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EXHIBIT 2
Agreement and Plan of Reorganization
Between
First United Bancshares, Inc.,
First United of Texas, Inc.
and
Fredonia Bancshares, Inc.
with Exhibits
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made as of
April 25, 1997 by and between First United Bancshares, Inc., an Arkansas
corporation ("Bancshares"),First United of Texas, Inc., an Arkansas
corporation ("FTI"), and Fredonia Bancshares, Inc., a Texas corporation
("Fredonia").
WHEREAS, Fredonia owns indirectly through its wholly owned subsidiary
Fredonia Bancshares of Delaware, Inc. ("Sub") one hundred percent (100%)
of the issued and outstanding shares of capital stock of Fredonia State
Bank, Nacogdoches, Texas ("FSB"); and
WHEREAS, Bancshares desires to acquire one hundred percent (100%) of the
capital stock of Fredonia (the "Fredonia Common Stock") upon the terms and
conditions hereinafter set forth through the merger of Fredonia with and
into FTI(the "Merger"), pursuant to a Plan of Merger in substantially the
form attached hereto as Exhibit A (the "Plan of Merger"); and
WHEREAS, the respective Boards of Directors of Bancshares , FTI, and
Fredonia believe that such proposed Merger and the exchange of shares of
Bancshares Stock (as defined in Section 2.01(a) hereof) for the Fredonia
Common Stock, pursuant and subject to the terms of this Agreement and the
Plan of Merger (the "Merger Agreements"), is desirable and in the best
interests of their respective corporations and shareholders; and
WHEREAS, Bancshares, FTI and Fredonia intend that the merger shall
qualify for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the"Code") and shall be recorded for accounting purposes as a pooling of
interests; and
WHEREAS, Bancshares, FTI, and Fredonia desire to make certain
representations, warranties and agreements in connection with the Merger
and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the promises, representations,
warranties and agreements herein contained, the parties hereto agree as
follows:
ARTICLE I
THE MERGER
1.01. The Merger. Subject to the terms and conditions of this Agreement,
Bancshares, FTI, and Fredonia agree to effect the Merger of Fredonia with
and into FTI in accordance with the Arkansas Business Corporation Act (the
"ABCA") and the Texas Business Corporation Act ("TBCA").
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1.02. Effective Time of the Merger. Subject to the provisions of this
Agreement, articles of merger (the "Articles of Merger") shall be duly
prepared and executed by FTI and Fredonia and thereafter delivered to the
Secretaries of State of Arkansas and Texas for filing, as provided in the
ABCA, and the TBCA, as soon as practicable on or after the Closing Date (as
defined in Section 1.03). The Merger shall become effective upon the
filing of the Articles of Merger with the Secretaries of State of Arkansas
and Texas or at such time within two business days thereafter as is
provided in the Articles of Merger (the "Effective Time").
1.03. Closing. The closing of the Merger (the "Closing") will take place
at the offices of 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. Fredonia and Bancshares shall use their
respective best efforts to cause the Closing to occur as soon after
September 1, 1997 as is practicable.
ARTICLE II
EFFECT OF THE MERGER
2.01. Effect on Common Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of
Fredonia Common Stock:
(a) Conversion of Fredonia Common Stock. The purchase price
paid by Bancshares to the owners of Fredonia Common Stock ("Fredonia
Shareholders") shall be One Million Six Hundred Thousand (1,600,000) shares
of fully paid and nonassessable shares of voting Common Stock, $1.00 par
value of Bancshares (the "Purchase Price" or "Bancshares Stock"). All of
the issued and outstanding shares of Fredonia Common Stock, other than
Dissenting Shares (as defined below), shall be converted into the right to
receive a pro rata portion of the Purchase Price based upon each
Shareholder's pro rata ownership of the total number of issued and
outstanding shares of Fredonia Common Stock at the Effective Time.
(b) Fractional Shares. Fractional shares of Bancshares Stock
shall not be issued. Any Fredonia Shareholder or holder of options to
purchase Fredonia Common Stock ("Options") entitled to receive a fractional
share shall receive a cash payment in lieu thereof equal to the value of
the fractional share based on the average sales price per share of
Bancshares common stock for all trades occurring on NASDAQ during the
period of ten (10) trading days on which one
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or more trades take place and which ends immediately prior to the second
trading day preceding the Closing Date ("Pricing Average").
(c) Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, shares of Fredonia Common Stock which are issued
and outstanding immediately prior to the Effective Time and which are held
by Shareholders who have not voted such shares in favor of the Merger and
who shall have delivered a written demand for payment of the fair value of
such shares within the time and in the manner provided in Article 5.12 of
the TBCA (the "Dissenting Shares") shall not be converted into or
exchangeable for the right to receive the Purchase Price provided in
Section 2.01(a) of this Agreement, and such Shareholders shall only be
entitled to receive payment of the fair cash value of such shares in
accordance with the provisions of the TBCA unless and until such holder
shall have failed to perfect or shall have effectively withdrawn or lost
such right, at which time such holder's Fredonia Common Stock shall
thereupon be deemed to have been converted into and have become
exchangeable for, at the Effective Time, the right to receive the Purchase
Price without any interest thereon.
(d) Cancellation of Shares. All shares of Fredonia Common
Stock issued and outstanding and all Options 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 or Options shall cease
to have any rights with respect thereto, except the right to receive a pro
rata number of shares of Bancshares Stock (or cash in the case of
Dissenting Shares) to be issued in consideration therefor upon the
surrender of such certificate in accordance with the Plan of Merger or to
receive Option Conversion Shares as defined below.
(e) Anti-Dilution. If prior to the Effective Time shares of
Bancshares Stock shall be changed into a different number of shares or a
different class of shares by reason of any reclassification,
recapitalization, split-up, combination, exchange of shares, readjustment
or similar transaction, or if a stock dividend shall be declared,
appropriate and proportionate adjustment or adjustments will be made in
the conversion rates set forth in subsections (a) and (h).
(f) Registration. The Bancshares Stock shall when issued be
subject to and covered by an effective registration statement as filed
under the Securities Act of 1933, as amended, and the rules and regulations
thereunder (the "Securities Act"), and such issuance shall comply with any
applicable state "Blue Sky" laws.
(g) Termination of 401(k) Plan. As soon as practicable after
execution of this Agreement, Fredonia shall and shall cause FSB to make all
filings, take all action and receive all approvals necessary and
appropriate to allow termination of the Fredonia 401(k) plan immediately
prior to the Closing Date. Bancshares shall assist Fredonia in
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accomplishing the above procedures and shall assist Fredonia employees in
any distribution or rollover of their 401(k) benefits to a self-directed
retirement plan or to a Bancshares plan as set forth in Section 6.07 of
this Agreement to the extent such rollovers are permissible under the
Bancshares Plan, ERISA (as defined below) and applicable rules and
regulations.
(h) Stock Options. Each outstanding Option to purchase
Fredonia Common Stock shall be converted into the right to receive
Bancshares Common Stock equal to the appreciated value of the said Option as
of the Effective Time as follows : The number of issued and outstanding
shares of Fredonia Common Stock as of the Effective Time shall be divided
into 1,600,000 to determine an option ratio. Said option ratio shall be
multiplied by the number of shares subject to option to determine the
interim shares. The interim shares shall be multiplied by the Pricing
Average, the total option purchase price shall be subtracted from said
amount and the result shall be divided by the Pricing Average to determine
the number of shares of Bancshares Common Stock to be issued to the
optionholder ("Option Conversion Shares").
2.02. Approval By Shareholders. Consummation of the Merger shall be
contingent upon its approval by the legally required votes of the shares of
Fredonia Common Stock at a shareholders meeting duly called for the purpose
of voting on the Merger. The Board of Directors of Fredonia shall
recommend approval of the Merger to the Fredonia Shareholders.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FREDONIA
Fredonia hereby represents and warrants to Bancshares and FTI the
following:
3.01. Organization, Standing and Power of Fredonia. Fredonia is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Texas and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted, except where the failure to have such
power or authority would not have a material adverse effect on the
business, operations or financial condition of Fredonia or any Fredonia
Subsidiary (as hereinafter defined). Fredonia is not qualified to do
business in any other state or foreign jurisdiction, and its ownership or
leasing of property or the conduct of its business does not require it to
be so qualified, except where such failure to be so qualified would not
have a material adverse effect on the business, operations or financial
condition of Fredonia or any Fredonia Subsidiary. Fredonia is registered
as a bank holding company with the Federal Reserve Board ("FRB") under the
Bank Holding Company Act of 1956, as amended (the "BHC Act"). Fredonia has
delivered to Bancshares true, accurate and complete copies of its currently
effective Articles of Incorporation and Bylaws, including all amendments
thereto.
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3.02. Ownership, Organization, Standing and Power of Fredonia
Subsidiaries. Fredonia directly and beneficially owns all of the shares of
the outstanding capital stock of Sub which owns all of the shares of the
outstanding capital stock of FSB. FSB owns all of the shares of the
outstanding capital stock of Fredonia Building Corporation ("FBC"), a
trusteed affiliate of FSB. FSB, FBC and Sub are hereinafter called
collectively the "Fredonia Subsidiaries" or individually a "Fredonia
Subsidiary". FSB, FBC and Sub are Fredonia's only subsidiaries. No
equity securities of FSB, FBC or Sub are or may become required to be
issued by reason of any option, warrant, call, right or agreement of any
character whatsoever; there are outstanding no securities or rights
convertible into or exchangeable for shares of any capital stock of FSB,
FBC or Sub; and there are no other contracts, commitments, understandings
or arrangements by which either FSB, FBC or Sub is bound to issue
additional shares of its capital stock or options, warrants, calls, rights
or agreements to purchase or acquire any additional shares of its capital
stock. All of the outstanding shares of capital stock of Sub owned by
Fredonia, of FSB owned by Sub and of FBC owned by FSB are fully paid and
nonassessable and are owned free and clear of any claim, lien, encumbrance
or agreement with respect thereto. No consent of any person must be
obtained by FSB, FBC or Sub prior to consummation of the Merger. FSB is a
banking association duly organized, validly existing and in good standing
under the laws of Texas, and has the corporate power and authority to own
or lease its properties and assets and to carry on its businesses as it is
now being conducted, except where the failure to have such power or
authority would not have a material adverse effect on the business,
operations or financial condition of Fredonia or FSB. The deposits of FSB
are insured by the Federal Deposit Insurance Corporation ("FDIC") to the
extent provided by law. Sub is a corporation duly organized, validly
existing and in good standing under the laws of Delaware, and has the
corporate power and authority to own and lease its properties and assets
and to carry on its business as it is now being conducted, except where the
failure to have such power or authority would not have a material adverse
effect on the business, operations or financial condition of Fredonia or
Sub. Sub is registered as a bank holding company with the FRB under the
BHC. FBC is a corporation duly organized, validly existing and in good
standing under the laws of Texas, and has the corporate power and authority
to own and lease its properties and assets and to carry on its business as
it is now being conducted, except where the failure to have such power or
authority would not have a material adverse effect on the business,
operations or financial condition of Fredonia or FBC. Fredonia has
delivered to Bancshares true, accurate and complete copies of the currently
effective Articles of Incorporation and Bylaws of FSB, FBC and Sub,
including all amendments thereto. Except for securities held in their
capacities as fiduciaries, FSB, FBC and Sub do not own beneficially,
directly or indirectly, any class of equity securities, partnership
interests or similar interests of any corporation, bank, partnership,
limited partnership, business trust, association
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or similar organization. The authorized capital stock of FSB consists of
287,496 shares of common stock, $10.00 par value, all of which shares are
outstanding and are owned by Sub. The authorized capital stock of Sub
consists of 3,000 shares of common stock, $.01 par value, all of which
shares of common stock are outstanding and are owned by Fredonia. FSB or
its predecessor banks have been chartered as banking institutions for
more than 5 years. The authorized capital stock of FBC consists of 25,000
shares of common stock, $10.00 par value, of which 100 shares of common
stock are outstanding and are owned by FSB.
3.03. Capital Structure of Fredonia. The authorized capital stock of
Fredonia consists of 2,000,000 shares of common stock, $10.00 par
value, 472,342 of which shares are issued and outstanding and 26,838 shares
are held by Fredonia in its treasury, and 1,000,000 shares of preferred
stock, $1.00 par value, no shares of which are issued and outstanding.
Neither Fredonia, FSB, FBC nor Sub has issued and has outstanding bonds,
debentures, notes or other indebtedness having the right to vote (or
convertible into securities having the right to vote) on any matters on
which shareholders may vote ("Voting Debt"). All outstanding shares of
Fredonia Common Stock are validly issued, fully paid, nonassessable, and
not subject to preemptive rights. Except as set forth in Exhibit 3.03,
there are no options, warrants, calls, rights, or agreements of any
character whatsoever to which Fredonia, FSB, FBC or Sub is a party or by
which Fredonia, FSB, FBC or Sub is obligated to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock
or any Voting Debt securities or by which Fredonia, FSB, FBC or Sub is
obligated to grant, extend or enter into any such option, warrant, call,
right or agreement. Except as set forth in Exhibit 3.03, immediately
before and after the Effective Time there will be no option, warrant, call,
right or agreement obligating Fredonia, FSB, FBC or Sub to issue, deliver
or sell, or cause to be issued, delivered or sold, any shares of capital
stock or obligating Fredonia, FSB, FBC or Sub to grant, extend or enter
into any such option, warrant, call, right or agreement.
3.04. Authority. Fredonia 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 Fredonia and of applicable regulatory authorities, to
consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the Plan of Merger and the consummation
of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of Fredonia's
board of directors. This Agreement and the Plan of Merger have been duly
executed and delivered by Fredonia, and, subject to such regulatory and
shareholder approval, each constitutes a valid and binding obligation of
Fredonia enforceable in accordance with its terms, except as the
enforceability of the Agreement may be subject to or limited by bankruptcy,
insolvency, reorganization,
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arrangement, moratorium or other similar laws relating to or affecting the
rights of creditors and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at
law). The execution and delivery of this Agreement and the Plan of Merger
do not, and the consummation of the transactions contemplated hereby and
thereby will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or the
loss of a material benefit under, or the creation of a lien, pledge,
security interest or other encumbrance on assets (any such conflict,
violation, default, right of termination, cancellation or acceleration loss
or creation, a "Violation"), pursuant to any provision of (a) the Articles
of Incorporation or Bylaws of Fredonia, FSB, FBC or Sub or (b) any loan or
credit agreement, note, mortgage, indenture, lease, or other agreement,
obligation, instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
Fredonia, FSB, FBC or Sub 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 Fredonia or any Fredonia
Subsidiary. Other than in connection or in compliance with the provisions
of the ABCA, the TBCA, the Securities Act and the regulations thereunder,
the Securities and Exchange Act of 1934, as amended, and the rules and
regulations thereunder (the "Exchange Act"), the securities or blue sky
laws of the various states, and consents, authorizations, approvals,
notices or exemptions required under the BHC Act, the National Bank Act,
Arkansas banking laws, Texas banking laws, and from other regulatory
agencies, no consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission
or other governmental authority or instrumentality, domestic or foreign (a
"Governmental Entity"), is required by or with respect to Fredonia, FSB,
FBC or Sub in connection with the execution and delivery of this Agreement
and the Plan of Merger by Fredonia or the consummation by Fredonia of the
transactions contemplated hereby and thereby.
3.05. Fredonia Financial Statements.
(a) The (i) consolidated balance sheets of Fredonia as of
December 31, 1996, and December 31, 1995 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 ▇▇▇▇▇ & Rode LLP, and (ii) the internally prepared and
unaudited financial statements for FSB, FBC and Sub dated ▇▇▇▇▇ ▇▇, ▇▇▇▇
(▇▇▇▇▇ (▇) - (▇▇) being called collectively the "Fredonia Financial
Statements"), copies of which have been furnished by Fredonia to
Bancshares, have been prepared in accordance with (A) generally accepted
accounting principles and practices with respect to item (i) and (B)
accounting principles and practices applied on a consistent basis
throughout the periods involved (except as otherwise noted therein and
except for
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year-end adjustments of the unaudited financial statements of a
non-material nature) with respect to item (ii). The Fredonia Financial
Statements present fairly the consolidated financial condition of Fredonia
and the financial condition of FSB, FBC and Sub, at the dates, and the
results of operations and cash flows for the periods, stated therein.
Neither Fredonia, FSB, FBC nor Sub has any liability of any nature, whether
direct, indirect, accrued, absolute, contingent or otherwise, which is
material to Fredonia except as provided for or disclosed in the Fredonia
Financial Statements and except for such of the following liabilities as
are incurred in the ordinary course of business:
(i) deposit liabilities and interest payable
thereon,
(ii) federal funds purchased and securities
sold under repurchase agreements and
interest payable thereon,
(iii) other short term borrowings,
(iv) contingent liability upon negotiable
instruments endorsed for the purpose of
collection,
(v) taxes,
(vi) accounts payable of the operating
business,
(vii) salaries and benefits payable,
(viii) unearned income and premiums,
(ix) abandoned and garnished accounts, and
(x) letters of credit and similar commitments.
(b) Without limitation of the foregoing, except as described
in Exhibit 3.05(b), Fredonia has no reserve allowance for self-insured
health and dental benefit claims and knows of no facts which should cause
it to create such a reserve.
3.06. Fredonia Reports. Fredonia, FSB, FBC and Sub have filed all
reports, registrations and statements, together with any amendments
required to be made with respect thereto, that were and are required to be
filed with (i) the FRB, (ii) the FDIC, (iii) the Texas Banking
Commissioner (the "TBC") and (iv) any other applicable securities, banking
or regulatory authorities (all such reports and statements are collectively
referred to herein as the "Fredonia Reports"), except where such failure to
file would not have a material adverse effect on the business operations or
financial condition of Fredonia or any Fredonia Subsidiary. The Fredonia
Reports complied in all material respects with all of the statutes, rules
and regulations enforced or promulgated by the regulatory authority with
which they were filed and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
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3.07. Information Supplied. None of the information supplied or to be
supplied by Fredonia for inclusion or incorporation by reference in any
document to be filed with the Securities and Exchange Commission, the FRB,
or any regulatory agency in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact or
omits or will omit 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. Fredonia has made available to Bancshares
all financial and other information reasonably requested by Bancshares.
3.08. Authorizations; Compliance with Applicable Laws. Fredonia, FSB,
FBC and Sub hold all authorizations, permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities which are
material to the operations of the businesses of Fredonia, FSB, FBC or Sub
(the "Fredonia Permits"), including appropriate authorizations from the
TBC. Fredonia, FSB, FBC and Sub are in compliance with the terms of the
Fredonia Permits, except where the failure so to comply would not have a
material adverse effect on Fredonia, FSB, FBC or Sub. The business of FSB
is not being conducted in violation of any federal, state or local law,
statute, ordinance or regulation of any Governmental Entity (collectively
"Laws"), including, without limitation, Regulation O of the FRB, except for
possible violations which individually or in the aggregate do not and,
insofar as reasonably can be foreseen, in the future will not, have a
material adverse effect on Fredonia, FSB, FBC or Sub. No investigation or
review by any Governmental Entity with respect to Fredonia, FSB, FBC or Sub
is pending or, to the best of their knowledge, threatened, nor has any
Governmental Entity indicated an intention to conduct the same. Without
limiting the foregoing, there have been no acts or omissions occurring on
or with respect to real estate currently or previously owned, leased or
otherwise used in the ordinary course of business by Fredonia, FSB, FBC or
Sub or, to the best of their knowledge, in which Fredonia, FSB, FBC or Sub
has or had an investment or security interest (by mortgage, deed of trust,
or otherwise), including, without limitation, properties under foreclosure,
properties held by Fredonia, FSB, FBC or Sub in its capacity as a trustee,
or properties in which any venture capital or similar unit of Fredonia,
FSB, FBC or Sub has or had an interest (the "Fredonia Property"), which
constitute or result, or may have constituted or resulted, in the creation
of any federal, state or common law nuisance (whether or not the nuisance
condition is, or was, foreseen or unforeseen) or which do not comply or
have not complied with federal, state or local environmental laws
including, without limitation, the Clean Water Act, the Clean Air Act, the
Resource Conservation and Recovery Act, the Toxic Substances Control Act
and the Comprehensive Environmental, Response, Compensation and Liability
Act, as amended, and their state and local law counterparts, all rules and
regulations promulgated thereunder and all other legal requirements
associated with the ownership and use of the Fredonia Property
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(collectively, "Environmental Laws"), and as a result of which acts or
omissions Fredonia, FSB, FBC or Sub is subject to or reasonably likely to
incur a material liability or suffer a diminution in value of any interest
exceeding $100,000.00. Neither Fredonia, FSB, FBC nor Sub is subject to or
reasonably likely to incur a material liability or suffer a diminution in
value of any interest exceeding $100,000.00 as a result of its ownership,
lease, operation, or use of any Fredonia Property or as a result of its
investment or security interest (as described above) in any Fredonia
Property (a) that is contaminated by or contains any hazardous waste, toxic
substances or related materials, including without limitation asbestos,
PCBs, pesticides, herbicides, petroleum products, substances defined as
"hazardous substances" or "toxic substances" in the Environmental Laws, and
any other substances or waste that is hazardous to human health or the
environment (collectively, "Toxic Substances"), or (b) on which any Toxic
Substance has been stored, disposed of, placed, or used in the construction
thereof. No claim, action, suit or proceeding is pending against Fredonia,
FSB, FBC or Sub relating to the Fredonia Property before any court or
other governmental authority or arbitration tribunal relating to Toxic
Substances, pollution or the environment, and there is no outstanding
judgment, order, writ, injunction, decree, or award against or affecting
Fredonia, FSB, FBC or Sub with respect thereto.
3.09. Litigation and Claims. Except as disclosed in Exhibit 3.09 (a)
neither Fredonia, FSB, FBC nor Sub 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 Fredonia, FSB, FBC or Sub pending or, to the best of their
knowledge, threatened, which will have or can reasonably be expected to
have a material adverse effect on Fredonia, FSB, FBC or Sub 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 Fredonia, FSB, FBC or Sub as a result of the examination by any
bank regulatory authority.
3.10. Taxes. Fredonia, FSB, FBC and Sub 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 Fredonia Financial Statements reflect an
adequate reserve for all taxes payable by Fredonia, FSB, FBC and Sub
accrued through the date of such financial statements. There has been no
examination by the United States Internal Revenue Service ("IRS") of
Fredonia, FSB, FBC or Sub for over seven years. There is no examination
pending by the IRS with respect to Fredonia, FSB, FBC or Sub. Neither
Fredonia, FSB, FBC nor Sub has executed or filed with the IRS any
agreement which
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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 Fredonia, FSB, FBC or Sub. There are no
material liens for taxes upon the assets of Fredonia, FSB, FBC or Sub
except for statutory liens for taxes not yet delinquent. Neither Fredonia,
FSB, FBC nor Sub is a party to any action or proceeding by any governmental
authority for assessment and collection of taxes, and no claim for
assessment and collection of taxes has been asserted against any of them.
For the purpose of this Agreement, the term "Tax" (including, with
correlative meaning, the terms "taxes" and "taxable") shall include all
federal, state, and local income, profits, franchise, gross receipts,
payroll, sales, employment, use, 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. Fredonia, FSB, FBC and Sub have withheld from their
employees and timely paid to the appropriate governmental agency proper and
accurate amounts for all periods through the date hereof in material
compliance with all Tax withholding provisions of applicable federal,
state, and local laws (including without limitation income, social security
and employment tax withholding for all types of compensation).
3.11. Certain Agreements.
(a) Except as disclosed in Exhibit 3.11(a) or 3.12(a), neither
Fredonia, FSB, FBC nor Sub is a party to any (i) consulting, professional
services , employment or other agreement not terminable at will providing
any term of employment, compensation, guarantee, severance, supplemental
retirement benefits, or other employment benefits or rights, (ii) 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, (iii) any stock option plan, stock
appreciation rights plan, restricted stock plan, stock purchase plan or
similar plan granting rights to acquire stock in Fredonia, FSB, FBC or Sub,
or (iv) contract containing covenants which limit the ability of Fredonia,
FSB, FBC or Sub 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, Fredonia, FSB, FBC or Sub may carry on its business (other than
as may be required by law or applicable regulatory authorities). Except as
set forth in Exhibit 3.11(a), Fredonia, FSB, FBC and Sub shall terminate
all existing consulting, professional services and employment contracts,
other than at will employment contracts by no later than the Closing Date.
(b) Except as set forth on Exhibit 3.11(b), neither the Fredonia, FSB,
FBC nor Sub is a party to any oral or written union, guild or collective
bargaining agreement or to any conciliation agreement with the Department
of Labor, the Equal
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Employment Opportunity Commission or any federal, state or local agency
which requires equal employment opportunities or affirmative action in
employment. To the best of Fredonia's knowledge, there are no unfair labor
practice complaints pending against Fredonia, FSB, FBC or Sub before the
National Labor Relations Board and there are no similar claims pending
before any similar state, local or foreign agency. There is no activity or
proceeding of any labor organization (or representative thereof) or
employee group to organize any employees of Fredonia, FSB, FBC or Sub, nor
any strikes, slowdowns, work stoppages, lockouts, or threats thereof, by or
with respect to any such employees. Fredonia, FSB, FBC and Sub are in
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and
neither the Fredonia, FSB, FBC nor Sub is engaged in any unfair labor
practice except where any violation would not have a material adverse
effect on the business, operations or financial condition of Fredonia or
any Fredonia Subsidiary.
3.12. Benefit Plans.
(a) With respect to any collective bargaining agreement or any bonus,
pension, profit sharing, deferred compensation, incentive compensation,
stock ownership, stock purchase, stock option, phantom stock, retirement,
vacation, severance, disability, death benefit, hospitalization, medical or
other plan, policy, program, arrangement or understanding (whether or not
legally binding) including "employee pension benefit plans" (as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) (sometimes referred to herein as "Pension Plans"),
"employee welfare benefit plans" (as defined in Section (3)(1) of ERISA)
(sometimes referred herein as "Welfare Plans")(collectively, "Plans")
providing benefits to any current or former employee, officer or director
of Fredonia or any of the Fredonia Subsidiary that are in effect on the
date hereof, and all Plans currently maintained, or contributed to, or
required to be maintained or contributed to, by Fredonia or any other
person or entity that, together with Fredonia, FSB, FBC or Sub, is treated
as a single employer under Section 414(b), (c), (m) or (o) of the Internal
Revenue Code of 1986, as amended (the "Code") or Section 4001(a) (14) or
4001(b) of ERISA (each a "Commonly Controlled Entity") (including each
Pension Plan that Fredonia or any commonly controlled entity that is, or
within the last six years was, subject to Title IV of ERISA and for which
Fredonia, FSB, FBC or Sub could have material liability) (all of the
foregoing such plans being herein referred to as the "Fredonia Benefit
Plans"), Fredonia has delivered, or caused to be delivered, to Bancshares
true, complete and correct copies of (i) each Fredonia Benefit Plan, (ii)
annual reports (Forms 5500) and all schedules thereto filed with the IRS
with respect to each Fredonia Benefit Plan for the past five years (if any
such report was required), (iii) the most recent summary plan description
for each Fredonia Benefit Plan for which such summary plan description is
required, (iv) each trust agreement,
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group annuity contract, investment management agreement, and any other
insurance contract or funding arrangement relating to any Fredonia Benefit
Plan; (v) the most recent actuarial report or valuation relating to a
Fredonia Benefit Plan subject to Title IV of ERISA; (vi) the most recent
determination letter as to qualification of each Fredonia Benefit Plan and
the forms and attachments submitted to the IRS for such determination
letter; (vii) a list of the Fredonia Benefit Plans; (viii) copies of all
tests for compliance for the past five years under Code Sections 401(a)(4),
401(a)(26), 401(k), 401(m), 404, 410(b), and 415, if applicable, for the
Fredonia Benefit Plans; and (ix) copies of all closing agreements and
documentation regarding any IRS, Department of Labor or Pension Benefit
Guaranty Corporation or self-correction procedures affecting the
qualification and/or operation of each Fredonia Benefit Plan.
(b) Exhibit 3.12(b) lists each deferred compensation plan, bonus and
incentive arrangement, stock option plan, restricted stock arrangement,
"cafeteria plan" as described in Section 125 of the Code and any other
"employee welfare benefit plan" (as defined in Section 3(1) of ERISA) and
each "employee pension benefit plan" (as defined in Section 3 (2) of ERISA)
maintained by Fredonia, FSB, FBC or Sub or to which Fredonia, FSB, FBC or
Sub contributes or is required to contribute, and sets forth the amount of
any liability of Fredonia, FSB, FBC or Sub for contributions more than 30
days past due with respect to each as of the date hereof and as of the end
of any subsequent month ending prior to the Closing.
(c) Unless otherwise listed in Exhibit 3.12(b), neither Fredonia nor
any Commonly Controlled Entity nor any entity that has ever been a Commonly
Controlled Entity has ever maintained any Pension Plan which is a defined
benefit plan.
(d) No Welfare Plan provides for continuing benefits or coverage for
any participant, beneficiary or former employee after such participant's or
former employee's termination of employment except as may be required by
Section 4980B of the Code and Sections 601-608 of ERISA.
(e) Each Fredonia Benefit Plan has been administered in accordance with
its terms. All of the Fredonia Benefit Plans and any related funding
instruments comply, and have complied in the past, both as to form and
operation in all material respects (including, but not limited to
applicable reporting and disclosure requirements) with the provisions of
ERISA, the Code and with all other applicable laws, rules and regulations.
Unless otherwise listed in Exhibit 3.12(e), with respect to each Pension
Plan that is intended to be tax-qualified under Section 401(a) of the
Code, a favorable determination letter as to the qualification under the
Code of each such Pension Plan and each amendment thereto has been issued
by the IRS, including any such letter that covers the amendments required
by the Tax Reform Act of 1986 (and nothing has occurred since the date of
the last such determination letter which resulted in, or is likely to
result in, the revocation of such
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determination). No event or condition exists which could reasonably be
expected to adversely affect the qualified status of a Fredonia Benefit
Plan that is a Pension Plan.
(f) Neither Fredonia nor any Commonly Controlled Entity, nor any plan
fiduciary of any Fredonia Benefit Plan or, to the best knowledge of
Fredonia, any other party in interest of any Fredonia Benefit Plan, has
engaged in any transaction in violation of Section 406 of ERISA (for which
transaction no exemption exists under Section 408 of ERISA) or in any
"prohibited transaction" as defined in Section 4975(c)(1) of the Code (for
which no exemption exists under Section 4975(c)(2) or 4975(d) of the Code)
or engaged in any other breach of fiduciary responsibility that could
subject Fredonia, FSB, FBC or Sub or any officer of Fredonia, FSB, FBC or
Sub to tax or penalty under ERISA, the Code or other applicable law.
Except as disclosed in Exhibit 3.11(a), neither any Fredonia Benefit Plan
that is a Pension Plan or a funded Welfare Plan nor any trust of such plan
has been terminated, nor has there been any "reportable event" (as that
term is defined in Section 4043 of ERISA) with respect to a Fredonia
Benefit Plan that is a Pension Plan, as to which Fredonia, FSB, FBC or Sub
could have any liability.
(g) Neither Fredonia nor any Commonly Controlled Entity has ever
maintained or contributed to, or has participated in or agreed to
participate in, a multi-employer plan (as defined in Section 3(37) of
ERISA), and neither Fredonia nor any Commonly Controlled Entity could have
any liability under a multi-employer plan.
(h) None of the Fredonia Benefit Plans that is a Pension Plan has an
"accumulated funding deficiency" (as such term is defined in Section 302 of
ERISA or Section 412 of the Code), and there has been no application for a
waiver of the minimum funding standards imposed by Section 412 of the Code
with respect to any such Pension Plan.
(i) Except as set forth in Exhibit 3.12(i) there are no claims pending
with respect to, or under, any Fredonia Benefit Plan other than routine
claims for plan benefits, and there are no disputes or litigation pending
or threatened with respect to any such plans, and no such claim, dispute or
litigation appears reasonably likely to arise.
(j) Except as set forth in Exhibit 3.12(j), neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby will (i) result in any payment to be made by Fredonia,
Bancshares or FTI, as successor to Fredonia, FSB, FBC or Sub, or any
Commonly Controlled Entity (including, without limitation, severance,
unemployment compensation, golden parachute (defined in Section 280G of the
Code), or otherwise becoming due to any employee, or (ii) increase or vest
any benefits otherwise payable under any Fredonia Benefit Plan.
(k) With respect to any Fredonia Benefit Plan that is a Welfare Plan
(i) no such Benefit Plan is funded through a "welfare benefit fund," as
such term is defined in Section 419(e) of the Code, (ii) each such Fredonia
Benefit Plan that is
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a "group health plan," as such term is defined in Section 5000(b)(1) of the
Code, complies in all material respects with the applicable requirements of
Section 4980B of the Code and Sections 601-609 of ERISA, and (iii) each
such Fredonia Benefit Plan may be amended or terminated without any
liability to Fredonia, FSB, FBC or Sub on or at any time after the
consummation of this Agreement.
(l) Neither Fredonia, FSB, FBC nor Sub nor a Commonly Controlled Entity
has incurred any material liability with respect to a Pension Plan (other
than for contributions not yet due) and to the Pension Benefit Guaranty
Corporation (other than for the payment of premiums not yet due), which
liability has not been fully paid as of the date hereof.
(m) Except as set forth in Exhibit 3.12(m) or as required by applicable
law, since June 30, 1996 there has not been any adoption of amendment in
any material respect of any Fredonia Benefit Plan. Except as disclosed in
Exhibit 3.12(m), there exist no employment, consulting, severance,
termination or indemnification agreements, arrangements or understandings
between Fredonia, FSB, FBC or Sub and any current or former employee,
officer or director of Fredonia, FSB, FBC or Sub.
(n) Except as set forth in Exhibit 3.12(n), any amount that could be
received (whether in cash or property or the vesting of property) as a
result of any of the transactions contemplated by this Agreement by any
employee, officer or director of Fredonia, FSB, FBC or Sub who is a
"disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any employment, severance or termination
agreement, other compensation arrangement or Fredonia Benefit Plan
currently in effect would not be characterized as an "excess parachute
payment" (as such term is defined in Section 280G(b)(1) of the Code).
3.13. Insurance. Fredonia has delivered to Bancshares correct and
complete copies of all material policies of insurance of Fredonia, FSB, FBC
and Sub currently in effect, including, but not limited to, directors and
officers liability policies and blanket bond policies. Neither Fredonia,
FSB, FBC nor Sub has any liability for unpaid premiums or premium
adjustments not properly reflected on the Fredonia Financial Statements.
3.14. Conduct of Fredonia to Date. Except as contemplated by this
Agreement and the Plan of Merger, from and after December 31, 1996 through
the date of this Agreement: (a) Fredonia, FSB, FBC and Sub have carried on
their respective businesses in the ordinary and usual course consistent
with past practices, (b) Fredonia, FSB, FBC and Sub have not issued or sold
any capital stock or issued or sold any corporate debt securities which
would be classified as long term debt on the balance sheet of Fredonia,
FSB, FBC or Sub, (c) except as disclosed in Exhibit 3.03, Fredonia, FSB,
FBC and Sub have not granted any option for the purchase of capital stock,
effected any stock split, or otherwise changed their capitalization, (d)
except as disclosed in Exhibit 3.14(d), Fredonia has not declared, set
aside, or paid any cash or stock dividend or other
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distribution in respect to its capital stock, (e) neither Fredonia, FSB,
FBC nor Sub 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 Fredonia, FSB, FBC
nor Sub 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 Fredonia, FSB, FBC nor Sub has
since December 31, 1996, sold, assigned, transferred, leased, exchanged, or
otherwise disposed of any of its properties or assets other than for a fair
consideration in the ordinary course of business, (h) except as set forth
in Exhibit 3.14(h), neither Fredonia, FSB, FBC nor Sub has increased the
rate of compensation of, or paid any bonus to, any of its directors,
officers, or other employees, except merit or promotion increases in
accordance with existing policy; entered into any new, or amended or
supplemented any existing, employment, management, consulting, deferred
compensation, severance, or other similar contract; adopted, entered into,
terminated, amended or modified any Fredonia Benefit Plan in respect of any
of present or former directors, officers or other employees; or agreed to
do any of the foregoing, (i) neither Fredonia, FSB, FBC nor Sub has
suffered any material damage, destruction, or loss, whether as the result
of flood, fire, explosion, earthquake, accident, casualty, labor trouble,
requisition or taking of property by any government or any agency of any
government, windstorm, embargo, riot, act of God, or other similar or
dissimilar casualty or event or otherwise, whether or not covered by
insurance, (j) neither Fredonia, FSB, FBC nor Sub has cancelled or
compromised any debt to an extent exceeding $50,000.00 owed to Fredonia,
FSB, FBC or Sub or claim to an extent exceeding $50,000.00 asserted by
Fredonia, FSB, FBC or Sub, (k) neither Fredonia, FSB, FBC nor Sub has
entered into any transaction, contract, or commitment outside the ordinary
course of its business, (1) neither Fredonia, FSB, FBC nor Sub has entered,
or agreed to enter, into any agreement or arrangement granting any
preferential right to purchase any of its material assets, properties or
rights or requiring the consent of any party to the transfer and assignment
of any such material assets, properties or rights, (m) there has not been
any change in the method of accounting or accounting practices of Fredonia,
FSB, FBC and Sub, and (n) Fredonia, FSB, FBC and Sub have kept all records
substantially in accordance with all regulatory and statutory requirements
and substantially in accordance with industry standards specified by the
American Bankers Association, and have retained such records for the
periods required by statute, regulation or American Bankers Association
industry standards.
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3.15. Material Adverse Change. Since December 31, 1996, there has been
no material adverse change in the financial condition, results of
operations or business of Fredonia or its subsidiaries.
3.16. Properties, Leases and Other Agreements. Except (i) with respect
to debts reflected in the Fredonia 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 Fredonia Financial Statements
or acquired since the date of such Statements, Fredonia, FSB, FBC and Sub
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 Fredonia Financial Statements, and all personal
and real property acquired since the date of such Fredonia Financial
Statements, except such personal and real property as has been disposed of
in the ordinary course of business. Substantially all of the buildings and
equipment in regular use by Fredonia, FSB, FBC and Sub have been reasonably
maintained and are in good and serviceable condition, reasonable wear and
tear excepted. All leases material to Fredonia, FSB, FBC and Sub pursuant
to which Fredonia, FSB, FBC or Sub, 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 Fredonia, FSB, FBC or Sub, or any other party thereto, or any event
which with notice or lapse of time or both would constitute such a material
default. No options to renew said leases have lapsed and the terms of the
leases govern the rights of the respective landlords of Fredonia, FSB, FBC
and Sub.
3.17. Accounting. Fredonia will not, and will use its best efforts to
cause any of its affiliates to not knowingly take any action that would, in
the reasonable opinion of Bancshares, prevent the Merger from qualifying
for pooling of interests accounting treatment.
3.18. No Untrue Statements. No representation or warranty hereunder or
information contained in any financial statement or any other document
delivered to 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.
3.19. Proper Documentation. With respect to all loans to borrowers which
are payable to Fredonia, FSB, FBC or Sub either directly or as a
participant and except for such imperfections in documentation which when
considered as a whole would not have a material adverse effect on the
business, operations or financial condition of Fredonia, FSB, FBC and Sub
taken as a whole:
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(a) All loans were made for good, valuable and adequate
consideration in the normal and ordinary course of business, and the
notes and other evidences of indebtedness and any loan agreements or
security documents executed in connection therewith are true and genuine
and constitute the valid and legally binding obligations of the borrowers
to whom the loans were made and are legally enforceable against such
borrowers in accordance with their terms subject to applicable
bankruptcy, insolvency, reorganization, moratorium, and similar debtor
relief laws from time to time in effect, as well as general principles of
equity applied by a court of proper jurisdiction (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
For purposes of the foregoing sentence, it is understood and agreed that
the phrase "enforceable against such borrowers in accordance with their
terms" shall not mean that the borrower has the financial ability to
repay a loan or that the collateral is sufficient in value to result in
payment of the loan secured thereby;
(b) The amounts represented to Bancshares as the balances
owing on the loans are the correct amounts actually and unconditionally
owing, are undisputed, and are not subject to any offsets, credits,
deductions or counterclaims;
(c) The collateral securing each loan as referenced in a loan
officer worksheet, loan summary report or similar interoffice loan
documentation is in fact the collateral held by Fredonia, FSB, FBC or Sub
to secure each loan;
(d) Fredonia, FSB, FBC or Sub has possession of all 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) Fredonia, FSB, FBC and Sub hold validly perfected liens
or security interests in the collateral granted to them to secure all
loans as referenced in the loan officer worksheets, loan summary reports
or similar interoffice loan documentation and the loan or credit files
contain the original security agreements, mortgages, or other lien
creation and perfection documents unless originals of such documents are
filed of public record;
(f) Each lien or security interest of Fredonia, FSB, FBC or
Sub in the collateral held for each loan is properly perfected in the
priority described as being held by Fredonia, FSB, FBC or Sub in the loan
officer worksheets, loan summary reports or similar interoffice loan
documentation contained in the loan document or credit files;
(g) Fredonia, FSB, FBC and Sub are in possession of all
collateral that the loan document files or credit files indicate they
have in their possession;
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(h) All guaranties granted to Fredonia, FSB, FBC and Sub 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); and
(i) With respect to any loans in which Fredonia, FSB, FBC and
Sub have sold participation interests to another bank or other financial
institution, none of the buyers of such participation interests are in
default under any participation agreements.
3.20. No Default. Neither Fredonia, FSB, FBC nor Sub is in default under
any material agreement, ordinance, resolution, decree, bond, note,
indenture, order or judgment to which it is a party,
by which it is bound, or to which its properties or assets are subject.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BANCSHARES
Bancshares hereby represents and warrants to Fredonia as follows:
4.01. Organization, Standing and Power. Bancshares and FTI are
corporations duly organized, validly existing and in good standing under
the laws of the State of Arkansas and have all requisite corporate power
and authority to own, lease and operate their properties and to carry on
their businesses as now being conducted, except where the failure to have
such power or authority would not have a material adverse effect on the
business, operations or financial condition of Bancshares and its
subsidiaries. Bancshares and FTI are registered as bank holding companies
with the FRB under the BHC Act. Bancshares has delivered or made available
to Fredonia a true, accurate and complete copy of its currently effective
Articles of Incorporation and Bylaws, including all amendments thereto.
4.02. Authority. Subject to the approval of this Agreement and the Plan
of Merger by applicable regulatory authorities, Bancshares and FTI have all
requisite corporate power and authority to enter into this Agreement and
the Plan of Merger and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the Plan of
Merger and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on the
part of Bancshares' and FTI's boards of directors, and FTI's shareholder.
This Agreement and the Plan of Merger have been duly executed and delivered
by Bancshares and FTI and, subject to regulatory approval, each constitutes
a valid and binding obligation of Bancshares and FTI enforceable in
accordance with its terms,
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except as the enforceability of the Agreement may be subject to or limited
by bankruptcy, insolvency, reorganization, arrangement, moratorium or other
similar laws relating to or affecting the rights of creditors. The
execution and delivery of this Agreement and the Plan of Merger do not, and
the consummation of the transactions contemplated hereby and thereby will
not, result in any Violation pursuant to any provision of the Articles of
Incorporation or Bylaws of Bancshares or FTI or any of their subsidiaries
or result in any Violation of any loan or credit agreement, note, mortgage,
indenture, lease, or other agreement, obligation, instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Bancshares, FTI or any of their
subsidiaries or their respective properties or assets. Other than as
described below in connection or in compliance with the provisions of the
ABCA,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 BHC Act, the National Bank Act,
Arkansas banking laws, Texas banking laws, and from other regulatory
authorities, no consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is
required by or with respect to Bancshares or FTI in connection with the
execution and delivery of this Agreement and the Plan of Merger by
Bancshares and FTI or the consummation by Bancshares and FTI of the
transactions contemplated hereby and thereby, the failure to obtain which
would have a material adverse effect on Bancshares, FTI or any Bancshares
or FTI subsidiary.
4.03. Capital Structure of Bancshares. The authorized capital stock of
Bancshares consists of 24,000,000 shares of common stock, $1.00 par value,
and 500,000 shares of preferred stock, $1.00 par value, of which 8,246,209
shares of common stock are issued and outstanding. The authorized capital
stock of FTI consists of 1,000 shares of common stock, $1.00 par value, of
which 1,000 shares of common stock are issued and outstanding. Bancshares
and FTI have no issued and 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.
All outstanding shares of Bancshares and FTI common stock are validly
issued, fully paid, nonassessable, and not subject to preemptive rights.
There are no options, warrants, calls, rights, or agreements of any
character whatsoever to which Bancshares or FTI is a party or by which
Bancshares or FTI is obligated to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or any voting
debt securities, or by which Bancshares or FTI is obligated to grant,
extend or enter into any such option, warrant, call, right or agreement,
except for options of three employees to purchase a total of 67,880 shares
of Bancshares common stock. Immediately before and after the Effective
Time there will be no option, warrant, call, right or agreement obligating
Bancshares or FTI to issue, deliver or sell, or cause to be issued,
delivered or sold, any shares of capital stock, or obligating
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Bancshares or FTI to grant, extend or enter into any such option, warrant,
call, right or agreement, except as disclosed in Exhibit 4.03.
Notwithstanding the foregoing or any other provision of this Agreement,
(i) no issuance of options to purchase common stock of Bancshares to
executive officers of Bancshares and its subsidiaries, (ii) no issuance of
shares of common stock pursuant to the exercise of outstanding options, and
(iii) no increase in the authorized or outstanding common stock of
Bancshares, or commitment to issue additional shares of Bancshares common
stock, in connection with any acquisition by Bancshares of a bank or
corporation, through merger or otherwise, shall constitute a breach of any
representation, warranty or other provision of this Agreement.
4.04. Bancshares Financial Statements. The consolidated balance sheets
of Bancshares as of December 31, 1996 and 1995 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP ("Bancshares Financial Statements") copies
of which have been furnished by Bancshares to Fredonia, have been prepared
in accordance with generally accepted accounting principles and practices
applied on a consistent basis throughout the periods involved (except as
otherwise noted therein and except for year end adjustments of 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. Neither
Bancshares nor any Bancshares subsidiary has any liability of any nature,
whether direct, indirect, accrued, absolute, contingent or otherwise, which
is material to Bancshares, except as provided for or disclosed in the
Bancshares Financial Statements and except for such of the following
liabilities as are incurred in the ordinary course of business:
(i) deposit liabilities and interest payable thereon,
(ii) federal funds purchased and securities sold under
repurchase agreements and interest payable thereon,
(iii) other short term borrowings,
(iv) contingent liability upon negotiable instruments
endorsed for the purpose of collection,
(v) taxes,
(vi) accounts payable of the operating business,
(vii) salaries and benefits payable,
(viii) unearned income and premiums,
(ix) abandoned and garnished accounts, and
(x) letters of credit and similar commitments.
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4.05. Bancshares Reports. Bancshares and its subsidiaries have filed all
reports, registrations and statements, together with any amendments
required to be made with respect thereto, that were and are required to be
filed with (i) the FRB, (ii) the Office of the Comptroller of the Currency,
(iii) the FDIC, (iv) the Arkansas State Bank Department (the "ASBD"), (v)
the TBC, (vi) the Securities and Exchange Commission, and(vii) any other
applicable securities, banking or regulatory authorities (all such reports
and statements are collectively referred to herein as the "Bancshares
Reports") except where such failure to file would not have a material
adverse effect on the business operations or financial condition of
Bancshares. The Bancshares Reports complied in all material respects with
all of the statutes, rules and regulations enforced or promulgated by the
regulatory authority with which they were filed and did not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
4.06. Authorizations; Compliance with Applicable Laws. 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 businesses 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 to comply would not have a material adverse effect on
Bancshares. The businesses of Bancshares and its subsidiaries are not
being conducted in violation of any Laws, including, without limitation,
Regulation O of the FRB, except for possible violations which individually
or in the aggregate do not and, insofar as reasonably can be foreseen, in
the future will not, have a material adverse effect on Bancshares. No
investigation or review by any Governmental Entity with respect to
Bancshares or its subsidiaries is pending or threatened, nor has any
Governmental Entity indicated an intention to conduct the same. Without
limiting the foregoing, there have been no acts or omissions occurring on
or with respect to real estate currently or previously owned, leased or
otherwise used by Bancshares or any Bancshares subsidiary or in which
Bancshares or any Bancshares subsidiary has or had an investment or
security interest (by mortgage, deed of trust, or otherwise), including,
without limitation, properties under foreclosure, properties held by
Bancshares or a Bancshares subsidiary in its capacity as a trustee, or
properties in which any venture capital or similar unit of Bancshares or a
Bancshares subsidiary has or had an interest (the "Bancshares Property"),
which constitute or result, or may have constituted or resulted, in the
creation of any federal, state or common law nuisance (whether or not the
nuisance condition is, or was, foreseen or unforeseen) or which do not
comply or have not complied with federal, state or local Environmental
Laws, and as a result of which acts or omissions Bancshares or a Bancshares
subsidiary is subject to or reasonably likely to incur a material
liability. Neither Bancshares nor any
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Bancshares subsidiary is subject to or reasonably likely to incur a
material liability as a result of its ownership, lease, operation, or use
of any Bancshares Property or as a result of its investment or security
interest (as described above) in any Bancshares Property (a) that is
contaminated by or contains any hazardous waste, toxic substances or
related materials, including without limitation asbestos, PCBs, pesticides,
herbicides, petroleum products, substances defined as "hazardous
substances" or "toxic substances" in the Environmental Laws, and any other
Toxic Substances, or (b) on which any Toxic Substance has been stored,
disposed of, placed, or used in the construction thereof. No claim,
action, suit or proceeding is pending against Bancshares or any Bancshares
subsidiary relating to the Bancshares Property before any court or other
governmental authority or arbitration tribunal relating to Toxic
Substances, pollution or the environment, and there is no outstanding
judgment, order, writ, injunction, decree, or award against or affecting
Bancshares or any Bancshares subsidiary with respect thereto.
4.07. Litigation and Claims. Except as disclosed in Exhibit 4.07, (a)
neither Bancshares nor any Bancshares subsidiary is subject to any
continuing order of, or written agreement or memorandum of understanding
with, or continuing material investigation by, any federal or state banking
or insurance authority or other Governmental Entity, or any judgment,
order, writ, injunction, decree or award of any Governmental Entity or
arbitrator, including, without limitation, cease-and-desist or other orders
of any bank regulatory authority, (b) there is no claim of any kind,
action, suit, litigation, proceeding, arbitration, investigation, or
controversy affecting Bancshares or any Bancshares subsidiary pending or
threatened, which will have or can reasonably be expected to have a
material adverse effect on Bancshares 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 Bancshares
or any Bancshares subsidiary as a result of the examination by any bank
regulatory authority.
4.08. Material Adverse Change. Since December 31, 1996, there has been
no material adverse change in the financial condition, results of
operations or business of Bancshares.
4.09. No Default. Neither Bancshares nor any Bancshares subsidiary is in
default under any material agreement, ordinance, resolution, decree, bond,
note, indenture, order or judgment to which it is a party, by which it is
bound, or to which its properties or assets are subject.
4.10 Regulatory Approvals. Bancshares and FTI have no reason to
believe that they will not be able to obtain all requisite regulatory
approvals necessary to consummate the transactions set forth in this
Agreement.
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4.11. Proxy Statement. None of the information supplied or to be
supplied by Bancshares, or, to the best knowledge of Bancshares, any of its
directors, officers, employees or agents for inclusion in: (a) the Proxy
Statement to be delivered to shareholders of Fredonia in connection with
their approval of the Merger; or (b) any registration statement or other
documents filed with the SEC or any regulatory or governmental agency or
authority in connection with the transactions contemplated herein, at the
respective times such documents are filed, and, with respect to the Proxy
Statement, when first mailed to the shareholders of Fredonia, will be false
or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading, or, in the
case of the Proxy Statement or any amendment thereof or supplement thereto,
at the time of the Shareholder's Meeting, be false or misleading with
respect to any material fact, or omit to state any material fact necessary
to correct any statement in any earlier communication with respect to the
solicitation of any proxy for the Shareholders' Meeting. All documents
that Bancshares is responsible for filing with any regulatory or
governmental agency in connection with the Merger will comply in all
material respects with the provisions of applicable law.
4.12 Availability of Bancshares Stock. Bancshares has available a
sufficient number of authorized and unissued shares of Bancshares Stock to
pay the Purchase Price, and Bancshares will not take any action during the
term of this Agreement that will cause it not to have a sufficient number
of authorized and unissued shares of Bancshares Stock to pay the Purchase
Price.
ARTICLE V
COVENANTS OF FREDONIA
5.01. Affirmative Covenants. Fredonia 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,
Fredonia will and Fredonia will cause FSB, FBC and Sub to:
(a) operate their businesses only in the usual, regular and
ordinary course consistent with past practices;
(b) use reasonable efforts to preserve intact their business
organization and assets, maintain their rights and franchises, retain the
services of their officers and key employees (except that they shall have
the right to lawfully terminate the employment of any officer or key
employee if such termination is in accordance with Fredonia's existing
employment procedures) and maintain their relationships with customers;
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(c) use reasonable efforts to maintain and keep their
properties in as good repair and condition as at present, except for
depreciation due to ordinary wear and tear;
(d) use reasonable efforts to keep in full force and effect
insurance and bonds comparable in amount and scope of coverage to that now
maintained;
(e) perform in all material respects all obligations required
to be performed by them under all material contracts, leases, and documents
relating to or affecting their assets, properties, and business;
(f) comply with and perform in all material respects all
obligations and duties imposed upon them by all Laws; and
(g) give Bancshares notice of all boards of directors
meetings, allow Bancshares to have a non-voting representative at each such
meeting except to the extent that Fredonia's legal counsel advises the
directors that permitting Bancshares's presence would constitute a breach
of their fiduciary duties, and provide Bancshares with all written
materials and communications provided to the directors in connection with
such meetings.
5.02. Negative Covenants. Except as specifically contemplated by this
Agreement, from the date hereof until the earlier of the termination of the
Agreement or the Effective Time, Fredonia shall not do, and Fredonia will
cause FSB, FBC and Sub not to do, without the prior written consent of
Bancshares, which consent shall not be unreasonably withheld, any of the
following:
(a) incur any material liabilities or material obligations,
whether directly or by way of guaranty, including any obligation for
borrowed money whether or not evidenced by a note, bond, debenture or
similar instrument, except in the ordinary course of business consistent
with past practice;
(b) (i) except as disclosed in Exhibit 3.14(h), grant any
bonuses or increase in compensation to their employees, officers or
directors, (ii) effect any change in retirement or any other benefits to
any class of employees or officers (unless any such change shall be
required by this Agreement or applicable law) which would increase their
retirement benefit liabilities, (iii) adopt, enter into, amend or modify
any Fredonia Benefit Plan except as provided herein, or (iv) hire any
executive officer or elect any new director;
(c) Except as set forth in Exhibit 3.14(d), declare or pay
any dividend on, or make any other distribution in respect of, their
outstanding shares of capital stock except dividends by FSB, FBC or Sub;
(d) (i) redeem, purchase or otherwise acquire any shares of
their capital stock or any securities or obligations convertible into or
exchangeable for any shares of their capital stock, or any options,
warrants, conversion or other rights
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to acquire any shares of their capital stock or any such securities or
obligations; (ii) merge with or into or consolidate with any other
corporation or bank, or effect any reorganization or recapitalization;
(iii) purchase or otherwise acquire any substantial portion of the assets
or any class of stock, of any corporation, bank or other business; (iv)
liquidate, sell, dispose of, or encumber any assets or acquire any assets,
other than in the ordinary course of business consistent with past
practice; or (v) split, combine or reclassify any of their capital or issue
or authorize or propose the issuance of any other securities in respect of,
in lieu of or in substitution for shares of their capital stock;
(e) issue, deliver, award, grant or sell, or authorize or
propose the issuance, delivery, award, grant or sale of, any shares of
their capital stock of any class (including shares held in treasury), any
Voting Debt or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, Voting Debt or convertible securities;
(f) except as required by applicable law, or upon 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), or take any other action to
facilitate, any inquiries or the making of any proposal which constitutes,
or may reasonably be expected to lead to, any Competing Transaction (as
such term is defined below), or negotiate with any person in furtherance of
such inquiries or to obtain a Competing Transaction, or agree to or endorse
any Competing Transaction, or authorize any of their officers, directors or
employees or any investment banker, financial advisor, attorney, accountant
or other representative retained by Fredonia, FSB, FBC or Sub to take any
such action and, upon learning of such action by any representative, shall
take appropriate steps to terminate such action, Fredonia 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 Fredonia, FSB, FBC or Sub; any merger,
consolidation, share exchange or other business combination; a sale, lease,
exchange, mortgage, pledge, transfer or other disposition of a substantial
portion of assets; a sale of shares of capital stock (or securities
convertible or exchangeable into or otherwise evidencing, or any agreement
or instrument evidencing, the right to acquire capital stock);
(g) propose or adopt any amendments to their corporate
charters or bylaws 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;
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(j) change any method of accounting in effect at December 31,
1996, 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, 1996, except as
may be required by law or generally accepted accounting principles;
(k) take action which would or is reasonably likely to (i)
adversely affect the ability of either of Bancshares or Fredonia to obtain
any necessary approvals of governmental authorities required for the
transactions contemplated hereby; (ii) adversely affect Fredonia's ability
to perform its covenants and agreements under this Agreement; or (iii)
result in any of the conditions to the Merger set forth in Article VIII not
being satisfied;
(l) change the lending, investment, asset/liability
management and other material policies concerning the business of Fredonia,
FSB, FBC or Sub, unless required by Law or order or unless such change does
not cause a material adverse effect on Fredonia, FSB, FBC or Sub;
(m) agree in writing or otherwise to do any of the foregoing;
(n) make any single new loan or series of loans not in
accordance with existing loan policies to one borrower or related series of
borrowers in an aggregate amount greater than $250,000.00;
(o) sell or otherwise dispose of securities owned as
investments except at maturity dates or in accordance with past practices
for securities held for sale or trading or in accordance with Generally
Accepted Accounting Principles for securities classified as "held to
maturity"; or
(p) except as set forth in Exhibit 5.02(p), sell or dispose
of any real estate or other assets having a value in excess of $100,000.00.
5.03. Access and Information. Upon reasonable notice, Fredonia shall
(and shall cause FSB, FBC and Sub to) afford to Bancshares's officers,
employees, accountants, counsel and other representatives, access, during
normal business hours during the period prior to the Effective Time, to all
its properties, books, contracts, commitments and records. During such
period, Fredonia shall (and shall cause FSB, FBC and Sub to) furnish
promptly to Bancshares (i) a copy of each Fredonia Report filed or received
by it during such period pursuant to the requirements of the BHC Act and
any other federal or state banking laws promptly after such documents are
available, (ii) the monthly financial statements of FSB, FBC and Sub
promptly after such financial statements are available, (iii) a summary of
any action taken by the Boards of Directors, or any committee thereof, of
Fredonia, FSB, FBC and Sub, and (iv) all other information concerning its
business, properties and personnel as Bancshares may reasonably request.
Unless otherwise required by law, each party will hold any
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information obtained from the other in connection with the transaction
which is nonpublic in confidence until such time as such information
otherwise becomes publicly available through no wrongful act of the party
holding nonpublic information of the other party, and in the event of
termination of this Agreement for any reason each party shall promptly
return all nonpublic documents obtained from the other party, and any
copies made of such documents, to such other party or destroy such
documents and copies.
5.04. Update Disclosure; Breaches. From and after the date hereof until
the earlier of the termination of this Agreement or the Effective Time,
Fredonia and Bancshares shall provide to the other party prompt notice of
any matters which have become known or which have occurred from and after
the date hereof which are material to the financial condition or operations
of the disclosing party or which have a material bearing on any matter
dealt with herein.
5.05. Merger of Sub Into Fredonia. Prior to the Closing Date Fredonia
shall take and shall cause Sub to take such actions as are necessary to
cause Sub to be merged with and into Fredonia.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01. Shareholders Meeting. Fredonia shall call a meeting of its
shareholders to be held as promptly as practicable for the purpose of
voting upon the Merger Agreements.
6.02. Legal Conditions to Merger. Each of Fredonia, Bancshares and FTI
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 FRB 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 Fredonia 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, FTI, Fredonia
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.
6.03. Reports.
(a) Prior to the Effective Time, Fredonia, Bancshares and FTI
shall respectively, prepare and file as and when required all Fredonia
Reports and Bancshares Reports.
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(b) Fredonia, Bancshares and FTI shall prepare such Fredonia
Reports and Bancshares Reports such that (i) they comply in all material
respects with all of the statutes, rules and regulations enforced or
promulgated by the regulatory authority with which they are filed and do
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading, and (ii) with respect to any Fredonia Report or
Bancshares Report containing financial information of the type included in
the Fredonia Financial Statements or the Bancshares Financial Statements,
the financial information (A) is prepared in accordance with accounting
principles and practices as utilized in the Fredonia Financial Statements
or the Bancshares Financial Statements, applied on a consistent basis
(except as stated therein or in the notes thereto) (B) presents fairly the
consolidated financial condition of Fredonia or Bancshares, at the dates,
and the consolidated results of operations and cash flows for the periods,
stated therein and (C) in the case of interim fiscal periods, reflects all
adjustments, consisting only of normal recurring items necessary for a fair
presentation, subject to year-end audit adjustments.
6.04. Brokers or Finders. Bancshares and Fredonia represent, as to
itself or themselves, and their subsidiaries, 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.
6.05. Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use all reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done,
all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated
by this Agreement, including cooperating fully with the other parties. In
case at any time after the Effective Time any further action is reasonably
necessary or desirable to carry out the purposes of this Agreement or to
vest Bancshares with full title to all properties, assets, rights,
approvals, immunities and franchises of either of Fredonia, FSB, FBC or
Sub, the proper officers and directors of each party to this Agreement
shall take all such necessary action.
6.06. Governmental and Other Third Party Approvals. Fredonia, Bancshares
and FTI 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. Fredonia, Bancshares and FTI
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. Fredonia, Bancshares and FTI will provide each other with
copies of all regulatory notices and filings made in
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connection with the transactions contemplated by this Agreement prior to
filing. Bancshares and Fredonia 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 parties advised
of the progress of obtaining all regulatory and third party approvals
required for the consummation of all transactions contemplated by this
Agreement.
6.07 Employee Benefits and Contracts. Following the Effective Time,
Bancshares shall provide generally to officers and employees of Fredonia
and FSB, who at or after the Effective Time become employees of Bancshares
or any of its affiliates, employee benefits under Bancshares employee
pension and welfare benefit plans, on terms and conditions as provided by
said plan agreements. Bancshares also shall cause Fredonia and its
Subsidiaries to honor on terms reasonably agreed upon by Bancshares and
Fredonia all employment, severance, consulting, and other compensation
contracts disclosed in Exhibit 3.11(a) to this Agreement between Fredonia
or FSB and any current or former director, officer, or employee thereof,
and all provisions for vested benefits or other vested amounts earned or
accrued through the Effective Time under the Fredonia Benefit Plans. For
purposes of vesting employees of Fredonia or FSB will be given credit under
Bancshares' Employee Stock Ownership Plan for prior service rendered to
Fredonia or FSB.
6.08 Indemnification.
(a) For a period of six years after the Effective Time,
Bancshares shall indemnify, defend, and hold harmless the present and
former directors, officers, employees, and agents of Fredonia and FSB
(each, an "Indemnified Party") against all liabilities arising out of
actions or omissions occurring at or prior to the Effective Time
(including the transactions contemplated by this Agreement) to the full
extent permitted under Texas Law and by the Articles of Incorporation or
Association and Bylaws of Fredonia and FSB as in effect on the date
hereof, including provisions relating to advances of expenses incurred in
the defense of any litigation. Without limiting the foregoing, in any
case in which approval by Bancshares is required to effectuate any
indemnification, Bancshares shall direct, at the election of the
Indemnified Party, that the determination of any such approval shall be
made by independent counsel mutually agreed upon between Bancshares and
the Indemnified Party.
(b) If Bancshares or any of its successors or assigns shall
consolidate with or merge into any other entity and shall not be the
continuing or surviving entity of such consolidation or merger or shall
transfer all or substantially all of its assets to any entity, then and
in each case, proper provision shall be made so that the successors and
assigns of Bancshares shall assume the obligations set forth in this
Section 6.08.
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(c) The provisions of this Section 6.08 are intended to be
for the benefit of and shall be enforceable by, each Indemnified Party,
his or her heirs and representatives.
ARTICLE VII
CONDITIONS PRECEDENT
7.01. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject
to the satisfaction prior to the Closing Date of the following conditions:
(a) Shareholder Approval. The Merger Agreements shall have
been approved and adopted by the legally required vote of the holders of
the outstanding shares of Fredonia Common Stock at a shareholders meeting
duly called for the purpose of voting on the Merger.
(b) Federal Reserve Board. The Merger Agreements and the
transactions contemplated hereby shall have been approved by the FRB and
other necessary banking authorities without any condition not 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) State Banking Commissioners. The TBC and Arkansas
State Banking Commissioner shall have approved the transfer of ownership of
FSB to FTI without any condition not acceptable to Bancshares.
(d) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger shall be in effect.
(e) No Proceeding or Litigation. No material action, suit or
proceeding before any court or any governmental or regulatory authority
shall have been commenced against Bancshares, Fredonia 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.
(f) Closing Date. The Closing Date shall occur as soon as
practicable but in no event later than December 31, 1997 unless extended by
Fredonia and Bancshares.
(g) Consents Under Agreements. Bancshares, Fredonia 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.
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(h) Securities Laws. A registration statement for the
Bancshares Stock shall have become effective under the Securities Act and
shall not be the subject of any stop order or proceedings seeking a stop
order. Bancshares shall have obtained all securities or "blue sky" permits
and other authorizations necessary under state securities laws for
Bancshares to issue the Bancshares Stock and consummate the Merger.
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 Fredonia set forth in this Agreement
shall be true and correct in all material respects (except that where any
statement in a representation or warranty expressly includes a standard of
materiality, such statement shall be true and correct in all respects) as
of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date, except for
changes expressly contemplated by this Agreement.
(b) Performance of Obligations of Fredonia. Fredonia 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 Fredonia by the chief executive officer and by the
chief financial officer of Fredonia to such effect.
(c) Opinion of Counsel. Fredonia shall have delivered to
Bancshares an opinion of its counsel, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P., dated
as of the Closing Date and in form and substance satisfactory to counsel
for Bancshares, to the aggregate effect that: (i) Fredonia has been duly
incorporated and organized and is a corporation validly existing in good
standing under the laws of Texas with full corporate power and authority to
enter into this Agreement and the Plan of Merger and to consummate the
transactions contemplated thereby; (ii) all corporate proceedings and other
actions on the part of Fredonia necessary to be taken in connection with
the Merger and (except for the filing of the Articles of Merger) necessary
to make same effective have been duly and validly taken; (iii) this
Agreement and the Plan of Merger have been duly and validly authorized,
executed and delivered on behalf of Fredonia and constitute (subject to
standard exceptions to enforceability arising from the bankruptcy laws and
rules of equity) valid and binding agreements of Fredonia; (iv) the
execution of the Articles of Merger by Fredonia has been duly and validly
authorized; and (v) Fredonia is governed by the TBCA.
(d) No Material Adverse Change. There shall have been no
material adverse change since December 31, 1996 in the financial condition,
results of operations or business of Fredonia.
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(e) Environmental Audits. Phase I environmental audits of
the Fredonia Property shall have been conducted at Bancshares's expense and
shall, to Bancshares's satisfaction, reflect no material problems under
Environmental Laws. Unless Bancshares notifies Fredonia on or before
August 1, 1997, that Bancshares is not satisfied with the results of any
such audit performed, Bancshares shall waive its right to assert this
condition to Closing.
(f) Pooling Opinion. Bancshares shall have received an
opinion from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP to the effect that the Merger qualifies
for pooling-of-interests accounting treatment under applicable accounting
principles and that it will be so treated by the SEC if consummated in
accordance with the Merger Agreements.
(g) Merger of Sub Into Fredonia. Sub shall have been merged
with and into Fredonia.
(h) Affiliates. Each person who receives a portion of the
Bancshares Stock and who might reasonably be considered to be an affiliate
of Fredonia, as defined in paragraph (a) of Rule 144 of the Rules of the
Securities and Exchange Commission under the Securities Act, shall have
executed and delivered at Closing a letter substantially in the form set
forth in Exhibit 7.02(h).
(i) 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.
(j) Dissenting Shares. The number of Dissenting Shares shall
not exceed 10% of the Fredonia Common Stock.
(k) Dissolution of FBC. FBC shall have been dissolved.
(l) Fredonia Optionholders. Each holder of Options to
purchase shares of Fredonia Common Stock shall have entered into a written
agreement with Bancshares, FTI and Fredonia providing that each
optionholder will accept in full satisfaction of Fredonia's obligations
under all stock Options granted to said optionholder the option conversion
shares determined in accordance with Section 2.01(h) above.
7.03. Conditions to Obligations of Fredonia . The obligations of
Fredonia to effect the Merger are subject to the satisfaction of the
following conditions unless waived by Fredonia:
(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 (except that where any
statement in a representation or warranty expressly includes a standard of
materiality, such statement shall be true and correct in all respects) as
of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Closing
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Date as though made on and as of the Closing Date, except for changes
expressly contemplated by this Agreement, and Fredonia shall have received
a certificate signed on behalf of Bancshares by the chief executive officer
and by the chief financial officer of Bancshares 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 Fredonia shall have received a
certificate signed on behalf of Bancshares by the chief executive officer
and by the chief financial officer of Bancshares to such effect.
(c) Opinion of Counsel. Bancshares shall have delivered to
Fredonia an opinion of its counsel, Mitchell, Williams, ▇▇▇▇▇, Gates &
▇▇▇▇▇▇▇▇, P.L.L.C., dated as of the Closing Date and in form and substance
satisfactory to counsel for Fredonia, to the aggregate effect that: (i)
Bancshares and FTI are corporations validly existing under the laws
Arkansas with full corporate power and authority to enter into this
Agreement and the Plan of Merger and to consummate the transactions
contemplated thereby; (ii) all corporate proceedings and other actions on
the part of Bancshares or FTI necessary to be taken in connection with the
Merger and (except for the filing of the Articles of Merger) necessary to
make same effective have been duly and validly taken; (iii) this Agreement
has been duly and validly authorized, executed and delivered on behalf of
Bancshares and FTI and constitutes (subject to standard exceptions to
enforceability arising from the bankruptcy laws and rules of equity) a
valid and binding agreement of Bancshares and FTI; and (iv) the execution
of the Articles of Merger by FTI has been duly and validly authorized.
(d) No Material Adverse Change. There shall have been no
material adverse change since December 31, 1996 in the financial condition,
results of operations or business of Bancshares.
(e) Authorized Shares. The shares of Bancshares Stock to be
delivered to Fredonia Shareholders pursuant to this Agreement shall have
been authorized for listing on the Nasdaq Market.
(f) Federal Income Tax Opinion. Fredonia shall have received
an opinion from counsel to Fredonia that, for federal income tax purposes,
(i) the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code; (ii) no gain or loss will be recognized by
holders of Fredonia Common Stock upon receipt of Bancshares Stock except
for cash received in lieu of fractional shares; (iii) the aggregate tax
basis of Bancshares Stock received by a Fredonia Shareholder will be the
same as the aggregate basis of the Fredonia Common Stock surrendered in
exchange therefor, and (iv) the holding period of the Bancshares Stock to
be received by each Fredonia Shareholder will include the period during
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which the Shareholder held the Fredonia Common Stock surrendered in
exchange therefor, provided that the Fredonia Common Stock is held as a
capital asset as of the date of exchange.
(g) Fairness Opinion. Fredonia shall have received letters
from ▇▇▇▇▇▇ & ▇▇▇▇▇▇, Incorporated dated the date of the mailing of the
Proxy Statement to the Fredonia Shareholders and dated the date of the
meeting of Fredonia Shareholders, in each case in form and substance
acceptable to Fredonia, confirming such financial advisor's prior opinion
to the Board of Directors of Fredonia that the consideration to be paid in
the Merger is fair to the Fredonia Shareholders from a financial point of
view.
(h) Pricing Average. The Pricing Average shall not have
decreased below $32.00.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.01. Termination. This Agreement and the Plan of Merger may be
terminated at any time prior to the Effective Time:
(a) by mutual consent of the Board of Directors of Bancshares
and the Board of Directors of Fredonia;
(b) by either Bancshares or Fredonia (A) if there has been a
breach in any material respect (except that where any statement in a
representation or warranty expressly includes a standard of materiality,
such statement shall have been breached in any respect) of any
representation, warranty, covenant or agreement on the part of Fredonia, on
the one hand, or Bancshares or FTI on the other hand, respectively, set
forth in this Agreement, or (B) if any representation or warranty of
Fredonia on the one hand, or Bancshares or FTI on the other hand,
respectively, shall be discovered to have become untrue in any material
respect (except that where any statement in a representation or warranty
expressly includes a standard of materiality, such statement shall have
become untrue in any respect), in either case which breach or other
condition has not been cured within 10 business days following receipt by
the nonterminating party of notice of such breach or other condition from
the terminating party;
(c) by either Bancshares or Fredonia if any permanent
Injunction preventing the consummation of the Merger shall have become
final and nonappealable;
(d) by either Bancshares or Fredonia if the Merger shall not
have been consummated on or before December 31, 1997, for a reason other
than the failure of the terminating party to comply with its obligations
under this Agreement;
(e) by either Bancshares or Fredonia if the FRB has denied
approval of the Merger and such denial has become final and nonappealable;
or
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(f) either by Bancshares or Fredonia 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 Fredonia 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 Fredonia, Bancshares,
FTI 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 or their representations, warranties, covenants or agreements set
forth in this Agreement.
8.03. Amendment. Subject to the next following sentence, this Agreement
and the Plan of Merger may be amended by the parties hereto by action taken
or authorized by the respective Boards of Directors of Bancshares and
Fredonia at any time prior to the Closing Date. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
8.04. Extension; Waiver. At any time prior to the Effective Time,
Bancshares, on the one hand, and Fredonia, on the other hand, by action
taken or authorized by their respective Boards of Directors, may, to the
extent legally allowed, (i) extend the time for the performance of any of
the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties of the other contained
herein or in any document delivered by the other pursuant hereto, and (iii)
waive compliance by the other with any of the agreements or conditions
contained 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):
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(a) if to Bancshares, to
First United Bancshares, Inc.
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Chief Financial Officer
P. ▇. ▇▇▇ ▇▇▇
▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Mitchell, Williams, ▇▇▇▇▇, Gates & ▇▇▇▇▇▇▇▇, P.L.L.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(b) if to Fredonia to:
Fredonia Bancshares, Inc.
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇, Chairman and President
P. O. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P.
South Tower Pennzoil Place
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
9.02. Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall
be deemed to be followed by the words "without limitation." The phrase
"made available" in this Agreement shall mean that the information referred
to has been made available if requested by the party to whom such
information is to be made available.
9.03. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed
by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
9.04. Entire Agreement. This Agreement (including the documents and the
instruments referred to herein, including the Plan of Merger) constitutes
the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter hereof.
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9.05. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Arkansas.
9.06. Publicity. The parties hereto agree that they will consult with
each other concerning any proposed press release or public announcement
pertaining to the Merger and will use their best 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. 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 the Parties. Wherever in this Agreement any
representation or warranty is made upon the knowledge of a party hereto
that is not an individual, such knowledge shall include the actual
knowledge, after due inquiry, of any executive officer of such party or an
executive officer of any subsidiary thereof.
9.09. Expenses. Except as otherwise provided herein, all Expenses
incurred by Bancshares and Fredonia in connection with or related to the
authorization, preparation and execution of this Agreement, the Plan of
Merger, and all other matters related to the closing of the transactions
contemplated hereby, including, without limitation of the generality of the
foregoing, all fees and expenses of agents, representatives, counsel and
accountants employed by either such party or its affiliates, shall be borne
solely and entirely by the party which has incurred the same.
9.10. Non-Survival of Representations and Warranties. Except as
hereinafter provided, 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.
9.11. Break Up Fee. In the event that all of the conditions to Closing
set forth in Sections 7.01 and 7.02 of this Agreement (excluding Subsection
7.01(f)) have been satisfied in time to allow for Closing on or before
December 31, 1997 and Bancshares, without right to terminate this Agreement
pursuant to Article VIII, elects not to close, then Bancshares shall pay to
Fredonia Three Million Dollars ($3,000,000.00) as liquidated damages, it
being agreed that actual damages are
38
40
impossible to quantify or estimate. Said amount shall be in lieu of and in
full satisfaction of all rights of Fredonia to damages or other
compensation under this Agreement.
IN WITNESS WHEREOF, Fredonia, Bancshares and FTI have caused this
Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
FIRST UNITED OF TEXAS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
ATTEST:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary
FIRST UNITED BANCSHARES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman, President and
Chief Executive Officer
ATTEST:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary
FREDONIA BANCSHARES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
Chairman and President
ATTEST:
/s/ J.R. ▇▇▇▇▇
------------------------------
J.R. ▇▇▇▇▇, Vice President
39
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EXHIBIT A
PLAN OF MERGER
This Plan of Merger, dated as of ______, 1997 ("Plan of Merger"),
by and between First United Bancshares, Inc., an Arkansas corporation
("Bancshares"), First United of Texas, Inc., an Arkansas corporation
("FTI"), and Fredonia Bancshares, Inc., a Texas corporation ("Fredonia").
WHEREAS, Fredonia is a corporation with authorized capital stock
consisting of 2,000,000 shares of common stock, $10.00 par value of which
472,342 shares of common stock ("Fredonia Common Stock") are validly issued
and outstanding and 26,838 shares are held by Fredonia in its treasury on
the date hereof;
WHEREAS, FTI 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, FTI is a corporation duly organized and existing under the
laws of Arkansas;
WHEREAS, concurrently with the execution and delivery of this Plan
of Merger, Bancshares, FTI and Fredonia 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 Fredonia
with and into FTI (the "Merger") upon the terms and conditions provided in
this Plan of Merger and the Agreement and pursuant to the Arkansas Business
Corporation Act (the "ABCA") and the Texas Business Corporation Act (the
"TBCA");
WHEREAS, the Boards of Directors of Bancshares, FTI and ▇▇▇▇▇▇▇▇
▇▇▇▇ it fair and equitable to, and in the best interests of, their
respective corporations and shareholders that Fredonia be merged with and
into FTI with FTI being the surviving corporation, and each such Board of
Directors has approved this Plan of Merger, has authorized its execution
and delivery, and has directed that this Plan of Merger and the Merger be
submitted to Fredonia's, FTI's and Bancshares' shareholders for approval,
and has recommended that the shareholders approve the Merger.
NOW, THEREFORE, in consideration of the promises and 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, Fredonia will be merged with and into FTI , which will
continue as the surviving corporation, in accordance with and with the
effect provided in the ABCA.
42
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 FTI and Fredonia and thereafter
delivered to the Secretaries of State of States of Arkansas and Texas for
filing, as provided in the ABCA, and 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
Secretaries of State of Arkansas and Texas or at such time within two
business days thereafter as is provided in the Articles of Merger (the
"Effective Time").
1.03. Effects of the Merger. (a) At the Effective Time, (i)
the separate existence of Fredonia shall cease and Fredonia shall be merged
with and into FTI ( FTI and Fredonia are sometimes referred to herein as
the "Constituent Corporations" and FTI is sometimes referred to herein as
the "Surviving Corporation"), (ii) the Articles of Incorporation of FTI in
effect as of the Effective Time (the "Articles") shall be the Articles of
Incorporation of the Surviving Corporation, and (iii) the Bylaws of FTI in
effect as of the Effective Time (the "Bylaws") shall be the Bylaws of the
Surviving Corporation.
(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.
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ARTICLE II
EFFECT OF THE MERGER ON THE COMMON STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
2.01. Conversion of Fredonia Common Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of the
holder of any shares of Fredonia Common Stock, but subject to the rights of
dissenting shareholders of Fredonia:
(a) Conversion of Fredonia Common Stock and Options.
The issued and outstanding shares of Fredonia Common Stock and options to
purchase Fredonia Common Stock ("Options") shall be converted in accordance
with the Agreement into the right to receive the consideration provided in
Section 2.01 of the Agreement.
(b) Cancellation of Shares. All shares of Fredonia
Common Stock and Options 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 or Options shares 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. Exchange of Certificates. (a) Exchange Agent. As of the
Effective Time, Bancshares shall deposit with the Trust Department of First
National Bank of El Dorado, El Dorado, Arkansas or such other bank or trust
company designated by Bancshares (the "Exchange Agent") for the benefit of
the holders of shares of Fredonia Common Stock, for exchange in accordance
with this Article II through the Exchange Agent, the number of shares of
Bancshares common stock and cash (the "Exchange Fund") to be paid pursuant
to Section 2.01 in exchange for shares of Fredonia Common Stock and Options
outstanding immediately prior to the Effective Time.
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time, the Exchange Agent shall mail to each
holder of record of a certificate or certificates which immediately prior
to the Effective Time represented outstanding shares of Fredonia Common
Stock or Options (the "Certificates") whose shares or Options were
converted into the right to receive shares of Bancshares common stock and
cash pursuant to Section 2.01, (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions as
Bancshares may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Bancshares
common stock and cash payment due. Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may
be appointed by Bancshares, together with such letter of transmittal, duly
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executed, the holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing the number of whole shares of
Bancshares common stock and cash which such holder has the right to receive
pursuant to Section 2.01 of the Agreement, and the Certificate so
surrendered shall forthwith be cancelled. Until surrendered as
contemplated by this Section 2.02, each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon
such surrender the consideration specified in Section 2.01 of the
Agreement.
(c) Distributions with Respect to Unexchanged Shares.
No delivery of Bancshares common stock or cash payment of any kind shall be
made to the holder of any unsurrendered Certificate until the holder of
record of such Certificate shall surrender such Certificate.
(d) No Further Ownership Rights in Fredonia Common
Stock. The consideration paid upon the surrender of shares of Fredonia
Common Stock or Options in accordance with the terms hereof including any
cash shall be deemed to have been paid in full satisfaction of all rights
pertaining to such shares of Fredonia Common Stock or Options, and there
shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of the shares of Fredonia Common Stock or
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 to the shareholders of Fredonia
for six months after the Effective Time shall be delivered to Bancshares,
upon demand, and any shareholders of Fredonia who have not theretofore
complied with this Section 2.02 shall thereafter look only to Bancshares
for payment of the Bancshares common stock and cash due for their Fredonia
stock.
(f) No Liability. Neither Bancshares, FTI nor
Fredonia shall be liable to any holder of shares of Fredonia Common Stock
for shares of Bancshares common stock or cash from the Exchange Fund
delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
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.
3.02. Termination. This Plan of Merger may be terminated and
the Merger abandoned by mutual consent of the respective Boards of
Directors of Fredonia and Bancshares at any time prior to the Effective
Time. If the Agreement
4
45
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 Fredonia or United.
3.03. Amendment. Subject to the next following sentence, 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. At any time prior to the Closing Date,
Bancshares and Fredonia, 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 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 FTI or Bancshares, to
First United Bancshares, Inc.
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Chief Financial Officer
P. ▇. ▇▇▇ ▇▇▇
▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Mitchell, Williams, ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
P.L.L.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(b) if to Fredonia, to
Fredonia Bancshares, Inc.
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇, Chairman and
President
P. O. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P.
South Tower Pennzoil Place
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▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
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. Governing Law. This Plan of Merger shall be governed and
construed in accordance with the laws of the State of Arkansas.
IN WITNESS WHEREOF, Fredonia, FTI 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.
FIRST UNITED OF TEXAS, INC.
By:
------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
ATTEST:
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary
FIRST UNITED BANCSHARES, INC.
By:
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman, President
and Chief Executive
Officer
ATTEST:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary
FREDONIA BANCSHARES, INC.
By:
------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
Chairman and President
ATTEST:
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EXHIBIT 7.02(h)
First United Bancshares, Inc.
Main and ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
I may presently be considered to be an "affiliate", as defined in
paragraph (a) of Rule 144 of the Rules and Regulations of the Securities
and Exchange Commission ("SEC") under the Securities Act of 1933, as
amended (the "Act"), of Fredonia Bancshares, Inc. a Texas Corporation
("Fredonia"). Pursuant to the merger (the "Merger") of Fredonia with and
into a subsidiary of First United Bancshares, Inc. ("First United"), I will
acquire __________ shares of the common stock, par value $1 per share
("Common Stock"), of First United . I represent and warrant that I (i) am
acquiring said shares (as the same may be increased, decreased or are
changed in accordance with the Agreement and Plan of Merger dated
____________, 1997, relating to the Merger, the ("Shares")) for my own
account (or in the capacity indicated hereon) and with no present intention
of dividing my participation with others or otherwise making a distribution
of the Shares and (ii) shall not make any sale, transfer or other
disposition of the Shares in violation of the Act or the General Rules and
Regulations promulgated thereunder by the SEC.
I have been advised that the Shares issued to me pursuant to the
Merger have been registered under the Act in the Registration Statement on
SEC Form S-4, as amended, Registration No. __________ ("Registration
Statement") as filed with the SEC, receipt of a copy of which Registration
Statement is hereby acknowledged. However, I have also been advised that
any public offering or sale by me of any of the Shares will, under current
law, require either (i) the further registration (by amendment of such Form
S-4 or otherwise) under the Act of the Shares to be sold or (ii) compliance
with Rule 145 promulgated under the Act or (iii) the availability of
another exemption from such registration.
I agree not to sell, transfer or dispose of the Shares unless (i)
there is in effect a registration statement under the Act covering such
sale, transfer, or other disposition, or (ii), such sale, transfer or
disposition complies with Rule 145 or is otherwise exempt from
registration. Further, I will furnish to First United such documentation
incident to such sale, transfer or other disposition as First United shall
reasonably request evidencing compliance with Rule 145 or the availability
of any exemption from registration being claimed. Such documentation shall
be provided to First United prior to any such sale, transfer or other
disposition in order that First United, and its counsel may have a
reasonable opportunity to review the documentation and form an opinion as
to the validity of any such exemption.
I agree that notwithstanding any provision herein or contained in
the Agreement and Plan of Reorganization that I will not sell, transfer, or
otherwise dispose of any of the Shares unless First United has made public
disclosure of financial results reflecting 30 days' of post-Merger combined
operations of Fredonia and First United within the meaning of Section
201.01 of the SEC's Codification of Financial Reporting Policies. First
United has agreed to make the required public disclosure of financial
results as set out above as soon as feasible after the Merger is
consummated. In addition, I hereby represent and warrant to First United
that I have not made any sales of Fredonia or First United common stock
during the 30-day period immediately preceding the date hereof and I
further agree not to engage in any such sales prior to the Merger, nor have
I pledged or will I pledge any First United or Fredonia common stock to
secure any obligation during such period.
I represent and warrant to First United that:
1. I have carefully read this letter and discussed its
requirements and other applicable limitations upon the sale, transfer or
other disposition of the Shares, to the extent I felt necessary, with my
counsel or counsel for Fredonia.
2. I have been informed by First United that any distribution
by me of the Shares has not been registered under the Act and that the
Shares must be held by me indefinitely until (i) such distribution of the
Shares has been registered under the Act, (ii) a sale of the Shares is made
in conformity with the volume and other limitations of Rule 145 promulgated
by the SEC under the Act, or (iii) some other exemption from registration
is available with respect to any such proposed sale, transfer or other
disposition of the Shares.
3. I have been informed by First United that it is required
to file periodic reports with the SEC and the NASDAQ and that certain sales
of the Shares by me may not be required to be registered under the Act by
virtue of Rule
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145 promulgated by the SEC under the Act, provided that such sales are made
in accordance with all of the terms and conditions of such Rule, including
among other things the following:
(a) The amount of First United Common Stock sold by me
pursuant to Rule 145 during any period of three months cannot exceed the
quantity limit of (i) one percent of the total outstanding First United
Common Stock or (ii) the average reported weekly trading volume on NASDAQ
during the four week period immediately preceding receipt of the order by
the broker to execute the transaction, whichever of (i) or (ii) is greater.
In computing the quantity limit it is necessary to count sales not only by
me but also by certain immediate family members and other related persons
and others with whom I may act in concert.
(b) Sales must be made in brokers' transactions as
defined by the SEC Rule 144 (certain provisions of which are incorporated
by reference into Rule 145).
(c) No sales may be made under the Rule unless First
United has filed all SEC reports required to be filed by First United.
(d) The broker must be given information showing
compliance with Rule 145.
4. I understand that First United is under no obligation to
register the sale, transfer or other disposition of the Shares by me or on
my behalf or to take any other action necessary in order to make compliance
with an exemption from registration available.
5. I understand and agree that stop transfer instructions
will be issued with respect to the Shares and there will be placed on the
certificates representing such Shares, or any certificate delivered in
substitution therefor, a legend stating in substance:
"The shares represented by this Certificate were issued in
a transaction to which Rule 145 under the Securities Act
of 1933, as amended, applied. The shares represented by
this certificate may be transferred only in accordance
with the terms of a letter agreement dated
_______________, 1997, by the registered holder in favor
of First United Bancshares, Inc., a copy of which
agreement is on file at the principal offices of First
United Bancshares, Inc."
I have been informed by First United that after the
restrictions imposed by Rule 145 have expired First United will, upon my
request, reissue share certificates for the shares which do not contain a
restrictive legend.
6. I understand and agree that unless the transfer by me of
Shares is a sale made in compliance with the provisions of this letter,
First United reserves the right to place the following legend on any
certificates issued to my transferee:
"The shares represented by this Certificate have not been
registered under the Securities Act of 1933, as amended,
and were acquired from a person who received such shares
in a transaction to which Rule 145 under the Securities
Act of 1933, as amended, applied. The shares have not
been acquired by the holder with a view to, or for resale
in connection with, any distribution thereof within the
meaning of the Securities Act of 1933, as amended, and may
not be sold, pledged otherwise transferred unless the
shares have been registered under the Securities Act of
1933, as amended, or an exemption from registration is
available."
7. I understand and agree that the legends set forth in
paragraphs 5 and 6 above shall be removed by delivery of substitute
Certificates without any legend if I deliver to First United a copy of a
letter from the staff of the Commission, or an opinion of counsel in form
and substance reasonably satisfactory to First United, to the effect that
no such legend is required for the purpose of the Securities Act.
8. I have been informed by First United that if I propose to
sell any of these Shares pursuant to Rule 145, and if such sale would be
permitted under the terms of this letter, First United will, upon my
written request, supply me with the following:
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(a) A statement as to whether First United has
complied with the provisions of Rule 145 regarding filing of SEC reports as
a condition to sales made pursuant to that Rule;
(b) A confirmation as to the number of shares of First
United Common Stock outstanding as shown by the most recent report or
statement published by it; and
(c) First United's taxpayer identification number and
SEC file number.
I have carefully read this letter and have had an adequate
opportunity to review the Merger Agreement and understand the requirements
and the limitations imposed upon the distribution, sale, transfer or other
disposition of Fredonia common stock or Shares of First United.
Very truly yours,
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