<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by Registrant: /X/
Filed by a Party other than the Registrant: / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Materials Pursuant to Section 240.14a-11(c) or Section
240.14a-12
TEXARKANA FIRST FINANCIAL CORPORATION
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / No fee required.
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
Common Stock, par value $0.01 per share
2) Aggregate number of securities to which transaction applies:
1,539,342
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: $37,500,000 - Sale Price
4) Proposed maximum aggregate value of transaction: $37,500,000
5) Total fee paid: $7,500
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
[LOGO]
August 11, 2000
Dear Shareholder:
You are cordially invited to attend the special meeting of
shareholders of Texarkana First Financial Corporation, a Texas corporation
and the holding company for First Federal Savings and Loan Association of
Texarkana, to be held at the main offices of First Federal, 3rd & Olive
Streets, Texarkana, Arkansas at 4:00 p.m. (Central time) on September 13,
2000.
The attached Notice of Special Meeting of Shareholders and proxy
statement describe the formal business to be transacted at the special
meeting. The purpose of the special meeting is to consider and vote upon a
proposal to approve and adopt the Agreement and Plan of Reorganization by and
between First United Bancshares, Inc. and Texarkana First Financial dated as
of May 15, 2000, and the Plan of Merger attached thereto as EXHIBIT A, which
provide for the merger of First United Acquisition Co., Inc., a Texas
corporation to be formed as a wholly-owned subsidiary of First United, with
and into Texarkana First Financial, with Texarkana First Financial continuing
as the surviving corporation and as a wholly-owned subsidiary of First
United. In the merger, the shares of, and options to acquire shares of,
Texarkana First Financial's common stock outstanding at the effective time of
the merger would be converted into the right to receive an aggregate amount
of cash equal to $37,500,000, or (i) $23.35208 per share of common stock
outstanding at the effective time, and (ii) $23.35208 less the per-share
exercise price for each option to acquire a share of common stock that is
outstanding and unexercised at the effective time. The merger will be a taxable
transaction to shareholders generally. Shareholders of Texarkana First
Financial will have no equity interest in either Texarkana First Financial or
First United after completion of the merger. The closing price per share for
the Texarkana First Financial common stock as reported on the AMEX on May 15,
2000, the last full trading day prior to the public announcement of the
proposed merger, was $21.50. The closing price per share on May 5, 2000, ten
days before public announcement of the proposed merger, was $16.625. The
accompanying proxy statement more fully describes the proposed merger.
Consummation of the merger is subject to certain conditions, including
the approval of all applicable regulatory authorities and the approval of our
shareholders. The Board of Directors believes that the proposed merger is in
the best interests of Texarkana First Financial and its shareholders, and has
unanimously approved the merger agreement and the merger. The Board of
Directors unanimously recommends that you vote "FOR" approval and adoption of
the merger agreement. You are urged to carefully read the accompanying proxy
statement, which provides important information regarding the merger and
related matters.
Your vote is important, regardless of the number of shares that you
own. In order for the merger to be consummated, the merger agreement must be
approved by the holders of two-thirds of the outstanding shares of common
stock entitled to vote. Consequently, a failure to vote or a vote to abstain
will have the same effect as a vote against the merger agreement. On behalf
of the Board of Directors, I urge you to sign, date and return the enclosed
proxy in the enclosed postage-paid envelope as soon as possible, even if you
currently plan to attend the special meeting. This will not prevent you from
voting in person but will assure that your vote is counted if you are not
able to attend the special meeting. Executed proxies with no instructions
indicated on such proxies will be voted "FOR" approval and adoption of the
merger agreement.
We look forward to seeing you at this important special meeting. If
you have any questions regarding the special meeting or the proposed merger,
you are encouraged to call John Harrison, President and Chief Operating
Officer of Texarkana First Financial, at (870) 773-1103.
Sincerely,
/s/ James W. McKinney
James W. McKinney
Chairman and Chief Executive Officer
<PAGE>
[LOGO]
3RD & OLIVE STREETS
TEXARKANA, ARKANSAS 71854
(870) 773-1103
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 13, 2000
A special meeting of the shareholders of Texarkana First Financial
Corporation will be held at the main offices of First Federal Savings and
Loan Association, 3rd & Olive Streets, Texarkana, Arkansas at 4:00 p.m.
(Central time) to consider the following proposal:
To approve and adopt the Agreement and Plan of Reorganization by and
between First United Bancshares, Inc. and Texarkana First Financial
Corporation, dated as of May 15, 2000, and the Plan of Merger attached
thereto as EXHIBIT A, pursuant to which:
- First United Acquisition Co., Inc., a Texas corporation to
be formed as a wholly-owned subsidiary of First United,
will merge with and into Texarkana First Financial, with
Texarkana First Financial continuing as the surviving
corporation and a wholly-owned subsidiary of First United;
and
- the outstanding shares of, and options to acquire shares
of, the common stock of Texarkana First Financial will be
exchanged for an aggregate consideration of $37,500,000 in
cash.
The board of directors has fixed July 26, 2000, as the record date for
the determination of shareholders entitled to vote at the special meeting.
If you wish to attend the special meeting and your shares are held by
a broker, bank or other nominee, you must bring to the special meeting a
recent brokerage statement or letter from the nominee confirming your
beneficial ownership of the shares of common stock. You must also bring a
form of personal identification. In order to vote your shares at the special
meeting you must obtain from each nominee a proxy issued in your name.
Under Part Five of the Texas Business Corporation Act, if Texarkana
First Financial shareholders dissent from and do not vote in favor of the
approval and adoption of the Agreement and Plan of Reorganization and the
merger, they are entitled to certain appraisal rights, provided that they
strictly comply with certain statutory procedures explained in detail in the
attached proxy statement. A copy of the dissenters' rights provisions of the
Texas Business Corporation Act (Articles 5.11 through 5.13) is attached as
APPENDIX C to the proxy statement.
It will be helpful to us if you read the proxy statement and voting
instructions on the proxy card, and then vote by promptly marking, signing,
dating and returning the proxy in the enclosed, self-addressed, stamped
envelope so that the necessary quorum will be represented at the special
meeting.
By Order of the Board of Directors,
/s/ James W. McKinney
James W. McKinney
Chairman and Chief Executive Officer
Texarkana, Arkansas
August 11, 2000
PLEASE DO NOT SEND ANY SHARE CERTIFICATES AT THIS TIME. IF THE MERGER IS
CONSUMMATED, YOU WILL BE SENT INSTRUCTIONS REGARDING YOUR CERTIFICATES.
<PAGE>
[logo]
3RD & OLIVE STREETS
TEXARKANA, ARKANSAS 71854
(870) 773-1103
_______________________
PROXY STATEMENT
_______________________
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 13, 2000
This proxy statement and the accompanying form of proxy are being
provided to you in connection with the solicitation of proxies by the Board
of Directors of Texarkana First Financial Corporation from holders of
outstanding shares of its common stock, par value $0.01 per share. The
proxies will be voted at Texarkana First Financial's special meeting of
shareholders to be held on September 13, 2000, at the time and place and for
the purpose set forth in the accompanying Notice of Special Meeting of
Shareholders and at any adjournments or postponements of the special meeting.
This proxy statement and the accompanying proxy are first being mailed to
shareholders on or about August 11, 2000.
At the special meeting, shareholders will consider and vote upon a
proposal to approve and adopt the Agreement and Plan of Reorganization by and
between Texarkana First Financial and First United Bancshares, Inc., dated as
of May 15, 2000, and the Plan of Merger attached thereto as EXHIBIT A
(together, the "merger agreement"), pursuant to which First United
Acquisition Co., Inc., a Texas corporation to be formed as a wholly-owned
subsidiary of First United, will merge with and into Texarkana First
Financial. As a result of the merger, Texarkana First Financial will
continue as the surviving corporation and as a wholly-owned subsidiary of
First United, and First United Acquisition Co. will cease to exist. In the
merger, the shares of, and options to acquire shares of, Texarkana First
Financial's common stock outstanding at the effective time of the merger will
be converted into the right to receive an aggregate amount of cash equal to
$37,500,000, or (i) $23.35208 per share of Texarkana First Financial common
stock outstanding at the effective time of the merger, and (ii) $23.35208
less the per-share exercise price for each option to acquire a share of
Texarkana First Financial common stock that is outstanding and unexercised
immediately prior to the effective time of the merger. Shares held by
shareholders properly perfecting their dissenters' rights will be converted
into cash pursuant to the dissenters' rights statutes also described in this
proxy statement. For a discussion of the consideration to be received by
Texarkana First Financial's shareholders in the merger, see "THE PROPOSED
MERGER--PURCHASE PRICE." The merger will be a taxable transaction to
shareholders generally. Shareholders of Texarkana First Financial will have
no equity interest in either Texarkana First Financial or First United after
completion of the merger. A copy of the merger agreement is included as
APPENDIX A to this proxy statement and is incorporated herein by reference.
The closing price per share for the Texarkana First Financial common stock as
reported on the AMEX on May 5, 2000, ten days before public announcement of
the proposed merger, was $16.625. The closing price per share on May 15,
2000, the last full trading day prior to the public announcement of the
proposed merger, was $21.50.
Consummation of the merger is conditioned upon, among other things,
approval and adoption of the merger agreement by the requisite vote of
Texarkana First Financial's shareholders and the receipt of all requisite
regulatory approvals and consents. For further information concerning the
terms and conditions of the merger, see "THE PROPOSED MERGER--THE MERGER."
The Board of Directors knows of no additional matters that will be
presented for consideration at the special meeting. No persons have been
authorized to give any information or to make any representations other than
those contained in this proxy statement in connection with the solicitation
of proxies made hereby, and, if given or made, such information or
representations must not be relied upon as having been authorized by
Texarkana First Financial or any other person.
<PAGE>
SUMMARY TERM SHEET
The following is a brief summary term sheet for the merger, which
highlights selected information from this proxy statement regarding the
merger and the merger agreement. This term sheet may not, however, contain
all of the information that is important to you as a shareholder of Texarkana
First Financial Corporation. Accordingly, we encourage you to carefully read
the entire proxy statement and the appendices to this proxy statement. Page
numbers refer to pages of this proxy statement on which more detailed
information may be found.
THE PROPOSED TRANSACTION
- THE PROPOSAL (page 8). You are being asked to consider and vote
upon a proposal to approve the merger agreement that provides for
Texarkana First Financial to be merged with and into First United
Bancshares, Inc.
- EACH TEXARKANA FIRST FINANCIAL SHARE WILL BE EXCHANGED FOR $23.35208
IN CASH (page 20). Upon completion of the merger, you will be
entitled to receive $23.35208 in cash for each of your shares of
Texarkana First Financial stock.
- EACH TEXARKANA FIRST FINANCIAL OPTION WILL BE EXCHANGED FOR $23.35208
LESS THE PER-SHARE EXERCISE PRICE IN CASH (pages 20 and 27). Upon
completion of the merger, you will be entitled to receive, for each
of your options to acquire a share of Texarkana First Financial stock
which is outstanding and unexercised immediately prior to the
effective time of the merger, the amount in cash equal to $23.35208
less the per-share exercise price of the option.
TEXARKANA FIRST FINANCIAL'S FINANCIAL ADVISOR SAYS THE CASH CONSIDERATION IS
FAIR TO TEXARKANA FIRST FINANCIAL SHAREHOLDERS (page 14 and APPENDIX B)
On August 11, 2000, Stifel, Nicolaus & Company, Incorporated,
Texarkana First Financial's financial advisor, delivered their opinion to
Texarkana First Financial's Board of Directors that, as of the date of this
proxy statement, the consideration to be received by Texarkana First
Financial shareholders in the merger is fair from a financial point of view.
Stifel, Nicolaus provided its advisory services and its opinion for
the information and assistance of the Texarkana First Financial board in
connection with its consideration of the merger. Stifel, Nicolaus's opinion
is not a recommendation as to how any Texarkana First Financial shareholder
should vote at the special meeting. THE OPINION IS ATTACHED AS APPENDIX B TO
THIS PROXY STATEMENT. YOU ARE URGED TO READ THE OPINION IN ITS ENTIRETY.
THE MERGER WILL BE A TAXABLE TRANSACTION TO YOU (page 23)
As a result of the merger, you will generally recognize a gain or loss
for United States income tax purposes measured by the difference between the
cash received pursuant to the merger agreement and your adjusted tax basis in
the shares of Texarkana First Financial's common stock exchanged for such
cash. Because determining the tax consequences of the merger can be
complicated, you should consult with your tax advisor as to the specific tax
consequences of the merger to you, including the applicability and effect of
federal, state, local, foreign and other tax laws.
TEXARKANA FIRST FINANCIAL'S RECOMMENDATION TO SHAREHOLDERS (page 12)
Your Board of Directors has determined, by unanimous vote, that the
merger is fair to and in the best interests of Texarkana First Financial and
its shareholders and has unanimously approved and adopted the merger
agreement and the merger. Your Board of Directors unanimously recommends
that shareholders vote FOR approval of the merger agreement at the special
meeting.
ii
<PAGE>
MARKET PRICE INFORMATION (page 35)
The closing price per share for the Texarkana First Financial common
stock as reported on the AMEX on April 17, 2000, the lowest price the stock
reached in the month immediately preceding the public announcement of the
proposed merger, was $15.875. The closing price per share on May 5, 2000,
ten days before public announcement of the proposed merger, was $16.625. The
closing price per share on May 15, 2000, the last full trading day prior to
the public announcement of the proposed merger, was $21.50.
THE SPECIAL MEETING
- TIME, PLACE AND DATE OF THE SPECIAL MEETING (page 4). The special
meeting of Texarkana First Financial shareholders will be held at
4:00 p.m., Central time, on September 13, 2000 in the lobby of First
Federal's main office, 3rd & Olive Streets, Texarkana, Arkansas.
- REQUIRED VOTE (page 4). Approval of the merger requires the
affirmative vote of the holders of two-thirds of the outstanding
shares of Texarkana First Financial common stock.
- SHAREHOLDERS ENTITLED TO VOTE (page 4). You are entitled to vote at
the special meeting if you owned shares of Texarkana First Financial
common stock at the close of business on July 26, 2000, the record
date for the special meeting. You will have one vote for each share
of Texarkana First Financial common stock you owned on the record
date. 1,539,342 shares of Texarkana First Financial common stock
were outstanding as of the record date and are entitled to vote at
the special meeting.
- PROCEDURE FOR VOTING (page 4). You may vote by completing and
returning the enclosed proxy card, or by appearing at the special
meeting and voting in person. If you complete and return the enclosed
proxy but wish to revoke it, you must either file a written, signed
notice of revocation with Texarkana First Financial's corporate
secretary, submit a later-dated proxy to Texarkana First Financial,
or attend the meeting and vote in person.
- SOLICITATION OF PROXIES (page 4). Texarkana First Financial will pay
all of the costs of soliciting proxies. In addition to soliciting
proxies by mail, Texarkana First Financial's directors, officers and
employees, without receiving additional compensation, may solicit
proxies by personal interview, mail, telephone and facsimile.
Arrangements will also be made with brokerage firms and other
custodians, nominees and fiduciaries to forward solicitation
materials to the beneficial owners of shares held of record by such
persons, and Texarkana First Financial will reimburse such brokerage
firms, custodians, nominees and fiduciaries for reasonable
out-of-pocket expenses incurred by them. Regan & Associates has been
retained by Texarkana First Financial to assist it in the solicitation
of proxies.
THE MERGER
- STRUCTURE OF THE MERGER (page 8). Upon completion of the merger:
- First United Acquisition Co. will be merged with and into
Texarkana First Financial, and Texarkana First Financial
will be the surviving corporation after the merger;
- Texarkana First Financial will be 100% owned by First
United; and
- Each share of Texarkana First Financial common stock issued
and outstanding immediately prior to the effective time of
the merger (other than shares as to which dissenters'
rights are perfected), and each option to acquire a share
of Texarkana First Financial common stock that is
outstanding and unexercised immediately prior to the
effective time, will be converted into the right to receive
a cash payment in accordance
iii
<PAGE>
with the merger agreement. Texarkana First Financial
shareholders will have no equity interest in Texarkana
First Financial or First United after the merger.
- ACCOUNTING TREATMENT (page 24). The merger will be accounted for as a
"purchase" in accordance with generally accepted accounting
principles. Consequently, the aggregate consideration paid by First
United in connection with the merger will be allocated to Texarkana
First Financial's assets and liabilities based upon their fair values,
with any excess being treated as goodwill.
- RIGHTS OF DISSENTING SHAREHOLDERS (page 24). Under Texas law, if
holders of the shares of Texarkana First Financial's common stock
dissent and do not vote for approval and adoption of the merger
agreement and the merger, they are entitled to appraisal rights,
provided that they strictly comply with certain statutory procedures
further explained in detail in this proxy statement. A copy of
Articles 5.11 through 5.13 of the Texas Business Corporation Act,
which sets forth the rights of dissenting shareholders under Texas
law, is attached as APPENDIX C to this proxy statement.
- REASONS FOR THE MERGER (page 12). In arriving at its determination
that the merger is fair to, and in the best interests of, the
Texarkana First Financial shareholders, the Texarkana First Financial
Board of Directors considered a number of factors, including, without
limitation, the following:
- The merger represents an opportunity for Texarkana First Financial
shareholders to realize a premium over recent market prices for
their shares;
- In the opinion of Texarkana First Financial's financial advisor,
the price per share of common stock to be received by you is fair
from a financial point of view;
- Texarkana First Financial and First Federal compete against many
larger and better capitalized financial institutions and are
vulnerable to competitive factors;
- Texarkana First Financial shares are somewhat illiquid, and there
is no assurance that Texarkana First Financial shares will
appreciate in the future; and
- The Board of Directors has explored strategic alternatives and
believes that the merger offers a unique opportunity to maximize
the value of Texarkana First Financial common stock.
- INTERESTS OF CERTAIN PERSONS IN THE MERGER (page 21). The officers
and directors of Texarkana First Financial have interests in the
merger as employees and directors that are different from, or in
addition to, your interests as shareholders.
PARTIES TO THE MERGER
- TEXARKANA FIRST FINANCIAL (page 1). Texarkana First Financial is a
thrift holding company subject to supervision by the Office of Thrift
Supervision. Texarkana First Financial directly owns 100% of the
shares of common stock of First Federal Savings and Loan Association,
Texarkana, Arkansas.
- FIRST UNITED (page 1). First United is an Arkansas corporation and
registered bank holding company subject to supervision by the Federal
Reserve. First United is based in El Dorado, Arkansas and conducts
its operations through 11 subsidiary banks and a subsidiary trust
company.
iv
<PAGE>
- FIRST UNITED ACQUISITION CO. (page 1). First United Acquisition Co.,
Inc. will be organized as a Texas corporation and wholly-owned
subsidiary of First United, solely for the purpose of effecting the
merger.
BANCORPSOUTH, INC.'S ACQUISITION OF FIRST UNITED
- THE BANCORPSOUTH MERGER (page 20). On April 16, 2000, First United
entered into an agreement to merge into BancorpSouth, Inc. That
merger, which is subject to several conditions, including regulatory
and shareholder approval, is expected to be completed during the
third quarter of 2000. BancorpSouth and First United have each
scheduled a special meeting of their shareholders on August 24, 2000,
to vote on that merger.
- BANCORPSOUTH, INC. (page 1). BancorpSouth, Inc. is a Mississippi
corporation and registered bank holding company, and conducts its
operations through its bank subsidiary, BancorpSouth Bank, and its
banking-related subsidiaries.
- HOW TEXARKANA FIRST FINANCIAL'S MERGER IS AFFECTED (page 20). If
First United merges into BancorpSouth before the Texarkana First
Financial merger with First United is completed, BancorpSouth will
succeed to First United's rights and obligations as a party to the
merger with Texarkana First Financial.
THE MERGER AGREEMENT
- EFFECTIVE TIME OF THE MERGER (page 26). The merger of Texarkana First
Financial and First United Acquisition Co. will become effective upon
the filing of Articles of Merger with the Secretary of State of the
State of Texas. The filing is expected to occur on or before
September 29, 2000, after approval of the merger agreement by
Texarkana First Financial's shareholders at the special meeting and
satisfaction or waiver of the other conditions to the merger contained
in the merger agreement. There can be no assurance that all
conditions to the merger contained in the merger agreement will be
satisfied or waived.
- REPRESENTATIONS AND WARRANTIES OF TEXARKANA FIRST FINANCIAL AND FIRST
UNITED (page 27). The merger agreement contains various customary
representations and warranties made by each of the parties to the
merger agreement.
- COVENANTS OF TEXARKANA FIRST FINANCIAL AND FIRST UNITED; CONDUCT OF
BUSINESS PRIOR TO THE MERGER (page 30). The merger agreement contains
various customary covenants, including a covenant that during the
period from the date of the merger agreement until consummation of
the merger Texarkana First Financial will conduct its business in the
usual and ordinary course.
- CONDITIONS TO CONSUMMATION OF THE MERGER (page 32). The completion of
the merger depends upon satisfaction of a number of conditions,
including, among other things:
- approval of the merger agreement by the shareholders of Texarkana
First Financial holding not less than two-thirds of the
outstanding shares of common stock;
- receipt of all applicable regulatory approvals; and
- the absence of a material adverse change in the business,
financial condition or results of operation of Texarkana First
Financial since December 31, 1999.
- NO NEGOTIATIONS WITH OTHERS (page 34). Subject to certain exceptions,
Texarkana First Financial may not, directly or indirectly, nor permit
either First Federal or their respective officers, directors or
employees to:
v
<PAGE>
- initiate, solicit or encourage, including by way of furnishing
information or assistance, or take any action to facilitate, any
inquiries or the making of any proposal which constitutes, or may
reasonably be expected to lead to, any competing transaction;
- negotiate with any person in furtherance of such inquiries or to
obtain a competing transaction; or
- agree to or endorse any competing transaction, or authorize any
investment banker, financial advisor, attorney, accountant or
other representative retained by Texarkana First Financial or
First Federal to take any such action.
- TERMINATION OF MERGER AGREEMENT (page 35). The merger agreement
provides that the merger agreement and the merger may be terminated
by the mutual consent of the parties, or by either party upon the
occurrence or non-occurrence of certain events.
MANAGEMENT OWNERSHIP (page 5)
As of the record date, July 26, 2000, the directors and executive
officers of Texarkana First Financial owned or had power to vote (including
options exercisable within 60 days of the record date), in the aggregate,
251,528 shares of outstanding Texarkana First Financial common stock,
representing an aggregate of approximately 15.2% of the outstanding shares of
Texarkana First Financial common stock. The table beginning on page 5 contains
more detailed information regarding the share ownership of executive officers
and directors.
vi
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY TERM SHEET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii
THE COMPANIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SELECTED CONSOLIDATED FINANCIAL DATA OF TEXARKANA FIRST FINANCIAL. . . . . . . . . .1
SPECIAL MEETING OF SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . .4
Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Solicitation and Voting . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Revocability of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Adjournments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT . . . . . . . . . . . . . . . . .5
THE PROPOSED MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Background of the Merger. . . . . . . . . . . . . . . . . . . . . . . . . . .9
Reasons for the Merger and Recommendation of the Board of Directors . . . . 12
Opinion of the Financial Advisor. . . . . . . . . . . . . . . . . . . . . . 14
Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Funding of the Purchase Price . . . . . . . . . . . . . . . . . . . . . . . 20
The BancorpSouth Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Interests of Certain Persons in the Merger. . . . . . . . . . . . . . . . . 21
Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . 23
Accounting Treatment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Dissenters' Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
THE MERGER AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Effective Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Conversion of Shares of Texarkana First Financial's Common Stock. . . . . . 26
Treatment of Texarkana First Financial Stock Options. . . . . . . . . . . . 27
Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . 27
Employee Matters and Impact on Employee Benefit Plans . . . . . . . . . . . 29
Covenants of Texarkana First Financial and First United;
Conduct of Business Prior to the Merger . . . . . . . . . . . . . . . . . . 30
Conditions to Consummation of the Merger. . . . . . . . . . . . . . . . . . 32
No Negotiations with Others . . . . . . . . . . . . . . . . . . . . . . . . 34
Noncompetition Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 34
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
MARKET PRICES AND DIVIDENDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
vii
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . 36
FUTURE SHAREHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
OTHER BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
FORWARD-LOOKING STATEMENTS--CAUTIONARY STATEMENTS. . . . . . . . . . . . . . . . . 37
</TABLE>
APPENDIX A: Agreement and Plan of Reorganization by and between First United
Bancshares, Inc. and Texarkana First Financial Corporation, dated
as of May 15, 2000
APPENDIX B: Opinion of Stifel, Nicolaus & Company, Incorporated
APPENDIX C: Dissenters' Rights Provisions -- Articles 5.11 - 5.13 of the Texas
Business Corporation Act
viii
<PAGE>
THE COMPANIES
TEXARKANA FIRST FINANCIAL CORPORATION
Texarkana First Financial is a thrift holding company subject to
supervision by the Office of Thrift Supervision. Texarkana First Financial
directly owns 100% of the shares of common stock of First Federal. First
Federal operates full-service banking locations in the Arkansas cities of
Texarkana, Ashdown, DeQueen, Hope and Nashville, and in Texarkana, Texas.
Texarkana First Financial's primary activities are to assist First Federal in
the management and coordination of its financial resources and to provide
capital, business development, long range planning and public relations for
First Federal. Texarkana First Financial's executive offices are located at 3rd
& Olive Streets, Texarkana, Arkansas, and its telephone number is (870)
773-1103.
FIRST UNITED
First United is an Arkansas corporation and registered bank holding
company subject to supervision by the Federal Reserve. First United is based in
El Dorado, Arkansas and conducts its operations through its 11 subsidiary banks,
The First National Bank of El Dorado, First National Bank of Magnolia, Merchants
and Planters Bank, N.A. of Camden, The City National Bank of Fort Smith, The
Bank of North Arkansas, FirstBank, First United Bank, Fredonia State Bank, City
Bank & Trust of Shreveport, Citizens National Bank of Hope and First Republic
Bank, and through its subsidiary trust company, First United Trust Company, N.A.
First United's subsidiaries conduct a commercial banking, trust and insurance
business through a total of 69 offices in 39 municipalities or communities in 21
counties and parishes in Arkansas, Louisiana and Texas. As of March 31, 2000,
First United had total assets of approximately $2.72 billion, deposits of
approximately $2.27 billion and shareholders' equity of approximately $264.1
million. First United's executive offices are located at Main and Washington
Streets, El Dorado, Arkansas 71730, and its telephone number is (870) 863-3181.
FIRST UNITED ACQUISITION CO.
First United Acquisition Co., Inc. will be organized as a Texas
corporation and wholly-owned subsidiary of First United solely for the purpose
of effecting the merger. It is anticipated that First United Acquisition Co.
will not conduct any business other than in connection with its formation and
capitalization and the transactions contemplated by the merger agreement.
BANCORPSOUTH
BancorpSouth, Inc. is a Mississippi corporation and registered bank
holding company, and conducts its operations through its bank subsidiary,
BancorpSouth Bank, and its banking-related subsidiaries. BancorpSouth Bank
conducts a commercial banking, trust, insurance and investment services business
through 167 banking and mortgage locations and 170 ATM's in 87 communities
throughout Mississippi, west Tennessee and portions of Alabama. Prior to June
20, 1997, BancorpSouth Bank operated under the trade names "Bank of Mississippi"
in Mississippi and "Volunteer Bank" in Tennessee. As of March 31, 2000,
BancorpSouth had total assets of approximately $5.84 billion, deposits of
approximately $4.98 billion and shareholders' equity of approximately $494.1
million. BancorpSouth's executive offices are located at One Mississippi Plaza,
Tupelo, Mississippi 38804, and its telephone number at that location is (662)
680-2000.
SELECTED CONSOLIDATED FINANCIAL DATA
OF TEXARKANA FIRST FINANCIAL
The selected consolidated financial data of Texarkana First Financial
for the years ended September 30, 1999, 1998, 1997, 1996 and 1995, and for
the six-months ended March 31, 2000 and 1999, and the balance sheet data as
of September 30, 1999, 1998, 1997, 1996 and 1995, and as of March 31, 2000
and 1999, are derived from the audited Consolidated Financial Statements of
Texarkana First Financial and the unaudited Consolidated Financial Statements
of Texarkana First Financial, respectively, not included in this proxy
statement.
1
<PAGE>
In thousands, except per share data and percentages
<TABLE>
<CAPTION>
For the Six Months Ended
March 31, For the Year Ended September 30,
-------------------------- -------------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
-------------------------- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY INCOME DATA:
Net interest income . . . . . . . . $3,592 $3,395 $6,901 $6,773 $6,435 $6,265 $5,194
Provision for loan losses . . . . . - - - (100) - - 177
Noninterest income . . . . . . . . 440 606 1,118 1,151 755 756 665
Noninterest expense . . . . . . . . 1,583 1,534 3,020 2,933 2,604 3,335 2,367
Income (loss) before securities gains
or losses, extraordinary items and
income taxes. . . . . . . . . . . 2,449 2,467 4,999 5,091 4,586 3,686 3,315
Federal income tax expense . . . . 856 860 1,778 1,785 1,702 1,283 1,312
Net income (loss) net of income tax
expense . . . . . . . . . . . . . 1,593 1,607 3,221 3,306 2,884 2,403 2,003
Extraordinary items . . . . . . . . - - - - - - -
Securities gains, net of income tax
expense . . . . . . . . . . . . . - 6 6 - - (2) -
Net income (loss) . . . . . . . . . 1,593 1,613 3,227 3,306 2,884 2,401 2,003
Dividends declared . . . . . . . . $ .34 $ .32 $ .65 $ .58 $ .50 $ 3.45 -
PER SHARE INCOME DATA:
Weighted average shares outstanding -
diluted . . . . . . . . . . . . . 1,485,156 1,588,098 1,556,569 1,708,687 1,720,070 1,833,786 1,844,928
Net income per share - diluted . . $1.072 $1.016 $2.07 $1.94 $1.68 $1.31 $.40(1)
SELECTED AVERAGE BALANCE SHEET DATA:
Loans, net of allowance for loan
losses. . . . . . . . . . . . . . $165,660 $155,588 $156,073 $149,774 $141,830 $129,182 $121,074
Assets . . . . . . . . . . . . . . 203,039 193,514 195,698 185,955 169,042 164,377 148,890
Deposits . . . . . . . . . . . . . 147,814 151,368 151,481 147,011 138,379 128,109 126,692
Long-term debt . . . . . . . . . . - - - - - - -
Shareholders' equity . . . . . . . $26,933 $27,189 $26,857 $27,907 $26,860 $32,705 $18,341
PER SHARE DATA:
Shares outstanding at end of period 1,539,342 1,588,592 1,539,342 1,675,992 1,787,005 1,884,563 1,983,750
Book value per common share . . . . $ 17.81 $ 16.77 $ 17.14 $ 16.36 $ 15.32 $ 14.02 $ 16.54
</TABLE>
----------------
(1) Earnings per share for 1995 are calculated from July 7, 1995, the
date of the initial public offering, to September 30, 1995.
2
<PAGE>
<TABLE>
<CAPTION>
For the Six Months Ended
March 31, For the Year Ended September 30,
-------------------------- -------------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
-------------------------- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED FINANCIAL RATIOS:
Net income to shareholders' equity
(end of period) . . . . . . . . . 5.81 6.05 12.23 12.06 10.53 9.09 6.11
Net income to total assets (end of
period). . . . . . . . . . . . . .77 .84 1.60 1.75 1.61 1.45 1.25
Total interest expense to gross
interest income . . . . . . . . . 53.75 54.13 53.57 53.86 52.04 50.84 53.77
Return on average assets . . . . . 1.57 1.67 1.65 1.78 1.71 1.46 1.35
Net interest rate margin . . . . . 3.63 3.62 3.63 3.74 3.90 3.90 3.59
Shareholders' equity to average
assets. . . . . . . . . . . . . . 13.26 14.05 13.72 15.01 15.89 19.90 12.32
Net loan charge-offs to average loans .008 .001 .005 .014 .015 .003 .004
Allowance for loan losses to total
loans . . . . . . . . . . . . . . .57 .65 .62 .64 .76 .84 .91
Nonperforming loans to total loans
(exclusive of other real estate) . .34 .51 .66 .19 .19 .15 .17
</TABLE>
3
<PAGE>
SPECIAL MEETING OF SHAREHOLDERS
PURPOSE
The special meeting will be held at 4:00 p.m., Central time, on
September 13, 2000 in the main offices of First Federal, 3rd and Olive
Streets, Texarkana, Arkansas. At the special meeting, shareholders of
Texarkana First Financial will be asked to consider and vote on a proposal to
approve and adopt the merger agreement. The merger agreement provides for
the merger of First United Acquisition Co., Inc. a Texas corporation to be
formed as a wholly-owned subsidiary of First United, with and into Texarkana
First Financial. Upon consummation of the merger, Texarkana First Financial
would be the surviving corporation and would be a wholly-owned subsidiary of
First United. Pursuant to the merger agreement, upon consummation of the
proposed merger (i) each share of Texarkana First Financial's common stock
outstanding immediately prior to the effective time of the merger will be
canceled and converted into the right to receive $23.35208 in cash, and (ii)
each option to acquire shares of Texarkana First Financial stock which is
outstanding and unexercised immediately prior to the effective time of the
merger will be canceled and converted into the right to receive the amount in
cash equal to $23.35208 less the per-share exercise price of each such option
to acquire shares of Texarkana First Financial stock. The aggregate purchase
price to be paid by First United for Texarkana First Financial's issued and
outstanding common stock and all outstanding and unexercised options to
acquire shares of Texarkana First Financial's common stock will be an amount
equal to $37,500,000. See "THE PROPOSED MERGER--THE MERGER."
The board of directors of Texarkana First Financial believes that the
merger is in the best interests of Texarkana First Financial and its
shareholders and unanimously recommends that you vote "FOR" approval and
adoption of the merger agreement.
SOLICITATION AND VOTING
In addition to the solicitation of proxies by use of the mail,
officers, directors and regular employees of Texarkana First Financial may
solicit the return of proxies by personal interview, mail, telephone and
facsimile. These persons will not be additionally compensated but will be
reimbursed for out-of-pocket expenses. Texarkana First Financial will also
request brokerage houses and other custodians, nominees and fiduciaries to
forward solicitation material to the beneficial owners of shares. Texarkana
First Financial will reimburse such persons and the transfer agent for their
reasonable out-of-pocket expenses in forwarding such materials.
Regan & Associates has been retained by Texarkana First Financial to
assist it in the solicitation of proxies. Regan & Associates will receive a
fee of $5,000 for its assistance, plus reimbursement for out-of-pocket
expenses. Texarkana First Financial will bear all of the costs of the
solicitation of proxies. Shareholders are urged to send in their proxies
without delay.
All shareholders of Texarkana First Financial as of the close of
business on the record date set for the special meeting are eligible to vote
at the special meeting. The record date for the special meeting is set at
the close of business on July 26, 2000. As of the record date, 1,983,750
shares of Texarkana First Financial's common stock were issued and 1,539,342
shares were outstanding. At that date, such shares were held of record by
approximately 391 shareholders. The presence, in person or by proxy, of at
least a majority of all the outstanding shares of Texarkana First Financial's
common stock entitled to vote at the special meeting is necessary to
constitute a quorum at the special meeting. Shareholders as of the record
date are entitled to one vote for each share of Texarkana First Financial's
common stock that they own.
The affirmative vote of the holders of at least two-thirds of the
outstanding shares of Texarkana First Financial's common stock entitled to
vote is required to approve and adopt the merger agreement and the merger. A
failure to return a properly executed proxy or to vote in person at the
special meeting will have the same effect as a vote "AGAINST" approval and
adoption of the merger agreement.
Abstentions and broker nonvotes will be counted as shares present at
the special meeting for purposes of determining the presence of a quorum.
Abstentions and broker nonvotes will have the same effect as a vote
4
<PAGE>
"AGAINST" approval of the merger agreement. A broker nonvote occurs when a
nominee holding shares for a beneficial owner does not vote on a particular
proposal because the nominee does not have discretionary voting power for
that particular item and has not received instructions from the beneficial
owner.
As of the record date, the directors and executive officers, together
with their respective affiliates, the Texarkana First Financial Directors'
and Officers' Management Recognition Plan Trusts, and including options
exercisable within 60 days of the record date, collectively owned or had
power to vote approximately 251,528 shares of Texarkana First Financial
common stock, or approximately 15.2% of the total currently outstanding
shares. See "BENEFICIAL OWNERSHIP OF COMMON STOCK BY CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT."
REVOCABILITY OF PROXIES
Texarkana First Financial encourages the personal attendance of its
shareholders at the special meeting. An execution of the accompanying proxy
will not affect a shareholder's right to attend the special meeting and to
vote in person.
Proxies may be revoked if you:
- Deliver a signed, written revocation letter, dated any time before the
proxy is voted, to Ms. Debbie Rose, Corporate Secretary, Texarkana
First Financial Corporation, at Texarkana First Financial's principal
executive offices, 3rd and Olive Streets, Texarkana, Arkansas 71854;
- Sign and deliver a proxy, dated later than the first one, to Texarkana
First Financial's Corporate Secretary at the above address; or
- Attend the meeting and vote in person. Attending the special meeting
alone will not revoke your proxy. A revocation letter or a later-dated
proxy will not be effective until received by Texarkana First
Financial prior to the shareholder vote at the special meeting.
ADJOURNMENTS
Although it is not expected, the special meeting may be adjourned for
the purpose of soliciting additional proxies to a date after the date of the
special meeting. Any adjournment may be made without notice, other than by
an announcement made at the special meeting, by the chairman of the board of
directors of Texarkana First Financial, by the whole board of directors, or
by approval of the holders of 50 percent of all votes entitled to be cast on
any issue proposed to be considered at the special meeting. Any adjournment
of the special meeting for the purpose of soliciting additional proxies will
allow Texarkana First Financial shareholders who have already sent in their
proxies to revoke them at any time prior to their use.
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table includes, as of the record date, certain
information as to Texarkana First Financial's common stock beneficially owned
by (i) the only persons or entities, including any "group" as that term is
used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
("1934 Act"), who or which were known to Texarkana First Financial to be the
beneficial owner of more than 5% of the issued and outstanding shares of
common stock, (ii) the directors of Texarkana First Financial, and (iii) all
directors and executive officers of Texarkana First Financial as a group.
5
<PAGE>
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED AS OF
JULY 26, 2000(1)
NAME OF BENEFICIAL OWNER AMOUNT PERCENT
--------------------------------------------- ---------------- ------------
<S> <C> <C>
Texarkana First Financial Corporation 162,764 (2) 10.6%
Employee Stock Ownership Plan Trust
3rd and Olive Streets
Texarkana, Arkansas 71854-5917
First Manhattan Capital Management 145,098 9.4%
437 Madison Avenue, 31st floor
New York, NY 10022
John Hancock Financial Services 124,800 8.1%
101 Huntington Avenue
Boston, MA 02199
Gabriel Capital Corp. 111,900 7.3%
450 Park Avenue
New York, NY 10022
Directors:
James W. McKinney (Chairman and CEO) 79,524 (3) 5.0%
John E. Harrison (President and COO) 74,530 (4) 4.7%
John M. Andres 12,829 (5) .8%
Arthur L. McElmurry 15,829 (6) 1.0%
Donald N. Morriss 21,829 (7) 1.4%
Josh R. Morriss, Jr. 15,805 (8) 1.0%
Certain other executive officers:
Travis L. Mauldin 11,976 (9) .7%
James L. Sangalli 4,693(10) .3%
All directors and executive officers
of Texarkana First Financial as a group 251,528(11) 15.2%
(8 persons)
</TABLE>
---------------
(1) For purposes of this table, pursuant to rules promulgated under the 1934
Act, an individual is considered to beneficially own shares of common
stock if he directly or indirectly has or shares (i) voting power, which
includes the power to vote or to direct the voting of the shares; or (ii)
investment power, which includes the power to dispose or direct the
disposition of the shares. Unless otherwise indicated, an individual has
sole voting power and sole investment power with respect to the indicated
shares. Shares which may be acquired by the exercise of stock options
which are exercisable within 60 days of the record date are deemed to be
beneficially owned by the holder and are outstanding for the purpose of
computing the percentages of common stock beneficially owned by the
respective individual or group. Percentages are based upon 1,539,342
shares issued and outstanding as of the record date.
(2) The Texarkana First Financial Corporation Employee Stock Ownership Plan
Trust was established pursuant to the Texarkana First Financial Employee
Stock Ownership Plan by an agreement between Texarkana First Financial
and Messrs. McElmurry, McKinney and Donald Morriss, who act as trustees
of the ESOP. As of the record date, 70,823 shares held in the ESOP Trust
had been allocated to the accounts of participating employees, and 91,941
shares were unallocated. Under the terms of the ESOP, the trustees must
vote all allocated shares held in the ESOP Trust in accordance with the
instructions of the
6
<PAGE>
participating employees, and unallocated shares held in the ESOP Trust
must be voted by the trustees in the same proportion as the allocated
shares are voted. Allocated shares for which no voting instructions are
received, or for which an abstention is received, shall be disregarded in
determining the proportion of votes for and against to be cast by the
trustees.
(3) Includes 25,870 shares held jointly with Mr. McKinney's spouse, with whom
voting and dispositive power is shared; 1,000 shares held jointly with
his daughter; 100 shares held as custodian for his granddaughter; and
12,879 vested shares allocated within the ESOP. Also includes 29,756
shares which are subject to options currently exercisable, and 9,919
shares subject to options exercisable within 60 days of the record date,
pursuant to Texarkana First Financial's Employee Stock Program. Mr.
McKinney is also one of three Trustees of the ESOP (see footnote 2
above). Mr. McKinney is also, as a director of Texarkana First
Financial, a trustee of the 1996 Texarkana First Financial Corporation
Management Recognition Plan and Trust for Directors, which awards shares
of Texarkana First Financial common stock to non-employee directors as
compensation for their contributions to Texarkana First Financial. The
trustees of the Directors' MRP and Trust vote all shares of Texarkana
First Financial common stock held by the Directors' MRP Trust which have
not yet been earned by and allocated to share recipients in their sole
discretion, provided, however, that the trustees of the Directors' MRP
and Trust may, in accordance with the terms of the Directors' MRP and
Trust Agreement, take into consideration how share recipients have voted
earned and allocated shares with respect to a particular proposal. As of
the record date, 3,500 shares of Texarkana First Financial common stock
were held by the Directors' MRP Trust and had not yet been earned and
allocated to share recipients, and thus will be voted by the Board of
Directors, as trustees of the Directors' MRP and Trust, in their sole
discretion.
(4) Includes 20,580 shares held jointly with Mr. Harrison's spouse, with whom
voting and dispositive power is shared; 1,160 shares owned by his spouse;
3,500 shares owned by a trust for which voting and dispositive power is
shared; and 8,455 vested shares allocated within the ESOP. Also includes
29,756 shares which are subject to options currently exercisable, and
9,919 shares subject to options exercisable within 60 days of the record
date, pursuant to Texarkana First Financial's Employee Stock Program.
Mr. Harrison is also, as a director of Texarkana First Financial, a
trustee of the Directors' MRP and Trust (see footnote 3 above).
(5) Includes 7,186 shares which are subject to options exercisable within 60
days of the record date pursuant to Texarkana First Financial's Directors
Stock Plan. Mr. Andres is also, as a director of Texarkana First
Financial, a trustee of the Directors' MRP and Trust (see footnote 3
above).
(6) Includes 9,593 shares held in trust for which Mr. McElmurry and his
spouse are trustees and share voting power. Also includes 6,236 shares
which are subject to options exercisable within 60 days of the record
date pursuant to Texarkana First Financial's Directors Stock Plan. Mr.
McElmurry is also one of three Trustees of the ESOP (see footnote 2
above). Mr. McElmurry is also, as a director of Texarkana First
Financial, a trustee of the Directors' MRP and Trust (see footnote 3
above). Mr. McElmurry is also, with Mr. Donald N. Morriss, a trustee of
the 1996 Texarkana First Financial Corporation Management Recognition
Plan and Trust for Officers, which awards shares of Texarkana First
Financial common stock to key employees as compensation for their
contributions to Texarkana First Financial. The trustees of the
Officers' MRP and Trust vote all shares of Texarkana First Financial
common stock held by the Officers' MRP Trust which have not yet been
earned by and allocated to share recipients in their sole discretion,
provided, however, that the trustees of the Officers' MRP and Trust may,
in accordance with the terms of the Officers' MRP and Trust Agreement,
take into consideration how share recipients have voted earned and
allocated shares with respect to a particular proposal. As of the record
date, 11,013 shares of Texarkana First Financial common stock were held
by the Officers' MRP Trust and had not yet been earned and allocated to
share recipients, and thus will be voted by the trustees of the Officers'
MRP and Trust in their sole discretion.
(7) Includes 800 shares held by Mr. Morriss as custodian for his children.
Also includes 6,736 shares which are subject to options exercisable
within 60 days of the voting record date pursuant to Texarkana First
7
<PAGE>
Financial's Directors Stock Plan. Mr. Morriss is also one of three
Trustees of the ESOP (see footnote 2 above). Mr. Morriss is also, as a
director of Texarkana First Financial, a trustee of the Directors' MRP
and Trust (see footnote 3 above). Mr. Morriss is also a trustee of the
Officers' MRP and Trust (see footnote 6 above).
(8) Includes 7,366 shares held in a Family Limited Partnership and 703 shares
owned by Mr. Morriss's spouse. Includes 7,736 shares which are subject
to options exercisable within 60 days of the voting record date pursuant
to Texarkana First Financial's Directors Stock Plan. Mr. Morriss is
also, as a director of Texarkana First Financial, a trustee of the
Directors' MRP and Trust (see footnote 3 above).
(9) Includes 757 shares owned by Mr. Mauldin's spouse, and 1,902 shares
allocated within the ESOP. Also includes 4,000 shares which are subject
to options currently exercisable, and 2,000 shares subject to options
exercisable within 60 days of the record date, pursuant to Texarkana
First Financial's Employee Stock Program. Includes 600 shares which are
to vest within 60 days of the record date pursuant to the Officers' MRP.
(10) Includes 2,293 shares allocated within the ESOP. Also includes 1,200
shares which are subject to options currently exercisable, and 400 shares
subject to options exercisable within 60 days of the record date,
pursuant to Texarkana First Financial's Employee Stock Program.
(11) Includes 25,529 shares allocated to the accounts of executive officers as
a group in the ESOP. Also includes 3,500 shares held by the Directors'
MRP Trust and 11,013 shares held by the Officers' MRP Trust.
THE PROPOSED MERGER
The following is a summary description of the material aspects of the
merger. This description does not purport to be complete and is qualified in
its entirety by reference to the appendices attached to this proxy statement,
including the merger agreement, which is attached as APPENDIX A to this proxy
statement. We urge you to read the appendices in their entirety.
THE MERGER
Under the terms of the merger agreement, at the effective time, First
United Acquisition Co., a Texas corporation to be formed as a wholly-owned
subsidiary of First United, will merge with and into Texarkana First
Financial with Texarkana First Financial continuing as the surviving
corporation. As a result of the merger, Texarkana First Financial will
become a wholly-owned subsidiary of First United and will succeed to all of
the assets and liabilities of First United Acquisition Co., Inc. which is to
be formed only to facilitate the merger. The separate corporate existence of
First United Acquisition Co. will cease following consummation of the merger.
Upon completion of the merger, shareholders of Texarkana First Financial
will no longer own any shares of Texarkana First Financial's common stock and
will not, as a result of the merger, own any common stock either of First
United or First United Acquisition Co.
As consideration for the merger of First United Acquisition Co. with
and into Texarkana First Financial, First United will pay to the shareholders
and option holders of Texarkana First Financial an aggregate amount of
$37,500,000 in cash. Each of the outstanding shares of Texarkana First
Financial's common stock will, therefore, be converted at the effective time
of the merger into the right to receive $23.35208 in cash, and each option to
acquire a share of Texarkana First Financial's common stock that is
outstanding and unexercised immediately prior to the effective time of the
merger will be converted into the right to receive $23.35208 less the
per-share exercise price for the option. For a discussion of the
consideration to be received by Texarkana First Financial's shareholders in
the merger, see "THE PROPOSED MERGER--PURCHASE PRICE" and "THE PROPOSED
MERGER--FUNDING OF THE PURCHASE PRICE."
8
<PAGE>
Immediately after the merger of First United Acquisition Co. with and
into Texarkana First Financial, and on the same day thereof, First United
will cause First Federal to be merged with and into FirstBank, a Texas
banking association and wholly-owned subsidiary of First United, with
FirstBank as the surviving entity. Simultaneously with the merger of First
Federal into FirstBank, First United will cause Texarkana First Financial to
be merged with and into First United. Immediately after the consummation of
these transactions, FirstBank will be a wholly-owned subsidiary of First
United.
On April 16, 2000, First United entered into an Agreement and Plan of
Merger with BancorpSouth, Inc., a Mississippi corporation and registered bank
holding company. Pursuant to that agreement, First United is to merge with
and into BancorpSouth, with BancorpSouth being the surviving entity, and the
banking subsidiaries and trust company subsidiary of First United will each
merge with and into BancorpSouth Bank, with BancorpSouth Bank being the
surviving entity. If the BancorpSouth merger is completed before the merger
of First United Acquisition Co. with and into Texarkana First Financial, then
BancorpSouth will assume the rights, interests and obligations of First
United with respect to the merger of First United Acquisition Co. with and
into Texarkana First Financial, First Federal will be merged with and into
BancorpSouth Bank, and Texarkana First Financial will be merged with and into
BancorpSouth. See "THE PROPOSED MERGER--THE BANCORPSOUTH MERGER."
BACKGROUND OF THE MERGER
Management and the Board of Directors have, from time to time,
discussed intensifying competition in, and the continuing consolidation of,
the bank, thrift and financial services industries. Management and the Board
of Directors continually are reviewing strategic alternatives in order to
enhance shareholder value, and at various times in the past, management and
the Board of Directors have considered the possibility of a sale of Texarkana
First Financial as a way to enhance shareholder value. Management and
certain members of the Board of Directors also have been contacted from time
to time by officers and other representatives of various financial
institutions, with inquiries about the willingness of the Board of Directors
to consider a sale of Texarkana First Financial; however, none of such
inquiries matured into a formal offer or resulted in a letter of intent for
the sale of Texarkana First Financial.
In late 1999, after receiving inquiries with respect to Texarkana
First Financial's interest in a potential business combination from Bank of
the Ozarks, Inc., Mr. James McKinney, Chairman of the Board of Directors,
contacted investment bankers, among them Stifel, Nicolaus, and requested that
they assist the Board of Directors in exploring strategic alternatives
available to Texarkana First Financial, and advise the Board of Directors on
matters relating to the enhancement of shareholder value. Representatives of
Texarkana First Financial informed Bank of the Ozarks, Inc. that Texarkana
First Financial was considering its strategic alternatives at that time and
that, should a sale of Texarkana First Financial be one of the options, they
would be contacted.
In early December 1999, Stifel, Nicolaus furnished the Board of
Directors with an analysis of strategic alternatives for Texarkana First
Financial. On December 7, 1999, representatives of Stifel, Nicolaus met with
the full Board of Directors in person and reviewed and discussed the
analysis. Among other things, Stifel's analysis discussed a range of
potential values for the sale of Texarkana First Financial, should Texarkana
First Financial determine that a sale was in the best interest of Texarkana
First Financial and its shareholders. The preliminary range of values
discussed at that time was $25-$30 per share. Stifel, Nicolaus was
subsequently retained as Texarkana First Financial's financial advisor on
December 14, 1999.
At the request of the Board of Directors, in January and February
2000, Stifel, Nicolaus contacted, from a list of potential acquirers
presented to the Board of Directors on December 7, 1999, ten potential
acquirers to seek indications of interest in acquiring Texarkana First
Financial. After contacting the list of potential acquirers, Stifel,
Nicolaus informed the Board of Directors that, of the ten companies initially
contacted, four, including Bank of the Ozarks, Inc. and First United, had
indicated an interest in receiving more information and entering into
discussions. At that time, the Board, through Mr. McKinney, instructed
Stifel, Nicolaus to attempt to determine the level of interest and range of
values that the four potential acquirers would consider in an acquisition of
Texarkana First Financial.
9
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Per Mr. McKinney's instructions, Stifel, Nicolaus obtained
confidentiality agreements with the four financial organizations that had
previously expressed an interest in Texarkana First Financial. Following the
execution of those confidentiality agreements, Stifel, Nicolaus supplied
certain financial and other information regarding Texarkana First Financial
and First Federal to these organizations. At the same time, Stifel, Nicolaus
requested indications of interest from the various organizations concerning
the possible acquisition of Texarkana First Financial.
During late February and early March 2000, First United responded with
a preliminary aggregate deal value of $40 million, or approximately $24.81
per Texarkana First Financial share, in cash. Upon further analysis, First
United reduced their indication of interest to $37.5 million. Bank of the
Ozarks, Inc. responded with a preliminary proposal for an exchange of 1.19
shares of Bank of the Ozarks, Inc. stock for each share of Texarkana First
Financial stock, or a preliminary value at the time of the proposal of
approximately $20.23 per Texarkana First Financial share. First Federal
Bancshares of Arkansas, Inc. responded with a preliminary value of $25 per
Texarkana First Financial share, in cash. A fourth company responded with an
oral indication of approximately $20-21 per Texarkana First Financial share
in stock. The fourth company was informed by Stifel, Nicolaus that they
would be contacted if their preliminary indication of interest compared
favorably with the others already received.
By March 2000, due to a decline in the market price of Bank of the
Ozarks, Inc.'s stock, the value of a possible stock transaction with Bank of
the Ozarks, Inc. was below that of a possible cash transaction with First
United or First Federal Bancshares. Consequently, in early to mid March,
Stifel, Nicolaus notified Bank of the Ozarks, Inc. that Texarkana First
Financial had decided to pursue other alternatives. Texarkana First
Financial scheduled separate on-site due diligence reviews with First United
and First Federal Bancshares. The due diligence reviews commenced on March
14, 2000, and ended on March 29, 2000, with both parties conducting due
diligence.
Upon conclusion of the due diligence reviews and further negotiations,
Stifel, Nicolaus solicited final offers from First United and First Federal
Bancshares. First Federal Bancshares withdrew its indication of interest and
First United reaffirmed its indication of interest for an aggregate deal
value of $37.5 million in cash, or $23.35208 per share.
On April 11, 2000, representatives of Stifel, Nicolaus were contacted
by James V. Kelley, Chairman, President and CEO of First United, to inform
them of negotiations for a potential merger between First United and
BancorpSouth, and to ask Stifel, Nicolaus to provide a fairness opinion to
First United in that transaction. On the same day, Stifel, Nicolaus
contacted James McKinney, Chairman and CEO of Texarkana First Financial, to
inform him that First United was participating in merger discussions with an
undisclosed acquirer, and to ascertain whether Mr. McKinney was opposed to
Stifel, Nicolaus' agreeing to provide a fairness opinion to First United.
Prior to that time the Board of Directors had no knowledge of the
BancorpSouth transaction.
At a meeting of the Board of Directors on April 18, 2000, the Board of
Directors was informed by counsel of the status of the potential merger
opportunity with First United. Counsel advised the Board of Directors of the
importance of maintaining the confidentiality of the discussions with regard
to the proposed transaction. Counsel advised that insider trading liability
could attach if information is provided to others, and that the directors and
their affiliates could not at that point trade in the securities of Texarkana
First Financial, First United or BancorpSouth.
Counsel then advised the Board of Directors of their duty of due care
to make a well-informed decision with regard to the potential merger and that
it would be imprudent to proceed in the transaction without a fairness
opinion rendered by an independent financial advisor. The Board of Directors
was then advised by counsel of possible conflicts of interest on the part of
Stifel, Nicolaus, given (i) Stifel, Nicolaus' economic interest in the
transaction, because they are to receive a 1% commission in the event the
proposed transaction is successful, but only a $75,000 fee if the transaction
is not successful, and (ii) given the fact that Stifel, Nicolaus would be
providing a fairness opinion to First United in the context of First United's
transaction with BancorpSouth. Counsel advised the Board of Directors that
steps had been taken to minimize the effects of any conflicts of interest
10
<PAGE>
of Stifel, Nicolaus, by ensuring that all amounts due and owing to Stifel,
Nicolaus in connection with its work with First United on the BancorpSouth
transaction would be paid before Stifel, Nicolaus would deliver its fairness
opinion analysis to the Board of Directors of Texarkana First Financial and
before the Board of Directors would approve the transaction with First United
(which delivery and approval took place on April 25, 2000). Counsel
cautioned the Board of Directors, however, that conflicts are still present.
The Board of Directors considered the risks associated with relying on
Stifel, Nicolaus' opinion despite the presence of conflicts of interest, and
weighed those risks against the benefits of relying on Stifel, Nicolaus'
fairness opinion in this transaction. The Board of Directors was concerned
principally that, if they did not use Stifel, Nicolaus' fairness opinion,
additional time would be necessary to obtain such an opinion from another
investment banker, and the resulting delay in the negotiation process with
First United might jeopardize the transaction as a whole, or might adversely
impact the final merger consideration, because prices for bank and thrift
stocks had fallen over the preceding months. The additional cost associated
with engaging another investment banker for purposes of obtaining a fairness
opinion was also considered, as was Stifel, Nicolaus' strong reputation in
the field and the integrity of the Stifel, Nicolaus representatives with whom
the Board of Directors had dealt to that point.
The Board of Directors also considered the fact that representatives
of Stifel, Nicolaus, in their December 7, 1999 presentation to the Board of
Directors, suggested that an appropriate sale price for Texarkana First
Financial would be in the range of $25 to $30 per share, but that the
consideration to be paid in the transaction with First United would be
$23.35208 per share. Counsel advised the Board of Directors that, because
Stifel, Nicolaus would receive a 1% brokerage commission if the transaction
was consummated, but a $75,000 fee if it was not, Stifel, Nicolaus had an
economic incentive to render a fairness opinion. Counsel also advised the
Board of Directors that representatives of Stifel, Nicolaus had assured them
that the lower value could be justified objectively, based on macroeconomic
changes that had taken place in the market for bank and thrift stocks since
December 1999, and that the same methodology that was used to generate values
of $25-$30 per share in December 1999 would also justify a fairness opinion
in April 2000 with regard to the $23.35208 per share to be paid in the First
United transaction. The Board of Directors considered the fact that stock
prices for publicly-traded financial institution holding companies had
declined by more than 10% since December 1999, and that Texarkana First
Financial's own stock price had dropped significantly over that period. The
Board of Directors also considered as a primary indicator of the fairness of
the transaction the fact that Texarkana First Financial had essentially
entered into an auction process, and that First United was the only
competitive bidder that remained.
The Board of Directors also was advised of the background of merger
discussions to date, and it thoroughly discussed the acquisition proposal of
First United. After extensive deliberation, the Board of Directors voted to
continue with Stifel, Nicolaus to provide the fairness opinion.
At a special meeting of the Board of Directors held on April 25, 2000,
a merger agreement with First United, substantially final in form, was
presented to the Board of Directors, and representatives of Stifel, Nicolaus
discussed the opinion of Stifel, Nicolaus regarding the fairness from a
financial point of view of the proposed First United transaction. At that
meeting, Stifel, Nicolaus delivered its oral opinion to the effect that, as
of that date, and subject to various assumptions, matters considered and
limitations described in the opinion, that the $37.5 million cash offer from
First United was fair, from a financial point of view, to the holders of
Texarkana First Financial's common stock. Stifel, Nicolaus also discussed
with the Board of Directors the declining prices for bank stocks generally,
and for Texarkana First Financial's stock in particular, since December 1999,
when Stifel, Nicolaus made its initial presentation to the Board of
Directors. Counsel advised the Board of Directors regarding, and the Board
of Directors discussed, various substantive matters governed by the merger
agreement. The Board of Directors' discussion included, among other things,
discussions regarding the status of negotiations with First United, timing of
a potential transaction, tax treatment of the proposal, Texarkana First
Financial's projected future performance and other available strategic
alternatives, including remaining independent, background information on
First United, their plans and prospects for financing the acquisition,
post-signing and preclosing covenants, termination provisions, employee
benefit matters, director and officer indemnification and director and
officer insurance coverage, various ancillary agreements, and other open
issues. After a lengthy discussion, the Board of Directors unanimously
approved the merger agreement and the merger of a subsidiary of First United
into Texarkana First Financial, and empowered management, through counsel, to
negotiate the final open issues with regard to the agreement. Counsel to
Texarkana First Financial then completed negotiations with regard to the
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<PAGE>
remaining open issues, and, upon the approval of management, prepared a final
agreement for execution, and prepared Texarkana First Financial's disclosure
schedules to accompany the final agreement. The agreement was then executed
as of May 15, 2000.
REASONS FOR THE MERGER AND RECOMMENDATION OF THE BOARD OF DIRECTORS
At a special board meeting on April 25, 2000, the Texarkana First
Financial Board of Directors determined that the merger is fair to and in the
best interests of Texarkana First Financial and its shareholders and, by the
unanimous vote of all the directors, approved and adopted the merger
agreement and the transactions contemplated by the merger agreement.
ACCORDINGLY, THE TEXARKANA FIRST FINANCIAL BOARD OF DIRECTORS RECOMMENDS THAT
TEXARKANA FIRST FINANCIAL SHAREHOLDERS VOTE FOR APPROVAL OF THE MERGER
AGREEMENT AT THE SPECIAL MEETING.
The Board of Directors believes that the terms of the merger
agreement, which are the product of arm's length negotiations between
representatives of First United and Texarkana First Financial, are fair and
in the best interests of Texarkana First Financial and its shareholders. In
the course of reaching its determination, the Board of Directors consulted
with its legal counsel with respect to its legal duties, the terms of the
merger agreement and related issues; with its financial advisor Stifel,
Nicolaus with respect to the financial aspects and fairness of the
transaction; and with senior management regarding, among other things,
operational matters.
The financial services industry has changed significantly in recent
years. Such changes include:
- consolidation of the banking industry through mergers;
- deregulation of competition among banking, securities and insurance
services providers; and
- a trend towards banks and others offering a broad range of different
financial services and products to customers.
In the future, many expect the extensive use of technology to continue
to transform the delivery of banking services. For these reasons, the Board
of Directors developed concerns about Texarkana First Financial's small size
and limited resources and its ability to meet the challenges facing it. The
Board of Directors was also concerned about Texarkana First Financial's
ability to meet its shareholders' expectations. Increasing shareholder value
in future years would require increases in profitability and growth, which
would be difficult for Texarkana First Financial to achieve given its small
size, current market conditions and increasing consumer demand for
sophisticated financial services. The Board of Directors believes that the
merger at this time is in the best interests of the shareholders. Texarkana
First Financial's financial advisor has advised us that First United's offer
of $23.35208 per share for Texarkana First Financial's outstanding common
stock is fair from a financial point of view to Texarkana First Financial's
shareholders.
In reaching its determination to approve the merger agreement, the
Board of Directors considered all factors it deemed material. The Board of
Directors analyzed information with respect to the financial condition,
results of operations, cash flow, businesses and prospects of Texarkana First
Financial. In this regard, the Board of Directors considered the performance
trends of Texarkana First Financial over the past several years. The Board of
Directors compared Texarkana First Financial's current and anticipated future
operating results to publicly available financial and other information for
other similarly sized banking institutions in Arkansas and East Texas. The
Board of Directors used this information in analyzing the options of selling
Texarkana First Financial, remaining independent on a stand-alone basis or
pursuing acquisitions, and the business strategies that could reasonably be
implemented by Texarkana First Financial. The Board of Directors concluded
that although Texarkana First Financial has been successful in reducing its
operating costs, competition from larger financial institutions would make it
difficult for Texarkana First Financial over time to earn an adequate return
as an independent entity, which, in the future, may decrease the value of
Texarkana First Financial's common stock.
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<PAGE>
The Board of Directors concluded that the merger represents an
opportunity for Texarkana First Financial's shareholders to realize a premium
over recent market prices for their common stock. The shareholders of
Texarkana First Financial will receive approximately a 40% premium over the
$16.625 closing price of Texarkana First Financial's common stock on May 5,
2000, the lowest point the stock reached during the two weeks prior to the
announcement that Texarkana First Financial had received a merger proposal
from First United.
The Board of Directors considered the opinion of Stifel, Nicolaus
that, as of April 25, 2000, and updated through the date of this proxy
statement, the purchase price to be received by holders of Texarkana First
Financial's common stock pursuant to the merger agreement was fair to
Texarkana First Financial's shareholders from a financial point of view. See
"THE PROPOSED MERGER--OPINION OF THE FINANCIAL ADVISOR." The Board of
Directors reviewed the assumptions and results of the various valuation
methodologies employed by Stifel, Nicolaus in arriving at its opinion and
found those assumptions and results to be reasonable and complete.
The Board of Directors considered the current operating environment,
including but not limited to, the continued consolidation and increasing
competition in the banking and financial services industries, the prospects
for further changes in these industries, and the importance of being able to
capitalize on developing opportunities in these industries. This information
had been periodically reviewed by the Board of Directors at its regular
meetings and was also discussed between the Board of Directors and Texarkana
First Financial's advisors. The Board of Directors also considered the
current and prospective economic and competitive conditions facing Texarkana
First Financial in its market areas.
The Board of Directors also considered provisions made for benefits to
and obligations of employees, management and members of the Board of
Directors. The Board of Directors concluded that those terms are fair and
reasonable.
The Board of Directors considered the likelihood of the merger being
approved by the appropriate regulatory authorities. See "THE PROPOSED
MERGER--REGULATORY APPROVALS."
The Board of Directors considered the specific terms of the merger
agreement, including the taxable nature of the purchase price. The Board of
Directors also considered the ability of First United to pay the aggregate
purchase price, and accordingly reviewed First United's financial condition,
results of operation, liquidity and capital position.
The Board of Directors also considered the fact that the merger
consideration is all cash, which provides certainty of value to Texarkana
First Financial's shareholders as compared to a stock transaction.
In addition, the Board of Directors considered the fact that the
merger agreement prohibits Texarkana First Financial and First Federal from
initiating, soliciting, or encouraging discussions with third parties which
may be reasonably expected to lead to an alternative business combination.
The above discussion of the factors considered by the Board of
Directors is not intended to be exhaustive. In determining whether to approve
and recommend the merger agreement, the Board of Directors did not assign any
relative or specific weights to any of the foregoing factors, and individual
directors may have weighed factors differently. After deliberating with
respect to the merger and the merger agreement, considering, among other
things, the reasons discussed above and the opinion of Stifel, Nicolaus
referred to above, the Board of Directors unanimously approved and adopted
the merger agreement and the merger as being in the best interests of
Texarkana First Financial and its shareholders.
For the reasons set forth above, the Board of Directors has
unanimously approved the merger agreement and the merger as advisable and in
the best interests of Texarkana First Financial and its shareholders and
recommends that the shareholders of Texarkana First Financial vote "FOR" the
approval and adoption of the merger agreement and the merger.
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<PAGE>
OPINION OF THE FINANCIAL ADVISOR
Texarkana First Financial retained Stifel, Nicolaus & Company,
Incorporated as its financial advisor in connection with the merger because
Stifel, Nicolaus is a nationally recognized investment-banking firm with
substantial expertise in transactions similar to the merger. Stifel,
Nicolaus is an investment banking and securities firm with membership on all
principal U.S. securities exchanges. As part of its investment banking
activities, Stifel, Nicolaus is regularly engaged in the independent
valuation of businesses and securities in connection with mergers,
acquisitions, underwritings, sales and distributions of listed and unlisted
securities, private placements and valuations for estate, corporate and other
purposes.
At a meeting of Texarkana First Financial's Board of Directors on
April 25, 2000, Stifel, Nicolaus rendered to Texarkana First Financial's
Board of Directors an oral opinion that, as of such date and subject to
various assumptions, matters considered and limitations described, the
$23.35208 to be paid for each share of Texarkana First Financial's common
stock pursuant to the merger agreement, referred to below as the cash
consideration, was fair to the holders of Texarkana First Financial's common
stock from a financial point of view.
Stifel, Nicolaus has confirmed its April 25, 2000 oral opinion by
delivery of its written opinion to Texarkana First Financial's Board of
Directors, dated the date of this proxy statement, that, based upon and
subject to various assumptions, matters considered and limitations described
therein, the cash consideration of $23.35208 per share to be received by the
shareholders of Texarkana First Financial pursuant to the merger agreement is
fair to such shareholders from a financial point of view.
The full text of Stifel, Nicolaus's opinion as of the date hereof,
which sets forth the assumptions made, matters considered and limitations of
the review undertaken, is attached as APPENDIX B to this proxy statement and
is incorporated herein by reference, and should be read in its entirety in
connection with this proxy statement. The summary of the opinion of Stifel,
Nicolaus set forth in this proxy statement is qualified in its entirety by
reference to the full text of such opinion.
No limitations were imposed by Texarkana First Financial on the scope
of Stifel, Nicolaus's investigation or the procedures to be followed by
Stifel, Nicolaus in rendering its opinion. Stifel, Nicolaus was not
requested to and did not make any recommendation to Texarkana First
Financial's Board of Directors as to the form or amount of the consideration
to be paid to Texarkana First Financial or its shareholders, which was
determined through arm's length negotiations between the parties. In
arriving at its opinion, Stifel, Nicolaus did not ascribe a specific range of
values to Texarkana First Financial. Its opinion is based on the financial
and comparative analyses described below. Stifel, Nicolaus's opinion was
directed solely to Texarkana First Financial's Board of Directors for its use
in connection with its consideration of the merger. Stifel, Nicolaus's
opinion addressed only the fairness of the consideration to be received from
a financial point of view, did not address any other aspect of the merger,
and was not intended to be and does not constitute a recommendation to any
shareholder of Texarkana First Financial as to how such shareholder should
vote with respect to the merger. Stifel, Nicolaus was not requested to opine
as to, and its opinion does not address, Texarkana First Financial's
underlying business decision to proceed with or effect the merger or the
relative merits of the merger compared to any alternative transaction that
might be available to Texarkana First Financial.
In connection with its April 25, 2000 oral opinion and its written
opinion dated the date hereof, Stifel, Nicolaus, among other things:
- reviewed the merger agreement;
- reviewed the financial statements of Texarkana First Financial
included in its Annual Reports on Form 10-K for each of the five
years ended September 30, 1995 through 1999, internal financial
statements for the three months ended March 31, 2000 and (in
connection with the written opinion dated the date hereof) the
financial statements included in its Quarterly Report on Form 10-Q
for the quarter ended March 31, 2000;
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<PAGE>
- reviewed the financial statements of First United included in its
Annual Reports on Form 10-K for each of the five years ended
December 31, 1995 through 1999, internal financial statements for
the three months ended March 31, 2000 and (in connection with the
written opinion dated the date hereof) the financial statements
included in its Quarterly Report on Form 10-Q for the quarter
ended March 31, 2000;
- reviewed various internal financial analyses and forecasts for
Texarkana First Financial and First United prepared by their
respective managements;
- reviewed pro forma financial forecasts for the pro forma combined
company resulting from the merger of First United with
BancorpSouth prepared by their respective managements which
utilized First United's and BancorpSouth's internal financial
forecasts, to determine, among other things, the ability of First
United and BancorpSouth to pay the merger consideration;
- conducted conversations with Texarkana First Financial's and First
United's senior management regarding their respective business
plans and financial forecasts;
- compared financial and securities data of Texarkana First
Financial and First United with various other companies whose
securities are traded in public markets and reviewed the
historical stock prices and trading volumes of the common stock of
Texarkana First Financial and First United;
- reviewed the financial terms of certain other business
combinations; and
- conducted such other financial studies, analyses and
investigations as it deemed appropriate for purposes of its
opinion.
Stifel, Nicolaus also took into account its assessment of general
economic, market and financial conditions and its experience in other
transactions, as well as its experience in securities valuations and its
knowledge of the bank and thrift industries generally.
In rendering its opinion, Stifel, Nicolaus relied upon and assumed,
without independent verification, the accuracy and completeness of all of the
financial and other information that was provided to it or that was otherwise
reviewed by it. Stifel, Nicolaus did not assume any responsibility for
independently verifying any of such information. With respect to the
financial forecasts supplied to it, Stifel, Nicolaus assumed with Texarkana
First Financial's consent that they were reasonably prepared on the basis
reflecting the best currently available estimates and judgments of the
management of Texarkana First Financial and First United as to the future
operating and financial performance of Texarkana First Financial and First
United, that they would be realized in the amounts and time periods estimated
and that they provided a reasonable basis upon which Stifel, Nicolaus could
form its opinion. Stifel, Nicolaus also assumed that there were no material
changes in the assets, liabilities, financial condition, results of
operations, business or prospects of either Texarkana First Financial or
First United since the date of the last financial statements made available
to it. Stifel, Nicolaus also assumed, without independent verification and
with Texarkana First Financial's consent, that the aggregate allowances for
loan losses set forth in the financial statements of Texarkana First
Financial and First United are in the aggregate adequate to cover all such
losses. Stifel, Nicolaus did not make or obtain any independent evaluation,
appraisal or physical inspection of Texarkana First Financial's or First
United's assets or liabilities, the collateral securing any of such assets or
liabilities, or the collectibility of any such assets nor did it review loan
or credit files of Texarkana First Financial or First United. Stifel,
Nicolaus relied on advice of Texarkana First Financial's counsel and
accountants as to all legal and accounting matters with respect to Texarkana
First Financial, the merger agreement and the transactions and other matters
contained or contemplated therein. Stifel, Nicolaus assumed, with Texarkana
First Financial's consent, that there are no factors that would delay or
subject to any adverse conditions any necessary regulatory or governmental
approval, and that all conditions to the merger will be satisfied and not
waived.
In rendering its opinion, Stifel, Nicolaus assumed that the merger
will be consummated as provided in the merger agreement, will constitute a
tax-free reorganization as contemplated by the merger agreement and will be
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accounted for under the purchase accounting method. Stifel, Nicolaus's
opinion was necessarily based on economic, market, financial and other
conditions as they existed on, and on the information made available to it as
of, the date of its opinion, and does not imply any conclusion as to the
price or trading range of the stock of Texarkana First Financial or First
United, which may vary depending upon various factors, including changes in
interest rates, dividend rates, market conditions, economic conditions and
other factors that influence the price of securities.
As a matter of policy, Texarkana First Financial and First United do
not publicly disclose internal management forecasts, projections or estimates
of the type furnished to Stifel, Nicolaus in connection with its analysis of
the financial terms of the merger, and such forecasts and estimates were not
prepared with a view towards public disclosure. These forecasts and
estimates were based on numerous variables and assumptions which are
inherently uncertain and which may not be within the control of the
management of either Texarkana First Financial or First United, including,
without limitation, factors related to the integration of Texarkana First
Financial and First United and general economic, regulatory and competitive
conditions. Accordingly, actual results could vary materially from those set
forth in such forecasts and estimates.
In connection with rendering its April 25, 2000 oral opinion, Stifel,
Nicolaus performed a variety of financial analyses that are summarized below.
Such summary does not purport to be a complete description of such analyses.
Stifel, Nicolaus believes that its analyses and the summary set forth herein
must be considered as a whole and that selecting portions of such analyses
and the factors considered therein, without considering all factors and
analyses, could create an incomplete view of the analyses and processes
underlying its opinion. The preparation of a fairness opinion is a complex
process involving subjective judgments and is not necessarily susceptible to
partial analysis or summary description. In its analyses, Stifel, Nicolaus
made numerous assumptions with respect to industry performance, business and
economic conditions, and other matters, many of which are beyond the control
of Texarkana First Financial or First United. Any estimates contained in
Stifel, Nicolaus's analyses are not necessarily indicative of actual future
values or results, which may be significantly more or less favorable than
suggested by such estimates. Estimates of values of companies do not purport
to be appraisals or necessarily reflect the actual prices at which companies
or their securities actually may be sold. No company or transaction utilized
in Stifel, Nicolaus's analyses was identical to Texarkana First Financial or
First United or the merger, respectively. Accordingly, such analyses are not
based solely on arithmetic calculations; rather, they involve complex
considerations and judgments concerning differences in financial and
operating characteristics of the relevant companies, the timing of the
relevant transactions, and prospective buyer interest, as well as other
factors that could affect the public trading values of Texarkana First
Financial or companies to which they are being compared. None of the
analyses performed by Stifel, Nicolaus was assigned a greater significance by
Stifel, Nicolaus than any other. The analyses described below do not purport
to be indicative of actual future results, or to reflect the prices at which
Texarkana First Financial's common stock or First United's common stock may
trade in the public markets.
The following is a summary of the financial analyses performed by
Stifel, Nicolaus in connection with providing its oral opinion on April 25,
2000.
ANALYSIS OF BANK MERGER TRANSACTIONS. Stifel, Nicolaus analyzed
various information relating to recent transactions in the thrift industry,
consisting of (1) 60 acquisitions announced between April 13, 1999 and April
13, 2000, involving sellers in all regions of the United States with
announced transaction values and excluding merger of equals transactions,
referred to below as Group A, (2) a second group of 19 thrift acquisitions
announced between April 13, 1999 and April 13, 2000, involving sellers in all
regions of the United States with announced transaction values between $25
million and $75 million and excluding merger of equals transactions, referred
to below as Group B, and (3) a third group of 13 thrift acquisitions
announced between April 13, 1999 and April 13, 2000, involving sellers with
an equity / assets ratio greater than 12% in all regions of the United States
with announced transaction values between $25 million and $75 million and
excluding merger of equals transactions, referred to below as Group C. These
transactions are referred to below as the selected transactions. Stifel,
Nicolaus calculated the following ratios with respect to the merger and the
selected transactions:
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<TABLE>
<CAPTION>
Texarkana/ Group A Selected Transactions
-----------------------------
First United
Ratios 25th Percentile Median 75th Percentile
------ --------------- ------ ---------------
<S> <C> <C> <C> <C>
Deal Price Per Share/Book Value
Per Share 136.8% 122.3% 152.3% 195.6%
Deal Price Per Share/Tangible Book
Value Per Share 136.8% 124.1% 155.3% 196.9%
Adjusted Deal Price/6.50% Equity 175.2% 161.0% 185.6% 225.5%
Deal Price Per Share/Latest 12
Months Earnings Per Share 11.0x 19.2x 25.3x 30.5x
Deal Price/Assets 18.2% 14.5% 18.6% 24.5%
Premium over Tangible Book
Value/Deposits 6.6% 5.4% 8.4% 12.7%
Deal Price/Deposits 24.5% 20.2% 24.5% 32.0%
Texarkana/ Group B Selected Transactions
-----------------------------
First United
Ratios 25th Percentile Median 75th Percentile
------ --------------- ------ ---------------
<S> <C> <C> <C> <C>
Deal Price Per Share/Book Value
Per Share 136.8% 121.5% 135.1% 166.2%
Deal Price Per Share/Tangible Book
Value Per Share 136.8% 122.7% 135.1% 174.6%
Adjusted Deal Price/6.50% Equity 175.2% 153.1% 170.7% 232.0%
Deal Price Per Share/Latest 12
Months Earnings Per Share 11.0x 19.8x 25.3x 29.0x
Deal Price/Assets 18.2% 16.1% 20.1% 25.6%
Premium over Tangible Book
Value/Deposits 6.6% 5.3% 8.1% 12.8%
Deal Price/Deposits 24.5% 21.8% 27.7% 33.8%
Texarkana/ Group C Selected Transactions
-----------------------------
First United
Ratios 25th Percentile Median 75th Percentile
------ --------------- ------ ---------------
<S> <C> <C> <C> <C>
Deal Price Per Share/Book Value
Per Share 136.8% 117.3% 124.6% 150.8%
Deal Price Per Share/Tangible Book
Value Per Share 136.8% 117.3% 126.1% 150.8%
Adjusted Deal Price/6.50% Equity 175.2% 149.8% 170.7% 223.4%
Deal Price Per Share/Latest 12
Months Earnings Per Share 11.0x 21.1x 27.8x 29.8x
Deal Price/Assets 18.2% 19.3% 22.9% 27.5%
Premium over Tangible Book
Value/Deposits 6.6% 5.0% 5.8% 12.4%
Deal Price/Deposits 24.5% 27.7% 30.0% 38.6%
This analysis resulted in a range of imputed values for Texarkana First Financial's common stock of
between $23.31 and $53.78 based on the median multiples for Group A, between $22.98 and $53.78 based
on the median multiples for Group B, and between $21.27 and $59.21 based on the median multiples for
Group C.
</TABLE>
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<PAGE>
PRESENT VALUE ANALYSIS. Applying discounted cash flow analysis to the
theoretical future earnings and dividends of Texarkana First Financial, Stifel,
Nicolaus compared the $23.35 consideration to be received in exchange for one
share of Texarkana First Financial's common stock under the terms of the merger
agreement as of April 25, 2000 to the calculated future value of one share of
Texarkana First Financial's common stock on a stand-alone basis. The analysis
was based upon management's projected earnings growth, a range of assumed
price/earnings ratios, and a 15.0%, 17.5%, 20.0% and 22.5% discount rate.
Stifel, Nicolaus selected the range of terminal price/earnings ratios on the
basis of past and current trading multiples for other publicly traded comparable
thrifts. The stand-alone present value of Texarkana First Financial's common
stock calculated on this basis ranged from $13.06 to $24.94 per share.
DISCOUNTED CASH FLOW ANALYSIS. Using a discounted cash flow analysis,
Stifel, Nicolaus estimated the net present value of the future streams of
after-tax cash flow that Texarkana First Financial could produce to benefit a
potential acquirer, referred to below as dividendable net income. In this
analysis, Stifel, Nicolaus assumed that Texarkana First Financial would perform
in accordance with management's estimates and calculated assumed after-tax
distributions to a potential acquirer such that its tangible common equity ratio
would be maintained at 6.5% of assets. Stifel, Nicolaus calculated the sum of
the assumed perpetual dividendable net income streams per share beginning in the
year 2000, discounted to present values at assumed discount rates ranging from
11.0% to 15.0%. This discounted cash flow analysis indicated an implied equity
value reference range of $17.72 to $29.18 per share of Texarkana First
Financial's common stock. This analysis did not purport to be indicative of
actual future results and did not purport to reflect the prices at which shares
of Texarkana First Financial's common stock may trade in the public markets. A
discounted cash flow analysis was included because it is a widely used valuation
methodology, but the results of such methodology are highly dependent upon the
numerous assumptions that must be made, including estimated revenue
enhancements, earnings growth rates, dividend payout rates and discount rates.
ANALYSIS OF PREMIUM TO MARKET PRICE FOR MERGER TRANSACTIONS. Stifel,
Nicolaus analyzed the premiums paid to the then current market price one day,
one week and one month prior to the date of announcement of a transaction for
549 transactions in the bank and thrift industries announced in the U.S. between
April 13, 1995 and April 13, 2000. Stifel, Nicolaus calculated the following
ratios with respect to the merger and such transactions:
<TABLE>
<CAPTION>
Texarkana/ Transactions Announced
----------------------
First United Between 4/13/95 and 4/13/00
---------------------------
Market Premium Data
------------------- 25th 75th
Percentile Median Percentile
---------- ------ ----------
<S> <C> <C> <C> <C>
Premium to stock price 1 day prior to announcement 39.4% 11.0% 21.5% 34.6%
Premium to stock price 1 week prior to announcement 43.7% 14.3% 25.4% 41.2%
Premium to stock price 1 month prior to announcement 53.1% 18.0% 30.5% 46.2%
</TABLE>
This analysis resulted in a range of imputed values for Texarkana First
Financial's common stock of between $19.90 and $20.35 based on the median
premiums for such transactions.
COMPARISON OF SELECTED COMPANIES. Stifel, Nicolaus reviewed and compared
various multiples and ratios for the merger with a peer group of seven thrifts
and two banks headquartered in the central part of the U.S., which Stifel,
Nicolaus deemed to be relevant. The group of selected thrifts and banks
consisted of Acadiana Bancshares, Inc., Bank West Financial Corporation, Chester
Bancorp, Inc., Citizens First Financial Corp., First Federal Bancshares of
Arkansas, Inc., Jacksonville Bancorp, Inc., National Bancshares Corporation of
Texas, North Central Bancshares, Inc., and Pocahontas Bancorp, Inc. In order to
calculate a range of imputed values for a share of Texarkana First Financial's
common stock, Stifel, Nicolaus applied a 30.5% control premium to the trading
prices of the selected group of comparable companies and compared the resulting
theoretical offer price to each of book value, tangible book value, adjusted
6.5% equity, latest 12 month earnings, estimated 2000 earnings as provided by
Institutional Brokers Estimate System, assets, tangible book value to deposits
and deposits. Stifel, Nicolaus then applied the resulting range of multiples
and ratios for the peer group specified above to the appropriate financial
results of Texarkana First Financial. This analysis resulted in a range of
imputed values for
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<PAGE>
Texarkana First Financial's common stock of between $14.31 and $29.06 based
on the median multiples and ratios for the peer group. The 30.5% control
premium selected by Stifel, Nicolaus was based on a 5 year analysis of market
premiums paid in bank and thrift merger transactions.
Additionally, Stifel, Nicolaus calculated the following ratios with respect
to the nine selected comparable companies after application of the 30.5% control
premium:
<TABLE>
<CAPTION>
Texarkana/ Nine Selected Comparable Companies
----------------------------------
First United
Ratios Minimum Median Maximum
------ ------- ------ -------
<S> <C> <C> <C> <C>
Deal Price Per Share/Book Value
Per Share 136.8% 87.5% 106.4% 144.4%
Deal Price Per Share/Tangible Book
Value Per Share 136.8% 92.2% 112.4% 173.3%
Adjusted Deal Price/6.50% Equity 175.2% 79.9% 110.3% 218.5%
Deal Price Per Share/Latest 12
Months Earnings Per Share 11.0x 9.7x 13.6x 25.4x
Deal Price per share/Estimated
2000 Earnings Per Share 11.1x 9.5x 13.7x 28.9x
Deal Price/Assets 18.2% 9.2% 11.1% 25.0%
Premium over Tangible Book
Value/Deposits 6.6% -1.6% 1.6% 10.2%
Deal Price/Deposits 24.5% 14.6% 16.2% 33.2%
</TABLE>
In connection with its written opinion dated as of the date of this proxy
statement, Stifel, Nicolaus performed procedures to update, as necessary, its
analyses and reviewed the assumptions on which such analyses were based and the
factors considered in connection therewith. Stifel, Nicolaus did not utilize
any methods of analysis in addition to those described above in updating its
April 25, 2000 oral opinion.
Pursuant to the terms of Stifel, Nicolaus's engagement, Texarkana First
Financial paid Stifel, Nicolaus a nonrefundable cash fee of $50,000 upon the
signing of the definitive agreement and a nonrefundable cash fee of $25,000
at the time of mailing of the proxy statement. In addition, Texarkana First
Financial has agreed to pay Stifel, Nicolaus an additional fee of 1.00% of
the total aggregate consideration paid in the transaction, less the fees
already paid, subject to and conditioned upon consummation of the merger.
Texarkana First Financial has also agreed to reimburse Stifel, Nicolaus for
various out-of-pocket expenses and has agreed to indemnify Stifel, Nicolaus,
its affiliates and their respective partners, directors, officers, agents,
consultants, employees and controlling persons against certain liabilities,
including liabilities under the federal securities laws.
Stifel, Nicolaus was also retained by First United as a financial advisor
and provided a fairness opinion in connection with the proposed merger of First
United and BancorpSouth Inc. Texarkana First Financial consented to the
retention of Stifel, Nicolaus by First United and waived any claim of a conflict
of interest with respect to the First United engagement or any activities
undertaken by Stifel, Nicolaus in connection therewith. Prior to Stifel,
Nicolaus's delivery of its oral opinion to the Texarkana First Financial Board
of Directors on April 25, 2000, First United paid Stifel, Nicolaus a
nonrefundable cash fee of $250,000 upon the signing of a definitive agreement
with regard to the merger of First United and BancorpSouth Inc. See "THE
PROPOSED MERGER - BACKGROUND OF THE MERGER."
In the ordinary course of its business, Stifel, Nicolaus actively trades
equity securities of Texarkana First Financial and First United in its own
account and for the accounts of its customers and, accordingly, may at any time
hold a long or short position in such securities.
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<PAGE>
PURCHASE PRICE
The merger agreement provides that the aggregate purchase price to be paid
by First United for Texarkana First Financial's common stock issued and
outstanding immediately prior to the effective time and for all existing options
to acquire shares of Texarkana First Financial's common stock outstanding and
unexercised immediately prior to the effective time will be an amount equal to
$37,500,000. On a per share, per option basis, the purchase price is equivalent
to: (i) $23.35208 in cash for each share of Texarkana First Financial common
stock outstanding; and (ii) $23.35208 less the per-share exercise price in cash
for each option to acquire a share of Texarkana First Financial common stock
which is outstanding and unexercised immediately prior to the effective time of
the merger. For those option holders who hold options with different exercise
prices, the total cash payment to be received for their options will be equal to
the mathematical result obtained by multiplying (x) $23.35208 less the weighted
average per share exercise price of all options held by the option holder, by
(y) the total number of shares subject to options held by the option holder.
FUNDING OF THE PURCHASE PRICE
First United intends to borrow $37,500,000 from First Tennessee Bank, N.A.,
to fund the full amount of the purchase price for the merger.
If First United merges into BancorpSouth prior to the effective time of the
merger of Texarkana First Financial and First United Acquisition Co., then the
purchase price of the merger will be funded by BancorpSouth from cash on hand.
THE BANCORPSOUTH MERGER
On April 16, 2000, First United entered into an Agreement and Plan of
Merger with BancorpSouth, pursuant to which First United is to merge with and
into BancorpSouth with BancorpSouth being the surviving entity, and each of the
following First United subsidiaries is to merge with and into BancorpSouth Bank
with BancorpSouth Bank being the surviving entity in each merger: (i) The First
National Bank of El Dorado, a national banking association organized under the
laws of the United States, (ii) First National Bank of Magnolia, a national
banking association organized under the laws of the United States, (iii)
Merchants and Planters Bank, National Association, a national banking
association organized under the laws of the United States, (iv) The City
National Bank of Fort Smith, a national banking association organized under the
laws of the United States, (v) The Bank of North Arkansas, an Arkansas banking
corporation, (vi) First United Bank, an Arkansas banking corporation, (vii)
Citizens National Bank of Hope, a national banking association organized under
the laws of the United States, (viii) City Bank & Trust of Shreveport, a
Louisiana banking corporation, (ix) First Republic Bank, a Louisiana banking
corporation, (x) First United Trust Company, N.A., a national association
organized under the laws of the United States, (xi) Fredonia State Bank, a Texas
banking association and (xii) FirstBank, a Texas banking association. As
consideration for the merger of First United with and into BancorpSouth, First
United common stock is to be converted into shares of BancorpSouth common stock
at an exchange ratio of 1.125 shares of BancorpSouth common stock per share of
First United common stock.
On July 21, 2000, BancorpSouth received approval from the FDIC for the
mergers of the various banking and trust company subsidiaries of First United
with and into BancorpSouth. BancorpSouth and First United have each scheduled a
special meeting of their respective shareholders to be held on August 24, 2000,
to vote on the merger of First United with and into BancorpSouth. If their
respective shareholders approve the merger, and if the merger is completed
before the merger of Texarkana First Financial and First United Acquisition Co.,
BancorpSouth would succeed First United as a party to the merger agreement
between First United and Texarkana First Financial. First United Acquisition
Co. would then be a wholly-owned subsidiary of BancorpSouth immediately prior to
the merger of First United Acquisition Co. and Texarkana First Financial.
Immediately after the merger of First United Acquisition Co. and Texarkana First
Financial, BancorpSouth would then cause First Federal to be merged with and
into BancorpSouth Bank, and would cause Texarkana First Financial to be merged
with and into BancorpSouth.
20
<PAGE>
INTERESTS OF CERTAIN PERSONS IN THE MERGER
BENEFICIAL OWNERSHIP. As of the record date, the executive officers and
directors of Texarkana First Financial, together with their respective
affiliates, the Directors' and Officers' MRP Trusts, and including options
exercisable within 60 days of the record date, collectively owned or had power
to vote approximately 251,528 shares of Texarkana First Financial common stock,
or approximately 15.2% of the outstanding shares. The directors and executive
officers will receive the same consideration for their shares as the other
shareholders and option holders of Texarkana First Financial. See "BENEFICIAL
OWNERSHIP OF COMMON STOCK BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT."
EMPLOYEE RETENTION AGREEMENTS. On May 15, 2000, Texarkana First Financial
entered into employee retention agreements with selected executive officers to
provide additional incentives to such officers to continue their employment with
Texarkana First Financial in the event that Texarkana First Financial
experienced a change of control, i.e., a merger, consolidation, or sale of the
assets or stock of Texarkana First Financial. Each employee retention agreement
provides that in certain cases the officer will receive a cash lump sum payment
equal to one or three times the officer's monthly compensation, excluding bonus
or extraordinary compensation. This amount is payable on the effective date of
the change in control unless such officer is terminated sooner for cause.
The following executive officers are entitled to payment of the specified
retention benefit in the event of a change in control:
James Sangalli 1x monthly compensation
Travis Mauldin 3x monthly compensation
INSURANCE; DIRECTORS' AND OFFICERS' INDEMNIFICATION. At the present time,
Texarkana First Financial maintains a directors' and officers liability
insurance policy. Prior to the effective date, Texarkana First Financial may
obtain an extended reporting period (otherwise known as "tail coverage") under
this policy for a period of up to four years from the effective time. In
addition, for a period of five years after the effective time, First United
shall indemnify, defend and hold harmless the officers and directors of
Texarkana First Financial against all liabilities arising out of actions or
omissions out of their employment by or service with Texarkana First Financial
and occurring at or prior to the effective time of the merger to the full extent
permitted under applicable law and by Texarkana First Financial's Articles of
Incorporation and Bylaws as in effect on the date of the merger agreement. No
such indemnification shall be made by First United for actions or omissions
which constitute fraud, are intentionally taken or omitted in bad faith,
constitute a knowing breach of the merger agreement or constitute violations of
criminal law, unless the indemnified party had no reasonable cause to believe
his or her conduct was unlawful.
EMPLOYMENT AGREEMENTS. Texarkana First Financial and First Federal entered
into employment agreements with each of Messrs. McKinney and Harrison effective
May 5, 1995 in connection with First Federal's conversion from mutual to stock
form in 1995. Texarkana First Financial and First Federal agreed to employ
Messrs. McKinney and Harrison for a term of three years, which term is extended
each year for an additional one-year period unless Texarkana First Financial and
First Federal or the officer elect, not less than 30 days prior to the annual
anniversary date, not to extend the employment term.
Each employment agreement is terminable with or without cause by Texarkana
First Financial and First Federal. The officer shall have no right to
compensation or other benefits pursuant to the employment agreement for any
period after voluntary termination or termination by Texarkana First Financial
and First Federal for cause, disability, retirement or death, provided, however,
that (i) in the event that the officer terminates his employment because of the
failure of Texarkana First Financial and First Federal to comply with any
material provision of the employment agreement or (ii) the employment agreement
is terminated by Texarkana First Financial and First Federal other than for
cause, disability, retirement or death or by the officer as a result of certain
adverse actions which are taken with respect to the officer's employment
following a change of control of Texarkana First Financial, the respective
officer will be entitled to a cash severance amount equal to three times his
average annual
21
<PAGE>
compensation over the most recent five taxable years (or such shorter time as
he has been employed by Texarkana First Financial and First Federal), payable
in equal monthly installments over 36 months. In addition, the respective
officer will be entitled to a continuation of benefits similar to those he is
receiving at the time of such termination for the remaining term of the
agreement or until the officer obtains full-time employment with another
employer, whichever occurs first.
A "change in control" is generally defined in the employment agreements to
include any change in control required to be reported under the federal
securities laws, as well as (i) the acquisition by any person of 25% or more of
Texarkana First Financial's outstanding voting securities and (ii) a change in a
majority of the directors of Texarkana First Financial during any two-year
period without the approval of at least two-thirds of the persons who were
directors of the Texarkana First Financial at the beginning of such period. The
merger of Texarkana First Financial and First United Acquisition Co. is
considered to be a change in control for purposes of the employment agreements.
The merger agreement provides that it is a condition to First United's
obligation to consummate the merger that Mr. McKinney enter into an agreement
providing that Mr. McKinney shall retire on the later of November 1, 2000 or one
month after the closing date of the merger, and that Mr. McKinney's existing
employment agreement with Texarkana First Financial shall terminate on that
date. Mr. McKinney will receive his normal compensation and benefits through
the date his employment agreement terminates but will receive no compensation or
other benefits under his employment agreement after such date, due to his
retirement thereunder pursuant to the terms of the amended employment agreement.
Although Mr. McKinney has agreed to retire, Mr. Harrison's employment agreement
will remain in effect with the surviving entity following the merger.
Each employment agreement provides that in the event that any of the
payments to be made thereunder or otherwise upon termination of employment are
deemed to constitute a "parachute payment" within the meaning of Section 280G of
the Internal Revenue Code of 1986, as amended, then such payments and benefits
received thereunder shall be reduced, in the manner determined by the employee,
by the amount, if any, which is the minimum necessary to result in no portion of
the payments and benefits being non-deductible by Texarkana First Financial and
First Federal for federal income tax purposes. Parachute payments generally are
payments equal to or exceeding three times the base amount, which is defined to
mean the recipient's average annual compensation from the employer includable in
the recipient's gross income during the most recent five taxable years ending
before the date on which a change of control of the employer occurred (or such
lesser time as the recipient has been employed). Recipients of parachute
payments are subject to a 20% excise tax on the amount by which such payments
exceed the base amount, in addition to regular income taxes, and payments in
excess of the base amount are not deductible by the employer as compensation
expense for federal income tax purposes.
REGULATORY APPROVALS
Completion of the merger is conditioned on, among other things, the receipt
of approvals by the Federal Deposit Insurance Corporation and the Texas
Department of Banking. The Board of Governors of the Federal Reserve System has
waived its notification filing requirements with respect to the merger.
As a Texas state nonmember bank, FirstBank has filed an application with
the FDIC for approval of the merger of First Federal with and into FirstBank
under Section 18(c) of the Federal Deposit Insurance Act, as amended. The FDIC
may disapprove the application if it finds that the merger tends to create or
result in a monopoly, substantially lessen competition or would be in restraint
of trade. FirstBank filed this application with the FDIC on June 16, 2000.
Following approval of the application by the FDIC, the United States Department
of Justice has between 15 and 30 calendar days to submit any adverse comments
relating to competitive factors resulting from the merger. Based on their
current knowledge, management of Texarkana First Financial believes that the
merger will likely be approved by the FDIC, and that the merger will not likely
be challenged by the Department of Justice under federal antitrust laws.
However, no assurance can be provided that the FDIC will provide its approval or
that the Department of Justice will not challenge the merger or that, in
connection with the grant of any approval, the FDIC will not impose conditions,
which are materially burdensome to First United within the meaning of the merger
agreement.
22
<PAGE>
Section 32.301 of the Texas Finance Code provides that a Texas state
banking association must obtain prior written approval from the Texas Banking
Commissioner in order to merge with another financial institution in a
transaction in which the Texas banking association is the surviving entity.
FirstBank filed an application with the Texas Banking Commissioner on June 16,
2000 for approval of the merger of First Federal with and into FirstBank. That
application consisted primarily of a copy of the application filed with the
FDIC, certified copies of board and shareholder resolutions, an opinion of
counsel and proof of publication of notice to the public. Based on their current
knowledge management of Texarkana First Financial believe that the merger will
likely be approved by the Texas Banking Commissioner.
FirstBank also filed on June 16, 2000 a notification with the Office of
Thrift Supervision regarding the merger of First Federal with and into
FirstBank. That notification consisted primarily of a copy of the application
filed with the FDIC. The prior written approval of the OTS is not required to
complete the merger of FirstBank and First Federal. The OTS has acknowledged
receipt of notification of the merger, and has not expressed any objection to
the merger.
First United and Texarkana First Financial have agreed that, in the event
the banking regulatory agencies require a divestiture of any of the assets or
liabilities of First Federal associated with its branch in Hope, Arkansas as a
condition to approval of the merger, that condition will be accepted by First
United and will not be considered by First United to be an unacceptable
condition to consummation of the merger. Further, First United and Texarkana
First Financial have agreed that, in the event the Federal Reserve requires a
divestiture of any of the assets or liabilities of First Federal associated with
its offices in Texarkana as a condition to approval of the merger, that
condition will not be acceptable to First United under the merger agreement.
First United and Texarkana First Financial are not aware of any other
governmental approvals or actions that are required for consummation of the
merger except as described above. Should any such approval or action be
required, it is presently contemplated that such approval or action would be
sought or taken. There can be no assurance that any such approval or action, if
needed, could be obtained, would not delay consummation of the merger, or would
not be conditioned in a manner that could cause First United to abandon the
merger.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL. The following is a summary of the material United States federal
income tax consequences of the merger to Texarkana First Financial shareholders.
This summary is based upon the provisions of the Internal Revenue Code,
applicable current and proposed United States Treasury Regulations, judicial
authority, and administrative rulings and practice. Legislative, judicial or
administrative rules and interpretations are subject to change, possibly on a
retroactive basis, at any time, and, therefore, the following statements and
conclusions could be altered or modified. It is assumed that the shares of
Texarkana First Financial common stock are held as capital assets by a United
States person (i.e., a citizen or resident of the United States or a domestic
corporation). This discussion does not address all aspects of United States
federal income taxation that may be relevant to a particular Texarkana First
Financial shareholder in light of that shareholder's personal investment
circumstances, or those Texarkana First Financial shareholders subject to
special treatment under the United States federal income tax laws (for example,
life insurance companies, tax-exempt organizations, financial institutions,
United States expatriates, foreign corporations and nonresident alien
individuals), Texarkana First Financial shareholders who hold shares of
Texarkana First Financial common stock as part of a hedging, "straddle,"
conversion or other integrated transaction, or Texarkana First Financial
shareholders who acquired their shares of Texarkana First Financial common stock
through the exercise of employee stock options or other compensation
arrangements. In addition, the discussion does not address any aspect of
foreign, state or local taxation or estate and gift taxation that may be
applicable to a Texarkana First Financial shareholder.
TAX CONSEQUENCES OF THE MERGER TO TEXARKANA FIRST FINANCIAL
SHAREHOLDERS. The receipt of cash for Texarkana First Financial's common
stock pursuant to the merger will be a taxable transaction for United States
federal income tax purposes to shareholders (and may be a taxable transaction
for state, local and foreign tax purposes as well). In general, a holder of
Texarkana First Financial's common stock will recognize a gain or loss
measured by the difference between such shareholder's adjusted tax basis for
Texarkana First Financial's common
23
<PAGE>
stock owned by him or her at the effective time and the amount of cash
received for the stock. Gain or loss will be calculated separately for each
block of shares converted in the merger (i.e., shares acquired at the same
cost in a single transaction). The gain or loss will be a capital gain or
loss if the stock is a capital asset of the shareholder. If the shares have
been held for one year or less at the effective time of the merger, the gain
or loss will be a short-term capital gain or loss. If the shares have been
held for more than one year, the gain or loss will be long-term capital gain
or loss. Shareholders who are individuals are subject to tax on net
long-term capital gains at a maximum United States federal income tax rate of
20%. Capital losses are deductable only to the extent of capital gains plus
(in the case of non-corporate taxpayers) the lower of the excess of capital
losses over capital gains or $3,000 ($1,500 in the case of a married
individual filing a separate tax return).
BACKUP TAX WITHHOLDING. Under the United States federal income tax
backup withholding rules, the cash payments due the holders of Texarkana
First Financial's common stock upon the exchange of such common stock
pursuant to the merger (unless certain exemptions apply) will be subject to
"backup withholding" for federal income tax purposes unless certain
requirements are met under federal law. First United as paying agent is
required to and will withhold 31% of all payments to which a Texarkana First
Financial shareholder or other payee is entitled in the merger, unless the
Texarkana First Financial shareholder or other payee provides a tax
identification number (social security number, in the case of an individual,
or employer identification number, in the case of other stockholders), and
certifies under penalties of perjury that that number is correct. Each
Texarkana First Financial shareholder and, if applicable, each other payee,
should complete and sign the substitute Form W-9 that will be part of the
letter of transmittal to be returned to the exchange agent (or other agent)
in order to provide the information and certification necessary to avoid
backup withholding, unless an applicable exemption exists and is otherwise
proved in a manner satisfactory to the exchange agent (or other agent). The
exemptions provide that certain Texarkana First Financial shareholders
(including, among others, all corporations and certain foreign individuals)
are not subject to these backup withholding requirements. In order for a
foreign individual to qualify as an exempt recipient, however, he or she must
submit a signed statement (such as a Certificate of Foreign Status on Form
W-8) attesting to his or her exempt status. Any amounts withheld will be
allowed as a credit against the holder's United States federal income tax
liability for that year.
No ruling has been or will be requested from the Internal Revenue
Service as to any of the tax effects to Texarkana First Financial's
shareholders of the transactions discussed in this proxy statement, and no
opinion of counsel has been or will be rendered to Texarkana First
Financial's shareholders with respect to any of the tax effects of the merger
to shareholders.
THE TAX CONSEQUENCES OF THE MERGER MAY VARY DEPENDING UPON THE
PARTICULAR CIRCUMSTANCES OF EACH SHAREHOLDER. THEREFORE, EACH SHAREHOLDER IS
URGED TO CONSULT HIS OR HER TAX ADVISOR TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES OF THE MERGER TO SUCH HOLDER, INCLUDING THOSE RELATING TO STATE,
LOCAL AND/OR OTHER TAXES.
ACCOUNTING TREATMENT
It is anticipated the merger will be accounted for as a "purchase"
transaction under generally accepted accounting principles. Under such
method of accounting, the assets and liabilities of Texarkana First Financial
will be revalued on First United's consolidated balance sheet at their fair
values as of the date the transaction is consummated. The excess purchase
price, if any, paid over the fair value of the net assets acquired (including
values assigned to core deposits and other such intangible assets) will be
reported as goodwill in First United's consolidated balance sheet. The
results of operations of Texarkana First Financial will be reported in First
United's consolidated statement of operations only after the effective time
of the merger.
DISSENTERS' RIGHTS
Pursuant to Article 5.11 of the Texas Business Corporation Act, any
holder of Texarkana First Financial's common stock who does not wish to
accept the consideration to be paid pursuant to the merger agreement may
dissent from the merger and elect to have the fair value agreed upon by the
shareholder and Texarkana First
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Financial or judicially determined by a court of competent jurisdiction and
paid to the shareholder in cash, provided that the shareholder complies with
the provisions of Articles 5.11 through 5.13 of the TBCA.
The following is a brief summary of the statutory procedures to be
followed by a holder of common stock in order to dissent from the merger and
perfect his or her appraisal rights under the TBCA. This summary is not
intended to be complete and is qualified in its entirety by reference to
Articles 5.11 through 5.13 of the TBCA, the text of which is attached as
APPENDIX C to this proxy statement.
If any holder of common stock desires to exercise the right to dissent
from the merger and demand appraisal, such shareholder must comply with the
following procedures:
- deliver to Texarkana First Financial, prior to the special meeting, a
written objection to the merger, setting out that the shareholder's right
to dissent will be exercised and the address to which notice that the
merger has been effected shall be delivered or mailed;
- vote against or abstain from voting in favor of the merger (failure to
vote "AGAINST" the merger will not constitute waiver of dissenters'
rights); and
- make written demand on Texarkana First Financial for payment of the fair
value of the shareholder's shares after the effective time and within ten
days from the delivery or mailing by Texarkana First Financial of the
notice to the shareholders that the merger has been effected. The demand
must state the number of shares of common stock owned by the shareholder
and the fair value of stock as estimated by the shareholder. Any
shareholder failing to make a demand within the ten day period will be
bound by the terms of the merger. A vote by the shareholder "AGAINST" the
merger will not satisfy the notice requirement.
If, within sixty days after the effective time, the value of the shares
is agreed upon by the shareholder and Texarkana First Financial, payment for
the shares of common stock must be made within ninety days after the date on
which the action was effected and upon surrender of the certificates duly
endorsed. Upon payment of the agreed value, the shareholder will cease to
have any interest in the shares or in Texarkana First Financial.
If, within the period of sixty days after the effective time, the
shareholder and Texarkana First Financial do not agree on the value of the
shares, then either the shareholder or Texarkana First Financial may, within
one hundred twenty days after the effective time, file a petition in any
court of competent jurisdiction asking for a finding and determination of the
fair value of the shareholder's shares.
Any shareholder who has demanded payment for his or her shares may not
thereafter vote or exercise any other rights of a shareholder except the
right to receive the merger consideration in payment for his or her shares or
the right to maintain an appropriate action to obtain relief on the ground
that the corporate action was fraudulent, and the respective shares for which
payment has been demanded will not thereafter be considered outstanding for
the purpose of any subsequent vote of shareholders. Within twenty days after
demanding payment for his or her shares, each holder of certificates
representing shares so demanding payment must submit the certificates to
Texarkana First Financial for notation on such certificates that the demand
has been made. If uncertificated shares for which payment has been demanded
or shares represented by a certificate on which notation has been so made are
transferred, any new certificate issued for the transferred certificate must
bear similar notation together with the name of the original dissenting
holder of such shares and a transferee of such shares will acquire by such
transfer no rights in Texarkana First Financial other than those that the
original dissenting shareholder had after making a demand for payment of the
fair value. Any shareholder who demanded payment for his or her shares may
withdraw such demand at any time before payment for his or her shares.
All written demands for appraisal (i.e., the notice of intent to
dissent) should be addressed to: Debbie Rose, Corporate Secretary, Texarkana
First Financial Corporation, 3rd & Olive Streets, Texarkana, Arkansas 71854,
before the taking of the vote concerning the merger at the special meeting,
and should be executed by, or on behalf of, the holder of record who held
such shares on the date of making such demand, and who continuously
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holds such shares through the time the certificates for such shares are
submitted to Texarkana First Financial for endorsement as dissenting shares,
fully and correctly, as such shareholder's name appears on his or her stock
certificate(s). Such demand must reasonably inform Texarkana First Financial
of the identity of the shareholder and that such shareholder is thereby
demanding appraisal of his or her shares.
Failure to comply with these procedures will cause the shareholder to
lose his or her dissenters' rights. Consequently, any shareholder who
desires to exercise his or her dissenters' rights is urged to consult a legal
advisor before attempting to exercise such rights.
THE MERGER AGREEMENT
The following is a summary of the material terms of the merger
agreement. The summary is qualified in its entirety by reference to the
merger agreement, a copy of which is attached to this proxy statement as
APPENDIX A.
EFFECTIVE TIME
The merger agreement provides that the closing of the merger will take
place as soon as reasonably practicable after all regulatory, corporate and
other approvals have been obtained and required waiting periods have passed.
As soon as practicable on or after the closing date, articles of merger will
be prepared, executed by representatives of Texarkana First Financial and
First United Acquisition Co., and filed with the Secretary of State of the
State of Texas. The merger will then become effective upon the approval of
the articles of merger by the Secretary of State, and upon the issuance by
the Secretary of State of a certificate of merger. The date on which the
certificate of merger is issued and the merger is effective is referred to
herein as the "effective time." The merger agreement provides that the
closing date shall occur as soon as practicable, but in no event later than
December 31, 2000, unless approved by both Texarkana First Financial and
First United. Although the parties have not adopted any formal timetable, it
is presently anticipated that the merger will be consummated on or prior to
September 29, 2000, assuming all conditions set forth in the merger agreement
are satisfied or waived; however, it is possible that the effective time may
extend beyond such date.
CONVERSION OF SHARES OF TEXARKANA FIRST FINANCIAL'S COMMON STOCK
No later than twenty (20) days prior to the effective time, First United
will furnish to Texarkana First Financial a letter of transmittal, and
instructions for use in effecting the surrender of the Texarkana First
Financial common stock and option certificates held by Texarkana First
Financial's shareholders in exchange for the merger consideration. Texarkana
First Financial will then mail the letter of transmittal and instructions to
its shareholders and option holders of record. The letter of transmittal and
instructions will specify that delivery of certificates representing
ownership of Texarkana First Financial common stock or options shall be
effected only upon delivery, on or after the effective time of the merger, of
the certificates to First United Trust Company, N.A., the paying agent for
the merger, and that, until the certificates are delivered by the shareholder
or option holder in accordance with the letter of transmittal and
instructions, the risk of loss of the certificates will remain with the
shareholder or option holder. The instructions will request shareholders and
option holders to deliver their certificates, along with a properly completed
and duly executed letter of transmittal and any other documentation that the
instructions may require, to First United Trust Company, N.A. The
instructions will provide that, in the event the merger is terminated prior
to the effective time, the completed letter of transmittal and other items
will be returned to the shareholder or option holder.
First United will instruct the paying agent that, on and after the
effective time, upon the delivery to the paying agent of the properly
completed letter of transmittal and other required documentation, the paying
agent will pay the shareholder or option holder the amount of cash that the
holder is entitled to receive in accordance with the terms of the merger
agreement, minus any withholding taxes required by law, payable by check or
direct deposit into the shareholder's or option holder's account with First
Federal, and the surrendered certificates will be canceled. If shareholders
or option holders deliver their properly completed letter of transmittal and
other required documentation to the paying agent no later than ten (10) days
prior to the effective time, the paying agent will be
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instructed to mail checks or make direct deposits to those holders
immediately after the effective time, and in no event later than the next
business day after the effective time. For all other holders, the paying
agent will mail checks or make direct deposits promptly, but in no event more
than ten (10) days following the later of (i) the effective time, or (ii) the
date on which the properly completed letter of transmittal and other required
documents are delivered to the paying agent. No payment will be made to an
individual until the paying agent has received from such holder the letter of
transmittal and all other required documentation, properly completed in
accordance with the instructions. No payment will be made for share or
option certificates prior to the effective time of the merger. No interest
will be payable with respect to the payment of the merger consideration made
to Texarkana First Financial shareholders and option holders under the merger
agreement.
TREATMENT OF TEXARKANA FIRST FINANCIAL STOCK OPTIONS
The merger agreement provides that the right to exercise all Texarkana
First Financial options shall be accelerated, and all Texarkana First
Financial options will be deemed exercised immediately prior to the effective
time of the merger. All holders of Texarkana First Financial options prior
to the effective time will cease to have any rights with respect to their
options, except the right to receive a cash payment computed in the manner
provided in the merger agreement, without interest. It is a condition to
First United's obligation to consummate the merger that each holder of
Texarkana First Financial options execute an agreement and waiver, in the
form attached as an exhibit to the merger agreement, providing that the
option holder accepts the cash payment due under the merger agreement in full
satisfaction of all rights the option holder has under their Texarkana First
Financial options.
REPRESENTATIONS AND WARRANTIES
REPRESENTATIONS AND WARRANTIES OF TEXARKANA FIRST FINANCIAL. The merger
agreement contains representations and warranties of Texarkana First
Financial, the material ones of which relate to:
- Texarkana First Financial's proper organization, qualification, good
standing, authority and other corporate organizational matters;
- Texarkana First Financial's capital structure and the number of its
authorized and outstanding shares of its common stock and designated
preferred stock;
- First Federal's capital structure and the number of its authorized and
outstanding shares of its common stock;
- Texarkana First Financial's compliance with applicable laws and its
possession of all requisite corporate power and authority to enter into the
merger agreement;
- the consistency of the merger agreement with Texarkana First Financial's
charter documents and its agreements;
- the absence of any default by Texarkana First Financial or First Federal
under any material agreement, ordinance, resolution, decree, bond, note,
indenture, order or judgment to which either is a party, is bound or to
which its assets are subject;
- compliance of Texarkana First Financial's financial statements with
generally accepted accounting principles;
- the absence of undisclosed material liabilities, except as provided in
Texarkana First Financial's financial statements and as incurred in the
ordinary course of business;
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- Texarkana First Financial's and First Federal's compliance with all filing
requirements with governmental regulatory agencies, and the absence of
material misstatements or omissions from any required reports and from any
documents to be filed in connection with the merger;
- Texarkana First Financial's and First Federal's material compliance with
applicable environmental laws;
- the absence of continuing orders against Texarkana First Financial and
First Federal by any federal or state banking or insurance regulatory
authority, and the absence of claims of any kind against Texarkana First
Financial or First Federal which could be reasonably expected to have a
material adverse effect on Texarkana First Financial and First Federal;
- the filing by Texarkana First Financial and First Federal of all required
tax returns, and the absence of material tax liens on the property of
Texarkana First Financial and First Federal, except for statutory liens for
taxes not yet delinquent;
- the absence of any undisclosed professional services agreements, collective
bargaining agreements, stock option or employee benefit plans, or
noncompetition agreements;
- the absence of any material prohibited transactions, breaches of fiduciary
duty or violations of law related to the employee benefit plans of
Texarkana First Financial or First Federal;
- the validity and enforceability of the material contracts, employee benefit
plans and insurance policies;
- the conduct of business in the ordinary course since December 31, 1999;
- the absence, since December 31, 1999, of any material adverse change to the
financial condition, results of operations or business of Texarkana First
Financial or First Federal;
- Texarkana First Financial's and First Federal's good title, free of
encumbrances, to all of the personal and real property reflected in
Texarkana First Financial's financial statements, except as disclosed in
the Texarkana First Financial financial statements, except for property
disposed of in the ordinary course of business, and except for encumbrances
and title imperfections that do not materially affect the value of the
property; and
- the absence of any untrue statements of a significant fact or any omission
of a significant fact relating to the representations and warranties of
Texarkana First Financial in the merger agreement.
REPRESENTATIONS AND WARRANTIES OF FIRST UNITED. The merger agreement
contains representations and warranties of First United, the material ones of
which relate to:
- its proper organization, qualification, good standing and other corporate
organizational matters;
- the execution, delivery and performance of the merger agreement;
- consistency of the merger agreement with First United's charter documents
and agreements and any laws applicable to First United;
- required consents and approvals in connection with the execution, delivery
and performance of the merger agreement, and the absence of any reason, to
First United's knowledge, that would prevent First United from obtaining
regulatory approval for the merger;
- the absence, since December 31, 1999, of a material adverse change in the
financial condition, results of operations or business of First United; and
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- the absence of any untrue statements of a material fact or any omission of
a material fact relating to the representations and warranties made by
First United in the merger agreement.
EMPLOYEE MATTERS AND IMPACT ON EMPLOYEE BENEFIT PLANS
BENEFIT PLANS. After the effective time, neither First United,
Texarkana First Financial nor First Federal will make additional
contributions to Texarkana First Financial's employee benefits plans. Each
employee of Texarkana First Financial or First Federal who after the merger
becomes an employee of First United or a subsidiary of First United (or of
BancorpSouth or a BancorpSouth Subsidiary) or who remains an employee of
First Federal, to the extent permissible under the terms of the First United
employee benefit plans (or upon the merger of First United with BancorpSouth,
under the terms of the BancorpSouth or BancorpSouth Bank plans), will be
entitled to participate in the employee benefit plans and programs maintained
for similarly situated employees of First United (or of BancorpSouth or
BancorpSouth Bank) and its affiliates to the same extent as similarly
situated employees of First United (or of BancorpSouth or BancorpSouth Bank),
in accordance with the respective terms of such plans and programs. The
merger agreement provides that First United will take all actions necessary
or appropriate to facilitate coverage of such continuing employees in such
plans and programs from and after the effective time (it being understood
that inclusion of Texarkana First Financial and First Federal employees in
First United's, BancorpSouth's, or BancorpSouth Bank's plans may occur at
different times with respect to different plans based on the specific
eligibility requirements and entry dates of each plan) subject to the
following:
(a) Each continuing employee shall be given vesting and eligibility
service credit for time during which the employee was employed by Texarkana
First Financial and/or First Federal for purposes of determining benefits due
under the First United Employee Stock Ownership Plan and the First United
401(k) Plan (or, upon the merger of First United with BancorpSouth, the
BancorpSouth or BancorpSouth Bank plans). Continuing employees shall not
receive service credit for any purpose under the First United Defined Benefit
Retirement Plan, which has been frozen (or, upon the merger of First United
with BancorpSouth, continuing employees shall not receive service credit for
the purpose of accrual of pension benefits under the BancorpSouth or
BancorpSouth Bank defined benefit plan).
(b) Each continuing employee shall receive credit for all time employed
with Texarkana First Financial or First Federal for purposes of the
application of First United's or a First United subsidiary's (or, if
applicable, BancorpSouth's or BancorpSouth Bank's) severance and vacation
policies applicable to employees generally, and for all purposes under the
employee welfare benefit plans and other employee benefit plans and programs
sponsored by First United or its affiliates (or by BancorpSouth or
BancorpSouth Bank) (but not for any purpose under the First United Defined
Benefit Retirement Plan or for accrual of pension benefits under any defined
benefit plan of BancorpSouth or BancorpSouth Bank). Such service, however,
shall not be recognized to the extent that such recognition would result in a
duplication or increase of benefits or such service would not be recognized
under an Employee Benefit Plan (or a plan of BancorpSouth or BancorpSouth
Bank). Any preexisting condition exclusion applicable to such plans and
programs shall be waived with respect to any continuing employee to the same
extent waived under Texarkana First Financial or First Federal employee
benefit plans. For purposes of determining each continuing employee's
benefit for the year in which the merger occurs under First United's (or, if
applicable, BancorpSouth's or BancorpSouth Bank's) vacation program, any
vacation taken by a continuing employee preceding the closing date of the
merger for the calendar year in which the merger occurs will be deducted from
the total First United (or, if applicable, BancorpSouth or BancorpSouth Bank)
vacation benefit available to such employee for such calendar year.
(c) On or before, but effective as of the closing date of the merger,
Texarkana First Financial may take such actions as may be necessary (i) to
cause each individual employed by Texarkana First Financial or First Federal
immediately prior to the closing date to have a fully vested and
nonforfeitable interest in such employee's account balance in the Texarkana
First Financial ESOP and the First Federal Financial Institutions Thrift Plan
sponsored by Texarkana First Financial as of the closing date and (ii) to
contribute amounts accrued on the books of Texarkana First Financial from
January 1, 2000 to the closing date to such plan(s). These provisions do not
create or modify any employee benefit plan of First United or any of its
affiliates (or of BancorpSouth or BancorpSouth Bank) and should not be
construed as creating any employment contract or third party beneficiary
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right between First United or Texarkana First Financial (or BancorpSouth or
BancorpSouth Bank), on one hand, and any such employee, on the other hand.
(d) Any continuing employee who is terminated for any reason other than
for cause within one year from the closing date shall be entitled to receive
severance pay equal to the product of (x) the continuing employee's weekly
base salary, and (y) the number of weeks applicable to the continuing
employee as set forth in the following schedule:
<TABLE>
<CAPTION>
Salary Ranges
-------------
Length of Service $15,000 or less $15,001 to $40,000 $40,001 or greater
----------------- --------------- ------------------ ------------------
<S> <C> <C> <C>
90 days but less than 5 years 2 weeks 4 weeks 8 weeks
5 years but less than 10 years 5 weeks 8 weeks 14 weeks
10 years or greater 8 weeks 12 weeks 20 weeks
</TABLE>
Any continuing employee who receives severance pay under this schedule shall
not be entitled to additional severance pay under any other policy of First
United (or BancorpSouth) as a result of the termination. For purposes of
this provision of the merger agreement, "cause" is defined as (i) any act or
omission by the continuing employee constituting fraud under the laws of the
State of Arkansas or the United States of America; or (ii) a finding of
probable cause, or a plea of nolo contendere to, a felony or other crime
involving moral turpitude by the continuing employee; or (iii) the negligent
performance by the continuing employee of the material responsibilities of
his or her position or the negligent failure by the continuing employee to
adhere to the policies of First United (or BancorpSouth); or (iv) the willful
or reckless failure by the continuing employee to substantially perform his
duties, the willful or reckless failure by the continuing employee to adhere
to First United's (or BancorpSouth's) policies, or the willful or reckless
engaging by the continuing employee in misconduct which is materially
injurious to First United (or BancorpSouth); or (v) failure by the continuing
employee to comply with First United's (or BancorpSouth's) policies
concerning employment discrimination or harassment; or (vi) the receipt by
the continuing employee of a materially and substantially unfavorable
performance review, provided, however, that the continuing employee shall be
given a thirty-day probationary period within which the continuing employee
shall be allowed an opportunity to correct any performance deficiencies
included in the review.
EMPLOYEE STOCK OWNERSHIP PLAN. Pursuant to the merger agreement, upon
execution of the agreement, Texarkana First Financial amended the Texarkana
First Financial ESOP to provide that: (i) effective with the closing date of
the merger, amounts received by the ESOP on the sale of the shares held as
collateral for any outstanding ESOP loan will be used first to repay the
outstanding balance on the ESOP loan; (ii) then any proceeds from the sale of
pledged unallocated shares held by the ESOP in excess of the outstanding
balance on the ESOP loan will be allocated directly to participants' accounts
under the ESOP, as earnings, in accordance with the terms of the ESOP; and
(iii) none of the proceeds received on the sale of the shares held as
collateral for the outstanding ESOP loan will be treated as annual additions
for purposes of Internal Revenue Code section 415. Texarkana First Financial
has filed this amendment with the Internal Revenue Service for a
determination as to the effect of the amendment on the qualified status of
the ESOP. Following the receipt of a favorable determination letter, all
proceeds received by the ESOP will be allocated to participants' accounts
under the ESOP, in accordance with the terms of the approved amendment. In
the event a favorable determination letter is not received, all proceeds
received by the ESOP will be allocated to participants' accounts under the
ESOP in accordance with its terms. Following such allocation, the ESOP may
either be terminated or merged into a First United plan (or upon the merger
of First United with BancorpSouth, a BancorpSouth plan or BancorpSouth Bank
plan) at the request of First United in accordance with the terms of ERISA
and all other applicable law.
COVENANTS OF TEXARKANA FIRST FINANCIAL AND FIRST UNITED; CONDUCT OF BUSINESS
PRIOR TO THE MERGER
The merger agreement contains covenants of First United and Texarkana
First Financial concerning, among other things:
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- cooperation to obtain government approvals to consummate the merger;
- provision of information about themselves and their subsidiaries;
- use of best efforts to consummate the merger;
- prompt notification of any event that would cause or constitute a breach of
any representation, warranty or covenant; and
- prompt notification of any pending or threatened legal action, obligation,
claim or controversy pending or threatened against that party.
The merger agreement provides that Texarkana First Financial will (and will
cause First Federal to), among other things:
- conduct their banking and related business in the ordinary course and
consistent with past practices;
- use all reasonable efforts to preserve their business organizations intact;
- perform all of their obligations under agreements and contracts;
- timely file reports, including tax returns, required to be filed with
governmental authorities;
- promptly pay taxes and withhold taxes; and
- maintain all tangible assets in good repair and maintain insurance policies
in effect.
The merger agreement further provides that prior to the effective time
neither Texarkana First Financial nor First Federal will, without the prior
written consent of First United:
- incur any material liabilities or material obligations, whether directly or
by way of guaranty, including any obligations for borrowed money whether or
not evidenced by a note, bond, debenture or similar instrument, except in
the ordinary course of business consistent with past practice;
- (i) except as disclosed in the disclosure schedule of Texarkana First
Financial delivered to First United in connection with the merger
agreement, and except for merit or promotion increases in accordance with
existing policy, grant any bonuses or increases in compensation to their
employees, officers or directors, (ii) effect any change in retirement or
any other benefits to any class of employees or officers (unless any such
change shall be required by the merger agreement or applicable law) which
would increase their retirement benefit liabilities, (iii) adopt, enter
into, amend or modify any Texarkana First Financial employee benefit plan
except as provided in the merger agreement, or (iv) hire any executive
officer or elect any new director;
- except as set forth in Texarkana First Financial's disclosure schedule,
declare or pay any dividend on, or make any other distribution in respect
of, their outstanding shares of capital stock or equity interests other
than cash dividends by First Federal;
- except as contemplated by the merger agreement or as set forth in Texarkana
First Financial's disclosure schedule, (i) redeem, purchase or otherwise
acquire any shares of its capital stock or equity interests or any
securities or obligations convertible into or exchangeable for any shares
of its capital stock or equity interests, or any options, warrants,
conversion or other rights to acquire any shares of its capital stock or
equity interests or any such securities or obligations; (ii) merge with or
into or consolidate with any other corporation or bank, or effect any
reorganization or recapitalization; (iii) purchase or otherwise acquire any
substantial portion of the assets or any class of stock, of any
corporation, bank or other business;
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(iv) liquidate, sell, dispose of, or encumber any assets or acquire any
assets, other than in the ordinary course of business consistent with past
practice; or (v) split, combine or reclassify any of its capital or issue
or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock;
- issue, deliver, award, grant or sell, or authorize or propose the issuance,
delivery, award, grant or sale of, any shares of its capital stock of any
class (including shares held in treasury), any equity interests, any voting
debt or any securities convertible into, or any rights, warrants or options
to acquire, any such shares, equity interests, voting debt or convertible
securities;
- initiate, solicit or encourage, or take any action to facilitate, any
inquiries or the making of any proposal which constitutes, or may
reasonably be expected to lead to, any competing transaction, except
pursuant to a written opinion of legal counsel that failure to take such
action would violate the directors' fiduciary duties;
- propose or adopt any amendments to its corporate charter or bylaws except
as provided in the merger agreement;
- authorize, recommend, propose or announce an intention to authorize,
recommend or propose, or enter into an agreement in principle with respect
to any acquisition of a material amount of assets or securities or any
release or relinquishment of any material contract rights not in the
ordinary course of business;
- except in their fiduciary capacities, purchase any shares of First United
common stock;
- change any method of accounting in effect at December 31, 1999, or change
any method of reporting income or deductions for federal income tax
purposes from those employed in the preparation of the federal income tax
returns for the taxable year ending September 30, 1999, except as may be
required by law, rule or regulation or GAAP;
- change the lending, investment, asset/liability management and other
material policies concerning the business of Texarkana First Financial or
First Federal, unless required by law or order or unless such change does
not cause a material adverse effect on Texarkana First Financial or First
Federal;
- make any single new loan or series of loans not in accordance with existing
loan policies to one borrower or related series of borrowers in an
aggregate amount greater than $500,000;
- sell or otherwise dispose of securities owned as investments except at
maturity dates or in accordance with past practices for securities held for
sale or trading or in accordance with GAAP for securities classified as
"held to maturity";
- sell or dispose of any real estate or other assets having a value in excess
of $100,000;
- make any capital expenditure other than those set forth in Texarkana First
Financial's disclosure schedule or those that are made in the ordinary
course of business or are necessary to maintain existing assets in good
repair, and in any event are in an amount of no more than $100,000 in the
aggregate, or except as necessary to comply with applicable regulatory
guidelines; or
- agree in writing or otherwise to do any of the foregoing.
CONDITIONS TO CONSUMMATION OF THE MERGER
The closing of the merger will occur only if, among other things:
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- the merger shall have been approved and adopted by the required vote of the
shareholders of Texarkana First Financial;
- the merger, the merger of First Federal with FirstBank and the other
transactions described herein shall have received all necessary regulatory
approvals, without any condition not reasonably acceptable to First United;
- no temporary restraining order, preliminary or permanent injunction or
other order preventing the consummation of the merger shall be in effect;
and
- no material action, suit or proceeding before any governmental authority
shall have been commenced against First United, Texarkana First Financial
or any affiliate, subsidiary, officer or director of either of them,
seeking to restrain or enjoin the transactions contemplated by the merger
agreement.
The obligation of First United to consummate the merger is subject to,
among other things, the following conditions:
- the representations and warranties of Texarkana First Financial in the
merger agreement must be true and correct as of the closing date;
- Texarkana First Financial must have performed its obligations under the
merger agreement;
- Texarkana First Financial must have delivered to First United an opinion of
legal counsel;
- there must not have been, since December 31, 1999, a material adverse
change in the financial condition, results of operations or business of
Texarkana First Financial;
- Phase I environment audits on those portions of Texarkana First Financial's
properties selected by First United for audit must have been conducted and
must show no material environmental problems;
- First United shall have obtained all consents or approvals required under
any loan or credit agreement, note, mortgage, indenture, lease or other
agreement or instrument;
- the number of dissenting shares of the outstanding Texarkana First
Financial common stock must not exceed 11% of the outstanding Texarkana
First Financial common stock, excluding options to purchase Texarkana First
Financial common stock;
- each of the directors of Texarkana First Financial and of First Federal
shall have executed and delivered to First United a noncompetition
agreement, which agreements will be effective as of the closing date of the
merger;
- each holder of options to purchase Texarkana First Financial common stock
shall have entered into a written agreement and waiver with First United
and Texarkana First Financial, providing that such option holder will
accept the consideration due under the merger agreement in full
satisfaction of all rights under their Texarkana First Financial options;
- each director and executive officer of Texarkana First Financial shall have
executed and delivered to First United a letter describing all known claims
such persons may have against Texarkana First Financial; and
- James McKinney shall have entered into an agreement amending his employment
agreement to provide that the employment agreement will terminate on the
later of November 1, 2000 or one month after the closing date, and that Mr.
McKinney will receive no change of control benefits under his employment
agreement as a result of the merger.
33
<PAGE>
The obligation of Texarkana First Financial to consummate the merger is
subject to, among other things, the following conditions:
- the representations and warranties of First United in the merger agreement
shall be true and correct as of the closing date of the merger;
- First United shall have performed its obligations under the merger
agreement;
- Texarkana First Financial shall have obtained the opinion of Stifel,
Nicolaus that the terms of the merger and the other transactions
contemplated by the merger agreement are fair from a financial point of
view to the shareholders of Texarkana First Financial;
- First United shall have delivered to Texarkana First Financial an opinion
of legal counsel; and
- there shall have been no material adverse change since December 31, 1999 in
the financial condition, results of operations or business of First United.
NO NEGOTIATIONS WITH OTHERS
Except upon advice of counsel to the extent required to fulfill the
fiduciary duties owed to the shareholders of Texarkana First Financial,
Texarkana First Financial will not, directly or indirectly, nor will it permit
First Federal or their respective officers, directors, employees,
representatives or agents to directly or indirectly:
- initiate, solicit or encourage, including by way of furnishing
information or assistance, or take any action to facilitate, any
inquiries or the making of any proposal which constitutes, or may
reasonably be expected to lead to, any "Competing Transaction" (as
that term is defined below);
- negotiate with any person in furtherance of such inquiries or to
obtain a Competing Transaction; or
- agree to or endorse any Competing Transaction, or authorize any of its
officers, directors or employees, or any investment banker, financial
advisor, attorney, accountant or other representative retained by
Texarkana First Financial or First Federal to take any such action.
For purposes of the merger agreement, "Competing Transaction" means any of the
following involving Texarkana First Financial or First Federal: any merger,
consolidation, share exchange or other business combination; a sale, lease,
exchange, mortgage, pledge, transfer or other disposition of a substantial
portion of assets; or a sale of shares of capital stock (or securities
convertible or exchangeable into or otherwise evidencing, or any agreement or
instrument evidencing, the right to acquire capital stock) or equity interests.
If any of the above actions are engaged in by a representative of Texarkana
First Financial or First Federal, upon learning of such action by the
representative, Texarkana First Financial must take appropriate steps to
terminate such action and must promptly notify First United orally of all of the
relevant details relating to all inquiries and proposals which it may receive
relating to the matter.
NONCOMPETITION AGREEMENTS
As a condition to First United's obligation to consummate the merger, the
directors of Texarkana First Financial and First Federal have, effective as of
May 15, 2000, entered into certain noncompetition agreements with First United.
Under these agreements each of the directors of Texarkana First Financial and
First Federal has agreed that, for a period of two years after the director
ceases to be a director, officer or consultant of Texarkana First Financial,
First Federal or First United, the director will not:
34
<PAGE>
- disclose any confidential information regarding Texarkana First
Financial, First Federal or First United; or
- own, manage, or serve as director, officer or consultant for, any
business engaged in banking in Hempstead, Howard, Little River, Miller
or Sevier Counties, Arkansas or Bowie County, Texas, except with the
prior written consent of First United.
- For these agreements, each director has received consideration of ten
dollars ($10.00). The noncompetition agreements are effective as of
the closing date of the merger and are null and void if the merger is
not consummated.
TERMINATION
The merger agreement provides that it may be terminated at any time prior
to the effective time:
- by mutual consent of the boards of directors of First United and
Texarkana First Financial;
- by either First United or Texarkana First Financial (i) if there has
been a breach by the other party in any material respect of any
representation, warranty, covenant or agreement set forth in the
merger agreement, or (ii) if any representation or warranty of the
other party is discovered to have become untrue in any material
respect, and the breach or other condition has not been cured within
10 business days following receipt by the nonterminating party of
notice of the breach or other condition from the terminating party;
- by either First United or by Texarkana First Financial if any
permanent injunction preventing the consummation of the merger has
become final and nonappealable;
- by either First United or by Texarkana First Financial if the merger
has not have been consummated on or before December 31, 2000, for a
reason other than the failure of the terminating party to comply with
its obligations under the merger agreement;
- by either First United or by Texarkana First Financial if the FDIC or
other regulatory authority has denied approval of the merger and such
denial has become final and nonappealable; or
- by either First United or by Texarkana First Financial if any
condition precedent to the terminating party's obligation to effect
the merger has not been satisfied, and the condition cannot reasonably
be expected to be satisfied prior to December 31, 2000.
AMENDMENT
The merger agreement may be amended by the boards of directors of Texarkana
First Financial and First United at any time prior to the closing date of the
merger, by an instrument in writing signed on behalf of each of Texarkana First
Financial and First United. However, the consideration to be received by the
Texarkana First Financial shareholders may not be changed after the special
shareholders' meeting.
MARKET PRICES AND DIVIDENDS
Texarkana First Financial's common stock trades on the AMEX under the
symbol "FTF." The following table sets forth, for the periods indicated, the
high and low sales prices for the common stock as quoted on the AMEX and the
amount of cash dividends paid per share.
35
<PAGE>
<TABLE>
<CAPTION>
Common Stock
------------------------------------------------
Cash Dividends
High Low Per Share
--------------- --------------- --------------
<S> <C> <C> <C>
Year Ended September 30, 1998
First Quarter $27.125 $23.875 $0.14
Second Quarter $29.625 $24.75 $0.14
Third Quarter $30.63 $27.875 $0.14
Fourth Quarter $28.25 $21.875 $0.16
Year Ended September 30, 1999
First Quarter $24.25 $20.00 $0.16
Second Quarter $24.125 $22.25 $0.16
Third Quarter $24.50 $23.25 $0.16
Fourth Quarter $24.50 $21.25 $0.17
Year Ending September 30, 2000
First Quarter $21.00 $19.25 $0.17
Second Quarter $19.25 $13.75 $0.17
Third Quarter $22.8125 $15.75 $0.17
Fourth Quarter $22.875 $22.4375 -
(to August 7, 2000)
</TABLE>
The closing price per share for the common stock as reported on the AMEX
on April 17, 2000, the lowest price the stock reached in the month
immediately preceding the public announcement of the proposed merger, was
$15.875. The closing price per share on May 5, 2000, ten days before public
announcement of the proposed merger, was $16.625. The closing price per
share on May 15, 2000, the last full trading day prior to the public
announcement of the proposed merger, was $21.50. As of the record date, July
26, 2000, there were approximately 391 holders of record of the common stock.
WHERE YOU CAN FIND MORE INFORMATION
Each of Texarkana First Financial, First United and BancorpSouth is
subject to the informational requirements of the Securities Exchange Act of
1934, as amended, and in accordance therewith files reports, proxy
statements, and other information with the SEC. You may read and copy these
reports, proxy statements and other information at the public reference
facilities of the SEC located at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, DC 20549, and the SEC's Regional offices located at Seven World
Trade Center, 13th Floor, New York, New York 10048, and Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511.
Copies of this material can also be obtained at prescribed rates by writing
to the Public Reference Section of the SEC at 450 Fifth Street, N.W.,
Washington, D.C., 20549 or by calling the SEC at 1-800-SEC-0330. In addition,
the SEC maintains a World Wide Web site at http://www.sec.gov, which contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the SEC.
36
<PAGE>
FUTURE SHAREHOLDER PROPOSALS
Texarkana First Financial intends to hold an annual meeting in 2001 only
if the merger is not completed. Any Texarkana First Financial shareholder
intending to submit a proposal for inclusion in the proxy statement and form
of proxy for our 2001 annual meeting of shareholders, in the event that it is
held, must submit the proposal to the attention of our Corporate Secretary at
our principal executive office sufficiently far in advance so that it is
received by us not later than August 29, 2000, and such proposal must comply
with the requirements of Rule 14a-8 of the Securities Exchange Act of 1934.
OTHER BUSINESS
No other business may be presented for consideration at the special meeting
other than as stated in the accompanying Notice of Special Meeting of
Shareholders.
FORWARD-LOOKING STATEMENTS--CAUTIONARY STATEMENTS
This proxy statement contains certain forward-looking statements and
information relating to Texarkana First Financial and its subsidiaries that
are based on the beliefs of Texarkana First Financial's management as well as
assumptions made by and information currently available to Texarkana First
Financial's management. When used in this proxy statement, the words
"anticipate," "believe," "estimate," "expect" and "intend" and words or
phrases of similar import, as they relate to Texarkana First Financial or its
subsidiaries or Texarkana First Financial management, are intended to
identify forward-looking statements. Such statements reflect the current
view of Texarkana First Financial with respect to future events and are
subject to certain risks, uncertainties and assumptions related to certain
factors including, without limitation, competitive factors, general economic
conditions, customer relations, the interest rate environment, governmental
regulation and supervision, nonperforming asset levels, loan concentrations,
changes in industry practices, one time events and other factors described
herein. Based upon changing conditions, should any one or more of these risks
or uncertainties materialize, or should any underlying assumptions prove
incorrect, actual results may vary materially from those described herein as
anticipated, believed, estimated, expected or intended. Texarkana First
Financial does not intend to update these forward-looking statements.
WE HAVE AUTHORIZED NO ONE TO GIVE YOU ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ABOUT THE MERGER, TEXARKANA FIRST FINANCIAL OR FIRST FEDERAL,
THAT DIFFERS FROM OR ADDS TO THE INFORMATION CONTAINED IN THIS PROXY
STATEMENT OR IN THE DOCUMENTS WE HAVE PUBLICLY FILED WITH THE SEC.
THEREFORE, IF ANYONE SHOULD GIVE YOU ANY DIFFERENT OR ADDITIONAL INFORMATION,
YOU SHOULD NOT RELY ON IT.
THE INFORMATION CONTAINED IN THIS PROXY STATEMENT SPEAKS ONLY AS OF THE
DATE INDICATED ON THE COVER OF THIS PROXY STATEMENT UNLESS THE INFORMATION
SPECIFICALLY INDICATES THAT ANOTHER DATE APPLIES.
37
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
FIRST UNITED BANCSHARES, INC.
AND
TEXARKANA FIRST FINANCIAL CORPORATION
Dated as of May 15, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE *
------- ------
<S> <C>
ARTICLE I
THE MERGER
SECTION 1.01. The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Conversion of FFC Stock . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.03. Exchange Procedures . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.04. Effective Time of the Merger . . . . . . . . . . . . . . . . . . . 3
SECTION 1.05. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.06. Subsidiary Mergers . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF FFC
SECTION 2.01. Organization of FFC . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.02. Capital Structure of FFC . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.03. Ownership and Organization of FSA . . . . . . . . . . . . . . . . . 4
SECTION 2.04. Capital Structure of FSA . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.05. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.06. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.07. No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.08. FFC Financial Statements . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.09. FFC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.10. Information Supplied . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.11. Authorizations; Compliance with Applicable Laws . . . . . . . . . . 6
SECTION 2.12. Compliance With Environmental Laws . . . . . . . . . . . . . . . . 6
SECTION 2.13. Litigation and Claims . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.14. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE *
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<S> <C>
SECTION 2.15. Certain Agreements . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.16. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.17. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.18. Conduct of FFC to Date . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.19. Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.20. Properties, Leases and Other Agreements . . . . . . . . . . . . . . 12
SECTION 2.21. No Untrue Statements . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.22. Proper Documentation . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.23 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.24. Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.25. Federal Financial Assistance . . . . . . . . . . . . . . . . . . . 14
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BANCSHARES
SECTION 3.01. Organization of Bancshares . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.02. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.03. No Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.04. Bancshares Financial Statements . . . . . . . . . . . . . . . . . . 15
SECTION 3.05. No Untrue Statements . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.06. Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.07. Authorizations; Compliance with Applicable Laws . . . . . . . . . . 15
SECTION 3.08. Regulatory Approval . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.09. Accredited Investor . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV
AGREEMENTS OF FFC
SECTION 4.01. Affirmative Covenants of FFC . . . . . . . . . . . . . . . . . . . 15
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE *
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<S> <C>
SECTION 4.02. Negative Covenants of FFC . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4.03. Access and Information . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.04. FFC Shareholders Meeting. . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.05. Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.06. Termination or Merger of Employee Benefit Plans . . . . . . . . . . 18
SECTION 4.07. FFC ESOP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.08. FFC's Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE V
AGREEMENTS OF BANCSHARES
SECTION 5.01. Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 5.02. Bancshares Employee Benefit Plans . . . . . . . . . . . . . . . . . 19
SECTION 5.03. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Legal Conditions to Merger . . . . . . . . . . . . . . . . . . . . 22
SECTION 6.02. Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 6.03. Update Disclosure; Breaches . . . . . . . . . . . . . . . . . . . . 22
SECTION 6.04. Ability to Perform . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 6.05. Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 6.06. Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 6.07. Governmental and Other Third Party Approvals . . . . . . . . . . . 23
SECTION 6.08. Nonpublic Information . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.01. Conditions to Each Party's Obligation to Effect the Merger . . . . 23
SECTION 7.02. Conditions to Obligations of Bancshares . . . . . . . . . . . . . . 24
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE *
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<S> <C>
SECTION 7.03. Conditions to Obligations of FFC . . . . . . . . . . . . . . . . . 25
ARTICLE VIII
TERMINATION AND AMENDMENT
SECTION 8.01. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 8.02. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 8.03. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 8.04. Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 9.02. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 9.03. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 9.04. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 9.05. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 9.06. Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 9.07. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 9.08. Knowledge of FFC . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 9.09. Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 9.10. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 9.11. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 9.12. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 9.13. Non-Survival of Representations and Warranties . . . . . . . . . . 28
EXHIBIT A Plan of Merger
EXHIBIT 7.02(c) Legal Opinion of Jenkens & Gilchrist, P.C.
EXHIBIT 7.02(h) Noncompetition Agreement
EXHIBIT 7.02(i) FFC Option Holder Agreement and Waiver
EXHIBIT 7.03(d) Legal Opinion of Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C.
</TABLE>
iv
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
SECTION
-------
<S> <C>
Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.09
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 1
Articles of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.04
BHC Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.07(a)
Bancshares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 1
Bancshares Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 3.04
Bancshares Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.07
Certificate, Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.03
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.05
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.05
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.16
Competing Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.02(f)
Continuing Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.02
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.04
Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.16
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.10(f)
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.16
ESOP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.06
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.07
401(k) Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5.02 C.
FDIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.09
FFC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 1
FFC Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.08
FFC Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.08
FFC Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.23
FFC Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.06
</TABLE>
v
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
SECTION
-------
<S> <C>
FFC Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.02
FFC Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.11
FFC Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.12(h)
FFC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.09
FFC Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.02
FFC Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 1
FSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.12(a)
FSA Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.06
FRB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.10
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.08
Governmental Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.07
Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.10(g)
Held to Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.02(m)
HOL Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01
Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.03
Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(c)
Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.03
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.14
Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.11, 3.07
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 1
Merger Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 1
Option Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . .1.02(a)(ii)
OTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.03
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.03
Per Share Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . 1.02(a)(i)
Plan of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 1
Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.10(b)
</TABLE>
vi
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
SECTION
-------
<S> <C>
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.02
SEC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.09
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.07
Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 1
Subsidiary Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.06
Tax, Taxes, Taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.14
TBCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.01
Transmittal Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.03
Transmittal Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.03
Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.04
Voting Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.03
</TABLE>
vii
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made as of
May 15, 2000 by and between First United Bancshares, Inc. ("Bancshares") and
Texarkana First Financial Corporation ("FFC").
WHEREAS, FFC owns one hundred percent (100%) of the issued and
outstanding shares of capital stock of First Federal Savings & Loan
Association of Texarkana, Texarkana, Arkansas ("FSA"); and
WHEREAS, Bancshares desires to acquire one hundred percent (100%) of
the capital stock of FFC (the "FFC Stock") upon the terms and conditions
hereinafter set forth through the merger of a newly created subsidiary of
Bancshares ("Sub") with and into FFC with FFC to be the surviving
corporation, (the "Merger"), pursuant to a Plan of Merger in substantially
the form attached hereto as Exhibit A (the "Plan of Merger"); and
WHEREAS, it is the intention of the parties to this Agreement that the
Merger shall not subject either party or Sub to any federal income tax
pursuant to provisions of the Internal Revenue Code; and
WHEREAS, the respective Boards of Directors of Bancshares and FFC
believe that such proposed Merger and the exchange of cash for the FFC Stock,
pursuant and subject to the terms of this Agreement and the Plan of Merger
(the "Merger Agreements"), is in the best interests of their respective
corporations and shareholders; and
WHEREAS, Bancshares and FFC desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
various conditions to the Merger;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties
hereto agree as follows:
ARTICLE I
TERMS OF THE MERGER
1.01. THE MERGER. Subject to the terms and conditions of this
Agreement, Bancshares and FFC agree to effect the Merger of Sub, a
wholly-owned subsidiary of Bancshares to be created by Bancshares, with and
into FFC in accordance with the Texas Business Corporation Act (the "TBCA").
FFC shall be the surviving corporation under the Merger. The separate
corporate identity of Sub shall cease upon consummation of the Merger. The
Merger will not effect any changes in FFC's Articles of Incorporation.
1.02. CONVERSION OF FFC STOCK.
(a) PURCHASE PRICE. At the Effective Time (as defined in
Section 1.04), by virtue of the Merger and without any action on the part of
any holder of FFC Stock ("FFC Shareholder"), but subject to the rights of
dissenting shareholders of FFC, all of the shares of the FFC Stock issued and
outstanding and all options to purchase shares of FFC Stock (the "FFC
Options") which are outstanding and unexercised immediately prior to the
Effective Time, shall be converted into the right to receive from Bancshares,
an aggregate amount in cash equal to $37,500,000 (the "Purchase Price"). The
Purchase Price shall be allocated to the holders of the FFC Stock and FFC
Options as follows:
(i) FFC STOCK. For each share of FFC Stock issued
and outstanding at the Effective Time, an amount in cash of $23.35208 per
share (the "Per Share Purchase Price"). Subject only to dissenter's rights
under Articles 5.11 through 5.13 of the TBCA, at the Effective Time all
shares of FFC Stock shall no longer be outstanding and shall be canceled and
retired and all rights with respect thereto shall cease to exist, and each
holder of FFC Stock shall cease to have any rights thereto, except the right
to receive, upon surrender of the certificate(s) representing any such shares
of FFC Stock, his pro rata share of the Purchase Price.
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(ii) FFC OPTIONS. For each FFC Option outstanding and
unexercised immediately prior to the Effective Time, an amount in cash
calculated in the manner provided in this Section 1.02(a)(ii). The amount of
cash to be received by each holder of an FFC Option shall be equal to the
mathematical result obtained by multiplying (x) the Per Share Purchase Price
less the weighted average per-share exercise price of all FFC Options held by
such holder, by (y) the number of shares subject to FFC Options held by such
holder (such amount of cash to be received by a holder of FFC Options with
respect to such holder's total FFC Options being the "Option Consideration").
(b) CANCELLATION OF SHARES. All shares of FFC Stock issued
and outstanding immediately prior to the Effective Time shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease
to exist, and each holder of a certificate representing any such shares shall
cease to have any rights with respect thereto, except dissenter's rights or
the right to receive a pro rata cash payment as provided in this Section 1.02
and Section 1.03 and in accordance with the Plan of Merger, without interest.
(c) ACCELERATION AND CANCELLATION OF OPTIONS. The right to
exercise all FFC Options shall be accelerated and all FFC Options shall be
deemed exercised immediately prior to the Effective Time. All holders of FFC
Options prior to the Effective Time shall cease to have any rights with
respect thereto except the right to receive a pro rata cash payment as
provided in this Section 1.02 and Section 1.03 and in accordance with the
Plan of Merger, without interest.
(d) CONVERSION OF STOCK OF SUB. At the Effective Time, the
shares of Sub common stock validly issued and outstanding immediately prior
to the Effective Time will, by virtue of the Merger and without any action by
the holder thereof, be converted into the capital stock of FFC, so that all
shares of capital stock of FFC will be owned by Bancshares. The outstanding
certificates representing shares of Sub common stock will, after the
Effective Time, be deemed to represent the number of shares of FFC into which
they have been converted and may be exchanged for new certificates of FFC
upon request of the holder thereof.
(e) DISSENTING SHAREHOLDERS. Any shares of FFC Stock held
by FFC Shareholders who perfect their dissenters' rights under the TBCA shall
not be converted as provided herein but shall, after the Effective Time,
represent such rights as are granted to dissenting shareholders by the TBCA.
1.03. EXCHANGE PROCEDURES. No later than twenty (20) days prior to
the Effective Time, Bancshares shall furnish to FFC, and FFC shall mail to
each holder of record of the FFC Stock and FFC Options, addressed to the most
current address of such persons according to the records of FFC, the
following: (i) a letter of transmittal specifying that delivery of
certificates representing ownership of FFC Stock or FFC Options
("Certificates" or, individually, a "Certificate") shall be effected and risk
of loss shall pass, on or after the Effective Time only upon delivery of the
Certificates to First United Trust Company, N.A. (the "Paying Agent"), which
shall be in a form and contain any other provisions as Bancshares may
reasonably require (the "Transmittal Letter"), and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for cash in the
amount of the consideration due hereunder (the "Instructions"). The
Instructions shall request holders to deliver their Certificates, a properly
completed, duly executed Transmittal Letter, and any other documentation that
may be required from such holder pursuant to the Instructions (collectively,
the "Transmittal Items") to the Paying Agent, and shall state that (x)
occurrence of the Effective Time is contingent upon the satisfaction of
significant conditions, including regulatory approval of the Merger and
expiration of statutory waiting periods, and (y) the Transmittal Items will
be returned to the holders thereof if the Agreement is terminated prior to
the Effective Time. Bancshares shall instruct the Paying Agent that, on and
after the Effective Time, upon the delivery to the Paying Agent of the
properly completed Transmittal Items, the Paying Agent is to pay the holder
of such Certificate in exchange therefor the amount of cash such holder is
entitled to receive in respect of the Certificate surrendered, pursuant to
the provisions of Section 1.02 and this Section 1.03, payable by check or
direct deposit into such shareholder's or option holder's account with FSA,
and the Certificate so surrendered shall forthwith be canceled. Such
payments shall be made, in the case of holders whose properly completed
Transmittal Items are delivered to the Paying Agent no later than ten (10)
days prior to the Effective Time, by mailing checks or making the direct
deposit immediately after the Effective Time and in no event later than the
next business day after the Effective Time, and in all other cases, by
mailing checks or making the direct deposit promptly, but in no event more
than ten (10) days following the later of (i) the Effective Time, or (ii) the
date on which the properly
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<PAGE>
completed Transmittal Items are delivered to the Paying Agent. Only holders
of Certificates who have delivered their properly completed Transmittal Items
to the Paying Agent no later than ten (10) days prior to the Effective Time
shall be eligible to receive payment at the Effective Time as herein
provided. Notwithstanding the foregoing, no payment shall be made to an
individual under this section until the Paying Agent has received from such
holder all of the required Transmittal Items properly completed in accordance
with the instructions. No payment shall be made for the Certificates prior
to the Effective Time, and no interest shall be payable with respect to the
payment of the Purchase Price.
1.04. EFFECTIVE TIME OF THE MERGER. Subject to the provisions of
this Agreement, articles of merger shall be duly prepared and executed by Sub
and FFC (the "Articles of Merger") and thereafter delivered to the Secretary
of State of Texas for filing, as provided in the TBCA, as soon as practicable
on or after the Closing Date (as defined in Section 1.05). The Merger shall
become effective upon the approval and filing of the Articles of Merger by
the Secretary of State of Texas (the "Effective Time").
1.05. CLOSING. The closing of the Merger (the "Closing") will take
place at the offices of Bancshares at a time and on a date (the "Closing
Date") to be specified in writing by the parties as soon as reasonably
practicable after the later to occur of all regulatory and other approvals
and the expiration of all waiting periods but in no event later than ten (10)
business days after the satisfaction of all conditions set forth in Article
VII.
1.06. SUBSIDIARY MERGERS. Immediately after the Effective Time FFC
shall be merged with and into Bancshares in accordance with the provisions of
the TBCA and the Arkansas Business Corporation Act, with Bancshares to be the
surviving corporation (the "FFC Merger"). Also, immediately after the
Effective Time FSA shall be merged with and into FirstBank, Texarkana, Texas,
with FirstBank to be the surviving entity (the "FSA Merger"). FFC and
Bancshares will take and will, respectively, cause FSA and FirstBank to take,
all such actions as are necessary to effect the FFC Merger and the FSA Merger
(which together are referred to herein as the "Subsidiary Mergers")
immediately after the Effective Time, including the filing of all necessary
applications for approval by banking regulators, providing information, and
taking all necessary corporate action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF FFC
FFC hereby represents and warrants to Bancshares and United the
following:
2.01. ORGANIZATION OF FFC. FFC is a corporation duly organized,
validly existing and in good standing under the laws of the state of Texas
and has the corporate power and authority to own, lease and operate its
assets and properties and to carry on its business as now being conducted.
FFC is qualified to do business in Arkansas and FFC is not qualified to do
business in any other state or foreign jurisdiction, and its ownership or
leasing of property or the conduct of its business does not require it to be
so qualified. FFC is registered as a savings and loan holding company with
the Office of Thrift Supervision ("OTS") under the Home Owners Loan Act of
1933, as amended (the "HOL Act"). FFC has delivered to Bancshares true,
accurate and complete copies of its currently effective Articles of
Incorporation and Bylaws, including all amendments thereto.
2.02. CAPITAL STRUCTURE OF FFC. The authorized capital stock of FFC
consists of (i) 15,000,000 shares of common stock, $0.01 par value, of which
1,983,750 shares are issued, 1,539,342 shares are outstanding and 444,408
shares are held by FFC in its treasury and (ii) 5,000,000 shares of preferred
stock, no par value, none of which are issued and outstanding. Options to
purchase 172,614 shares of FFC common stock are outstanding, all of which
shall be deemed to be exercised immediately prior to Closing. All
outstanding shares of FFC common stock are validly issued, fully paid,
nonassessable, and have not been issued in violation of any preemptive
rights. FFC has not issued and has no outstanding bonds, debentures, notes or
other indebtedness having the right to vote (or convertible into securities
having the right to vote) on any matters on which shareholders may vote
("Voting Debt"). Except as described herein, there are no outstanding
options, warrants, calls, rights, or agreements of any character whatsoever
to which FFC is a party or by which FFC is obligated to issue, deliver or
sell additional shares of capital stock or any Voting Debt or by which FFC is
obligated to grant, extend or enter into any such option, warrant, call,
right or agreement.
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<PAGE>
2.03. OWNERSHIP AND ORGANIZATION OF FSA. FFC directly and
beneficially owns all of the shares of the outstanding capital stock of FSA.
FSA is a federal savings association duly organized and in good standing
under the laws of the United States and has the corporate power and authority
to own, lease and operate its assets and properties and to carry on its
business as now being conducted. FFC has caused FSA to deliver to Bancshares
true, accurate and complete copies of its currently effective Articles of
Association and Bylaws, including all amendments thereto.
2.04. CAPITAL STRUCTURE OF FSA. The authorized capital stock of FSA
consists of (i) 10,000,000 shares of common stock $0.01 par value, of which
100 shares are issued and outstanding and no shares are held by FSA in its
treasury and (ii) 5,000,000 shares of preferred stock, $0.01 par value, none
of which are issued and outstanding. All of the outstanding shares of common
stock of FSA are fully paid and nonassessable and are owned by FFC free and
clear of any claim, lien, encumbrance or agreement with respect thereto and
were not issued in violation of any preemptive rights. FSA has not issued
and has no outstanding Voting Debt. There are no outstanding options,
warrants, calls, rights, or agreements of any character whatsoever to which
FSA is a party or by which FSA is obligated to issue, deliver or sell
additional shares of capital stock or any Voting Debt or by which FSA is
obligated to grant, extend or enter into any such option, warrant, call,
right or agreement.
2.05. SUBSIDIARIES. FFC has no subsidiaries other than FSA. Except
as described herein and except for securities held in FSA's capacity as a
fiduciary or as investments made and held in the ordinary course of business,
neither FFC nor FSA owns beneficially, directly or indirectly, any class of
equity securities, partnership interests or similar interests of any
corporation, bank, partnership, limited partnership, business trust,
association or similar organization.
2.06. AUTHORITY. FFC has all requisite corporate power and authority
to enter into this Agreement and the Plan of Merger and, subject only to
approval of this Agreement and the Plan of Merger by the shareholders of FFC
and by applicable regulatory authorities, to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this
Agreement and the Plan of Merger and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of FFC's board of directors. This Agreement and
the Plan of Merger have been duly executed and delivered by FFC, and, subject
to such shareholder approval, each constitutes a valid and binding obligation
of FFC enforceable in accordance with its terms, except as the enforceability
of the Agreement may be subject to or limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at
law).
2.07. NO DEFAULT.
(a) Except as set forth in Schedule 2.07 of FFC's Disclosure
Schedule, the execution and delivery of this Agreement and the Plan of Merger
do not, and the consummation of the transactions contemplated hereby and
thereby will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or the
loss of a material benefit under, or the creation of a lien, pledge, security
interest or other encumbrance on assets (any such conflict, violation,
default, right of termination, cancellation or acceleration, loss or
creation, a "Violation"), pursuant to any provision of (i) the Articles of
Incorporation, Articles of Association, or Bylaws of FFC or FSA or (ii) any
loan or credit agreement, note, mortgage, indenture, lease, or other
agreement, obligation, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to FFC or FSA or their respective properties or assets, except
where such violation would not have a material adverse effect on the
business, operations or financial condition of FFC and FSA taken as a whole.
Other than in connection or in compliance with the provisions of the TBCA,
the Securities Act of 1933, as amended and the regulations thereunder (the
"Securities Act"), the Securities and Exchange Act of 1934, as amended, and
the rules and regulations thereunder (the "Exchange Act"), the securities or
blue sky laws of the various states, and consents, authorizations, approvals,
notices or exemptions required under the Bank Merger Act, the Bank Holding
Company Act of 1956 (the "BHC Act"), the HOL Act, Arkansas banking laws,
Texas banking laws, and from other Governmental Entities (as defined below),
no consent, approval, order or authorization of, or registration, declaration
or filing with, any court, administrative agency or commission or other
governmental authority or
4
<PAGE>
instrumentality, domestic or foreign (a "Governmental Entity"), is required
by or with respect to FFC or FSA in connection with the execution and
delivery of this Agreement and the Plan of Merger by FFC or the consummation
by FFC of the transactions contemplated hereby and thereby.
(b) Neither FFC nor FSA is in default under any material
agreement, ordinance, resolution, decree, bond, note, indenture, order or
judgment to which it is a party, by which it is bound, or to which its
properties or assets are subject.
2.08. FFC FINANCIAL STATEMENTS.
(a) The (i) consolidated balance sheet of FFC as of
September 30, 1999 and 1998 and the related consolidated statements of
income, consolidated statements of cash flows and consolidated statements of
shareholders equity for the years then ended certified Wilf & Henderson,
P.C., and (ii) the internally prepared and unaudited financial statements for
FFC and FSA dated February 29, 2000, (items (i) - (ii) being called
collectively the "FFC Financial Statements"), copies of which have been
furnished by FFC to Bancshares, have been prepared in accordance with
generally accepted accounting principles ("GAAP") (except as otherwise noted
therein and, except for year-end adjustments of the unaudited financial
statements of a non-material nature), present fairly the consolidated
financial condition of FFC and the financial condition of FSA, at the dates,
and the results of operations and cash flows for the periods, stated therein.
(b) Neither FFC nor FSA has any liability of any nature,
whether direct, indirect, accrued, absolute, contingent or otherwise, which
is material to FFC and is required to be so disclosed under GAAP, except as
provided for or disclosed in the FFC Financial Statements and except for such
liabilities as are incurred in the ordinary course of business.
2.09. FFC REPORTS. FFC and FSA have filed all reports, registrations
and statements, together with any amendments required to be made with respect
thereto, that were and are required to be filed with (i) the OTS, (ii) the
Federal Deposit Insurance Corporation ("FDIC"), (iii) the Securities and
Exchange Commission ("SEC") and (iv) any other applicable Governmental Entity
(all such reports and statements are collectively referred to herein as the
"FFC Reports"), except where such failure to file would not have a material
adverse effect on the business operations or financial condition of FFC or
FSA. The FFC Reports complied in all material respects with all of the
statutes, rules and regulations enforced or promulgated by the Governmental
Entity with which they were filed and did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
2.10. INFORMATION SUPPLIED.
(a) None of the information provided or to be provided by
FFC for inclusion or incorporation by reference in any document to be filed
with the SEC, the Board of Governors of the Federal Reserve System ("FRB"),
the FDIC, the Texas Banking Commissioner or any regulatory agency or officer
in connection with the transactions contemplated hereby, contains or will
contain any untrue statement of any material fact or omit to state a material
fact required to be stated therein in order to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(b) None of the information with respect to FFC or FSA to be
included in the Proxy Statement (as defined below) will, at the time of the
mailing of the Proxy Statement or any amendments or supplements thereto, and
at the time of the FFC Shareholders Meeting, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Proxy
Statement will comply as to form in all material respects with the provisions
of the Exchange Act. The letter to shareholders, notice of meeting, proxy
statement and form of proxy to be distributed to shareholders in connection
with the Merger and any schedules required to be filed with the SEC in
connection therewith are collectively referred to herein as the "Proxy
Statement."
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<PAGE>
2.11. AUTHORIZATIONS; COMPLIANCE WITH APPLICABLE LAWS. FFC and FSA
hold all authorizations, permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities which are material to the operations
of the businesses of FFC or FSA (the "FFC Permits"). FFC and FSA are in
compliance with the terms of the FFC Permits, except where the failure so to
comply would not have a material adverse effect on FFC or FSA. To the
knowledge of FFC, the businesses of FFC and FSA are not being conducted in
violation of any federal, state or local law, statute, ordinance or
regulation of any Governmental Entity (collectively "Laws"), except for
possible violations which individually or in the aggregate do not and,
insofar as reasonably can be foreseen, in the future will not, have a
material adverse effect on FFC or FSA. Other than routine, scheduled
examinations by banking regulators, no investigation or review by any
Governmental Entity with respect to FFC or FSA is pending or, to the
knowledge of FFC, threatened, nor has any Governmental Entity indicated an
intention to conduct the same.
2.12 COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as disclosed in
Schedule 2.12 of FFC's Disclosure Schedule:
(a) To the knowledge of FFC, FFC and FSA are, and at all
times have been, in material compliance with, and have not been and are not
in violation of or liable under, any Environmental Law as defined below. FFC
and FSA do not have any basis to expect, nor has either received, any actual
or threatened order, notice or other communication from (a) any Governmental
Entity or private citizen acting in the public interest, or (b) the current
or prior owner or operator of any of the FFC Property, as defined below, of
any actual or potential violation or failure to comply with any Environmental
Law, or of any actual or threatened obligation to undertake or bear any costs
or expenses to comply with or as a result of such Environmental Law with
respect to any of the FFC Property, or with respect to any of the FFC
Property to or at which Hazardous Materials were generated, manufactured,
refined, transferred, imported, used or processed by FFC or FSA or any person
for whose conduct they are or may be held responsible, or from or at which
Hazardous Materials have been transported, treated, stored, handled,
transferred, disposed, recycled or received.
(b) None of the FFC Property contains Hazardous Materials
that cannot be easily remediated, removed or cleaned up, and, in the case of
asbestos, completely abated. For purposes of this provision, a Hazardous
Material is deemed easily remediated, removed or cleaned up, and, in the case
of asbestos, completely abated, if the reasonably estimated cost of such
removal, clean-up, remediation, restoration of natural resources, or
abatement does not exceed $250,000 in the aggregate and if such removal,
clean-up, remediation, restoration of natural resources, or abatement does
not materially interfere with the day-to-day operations of FFC or FSA.
(c) To the knowledge of FFC, none of the outstanding loans
of FFC or FSA are secured by properties (such term shall include properties
held by FFC or FSA as trustee) that contain Hazardous Materials that cannot
be remediated, removed or cleaned up, and, in the case of asbestos,
completely abated, at an expense not exceeding ten percent (10%) of the fair
market value of such properties.
(d) To the knowledge of FFC, FFC and FSA do not hold in the
capacity of trustee, and have not loaned money against, the securities or
assets of any company or other association that has not obtained all permits,
licenses, approvals, and other authorizations that are required under
Environmental Laws relating to emissions, discharges, wetlands, releases or
threatened releases of pollutants, contaminants or Hazardous Materials into
ambient air, surface water, ground water or land, or otherwise relating to
the manufacture, processing, distribution, use, treatment, release,
discharge, emission, storage, disposal, transport or handling of pollutants,
contaminants or Hazardous Materials.
(e) To the knowledge of FFC, FFC and FSA do not hold in the
capacity of trustee, and have not loaned money against, the securities or
assets of any company or other association, and have not at any time owned
property, that is presently, or for which there is a reasonable basis to
believe that it will be in the future, subject to any claim, action, suit,
proceeding, hearing, investigation, injunction, notice of violation, consent
administrative order, or penalty arising out of or relating to the
manufacture, presence, processing, distribution, use, treatment, release,
discharge, emission, storage, disposal, transport or handling of any
pollutant, contaminant, or Hazardous Material or violation of Environmental
Laws.
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(f) As used in this Agreement, "Environmental Laws" means
any and all federal, state and local environmental, health and/or
safety-related laws, standards, ordinances, rules, codes, judicial or
administrative orders or decrees, directives, guidelines, and permits or
permit conditions, which are or become applicable to the FFC Property,
including, without limitation, (i) the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. Sections 9601,
ET SEQ.), (ii) the Hazardous Materials Transportation Act, as amended (49
U.S.C. Sections 1801, ET SEQ.), (iii) the Resource Conservation and Recovery
Act, as amended (42 U.S.C. Sections 6901, ET SEQ.), (iv) the Federal Water
Pollution Control Act, as amended (33 U.S.C. Sections 1251, ET SEQ. and
Sections 1321, ET SEQ.), (v) the Occupational Safety and Health Act of 1970,
as amended (29 U.S.C. Sections 651 ET SEQ.), (vi) the Toxic Substances
Control Act, as amended (15 U.S.C.Section 2601 ET SEQ.), and in the
regulations adopted and promulgated pursuant thereto, as such laws or
regulations now exist or may be amended, enacted, issued or adopted in the
future.
(g) As used in this Agreement, "Hazardous Materials" means
any chemical, substance, material, controlled substance, object, condition,
waste, living organism or combination thereof which is or may be hazardous to
human health or safety or to the environment due to its radioactivity,
ignitability, corrosivity, reactivity, explosivity, toxicity,
carcinogenicity, mutagenicity, phytotoxicity, infectiousness or other harmful
or potentially harmful properties or effects, including, without limitation,
petroleum and petroleum products, asbestos and asbestos-containing materials,
radon, underground storage tanks and the contents thereof, polychlorinated
biphenyls (PCBs), and all of those chemicals, substances, materials,
controlled substances, objects, conditions, wastes, living organisms or
combinations thereof, which are listed, defined or regulated in any manner,
based directly or indirectly upon such properties or effects, pursuant to any
Environmental Law.
(h) As used in this Agreement, "FFC Property" means any and
all real estate currently or previously owned, leased or otherwise used in
the ordinary course of business by FFC or FSA, or in which FFC or FSA has or
had an investment or security interest (by mortgage, deed of trust or
otherwise), including, without limitation, properties owned pursuant to
foreclosure, properties held by FFC or FSA in the capacity of a trustee or
properties in which any venture capital or similar unit of FFC or FSA had an
interest. Warranties given herein with respect to the FFC Property in which
FFC or FSA has only a security interest shall be to the knowledge of FFC.
(i) There shall be no breach of any warranty given in this
Section 2.12 unless as a result of the acts or omissions in question FFC
and/or FSA are subject to or reasonably likely to incur a material liability,
or suffer a diminution in value of any interests, exceeding $300,000.
2.13. LITIGATION AND CLAIMS. Except as disclosed in Schedule 2.13 of
FFC's Disclosure Schedule, (a) neither FFC nor FSA is subject to any
continuing order of, or written agreement or memorandum of understanding
with, or continuing material investigation by, any federal or state banking
or insurance authority or other Governmental Entity, or any judgment, order,
writ, injunction, decree or award of any Governmental Entity or arbitrator,
including, without limitation, cease-and-desist or other orders of any bank
regulatory authority, (b) there is no claim of any kind, action, suit,
litigation, proceeding, arbitration, investigation, or controversy affecting
FFC or FSA pending or, to the knowledge of FFC, threatened, which will have
or can reasonably be expected to have a material adverse effect on FFC or
FSA, and (c) there are no uncured material violations, or violations with
respect to which material refunds or restitutions may be required, cited in
any compliance report to FFC or FSA as a result of the examination by any
bank regulatory authority.
2.14. TAXES. FFC and FSA have filed all tax returns required to be
filed by them and have paid or have set up an adequate reserve for the
payment of, all taxes required to be paid as shown on such returns, and the
most recent FFC Financial Statements reflect an adequate reserve for all
taxes payable by FFC and FSA accrued through the date of such financial
statements. There has been no audit by the United States Internal Revenue
Service ("IRS") of FFC or FSA. There is no audit pending by the IRS with
respect to FFC or FSA. Neither FFC nor FSA has executed or filed with the
IRS any agreement which is still in effect extending the period for
assessment and collection of any federal tax, and there are no existing
material disputes as to federal, state, or local taxes due from FFC or FSA.
There are no material liens for taxes upon the assets of FFC or FSA, except
for statutory liens for taxes not yet delinquent. Neither FFC nor FSA is a
party to any action or proceeding by any Governmental Entity for assessment
and collection of taxes, and no claim for assessment and collection of taxes
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has been asserted against any of them. For the purpose of this Agreement, the
term "tax" (including, with correlative meaning, the terms "taxes" and
"taxable") shall include all federal, state, and local income, profits,
franchise, gross receipts, payroll, sales, employment, use, personal and real
property, withholding, excise and other taxes, duties or assessments of any
nature whatsoever, together with all interest, penalties and additions
imposed with respect to such amounts. FFC and FSA have withheld from their
employees and timely paid to the appropriate governmental agency proper and
accurate amounts for all periods through the date hereof in material
compliance with all tax withholding provisions of applicable federal, state,
and local laws (including without limitation income, social security and
employment tax withholding for all types of compensation).
2.15. CERTAIN AGREEMENTS. Except as disclosed in Schedule 2.15 of
FFC's Disclosure Schedule or as otherwise contemplated by this Agreement,
neither FFC nor FSA is a party to any written, or to their knowledge, oral
(i) consulting, professional services, employment or other agreement
providing any term of employment, compensation, guarantee, or severance or
supplemental retirement benefit not terminable at will, (ii) union, guild or
collective bargaining agreement, (iii) agreement or plan, any of the benefits
of which will be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by
this Agreement or the value of any of the benefits of which will be
calculated on the basis of the transactions contemplated by this Agreement,
(iv) any stock option plan, stock appreciation rights plan, restricted stock
plan, stock purchase plan or similar plan granting rights to acquire stock or
other equity in FFC or FSA, or (v) contract containing covenants which limit
the ability of FFC or FSA to compete in any line of business or with any
person or which involve any restriction of the geographical area in which, or
method by which, FFC or FSA may carry on its business (other than as may be
required by law or applicable regulatory authorities). FFC and FSA shall
terminate all existing consulting, professional services and employment
contracts other than at will employment contracts and other than those
disclosed in Schedule 2.15 of FFC's Disclosure Schedule, by no later than the
Closing Date unless otherwise requested by Bancshares.
2.16. EMPLOYEE BENEFIT PLANS.
(a) Schedule 2.16(a) of FFC's Disclosure Schedule sets forth
a true, complete and correct list (all of which are collectively referred to
as the "Employee Benefit Plans") of all "employee benefit plans", as defined
in Section 3(3) of the Employee Retirement Security Act of 1974, as amended
and the rules and regulations promulgated thereunder (collectively, "ERISA")
all benefit plans as defined in Section 6039D of the Internal Revenue Code
of 1986, as amended, and the rules and regulations promulgated thereunder
(collectively the "Code"), and all other bonus, incentive compensation,
deferred compensation, profit sharing, stock option, severance, supplemental
unemployment, layoff, salary continuation, retirement, pension, health, life
insurance, disability, group insurance, vacation, holiday, sick leave, fringe
benefit or welfare plan or employment, consulting, change in control,
independent contractor, professional services, confidentiality, or
non-competition agreement or any other similar plan, agreement, policy or
understanding (whether oral or written, qualified or non-qualified) and any
trust, escrow or other funding arrangement related thereto except to the
extent previously disclosed under Section 2.15,
(i) which is currently or has been at any time within the last
sixty (60) months maintained or contributed to by FFC, FSA
or any ERISA Affiliate (as herein defined), or
(ii) with respect to which FFC, FSA or any ERISA Affiliate, to
the knowledge of FFC, has any liability or obligations to
any current or former officer, Employee, or service
provider of FFC, FSA or any ERISA Affiliate, or the
dependents of any thereof, and regardless of whether
funded, or
(iii) which to the knowledge of FFC could result in the
imposition of liability or obligation of any kind or
nature, whether accrued, absolute, contingent, direct,
indirect, known or unknown, perfected or inchoate or
otherwise and whether or not now due or to become due, to
FFC, FSA or an ERISA Affiliate which would have a material
adverse effect on FFC, FSA or Bancshares.
(b) No Employee Benefit Plan is a defined benefit plan within
the meaning of Section 3(35) of ERISA. Except as disclosed in Schedule 2.16(b)
of FFC's Disclosure Schedule, during the last sixty (60) months,
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FFC, FSA and all ERISA Affiliates have not maintained, sponsored or been
obligated to contribute to any Employee Benefit Plans that are subject to
Title IV of ERISA, that are multi-employer plans, or that are multiple
employer plans as defined under the Code and ERISA.
(c) FFC has heretofore provided to Bancshares, or will
provide to Bancshares, within fourteen days following the date hereof (or for
purposes of Section 2.16(c)(xv), the date of request by Bancshares, if later)
with respect to each of the Employee Benefit Plans, true, accurate and
complete copies of the following documents as applicable:
(i) the Employee Benefit Plan document and all amendments,
(ii) the actuarial report, if any, for such Employee Benefit Plan for
each of the last three (3) years,
(iii) the most recent determination letter from the Internal Revenue
Service for such Employee Benefit Plan,
(iv) the Internal Revenue Service Form 5500 annual reports for such
Employee Benefit Plan for each of the last three years,
(v) the most recent summary plan description and related summaries of
material modifications,
(vi) all personnel, payroll and employment manuals and policies,
(vii) all collective bargaining agreements pursuant to which
contributions have been made or obligations incurred by FFC, FSA
or any ERISA Affiliates, and all collective bargaining agreements
pursuant to which contributions are being made or obligations are
owed by such entities,
(viii) a written description of any Employee Benefit Plan that is not
otherwise in writing,
(ix) all registration statements filed with respect to any Employee
Benefit Plan,
(x) all insurance policies purchased by or to provide benefits under
any Employee Benefit Plan,
(xi) all contracts with third party administrators, actuaries,
investment managers, consultants, and other independent
contractors that relate to any Employee Benefit Plan,
(xii) all tests for compliance for the past three (3) years under Code
Sections 401(a)(4), 401(a)(26), 401(k), 401(m), 404, 410(b), 415
and 416, if applicable and reports submitted within the three (3)
years preceding the date of this Agreement by third party
administrators, actuaries, investment managers, consultants, or
other independent contractors with respect to any Employee Benefit
Plan,
(xiii) sample notices that were given by FFC, FSA, or any ERISA Affiliate
to the Internal Revenue Service (the "IRS"), the Pension Benefit
Guaranty Corporation ("PBGC"), the Department of Labor ("DOL") or
any participant or beneficiary, pursuant to statute, within the
three (3) years preceding the date of this Agreement, including
notices that are expressly mentioned elsewhere in this Section
2.16,
(xiv) all closing agreements and documentation regarding any IRS, DOL or
PBGC audits or self-correction programs and all notices that were
given by the IRS, the PBGC, or the DOL to FFC, FSA, or any ERISA
Affiliate within the three (3) years preceding the date of this
Agreement, and
(xv) such other documents, records or other materials related thereto
reasonably requested by Bancshares prior to the Merger.
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(d) Except as disclosed in Schedule 2.16(d) of FFC's
Disclosure Schedule, there have been no material prohibited transactions,
breaches of fiduciary duty or any other breaches or violations of any law
applicable to the Employee Benefit Plans. None of the facts disclosed in
Schedule 2.16(d) of FFC's Disclosure Schedule have had or could reasonably be
expected to have a material adverse effect on FFC and FSA taken as a whole.
Except as disclosed in Schedule 2.16(d) of FFC's Disclosure Schedule, each
Employee Benefit Plan is in compliance with all applicable material
provisions of the Code and ERISA; each Employee Benefit Plan intended to be
qualified under Code Section 401(a) has a current favorable determination
letter and any subsequent amendments are within the remedial amendment
period; and nothing has occurred which could reasonably be expected to result
in the revocation of such favorable determination letter. There are no
pending or, to the knowledge of FFC, threatened or anticipated claims,
lawsuits or actions relating to, by, on behalf of or against any Employee
Benefit Plan (other than routine claims for benefits). There is no medical,
dental, life or disability coverage for any period of time beyond termination
of employment (except to the extent of coverage required under the Family and
Medical Leave Act, Section 4980B of the Code and Section 601 of ERISA).
(e) To the knowledge of FFC and except as disclosed in
Schedule 2.16(e) of FFC's Disclosure Schedule:
(i) FFC and FSA have performed all of their respective
obligations under all Employee Benefit Plans, and
have made appropriate entries in their financial
records and statements for all obligations and
liabilities under such Employee Benefit Plans, that
have accrued but are not due.
(ii) No statement, either written or oral, has been made
by FFC or FSA with regard to any Employee Benefit
Plan that was not in accordance with the Employee
Benefit Plan that could have a material adverse
economic consequence to FFC, FSA or to Bancshares.
(iii) Each Employee Benefit Plan is in full compliance
with ERISA, the Code, all securities laws, and other
applicable laws including the provisions of such
laws expressly mentioned in this Section 2.16 and
with any applicable collective bargaining agreement.
(iv) All filings required by ERISA and the Code as to
each Employee Benefit Plan have been timely filed,
and all notices and disclosures to participants
required by either ERISA or the Code have been
timely provided.
(v) All contributions and payments made or accrued with
respect to all Employee Benefit Plans, are
deductible under Code Section 162 or Section 404. No
amount, or any asset of any Employee Benefit Plan is
subject to tax as unrelated business taxable income.
(vi) Except to the extent disclosed pursuant to this
Agreement, each Employee Benefit Plan can be
terminated within thirty (30) days, without payment
of any additional contribution or amount and without
the acceleration of any benefits promised by such
Employee Benefit Plan.
(viii) No event has occurred or circumstance exists that
could result in a material increase in premium costs
of Employee Benefit Plans that are insured, or a
material increase in benefit costs of any other
Employee Benefit Plan.
(ix) FFC and FSA have not filed a notice of intent to
terminate any Employee Benefit Plan or adopted any
amendment to treat any Employee Benefit Plan as
terminated.
(x) No payment that is owed or may become due to any
director, officer, Employee,
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or agent of FFC or FSA or any ERISA Affiliate will
be non-deductible to the FFC or FSA or subject to
tax under Code Section 280G or Section 4999; nor
will FFC or FSA be required to "gross up" or
otherwise compensate any such person because of the
imposition of any excise tax on a payment to such
person.
(xi) The consummation of the Merger will not result in
the payment, vesting, or acceleration of any benefit
except as otherwise contemplated by this Agreement.
(xii) Full payment has been made of all amounts which FFC,
FSA or any ERISA Affiliate is required, under
applicable law or under any Employee Benefit Plan or
any agreement relating to any Employee Benefit Plan
to which FFC, FSA or any ERISA Affiliate is a party,
to have paid as contributions or premiums thereto as
of the last day of the most recent fiscal year of
such Employee Benefit Plan ended prior to the date
hereof. All such contributions and/or premiums have
been fully deducted for income tax purposes and no
such deduction has been challenged or disallowed by
any Governmental Entity, and no event has occurred
and no condition or circumstance has existed that
could give rise to any such challenge or
disallowance. FFC and FSA have made adequate
provision for the reserves to meet contributions and
premiums and any other liabilities that have not
been paid or satisfied because they are not yet due
under the terms of any Employee Benefit Plan,
applicable law or related agreements. Benefits
under all Employee Benefit Plans are as represented
and have not been increased subsequent to the date
as of which documents have been provided except as
otherwise contemplated by this Agreement.
(f) For the purpose of this Section 2.16, the term "ERISA
Affiliate" shall mean (i) any related company or trade or business that is
required to be aggregated with FFC or FSA under Code Sections 414(b), (c),
(m) or (o); (ii) any other company, entity or trade or business that has
adopted or has ever participated in any Employee Benefit Plan; and (iii) any
predecessor or successor company or trade or business of FFC or FSA or any
entity described in 2.16(f)(i) and (f)(ii).
(g) For the purpose of this Section 2.16, the term
"Employee" shall be considered to include individuals rendering personal
services to FFC or FSA as independent contractors and leased employees as
defined in Code Section 414(n) and the regulations promulgated pursuant
thereto.
(h) No lien, security interests or other encumbrances exist
with respect to any of the assets of FFC or FSA, which were imposed pursuant
to the terms of the Code or ERISA, and to the knowledge of FFC or FSA no
condition exists or could occur that would result in the imposition of such
liens, security interests or encumbrances arising from or relating to the
Employee Benefit Plans which could have a material adverse effect on FFC, FSA
or Bancshares.
2.17. INSURANCE. FFC has delivered to Bancshares correct and
complete copies of all material policies of insurance of FFC and FSA
currently in effect, including, but not limited to, directors and officers
liability policies and blanket bond policies. Neither FFC nor FSA has any
liability for unpaid premiums or premium adjustments not properly reflected
on the FFC Financial Statements.
2.18. CONDUCT OF FFC TO DATE. Except as contemplated by this
Agreement and the Plan of Merger, from and after December 31, 1999: (a) FFC
and FSA have carried on their respective businesses in the ordinary and usual
course consistent with past practices, (b) FFC and FSA have not issued or
sold any capital stock or equity interests or issued or sold any corporate
debt securities which would be classified as long term debt on the balance
sheet of FFC or FSA other than in connection with FFC Employee Benefit Plans,
(c) FFC and FSA have not granted any option for the purchase of capital
stock, effected any stock split, or otherwise changed their capitalization,
(d) except as set forth in Schedule 2.18 of FFC's Disclosure Schedule, FFC
has not declared, set aside, or paid any cash or stock dividend or other
distribution in respect to its capital stock, (e) neither FFC nor
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FSA has incurred any material obligation or liability (absolute or
contingent), except normal trade or business obligations or liabilities
incurred in the ordinary course of business or mortgaged, pledged, or
subjected to lien, claim, security interest, charge, encumbrance or
restriction any of its assets or properties, (f) neither FFC nor FSA has
discharged or satisfied any material lien, mortgage, pledge, claim, security
interest, charges, encumbrance, or restriction or paid any material
obligation or liability (absolute or contingent), other than in the ordinary
course of business, (g) neither FFC nor FSA has since December 31, 1999,
sold, assigned, transferred, leased, exchanged, or otherwise disposed of any
of its properties or assets other than for a fair consideration in the
ordinary course of business, (h) except as set forth in Schedule 2.18 of
FFC's Disclosure Schedule, neither FFC nor FSA has increased the rate of
compensation of, or paid any bonus to, any of its directors, executive
officers, or other employees, except merit, promotion, or periodic increases
in accordance with existing policy; entered into any new, or amended or
supplemented any existing, employment, management, consulting, deferred
compensation, severance, or other similar contract; adopted, entered into,
terminated, amended or modified (other than as legally required to do so with
respect to the qualified plans) any Employee Benefit Plan in respect of any
of their present or former directors, officers or other employees; or agreed
to do any of the foregoing, (i) neither FFC nor FSA has suffered any material
damage, destruction, or loss, whether as the result of flood, fire,
explosion, earthquake, accident, casualty, labor trouble, requisition or
taking of property by any government or any agency of any government,
windstorm, embargo, riot, act of God, or other similar or dissimilar casualty
or event or otherwise, whether or not covered by insurance, (j) except as set
forth in Schedule 2.18 of FFC's Disclosure Schedule, neither FFC nor FSA has
cancelled or compromised any debt to an extent exceeding $250,000.00 owed to
FFC or FSA or claim to an extent exceeding $250,000.00 asserted by FFC or
FSA, (k) neither FFC nor FSA has entered into any transaction, contract, or
commitment outside the ordinary course of its business, (1) neither FFC nor
FSA has entered, or agreed to enter, into any agreement or arrangement
granting any preferential right to purchase any of its material assets,
properties or rights or requiring the consent of any party to the transfer
and assignment of any such material assets, properties or rights, (m) there
has not been any material change in the method of accounting or accounting
practices of FFC or FSA other than as a result of changes or pronouncements
by a Governmental Entity, and (n) FFC and FSA have kept all records
substantially in accordance with all regulatory and statutory requirements
and substantially in accordance with industry standards, and have retained
such records for the periods required by statute, regulation industry
standards.
2.19. MATERIAL ADVERSE CHANGE. Since December 31, 1999, there has
been no material adverse change in the financial condition, results of
operations or business of FFC or FSA.
2.20. PROPERTIES, LEASES AND OTHER AGREEMENTS. Except (i) with
respect to debts reflected in the FFC Financial Statements, (ii) for any lien
for current taxes not yet delinquent, (iii) for pledges to secure deposits
and (iv) for such other liens, security interests, claims, charges, options
or other encumbrances and imperfections of title which do not materially
affect the value or interfere with or impair the present and continued use of
personal or real property reflected in the FFC Financial Statements or
acquired since the date of such FFC Statements, FFC and FSA have good title,
free and clear of any liens, security interests, claims, charges, options or
other encumbrances to all of the personal and real property reflected in the
FFC Financial Statements, and all personal and real property acquired since
the date of such FFC Financial Statements, except such personal and real
property as has been disposed of in the ordinary course of business. All of
the buildings and equipment in regular use by FFC and FSA have been
reasonably maintained and are in good and serviceable condition, reasonable
wear and tear excepted. All leases material to FFC and FSA pursuant to
which FFC or FSA, as lessee, leases real or personal property are valid and
effective in accordance with their respective terms and there is not, under
any of such leases, any material existing default by FFC or FSA, or, to their
knowledge, any other party thereto, or any event which with notice or lapse
of time or both would constitute such a material default. No options to
renew said leases have lapsed and the terms of the leases govern the rights
of the respective landlords of FFC and FSA.
2.21. NO UNTRUE STATEMENTS. To the knowledge of FFC, no
representation or warranty hereunder in any financial statement or any other
document delivered to Bancshares pursuant to this Agreement contains any
untrue statement of a material fact or omits to state a material fact
necessary to make the statements contained herein or therein not misleading.
2.22. PROPER DOCUMENTATION. With respect to all loans to borrowers
which are payable to FFC or FSA either directly or as a participant and
except for such imperfections in documentation which when considered as a
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whole would not have a material adverse effect on the business, operations or
financial condition of either FFC or FSA:
(a) All loans were made for good, valuable and adequate
consideration in the normal and ordinary course of business, and the notes
and other evidences of indebtedness and any loan agreements or security
documents executed in connection therewith are true and genuine and, to the
knowledge of FFC, constitute the valid and legally binding obligations of the
borrowers to whom the loans were made and are legally enforceable against
such borrowers in accordance with their terms subject to applicable
bankruptcy, insolvency, reorganization, moratorium, and similar debtor relief
laws from time to time in effect, as well as general principles of equity
applied by a court of proper jurisdiction (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(b) The amounts reflected in the FFC Statements as the
balances owing on the loans are the correct amounts actually and
unconditionally owing, are undisputed, and are not subject to any offsets,
credits, deductions or counterclaims;
(c) The collateral securing each loan as referenced in a
security agreement is in fact the collateral held by FFC or FSA to secure
each loan;
(d) Except for loans originated by others in which FSA
participates, FFC or FSA has possession of reasonably complete loan document
files and credit files for all loans held by them containing promissory notes
and other relevant evidences of indebtedness with original signatures of
their borrowers and guarantors;
(e) To the knowledge of FFC, FFC and FSA hold validly
perfected liens or security interests in the collateral granted to them to
secure all loans as referenced in the security agreements and the loan or
credit files contain the original security agreements, mortgages, or other
lien creation and perfection documents unless originals of such documents are
filed of public record;
(f) To the knowledge of FFC, each lien or security interest
of FFC or FSA in the collateral held for each loan is properly perfected in
the priority described as being held by FFC or FSA in the security agreements
contained in the loan document or credit files;
(g) FFC and FSA are in possession of all collateral that the
loan document files or credit files indicate they have in their possession;
(h) To the knowledge of FFC, all guaranties granted to FFC
and FSA to insure payment of loans constitute the valid and legally binding
obligations of the guarantors and are enforceable in accordance with their
terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium, and similar debtor relief laws from time to time in effect, as
well as general principles of equity applied by a court of proper
jurisdiction (regardless of whether such enforceability is considered in a
proceeding in equity or at law);
(i) With respect to any loans in which FFC and FSA have sold
participation interests to another bank or other financial institution, to
the knowledge of FFC, none of the buyers of such participation interests are
in default under any participation agreements.
2.23. MATERIAL CONTRACTS. Except as set forth in the FFC Reports and
except for contracts with data processing providers, neither FFC nor FSA is a
party to or bound by any "material contract" (as such term is defined in item
601(b)(10) of Regulation S-K of the SEC) (all contracts of the type described
in this Section 2.23 being referred to herein as "FFC Material Contracts").
Schedule 2.23 of FFC's Disclosure Schedule sets forth, as of the date of this
Agreement, a true and complete list of all contracts (other than those
disclosed in FFC's SEC reports) to which FFC or FSA is a party relating to
the business or assets of FFC or FSA (except, with respect to clauses (ii)
and (iv) below, any of the foregoing calling for aggregate payments of less
than $100,000), including, without limitation, all written or oral, express
or implied (i) contracts not made in the ordinary course of business
consistent with past practice; (ii) purchase, supply and customer contracts;
(iii) contracts relating to the borrowing
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of money or for lines of credit; (iv) contracts involving leases and
subleases of real or personal property; (v) contracts for the sale of any
assets other than in the ordinary course of business consistent with past
practice or for the grant of any options or preferential rights to purchase
any assets, property or rights; (vi) contracts granting any power of attorney
with respect to the affairs of either FFC or FSA; (vii) suretyship contracts,
working capital maintenance or other forms of guaranty contracts; (viii)
contracts limiting or restraining FFC or FSA from engaging or competing in
any lines of business or with any person, firm or corporation, (ix)
partnership and joint venture contracts; (x) indentures, mortgages, notes,
installment obligations, or other instruments relating to the borrowing of
money in excess of $100,000 by FFC or FSA; (xi) contracts which have
remaining terms, as of the date of this Agreement, of over one year in length
of obligation on the part of FFC or FSA and provide for aggregate payments in
excess of $100,000; and (xii) all amendments, modifications, extensions or
renewals of any of the foregoing. Each contract described above is valid and
binding on FFC or FSA and is in full force and effect, and FFC and FSA have
in all material respects performed all obligations required to be performed
by them to date under each FFC Material Contract, except where such
noncompliance, individually or in the aggregate, would not have a material
adverse effect on FFC or FSA. Neither FFC nor FSA knows of, or has received
notice of, any violation or default under any such contract except for such
violations or defaults as would not in the aggregate have a material adverse
effect on FFC or FSA.
2.24. REGULATORY APPROVALS. FFC is not aware of any reason that
would prevent Bancshares from obtaining the necessary regulatory approval for
the consummation of the Merger.
2.25. FEDERAL FINANCIAL ASSISTANCE. FFC has never received any
Federal Financial Assistance as that term is defined in Section 597 of the
Code and the regulations adopted thereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BANCSHARES
Bancshares hereby represents and warrants to FFC as follows:
3.01. ORGANIZATION OF BANCSHARES. Bancshares is a corporation duly
organized, validly existing and in good standing under the laws of the state
of Arkansas and has the corporate power and authority to own, lease and
operate its assets and properties and to carry on its business as now being
conducted. Bancshares is registered as a bank holding company with the FRB
under the BHC Act.
3.02. AUTHORITY. Subject to the approval of this Agreement and the
Plan of Merger by applicable regulatory authorities, Bancshares has the
corporate power and authority to enter into this Agreement and the Plan of
Merger and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the Plan of Merger and the
consummation of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action on the part of Bancshares'
board of directors. This Agreement and the Plan of Merger have been duly
executed and delivered by Bancshares and each constitutes a valid and binding
obligation of Bancshares enforceable in accordance with its terms, except as
the enforceability of the Agreement may be subject to or limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors and by general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
3.03. NO DEFAULT. The execution and delivery of this Agreement and
the Plan of Merger do not, and the consummation of the transactions
contemplated hereby and thereby will not, result in any Violation pursuant to
any provision of (i) the Articles of Incorporation or Bylaws of Bancshares
or any of its subsidiaries or (ii) any loan or credit agreement, note,
mortgage, indenture, lease, or other agreement, obligation, instrument,
permit, concession, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Bancshares or any of its
subsidiaries or their respective properties or assets, except where such
violation would not have a material adverse effect on the business,
operations or financial condition of Bancshares and its subsidiaries taken as
a whole. Other than in connection or in compliance with the provisions of
the TBCA, the Securities Act, the Exchange Act, the securities or blue sky
laws of the various states, and consents, authorizations, approvals, notices
or exemptions required under the Bank Merger Act, BHC Act, the HOL Act,
Arkansas banking laws, Texas banking laws, and from other Governmental
Entities, no consent, approval, order or authorization of, or
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registration, declaration or filing with, any Governmental Entity is required
by or with respect to Bancshares in connection with the execution and
delivery of this Agreement and the Plan of Merger by Bancshares or the
consummation by Bancshares of the transactions contemplated hereby and
thereby.
3.04. BANCSHARES FINANCIAL STATEMENTS. (a) The (i) consolidated
balance sheets of Bancshares as of December 31, 1999 and 1998 and the related
consolidated statements of income, consolidated statements of cash flows and
consolidated statements of shareholders equity for the years then ended
certified by Arthur Andersen LLP ("Bancshares Financial Statements") copies
of which have been furnished by Bancshares to FFC, have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as otherwise noted therein and except for year end
adjustments of a non-material nature), and present fairly the consolidated
financial condition of Bancshares, at the dates, and the consolidated results
of operations and cash flows for the periods, stated therein.
3.05. NO UNTRUE STATEMENTS. To Bancshares' knowledge, no
representation or warranty hereunder or in any financial statement or any
other document delivered to FFC pursuant to this Agreement contains any
untrue statement of a material fact or omits to state a material fact
necessary to make the statements contained herein or therein not misleading.
3.06. MATERIAL ADVERSE CHANGE. Since December 31, 1999, there has
been no material adverse change in the financial condition, results of
operations or business of Bancshares.
3.07. AUTHORIZATIONS; COMPLIANCE WITH APPLICABLE LAWS. Bancshares
and its subsidiaries hold all authorizations, permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities which are
material to the operations of the business of Bancshares and its subsidiaries
(the "Bancshares Permits"). Bancshares and its subsidiaries are in
compliance with the terms of the Bancshares Permits, except where the failure
so to comply would not have a material adverse effect on Bancshares or a
Bancshares subsidiary. To the knowledge of Bancshares, the businesses of
Bancshares and its subsidiaries are not being conducted in violation of any
federal, state or local law, statute, ordinance or regulation of any
Governmental Entity (collectively "Laws"), except for possible violations
which individually or in the aggregate do not and, insofar as reasonably can
be foreseen, in the future will not, have a material adverse effect on
Bancshares or a Bancshares subsidiary. Other than routine, scheduled
examinations by banking regulators, no investigation or review by any
Governmental Entity with respect to Bancshares or a Bancshares subsidiary is
pending or, to the knowledge of Bancshares, threatened, nor has any
Governmental Entity indicated an intention to conduct the same.
3.08. REGULATORY APPROVAL. Bancshares is not aware of any reason
that would prevent Bancshares from obtaining the necessary regulatory
approvals for the consummation of the Merger and the Subsidiary Mergers.
3.09. ACCREDITED INVESTOR. Bancshares is an accredited investor as
defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as
amended ("Act").
ARTICLE IV
AGREEMENTS OF FFC
4.01. AFFIRMATIVE COVENANTS OF FFC. FFC hereby covenants and agrees
with Bancshares that prior to the Effective Time, unless the prior written
consent of Bancshares shall have been obtained, which consent shall not be
unreasonably withheld, and except as otherwise contemplated herein, FFC will
and FFC will cause FSA to:
(a) operate its business only in the usual, regular and
ordinary course consistent with past practices;
(b) use reasonable efforts to preserve intact its business
organization and assets, maintain its rights and franchises, retain the
services of its officers and key employees (except that it shall have the
right to lawfully terminate the employment of any officer or key employee if
such termination is in accordance with existing employment procedures of FFC
or FSA) and maintain its relationships with customers;
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(c) use reasonable efforts to maintain and keep its
properties in as good repair and condition as at present, except for
depreciation due to ordinary wear and tear;
(d) use reasonable efforts to keep in full force and effect
insurance and bonds comparable in amount and scope of coverage to that now
maintained;
(e) perform in all material respects all obligations
required to be performed by it under all material contracts, leases, and
documents relating to or affecting its assets, properties, and business;
(f) use reasonable efforts to comply with and perform in all
material respects all obligations and duties imposed upon it by all Laws; and
(g) give Bancshares notice of all board of directors
meetings, allow Bancshares to have a non-voting representative at each such
meeting except to the extent that FFC's legal counsel advises the directors
that permitting Bancshares' presence would constitute a breach of its
fiduciary duties, and provide Bancshares with all written materials and
communications provided to the directors in connection with such meetings;
provided, however, that such representative will not receive written
materials relating solely to the Merger and will be excused from the portion
of such meetings at which the sole matter to be considered is action related
to the Merger.
4.02. NEGATIVE COVENANTS OF FFC. Except as specifically contemplated
by this Agreement, from the date hereof until the earlier of the termination
of the Agreement or the Effective Time, FFC shall not do, and FFC will cause
FSA not to do, any of the following acts without the prior written consent of
Bancshares, which consent shall not be unreasonably withheld:
(a) incur any material liabilities or material obligations,
whether directly or by way of guaranty, including any obligation for borrowed
money whether or not evidenced by a note, bond, debenture or similar
instrument, except in the ordinary course of business consistent with past
practice;
(b) (i) except as disclosed in Schedule 2.18 of FFC's
Disclosure Schedule and except for merit or promotion increases in accordance
with existing policy, grant any bonuses or increase in compensation to their
employees, officers or directors, (ii) effect any change in retirement or any
other benefits to any class of employees or officers (unless any such change
shall be required by this Agreement or applicable law) which would increase
their retirement benefit liabilities, (iii) adopt, enter into, amend or
modify any FFC Employee Benefit Plan except as provided herein, or (iv) hire
any executive officer or elect any new director;
(c) except as set forth in Schedule 4.02(c) of FFC's
Disclosure Schedule, declare or pay any dividend on, or make any other
distribution in respect of, their outstanding shares of capital stock or
equity interests other than cash dividends by FSA;
(d) except as contemplated by this Agreement or as set forth
in Schedule 4.02(d) of FFC's Disclosure Schedule, (i) redeem, Purchase or
otherwise acquire any shares of its capital stock or equity interests or any
securities or obligations convertible into or exchangeable for any shares of
its capital stock or equity interests, or any options, warrants, conversion
or other rights to acquire any shares of its capital stock or equity
interests or any such securities or obligations; (ii) merge with or into or
consolidate with any other corporation or bank, or effect any reorganization
or recapitalization; (iii) Purchase or otherwise acquire any substantial
portion of the assets or any class of stock, of any corporation, bank or
other business; (iv) liquidate, sell, dispose of, or encumber any assets or
acquire any assets, other than in the ordinary course of business consistent
with past practice; or (v) split, combine or reclassify any of its capital or
issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock;
(e) issue, deliver, award, grant or sell, or authorize or
propose the issuance, delivery, award, grant or sale of, any shares of its
capital stock of any class (including shares held in treasury), any equity
interests, any Voting Debt or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, equity interests, Voting
Debt or convertible securities;
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<PAGE>
(f) except pursuant to a written opinion of legal counsel
that failure to take such action would violate the directors' fiduciary
duties, initiate, solicit or encourage (including by way of furnishing
information or assistance), take any action to facilitate, any inquiries or
the making of any proposal which constitutes, or may reasonably be expected
to lead to, any Competing Transaction (as such term is defined below), or
negotiate with any person in furtherance of such inquiries or to obtain a
Competing Transaction, or agree to or endorse any Competing Transaction, or
authorize any of its officers, directors or employees or any investment
banker, financial advisor, attorney, accountant or other representative
retained by FFC or FSA to take any such action and, upon learning of such
action by any representative, shall take appropriate steps to terminate such
action and shall promptly notify Bancshares orally of all of the relevant
details relating to all inquiries and proposals which it may receive relating
to any of such matters. For purposes of this Agreement, "Competing
Transaction" shall mean any of the following involving FFC or FSA: any
merger, consolidation, share exchange or other business combination; a sale,
lease, exchange, mortgage, pledge, transfer or other disposition of a
substantial portion of assets; a sale of shares of capital stock (or
securities convertible or exchangeable into or otherwise evidencing, or any
agreement or instrument evidencing, the right to acquire capital stock) or
equity interests;
(g) propose or adopt any amendments to its corporate charter
or bylaws except as provided in this Agreement;
(h) authorize, recommend, propose or announce an intention
to authorize, recommend or propose, or enter into an agreement in principle
with respect to any acquisition of a material amount of assets or securities
or any release or relinquishment of any material contract rights not in the
ordinary course of business;
(i) except in their fiduciary capacities, Purchase any
shares of Bancshares common stock;
(j) change any method of accounting in effect at December
31, 1999, or change any method of reporting income or deductions for federal
income tax purposes from those employed in the preparation of the federal
income tax returns for the taxable year ending December 31, 1999, except as
may be required by law, rule or regulation or GAAP;
(k) change the lending, investment, asset/liability
management and other material policies concerning the business of FFC or FSA,
unless required by Law or order or unless such change does not cause a
material adverse effect on FFC or FSA;
(l) make any single new loan or series of loans not in
accordance with existing loan policies to one borrower or related series of
borrowers in an aggregate amount greater than $500,000;
(m) sell or otherwise dispose of securities owned as
investments except at maturity dates or in accordance with past practices for
securities held for sale or trading or in accordance with GAAP for securities
classified as "held to maturity";
(n) sell or dispose of any real estate or other assets
having a value in excess of $100,000.00;
(o) make any capital expenditure other than those set forth
in Schedule 4.02(o) of FFC's Disclosure Schedule or those that are made in
the ordinary course of business or are necessary to maintain existing assets
in good repair, and in any event are in an amount of no more than $100,000 in
the aggregate, or except as necessary to comply with applicable regulatory
guidelines; or
(p) agree in writing or otherwise to do any of the foregoing.
4.03. ACCESS AND INFORMATION. Upon reasonable notice, FFC shall, and
shall cause FSA to, afford to Bancshares's officers, employees, accountants,
counsel and other representatives, reasonable access, during normal business
hours during the period prior to the Effective Time, to all its properties,
books, contracts, commitments and records. Bancshares agrees that any such
investigation will be conducted in a manner that is the least disruptive to
FFC's and FSA's business as possible. During such period, FFC shall, and
shall cause FSA to, furnish promptly to Bancshares (i) a copy of each FFC
Report filed by it during such period pursuant to the
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<PAGE>
requirements of all applicable federal or state banking laws or bank holding
company laws promptly after such documents are available, (ii) the monthly
financial statements of FSA promptly after such financial statements are
available, (iii) minutes of the meetings of the Boards of Directors, or any
committee thereof, of FFC or FSA, and (iv) all other information concerning
its business, properties and personnel as Bancshares may reasonably request.
4.04. FFC SHAREHOLDERS MEETING. FFC shall call a meeting of its
shareholders to be held as promptly as practicable, which date may be after
Bancshares has filed its regulatory applications related to the Merger, for
the purpose of voting upon the Merger Agreements. Consummation of the Merger
shall be contingent upon its approval by the legally required votes of the
shares of FFC Stock at such shareholder meeting. FFC will with the
cooperation and assistance of Bancshares, prepare and file a Proxy Statement
soliciting proxies from FFC's shareholders in connection with the FFC
shareholders meeting. The Board of Directors of FFC shall recommend approval
of the Plan of Merger to FFC's shareholders, provided, however, that FFC's
Board of Directors may submit this Agreement and the transactions
contemplated therein to its shareholders for approval without recommendation
pursuant to Article 5.03(B) of the TBCA if such Board of Directors determines
in good faith that it must do so in order to comply with its fiduciary duties.
4.05. PROXY STATEMENT. As soon as practicable after the date hereof,
after Bancshares files its applications, FFC shall prepare and file the Proxy
Statement with the SEC under the Exchange Act and shall use its reasonable
best efforts to have the Proxy Statement cleared by the SEC. Bancshares and
FFC shall cooperate with each other in the preparation of the Proxy
Statement. FFC shall notify Bancshares promptly of the receipt of any
comments of the SEC with respect to the Proxy Statement and of any request by
the SEC for any amendment or supplement thereto or for additional
information. FFC shall provide to Bancshares promptly copies of all
correspondence between FFC or any representative of FFC and the SEC. FFC
shall give Bancshares and its counsel the opportunity to review the Proxy
Statement prior to its being filed with the SEC and shall give Bancshares and
its counsel the opportunity to review all amendments and supplements to the
Proxy Statement and all responses to requests for additional information and
replies to comments prior to their being filed with, or sent to, the SEC.
Each of Bancshares and FFC agrees to use its reasonable best efforts, after
consultation with the other party hereto, to respond promptly to all such
comments of and requests by the SEC and to cause the Proxy Statement and all
required amendments and supplements thereto to be mailed to the holders of
FFC Stock entitled to vote at the FFC shareholders meeting referred to in
Section 4.04 at the earliest practicable time.
4.06. TERMINATION OR MERGER OF EMPLOYEE BENEFIT PLANS. If requested
by Bancshares, prior to the Effective Time, FFC hereby covenants and agrees
to cooperate with Bancshares and take all reasonable actions to effect the
merger of any Employee Benefit Plan that is intended to be qualified under
Code Section 401(a) into the appropriate tax qualified retirement plan of
Bancshares (or upon merger of Bancshares with BancorpSouth, Inc. of
BancorpSouth, Inc. or BancorpSouth Bank) after the Merger is completed, so
that such plan merger satisfies the requirements of Code Section 414(l);
PROVIDED, HOWEVER, that Bancshares shall not be obligated to effect any such
merger of an Employee Benefit Plan.
If requested by Bancshares (or, upon merger of Bancshares with
BancorpSouth, Inc., by BancorpSouth, Inc.), prior to the Effective Time, FFC
hereby covenants and agrees to freeze, terminate, amend or take other action
with respect to any Employee Benefit Plan that Bancshares (or BancorpSouth,
Inc.), in its sole discretion, deems advisable and not inconsistent with this
Agreement; to take all steps necessary to accomplish such requests, including
terminating FFC's and FSA's participation in any Employee Benefit Plan with
respect to FFC and FSA Employees; to provide all the required notices to
participants and appropriate governmental agencies, to adopt all necessary
resolutions and Employee Benefit Plan amendments, and to provide to
Bancshares (or BancorpSouth, Inc.) satisfactory evidence of the executed
documents described in this Section 4.06.
4.07 FFC ESOP. Upon execution of this Agreement, FFC will amend the
FFC ESOP to provide that: (i) effective with the Closing Date, amounts
received by the FFC ESOP on the sale of the shares held as collateral for the
outstanding FFC ESOP loan will be used first to repay the outstanding balance
on the FFC ESOP loan; (ii) then any proceeds from the sale of pledged
unallocated shares held by the FFC ESOP in excess of the outstanding balance
on the FFC ESOP loan, will be allocated directly to participants' accounts
under the FFC ESOP, as earnings, in accordance with the terms of the FFC
ESOP; and (iii) that none of the proceeds received on the sale of the shares
held as collateral for the outstanding FFC ESOP loan will be treated as
annual additions for purposes of
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Code section 415. FFC shall then promptly file such amendment with the
Internal Revenue Service for a determination as to the effect of the
amendment on the qualified status of the FFC ESOP. Following the receipt of
a favorable determination letter, all proceeds received by the FFC ESOP will
be allocated to participants' accounts under the FFC ESOP, in accordance with
the terms of the approved amendment. In the event a favorable determination
letter is not received, all proceeds received by the FFC ESOP will be
allocated to participants' accounts under the FFC ESOP in accordance with its
terms. Following such allocation, and subject to Section 4.06 and Section
5.02(c) hereof, the FFC ESOP may either be terminated or merged into a
Bancshares plan (or upon the merger of Bancshares with BancorpSouth, Inc., a
BancorpSouth, Inc. Plan or BancorpSouth Bank plan) at the request of
Bancshares in accordance with the terms of ERISA and all other applicable law.
4.08. FFC'S DISCLOSURE SCHEDULE. On or prior to the date hereof, FFC
has delivered to Bancshares a schedule ("FFC's Disclosure Schedule") setting
forth, among other things, items the disclosure of which is necessary or
appropriate in relation to any or all of its representations and warranties.
ARTICLE V
AGREEMENTS OF BANCSHARES
5.01. REGULATORY APPROVALS. Bancshares shall file all regulatory
applications required to consummate the Merger, including but not limited to
an application for the prior approval of the FDIC and the Texas Banking
Commissioner, and shall use its reasonable best efforts to have the
applications approved. Bancshares and FFC shall cooperate with each other in
the preparation of the applications and Bancshares shall notify FFC promptly
of the receipt of any comments of any regulatory agency with respect to an
application and of any request for any amendment or supplement thereto or for
additional information. Bancshares shall provide to FFC promptly copies of
all correspondence between Bancshares or any representative of Bancshares and
any regulatory agency regarding an application. Bancshares shall give FFC
and its counsel the opportunity to review the applications prior to their
being filed and shall give FFC and its counsel the opportunity to review all
amendments and supplements to any application and all responses to requests
for additional information and replies to comments prior to their being filed
with, or sent to, the regulatory agency. Each of Bancshares and FFC agrees
to use its reasonable best efforts, after consultation with the other party
hereto, to respond promptly to all such comments of and requests by a
regulatory agency.
5.02. BANCSHARES EMPLOYEE BENEFIT PLANS. Bancshares presently
intends that, whether the Employee Benefit Plans are terminated or merged,
after the Merger, neither Bancshares, FFC nor FSA will make additional
contributions to the Employee Benefit Plan, under the terms of the Employee
Benefit Plans. Each employee of FFC or FSA who after the Merger becomes an
employee of Bancshares or a Bancshares subsidiary (or of BancorpSouth or a
BancorpSouth subsidiary) or who remains an employee of FSA, (each, a
"Continuing Employee"), to the extent permissible under the terms of the
Bancshares plans (or upon the merger of Bancshares with BancorpSouth, Inc.,
under the terms of the BancorpSouth, Inc. or BancorpSouth Bank plans), will
be entitled to participate in the employee benefit plans and programs
maintained for similarly situated employees of Bancshares (or of
BancorpSouth, Inc. or BancorpSouth Bank) and its affiliates to the same
extent as similarly situated employees of Bancshares (or of BancorpSouth,
Inc. or BancorpSouth Bank), in accordance with the respective terms of such
plans and programs, and Bancshares shall take all actions necessary or
appropriate to facilitate coverage of the Continuing Employees in such plans
and programs from and after the Effective Time (it being understood that
inclusion of FFC and FSA employees in Bancshares', BancorpSouth, Inc.'s, or
BancorpSouth Bank's plans may occur at different times with respect to
different plans based on the specific eligibility requirements and entry
dates of each plan) subject to the following:
(a) Each Continuing Employee shall be given vesting and eligibility
service credit for time during which the employee was employed by FFC and/or
FSA for purposes of determining benefits due under the Bancshares' Employee
Stock Ownership Plan and the Bancshares' 401(k) Plan (or upon the merger of
Bancshares with BancorpSouth, Inc., the BankcorpSouth, Inc. or BancorpSouth
Bank plans). Continuing Employees shall not receive service credit, for any
purpose under the Bancshares' Defined Benefit Retirement Plan, which has been
frozen (or upon merger of Bancshares with BancorpSouth, Inc., Continuing
Employees shall not receive service credit for the purpose of accrual of
pension benefits under the BancorpSouth, Inc. or BancorpSouth Bank defined
benefit plan).
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(b) Each Continuing Employee shall receive credit for all time
employed with FFC or FSA for purposes of the application of Bancshares' or a
Bancshares' subsidiary's (or, if applicable, BancorpSouth, Inc.'s or
BancorpSouth Bank's) severance (as limited by Section 5.02(d)) and vacation
policies applicable to employees generally, and for all purposes under the
employee welfare benefit plans and other employee benefit plans and programs
sponsored by Bancshares or its affiliates (or by BancorpSouth, Inc. or
BancorpSouth Bank) (but not for any purpose under the Bancshares' Defined
Benefit Retirement Plan or for accrual of pension benefits under any defined
benefit plan of BancorpSouth, Inc. or BancorpSouth Bank); PROVIDED HOWEVER,
that such service shall not be recognized to the extent that such recognition
would result in a duplication or increase of benefits or such service would
not be recognized under an Employee Benefit Plan (or a plan of BancorpSouth,
Inc. or BancorpSouth Bank). Any preexisting condition exclusion applicable
to such plans and programs shall be waived with respect to any Continuing
Employee to the same extent waived under the FFC or FSA Employee Benefit
Plans. For purposes of determining each Continuing Employee's benefit for
the year in which the Merger occurs under the Bancshares' (or, if applicable,
BancorpSouth, Inc.'s or BancorpSouth Bank's) vacation program, any vacation
taken by a Continuing Employee preceding the Closing Date for the calendar
year in which the Merger occurs will be deducted from the total Bancshares'
(or, if applicable, BancorpSouth, Inc.'s or BancorpSouth Bank's) vacation
benefit available to such employee for such calendar year.
(c) On or before, but effective as of the Closing Date, FFC may
take such actions as may be necessary (a) to cause each individual employed
by FFC or FSA immediately prior to the Closing Date to have a fully vested
and nonforfeitable interest in such employee's account balance in the FFC
ESOP and the First Federal Savings & Loan Association of Texarkana Financial
Institutions Thrift Plan ("401(k) Plan") sponsored by FFC as of the Closing
Date and (b) to contribute amounts accrued on the books of FFC from January
1, 2000 to the Closing Date to such plan(s).
The provisions of this Section are solely for the purpose of setting
forth the understanding between Bancshares and FFC, and shall not create or
modify any employee benefit plan of Bancshares or any of its affiliates (or
of BancorpSouth, Inc. or BancorpSouth Bank), and shall not be construed as
creating any employment contract or third party beneficiary right between
Bancshares or FFC (or BancorpSouth, Inc. or BancorpSouth Bank), on one hand,
and any such employee, on the other hand.
(d) Any Continuing Employee who is terminated for any reason other
than for cause within one year from the Closing Date shall be entitled to
receive severance pay ("Severance Pay") equal to the product of (x) such
Continuing Employee's weekly base salary, and (y) the number of weeks
applicable to such Continuing Employee as set forth in the following
schedule:
<TABLE>
<CAPTION>
Salary Ranges
-------------
Length of Service $15,000 or less $15,001 to $40,000 $40,001 or greater
----------------- --------------- ------------------ ------------------
<S> <C> <C> <C>
90 days but less than 5 years 2 weeks 4 weeks 8 weeks
5 years but less than 10 years 5 weeks 8 weeks 14 weeks
10 years or greater 8 weeks 12 weeks 20 weeks
</TABLE>
Any Continuing Employee who receives Severance Pay under this schedule shall
not be entitled to additional severance pay under any other policy of
Bancshares (or BancorpSouth) as a result of the termination described herein.
For purposes of this Section 5.02(d), "cause" shall be defined as (i) any
act or omission by such Continuing Employee constituting fraud under the laws
of the State of Arkansas or the United States of America; or (ii) a finding
of probable cause, or a plea of nolo contendere to, a felony or other crime
involving moral turpitude by such Continuing Employee; or (iii) the negligent
performance by such Continuing Employee of the material responsibilities of
his or her position or the negligent failure by such Continuing Employee to
adhere to the policies of Bancshares (or BancorpSouth); or (iv) the willful
or reckless failure by such Continuing Employee to substantially perform his
duties hereunder, the willful or reckless failure by such Continuing Employee
to adhere to
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Bancshares' (or BancorpSouth's) policies, or the willful or reckless engaging
by such Continuing Employee in misconduct which is materially injurious to
Bancshares (or BancorpSouth); or (v) failure by such Continuing Employee to
comply with Bancshares' (or BancorpSouth's) policies concerning employment
discrimination or harassment; or (vi) the receipt by such Continuing Employee
of a materially and substantially unfavorable performance review, provided,
however, that such Continuing Employee shall be given a thirty day
probationary period within which said Continuing Employee shall be allowed an
opportunity to correct any performance deficiencies included in the review.
5.03. INDEMNIFICATION.
(a) For a period of five years after the Effective Time,
Bancshares shall indemnify, defend and hold harmless the officers and
directors of FFC (each, an "Indemnified Party") against all liabilities
arising out of actions or omissions out of their employment by or service
with FFC and occurring at or prior to the Effective Time to the full extent
permitted under applicable law and by Bancshares' Articles of Incorporation
and Bylaws as in effect on the date hereof, including provisions relating to
advances of expenses incurred in the defense of any litigation; provided that
no such indemnification shall be made for actions or omissions which
constitute fraud, are intentionally taken or omitted in bad faith, constitute
a knowing breach of this Agreement or constitute violations of criminal law,
unless the Indemnified Party had no reasonable cause to believe his or her
conduct was unlawful.
(b) Any Indemnified Party wishing to claim indemnification
under this Section 5.03, upon learning of any such liability of litigation,
shall promptly notify Bancshares thereof (provided, however, that the failure
to so notify shall release Bancshares only to the extent it actually
prejudiced thereby). In the event of any such litigation (whether arising
before or after the Effective Time), (i) Bancshares shall have the right to
assume the defense thereof and Bancshares shall not be liable to such
Indemnified Party for any legal expenses for other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if Bancshares elects not to assume such
defense or counsel for the Indemnified Parties advises that there are
substantive issues which raise conflicts of interest between Bancshares and
the Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and Bancshares shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties; PROVIDED, HOWEVER, that
Bancshares shall be obligated pursuant to this Section 5.03 to pay for such
additional counsel for Indemnified Parties in any jurisdiction as counsel for
Bancshares shall determine is necessary under law and professional ethics;
(ii) the Indemnified Parties will cooperate in the defense of any such
litigation, and (iii) Bancshares shall not be liable for any settlement
effected without its prior written consent; and provided, further, that
Bancshares shall not have obligation hereunder to any Indemnified Party when
and if a court of competent jurisdiction shall determine, and such
determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by
applicable law.
(c) In consideration of the indemnification obligations
provided by Bancshares in this Section 5.03 and as a condition precedent
thereto, each officer and director of FFC shall have delivered to Bancshares
on or prior to the date of this Agreement a letter (in form reasonably
satisfactory to Bancshares) describing all known claims such officers and
directors may have against FFC. In the letter, the officer or director
shall; (a) acknowledge the assumption by Bancshares of all liability (to the
extent FFC would be so liable) for claims for indemnification arising under
Section 5.03 hereof; (b) affirm that he or she is not aware of any claims he
or she might have against FFC; (c) identify any other facts or circumstances
of which he or she is aware and which he or she reasonably believes could
give rise to a claim for indemnification under Section 5.03 hereof; and (d)
release as of the Effective Time any and all claims that he or she may have
against FFC known to him or her which he or she knowingly did not disclose to
Bancshares.
(d) FFC hereby represents and warrants to Bancshares that it
has no knowledge of any claim, pending or threatened, or of any facts or
circumstances that it reasonably believes could give rise to any obligation
by Bancshares to provide the indemnification required by this Section 5.03.
(e) Bancshares shall cause the persons serving as officers
and directors of FFC immediately prior to the Effective Time to be covered
for a period of four years from the Effective Time by the directors' and
officers' liability insurance policy maintained by Bancshares with respect to
acts or omissions occurring prior to
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the Effective Time which were committed by such officers and directors in
their capacity as such.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01. LEGAL CONDITIONS TO MERGER. Each of FFC and Bancshares will
take all reasonable actions necessary to comply promptly with all legal
requirements it may have with respect to the Merger (including furnishing all
information required by the FDIC or in connection with approvals of or
filings with any other Governmental Entity) and will promptly cooperate with
and furnish information to each other in connection with any such
requirements imposed upon either of them or any of their subsidiaries in
connection with the Merger. Each of FFC and Bancshares will, respectively,
cause their subsidiaries to take in a prompt manner all reasonable actions
necessary to obtain (and will cooperate with each other in obtaining) any
agreement, consent, authorization, order or approval of, or any exemption by,
any Governmental Entity or other public or private third party, required to
be obtained or made by Bancshares, FFC or any of their subsidiaries in
connection with the Merger or the taking of any action contemplated thereby
or by this Agreement and the Plan of Merger.
6.02. REPORTS.
(a) Prior to the Effective Time, FFC shall prepare and file
as and when required all FFC Reports.
(b) FFC shall prepare such FFC Reports such that (i) they
comply in all material respects with all of the statutes, rules and
regulations enforced or promulgated by the Governmental Entity with which
they are filed and do not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading, and (ii) with respect to any FFC Report
containing financial information of the type included in the FFC Financial
Statements, the financial information (A) will be prepared in accordance with
GAAP, applied on a consistent basis with past practices (except as stated
therein or in the notes thereto) (B) will present fairly the consolidated
financial condition of FFC, at the dates, and the consolidated results of
operations and cash flows for the periods, stated therein and (C) in the case
of interim fiscal periods, will reflect fairly the consolidated financial
condition of FFC, at the dates, and the consolidated results of operations
and cash flows for the periods stated therein, subject to year-end audit
adjustments.
6.03. UPDATE DISCLOSURE; BREACHES. From and after the date hereof
until the earlier of the termination of this Agreement or the Effective Time,
FFC and Bancshares shall provide to the other party prompt notice of any
matters which have become known or have occurred after the date hereof which
(i) are material to the financial condition or operations of the disclosing
party, (ii) which have a material bearing on any matter dealt with herein,
(iii) would cause or constitute a failure of a condition precedent to either
party's obligation to effect the Merger, or (iv) would cause or constitute a
material breach, or would have caused or constituted a material breach had
such matter been known prior to the date hereof, of any of its
representations, warranties or agreements contained herein.
6.04. ABILITY TO PERFORM. Neither FFC nor Bancshares will knowingly
take action which would or is reasonably likely to (i) adversely affect the
ability of either of Bancshares or FFC to obtain any necessary approvals of
Governmental Entities required for the transactions contemplated hereby; (ii)
adversely affect FFC's or Bancshares' ability to perform their covenants and
agreements under this Agreement; or (iii) result in any of the conditions to
the Merger set forth in Article VII not being satisfied.
6.05. BROKERS OR FINDERS. Except as set forth in Section 7.03(c),
Bancshares and FFC represent that no agent, broker, investment banker,
financial advisor or other firm or person is or will be entitled to any
broker's or finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement.
6.06. REASONABLE EFFORTS. Subject to the terms and conditions of
this Agreement, each of the parties hereto agrees to use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all
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things necessary, proper or advisable under applicable laws and regulations
to consummate and make effective the transactions contemplated by this
Agreement, including cooperating fully with the other party. In case at any
time after the Effective Time any further action is reasonably necessary or
desirable to carry out the purposes of this Agreement or to vest Bancshares
with full title to all properties, assets, rights, approvals, immunities and
franchises of either of FFC or FSA, the proper officers and directors of each
party to this Agreement shall take all such necessary action.
6.07. GOVERNMENTAL AND OTHER THIRD PARTY APPROVALS. FFC and
Bancshares shall each use their reasonable best efforts to obtain all
governmental and other third party approvals, authorizations and consents
that may be necessary or reasonably required of them in order to effect the
transactions contemplated by this Agreement. FFC and Bancshares agree to
make all filings and applications for such approvals and reviews as soon as
practicable, to prosecute the same with reasonable diligence and to notify
each other when such approvals, authorizations and consents have been
received. FFC and Bancshares will provide each other with copies of all
regulatory notices and filings made in connection with the transactions
contemplated by this Agreement prior to filing. Bancshares and FFC will each
provide to the other copies of any correspondence received from any
regulatory agency relating to such filings, and shall use its best efforts to
keep the other party advised of the progress of obtaining all regulatory and
third party approvals required for the consummation of all transactions
contemplated by this Agreement. Within ten days from the date of this
Agreement Bancshares will make an initial request of FFC for FFC to provide
to Bancshares information Bancshares needs to prepare its applications for
regulatory approval of the Merger. Bancshares agrees to file its
applications for regulatory approval of the Merger within 45 days from the
date of this Agreement or within 30 days from the date it receives the
information required in the initial request for information from FFC,
whichever is later.
6.08. NONPUBLIC INFORMATION. Unless otherwise required by law, each
party will hold any nonpublic information obtained from the other in
connection with the transaction in confidence until such time as such
information otherwise becomes publicly available through no wrongful act of
the party holding nonpublic information of the other party, and in the event
of termination of this Agreement for any reason, each party shall promptly
return all nonpublic documents obtained from the other party, and any copies
made of such documents, to such other party or destroy such documents and
copies.
ARTICLE VII
CONDITIONS PRECEDENT
7.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be
subject to the satisfaction prior to the Closing Date of the following
conditions:
(a) SHAREHOLDER APPROVAL. The Merger shall have been
approved and adopted by the legally required vote of the holders of the
outstanding shares of FFC Stock at a shareholders meeting duly called for
the purpose of voting on the Merger.
(b) BANKING REGULATORS. The Merger, the Subsidiary Mergers
and the transactions contemplated hereby shall have been approved by the
FDIC, the Texas Banking Commissioner, and any other necessary federal or
state banking authorities without any condition not reasonably acceptable to
Bancshares. All conditions required to be satisfied prior to the Effective
Time imposed by the terms of such approvals shall have been satisfied and all
waiting periods relating to such approvals shall have expired.
(c) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger shall be in effect.
(d) NO PROCEEDING OR LITIGATION. No material action, suit
or proceeding before any court or any governmental or regulatory authority
shall have been commenced against Bancshares or FFC or any affiliate,
subsidiary, associate, officer or director of either of them, seeking to
restrain, enjoin, prevent, change or rescind the transactions contemplated
hereby or questioning the validity or legality of any such transactions.
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(e) CLOSING DATE. The Closing Date shall occur as soon as
practicable but in no event later than December 31, 2000 unless extended by
FFC and Bancshares.
(f) CONSENTS UNDER AGREEMENTS. Bancshares, FFC and their
subsidiaries shall have obtained the consent or approval of each person whose
consent or approval shall be required in connection with the transactions
contemplated hereby under any loan or credit agreement, note, mortgage,
indenture, lease or other agreement or instrument.
7.02. CONDITIONS TO OBLIGATIONS OF BANCSHARES. The obligation of
Bancshares to effect the Merger is subject to the satisfaction of the
following conditions unless waived in writing by Bancshares:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of FFC set forth in this Agreement shall be
true and correct in all material respects as of the date of this Agreement
and (except to the extent such representations and warranties speak as of an
earlier date) as of the Closing Date as though made on and as of the Closing
Date, except for changes expressly contemplated by this Agreement, and
Bancshares shall have received a certificate signed on behalf of FFC by its
chief executive officer and chief financial officer to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF FFC. FFC shall have
performed in all material respects each of the obligations required to be
performed by it under this Agreement and the Plan of Merger at or prior to
the Closing Date, and Bancshares shall have received a certificate signed on
behalf of FFC by its chief executive officer and chief financial officer to
such effect.
(c) OPINION OF COUNSEL. FFC shall have delivered to
Bancshares an opinion of its counsel, Jenkens & Gilchrist, P.C., dated as of
the Closing Date and in substantially the form and substance attached hereto
as Exhibit 7.02(c).
(d) NO MATERIAL ADVERSE CHANGE. There shall have been no
material adverse change since December 31, 1999 in the financial condition,
results of operations or business of FFC.
(e) ENVIRONMENTAL AUDITS. Phase I environmental audits of
such portions of the FFC Property as are selected by Bancshares shall have
been conducted at Bancshares' expense and shall, to Bancshares' satisfaction,
reflect no material problems under Environmental Laws.
(f) CONSENTS UNDER AGREEMENTS. Bancshares and its
subsidiaries shall have obtained the consent or approval of each person whose
consent or approval of any transaction contemplated herein is required under
any loan or credit agreement, note, mortgage, indenture, lease or other
agreement or instrument.
(g) DISSENTING SHARES. The number of dissenting shares
shall not exceed eleven percent (11%) of the outstanding FFC Stock, not
including the FFC Options.
(h) NONCOMPETITION AGREEMENTS OF FFC DIRECTORS AND OFFICERS.
Each of the directors of FFC and FSA as of the date of this Agreement shall
have executed and delivered to Bancshares a non-competition agreement
substantially in the form of Exhibit 7.02(h) hereto. Such non-competition
agreements shall be effective as of the Closing Date and shall be null and
void in the event the Merger is not consummated.
(i) FFC OPTIONS. Each holder of an FFC Option shall have
entered into a written agreement and waiver with Bancshares and FFC in the
form attached hereto as Exhibit 7.02(i) that said holder will accept in full
satisfaction of all rights under the FFC Options the Option Consideration due
to said holder.
(j) DIRECTORS AND OFFICERS LETTERS. Each of the Directors
and Officers of FFC shall have executed and delivered to Bancshares the
letter described in Section 5.03(c).
(k) TERMINATION OF EMPLOYMENT AGREEMENT. James W. McKinney,
FFC, FSA and Bancshares shall have entered into an agreement amending the
provisions of McKinney's employment agreement
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("Employment Agreement") to provide (i) on the later of November 1, 2000 or
one month after the Closing Date McKinney shall retire, (ii) the Employment
Agreement shall terminate on the later of November 1, 2000 or one month after
the Closing Date, (iii) McKinney shall receive usual compensation and
benefits through the later of November 1, 2000 or one month after the Closing
Date, and (iv) no compensation or other benefits shall be paid to or provided
for McKinney under Section 5(c) of the Employment Agreement.
7.03. CONDITIONS TO OBLIGATIONS OF FFC. The obligations of FFC to
effect the Merger are subject to the satisfaction of the following conditions
unless waived in writing by FFC:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of Bancshares set forth in this Agreement
shall be true and correct in all material respects as of the date of this
Agreement and (except to the extent such representations and warranties speak
as of an earlier date) as of the Closing Date as though made on and as of the
Closing Date, except for changes expressly contemplated by this Agreement,
and FFC shall have received a certificate signed on behalf of Bancshares by
its chief executive officer and chief financial officer to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF BANCSHARES. Bancshares
shall have performed in all material respects each of the obligations
required to be performed by it under this Agreement and the Plan of Merger at
or prior to the Closing Date, and FFC shall have received a certificate
signed on behalf of Bancshares by its chief executive officer and chief
financial officer to such effect.
(c) FAIRNESS OPINION. FFC shall have obtained, at its
expense, on or before the Closing Date, the opinion of Stifel, Nicolaus &
Company, acceptable to it to the effect that the terms of the transaction
contemplated by this Agreement are fair from a financial point of view to the
FFC Shareholders.
(d) OPINION OF COUNSEL. Bancshares shall have delivered to
FFC an opinion of its counsel, Mitchell, Williams, Selig, Gates & Woodyard,
P.L.L.C., dated as of the Closing Date in substantially the form and
substance attached hereto as Exhibit 7.03(d).
(e) NO MATERIAL ADVERSE CHANGE. There shall have been no
material adverse change since December 31, 1999 in the financial condition,
results of operations or business of Bancshares.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.01. TERMINATION. This Agreement and the Plan of Merger may be
terminated at any time prior to the Effective Time:
(a) by mutual consent of the Boards of Directors of
Bancshares, United and FFC;
(b) by either Bancshares and United or by FFC (A) if there
has been a breach by the other party in any material respect of any
representation, warranty, covenant or agreement set forth in this Agreement,
or (B) if any representation or warranty of the other party shall be
discovered to have become untrue in any material respect, and in either case
such breach or other condition has not been cured within 10 business days
following receipt by the nonterminating party of notice of such breach or
other condition from the terminating party;
(c) by either Bancshares and United or by FFC if any
permanent injunction preventing the consummation of the Merger shall have
become final and nonappealable;
(d) by either Bancshares and United or by FFC if the Merger
shall not have been consummated on or before December 31, 2000, for a reason
other than the failure of the terminating party to comply with its
obligations under this Agreement;
(e) by either Bancshares and United or by FFC if the FDIC or
other Governmental Entity has denied approval of the Merger and such denial
has become final and nonappealable; or
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(f) by either Bancshares and United or by FFC if any
condition precedent to the terminating party's obligation to effect the
Merger has not been satisfied and such condition cannot reasonably be
expected to be satisfied prior to the date specified in Subsection 8.01(d).
8.02. EFFECT OF TERMINATION. In the event of termination of this
Agreement by either FFC or Bancshares as provided in Section 8.01, this
Agreement and the Plan of Merger shall forthwith become void and there shall
be no liability or obligation on the part of FFC, Bancshares, United or their
respective officers or directors, except to the extent that such termination
results from the willful breach by a party hereto of any of its
representations, warranties, covenants or agreements set forth in this
Agreement; provided, however, that the duties of the parties with respect to
nonpublic information as set forth in Section 6.09 will not be terminated.
8.03. AMENDMENT. Subject to the next following sentence, this
Agreement and the Plan of Merger may be amended by the parties hereto by
action taken or authorized by the Boards of Directors of Bancshares and FFC
at any time prior to the Closing Date, except that the consideration to be
received by the FFC shareholders may not be changed after the FFC
shareholders' meeting. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
8.04. EXTENSION; WAIVER. At any time prior to the Effective Time,
Bancshares or FFC by action taken or authorized by its Board of Directors,
may, to the extent legally allowed, (i) extend the time for the performance
of any of the obligations or other acts of the other party hereto, (ii) waive
any inaccuracies in the representations and warranties of the other party
contained herein or in any document delivered by the other pursuant hereto,
and (iii) waive compliance by the other party with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party.
ARTICLE IX
GENERAL PROVISIONS
9.01. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally (with receipt
confirmed) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Bancshares or United, to
First United Bancshares, Inc.
Attention: John G. Copeland
P. O. Box 751
El Dorado, Arkansas 71731
with a copy to:
Hermann Ivester, Esq.
Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C.
425 West Capitol Avenue, Suite 1800
Little Rock, Arkansas 72201
(b) if to FFC, to:
Texarkana First Financial Corporation
Third & Olive Streets
Texarkana, Arkansas 71854
Attention: Mr. James W. McKinney
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with a copy to:
Jenkens & Gilchrist, P.C.
1445 Ross Avenue, Suite 3200
Dallas, Texas 75202
Attention: Financial Institutions Department
9.02. INTERPRETATION. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation." The phrase "made available" in
this Agreement shall mean that the information referred to has been made
available if requested by the party to whom such information is to be made
available.
9.03. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one counterpart has been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart.
9.04. ENTIRE AGREEMENT. Except for those provisions of the letter
agreement dated January 26, 2000 between the parties under which First United
is obligated to maintain the confidentiality of certain information and to
refrain from soliciting the employment of employees of FFC, this Agreement
(including the Plan of Merger and the other documents and instruments
referred to herein) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof.
9.05. GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of Arkansas, except that the Plan of
Merger shall be filed in accordance with and comply with the corporate laws
of the State of Texas.
9.06. PUBLICITY. The parties hereto agree that they will consult
with each other concerning any proposed press release or public announcement
pertaining to the Merger and will use their best efforts to agree upon the
text of such press release or public announcement prior to the publication of
such press release or the making of such public announcement. However, the
determination by Bancshares as to when and whether it will make a public
statement and the contents of any such public statement shall be final and
binding.
9.07. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, whether by operation of law or otherwise, without the prior written
consent of the other parties, provided, however, that Bancshares may assign
this Agreement and its rights, interests, and obligations hereunder to
BancorpSouth, Inc., by operation of law or otherwise, without the prior
written consent of FFC and, in the event of an assignment other than by
operation of law, so long as BancorpSouth, Inc. expressly assumes Bancshares'
obligations hereunder. No such assignment shall alter or terminate
Bancshares' obligations under this Agreement. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective heirs, successors and assigns.
9.08. KNOWLEDGE OF FFC. Wherever in this Agreement any
representation or warranty is made to the knowledge of FFC, such knowledge
shall be limited to the actual knowledge of the directors of FFC and FSA as
of the date of this Agreement and the individuals listed in Schedule 9.08 of
FFC's Disclosure Schedule.
9.09. MATERIAL ADVERSE CHANGE. Material Adverse Change shall not be
deemed to include the impact of (a) changes in banking and similar laws of
general applicability or interpretations thereof by courts or governmental
authorities, (b) changes in GAAP or regulatory accounting principles
generally applicable to banks and their holding companies, (c) actions and
omissions of a party (or any of its subsidiaries) taken with the prior
informed consent of the other party in contemplation of the transactions
contemplated hereby, and (d) the Merger and compliance with the provisions of
this Agreement on the operating performance of the parties.
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9.10. SEVERABILITY. In the event that any provisions of this
Agreement or any portion thereof shall be finally determined to be unlawful
or unenforceable, such provision or portion thereof shall be deemed to be
severed from this Agreement, and every other provision, and any portion of a
provision, that is not invalidated by such determination, shall remain in
full force and effect.
9.11. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors and assigns. There shall be no third party beneficiaries hereof.
9.12. EXPENSES. Except as otherwise provided herein, all expenses
incurred by Bancshares and FFC in connection with or related to the
authorization, preparation and execution of this Agreement, the Plan of
Merger, and all other matters related to the closing of the transactions
contemplated hereby, including, without limitation of the generality of the
foregoing, all fees and expenses of agents, representatives, counsel and
accountants employed by either such party or its affiliates, shall be borne
solely and entirely by the party which has incurred the same.
9.13. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained in this Agreement and all other
terms, covenants and conditions hereof shall merge in the closing documents
and shall not survive Closing or, after Closing be the basis for any action
by any party, except as to any matter which is based upon willful fraud by a
party with respect to which the representations, warranties, terms, covenants
and conditions set forth in this Agreement shall expire only upon expiration
of the applicable statute of limitations and except for those covenants and
agreements contained herein which by their terms apply in whole or in part
after the Effective Time.
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IN WITNESS WHEREOF, FFC and Bancshares have caused this Agreement to
be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
FIRST UNITED BANCSHARES, INC.
By: /s/ JAMES V. KELLEY
--------------------
James V. Kelley
Chairman, President and Chief
Executive Officer
ATTEST:
/s/ JOHN G. COPELAND
---------------------
John G. Copeland, Secretary
TEXARKANA FIRST FINANCIAL CORPORATION
By: /s/ JAMES W. MCKINNEY
----------------------
ATTEST: James W. McKinney
Chairman
/s/ DEBBIE ROSE
----------------
Debbie Rose, Secretary
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EXHIBIT A
PLAN OF MERGER
This Plan of Merger, dated as of __________, 2000 ("Plan of Merger"),
by and between First United Bancshares, Inc., an Arkansas corporation
("Bancshares"), Texarkana First Financial Corporation, a Texas corporation
("FFC"), and Acquisition Co., Inc., a Texas corporation and wholly-owned
subsidiary of Bancshares ("Sub").
WHEREAS, FFC is a corporation with authorized capital stock consisting
of 15,000,000 shares of common stock, $0.01 par value of which 1,539,342
shares of common stock ("FFC Stock") are validly issued and outstanding and
444,408 shares are held by FFC in its treasury on the date hereof;
WHEREAS, Sub is a corporation with authorized capital stock of 1,000
shares of common stock, $1.00 par value, of which 1,000 shares of common
stock are validly issued and outstanding on the date hereof;
WHEREAS, Sub is a corporation duly organized and existing under the
laws of Texas;
WHEREAS, Bancshares and FFC have entered into an Agreement and Plan of
Reorganization (the "Agreement" and, together with this Plan of Merger, the
"Merger Agreements") that contemplates the merger of Sub with and into FFC
(the "Merger") upon the terms and conditions provided in this Plan of Merger
and the Agreement and pursuant to the Texas Business Corporation Act (the
"TBCA"), with FFC to be the surviving corporation and, upon consummation of
the Merger, become a wholly-owned subsidiary of Bancshares;
WHEREAS, the Boards of Directors of Bancshares, FFC and Sub deem it
fair and equitable to, and in the best interests of, their respective
corporations and shareholders that Sub be merged with and into FFC with FFC
being the surviving corporation, and the Boards of Directors and shareholders
of FFC and Sub have approved this Plan of Merger and have authorized its
execution and delivery.
NOW, THEREFORE, in consideration of the agreements herein contained,
the parties hereto adopt and agree to the following agreements, terms and
conditions relating to the Merger and the mode of carrying the same into
effect:
ARTICLE I
THE MERGER
1.01. THE MERGER. Subject to the terms and conditions of the Merger
Agreements, Sub will be merged with and into FFC , which will continue as the
surviving corporation, in accordance with and with the effect provided in the
TBCA.
1.02. EFFECTIVE TIME OF THE MERGER. Subject to the provisions of the
Merger Agreements, articles of merger (the "Articles of Merger") shall be
duly prepared and executed by FFC and Sub and thereafter delivered to the
Secretary of State of Texas for filing, as provided in the TBCA as soon as
practicable on or after the Closing Date (as defined in the Agreement). The
Merger shall become effective upon the filing of the Articles of Merger with
the Secretary of State of Texas (the "Effective Time").
1.03. EFFECTS OF THE MERGER. (a) At the Effective Time, (i) the
separate existence of Sub shall cease and Sub shall be merged with and into
FFC ( FFC and Sub are sometimes referred to herein as the "Constituent
Corporations" and FFC is sometimes referred to herein as the "Surviving
Corporation"); (ii) the Articles of Incorporation of Sub in effect as of the
Effective Time (the "Articles") shall become the Articles of Incorporation of
the Surviving Corporation; (iii) the Bylaws of Sub in effect as of the
Effective Time (the "Bylaws") shall become the Bylaws of the Surviving
Corporation; and (iv) the Directors and officers of FFC immediately after the
Effective Time shall be the Directors and officers of FFC prior to the
Effective Time.
<PAGE>
(b) At and after the Effective Time, the Surviving
Corporation shall possess all the rights, privileges, powers and franchises
of a public as well as of a private nature, and be subject to all the
restrictions, disabilities and duties of each of the Constituent
Corporations; and all and singular rights, privileges, powers and franchises
of each of the Constituent Corporations, and all property, real, personal and
mixed and all debts due to either of the Constituent Corporations on whatever
account, as well as for stock subscriptions and all other things in action or
belonging to each of the Constituent Corporations, shall be vested in the
Surviving Corporation; and all property, rights, privileges, powers and
franchises, and all and every other interest shall be thereafter as
effectually the property of the Surviving Corporation as they were of the
Constituent Corporations, and the title to any real estate vested by deed or
otherwise, in either of the Constituent Corporations, shall not revert or be
in any way impaired; but all rights of creditors and all liens upon any
property of either of the Constituent Corporations shall be preserved
unimpaired, and all debts, liabilities and duties of the Constituent
Corporations shall thenceforth attach to the Surviving Corporation, and may
be enforced against it to the same extent as if said debts and liabilities
had been incurred by it. Any action or proceeding, whether civil, criminal
or administrative, pending by or against either Constituent Corporation shall
be prosecuted as if the Merger had not taken place, and the Surviving
Corporation may be substituted as a party in such action or proceeding in
place of any Constituent Corporation.
ARTICLE II
EFFECT OF THE MERGER ON THE COMMON STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
2.01. CONVERSION. At the Effective Time, by virtue of the Merger and
without any action on the part of the holder of any shares of FFC Stock or
options to purchase FFC Stock ("FFC Options"), but subject to the rights of
dissenting shareholders of FFC:
(a) CONVERSION OF FFC STOCK AND FFC OPTIONS. All FFC Stock
and all FFC Options shall be converted in accordance with the Agreement into
the right to receive the amount of cash consideration provided in Section
1.02 of the Agreement.
(b) CANCELLATION OF FFC SHARES AND FFC OPTIONS. All shares
of FFC Stock issued and outstanding immediately prior to the Effective Time
shall no longer be outstanding and all FFC Options in effect immediately
prior to the Effective Time shall no longer be effective and shall
automatically be cancelled and retired and shall cease to exist, and each
holder of a certificate representing any such FFC Stock or FFC Options (a
"Certificate") shall cease to have any rights with respect thereto, except
the right to receive a pro rata amount of the consideration provided therefor
upon the surrender of such Certificate in accordance with the Plan of Merger.
2.02. THE EXCHANGE.
(a) PAYING AGENT. At the Effective Time, Bancshares shall
deposit with First United Trust Company, N.A. (the "Paying Agent") for the
benefit of the holders of FFC Stock and FFC Options the cash consideration to
be paid pursuant to Section 1.02 of the Agreement (the "Exchange Fund").
(b) EXCHANGE PROCEDURES. No later than twenty (20) days
prior to the Effective Time, Bancshares shall furnish to FFC, and FFC shall
mail to each holder of record of the FFC Stock and FFC Options, addressed to
the most current address of such persons according to the records of FFC, the
following: (i) a letter of transmittal specifying that delivery of
Certificates shall be effected and risk of loss shall pass, on or after the
Effective Time only upon delivery of the Certificates to First United Trust
Company, N.A. (the "Paying Agent"), which shall be in a form and contain any
other provisions as Bancshares may reasonably require (the "Transmittal
Letter"), and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for cash in the amount of the consideration due
pursuant to the Agreement (the "Instructions"). The Instructions shall
request holders to deliver their Certificates, a properly completed, duly
executed Transmittal Letter, and any other documentation that may be required
from such holder pursuant to the Instructions (collectively, the "Transmittal
Items") to the Paying Agent, and shall state that (x) occurrence of the
Effective Time is contingent upon the satisfaction of significant conditions,
including regulatory approval of the Merger and expiration of statutory
waiting periods, and (y) the Transmittal Items will be returned to
2
<PAGE>
the holders thereof if the Agreement is terminated prior to the Effective
Time. Bancshares shall instruct the Paying Agent that, on and after the
Effective Time, upon the delivery to the Paying Agent of the properly
completed Transmittal Items, the Paying Agent is to pay the holder of such
Certificate in exchange therefor the amount of cash such holder is entitled
to receive in respect of the Certificate surrendered, pursuant to the
provisions of Article I of the Agreement and this Section 2.02, payable by
check or direct deposit into such shareholder's or option holder's account
with FSA, and the Certificate so surrendered shall forthwith be canceled.
Such payments shall be made, in the case of holders whose properly completed
Transmittal Items are delivered to the Paying Agent no later than ten (10)
days prior to the Effective Time, by mailing checks or making the direct
deposit immediately after the Effective Time and in no event later than the
next business day after the Effective Time, and in all other cases, by
mailing checks or making the direct deposit promptly, but in no event more
than ten (10) days following the later of (i) the Effective Time, or (ii) the
date on which the properly completed Transmittal Items are delivered to the
Paying Agent. Only holders of Certificates who have delivered their properly
completed Transmittal Items to the Paying Agent no later than ten (10) days
prior to the Effective Time shall be eligible to receive payment at the
Effective Time as herein provided. Notwithstanding the foregoing, no payment
shall be made to an individual under this section until the Paying Agent has
received from such holder all of the required Transmittal Items properly
completed in accordance with the instructions. No payment shall be made for
the Certificates prior to the Effective Time, and no interest shall be
payable with respect to the payment of the Purchase Price.
(c) DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED
CERTIFICATES. No cash payment of any kind shall be made to the holder of any
unsurrendered Certificate until the holder of record or owner of such
Certificate shall surrender such Certificate.
(d) NO FURTHER OWNERSHIP RIGHTS. The consideration paid
upon the surrender of Certificates in accordance with the terms hereof shall
be deemed to have been paid in full satisfaction of all rights pertaining to
the Certificates, and there shall be no further registration of transfers on
the stock transfer books of the Surviving Corporation of the shares of FFC
Stock, or issuance of any stock pursuant to FFC Options, which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be cancelled and payment shall be made as provided in this Plan of
Merger.
(e) TERMINATION OF EXCHANGE FUND. Any portion of the
Exchange Fund which remains undistributed as provided herein for six months
after the Effective Time shall be delivered to Bancshares and holders of FFC
Stock and holders of FFC Options who have not theretofore complied with this
Section 2.02 shall thereafter look only to Bancshares for payment of the cash
due.
(f) NO LIABILITY. Neither Bancshares, FFC nor Sub shall be
liable to any holder of FFC Stock or FFC Options for cash due to said holders
that is delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(g) LOST CERTIFICATES. In the event any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen or destroyed
and, if required by Bancshares, the posting by such person of a bond in such
amount as Bancshares may direct as indemnity against any claim that may be
made against it with respect to such Certificate, the Paying Agent will issue
in exchange for such lost, stolen or destroyed Certificate the cash payable
in respect thereof pursuant to the Agreement and this Plan of Merger.
ARTICLE III
CONDITIONS; TERMINATION; AMENDMENT
3.01. CONDITIONS TO THE MERGER. Consummation of the Merger is
conditional upon the fulfillment or waiver of the conditions precedent set
forth in Article VII of the Agreement.
3
<PAGE>
3.02. TERMINATION. If the Agreement is terminated in accordance with
Article VIII thereof, then this Plan of Merger will terminate simultaneously
and the Merger will be abandoned without further action by FFC, Sub or
Bancshares.
3.03. AMENDMENT. Subject to the next following sentence and to the
provisions of the Agreement, this Plan of Merger may be amended by the
parties hereto by action taken or authorized by their respective Boards of
Directors at any time before the Closing Date. This Plan of Merger may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto.
3.04. EXTENSION; WAIVER. Subject to the provisions of the Agreement,
at any time prior to the Closing Date, Bancshares and Sub, by action taken or
authorized by their respective Board of Directors, may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations or
other acts of the other party hereto and (ii) waive compliance by the other
with any of the agreements or conditions contained herein. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid
only if set forth in a written instrument signed on behalf of such party.
ARTICLE IV
GENERAL PROVISIONS
4.01. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally (with receipt
confirmed) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Bancshares, to
First United Bancshares, Inc.
Attention: John G. Copeland
Chief Financial Officer
P. O. Box 751
El Dorado, Arkansas 71731
with a copy to:
Hermann Ivester, Esq.
Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C.
425 West Capitol Avenue, Suite 1800
Little Rock, Arkansas 72201
(b) if to FFC, to
Texarkana First Financial Corporation
Third & Olive Streets
Texarkana, Arkansas 71854
Attention: Mr. James W. McKinney
with a copy to:
Jenkens & Gilchrist, P.C.
1445 Ross Avenue, Suite 3200
Dallas, Texas 75202
Attn: Financial Institutions Department
4
<PAGE>
4.02. INTERPRETATION. When a reference is made in this Plan of
Merger to Sections, such reference shall be to a Section of this Plan of
Merger unless otherwise indicated. The headings contained in this Plan of
Merger are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Plan of Merger.
4.03. COUNTERPARTS. This Plan of Merger may be executed in two or
more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
4.04. CAPITALIZED TERMS. Capitalized terms used in this Plan of
Merger that are not defined herein shall have the meaning given to them in
the Agreement.
4.05. GOVERNING LAW. This Plan of Merger shall be governed and
construed in accordance with the laws of the State of Texas.
IN WITNESS WHEREOF, FFC, Sub and Bancshares have caused this Plan of
Merger to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
ACQUISITION CO., INC.
By:
------------------------------------
ATTEST: James V. Kelley
President
------------------------------
, Secretary
----------------
TEXARKANA FIRST FINANCIAL CORPORATION
By:
------------------------------------
------------------------------------
ATTEST: Title:
------------------------------
------------------------------
, Secretary
----------------
FIRST UNITED BANCSHARES, INC.
By:
------------------------------------
ATTEST: James V. Kelley
Chairman, President and Chief
Executive Officer
------------------------------
John G. Copeland, Secretary
5
<PAGE>
APPENDIX B
FAIRNESS OPINION OF STIFEL, NICOLAUS
<PAGE>
[LETTERHEAD]
August 11, 2000
Board of Directors
Texarkana First Financial Corporation
3rd & Olive Street
Texarkana, Arkansas 75502
Members of the Board:
You have requested our opinion as to the fairness from a financial
point of view to the shareholders of Texarkana First Financial Corporation
("FTF") of the right to receive an amount of cash equal to $23.35208 from
First United Bancshares, Inc. ("UNTD") for each outstanding share of common
stock, par value $0.01 per share, of FTF ("FTF Common Stock") pursuant to the
terms of the Agreement and Plan of Reorganization by and between UNTD and
FTF, dated as of May 15, 2000 (the "Agreement"). For the purposes of our
opinion, we have assumed that the merger of FTF with a subsidiary of UNTD
(the "Merger") will be consummated pursuant to the terms of the Agreement and
will constitute a taxable reorganization as contemplated by the Agreement and
the Merger will be accounted for under the purchase accounting method.
Stifel, Nicolaus & Company, Incorporated ("Stifel"), as part of its
investment banking services, is regularly engaged in the independent
valuation of businesses and securities in connection with mergers,
acquisitions, underwritings, sales and distributions of listed and unlisted
securities, private placements and valuations for estate, corporate and other
purposes. In the ordinary course of its business, Stifel actively trades
equity securities of FTF and UNTD for its own account and for the accounts of
its customers and, accordingly, may at any time hold a long or short position
in such securities.
In rendering our opinion, we have reviewed, among other things: the
Agreement; the financial statements of FTF and UNTD included in their
respective Annual Reports on Form 10-K for the 5 years ended September 30,
1999 and December 31, 1999; their respective Quarterly Reports on Form 10-Q
for the quarter ended March 31, 2000; certain internal financial analyses and
forecasts for FTF and UNTD prepared by their respective managements; and
certain pro forma financial forecasts for the pro forma combined company
resulting from the merger of UNTD with BancorpSouth, Inc. prepared by their
respective managements which utilized UNTD's and BancorpSouth, Inc.'s internal
financial forecasts. We have conducted conversations with FTF's and UNTD's
senior management regarding their respective business
<PAGE>
Board of Directors - Texarkana First Financial Corporation
Page 2
plans and financial forecasts. We have also compared certain financial and
securities data of FTF and UNTD with various other companies whose securities
are traded in public markets, reviewed the historical stock prices and
trading volumes of the common stock of FTF and UNTD, reviewed the financial
terms of certain other business combinations and conducted such other
financial studies, analyses and investigations as we deemed appropriate for
purposes of this opinion. We also took into account our assessment of
general economic, market and financial conditions and our experience in other
transactions, as well as our experience in securities valuations and our
knowledge of the bank and thrift industries generally.
In rendering our opinion, we have relied upon and assumed, without
independent verification, the accuracy and completeness of all of the
financial and other information that was provided to us or that was otherwise
reviewed by us and have not assumed any responsibility for independently
verifying any of such information. With respect to the financial forecasts
supplied to us (including without limitation, projected cost savings and
operating synergies resulting from the Merger), we have assumed with your
consent that they were reasonably prepared on the basis reflecting the best
currently available estimates and judgments of the management of FTF and UNTD
as to the future operating and financial performance of FTF and UNTD, that
they would be realized in the amounts and time periods estimated and that
they provided a reasonable basis upon which we could form our opinion. We
also assumed that there were no material changes in the assets, liabilities,
financial condition, results of operations, business or prospects of either
FTF or UNTD since the date of the last financial statements made available to
us. We have also assumed, without independent verification and with your
consent, that the aggregate allowances for loan losses set forth in the
financial statements of FTF and UNTD are in the aggregate adequate to cover
all such losses. We did not make or obtain any independent evaluation,
appraisal or physical inspection of FTF's or UNTD's assets or liabilities,
the collateral securing any of such assets or liabilities, or the
collectibility of any such assets nor did we review loan or credit files of
FTF or UNTD. We relied on advice of FTF's counsel and accountants as to all
legal and accounting matters with respect to FTF, the Agreement and the
transactions and other matters contained or contemplated therein. We have
assumed, with your consent, that there are no factors that would delay or
subject to any adverse conditions any necessary regulatory or governmental
approval and that all conditions to the Merger will be satisfied and not
waived. As you are aware and with your consent, we have acted as financial
advisor to UNTD for the purpose of rendering a fairness opinion with respect
to the acquisition of UNTD by BancorpSouth, Inc.
Our opinion is necessarily based on economic, market, financial and
other conditions as they exist on, and on the information made available to
us as of, the date of this letter. Our opinion is directed to the Board of
Directors of FTF for its information and assistance in connection with its
consideration of the financial terms of the Merger and does not constitute a
recommendation to any shareholder as to how such shareholder should vote on
the proposed transaction, nor have we expressed any opinion as to the prices
at which any securities of FTF or UNTD might trade in the future. Except as
required by applicable law, including without limitation federal securities
laws, our opinion may not be published or otherwise used or referred to, nor
shall any public reference to Stifel be made, without our prior written
consent.
<PAGE>
Board of Directors - Texarkana First Financial Corporation
Page 3
Based upon the foregoing and such other factors as we deem relevant,
we are of the opinion, as of the date hereof, that the right to receive an
amount of cash equal to $23.35208 per share pursuant to the Agreement is fair
to the holders of FTF Common Stock from a financial point of view.
Very truly yours,
/s/ STIFEL, NICOLAUS & COMPANY, INCORPORATED
STIFEL, NICOLAUS & COMPANY, INCORPORATED
<PAGE>
APPENDIX C
ARTICLES 5.11-5.13
OF THE
TEXAS BUSINESS CORPORATION ACT
<PAGE>
ART. 5.11 RIGHTS OF DISSENTING SHAREHOLDERS IN THE EVENT OF CERTAIN CORPORATE
ACTIONS
A. Any shareholder of a domestic corporation shall have the right to
dissent from any of the following corporate actions:
(1) Any plan of merger to which the corporation is a party if
shareholder approval is required by Article 5.03 or 5.16 of this Act and the
shareholder holds shares of a class or series that was entitled to vote
thereon as a class or otherwise;
(2) Any sale, lease, exchange or other disposition (not including
any pledge, mortgage, deed of trust or trust indenture unless otherwise
provided in the articles of incorporation) of all, or substantially all, the
property and assets, with or without good will, of a corporation if special
authorization of the shareholders is required by this Act and the shareholder
hold shares of a class or series that was entitled to vote thereon as a class
or otherwise;
(3) Any plan of exchange pursuant to Article 5.02 of this Act in
which the shares of the corporation of the class or series held by the
shareholder are to be acquired.
B. Notwithstanding the provisions of Section A of this Article, a
shareholder shall not have the right to dissent from any plan of merger in
which there is a single surviving or new domestic or foreign corporation, or
from any plan of exchange, if:
(1) the shares held by the shareholder are part of a class or
series, shares of which are on the record date fixed to determine the
shareholders entitled to vote on the plan of merger or plan of exchange:
(a) listed on a national securities exchange;
(b) listed on the Nasdaq Stock Market (or successor quotation)
or designated as a national market security on an interdealer quotation system
by the National Association of Securities Dealers, Inc., or successor entity; or
(c) held of record by not less than 2,000 holders;
(2) the shareholder is not required by the terms of the plan of merger
or plan of exchange to accept for the shareholder's shares any consideration
that is different than the consideration (other than cash in lieu of fractional
shares that the shareholder would otherwise be entitled to receive) to be
provided to any other holder of shares of the same class or series of shares
held by such shareholder; and
(3) the shareholder is not required by the terms of the plan of merger
or the plan of exchange to accept for the shareholder's shares any consideration
other than:
(a) shares of domestic or foreign corporation that, immediately
after the effective time of the merger or exchange, will be part of a class or
series, shares of which are:
(i) listed, or authorized for listing upon official
notice of issuance national securities exchange;
(ii) approved for quotation as a national market security
on an interdealer quotation system by the National Association of
Securities Dealers, Inc., or successor entity; or
(iii) held of record by not less than 2,000 holders;
<PAGE>
(b) cash in lieu of fractional shares otherwise entitled to be
received; or
(c) any combination of the securities and cash described in
Subdivisions (a) and (b) of this subsection.
ART. 5.12 PROCEDURE FOR DISSENT BY SHAREHOLDER AS TO SAID CORPORATE ACTIONS
A. Any shareholder of any domestic corporation who has the right to
dissent only by complying with the following procedures:
(1) (a) With respect to proposed corporate action that is
submitted to a vote of shareholders at a meeting, the shareholder shall file
with the corporation, prior to the meeting, a written objection to the
action, setting out that the shareholder's right to dissent will be exercised
if the action is effective and giving the shareholder's address, to which
notice thereof shall be delivered or mailed in that event. If the action is
effected and the shareholder shall not have voted in favor of the action, the
corporation, in the case of action other than a merger, or the surviving or
new corporation (foreign or domestic) or other entity that is liable to
discharge the shareholder's right of dissent, in the case of a merger, shall,
within ten (10) days after the action is effected, deliver or mail to the
shareholder written notice that the action has been effected, and the
shareholder may, within ten (10) days from the delivery or mailing of the
notice, make written demand on the existing, surviving, or new corporation
(foreign or domestic) or other entity, as the case may be, for payment of the
fair value of the shareholder's shares. The fair value of the shares shall be
the value thereof as of the day immediately preceding the meeting, excluding
any appreciation or depreciation in anticipation of the proposed action. The
demand shall state the number and class of the shares owned by the
shareholder and the fair value of the shares as estimated by the shareholder.
Any shareholder failing to make demand within the ten (10) day period shall
be bound by the action.
(b) With respect to proposed corporate action that is
approved pursuant to Section A of Article 9.10 of this Act, the corporation,
in the case of action other than a merger, and the surviving or new
corporation (foreign or domestic) or other entity that is liable to discharge
the shareholder's right of dissent, in the case of a merger, shall, within
ten (10) days after the date the action is effected, mail to each shareholder
of record as of the effective date of the action notice of the fact and date
of the action and that the shareholder may exercise the shareholder's right
to dissent from the action. If the shareholder shall not have consented to
the taking of the action, the shareholder may, within twenty (20) days after
the mailing of the notice, make written demand on the existing, surviving, or
new corporation (foreign or domestic) or other entity, as the case may be,
for payment of the fair value of the shareholder's shares. The fair value of
the shares shall be the value thereof as of the date the written consent
authorizing the action was delivered to the corporation pursuant to Section A
of Article 9.10 of this Act, excluding any appreciation or depreciation in
anticipation of the action. The demand shall state the number and class of
shares owned by the dissenting shareholder and the fair value of the shares
as estimated by the shareholder. Any shareholder failing to make demand
within the twenty (20) day period shall be bound by the action.
(2) Within twenty (20) days after receipt by the existing,
surviving, or new corporation (foreign or domestic) or other entity, as the
case may be, of a demand for payment made by a dissenting shareholder in
accordance with Subsection (1) of this Section, the corporation (foreign or
domestic) or other entity shall deliver or mail to the shareholder a written
notice that shall either set out that the corporation (foreign or domestic)
or other entity accepts the amount claimed in the demand and agrees to pay
that amount within ninety (90) days after the date on which the action was
effected, and, in the case of shares represented by certificates, upon the
surrender of the certificates duly endorsed, or shall contain an estimate by
the corporation (foreign or domestic) or other entity of the fair value of
the shares, together with an offer to pay the amount of that estimate within
ninety (90) days after the date on which the action was effected, upon
receipt of notice within sixty (60) days after that date from the shareholder
that the shareholder agrees to accept that amount and, in the case of shares
represented by certificates, upon the surrender of the certificates duly
endorsed.
<PAGE>
(3) If, within sixty (60) days after the date on which the
corporate action was effected, the value of the shares is agreed upon between
the shareholder and the existing, surviving, or new corporation (foreign or
domestic) or other entity, as the case may be, payment for the shares shall
be made within ninety (90) days after the date on which the action was
effected and, in the case of shares represented by certificates, upon
surrender of the certificates duly endorsed. Upon payment of the agreed
value, the shareholder shall cease to have any interest in the shares or in
the corporation.
B. If, within the period of sixty (60) days after the date on which the
corporate action was effected, the shareholder and the existing, surviving or
new corporation (foreign or domestic) or other entity, as the case may be, do
not so agree, then the shareholder or the corporation (foreign or
domestic) or other entity may, within sixty (60) days after the expiration of
the sixty (60) day period, file a petition in any court of competent
jurisdiction in the county in which the principal office of the domestic
corporation is located, asking for a finding and determination of the fair
value of the shareholder's shares. Upon the filing of any such petition by
the shareholder, service of a copy thereof shall be made upon the corporation
(foreign or domestic) or other entity, which shall, within ten (10) days
after service, file in the office of the clerk of the court in which the
petition was filed a list containing the names and addresses of all
shareholders of the domestic corporation who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the corporation (foreign or domestic) or other entity. If the
petition shall be filed by the corporation (foreign or domestic) or other
entity, the petition shall be accompanied by such a list. The clerk of the
court shall give notice of the time and place fixed for the hearing of the
petition by registered mail to the corporation (foreign or domestic) or other
entity and to the shareholders named on the list at the addresses therein
stated. The forms of the notices by mail shall be approved by the court. All
shareholders thus notified and the corporation (foreign or domestic) or other
entity shall thereafter be bound by the final judgment of the court.
C. After the hearing of the petition, the court shall determine the
shareholders who have complied with the provisions of this Article and have
become entitled to the valuation of and payment for their shares, and shall
appoint one or more qualified appraisers to determine that value. The
appraisers shall have power to examine any of the books and records of the
corporation the shares of which they are charged with the duty of valuing,
and they shall make a determination of the fair value of the shares upon such
investigation as to them may seem proper. The appraisers shall also afford a
reasonable opportunity to the parties interested to submit to them pertinent
evidence as to the value of the shares. The appraisers shall also have such
power and authority as may be conferred on Masters in Chancery by the Rules
of Civil Procedure or by the order of their appointment.
D. The appraisers shall determine the fair value of the shares of the
shareholders adjudged by the court to be entitled to payment for their shares
and shall file their report of that value in the office of the clerk of the
court. Notice of the filing of the report shall be given by the clerk to the
parties in interest. The report shall be subject to exceptions to be heard
before the court both upon the law and the facts. The court shall by its
judgment determine the fair value of the shares of the shareholders entitled
to payment of that value by the existing, surviving, or new corporation
(foreign or domestic) or other entity, together with interest thereon,
beginning 91 days after the date on which the applicable corporate action
from which the shareholder elected to dissent was effected to the date of
such judgment, to the shareholders entitled to payment. The judgment shall be
payable to the holders of uncertificated shares immediately but to the
holders of shares represented by certificates only upon, and simultaneously
with, the surrender to the existing, surviving, or new corporation (foreign
or domestic) or other entity, as the case may be, of duly endorsed
certificates for those shares. Upon payment of the judgment, the dissenting
shareholders shall cease to have any interest in those shares or in the
corporation. The court shall allow the appraisers a reasonable fee as court
costs, and all court costs shall be allotted between the parties in the
manner that the court determines to be fair and equitable.
E. Shares acquired by the existing, surviving or new corporation (foreign
or domestic) or other entity, as the case may be, pursuant to the payment of
the agreed value of the shares or pursuant to payment of the judgment entered
for the value of the shares, as in this Article provided, shall in the case
of a merger, be treated as provided in
<PAGE>
the plan of merger and, in all other cases, may be held and disposed of by
the corporation as in the case of other treasury shares.
F. The provisions of this Article shall not apply to a merger if, on the
date of the filing of the articles of merger, the surviving corporation is
the owner of all the outstanding shares of the other corporations, domestic
or foreign, that are parties to the merger.
G. In the absence of fraud in the transaction, the remedy provided by
this Article to a shareholder objecting to any corporate action referred to
in Article 5.11 of this Act is the exclusive remedy for the recovery of the
value of his shares or money damages to the shareholder with respect to the
action. If the existing, surviving, or new corporation (foreign or domestic)
or other entity, as the case may be, complies with the requirements of this
Article, any shareholder who fails to comply with the requirements of this
Article shall not be entitled to bring suit for the recovery of the value of
his shares or money damages to the shareholder with respect to the action.
ART. 5.13 PROVISIONS AFFECTING REMEDIES OF DISSENTING SHAREHOLDERS
A. Any shareholder who has demanded payment for his shares in accordance
with either Article 5.12 or 5.16 of this Act shall not thereafter be entitled
to vote or exercise any other rights of a shareholder except the right to
receive payment for his shares pursuant to the provisions of those articles
and the right to maintain an appropriate action to obtain relief on the
ground that the corporate action would be or was fraudulent, and the
respective shares for which payment has been demanded shall not thereafter be
considered outstanding for the purposes of any subsequent vote of
shareholders.
B. Upon receiving a demand for payment from any dissenting shareholder,
the corporation shall make an appropriate notation thereof in its shareholder
records. Within twenty (20) days after demanding payment for his shares in
accordance with either Article 5.12 or 5.16 of this Act, each holder of
certificates representing shares so demanding payment shall submit such
certificates to the corporation for notation thereon that such demand has
been made. The failure of holders of certificated shares to do so shall, at
the option of the corporation, terminate such shareholder's rights under
Articles 5.12 and 5.16 of this Act unless a court of competent jurisdiction
for good and sufficient cause shown shall otherwise direct. If uncertificated
shares for which payment has been demanded or shares represented by a
certificate on which notation has been so made shall be transferred, any new
certificate issued thereof shall bear similar notation together with the name
of the original dissenting holder of such shares and transferee of such
shares shall acquire by such transfer no rights in the corporation other than
those which the original dissenting shareholder had after making demand for
payment of the fair value thereof.
C. Any shareholder who has demanded payment for his shares in accordance
with either Article 5.12 or 5.16 of this Act may withdraw such demand at any
time before payment for his shares or before any petition has been filed
pursuant to Article 5.12 or 5.16 or this Act asking for a finding and
determination of the fair value of such shares, but no such demand may be
withdrawn after such payment has been made or, unless the corporation shall
consent thereto, after any such petition has been filed. If, however, such
demand shall be withdrawn as hereinbefore provided, or if pursuant to Section
B of this Article the corporation shall terminate the shareholder's rights
under Article 5.12 or 5.16 of this Act, as the case may be, or if no petition
asking for a finding and determination of fair value of such shares by a
court shall have been filed within the time provided in Article 5.12 or 5.16
of this Act, as the case may be, or if after the hearing of a petition filed
pursuant to Article 5.12 or 5.16, the court shall determine that such
shareholder is not entitled to the relief provided by those articles, then,
in any such case, such shareholder and all persons claiming under him shall
be conclusively presumed to have approved and ratified the corporate action
from which he dissented and shall be bound thereby, the right of such
shareholder to be paid the fair value of his shares shall cease, and his
status as a shareholder shall be restored without prejudice to any corporate
proceedings which may have been taken during the interim, and such
shareholder shall be entitled to receive any dividends or other distributions
made to shareholders in the interim.
<PAGE>
TEXARKANA FIRST FINANCIAL CORPORATION
3rd & Olive Streets
Texarkana, Arkansas 71854
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James Sangalli and Travis Mauldin and
each of them, as proxies, each with the power to appoint his substitute, and
hereby authorizes each of them to represent and vote, as designated below,
all of the shares of the common stock of Texarkana First Financial
Corporation held of record by the undersigned on July 26, 2000, at the
Special Meeting of Shareholders to be held on September 13, 2000, or any
adjournment(s) thereof.
Proposal to approve and adopt the Agreement and Plan of Reorganization by and
between First United Bancshares, Inc. and Texarkana First Financial
Corporation, dated as of May 15, 2000, and the Plan of Merger attached
thereto as EXHIBIT A, pursuant to which:
- First United Acquisition Co., Inc., a Texas corporation to be
formed as a wholly-owned subsidiary of First United, will merge
with and into Texarkana First Financial, with Texarkana First
Financial continuing as the surviving corporation and a
wholly-owned subsidiary of First United; and
- the outstanding shares of, and options to acquire shares of, the
common stock of Texarkana First Financial will be exchanged for an
aggregate consideration of $37,500,000 in cash.
FOR [_] AGAINST [_] ABSTAIN [_]
Please execute this proxy as your name appears hereon. When shares
are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name by the president or
other authorized officer. If a partnership, please sign in partnership name
by authorized persons. Please mark, sign, date and return this proxy promptly
using the enclosed envelope.
This proxy, when properly executed,
will be voted in the manner directed
herein by the undersigned shareholder(s).
If no direction is made, this proxy will
be voted "for" the approval and adoption
of the Agreement and Plan of Reorganization.
DATED: _____________________, 2000
______________________________
Signature
______________________________
Signature if Held Jointly
