% 9.7% 14.0%
Deal Price/Deposits.............................. 20.3% 14.6% 20.3% 26.1%
</TABLE>
This analysis resulted in a range of imputed values for First United common
stock of between $21.05 and $27.56 based on the median multiples for the U.S.
banking industry selected transactions, and between $18.01 and $24.07 based on
the median multiples for mid-south banking industry selected transactions.
Stifel also compared the selected ratios of First United and BancorpSouth
to the recently announced pooling transaction between Wells Fargo & Company and
First Security Corporation. As of the announcement date, April 10, 2000, Wells
Fargo paid 157% of book value, 198% of tangible book value, 167% of adjusted
deal price to 6.50% equity, 10.2x latest 12 months earnings per share, 12.1% of
assets, 10.4% of premium over tangible book value to deposits, and 21.0% of
deposits.
PRESENT VALUE ANALYSIS. Applying discounted cash flow analysis to the
theoretical future earnings and dividends of First United and BancorpSouth,
Stifel compared the $18.00 value of one share of First United common stock under
the terms of the merger agreement as of April 16, 2000 to the calculated future
value of a First United share on a stand-alone basis and to the calculated
future value of the 1.125 shares of the combined company that each holder of one
share of First United common stock would receive under the terms of the merger
agreement. The analysis was based upon management's projected earnings growth, a
range of assumed price/earnings ratios, and a 15.0%, 17.5% and 20.0% discount
rate. Stifel selected the range of terminal price/earnings ratios on the basis
of past and current trading multiples for other publicly traded comparable
commercial banks. The stand-alone present value of First United common stock
calculated on this basis ranged from $11.70 to $17.00 per share. The present
value of the
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stock in the combined entity that the holders of one share of First United
common stock would receive under the terms of the merger agreement calculated on
this basis ranged from $13.20 to $19.00.
CONTRIBUTION ANALYSIS. Stifel reviewed certain financial information for
First United and BancorpSouth for the three month period ended March 31, 2000,
including net revenues before and after provision for loan losses, net income
before preferred dividends, extraordinary items, restructuring charges, total
assets, net loans, total deposits and total equity. Stifel compared the
percentage contribution of First United to the pro forma combined figures for
First United and BancorpSouth and to the percentage of total outstanding
BancorpSouth common stock that would be owned by the First United stockholders
as a result of the merger. The contribution analysis showed that First United
would contribute 31% of pro forma combined net revenues before provision for
loan losses, 32% of pro forma combined net revenues after provision for loan
losses, 32% of pro forma combined net income before preferred dividends,
extraordinary items and restructuring charges, 32% of pro forma combined total
assets, 27% of pro forma combined net loans, 31% of pro forma combined total
deposits, and 35% of pro forma combined total equity. Under the terms of the
merger agreement, First United shareholders would own 33% of the total
outstanding shares of BancorpSouth common stock. Ownership figures are based on
an exchange ratio of 1.125.
ANALYSIS OF PREMIUM TO MARKET PRICE FOR MERGER TRANSACTIONS. Stifel
analyzed the premiums paid to the then current market price one day, one week
and one month prior to the date of announcement of a transaction for 550
transactions in the bank and thrift industries announced in the U.S. between
April 6, 1995 and April 6, 2000. Stifel calculated the following ratios with
respect to the merger and these transactions:
<TABLE>
<CAPTION>
TRANSACTIONS ANNOUNCED BETWEEN
APRIL 6, 1995 AND APRIL 6, 2000
----------------------------------
FIRST UNITED/ 25TH 75TH
MARKET PREMIUM DATA BANCORPSOUTH PERCENTILE MEDIAN PERCENTILE
------------------- ------------- ---------- ------ ----------
<S> <C> <C> <C> <C>
Premium to stock price 1 day prior to
Announcement................................... 42.6% 11.0% 21.5% 34.6%
Premium to stock price 1 week prior to
announcement................................... 41.2% 14.3% 25.4% 41.2%
Premium to stock price 1 month to Announcement... 63.6% 18.2% 30.5% 46.2%
</TABLE>
This analysis resulted in a range of imputed values for First United common
stock of between $14.36 and $15.99 based on the median premiums for these
transactions.
COMPARISON OF SELECTED COMPANIES. Stifel reviewed and compared certain
multiples and ratios for the merger with a peer group of nine selected banks
with assets between $1 billion and $3 billion which Stifel deemed to be
relevant. The group of selected banks consisted of BancFirst Corporation, First
Financial Bankshares Inc., Mississippi Valley Bancshares Inc., National City
Bancshares Inc., Simmons First National Corporation, Southwest Bancorp Inc.,
Southwest Bancorp. of Texas Inc., Sterling Bancshares Inc. and Texas Regional
Bancshares. In order to calculate a range of imputed values for a share of First
United common stock, Stifel applied a 30.6% control premium to the trading
prices of the selected group of comparable companies and compared the resulting
theoretical offer price to each of book value, tangible book value, adjusted
6.5% equity, latest 12 month earnings, estimated 2000 earnings as provided by
Institutional Brokers Estimate System (or "IBES"), assets, tangible book value
to deposits and deposits. Stifel then applied the resulting range of multiples
and ratios for the peer group specified above to the appropriate financial
results of First United. This analysis resulted in a range of imputed values for
First United common stock of between $16.84 and $22.14 based on the median
multiples and ratios for the peer group. The 30.6% control premium selected by
Stifel was based on a five year analysis of market premiums paid in bank and
thrift merger transactions.
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Additionally, Stifel calculated the following ratios with respect to the
nine selected comparable companies after application of the 30.6% control
premium:
<TABLE>
<CAPTION>
NINE SELECTED COMPARABLE
COMPANIES
FIRST UNITED/ --------------------------------
RATIOS BANCORPSOUTH MINIMUM MEDIAN MAXIMUM
------ ------------- ---------- ------ ----------
<S> <C> <C> <C> <C>
Deal Price Per Share/Book Value........................ 173.0% 138.3% 210.3% 351.8%
Deal Price Per Share/Tangible Book Value............... 183.7% 142.7% 226.0% 369.3%
Adjusted Deal Price/6.50% Equity....................... 209.3% 137.1% 250.8% 364.9%
Deal Price Per Share/Last 12 Months Earnings Per
Share................................................ 13.5x 10.7x 13.3x 26.3x
Deal Price Per Share/Estimated 2000 Earnings Per
Share................................................ 12.9x 9.4x 12.0x 19.8x
Deal Price/Assets...................................... 17.0% 10.4% 18.3% 24.1%
Premium over Tangible Book Value/Deposits.............. 9.2% 3.1% 12.1% 23.1%
Deal Price/Deposits.................................... 20.3% 13.3% 22.4% 31.6%
</TABLE>
No company or transaction used in the above analyses as a comparison is
identical to First United, BancorpSouth or the merger. Accordingly, an analysis
of the results of the above analyses is not mathematical; rather, it involves
complex considerations and judgements concerning differences in financial and
operating characteristics of the companies and other facts that could affect the
public trading value of the companies to which they are being compared. The
foregoing analyses did not purport to be indicative of actual future results, or
to reflect the prices at which First United common stock or BancorpSouth common
stock may trade in the public markets.
As described above, Stifel's opinion was among the many factors taken into
consideration by First United's Board of Directors in making its determination
to approve the merger.
COMPENSATION AND INTERESTS OF STIFEL. Pursuant to the terms of Stifel's
engagement, First United paid Stifel a nonrefundable cash fee of $250,000 upon
the rendering of Stifel's opinion. First United has also agreed to reimburse
Stifel for certain out-of-pocket expenses and has agreed to indemnify Stifel,
its affiliates and their respective partners, directors, officers, agents,
consultants, employees and controlling persons against certain liabilities,
including liabilities under the federal securities laws.
In the ordinary course of its business, Stifel actively trades equity
securities of First United and BancorpSouth for its own account and for the
accounts of its customers and, accordingly, may at any time hold a long or short
position in such securities. In addition, Stifel is acting as financial advisor
to Texarkana First Financial Corporation in connection with the acquisition of
Texarkana First Financial by First United. First United's Board of Directors was
aware of Stifel's engagement and has waived any conflict or other claim which
may arise from that engagement.
REGULATORY APPROVAL
Completion of the merger is conditioned on, among other things, the receipt
of approvals by the Federal Deposit Insurance Corporation, the Mississippi
Department of Banking and Consumer Finance, the Arkansas State Bank Department,
the Texas Department of Banking, the Louisiana Office of Financial Institutions
and the Office of the Comptroller of the Currency. The Board of Governors of the
Federal Reserve System has waived its notification filing requirements with
respect to the merger.
As a Mississippi state non-member bank, BancorpSouth Bank must file an
application with the FDIC for approval of the merger under Sections 18(c) and
18(d) of the Federal Deposit Insurance Act. The FDIC may disapprove the
application if it finds that the merger tends to create or result in a monopoly,
substantially lessen competition or would be in restraint of trade. BancorpSouth
Bank filed this application with the FDIC on May 31, 2000. Following approval of
the application by the FDIC, the United States Department of Justice has between
15 and 30 calendar days to submit any adverse comments relating to competitive
factors resulting from the merger. BancorpSouth obtained approval of the merger
from the FDIC on , 2000, and, according to the specific terms of the
FDIC approval, the waiting period expired on , 2000.
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BancorpSouth filed an application with the Mississippi Department of
Banking and Consumer Finance on May 31, 2000 for approval of the merger of First
United's bank subsidiaries and trust company subsidiary into BancorpSouth Bank.
Approval of these bank mergers by the Mississippi Department of Banking and
Consumer Finance is expected to be received following approval of the merger
agreement by First United shareholders and BancorpSouth shareholders.
First United and BancorpSouth filed a change of control application with
the Arkansas State Bank Department on May 31, 2000 for approval of the merger.
In addition to this application, BancorpSouth provided to the Arkansas State
Bank Department a copy of the application filed with the FDIC and executed
originals of certain documents required for completion of the merger. Approval
of the merger by the Commissioner of the Arkansas State Bank Department is
expected to be received on or about , 2000.
In connection with the merger of First United's Texas state bank
subsidiaries into BancorpSouth Bank, First United and BancorpSouth filed an
application with the Commissioner of the Texas Department of Banking on May 31,
2000. That application consists primarily of providing to the Texas Department
of Banking notice to the public of the pending merger, a copy of the application
filed with the FDIC, a copy of the waiver application filed with the Federal
Reserve, certified copies of board and shareholder resolutions and an opinion of
counsel. Approval of the merger by the Commissioner of the Texas Department of
Banking is expected to be received on or about , 2000.
In connection with the merger of First United's Louisiana state bank
subsidiaries into BancorpSouth Bank, on May 31, 2000 First United and
BancorpSouth filed with the Commissioner of the Louisiana Office of Financial
Institutions a notice of the pending merger, provided a copy of all applications
filed with any federal agency in connection with the merger and paid a fee as
prescribed by regulation of the Commissioner.
In connection with the merger of First United's national bank subsidiaries
into BancorpSouth Bank, First United filed a notice with the OCC on May 31, 2000
notifying the OCC of the merger and the identity of the resulting institution.
Upon approval of the merger by the shareholders of First United and BancorpSouth
and immediately prior to completion of the merger, each subsidiary national bank
must return its original charter, branch authorizations and trust permits, if
any, to the OCC and certify that it has shredded all OCC reports of examination.
ACCOUNTING TREATMENT
BancorpSouth intends to account for the merger as a pooling of interests
under generally accepted accounting principles. The merger is conditioned upon
BancorpSouth receiving a letter from its independent certified public
accountants that the merger will qualify for pooling of interests accounting
treatment and First United receiving a letter from its independent certified
public accountants that First United is a poolable entity under applicable
accounting standards. The unaudited pro forma financial information included in
this Joint Proxy Statement/Prospectus reflects the merger using the pooling of
interests method of accounting. See "SUMMARY -- Comparative Unaudited Per Share
Data" and "SELECTED HISTORICAL FINANCIAL DATA AND UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material anticipated U.S. federal income
tax consequences of the merger to First United shareholders who hold First
United common stock as a capital asset. The summary is based on the Internal
Revenue Code, applicable Treasury regulations, and administrative rulings and
court decisions in effect as of the date of this Joint Proxy
Statement/Prospectus, all of which are subject to change at any time, possibly
with retroactive effect. This summary is not a complete description of all of
the consequences of the merger and, in particular, may not address U.S. federal
income tax considerations applicable to shareholders subject to special
treatment under U.S. federal income tax law, such as non-U.S. persons, financial
institutions, dealers in securities, insurance companies, tax-exempt
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entities, holders who acquired First United common stock upon the exercise of an
employee stock option or right or otherwise as compensation, and holders who
hold First United common stock as part of a hedge, straddle or conversion
transaction. In addition, no information is provided herein with respect to the
tax consequences of the merger under applicable foreign, state or local laws.
BancorpSouth has received an opinion of Waller Lansden Dortch & Davis,
PLLC, and First United has received an opinion of Mitchell, Williams, Selig,
Gates & Woodyard, PLLC, that, as of the respective dates of the opinions, the
merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code and that
BancorpSouth and First United will each be a party to that reorganization within
the meaning of Section 368(b) of the Internal Revenue Code. It is a condition to
the obligation of each of BancorpSouth and First United to complete the merger
that their respective tax counsel confirm its opinion as of the closing date.
The opinions of the parties' respective tax counsel regarding the merger
have relied, and the opinions regarding the merger as of the closing date will
each rely, on (1) representations and covenants made by BancorpSouth and First
United, including those contained in certificates of officers of BancorpSouth
and First United, and (2) specified assumptions, including an assumption
regarding the completion of the merger in the manner contemplated by the merger
agreement. In addition, the opinions of the parties' respective tax counsel have
assumed, and the tax counsel's ability to provide the opinions at the closing of
the merger will depend on, the absence of changes in existing facts or in law
between the date of this Joint Proxy Statement/Prospectus and the closing date.
If any of those representations, covenants or assumptions is inaccurate, the
parties' respective tax counsel may not be able to provide one or more of the
required opinions to be delivered at the closing of the merger and/or the tax
consequences of the merger could differ from those described in the opinions
that tax counsel have delivered. These opinions do not bind the Internal Revenue
Service and do not preclude the IRS or the courts from adopting a contrary
position. BancorpSouth and First United do not intend to obtain a ruling from
the IRS on the tax consequences of the merger.
BancorpSouth and First United expect that, for federal income tax purposes:
- The merger will be treated as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code;
- No gain or loss will be recognized by BancorpSouth or First United as a
result of the merger;
- No gain or loss will be recognized by First United shareholders who
exchange all of their respective First United common stock solely for
BancorpSouth common stock pursuant to the merger, except with respect to
cash received in lieu of a fractional share of BancorpSouth common stock;
and
- The aggregate tax basis of the BancorpSouth common stock received by
First United shareholders who exchange all of their respective shares of
First United common stock solely for BancorpSouth common stock pursuant
to the merger will be the same as the aggregate tax basis of First United
common stock surrendered in exchange therefor, reduced by any amount
allocable to a fractional share interest for which cash is received.
Generally, cash received by a First United shareholder in lieu of a
fractional share of BancorpSouth common stock will be treated as received in
redemption of that fractional share interest, and the First United shareholder
should generally recognize capital gain or loss for federal income tax purposes
measured by the difference between the amount of cash received and the portion
of the tax basis of the share of First United common stock treated as redeemed.
This gain or loss should be a long-term capital gain or loss if the holding
period for shares of First United common stock is greater than one year at the
effective time of the merger. Generally, in the case of individual shareholders,
this capital gain will be taxed at a maximum rate of 20% (10%, if the gain would
be taxed at 15% if it were treated as ordinary income) if the shareholder's
holding period is more than one year. The holding period of a share of
BancorpSouth common stock received in the merger, including a fractional share
interest deemed received and redeemed as described in this paragraph above, will
include the holder's holding period in First United common stock surrendered in
exchange for BancorpSouth common stock.
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This discussion of material U.S. federal income tax consequences is
intended to provide only a general summary, and is not a complete analysis or
description of all potential federal income tax consequences of the merger. This
discussion does not address tax consequences that may vary with, or are
contingent on, individual circumstances. In addition, it does not address any
non-income tax or any foreign, state or local tax consequences of the merger.
ACCORDINGLY, FIRST UNITED SHAREHOLDERS ARE URGED TO CONSULT WITH THEIR TAX
ADVISORS REGARDING THE TAX CONSEQUENCES OF THE MERGER TO THEM, INCLUDING THE
EFFECTS OF U.S. FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND OF
POTENTIAL CHANGES TO APPLICABLE TAX LAW.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of management of First United and First United's Board of
Directors may be deemed to have interests in the merger that are in addition to
their interests as First United shareholders generally. First United's Board of
Directors was aware of these interests and considered them, among other matters,
in approving the merger agreement.
In particular, James V. Kelley, currently the Chairman, President and Chief
Executive Officer of First United, will become President and Chief Operating
Officer of BancorpSouth after the merger. Mr. Kelley has entered into a change
in control agreement and a stock bonus agreement with BancorpSouth that are
effective upon completion of the merger. These agreements replace and terminate
Mr. Kelley's severance agreement with First United, which provided for severance
payments to Mr. Kelley upon termination of his employment for any reason
following a change in control of First United, in an amount equal to three times
the sum of Mr. Kelley's annual base salary plus the greater of his target
incentive bonus amount or his average incentive bonus for the prior two fiscal
years, payable in a lump sum of cash or First United common stock. The change in
control agreement with BancorpSouth provides that Mr. Kelley will receive a cash
payment equal to three times the sum of Mr. Kelley's then annual base
compensation and highest annual bonus for which he would be eligible in the
event Mr. Kelley is terminated without cause or terminates his employment for
cause within 24 months after a change in control of BancorpSouth. The stock
bonus agreement provides that Mr. Kelley will receive 100,000 shares of
BancorpSouth common stock upon completion of the merger as consideration for
serving as President and Chief Operating Officer of BancorpSouth and for
terminating his severance agreement with First United. The 100,000 shares will
be released from escrow over a period of five years, with 20% of the shares
being released each year, assuming certain performance requirements are
satisfied, with the first release occurring on the first anniversary of the
completion of the merger. Under Mr. Kelley's stock bonus agreement, in the event
that Mr. Kelley's employment is terminated prior to the fifth anniversary of the
merger by Mr. Kelley or by BancorpSouth for cause, Mr. Kelley will retain full
ownership of the shares of BancorpSouth common stock that have then been
released from escrow to him, and Mr. Kelley will lose all rights to the shares
of BancorpSouth common stock then held in escrow. If Mr. Kelley terminates his
employment after a change in control of BancorpSouth, however, he will be
entitled to full ownership of all of the shares of BancorpSouth common stock
issued under the stock bonus agreement. In his stock bonus agreement, Mr. Kelley
has agreed that he will not compete with BancorpSouth Bank within a specified
area.
Various other officers of First United, including John G. Copeland, Chief
Financial Officer of First United, and Jim N. Harwood, John Robert Graves and
Gordon R. Lewis, Regional Chairmen of First United, are parties to severance or
employment agreements with First United under which they may be entitled to
severance payments and benefits upon termination of their employment following a
change in control of First United. It is anticipated that the merger would
constitute a change in control for purposes of these agreements.
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Directors and executive officers of First United will receive shares of
BancorpSouth common stock in the merger on the same basis as other First United
shareholders. The following chart shows the number of shares of BancorpSouth
common stock that may be issued to directors and executive officers of First
United in the merger:
<TABLE>
<S> <C>
Shares of First United common stock, including stock options
exercisable within 60 days, beneficially owned by First
United executive officers and directors as of
, 2000........................................
Shares of BancorpSouth common stock that may be received in
the merger by First United executive officers and
directors (based on such beneficial ownership)............
</TABLE>
Members of First United's Board of Directors have certain interests under
the merger agreement regarding indemnification and continuation of liability
insurance coverage following the merger. See "MERGER
AGREEMENT -- Indemnification."
COMPARISON OF RIGHTS OF SHAREHOLDERS
At the effective time of the merger, First United shareholders will
automatically become BancorpSouth shareholders (except for those First United
shareholders who exercise dissenters' rights). BancorpSouth is a Mississippi
corporation governed by provisions of the Mississippi Business Corporation Act
and BancorpSouth's restated articles of incorporation and amended and restated
bylaws. First United is an Arkansas corporation governed by provisions of the
Arkansas Business Corporation Act of 1987, and First United's articles of
incorporation, as amended, and restated bylaws. See "COMPARISON OF RIGHTS OF
SHAREHOLDERS."
RESTRICTIONS ON RESALES BY AFFILIATES
The shares of BancorpSouth common stock issuable to First United
shareholders upon completion of the merger have been registered under the
Securities Act of 1933. These shares may be traded freely without restriction by
those shareholders who are not deemed to be "affiliates" of First United or
BancorpSouth, as that term is defined in SEC rules under the Securities Act. An
"affiliate" of a company generally includes its directors and executive officers
and holders of a significant amount of the company's voting stock.
Shares of BancorpSouth common stock received by those First United
shareholders who are deemed to be affiliates of First United at the time of the
First United special meeting may be resold without registration under the
Securities Act only as permitted by Rule 145 under the Securities Act. Under
Rule 145, during the one-year period following completion of the merger,
affiliates of First United may resell shares of BancorpSouth common stock
received by them in the merger subject to limitations on the number of shares
that may be sold during any three-month period and the manner in which the
shares may be sold, including the use of a broker and non-solicitation of a
buyer. Persons who are affiliates of BancorpSouth may resell shares of
BancorpSouth common stock subject to similar limitations and certain filing
requirements specified in Rule 144 under the Securities Act.
SEC guidelines regarding the pooling of interests method of accounting also
limit sales of shares of the acquiring and acquired company by affiliates of
either company in a business combination. SEC guidelines indicate that the
pooling of interests method of accounting generally will not be challenged on
the basis of sales by affiliates of the acquiring or acquired company if such
affiliates do not dispose of any of the shares of the corporation they own, or
shares of a corporation they receive in connection with a merger, during the
period beginning 30 days before the merger is consummated and ending when
financial results covering at least 30 days of post-merger operations of the
combined companies have been published.
First United has agreed in the merger agreement to use its reasonable best
efforts to cause each person who is an affiliate, for purposes of Rule 145 under
the Securities Act and for purposes of qualifying
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the merger for pooling of interests accounting treatment, to deliver to
BancorpSouth a written agreement intended to ensure compliance with the
Securities Act and to preserve the ability of the merger to be accounted for as
a pooling of interests.
BancorpSouth has agreed in the merger agreement to use its best efforts to
publish financial results covering at least 30 days of post-merger combined
operations, as contemplated by Accounting Series Release No. 135 issued by the
SEC, as soon as reasonably practicable after such financial results are
available and in conjunction with BancorpSouth's quarterly press releases
regarding, among other things, its earnings in the previous quarter.
BancorpSouth will publish these results by press release or the making of an
appropriate filing under the Securities Exchange Act of 1934.
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THE MERGER AGREEMENT
The following summary of certain terms and provisions of the merger
agreement is qualified in its entirety by reference to the merger agreement,
which is incorporated into this document by reference and, with the exception of
exhibits and schedules to the merger agreement, is attached as Annex A to this
Joint Proxy Statement/Prospectus.
EXCHANGE OF CERTIFICATES
BancorpSouth will deposit with SunTrust Bank, Atlanta, as the exchange
agent for the merger, certificates representing the shares of BancorpSouth
common stock and cash to be paid in lieu of fractional shares to which a holder
of certificates formerly representing First United common stock would otherwise
be entitled based on the exchange ratio.
Within three business days after the date on which the effective time of
the merger occurs, the exchange agent will mail to each holder of record of a
certificate formerly representing First United common stock a form letter of
transmittal for use in exchanging such shareholder's First United certificates
for consideration due under the merger agreement. Upon surrender of a First
United certificate for exchange and cancellation to the exchange agent, together
with a duly executed letter of transmittal, the holder of a First United
certificate will be entitled to receive the number of whole shares of
BancorpSouth common stock and cash for any fractional shares to which such
holder has become entitled in accordance with the merger agreement. BancorpSouth
will pay to each First United shareholder who would otherwise be entitled to a
fractional share of BancorpSouth common stock, after taking into account all
First United certificates delivered by the shareholder, an amount in cash to be
paid in lieu of fractional shares, without interest, determined by multiplying
such fraction by the average of the last sale prices of BancorpSouth common
stock as reported on the New York Stock Exchange for the three trading days
immediately preceding the merger. First United certificates so surrendered will
immediately be canceled. No interest will be paid or accrued on any cash to be
paid upon such surrender, whether in lieu of fractional shares of BancorpSouth
common stock or with respect to unpaid dividends or distributions thereon.
FIRST UNITED SHAREHOLDERS SHOULD NOT SEND IN THEIR STOCK CERTIFICATES UNTIL
THEY RECEIVE THE TRANSMITTAL MATERIALS FROM THE EXCHANGE AGENT.
Any part of the BancorpSouth common stock certificates and cash deposited
with the exchange agent that remains unclaimed by First United shareholders for
12 months after the merger will be paid to BancorpSouth. After such time, First
United shareholders may look only to BancorpSouth for unpaid dividends and
distributions on First United common stock deliverable in respect of each share
of First United common stock held by the shareholder, in each case, without
interest. None of First United, BancorpSouth or the exchange agent, or any other
person, will be liable to any former First United shareholder for any amounts
properly delivered to a public official under applicable abandoned property,
escheat or similar laws.
If any certificate formerly representing First United common stock is lost,
stolen or destroyed, BancorpSouth can require the holder to give an affidavit of
that fact and to post a bond in an amount that BancorpSouth or the exchange
agent may direct as indemnity against any claim that may be made with respect to
this First United certificate. Upon making such affidavit and/or posting such
bond, the exchange agent will issue the consideration due under the merger
agreement.
No dividends or other distributions with respect to BancorpSouth common
stock declared after the merger and payable to BancorpSouth shareholders of
record will be paid to the holder of any unsurrendered First United certificate
until the holder of the certificate surrenders the First United certificate.
After the proper surrender of a First United certificate, the record holder of
the certificate will receive any such dividends or other distributions, without
any interest, which the holder would have received if he or she had exchanged
his First United certificate immediately after the merger.
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CONDITIONS TO THE MERGER
The obligations of First United and BancorpSouth to complete the merger are
subject to the satisfaction (or waiver, where legally allowed), at or prior to
the effective time of the merger, of a number of conditions, which are set forth
in the merger agreement. These conditions include:
- Approval of the merger agreement by First United shareholders;
- Approval of the merger agreement by BancorpSouth shareholders;
- The New York Stock Exchange listing the shares of BancorpSouth common
stock to be issued to First United shareholders as consideration under
the merger agreement;
- Receipt of the required regulatory approvals, including approval by the
FDIC;
- The absence of any legal prohibition to completion of the merger;
- The accuracy of the parties' representations and performance of the
parties' obligations under the merger agreement; and
- Receipt of the required tax opinions.
The obligation of BancorpSouth to complete the merger is also conditioned
upon BancorpSouth receiving a pooling letter from KPMG LLP, certified public
accountants for BancorpSouth, dated as of the closing date of the merger, that
the merger may be accounted for using the pooling of interests method of
accounting.
The obligation of First United to complete the merger is also conditioned
upon First United receiving a pooling letter from Arthur Andersen LLP, certified
public accountants for First United, dated as of the closing date of the merger,
that First United is a poolable entity under applicable accounting standards.
We cannot guarantee that the required regulatory approvals will be obtained
or that all of the other conditions precedent to the merger will be satisfied
or, where legally permitted, waived by the party permitted to do so.
TERMINATION OF THE MERGER AGREEMENT
The merger agreement may be terminated at any time prior to the effective
time of the merger, whether before or after approval of the merger by First
United shareholders or BancorpSouth shareholders, as set forth in the merger
agreement, including by mutual consent of BancorpSouth and First United. In
addition, the merger agreement may be terminated by either party if:
- A governmental entity issues a final order prohibiting the merger or
(subject to a 60 day waiting period) rejects an application for a
required regulatory approval;
- The merger is not completed on or before December 31, 2000;
- BancorpSouth shareholders or First United shareholders fail to approve
the merger agreement;
- The other party materially breaches its representations or covenants set
forth in the merger agreement and fails to cure that breach within the
prescribed time limit;
- BancorpSouth's Board of Directors or First United's Board of Directors
has withdrawn or changed in a manner adverse to the other party its
approval of the merger, or its recommendation to its shareholders that
such shareholders approve the merger agreement; or
- Their respective independent certified public accountants do not deliver
a pooling letter.
BancorpSouth may terminate the merger agreement if First United enters into
any letter of intent, agreement in principle, or acquisition or similar
agreement related to any tender or exchange offer, proposal for a merger,
consolidation or other business combination involving First United or any of its
subsidiaries or any proposal, inquiry or offer to acquire in any manner all or
10% or greater interest in, or
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all or a substantial portion of the assets of, First United or any of its
subsidiaries, other than the transactions described in this Joint Proxy
Statement/Prospectus. BancorpSouth also may terminate the merger agreement if
the cash it must pay to First United shareholders for fractional shares and
dissenters' rights exceeds the amount permissible to account for the merger as a
pooling of interests.
First United's Board of Directors may elect to terminate the merger
agreement if:
- The average closing price of BancorpSouth common stock for the 20
consecutive full trading days ending at the close of trading on the day
on which BancorpSouth receives the last applicable federal and state
regulatory consent required for completion of the merger declines at
least 20% below $15.75 per share, the closing price of BancorpSouth
common stock on April 17, 2000; and
- The quotient of (i) that 20 day average, divided by (ii) $15.75 is at
least 20% less than the quotient of (x) the average closing price of an
index consisting of a weighted average of similarly situated
publicly-held banks and bank holding companies for the same 20 trading
day period, divided by (y) the average closing price of the index on
April 17, 2000.
First United must notify BancorpSouth of its decision to so terminate the merger
agreement during the 10 day period commencing two days after BancorpSouth
receives the last applicable federal and state regulatory consent required for
completion of the merger. After BancorpSouth receives this termination notice,
it may elect to increase the exchange ratio to equal the lesser of:
- The quotient of (i) the product of (A) 0.80, multiplied times (B) $15.75,
multiplied times (C) the exchange ratio (as then in effect), divided by
(ii) that 20 day average closing price of BancorpSouth common stock; or
- The quotient of (i) the product of (A) the quotient of the index's 20
trading day average closing price divided by the index's average closing
price on April 17, 2000, multiplied times (B) the exchange ratio (as then
in effect), divided by (ii) the quotient of the 20 trading day average
closing price of BancorpSouth common stock divided by $15.75.
If BancorpSouth elects to increase the exchange ratio within five days after
receiving First United's termination notice, it must give prompt written notice
to First United and the merger agreement will remain in effect, except that all
references to the exchange ratio will then mean the increased exchange ratio.
In the event of termination of the merger agreement, the merger agreement
will become void and have no effect, except with respect to the parties'
obligations regarding confidential information and expenses as set forth in the
merger agreement. Termination also will not relieve or release a breaching party
from liability or damages for its willful breach of the merger agreement.
CONDUCT OF BUSINESS PRIOR TO THE MERGER AND OTHER COVENANTS
In the merger agreement, First United and BancorpSouth agreed that, except
as expressly contemplated or permitted by the merger agreement or with the prior
written consent of the other party, each will carry on their respective
businesses in the ordinary course consistent with past practice. Each of the
parties also agreed to refrain from engaging in, or permitting its subsidiaries
to engage in, certain activities which are described in the merger agreement.
First United has agreed to refrain from:
- Declaring or paying any dividends on, or making other distributions in
respect of, any of its capital stock during any period, except that First
United may declare and pay regular quarterly cash dividends in a manner
consistent with past practice, and with usual and regular record and
payment dates in accordance with past practice, provided that the amount
of such dividends may be adjusted to take into account the exchange ratio
and the cash dividends paid by BancorpSouth during the same period;
- Issuing or acquiring its capital stock;
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- Issuing any options or other securities convertible into or exchangeable
for its capital stock other than under First United's employee stock
option plan consistent with past practice;
- Amending its articles of incorporation or bylaws;
- Making capital expenditures in excess of $250,000 in the aggregate;
- Entering into any new line of business, except for Internet banking;
- Engaging in a material acquisition of another business;
- Taking any action intended or reasonably expected to result in any of its
representations and warranties in the merger agreement being or becoming
untrue, or in any of the conditions to the merger set forth in the merger
agreement not being satisfied;
- Changing its methods of accounting in effect at December 31, 1999, except
as required by changes in generally accepted accounting principles or
regulatory accounting principles;
- Adopting or amending any employee benefit plan or compensation
arrangement, except that First United may amend its 1994 Equity
Participation Plan to delete the provision that would terminate
unexercised options granted under it in the event of a change in control
of First United and except as otherwise requested by BancorpSouth;
- Taking any action that would disqualify the merger as a pooling of
interests;
- Entering into any loans in an original principal amount in excess of $2.5
million or renewing, or committing to renew, any existing loans in a
principal amount in excess of $4.0 million;
- Incurring any indebtedness other than in the ordinary course of business
consistent with past practice;
- Filing any application to relocate or terminate the operations of any of
its or its subsidiaries' banking offices;
- Taking any action or entering into any agreement that could reasonably be
expected to jeopardize or materially delay the receipt of any required
regulatory approval;
- Disposing of any material assets other than in the ordinary course of
business consistent with past practice; or
- Entering into, renewing, amending or terminating any material contract,
other than the renewal in the ordinary course of business of any lease
the term of which expires prior to the merger.
BancorpSouth has agreed to refrain from:
- Amending its articles of incorporation or bylaws;
- Taking any action intended or reasonably expected to result in any of its
representations and warranties in the merger agreement being or becoming
untrue, or in any of the conditions to the merger set forth in the merger
agreement not being satisfied;
- Changing its methods of accounting in effect at December 31, 1999, except
as required by changes in generally accepted accounting principles or
regulatory accounting principles;
- Taking any action or entering into any agreement that could reasonably be
expected to jeopardize or materially delay the receipt of any required
regulatory approval;
- Taking any action that would disqualify the merger as a pooling of
interests;
- Selling, leasing, encumbering or otherwise disposing of any of its
material assets, properties or other rights or agreements other than in
the ordinary course of business consistent with past practice; or
- Engaging in a material acquisition of another business.
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In addition, First United agreed that, prior to the merger, it will not
authorize or permit any of its officers, directors, employees or agents to,
directly or indirectly, solicit, initiate, facilitate, encourage or participate
in any inquiries, proposals, discussions or negotiations relating to a tender or
exchange offer, merger, consolidation or other business combination involving
First United or the acquisition of a substantial portion of its capital stock or
assets. First United agreed to immediately cease and terminate any existing
activities, discussions or negotiations previously conducted with any parties
other than BancorpSouth with respect to any of these activities, and to notify
BancorpSouth immediately if it receives any such inquiry or proposal or request
for information. First United also agreed to promptly inform BancorpSouth in
writing of all of the relevant details with respect to any such inquiry or
proposal or request for information, including the material terms and conditions
and the identity of the person or group making such request, proposal or
inquiry. Additionally, First United agreed to keep BancorpSouth fully informed
of the status and details of any such request, proposal or inquiry.
First United further agreed that it would not provide third parties with
any nonpublic information relating to any such inquiry or proposal. It may,
however, communicate information about any such inquiry or proposal to its
shareholders if, in the judgment of First United's Board of Directors, the
communication is required under applicable law. In addition, First United may,
and may authorize and permit its officers, directors, employees or agents to,
provide or cause to be provided such information and participate in such
discussions or negotiations if First United's Board of Directors has determined
that the failure to do so could cause the members of First United's Board of
Directors to breach their fiduciary duties under applicable laws.
The merger agreement also contains certain other agreements relating to the
conduct of the parties prior to the merger, including, among other things, those
requiring each party:
- To apply for and obtain all consents and approvals required to complete
the merger;
- To afford to the other party and its representatives access during normal
business hours to all of such party's information concerning its
business, properties and personnel as the other party may reasonably
request;
- To take all actions required to comply with any legal requirements to
complete the merger.
First United agreed to cause each director, executive officer and other
person who is an "affiliate" of First United for purposes of Rule 145 under the
Securities Act, and for purposes of qualifying the merger for pooling of
interests accounting treatment, to deliver to BancorpSouth a written agreement
intended to ensure compliance with the Securities Act and to preserve the
ability of the merger to be accounted for as a pooling of interests.
BancorpSouth and First United each agreed to call and hold a special
meeting of their respective shareholders and, through their respective Boards of
Directors, to recommend the merger agreement for approval to their respective
shareholders. BancorpSouth also agreed to cause the shares of BancorpSouth
common stock to be issued in the merger to be approved for listing on the New
York Stock Exchange.
INDEMNIFICATION
BancorpSouth agreed to provide indemnification to the officers, directors
and employees of First United to the full extent permitted by law after the
merger and to provide, for three years after the merger, directors' and
officers' liability insurance for the directors and officers of First United to
the maximum extent available at an annual premium not to exceed 150% of the
amount expended by First United as of April 16, 2000.
AMENDMENT OF THE MERGER AGREEMENT
Subject to compliance with applicable law, the merger agreement may be
amended by First United and BancorpSouth, by action taken or authorized by their
respective Boards of Directors, at any time before or after the BancorpSouth
shareholders and/or the First United shareholders approve the merger
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agreement. However, after any approval of the merger agreement by First United
shareholders, there may not be, without further approval of the First United
shareholders, any amendment of the merger agreement which reduces the amount or
changes the form of the consideration due under the merger agreement, other than
as contemplated in the merger agreement. The merger agreement provides that it
may not be amended except by an instrument in writing signed on behalf of
BancorpSouth and First United.
WAIVER
Prior to the merger, BancorpSouth and First United may extend the time for
the performance of any of the obligations or other acts of the other party to
the merger agreement, waive any inaccuracies in the representations or
warranties of the other party contained in the merger agreement or waive
compliance with any of the agreements or conditions of the other party contained
in the merger agreement.
EXPENSES
Each party to the merger agreement will bear all expenses incurred by it in
connection with the merger agreement and the merger.
STOCK OPTION AGREEMENTS
BANCORPSOUTH'S OPTION TO PURCHASE SHARES OF FIRST UNITED COMMON STOCK
In connection with the execution of the merger agreement, First United
granted to BancorpSouth an option to purchase from First United up to 5,056,959
shares of First United common stock at an exercise price of $12.625 per share.
This number of shares is subject to adjustment in certain circumstances, but the
number of shares may not exceed 19.9% of the shares of First United common stock
outstanding immediately prior to exercise of the option. First United granted
the option to BancorpSouth as an inducement for BancorpSouth to enter into the
merger agreement. A copy of the option agreement is included as Annex F to this
Joint Proxy Statement/Prospectus. This description is qualified in its entirety
by reference to the full text of that option agreement.
The option granted to BancorpSouth is intended to increase the likelihood
that the merger will be completed. Consequently, certain aspects of the option
may have the effect of discouraging persons from considering or proposing a
competing acquisition of all or a significant part of First United's assets or
common stock. The acquisition of First United other than by BancorpSouth could
cause the option to become exercisable. The existence of the option could
significantly increase the cost to a potential acquirer of acquiring First
United compared to its cost had the option not been granted. That increased cost
might discourage a potential acquirer from considering or proposing an
acquisition or might result in a potential acquirer proposing to pay a lower per
share price to acquire First United than it might otherwise have proposed to
pay. The exercise or repurchase of the option may prohibit any other acquirer of
First United from accounting for an acquisition of First United using the
pooling of interests accounting method for a period of two years.
The number of shares of First United common stock subject to the option
granted to BancorpSouth will be increased or decreased, as appropriate, to the
extent that additional shares of First United common stock are either (1) issued
or otherwise become outstanding after April 16, 2000 or (2) redeemed,
repurchased, retired or otherwise cease to be outstanding after April 16, 2000,
such that, after such issuance, the number of shares of First United common
stock subject to the option will continue to equal 19.9% of the shares of First
United common stock then issued and outstanding. In the event of any change in,
or distributions in respect of, the number of shares of First United common
stock that would be prohibited by the merger agreement, the type and number of
shares of First United common stock purchasable upon exercise of the option, and
the option price, will also be adjusted in such a manner as will fully preserve
the economic benefits of the option.
BancorpSouth may exercise the option, in whole or in part, subject to
regulatory approval, if both an Initial Triggering Event (as defined in Section
2(c) of the option agreement) and a Subsequent Triggering
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Event (as defined in Section 2(d) of the option agreement) have occurred prior
to the occurrence of an Exercise Termination Event (as defined in Section 2(b)
of the option agreement). BancorpSouth may exercise the option only if
BancorpSouth has sent to First United written notice of such exercise within 90
days following the Subsequent Triggering Event, subject to extension as provided
in the option agreement.
The terms "Initial Triggering Event" and "Subsequent Triggering Event"
generally relate to attempts by one or more third parties to acquire a
significant interest in First United. Any exercise of the option will be deemed
to occur on the date such notice of exercise is sent.
As of the date of this Joint Proxy Statement/Prospectus, BancorpSouth and
First United are not aware that an Initial Triggering Event or a Subsequent
Triggering Event has occurred.
Neither BancorpSouth nor First United may assign any of its rights and
obligations under the option to any other person without the express written
consent of the other party. However, if a Subsequent Triggering Event occurs
prior to an Exercise Termination Event, BancorpSouth, subject to the terms of
the option, may assign, in whole or in part, its rights and obligations under
the option. BancorpSouth may not assign its rights under the option until the
date 15 days after the date on which the Federal Reserve approves an application
by BancorpSouth to acquire the shares of First United common stock subject to
the option, except in:
- A widely dispersed public distribution;
- A private placement in which no one party acquires the right to purchase
in excess of 2% of the voting shares of First United;
- An assignment to a single party for the purpose of conducting a widely
dispersed public distribution on BancorpSouth's behalf; or
- Any other manner approved by the Federal Reserve.
BancorpSouth may, at any time following a Repurchase Event (as defined in
Section 7(d) of the option agreement) and prior to the occurrence of an Exercise
Termination Event, surrender the option to First United in exchange for a cash
fee equal to $22.5 million plus, if applicable, any purchase price BancorpSouth
previously paid for First United common stock acquired upon exercise of a
portion of the option, and minus, if applicable, the excess of the net price, if
any, received by BancorpSouth pursuant to the sale of any of those previously
acquired shares of First United common stock to any unaffiliated party, over
BancorpSouth's purchase price for such shares.
At BancorpSouth's request following a Repurchase Event, First United must
repurchase the option for a price equal to the product of (1) the amount by
which the Market/Offer Price (as defined in Section 7(a) of the option
agreement) exceeds the exercise price under the option, multiplied times (2) the
number of shares of First United common stock then subject to the option. In
addition, following a Repurchase Event, at the request of a holder of shares of
First United common stock acquired upon exercise of the option, First United
must purchase the shares of First United common stock at the Market/Offer Price.
Similarly, at First United's request following a Repurchase Event, First United
may repurchase the option and any shares of First United common stock acquired
upon exercise of the option at those same terms.
BancorpSouth's total profit under the option may not exceed $22.5 million.
Certain rights and obligations under the option are subject to receipt of
required regulatory approvals. The approval of the Federal Reserve is required
for the acquisition by BancorpSouth of more than 5% of the outstanding shares of
First United common stock.
FIRST UNITED'S OPTION TO PURCHASE SHARES OF BANCORPSOUTH COMMON STOCK
In connection with the execution of the merger agreement, BancorpSouth
granted to First United an option to purchase from BancorpSouth up to 11,245,425
shares of BancorpSouth common stock at an
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exercise price of $16.00 per share. This number of shares is subject to
adjustment in certain circumstances, but the number of shares may not exceed
19.9% of the shares of BancorpSouth common stock outstanding immediately prior
to exercise of the option. BancorpSouth granted the option to First United as an
inducement for First United to enter into the merger agreement. The option
agreement is included as Annex G to this Joint Proxy Statement/Prospectus. This
description is qualified in its entirety by reference to the full text of this
option agreement.
The option granted to First United is intended to increase the likelihood
that the merger will be completed. Consequently, certain aspects of the option
may have the effect of discouraging persons from considering or proposing an
acquisition of all or a significant part of BancorpSouth's assets or common
stock. The acquisition of BancorpSouth could cause the option to become
exercisable. The existence of the option could significantly increase the cost
to a potential acquirer of acquiring BancorpSouth compared to its cost had the
option not been granted. That increased cost might discourage a potential
acquirer from considering or proposing an acquisition or might result in a
potential acquirer proposing to pay a lower per share price to acquire
BancorpSouth than it might otherwise have proposed to pay. The exercise or
repurchase of the option may prohibit any other acquirer of BancorpSouth from
accounting for an acquisition of BancorpSouth using the pooling of interests
accounting method for a period of two years.
The number of shares of BancorpSouth common stock subject to the option
granted to First United will be increased or decreased, as appropriate, to the
extent that additional shares of BancorpSouth common stock are either (1) issued
or otherwise become outstanding after April 16, 2000 or (2) redeemed,
repurchased, retired or otherwise cease to be outstanding after April 16, 2000,
such that, after such issuance, the number of shares of BancorpSouth common
stock subject to the option will continue to equal 19.9% of the shares of
BancorpSouth common stock then issued and outstanding. In the event of any
change in, or distributions in respect of, the number of shares of BancorpSouth
common stock that would be prohibited by the merger agreement, the type and
number of shares of BancorpSouth common stock purchasable upon exercise of the
option, and the option price, will also be adjusted in such a manner as will
fully preserve the economic benefits of the option.
First United may exercise the option, in whole or in part, subject to
regulatory approval, if both an Initial Triggering Event (as defined in Section
2(c) of the option agreement) and a Subsequent Triggering Event (as defined in
Section 2(d) of the option agreement) have occurred prior to the occurrence of
an Exercise Termination Event (as defined in Section 2(b) of the option
agreement). First United may exercise the option only if First United has sent
to BancorpSouth written notice of such exercise within 90 days following such
Subsequent Triggering Event, subject to extension as provided in the option
agreement.
The terms "Initial Triggering Event" and "Subsequent Triggering Event"
generally relate to attempts by one or more third parties to acquire a
significant interest in BancorpSouth. Any exercise of the option will be deemed
to occur on the date such notice of exercise is sent.
As of the date of this Joint Proxy Statement/Prospectus, First United and
BancorpSouth are not aware that an Initial Triggering Event or a Subsequent
Triggering Event has occurred.
Neither BancorpSouth nor First United may assign any of its rights and
obligations under the option to any other person without the express written
consent of the other party. However, if a Subsequent Triggering Event occurs
prior to an Exercise Termination Event, First United, subject to the terms of
the option, may assign, in whole or in part, its rights and obligations under
the option. First United may not assign its rights under the option until the
date 15 days after the date on which the Federal Reserve approves an application
by First United to acquire the shares of BancorpSouth common stock subject to
the option, except in:
- A widely dispersed public distribution;
- A private placement in which no one party acquires the right to purchase
in excess of 2% of the voting shares of BancorpSouth;
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<PAGE> 75
- An assignment to a single party for the purpose of conducting a widely
dispersed public distribution on First United's behalf; or
- Any other manner approved by the Federal Reserve.
First United may, at any time following a Repurchase Event (as defined in
Section 7(d) of the option agreement) and prior to the occurrence of an Exercise
Termination Event, surrender the option to BancorpSouth in exchange for a cash
fee equal to $22.5 million plus, if applicable, any purchase price First United
previously paid for BancorpSouth common stock acquired upon exercise of a
portion of the option, and minus, if applicable, the excess of the net price, if
any, received by First United pursuant to the sale of any of those previously
acquired shares of BancorpSouth common stock to any unaffiliated party, over
First United's purchase price of such shares.
At First United's request following a Repurchase Event, BancorpSouth must
repurchase the option for a price equal to the product of (1) the amount by
which the Market/Offer Price (as defined in Section 7(a) of the option
agreement) exceeds the exercise price under the option, multiplied times (2) the
number of shares of BancorpSouth common stock then subject to the option. In
addition, following a Repurchase Event, at the request of a holder of shares of
BancorpSouth common stock acquired upon exercise of the option, BancorpSouth
must purchase the shares of BancorpSouth common stock at the Market/Offer Price.
Similarly, at BancorpSouth's request following a Repurchase Event, BancorpSouth
may repurchase the option and any shares of BancorpSouth common stock acquired
upon exercise of the option on those same terms.
First United's total profit under the option may not exceed $22.5 million.
Certain rights and obligations under the option are subject to receipt of
required regulatory approvals. The approval of the Federal Reserve is required
for the acquisition by First United of more than 5% of the outstanding shares of
BancorpSouth common stock.
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MANAGEMENT AND OPERATIONS FOLLOWING THE MERGER
BOARD OF DIRECTORS
After the merger, BancorpSouth's Board of Directors initially will be
comprised of 13 directors, including the nine directors of BancorpSouth
immediately prior to the merger and four members of First United's Board of
Directors who are to be designated by First United. These four First United
directors are to be appointed to fill the three classes of BancorpSouth
directors as equally as possible, given existing vacancies in these classes. In
the event that any of these four First United directors fails to serve his or
her initial term as a BancorpSouth director, then, in considering nominees to
fill that vacancy on BancorpSouth's Board of Directors, BancorpSouth's
nominating committee will first consider a person selected by the remaining
First United directors.
BancorpSouth Bank's initial Board of Directors following the merger will be
comprised of the directors of BancorpSouth Bank immediately prior to the merger,
the four First United directors appointed to BancorpSouth's Board of Directors
following the merger and three other members of First United's Board of
Directors who are to be designated by First United.
BancorpSouth anticipates that it will elect two additional members of the
BancorpSouth Board of Directors at BancorpSouth's 2001 annual meeting of
shareholders, and that BancorpSouth's nominating committee will nominate one of
these three other First United directors appointed to BancorpSouth Bank's Board
of Directors for election to one of those positions.
MANAGEMENT
Following the merger, Aubrey B. Patterson, currently the Chairman,
President and Chief Executive Officer of BancorpSouth, will continue to serve as
Chairman and Chief Executive Officer of BancorpSouth, and James V. Kelley,
currently the Chairman of the Board, President and Chief Executive Officer of
First United, will serve as President and Chief Operating Officer of
BancorpSouth.
EMPLOYEE BENEFITS
BancorpSouth has agreed that employees of First United and its subsidiaries
will be eligible to participate in BancorpSouth's employee benefit plans in a
manner comparable to that of similarly situated employees of BancorpSouth or
BancorpSouth Bank. Prior service with First United will be treated as service
with BancorpSouth, except to the extent that such treatment would result in a
duplication or increase in benefits. Prior service with First United and its
subsidiaries will not be treated as service for purposes of accrual of pension
benefits. Each BancorpSouth plan will waive pre-existing condition limitations
to the same extent waived under the applicable First United plan. First United
employees are to be given credit for amounts paid under a First United employee
benefit plan for purposes of applying deductibles, co-payments and out-of-pocket
maximums as though such amounts had been paid in accordance with the terms and
conditions of BancorpSouth's employee benefit plan.
At the effective time of the merger, BancorpSouth and its subsidiaries are
to assume and honor employment, severance and other compensation agreements and
arrangements existing prior to April 16, 2000 between First United and its
subsidiaries and their directors, officers and employees.
First United and BancorpSouth agreed to cooperate and take all reasonable
actions after the merger to merge any employee benefit plan of First United that
is intended to be qualified under Section 401(a) of the Internal Revenue Code
into BancorpSouth's appropriate tax-qualified retirement plan so that the merger
of such plan satisfies the requirements of Section 414(l) of the Internal
Revenue Code. No First United employee benefit plan will be merged into
BancorpSouth's appropriate tax-qualified retirement plan if First United's plan
is not fully funded under Section 412 of the Internal Revenue Code and Section
302 of the Employee Retirement Income Security Act of 1974, or if the merger of
the plans would jeopardize the tax-qualified status of a BancorpSouth plan.
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THE COMPANIES
BANCORPSOUTH
GENERAL. BancorpSouth is a bank holding company organized under the laws
of the state of Mississippi with commercial banking and financial services
operations in Mississippi, Tennessee and Alabama. Its principal subsidiary is
BancorpSouth Bank. BancorpSouth's principal office is located at One Mississippi
Plaza, Tupelo, Mississippi 38804 and its telephone number is (662) 680-2000.
DESCRIPTION OF BUSINESS. BancorpSouth Bank has its principal office in
Tupelo, Lee County, Mississippi, and conducts a general commercial banking,
trust, insurance and investment services business through 167 banking and
mortgage locations and 170 ATM's in 87 communities throughout Mississippi,
western Tennessee and parts of Alabama. BancorpSouth Bank has grown through the
acquisition of other banks, the purchase of assets from federal regulators and
through the opening of new branches and offices. In addition, BancorpSouth Bank
operates investment services, consumer finance, credit life insurance and
insurance agency subsidiaries. At March 31, 2000, BancorpSouth Bank had total
deposits of approximately $4.98 billion and total assets of approximately $5.84
billion.
BancorpSouth, through its subsidiaries, provides a range of financial
services to individuals and small-to-medium size businesses. Various types of
checking accounts, both interest bearing and non-interest bearing, are
available. Savings accounts and certificates of deposit with a range of
maturities and interest rates are available to meet the needs of customers.
Other services include safe deposit and night depository facilities. Limited
24-hour banking with automated teller machines is provided in most of its
principal markets. BancorpSouth Bank is an issuing bank for MasterCard and
overdraft protection is available to approved MasterCard holders maintaining
checking accounts with BancorpSouth Bank.
BancorpSouth offers a variety of services through BancorpSouth Bank's trust
department, including personal trust and estate services, certain employee
benefit accounts and plans, including individual retirement accounts, and
limited corporate trust functions.
COMPETITION. Vigorous competition exists in all major areas where
BancorpSouth is engaged in business. BancorpSouth Bank competes for available
loans and depository accounts with state and national commercial banks as well
as savings and loan associations, insurance companies, credit unions, money
market mutual funds, automobile finance companies and financial services
companies. None of these competitors is dominant in the entire area served by
BancorpSouth.
The principal areas of competition in the banking industry center on a
financial institution's ability and willingness to provide credit on a timely
and competitively priced basis, to offer a sufficient range of deposit and
investment opportunities at a competitive price and maturity, and to offer
personal and other services of sufficient quality and at competitive prices.
BancorpSouth and its subsidiaries believe they compete effectively in each of
these areas.
LENDING ACTIVITIES. BancorpSouth Bank's lending activities include both
commercial and consumer loans. Loan originations are derived from a number of
sources including real estate broker referrals, mortgage loan companies, direct
solicitation by BancorpSouth Bank's loan officers, present savers and borrowers,
builders, attorneys, walk-in customers and, in some instances, other lenders.
BancorpSouth Bank has established disciplined and systematic procedures for
approving and monitoring loans that vary depending on the size and nature of the
loan.
COMMERCIAL LENDING. BancorpSouth Bank offers a variety of commercial loan
services including term loans, lines of credit, equipment and receivable
financing and agricultural loans. A broad range of short-to-medium term
commercial loans, both secured and unsecured are made available to businesses
for working capital, including inventory and receivables, business expansion,
including acquisition and development of real estate and improvements, and the
purchase of equipment and machinery. At times, BancorpSouth Bank also makes
construction loans to real estate developers for the acquisition, development
and construction of residential subdivisions.
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Commercial loans are granted based on the borrower's ability to generate
cash flow to support its debt obligations and other cash related expenses. A
borrower's ability to repay commercial loans is substantially dependent on the
success of the business itself and on the quality of its management. As a
general practice, BancorpSouth Bank takes as collateral a security interest in
any available real estate, equipment, inventory, receivables or other personal
property, although such loans may also be made infrequently on an unsecured
basis. Generally, BancorpSouth Bank requires personal guaranties of its
commercial loans to offset the risks associated with such loans.
BancorpSouth Bank has very little exposure as an agricultural lender. Crop
production loans are either fully supported by the collateral and financial
strength of the borrower, or else a 90% loan guaranty is obtained through the
Farmers Home Administration on such loans.
RESIDENTIAL CONSUMER LENDING. A portion of BancorpSouth Bank's lending
activities consists of the origination of fixed and adjustable rate residential
mortgage loans secured by owner-occupied property located in BancorpSouth Bank's
primary market areas. Home mortgage lending is unique in that a broad geographic
territory may be serviced by originators working from strategically placed
offices either within BancorpSouth Bank's traditional banking facilities or from
affordable storefront locations in commercial buildings. In addition,
BancorpSouth Bank offers construction loans, second mortgages home improvement
loans and home equity lines of credit. BancorpSouth Bank has received an
"outstanding" CRA rating from the FDIC after its most recent examination.
BancorpSouth Bank finances the construction of individual, owner-occupied
houses on the basis of written underwriting and construction loan management
guidelines. First mortgage construction loans are made to solvent and competent
contractors on both a pre-sold and a "speculation" basis. Such loans are also
made to qualified individual borrowers and are generally supported by a take-out
commitment from a permanent lender. BancorpSouth Bank makes residential
construction loans to individuals who intend to erect owner occupied housing on
a purchased parcel of real estate. The construction phase of these loans have
certain risks, including the viability of the contractor, the contractor's
ability to complete the project and changes in interest rates.
In most cases, BancorpSouth Bank will sell its mortgage loans of 15 or more
years in term in the secondary market. The sale to the secondary market allows
BancorpSouth Bank to hedge against the interest rate risks related to such
lending operations. This brokerage arrangement allows BancorpSouth Bank to
accommodate its clients' demands while eliminating the interest rate risk for
the 15 to 30 year period generally associated with such loans. After the sale of
a loan, BancorpSouth Bank's only involvement is to act as a servicing agent.
BancorpSouth Bank in most cases requires title, fire, extended casualty
insurance, and, where required by applicable regulations, flood insurance to be
obtained by the borrower. BancorpSouth Bank maintains its own errors and
omissions insurance policy to protect against loss in the event of failure of a
mortgagor to pay premiums on fire and other hazard insurance policies. Mortgage
loans originated by BancorpSouth Bank customarily include a "due on sale" clause
giving BancorpSouth Bank the right to declare a loan immediately due and payable
in the event, among other matters, that the borrower sells or otherwise disposes
of the real property subject to a mortgage. In general, BancorpSouth Bank
enforces due on sale clauses. Borrowers are typically permitted to refinance or
repay loans at their option without penalty.
NON-RESIDENTIAL CONSUMER LENDING. Non-residential consumer loans made by
BancorpSouth Bank include loans for automobiles, recreation vehicles, boats,
personal, secured and unsecured, and deposit account secured loans. In addition,
BancorpSouth Bank provides federally insured or guaranteed student loans to
students at major universities and community colleges in BancorpSouth Bank's
market areas. BancorpSouth Bank also conducts various indirect lending
activities through established retail companies in its market areas.
Non-residential consumer loans are attractive to BancorpSouth Bank because they
typically have a shorter term and carry higher interest rates than that charged
on other types of loans. Non-residential consumer loans, however, do pose
additional risks of collectability when compared to traditional types of loans
granted by commercial banks such as residential mortgage loans.
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BancorpSouth Bank also issues credit cards solicited on the basis of
applications received through referrals from BancorpSouth Bank's branch
networks. BancorpSouth Bank generally has a small portfolio of credit card
receivables outstanding. Credit card lines are underwritten using conservative
credit criteria, including past credit history and debt-to-income ratios,
similar to the credit policies applicable to other personal consumer loans.
Historically, BancorpSouth Bank believes that its credit card losses have been
well-below industry norms.
Consumer loans are granted based on employment and financial information
solicited from prospective borrowers as well as credit records collected from
various reporting agencies. Stability of the borrower, willingness to pay and
credit history are the primary factors to be considered. The availability of
collateral is also a factor considered in making such a loan. BancorpSouth Bank
seeks collateral that can be assigned and has good marketability with a clearly
adequate margin of value. The geographic area of the borrower is another
consideration with preference given to borrowers in BancorpSouth Bank's market
area.
OTHER FINANCIAL SERVICES. BancorpSouth Bank's consumer finance
subsidiaries extend consumer loans to individuals and entities that may not
satisfy BancorpSouth Bank's lending standards, and operate in Mississippi,
Tennessee and Alabama.
BancorpSouth Bank's insurance service subsidiaries serve as agents in the
sale of title, life, automobile, homeowners, farmowners and other commercial
insurance policies, and operate in Mississippi, Tennessee and Alabama. On June
30, 1999, Stewart Sneed Hewes, Inc. and its affiliated companies merged with one
of BancorpSouth Bank's insurance services subsidiaries. Founded in 1905, Stewart
Sneed Hewes specialized in commercial lines of insurance and offered a full line
of property and casualty, life, health and employee benefits products and
services. Stewart Sneed Hewes was one of the largest insurance brokerage
organizations in Mississippi.
BancorpSouth Bank's investment services subsidiary provides brokerage,
investment advisory and asset management services, and operates in Mississippi,
Tennessee and Alabama.
FIRST UNITED
DESCRIPTION OF BUSINESS. First United is a multi-bank holding company
organized under the laws of the state of Arkansas with commercial banking and
financial services operations in Arkansas, Louisiana and Texas. First United is
headquartered in El Dorado, Arkansas and was incorporated in 1980 for the
purpose of holding all the outstanding stock of the First National Bank of El
Dorado. Between 1981 and 1988, First United acquired fifteen other banks in
different cities within Arkansas, Louisiana and Texas and has made several other
recent acquisitions. First United has 11 wholly-owned bank subsidiaries and a
wholly-owned trust company subsidiary. At March 31, 2000, First United had total
assets of approximately $2.72 billion and total deposits of approximately $2.27
billion.
First United's bank subsidiaries offer customary services of banks of
similar size and similar markets, including interest-bearing and
non-interest-bearing deposit accounts, commercial, real estate and personal
loans, correspondent banking services and safe deposit box activities. First
United's trust company subsidiary provides trust services and fiduciary
functions of First United's bank subsidiaries which provide such services except
that FirstBank and City Bank & Trust of Shreveport, each a First United bank
subsidiary, continue to act as the fiduciary for all of their accounts and First
United Bank, a First United bank subsidiary, maintains a limited number of its
accounts on a full service basis.
COMPETITION. The banking business is highly competitive. The banking and
trust subsidiaries of First United compete actively with national and state
banks, savings and loan associations, trust companies, securities dealers,
mortgage bankers, finance companies and insurance companies. Competition is
based upon interest rates offered on deposit accounts, interest rates charged on
loans, fees and service charges, the quality and scope of the services rendered,
the convenience of banking facilities and, in the case of loans to commercial
borrowers, relative lending limits.
RECENT DEVELOPMENT. On May 15, 2000, First United and Texarkana First
Financial Corporation, a Texas corporation and a bank holding company, entered
into a merger agreement that provides that
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Texarkana First Financial and its wholly-owned subsidiary, First Federal Savings
and Loan Association of Texarkana, will each merge with a subsidiary of First
United. First Federal conducts a general savings and loan business through six
offices in Ashdown, DeQueen, Hope, Nashville and Texarkana, Arkansas and
Texarkana, Texas. At March 31, 2000, Texarkana First Financial had total assets
of approximately $206 million, total loans of approximately $171 million and
total deposits of approximately $153 million. First United will acquire all of
the outstanding Texarkana First Financial common stock for approximately $37.5
million in cash. That merger will be accounted for as a purchase and First
United's management anticipates that the earnings impact of the merger will be
accretive to operating results for 2000. First United anticipates that that
merger will close in the third quarter of 2000. On May 15, 2000, BancorpSouth
and First United amended their merger agreement to permit First United to enter
into the merger agreement with Texarkana First Financial. BancorpSouth and First
United believe that the merger with Texarkana First Financial will not cause a
material delay in completing the proposed merger between First United and
BancorpSouth.
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PRICE RANGE OF COMMON STOCK AND DIVIDENDS
BANCORPSOUTH
BancorpSouth common stock is listed on the New York Stock Exchange under
the symbol "BXS." As of , 2000, BancorpSouth common stock was held of
record by approximately persons. The following table sets forth the high
and low sale prices for BancorpSouth common stock as reported on the New York
Stock Exchange, and cash dividends declared per share of BancorpSouth common
stock, for the periods indicated:
<TABLE>
<CAPTION>
STOCK PRICES
-------------------- CASH DIVIDENDS
HIGH(1) LOW(1) PER SHARE
-------- -------- --------------
<S> <C> <C> <C>
2000
First Quarter............................... $16.6250 $14.0000 $0.13
Second Quarter..............................
Third Quarter (through , 2000).......
1999
First Quarter............................... $19.4375 $15.7500 $0.12
Second Quarter.............................. 19.1250 15.8125 0.12
Third Quarter............................... 19.3750 15.3750 0.12
Fourth Quarter.............................. 17.5000 16.3125 0.13
1998
First Quarter............................... $24.0000 $20.6250 $0.11
Second Quarter.............................. 23.0625 20.3125 0.11
Third Quarter............................... 22.4375 16.8125 0.11
Fourth Quarter.............................. 21.5625 17.7500 0.12
</TABLE>
---------------
(1) Adjusted to reflect a two-for-one stock split of BancorpSouth common stock,
effected in the form of a 100% stock dividend as of May 15, 1998.
FIRST UNITED
First United common stock is quoted on the Nasdaq Stock Market under the
symbol "UNTD." As of , 2000, First United common stock was held of
record by approximately persons. The following table sets forth the high
and low sale prices for First United common stock as reported on the Nasdaq
Stock Market, and cash dividends declared per share of First United common
stock, for the periods indicated:
<TABLE>
<CAPTION>
STOCK PRICES
------------------- CASH DIVIDENDS
HIGH(1) LOW(1) PER SHARE
-------- ------- --------------
<S> <C> <C> <C>
2000
First Quarter................................ $14.2500 $10.000 $0.125
Second Quarter...............................
Third Quarter (through , 2000).....
1999
First Quarter................................ $20.1250 $13.500 $0.115
Second Quarter............................... 18.8125 14.500 0.125
Third Quarter................................ 18.4375 14.000 0.125
Fourth Quarter............................... 17.6250 13.375 0.125
1998
First Quarter................................ $26.7500 $19.500 $0.100
Second Quarter............................... 28.5000 23.500 0.115
Third Quarter................................ 25.5000 17.625 0.115
Fourth Quarter............................... 21.6250 16.500 0.115
</TABLE>
---------------
(1) Adjusted to reflect a two-for-one stock split of First United common stock,
effected in the form of a 100% stock dividend as of June 30, 1998.
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COMPARISON OF RIGHTS OF SHAREHOLDERS
First United shareholders, whose rights are currently governed by First
United's articles of incorporation, as amended, and restated bylaws and by the
Arkansas Business Corporation Act of 1987, will become shareholders of
BancorpSouth upon completion of the merger. As such, the rights of the former
First United shareholders will thereafter be governed by BancorpSouth's restated
articles of incorporation and amended and restated bylaws and by the Mississippi
Business Corporation Act.
While it is impractical to summarize all of the pertinent differences, set
forth below are the material differences between the rights of First United
shareholders under First United's governing documents and law and the rights of
BancorpSouth shareholders under BancorpSouth's governing documents and law.
VOTING RIGHTS; CUMULATIVE VOTING; ACTION BY WRITTEN CONSENT
BANCORPSOUTH. BancorpSouth's articles of incorporation provide that each
issued and outstanding share of BancorpSouth common stock entitles the holder to
one vote on each matter with respect to which shareholders are entitled to vote.
BancorpSouth's governing documents do not provide cumulative voting by
shareholders. BancorpSouth's bylaws provide that shareholders may take action by
the unanimous written consent of all shareholders entitled to vote on any
matter.
FIRST UNITED. First United's articles of incorporation provide for
cumulative voting by First United shareholders in elections of members of First
United's Board of Directors. Cumulative voting entitles each First United
shareholder to cast a total number of shares equal to the product of (1) the
number of directors being elected, multiplied times (2) the number of shares
held in the shareholder's name as of the record date. This total number of votes
may be cast for one candidate or distributed among as many candidates as the
shareholder desires. In voting on any matter other than the election of
directors, such as approval of the merger agreement, each First United
shareholder entitled to vote on the matter is entitled to one vote for each
share of First United common stock held by the shareholder. While First United's
governing documents are silent, the Arkansas Business Corporation Act of 1987
provides that (1) shareholders may take action to increase the capital stock or
bond indebtedness of First United by the unanimous written consent of all
shareholders entitled to vote on the matter; and (2) shareholders having not
less than the minimum number of votes that would be necessary to take any other
action may act by written consent.
CHANGE OF CONTROL
BANCORPSOUTH. BancorpSouth's governing documents and shareholders rights
plan contain several provisions which make a change of control of BancorpSouth
more difficult to accomplish without the approval of BancorpSouth's Board of
Directors, including the following:
- BancorpSouth's Board of Directors is divided into three classes so that
approximately one-third of the directors will be subject to reelection at
each annual meeting of the shareholders of BancorpSouth;
- Two-thirds of the shares of BancorpSouth common stock entitled to vote
are required to constitute a quorum for the transaction of any business
at a special meeting of shareholders. A majority of the shares of
BancorpSouth common stock entitled to vote are required to constitute a
quorum at an annual meeting of shareholders;
- BancorpSouth's bylaws provide that a vote of at least 80% of the
outstanding shares of BancorpSouth common stock is required to increase
the maximum number of members of BancorpSouth's Board of Directors unless
BancorpSouth's Board recommends such an increase;
- BancorpSouth's articles of incorporation provide that the affirmative
vote of the holders of not less than 80% of the outstanding shares of
voting stock of BancorpSouth is required in the event that BancorpSouth's
Board of Directors does not recommend to BancorpSouth shareholders a vote
in
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<PAGE> 83
favor of a merger or consolidation of BancorpSouth with, or a sale or
lease of all or substantially all of the assets of BancorpSouth to, any
person or entity;
- The affirmative vote of the holders of not less than 80% of the
outstanding shares of voting stock of BancorpSouth, as well as at least
67% of the outstanding shares of voting stock of BancorpSouth not held by
a person owning or controlling 20% or more of BancorpSouth's voting
stock, is required for the approval of a merger, consolidation, or sale
or lease of all or substantially all of BancorpSouth's assets with or to
a controlling person, except in certain instances; and
- BancorpSouth has implemented a shareholders rights plan (which is
commonly referred to as a "poison pill") under which a common stock
purchase right attaches to and trades with each share of BancorpSouth
common stock (including shares of BancorpSouth common stock to be issued
to First United shareholders in connection with the merger). Upon the
occurrence of certain events, including the acquisition of, or tender
offer for, 20% or more of the outstanding shares of BancorpSouth common
stock by any person or entity, then the holders of each such purchase
right (except those held by the person acquiring the shares or making the
tender offer) will be entitled to purchase one share of BancorpSouth
common stock at a price equal to 50% of the then current market price.
FIRST UNITED. First United's governing documents do not provide for the
staggered election of members of First United's Board of Directors. Directors of
First United are elected annually for a one-year term and hold office until the
next succeeding annual meeting of First United's shareholders and until their
successors have been elected and qualified, subject to earlier resignation and
removal. A majority of the shares of First United common stock entitled to vote
are required to constitute a quorum at an annual meeting of shareholders and a
special shareholders meeting. The minimum and maximum number of directors of
First United provided in First United's articles of incorporation may not be
increased or decreased. First United cannot effect a transaction where a
purchaser would acquire control of First United, whether by merger,
consolidation, purchase of stock or otherwise, such as the proposed merger of
BancorpSouth and First United, except upon the approval of two-thirds of all
issued and outstanding shares of First United common stock that are entitled to
vote at a duly called meeting of shareholders. First United has not adopted a
shareholders rights plan.
SHAREHOLDER NOMINATIONS AND PROPOSALS
BANCORPSOUTH. BancorpSouth's bylaws provide that proposals by BancorpSouth
shareholders of business to be considered, or nominations by shareholders for
election of directors, at an annual meeting of shareholders must be stated in
writing and filed with BancorpSouth's corporate Secretary not later than 90
calendar days and not earlier than 120 calendar days prior to the first
anniversary date of the preceding year's annual meeting. If the annual meeting
is more than 30 calendar days from the anniversary date of the preceding year's
annual meeting, notice by the shareholders must be delivered not earlier than
120 calendar days prior to the annual meeting and no later than the later of 90
calendar days prior to the annual meeting or 10 calendar days following the day
that BancorpSouth first publicly announces the date of the annual meeting.
BancorpSouth shareholders who wish to nominate any person for election to
BancorpSouth's Board of Directors at a special meeting of shareholders must
deliver written notice to BancorpSouth's corporate Secretary not earlier than
120 calendar days prior to the special meeting and not later than the later of
90 calendar days prior to the special meeting or 10 calendar days following the
day on which BancorpSouth first publicly announces the date of the special
meeting.
BancorpSouth's bylaws also require that any shareholder notice of
nomination for election of a director provide certain information concerning the
shareholder and his or her nominee, including, among other things, the
information regarding the nominee as would be required to be included in a proxy
statement filed under the proxy rules of the SEC, and the consent of the nominee
to serve as a director of BancorpSouth if elected.
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<PAGE> 84
The chairman of the meeting may refuse to acknowledge any shareholder
proposals or nominations that are not made in compliance with these procedures.
FIRST UNITED. First United's governing documents do not contain any
provisions which require First United shareholders to provide advance notice to
First United prior to proposing business or nominating persons at an annual
meeting or a special meeting of shareholders.
BOARD OF DIRECTORS
BANCORPSOUTH. BancorpSouth's Board of Directors consists of between nine
and 24 members, as determined from time to time by BancorpSouth's Board of
Directors, and on the date of this Joint Proxy Statement/Prospectus consisted of
nine members. The vote of at least 80% of the outstanding shares of BancorpSouth
common stock is required to increase the maximum number of members of
BancorpSouth's Board of Directors unless BancorpSouth's Board of Directors
recommends such an increase. Any vacancy arising from a director's early
retirement from BancorpSouth's Board of Directors or an increase in the number
of members of BancorpSouth's Board of Directors is to be filled by vote of the
shareholders of BancorpSouth. The members of the BancorpSouth's Board of
Directors are divided into three classes, with the classes elected for staggered
three-year terms. Each director of BancorpSouth must own at least $200 of par
value of unencumbered shares of BancorpSouth common stock.
FIRST UNITED. First United's Board of Directors consists of between three
and 25 members, as determined from time to time by First United's shareholders
and on the date of this Joint Proxy Statement/Prospectus First United's Board of
Directors consisted of 14 members. Any vacancy or an increase in the number of
members of First United's Board of Directors is to be filled by majority vote of
the First United directors then in office. Each First United director is elected
to serve a one-year term. First United's shareholders elect all directors at
their annual meeting or, if the annual meeting is not held, at a special meeting
called for the purpose of the election of directors. Directors of First United
are not required to be shareholders of First United.
REMOVAL OF DIRECTORS
BANCORPSOUTH. BancorpSouth's governing documents provide that a director
of BancorpSouth may be removed by the affirmative vote of a majority of the
entire Board of Directors of BancorpSouth and by BancorpSouth's shareholders,
only for cause, at a special meeting called for the purpose of removing such
director.
FIRST UNITED. While First United's governing documents are silent as to
the removal of directors, the Arkansas Business Corporation Act of 1987 provides
that First United's shareholders may remove a director with or without cause at
a shareholder meeting called for the purpose of removing the director. The
notice of such a shareholder meeting must state that the purpose, or one of the
purposes, of the meeting is the removal of the director. A director may not be
removed, however, if the number of votes sufficient to elect the director under
cumulative voting is voted against the director's removal.
AUTHORIZED CAPITAL STOCK
<TABLE>
<CAPTION>
CLASS OF STOCK AUTHORIZED SHARES PAR VALUE PER SHARE
-------------- ----------------- -------------------
<S> <C> <C> <C>
First United................................. Common 50,000,000 $1.00
Preferred 500,000 $1.00
BancorpSouth................................. Common 500,000,000 $2.50
</TABLE>
RIGHTS OF SHAREHOLDERS TO CALL SPECIAL MEETINGS
BANCORPSOUTH. BancorpSouth's governing documents provide that a special
meeting of BancorpSouth's shareholders may be called by the Chief Executive
Officer or Secretary of BancorpSouth,
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<PAGE> 85
or by the holders of not less than a majority of the shares of BancorpSouth
common stock entitled to vote at such meeting.
FIRST UNITED. First United's bylaws provide that a special meeting of the
First United shareholders may be called by the Chairman, President, Secretary or
by the First United Board of Directors, or any three shareholders owning in the
aggregate not less than 25% of the shares of First United common stock.
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<PAGE> 86
WHERE YOU CAN FIND MORE INFORMATION
BancorpSouth has filed with the SEC under the Securities Act a registration
statement on Form S-4 that registers the distribution to First United
shareholders of the shares of BancorpSouth common stock to be issued in
connection with the merger. The registration statement, including the attached
exhibits and schedules, contain additional relevant information about
BancorpSouth, First United and BancorpSouth common stock. The rules and
regulations of the SEC allow BancorpSouth and First United to omit certain
information included in the registration statement from this Joint Proxy
Statement/Prospectus.
In addition, each of BancorpSouth and First United files reports, proxy
statements and other information with the SEC under the Securities Exchange Act.
You may read and copy this information at the following locations of the SEC:
<TABLE>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
</TABLE>
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. You may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC also maintains an Internet world wide web site that contains
reports, proxy statements and other information about issuers, like BancorpSouth
and First United, which file electronically with the SEC. The address of that
site is http://www.sec.gov.
You can also inspect reports, proxy statements and other information about
BancorpSouth at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
The SEC allows BancorpSouth and First United to "incorporate by reference"
information into this Joint Proxy Statement/Prospectus from documents that they
have previously filed with the SEC. This means that BancorpSouth and First
United can disclose important information to you by referring you to another
document filed separately with the SEC. These documents contain important
information about BancorpSouth and First United and their respective financial
condition, operations and business. The information incorporated by reference is
considered to be a part of this Joint Proxy Statement/Prospectus, except for any
information that is superseded by other information contained directly in this
Joint Proxy Statement/Prospectus or in documents filed by First United or
BancorpSouth with the SEC after the date of this Joint Proxy
Statement/Prospectus. Information incorporated from another document is
considered to have been disclosed to you whether or not you chose to read the
document.
This Joint Proxy Statement/Prospectus incorporates by reference the
following documents with respect to BancorpSouth:
- BancorpSouth's Annual Report on Form 10-K for the year ended December 31,
1999;
- BancorpSouth's Quarterly Report on Form 10-Q for the quarter ended March
31, 2000;
- BancorpSouth's Current Report on Form 8-K dated January 28, 2000;
- BancorpSouth's Current Report on Form 8-K dated April 17, 2000;
- BancorpSouth's Current Report on Form 8-K dated April 27, 2000;
- BancorpSouth's Current Report on Form 8-K dated May 9, 2000;
- The description of BancorpSouth common stock contained in BancorpSouth's
Registration Statement on Form 8-A dated May 14, 1997; and
- The description of BancorpSouth Common Stock Purchase Rights contained in
BancorpSouth's Registration Statement on Form 8-A dated May 14, 1997.
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<PAGE> 87
BancorpSouth incorporates by reference additional documents that
BancorpSouth may file with the SEC between the date of this Joint Proxy
Statement/Prospectus and the completion of the merger. These documents include
periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q and Current Reports on Form 8-K, as well as proxy statements.
This Joint Proxy Statement/Prospectus incorporates by reference the
following documents with respect to First United:
- First United's Annual Report on Form 10-K for the year ended December 31,
1999;
- First United's Quarterly Report on Form 10-Q for the quarter ended March
31, 2000;
- First United's Current Report on Form 8-K dated April 18, 2000; and
- The description of First United common stock contained in First United's
Registration Statement on Form 8-A dated April 23, 1984.
First United incorporates by reference additional documents that First
United may file with the SEC between the date of this Joint Proxy
Statement/Prospectus and the completion of the merger. These documents include
periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q and Current Reports on Form 8-K, as well as proxy statements.
BancorpSouth has supplied all information contained or incorporated by
reference in this Joint Proxy Statement/Prospectus relating to BancorpSouth and
BancorpSouth Bank, as well as all pro forma financial information.
First United has supplied all information contained in this Joint Proxy
Statement/Prospectus relating to First United and its subsidiaries.
You can obtain copies of the documents incorporated by reference in this
Joint Proxy Statement/ Prospectus with respect to BancorpSouth and First United
without charge, excluding any exhibits to those documents unless the exhibit is
specifically incorporated by reference as an exhibit in this Joint Proxy
Statement/Prospectus, by requesting them in writing or by telephone from
BancorpSouth or First United at the following:
<TABLE>
<S> <C>
BancorpSouth, Inc. First United Bancshares, Inc.
One Mississippi Plaza Main and Washington Streets
Tupelo, Mississippi 38804 El Dorado, Arkansas 71730
(662) 680-2000 (870) 863-3181
Attention: Cathy S. Freeman, Secretary Attention: John G. Copeland, Secretary
</TABLE>
IF YOU WOULD LIKE TO REQUEST DOCUMENTS FROM BANCORPSOUTH OR FIRST UNITED,
PLEASE DO SO BY , 2000 TO RECEIVE THEM BEFORE THE BANCORPSOUTH AND
FIRST UNITED SPECIAL MEETINGS. You can also obtain copies of these documents
from the SEC through the SEC's Internet world wide web site or at the SEC's
address described in this section above.
You should rely only on the information contained in or incorporated by
reference in this Joint Proxy Statement/Prospectus in considering how to vote
your shares. Neither BancorpSouth nor First United has authorized anyone to
provide you with information that is different from the information in this
document. This Joint Proxy Statement/Prospectus is dated , 2000. You
should not assume that the information contained in this document is accurate as
of any date other than that date. Neither the mailing of this Joint Proxy
Statement/Prospectus nor the issuance of BancorpSouth common stock in the merger
shall create any implication to the contrary.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
This Joint Proxy Statement/Prospectus contains certain forward-looking
statements about the financial condition, results of operations and business of
BancorpSouth and First United and about the combined companies following the
merger. These statements concern the cost savings, revenue enhancements and
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<PAGE> 88
other advantages the companies expect to obtain from the merger, the anticipated
impact of the merger on BancorpSouth's financial performance, tax consequences
and accounting treatment of the merger, receipt of regulatory approvals, market
prices of BancorpSouth common stock and First United common stock and earnings
estimates for the combined company. These statements appear in several sections
of this Joint Proxy Statement/Prospectus, including "SUMMARY," "THE
MERGER -- Reasons for the Merger" and "THE MERGER -- Fairness Opinion." Also,
the forward-looking statements generally include any of the words "believes,"
"expects," "anticipates," "intends," "estimates," "should," "will" or "plans" or
similar expressions.
Forward-looking statements are not guarantees of future performance. They
involve risks, uncertainties and assumptions. The future results and shareholder
values of BancorpSouth and First United, and of the combined companies, may
differ materially from those expressed in these forward-looking statements. Many
of the factors that could influence or determine actual results are
unpredictable and not within the control of BancorpSouth or First United. In
addition, neither BancorpSouth nor First United intends to, nor are they
obligated to, update these forward-looking statements after this Joint Proxy
Statement/ Prospectus is distributed, even if new information, future events or
other circumstances have made them incorrect or misleading as of any future
date. For all of these statements, BancorpSouth and First United claim the
protection of the safe harbor for forward-looking statements provided in Section
27A of the Securities Act and Section 21E of the Securities Exchange Act.
Factors that may cause actual results to differ materially from those
contemplated by these forward-looking statements include, among others, the
following possibilities:
- Cost savings the companies expect from the merger might not be fully
realized or realized within the time frame the companies anticipate;
- Revenues following the merger may be lower than expected;
- Loss of deposits, customers or revenues following the merger may be
greater than anticipated;
- Competitive pressure among financial services providers in the mid-south
region of the United States or in the financial services industry
generally may increase significantly;
- Costs or difficulties related to regulatory requirements involved in
combining the companies, including the subsidiary banks, may be greater
than expected;
- Interest rates may change in such a way as to reduce the companies'
margins;
- General economic or monetary conditions, either nationally or regionally,
may be less favorable than expected, resulting in a deterioration in
credit quality or a diminished demand for the companies' services and
products;
- Changes in laws or government rules, or the way in which courts interpret
these laws or rules, may adversely affect the companies' businesses; and
- Business conditions, inflation or securities markets may undergo
significant change.
LEGAL MATTERS
Riley, Ford, Caldwell & Cork, P.A., Tupelo, Mississippi, counsel to
BancorpSouth, will pass upon the validity of the shares of BancorpSouth common
stock to be issued in the merger. Waller Lansden Dortch & Davis, PLLC,
Nashville, Tennessee, special counsel to BancorpSouth, will pass upon certain
legal matters concerning the merger on behalf of BancorpSouth. Mitchell,
Williams, Selig, Gates & Woodyard, P.L.L.C., Little Rock, Arkansas, counsel to
First United, will pass upon certain legal matters concerning the merger on
behalf of First United.
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EXPERTS
The consolidated financial statements of BancorpSouth as of December 31,
1999 and 1998, and for each of the years in the three-year period ended December
31, 1999, have been incorporated by reference in this Joint Proxy
Statement/Prospectus and in the registration statement on Form S-4 in reliance
upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of such firm as experts
in accounting and auditing.
The consolidated financial statements of First United at December 31, 1999
and 1998 and for each of the years in the three-year period ended December 31,
1999, incorporated by reference in this Joint Proxy Statement/Prospectus and in
the registration statement on Form S-4, have been audited by Arthur Andersen
LLP, independent certified public accountants, as set forth in their reports.
The financial statements referred to above have been incorporated by reference
in this Joint Proxy Statement/Prospectus in reliance upon the authority of
Arthur Andersen LLP as an expert in giving these reports.
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<PAGE> 90
ANNEX A
AGREEMENT AND PLAN OF MERGER
BETWEEN
BANCORPSOUTH, INC.
AND
FIRST UNITED BANCSHARES, INC.
DATED AS OF APRIL 16, 2000
<PAGE> 91
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I THE MERGER.................................................. A-2
1.1 The Merger.................................................. A-2
1.2 Effective Time.............................................. A-2
1.3 Effects of the Merger....................................... A-2
1.4 Conversion of First United Common Stock..................... A-3
1.5 Stock Options............................................... A-4
1.6 BancorpSouth Common Stock................................... A-4
1.7 Articles of Incorporation................................... A-4
1.8 Bylaws...................................................... A-4
1.9 Directors and Officers...................................... A-5
1.10 Tax Consequences; Accounting Treatment...................... A-5
ARTICLE II EXCHANGE OF SHARES.......................................... A-5
2.1 BancorpSouth to Make Shares Available....................... A-5
2.2 Exchange of Shares.......................................... A-5
ARTICLE III DISCLOSURE SCHEDULES; STANDARDS FOR REPRESENTATIONS AND
WARRANTIES.................................................. A-6
3.1 Disclosure Schedules........................................ A-6
3.2 Standards................................................... A-7
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF FIRST UNITED.............. A-7
4.1 Corporate Organization...................................... A-7
4.2 Capitalization.............................................. A-11
4.3 Authority; No Violation..................................... A-12
4.4 Consents and Approvals...................................... A-13
4.5 Reports..................................................... A-13
4.6 Financial Statements........................................ A-13
4.7 Broker's Fees............................................... A-14
4.8 Absence of Certain Changes or Events........................ A-14
4.9 Legal Proceedings........................................... A-14
4.10 Taxes....................................................... A-15
4.11 Employees................................................... A-15
4.12 First United Information.................................... A-16
4.13 Compliance with Applicable Law.............................. A-17
4.14 Certain Contracts........................................... A-17
4.15 Agreements with Regulatory Agencies......................... A-17
4.16 Business Combination Provision; Takeover Laws............... A-17
4.17 Environmental Matters....................................... A-18
4.18 Approvals................................................... A-18
4.19 Insurance................................................... A-18
4.20 Year 2000................................................... A-18
4.21 Accounting for the Merger; Reorganization................... A-19
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BANCORPSOUTH.............. A-19
5.1 Corporate Organization...................................... A-19
5.2 Capitalization.............................................. A-19
5.3 Authority; No Violation..................................... A-20
5.4 Consents and Approvals...................................... A-21
5.5 Reports..................................................... A-21
5.6 Financial Statements; SEC Reports........................... A-21
</TABLE>
i
<PAGE> 92
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
5.7 Broker's Fees............................................... A-22
5.8 Absence of Certain Changes or Events........................ A-22
5.9 Legal Proceedings........................................... A-22
5.10 Taxes....................................................... A-22
5.11 Employees................................................... A-22
5.12 BancorpSouth Information.................................... A-23
5.13 Compliance with Applicable Law.............................. A-23
5.14 Ownership of First United Common Stock; Affiliates and
Associates.................................................. A-23
5.15 Agreements with Regulatory Agencies......................... A-23
5.16 Approvals................................................... A-23
5.17 Environmental Matters....................................... A-23
5.18 Insurance................................................... A-24
5.19 Accounting for the Merger; Reorganization................... A-24
ARTICLE VI COVENANTS RELATING TO CONDUCT OF BUSINESS................... A-24
6.1 Covenants of First United................................... A-24
6.2 Covenants of BancorpSouth................................... A-27
6.3 Mutual Covenant............................................. A-27
ARTICLE VII ADDITIONAL AGREEMENTS....................................... A-27
7.1 Regulatory Matters.......................................... A-27
7.2 Access to Information....................................... A-28
7.3 Shareholder Meetings........................................ A-29
7.4 Legal Conditions to Merger.................................. A-29
7.5 Affiliates.................................................. A-29
7.6 NYSE Listing................................................ A-29
7.7 Employee Benefit Plans; Existing Agreements................. A-29
7.8 Indemnification of First United Directors and Officers...... A-30
7.9 Additional Agreements....................................... A-31
7.10 Coordination of Dividends................................... A-31
7.11 Stock Option Agreements..................................... A-31
7.12 Publication of Combined Results............................. A-31
7.13 Reasonable Best Efforts..................................... A-31
7.14 BancorpSouth Board of Directors............................. A-32
7.15 First United -Texas Subsidiary Merger....................... A-32
ARTICLE VIII CONDITIONS PRECEDENT........................................ A-32
8.1 Conditions to Each Party's Obligation To Effect the
Merger...................................................... A-32
8.2 Conditions to Obligations of BancorpSouth................... A-33
8.3 Conditions to Obligations of First United................... A-33
ARTICLE IX TERMINATION AND AMENDMENT................................... A-34
9.1 Termination................................................. A-34
9.2 Effect of Termination....................................... A-37
9.3 Amendment................................................... A-37
9.4 Extension; Waiver........................................... A-37
ARTICLE X GENERAL PROVISIONS.......................................... A-37
10.1 Closing..................................................... A-37
10.2 Nonsurvival of Representations, Warranties and Agreements... A-37
10.3 Expenses.................................................... A-38
10.4 Notices..................................................... A-38
10.5 Interpretation.............................................. A-38
10.6 Defined Terms............................................... A-39
10.7 Counterparts................................................ A-39
</TABLE>
ii
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<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
10.8 Entire Agreement............................................ A-39
10.9 Governing Law............................................... A-39
10.10 Enforcement of Agreement.................................... A-39
10.11 Severability................................................ A-39
10.12 Publicity................................................... A-40
10.13 Assignment; Successors; Third Party Beneficiaries........... A-40
</TABLE>
iii
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of April 16, 2000
("Agreement"), between BANCORPSOUTH, INC., a Mississippi corporation
("BancorpSouth"), and FIRST UNITED BANCSHARES, INC., an Arkansas corporation
("First United," and collectively with BancorpSouth, the "Holding Companies").
RECITALS:
WHEREAS, BancorpSouth is the parent corporation of BancorpSouth Bank, a
Mississippi banking corporation ("BancorpSouth Bank");
WHEREAS, First United is the sole shareholder of the following entities:
(i) The First National Bank of El Dorado, a national banking association
organized under the laws of the United States ("El Dorado"), (ii) First National
Bank of Magnolia, a national banking association organized under the laws of the
United States ("Magnolia"), (iii) Merchants and Planters Bank, N.A. of Camden, a
national banking association organized under the laws of the United States
("Merchants"), (iv) The City National Bank of Fort Smith, a national banking
association organized under the laws of the United States ("Fort Smith"), (v)
The Bank of North Arkansas, an Arkansas banking corporation ("North Arkansas"),
(vi) FirstBank, a Texas banking corporation ("FirstBank"), (vii) First United
Bank, an Arkansas banking corporation ("FU Bank"), (viii) Fredonia State Bank, a
Texas banking corporation ("Fredonia"), (ix) City Bank & Trust of Shreveport, a
Louisiana banking corporation ("City Bank"), (x) Citizens National Bank of Hope,
a national banking association organized under the laws of the United States
("Citizens"), (xi) First Republic Bank, a Louisiana banking corporation
("Republic"), and (xii) First United Trust Company, N.A., a national association
organized under the laws of the United States ("First United Trust") (El Dorado,
Magnolia, Merchants, Fort Smith, North Arkansas, FirstBank, FU Bank, Fredonia,
City Bank, Citizens, Republic and First United Trust shall collectively be
referred to for purposes of this Agreement as the "First United Banks");
WHEREAS, First United is the sole shareholder of First United of Texas,
Inc., an Arkansas corporation ("First United-Texas"), which is the sole
shareholder of Fredonia and First Bank;
WHEREAS, BancorpSouth and First United have determined that it is in the
best interests of their respective companies and their shareholders to
consummate the business combination transactions provided for herein in which
(i) First United will merge with and into BancorpSouth (the "Holding Company
Merger") and (ii) each of the First United Banks will merge with and into
BancorpSouth Bank (collectively, the "Bank Mergers"), each subject to the terms
and conditions set forth herein (the Holding Company Merger and the Bank
Mergers, collectively, the "Merger");
WHEREAS, concurrently with the execution and delivery of this Agreement,
the parties are entering into Stock Option Agreements (the "Stock Option
Agreements") pursuant to which each of the parties shall grant to the other an
option to acquire, under certain circumstances, up to 19.9% of the party's
outstanding shares of common stock;
WHEREAS, the parties intend that the Merger be treated as a reorganization
under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder (the "Code");
WHEREAS, the parties intend that the Merger be accounted for under the
pooling of interests method of accounting; 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 Mergers.
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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:
AGREEMENT:
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") and the Arkansas
Business Corporation Act of 1987 (the "ABCA"), at the Effective Time (as defined
in Section 1.2), First United shall merge with and into BancorpSouth.
BancorpSouth 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
First United shall terminate.
(b) Subject to the terms and conditions of this Agreement, in accordance
with the Mississippi Banking Act (the "MBA"), the National Bank Act (the "NBA"),
the Arkansas Banking Code of 1997 (the "ABA"), the Louisiana Banking Law (the
"LBL") and the Texas Finance Code (the "TBA"), as applicable, at the Effective
Time, each of the First United Banks shall merge with and into BancorpSouth
Bank. BancorpSouth Bank shall be the surviving banking corporation (hereinafter
sometimes called the "Surviving Bank") in each of the Bank Mergers, 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 Mergers, the separate corporate existence of each of
the First United Banks shall terminate.
1.2 Effective Time.
(a) The Holding Company Merger shall become effective as set forth in the
articles of merger (the "Holding Company Articles of Merger") which shall be
filed on the Closing Date (as defined in Section 10.1) with the Secretary of
State of the State of Mississippi (the "Mississippi Secretary") and the
Secretary of State of the State of Arkansas (the "Arkansas Secretary") with
respect to the Holding Company Merger.
(b) The Bank Mergers shall become effective as set forth in the respective
articles of merger (the "Bank Articles of Merger," and together with the Holding
Company Articles of Merger, the "Articles of Merger") which shall be filed on
the Closing Date (as defined in Section 10.1) with the Mississippi Department of
Banking and Consumer Finance (the "Mississippi Department"), the Arkansas State
Bank Department (the "Arkansas Department"), the Texas Department of Banking
(the "Texas Department"), the Louisiana Office of Financial Institutions (the
"Louisiana Department"), the Office of the Comptroller of the Currency of the
United States Department of Treasury (the "OCC") and the Arkansas Secretary with
respect to the Bank Mergers, but shall occur immediately after the Holding
Company Merger.
(c) 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.
(a) At and after the Effective Time, the Holding Company Merger shall have
the effects set forth in Section 79-4-11.06 of the MBCA and Section 4-27-1106 of
the ABCA.
(b) At and after the Effective Time, the Bank Mergers shall have the
effects set forth in, as applicable, Section 81-5-85 of the MBA, Section
23-48-604 of the ABA, Section 6:355 of the LBL, Section 32.301 of the TBA and
Section 3(e) of the NBA (12 U.S.C. sec. 215a(e)).
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1.4 Conversion of First United Common Stock.
(a) At the Effective Time, subject to Section 2.2(e) hereof, each share of
the common stock, par value $1.00 per share, of First United (the "First United
Common Stock") issued and outstanding immediately prior to the Effective Time
(other than First United Dissenting Shares (as defined in this Section below)
and other than shares of First United Common Stock held directly or indirectly
by BancorpSouth or First United or any of their respective Subsidiaries (as
defined in Section 3.2 hereof), except for Trust Account Shares and DPC shares
(as such terms are defined in this Section below), shall, by virtue of this
Agreement and without any action on the part of the holder thereof, be converted
into and exchangeable for 1.125 shares (the "Exchange Ratio"), based upon the
representations contained in Section 4.2, of the common stock, par value $2.50
per share, of BancorpSouth ("BancorpSouth Common Stock"), together with the
number of BancorpSouth Rights (as defined in Section 5.2) associated therewith.
There shall be no adjustment in the Exchange Ratio in the event of any change in
the price of BancorpSouth Common Stock, First United Common Stock or any other
matter, other than for Anti-Dilution Events (as defined in this Section below).
(b) All of the shares of First United Common Stock converted into
BancorpSouth Common Stock pursuant to this Article I shall no longer be
outstanding and shall automatically be canceled and shall cease to exist, and
each certificate (each a "Certificate") previously representing any such shares
of First United Common Stock shall thereafter only represent the right to
receive (i) the number of whole shares of BancorpSouth Common Stock and (ii) the
cash in lieu of fractional shares into which the shares of First United Common
Stock represented by such Certificate have been converted pursuant to this
Section 1.4(a) and Section 2.2(e) hereof. Certificates previously representing
shares of First United Common Stock shall be exchanged for certificates
representing whole shares of BancorpSouth 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 BancorpSouth 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 (any such event, an
"Anti-Dilution Event"), the Exchange Ratio shall be adjusted to result in the
same aggregate consideration being delivered to First United's shareholders as
would have been received had such Anti-Dilution Event not occurred.
(c) At the Effective Time, all shares of First United Common Stock that are
owned directly or indirectly by BancorpSouth or First United or any of their
respective Subsidiaries, other than shares of First United Common Stock (i) 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 BancorpSouth Common Stock which are similarly held,
whether held directly or indirectly by BancorpSouth or First United, as the case
may be, being referred to herein as "Trust Account Shares") and (ii) held by
BancorpSouth or First United or any of their respective Subsidiaries in respect
of a debt previously contracted (any such shares of First United Common Stock,
and shares of BancorpSouth Common Stock which are similarly held, whether held
directly or indirectly by BancorpSouth or First United, being referred to herein
as "DPC Shares"), shall be canceled and shall cease to exist and no stock of
BancorpSouth or other consideration shall be delivered in exchange therefor. All
shares of BancorpSouth Common Stock that are owned by First United or any of its
Subsidiaries (other than Trust Account Shares and DPC Shares) shall become
treasury stock of BancorpSouth.
(d) Notwithstanding anything in this Agreement to the contrary, shares of
First United 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 Sections 4-27-1301 et seq. of the ABCA
("First United Dissenting Shares") shall not be converted into the right to
receive, or be exchangeable for, BancorpSouth 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 First United Dissenting Shares in accordance with
the provisions of Sections 4-27-1301 et seq. of the ABCA; provided, however,
that (i) if any holder of First United 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 Sections 4-27-1301 et
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seq. of the ABCA, such holder or holders (as the case may be) shall forfeit the
right to appraisal of such shares of First United Common Stock and each of such
shares shall thereupon be deemed to have been converted into the right to
receive, and to have become exchangeable for, as of the Effective Time,
BancorpSouth Common Stock and/or cash in lieu of fractional shares, without any
interest thereon, as provided in Sections 1.4(a) and 1.4(b) and Article II
hereof.
(e) BancorpSouth 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 method of accounting with respect to the
Merger.
(f) At the Effective Time, all shares of El Dorado common stock ("El Dorado
Common Stock"), Magnolia common stock ("Magnolia Common Stock"), Merchants
common stock ("Merchants Common Stock"), Fort Smith common stock ("Fort Smith
Common Stock"), North Arkansas common stock ("North Arkansas Common Stock"),
FirstBank common stock ("FirstBank Common Stock"), FU Bank common stock ("FU
Bank Common Stock"), Fredonia common stock ("Fredonia Common Stock"), City Bank
common stock ("City Bank Common Stock"), Citizens common stock ("Citizens Common
Stock"), Republic common stock ("Republic Common Stock"), and First United Trust
common stock ("First United Trust Common Stock"), shall be canceled and shall
cease to exist and no stock of BancorpSouth or BancorpSouth Bank, or other
consideration shall be delivered in exchange therefor.
1.5 Stock Options. At the Effective Time, each option granted by First
United to purchase shares of First United Common Stock (each a "First United
Option") which is outstanding and unexercised immediately prior thereto shall
cease to represent a right to acquire shares of First United Common Stock and
shall be promptly replaced by an option issued under and subject to the
appropriate stock option plan of BancorpSouth to purchase shares of BancorpSouth
Common Stock in an amount and at an exercise price determined as provided below:
(i) The number of shares of BancorpSouth Common Stock to be subject to
the new option shall be equal to the product of the number of shares of
First United Common Stock subject to the original option and the Exchange
Ratio, provided that any fractional shares of BancorpSouth Common Stock
resulting from such multiplication shall be rounded down to the nearest
whole share; and
(ii) The exercise price per share of BancorpSouth Common Stock under
the new option shall be equal to the exercise price per share of First
United 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 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) and pooling of interests method of accounting rules shall override
anything to the contrary contained herein. The duration of the new option
shall be the same as the original option.
1.6 BancorpSouth Common Stock. Except for shares of BancorpSouth Common
Stock owned by First United or any of its Subsidiaries (other than Trust Account
Shares and DPC Shares), which shall be converted into treasury stock of
BancorpSouth as contemplated by Section 1.4 hereof, the shares of BancorpSouth
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 of Incorporation. At the Effective Time, the Amended and
Restated Articles of Incorporation of BancorpSouth, 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 Bylaws. At the Effective Time, the Bylaws of BancorpSouth, as in
effect immediately prior to the Effective Time, shall be the bylaws of the
Surviving Corporation until thereafter amended in accordance with applicable law
and the articles of incorporation of the Surviving Corporation. At the Effective
Time, the Bylaws of BancorpSouth Bank, as in effect immediately prior to the
Effective Time, shall be the bylaws of the
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Surviving Bank until thereafter amended in accordance with applicable law and
the articles of association of the Surviving Bank.
1.9 Directors and Officers. Except as provided in Section 7.14, the
directors and officers of BancorpSouth immediately prior to the Effective Time
shall be the directors and officers of the Surviving Corporation, each to hold
office in accordance with the articles of incorporation and bylaws 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 articles of
association and bylaws 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 in Section
4.6).
ARTICLE II
EXCHANGE OF SHARES
2.1 BancorpSouth to Make Shares Available. At or prior to the Effective
Time, BancorpSouth shall deposit, or shall cause to be deposited, with SunTrust
Bank, Atlanta, N.A. or other bank or trust company (the "Exchange Agent")
selected by BancorpSouth and reasonably satisfactory to First United, for the
benefit of the holders of Certificates, for exchange in accordance with this
Article II, certificates representing the shares of BancorpSouth Common Stock
and the cash in lieu of fractional shares (such cash and certificates for shares
of BancorpSouth 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 First United 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
BancorpSouth Common Stock and the cash in lieu of fractional shares into which
the shares of First United Common Stock represented by such Certificate or
Certificates shall have been converted pursuant to this Agreement. 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 and the Exchange
Agent shall mail to such holder within three business days of such surrender (i)
a certificate representing that number of whole shares of BancorpSouth Common
Stock to which such holder of First United Common Stock shall have become
entitled pursuant to the provisions of Article I hereof and (ii) 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 BancorpSouth 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 BancorpSouth Common Stock represented by such
Certificate.
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(c) If any certificate representing shares of BancorpSouth 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 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 BancorpSouth 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 First United of the shares of First United 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 canceled and exchanged for
certificates representing shares of BancorpSouth Common Stock as provided in
this Article II.
(e) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of BancorpSouth Common
Stock shall be issued upon the surrender for exchange of Certificates, no
dividend or distribution with respect to BancorpSouth 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 BancorpSouth. In lieu of the issuance of any such fractional
share, BancorpSouth shall pay to each former stockholder of First United who
otherwise would be entitled to receive a fractional share of BancorpSouth Common
Stock an amount in cash equal to the product of (x) the Closing Price (as
defined below), times (y) the fraction of a share of BancorpSouth Common Stock
which such holder would otherwise be entitled to receive pursuant to Article I
hereof. The "Closing Price" means the average of the last reported sale prices
of BancorpSouth Common Stock, as reported by the New York Stock Exchange
("NYSE") Composite Transactions Reporting System (as reported in The Wall Street
Journal or, if not reported therein, in another authoritative source mutually
agreeable to the parties), for the three NYSE trading days immediately preceding
the Closing Date.
(f) Any portion of the Exchange Fund that remains unclaimed by the
shareholders of First United for 12 months after the Effective Time shall be
paid to BancorpSouth. Any shareholders of First United who have not theretofore
complied with this Article II shall thereafter look only to BancorpSouth for
payment of their shares of BancorpSouth Common Stock, cash in lieu of fractional
shares and unpaid dividends and distributions on BancorpSouth Common Stock
deliverable in respect of each share of First United Common Stock such
stockholder holds as determined pursuant to this Agreement, in each case,
without any interest thereon. Notwithstanding the foregoing, none of
BancorpSouth, First United, the Exchange Agent or any other person shall be
liable to any former holder of shares of First United Common Stock for any
amount properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(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 BancorpSouth,
the posting by such person of a bond in such amount as BancorpSouth 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 BancorpSouth 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. On or prior to the date hereof, each of
BancorpSouth and First United has delivered to the other party a schedule (in
the case of First United, the "First United Disclosure Schedule," and in the
case of BancorpSouth, the "BancorpSouth Disclosure Schedule," and, generally, a
"Disclosure Schedule") setting forth, among other things, items the disclosure
of which is necessary or appropriate either in response to an express disclosure
requirement contained in a provision hereof or as an exception to one or
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more of such party's representations or warranties contained in Article IV, in
the case of First United, or Article V, in the case of BancorpSouth, or to one
or more of such party's covenants contained in Article VI; provided, however,
that 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 in Section 3.2 below) with respect to either First
United or BancorpSouth, respectively.
3.2 Standards.
(a) No representation or warranty of First United contained in Article IV,
or of BancorpSouth 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 any representation or warranty contained in Article
IV, in the case of First United, or Article V, in the case of BancorpSouth, has
had or could be reasonably expected to have a Material Adverse Effect with
respect to (i) First United or (ii) BancorpSouth, respectively.
(b) As used in this Agreement, the term "Material Adverse Effect" means,
with respect to BancorpSouth or First United, 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 (A) any change in banking or similar laws,
rules or regulations of general applicability or interpretations thereof by
courts or governmental authorities, (B) any change in GAAP or regulatory
accounting principles applicable to banks or their holding companies generally,
(C) any action or omission of First United or BancorpSouth or any Subsidiary of
either of them taken with the express prior written consent of the other party
hereto, or (D) any expenses incurred by such party where 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. Changes in the
market price of First United Common Stock or BancorpSouth Common Stock shall not
be considered Material Adverse Effects or otherwise considered a material change
or circumstance for any purpose.
(c) As used in this Agreement, the word "Subsidiary" when used with respect
to any party means any corporation, partnership, limited liability company or
other person, entity or organization, whether incorporated or unincorporated,
with respect to which such party owns, directly or indirectly, 50% or more of
the equity or ownership interests, or an amount of voting securities or
ownership interests sufficient to elect at least a majority of its board of
directors or other governing body.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FIRST UNITED
Subject to Article III, First United hereby represents and warrants to
BancorpSouth as follows:
4.1 Corporate Organization.
(a) First United is a corporation duly organized, validly existing and in
good standing under the laws of the State of Arkansas. First United 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.
First United 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 Bylaws of First United, copies of which have previously been provided or
will be provided to BancorpSouth within seven days following the date hereof,
are true and correct copies of such documents as currently in effect. First
United has no Subsidiaries other than the First United Banks, First United-Texas
and First Bankers Insurance Services, LLC, an Arkansas limited liability company
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("First United Insurance"), and except for the First United Banks, First
United-Texas and First United Insurance, First United does not own (other than
in a bona fide fiduciary capacity or in satisfaction of a debt previously
contracted) beneficially, directly or indirectly (other than as set forth in
Section 4.1(a) of First United Disclosure Schedule), any shares of capital stock
or any equity securities or similar interests of any person, or any interest in
a partnership or joint venture of any kind.
(b) El Dorado is a national banking association duly organized, validly
existing and in good standing under the laws of the United States. The deposit
accounts of El Dorado are insured by the Federal Deposit Insurance Corporation
(the "FDIC") through the Bank Insurance Fund ("BIF") to the fullest extent
permitted by law, and all premiums and assessments required to be paid in
connection therewith have been paid when due. El Dorado 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 the location of the properties and assets owned or
leased by it makes such licensing or qualification necessary. The Articles of
Association and Bylaws of El Dorado, copies of which have previously or will be
provided to BancorpSouth within seven days following the date hereof, are true
and correct copies of such documents as currently in effect. El Dorado has no
Subsidiaries and 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.
(c) Magnolia is a national banking association duly organized, validly
existing and in good standing under the laws of the United States. The deposit
accounts of Magnolia are insured by the FDIC through the BIF to the fullest
extent permitted by law, and all premiums and assessments required to be paid in
connection therewith have been paid when due. Magnolia 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 the location of the properties and assets owned or
leased by it makes such licensing or qualification necessary. The Articles of
Association and Bylaws of Magnolia, copies of which have previously been
provided or will be provided to BancorpSouth within seven days following the
date hereof, are true and correct copies of such documents as currently in
effect. Magnolia has no Subsidiaries and 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.
(d) Merchants is a national banking association duly organized, validly
existing and in good standing under the laws of the United States. The deposit
accounts of Merchants are insured by the FDIC through the BIF to the fullest
extent permitted by law, and all premiums and assessments required to be paid in
connection therewith have been paid when due. Merchants 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 the location of the properties and assets owned or
leased by it makes such licensing or qualification necessary. The Articles of
Association and Bylaws of Merchants, copies of which have previously been
provided or will be provided to BancorpSouth within seven days following the
date hereof, are true and correct copies of such documents as currently in
effect. Merchants has no Subsidiaries and 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.
(e) Fort Smith is a national banking association duly organized, validly
existing and in good standing under the laws of the United States. The deposit
accounts of Fort Smith are insured by the FDIC through the BIF to the fullest
extent permitted by law, and all premiums and assessments required to be paid in
connection therewith have been paid when due. Fort Smith 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 the location of the properties and assets owned or
leased by it makes such licensing or qualification necessary. The
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Articles of Association and Bylaws of Fort Smith, copies of which have
previously been provided or will be provided to BancorpSouth within seven days
following the date hereof, are true and correct copies of such documents as
currently in effect. Fort Smith has no Subsidiaries and 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.
(f) North Arkansas is an Arkansas state bank duly organized, validly
existing and in good standing under the laws of the State of Arkansas. The
deposit accounts of North Arkansas are insured by the FDIC through the BIF to
the fullest extent permitted by law, and all premiums and assessments required
to be paid in connection therewith have been paid when due. North Arkansas 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 the location of the properties
and assets owned or leased by it makes such licensing or qualification
necessary. The Articles of Association and Bylaws of North Arkansas, copies of
which have previously been provided or will be provided to BancorpSouth within
seven days following the date hereof, are true and correct copies of such
documents as currently in effect. North Arkansas has no Subsidiaries and 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.
(g) FirstBank is a Texas state bank duly organized, validly existing and in
good standing under the laws of the State of Texas. The deposit accounts of
FirstBank are insured by the FDIC through the BIF to the fullest extent
permitted by law, and all premiums and assessments required to be paid in
connection therewith have been paid when due. FirstBank 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 the location of the properties and assets owned or
leased by it makes such licensing or qualification necessary. The Articles of
Association and Bylaws of FirstBank, copies of which have previously been
provided or will be provided to BancorpSouth within seven days following the
date hereof, are true and correct copies of such documents as currently in
effect. FirstBank has no Subsidiaries and 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.
(h) FU Bank is an Arkansas state bank duly organized, validly existing and
in good standing under the laws of the State of Arkansas. The deposit accounts
of FU Bank are insured by the FDIC through the BIF to the fullest extent
permitted by law, and all premiums and assessments required to be paid in
connection therewith have been paid when due. FU Bank 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 the location of the properties and assets owned or
leased by it makes such licensing or qualification necessary. The Articles of
Association and Bylaws of FU Bank, copies of which have previously been provided
or will be provided to BancorpSouth within seven days following the date hereof,
are true and correct copies of such documents as currently in effect. FU Bank
has no Subsidiaries and 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.
(i) Fredonia is a Texas state bank duly organized, validly existing and in
good standing under the laws of the State of Texas. The deposit accounts of
Fredonia are insured by the FDIC through the BIF to the fullest extent permitted
by law, and all premiums and assessments required to be paid in connection
therewith have been paid when due. Fredonia 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 the location of the
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properties and assets owned or leased by it makes such licensing or
qualification necessary. The Articles of Association and Bylaws of Fredonia,
copies of which have previously been provided or will be provided to
BancorpSouth within seven days following the date hereof, are true and correct
copies of such documents as currently in effect. Fredonia has no Subsidiaries
and 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.
(j) City Bank is a Louisiana state bank duly organized, validly existing
and in good standing under the laws of the State of Louisiana. The deposit
accounts of City Bank are insured by the FDIC through the BIF to the fullest
extent permitted by law, and all premiums and assessments required to be paid in
connection therewith have been paid when due. City Bank 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 the location of the properties and assets owned or
leased by it makes such licensing or qualification necessary. The Articles of
Association and Bylaws of City Bank, copies of which have previously been
provided or will be provided to BancorpSouth within seven days following the
date hereof, are true and correct copies of such documents as currently in
effect. City Bank has no Subsidiaries and 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.
(k) Citizens is a national banking association duly organized, validly
existing and in good standing under the laws of the United States. The deposit
accounts of Citizens are insured by the FDIC through the BIF to the fullest
extent permitted by law, and all premiums and assessments required to be paid in
connection therewith have been paid when due. Citizens 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 the location of the properties and assets owned or
leased by it makes such licensing or qualification necessary. The Articles of
Association and Bylaws of Citizens, copies of which have previously been
provided or will be provided to BancorpSouth within seven days following the
date hereof, are true and correct copies of such documents as currently in
effect. Citizens has no Subsidiaries and 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, except First United Insurance and Citizen's Investment
Services, Inc., an Arkansas corporation.
(l) Republic is a Louisiana state bank duly organized, validly existing and
in good standing under the laws of the State of Louisiana. The deposit accounts
of Republic are insured by the FDIC through the BIF to the fullest extent
permitted by law, and all premiums and assessments required to be paid in
connection therewith have been paid when due. Republic 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 the location of the properties and assets owned or
leased by it makes such licensing or qualification necessary. The Articles of
Association and Bylaws of Republic, copies of which have previously been
provided or will be provided to BancorpSouth within seven days following the
date hereof, are true and correct copies of such documents as currently in
effect. Republic has no Subsidiaries and 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, except Eagle Premium Assistance Corporation, a Louisiana
corporation, and First Republic Agricultural Credit Corporation, a Louisiana
corporation.
(m) First United Trust is a national association duly organized, validly
existing and in good standing under the laws of the United States. The trust
accounts of First United Trust are insured by the FDIC through the BIF to the
fullest extent permitted by law, and all premiums and assessments required to be
paid in connection therewith have been paid when due. First United Trust 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
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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 and Bylaws of First United Trust,
copies of which have previously been provided or will be provided to
BancorpSouth within seven days following the date hereof, are true and correct
copies of such documents as currently in effect. First United Trust has no
Subsidiaries and 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.
(n) First United Insurance is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Arkansas.
First United Insurance has the 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 the location of
the properties and assets owned or leased by it makes such licensing or
qualification necessary. The Articles of Organization and Operating Agreement of
First United Insurance, copies of which have previously been provided or will be
provided to BancorpSouth within seven days following the date hereof, are true
and correct copies of such documents as currently in effect. First United
Insurance has no Subsidiaries and does not own 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.
(o) First United-Texas is a corporation duly organized, validly existing
and in good standing under the laws of the State of Arkansas. First United-Texas
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.
First United-Texas is duly registered as a bank holding company under the BHC
Act. The Articles of Incorporation and Bylaws of First United-Texas, copies of
which have previously been provided or will be provided to BancorpSouth within
seven days following the date hereof, are true and correct copies of such
documents as currently in effect. First United-Texas has no Subsidiaries and
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 capital stock or any equity securities or similar interests of any person, or
any interest in a partnership or joint venture of any kind, except for Fredonia
and FirstBank.
(p) The minute books of First United and each of its Subsidiaries contain
true and correct records of all meetings and other corporate actions held or
taken since December 31, 1994 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 First United consists of 50,000,000
shares of First United Common Stock and 500,000 shares of preferred stock, $1.00
par value (the "First United Preferred Stock"). There are 25,297,444 shares of
First United Common Stock issued and outstanding and no shares of First United
Common Stock held by First United as treasury stock. There are no shares of
First United Common Stock reserved for issuance upon exercise of outstanding
stock options or otherwise except for (i) (A) 4% of the outstanding shares of
First United Common Stock reserved for issuance pursuant to First United's 1999
Employee's Long-Term Incentive Plan (the "1999 Plan") and (B) 300,000 shares of
First United Common Stock reserved for issuance under First United's 1994 Equity
Participation Plan (together with the 1999 Plan, the "First United Option
Plans"), and (ii) 5,056,959 shares of First United Common Stock reserved for
issuance upon exercise of the option (the "BancorpSouth Option") to be issued to
BancorpSouth pursuant to the Stock Option Agreements. There are no shares of
First United Preferred Stock issued or outstanding, held in First United's
treasury or reserved for issuance upon exercise of outstanding stock options or
otherwise. All of the issued and outstanding shares of First United Common Stock
have been duly authorized and validly issued and are fully paid, nonassessable,
and were issued in compliance with and are currently free of all preemptive
rights, with no personal liability attaching to the ownership thereof. Except
for (i) the BancorpSouth Option, and (ii) options outstanding under the First
United Option Plans to purchase a total of
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415,114 shares of First United Common Stock (the "Plan Options"), First United
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 First United Common Stock or First United
Preferred Stock or any other equity security or Capital Stock of First United or
any securities representing the right to purchase or otherwise receive any
shares of First United Common Stock or any other equity security or Capital
Stock of First United. Set forth in Section 4.2(a) of the First United
Disclosure Schedules is a complete and correct list, for each of the Plan
Options, of the names of the optionees, the date of grant, 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.
(b) Except as set forth in Section 4.2(b) of First United Disclosure
Schedule, First United owns, directly or indirectly, all of the issued and
outstanding shares of the capital stock and equity securities of each of First
United's 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 (except as otherwise provided
by applicable federal law) and free of preemptive rights, with no personal
liability attaching to the ownership thereof. First United owns 51% of the
outstanding membership interests of First United Insurance, free and clear of
all liens, charges, encumbrances and security interests whatsoever, and all of
such membership interests are duly authorized validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. First United's Subsidiaries are 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 capital stock or any other equity security of any of First United's
Subsidiaries or any securities representing the right to purchase or otherwise
receive any shares of capital stock or any other equity security of any of First
United's Subsidiaries. There are no outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character by which First
United or any of its Subsidiaries will be bound calling for the purchase or
issuance of any shares of the capital stock or equity securities of any of First
United's Subsidiaries.
4.3 Authority; No Violation.
(a) First United has full corporate power and authority to execute and
deliver this Agreement and the Stock Option Agreements and, upon the receipt of
requisite approval by the shareholders of First United of this Agreement, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the Stock Option Agreements and the consummation of the
transactions contemplated hereby and thereby have been duly and validly approved
by the Boards of Directors of First United. The Board of Directors of First
United has directed that this Agreement and the transactions contemplated hereby
be submitted to First United's shareholders for approval at a meeting of such
shareholders and First United has approved, or promptly after the date hereof
and prior to the Closing Date will approve, this Agreement and the transactions
contemplated hereby, and the Board has directed officers of First United to so
approve this Agreement and the transactions contemplated herein in its capacity
as the sole shareholder of each of the First United Banks. Except for the
adoption of this Agreement by the requisite vote of First United's shareholders,
no other proceedings on the part of First United or its Subsidiaries are
necessary to approve this Agreement and the Stock Option Agreements and to
consummate the transactions contemplated hereby and thereby, except for the
approval, which will occur promptly after the date hereof, of this Agreement by
the board directors of each of First United's Subsidiaries as set forth in
Section 6.3 herein. This Agreement and the Stock Option Agreements have been
duly and validly executed and delivered by First United, and this Agreement
constitutes a valid and binding obligation of First United, enforceable against
First United 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 Agreements by First United, nor the consummation by First United of the
transactions contemplated hereby or thereby, nor compliance by First United with
any of the terms or provisions hereof or thereof, will (i) violate any provision
of the Articles of Incorporation or Bylaws of First United or the articles of
incorporation, bylaws or similar governing documents of any of First United's
Subsidiaries, or (ii) assuming that the consents and approvals
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referred to in Section 4.4 hereof are duly obtained, (A) violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to First United or any of its Subsidiaries, or any of their
respective properties or assets, or (B) violate, conflict with, result in a
breach of any provision of or, except as provided in Section 4.14, 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 (except as provided in
Section 4.14), 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 First United 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 First United 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"), the FDIC, the OCC, the Federal Trade
Commission (the "FTC") and the Department of Justice ("DoJ"), 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, and declaration of effectiveness by, the United States
Securities and Exchange Commission ("SEC") of a registration statement on Form
S-4 (such registration statement and any post-effective amendment thereto
relating to this transaction, or any other registration statement on Form S-4
used in connection with the Merger, the "S-4") in which will be included as a
prospectus a definitive joint proxy statement relating to the respective
meetings of shareholders of First United and BancorpSouth to be held in
connection with this Agreement and the transactions contemplated herein (the
"Proxy Statement"), (d) the approval of this Agreement by the requisite vote of
the shareholders of First United, (e) the filing of the Articles of Merger with,
as applicable, the OCC, the Mississippi Secretary, the Arkansas Secretary, the
Mississippi Department, the Arkansas Department, the Texas Department and the
Louisiana Department and (f) approval for listing of BancorpSouth Common Stock
to be issued in the Merger on the 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 (i) the execution and delivery
by First United of this Agreement and the Stock Option Agreements and (ii) the
consummation by First United and its Subsidiaries of the Merger and the other
transactions contemplated hereby and thereby.
4.5 Reports. First United 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, 1994 with (i) the Federal Reserve Board, (ii) the FDIC, (iii) any Federal
Reserve Bank, (iv) the OCC, (v) any state banking commissions, including without
limitation the Arkansas Department, the Texas Department and the Louisiana
Department, or any other state regulatory authority (each a "State Regulator"),
(vi) the SEC, and (vii) any 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 First United and its
Subsidiaries, no Regulatory Agency has initiated any proceeding or, to the
knowledge of First United, investigation into the business or operations of
First United or any of its Subsidiaries since December 31, 1994. There is no
unresolved outstanding violation, criticism, or exception by any Regulatory
Agency with respect to any report or statement relating to any examinations of
First United or any of its Subsidiaries that cannot be resolved with reasonable
effort and within a reasonable time.
4.6 Financial Statements.
(a) The consolidated financial statements of First United and its
subsidiaries (the "First United Financial Statements"), including consolidated
statements of condition, statements of earnings, changes in shareholders' equity
and cash flows; SEC Reports and related notes, included in the First United SEC
Reports (as defined in this section below) fairly present the consolidated
financial position of First United and its Subsidiaries as of the respective
date thereof, and 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
First United and its Subsidiaries for the respective fiscal
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periods or as of the respective dates therein set forth; each of such First
United Financial Statements (including the related notes, where applicable)
complies with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto; and each of such First United
Financial Statements (including the related notes, where applicable) has been
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 SEC Form
10-Q. The books and records of First United and its Subsidiaries have been, and
are being, maintained in accordance with GAAP and any other applicable legal and
accounting requirements.
(b) First United's Annual Reports on Form 10-K for the fiscal years ended
December 31, 1999, 1998, 1997, 1996 and 1995, and all other reports,
registration statements, definitive proxy statements or information statements
filed by First United or any of its Subsidiaries subsequent to December 31, 1994
under the Securities Act, or under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or under the
securities regulations of the SEC, in the form filed (collectively, the "First
United SEC Reports") with the SEC as of the date filed, (i) complied in all
material respects as to form with the applicable requirements under the
Securities Act or the Exchange Act, as the case may be, and (ii) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
Except as described in Section 4.6(b) of the First United Disclosure Schedules,
First United has timely filed all First United SEC 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 First United SEC Reports complied with the
published rules and regulations of the SEC with respect thereto.
4.7 Broker's Fees. Except for Stephens Inc., the fees of which are set
forth in that certain agreement with First United dated as of April 12, 2000,
and Stifel Nicholas & Co., the fees of which are set forth in that certain
agreement with First United dated as of April 13, 2000, true and correct copies
of which agreements have been provided to BancorpSouth, neither First United nor
any of its Subsidiaries, 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 Agreements.
4.8 Absence of Certain Changes or Events.
(a) Except as disclosed in any First United SEC Report filed with the SEC
prior to the date of this Agreement, since December 31, 1999, there has been no
change or development or combination of changes or developments which,
individually or in the aggregate, has had or is reasonably likely to have a
Material Adverse Effect with respect to First United.
(b) Except as disclosed in any First United SEC Report filed with the SEC
prior to the date of this Agreement, since December 31, 1999, First United and
its Subsidiaries have carried on their respective businesses in the ordinary
course consistent with their past practices.
(c) Section 4.8(c) of the First United Disclosure Schedule sets forth a
true and correct list of all stock options granted since December 31, 1999.
Except as set forth in Section 4.8(c) of the First United Disclosure Schedule,
neither First United nor any of its Subsidiaries has 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, 1999, 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 cash and
in the ordinary course of business consistent with past practices) or granted
any stock option.
4.9 Legal Proceedings. Except as set forth in a First United SEC Report or
as disclosed pursuant to Section 4.15, listed in Section 4.9 of the First United
Disclosure Schedule are all pending or, to First United's knowledge, threatened,
legal, administrative, arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against First United or
any of its Subsidiaries or challenging the validity or propriety of the
transactions contemplated by this Agreement or the Stock Option Agreements,
other than
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regularly scheduled examinations and similar routine investigations made by bank
regulatory officials in the course of their supervision of First United or any
of its Subsidiaries. Except as set forth in a First United SEC Report or as
disclosed pursuant to Section 4.15, neither First United nor any of its
Subsidiaries is a party to any, and there are no pending or, to First United's
knowledge, threatened, legal, administrative, arbitral or other proceedings,
claims, actions or governmental or regulatory investigations of any nature
against First United or any of its Subsidiaries or challenging the validity or
propriety of the transactions contemplated by this Agreement or the Stock Option
Agreements, other than regularly scheduled examinations and similar routine
investigations made by bank regulatory officials in the course of their
supervision of First United or any of its Subsidiaries, which has had, or could
reasonably be expected to have, a Material Adverse Effect with respect to First
United. There is no injunction, order, judgment, decree or unique regulatory
restriction imposed upon First United, any of its Subsidiaries or the assets of
First United or any of its Subsidiaries.
4.10 Taxes.
(a) Each of First United and its Subsidiaries has (i) duly and timely filed
(including applicable extensions granted) all Tax Returns (as defined in this
Section below) 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 First United (in accordance with GAAP)
for all Taxes (as defined in this Section below) shown to be due on such Tax
Returns. Neither First United 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, except with respect to Tax Returns
for the year ended December 31, 1999. With respect to each taxable period of
First United and its Subsidiaries, the federal and state income Tax Returns of
First United and its Subsidiaries have either 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, except as disclosed in Section
4.10(a) of the First United Disclosure Schedule.
(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 First United Disclosure Schedule sets forth a true,
complete and correct list (all of which are collectively referred to as the
"Plans") of all "employee benefit plans" as defined by Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended, and the rules and
regulations promulgated thereunder (collectively, "ERISA"), all specified fringe
benefit plans as defined in Section 6039D of the Code, and all other bonus,
incentive compensation, deferred compensation, profit sharing, stock option,
stock appreciation right, stock bonus, stock purchase, employee stock ownership,
savings, severance, supplemental unemployment, layoff, salary continuation,
retirement, pension, health, life insurance, disability, group insurance,
vacation, holiday, sick leave, fringe benefit, or welfare plan, or employment,
consulting, change in control, independent contractor, professional services,
confidentiality, or non-competition agreement or any other similar plan,
agreement, policy or understanding (whether written or oral, qualified or
nonqualified), and any trust, escrow or other agreement related thereto, which
(i) is now or was for the last five (5) years, (unless a determination letter
was obtained on termination and if it is a defined benefit plan the termination
was a standard termination under ERISA Section 4041(b)) maintained or
contributed to by First United or an ERISA Affiliate (as hereinafter defined),
or (ii) with respect to which First United or any ERISA Affiliate has any
obligations to any current or former officer, Employee, service provider, or the
dependents of any thereof, and regardless of whether funded, or (iii) which
could result in the imposition of liability or obligation of any kind or nature,
whether accrued, absolute, contingent, direct, indirect, known or unknown,
perfected or inchoate or otherwise and whether or not now due or to become due
to First United or any ERISA Affiliate.
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(b) First United has heretofore provided to BancorpSouth, or will provide
to BancorpSouth within seven days following the date hereof, with respect to
each of the Plans true and correct copies of each of the following documents, as
applicable: (i) the Plan document; (ii) the actuarial report, if any, for such
Plan for each of the last three years, (iii) the most recent determination
letter from the Internal Revenue Service for such Plan, (iv) the Internal
Revenue Service Form 5500 annual reports for such Plan for each of the last
three years, and (v) the most recent summary plan description and related
summaries of material modifications.
(c) To the knowledge of First United, there have been no prohibited
transactions or breaches of fiduciary duty with respect to the Plans. To the
knowledge of First United, each of the Plans is 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 First
United, 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 First United
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 First United 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 First United 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 First United, 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) To the knowledge of First United, no written or oral representations
have been made to any Employee or former Employee of First United promising or
guaranteeing any employer payment or funding, and no Plans provide, for the
continuation of medical, dental, life or disability insurance coverage for any
former Employee of First United for any period of time beyond the end of the
current plan year (except to the extent of coverage required under Title I, Part
6, of ERISA). Except as set forth in Section 4.14(a) of the First United
Disclosure Schedule, the consummation of the transactions contemplated by this
Agreement will not accelerate the time of vesting, of payment, or increase the
amount, of compensation to any Employee, officer, former Employee or former
officer of First United. No Plans or other contracts or arrangements provide for
payments that would be triggered by the consummation of the transactions
contemplated by this Agreement that would subject any person to excise tax under
Section 4999 of the Code (i.e., "golden parachute" taxes). All compensation
amounts that have been paid or are payable are or will become deductible by
First United or BancorpSouth pursuant to Section 162 of the Code.
(e) For the purpose of this Section 4.11, the term "ERISA Affiliate" shall
mean (i) any related company or trade or business that is required to be
aggregated with First United under Code Sections 414(b), (c), (m) or (o); (ii)
any other company, entity or trade or business that has adopted or has ever
participated in any Plan; and (iii) any predecessor or successor company or
trade or business of First United or any entity described in 4.11(f)(i) and
(f)(ii).
(f) For the purpose of this Section 4.11, the term "Employee" shall be
considered to include individuals rendering personal services to First United as
independent contractors and leased employees as defined in Code Section 414(n)
and the regulations promulgated pursuant thereto.
(g) No lien, security interests or other encumbrances exist with respect to
any of the assets of First United, which were imposed pursuant to the terms of
the Code or ERISA and to the knowledge of First United no condition exists or
could occur that would result in the imposition of such liens, security
interests or encumbrances arising from or relating to the Plans.
4.12 First United Information. The information relating to First United
and its Subsidiaries which is provided to BancorpSouth by First United 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
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therein, in light of the circumstances in which they are made, not misleading.
The S-4 and the Proxy Statement (except for such portions thereof that relate
only to BancorpSouth or any of its Subsidiaries) will comply with the provisions
of the Securities Act, the Exchange Act and the rules and regulations
thereunder.
4.13 Compliance with Applicable Law. First United 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 material respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity relating to First
United or any of its Subsidiaries, and neither First United nor any of its
Subsidiaries has received notice, and First United does not know, of any
violations of any of the above.
4.14 Certain Contracts.
(a) Set forth in Section 4.14(a) of the First United Disclosure Schedule is
a list of any contract or agreement (whether written or oral) to which, First
United or any of its Subsidiaries is a party to or bound by any contract or
agreement (whether written or oral) (i) with respect to the employment of any
employees, officers, 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
BancorpSouth, First United, the Surviving Corporation or any of their respective
Subsidiaries to any employee, officer, 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 First United SEC Reports, (iv) which
is not terminable on 90 days or less notice involving the payment of more than
$100,000 per annum, or (v) which materially restricts the conduct of any line of
business by First United or any of its Subsidiaries. Each contract, arrangement,
commitment or understanding of the type described in this Section 4.14(a) is
referred to herein as a "First United Contract." First United has previously
provided to BancorpSouth true and correct copies of each First United Contract.
(b) Each First United Contract described in clause (iii) of Section 4.14(a)
is valid and binding and in full force and effect with respect to the
obligations of First United or its Subsidiaries and, to the knowledge of First
United, is valid and binding and in full force and effect with respect to the
obligations of the counterparties thereto. First United and each of its
Subsidiaries has performed all obligations required to be performed by it to
date under each First United Contract described in clause (iii) of Section
4.14(a). Except as set forth in Section 4.14(b) of the First United Disclosure
Schedules, no event or condition exists which constitutes or, after notice or
lapse of time or both, would constitute, a default on the part of First United
or any of its Subsidiaries under any First United Contract described in clause
(iii) of Section 4.14(a). No other party to any First United Contract described
in clause (iii) of Section 4.14(a) is, to the knowledge of First United, in
default in any respect thereunder.
4.15 Agreements with Regulatory Agencies. Neither First United 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 First United or any of its Subsidiaries been advised by
any Regulatory Agency or other Governmental Entity that it is considering
issuing or requesting any Regulatory Agreement.
4.16 Business Combination Provision; Takeover Laws. First United, its
Subsidiaries, and this Agreement, the Stock Option Agreements and the
transactions contemplated hereby and thereby, are not subject to or are exempt
from, the requirements of any "moratorium", "control share", "fair price" or
other anti-takeover laws and regulations (collectively, "Takeover Laws").
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4.17 Environmental Matters.
(a) Except as disclosed in Section 4.17 of the First United Disclosure
Schedules, each of First United and its Subsidiaries and, to the knowledge of
First United, each of the Participation Facilities and the Loan Properties (each
as defined in this Section below), 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 First United, threatened, before any Governmental Entity or other
forum in which First United, 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 (i) for alleged noncompliance (including by any
predecessor) with any Environmental Laws, or (ii) 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 First United or any of
its Subsidiaries, any Participation Facility or any Loan Property;
(c) Except as disclosed in Section 4.17 of the First United Disclosure
Schedules, to the knowledge of First United, during the period of (i) First
United's or any of its Subsidiaries' ownership or operation of any of their
respective current or former properties, (ii) First United's or any of its
Subsidiaries' participation in the management of any Participation Facility, or
(iii) First United'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 First United, prior to the period of (i)
First United's or any of its Subsidiaries' ownership or operation of any of
their respective current or former properties, (ii) First United's or any of its
Subsidiaries' participation in the management of any Participation Facility, or
(iii) First United'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 4.17: (i)
"Hazardous Materials" means any chemicals, pollutants, contaminants, wastes,
toxic substances, petroleum or other regulated substances or materials, (ii)
"Loan Property" means any property in which First United 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 (iii) "Participation
Facility" means any facility in which First United 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.
4.18 Approvals. First United knows of no reason why all regulatory
approvals required for the consummation of the transactions contemplated hereby
(including, without limitation, the Holding Company Merger and each of the Bank
Mergers) should not be obtained.
4.19 Insurance. First United and its Subsidiaries are insured with
reputable insurers against such risks and in such amounts as First United's
management reasonably has determined to be prudent in accordance with industry
practices. All of such policies are in full force and effect; First United and
its Subsidiaries are not in material default thereunder; and all claims
thereunder for which a basis is known, or reasonably should be known, by First
United have been filed in due and timely fashion.
4.20 Year 2000. The mission critical computer software operated by First
United and/or any of its Subsidiaries is currently capable of providing
uninterrupted millennium functionality to record, store, process and present
calendar dates falling on or after January 1, 2000 in substantially the same
manner and with substantially the same functionality as such mission critical
software records, stores, processes and presents such calendar dates falling on
or before December 31, 1999. Neither First United nor any of its Subsidiaries
have experienced any disruptions, computer or equipment failures or
malfunctions, work stoppages or similar events related to the Year 2000. Neither
First United nor any of its Subsidiaries has received, nor to its knowledge are
there facts that would reasonably be expected to form the basis for the issuance
of, a "Year 2000 Deficiency Notification Letter" (as such term is employed in
the Federal Reserves Supervision and
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Regulatory Letter No. SR 98-3 (SUP), dated March 4, 1998) or similar notice from
any state banking authority.
4.21 Accounting for the Merger; Reorganization. First United has no reason
to believe that the Merger will fail to qualify (i) for pooling of interests
method of accounting under GAAP or (ii) as a reorganization under Section 368(a)
of the Code.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BANCORPSOUTH
Subject to Article III, BancorpSouth hereby represents and warrants to
First United as follows:
5.1 Corporate Organization.
(a) BancorpSouth is a corporation duly organized, validly existing and in
good standing under the laws of the State of Mississippi. BancorpSouth 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.
BancorpSouth is duly registered as a bank holding company under the BHC Act. The
Amended and Restated Articles of Incorporation and Bylaws of BancorpSouth (the
"BancorpSouth Governing Documents"), copies of which have previously been made
available to First United, 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 BIF 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 BancorpSouth's other Subsidiaries is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Each Subsidiary of BancorpSouth 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 Amended and Restated Articles of Incorporation and Bylaws of BancorpSouth
Bank (the "BancorpSouth Bank Governing Documents"), copies of which have
previously been made available to First United, are true and correct copies of
such documents as in effect as of the date of this Agreement.
(c) The minute books of BancorpSouth and each of its Subsidiaries contain
true and correct records of all meetings and other corporate actions held or
taken since December 31, 1994 (or the date of incorporation if later) of their
respective shareholders and Boards of Directors (including committees of their
respective Boards of Directors).
5.2 Capitalization.
(a) The authorized capital stock of BancorpSouth consists of 500,000,000
shares of BancorpSouth Common Stock. As of April 14, 2000, 57,304,252 shares of
BancorpSouth Common Stock were issued, 794,575 shares of BancorpSouth Common
Stock were held in BancorpSouth's treasury and 56,509,677 shares of BancorpSouth
Common Stock were outstanding. As of the date of this Agreement, no shares of
BancorpSouth Common Stock were reserved for issuance, except shares reserved for
issuance upon exercise of the option to be issued to First United pursuant to
the Stock Option Agreements (the "First United Option"), employee benefit plans,
stock option plans and BancorpSouth's shareholder rights plan pursuant to which
holders of BancorpSouth Common Stock are granted certain attached rights that
are exercisable under certain circumstances (the "BancorpSouth Rights"). All of
the issued and outstanding shares of BancorpSouth 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 the plans and arrangements referred to above with respect to
reserved shares and BancorpSouth's dividend reinvestment
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plan, BancorpSouth 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 BancorpSouth
Common Stock or any other equity securities of BancorpSouth or any securities
representing the right to purchase or otherwise receive any shares of
BancorpSouth Common Stock. The shares of BancorpSouth 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) Exhibit 21 to BancorpSouth's Annual Report on Form 10-K for the year
ended December 31, 1999 sets forth a true and correct list of all material
Subsidiaries of BancorpSouth as of the date of this Agreement. BancorpSouth
owns, directly or indirectly, all of the issued and outstanding shares of
capital stock of each of the Subsidiaries of BancorpSouth, 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 owned as of the date hereof by BancorpSouth 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 BancorpSouth 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) BancorpSouth has full corporate power and authority to execute and
deliver this Agreement and the Stock Option Agreements and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Stock Option Agreements and the consummation of the
transactions contemplated hereby and thereby have been duly and validly approved
by the Board of Directors of BancorpSouth. The Board of Directors of
BancorpSouth has directed that this Agreement and the transactions contemplated
hereby be submitted to BancorpSouth's shareholders for approval at a meeting of
such shareholders and BancorpSouth has approved, or promptly after the date
hereof and prior to the Closing Date will approve, this Agreement and the
transactions contemplated hereby, and the Board has directed officers of
BancorpSouth to so approve this Agreement and the transactions contemplated
herein in its capacity as the sole shareholder of the BancorpSouth Bank. Except
for the adoption of this Agreement by the requisite vote of BancorpSouth's
shareholders, no other corporate proceedings on the part of BancorpSouth or the
BancorpSouth's Subsidiaries are necessary to approve this Agreement and the
Stock Option Agreements and to consummate the transactions contemplated hereby
and thereby, except for the approval, which will occur after the date hereof, of
this Agreement by the board of directors of each of First United's Subsidiaries
as set forth in Section 6.3 herein. Each of this Agreement and the Stock Option
Agreements has been duly and validly executed and delivered by BancorpSouth and
constitutes a valid and binding obligation of BancorpSouth, enforceable against
BancorpSouth 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 Agreements by BancorpSouth, nor the consummation by BancorpSouth of the
transactions contemplated hereby or thereby, nor compliance by BancorpSouth with
any of the terms or provisions hereof or thereof, will (i) violate any provision
of the BancorpSouth Governing Documents or the BancorpSouth Bank Governing
Documents, or (ii) assuming that the consents and approvals referred to in
Section 5.4 are duly obtained, (A) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to
BancorpSouth or any of its Subsidiaries or any of their respective properties or
assets, or (B) 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 BancorpSouth 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
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BancorpSouth 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, the
FDIC, the FTC, and the DoJ, 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, and declaration of
effectiveness by, the SEC of the S-4, (d) the approval of this Agreement by the
requisite vote of the shareholders of BancorpSouth, (e) the filing of the
Articles of Merger with the OCC, the Mississippi Secretary, the Arkansas
Secretary, the Mississippi Department, the Arkansas Department, the Texas
Department and the Louisiana Department, (f) 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 BancorpSouth
Common Stock pursuant to this Agreement and (g) approval for listing of the
BancorpSouth 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 (i) the execution and delivery
by BancorpSouth of this Agreement and the Stock Option Agreement and (ii) the
consummation by BancorpSouth and BancorpSouth Bank of the Merger and the other
transactions contemplated hereby.
5.5 Reports. BancorpSouth 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, 1994 with any Regulatory Agency, and have paid all fees and assessments due
and payable in connection therewith. Except for matters disclosed pursuant to
Section 5.15 and normal examinations conducted by a Regulatory Agency in the
regular course of the business of BancorpSouth and its Subsidiaries, no
Regulatory Agency has initiated any proceeding or, to the knowledge of
BancorpSouth, investigation into the business or operations of BancorpSouth or
any of its Subsidiaries since December 31, 1994. Except for matters disclosed
pursuant to Section 5.15, there is no unresolved violation, criticism, or
exception by any Regulatory Agency with respect to any report or statement
relating to any examinations of BancorpSouth or any of its Subsidiaries.
5.6 Financial Statements; SEC Reports.
(a) The consolidated financial statements of BancorpSouth and its
subsidiaries (the "BancorpSouth Financial Statements"), including consolidated
statements of condition, statements of earnings, changes in shareholders' equity
and cash flows; SEC Reports and related notes, included in the BancorpSouth SEC
Reports (as defined in this section below) fairly present the consolidated
financial position of BancorpSouth and its Subsidiaries as of the respective
date thereof, and 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
BancorpSouth and its Subsidiaries for the respective fiscal periods or as of the
respective dates therein set forth; each of such BancorpSouth Financial
Statements (including the related notes, where applicable) complies with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto; and each of such BancorpSouth Financial
Statements (including the related notes, where applicable) has been 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 SEC Form 10-Q. The books and records of BancorpSouth and its
Subsidiaries have been, and are being, maintained in accordance with GAAP and
any other applicable legal and accounting requirements.
(b) BancorpSouth's Annual Reports on Form 10-K for the fiscal years ended
December 31, 1999, 1998, 1997, 1996 and 1995, and all other reports,
registration statements, definitive proxy statements or information statements
filed by BancorpSouth or any of its Subsidiaries subsequent to December 31, 1994
under the Securities Act, or under Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act, or under the securities regulations of the SEC, in the form filed
(collectively, the "BancorpSouth SEC Reports") with the SEC as of the date
filed, (i) complied in all material respects as to form with the applicable
requirements under the Securities Act or the Exchange Act, as the case may be,
and (ii) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements
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therein, in the light of the circumstances under which they were made, not
misleading. BancorpSouth has timely filed all BancorpSouth SEC 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 BancorpSouth SEC Reports complied
with the published rules and regulations of the SEC with respect thereto.
5.7 Broker's Fees. Except for Salomon Smith Barney, Inc. and J.P. Morgan
Securities Inc., neither BancorpSouth nor any Subsidiary of BancorpSouth, 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 Agreements.
5.8 Absence of Certain Changes or Events. Except as disclosed in any
BancorpSouth SEC Report filed with the SEC prior to the date of this Agreement,
since December 31, 1999, BancorpSouth and its Subsidiaries have carried on their
respective businesses in the ordinary course consistent with their past
practices.
5.9 Legal Proceedings. Except as set forth in a BancorpSouth SEC Report or
as disclosed pursuant to Section 5.15 hereto, neither BancorpSouth nor any of
its Subsidiaries is a party to any and there are no pending or, to
BancorpSouth's knowledge, threatened, legal, administrative, arbitral or other
proceedings, claims, actions or governmental or regulatory investigations of any
nature against BancorpSouth or any of its Subsidiaries or challenging the
validity or propriety of the transactions contemplated by this Agreement or the
Stock Option Agreements, other than regularly scheduled examinations and similar
routine investigations made by bank regulatory officials in the course of their
supervision of BancorpSouth or any of it Subsidiaries. There is no injunction,
order, judgment, decree or regulatory restriction imposed upon BancorpSouth, any
of its Subsidiaries or the assets of BancorpSouth or any of its Subsidiaries.
5.10 Taxes. Except as set forth in Section 5.10 of the BancorpSouth
Disclosure Schedule, each of BancorpSouth and its Subsidiaries has (i) duly and
timely filed (including applicable extensions granted) 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 BancorpSouth (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 BancorpSouth
Disclosure Schedule, as of the date hereof, neither BancorpSouth 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.
5.11 Employees.
(a) Section 5.11(a) of the BancorpSouth Disclosure Schedule sets forth a
true, complete and correct list of each (i) deferred compensation plan,
incentive compensation plan, equity compensation plan, "welfare" plan, fund or
program (within the meaning of Section 3(1) of the ERISA); (ii) "pension" plan,
fund or program (within the meaning of Section 3(2) of ERISA); (iii) each
employment, termination or severance agreement; and (iv) 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 "BancorpSouth Plans") by BancorpSouth, any of its
Subsidiaries or by any trade or business, whether or not incorporated (a
"BancorpSouth ERISA Affiliate"), all of which together with BancorpSouth would
be deemed a "single employer" within the meaning of Section 4001 of ERISA, for
the benefit of any employee or former employee of BancorpSouth, any Subsidiary
or any BancorpSouth ERISA Affiliate.
(b) Except as disclosed in Section 5.11(b) of the BancorpSouth Disclosure
Schedule, to BancorpSouth's knowledge, each of the BancorpSouth Plans is in
compliance with the applicable provisions of the Code and ERISA; each of the
BancorpSouth 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 BancorpSouth, nothing has occurred which could
reasonably be expected to result in the revocation of such letter; no
BancorpSouth Plan has an accumulated or waived funding deficiency within the
meaning of Section 412 of the Code; neither BancorpSouth nor any BancorpSouth
ERISA Affiliate has incurred, directly or indirectly, any liability to or on
account of a BancorpSouth Plan pursuant to Title IV of ERISA (other than PBGC
premiums); to the knowledge of BancorpSouth no proceedings have been instituted
to terminate any
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BancorpSouth 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 BancorpSouth Plan (other than a reportable event with respect to which
the thirty day notice period has been waived); and no condition exists that
presents a material risk to BancorpSouth of incurring a liability to or on
account of a BancorpSouth Plan pursuant to Title IV of ERISA; no BancorpSouth
Plan is a multiemployer plan (within the meaning of Section 4001(a)(3) of ERISA
and no BancorpSouth Plan is a multiple employer plan as defined in Section 413
of the Code; and there are no pending, or, to the knowledge of BancorpSouth,
threatened or anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the BancorpSouth Plans or any trusts related
thereto.
5.12 BancorpSouth Information. The information relating to BancorpSouth
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 S-4 and the Proxy
Statement (except for such portions thereof that relate only to First United or
any of its Subsidiaries) will comply with the provisions of the Securities Act,
the Exchange Act and the rules and regulations thereunder.
5.13 Compliance with Applicable Law. BancorpSouth 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 5.15 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 BancorpSouth or any of its Subsidiaries and
neither BancorpSouth nor any of its Subsidiaries knows of, or has received
notice, and BancorpSouth does not know, of any violations of any of the above.
5.14 Ownership of First United Common Stock; Affiliates and Associates. As
of the date hereof, neither BancorpSouth 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 First United (other than Trust Account Shares and DPC
Shares).
5.15 Agreements with Regulatory Agencies. Neither BancorpSouth 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 "BancorpSouth 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 BancorpSouth or any of its Subsidiaries been
advised by any Regulatory Agency or other Governmental Entity that it is
considering issuing or requesting any BancorpSouth Regulatory Agreement.
5.16 Approvals. BancorpSouth knows of no reason why all regulatory
approvals required for the consummation of the transactions contemplated hereby
(including, without limitation, the Holding Company Merger and each of the Bank
Mergers) should not be obtained.
5.17 Environmental Matters.
(a) Except as disclosed in Section 5.17 of the BancorpSouth Disclosure
Schedules, each of BancorpSouth and its Subsidiaries and, to the knowledge of
BancorpSouth, each of the Participation Facilities and the Loan Properties (each
as defined in this Section below), 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 BancorpSouth, threatened, before any Governmental Entity or other
forum in which BancorpSouth, any of its Subsidiaries,
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any Participation Facility or any Loan Property, has been or, with respect to
threatened proceedings, may be, named as a defendant (i) for alleged
noncompliance (including by any predecessor) with any Environmental Laws, or
(ii) 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
BancorpSouth or any of its Subsidiaries, any Participation Facility or any Loan
Property;
(c) Except as disclosed in Section 5.17 of the BancorpSouth Disclosure
Schedules, to the knowledge of BancorpSouth, during the period of (i)
BancorpSouth's or any of its Subsidiaries' ownership or operation of any of
their respective current or former properties, (ii) BancorpSouth's or any of its
Subsidiaries' participation in the management of any Participation Facility, or
(iii) BancorpSouth'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 BancorpSouth, prior to the period of (i)
BancorpSouth's or any of its Subsidiaries' ownership or operation of any of
their respective current or former properties, (ii) BancorpSouth's or any of its
Subsidiaries' participation in the management of any Participation Facility, or
(iii) BancorpSouth'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: (i)
"Hazardous Materials" means any chemicals, pollutants, contaminants, wastes,
toxic substances, petroleum or other regulated substances or materials, (ii)
"Loan Property" means any property in which BancorpSouth 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 (iii) "Participation
Facility" means any facility in which BancorpSouth 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.
5.18 Insurance. BancorpSouth and its Subsidiaries are insured with
reputable insurers against such risks and in such amounts as BancorpSouth's
management reasonably has determined to be prudent in accordance with industry
practices. All of such policies are in full force and effect; BancorpSouth and
its Subsidiaries are not in material default thereunder; and all claims
thereunder for which a basis is known, or reasonably should be known, by
BancorpSouth have been filed in due and timely fashion.
5.19 Accounting for the Merger; Reorganization. BancorpSouth has no reason
to believe that the Merger will fail to qualify (i) for pooling of interests
method of accounting 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 First United. During the period from the date of this
Agreement and continuing until the Effective Time, except as expressly
contemplated or permitted by this Agreement and the Stock Option Agreements or
with the prior express written consent of BancorpSouth, First United 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 First United Disclosure Schedule
or as otherwise contemplated by this Agreement and the Stock Option Agreements
or as expressly consented to in writing in advance by BancorpSouth, First United
shall not, and shall not permit any of its Subsidiaries to:
(a) declare or pay any dividends on, or make other distributions in
respect of, any of its capital stock during any period, other than
dividends distributions by a Subsidiary of First United to First United;
provided, however, that First United may declare and pay regular quarterly
cash dividends in a manner consistent with, and with usual and regular
record and payment dates in accordance with, past practice, except that the
amount of such dividends may be adjusted to reflect the payout that would
have been received with respect to First United Common Stock on a pro forma
basis, taking into account the Exchange Ratio and the amount of cash
dividends declared and paid by BancorpSouth during the same period;
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(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 First
United or any Subsidiary of First United, or any securities convertible
into or exercisable for any shares of the capital stock of First United or
any Subsidiary of First United, except for purchases of First United Common
Stock pursuant to First United's employee stock ownership plan (the "ESOP")
and, subject to the terms and conditions of this Agreement, consistent with
First United's past practice, (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, other than pursuant to the
ESOP consistent with past practice, except, in the case of clauses (ii) and
(iii), for the issuance of First United Common Stock (A) upon the exercise
or fulfillment of rights or options issued or existing pursuant to the
First United Option Plans all to the extent outstanding and in existence on
the date of this Agreement and in accordance with their current terms or
(B) pursuant to the Stock Option Agreements;
(c) amend its Articles of Incorporation, Bylaws or other similar
governing documents;
(d) directly or indirectly, (i) solicit, initiate, encourage,
facilitate, entertain or accept any Acquisition Proposal (as defined in
this subsection below), or (ii) participate or engage in any discussions or
negotiations with any person or entity other than BancorpSouth or
BancorpSouth Bank relating or with respect to any Acquisition Proposal, or
(iii) provide any nonpublic information to any person or entity other than
BancorpSouth or BancorpSouth Bank relating or with respect to any
Acquisition Proposal, or (iv) make any Acquisition Proposal to any person
or entity other than BancorpSouth and BancorpSouth Bank, or (v) enter into
any agreement with respect to any Acquisition Proposal, or (vi) otherwise
facilitate any effort or attempt to make an Acquisition Proposal, or (vii)
authorize or permit any of its officers, directors, employees,
representatives or agents to do any of the foregoing; provided, however,
that in response to an unsolicited, bona-fide written Acquisition Proposal,
First United after giving notice of such to BancorpSouth, may do the
following if the Board of Directors of First United determines in good
faith that it must do so to comply with its fiduciary duties: (i)
communicate information about such Acquisition Proposal to First United's
shareholders if required under applicable law, and (ii) authorize and
permit its officers, directors, employees, representatives, investment
bankers, attorneys, accountants, financial advisors, or agents to, (A)
participate or engage in such discussions or negotiations, or (B) provide
or cause to be provided nonpublic information. First United will
immediately cease and cause to be terminated as of the date of this
Agreement any existing activities, discussions or negotiations previously
or currently conducted with any persons or entities other than BancorpSouth
and BancorpSouth Bank with respect to any Acquisition Proposal or any of
the foregoing. First United will notify BancorpSouth immediately if any
Acquisition Proposal is received by, any such information is requested
from, or any such negotiations or discussions are sought to be initiated or
continued with, First United, and First United will promptly (within 24
hours) inform BancorpSouth in writing of all of the relevant details with
respect to the foregoing, including the material terms and conditions of
such request or Acquisition Proposal and the identity of the person or
group making such request or proposal. First United will keep BancorpSouth
fully informed of the status and details (including amendments or proposed
amendments) of any such request or Acquisition Proposal. For purposes of
this Agreement, "Acquisition Proposal" shall mean any tender or exchange
offer, proposal for a merger, consolidation or other business combination
involving First United or any Subsidiary of First United or any proposal,
inquiry or offer to acquire in any manner all or 10% or greater equity
interest in, or all or a substantial portion of the assets of, First United
or any Subsidiary of First United, other than the transactions contemplated
or permitted by this Agreement and the Stock Option Agreements;
(e) make any capital expenditures other than those which are (i) set
forth in Section 6.1 of the First United Disclosure Schedule or (ii) are
made in the ordinary course of business or are necessary to maintain
existing assets in good repair, and in any event are in an amount of no
more than $250,000 in the aggregate, or except as necessary to comply with
applicable regulatory guidelines or requirements;
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(f) enter into any new line of business, except for Internet banking;
(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, limited liability company, association or other business
organization or entity or division thereof, or otherwise acquire any
assets, which would be material, individually or in the aggregate, to First
United, 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 hereof, 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 at December 31, 1999,
except as required by changes in GAAP or regulatory accounting principles
as concurred to by First United'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 First United or any Subsidiary of First United and one or more of
its current or former directors, officers or employees, except that First
United may amend its 1994 Equity Participation Plan to delete the provision
thereof regarding termination of options granted under such plan in the
event that the options are unexercised at the effective time of a change in
control of First United, (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 cash 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, or
(iii) grant or award any stock options, stock appreciation rights,
restricted stock, restricted stock units or performance units or shares;
(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 First United or any of
its Subsidiaries is a party or by which First United 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 First United 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));
(q) enter or commit to enter into any new loans in an original
principal amount in excess of $2,500,000, or renew, or commit to renew, any
existing loans in a principal amount in excess of $4,000,000; or
(r) agree or commit to do any of the foregoing.
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6.2 Covenants of BancorpSouth. During the period from the date of this
Agreement and continuing until the Effective Time, except as expressly
contemplated or permitted by this Agreement and the Stock Option Agreements or
with the prior express written consent of First United, BancorpSouth 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 6.2 of the BancorpSouth Disclosure Schedule
or as otherwise contemplated by this Agreement and the Stock Option Agreements
or as expressly consented to in writing in advance by First United, BancorpSouth
shall not, and shall not permit any of its Subsidiaries to:
(a) except as contemplated by Article III hereof, 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;
(c) change its methods of accounting in effect at December 31, 1999,
except in accordance with changes in GAAP or regulatory accounting
principles as concurred to by BancorpSouth'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;
(e) amend its Restated Articles of Incorporation, Bylaws or other
similar governing documents;
(f) 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, limited liability company, association or other business
organization or entity or division thereof, or otherwise acquire any
assets, which would be material, individually or in the aggregate, to
BancorpSouth, 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;
(g) 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;
or
(h) agree or commit to do any of the foregoing.
6.3 Mutual Covenant. Each of First United and BancorpSouth shall cause the
boards of directors of each of First United's Subsidiaries and BancorpSouth
Bank, respectively, to consider and act to approve this Agreement promptly after
the date hereof and prior to the Closing Date.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Regulatory Matters.
(a) BancorpSouth and First United shall promptly prepare and file with the
SEC the Proxy Statement, and BancorpSouth shall promptly prepare and file with
the SEC the S-4, in which the Proxy Statement will be included as a prospectus.
Each of First United and BancorpSouth 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 each of First United and BancorpSouth shall
thereafter mail the Proxy Statement to its respective shareholders as promptly
as practicable. BancorpSouth 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.
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(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 Holding Company Merger and the
Bank Mergers). First United and BancorpSouth 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 First United or BancorpSouth, 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 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) BancorpSouth and First United 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 BancorpSouth,
First United or any of their respective Subsidiaries to any Governmental Entity
in connection with the Merger and the other transactions contemplated by this
Agreement.
(d) BancorpSouth and First United shall promptly furnish each other with
copies of written communications received by BancorpSouth or First United, 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, attorneys,
financial advisors and other representatives (each, a "Representative") 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. In addition, First United
and each of its Subsidiaries shall permit a Representative of BancorpSouth to
have access to the premises and observe the operations of First United or any of
its Subsidiaries, as the case may be, without interfering with the operations of
First United or any of its Subsidiaries and only during normal business hours
and to attend each meeting of their respective Boards of Directors and
committees thereof (other than during discussions regarding this Agreement, the
Stock Option Agreements and the transactions contemplated hereby and thereby).
Neither party nor any of its Subsidiaries shall be required to provide access to
or to disclose information where such access or disclosure would reasonably
violate or prejudice the rights of its customers or its relationship with such
customers, reasonably 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.
(b) All information furnished pursuant to Section 7.2(a) shall be subject
to, and the parties shall hold all such information in confidence in accordance
with, the provisions of the confidentiality agreement, dated as of April 11,
2000 (the "Confidentiality Agreement"), between BancorpSouth and First United.
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(c) Notwithstanding anything in the Confidentiality Agreement or any other
agreement to the contrary, no provision of the Confidentiality Agreement or
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 to the extent provided
herein, subject to Section 10.2.
7.3 Shareholder Meetings. Each of First United and BancorpSouth shall take
all steps in accordance with applicable law necessary to duly call, give notice
of, convene and hold a meeting of its respective 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. Each
of First United and BancorpSouth will, through its respective Board of
Directors, recommend to its respective shareholders approval of this Agreement
and the transactions contemplated hereby and such other matters as may be
submitted to its respective shareholders in connection with this Agreement;
provided, however, that each of First United's and BancorpSouth's respective
Boards of Directors may submit this Agreement and the transactions contemplated
herein to its respective shareholders for approval without recommendation
pursuant to Section 4-27-1103 of the ABCA and Section 79-4-11.03 of the MBCA,
respectively, if such Board of Directors determines in good faith that it must
do so in order to comply with its fiduciary duties.
7.4 Legal Conditions to Merger. Each of BancorpSouth and First United
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 First United or BancorpSouth 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. First United 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 BancorpSouth, as soon as practicable after the date of this
Agreement, a written agreement, in the form of Exhibit 7.5.
7.6 NYSE Listing. BancorpSouth shall make all filings required of it to
cause the shares of BancorpSouth 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, to the extent permissible under the terms of
the BancorpSouth Plans, the employees of First United and its Subsidiaries (the
"First United Employees") shall be eligible to participate in BancorpSouth's
employee benefit plans in which similarly situated employees of BancorpSouth or
BancorpSouth Bank participate, to the same extent as similarly situated
employees of BancorpSouth or BancorpSouth Bank (it being understood that
inclusion of First United Employees in BancorpSouth's employee benefit plans may
occur at different times with respect to different plans).
(b) With respect to each BancorpSouth 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) service with First United (or predecessor employers to the extent
First United provides past service credit) shall be treated as service with
BancorpSouth; 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 BancorpSouth Plan shall waive
pre-existing condition limitations to the same extent waived under the
applicable First United Plan. First United Employees shall be given credit for
amounts paid under a corresponding benefit plan during the same period for
purposes of applying
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deductibles, copayments and out-of-pocket maximums as though such amounts had
been paid in accordance with the terms and conditions of the BancorpSouth Plan.
(c) As of the Effective Time, except as otherwise agreed, BancorpSouth
shall assume and honor and shall cause the appropriate Subsidiaries of
BancorpSouth 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 First United
or any of its Subsidiaries and any director, officer or employee thereof and
which have been disclosed in the First United Disclosure Schedule.
(d) BancorpSouth and First United agree to cooperate and take all
reasonable actions to effect the merger of any employee benefit plan that is
intended to be qualified under Section 401(a) of the Code into the appropriate
tax-qualified retirement plan of BancorpSouth after the Merger is completed, so
that such plan merger satisfies the requirements of Section 414(l) of the Code;
provided, however, that BancorpSouth 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 BancorpSouth Plan.
(e) If requested by BancorpSouth, prior to the Effective Time, First United
shall freeze, terminate, amend or take other action with respect to any Plan
that BancorpSouth, in its sole discretion, deems advisable and not inconsistent
with this Agreement, and provide all required notices to participants and
appropriate governmental agencies; provided, that First United may nevertheless
freeze its defined benefit pension plan even without any such request by
BancorpSouth.
7.8 Indemnification of First United Directors and Officers.
(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 or officer of First United 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 or
she is or was a director or officer of First United, any of the Subsidiaries of
First United 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, BancorpSouth 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. 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 BancorpSouth; provided,
however, that (1) BancorpSouth shall have the right to assume the defense
thereof and upon such assumption BancorpSouth 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 BancorpSouth elects not to assume such defense or if
counsel for the Indemnified Parties reasonably advises that there are issues
which raise conflicts of interest between BancorpSouth and the Indemnified
Parties, the Indemnified Parties may retain counsel reasonably satisfactory to
them after consultation with BancorpSouth, and BancorpSouth shall pay the
reasonable fees and expenses of such counsel for the Indemnified Parties, (2)
BancorpSouth shall in all cases be obligated pursuant to this paragraph to pay
for only one firm of counsel for all Indemnified Parties (unless an ethical
conflict of interest arises for such firm of counsel in representing all
Indemnified Parties), (3) BancorpSouth shall not be liable for any settlement
effected without its prior written consent (which consent shall not be
unreasonably withheld) and (4) BancorpSouth shall have no obligation hereunder
to any Indemnified Party when and if a court of competent jurisdiction shall
ultimately
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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 BancorpSouth thereof,
provided that the failure to so notify shall not affect the obligations of
BancorpSouth under this Section 7.8 except to the extent such failure to notify
materially prejudices BancorpSouth. BancorpSouth's obligations under this
Section 7.8 shall continue in full force and effect without time limit from and
after the Effective Time.
(b) BancorpSouth shall cause each person serving as a director or officer
of First United 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 First United (provided that
BancorpSouth 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 BancorpSouth be required to
expend on an annual basis more than 150% of the current amount expended by First
United (the "Insurance Amount") to maintain or procure insurance coverage, and
further provided that if BancorpSouth is unable to maintain or obtain the
insurance called for by this Section 7.8(b), BancorpSouth shall use all
reasonable efforts to obtain as much comparable insurance as is available for
the Insurance Amount.
(c) In the event BancorpSouth 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
BancorpSouth 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.
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 BancorpSouth.
7.10 Coordination of Dividends. After the date of this Agreement each of
BancorpSouth and First United shall coordinate with the other the declaration of
any dividends in respect of First United Common Stock and the record dates and
payments dates relating thereto, it being the intention of the parties that the
holders of First United Common Stock may (to the extent allowed by law and
declared) receive one, but not more than one, dividend for any calendar quarter
or other period with respect to their shares of First United Common Stock and
any shares of BancorpSouth Common Stock any holder of First United Common Stock
receives in exchange thereof in the Merger.
7.11 Stock Option Agreements. Contemporaneously with the execution and
delivery of this Agreement, First United and BancorpSouth shall execute and
deliver the Stock Option Agreements.
7.12 Publication of Combined Results. As soon as reasonably practicable
after the date that at least 30 days of combined financial results of First
United and BancorpSouth are available and in conjunction with BancorpSouth's
quarterly press releases regarding, among other things, its earnings in the
previous quarter, BancorpSouth shall publish such results by press release or
the making of an appropriate filing under the Exchange Act.
7.13 Reasonable Best Efforts. Subject to the terms and conditions of this
Agreement, each of BancorpSouth and First United agrees to use its respective
reasonable best efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation of
the Merger as promptly as practicable and
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otherwise to enable consummation of the transactions contemplated hereby and
shall cooperate fully with the other party hereto to that end.
7.14 BancorpSouth Board of Directors. The initial Board of Directors of
the Surviving Corporation shall be comprised of 13 members, nine of which shall
be the directors of BancorpSouth as of the Effective Time (the "Initial
BancorpSouth Directors") and four of which shall be directors of First United as
of the Effective Time who are designated therefor by First United (the "Initial
First United Directors"). The Initial BancorpSouth Directors shall serve in the
classes to which they were elected or appointed and the Initial First United
Directors shall be appointed to fill classes designated as equally as possible
given existing vacancies. If any of the Initial First United Directors shall
fail for any reason to serve the initial term to which he was appointed, the
nominating committee of the Surviving Corporation shall first consider nominees
for that vacancy nominated by a majority of the remaining Initial First United
Directors. The initial Board of Directors of the Surviving Bank shall be
comprised of the members of the Board of Directors of BancorpSouth Bank as of
the Effective Time, the Initial First United Directors and three other directors
of First United as of the Effective Time who are designated therefor by First
United (the "Initial First United Bank Directors"). It is anticipated that two
additional members will be elected to the Board of Directors of the Surviving
Corporation at the annual meeting of shareholders to be held in 2001, and the
nominating committee of the Surviving Corporation will nominate one of the
Initial First United Bank Directors as a candidate for one of those positions.
7.15 First United-Texas Subsidiary Merger. Prior to the Closing, First
United shall cause First United-Texas to be merged with and into First United.
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 votes of the shareholders of First United and
the shareholders of BancorpSouth under applicable law.
(b) Listing of Shares. The shares of BancorpSouth Common Stock which
shall be issued to the shareholders of First United upon 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.
(f) Pooling Treatment. KPMG LLP, certified public accountants for
BancorpSouth, shall have delivered a letter dated the Effective Time and
addressed to BancorpSouth, to the effect that the Merger will qualify for
pooling of interests accounting treatment under applicable accounting
standards if
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consummated in accordance with this Agreement. Arthur Andersen LLP,
certified public accountants for First United, shall have delivered a
letter dated the Effective Time and addressed to First United, to the
effect that First United is a poolable entity under applicable accounting
standards. First United shall use its best efforts to procure drafts of
such letters from its accountants and provide them to BancorpSouth and its
respective counsel no later than 10 business days prior to the Closing
Date.
8.2 Conditions to Obligations of BancorpSouth. The obligation of
BancorpSouth to effect the Merger is also subject to the satisfaction or waiver
by BancorpSouth at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
warranties of First United set forth in Sections 4.2 and 4.7 of this
Agreement shall be true and correct in all respects without giving effect
to Section 3.2 of this Agreement, and those set forth elsewhere in this
Agreement shall be true and correct after giving effect to Section 3.2, in
each case as of the date of this Agreement and (except to the extent such
representations and warranties speak only as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date. BancorpSouth
shall have received a certificate signed on behalf of First United by the
Chief Executive Officer and the Chief Financial Officer of First United to
the foregoing effect.
(b) Performance of Obligations of First United. First United 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
BancorpSouth shall have received a certificate signed on behalf of First
United by the Chief Executive Officer and the Chief Financial Officer of
First United 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. BancorpSouth shall have received an opinion
from Waller Lansden Dortch & Davis, PLLC, counsel to BancorpSouth
("BancorpSouth's Counsel"), in form and substance reasonably satisfactory
to BancorpSouth, 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 BancorpSouth and First
United will each be a party to that reorganization. In rendering such
opinion, BancorpSouth's Counsel may require and rely upon representations
and covenants, including those contained in certificates of officers of
BancorpSouth, First United and others, reasonably satisfactory in form and
substance to such counsel. BancorpSouth and First United will cooperate
with each other and BancorpSouth's Counsel in executing and delivering to
BancorpSouth's Counsel customary representations letters in connection with
such opinion.
(e) Fairness Opinion. Prior to mailing the Proxy Statement,
BancorpSouth shall have received an opinion from Salomon Smith Barney, Inc.
or other financial advisor reasonably satisfactory to BancorpSouth to the
effect that as of the date thereof and based upon and subject to the
matters set forth therein, the Exchange Ratio is fair to the shareholders
of BancorpSouth from a financial point of view.
8.3 Conditions to Obligations of First United. The obligation of First
United to effect the Merger is also subject to the satisfaction or waiver by
First United at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
warranties of BancorpSouth set forth in this Agreement shall be true and
correct after 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. First United shall have received a
certificate signed on behalf of BancorpSouth by the Chief Executive Officer
and the Chief Financial Officer of BancorpSouth to the foregoing effect.
(b) Performance of Obligations of BancorpSouth. BancorpSouth shall
have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the
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Closing Date, and First United shall have received a certificate signed on
behalf of BancorpSouth by the Chief Executive Officer and the Chief
Financial Officer of BancorpSouth 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. First United shall have received an opinion
from Mitchell, Williams, Selig, Gates & Woodyard, PLLC ("First United's
Counsel"), or other counsel reasonably satisfactory to First United, in
form and substance reasonably satisfactory to First United, 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 BancorpSouth and First United will each be a
party to that reorganization. In rendering such opinion, First United's
Counsel may require and rely upon representations and covenants, including
those contained in certificates of officers of BancorpSouth, First United
and others, reasonably satisfactory in form and substance to such counsel.
BancorpSouth and First United will cooperate with each other and First
United's Counsel in executing and delivering to First United's Counsel
customary representations letters in connection with such opinion.
(e) Fairness Opinion. Prior to the mailing of the Proxy Statement,
First United shall have received opinions from Stephens Inc. and from
Stifel Nicholas & Co. to the effect that as of the date thereof and based
upon and subject to the matters set forth therein, the Exchange Ratio is
fair to the shareholders of First United 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 First United and
BancorpSouth:
(a) By mutual consent of First United and BancorpSouth 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 BancorpSouth or First United 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 BancorpSouth or First United upon written notice to the
other party if the Merger shall not have been consummated on or before
December 31, 2000, unless the failure of the Closing to occur by such date
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;
(d) By either BancorpSouth or First United upon written notice to the
other party (provided that a party may not terminate if it is in material
breach of any of its obligations under Section 7.3) if any approval of the
respective shareholders of First United or BancorpSouth required for the
consummation of the Merger shall not have been obtained by reason of the
failure to obtain the required vote at a respective duly held meeting of
such shareholders or at any adjournment or postponement thereof;
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(e) By either BancorpSouth or First United upon written notice to the
other party (provided that the terminating party is not then in breach of
any representation or warranty (after giving effect to Section 3.2) or
material breach of any covenant or other agreement contained herein) in the
event of either: (i) if any of the representations or warranties set forth
in this Agreement on the part of the other party hereto shall be or become
untrue or incorrect (after giving effect to Section 3.2 hereof as provided
in Article VIII), and such representation is either incapable, by its
nature, of being cured or is not cured within 30 calendar days following
the giving of written notice thereof to the party making such
representation; or (ii) a material breach by the other party of any of the
covenants or agreements contained in this Agreement, and such breach is
either incapable, by its nature, of being cured or is not cured within 30
calendar days following the giving of written notice thereof to such other
party;
(f) By First United upon written notice to BancorpSouth if
BancorpSouth's Board of Directors shall have failed to recommend in the
Proxy Statement that BancorpSouth's shareholders approve and adopt this
Agreement, or BancorpSouth's Board of Directors shall have withdrawn,
modified or changed, in a manner adverse to First United, its approval or
recommendation of this Agreement and the transactions contemplated hereby;
(g) By BancorpSouth upon written notice to First United if First
United's Board of Directors shall have failed to recommend in the Proxy
Statement that First United's shareholders approve and adopt this
Agreement, or First United's Board of Directors shall have withdrawn,
modified or changed, in a manner adverse to BancorpSouth, its approval or
recommendation of this Agreement and the transactions contemplated hereby,
or if First United enters into any letter of intent, agreement in
principle, or acquisition or similar agreement related or with respect to
any Acquisition Proposal.
(h) By either party in writing prior to May 8, 2000 unless waived
earlier by the express mutual written consent of First United and
BancorpSouth, if the Board of Directors of such party by a majority vote of
its entire Board determines in its reasonable good faith judgment through
such party's own review or based upon disclosures made by the other party
(including the Disclosure Schedules) that the assets, liabilities,
business, financial condition, and results of operations of the other party
and its Subsidiaries, taken as a whole, are materially and adversely
different from the terminating party's reasonable expectations of such
matters as of the date of this Agreement based solely upon the other
party's most recent annual report on Form 10-K filed with the SEC and
without considering any other representation, warranty or other disclosure.
(i) by the Board of Directors of First United, if it determines by a
vote of a majority of the members of its entire Board at any time during
the ten-day period commencing two days after the Determination Date, if
both of the following conditions are satisfied:
(1) the Average Closing Price shall be twenty percent (20%) less
than the Starting Price; and
(2) the BancorpSouth Ratio shall be less than 0.80 times the Index
Ratio;
subject, however, to the following: If the First United Board of Directors
elects to so terminate this Agreement pursuant to this Section 9.1(i), it
shall give prompt written notice thereof to BancorpSouth; provided, that
such notice of election to terminate may be withdrawn at any time within
the aforementioned ten-day period. During the five-day period commencing
with its receipt of such notice, BancorpSouth shall have the option to
elect to increase the Exchange Ratio to equal the lesser of (i) the
quotient obtained by dividing (1) the product of 0.80, the Starting Price
and the Exchange Ratio (as then in effect) by (2) the Average Closing
Price, and (ii) the quotient obtained by dividing (1) the product of the
Index Ratio and the Exchange Ratio (as then in effect) by (2) the
BancorpSouth Ratio. If BancorpSouth makes an election contemplated by the
preceding sentence, within such five-day period, it shall give prompt
written notice to First United of such election pursuant to this Section
9.1(i) and this Agreement shall remain in effect in accordance with its
terms (except as the Exchange Ratio shall have
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been so modified), and any references in this Agreement to "Exchange Ratio"
shall thereafter be deemed to refer to the Exchange Ratio as adjusted
pursuant to this Section 9.1(i).
For purposes of this Section 9.1(i), the following terms shall have the
meanings indicated:
"Average Closing Price" shall mean the average of the daily last sales
prices of BancorpSouth Common Stock as reported on the NYSE (as reported by
The Wall Street Journal or, if not reported thereby, another authoritative
source as chosen by BancorpSouth) for the 20 consecutive full trading days
in which such shares are traded ending at the closing of trading on the
Determination Date.
"Average Index Price" shall mean the average of the daily Index Price
for the 20 consecutive full trading days ending at the closing of trading
on the Determination Date.
"BancorpSouth Ratio" shall mean the quotient of the Average Closing
Price divided by the Starting Price.
"Determination Date" shall mean the date on which the last consent of
the applicable federal and state regulatory authorities shall be received.
"Index Group" shall mean the bank holding companies listed below, the
common stocks of all of which shall be publicly traded and as to which
there shall not have been, since the Starting Date and before the
Determination Date, any public announcement of a proposal for such company
to be acquired or for such company to acquire another company or companies
in transactions with a value exceeding 75% of the acquiror's market
capitalization. In the event that any such company or companies are removed
from the Index Group, the weights (which shall be determined based upon the
number of outstanding shares of common stock) shall be redistributed
proportionately for purposes of determining the Index Price. The bank
holding companies and the weights attributed to them are as follows:
<TABLE>
<CAPTION>
HOLDING COMPANY WEIGHTING (%)
--------------- -------------
<S> <C>
Fulton Financial Corporation........................... 7.5
M&T Bank Corporation................................... 0.8
City National Corporation.............................. 5.2
Centura Banks, Inc. ................................... 3.1
Cullen/Frost Bankers, Inc. ............................ 5.8
Old National Bancorp................................... 5.2
Wilmington Trust Corporation........................... 3.5
Commerce Bancorp, Inc. ................................ 3.3
UMB Financial Corporation.............................. 2.4
Westamerica Bancorporation............................. 4.0
Valley National Bancorp................................ 6.5
TCF Financial Corporation.............................. 9.0
Park National Corporation.............................. 1.1
Mercantile Bankshares Corporation...................... 7.5
Commerce Bancshares, Inc. ............................. 6.7
First Financial Bancorp................................ 5.1
First Virginia Banks, Inc. ............................ 5.3
TrustCo. Bank Corp of NY............................... 5.8
United Bankshares, Inc. ............................... 4.6
Trustmark Corporation.................................. 7.6
-----
TOTAL.................................................. 100.0
</TABLE>
"Index Price" on a given date shall mean the sum of the following: the
closing sales price of a share of common stock of each company comprising
the Index Group (as reported for such date on the
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consolidated transaction reporting system for the stock exchange or market
on which such common stock is principally traded), multiplied by the
applicable weighting for such common stock.
"Index Ratio" shall mean the quotient of the Average Index Price
divided by the Index Price on the Starting Date.
"Starting Price" shall the greater of (i) $15.50, and (ii) the closing
sales price of BancorpSouth Common Stock on the Starting Date, as reported
on the NYSE (as reported by The Wall Street Journal or, if not reported
thereby, another authoritative source as chosen by BancorpSouth). The
Starting Price shall be equitably adjusted to take into effect any stock
dividend, reclassification, recapitalization, split up, combination,
exchange of shares, or similar transaction between the date of this
Agreement and the Determination Date.
"Starting Date" shall mean April 17, 2000.
9.2 Effect of Termination. In the event of termination of this Agreement
by either BancorpSouth or First United as provided in Section 9.1, this
Agreement shall forthwith become void and have no effect except (i) Sections
7.2(b), 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 breach of any provision of this Agreement, it being understood and
agreed, however, that a termination pursuant to Section 9.1(h) above shall not
give rise to any liability or damages for termination.
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 respective shareholders
of First United and BancorpSouth; provided, however, that after any approval of
the transactions contemplated by this Agreement by a party'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 such 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
Time) on the first day which is 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 the
offices of 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 Agreement or
in any instrument delivered pursuant to this Agreement (other than Section 10.3
hereof and pursuant to the Stock Option Agreements, which shall terminate in
accordance with its terms) shall survive the Effective Time, except for those
covenants and
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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, including legal, accounting and
financial advisory fees and expenses, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses. Without limiting the foregoing, each party hereto shall
be solely responsible for the compensation, if any, owed to its respective
financial advisor.
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 BancorpSouth, to:
BancorpSouth, Inc.
One Mississippi Plaza
Tupelo, Mississippi 38804
Attention: Chief Executive Officer
Facsimile: (662) 680-2000
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.
Facsimile: (615) 244-6804
and
(b) if to First United, to:
First United Bancshares, Inc.
Main and Washington Streets
El Dorado, Arkansas 71730
Attention: Chief Executive Officer
Facsimile: (870) 863-3181
with a copy (which shall not constitute notice) to:
Mitchell, Williams, Selig, Gates & Woodyard, PLLC
425 West Capitol Avenue, Suite 1800
Little Rock, Arkansas 72201
Attention: Hermann Ivester, Esq.
Facsimile: (501) 688-8807
10.5 Interpretation.
(a) In this Agreement, unless a contrary intention appears, (i) the words
"herein," "hereof" and "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular Article, Section or other
subdivision, and (ii) when a reference is made in this Agreement to Articles,
Sections, Exhibits or Schedules, such reference shall be to an Article, Section
of or Exhibit or Schedule to this Agreement, as applicable. 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 April 16, 2000. Unless
the context otherwise requires, when used in this Agreement, (i) the singular
shall include the plural, the plural shall include the singular, and all nouns,
pronouns and any
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variations thereof shall be deemed to refer to the masculine, feminine or
neuter, as the identity of the person or persons may require, and (ii) the term
"or" shall mean "and/or." For purposes of this Agreement, "knowledge" means,
with respect to an individual, such individual is actually aware, after
reasonable inquiry, of the particular fact, matter, circumstance or other item,
and, with respect to any party, entity or other person other than an individual,
any individual who is serving as a director, chairman, chief executive officer,
president, chief operating officer, chief financial officer, chief accounting
officer, controller, chief credit officer, general counsel, senior or executive
vice president, or regional chairman of such party, entity or other person or
other officer, regardless of title, thereof charged with or responsible for the
oversight of a particular area, department or function to which the subject
matter relates, has or at any time had "knowledge" of such fact, matter,
circumstance or other item. References to any document (including this
Agreement) are references to that document as amended, consolidated,
supplemented, novated or replaced by the parties from time to time. References
to any party to this Agreement shall include references to its respective
successors and permitted assigns. References to law are references to that law
as amended, consolidated, supplemented or replaced from time to time, and shall
include references to any constitutional provision, treaty, decree, convention,
statute, act, regulation, rule, ordinance, subordinate legislation, rule of
common law and of equity and judgment and shall include the requirements of any
applicable stock exchange. References to a judgment shall include references to
any order, injunction, decree, determination or award of any court or tribunal.
References to any Governmental Entity or Regulatory Agency include any successor
to that Governmental Entity or Regulatory Agency.
(b) 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. The parties hereto have each negotiated the
terms hereof, reviewed this Agreement carefully, and discussed it with their
respective legal counsel. It is the intent of the parties that each word, phrase
and sentence and other part hereof shall be given its plain meaning. No
provision of this Agreement shall be interpreted or construed against any party
hereto solely because such party or its legal representative drafted such
provision.
10.6 Defined Terms. Certain terms used in this Agreement have the meanings
ascribed thereto herein, and shall be applicable to the singular and the plural
forms of such terms, except as otherwise provided herein.
10.7 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 party hereto, it being understood that all parties need not sign the same
counterpart.
10.8 Entire Agreement. This Agreement (including the schedules, exhibits,
documents and instruments referred to herein) constitutes the entire agreement
and supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof, other than the
Stock Option Agreements and the Confidentiality Agreement.
10.9 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Mississippi, without regard to the
conflicts of laws principles of any jurisdiction. The parties agree that the
venue for resolution of any dispute arising out of this Agreement shall be a
court of competent jurisdiction in Mississippi or Arkansas.
10.10 Enforcement of Agreement. The parties hereto agree that irreparable
damage would occur in the event that the provisions contained in 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 this Agreement and to enforce
specifically the terms and provisions thereof in any court of the United States
or any state having jurisdiction, without having to post bond therefor or prove
actual damages, this being in addition to any other remedy to which they are
entitled at law or in equity.
10.11 Severability. Any term or provision of this Agreement or Stock
Option Agreement which is invalid or unenforceable in any jurisdiction shall, as
to that jurisdiction, be 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.
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10.12 Publicity. Except as otherwise required by law or the rules of the
NYSE and the Nasdaq Stock Market, so long as this Agreement is in effect,
neither BancorpSouth nor First United 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 or
delayed.
10.13 Assignment; Successors; 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.
[THE FOLLOWING PAGE IS THE SIGNATURE PAGE.]
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IN WITNESS WHEREOF, each of the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized as of the
date first above written for themselves and their respective Subsidiaries.
BANCORPSOUTH, INC.
By: /s/ AUBREY B. PATTERSON
------------------------------------
Aubrey B. Patterson
Chairman and Chief Executive
Officer
FIRST UNITED BANCSHARES, INC.
By: /s/ JAMES V. KELLEY
------------------------------------
James V. Kelley
Chairman and Chief Executive
Officer
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<PAGE> 135
CONSENT
AND
AMENDMENT TO AGREEMENT AND PLAN OF MERGER
This Consent to and Amendment to Agreement and Plan of Merger ("Consent and
Amendment") is entered into and made this 15th day of May, 2000, by and between
BancorpSouth, Inc. ("BancorpSouth") and First United Bancshares, Inc. ("First
United").
WHEREAS, on April 16, 2000, BancorpSouth and First United entered into a
certain Agreement and Plan of Merger (the "Merger Agreement"). (Capitalized
terms used herein and not defined shall have the meanings ascribed to such terms
in the Merger Agreement.)
WHEREAS, pursuant to the terms of the Merger Agreement, First United made
certain representations and warranties to BancorpSouth as set forth in Article
IV of the Merger Agreement and Section 8.2(a) requires that such representations
and warranties be true and correct as of the date of the Merger Agreement and as
of the Closing Date. In addition First United is prohibited from taking certain
actions as delineated in Section 6.1 unless BancorpSouth expressly consents in
advance of any such action.
WHEREAS, prior to and subsequent to the execution of the Merger Agreement,
First United has negotiated with Texarkana First Financial Corporation ("FFC")
the terms of a proposed Agreement and Plan of Reorganization ("FFC Agreement"),
drafts of which have been made available to BancorpSouth, whereby First United
would acquire one hundred percent (100%) of the issued and outstanding capital
stock of FFC and then immediately thereafter FFC would be merged into First
United and FFC's wholly-owned subsidiary, First Federal Savings & Loan
Association of Texarkana, would be merged with and into FirstBank, an indirect
wholly-owned subsidiary of First United. Without the consent of BancorpSouth the
execution of the FFC Agreement and consummation of the transactions contemplated
therein by First United would be prohibited by the terms of the Merger Agreement
including subsection 6.1(d) (Acquisition Proposal restrictions) and subsection
6.1(e) (purchase of equity interests), and execution and consummation of the FFC
Agreement will affect certain of the representations and warranties of First
United contained in the Merger Agreement.
WHEREAS, First United has requested that BancorpSouth waive and amend the
restrictions contained in the Merger Agreement for the purpose of allowing First
United to enter into the FFC Agreement and consummating the transactions
contemplated therein.
NOW, THEREFORE, BancorpSouth grants its consent to First United and the
parties agree to amend the Merger Agreement as set forth below:
1. Waiver and Consent. BancorpSouth hereby waives the covenants contained
in Section 6.1 of the Merger Agreement for the purpose of permitting First
United to enter into the FFC Agreement, which is attached hereto as Exhibit A,
perform its obligations thereunder and consummate the transactions contemplated
thereby and hereby consents to such actions by First United.
2. Amendment to Merger Agreement. The Merger Agreement is hereby amended
by adding the following Section 9.5:
9.5. Texarkana Transaction.
(a) No actions taken by First United in executing and performing its
obligations under the Agreement and Plan of Reorganization between First
United Bancshares, Inc. and Texarkana First Financial Corporation (the "FFC
Agreement") shall constitute a breach by First United of any covenant under
this Agreement.
(b) The Representations and Warranties of First United under this
Agreement shall be true and correct as of the Closing Date without giving
effect to changes that have occurred or circumstances that exist as a
result of First United's execution, performance or consummation of the FFC
Agreement; provided, however, that the representations and warranties
contained in Sections 4.2(a), 4.7 and 4.8(a) shall be true and correct
after giving effect to such changes and circumstances and with respect to
the representations and warranties in Section 4.8(a) without giving effect
to the provisions of Section 3.2(b).
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The closing certificate to be delivered by First United at Closing shall be
consistent with the provisions of this Section 9.5.
3. Amendment to Section 7.15. Section 7.15 of the Merger Agreement shall
be amended and restated in its entirety as follows:
7.15. Holding Company Mergers. Prior to the Closing, First United
shall cause (i) First United-Texas to be merged with and into First United
and (ii) assuming the acquisition of Texarkana First Financial Corporation
("FFC") by First United prior to Closing, FFC with and into First United.
4. No Additional Waiver. The consent of BancorpSouth to the waiver of the
covenants contained in Section 6.1 of the Merger Agreement is expressly limited
to the extent set forth herein and shall not preclude BancorpSouth from
exercising any right, power or privilege under the Merger Agreement as to any
such terms and conditions not expressly waived herein. Except to the extent the
provisions of the Merger Agreement are specifically amended, modified or
superseded by this Consent, the Merger Agreement shall remain in full force and
effect without any other modification.
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IN WITNESS WHEREOF, this Consent and Amendment has been duly executed and
delivered by the duly authorized officers of BancorpSouth and First United and
made effective as of the date first above written.
BANCORPSOUTH, INC.
By: /s/ AUBREY B. PATTERSON
------------------------------------
Aubrey B. Patterson
Chairman and Chief Executive
Officer
FIRST UNITED BANCSHARES, INC.
By: /s/ JAMES V. KELLEY
------------------------------------
James V. Kelley
Chairman and Chief Executive
Officer
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<PAGE> 138
ANNEX B
ARKANSAS BUSINESS CORPORATION ACT OF 1987
SUBCHAPTER 13
DISSENTERS' RIGHTS
RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
4-27-1301. DEFINITIONS.
In this subchapter:
1. "Corporation" means the issuer of the shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation by
merger or share exchange of that issuer;
2. "Dissenter" means a shareholder who is entitled to dissent from
corporate action under sec. 4-27-1302 and who exercises that right when and
in the manner required by sec.sec. 4-27-1320 -- 4-27-1328;
3. "Fair value", with respect to a dissenter's shares, means the value
of the shares immediately before the effectuation of the corporate action
to which the dissenter objects, excluding any appreciation or depreciation
in anticipation of the corporate action unless exclusion would be
inequitable;
4. "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair
and equitable under all the circumstances;
5. "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of
shares to the extent of the rights granted by a nominee certificate on file
with a corporation;
6. "Beneficial shareholder" means the person who is a beneficial owner
of shares held in a voting trust or by a nominee as the record shareholder;
7. "Shareholder" means the record shareholder or the beneficial
shareholder.
4-27-1302. RIGHT OF DISSENT.
A. A shareholder is entitled to dissent from and obtain payment of the fair
value of his shares in the event of any of the following corporate actions:
1. Consummation of a plan of merger to which the corporation is a
party:
(i) If shareholder approval is required for the merger by sec.
4-27-1103 or the articles of incorporation and the shareholder is
entitled to vote on the merger; or
(ii) If the corporation is a subsidiary that is merged with its
parent under sec. 4-27-1104;
2. Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if the
shareholder is entitled to vote on the plan;
3. Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation other than in the usual and regular course
of business, if the shareholder is entitled to vote on the sale or
exchange, including a sale in dissolution, but not including a sale
pursuant to court order or a sale for cash pursuant to a plan by which all
or substantially all of the net proceeds of the sale will be distributed to
the shareholders within one (1) year after the date of sale;
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4. An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
(i) Alters or abolishes a preferential right of the shares;
(ii) Creates, alters, or abolishes a right in respect of
redemption, including a provision respecting a sinking fund for the
redemption or repurchase, of the shares;
(iii) Alters or abolishes a preemptive right of the holder of the
shares to acquire shares or other securities;
(iv) Excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution
through issuance of shares or other securities with similar voting
rights; or
(v) Reduces the number of shares owned by the shareholder to a
fraction of a share if the fractional share so created is to be acquired
for cash under sec. 4-27-604; or
5. Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws, or a resolution of the board
of directors provides that voting or nonvoting shareholders are entitled to
dissent and obtain payment for their shares.
B. A shareholder entitled to dissent and obtain payment for his shares
under this subchapter may not challenge the corporate action creating his
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
4-27-1303. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
A. A record shareholder may assert dissenters' rights as to fewer than all
the shares registered in his name only if he dissents with respect to all shares
beneficially owned by any one (1) person and notifies the corporation in writing
of the name and address of each person on whose behalf he asserts dissenters'
rights. The rights of a partial dissenter under this subsection are determined
as if the shares as to which he dissents and his other shares were registered in
the names of different shareholders.
B. A beneficial shareholder may assert dissenters' rights as to shares held
on his behalf only if:
1. He submits to the corporation the record shareholder's written
consent to the dissent not later than the time the beneficial shareholder
asserts dissenters' rights; and
2. He does so with respect to all shares of which he is the beneficial
shareholder or over which he has power to direct the vote.
PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
4-27-1320. NOTICE OF DISSENTERS' RIGHTS.
A. If proposed corporate action creating dissenters' rights under sec.
4-27-1302 is submitted to a vote at a shareholders' meeting, the meeting notice
must state that shareholders are or may be entitled to assert dissenters' rights
under this chapter and be accompanied by a copy of this chapter.
B. If corporate action creating dissenters' rights under sec. 4-27-1302 is
taken without a vote of shareholders, the corporation shall notify in writing
all shareholders entitled to assert dissenters' rights that the action was taken
and send them the dissenters' notice described in sec. 4-27-1322.
4-27-1321. NOTICE OF INTENT TO DEMAND PAYMENT.
A. If proposed corporate action creating dissenters' rights under sec.
4-27-1302 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights:
(1) Must deliver to the corporation before the vote is taken written
notice of his intent to demand payment for his shares if the proposed
action is effectuated; and
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(2) Must not vote his shares in favor of the proposed action.
B. A shareholder who does not satisfy the requirements of subsection A. of
this section is not entitled to payment for his shares under this subchapter.
4-27-1322. DISSENTERS' NOTICE.
A. If proposed corporate action creating dissenters' rights under sec.
4-27-1302 is authorized at a shareholders' meeting, the corporation shall
deliver a written dissenters' notice to all shareholders who satisfied the
requirements of sec. 4-27-1321.
B. The dissenters' notice must be sent no later than ten (10) days after
the corporate action was taken and must:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(3) Supply a form for demanding payment that includes the date of the
first announcement to news media or to shareholders of the terms of the
proposed corporate action and requires that the person asserting
dissenters' rights certify whether or not he acquired beneficial ownership
of the shares before that date;
(4) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than thirty (30) nor more than sixty
(60) days after the date the notice required by subsection A. of this
section is delivered; and
(5) Be accompanied by a copy of this subchapter.
4-27-1323. DUTY TO DEMAND PAYMENT
A. A shareholder sent a dissenters' notice described in sec. 4-27-1322 must
demand payment, certify whether he acquired beneficial ownership of the shares
before the date required to be set forth in the dissenters' notice pursuant to
sec. 4-27-1322B.(3), and deposit his certificates in accordance with the terms
of the notice.
B. The shareholder who demands payment and deposits his share certificates
under subsection A. of this section retains all other rights of a shareholder
until these rights are cancelled or modified by the takings of the proposed
corporate action.
C. A shareholder who does not demand payment or deposit his share
certificates where required. each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this subchapter.
4-27-1324. SHARE RESTRICTIONS.
A. The corporation may restrict the transfer of uncertificated shares from
the date the payment is received until the proposed corporate action is taken or
the restrictions released under sec. 4-27-1326.
B. The person for whom dissenters' rights are asserted as to uncertificated
shares retains all other rights of a shareholder until these rights are
cancelled or modified by the taking of the proposed corporate action.
4-27-1325. PAYMENT.
A. Except as provided in sec. 4-27-1327, as soon as the proposed
corporation action is taken, or upon receipt of a payment demand, the
corporation shall pay each dissenter who complied with sec. 4-27-1323 the amount
the corporation estimates to be the fair value of his shares, plus accrued
interest.
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B. The payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen (16) months before the date of payment, an
income statement for that year, a statement of changes in shareholders'
equity for that year, and the latest available interim financial
statements, if any;
(2) A statement of the corporations' estimate of the fair value of the
shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand payment under sec.
4-27-1328; and
(5) A copy of this subchapter.
4-27-1326. FAILURE TO TAKE ACTION.
A. If the corporation does not take the proposed action within sixty (60)
days after the date set for demanding payment and depositing share certificates,
the corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
B. If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under sec. 4-27-1322 and repeat the payment demand procedure.
4-27-1327. AFTER-ACQUIRED SHARES.
A. A corporation may elect to withhold payment required by sec. 4-27-1325
from a dissenter unless he was the beneficial owner of the shares before the
date set forth in the dissenters' notice as the date of the first announcement
to news media or to shareholders of the terms of the proposed corporate action.
B. To the extent the corporation elects to withhold payment under
subsection A. of this section, after taking the proposed corporate action, it
shall estimate the fair value of the shares, plus accrued interest, and shall
pay this amount to each dissenter who agrees to accept it in full satisfaction
of his demand. The corporation shall send with its offer a statement of its
estimate of the fair value of the shares, an explanation of how the interest was
calculated, and a statement of the dissenter's right to demand payment under
sec. 4-27-1328.
4-27-1328. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.
A. A dissenter may notify the corporation in writing of his own estimate of
the fair value of his shares and amount of interest due, and demand payment of
his estimate (less any payment under sec. 4-27-1325), or reject the
corporation's offer under sec. 4-27-1327 and demand payment of the fair value of
his shares and interest due, if:
(1) The dissenter believes that the amount paid under sec. 4-27-1325
or offered under sec. 4-27-1327 is less than the fair value of his shares
or that the interest due is incorrectly calculated;
(2) The corporation fails to make payment under sec. 4-27-1325 within
sixty (60) days after the date set for demanding payment; or
(3) The corporation, having failed to take the proposed action, does
not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within sixty (60) days after the date set
for demanding payment.
B. A dissenter waives his right to demand payment under this section unless
he notifies the corporation of his demand in writing under subsection A. of this
section within thirty (30) days after the corporation made or offered payment
for his shares.
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JUDICIAL APPRAISAL OF SHARES
4-27-1330. COURT ACTION.
A. If a demand for payment under sec. 4-27-1328 remains unsettled, the
corporation shall commence a proceeding within sixty (60) days after receiving
the payment demand and petition the court to determine the fair value of the
shares and accrued interest. If the corporation does not commence the proceeding
within the sixty-day period, it shall pay each dissenter whose demand remains
unsettled the amount demanded.
B. The corporation shall commence the proceeding in the circuit court of
the county where the corporation's principal office (or, if none in this state,
its registered office) is located. If the corporation is a foreign corporation
without a registered office in this state, it shall commence the proceeding in
the county in this state where the registered office of the domestic corporation
merged with or whose shares were acquired by the foreign corporation was
located.
C. The corporation shall make all dissenters (whether or not residents of
this state) whose demands remain unsettled parties to the proceeding as in an
action against their shares and all parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
D. The jurisdiction of the court in which the proceeding is commenced under
subsection B. of this section is plenary and exclusive. The court may appoint
one (1) or more persons as appraisers to receive evidence and recommend decision
on the question of fair value. The appraisers have the powers described in the
order appointing them, or in any amendment to it. The dissenters are entitled to
the same discovery rights as parties in other civil proceedings.
E. Each dissenter made a party to the proceeding is entitled to judgment:
(1) For the amount, if any, by which the court finds the fair value of
his shares, plus interest, exceeds the amount paid by the corporation; or
(2) For the fair value, plus accrued interest, of his after-acquired
shares for which the corporation elected to withhold payment under sec.
4-27-1327.
4-27-1331. COURT COSTS AND COUNSEL FEES.
A. The court in an appraisal proceeding commenced under sec. 4-27-1330
shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court shall
assess the costs against the corporation, except that the court may assess costs
against all or some of the dissenters, in amounts the court finds equitable, to
the extent the court finds the dissenters acted arbitrarily, vexatiously, or not
in good faith in demanding payment under sec. 4-27-1328.
B. The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:
1. Against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of sec.sec. 4-27-1320 -- 4-27-1328; or
2. Against either the corporation or a dissenter, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith
with respect to the rights provided by this chapter.
C. If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to these counsel reasonable fees to be paid out of the amounts awarded the
dissenters who were benefited.
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ANNEX C
[LETTERHEAD OF SALOMON SMITH BARNEY INC.]
April 16, 2000
The Board of Directors
BancorpSouth, Inc.
One Mississippi Plaza
Tupelo, Mississippi 38804
Members of the Board:
You have requested our opinion as to the fairness, from a financial point
of view, to BancorpSouth, Inc. (the "Company") of the Exchange Ratio (as defined
below) set forth in the Agreement and Plan of Merger (the "Agreement") to be
entered into by and between the Company and First United Bancshares, Inc.
("First United").
As more fully described in the Agreement, and subject to the terms and
conditions thereof, (i) First United and the First United Banks (as defined in
the Agreement) will be merged with and into the Company (the "Merger") and (ii)
each outstanding share of common stock, par value $1.00 per share, of First
United (the "First United Common Stock"), other than shares of First United
Common Stock held by First United or the Company except for Trust Account Shares
and DPC Shares (as defined in the agreement), will be converted into and
exchangeable for the right to receive 1.125 shares (the "Exchange Ratio") of
common stock, par value $2.50 per share, of the Company (the "Company Common
Stock").
In arriving at our opinion, we reviewed a draft of the Agreement dated
April 16, 2000 and held discussions with certain senior officers, and other
representatives and advisors of the Company and certain senior officers and
other representatives and advisors of First United concerning the businesses,
operations and prospects of the Company and First United. We examined certain
publicly available business and financial information relating to the Company
and First United as well as certain financial forecasts and other information
and data for the Company and First United which were provided to or otherwise
discussed with us by the managements of the Company and First United, including
information relating to certain strategic implications and operational benefits
anticipated to result from the Merger. We reviewed the financial terms of the
Merger as set forth in the Agreement in relation to, among other things: current
and historical market prices and trading volumes of the Company Common Stock and
First United Common Stock; the historical and forecasted earnings and other
operating data of the Company and First United; and the historical and
forecasted capitalization and financial condition of the Company and First
United. We considered, to the extent publicly available, the financial terms of
certain other similar transactions that we considered relevant in evaluation of
the Exchange Ratio and analyzed certain financial, stock market and other
publicly available information relating to the businesses of other companies
whose operations we considered relevant in evaluating those of the Company and
First United. We also evaluated the pro forma financial impact of the Merger on
the Company. In addition to the foregoing, we conducted such other analyses and
examinations and considered such other information and financial, economic and
market criteria as we deemed appropriate in arriving at our opinion.
In rendering our opinion, we have assumed and relied, without independent
verification, upon the accuracy and completeness of all financial and other
information and data publicly available or furnished to or otherwise reviewed by
or discussed with us and have further relied upon the assurances of managements
of the Company and First United that they are not aware of any facts that would
make any of such information inaccurate or misleading. With respect to financial
forecasts and other information and data provided to or otherwise reviewed by or
discussed with us (including forecasts of cost savings and operating synergies
forecasted by management of the Company to result from the Merger), we have been
advised by the
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managements of the Company and First United that such forecasts and other
information and data were reasonably prepared on bases reflecting the best
currently available estimates and judgments of the managements of the Company
and First United as to the future financial performance of the Company and First
United and the strategic implications and operational benefits anticipated to
result from the Merger. We express no view with respect to such forecasts and
other information and data or the assumptions on which they were based. We have
assumed, with your consent, that the Merger will be treated as a tax-free
reorganization for federal income tax purposes and that it qualifies, and will
be accounted for, as a "pooling of interests" in accordance with generally
accepted accounting principles. We have not made or been provided with an
independent evaluation or appraisal of the assets or liabilities (contingent or
otherwise) of the Company or First United nor have we made any physical
inspection of the properties or assets of the Company or First United. We are
not experts in the evaluation of loan or lease portfolios for purposes of
assessing the adequacy of the allowances for losses with respect thereto and we
have neither made an independent evaluation of the adequacy of such allowances
of the Company or First United, nor have we reviewed any individual credit or
lease files, and, as a result, we have assumed that the aggregate allowances for
such losses for each of the Company and First United are in the aggregate
adequate to cover such losses. Representatives of the Company have advised us,
and we have assumed, that the final terms of the Agreement will not vary
materially from those set forth in the draft reviewed by us. We have further
assumed that the Merger will be consummated in a timely fashion in accordance
with the terms of the Agreement, without waiver of any of the conditions to the
Merger contained in the Agreement.
Our opinion, as set forth herein, relates to the relative values of the
Company and First United. We are not expressing any opinion as to what the value
of the Company Common Stock actually will be when issued pursuant to the Merger
or the price at which the Company Common Stock will trade subsequent to the
announcement or consummation of the Merger. We were not requested to consider,
and our opinion does not address, the relative merits of the Merger as compared
to any alternative business strategies that might exist for the Company or the
effect of any other transaction in which the Company might engage. Our opinion
is necessarily based upon information available to us, and financial, stock
market and other conditions and circumstances existing and disclosed to us, as
of the date hereof and we assume no responsibility to update or revise our
opinion based upon circumstances or events after the date hereof.
Salomon Smith Barney Inc. is acting as financial advisor to the Company in
connection with the proposed Merger and will receive a fee for such services, a
significant portion of which is payable only upon the consummation of the
Merger. We also will receive a fee upon the signing of the Agreement. In the
ordinary course of our business, we and our affiliates may actively trade or
hold the securities of the Company and First United for our own account or for
the accounts of our customers and, accordingly, may at any time hold a long or
short position in such securities. In addition, we and our affiliates (including
Citigroup Inc. and its affiliates) may maintain relationships with the Company,
First United and their respective affiliates.
Our advisory services and the opinion expressed herein are provided for the
information of the Board of Directors of the Company in its evaluation of the
proposed Merger and our opinion is not intended to be and does not constitute a
recommendation to any stockholder as to how such stockholder should vote on any
matters relating to the proposed Merger.
Based upon and subject to the foregoing, our experience as investment
bankers, our work as described above and other factors we deemed relevant, we
are of the opinion that, as of the date hereof, the Exchange Ratio is fair, from
a financial point of view, to the Company.
Very truly yours,
/s/ Salomon Smith Barney Inc.
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ANNEX D
[LETTERHEAD OF STEPHENS INC.]
April 16, 2000
Members of the Board of Directors
First United Bancshares, Inc.
Main & Washington
El Dorado, AR 71730
Members of the Board:
We have acted as your financial advisor in connection with the proposed
merger, pursuant to a merger agreement dated April 16, 2000 (the "Merger
Agreement"), of First United Bancshares, Inc. ("First United") with and into
BancorpSouth, Inc. ("BancorpSouth") in a transaction (the "Transaction") in
which each outstanding share of First United's common stock, par value $1.00 per
share, will be converted into the right to receive 1.125 shares (the "Exchange
Ratio") of BancorpSouth common stock, par value $2.50 per share.
You have requested our opinion as to whether the Exchange Ratio is fair
from a financial point of view to the disinterested shareholders of First
United. For purposes of this opinion, the term "disinterested shareholders"
means holders of First United's one class of publicly traded common stock (the
"Common Stock") other than (1) directors and officers of First United, (2) any
holder of five percent or more of the outstanding shares of Common Stock, and
(3) BancorpSouth and its affiliates.
In connection with rendering our opinion we have:
(i) reviewed certain publicly available financial statements and reports
regarding First United and BancorpSouth;
(ii) reviewed certain internal financial statements and other financial and
operating data (including budgeted financial statements) concerning
First United and BancorpSouth as well as the amount and timing of the
cost savings and related expenses and synergies expected to result
from the Transaction (the "Expected Synergies") prepared by management
of BancorpSouth;
(iii) discussed with managements of First United and BancorpSouth the
operations and future business prospects of First United and
BancorpSouth and the anticipated financial consequences of the
Transaction;
(iv) reviewed the reported prices and trading activity for the common stock
of First United and BancorpSouth;
(v) compared the financial performance of First United and BancorpSouth and
the prices and trading activity of the common stock of First United and
BancorpSouth with that of certain other publicly traded banking
companies;
(vi) reviewed the financial terms, to the extent publicly available, of
certain other transactions in the banking industry;
(vii) reviewed the Merger Agreement; and
(viii) performed such other analyses and considered such other information
as we have deemed appropriate.
In connection with our review, we have relied on the accuracy and
completeness of all of the information and financial data reviewed by us and
have assumed such accuracy and completeness for purposes of rendering this
opinion. We have inquired into the reliability of the information and financial
data provided to us by First United and BancorpSouth only to the limited extent
necessary to provide a reasonable basis for our opinion,
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recognizing that we are rendering only an informed opinion and not an appraisal
or certification of value. For purposes of our analysis with respect to
forecasts of future performance, we have relied at your instruction on consensus
analyst estimates for First United and BancorpSouth published by the
Institutional Brokers Estimate Service. We have assumed with your consent that
the Expected Synergies have been reasonably prepared on bases reflecting at the
time of preparation the best currently available estimates and judgments of the
managements of First United and BancorpSouth as to the future financial
performance of First United and BancorpSouth (including the timing, amount and
achievability thereof). We are not an expert in the evaluation of loan
portfolios for purposes of assessing the adequacy of the allowances for losses
with respect thereto or otherwise and have assumed, with your consent, that such
allowances for each of First United and BancorpSouth are in the aggregate
adequate to cover such losses. In addition, we have not assumed responsibility
for reviewing the liabilities of either First United or BancorpSouth or any
individual loan or credit files or making an independent evaluation, appraisal
or physical inspection of the assets or individual properties of First United or
BancorpSouth, nor have we been furnished with any such evaluations or
appraisals.
We have also assumed, with your consent, that there have been no material
changes in First United's or BancorpSouth's assets, liabilities, financial
condition, results of operations, business or prospects since the respective
dates of their last financial statements reviewed by us and that off-balance
sheet activities of First United and BancorpSouth, including derivatives and
other similar financial instruments, will not materially and adversely affect
the future financial position or results of operations of First United or
BancorpSouth. We have further assumed, with your consent, that in the course of
obtaining the necessary regulatory and third party consents for the Transaction,
no restriction or requirement will be imposed that would have a material adverse
effect on the contemplated benefits of the Transaction or the transactions
contemplated thereby, and that the Transaction will be consummated in accordance
with the terms of the Merger Agreement, without amendment thereto, and without
any waiver by either party of any material conditions thereunder. Finally, our
opinion is based on economic, monetary, market and other conditions as in effect
on, and the information made available to us as of, the date hereof.
As part of our investment banking business, we regularly issue fairness
opinions and are continually engaged in the valuation of companies and their
securities in connection with mergers and acquisitions, negotiated
underwritings, secondary distributions of listed and unlisted securities,
private placements, and valuations for estate, corporate and other purposes. We
are familiar with First United and BancorpSouth and have provided investment
banking and brokerage services to First United and issue periodic research
reports regarding its business activities and prospects. In the ordinary course
of business, Stephens Inc. and its affiliates at any time may hold long or short
positions, and may trade or otherwise effect transactions as principal or for
the accounts of customers, in debt or equity securities or options on securities
of First United and BancorpSouth. Certain affiliates of Stephens Inc.
collectively own approximately 9.5% of the outstanding shares of First United's
common stock. We are acting as financial advisor to First United in connection
with the Transaction and will receive a fee from First United for our services,
a significant portion of which is contingent upon the consummation of the
Transaction.
This opinion is for the use and benefit of the Board of Directors of First
United. Our opinion does not address the merits of the underlying decision by
First United to engage in the Transaction and does not constitute a
recommendation to any shareholder of First United as to how such shareholder
should vote on the proposed Transaction.
We are not expressing any opinion herein as to the prices at which
BancorpSouth's common stock will trade following the announcement or
consummation of the Transaction.
Based on the foregoing and our general experience as investment bankers,
and subject to the qualifications stated herein, we are of the opinion on the
date hereof that the Exchange Ratio is fair from a financial point of view to
the disinterested shareholders of First United.
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This opinion and a summary discussion of our underlying analyses and role
as your financial advisor may be included in communications to First United's
shareholders provided that we approve of such disclosures prior to publication.
Very truly yours,
/s/ STEPHENS INC.
STEPHENS INC.
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ANNEX E
[LETTERHEAD OF STIFEL, NICOLAUS & COMPANY, INCORPORATED]
April 16, 2000
Board of Directors
First United Bancshares, Inc.
Main and Washington Streets
El Dorado, AR 71731
Members of the Board:
You have requested our opinion as to the fairness from a financial point of
view to the shareholders of First United Bancshares, Inc. ("First United") of
the exchange ratio (the "Exchange Ratio") of 1.125 shares of common stock, $2.50
par value per share, of BancorpSouth, Inc. ("BancorpSouth") to be exchanged for
each share of common stock, $1.00 par value per share, of First United pursuant
to the terms of the Agreement and Plan of Merger, dated as of April 16, 2000
(the "Agreement") by and between BancorpSouth and First United. For the purposes
of our opinion, we have assumed that the merger of First United with
BancorpSouth pursuant to the Agreement (the "Merger") will be consummated as
provided in the Agreement, will constitute a tax-free reorganization as
contemplated by the Agreement and will qualify as a pooling of interests for
accounting purposes.
Stifel, Nicolaus & Company, Incorporated ("Stifel"), as part of its
investment banking services, is regularly engaged in the independent valuation
of businesses and securities in connection with mergers, acquisitions,
underwritings, sales and distributions of listed and unlisted securities,
private placements and valuations for estate, corporate and other purposes. We
are familiar with First United and BancorpSouth and have completed our financial
analysis of this transaction. In the ordinary course of its business, Stifel
actively trades equity securities of First United and BancorpSouth for its own
account and for the accounts of its customers and, accordingly, may at any time
hold a long or short position in such securities.
In rendering our opinion, we have reviewed, among other things: the form of
the Agreement as executed on April 16, 2000; the financial statements of First
United and BancorpSouth included in their respective 10-Ks for the 5 years ended
December 31, 1999, and their respective 10-Qs for the quarter ended September
30, 1999; and certain internal financial analyses and forecasts for First United
and BancorpSouth prepared by their respective management. We have conducted
conversations with First United's and BancorpSouth's senior management regarding
recent developments and management's financial forecasts for First United and
BancorpSouth. In addition, we have spoken to members of First United's and
BancorpSouth's senior management regarding factors which affect each entity's
business. We have also compared certain financial and securities data of First
United and BancorpSouth with various other companies whose securities are traded
in public markets, reviewed the historical stock prices and trading volumes of
the common stock of First United and BancorpSouth, reviewed the financial terms
of certain other business combinations and conducted such other financial
studies, analyses and investigations as we deemed appropriate for purposes of
this opinion. We also took into account our assessment of general economic,
market and financial conditions and our experience in other transactions, as
well as our experience in securities valuations and our knowledge of the
commercial banking and thrift industries generally.
In rendering our opinion, we have relied upon and assumed, without
independent verification, the accuracy and completeness of all of the financial
and other information that was provided to us or that was otherwise reviewed by
us and have not assumed any responsibility for independently verifying any of
such information. With respect to the financial forecasts supplied to us
(including without limitation, projected cost savings and operating synergies
resulting from the Merger), we have assumed that they were reasonably prepared
on the basis reflecting the best currently available estimates and judgments of
the management of First United and BancorpSouth as to the future operating and
financial performance of First United and BancorpSouth, that they would be
realized in the amounts and time periods estimated and that they provided
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a reasonable basis upon which we could form our opinion. We also assumed that
there were no material changes in the assets, liabilities, financial condition,
results of operations, business or prospects of either First United or
BancorpSouth since the date of the last financial statements made available to
us. We have also assumed, without independent verification and with your
consent, that the aggregate allowances for loan losses set forth in the
financial statements of First United and BancorpSouth are in the aggregate
adequate to cover all such losses. We did not make or obtain any independent
evaluation, appraisal or physical inspection of First United's or BancorpSouth's
assets or liabilities, the collateral securing any of such assets or
liabilities, or the collectibility of any such assets nor did we review loan or
credit files of First United or BancorpSouth. We relied on advice of First
United's counsel as to all legal matters with respect to First United, the
Agreement and the transactions and other matters contained or contemplated
therein. We have assumed, with your consent, that there are no factors that
would delay or subject to any adverse conditions any necessary regulatory or
governmental approval and that all conditions to the Merger will be satisfied
and not waived.
Our opinion is necessarily based on economic, market, financial and other
conditions as they exist on, and on the information made available to us as of,
the date of this letter. Our opinion is directed to the Board of Directors of
First United for its information and assistance in connection with its
consideration of the financial terms of the Merger and does not constitute a
recommendation to any shareholder as to how such shareholder should vote on the
proposed transaction, nor have we expressed any opinion as to the prices at
which any securities of First United or BancorpSouth might trade in the future.
Except as required by applicable law, including without limitation federal
securities laws, our opinion may not be published or otherwise used or referred
to, nor shall any public reference to Stifel be made, without our prior written
consent.
Based upon the foregoing and such other factors as we deem relevant, we are
of the opinion, as of the date hereof, that the Exchange Ratio pursuant to the
Agreement is fair to the holders of First United Common Stock from a financial
point of view.
Very truly yours,
/s/ Stifel, Nicolaus & Company,
Incorporated
STIFEL, NICOLAUS & COMPANY,
INCORPORATED
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ANNEX F
THE TRANSFER OF THIS AGREEMENT AND THE SECURITIES CREATED HEREUNDER IS SUBJECT
TO CERTAIN PROVISIONS CONTAINED HEREIN AND TO RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement"), dated as of April 16, 2000,
between FIRST UNITED BANCSHARES, INC., an Arkansas corporation ("First United"),
and BANCORPSOUTH, INC., a Mississippi corporation ("BancorpSouth").
WITNESSETH:
WHEREAS, BancorpSouth and First United have entered into an Agreement and
Plan of Merger (the "Merger Agreement") concurrently with the execution and
delivery of this Agreement; and
WHEREAS, as a condition to BancorpSouth's entering into the Merger
Agreement, without which BancorpSouth would not have entered into the Merger
Agreement, and in consideration therefor, First United has agreed to grant
BancorpSouth the Option (as hereinafter defined) on the terms and conditions set
forth herein;
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:
AGREEMENT:
1. Grant of Option.
(a) First United hereby grants to BancorpSouth an unconditional and
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to an aggregate of 5,056,959 fully paid and nonassessable shares of First
United's Common Stock, $1.00 par value ("First United Common Stock"), at a price
of $12.625 per share (the "Option Price"); provided, however, that in no event
shall the number of shares of First United Common Stock for which this Option is
exercisable exceed 19.9% of First United's issued and outstanding shares of
First United Common Stock without giving effect to any shares subject to or
issued pursuant to the Option. The number of shares of First United 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 First United 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 First United 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 First United Common Stock then
issued and outstanding without giving effect to any shares subject or issued
pursuant to the Option. Nothing contained in this Section 1(b) or elsewhere in
this Agreement shall be deemed to authorize First United or BancorpSouth to
breach any provision of the Merger Agreement.
2. Exercise of the Option.
(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 (f) of this Section
2) within 90 days following such Subsequent Triggering Event (or such later
period pursuant to Section 10). The term "Holder" shall mean the BancorpSouth or
any future holder or holders of the Option.
(b) Each of the following shall be an "Exercise Termination Event": (i) the
Effective Time of the Merger; (ii) termination of the Merger Agreement by First
United in accordance with the provisions of
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Sections 9.1(h) or 9.1(i) thereof, (iii) termination of the Merger Agreement in
accordance with the provisions thereof (other than by First United pursuant to
Sections 9.1(h) or 9.1(i) thereof), if such termination occurs prior to the
occurrence of an Initial Triggering Event (except termination by BancorpSouth
pursuant to Section 9.1(e) or Section 9.1(g) of the Merger Agreement, unless the
breach by First United giving rise to such right of termination is
non-volitional) (a "Listed Termination"); or (iv) the passage of 12 months after
termination of the Merger Agreement (or such later period pursuant to Section
10) if such termination follows the occurrence of an Initial Triggering Event or
a Listed Termination.
(c) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) (A) First United or any of its Subsidiaries (each an "First United
Subsidiary"), without having received BancorpSouth'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
BancorpSouth or any of its Subsidiaries (each a "BancorpSouth Subsidiary"),
or (B) the Board of Directors of First United shall have recommended that
the shareholders of First United approve or accept any Acquisition
Transaction.
(ii) First United or any First United Subsidiary, without having
received BancorpSouth'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 BancorpSouth or a BancorpSouth Subsidiary, or the Board
of Directors of First United shall have publicly withdrawn, modified or
qualified, or publicly announced its intention to withdraw, modify or
qualify, in any manner adverse to BancorpSouth, its recommendation that the
shareholders of First United approve the transactions contemplated by the
Merger Agreement in anticipation of engaging in an Acquisition Transaction;
(iii) The stockholders of First United shall have voted and failed to
approve the Merger Agreement and the Merger at a meeting which has been
held for that purpose or any adjournment or postponement thereof, or such
meeting shall not have been held in violation of the Merger Agreement or
shall have been canceled prior to termination of the Merger Agreement if,
prior to such meeting (or if such meeting shall not have been held or shall
have been canceled, prior to such termination), it shall have been publicly
announced that any person (other than BancorpSouth or any BancorpSouth
Subsidiary) shall have made, or disclosed an intention to make, a proposal
to engage in an Acquisition Transaction;
(iv) Any person other than BancorpSouth or any BancorpSouth Subsidiary
shall have filed with the SEC a registration statement or tender offer
materials with respect to a potential exchange or tender offer that would
constitute an Acquisition Transaction (or filed a preliminary proxy
statement with the SEC with respect to a potential vote by its stockholders
to approve the issuance of shares to be offered in such an exchange offer);
(v) Any person other than BancorpSouth, any BancorpSouth Subsidiary or
any First United 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 First United 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);
(vi) Any person other than BancorpSouth or any BancorpSouth Subsidiary
shall have made a bona fide proposal to First United or its shareholders by
public announcement or written communication that is or becomes the subject
of public disclosure to engage in an Acquisition Transaction;
(vii) After an overture is made by a third party to First United or
its shareholders to engage in an Acquisition Transaction or in anticipation
of an Acquisition Transaction, First United shall have willfully breached
any covenant or obligation contained in the Merger Agreement and such
breach would entitle
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BancorpSouth to terminate the Merger Agreement (whether immediately, upon
the giving of notice or passage of time, or both); or
(viii) Any person other than BancorpSouth or any BancorpSouth
Subsidiary, other than in connection with a transaction to which
BancorpSouth 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 been
accepted for processing, for approval to engage in an Acquisition
Transaction.
For purposes of this Agreement, "Acquisition Transaction" shall mean with
respect to any person except BancorpSouth or any BancorpSouth Subsidiary, (1) a
merger or consolidation, or any similar transaction, involving First United or
any "Significant Subsidiary" (as defined in Rule 1-02 of Regulation S-X
promulgated by the Securities and Exchange Commission (the "SEC")) of First
United, (2) a purchase, lease or other acquisition or assumption of all or a
substantial portion of the assets or deposits of First United or any Significant
Subsidiary of First United, (3) 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 First United or any Significant
Subsidiary of First United, or (4) any substantially similar transaction;
For purposes of this Agreement, "Subsidiary" shall have the meaning set
forth in Rule 12b-2 under the 1934 Act.
(d) 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 (other than BancorpSouth or any
BancorpSouth Subsidiary) of beneficial ownership of 25% or more of the then
outstanding shares of First United Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
paragraph (i) of subsection (c) of this Section 2, except that the
percentage referred to in clause (3) of the definition of "Acquisition
Proposal" above shall be deemed to be 25%.
(e) First United shall notify BancorpSouth promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event
(together, a "Triggering Event"), it being understood that the giving of such
notice by First United shall not be a condition to the right of the Holder to
exercise the Option.
(f) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to First United a written notice
(the date of which being herein referred to as the "Notice Date") specifying (i)
the total number of shares of First United Common Stock 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 after 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.
(g) At the closing referred to in subsection (f) of this Section 2, the
Holder shall pay to First United the aggregate purchase price for the shares of
First United Common Stock purchased pursuant to the exercise of the Option in
immediately available funds by wire transfer to a bank account designated by
First United; provided that failure or refusal of First United to designate such
a bank account or to accept surrender of this Agreement shall not preclude the
Holder from exercising the Option.
(h) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (g) of this Section 2, First United
shall deliver to the Holder a certificate or certificates representing the
number of shares of First United Common Stock purchased by the Holder and, if
the Option
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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.
(i) Certificates for First United 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
First United Bancshares, Inc. (the "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 the Issuer and will be
provided to the holder hereof without charge upon receipt by the Issuer of
a written request therefor."
The parties acknowledge and agree 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 First United a copy of a
letter from the staff of the SEC, or an opinion of counsel, in form and
substance reasonably satisfactory to First United, 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.
(j) Upon the giving by the Holder to First United of the written notice of
exercise of the Option provided for under subsection (f) 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 First United
Common Stock issuable upon such exercise, notwithstanding that the stock
transfer books of First United shall then be closed or that certificates
representing such shares of First United Common Stock shall not then be actually
delivered to the Holder. First United 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.
3. Covenants. First United agrees: (i) that it shall at all times
maintain, free from preemptive rights, sufficient authorized but unissued shares
of First United Common Stock so that the Option may be exercised without
additional authorization of First United Common Stock after giving effect to all
other options, warrants, convertible securities and other rights to purchase
First United Common Stock; (ii) that it will not, by amendment of its articles
of incorporation 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 First United; (iii) promptly to take all
action as may from time to time be required (including (A) complying with all
premerger notification, reporting and waiting period requirements specified in
15 U.S.C. sec. 18a and regulations promulgated thereunder and (B) 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 First
United duly and effectively to issue shares of First United Common Stock
pursuant hereto; and (iv) promptly to take all action provided herein to protect
the rights of the Holder against dilution.
4. Exchange and Replacement. 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 First
United, 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 First United Common Stock purchasable hereunder. The terms "Agreement"
and "Option" as used herein include any Stock Option Agreements and related
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Options for which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by First United 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, First
United 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 First United, whether or not the Agreement so lost,
stolen, destroyed or mutilated shall at any time be enforceable by anyone.
5. Anti-Dilution Adjustments. In addition to the adjustment in the number
of shares of First United Common Stock that are purchasable upon exercise of the
Option pursuant to Section 1 of this Agreement, the number of shares of First
United 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
First United Common Stock by reason of a stock dividend, stock split, split-up,
merger, recapitalization, combination, subdivision, conversion, exchange of
shares, distribution on or in respect of the First United Common Stock that
would be prohibited under the terms of the Merger Agreement, or the like, the
type and number of shares or securities subject to the Option, and the Option
Price therefor, 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 First United's obligations
hereunder, so that the Holder shall receive, upon exercise of the Option, the
number and class of shares or other securities or property that the Holder would
have received in respect of First United Common Stock if the Option had been
exercised immediately prior to such event, or the record date therefor, as
applicable. If any additional shares of First United Common Stock are issued
after the date of this Agreement (other than pursuant to an event described in
the first sentence of this Section 5), the number of shares of First United
Common Stock subject to the Option shall be adjusted so that, after such
issuance, it, together with any shares of First United Common Stock previously
issued pursuant hereto, equals 19.9% of the number of shares of First United
Common Stock then issued and outstanding, without giving effect to any shares
subject to or issued pursuant to the Option.
6. Registration Rights. Upon the occurrence of a Subsequent Triggering
Event that occurs prior to an Exercise Termination Event, First United shall, at
the request of Holder delivered within 180 days following 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 First United
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 First United Common Stock issued upon total or partial exercise of
this Option ("Option Shares") in accordance with any plan of disposition
requested by Holder. First United 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. Holder shall
have the right to demand two such registrations. The First United shall bear the
costs of such registrations (including, but not limited to, First United's
attorneys' fees, printing costs and filing fees, but excluding underwriting
discounts or commissions, brokers' fees and the fees and disbursements of
Holder's counsel related to the Option or Option Shares). The foregoing
notwithstanding, if, at the time of any request by Holder for registration of
the Option or Option Shares as provided above, First United is in registration
with respect to an underwritten public offering by First United of shares of
First United 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 Option or the Option Shares
would interfere with the successful marketing of the shares of First United
Common Stock offered by First United, 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 First United in the aggregate; and provided further, however, that if such
reduction occurs, then First United shall file a registration statement for the
balance as promptly as practicable
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and no reduction pursuant to this Section 6 shall be permitted or occur and the
Holder shall thereafter be entitled to one additional registration, and the 180
day period referenced in the first sentence of this Section 6 shall be deemed to
be 360 days. Each such Holder shall provide all information reasonably requested
by First United for inclusion in any registration statement to be filed
hereunder. If requested by any such Holder in connection with such registration,
First United 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 First United. Upon
receiving any request under this Section 6 from any Holder, First United agrees
to send a copy thereof to any other person known to First United 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 First United 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 Holder as a result of any assignment or division of this
Agreement.
7. Repurchase.
(a) At BancorpSouth's Option. At any time after the occurrence of a
Repurchase Event (as defined below), (i) at the request of the Holder, delivered
prior to an Exercise Termination Event (or such later period pursuant to Section
10), First United (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 of First United Common Stock 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 prior to a Repurchase Event
(or such later period pursuant to Section 10), First United (or any successor
thereto) 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.
For purposes of this Agreement, the term "Market/Offer Price" shall mean
the highest of (i) the price per share of First United Common Stock at which a
tender offer or exchange offer therefor has been made, (ii) the price per share
of First United Common Stock to be paid by any third party pursuant to an
agreement with First United, (iii) the highest closing price for shares of First
United Common Stock within the six-month period immediately preceding the date
the Holder gives notice of the required repurchase of the 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 First United's
assets or deposits, the sum of the price paid in such sale for such assets or
deposits and the current market value of the remaining net assets of First
United 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
First United, divided by the number of shares of First United Common Stock
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 First United.
The Holder and the Owner, as the case may be, may exercise its right to
require First United to repurchase the Option and any Option Shares pursuant to
this Section 7 by surrendering for such purpose to First United, at its
principal office, a copy of 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 First United to repurchase
this Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly as practicable, and in any event within 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, First United
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 that First United is not then prohibited under applicable law and
regulation from so delivering.
(b) At First United's Option. At any time after the occurrence of a
Repurchase Event, (i) at the request of First United to the Holder, delivered
prior to an Exercise Termination Event (or such later period pursuant to Section
10), First United (or any successor thereto) may repurchase the Option from the
Holder
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at the Option Repurchase Price, and (ii) at the request of First United to the
Owner, delivered prior to a Repurchase Event (or such later period pursuant to
Section 10), First United (or any successor thereto) may repurchase the Option
Shares (except with respect to Option Shares that have theretofore been
transferred by the Holder to an unaffiliated third party) from the Owner at the
Option Share Repurchase Price.
First United may exercise its right to repurchase the Option and any Option
Shares pursuant to this Section 7 by surrendering for such purpose to Holder or
Owner, as applicable, United, at its principal office, a written notice or
notices stating that First United elects to repurchase this Option and/or the
Option Shares in accordance with the provisions of this Section 7. As promptly
as practicable, and in any event within 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, First United 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.
(c) Regulatory Restrictions. To the extent that First United is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from repurchasing the Option and/or the Option Shares in full, First
United 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 First United is no
longer so prohibited; provided, however, that if First United 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, or as a consequence of
administrative policy, 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 First United 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, First United shall promptly (i) deliver to the
Holder and/or the Owner, as applicable, that portion of the Option Repurchase
Price or the Option Share Repurchase Price that First United is not prohibited
from delivering; and (ii) deliver, as applicable, either (A) to the Holder, a
new Agreement evidencing the right of the Holder to purchase that number of
shares of First United Common Stock obtained by multiplying the number of shares
of First United Common Stock for which the surrendered 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, and/or (B) to the Owner, a certificate for the Option Shares it is then
so prohibited from repurchasing. If an Exercise Termination Event shall have
occurred prior to the date of the notice by First United described in the first
sentence of this subsection (c), or should be scheduled to occur at any time
before the expiration of a period ending on the 30th day after such date, the
Holder shall nonetheless have the right to exercise the Option until the
expiration of such 30-day period.
(d) For purposes of this Section 7, a "Repurchase Event" shall be deemed to
have occurred upon the occurrence of any of the following events or transactions
after the date hereof:
(i) the acquisition by any person (other than BancorpSouth or any
BancorpSouth Subsidiary) of beneficial ownership of 50% or more of the then
outstanding shares of First United Common Stock; or
(ii) the consummation of any Acquisition Transaction described in
Section 2 hereof, except that the percentage of voting power referred to in
clause (3) thereof shall be deemed to be 25%.
8. Successor Issuer.
(a) In the event that prior to an Exercise Termination Event, First United
shall enter into an agreement (i) to consolidate with or merge into any person,
other than BancorpSouth or a BancorpSouth Subsidiary, or engage in a plan of
exchange with any person other than BancorpSouth or a BancorpSouth Subsidiary,
and First United shall not be the continuing or surviving corporation of such
consolidation or merger or the acquirer in such plan of exchange, (ii) to permit
any person, other than BancorpSouth or a BancorpSouth Subsidiary, to merge into
First United or be acquired by First United in a plan of exchange and First
United
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shall be the continuing or surviving corporation, but, in connection with such
merger or plan of exchange, the then outstanding shares of First United 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
First United Common Stock shall after such merger or plan of exchange represent
less than 50% of the outstanding voting shares and voting share equivalents of
the merged or acquiring company, or (iii) to sell or otherwise transfer all or
substantially all of its or any First United Subsidiary's assets or deposits to
any person, other than BancorpSouth or a BancorpSouth Subsidiary, 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 or entity that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (A) the continuing or surviving
person of a consolidation or merger with First United (if other than First
United), (B) the acquiring person in a plan of exchange in which First
United is acquired, (C) the First United in a merger or plan of exchange in
which First United is the continuing or surviving or acquiring person, and
(D) the transferee of all or substantially all of First United's assets or
deposits (or the assets or deposits of any First United Subsidiary).
(ii) "Substitute Common Stock" shall mean the common stock issued by
the issuer of the Substitute Option upon exercise of the Substitute Option.
(iii) "Assigned Value" shall mean the Market/Offer Price, as defined
in Section 7.
(iv) "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 First United 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 First
United 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 (after giving effect for
such purpose to the provisions of Section 9), which agreement 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 First United Common Stock for which the Option was
exercisable immediately prior to the event described in the first sentence of
Section 8(a) above, 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 First United Common Stock for which the Option was
exercisable immediately prior to the event described in the first sentence of
Section 8(a) above 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
subsection (e), the issuer of the Substitute Option (the "Substitute Option
Issuer") shall make a cash payment to the Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in this
subsection (e) over (ii) the value of the Substitute Option after giving effect
to the limitation in this subsection (e). This
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difference in value shall be determined by a nationally recognized investment
banking firm selected by the Holder.
(f) First United 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
First United hereunder.
9. Successor Repurchase.
(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 180 day 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/or 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, or as a consequence of administrative policy, from
repurchasing the Substitute Option and/or the Substitute Shares in part or in
full, the Substitute Option Issuer 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, or as a consequence of administrative policy, 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 applicable, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that
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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, and/or (B) to the Substitute Share Owner, a certificate for
the Substitute Common Shares it is then so prohibited from repurchasing. If an
Exercise Termination Event shall have occurred prior to the date of the notice
by the Substitute Option Issuer described in the first sentence of this
subsection (c), or shall be scheduled to occur at any time before the expiration
of a period ending on the 30th day after such date, the Substitute Option Holder
shall nevertheless have the right to exercise the Substitute Option until the
expiration of such 30 day period.
10. Certain Extensions of Exercise Period. The periods for exercise of
certain rights under Sections 2, 6, 7, 9 and 11 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; (ii) to the
extent necessary to avoid liability under Section 16(b) of the 1934 Act by
reason of such exercise; and (iii) to the extent that there exists an
injunction, order or judgment that prohibits or delays exercise of such right.
11. Surrender.
(a) Holder may, at any time following a Repurchase Event and prior to the
occurrence of an Exercise Termination Event (or such later period pursuant to
Section 10), relinquish the Option (together with any Option Shares issued to
and then owned by Holder) to First United in exchange for a cash fee equal to
the Surrender Price (as hereinafter defined). The "Surrender Price" shall be
equal to (x) $22,500,000 plus, if applicable, (y) Holder's purchase price with
respect to any Option Shares, and minus, if applicable, (z) the excess of (1)
the net price, if any, received by Holder or a Holder Subsidiary pursuant to the
sale of Option Shares (or any other securities into which such Option Shares
were converted or exchanged) to any unaffiliated party, over (2) Holder's
purchase price of such Option Shares.
(b) Holder may exercise its right to relinquish the Option and any Option
Shares pursuant to this Section 11 by surrendering to First United, at its
principal office, a copy of this Agreement together with certificates for Option
Shares, if any, accompanied by a written notice stating (i) that Holder elects
to relinquish the Option and Option Shares, if any, in accordance with the
provisions of this Section 11 and (ii) the Surrender Price. The Surrender Price
shall be payable in immediately available funds on or before the second business
day following receipt of such notice by First United.
(c) To the extent that First United is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from paying the
Surrender Price to Holder in full, First United shall immediately so notify
Holder and thereafter deliver or cause to be delivered, from time to time, to
Holder, the portion of the Surrender Price that it is no longer prohibited from
paying, within five business days after the date on which First United is no
longer so prohibited; provided, however, that if First United at any time after
delivery of a notice of surrender pursuant to subsection (b) of this Section 11
is prohibited under applicable law or regulation, or as a consequence of
administrative policy, from paying to Holder the Surrender Price in full, then
(i) First United shall (A) use its reasonable best efforts to obtain all
required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to make such payments, (B) within five business
days after the submission or receipt of any documents relating to any such
regulatory and legal approvals, provide Holder with copies of the same, and (C)
keep Holder advised of both the status of any such request for regulatory and
legal approvals, as well as any discussions with any relevant regulatory or
other third party reasonably related to the same, and (ii) Holder may revoke
such notice of surrender by delivery of a notice of revocation to First United
and, upon delivery of such notice of revocation, the Exercise Termination Date
shall be extended to a date 90 days following the date on which the Exercise
Termination Date would have occurred if not for the provisions of this Section
11(c) (during which period Holder may exercise any of its rights hereunder,
including any and all rights pursuant to this Section 11).
12. Maximum Total Profit. Notwithstanding any other provision of this
Agreement to the contrary, in no event shall Holder's Total Profit (as defined
below) exceed $22,500,000, and, if such Total Profit would
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otherwise exceed $22,500,000, Holder, at its election in its sole discretion,
shall either (i) reduce the number of shares of First United Common Stock
subject to the Option, (ii) deliver to First United for cancellation without
consideration Option Shares previously purchased by Holder, (iii) pay cash to
First United, or (iv) any combination of the foregoing, such that Holder's
actually realized Total Profit shall not exceed $22,500,000 after taking into
account the foregoing actions.
As used in this Agreement, the term "Total Profit" shall mean the aggregate
sum (prior to the payment of taxes) of the following: (a) the amount of Option
Repurchase Price received by Holder pursuant to First United's repurchase of the
Option (or any portion thereof) pursuant to Section 7 hereof; plus (b) the
difference of (i) the amount of Option Share Repurchase Price received by Holder
pursuant to First United's repurchase of Option Shares pursuant to Section 7
hereof, less (ii) Holder's purchase price for such Option Shares; plus (c) the
difference of (i) the net cash amounts received by Holder pursuant to the sale
of Option Shares (or any other securities into which such Option Shares shall be
converted or exchanged) to any unaffiliated person, less (ii) Holder's purchase
price of such Option Shares; plus (d) any amounts received by BancorpSouth on
the transfer of the Option (or any portion thereof) to any unaffiliated person;
plus (e) the amount of Surrender Price received by Holder pursuant to
relinquishment of the Option and Option Shares to First United pursuant to
Section 11 hereof.
The provisions of this Section 12 shall apply to any Substitute Option.
The parties hereto agree that this Section 12 shall not, and shall not be
deemed to, limit, prejudice or restrict any money damages, injunctive relief or
other legal or equitable remedy or relief available to BancorpSouth with respect
to any breach of the Merger Agreement or this Agreement.
13. Representations and Warranties.
(a) By First United. First United hereby represents and warrants to
BancorpSouth as follows:
(i) First United has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions 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 First United and no other corporate
proceedings on the part of First United are necessary to authorize this
Agreement or to consummate the transactions so contemplated. This Agreement
has been duly and validly executed and delivered by First United and is
enforceable against First United in accordance with its terms.
(ii) First United 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 First United Common Stock equal to the maximum
number of shares of First United 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.
(b) By BancorpSouth. BancorpSouth hereby represents and warrants to First
United as follows:
(i) BancorpSouth 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 and validly authorized by
all necessary corporate action on the part of BancorpSouth. This Agreement
has been duly executed and delivered by BancorpSouth.
(ii) The Option is not being, and any shares of First United Common
Stock or other securities acquired by BancorpSouth upon exercise of the
Option will not be, acquired by BancorpSouth with a view to the public
distribution thereof and will not be transferred or otherwise disposed of
by BancorpSouth except in a transaction registered under or exempt from
registration under the 1933 Act.
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14. Assignment. Neither of the parties hereto may assign any of its rights
or obligations under this 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, BancorpSouth, subject to the express provisions hereof, may
assign in whole or in part its rights and obligations hereunder; provided,
however, that until the date 15 days following the date on which the Federal
Reserve Board approves an application by BancorpSouth under the BHCA to acquire
the shares of First United Common Stock subject to the Option, BancorpSouth may
not assign 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 First United, (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 BancorpSouth's
behalf, or (iv) any other manner approved by the Federal Reserve Board.
15. Best Efforts. Each of BancorpSouth and First United will use its
reasonable 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 First United Common
Stock issuable hereunder on any exchange or market on which shares of First
United Common Stock may be listed or quoted upon official notice of issuance and
applying to the Federal Reserve Board under the BHCA for approval to acquire the
shares issuable hereunder, but BancorpSouth shall not be obligated to apply to
state banking authorities for approval to acquire the shares of First United
Common Stock issuable hereunder until such time, if ever, as it deems
appropriate to do so.
16. Miscellaneous.
(a) 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):
(i) if to BancorpSouth, to:
BancorpSouth, Inc.
One Mississippi Plaza
Tupelo, Mississippi 38804
Attention: Aubrey B. Patterson
Facsimile: (662) 680-2006
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.
Facsimile: (615) 244-6804
and
(ii) if to First United, to:
First United Bancshares, Inc.
Main and Washington Streets
El Dorado, Arkansas 71730
Attention: James V. Kelley
Facsimile: (870) 863-3181
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with a copy (which shall not constitute notice) to:
Mitchell, Williams, Selig, Gates &
Woodyard, PLLC
425 West Capitol Avenue, Suite 1800
Little Rock, Arkansas 72201
Attention: Hermann Ivester, Esq.
Facsimile: (501) 688-8807
(b) Interpretation. In this Agreement, unless a contrary intention
appears, the words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular Section or
other subdivision. 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 April 16, 2000. Unless the context otherwise
requires, when used in this Agreement, (i) the singular shall include the
plural, the plural shall include the singular, and all nouns, pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine or
neuter, as the identity of the person or persons may require, and (ii) the term
"or" shall mean "and/or." The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. The parties hereto have each negotiated the
terms hereof, reviewed this Agreement carefully, and discussed it with their
respective legal counsel. It is the intent of the parties that each word, phrase
and sentence and other part hereof shall be given its plain meaning. No
provision of this Agreement shall be interpreted or construed against any party
hereto solely because such party or its legal representative drafted such
provision.
(c) Defined Terms. Capitalized terms used in this Agreement and not
defined herein shall have the meanings assigned thereto in the Merger Agreement,
and shall be applicable to the singular and the plural forms of such terms,
except as otherwise provided herein.
(d) 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 party hereto, it being understood that all parties need not sign the same
counterpart.
(e) Entire Agreement. This Agreement 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 Merger
Agreement.
(f) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Mississippi, without regard to the
conflicts of laws principles of any jurisdiction. The parties agree that the
venue for resolution of any dispute arising out of this Agreement shall be a
court of competent jurisdiction in Mississippi or Arkansas.
(g) Enforcement of Agreement. The parties hereto agree that irreparable
damage would occur in the event that the provisions contained in 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 this Agreement and to enforce
specifically the terms and provisions thereof in any court of the United States
or any state having jurisdiction, without having to post bond therefor or prove
actual damages, this being in addition to any other remedy to which they are
entitled at law or in equity.
(h) Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
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. If for any reason a court or regulatory
agency determines that the Holder is not permitted to acquire, or First United
is not permitted to repurchase pursuant to Section 7, the full number of
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shares of First United Common Stock provided in Section 1(a) hereof (as adjusted
pursuant to Section 1(b) or 5 hereof), it is the express intention of the
parties to allow the Holder to acquire, or to require or permit First United to
repurchase pursuant to Section 7, such lesser number of shares of First United
Common Stock as may be permissible, without any amendment or modification
hereof.
(i) Waiver. No delay or omission on the part of any party hereto in
exercising any right hereunder shall operate as a waiver of such right or any
other right under this Agreement. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof.
(j) Expenses. All costs and expenses, including legal, accounting and
financial advisory fees and expenses, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses.
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.
FIRST UNITED BANCSHARES, INC.
By: /s/ James V. Kelley
------------------------------------
James V. Kelley
Chairman and
Chief Executive Officer
BANCORPSOUTH, INC.
By: /s/ Aubrey B. Patterson
------------------------------------
Aubrey B. Patterson
Chairman and
Chief Executive Officer
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ANNEX G
THE TRANSFER OF THIS AGREEMENT AND THE SECURITIES CREATED HEREUNDER IS SUBJECT
TO CERTAIN PROVISIONS CONTAINED HEREIN AND TO RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement"), dated as of April 16, 2000,
between FIRST UNITED BANCSHARES, INC., an Arkansas corporation ("First United"),
and BANCORPSOUTH, INC., a Mississippi corporation ("BancorpSouth").
W I T N E S S E T H:
WHEREAS, BancorpSouth and First United have entered into an Agreement and
Plan of Merger (the "Merger Agreement") concurrently with the execution and
delivery of this Agreement; and
WHEREAS, as a condition to First United's entering into the Merger
Agreement, without which First United would not have entered into the Merger
Agreement, and in consideration therefor, BancorpSouth has agreed to grant First
United the Option (as hereinafter defined) on the terms and conditions set forth
herein;
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:
A G R E E M E N T:
1. Grant of Option.
(a) BancorpSouth hereby grants to First United an unconditional and
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to an aggregate of 11,245,425 fully paid and nonassessable shares of
BancorpSouth's Common Stock, $2.50 par value ("BancorpSouth Common Stock"), at a
price of $16.00 per share (the "Option Price"); provided, however, that in no
event shall the number of shares of BancorpSouth Common Stock for which this
Option is exercisable exceed 19.9% of BancorpSouth's issued and outstanding
shares of BancorpSouth Common Stock without giving effect to any shares subject
to or issued pursuant to the Option. The number of shares of BancorpSouth 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 BancorpSouth 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 BancorpSouth 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 BancorpSouth Common Stock then
issued and outstanding without giving effect to any shares subject or issued
pursuant to the Option. Nothing contained in this Section 1(b) or elsewhere in
this Agreement shall be deemed to authorize First United or BancorpSouth to
breach any provision of the Merger Agreement.
2. Exercise of the Option.
(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 (f) of this Section
2) within 90 days following such Subsequent Triggering Event (or such later
period pursuant to Section 10). The term "Holder" shall mean First United or any
future holder or holders of the Option.
(b) Each of the following shall be an "Exercise Termination Event": (i) the
Effective Time of the Merger; (ii) termination of the Merger Agreement by
BancorpSouth in accordance with the provisions of Sections 9.1(h) thereof, (iii)
termination of the Merger Agreement in accordance with the provisions thereof
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(other than by BancorpSouth pursuant to Section 9.1(h) thereof), if such
termination occurs prior to the occurrence of an Initial Triggering Event
(except termination by First United pursuant to Section 9.1(e) of the Merger
Agreement, unless the breach by BancorpSouth giving rise to such right of
termination is non-volitional) (a "Listed Termination"); or (iv) the passage of
12 months after termination of the Merger Agreement (or such later period
pursuant to Section 10) if such termination follows the occurrence of an Initial
Triggering Event or a Listed Termination.
(c) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) (A) BancorpSouth or any of its Subsidiaries (each an "BancorpSouth
Subsidiary"), without having received First United'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
First United or any of its Subsidiaries (each a "First United Subsidiary"),
or (B) the Board of Directors of BancorpSouth shall have recommended that
the shareholders of BancorpSouth approve or accept any Acquisition
Transaction.
(ii) BancorpSouth or any BancorpSouth Subsidiary, without having
received First United'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 First United or a First United Subsidiary, or the Board
of Directors of BancorpSouth shall have publicly withdrawn, modified or
qualified, or publicly announced its intention to withdraw, modify or
qualify, in any manner adverse to First United, its recommendation that the
shareholders of BancorpSouth approve the transactions contemplated by the
Merger Agreement in anticipation of engaging in an Acquisition Transaction;
(iii) The stockholders of BancorpSouth shall have voted and failed to
approve the Merger Agreement and the Merger at a meeting which has been
held for that purpose or any adjournment or postponement thereof, or such
meeting shall not have been held in violation of the Merger Agreement or
shall have been canceled prior to termination of the Merger Agreement if,
prior to such meeting (or if such meeting shall not have been held or shall
have been canceled, prior to such termination), it shall have been publicly
announced that any person (other than First United or any First United
Subsidiary) shall have made, or disclosed an intention to make, a proposal
to engage in an Acquisition Transaction;
(iv) Any person other than First United or any First United Subsidiary
shall have filed with the SEC a registration statement or tender offer
materials with respect to a potential exchange or tender offer that would
constitute an Acquisition Transaction (or filed a preliminary proxy
statement with the SEC with respect to a potential vote by its stockholders
to approve the issuance of shares to be offered in such an exchange offer);
(v) Any person other than First United, any First United Subsidiary or
any First United 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 BancorpSouth 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);
(vi) Any person other than First United or any First United Subsidiary
shall have made a bona fide proposal to BancorpSouth or its shareholders by
public announcement or written communication that is or becomes the subject
of public disclosure to engage in an Acquisition Transaction;
(vii) After an overture is made by a third party to BancorpSouth or
its shareholders to engage in an Acquisition Transaction or in anticipation
of an Acquisition Transaction, BancorpSouth shall have willfully breached
any covenant or obligation contained in the Merger Agreement and such
breach would
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entitle First United to terminate the Merger Agreement (whether
immediately, upon the giving of notice or passage of time, or both); or
(viii) Any person other than First United or any First United
Subsidiary, other than in connection with a transaction to which First
United 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 been accepted for
processing, for approval to engage in an Acquisition Transaction.
For purposes of this Agreement, "Acquisition Transaction" shall mean with
respect to any person except First United or any First United Subsidiary, (1) a
merger or consolidation, or any similar transaction, involving BancorpSouth or
any "Significant Subsidiary" (as defined in Rule 1-02 of Regulation S-X
promulgated by the Securities and Exchange Commission (the "SEC")) of
BancorpSouth, (2) a purchase, lease or other acquisition or assumption of all or
a substantial portion of the assets or deposits of BancorpSouth or any
Significant Subsidiary of BancorpSouth, (3) 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 BancorpSouth or any
Significant Subsidiary of BancorpSouth, or (4) any substantially similar
transaction;
For purposes of this Agreement, "Subsidiary" shall have the meaning set
forth in Rule 12b-2 under the 1934 Act.
(d) 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 (other than First United or any
First United Subsidiary) of beneficial ownership of 25% or more of the then
outstanding shares of BancorpSouth Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
paragraph (i) of subsection (c) of this Section 2, except that the
percentage referred to in clause (3) of the definition of "Acquisition
Proposal" above shall be deemed to be 25%.
(e) BancorpSouth shall notify First United promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event
(together, a "Triggering Event"), it being understood that the giving of such
notice by BancorpSouth shall not be a condition to the right of the Holder to
exercise the Option.
(f) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to BancorpSouth a written notice
(the date of which being herein referred to as the "Notice Date") specifying (i)
the total number of shares of BancorpSouth Common Stock 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 after 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.
(g) At the closing referred to in subsection (f) of this Section 2, the
Holder shall pay to BancorpSouth the aggregate purchase price for the shares of
BancorpSouth Common Stock purchased pursuant to the exercise of the Option in
immediately available funds by wire transfer to a bank account designated by
BancorpSouth; provided that failure or refusal of BancorpSouth to designate such
a bank account or to accept surrender of this Agreement shall not preclude the
Holder from exercising the Option.
(h) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (g) of this Section 2, BancorpSouth
shall deliver to the Holder a certificate or certificates representing the
number of shares of BancorpSouth Common Stock purchased by the Holder and, if
the
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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.
(i) Certificates for BancorpSouth 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
BancorpSouth, Inc. (the "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 the Issuer and will be provided to the holder
hereof without charge upon receipt by the Issuer of a written request
therefor."
The parties acknowledge and agree 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 BancorpSouth a copy of a
letter from the staff of the SEC, or an opinion of counsel, in form and
substance reasonably satisfactory to BancorpSouth, 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.
(j) Upon the giving by the Holder to BancorpSouth of the written notice of
exercise of the Option provided for under subsection (f) 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 BancorpSouth
Common Stock issuable upon such exercise, notwithstanding that the stock
transfer books of BancorpSouth shall then be closed or that certificates
representing such shares of BancorpSouth Common Stock shall not then be actually
delivered to the Holder. BancorpSouth 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.
3. Covenants. BancorpSouth agrees: (i) that it shall at all times
maintain, free from preemptive rights, sufficient authorized but unissued shares
of BancorpSouth Common Stock so that the Option may be exercised without
additional authorization of BancorpSouth Common Stock after giving effect to all
other options, warrants, convertible securities and other rights to purchase
BancorpSouth Common Stock; (ii) that it will not, by amendment of its articles
of incorporation 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 BancorpSouth; (iii) promptly to take all
action as may from time to time be required (including (A) complying with all
premerger notification, reporting and waiting period requirements specified in
15 U.S.C. sec. 18a and regulations promulgated thereunder and (B) 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
BancorpSouth duly and effectively to issue shares of BancorpSouth Common Stock
pursuant hereto; and (iv) promptly to take all action provided herein to protect
the rights of the Holder against dilution.
4. Exchange and Replacement. 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
BancorpSouth, 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 BancorpSouth Common Stock purchasable hereunder.
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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 BancorpSouth 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, BancorpSouth 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 BancorpSouth,
whether or not the Agreement so lost, stolen, destroyed or mutilated shall at
any time be enforceable by anyone.
5. Anti-Dilution Adjustments. In addition to the adjustment in the number
of shares of BancorpSouth Common Stock that are purchasable upon exercise of the
Option pursuant to Section 1 of this Agreement, the number of shares of
BancorpSouth 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 BancorpSouth Common Stock by reason of a stock dividend, stock split,
split-up, merger, recapitalization, combination, subdivision, conversion,
exchange of shares, distribution on or in respect of the BancorpSouth Common
Stock that would be prohibited under the terms of the Merger Agreement, or the
like, the type and number of shares or securities subject to the Option, and the
Option Price therefor, 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 BancorpSouth's
obligations hereunder, so that the Holder shall receive, upon exercise of the
Option, the number and class of shares or other securities or property that the
Holder would have received in respect of BancorpSouth Common Stock if the Option
had been exercised immediately prior to such event, or the record date therefor,
as applicable. If any additional shares of BancorpSouth Common Stock are issued
after the date of this Agreement (other than pursuant to an event described in
the first sentence of this Section 5), the number of shares of BancorpSouth
Common Stock subject to the Option shall be adjusted so that, after such
issuance, it, together with any shares of BancorpSouth Common Stock previously
issued pursuant hereto, equals 19.9% of the number of shares of BancorpSouth
Common Stock then issued and outstanding, without giving effect to any shares
subject to or issued pursuant to the Option.
6. Registration Rights. Upon the occurrence of a Subsequent Triggering
Event that occurs prior to an Exercise Termination Event, BancorpSouth shall, at
the request of Holder delivered within 180 days following 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 BancorpSouth
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 BancorpSouth Common Stock issued upon total or partial exercise of
this Option ("Option Shares") in accordance with any plan of disposition
requested by Holder. BancorpSouth 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. Holder shall
have the right to demand two such registrations. BancorpSouth shall bear the
costs of such registrations (including, but not limited to, BancorpSouth's
attorneys' fees, printing costs and filing fees, but excluding underwriting
discounts or commissions, brokers' fees and the fees and disbursements of
Holder's counsel related to the Option or Option Shares). The foregoing
notwithstanding, if, at the time of any request by Holder for registration of
the Option or Option Shares as provided above, BancorpSouth is in registration
with respect to an underwritten public offering by BancorpSouth of shares of
BancorpSouth 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 Option or the Option Shares
would interfere with the successful marketing of the shares of BancorpSouth
Common Stock offered by BancorpSouth, 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
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the total number of shares to be sold by the Holder and BancorpSouth in the
aggregate; and provided further, however, that if such reduction occurs, then
BancorpSouth shall file a registration statement for the balance as promptly as
practicable and no reduction pursuant to this Section 6 shall be permitted or
occur and the Holder shall thereafter be entitled to one additional
registration, and the 180 day period referenced in the first sentence of this
Section 6 shall be deemed to be 360 days. Each such Holder shall provide all
information reasonably requested by BancorpSouth for inclusion in any
registration statement to be filed hereunder. If requested by any such Holder in
connection with such registration, BancorpSouth 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 BancorpSouth. Upon receiving any request under this
Section 6 from any Holder, BancorpSouth agrees to send a copy thereof to any
other person known to BancorpSouth 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
BancorpSouth 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 Holder as a
result of any assignment or division of this Agreement.
7. Repurchase.
(a) At First United's Option. At any time after the occurrence of a
Repurchase Event (as defined below), (i) at the request of the Holder, delivered
prior to an Exercise Termination Event (or such later period pursuant to Section
10), BancorpSouth (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 of BancorpSouth Common Stock 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 prior to a Repurchase Event
(or such later period pursuant to Section 10), BancorpSouth (or any successor
thereto) 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.
For purposes of this Agreement, the term "Market/Offer Price" shall mean
the highest of (i) the price per share of BancorpSouth Common Stock at which a
tender offer or exchange offer therefor has been made, (ii) the price per share
of BancorpSouth Common Stock to be paid by any third party pursuant to an
agreement with BancorpSouth, (iii) the highest closing price for shares of
BancorpSouth Common Stock within the six-month period immediately preceding the
date the Holder gives notice of the required repurchase of the 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
BancorpSouth's assets or deposits, the sum of the price paid in such sale for
such assets or deposits and the current market value of the remaining net assets
of BancorpSouth 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 BancorpSouth, divided by the number of shares of BancorpSouth
Common Stock 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 BancorpSouth.
The Holder and the Owner, as the case may be, may exercise its right to
require BancorpSouth to repurchase the Option and any Option Shares pursuant to
this Section 7 by surrendering for such purpose to BancorpSouth, at its
principal office, a copy of 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 BancorpSouth to repurchase
this Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly as practicable, and in any event within 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, BancorpSouth
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 that BancorpSouth is not then prohibited under applicable law and
regulation from so delivering.
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(b) At BancorpSouth's Option. At any time after the occurrence of a
Repurchase Event, (i) at the request of BancorpSouth to the Holder, delivered
prior to an Exercise Termination Event (or such later period pursuant to Section
10), BancorpSouth (or any successor thereto) may repurchase the Option from the
Holder at the Option Repurchase Price, and (ii) at the request of BancorpSouth
to the Owner, delivered prior to a Repurchase Event (or such later period
pursuant to Section 10), BancorpSouth (or any successor thereto) may repurchase
the Option Shares (except with respect to Option Shares that have theretofore
been transferred by the Holder to an unaffiliated third party) from the Owner at
the Option Share Repurchase Price.
BancorpSouth may exercise its right to repurchase the Option and any Option
Shares pursuant to this Section 7 by surrendering for such purpose to Holder or
Owner, as applicable, at its principal office, a written notice or notices
stating that BancorpSouth elects to repurchase this Option and/or the Option
Shares in accordance with the provisions of this Section 7. As promptly as
practicable, and in any event within 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, BancorpSouth 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.
(c) Regulatory Restrictions. To the extent that BancorpSouth is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from repurchasing the Option and/or the Option Shares in full,
BancorpSouth 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 BancorpSouth
is no longer so prohibited; provided, however, that if BancorpSouth 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, or as a consequence
of administrative policy, 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 BancorpSouth 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, BancorpSouth shall promptly (i) deliver to the
Holder and/or the Owner, as applicable, that portion of the Option Repurchase
Price or the Option Share Repurchase Price that BancorpSouth is not prohibited
from delivering; and (ii) deliver, as applicable, either (A) to the Holder, a
new Agreement evidencing the right of the Holder to purchase that number of
shares of BancorpSouth Common Stock obtained by multiplying the number of shares
of BancorpSouth Common Stock for which the surrendered 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, and/or (B) to the Owner, a certificate for the Option Shares it is then
so prohibited from repurchasing. If an Exercise Termination Event shall have
occurred prior to the date of the notice by BancorpSouth described in the first
sentence of this subsection (c), or should be scheduled to occur at any time
before the expiration of a period ending on the 30th day after such date, the
Holder shall nonetheless have the right to exercise the Option until the
expiration of such 30-day period.
(d) For purposes of this Section 7, a "Repurchase Event" shall be deemed to
have occurred upon the occurrence of any of the following events or transactions
after the date hereof:
(i) the acquisition by any person (other than First United or any
First United Subsidiary) of beneficial ownership of 50% or more of the then
outstanding shares of BancorpSouth Common Stock; or
(ii) the consummation of any Acquisition Transaction described in
Section 2 hereof, except that the percentage of voting power referred to in
clause (3) thereof shall be deemed to be 25%.
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8. Successor Issuer.
(a) In the event that prior to an Exercise Termination Event, BancorpSouth
shall enter into an agreement (i) to consolidate with or merge into any person,
other than First United or a First United Subsidiary, or engage in a plan of
exchange with any person other than First United or a First United Subsidiary,
and BancorpSouth shall not be the continuing or surviving corporation of such
consolidation or merger or the acquirer in such plan of exchange, (ii) to permit
any person, other than First United or a First United Subsidiary, to merge into
BancorpSouth or be acquired by BancorpSouth in a plan of exchange and
BancorpSouth shall be the continuing or surviving corporation, but, in
connection with such merger or plan of exchange, the then outstanding shares of
BancorpSouth 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 BancorpSouth Common Stock shall after such merger or plan
of exchange represent less than 50% of the outstanding voting shares and voting
share equivalents of the merged or acquiring company, or (iii) to sell or
otherwise transfer all or substantially all of its or any BancorpSouth
Subsidiary's assets or deposits to any person, other than First United or a
First United Subsidiary, 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 or entity that controls the Acquiring
Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (A) the continuing or surviving
person of a consolidation or merger with BancorpSouth (if other than
BancorpSouth), (B) the acquiring person in a plan of exchange in which
BancorpSouth is acquired, (C) BancorpSouth in a merger or plan of exchange
in which BancorpSouth is the continuing or surviving or acquiring person,
and (D) the transferee of all or substantially all of BancorpSouth's assets
or deposits (or the assets or deposits of any BancorpSouth Subsidiary).
(ii) "Substitute Common Stock" shall mean the common stock issued by
the issuer of the Substitute Option upon exercise of the Substitute Option.
(iii) "Assigned Value" shall mean the Market/Offer Price, as defined
in Section 7.
(iv) "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 BancorpSouth 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
BancorpSouth 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 (after giving effect for
such purpose to the provisions of Section 9), which agreement 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 BancorpSouth Common Stock for which the Option was
exercisable immediately prior to the event described in the first sentence of
Section 8(a) above, 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 BancorpSouth Common Stock for which the Option was
exercisable immediately prior to the event described in the first sentence of
Section 8(a) above and the denominator of
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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
subsection (e), the issuer of the Substitute Option (the "Substitute Option
Issuer") shall make a cash payment to the Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in this
subsection (e) over (ii) the value of the Substitute Option after giving effect
to the limitation in this subsection (e). This difference in value shall be
determined by a nationally recognized investment banking firm selected by the
Holder.
(f) BancorpSouth 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
BancorpSouth hereunder.
9. Successor Repurchase.
(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 180 day 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/or 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, or as a consequence of administrative policy, from
repurchasing the Substitute Option and/or the Substitute Shares in part or in
full, the Substitute Option Issuer 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, or as a consequence of administrative policy, from delivering to the
Substitute Option Holder and/or the Substitute Share Owner, as appropriate, the
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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 applicable, 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, and/or (B) to the Substitute
Share Owner, a certificate for the Substitute Common Shares it is then so
prohibited from repurchasing. If an Exercise Termination Event shall have
occurred prior to the date of the notice by the Substitute Option Issuer
described in the first sentence of this subsection (c), or shall be scheduled to
occur at any time before the expiration of a period ending on the 30th day after
such date, the Substitute Option Holder shall nevertheless have the right to
exercise the Substitute Option until the expiration of such 30 day period.
10. Certain Extensions of Exercise Period. The periods for exercise of
certain rights under Sections 2, 6, 7, 9 and 11 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; (ii) to the
extent necessary to avoid liability under Section 16(b) of the 1934 Act by
reason of such exercise; and (iii) to the extent that there exists an
injunction, order or judgment that prohibits or delays exercise of such right.
11. Surrender.
(a) Holder may, at any time following a Repurchase Event and prior to the
occurrence of an Exercise Termination Event (or such later period pursuant to
Section 10), relinquish the Option (together with any Option Shares issued to
and then owned by Holder) to BancorpSouth in exchange for a cash fee equal to
the Surrender Price (as hereinafter defined). The "Surrender Price" shall be
equal to (x) $22,500,000 plus, if applicable, (y) Holder's purchase price with
respect to any Option Shares, and minus, if applicable, (z) the excess of (1)
the net price, if any, received by Holder or a Holder Subsidiary pursuant to the
sale of Option Shares (or any other securities into which such Option Shares
were converted or exchanged) to any unaffiliated party, over (2) Holder's
purchase price of such Option Shares.
(b) Holder may exercise its right to relinquish the Option and any Option
Shares pursuant to this Section 11 by surrendering to BancorpSouth, at its
principal office, a copy of this Agreement together with certificates for Option
Shares, if any, accompanied by a written notice stating (i) that Holder elects
to relinquish the Option and Option Shares, if any, in accordance with the
provisions of this Section 11 and (ii) the Surrender Price. The Surrender Price
shall be payable in immediately available funds on or before the second business
day following receipt of such notice by BancorpSouth.
(c) To the extent that BancorpSouth is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from paying the
Surrender Price to Holder in full, BancorpSouth shall immediately so notify
Holder and thereafter deliver or cause to be delivered, from time to time, to
Holder, the portion of the Surrender Price that it is no longer prohibited from
paying, within five business days after the date on which BancorpSouth is no
longer so prohibited; provided, however, that if BancorpSouth at any time after
delivery of a notice of surrender pursuant to subsection (b) of this Section 11
is prohibited under applicable law or regulation, or as a consequence of
administrative policy, from paying to Holder the Surrender Price in full, then
(i) BancorpSouth shall (A) use its reasonable best efforts to obtain all
required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to make such payments, (B) within five business
days after the submission or receipt of any documents relating to any such
regulatory and legal approvals, provide Holder with copies of the same, and (C)
keep Holder advised of both
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the status of any such request for regulatory and legal approvals, as well as
any discussions with any relevant regulatory or other third party reasonably
related to the same, and (ii) Holder may revoke such notice of surrender by
delivery of a notice of revocation to BancorpSouth and, upon delivery of such
notice of revocation, the Exercise Termination Date shall be extended to a date
90 days following the date on which the Exercise Termination Date would have
occurred if not for the provisions of this Section 11(c) (during which period
Holder may exercise any of its rights hereunder, including any and all rights
pursuant to this Section 11).
12. Maximum Total Profit. Notwithstanding any other provision of this
Agreement to the contrary, in no event shall Holder's Total Profit (as defined
below) exceed $22,500,000, and, if such Total Profit would otherwise exceed
$22,500,000, Holder, at its election in its sole discretion, shall either (i)
reduce the number of shares of BancorpSouth Common Stock subject to the Option,
(ii) deliver to BancorpSouth for cancellation without consideration Option
Shares previously purchased by Holder, (iii) pay cash to BancorpSouth, or (iv)
any combination of the foregoing, such that Holder's actually realized Total
Profit shall not exceed $22,500,000 after taking into account the foregoing
actions.
As used in this Agreement, the term "Total Profit" shall mean the aggregate
sum (prior to the payment of taxes) of the following: (a) the amount of Option
Repurchase Price received by Holder pursuant to BancorpSouth's repurchase of the
Option (or any portion thereof) pursuant to Section 7 hereof; plus (b) the
difference of (i) the amount of Option Share Repurchase Price received by Holder
pursuant to BancorpSouth's repurchase of Option Shares pursuant to Section 7
hereof, less (ii) Holder's purchase price for such Option Shares; plus (c) the
difference of (i) the net cash amounts received by Holder pursuant to the sale
of Option Shares (or any other securities into which such Option Shares shall be
converted or exchanged) to any unaffiliated person, less (ii) Holder's purchase
price of such Option Shares; plus (d) any amounts received by First United on
the transfer of the Option (or any portion thereof) to any unaffiliated person;
plus (e) the amount of Surrender Price received by Holder pursuant to
relinquishment of the Option and Option Shares to BancorpSouth pursuant to
Section 11 hereof.
The provisions of this Section 12 shall apply to any Substitute Option.
The parties hereto agree that this Section 12 shall not, and shall not be
deemed to, limit, prejudice or restrict any money damages, injunctive relief or
other legal or equitable remedy or relief available to BancorpSouth with respect
to any breach of the Merger Agreement or this Agreement.
13. Representations and Warranties.
(a) By BancorpSouth. BancorpSouth hereby represents and warrants to First
United as follows:
(i) BancorpSouth has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions 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 BancorpSouth and no other corporate
proceedings on the part of BancorpSouth are necessary to authorize this
Agreement or to consummate the transactions so contemplated. This Agreement
has been duly and validly executed and delivered by BancorpSouth and is
enforceable against BancorpSouth in accordance with its terms.
(ii) BancorpSouth 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 BancorpSouth Common Stock equal to the maximum
number of shares of BancorpSouth 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.
(b) By First United. First United hereby represents and warrants to
BancorpSouth as follows:
(i) First United 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
G-11
<PAGE> 175
hereby. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of First United.
This Agreement has been duly executed and delivered by First United.
(ii) The Option is not being, and any shares of BancorpSouth Common
Stock or other securities acquired by First United upon exercise of the
Option will not be, acquired by First United with a view to the public
distribution thereof and will not be transferred or otherwise disposed of
by First United except in a transaction registered under or exempt from
registration under the 1933 Act.
14. Assignment. Neither of the parties hereto may assign any of its rights
or obligations under this 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, First United, subject to the express provisions hereof, may
assign in whole or in part its rights and obligations hereunder; provided,
however, that until the date 15 days following the date on which the Federal
Reserve Board approves an application by First United under the BHCA to acquire
the shares of BancorpSouth Common Stock subject to the Option, First United may
not assign 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 First United, (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 First United's
behalf, or (iv) any other manner approved by the Federal Reserve Board.
15. Best Efforts. Each of BancorpSouth and First United will use its
reasonable 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 BancorpSouth Common
Stock issuable hereunder on any exchange or market on which shares of
BancorpSouth Common Stock may be listed or quoted upon official notice of
issuance and applying to the Federal Reserve Board under the BHCA for approval
to acquire the shares issuable hereunder, but First United shall not be
obligated to apply to state banking authorities for approval to acquire the
shares of BancorpSouth Common Stock issuable hereunder until such time, if ever,
as it deems appropriate to do so.
16. Miscellaneous.
(a) 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):
(i) if to BancorpSouth, to:
BancorpSouth, Inc.
One Mississippi Plaza
Tupelo, Mississippi 38804
Attention: Aubrey B. Patterson
Facsimile: (662) 680-2006
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.
Facsimile: (615) 244-6804
and
G-12
<PAGE> 176
(ii) if to First United, to:
First United Bancshares, Inc.
Main and Washington Streets
El Dorado, Arkansas 71730
Attention: James V. Kelley
Facsimile: (870) 863-3181
with a copy (which shall not constitute notice) to:
Mitchell, Williams, Selig, Gates & Woodyard, PLLC
425 West Capitol Avenue, Suite 1800
Little Rock, Arkansas 72201
Attention: Hermann Ivester, Esq.
Facsimile: (501) 688-8807
(b) Interpretation. In this Agreement, unless a contrary intention
appears, the words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular Section or
other subdivision. 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 April 16, 2000. Unless the context otherwise
requires, when used in this Agreement, (i) the singular shall include the
plural, the plural shall include the singular, and all nouns, pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine or
neuter, as the identity of the person or persons may require, and (ii) the term
"or" shall mean "and/or." The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. The parties hereto have each negotiated the
terms hereof, reviewed this Agreement carefully, and discussed it with their
respective legal counsel. It is the intent of the parties that each word, phrase
and sentence and other part hereof shall be given its plain meaning. No
provision of this Agreement shall be interpreted or construed against any party
hereto solely because such party or its legal representative drafted such
provision.
(c) Defined Terms. Capitalized terms used in this Agreement and not
defined herein shall have the meanings assigned thereto in the Merger Agreement,
and shall be applicable to the singular and the plural forms of such terms,
except as otherwise provided herein.
(d) 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 party hereto, it being understood that all parties need not sign the same
counterpart.
(e) Entire Agreement. This Agreement 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 Merger
Agreement.
(f) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Mississippi, without regard to the
conflicts of laws principles of any jurisdiction. The parties agree that the
venue for resolution of any dispute arising out of this Agreement shall be a
court of competent jurisdiction in Mississippi or Arkansas.
(g) Enforcement of Agreement. The parties hereto agree that irreparable
damage would occur in the event that the provisions contained in 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 this Agreement and to enforce
specifically the terms and provisions thereof in any court of the United States
or any state having jurisdiction, without having to post bond therefor or prove
actual damages, this being in addition to any other remedy to which they are
entitled at law or in equity.
G-13
<PAGE> 177
(h) Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
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. If for any reason a court or regulatory
agency determines that the Holder is not permitted to acquire, or First United
is not permitted to repurchase pursuant to Section 7, the full number of shares
of BancorpSouth Common Stock provided in Section 1(a) hereof (as adjusted
pursuant to Section 1(b) or 5 hereof), it is the express intention of the
parties to allow the Holder to acquire, or to require or permit BancorpSouth to
repurchase pursuant to Section 7, such lesser number of shares of BancorpSouth
Common Stock as may be permissible, without any amendment or modification
hereof.
(i) Waiver. No delay or omission on the part of any party hereto in
exercising any right hereunder shall operate as a waiver of such right or any
other right under this Agreement. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof.
(j) Expenses. All costs and expenses, including legal, accounting and
financial advisory fees and expenses, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses.
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.
FIRST UNITED BANCSHARES, INC.
BY: /s/ JAMES V. KELLEY
------------------------------------
James V. Kelley
Chairman and Chief Executive
Officer
BANCORPSOUTH, INC.
BY: /s/ AUBREY B. PATTERSON
------------------------------------
Aubrey B. Patterson
Chairman and Chief Executive
Officer
G-14
<PAGE> 178
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
A. Restated Articles of Incorporation and Bylaws.
BancorpSouth's Restated Articles of Incorporation provide that it will
indemnify, and upon request advance expenses to, any person (or his estate) who
was or is a party to any legal proceeding because he is or was a director,
officer or employee of BancorpSouth, or is or was serving at the request of
BancorpSouth as a director, officer, partner, trustee, employee or agent of
another corporation, partnership, or other entity, against any liability
incurred in that proceeding (A) to the full extent permitted by the Mississippi
Business Corporation Act, and (B) despite the fact that such person did not meet
the standard of conduct specified in the Mississippi Business Corporation Act or
would be disqualified for indemnification under the Mississippi Business
Corporation Act, if a determination is made that (i) the person seeking
indemnity is fairly and reasonably entitled to indemnification in view of all of
the relevant circumstances, and (ii) his acts or omissions did not constitute
gross negligence or willful misconduct. A request for reimbursement or
advancement of expenses prior to final disposition of the proceeding must be
accompanied by an undertaking to repay the advances if it is ultimately
determined that he did not meet the requisite standard of conduct but it need
not be accompanied by an affirmation that the person seeking indemnity believed
he has met the standard of conduct.
BancorpSouth's Amended and Restated Bylaws provide that it will indemnify
officers and directors who are a party to any legal proceeding because he is or
was an officer or director of BancorpSouth against any expenses or awards in
connection therewith if he acted in good faith and in a manner he reasonably
believed to be in the best interest of BancorpSouth and, with respect to any
criminal proceeding, had no reasonable cause to believe his conduct was
unlawful. BancorpSouth also will indemnify officers and directors who are a
party to any derivative suit with respect to BancorpSouth because that person is
or was an officer or director of BancorpSouth, against expenses incurred in
connection with that action unless he is found to have acted without good faith
and without that degree of care, diligence and skill which ordinarily prudent
men would exercise in similar circumstances and in like positions, unless,
despite such finding of liability, the court determines that he is entitled to
indemnity. BancorpSouth's Amended and Restated Bylaws also provide that
BancorpSouth may (i) advance to the officer or director the expenses incurred in
defending a proceeding upon receipt of an undertaking that he will repay amounts
advanced unless it ultimately is determined that he is entitled to be
indemnified, and (ii) purchase and maintain insurance on behalf of an officer or
director against any liability arising out of his acting as such.
B. Mississippi Business Corporation Act.
In addition to the foregoing provisions of BancorpSouth's Restated Articles
of Incorporation and Amended and Restated Bylaws, directors, officers, employees
and agents of BancorpSouth and its subsidiaries may be indemnified by
BancorpSouth pursuant to Sections 79-4-8.50 through 79-4-8.57 and 79-4-8.59 of
the Mississippi Business Corporation Act.
C. Insurance.
BancorpSouth maintains and pays premiums on an insurance policy on behalf
of its officers and directors against liability asserted against or incurred by
such persons in or arising from their capacity as such.
D. SEC Policy On Indemnification.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling BancorpSouth
pursuant to the foregoing provisions, BancorpSouth has been informed that in the
opinion of the SEC such indemnification is against public policy as expressed in
the Securities Act and is therefore unenforceable.
II-1
<PAGE> 179
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <C> <S>
2.1 -- Agreement and Plan of Merger, dated as of April 16, 2000,
between BancorpSouth, Inc. and First United Bancshares,
Inc.(1)
2.2 -- Consent and Amendment to Agreement and Plan of Merger, dated
as of May 15, 2000, between BancorpSouth, Inc. and First
United Bancshares, Inc.
3.1 -- Restated Articles of Incorporation of BancorpSouth, Inc.(2)
3.2 -- Amended and Restated Bylaws of BancorpSouth, Inc.(3)
5.1 -- Opinion of Riley, Ford, Caldwell & Cork, P.A.
8.1 -- Opinion of Waller Lansden Dortch & Davis, A Professional
Limited Liability Company, as to tax matters
8.2 -- Opinion of Mitchell, Williams, Selig, Gates & Woodyard,
P.L.L.C., as to tax matters
10.1 -- Stock Option Agreement, dated as of April 16, 2000, between
BancorpSouth, Inc. and First United Bancshares, Inc. in
favor of the Registrant
10.2 -- Stock Option Agreement, dated as of April 16, 2000, between
BancorpSouth, Inc. and First United Bancshares, Inc. in
favor of First United Bancshares, Inc.
10.3 -- Stock Bonus Agreement, dated as of April 16, 2000, between
BancorpSouth, Inc. and James V. Kelley
10.4 -- Stock Bonus Escrow Agreement, dated as of April 16, 2000,
among BancorpSouth, Inc., James V. Kelley and BancorpSouth
Bank
10.5 -- Change in Control Agreement, dated as of April 16, 2000,
between BancorpSouth, Inc. and James V. Kelley
11.1 -- Statement re computation of earnings per share(4)
21.1 -- List of subsidiaries of BancorpSouth, Inc.(4)
23.1 -- Consent of KPMG LLP
23.2 -- Consent of Arthur Andersen LLP
23.3 -- Consent of Waller Lansden Dortch & Davis, A Professional
Limited Liability Company (included in opinion filed as
Exhibit 8.1)
23.4 -- Consent of Mitchell, Williams, Selig, Gates & Woodyard,
P.L.L.C. (included in opinion filed as Exhibit 8.2)
23.5 -- Consent of Riley, Ford, Caldwell & Cork, P.A. (included in
opinion filed as Exhibit 5.1)
23.6 -- Consent of Salomon Smith Barney Inc.
23.7 -- Consent of Stephens Inc.
23.8 -- Consent of Stifel, Nicolaus & Company, Inc.
24.1 -- Power of Attorney (included on page II-4)
99.1 -- Form of BancorpSouth, Inc.'s Proxy Card
99.2 -- Form of First United Bancshares, Inc.'s Proxy Card
</TABLE>
---------------
(1) Incorporated by reference to BancorpSouth, Inc.'s Current Report on Form 8-K
filed on April 27, 2000.
II-2
<PAGE> 180
(2) Incorporated by reference to exhibits 3.1 and 3.2 filed with BancorpSouth,
Inc.'s Registration Statement on Form S-4, filed on January 5, 1995.
(3) Incorporated by reference to BancorpSouth, Inc.'s Annual Report on Form 10-K
for the year ended December 31, 1998.
(4) Incorporated by reference to BancorpSouth, Inc.'s Annual Report on Form 10-K
for the year ended December 31, 1999.
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act) that is incorporated by reference in the Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
The Registrant undertakes that every prospectus: (i) that is filed pursuant
to the paragraph immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Securities Act and is used in connection
with an offering of securities subject to Rule 415, will be filed as part of an
amendment to the Registration Statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-3
<PAGE> 181
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tupelo, State of
Mississippi, on June 14, 2000.
BANCORPSOUTH, INC.
By: /s/ AUBREY B. PATTERSON
------------------------------------
Aubrey B. Patterson
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Aubrey B. Patterson and L. Nash Allen, Jr., and
each of them, with full power to act without the other, his true and lawful
attorney-in-fact, as agent and with full power of substitution and
resubstitution for him and in his name, place and stead, in any and all
capacity, to sign any or all amendments to this Registration Statement and any
registration statement relating to the same offering as this Registration
Statement that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agents in full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully and to all intents and purposes
as they might or be in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, and their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
/s/ AUBREY B. PATTERSON Chairman of the Board, June 14, 2000
--------------------------------------------------- President, Chief Executive
Aubrey B. Patterson Officer, Director (principal
executive officer)
/s/ L. NASH ALLEN, JR. Treasurer and Chief Financial June 14, 2000
--------------------------------------------------- Officer (principal financial
L. Nash Allen, Jr. and accounting officer)
/s/ SHED H. DAVIS Director June 14, 2000
---------------------------------------------------
Shed H. Davis
/s/ HASSELL H. FRANKLIN Director June 14, 2000
---------------------------------------------------
Hassell H. Franklin
/s/ W.G. HOLLIMAN, JR. Director June 14, 2000
---------------------------------------------------
W.G. Holliman, Jr.
</TABLE>
II-4
<PAGE> 182
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
/s/ A. DOUGLAS JUMPER Director June 14, 2000
---------------------------------------------------
A. Douglas Jumper
/s/ TURNER O. LASHLEE Director June 14, 2000
---------------------------------------------------
Turner O. Lashlee
/s/ ALAN W. PERRY Director June 14, 2000
---------------------------------------------------
Alan W. Perry
/s/ TRAVIS E. STAUB Director June 14, 2000
---------------------------------------------------
Travis E. Staub
/s/ ANDREW R. TOWNES, D.D.S. Director June 14, 2000
---------------------------------------------------
Andrew R. Townes, D.D.S
</TABLE>
II-5
<PAGE> 183
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <C> <S>
2.1 -- Agreement and Plan of Merger, dated as of April 16, 2000,
between BancorpSouth, Inc. and First United Bancshares,
Inc.(1)
2.2 -- Consent and Amendment to Agreement and Plan of Merger, dated
as of May 15, 2000, between BancorpSouth, Inc. and First
United Bancshares, Inc.
3.1 -- Restated Articles of Incorporation of BancorpSouth, Inc.(2)
3.2 -- Amended and Restated Bylaws of BancorpSouth, Inc.(3)
5.1 -- Opinion of Riley, Ford, Caldwell & Cork, P.A.
8.1 -- Opinion of Waller Lansden Dortch & Davis, A Professional
Limited Liability Company, as to tax matters
8.2 -- Opinion of Mitchell, Williams, Selig, Gates & Woodyard,
P.L.L.C., as to tax matters
10.1 -- Stock Option Agreement, dated as of April 16, 2000, between
BancorpSouth, Inc. and First United Bancshares, Inc. in
favor of the Registrant
10.2 -- Stock Option Agreement, dated as of April 16, 2000, between
BancorpSouth, Inc. and First United Bancshares, Inc. in
favor of First United Bancshares, Inc.
10.3 -- Stock Bonus Agreement, dated as of April 16, 2000, between
BancorpSouth, Inc. and James V. Kelley
10.4 -- Stock Bonus Escrow Agreement, dated as of April 16, 2000,
among BancorpSouth, Inc., James V. Kelley and BancorpSouth
Bank
10.5 -- Change in Control Agreement, dated as of April 16, 2000,
between BancorpSouth, Inc. and James V. Kelley
11.1 -- Statement re computation of earnings per share(4)
21.1 -- List of subsidiaries of BancorpSouth, Inc.(4)
23.1 -- Consent of KPMG LLP
23.2 -- Consent of Arthur Andersen LLP
23.3 -- Consent of Waller Lansden Dortch & Davis, A Professional
Limited Liability Company (included in opinion filed as
Exhibit 8.1)
23.4 -- Consent of Mitchell, Williams, Selig, Gates & Woodyard,
P.L.L.C. (included in opinion filed as Exhibit 8.2)
23.5 -- Consent of Riley, Ford, Caldwell & Cork, P.A. (included in
opinion filed as Exhibit 5.1)
23.6 -- Consent of Salomon Smith Barney Inc.
23.7 -- Consent of Stephens Inc.
23.8 -- Consent of Stifel, Nicolaus & Company, Inc.
24.1 -- Power of Attorney (included on page II-4)
99.1 -- Form of BancorpSouth, Inc.'s Proxy Card
99.2 -- Form of First United Bancshares, Inc.'s Proxy Card
</TABLE>
---------------
(1) Incorporated by reference to BancorpSouth, Inc.'s Current Report on Form 8-K
filed on April 27, 2000.
(2) Incorporated by reference to exhibits 3.1 and 3.2 filed with BancorpSouth,
Inc.'s Registration Statement on Form S-4, filed on January 5, 1995.
(3) Incorporated by reference to BancorpSouth, Inc.'s Annual Report on Form 10-K
for the year ended December 31, 1998.
(4) Incorporated by reference to BancorpSouth, Inc.'s Annual Report on Form 10-K
for the year ended December 31, 1999.
