UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the quarterly period ended March 31, 1999
Commission File Number 2-89900
NBC CAPITAL CORPORATION
(Exact name of registrant as specified in its charter.)
Mississippi 64-0694775
(State of other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
NBC Plaza, P. O. Box 1187, Starkville, Mississippi 39760
(Address of principal executive offices) (Zip Code)
Registrants's telephone number, including area code: (601) 323-1341
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date:
Common Stock, $1 Par Value - 5,664,736 shares as of March 31, 1999.
PART I - FINANCIAL INFORMATION
NBC CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME FOR
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Unaudited)
(Amounts in thousands, except per share data)
1999 1998
________ ________
INTEREST INCOME:
Interest and Fees on Loans $ 10,747 $ 10,971
Interest And Dividends On Investment Securities 2,683 2,984
Other Interest Income 316 366
________ ________
Total Interest 13,746 14,321
INTEREST EXPENSE:
Interest on Deposit 5,709 6,174
Interest on Borrowed Funds 375 468
________ ________
Total Interest Expense 6,084 6,642
________ ________
Net Interest Income 7,662 7,679
Provision for Possible Loan Losses 315 323
________ ________
Net Interest Income After Provision for
Loan Losses 7,347 7,356
________ ________
NON-INTEREST INCOME:
Income from Fiduciary Activities 330 294
Service Charge on Deposit Accounts 1,072 1,010
Other Non-Interest Income 763 833
________ ________
Total Non-Interest Income 2,165 2,137
Gains (Losses) on Securities 0 (24)
________ ________
NON-INTEREST EXPENSE:
Salaries and Employee Benefits 3,244 3,216
Expense of Premises and Fixed Assets 1,016 915
Other Non-Interest Expense 1,861 1,873
________ ________
Total Non-Interest Expense 6,121 6,004
________ ________
Income Before Income Taxes 3,391 3,465
Income Taxes 628 870
________ ________
NET INCOME $ 2,763 $ 2,595
======== ========
Basic and Diluted Earnings Per Share $ 0.49 $ 0.46
======== ========
NBC CAPITAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share amounts)
Mar. 31, 1999 Dec. 31, 1998
_____________ _____________
(Unaudited) (Audited)
ASSETS:
Cash and Due From Banks:
Non-Interest Bearing Balances $ 26,743 $ 27,873
Interest Bearing Balances 106 233
________ ________
Total Cash and Due From Banks 26,849 28,106
Held-To-Maturity Securities
(Market value of $34,222 at
March 31, 1999 and $34,444 at
December 31, 1998) 31,165 31,156
Available-For-Sale Securities 178,110 172,723
________ ________
Total Securities 209,275 203,879
Federal Funds Sold and Securities
Purchased Under Agreement to Resell 16,664 26,228
Loans 494,844 486,302
Less: Reserve for Loan Losses (9,747) (9,572)
________ ________
Net Loans 485,097 476,730
Bank Premises and Equipment (Net) 15,288 15,021
Interest Receivable 7,310 8,123
Other Assets 18,291 18,945
________ ________
TOTAL ASSETS $778,774 $777,032
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-Interest Bearing $ 83,203 $ 91,290
Interest Bearing Deposits 570,560 559,925
________ ________
Total Deposits 653,763 651,215
Federal Funds Purchased and Securities
Sold Under Agreements to Repurchase 11,693 10,464
Other Borrowed Funds 14,519 16,048
Interest 2,356 2,674
Other Liabilities 5,842 8,337
________ ________
TOTAL LIABILITIES 688,173 688,738
________ ________
Stockholders' Equity:
Common Stock $1 par Value, Authorized
10,000,000 shares, Issued and
Outstanding 5,664,736 5,665 5,665
Surplus and Undivided Profits 84,005 81,207
Accumulated Other Comprehensive Income
on Available-for-Sale Securities 931 1,422
________ ________
TOTAL STOCKHOLDERS' EQUITY 90,601 88,294
________ ________
TOTAL LIABILITIES & STOCKHOLDERS'
EQUITY $778,774 $777,032
======== ========
NBC CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Unaudited)
(Amounts in thousands)
1999 1998
________ ________
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 2,763 $ 2,595
Adjustments to Reconcile Net Income
to Net Cash:
Depreciation and Amortization 544 537
Deferred Income Taxes (Credits) 2 (61)
Provision for Loan Losses 315 323
Loss (Gain) on Sale of Securities - 24
(Increase) Decrease in Interest
Receivable 813 781
(Increase) Decrease in Other Assets 848 (7,072)
Increase (Decrease) in Interest
Payable (318) (266)
Increase (Decrease) in Other
Liabilities (2,495) (2,522)
________ ________
Net Cash Provided by Operating
Activities 2,472 (5,661)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from Maturities of Securities 12,287 13,874
Proceeds from Sale of Securities - 5,569
Purchase of Securities (18,427) (36,913)
Increase (Decrease) in Loans (8,682) 4,040
Additions to Bank Premises and Equipment (719) (266)
________ ________
Net Cash Used in Investing Activities (15,541) (13,696)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (Decrease) in Deposits 2,548 33,283
Dividend Paid on Common Stock - -
Increase (Decrease) in Borrowed Funds (300) (7,778)
________ ________
Net Cash Provided by Financing Activities 2,248 25,505
Net Increase (decrease) in Cash and Cash
Equivalents (10,821) 6,148
Cash and Cash Equivalents at Beginning of
Year 54,334 50,532
________ ________
Cash and Cash Equivalents at End of
Quarter $ 43,513 $ 56,680
======== ========
Interest $ 6,402 $ 6,908
======== ========
Income Taxes $ 493 $ 676
======== ========
NBC CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements include the
accounts of NBC Capital Corporation and its subsidiaries, National Bank of
Commerce and First National Finance Company. All significant intercompany
accounts and transactions have been eliminated. In the normal decision
making process, management makes certain estimates and assumptions that
affect the reported amounts that appear in these statements. Although
management believes that the estimates and assumption are reasonable and
are based on the best information available, actual results could differ.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with Generally Accepted Accounting
Principles have been condensed or omitted.
In the opinion of management, all adjustments necessary for the fair
presentation of the financial statement presented in this report have been
made. Such adjustments were of a normal recurring nature.
On December 31, 1998, the Corporation acquired all the outstanding common
stock of First National Corporation of West Point in exchange for shares of
the Corporations common stock. The acquisition of First National and its
subsidiaries has been accounted for as a pooling of interest and,
accordingly, all 1998 financial statements have been restated to include
the consolidated accounts and consolidated operations of First National and
its subsidiaries.
PART I. ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
MARCH 31, 1999
RESULTS OF OPERATIONS
First quarter of 1999 compared to the first quarter of 1998
Earnings for the first quarter of 1999 grew 6.2% to $2.76 million or $.49
per share. This compares to $2.60 million or $.46 per share for the first
quarter of 1998. These 1999 totals equate to a 1.4% return on average
assets and 12.4% return on average equity.
Net Interest Income for the first quarter of 1999 was $7.66 million
compared to $7.68 million in 1998. This represents a decrease of .3%.
This decrease resulted from a five(5) basis point decline in the net
interest margin and an $11.4 million increase in earning assets.
Non-Interest Income grew 1.3% paced by a 12.2% increase in income from the
Company's Trust and Financial Management activities and a 6.1% increase in
income from deposit accounts.
Non-Interest Expense increased 1.9% for the period reported. Approximately
86% of this increase resulted from additional depreciation and amortization
expense associated with the normal purchases of new equipment to
accommodate the growth in staff resulting from the acquisition of First
National Corporation of West Point on December 31, 1998.
Income tax expense decreased 27.8% for the period. This was the result of
an increase in the level of non-taxable securities in the investment
portfolio.
FINANCIAL CONDITION
The Company's balance sheet shows a small increase in total assets from
$777 million to $779 million during the first quarter of 1999. Deposits
increased $2.5 million. This increase in available funds, along with a $9.6
million reduction in the amount of Fed Funds Sold, were used to fund an
increase in the investment securities portfolio of $5.4 million and an
increase in net loans of $8.4 million. Loan quality remains good and
management is committed to not relaxing its underwriting standards.
Shareholders' equity increased from $88.3 million to $90.6 million during
the first quarter of 1999. This represented a 2.6% increase. During the
period there was a decrease in the market value of the available-for-sale
portion of the investment securities portfolio. This resulted in the
Accumulated Other Comprehensive Income on the available for sale securities
component of Shareholders' Equity decreasing from $1,422,000 at
December 31, 1998, to $931,000 at March 31, 1999.
The Company's bank subsidiaries are required to maintain minimum amounts of
capital to total risk weighted assets as defined by the banking regulators.
At March 31, 1999, the banks' Tier I, Tier II and Total Capital Ratios
exceeded the well-capitalized standards developed under the referenced
regulatory guidelines.
Dividends paid by the Company are provided from dividends received from the
subsidiary banks. Under the regulations controlling national banks, the
payment of dividends by the banks without prior approval from the
Comptroller of the Currency is limited in amount to the current year's net
profit and the retained net earnings of the two preceding years. At March
31, 1999, this amounted to approximately $14 million. Also, under
regulations controlling national banks, the banks are limited in the
amounts they can lend to the Company and such loans are required to be on a
fully secured basis.
YEAR 2000 COMPLIANCE
During the first quarter of 1999, the Company has continued its efforts to
prepare for January 1, 2000. All levels of the Company's management and its
Board of Directors are aware of the seriousness of this issue and the
effects it may have on the Company and its customers. The Company has a
Year 2000 Steering Committee under the leadership of the President and
Chief Operating Officer to guide it through its action plan for compliance.
The committee has been organized into three major areas, with a senior
officer directly responsible for each of the respective areas. The
committee reports monthly to the Board of Directors.
The first major area of risk relates to the Company's internal hardware and
software programs. The Company does not write its source programming code
and therefore is dependent upon external vendors and service providers.
The Company developed a plan for testing all these systems and began the
testing process during 1998. As of March 31,1999, the testing phase was
approximately 98% completed. Management considers the testing to have been
successful. Where problems have been found, steps have been taken to make
the appropriate corrections. At this time, the testing of one mission
critical system has not been completed. This test was delayed past the
initial deadline because of scheduling issues with the vendor. This test
is scheduled to be completed by May 31, 1999.
The second major area relates to external factors involving customers,
vendors and outside service providers. The risks associated with this
issue go beyond the Company's own ability to solve Year 2000 problems.
Should significant commercial customers fail to address these issues
effectively, their ability to meet debt service requirement could be
impaired, resulting in increased credit risk and increased loan
charge-offs. Should suppliers of critical services fail in their efforts
to become Year 2000 compliant, or if significant third party interfaces
fail to be compatible with the Company or fail to be Year 2000 compliant,
it could have significant adverse affects on the operations and financial
results of the Company. The Company has identified its major commercial
customers and developed plans for educating and monitoring, on an
individual account basis, the adequacy of the customers actions to address
the Year 2000 issues. The assessment of these customers was risk rated and
is being used as a factor in analyzing the allowance for loan losses. This
assessment has also become a part of the overall credit underwriting
process. Currently, management believes that the reserve for loan losses
is adequate to cover the identified risk in the loan portfolio related
specifically to this issue. However, this will be an on-going evaluation
and this situation could change as the Company moves through 1999.
As vendors of critical services and products were reviewed, management
attempted to prioritize these product and services and to determine the
worst case scenarios, assuming that these parties are unable to provide
normal services. Management has prepared contingency plans covering these
scenarios. These plans will be tested, if possible, during 1999.
Both internal and external resources are being utilized to address the Year
2000 problem. A budget of $1.8 million has been completed and approved by
the Board of Directors. Approximately 60% of this total will be from the
allocation of the salary and benefits of current employees assigned to work
on this project. Another 4% will be spent on items that will be
capitalized and amortized or depreciated over future periods. Through the
first quarter of 1999, the company has incurred approximately $400,000 in
both allocated and direct expenses relating to Year 2000. The remaining
portion of the budget is expected to be spent during the remaining portion
of 1999. This expenditure is not expected to have a material impact on the
financial performance of the Company.
Year 2000 cost and the date on which the Year 2000 modifications are
expected to be completed are based on management's estimates, which were
derived utilizing numerous assumptions of future events including the
availability of certain resources, third party modifications and other
factors. Although Management believes that the desired results will be
attained, there are no guarantees that these estimates will be achieved
and actual results could differ materially from planned results.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Debt
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
On February 3, 1999, NBC Capital Corporation entered into a
Definitive Agreement to acquire the outstanding stock of FFBS
Bancorp, Inc., in exchange for shares of its own common stock.
As a part of the merger, FFBS Bancorp, Inc. has granted an
irrevocable option to NBC Capital Corporation to purchase 19.9%
of the FFBS Bancorp, Inc. issued and outstanding shares of
Common Stock. The transaction, which is pending shareholder and
regulatory approval, is expected to be completed during the
summer of 1999.
Item 6. Exhibits and Form 8-K
(a) Exhibits
27 Financial Data Schedule
99.1 Press Release regarding the acquisition of FFBS
Bancorp, Inc. by NBC Capital Corporation, dated
February 4, 1999.
99.2 Agreement and Plan of Merger between NBC Capital
Corporation and FFBS Bancorp, Inc.
99.3 Stock Option Agreement between NBC Capital
Corporation and FFBS Bancorp, Inc.
99.4 Plan of Reorganization and Merger between NBC
Capital Corporation and FFBS Bancorp, Inc.
(b) Form 8-K
A report on Form 8-K was filed January 15, 1999.
The financial information furnished herein has not been audited by
independent accountants; however, in the opinion of management, all
adjustments necessary for a fair presentation on the results of operation
for the three month period ended March 30, 1999, have been included.
NBC CAPITAL CORPORATION
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
NBC CAPITAL CORPORATION
Registrant
May 10, 1999 /s/ Richard T. Haston
Date Richard T. Haston
Executive Vice President, Chief
Financial Officer and Treasurer
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 26,743
<INT-BEARING-DEPOSITS> 106
<FED-FUNDS-SOLD> 16,664
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 178,110
<INVESTMENTS-CARRYING> 31,165
<INVESTMENTS-MARKET> 34,222
<LOANS> 494,844
<ALLOWANCE> 9,747
<TOTAL-ASSETS> 778,774
<DEPOSITS> 653,763
<SHORT-TERM> 11,693
<LIABILITIES-OTHER> 8,198
<LONG-TERM> 14,519
0
0
<COMMON> 5,665
<OTHER-SE> 84,936
<TOTAL-LIABILITIES-AND-EQUITY> 778,774
<INTEREST-LOAN> 10,747
<INTEREST-INVEST> 2,683
<INTEREST-OTHER> 316
<INTEREST-TOTAL> 13,746
<INTEREST-DEPOSIT> 5,709
<INTEREST-EXPENSE> 6,084
<INTEREST-INCOME-NET> 7,662
<LOAN-LOSSES> 315
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 6,121
<INCOME-PRETAX> 3,391
<INCOME-PRE-EXTRAORDINARY> 2,763
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,763
<EPS-PRIMARY> 0.49
<EPS-DILUTED> 0.49
<YIELD-ACTUAL> 4.25
<LOANS-NON> 550
<LOANS-PAST> 1,437
<LOANS-TROUBLED> 28
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 9,572
<CHARGE-OFFS> 231
<RECOVERIES> 90
<ALLOWANCE-CLOSE> 9,747
<ALLOWANCE-DOMESTIC> 316
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
Exhibit 99.1
Press Release
COLUMBUS' FIRST FEDERAL TO MERGE WITH NBC
STARKVILLE - The Boards of Directors of NBC Capital Corporation and FFBS
Bancorp, Inc., the parent company for First Federal Bank for Savings,
Columbus, Mississippi, have jointly announced that they have reached an
agreement to merge the two companies whereupon NBC Capital Corporation
would be the surviving company. First Federal was originally chartered in
Columbus in 1892.
NBC Capital Corporation, with approximately $780 million in assets,
currently operates 32 banking offices in East Mississippi and Tuscaloosa,
Alabama. The company earned $9.3 million in 1998 prior to its recently
concluded merger with First National Corporation of West Point. First
Federal has assets of $160 million and operates four banking offices in
Columbus and New Hope, Mississippi. The resulting entity will have assets
of approximately $940 million.
Under the terms of the agreement, each share of FFBS common stock will be
exchanged for .7702 shares of NBC common stock. Based on the current market
price for NBC ($40.00), the per share value of the transaction is $30.81.
The aggregate value of the transaction, including the exercise of all stock
options, is approximately $50.6 million. The transaction will be a tax-free
exchange and accounted for as a pooling of interest. The transaction, which
is pending shareholder and regulatory approval is expected to be completed
in mid-1999.
"First Federal has provided quality financial service to the citizens of
Columbus and Lowndes County since 1892," stated L.F. Mallory, Jr., Chairman
and CEO of NBC Capital Corporation. "They have a well earned reputation of
offering excellent personal service to their customers and have excelled as
a retail mortgage lender in the Columbus/Lowndes County market. They are a
successful organization," said Mallory. "We look forward to our association
with them and plan to further enhance their mortgage activities as well as
provide additional financial services to their many loyal customers,"
concluded Mallory.
"We are pleased to unite with NBC," stated Frank Griffin, President and CEO
of FFBS Bancorp. "We are familiar with their management and corporate
culture. They are strong financially and share our values and commitment to
customer service. We believe our union with NBC will provide our customers
with additional financial services that will be useful to them," concluded
Griffin.
William McIntyre, Chairman of FFBS Bancorp shared Griffin's enthusiasm.
"NBC is a quality institution that knows this market. We look forward to
our companies coming together and the tremendous opportunity this union
represents for those served by First Federal and NBC," concluded McIntyre.
Exhibit 99.2
AGREEMENT AND PLAN OF MERGER
__________________________________________________________________________
BY AND BETWEEN
NBC CAPITAL CORPORATION
AND
FFBS BANCORP, INC.
DATED AS OF FEBRUARY _____, 1999
TABLE OF CONTENTS
PARTIES
RECITALS
ARTICLE I THE PARENT MERGER: EFFECTIVE TIME
1.1 The Merger
1.2 Effects of Parent Merger
1.3 Effective Time
1.4 Basic Terms
1.5 Exchange Procedures
1.6 No Fractional Shares
1.7 Pooling of Interests
1.8 Agreement
1.9 Subsequent Actions
1.10 Anti-Dilution Adjustments
1.11 Treatment of Stock Options
1.12 Reservation of Right to Revise Transaction
ARTICLE II ARTICLES OF INCORPORATION AND BY-LAWS
OF THE SURVIVING CORPORATION
2.1 Articles of Incorporation
2.2 By-Laws
ARTICLE III THE BANK MERGER
3.1 The Bank Merger
3.2 Liquidation Account
ARTICLE IV OFFICERS AND DIRECTORS
OF THE SURVIVING CORPORATION
4.1 Directors
4.2 Officers
ARTICLE V DISSENTING SHAREHOLDERS
ARTICLE VI REPRESENTATION AND WARRANTIES OF FFBS
6.1 Organization, Corporate Power and Qualification
6.2 Financial Statements
6.3 Legal Proceedings
6.4 Capitalization
6.5 Authority; No Violation
6.6 Consents and Approvals
6.7 Ownership of Subsidiary
6.8 Financial Statements and Reports
6.9 No Broker's or Finder's Fees
6.10 Compliance with Law
6.11 Employee Benefits
6.12 Information Furnished: Registration Statement
6.13 Agreements and Instruments
6.14 Material Contract Defaults
6.15 Tax Matters
6.16 Environmental Matters
6.17 Insurance
6.18 Accounting and Tax Treatment
6.19 Undisclosed Liabilities
6.20 Loans
6.21 Year 2000 Readiness
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF NBC
7.1 Organization, Corporate Power and Qualification
7.2 Authority; No Violation
7.3 Consents and Approvals
7.4 Legal Proceedings
7.5 SEC Documents
7.6 Capitalization
7.7 Financial Statements and Reports
7.8 No Broker's or Finder's Fees
7.9 Compliance with Law
7.10 Employee Benefits
7.11 Information Furnished; Registration Statement
7.12 Material Contract Defaults
7.13 Tax Matters
7.14 Environmental Matters
7.15 Insurance
7.16 Accounting and Tax Treatment
7.17 Undisclosed Liabilities
7.18 Loans
7.19 Year 2000 Readiness
ARTICLE VIII COVENANTS OF THE PARTIES
8.1 Exclusive Dealings
8.2 Conduct of Business
8.3 Current Information
8.4 Access to Properties and Records; Confidentiality
8.5 Interim Financial Statements
8.6 Approval of Shareholders
8.7 Cooperation
8.8 Unusual Events
8.9 FFBS Employees
8.10 Employee Benefit Plans
8.11 Directors
8.12 Registration Statement and Regulatory Filings
8.13 Registration of Stock Options
8.14 Pooling-of-Interests and Tax-Free Treatment
8.15 Agreements of Affiliates
ARTICLE IX CLOSING CONDITIONS
9.1 Conditions to Each Party's Obligations
Under this Agreement
9.2 Conditions Precedent to the Obligations of NBC
9.3 Conditions Precedent to the Obligations of FFBS
ARTICLE X CLOSING
10.1 Time and Place
10.2 Deliveries at Closing
ARTICLE XI TERMINATION, AMENDMENT AND WAIVER
11.1 Termination
11.2 Effect of Termination
11.3 Amendments and Waivers
ARTICLE XII MISCELLANEOUS
12.1 Expenses
12.2 Indemnification
12.3 Breach/Specific Performance
12.4 Disclosures
12.5 Parties in Interest
12.6 Survival of Representations
12.7 Waiver
12.8 Counterparts
12.9 Notices
12.10 Section Headings
12.11 Governing Law
12.12 Entire Agreement
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger ("Agreement") is executed this _______
day of February, 1999, by and between NBC CAPITAL CORPORATION ("NBC"or
"Surviving Corporation"), a Mississippi Corporation and FFBS BANCORP, INC.
("FFBS"), a Delaware Corporation, these companies being herein sometimes
collectively referred to as the "Constituent Corporations."
RECITALS
WHEREAS, the respective Boards of Directors of the Constituent Corporations
deem the merger of FFBS with and into NBC with NBC surviving, as provided
herein ("the Parent Merger") advisable and in the best interest of their
respective corporations and shareholders; and
WHEREAS, the Constituent Corporations are either bank or savings and loan
holding companies which have subsidiary banks, NBC's subsidiary bank being
National Bank of Commerce, a national banking corporation wholly owned by
NBC (the"Bank"), and FFBS's bank subsidiary being First Federal Bank for
Savings, Columbus, Mississippi, a federally chartered savings bank
regulated by the Office of Thrift Supervision ("OTS") of the Department of
the Treasury of the United States (the"Thrift"); and
WHEREAS, it is deemed by the parties to this Agreement to be appropriate
and necessary that Thrift be merged into and become a part of the Bank as
a part of the merger activity to be implemented pursuant to this Agreement;
WHEREAS, the respective Boards of Directors of NBC and FFBS have duly
adopted resolutions approving this Agreement and have directed that it be
submitted for required shareholder approval; and
WHEREAS, the Constituent Corporations parties desire and intend that the
Parent Merger qualify for federal income tax purposes as a tax-free
reorganization under Section 368 (a) of the Internal Revenue Code of 1986,
as Amended ("Code") and the regulations thereunder; and
WHEREAS, NBC and FFBS respectively desire to have certain representations,
warranties and covenants made with respect to the Parent Merger.
NOW, THEREFORE, in order to prescribe (a) the terms and conditions of the
Parent Merger, (b) the mode of carrying the same into effect, (c) the
manner and basis for converting and exchanging the common shares of FFBS
into the right to receive common shares of capital stock of NBC or cash to
holders of FFBS who validly demand dissenter's rights pursuant to
applicable provisions of law who do not vote in favor of the Parent Merger,
and (d) such other provisions as are deemed necessary, these parties hereby
agree as follows:
ARTICLE I
The Parent Merger: Effective Time
1.1 The Mergers. Subject to the terms and conditions of this Agreement,
at the Effective Time (as defined in Section 1.3 hereof), FFBS shall be
merged with and into NBC and the separate corporate existence of FFBS shall
then cease. NBC shall be the surviving corporation in the Parent Merger
and shall continue to be governed by the laws of the State of Mississippi,
and the corporate existence of NBC shall continue with the effects
specified by the Mississippi Business Corporation Act ("MBCA"). Thrift
will be merged into Bank as soon as regulatory approval will permit and all
compliance and operating requirements are met after which Thrift shall
cease to exist.
1.2 Effects of Parent Merger. On the closing, the corporate name and
existence of FFBS shall cease and all of its purposes, powers and objects,
and all of its rights, assets, liabilities and obligations, shall pass to
and vest in NBC as the Surviving Corporation without any conveyance or
transfer, and NBC as the Surviving Corporation shall continue to be
governed by the laws of the State of Mississippi and shall also succeed to
all rights, assets, liabilities and obligations of FFBS in accordance with
the MBCA. Upon the closing of the Parent Merger, the separate existence
and corporate organization of FFBS shall cease.
1.3 Effective Time. The Effective Time of the Parent Merger shall be the
time and date set forth in the certificate of merger issued by the
Secretary of State of the State of Mississippi pursuant to the MBCA and the
related certificate issued by the appropriate authorities of the State of
Delaware under the requirements of the Delaware General Corporate Law (the
"DGCL").
1.4 Basic Terms. Each share of FFBS Common Stock issued and outstanding
at the Effective Time shall be converted into .7702 of a share of NBC
Common Stock (the "Exchange Ratio"); provided, however, that in the event
the average per share closing price of NBC Common Stock ("NBC Average
Price"), as quoted by the Over-the-Counter Bulletin Board, for the 20
trading day period ending one day prior to the Effective Time is below
$33.50, then the Exchange Ratio will be adjusted upward such that the
Exchange Ratio shall equal the quotient of $25.802 divided by the NBC
Average Price, rounded to four decimal places.
Each option for the purchase of FFBS Common Stock ("FFBS Stock Option")
will be converted into an option for the purchase of NBC Common Stock as
set forth in Section 1.11.
FFBS represents that, as of the date herein, 1,575,635 shares of FFBS
Common Stock and 65,966 FFBS Stock Options (with a weighted average
exercise price of $10.00) are outstanding.
Payment will be made in cash in lieu of issuance of fractional shares based
on the Exchange Ratio as herein established and determined at the Effective
Time.
1.5. Exchange Procedures. (a) At or prior to the Effective Time, NBC
shall deposit, or shall cause to be deposited, with SunTrust Bank, Atlanta
(the "Exchange Agent"), for the benefit of the holders of certificates of
FFBS Common Stock for exchange in accordance with this Article I,
certificates representing the shares of NBC Common Stock and an estimated
amount of cash to be paid in lieu of fractional shares to be paid pursuant
to this Article I in exchange for outstanding shares of FFBS Common Stock.
(b) Holders of record of certificates which immediately prior to the
Effective Time represented outstanding shares of FFBS Common Stock (the
"Certificates") shall be instructed to tender such Certificates to the
Exchange Agent pursuant to a letter of transmittal that NBC shall deliver
or cause to be delivered to such holders as promptly as practicable
following the Effective Time. Such letter of transmittal shall specify
that risk of loss and title to Certificates shall pass only upon delivery
of such Certificates to the Exchange Agent.
(c) Subject to Section 1.6, after the Effective Time, each holder of a
Certificate(s) that surrenders such Certificate(s) to the Exchange Agent,
will, upon acceptance thereof by the Exchange Agent, be entitled to (x) a
certificate or certificates representing the number of whole shares of NBC
Common Stock into which the shares represented by the Certificate(s) so
surrendered (aggregating all Certificates surrendered by such holder) shall
have been converted pursuant to this Agreement and (y) a check representing
the amount of any cash in lieu of fractional shares, if any, and dividends
and distributions, if any, which such holder has the right to receive
hereunder with respect to the Certificate(s) so surrendered, in each case
after giving effect to any required withholding tax.
(d) The Exchange Agent shall accept Certificates upon compliance with such
reasonable terms and conditions as NBC or the Exchange Agent may impose to
effect an orderly exchange thereof in accordance with customary exchange
practices. Certificates shall be appropriately endorsed or accompanied by
such instruments of transfer as the Exchange Agent may reasonably require.
(e) All shares of NBC Common Stock issued upon surrender of Certificates
in accordance with the terms hereof (including any cash paid pursuant to
this Article I) shall be deemed to have been in full satisfaction of all
rights pertaining to such shares of FFBS Common Stock represented thereby.
After the Effective Time, holders of Certificates shall cease to have
rights with respect to the shares previously represented by such
Certificates, and their sole rights shall be to exchange such Certificates
for the consideration provided for in this Agreement.
(f) After the Effective Time, there shall be no further transfer on the
records of FFBS of Certificates, and if such Certificates are presented to
FFBS for transfer, they shall be canceled against delivery of the
consideration provided therefor in this Agreement. NBC shall not be
obligated to deliver the consideration to which any former holder of FFBS
Common Stock is entitled as a result of the Parent Merger until such holder
surrenders the Certificates as provided herein. Certificates surrendered
for exchange by any person constituting an "affiliate" of FFBS for purposes
of Rule 145 of the Securities Act, shall not be exchanged for certificates
representing NBC Common Stock until NBC has received a written agreement
from such person in the form attached hereto as Exhibit 1.5(f). Neither
the Exchange Agent nor any party to this Agreement nor any Affiliate
thereof shall be liable to any holder of stock represented by any
Certificate for any consideration paid to a public official pursuant to
applicable abandoned property, escheat or similar laws. NBC and the
Exchange Agent shall be entitled to rely upon the stock transfer books of
FFBS to establish the identity of those persons entitled to receive
consideration specified in this Agreement, which books shall be conclusive
with respect thereto. In the event of a dispute with respect to ownership
of stock represented by any Certificate, NBC and the Exchange Agent shall
be entitled to deposit any consideration represented thereby in escrow with
an independent third party and thereafter be relieved with respect to any
claims thereto.
(g) Notwithstanding any other provisions of this Agreement, no dividends
or other distributions declared or made after the Effective Time with
respect to NBC Common Stock having a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate, and no cash
payment in lieu of fractional shares shall be paid to any such holder,
until the holder shall surrender such Certificate as provided in this
Section 1.5. Subject to the effect of applicable laws, following surrender
of any such Certificate, there shall be paid to the holder of the
certificates representing whole shares of NBC Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender, the
amount of dividends or other distributions with a record date on or after
the Effective Time theretofore payable with respect to such whole shares of
NBC Common Stock and not paid, less the amount of any withholding taxes
which may be required thereon, and (ii) at the appropriate payment date
subsequent to surrender, the amount of dividends or other distributions
with a record date on or after the Effective Time but prior to surrender
and a payment date subsequent to surrender payable with respect to such
whole shares of NBC Common Stock, less the amount of any withholding taxes
which may be required thereon.
1.6. No Fractional Shares. Notwithstanding any other provision of this
Agreement, neither certificates nor scrip for fractional shares of NBC
Common Stock shall be issued in the Parent Merger. Each holder who
otherwise would have been entitled to a fraction of a share of NBC Common
Stock shall receive in lieu thereof cash (without interest) in an amount
determined by multiplying the fractional share interest to which such
holder would otherwise be entitled by the average of the closing prices per
share of NBC Common Stock for the 20 trading day period immediately
preceding the Closing Date as reported on the National Quotation Bureau
pink sheets. No such holder shall be entitled to dividends, voting rights
or any other rights in respect of any fractional share.
1.7 Pooling of Interests. The combination of such stock delivered to FFBS
shareholders and cash paid to satisfy dissenting shareholders and
fractional shareholders, and other requirements, shall be in accordance
with the requirements necessary for this transaction to be treated as a
pooling of interests transaction for accounting purposes, applying
generally accepted accounting principles.
1.8 Agreement. The parties shall diligently pursue, and as expeditiously
as possible, execute Articles of Merger consistent with the provisions of
this Agreement and shall use this Agreement and any amendments as provided
for herein as the required Plan of Merger and satisfy the filing
requirements of the State of Mississippi and other applicable law and
regulations. Both parties shall agree to and take such action as may be
necessary to qualify this transaction as a tax-free reorganization under
Section 368 of the Internal Revenue Code and the regulations thereunder.
Appropriate filings shall be made with regulatory agencies as required,
including the filing of an Interagency Application in the form set forth in
OCC Manual of April 1998, and/or such other forms and requirements as may
be directed by applicable regulatory authority.
1.9 Subsequent Actions. If, at any time after the Effective Time, NBC
shall deem that any documents or other actions are appropriate to confirm
title or rights with respect to any property of FFBS in connection with
this Merger, the Officers and Directors of NBC are authorized to execute
and deliver such documents in the name of NBC and/or FFBS and take all such
other actions considered appropriate to consummate this Agreement.
1.10. Anti-Dilution Adjustments. In the event that prior to the
Effective Time NBC shall (or shall establish a record date prior to the
Effective Time for the following) declare a stock dividend or other
distribution payable in NBC Common Stock or securities convertible into NBC
Common Stock or a distribution otherwise previously disclosed, or effect a
stock split, reclassification, combination or other change with respect to
NBC Common Stock, the Exchange Rate shall be appropriately adjusted to
reflect such dividend, distribution, stock split, reclassification,
combination or other change, such that the shareholders of FFBS shall be
entitled to same as if the Effective Time had occurred prior thereto.
1.11. Treatment of Stock Options. (a) At the Effective Time, each
outstanding option to purchase shares of FFBS Common Stock under the FFBS
stock option plans (each, an "FFBS Stock Option"), whether vested or
unvested, shall be converted into an option to acquire, on the same terms
and conditions as were applicable under such FFBS Stock Option, the number
of shares of NBC Common Stock equal to (a) the number of shares of FFBS
Common Stock subject to the FFBS Stock Option, multiplied by (b) the
Exchange Rate (such product rounded to the nearest whole number) (a
"Replacement Option"), at the exercise price per share (rounded down to the
nearest whole cent) equal to (y) the per share exercise price pursuant to
such FFBS Stock Option divided by (z) the Exchange Rate. For example, each
FFBS Stock Option with an exercise price of $10.00 shall be converted into
an option to purchase .7702 shares of NBC Common Stock with an exercise
price of $12.98. Notwithstanding the foregoing, each FFBS Stock Option
which is intended to be an "incentive stock option" (as defined in Section
422 of the Code) shall be adjusted in accordance with the requirements of
Section 424 of the Code. Accordingly, with respect to "incentive stock
options," fractional shares will be rounded down to the nearest whole
number of shares and where necessary the per share exercise price shall be
rounded up to the nearest cent. At or prior to the Effective Time, FFBS
shall use its best efforts, including its reasonable best efforts to obtain
any necessary consents from optionees, with respect to the FFBS stock
option plans to permit the replacement of the outstanding FFBS Stock
Options by NBC pursuant to this Section and to permit NBC to assume the
FFBS stock option plans. FFBS shall further take all action necessary to
amend the FFBS stock option plans to eliminate automatic grants or awards
thereunder following the Effective Time. At the Effective Time, NBC shall
assume the FFBS stock option plans; provided, that such assumption shall be
only in respect of the Replacement Options and that NBC shall have no
obligation with respect to any awards under the FFBS stock option plans
other than the Replacement Options and shall have no obligation to make any
additional grants or awards under such assumed FFBS stock option plans. As
used herein, Exchange Rate shall mean the Exchange Rate as it may be
adjusted pursuant to Section 1.4 of this Agreement.
(b) At all time after the Effective Time, NBC shall reserve for issuance
such number of shares of NBC Common Stock as necessary so as to permit the
exercise of options granted under the FFBS stock option plans in the manner
contemplated by this Agreement and the instruments pursuant to which such
options were granted. NBC shall file with the SEC a registration statement
on an appropriate form under the Securities Act with respect to the shares
of NBC Common Stock subject to the options to acquire NBC Common Stock
issued pursuant to Section 1.11(a) hereof, and shall use its reasonable
best efforts to maintain the current status of the prospectus contained
therein, as well as comply with any applicable state securities or "blue
sky" laws, for so long as such options remain outstanding.
1.12 Reservation of Right to Revise Transaction. NBC may at any time
change the method of effecting the acquisition of FFBS or Thrift by NBC,
and FFBS shall cooperate in such efforts, if and to the extent NBC deems
such change to be desirable and subject to FFBS's approval (which approval
shall not be unreasonably withheld); provided, however, that no such change
shall (A) alter or change the amount or kind of consideration to be issued
to holders of FFBS Common Stock as provided for in this Agreement (the
"Merger Consideration"), (B) adversely affect the tax treatment to FFBS's
shareholders as a result of receiving the Merger Consideration, (C)
adversely affect the qualification of the Parent Merger as a pooling of
interests for accounting and financial reporting purposes or (D) materially
delay the consummation of the transactions contemplated by this Agreement.
ARTICLE II
Articles of Incorporation and By-Laws
of the Surviving Corporation
2.1 Articles of Incorporation. The Articles of Incorporation of NBC, as
in effect immediately prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation, unless and until duly amended
in accordance with the terms thereof and MBCA.
2.2 By-Laws. The By-Laws of NBC, as in effect immediately prior to the
Effective Time, shall be the By-Laws of the Surviving Corporation unless
and until duly amended in accordance with the terms thereof and the MBCA.
2.3 No amendments to the Articles or By-Laws are contemplated at the
present time.
ARTICLE III
The Bank Merger
3.1. The Bank Merger. As may be determined by NBC to be practicable
following the Effective Time, Thrift shall be merged with and into the Bank
("Bank Merger") pursuant to the terms and conditions set forth herein and
in the Plan of Reorganization and Merger attached hereto as Exhibit 3.1
(the "Bank Agreement") and pursuant to 12 U.S.C. Sections 215c, 1815(d)(3)
and 1828(c), the separate existence of Thrift shall thereupon cease, the
Bank shall be the surviving institution in the Merger, all of the Bank's
rights, privileges, powers, immunities, purposes and franchises shall
continue unaffected by the Bank Merger, except to the extent impacted by
the assumptions of all obligations, rights, assets and liabilities of
Thrift, and the Bank shall continue at the effective time of the Bank
Merger to be regulated by the Office of the Comptroller of the Currency of
the Department of the Treasury of the United States ("OCC").
3.2. Liquidation Account. The liquidation account established by Thrift
pursuant to the plan of conversion adopted in connection with its
conversion from mutual to stock form shall, to the extent required by
applicable law, continue to be maintained by the Bank after the Effective
Time for the benefit of those persons and entities who were savings account
holders of Thrift on the eligibility and supplemental eligibility record
dates for such conversion and who continue from time to time to have rights
therein. If required by the rules and regulations of the OTS, the Bank
shall amend its charter to specifically provide for the continuation of the
liquidation account previously established by Thrift.
ARTICLE IV
Officers and Directors of the Surviving Corporation
4.1 Directors. The Directors of NBC, immediately prior to the Effective
Time shall be, from and after the Effective Time, the Directors of the
Surviving Corporation until their respective successors have been duly
elected or appointed and qualified or until their earlier death,
resignation or removal. Two presently serving directors of FFBS, shall be
appointed by NBC and become directors of NBC at the Effective Time in
accordance with applicable provisions of NBC By-Laws. The NBC Board of
Directors agrees to nominate and support such appointees for re-election to
the NBC Board at its next annual election of Directors provided such
appointees are then serving on said Board in good stead.
4.2 Officers. The Officers of NBC, immediately prior to the Effective
Time shall become the Officers of the Surviving Corporation together with
such present officers of FFBS who may be duly appointed as additional
officers of the Surviving Corporation.
ARTICLE V
Dissenting Shareholders
5.1 Each FFBS shareholder who votes against the Parent Merger and demands
Dissenter's Rights or rights of appraisal pursuant to Delaware General
Corporate Law ("DGCL"), Section 262, ("Dissenting Shareholder") and who
shall not withdraw or lose such rights of appraisal shall not have such
shares exchanged for NBC Common Stock as provided for hereinabove, but
shall be treated as a Dissenting Shareholder.
5.2 Each Dissenting Shareholder shall be entitled only to those rights
granted by DGCL Section 262 or other applicable law. FFBS shall give NBC
prompt written notice upon receipt by FFBS of any written demands for
Dissenter's Rights, and withdrawal of demands for Dissenter's Rights. FFBS
shall not, except with prior written consent of NBC, make any payment with
respect to, or settle or offer to settle, any such demands. Each
Dissenting Shareholder who becomes entitled to payment for FFBS Dissenting
Shares, shall receive payment of the estimated fair value of each share of
FFBS Common Stock from NBC and such shares of FFBS Common Stock shall be
canceled.
5.3 If any FFBS shareholder who demands Dissenter's Rights shall
effectively withdraw or lose such Dissenter's Right, each such FFBS share
shall be converted to shares of NBC at the conversion rate set out in
Section 1.4 hereof.
ARTICLE VI
Representation and Warranties of FFBS
FFBS hereby makes the following representations and warranties to NBC
except as previously disclosed or set forth in a schedule hereto:
6.1 Organization, Corporate Power and Qualification. FFBS and its
subsidiary are validly existing and in good standing with all applicable
authorities and are duly qualified to do business as a foreign corporation
in each jurisdiction in which such corporation conducts business and in
which qualification is necessary under applicable law, except to the extent
that any failure to do so would not, in the aggregate, have a material
adverse effect on the business, financial condition or result of operations
of FFBS and its subsidiary taken as a whole. FFBS has the requisite power
and authority to enter into and carry out the transactions contemplated by
this Agreement, subject to obtaining shareholder and regulatory approval as
provided herein.
6.2 Financial Statements. At the request of NBC, FFBS has previously
delivered to NBC copies of the consolidated balance sheet of FFBS as of
June 30, 1998, and each year for the previous two fiscal years, and the
related consolidated statements of income, changes in shareholders equity,
and changes in financial position, for the periods then ended, in each case
accompanied by the audit report of T. E. Lott & Company, independent
certified public accountants. These financial documents fairly represent
the consolidated financial position of FFBS and its subsidiary as of the
date thereof, and fairly present the results of the consolidated operations
and changes in shareholder equity and the consolidated financial position
of FFBS and its subsidiary for the respective fiscal periods or as of the
respective dates therein set forth. Each of the financial statements above
is true and correct in all material respects, and has been prepared in
accordance with GAAP applied on a basis consistent with other periods,
except as otherwise noted.
6.3 Legal Proceedings. Except as set forth in Schedule 6.3 to this
Agreement: (i) neither FFBS nor its subsidiary is a party to any, and
there are no pending or, to the best of FFBS's knowledge, threatened
material legal, administrative, arbitration or other proceedings, claims or
actions or governmental investigations of any nature challenging the
validity or propriety of the transaction contemplated in this Agreement,
and to the best of FFBS's knowledge, there is no reasonable basis for any
such objection; and (ii) neither FFBS, nor its subsidiary is a party to any
order, judgment or decree which will, or might reasonably be expected to,
materially adversely affect their business, operations, properties, assets
or financial condition or their ability to acquire any property or conduct
business in any area in which they presently do business.
6.4 Capitalization. The authorized capital stock of FFBS consists of
2,000,000 shares of common stock and 500,000 shares of preferred stock
(none of which are issued and outstanding). At the close of business on
August 31, 1998, there were 1,575,635 shares of such stock issued and
outstanding (excluding 100 shares of treasury stock issued but not
outstanding) and there were outstanding FFBS director and incentive stock
options for individuals to acquire 65,966 additional shares of FFBS common
stock. There are existing Recognition and Retention Plans with stock rights
calling for the issuance of 10,580 shares of FFBS common stock which number
is included in the 1,575,635 shares shown above to be outstanding. All
issued and outstanding shares of FFBS common stock have been duly
authorized and validly issued and are fully paid, non-assessable and free
of preemptive rights with no personal liability attached to the ownership
thereof. Except as set forth in Schedule 6.4 hereto, FFBS has not issued
any shares of FFBS stock in excess of the shares set forth above, and does
not have and is not bound by any outstanding subscription, option, warrant,
cause, commitment or other agreements of any character calling for the
purchase or issuance of any shares of FFBS stock or any security
representing the right to purchase or otherwise receive any FFBS stock
except as set forth in this paragraph.
6.5 Authority; No Violation.
(a) FFBS has full corporate power and authority to execute and deliver
this Agreement, and subject to obtaining approval of its shareholders as
provided herein, to consummate the transactions contemplated hereby. These
actions have been duly and validly approved by the Board of Directors of
FFBS. The Board has directed that this Agreement and the transaction
contemplated hereby be submitted to the FFBS shareholders for approval at a
meeting to be duly convened, and, except for such shareholder approval, no
other corporate proceedings on the part of FFBS are necessary to consummate
the transaction so contemplated.
(b) Neither the execution and delivery of this Agreement by FFBS nor the
consummation by FFBS of the transaction contemplated hereby, nor compliance
by FFBS with any provision hereof, will (i) violate any provision of the
Certificate of Incorporation or By-Laws of FFBS or (ii) violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree
or injunction applicable to FFBS of its subsidiary or affecting their
respective properties or assets, or (iii) violate, conflict with, result in
a breach of any provision of, constitute a default under, result in the
termination of, accelerate the performance required by, or result in the
creation of any lien, security interest, charge or other encumbrance upon
any such asset of FFBS or its subsidiary, except to the extent that such
collectively are not material and adverse.
6.6 Consent and Approvals. Except as set forth in Schedule 6.6 hereto, to
the best of the knowledge of the FFBS officers and board, no permit,
consent, approval or authorization of, or declaration, filing or
registration with, any public body or authority, or to the knowledge of
FFBS is necessary in connection with this Agreement, its consummation, the
transfer of FFBS assets to NBC and the conduct by NBC of all business now
conducted by FFBS and its subsidiary.
6.7 Ownership of Subsidiary. All the outstanding shares of the capital
stock or other ownership interests in Thrift are validly issued, fully
paid, nonassessable and owned beneficially and of record by FFBS or Thrift
free and clear of any Encumbrance. There are no outstanding rights to
purchase or acquire any capital stock of any FFBS subsidiary and no oral or
written agreement, contract, arrangement, understanding, plan or instrument
of any kind to which any of FFBS or any of its affiliates is subject with
respect to the issuance, voting or sale of issued or unissued shares of the
capital stock of Thrift. Except as disclosed in Schedule 6.7 hereto,
neither FFBS nor Thrift owns any of the capital stock or other equity
securities (including any rights with respect to such securities) of or
profit participation in any person or "company" (as defined in Section
10(a)(1)(C) of the HOLA) other than the Federal Home Loan Bank of Dallas
and Thrift.
6.8 Financial Statements and Reports. For the past three years, FFBS
and the Thrift have timely filed all regulatory documents required to be
filed by them, except to the extent that all failures to so file, in the
aggregate, would not have a material adverse effect on FFBS; and all such
documents, as finally amended, complied in all material respects with
applicable requirements of applicable law and, as of their respective date
or the date as amended, 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 light of the circumstances
under which they were made, not misleading. Except to the extent stated
therein, all financial statements and schedules included in the documents
referred to in the preceding sentences (i) are in accordance with FFBS's
books and records and those of Thrift, which books and records are
complete and accurate in all material respects and have been maintained in
all material respects in accordance with applicable law, and (ii) present
fairly the consolidated financial position and the consolidated results of
operations and cash flows of FFBS as of the dates and for the periods
indicated in accordance with GAAP consistently applied during the periods
involved (except for the omission of notes to unaudited statements,
year-end adjustments to interim results normal in nature and amount and
changes in GAAP and except where regulatory reporting requirements provide
otherwise). The audited consolidated financial statements of FFBS as of
June 30, 1998 and for the two years then ended last filed by FFBS as part
of a publicly available regulatory document disclose all liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise, whether
due or to become due and regardless of when asserted), as of their
respective dates, of FFBS and Thrift required to be reflected in such
financial statements according to GAAP, other than liabilities which are
not, in the aggregate, material to FFBS and Thrift, taken as a whole, and
contain in the opinion of management, adequate reserves for losses on loans
and properties acquired in settlement of loans, taxes and all other
material accrued liabilities and for all reasonably anticipated material
losses in accordance with GAAP, if any, as of such date. Except for (i)
those liabilities that are fully reflected or reserved against on FFBS's
audited consolidated balance sheet last filed by FFBS as part of a publicly
available regulatory document and (ii) liabilities incurred in the ordinary
course of business since the date of such audited consolidated balance
sheet and which would not have, individually or in the aggregate, a
material adverse effect on FFBS, FFBS has no liabilities or obligations of
any nature, whether absolute, accrued, contingent or otherwise and whether
due or to become due, which are or would be required by GAAP to be shown on
its consolidated balance sheet.
6.9 No Broker's or Finder's Fees. No agent, broker, investment banker,
person or firm acting on behalf or under authority of FFBS or Thrift is or
will be entitled to any broker's or finder's fee or any other commission or
similar fee directly or indirectly in connection with the Parent Merger or
any other transaction contemplated hereby, except FFBS has engaged Trident
Financial Corporation, an investment banking firm, to provide financial
advisory services.
6.10 Compliance with Law. FFBS and Thrift have been in compliance in all
respects with all applicable laws, except where such non-compliance would
not have, in the aggregate, a material adverse effect on FFBS, and neither
FFBS nor Thrift has received notice from any governmental authority of any
material violation of, and does not know of any material violations of, any
applicable law.
6.11 Employee Benefits. (a) Except as disclosed on Schedule 6.11 hereto,
neither FFBS nor Thrift maintains, contributes to or sponsors any funded
deferred compensation plans (including profit sharing, pension, savings or
stock bonus plans), unfunded deferred compensation arrangements or employee
benefit plans as defined in Section 3(3) of ERISA ("FFBS Employee Benefit
Plans") (true and correct copies of which have been delivered to NBC).
Except as disclosed on Schedule 6.11 hereto, neither FFBS nor Thrift (i)
provides health, medical, death or survivor benefits to any former employee
or beneficiary thereof, or (ii) maintains any form of current (exclusive of
base salary and base wages) or deferred compensation, bonus, stock option,
stock appreciation right, severance pay, retirement, incentive, group or
individual health insurance, welfare or similar plan or arrangement for the
benefit of any single or class of directors, officers or employees, whether
active or retired (collectively "Benefit Arrangements").
(b) Except as previously disclosed, all FFBS Employee Benefit Plans and
Benefit Arrangements were in effect for substantially all of calendar year
1998 and, there has been no material amendment thereof (other than
amendments required to comply with applicable law) and, except as disclosed
in publicly available regulatory documents filed by FFBS prior to the date
of this Agreement, there will be no material increase in the cost thereof
or benefits payable thereunder on or after January 1, 1999.
(c) To the knowledge of FFBS, with respect to all FFBS Employee Benefit
Plans and Benefit Arrangements, FFBS and Thrift are in substantial
compliance with the requirements prescribed by any and all Applicable Laws
currently in effect, including but not limited to ERISA and the Code,
applicable to such FFBS Employee Benefit Plans or Benefit Arrangements.
None of the FFBS Employee Benefit Plans which are defined benefit pension
plans have incurred any "accumulated funding deficiency" (whether or not
waived) as that term is defined in Section 412 of the Code and the fair
market value of the assets of each such plan equals or exceeds the accrued
liabilities of such plan. To the best knowledge of FFBS and Thrift, there
are not now nor have there been any non-exempt "prohibited transactions,"
as such term is defined in Section 4975 of the Code or Section 406 of
ERISA, involving the FFBS Employee Benefit Plans which could subject FFBS
or Thrift to the penalty or Tax imposed under Section 502(i) of ERISA or
Section 4975 of the Code. No FFBS Employee Benefit Plan which is subject
to Title IV of ERISA has been completely or partially terminated; no
proceedings to completely or partially terminate any FFBS Employee Benefit
Plan have been instituted within the meaning of Subtitle C of said Title IV
of ERISA; and no reportable event, within the meaning of Section 4043(c) of
said Subtitle C for which the 30-day notice requirement of ERISA has not
been waived, has occurred with respect to any FFBS Employee Benefit Plan.
Neither FFBS nor Thrift has engaged in any transaction described in Section
4069 of ERISA within the last five years. Neither FFBS nor Thrift has
failed to make any contribution or pay any amount due and owing as required
by the terms of any FFBS Employee Benefit Plan or Benefit Arrangement.
Neither FFBS nor Thrift has incurred or reasonably expects to incur any
liability to the Pension Benefit Guaranty Corporation except for required
premium payments which, to the extent due and payable, have been paid. To
the knowledge of FFBS, the FFBS Employee Benefit Plans intended to be
qualified under Section 401(a) of the Code are so qualified, and FFBS is
not aware of any fact which would adversely affect the qualified status of
such plans.
6.12 Information Furnished: Registration Statement. (a) To the best
knowledge of FFBS, no statement contained in any schedule, certificate or
other document furnished or to be furnished in writing by or on behalf of
FFBS or any of its affiliates to NBC pursuant to this Agreement (whether
prior to or subsequent to the date of this Agreement) contains or will
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 light of the circumstances under which they were made, not
misleading.
(b) None of the information provided by FFBS or Thrift for inclusion in
the registration statement on Form S-4 to be filed with the SEC by NBC
under the Securities Act of 1933, as amended ("Securities Act") relating to
shares of NBC Common Stock to be issued in the Parent Merger, including the
prospectus (the "Prospectus") relating to such issuance and the joint proxy
statement and forms of proxy relating to the vote of NBC shareholders and
FFBS shareholders with respect to the Parent Merger (as amended,
supplemented or modified, the "Proxy Statement") contained therein (such
registration statement as amended, supplemented or modified, the
"Registration Statement"), at the time the Registration Statement becomes
effective or, in the case of the Proxy Statement, at the date of mailing,
will contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are
made, not misleading.
6.13 Agreements and Instruments. Except as previously disclosed,
neither FFBS nor Thrift is a party to (a) any material contract, (b) any
contract relating to the borrowing of money by FFBS or Thrift or the
guarantee by FFBS or Thrift of any such obligation (other than Federal Home
Loan Bank advances), (c) any contract to make loans or for the provision,
purchase or sale of goods, services or property between FFBS or Thrift and
any director or officer of FFBS or Thrift, or any member of the immediate
family or affiliate of any of the foregoing (other than loans or deposits
made on an arm's-length basis in the ordinary course of business), (d) any
contract with or concerning any labor or employee organization, (e) any
contract between FFBS or Thrift and any affiliate thereof (other than
contracts solely between FFBS and Thrift, (f) any agreements, directives,
orders, or similar arrangements between or involving FFBS or Thrift and any
governmental authority, (g) any contract with respect to the employment,
retention or severance of any directors, officers, employees or
consultants, (h) any contract which materially restricts the conduct of any
line of business by FFBS or any current or future affiliates thereof or (i)
any contract pursuant to which FFBS or is or may become obligated to invest
in or contribute capital to Thrift.
6.14 Material Contract Defaults. Neither FFBS nor Thrift nor, to the
knowledge of FFBS and Thrift, the other party thereto is in default in any
respect under any contract to which any of FFBS or Thrift is a party or by
which its respective assets, business, or operations may be bound or
affected or under which it or its respective assets, business, or
operations receives benefits, other than any such default or defaults which
would not have, in the aggregate, a material adverse effect on FFBS, and
there has not occurred any event that, with the lapse of time or the giving
of notice or both, would constitute such a default. All material contracts
to which FFBS or Thrift is a party are valid, binding and in full force
and effect.
6.15 Tax Matters. (a) FFBS, Thrift and any affiliated group (within the
meaning of Section 1504(a) of the Code) of which FFBS or Thrift is a member
have duly and properly filed all federal, state, local and other tax
returns required to be filed by them and have made timely payments of all
taxes due and payable, whether disputed or not; such tax returns are true,
correct and complete in all material respects; the current status of audits
of such tax returns by the IRS and other applicable agencies has been
previously disclosed; and there is no agreement by FFBS or Thrift for the
waiver or extension of time for the assessment or payment of any taxes
payable. Neither the IRS nor any other taxing authority is now asserting
or, to the best knowledge of FFBS and Thrift, threatening to assert any
deficiency or claim for additional taxes, nor to the knowledge of FFBS or
Thrift is there any basis for any such assertion or claim. FFBS and Thrift
has complied in all material respects with applicable IRS backup
withholding requirements and have filed all appropriate information
reporting returns for all tax years for which the statute of limitations
has not closed. FFBS and FFBS subsidiary have complied with all
applicable state law sales and use tax collection and reporting
requirements.
(b) Adequate provision for any federal, state or local taxes due or to
become due for FFBS or Thrift for any period or periods through and
including September 30, 1998, has been made and is reflected on the
September 30,1998, consolidated financial statements last filed by FFBS as
part of a publicly available regulatory document and has been or will be
made with respect to periods ending after September 30, 1998.
6.16 Environmental Matters. To the knowledge of FFBS, neither FFBS nor
Thrift owns or leases any properties affected by toxic waste. Neither FFBS
nor Thrift has knowledge of, nor has FFBS or Thrift received written notice
from any governmental authority of, any conditions, activities, practices
or incidents which are reasonably likely to interfere with or prevent
compliance or continued compliance by FFBS or Thrift with hazardous
substance laws or any regulation, order, decree, judgment or injunction,
issued, entered, promulgated or approved thereunder, or which may give rise
to any common law or legal liability on the part of FFBS or Thrift, or
otherwise form the basis of any claim, action, suit, proceeding, hearing or
investigation against or of FFBS or Thrift, based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, release or threatened
release into the environment, of any pollutant, contaminant or chemical, or
industrial, toxic or hazardous substance or waste. There is no civil,
criminal or administrative claim, action, suit, proceeding, hearing or
investigation pending or, to the best knowledge of FFBS and Thrift,
threatened against FFBS or Thrift relating in any way to such hazardous
substance laws or any regulation, order, decree, judgment or injunction
issued, entered, promulgated or approved thereunder. To the knowledge of
FFBS and Thrift, neither FFBS nor Thrift has made or participated in any
loan to any Person who is subject to any civil, criminal or administrative
claim, action, suit, proceeding, hearing or investigation relating in any
way to such hazardous substance laws or any regulation, order, decree,
judgment or injunction issued, entered, promulgated or approved thereunder
and relating to the property secured by such loan.
6.17 Insurance. FFBS and Thrift have in effect insurance coverage with
reputable insurers which, in respect of amounts, types and risks insured,
is reasonably adequate for the business in which FFBS and Thrift are
engaged. A schedule of all insurance policies in effect as to FFBS and
Thrift (the "Insurance Policies") has been previously disclosed (other than
policies pertaining to secured loans made in the ordinary course of
business). All insurance policies are in full force and effect, all
premiums with respect thereto covering all periods up to and including the
date of this Agreement have been paid, such premiums covering all periods
from the date hereof up to and including the Effective Date shall have been
paid on or before the Effective Date, to the extent then due and payable
(other than retrospective premiums which may be payable with respect to
worker's compensation insurance policies, adequate reserves for which are
reflected in FFBS's financial statements last filed by FFBS as part of a
publicly available regulatory document). The Insurance Policies are valid,
outstanding and enforceable in accordance with their respective terms and
will not in any way be affected by, or terminated or lapsed solely by
reason of, the transactions contemplated by this Agreement. To the
knowledge of FFBS, neither FFBS nor Thrift has been refused any insurance
with respect to any material properties, assets or operations, nor has any
coverage been limited or terminated by any insurance carrier to which it
has applied for any such insurance or with which it has carried insurance
during the last three (3) years.
6.18 Accounting and Tax Treatment. Neither FFBS nor any of its
affiliates has taken or agreed to take any action that or has failed to
take any action the result of which would (but without giving effect to any
actions taken or agreed to be taken by NBC or any of its Affiliates) (i)
prevent NBC from accounting for the Parent Merger as a pooling of interests
for accounting and financial reporting purposes or (ii) prevent the Merger
from qualifying as a "reorganization" under Section 368(a) of the Code.
6.19 Undisclosed Liabilities. Except as set forth in Schedule 6.19,
neither FFBS nor Thrift has any material liabilities other than those
liabilities disclosed on or provided for in the balance sheet as of June
30, 1998, and liabilities incurred since such date in the ordinary course
of business consistent with past practices.
6.20 Loans. All of the loans on the books of FFBS and Thrift are valid
and properly documented and were made in the ordinary course of business.
6.21 Year 2000 Readiness. FFBS and the FFBS subsidiary have taken all
reasonable steps necessary to address the computer software, accounting and
record keeping issues raised in order for the data processing systems used
in the business conducted by them to be substantially Year 2000 compliant
on or before the end of 1999 and, except as set forth in the Schedule 6.21,
FFBS does not expect the future cost of addressing such issues to be
material.
ARTICLE VII
Representations and Warranties of NBC
NBC represents and warrants to FFBS as follows:
7.1 Organization, Corporate Power and Qualification. NBC and its
subsidiaries are validly existing and in good standing with all applicable
authorities and are duly qualified to do business in each jurisdiction in
which such corporation and its subsidiaries conduct business. NBC has the
corporate power and authority and has received all appropriate regulatory
authorizations to own or lease all of its properties and to carry on its
businesses as they are now being conducted.
7.2 Authority; No Violation. (a) NBC has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby upon valid approval of its shareholders
and receipt of regulatory approvals. The Board of Directors of NBC has
duly and validly approved and adopted this Agreement and approved the
transaction contemplated hereby, and has authorized execution and delivery
of this Agreement, which (subject to appropriate shareholder approval)
constitutes a valid and binding obligation of NBC, enforceable in
accordance with its terms.
(b) Neither the execution and delivery of this Agreement by NBC nor the
consummation by NBC of the transaction contemplated hereby, nor compliance
by NBC with any provision hereof, will (i) violate any provision of the
Articles of Incorporation or By-Laws of NBC or (ii) violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to NBC or any of its subsidiaries or any of their
respective properties or assets, or (iii) violate, conflict with, result in
a breach of any provisions of, constitute a default under, result in the
termination of, accelerate the performance required by, or result in the
creation of any lien, security interest, charge or other encumbrance upon
any of the respective properties or assets of NBC, or any of its
subsidiaries except to the extent that such collectively are not material
and adverse.
7.3 Consents and Approvals. Consents, approvals, filings, or
registrations with the following governmental entities or third parties are
necessary in connection with the consummation of the Merger contemplated
hereby:
(a) the filing by NBC of an Application with the Board of Governors of the
Federal Reserve under The Bank Holding Company Act and approval or such
application, or the obtaining of an appropriate waiver thereof.
(b) the filing with the Securities and Exchange Commission ("SEC") of the
Proxy Statement/Prospectus in definitive form relating to the meeting of
FFBS shareholders to be held in connection with this Agreement and the
transaction contemplated hereby, together with registration statements on
SEC Form S-4 and other required SEC compliance.
(c) the filing of the Articles of Merger with the Secretary of State of
the State of Mississippi under the MBCA and the Certificate of Merger with
the Secretary of State of Delaware.
(d) such filings and approvals as are required under the Securities or
"Blue Sky" laws of various states in connection with the issuance of shares
of NBC common stock pursuant to this Agreement, and
(e) such other filings, approvals, or consents as may be required by
applicable federal and state law and regulations promulgated thereunder;
including appropriate filings with the OCC and the OTS.
7.4 Legal Proceedings. Except as set forth in Schedule 7.4 to this
Agreement: (i) neither NBC or any subsidiary is a party to any, and there
are no pending or, to the best of NBC's knowledge, threatened material
legal, administrative, arbitration or other proceedings, claims or actions
or governmental investigations of any nature challenging the validity or
propriety of the transaction contemplated in this Agreement, and to the
best of NBC's knowledge, there is no reasonable basis for any such
objection; and (ii) neither NBC, nor any subsidiary is a party to any
order, judgment or decree which will, or might reasonably be expected to,
materially adversely affect their business, operations, properties, assets
or financial condition or their ability to acquire any property or conduct
business in any area in which they presently do business.
7.5 SEC Documents. NBC will make available to FFBS a true and complete
copy of each report, schedule, registration statement, and proxy statement
and amendment filed by NBC with the SEC since December 31, 1994. These
constitute all such documents that NBC was required to file with the SEC
and they complied in all material respects with the requirements of all
applicable law and regulations. They were prepared in accordance with
GAAP, were true, complete and correct and they fairly present the financial
position of NBC and its subsidiaries as of their respective dates.
7.6 Capitalization. The authorized capital stock of NBC consists of
10,000,000 shares of common stock. At the close of business on January
28, 1998, there were 5,664,736 shares of such stock issued and outstanding.
All issued and outstanding shares of NBC common stock have been duly
authorized and validly issued and are fully paid, non-assessable and free
of preemptive rights with no personal liability attached to the ownership
thereof. NBC has not issued any shares of NBC stock in excess of the
shares set forth above, and does not have and is not bound by any
outstanding subscription, option, warrant, cause, commitment or other
agreements of any character calling for the purchase or issuance of any
shares of NBC stock or any security representing the right to purchase or
otherwise receive any NBC stock except as set forth in this paragraph.
7.7 Financial Statements and Reports. For the past three years, NBC
and the NBC subsidiaries have timely filed all regulatory documents
required to be filed by them, except to the extent that all failures to so
file, in the aggregate, would not have a material adverse effect on NBC;
and all such documents, as finally amended, complied in all material
respects with applicable requirements of applicable law and, as of their
respective date or the date as amended, 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 light of
the circumstances under which they were made, not misleading. Except to
the extent stated therein, all financial statements and schedules included
in the documents referred to in the preceding sentences (i) are in
accordance with NBC's books and records and those of the NBC subsidiaries,
which books and records are complete and accurate in all material respects
and have been maintained in all material respects in accordance with
applicable law, and (ii) present fairly the consolidated financial position
and the consolidated results of operations and cash flows of NBC as of the
dates and for the periods indicated in accordance with GAAP consistently
applied during the periods involved (except for the omission of notes to
unaudited statements, year-end adjustments to interim results normal in
nature and amount and changes in GAAP and except where regulatory reporting
requirements provide otherwise). The audited consolidated financial
statements of NBC as of December 31, 1997, and for the two years then ended
last filed by NBC as part of a publicly available regulatory document
disclose all liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise, whether due or to become due and regardless of
when asserted), as of their respective dates, of NBC and the NBC
subsidiaries required to be reflected in such financial statements
according to GAAP, other than liabilities which are not, in the aggregate,
material to NBC and the NBC subsidiaries, taken as a whole, and contain in
the opinion of management, adequate reserves for losses on loans and
properties acquired in settlement of loans, taxes and all other material
accrued liabilities and for all reasonably anticipated material losses in
accordance with GAAP, if any, as of such date. Except for (i) those
liabilities that are fully reflected or reserved against on NBC's audited
consolidated balance sheet last filed by NBC as part of a publicly
available regulatory document and (ii) liabilities incurred in the ordinary
course of business since the date of such audited consolidated balance
sheet and which would not have, individually or in the aggregate, a
material adverse effect on NBC, NBC has no liabilities or obligations of
any nature, whether absolute, accrued, contingent or otherwise and whether
due or to become due, which are or would be required by GAAP to be shown on
its consolidated balance sheet.
7.8 No Broker's or Finder's Fees. No agent, broker, investment banker,
person or firm acting on behalf or under authority of NBC or the NBC
subsidiaries is or will be entitled to any broker's or finder's fee or any
other commission or similar fee directly or indirectly in connection with
the Parent Merger or any other transaction contemplated hereby.
7.9 Compliance with Law. NBC and the NBC subsidiaries have been in
compliance in all respects with all applicable laws, except where such
non-compliance would not have, in the aggregate, a material adverse effect
on NBC, and neither NBC nor any NBC subsidiary has received notice from any
governmental authority of any material violation of, and does not know of
any material violations of, any applicable law.
7.10 Employee Benefits. To the knowledge of NBC, with respect to all
NBC Employee Benefit Plans and NBC Benefit Arrangements, NBC and the NBC
subsidiaries are in substantial compliance with the requirements prescribed
by any and all Applicable Laws currently in effect, including but not
limited to ERISA and the Code, applicable to such NBC Employee Benefit
Plans or NBC Benefit Arrangements. None of the NBC Employee Benefit Plans
which are defined benefit pension plans have incurred any "accumulated
funding deficiency" (whether or not waived) as that term is defined in
Section 412 of the Code and the fair market value of the assets of each
such plan equals or exceeds the accrued liabilities of such plan. To the
best knowledge of NBC and Bank, there are not now nor have there been any
non-exempt "prohibited transactions," as such term is defined in Section
4975 of the Code or Section 406 of ERISA, involving the NBC Employee
Benefit Plans which could subject NBC or the NBC subsidiaries to the
penalty or Tax imposed under Section 502(i) of ERISA or Section 4975 of the
Code. No NBC Employee Benefit Plan which is subject to Title IV of ERISA
has been completely or partially terminated; no proceedings to completely
or partially terminate any NBC Employee Benefit Plan have been instituted
within the meaning of Subtitle C of said Title IV of ERISA; and no
reportable event, within the meaning of Section 4043(c) of said Subtitle C
for which the 30-day notice requirement of ERISA has not been waived, has
occurred with respect to any NBC Employee Benefit Plan. No NBC Employee
Benefit Plan or NBC Benefit Arrangement is a "multi-employer plan" within
the meaning of Section 4001(a)(3) of ERISA or a plan that has two or more
contributing sponsors at least two of whom are not under common control,
within the meaning of Section 4063 of ERISA. Neither NBC nor any NBC
subsidiary has engaged in any transaction described in Section 4069 of
ERISA within the last five years. Neither NBC nor any NBC subsidiary has
failed to make any contribution or pay any amount due and owing as required
by the terms of any NBC Employee Benefit Plan or NBC Benefit Arrangement.
Neither NBC nor any NBC subsidiary has incurred or reasonably expects to
incur any liability to the Pension Benefit Guaranty Corporation except for
required premium payments which, to the extent due and payable, have been
paid. To the knowledge of NBC, the NBC Employee Benefit Plans intended to
be qualified under Section 401(a) of the Code are so qualified, and FFBS is
not aware of any fact which would adversely affect the qualified status of
such plans.
7.11 Information Furnished; Registration Statement. (a) To the best
knowledge of NBC, no statement contained in any schedule, certificate or
other document furnished or to be furnished in writing by or on behalf of
NBC or any of its affiliates to FFBS pursuant to this Agreement (whether
prior to or subsequent to the date of this Agreement) contains or will
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 light of the circumstances under which they were made, not
misleading.
(b) None of the information provided by NBC or any NBC subsidiary for
inclusion in the registration statement on Form S-4 to be filed with the
SEC by NBC under the Securities Act of 1933, as amended ("Securities Act")
relating to shares of NBC Common Stock to be issued in the Parent Merger,
including the prospectus (the "Prospectus") relating to such issuance and
the joint proxy statement and forms of proxy relating to the vote of NBC
shareholders with respect to the Parent Merger (as amended, supplemented or
modified, the "Proxy Statement") contained therein (such registration
statement as amended, supplemented or modified, the "Registration
Statement"), at the time the Registration Statement becomes effective or,
in the case of the Proxy Statement, at the date of mailing, will contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
7.12 Material Contract Defaults. Neither NBC nor any NBC subsidiary nor,
to the knowledge of NBC and Bank, the other party thereto is in default in
any respect under any contract to which any of NBC or any NBC subsidiary is
a party or by which its respective assets, business, or operations may be
bound or affected or under which it or its respective assets, business, or
operations receives benefits, other than any such default or defaults which
would not have, in the aggregate, a material adverse effect on NBC, and
there has not occurred any event that, with the lapse of time or the giving
of notice or both, would constitute such a default. All material contracts
to which NBC and the NBC subsidiaries are parties are valid, binding and
in full force and effect.
7.13 Tax Matters. (a) NBC, the NBC subsidiaries and any affiliated
group (within the meaning of Section 1504(a) of the Code) of which NBC or
any NBC subsidiary is a member have duly and properly filed all federal,
state, local and other tax returns required to be filed by them and have
made timely payments of all taxes due and payable, whether disputed or not;
such tax returns are true, correct and complete in all material respects;
the current status of audits of such tax returns by the IRS and other
applicable agencies has been previously disclosed; and there is no
agreement by NBC or the NBC subsidiaries for the waiver or extension of
time for the assessment or payment of any taxes payable. Neither the IRS
nor any other taxing authority is now asserting or, to the best knowledge
of NBC and Bank, threatening to assert any deficiency or claim for
additional taxes, nor to the knowledge of NBC or Bank is there any basis
for any such assertion or claim. NBC and the NBC subsidiaries have
complied in all material respects with applicable IRS backup withholding
requirements and have filed all appropriate information reporting returns
for all tax years for which the statute of limitations has not closed. NBC
and NBC subsidiaries have complied with all applicable state law sales and
use tax collection and reporting requirements.
(b) Adequate provision for any federal, state or local taxes due or to
become due for NBC or the NBC subsidiaries for any period or periods
through and including December 31, 1997, has been made and is reflected on
the December 31, 1997, consolidated financial statements last filed by NBC
as part of a publicly available regulatory document and has been or will be
made with respect to periods ending after December 31, 1997.
7.14 Environmental Matters. To the knowledge of NBC, neither NBC nor any
NBC subsidiary owns or leases any properties affected by toxic waste.
Neither NBC nor any NBC subsidiary has knowledge of, nor has NBC or any NBC
subsidiary received written notice from any governmental authority of, any
conditions, activities, practices or incidents which are reasonably likely
to interfere with or prevent compliance or continued compliance by NBC or
any NBC subsidiary with hazardous substance laws or any regulation, order,
decree, judgment or injunction, issued, entered, promulgated or approved
thereunder, or which may give rise to any common law or legal liability on
the part of NBC or any NBC subsidiary, or otherwise form the basis of any
claim, action, suit, proceeding, hearing or investigation against or of NBC
or any NBC subsidiary, based on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling, or
the emission, discharge, release or threatened release into the
environment, of any pollutant, contaminant or chemical, or industrial,
toxic or hazardous substance or waste. There is no civil, criminal or
administrative claim, action, suit, proceeding, hearing or investigation
pending or, to the best knowledge of NBC and Bank, threatened against NBC
or any NBC subsidiary relating in any way to such hazardous substance laws
or any regulation, order, decree, judgment or injunction issued, entered,
promulgated or approved thereunder. To the knowledge of NBC and Bank,
neither NBC nor any NBC subsidiary has made or participated in any loan to
any person who is subject to any civil, criminal or administrative claim,
action, suit, proceeding, hearing or investigation relating in any way to
such hazardous substance laws or any regulation, order, decree, judgment or
injunction issued, entered, promulgated or approved thereunder and relating
to the property secured by such loan.
7.15 Insurance. NBC and the NBC subsidiaries have in effect insurance
coverage with reputable insurers which, in respect of amounts, types and
risks insured, is reasonably adequate for the business in which NBC and the
NBC subsidiaries are engaged. A schedule of all insurance policies in
effect as to NBC and the NBC subsidiaries (the "Insurance Policies") has
been previously disclosed (other than policies pertaining to secured loans
made in the ordinary course of business). All insurance policies are in
full force and effect, all premiums with respect thereto covering all
periods up to and including the date of this Agreement have been paid, such
premiums covering all periods from the date hereof up to and including the
Effective Date shall have been paid on or before the Effective Date, to the
extent then due and payable (other than retrospective premiums which may be
payable with respect to worker's compensation insurance policies, adequate
reserves for which are reflected in NBC's financial statements last filed
by NBC as part of a publicly available regulatory document). The Insurance
Policies are valid, outstanding and enforceable in accordance with their
respective terms and will not in any way be affected by, or terminated or
lapsed solely by reason of, the transactions contemplated by this
Agreement. To the knowledge of NBC, neither NBC nor the NBC subsidiaries
have been refused any insurance with respect to any material properties,
assets or operations, nor has any coverage been limited or terminated by
any insurance carrier to which it has applied for any such insurance or
with which it has carried insurance during the last three (3) years.
7.16 Accounting and Tax Treatment. Neither NBC nor any of its affiliates
has taken or agreed to take any action that or has failed to take any
action the result of which would (i) prevent NBC from accounting for the
Parent Merger as a pooling of interests for accounting and financial
reporting purposes or (ii) prevent the Merger from qualifying as a
"reorganization" under Section 368(a) of the Code.
7.17 Undisclosed Liabilities. Neither NBC nor the NBC subsidiaries have
any material liabilities other than those liabilities disclosed on or
provided for in the balance sheet as of June 30, 1998, and liabilities
incurred since such date in the ordinary course of business consistent with
past practices.
7.18 Loans. All of the loans on the books of NBC and the NBC
subsidiaries are valid and properly documented and were made in the
ordinary course of business.
7.19 Year 2000 Readiness. NBC and the NBC subsidiaries have instituted and
are conducting a program to assess and correct Year 2000 issues and, to the
best of knowledge of NBC and NBC subsidiaries, NBC and NBC subsidiaries
have met all targeted goals to be substantially Year 2000 compliant.
ARTICLE VIII
Covenants of the Parties
8.1 Exclusive Dealings. FFBS shall not authorize or permit any of its
officers, directors, employees or agents to directly or indirectly solicit,
initiate, facilitate or encourage any inquiries relating to, or the making
of any proposal which constitutes a tender or exchange offer, proposal for
merger, consolidation or any other business combination involving FFBS or
any of its subsidiaries, or any proposal or offer to inquire in any manner
a substantial equity interest in, or a substantial portion of the assets of
FFBS other than the transaction contemplated or permitted by this
Agreement, or participate in any discussions or negotiations, or provide
third parties with any non-public information, relating to any inquiry or
proposal or otherwise facilitate any effort or attempt to make a takeover
proposal, unless FFBS is advised by legal counsel that such communication
is required under applicable law or that the failure to do so would cause
the members of the Board of Directors to be in breach of their fiduciary
duties under applicable laws. FFBS will immediately cease and cause to be
terminated any existing activities, discussions or negotiations previously
conducted with any parties other than NBC with respect to any of the
foregoing.
8.2 Conduct of Business. During the period from the date of this
Agreement to the Effective Time, FFBS, and its subsidiary, will conduct
their business and engage in transactions only in the ordinary course and
consistent with prudent banking practices. FFBS and its subsidiary will
operate their business in substantially the same manner as before this
Agreement, and will maintain and keep their property in good repair and
properly insured. FFBS will not, without the prior express consent of NBC
(which will not be unreasonably withheld):
(a) Pay any dividends prior to the Effective Time other than regular
anticipated semi-annual dividends of 30 cents per share to its shareholders
payable in January 1999 and July 1999;
(b) Except as set forth in Schedule 8.2(b), lend an amount exceeding
$200,000.00 to an individual or entity or lend an amount, which when
aggregated with other loans to the same individual or entity or related
interests, would exceed $300,000.00;
(c) Hire new, additional or replacement employees;
(d) Grant promotions to current employees except for planned promotions as
set forth on Schedule 8.2(d) to this Agreement;
(e) Except as set forth in Schedule 8.2(e), make, incur, or agree to
incur, any single capital expenditure which alone exceeds $10,000.00 or
enter into any lease agreement with total rental payments exceeding
$10,000.00;
(f) Pay, or agree to pay, any bonus to any employee, officer or director,
other than payments of scheduled bonuses as set forth in Schedule 8.2(f) to
this Agreement;
(g) Grant any raise or salary increase to any employee, officer, or
director except anticipated raises as set forth in Schedule 8.2(g) to this
Agreement;
(h) Enter into any contracts, contract renewals or extensions except such
contracts which will not obligate FFBS to pay more than $5,000.00;
(i) Purchase, lease or sell any assets outside the normal course of
business unless such anticipated transactions are set forth in Schedule
8.2(i) to this Agreement;
(j) Purchase or sell investment securities;
(k) Issue any additional capital stock or declare any stock dividend or
stock split;
(l) Establish any employee benefits in addition to those in effect on the
date of this Agreement, as disclosed heretofore to NBC; and
(m) Grant additional options to purchase shares of FFBS Common Stock other
than as may be issued pursuant to the Stock Option Agreement between NBC
and FFBS of even date herewith.
8.3 Current Information. During the period from the date of this
Agreement to the Effective Time, FFBS will cause designated representatives
to confer on a regular and frequent basis with representatives of NBC to
report the general status of its ongoing operations. FFBS will promptly
notify NBC of any material change in the normal course of its business or
in the operation of its properties and of any governmental complaints,
investigations or hearings or any indication that such may be contemplated,
or the institution or threat of litigation, and will keep NBC fully
informed with respect to all such events.
8.4 Access to Properties and Records; Confidentiality. (a) For purposes
of allowing NBC and its counsel to prepare regulatory submissions, FFBS
shall permit NBC reasonable access to its property, and shall disclose and
make available to NBC all documents relating to the assets, stock
ownership, operations, obligations and liabilities of FFBS and its
subsidiary including all books of accounts, ledgers, tax records, minutes,
corporate documents, contracts, regulatory filings, litigation files,
compensation plans and any other materials pertaining to matters in which
NBC may have a reasonable interest in light of the proposed Parent Merger.
No disclosure will be required which would violate any law, legal ruling or
attorney-client privilege, nor will disclosure be required of any materials
prepared by Trident Financial Corporation and/or Trident Securities for
FFBS in connection with negotiations which were consummated by this
Agreement, nor with respect to such materials or communications prepared
for or received from third parties concerning a possible merger acquisition
or affiliation with FFBS, nor with respect to references in FFBS minutes to
such possible transactions;
(b) NBC shall afford to FFBS and its authorized agents and representatives
reasonable access, upon reasonable notice to an executive officer of NBC
and during normal business hours, to all contracts, documents and
information of or relating to the assets, liabilities, business,
operations, personnel and other aspects of relevance, in the reasonable
judgment of NBC, to the transactions contemplated hereby. NBC shall cause
its personnel, attorneys and accountants to provide assistance to FFBS in
FFBS's investigation of matters relating to the Parent Merger, including
allowing FFBS and its authorized agents and representatives access to its
operating sites and facilities; provided, however, that FFBS's
investigation shall be conducted in a manner which does not unreasonably
interfere with NBC's normal operations, customers, and employee relations;
provided further, however, that, in providing the foregoing access, NBC
shall not be required to jeopardize its attorney-client privilege (NBC
hereby agreeing to use all reasonable efforts to make appropriate
alternative disclosure arrangements in such circumstances).
(c) All information furnished by a party to another pursuant hereto shall
be treated as the sole property of the party furnishing such information
until consummation of the proposed Parent Merger and, if such Parent Merger
shall not occur, the party receiving such information shall return all
materials relating to such information, and shall use its best efforts to
keep all such information confidential, and shall not directly or
indirectly use such information for any competitive or commercial purpose.
The obligation to keep such information confidential shall continue if
this Parent Merger is abandoned and shall apply only to such information
not available to the party from any other source; nor shall it apply to
information which must be disclosed in accordance with a valid court order.
8.5 Interim Financial Statements. When interim quarterly financial
statements are completed by each party, each party will deliver to the
other a copy of such interim financial statements.
8.6 Approval of Shareholders. The respective Boards of Directors of FFBS
and NBC will take all steps necessary to duly call, give notice of, convene
and hold a special meeting of its shareholders as soon as practicable for
the purpose of approving and adopting this Agreement and the transaction
contemplated hereby and for such other purposes as may be needed. The
Boards of Directors of FFBS and NBC will recommend approval of all such
actions to their respective shareholders, cooperate fully in securing
regulatory approval and consummating the Parent Merger and use their best
efforts to obtain all necessary approvals of this transaction; provided,
that the Board of Directors of FFBS may withdraw or refuse to make such
recommendation only if the Board of Directors shall determine in good faith
that such recommendation should not be made in view of its fiduciary duty
to FFBS's shareholders following (i) the consideration of advice of legal
counsel that making such recommendation or the failure to withdraw or
modify such recommendation would, more likely than not, constitute a breach
of the fiduciary duties of such Board to shareholders of FFBS, or (ii) the
withdrawal by FFBS's financial advisor of its opinion referred to in
Section 9.3(e) or the delivery to the FFBS Board of Directors of advice
from its financial advisor that the Merger Consideration is not fair or is
inadequate to the shareholders of FFBS from a financial point of view.
8.7 Cooperation. These parties shall cooperate in joint efforts to
obtain unconditional regulatory approval of the Parent Merger, and the
obligation of each party to consummate the Parent Merger is contingent upon
the receipt of all regulatory and U. S. Department of Justice approvals
without conditions which are unacceptable to either party. FFBS shall use
its best efforts to cause its officers, directors and employees to support
the actions and objectives contemplated by this Agreement.
8.8 Unusual Events. Until the Effective Time, FFBS and NBC shall
supplement or amend all relevant schedules with respect to any matter
arising or discovered, which if existing or known at this date would have
been required to be disclosed; provided, however, that subsequent
disclosure shall not necessarily be deemed to have cured any
misrepresentation or breach by concealment thereof.
8.9 FFBS Employees. All FFBS employees will continue to serve at the
discretion of NBC. The FFBS employees set forth in Schedule 8.9 will be
offered a "pay to stay" benefit of 25% of their current annual base salary
to continue to serve from the date of this Agreement through the actual
consolidation of operating and accounting systems of Thrift and Bank , to
be paid in a lump sum immediately following successful consolidation of the
two systems or December 31, 1999, whichever occurs first. NBC will pay
severance benefits of one week's base pay for each year or fraction thereof
of service for a minimum of four weeks pay and up to a total of eight
weeks pay for each non-officer employee and up to twelve weeks pay for each
officer in the event of termination within twelve months of closing, except
terminations for cause. NBC recognizes FFBS Employment Agreements dated
April 14, 1994, with officers listed on Schedule 8.9 with three year terms
which have been renewed annually and now extend through April 2001. These
will not be further extended and will terminate in April 2001, unless a
covered officer waives rights, claims or payments due under such agreements
or enters into a replacement agreement with NBC, whether prior to or
subsequent to the execution of this Agreement. Until such time each such
covered officer will be entitled to the protection of the Section 5
provisions thereof, and any change in control payments required by such
agreements, as set forth in Schedule 8.9, will be made by NBC as required.
8.10 Employee Benefit Plans. The FFBS ESOP will be terminated on or before
closing, in which case the loan will be paid in full and the shares will be
fully allocated among FFBS participants. FFBS plans other than the ESOP
will be discontinued and the participants enrolled in NBC plans as
permitted by ERISA. The FFBS employees will be offered dental and health
insurance now available to NBC employees on the same terms and conditions
as then available to NBC employees. Accrued vacation (not exceeding three
weeks)and sick leave (not exceeding 90 days) for FFBS employees will be
transferred and honored by NBC, but any such accrued vacation time must be
used entirely by the end of the calendar year in which the merger is
consummated. On or before the Effective Time, FFBS and E. Frank Griffin,
III shall enter into a supplemental executive retirement plan providing
benefits as set forth in Schedule 8.10. The present FFBS pension plan
shall be terminated, and such plan benefits may be amended provided that
the amendments shall not increase any plan funding requirements in excess
of plan assets, net of termination expenses, determined on a termination
basis, and FFBS employees shall participate in the NBC pension plan to the
same extent as similarly situated NBC employees. Upon entry into the NBC
plans, FFBS employees shall be credited with the number of years of service
as credited under the FFBS plans for vesting, and such service shall also
apply for purposes of satisfying any waiting periods, evidence of
insurability requirements, or the application of any pre-existing condition
or limitations as permitted by the respective NBC plans or providers.
Funding for FFBS employees will commence upon entry into NBC plans with no
funding for prior participation.
8.11 Directors. Two present directors of FFBS shall become directors of
NBC in accordance with Section 4.1 of this Agreement.
8.12 Registration Statement and Regulatory Filings. (a) NBC shall file
with the SEC as soon as reasonably practical after the execution of this
Agreement, a Registration Statement complying with all SEC and other
regulatory requirements and will amend and supplement the same as may be
required or appropriate. The Proxy Statement/Prospectus (to be delivered
to shareholders of each party) in connection therewith must be reasonably
acceptable to FFBS and will be used in connection with the meetings of the
shareholders of FFBS and NBC. NBC will also prepare and file all documents
appropriate to comply with securities laws of the State of Mississippi and
the State of Delaware and other applicable laws and regulations. In
advance of the filing of such Registration Statement and other documents,
NBC will furnish copies thereof to FFBS and its counsel and subsequent to
the filings shall promptly advise them of any material communication
received from SEC or any state securities commission relating thereto. No
information contained in any such documents shall be false or misleading
with respect to any material fact or shall omit to state any material fact.
FFBS will provide to NBC any information with respect to FFBS requested by
NBC to be included in the Registration Statement.
(b) NBC will use its best reasonable efforts to obtain the regulatory
approvals described herein and FFBS will cooperate fully in the process of
obtaining such approvals. The obligation to take all reasonable actions in
this regard shall not be construed as including an obligation to accept any
terms or conditions to a consent or approval that are not acceptable either
to NBC or to FFBS, provided that such unacceptable conditions would cause
material adverse economic results or would require NBC to change its
present business practices or that of any subsidiary. NBC shall provide
FFBS with copies of all applications filed and all responses when received.
8.13 Registration of Stock Options. NBC will register the issuance of all
shares of NBC Common Stock to be issued upon exercise of the exchange stock
options, and will take such action as may be necessary to cause such shares
of NBC Common Stock not to be "restricted securities" within the meaning of
Rule 144 under the Securities Act of 1993, as amended.
8.14 Pooling-of-Interests and Tax-Free Treatment. Each of the parties
hereto shall use its reasonable best efforts (i) to cause the Parent Merger
to qualify for pooling-of-interests accounting treatment and (ii) to cause
the Parent Merger to constitute a "reorganization" under Section 368(a) of
the Code.
8.15 Agreements of Affiliates. FFBS shall use its best efforts to cause
each person who may be at the Effective Time or was on the date hereof an
"affiliate" of FFBS for purposes of Rule 145 under the Securities Act or of
determining the qualification of the Parent Merger as a pooling of
interests for accounting and financial reporting purposes, to execute and
deliver to NBC, no less than 45 days prior to the date of the meeting of
FFBS shareholders to approve the Parent Merger, the written undertakings in
the form attached hereto as Exhibit 1.5(f). On or prior to such delivery
date, FFBS shall provide NBC with a letter specifying, to the best of its
knowledge, all of the persons who may be deemed to be "affiliates" of FFBS
under the preceding sentence.
ARTICLE IX
Closing Conditions
9.1 Conditions to Each Party's Obligations Under this Agreement. The
respective obligations of each party under this Agreement shall be subject
to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) This Agreement and the transaction contemplated hereby shall have been
approved and adopted by the affirmative vote of the holders of the
outstanding shares of FFBS and NBC at the meetings of the shareholders of
FFBS and NBC pursuant to Section 8.6 hereof, in accordance with the
respective Certificate of Incorporation of FFBS, the Articles of
Incorporation of NBC, and the respective By-Laws of each and the laws of
the states of Delaware and Mississippi.
(b) Neither party hereto shall be subject to any order, decree, or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits the consummation of the Parent Merger.
(c) NBC and FFBS shall have received an opinion of special tax advisor,
T. E. Lott & Company, to the effect that the transaction will be treated,
and will qualify, as a tax-free reorganization within the meaning of
Section 368 of the Code; that NBC and FFBS will each be a "party to the
reorganization" within the meaning of Section 368(b); that no gain or loss
will be recognized by FFBS on account of the conversion of its stock into
NBC stock; and that the combination of such stock delivered to FFBS
shareholders and cash paid to satisfy requirements described herein shall
be in accordance with the requirements necessary for this transaction to be
treated and qualify as a Pooling of Interests Transaction for accounting
purposes applying GAAP.
(d) The SEC shall have declared the Registration Statement effective; and
on the Closing Date and at the Effective time, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or then threatened
by the SEC.
(e) All permits, consents, waivers, clearances, approvals, and
authorizations of all third parties and federal and state governmental
bodies shall have been obtained in a form which is unconditional or which
provides no conditions which would be unacceptable to either party, and
all statutory waiting periods shall have expired.
9.2 Conditions Precedent to the Obligations of NBC. The obligations of
NBC under this Agreement shall be further subject to the satisfaction, at
or prior to the Effective Time of the following conditions, any one or more
of which may be waived by NBC:
(a) Each of the obligations of FFBS required to be performed by it at or
prior to the closing pursuant to the terms of this Agreement shall have
been duly performed and complied with and the representations and
warranties of FFBS contained in this Agreement shall be true and correct in
all material respects as of the Effective Time as though made at the
Effective Time (except as otherwise contemplated herein) AND NBC shall have
received a Certificate to that effect signed by the President and Secretary
of FFBS.
(b) All action required to be taken by, or on the part of, FFBS and its
shareholders to authorize the execution, delivery, and performance of this
Agreement by FFBS and the consummation of the transaction contemplated
hereby shall have been duly and validly taken by the Board of Directors of
FFBS and its shareholders and NBC shall have received certified copies of
the resolutions evidencing such authorization.
(c) NBC shall have received an opinion from counsel to FFBS, dated as of
the Effective Time, and in form an substance satisfactory to counsel for
NBC. In rendering such opinion, counsel may rely as to matters of fact,
upon such FFBS officers or governmental officials as counsel deems
appropriate.
(d) The net worth of FFBS at the time of closing shall be no less than
$22,500,000 as determined under GAAP excluding the effect of any actions
taken pursuant to subparagraph (e) below.
(e) The loan and lease loss reserves of FFBS at the Effective Time shall
be an amount not less than one per cent (1%) of gross loans outstanding
immediately prior to the Effective Time after any charge-offs taken by FFBS
in the ordinary course of its business after the date of this Agreement and
prior to the Effective Time and after any additional charge offs directed
by NBC as a result of additional loan portfolio due diligence done by it
after this date, or $1,035,000 whichever is greater. FFBS will not adjust
its loan loss reserves until after receipt of all regulatory and
stockholder approvals, and just prior to the Effective Time.
(f) The officers listed on Schedule 9.2(f) shall have entered into
Employment Agreements with NBC in the form set forth in Schedule 9.2(f)
hereto, and none of such officers shall have terminated employment with
FFBS prior to the Effective Time unless such termination is because of
death or disability.
FFBS shall furnish NBC such certificates sufficient to evidence fulfillment
of the conditions set forth in this Section 9.2 as NBC may reasonably
request.
9.3 Conditions Precedent to the Obligations of FFBS under this Agreement.
The obligations, conditions, covenants and agreements of FFBS under this
Agreement shall be further subject to the satisfactions, at or prior to the
Effective Time, of the following conditions, any one or more of which may
be waived by FFBS:
(a) Each of the obligations of NBC required to be performed by it at or
prior to the closing, pursuant to the terms of this Agreement shall have
been duly performed and complied with and the representations and
warranties of NBC contained in this Agreement shall be true and correct in
all material respects as of the date of the Agreement and as of the
Effective Time as though made at the Effective Time (except as otherwise
contemplated herein) and FFBS shall have received a certificate to that
effect signed by the Chief Executive Officer and Chief Financial Officer of
NBC.
(b) All action required to be taken by, or on behalf of NBC to authorize
the execution, delivery, and performance of this Agreement of NBC and
consummation of the transaction contemplated hereby shall have been duly
and validly taken by the Board of Directors and shareholders of NBC and
FFBS and NBC and FFBS shall have received certified copies of the
resolutions evidencing such authorization. In order to complete such a due
diligence review of NBC, FFBS shall have access to all appropriate NBC
books, records and other documents.
(c) All permits, consents, waivers, clearances, approvals and
authorizations of all third parties and governmental bodies shall have been
obtained by NBC which are necessary in connection with the consummation of
the Parent Merger and the transaction contemplated hereby and which by the
terms herein are to be obtained by NBC.
(d) FFBS shall have completed a due diligence review of NBC, and its
subsidiaries, to its sole satisfaction, and prior to the closing, nothing
shall have come to the attention of FFBS with respect to the operations,
assets, financial conditions or business of NBC, or any of its
subsidiaries, which has or may have a material adverse effect on the
condition of NBC as determined by FFBS.
(e) FFBS has received from a financial advisor a fairness opinion in a
form and substance satisfactory to it to the effect that the Parent Merger
is fair from a financial point of view to the shareholders of FFBS, and
such fairness opinion shall be satisfactorily updated at the date of the
mailing of the prospectus/proxy statement and again at closing.
(f) FFBS shall have received an opinion from counsel to NBC, dated as of
the Effective Time, and in form and substance satisfactory to counsel for
FFBS. In rendering such opinion, counsel may rely as to matters of fact,
upon such NBC officers or governmental officials as counsel deems
appropriate.
ARTICLE X
Closing
10.1 Time and Place. Subject to the provisions of Articles VIII and X
hereof, the closing of the transaction contemplated hereby shall take place
at the offices of NBC. 301 East Main Street, Starkville, Mississippi 39759,
at 9:00 a.m. local time, on the last business day of the month in which all
conditions precedent to closing are met or at such other date as NBC and
FFBS may agree.
10.2 Deliveries at Closing. Subject to the provisions of Article VIII and
X hereof, at the closing there shall be delivered to NBC and FFBS the
opinions, certificates, and other documents required under the provisions
of this agreement.
ARTICLE XI
Termination, Amendment and Waiver
11.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, under the following conditions:
(a) The mutual consent of NBC and FFBS;
(b) By either party upon denial of shareholder or regulatory approval in a
form which provides conditions which would be unacceptable to either party
as provided for herein;
(c) By NBC in the event that prior to the Effective Time the proposed
Merger is determined by applicable regulatory authority to be disqualified
as a pooling of interest in accordance with GAAP;
(d) By FFBS in the event that prior to the Effective Time it is determined
that the Parent Merger will not qualify as a tax-free reorganization and
exchange under Section 368(a) of the Internal Revenue Code as determined by
special tax counsel;
(e) By either party, if at the time of such determination there shall be a
material adverse change in the financial condition of the other party from
that set forth in the financial statements for the period ending June 30,
1998;
(f) By either party if the Parent Merger shall not have been completed by
September 30, 1999, unless that date is extended by mutual consent of both
parties;
(g) By the non-breaching party in the event of a material breach in the
provisions of this Agreement, and said breach has not been cured within 30
days of written notice by the non-breaching party to the other party
setting out in specific detail the nature of the claimed material breach.
(h) By FFBS if NBC fails to increase the Exchange Rate as required by
Section 1.4 hereof.
11.2 Effect of Termination. In the event of termination of this Agreement
as provided herein, this Agreement shall forthwith become void and except
as provided in Section 12.3 hereof there shall be no further liability on
the part of NBC or FFBS, or their respective officers or directors, other
than liability for any default or breach hereunder occurring prior to such
termination, to the extent permitted by applicable law.
11.3 Amendments and Waivers. Subject to applicable law, at any time prior
to the consummation of the Parent Merger, whether before or after approval
by the respective shareholders of the parties, by action taken by the
respective Boards of Directors, the parties may (a) amend this Agreement,
(b) extend the time of the performance of any of the obligations or other
acts of the other parties hereto, (c) waive any inaccuracies in the
representations and warranties contained herein or in any document
delivered pursuant hereto, or (d) waive compliance with any of the
agreements and conditions contained in Articles VIII and IX. Provided,
however, after approval hereto by the respective shareholders, there may
not be, without further approval of such shareholders, any amendment,
extension or waiver which changes the amount or form of the consideration
to be delivered to FFBS and its shareholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
ARTICLE XII
Miscellaneous
12.1 Expenses. NBC shall pay all reasonable expenses subsequent to the
Effective Time of the Parent Merger, including reasonable counsel fees for
present counsel to FFBS in consultation with NBC, in connection with this
Agreement and the transactions hereunder, to the extent NBC deems such
services appropriate. All expenses, including, but not limited to,
investment advisor fees, brokers' fee, commission, finder's fees, and legal
fees incurred in connection with the merger and up to the Effective Time
shall be paid by the party incurring such costs; provided, however, NBC
shall pay the cost of printing and mailing the Prospectus/Proxy Statement
to FFBS shareholders.
12.2 Indemnification. After the Effective Time, NBC shall indemnify,
defend and hold harmless the directors, officers, employees, and agents of
FFBS and its subsidiary (each a "FFBS indemnified party") against all
liabilities, including reasonable attorney fees, expenses, judgments, fines
and amounts paid in settlement, arising out of actions or omissions
occurring at or prior to the Effective Time, including the Parent Merger
and transactions contemplated by this Agreement, to the full extent
permitted by Delaware law and as would have been permitted by the
Certificate of Incorporation and By-Laws of FFBS prior to the Parent
Merger. FFBS and the indemnified parties may retain counsel reasonably
satisfactory to such party after consultation with NBC; provided, however,
that:
(1) NBC shall have the right to assume the defense thereof and upon such
assumption, NBC shall not be liable to any FFBS indemnified party for any
legal expenses subsequently incurred except that if NBC elects not to
assume such defense or if counsel for the FFBS indemnified party reasonably
advises that there are issues which raise conflicts of interest between NBC
and the FFBS indemnified party, such party may retain separate counsel
after consultation with NBC, in which case NBC shall bear reasonable
expenses thereof.
(2) An FFBS indemnified party shall consult and obtain the approval of NBC
prior to affecting any settlement, which said approval shall not be
unreasonably withheld; and
(3) NBC shall have no obligation hereunder to any indemnified party when
and if a court of competent jurisdiction shall ultimately determine, and
such determination shall have become final, that indemnification of such
FFBS indemnified party in the manner contemplated hereby is prohibited by
applicable law.
Prior to the Effective Time, NBC and FFBS shall cooperate in obtaining
extensions of directors' and officers' liability coverage maintained by
FFBS for a period of five (5) years from the Effective Time, or at its
option, NBC may substitute similar coverage with another insurance carrier
therefor. NBC shall pay premiums for such insurance coverage provided for
herein.
12.3 Breach/Specific Performance. (a) In the event either party breaches
any of the terms and conditions of this Agreement, and the other party is
required to employ legal counsel, or institute legal action, in order to
enforce its rights under the terms and conditions of this agreement, the
successful party shall be entitled to recover from the breaching party all
expenses, attorney fees, court costs and other expenses incidental to said
action.
(b) In the event either party fails or refuses to carry out the terms and
conditions of this Agreement in any respect, or to complete the
transactions contemplated hereunder, the other party shall have the right,
in addition to the recovery of all damages, incidental or consequential, as
a result of said breach or failure, to obtain an order of specific
performance of this Agreement in any court of competent jurisdiction.
12.4 Disclosures. Upon the execution of this Agreement, the Parent Merger
shall be announced by these parties in a mutually agreed upon manner, with
such other disclosures to the shareholders and public as may be required or
agreed upon.
12.5 Parties in Interest. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors
and assigns, provided, however, that neither this Agreement nor any rights
or obligations hereunder may be assigned by either party without prior
written consent of the other.
12.6 Survival of Representations. None of the representations, warranties,
covenants and agreements contained in this Agreement shall survive the
Effective Time or termination of this Agreement, except for those
contained herein which by their terms apply in whole or in part after the
Effective Time or termination of this Agreement. Representations,
warranties covenants and agreements contained herein with respect to
exchange procedures, rights of former FFBS shareholders, Dissenting
Shareholders, subsequent actions required after the Effective Time,
confidentiality, expenses, indemnification, exchange of stock options,
officer positions, board seats, and employee benefits shall all survive
the Effective Time and termination of this Agreement.
12.7 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.
12.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall comprise one and the same instrument.
12.9 Notices. All notices and other communications between the parties
shall be in writing and shall be deemed to have been duly given if
delivered in person or by certified or registered mail, or by prepaid
overnight delivery service:
To NBC: Lewis F. Mallory, Jr.
National Bank of Commerce
P. O. Box 1187
Starkville, MS 39760
To FFBS: E. Frank Griffin III
First Federal Bank for Savings
1121 Main Street
Columbus, MS 39701
or such other address as either party may designate by notice to the other.
12.10 Section Headings. The section headings are for reference only
and shall not limit or control the mean of any provision of this agreement.
12.11 Governing Law. This Agreement shall be governed by the laws of
the State of Mississippi and where necessary with respect to the
incorporation of FFBS in Delaware by the corporate laws of Delaware to the
extent that federal law does not apply.
12.12 Entire Agreement. This Agreement, with any schedules and
exhibits hereto, constitutes the entire agreement between these parties and
is executed on behalf of and at the direction of the Boards of Directors of
the respective parties. It is intended that this agreement constitute a
binding agreement between the parties notwithstanding that there may be
other matters unresolved and subject to negotiation at the time of its
execution and the fact that its final consummation is conditioned and
contingent upon the approvals set forth herein. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the
parties hereto, and their respective successors, any rights, remedies,
obligations or liabilities, except for rights of directors, officers and
employees of FFBS and Thrift to enforce rights set forth herein applicable
to them.
IN WITNESS WHEREOF, the Boards of Directors of NBC Capital Corporation and
FFBS Bancorp, respectively, have each executed this Agreement and directed
the authorized signature of the undersigned duly authorized officers as of
this ____ day of _____________________, 1999.
NBC CAPITAL CORPORATION
BY: ______________________________________
LEWIS F. MALLORY, Chairman of the
the Board and Chief Executive
Officer
ATTEST:
_______________________________
SECRETARY
FFBS BANCORP, INC.
BY: ______________________________________
E. FRANK GRIFFIN, III, President
Chief Executive Officer
ATTEST:
________________________________
SECRETARY
EXHIBIT 99.3
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT, dated as of the _____ day of
February, 1999 (the "Agreement"), is by and between FFBS BANCORP,
INC., a Delaware corporation ("Issuer"), and NBC CAPITAL
CORPORATION, a Mississippi corporation ("Grantee").
WHEREAS, Issuer and Grantee have entered into an Agreement and
Plan of Merger, (the "Merger Agreement"), which agreement has
been executed by the parties hereto immediately prior to this
Stock Option Agreement (the "Agreement"); and
WHEREAS, as a condition and inducement to Grantee's execution of
the Merger Agreement, Grantee has required that Issuer agree, and
Issuer has agreed, to grant Grantee the Option (as defined
below);
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements
set forth herein and in the Merger Agreement, and intending to be
legally bound hereby, Issuer and Grantee agree as follows:
1. Defined Terms. Capitalized terms which are used but not
defined herein shall have the meanings ascribed to such terms in
the Merger Agreement.
2. Grant of Option. Subject to the terms and conditions set
forth herein, Issuer hereby grants to Grantee an irrevocable
option (the "Option") to purchase up to 313,551 shares (the
"Option Shares") of Common Stock of Issuer, par value $.01 per
share ("Issuer Common Stock"), at a purchase price per Option
Share (the "Purchase Price") equal to $27.00
; provided, however, that in no event shall the number of shares
of Issuer Common Stock for which this Option is exercisable
exceed 19.9% of the Issuer's issued and outstanding shares of
Common Stock. The number of shares of Issuer Common Stock that
may be received upon the exercise of the Option and the Purchase
Price are subject to adjustment as herein set forth.
3. Exercise of Option.
(a) Provided that (i) Grantee shall not be in material breach of
the agreements or covenants contained in this Agreement or the
Merger Agreement, or (ii) no preliminary or permanent injunction
or other order against the delivery of the Option Shares issued
by any court of competent jurisdiction in the United States shall
be in effect, Grantee may exercise the Option, in whole or in
part, at any time and from time to time, but only following the
occurrence of a Purchase Event (as defined below); provided that
the Option shall terminate and be of no further force or effect
upon the earlier to occur of (A) the Effective Time of the
Merger, (B) the termination of the Merger Agreement in accordance
with the terms thereof before the occurrence of a Purchase Event
or a Preliminary Purchase Event (other than a termination of the
Merger Agreement by Grantee pursuant to Section 11.1(g) of the
Merger Agreement (an "Issuer Default Termination"); (C) the close
of business on the 365th day after the occurrence of a
termination of the Merger Agreement by an Issuer Default
Termination; and (D) the close of business on the 365th day after
termination of the Merger Agreement following the occurrence of a
Purchase Event or a Preliminary Purchase Event (hereinafter
sometimes referred to as the "Termination Date"); provided that
any purchase of Option Shares upon the exercise of the Option
shall be subject to compliance with applicable law, including,
without limitation, the Bank Holding Company Act of 1956 (the
"BHCA"), and any required consent of any regulatory authority.
The rights set forth in Section 8 of this Agreement shall
terminate when the right to exercise the Option terminates (other
than as a result of a complete exercise of the Option) as set
forth herein.
(b) As used herein, a "Purchase Event" means any of the
following events:
(i) without Grantee's prior written consent, Issuer shall have
authorized, recommended, publicly proposed or publicly announced
an intention to authorize, recommend or propose, or entered into
an agreement with any person (other than Grantee or any
subsidiary of Grantee) to effect an Acquisition Transaction (as
defined below). As used herein, the term "Acquisition
Transaction" shall mean (A) a merger, consolidation or similar
transaction involving Issuer or any of its subsidiaries (other
than transactions solely between Issuer's subsidiaries), (B) the
disposition, by sale, lease, exchange or otherwise, of assets of
Issuer or any of its subsidiaries representing in either case 30%
or more of the consolidated assets of Issuer and its subsidiaries
or (C) the issuance, sale or other disposition of (including by
way of merger, consolidation, share exchange or any similar
transaction) securities representing 30% or more of the voting
power of Issuer or any of its significant subsidiaries; or
(ii) any person (other than Grantee or any subsidiary of Grantee)
shall have acquired beneficial ownership (as such term is defined
in Rule 13d-3 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) of, or the right to
acquire beneficial ownership of, or any "group" (as such term is
defined under the Exchange Act) shall have been formed which
beneficially owns or has the right to acquire beneficial
ownership of, 30% or more (or, if such person or group is the
beneficial owner of 30% of more on the date hereof, such person
or group acquires an additional 5% or more) of the voting power
of Issuer or any of its significant subsidiaries.
(c) As used herein, a "Preliminary Purchase Event" means any of
the following events:
(i) any person (other than Grantee or any subsidiary of Grantee)
shall have commenced (as such term is defined in Rule 14d-2 under
the Exchange Act) or shall have filed a registration statement
under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to a tender offer or exchange offer to
purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such person would own or control 20%
or more of the then outstanding shares of Issuer Common Stock
(such an offer being referred to herein as a "Tender Offer" or an
"Exchange Offer," respectively); or
(ii) the holders of Issuer Common Stock shall not have approved
the Merger Agreement at the meeting of such shareholders held for
the purpose of voting on the Merger Agreement, such meeting shall
not have been held or shall have been canceled prior to
termination of the Merger Agreement or Issuer's Board of
Directors shall have withdrawn or modified in a manner adverse to
Grantee the recommendation of Issuer's Board of Directors with
respect to the Merger Agreement, in each case, after it shall
have been publicly announced that any person (other than Grantee
or any subsidiary of Grantee) shall have (A) made, or disclosed
an intention to make, a proposal to engage in an Acquisition
Transaction, (B) commenced a Tender Offer or filed a registration
statement under the Securities Act with respect to an Exchange
Offer or (C) filed an application (or given a notice), whether in
draft or final form, under banking or corporate law or any other
applicable law seeking, including, without limitation, the BHCA,
approval to engage in an Acquisition Transaction.
As used in this Agreement, "person" shall have the meaning
specified in Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(d) Notwithstanding the foregoing, the obligation of Issuer to
issue Option Shares upon exercise of the Option shall be deferred
(but shall not be terminated): (i) until the receipt of all
required governmental or regulatory approvals or consents
necessary for Issuer to issue the Option Shares or Holder to
exercise the Option, or until the expiration or termination of
any waiting period required by law, or (ii) so long as any
injunction or other order, decree or ruling issued by any federal
or state court of competent jurisdiction is in effect which
prohibits the sale or delivery of the Option Shares.
(e) Issuer shall notify Grantee promptly in writing of the
occurrence of any Preliminary Purchase Event or Purchase Event,
it being understood that the giving of such notice by Issuer
shall not be a condition to the right of Grantee to exercise the
Option.
(f) In the event Grantee wishes to exercise the Option, it shall
send to Issuer a written notice (the date of which being herein
referred to as the "Notice Date") specifying (i) the total number
of Option Shares it intends to purchase pursuant to such exercise
and (ii) subject to the next sentence, a place and date not
earlier than three (3) business days nor later than fifteen (15)
business days after the Notice Date for the closing (the
"Closing") of such purchase (the "Closing Date"). If prior
notification to or consent of any regulatory authority is
required in connection with such purchase, then, notwithstanding
the prior occurrence of the Termination Date, the Closing Date
shall be extended for such period as shall be necessary to enable
such prior notification or consent to occur or to be obtained
(and the expiration of any mandatory waiting period). Issuer
shall cooperate with Grantee in the filing of any applications or
documents necessary to obtain any required consent or in
connection with any required prior notification and the Closing
shall occur not earlier than three (3) business days nor later
than fifteen (15) business days following receipt of such consent
(or the filing of any such prior notification and the expiration
of any mandatory waiting periods).
4. Payment and Delivery of Certificates.
(a) On each Closing Date, Grantee shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account
designated by Issuer, an amount equal to the Purchase Price
multiplied by the number of Option Shares to be purchased on such
Closing Date, and (ii) present and surrender this Agreement to
the Issuer at the address of the Issuer specified herein.
(b) At each Closing, simultaneously with the delivery of
immediately available funds and surrender of this Agreement as
provided in Section 4(a) above, (i) Issuer shall deliver to
Grantee (A) a certificate or certificates representing the Option
Shares to be purchased at such Closing, which Option Shares shall
be free and clear of all liens, claims, charges and encumbrances
of any kind whatsoever and subject to no pre-emptive rights, and
(B) if the Option is exercised in part only, a new Stock Option
Agreement, executed by Issuer, with the same terms as this
Agreement evidencing the right to purchase the balance of the
shares of Issuer Common Stock purchasable hereunder, and (ii)
Grantee shall deliver to Issuer a letter agreeing that Grantee
shall not offer to sell or otherwise dispose of such Option
Shares in violation of applicable federal and state law or of the
provisions of this Agreement.
(c) In addition to any other legend that is required by
applicable law, certificates for the Option Shares delivered at
each Closing shall be endorsed with a restrictive legend which
shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT
DATED AS OF _______________, 1999. A COPY OF SUCH AGREEMENT WILL
BE PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY
THE ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that (i) the references to the trade
restrictions of the Securities Act in the above legend shall be
removed by delivery of substitute certificate(s) without such
legend if Grantee shall have delivered to Issuer an opinion of
counsel in form and substance reasonably satisfactory to Issuer
and its counsel, to the effect that such legend is not required
for purposes of the Securities Act; (ii) the references to the
provisions of 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.
(d) Upon the giving by Grantee to Issuer of the written notice
of exercise of the Option provided for under Section 3(e) of this
Agreement, the tender of the applicable Purchase Price in
immediately available funds and the tender of this Agreement to
Issuer, Grantee shall be deemed to be the holder of record of the
shares of Issuer Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of Issuer shall
then be closed or that certificates representing such shares of
Issuer Common Stock shall not then be actually delivered to
Grantee. Issuer shall pay all expenses, and any and all United
States federal, state, and local taxes and other charges that may
be payable in connection with the preparation, issuance and
delivery of stock certificates under this Section in the name of
Grantee or its assignee, transferee, or designee.
(e) Issuer agrees (i) that it shall at all times maintain, free
from pre-emptive rights, sufficient authorized but unissued or
treasury shares of Issuer Common Stock so that the Option may be
exercised without additional authorization of Issuer Common Stock
after giving effect to all other options, warrants, convertible
securities and other rights to purchase Issuer Common Stock, (ii)
that it will not, by amendment to its Articles of Incorporation
or Bylaws or through reorganization, consolidation, merger,
dissolution or sale of assets, or by any other voluntary act,
avoid or seek to avoid the observance or performance of any of
the covenants, stipulations or conditions to be observed or
performed hereunder by Issuer, (iii) promptly to take all action
as may from time to time be required (including (A) complying (if
applicable) 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 any
federal or state law, prior notice to consent of any regulatory
authority is necessary before the Option may be exercised,
cooperating fully with Grantee in preparing any required
application or notice and providing such information to such
regulatory authority as such regulatory authority may require) in
order to permit Grantee to exercise the Option and Issuer duly
and effectively to issue shares of Issuer Common Stock pursuant
hereto, and (iv) promptly to take all action provided herein to
protect the rights of Grantee against dilution.
5. Representations and Warranties of Issuer. Issuer hereby
represents and warrants to Grantee as follows:
(a) Due Authorization. Issuer has all requisite corporate
power and authority to enter into this Agreement and, subject to
any approvals referred to herein, to consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate
action on the part of Issuer. This Agreement has been duly
executed and delivered by Issuer.
(b) Authorized Stock. Issuer has taken all necessary
corporate and other action to authorize and reserve and to permit
it to issue, and, at all times from the date hereof until the
obligation to deliver Issuer Common Stock upon the exercise of
the Option terminates, will have reserved for issuance, upon
exercise of the Option, the number of shares of Issuer Common
Stock necessary for Grantee to exercise the Option, and Issuer
will take all necessary corporate action to authorize and reserve
for issuance all additional shares of Issuer Common Stock or
other securities which may be issued pursuant to Section 7 of
this Agreement upon exercise of the Option. The shares of Issuer
Common Stock to be issued upon due exercise of the Option,
including all additional shares of Issuer Common Stock or other
securities which may be issuable pursuant to Section 7 of this
Agreement, upon issuance pursuant hereto, shall be duly and
validly issued, fully paid and nonassessable, and shall be
delivered free and clear of all liens, claims, charges and
encumbrances of any kind or nature whatsoever, including any
pre-emptive right of any shareholder of Issuer, but subject to
the voting restrictions contained in the Certificate of
Incorporation of Issuer.
(c) No Violation. Except as disclosed pursuant to the Merger
Agreement, the execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated hereby will
not, conflict with, or result in any violation pursuant to any
provisions of the Certificate of Incorporation, Charter or Bylaws
of Issuer or any subsidiary of Issuer or, subject to obtaining
any approvals or consents contemplated hereby, result in any
violation of any loan or credit agreement, note, mortgage,
indenture, lease, plan or other agreement, obligation,
instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation
applicable to Issuer or any subsidiary of Issuer or their
respective properties or assets which violation would have a
material adverse effect on the condition of Issuer on a
consolidated basis.
6. Representations and Warrants of Grantee. Grantee hereby
represents and warrants to Issuer that:
(a) Due Authorization. Grantee has all requisite corporate
power and authority to enter into this Agreement and, subject to
any approvals or consents referred to herein, to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of Grantee. This Agreement has been
duly executed and delivered by Grantee.
(b) Purchase Not for Distribution. This Option is not being,
and any Option Shares or other securities acquired by Grantee
upon exercise of the Option will not be, acquired with a view to
the public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or
exempt from registration under the Securities Act.
7. Adjustment Upon Changes in Capitalization, Etc.
(a) In the event of any change in Issuer Common Stock by reason
of a stock dividend stock split, split-up, recapitalization,
combination, exchange of shares or similar transaction, the type
and number of shares or securities subject to the Option, and the
Purchase Price therefor, shall be adjusted appropriately, and
proper provision shall be made in the agreements governing such
transaction so that Grantee shall receive, upon exercise of the
Option, the number and class of shares or other securities or
property that Grantee would have received in respect of Issuer
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 Issuer Common Stock are issued after the
date of this Agreement (other than pursuant to an event described
in the first sentence of this Section 7(a)), the number of shares
of Issuer Common Stock subject to the Option shall be adjusted so
that, after such issuance, the Option, together with any shares
of Issuer Common Stock previously issued pursuant hereto, equals
19.9% of the number of shares of Issuer Common Stock then issued
and outstanding, without giving effect to any shares subject to
or issued pursuant to the Option.
(b) In the event that, prior to the Termination Date, Issuer
shall enter into an agreement: (i) to consolidate with or merge
into any person, other than Grantee or one of its subsidiaries,
and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than
Grantee or one of its subsidiaries, to merge into Issuer where
Issuer shall be the continuing or surviving corporation, but, in
connection with such merger, the then outstanding shares of
Issuer Common Stock shall be changed into or exchanged for stock
or other securities of Issuer or any other person or cash or any
other property or the outstanding shares of Issuer Common Stock
immediately prior to such merger shall after such merger
represent less than 50% of the outstanding shares and share
equivalents of the merged company, or (iii) to sell or otherwise
transfer all or substantially all of its assets to any person,
other than Grantee or one of its subsidiaries, then, and in each
such case, the agreement governing such transaction shall make
proper provisions so that, upon the consummation of any such
transaction and upon the terms and conditions set forth herein,
the Option, notwithstanding the fact that as of the date of
consummation of such transaction the Termination Date shall have
occurred, shall be converted into, or exchanged for, an option
(the "Substitute Option"), at the election of Grantee, of either
(x) the Acquiring Corporation (as defined below), (y) any person
that controls the Acquiring Corporation, or (z) in the case of a
merger described in clause (ii), the Issuer (in each case, such
entity being referred to as the "Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the
Option, provided that, if the terms of the Substitute Option
cannot, because of the applicability of any law or regulation,
have the exact terms as the Option, such terms shall be as
similar as possible and in no event less advantageous to Grantee.
The Substitute Option Issuer shall also enter into an agreement
with the then-holder or holders of the Substitute Option in
substantially the same form as this Agreement, which shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of the Substitute Common Stock (as hereinafter defined)
as is equal to the Assigned Value (as hereinafter defined)
multiplied by the number of shares of the Issuer Common Stock for
which the Option was theretofore exercisable, divided by the
Average Price (as hereinafter defined). The exercise price of
each share of Substitute Common Stock subject to the Substitute
Option (the "Substitute Purchase Price") shall be equal to the
Purchase Price multiplied by a fraction in which the numerator is
the number of shares of the Issuer Common Stock for which the
Option was theretofore exercisable and the denominator is the
number of shares for which the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (x) the continuing or
surviving corporation of a consolidation or merger with (if other
than Issuer), (y) the Issuer in a consolidation or merger or in
which the Issuer is the continuing or surviving corporation, and
(z) the transferee of all or any substantial part of the Issuer's
assets (or the assets of its subsidiaries).
(ii) "Assigned Value" shall mean the highest of (x) the price per
share of the Issuer Common Stock at which a Tender Offer or
Exchange Offer therefor has been made by any person (other than
Grantee), (y) the price per share of the Issuer Common Stock to
be paid by any person (other than the Grantee) pursuant to an
agreement with Issuer, and (z) the highest last sales price per
share of Issuer Common Stock quoted on any national securities
exchange (including the NASDAQ - National Market System) (or if
Issuer Common Stock is not quoted on any such national securities
exchange, the highest bid price per share on any day as quoted on
the principal trading market or securities exchange on which such
shares are traded as reported by a recognized source chosen by
Grantee) within the six-month period immediately preceding the
agreement described in Section 7(b) above; provided, however,
that in the event of a sale of less than all of Issuer's assets,
the Assigned Value shall be the sum of the price paid in such
sale for such assets and the current market value of the
remaining assets of Issuer as determined by a nationally
recognized investment banking firm selected by Grantee, divided
by the number of shares of the Issuer Common Stock outstanding at
the time of such sale. In the event a Tender Offer or Exchange
Offer is made for the Issuer Common Stock or an agreement is
entered into for a merger or consolidation involving
consideration other than cash, the value of the securities or
other property issuable or deliverable in exchange for the Issuer
Common Stock shall be determined by a nationally recognized
investment banking firm mutually selected by Grantee and Issuer
(or if applicable, Acquiring Corporation), provided that if a
mutual selection cannot be made as to such investment banking
firm, it shall be selected by Grantee.
(iii) "Average Price" shall mean the average last sales price
of a share of the Substitute Common Stock for the one year
immediately preceding the consolidation, merger or sale in
question, as quoted on any national securities exchange
(including the NASDAQ National Market System), and if the
Substitute Common Stock is not quoted on any such national
securities exchange, the average of the bid price for the one
year period described above, as quoted on the principal trading
market or securities exchange on which such Substitute Common
Stock is traded, as reported by a recognized source, as chosen by
Grantee, but in no event higher than the last sales price or
closing price or the bid price of the shares of the Substitute
Common Stock on the day preceding such consolidation, merger, or
sale; provided that if Issuer is the issuer of the Substitute
Option, the Average Price shall be computed with respect to a
share of common stock issued by Issuer, the person merging into
Issuer or by any company which controls or is controlled by such
person, as Grantee may elect.
(iv) "Substitute Common Stock" shall mean the common stock issued
by the Substitute Option Issuer upon the exercise of the
Substitute Option.
(f) In no event pursuant to any of the foregoing paragraphs
shall the Substitute Option be exercisable for more than 19.9% of
the aggregate of the shares of the 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 aggregate of the shares of the Substitute
Common Stock but for this clause (f), the Substitute Option
Issuer shall make a cash payment to Grantee equal to the amount
of (i) the value of the Substitute Option without giving effect
to the limitation in this clause (f) in excess of (ii) the value
of the Substitute Option after giving effect to the limitation in
this clause (f). This difference in value shall be determined by
a nationally recognized investment banking firm selected by
Grantee.
(g) Issuer shall not enter into any transaction described in
subsection (b) of this Section 7 unless the Acquiring Corporation
and any person that controls the Acquiring Corporation assumes in
writing all of the obligations of Issuer hereunder and takes all
other actions that may be necessary so that the provisions of
this Section 7 are given full force and effect (including,
without limitation, any action that may be necessary so that the
shares of Substitute Common Stock are in no way distinguished
from or have lesser economic value (other than any diminution
resulting from the fact that the Substitute Common Stock is
"restricted securities" within the meaning of Rule 144 under the
Securities Act) than other shares of common stock issued by the
Substitute Option Issuer).
(h) The provisions of Sections 8, 9 and 10 shall apply, with
appropriate adjustments, to any securities for which the Option
becomes exercisable pursuant to this Section 7 and, as
applicable, references in such sections to "Issuer," "Option,"
"Purchase Price," and "Issuer Common Stock" shall be deemed to be
references to "Substitute Option Issuer," "Substitute Option,"
"Substitute Purchase Price," and "Substitute Common Stock,"
respectively.
8. Repurchase at the Option of Grantee.
(a) Subject to the last sentence of Section 3(a) of this
Agreement, at the request of Grantee at any time commencing upon
the first occurrence of a Repurchase Event (as defined in Section
8(d)) and ending at the close of business 365 days thereafter,
Issuer shall repurchase from Grantee the Option and all shares of
Issuer Common Stock purchased by Grantee pursuant hereto with
respect to which Grantee then has beneficial ownership. The date
on which Grantee exercises its rights under this Section 8 is
referred to as the "Request Date." Such repurchase shall be at
an aggregate price (the "Section 8 Repurchase Consideration")
equal to the sum of:
(i) the aggregate Purchase Price paid by Grantee for any shares
of Issuer Common Stock acquired pursuant to complete or partial
exercise of the Option with respect to which Grantee then has
beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as defined
below) for each share of Issuer Common Stock over (y) the
Purchase Price (subject to adjustment pursuant to Section 7),
multiplied by the number of shares of Issuer Common Stock with
respect to which the Option has not been exercised; and
(iii) the excess, if any, of the Applicable Price over the
Purchase Price (subject to adjustment pursuant to Section 7) paid
(or, in the case of Option Shares with respect to which the
Option has been exercised but the Closing Date has not occurred,
payable) by Grantee for each share of Issuer Common Stock with
respect to which the Option has been exercised and with respect
to which Grantee then has beneficial ownership, multiplied by the
number of such shares.
(b) If Grantee exercises its rights under this Section 8, Issuer
shall, within ten (10) business days after the Request Date, pay
the Section 8 Repurchase Consideration to Grantee in immediately
available funds, and contemporaneously with such payment Grantee
shall surrender to Issuer the Option and the certificates
evidencing the shares of Issuer Common Stock purchased thereunder
with respect to which Grantee then has beneficial ownership, and
Grantee shall warrant that it has sole record and beneficial
ownership of such shares and that the same are then free and
clear of all liens, claims, charges and encumbrances of any kind
whatsoever. Notwithstanding the foregoing, to the extent that
prior notification to or Consent of any Regulatory Authority is
required in connection with the payment of all or any portion of
the Section 8 Repurchase Consideration, or Issuer 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, Issuer shall immediately so notify Grantee
and thereafter deliver from time to time, and as permitted by
applicable law or regulation, that portion of the Section 8
Repurchase Consideration that it is not then so prohibited from
paying within five business days after the date on which Issuer
is no longer prohibited; provided, however, that if Issuer at any
time is prohibited under applicable law or regulation, or as a
consequence of administrative policy, from delivering to the
Grantee the Section 8 Repurchase Consideration, in full (and
Issuer hereby undertakes to use its best efforts to obtain all
required consents of regulatory authorities and to file any
required notices as promptly as practicable in order to
accomplish such repurchase), the Grantee may, at its option,
revoke its request that Issuer repurchase the Option or the
Option Shares either in whole or to the extent of the
prohibition, whereupon, in the latter case, Issuer shall promptly
(i) deliver to the Grantee that portion of the Section 8
Repurchase Consideration that Issuer is not prohibited from
delivering; and (ii) deliver, to the Grantee either (A) a new
Stock Option Agreement evidencing the right of Issuer to purchase
that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Stock
Option Agreement was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the
Section 8 Repurchase Consideration less the portion thereof
theretofore delivered to the Grantee and the denominator of which
is the Section 8 Repurchase Consideration, or (B) a certificate
for the Option Shares it is then prohibited from repurchasing.
Notwithstanding anything herein to the contrary, all of Grantee's
rights under this Section 8 shall terminate on the Termination
Date of this Option pursuant to Section 3(a) of this Agreement.
(c) For purposes of this Agreement, the "Applicable Price" means
the highest of: (i) the highest price per share of Issuer Common
Stock paid for any such share by the person or groups described
in Section 8(d)(i) below; (ii) the price per share of Issuer
Common Stock received by holders of Issuer Common Stock in
connection with any merger or other business combination
transaction described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii)
above; or (iii) the highest last sales price per share of Issuer
Common Stock quoted on any national securities exchange
(including the NASDAQ - National Market System) (or if Issuer
Common Stock is not quoted on any such national securities
exchange, the highest bid price per share as quoted on the
principal trading market or securities exchange on which such
shares are traded as reported by a recognized source chosen by
Grantee) during the sixty (60) business days preceding the
Request Date; provided, however, that in the event of a sale of
less than all of Issuer's assets, the Applicable Price shall be
the sum of the price paid in such sale for such assets and the
current market value of the remaining assets of Issuer as
determined by a nationally recognized investment banking firm
selected by Grantee, divided by the number of shares of the
Issuer Common Stock outstanding at the time of such sale. If the
consideration to be offered, paid or received pursuant to either
of the foregoing clauses (i) or (ii) shall be other than in cash,
the value of such consideration shall be determined in good faith
by an independent nationally recognized investment banking firm
selected by Grantee and reasonably acceptable to Issuer and
reasonably acceptable to Issuer, which determination shall be
conclusive for all purposes of this Agreement.
(d) As used herein, a "Repurchase Event" shall occur if (i) any
person (other than Grantee or any subsidiary of Grantee) shall
have acquired beneficial ownership of (as such term is defined in
Rule 13d-3 promulgated under the Exchange Act), or the right to
acquire beneficial ownership of, or any "group" (as such term is
defined under the Exchange Act) shall have been formed which
beneficially owns or has the right to acquire beneficial
ownership of, 50% or more of the then outstanding shares of
Issuer Common Stock, or (ii) any of the transactions described in
Section 7(b)(i), 7(b)(ii) or 7(b)(iii) of this Agreement shall be
consummated.
9. Registration Rights.
(a) Demand Registration Rights. Issuer shall, subject to the
conditions of subparagraph (c) below, if requested by Grantee, as
expeditiously as possible prepare and file a registration
statement under the Securities Act if such registration is
necessary in order to permit the sale or other disposition of any
or all shares of Issuer Common Stock or other securities that
have been acquired by or are issuable to Grantee upon exercise of
the Option in accordance with the intended method of sale or
other disposition stated by Grantee in such request, including
without limitation a "shelf" registration statement under Rule
415 under the Securities Act or any successor provision, and
Issuer shall use its best efforts to qualify such shares or other
securities for sale under any applicable state securities laws.
(b) Additional Registration Rights. If Issuer at any time
after the exercise of the Option proposes to register any shares
of Issuer Common Stock under the Securities Act in connection
with an underwritten public offering of such Issuer Common Stock,
Issuer will promptly give written notice to Grantee (any
permitted transferee) of its intention to do so and, upon the
written request of Grantee (or any such permitted transferee of
Grantee) given within 30 days after receipt of any such notice
(which request shall specify the number of shares of Issuer
Common Stock intended to be included in such underwritten public
offering by Grantee (or such permitted transferee)), Issuer will
cause all such shares, the holders of which shall have requested
participation in such registration, to be so registered and
included in such underwritten public offering; provided, that the
Issuer may elect not to cause all of the shares for which the
Grantee has requested participation in such registration to be
registered and included in such underwritten public offering (i)
if the underwriters, for good business reasons and in good faith,
object to such inclusion or (ii) in the case of a registration
solely to implement a dividend reinvestment or similar plan, an
employee benefit plan or a registration filed on Form S-4 or any
successor form, or a registration filed on a form which does not
permit registration of resales; provided further, that such
election pursuant to clause (i) may be made only one time. If
some but not all the shares of Issuer Common Stock, with respect
to which Issuer shall l have received requests for registration
pursuant to this subparagraph (b), shall be excluded from such
registration, Issuer shall make appropriate allocation of shares
to be registered among selling holders of Option Shares and any
other person (other than Issuer or any person exercising demand
registration rights in connection with such registration) who or
which is permitted to register their shares of Issuer Common
Stock in connection with such registration pro rata in the
proportion that the number of shares requested to be registered
by each selling holder of Option Shares bears to the total number
of shares requested to be registered by all persons then desiring
to have Issuer Common Stock registered for sale.
(c) Conditions to Required Registration. Issuer shall use all
reasonable efforts to cause each registration statement referred
to in subparagraph (a) above to become effective and to obtain
all consents or waivers of other parties which are required
therefor and to keep such registration statement effective,
provided, however, that Issuer may delay any registration of
Option Shares required pursuant to subparagraph (a) above for a
period not exceeding 90 days in the event that Issuer shall in
good faith determine that any such registration would adversely
affect an offering or contemplated offering of other securities
by Issuer, and Issuer shall not be required to register Option
Shares under the Securities Act pursuant to subparagraph (a)
above:
(i) prior to the earliest of (a) termination of the Merger
Agreement, and (b) a Purchase Event;
(ii) on more than two occasions;
(iii)more than once during any calendar year; and
(iv) within 90 days after the effective date of a registration
referred to in subparagraph (b) above pursuant to which the
holder or holders of the Option Shares concerned were afforded
the opportunity to register such shares under the Securities Act
and such shares were registered as requested.
(v) unless a request therefor is made to Issuer by selling
holders of Option Shares holding at least 25% or more of the
aggregate number of Option Shares then outstanding.
In addition to the foregoing, Issuer shall not be required to
maintain the effectiveness of any registration statement after
the expiration of 180 days from the effective date of such
registration statement. Issuer shall use all reasonable efforts
to make any filings, and take all steps, under all applicable
state securities laws to the extent necessary to permit the sale
or other disposition of the Option Shares so registered in
accordance with the intended method of distribution for such
shares, provided, that Issuer shall not be required to consent to
general jurisdiction or qualify to do business in any state where
it is not otherwise required to so consent to such jurisdiction
or to so qualify to do business.
(d) Expenses. Except where applicable state law prohibits
such payments, Issuer will pay all of its expenses (including,
without limitation, registration fees, qualification fees, blue
sky fees and expenses, legal expenses, printing expenses and the
costs of special audits or "cold comfort" letters, expenses of
underwriters, excluding discounts and commissions but including
liability insurance if Issuer so desires or the underwriters so
require, and the reasonable fees and expenses of any necessary
special experts) in connection with each registration pursuant to
subparagraph (a) or (b) above (including the related offerings
and sales by holders of Option Shares) and all other
qualifications, notifications or exemptions pursuant to
subparagraph (a) or (b) above; provided, however, that fees and
expenses of counsel to the selling holders of Option Shares and
any other expenses (including underwriting discounts and
commissions relating to the sale of Option Shares) incurred by
the selling holders of Option Shares in connection with such
registration shall be borne by the selling holders of Option
Shares.
(e) Indemnification. In connection with any registration
under subparagraph (a) or (b) above Issuer hereby indemnifies the
holder of the Option Shares, and each underwriter thereof,
including each person, if any, who controls such holder or
underwriter within the meaning of Section 15 of the Securities
Act, against all expenses, losses, claims, damages and
liabilities caused by any untrue, or alleged untrue, statement of
a material fact contained in any registration statement or
prospectus or notification or offering circular (including any
amendments or supplements thereto) or any preliminary prospectus,
or caused by any omission, or alleged omission, to state therein
a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as
such expenses, losses, claims, damages or liabilities of such
indemnified party are caused by any untrue statement or alleged
untrue statement that was included by Issuer in any such
registration statement or prospectus or notification or offering
circular (including any amendments or supplements thereto) in
reliance upon and in conformity with, information furnished in
writing to Issuer by such indemnified party expressly for use
therein, and Issuer and each officer, director and controlling
person of Issuer shall be indemnified by such holder of the
Option Shares, or by such underwriter, as the case may be, for
all such expenses, losses, claims, damages and liabilities caused
by any untrue, or alleged untrue, statement, that was included by
Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or
supplements thereto) in reliance upon, and in conformity with,
information furnished in writing to Issuer by such holder or such
underwriter, as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this
subparagraph (e) of notice of the commencement of any action
against such indemnified party in respect of which indemnity or
reimbursement may be sought against any indemnifying party under
this subparagraph (e), such indemnified party shall notify the
indemnifying party in writing of the commencement of such action,
but the failure so to notify the indemnifying party shall not
relieve it of any liability which it may otherwise have to any
indemnified party under this subparagraph (e) provided such
failure does not prejudice Issuer. In case notice of
commencement of any such action shall be given to the
indemnifying party as above provided, the indemnifying party
shall be entitled to participate in and, to the extent it may
wish, jointly with any other indemnifying party similarly
notified, to assume the defense of such action at its own
expense, with counsel chosen by it and satisfactory to such
indemnified party. The indemnified party shall have the right to
employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel (other
than reasonable costs of investigation) shall be paid by the
indemnified party unless (i) the indemnifying party either agrees
to pay the same, (ii) the indemnifying party fails to assume the
defense of such action with counsel satisfactory to the
indemnified party, or (iii) the indemnified party has been
advised by counsel that one or more legal defenses may be
available to the indemnifying party that may be contrary to the
interest of the indemnified party, in which case the indemnifying
party shall be entitled to assume the defense of such action
notwithstanding its obligation to bear fees and expenses of such
counsel. No indemnifying party shall be liable for any
settlement entered into without its consent, which consent may
not be unreasonably withheld.
If the indemnification provided for in this subparagraph (e) is
unavailable to a party otherwise entitled to be indemnified in
respect of any expenses, losses, claims, damages or liabilities
referred to herein, then the indemnifying party, in lieu of
indemnifying such party otherwise entitled to be indemnified,
shall contribute to the amount paid or payable by such party to
be indemnified as a result of such expenses, losses, claims,
damages or liabilities in such proportion as is appropriate to
reflect the relative benefits received by Issuer, the selling
shareholders and the underwriters from the offering of the
securities and also the relative fault of Issuer, the selling
shareholders and the underwriters in connection with the
statements or omissions which resulted in such expenses, losses,
claims, damages or liabilities, as well as any other relevant
equitable considerations. The amount paid or payable by a party
as a result of the expenses, losses, claims, damages and
liabilities referred to above shall be deemed to include any
legal or other fees or expenses reasonably incurred by such party
in connection with investigating or defending any action or
claim; provided, however, that in no case shall the holders of
the Option Shares be responsible, in the aggregate, for any
amount in excess of the net offering proceeds attributable to its
Option Shares included in the offering. No person guilty of
fraudulent misrepresentation (with the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
Any obligation by any holder to indemnify shall be several and
not joint with other holders.
In connection with any registration pursuant to subparagraph (a)
or (b) above, Issuer and each holder of any Option Shares (other
than Grantee) shall enter into an agreement containing the
indemnification provisions of this subparagraph (e).
(f) Miscellaneous Reporting. Issuer shall comply with all
reporting requirements and will do all such other things as may
be necessary to permit the expeditious sale at any time of any
Option Shares by the holder thereof in accordance with and to the
extent permitted by any rule or regulation promulgated by the SEC
from time to time. Issuer shall at its expense provide the
holder of any Option Shares with any information necessary in
connection with the completion and filing of any reports or forms
required to be filed by them under the Securities Act or the
Exchange Act, or required pursuant to any state securities laws
or the rules of any stock exchange.
10. Quotation; Listing. If Issuer Common Stock or any other
securities to be acquired upon exercise of the Option are then
authorized for quotation or trading or listing on the NASDAQ
National Market or any other securities exchange or any automated
quotations system maintained by a self-regulatory organization,
Issuer will promptly file an application, if required, to
authorize for quotation or trading or listing the shares of
Issuer Common Stock or other securities to be acquired upon
exercise of the Option on the NASDAQ National Market or any other
securities exchange or any automated quotations system maintained
by a self-regulatory organization and will use its best efforts
to obtain approval, if required, of such quotation or listing as
soon as practicable.
11. Division of Option. This Agreement (and the Option
granted hereby) are exchangeable, without expense, at the option
of Grantee, upon presentation and surrender of this Agreement at
the principal office of Issuer for other Agreements providing for
Options of different denominations entitling the holder thereof
to purchase in the aggregate the same number of shares of Issuer
Common Stock purchasable hereunder. The terms "Agreement" and
"Option" as used herein include any other Agreements and related
Options for which this Agreement (and the Option granted hereby)
may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation
of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Agreement, if mutilated,
Issuer will execute and deliver a new Agreement of like tenor and
date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of
Issuer, whether or not the Agreement so lost, stolen, destroyed
or mutilated shall at any time be enforceable by anyone.
12. Miscellaneous.
(a) Expenses. Except as otherwise provided in Section 9 of
this Agreement, each of the parties hereto shall bear and pay all
costs and expenses incurred by it or on its behalf in connection
with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers,
accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may
be waived at any time by the party that is entitled to the
benefits of such provision if such waiver is in writing. This
Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement
executed by the parties hereto.
(c) Entire Agreement; No Third-Party Beneficiary; Severability.
This Agreement, together with the Merger Agreement and the other
documents and instruments referred to herein and therein, between
Grantee and Issuer (a) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written
and oral, between the parties with respect to the subject matter
hereof and (b) is not intended to confer upon any person other
than the parties hereto (other than any transferees of the Option
Shares or any permitted transferee of this Agreement pursuant to
Section 12(h)) any rights or remedies hereunder. If any term,
provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or a federal or state regulatory
agency to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. If for any reason such court
or regulatory agency determines that the Option does not permit
Grantee to acquire, or does not require Issuer to repurchase, the
full number of shares of Issuer Common Stock as provided in
Sections 3 and 8 (as adjusted pursuant to Section 7), it is the
express intention of Issuer to allow Grantee to acquire or to
require Issuer to repurchase such lesser number of shares as may
be permissible without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware
without regard to any applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings contained
herein are for convenience of reference only and shall not affect
in any way the meaning or interpretation of this Agreement,
except to the extent that federal law may apply.
(f) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered
personally, telecopied (with confirmation) or mailed by
registered or certified mail (return receipt requested) to the
parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
If to Issuer to: E. Frank Griffin, III
First Federal Bank for Savings
Post Office Box 152
Columbus MS 39703-0152
With a copy to: Charles E. Sloane
Malizia, Spidi, Sloane & Fisch, P.C.
One Franklin Square
1301 K. Street, N.W.
Suite 700 East
Washington, DC 20005
If to Grantee to: Lewis F. Mallory
National Bank of Commerce
Post Office Box 1187
Starkville MS 39760
With a copy to: Hunter M. Gholson
Gholson, Hicks & Nichols
Post Office Box 1111
Columbus MS 39703-1111
(g) Counterparts. This Agreement and any amendments hereto
may be executed in two counterparts, each of which shall be
considered one and the same agreement and shall become effective
when both counterparts have been signed, it being understood that
both parties need not sign the same counterpart.
(h) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be
assigned by any of the parties hereto (whether by operation of
law or otherwise) without the prior written consent of the other
party, except that Grantee may assign this Agreement to a wholly
owned subsidiary of Grantee and Grantee may assign its rights
hereunder in whole or in part after the occurrence of a Purchase
Event; provided, however, that until the Federal Reserve has
approved an application by Grantee to acquire the shares of
Issuer Common Stock subject to the Option, Grantee 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 Issuer, (iii) an assignment to a single party
(e.g., a broker or investment banker) for the purpose of
conducting a widely dispersed public distribution on Grantee's
behalf or (iv) any other manner approved by the Federal Reserve.
Any such assignment shall be in compliance with all applicable
laws. Subject to the preceding sentence, this Agreement shall
be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
(i) Further Assurances. In the event of any exercise of the
Option by Grantee, Issuer and Grantee shall execute and deliver
all other documents and instruments and take all other action
that may be reasonably necessary in order to consummate the
transactions provided for by such exercise.
(j) Specific Performance. The parties hereto agree that this
Agreement may be enforced by either party through specific
performance, injunctive relief and other equitable relief. Both
parties further agree to waive any requirement for the securing
or posting of any bond in connection with the obtaining of any
such equitable relief and that this provision is without
prejudice to any other rights that the parties hereto may have
for any failure to perform this Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Agreement
to be signed by their respective officers thereunto duly
authorized, all as of the day and year first written above.
FFBS BANCORP, INC., a Delaware corporation
BY: _______________________________________
NBC CAPITAL CORPORATION, a Mississippi
corporation
BY: _______________________________________
EXHIBIT 99.4
PLAN OF REORGANIZATION AND MERGER
By and Between
NATIONAL BANK OF COMMERCE
AND
FIRST FEDERAL BANK FOR SAVINGS
THIS PLAN OF REORGANIZATION AND MERGER (the "Bank Merger Agreement"),
dated as of the _______ day of February, 1999, by and between NATIONAL BANK
OF COMMERCE, a wholly owned national banking subsidiary of NBC CAPITAL
CORPORATION, and FIRST FEDERAL BANK FOR SAVINGS, a wholly owned federally
chartered savings bank subsidiary of FFBS BANCORP, INC., organized under
the laws of the United States.
RECITALS
WHEREAS, on the _____________ day of February, 1999, NBC Capital
Corporation, a Mississippi corporation ("NBC"), and FFBS Bancorp, Inc., a
Delaware corporation ("FFBS"), executed an Agreement and Plan of Merger
(the "Merger Agreement"), through which FFBS will be merged with and into
NBC (the "Parent Merger"); and
WHEREAS, First Federal Bank for Savings ("Thrift") is a wholly owned
subsidiary of FFBS, and National Bank of Commerce ("Bank") is a wholly
owned subsidiary of NBC; and
WHEREAS, the respective Boards of Directors deem the merger of Thrift with
and into Bank as provided herein (the "Bank Merger") advisable and in the
best interest of their respective corporations and shareholders; and
WHEREAS, the respective Boards of Directors of Bank and Thrift, by
resolutions duly adopted, have approved this Merger Agreement and the
contemplated Bank Merger; and
WHEREAS, Bank and Thrift respectively desire to have certain
representations made with respect to the Bank Merger.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties agree that Thrift shall be merged with and
into Bank, and that the terms and conditions of the Bank Merger and the
method of carrying the Bank Merger into effect and certain other provisions
relating thereto shall be as hereinafter set forth.
ARTICLE I
1.1 The Bank Merger. In accordance with the provisions of this Bank
Merger Agreement and the laws of the United States, and after the Effective
Time of the Parent Merger (as defined in the Parent Merger Agreement) (the
"Effective Time"), Thrift shall be merged with and into Bank under the
charter of Bank. The Bank Merger shall be consummated (i) upon notice to
the Office of Thrift Supervision of the Department of the Treasury of The
United States ("OTS") pursuant to 12 C.F.R. 563.22(b); (ii) at the time
specified in the Certificate Approving Bank Merger issued by the Office of
the Comptroller of the Currency ("OCC"); and (iii) shall occur after the
Parent Merger pursuant to 12 U.S.C. Section 215c, 1815(d)(3) and 1828(c).
1.2 Surviving Bank. Bank shall continue to exist under the laws of the
United States as a wholly owned subsidiary of NBC. At the Effective Time,
the separate existence and organization of Thrift shall cease. Bank will
continue to operate as a national banking association titled National Bank
of Commerce with its principal office located at 301 East Main Street,
Starkville, Mississippi, 39759, and at the legally established branches of
Bank and Thrift.
1.3 Capital Structure. Upon consummation of the Bank Merger, each share
of common stock of Thrift shall be canceled, and no cash, securities or
other property shall be issued in the Bank Merger in respect thereof.
As of the time of the Bank Merger, the amount of capital stock of Bank
shall be $1,200,000 divided into 1,200,000 shares of common stock, each of
$1.00 par value, and shall have a surplus determined as of June 30, 1998
of $33,000,000 and undivided profits, including capital reserves of
$27,809,000, adjusted, however, for normal earnings and expenses between
June 30, 1998 and the date of the Bank Merger.
1.4 Effect of the Bank Merger; Tax Consequences. All assets of Thrift as
they exist at the Effective Time, shall pass to and vest in the Bank
without any conveyance or other transfer; and Bank shall be responsible for
all of the liabilities of Bank and Thrift of every kind and description.
For federal income tax purposes, the Bank Merger shall constitute a
tax-free reorganization pursuant to Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code"), and the Bank Merger shall
constitute a "Plan of Reorganization" for purposes of the Rules and
Regulations governing Code Section 368.
1.5 Directors and Officers. After the Bank Merger, the present officers
of Bank together with such present officers of Thrift who may be duly
appointed as additional officers shall serve as the officers of the Bank,
and shall serve in such capacities until the next annual meeting or until
such time as their successors have been elected and have been qualified.
The directors of Bank, immediately prior to the Effective Time shall be,
from and after the Effective Time, the directors of the Surviving
Corporation, and two presently serving directors of FFBS shall be appointed
and become directors of Bank.
1.6 Articles of Association; Bylaws. After the Bank Merger, the Articles
of Association of Bank shall be the Articles of Association of the Bank.
The Bylaws of Bank, as in effect immediately prior to the Bank Merger,
shall be the Bylaws of the Surviving Bank until amended as therein
provided.
1.7 Dividends and Conduct of Business. To the extent permitted by the
Merger Agreement, Bank and Thrift may each continue to declare and pay
dividends to their respective shareholders and may dispose of any assets in
any manner in the normal course of business and for adequate value.
1.8 Liquidation Account. The liquidation account established by the
Thrift pursuant to the plan of conversion adopted in connection with its
conversion from mutual to stock form shall, to the extent required by
applicable law, continue to be maintained by the Bank after the Effective
Time for the benefit of those persons and entities who were savings account
holders of the Thrift on the eligibility and supplemental eligibility
record dates for such conversion and who continue from time to time to have
rights therein. If required by the rules and regulations of the OTS, the
Bank shall amend its charter to specifically provide for the continuation
of the liquidation account previously established by Thrift.
ARTICLE II
Representations and Warranties of Bank and Thrift
2.1 Corporate Organization. Bank and Thrift are validly existing and in
good standing under the laws of the United States and have the power and
authority to own or lease all of their properties and assets and to carry
on their business as it is now being conducted.
2.2 Authority; No Violation. Bank and Thrift have the full corporate
power and authority to execute and deliver this Merger Agreement and to
consummate the transactions contemplated thereby. The execution and
delivery of this Bank Merger Agreement and the consummation of the
transactions contemplated will have been duly and validly approved by the
Boards of Directors of the Bank and Thrift and by the Boards of Directors
of NBC and FFBS as the sole shareholders of Bank and Thrift.
2.3 Consents and Approvals. The parties hereto will cooperate in the
preparation and filing of all documents necessary to obtain the consent and
approval of the OCC and such other filings, approvals or consents as may be
required by applicable federal and state laws or regulations.
2.4 Parent Merger. The Bank Merger and all provisions of this Bank
Merger Agreement are contingent upon appropriate shareholder and regulatory
approval of the Merger Agreement, and all necessary consents or permits
from all applicable regulatory authorities shall have been obtained prior
to consummation of the Bank Merger. This Bank Merger and the transactions
contemplated hereby shall have been approved by the OCC and all other
applicable federal and state authorities in a form acceptable to Bank and
Thrift.
ARTICLE III
Closing
3.1 Closing. Subject to the provisions contained herein and all
appropriate provisions of the Merger Agreement, the Closing of the Bank
Merger shall take place following the closing of the Parent Merger.
3.2 Termination. This Agreement shall automatically terminate upon the
termination of the Merger Agreement or on September 30, 1999, unless
extended in writing and upon the same terms and conditions as provided for
in the Merger Agreement.
3.3 Conditions. The consummation of the transactions contemplated herein
is expressly conditioned upon (a) the ratification and confirmation of the
contemplated transactions by the affirmative vote of the shareholders, (b)
the procurement of consents and approvals, including but not limited to the
approval of the OCC, and the satisfaction of all other requirements
prescribed by applicable law that are necessary for the consummation of the
transactions contemplated herein, and (c) no litigation or proceeding
initiated by any governmental authority shall be pending before any court
or agency which presents a claim to restrain, prohibit, or invalidate the
transactions contemplated herein and no order of any court or agency shall
restrain or prohibit the transactions contemplated herein.
ARTICLE IV
4.1 Incorporation by Reference. The Merger Agreement is hereby
incorporated by reference, and the parties hereto acknowledge that all
provisions of that document applicable to representations, warranties,
covenants, conditions, conduct of business, disclosures, termination and
closing contained in said Merger Agreement shall be binding upon and inure
to the benefit of the parties hereto.
IN WITNESS WHEREOF, the Boards of Directors of Bank and Thrift have
approved this Merger Agreement and directed the authorized signatures and
seal of each respective corporation to be set hereunto by its Chairman of
the Board and attested to by a duly authorized officer, and the Boards of
Directors of Bank and Thrift have caused this Merger Agreement to be
executed by their duly authorized officers, all as of the day and year
first above written.
FIRST FEDERAL BANK FOR SAVINGS
(S E A L)
BY: _________________________________
ATTEST:
________________________________
SECRETARY
NATIONAL BANK OF COMMERCE
(S E A L)
BY: __________________________________
ATTEST:
________________________________
SECRETARY
