AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
FIRST M&F CORPORATION
AND
MERCHANTS & FARMERS BANK
AND
COMMUNITY FEDERAL BANCORP
AND
COMMUNITY FEDERAL BANK
AGREEMENT AND PLAN OF MERGER
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THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of the 8th day
of July, 1999, is made between Community Federal Bancorp, Inc., Tupelo,
Mississippi, a Delaware corporation ("Community Federal"), First M&F
Corporation, Kosciusko, Mississippi, a Mississippi corporation ("First M&F"),
Community Federal Bank, Tupelo, Mississippi, a federally chartered savings bank
("Community Federal Bank"), and Merchants & Farmers Bank, Kosciusko,
Mississippi, a Mississippi state bank ("M&F Bank").
In consideration of their mutual promises and obligations, the parties agree
that Community Federal shall be merged with and into First M&F on the terms and
subject to the conditions set forth in this Agreement:
ARTICLE 1
DEFINITIONS
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Certain Defined Terms. As used in this Agreement, the following terms shall
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have the following meanings (such meaning to be equally applicable to both the
singular and plural forms of the terms defined):
1.1 "Agreement" shall mean this Agreement and Plan of Merger by and between
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Community Federal, First M&F, Community Federal Bank and M&F Bank and any
amendments thereto. References to Articles, Sections, Schedules and the like
refer to the Articles, Sections, Schedules and the like of this Agreement unless
otherwise indicated.
1.2 "Business Day" shall mean a day on which M&F Bank is open for business
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and which is not a Saturday, Sunday or legal bank holiday.
1.3 "Community Federal Bank" means Community Federal Bank, a federally
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chartered savings bank that was organized on August 25, 1994, organized and
existing under and pursuant to the laws of the United States of America and
maintaining its principal place of business and registered address at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
1.4 "Community Federal" means Community Federal Bancorp, Inc., a corporation
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duly chartered in November 1995, organized, and existing under and pursuant to
the laws of the State of Delaware; maintaining its principal place of business
at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ in Tupelo, ▇▇▇ County, Mississippi.
1.5 "Closing" The closing (the "Closing") of the transactions contemplated
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herein will take place at a place and on a date that is mutually agreed to by
the parties ("Closing Date") that is within thirty (30) days following the later
of the date of receipt of all applicable regulatory approvals relating to the
transactions contemplated herein, the expiration of all applicable statutory and
regulatory waiting periods relative thereto, the date the Registration Statement
(the "Registration Statement") filed with the SEC is declared effective, the
dates on which the Community Federal shareholders and the First M&F shareholders
approve the Agreement, or such earlier or later date as may be agreed to by the
parties. At the Closing the parties shall each deliver to the other such
evidence of the satisfaction of the conditions to the Merger (as defined in
Section 2.1 hereof) as may reasonably be required (including material required
to be delivered under this Agreement).
1.6 "Effective Date" The Merger shall become effective as of the date and
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time specified in Articles of Merger filed with the Secretary of State of the
State of Mississippi pursuant to the provisions of Article 11 of the Mississippi
Business Corporation Act (the "MBCA") and the Certificate of Merger filed with
the Delaware Secretary of State pursuant to Section 252 of the Delaware General
Corporation Law (the "DGCL").
1.7 "FDIC" means that agency of the United States of America known as the
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Federal Deposit Insurance Corporation, or any successor United States
governmental agency which insures deposits of commercial banks.
1.8 "FRB" means that agency of the United States of America which acts in
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the capacity of a governmental central bank known as the Federal Reserve System
represented by actions of its Board of Governors, having regulatory authority
over bank holding companies, or any successor United States governmental agency
performing the function of exercising such regulatory authority.
1.9 "First M&F" means First M&F Corporation, a corporation duly chartered,
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organized and existing under and pursuant to the laws of the State of
Mississippi; maintaining its principal place of business at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
in Kosciusko, Attala County, Mississippi.
1.10 "M&F Bank" means Merchants & Farmers Bank, a Mississippi banking
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corporation, duly chartered, organized and existing under and pursuant to the
laws of the State of Mississippi and maintaining its principal place of business
at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, in Kosciusko, Attala County, Mississippi.
1.11 "MDBCF" means the Department of Banking and Consumer Finance of the
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State of Mississippi having regulatory authority over M&F Bank or any successor
Mississippi governmental agency exercising such regulatory authority.
1.12 "OTS" means the Office of Thrift Supervision having regulatory
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authority over Community Federal Bank.
1.13 "Party" shall mean First M&F, M&F Bank, Community Federal or Community
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Federal Bank and "Parties" shall mean First M&F, M&F Bank, Community Federal and
Community Federal Bank.
1.14 "Person" shall mean any individual, corporation, partnership, joint
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venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
1.15 "SEC" means that agency of the United States of America known as the
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Securities and Exchange Commission.
1.16 "Trading Day" means a day on which First M&F Common Stock is traded as
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reported on the NASDAQ National Market System.
ARTICLE 2
THE MERGER AND RELATED MATTERS
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2.1 Merger. On the Effective Date, Community Federal shall be merged with
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and into First M&F (the "Merger") pursuant to the provisions of this Agreement,
the provisions of and with the effect provided in, Article 11 of the MBCA and
Section 252 of the DGCL and the Merger Agreement in substantially the form of
Exhibit A hereto (the "Merger Agreement"). For federal income tax purposes, it
is intended that the Merger shall qualify as a reorganization under Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code"), and
the applicable IRS regulations. The Parties expect that the Merger will further
certain of their business objectives, including, and without limitation, the
expansion of operations as a financial institution.
2.2 The Closing.
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a. The Closing of the transactions contemplated herein will take place,
assuming satisfaction or waiver of each of the conditions set forth in
Article 8 hereof, on the date provided in Section 1.5.
b. At the Closing (i) Community Federal and Community Federal Bank, on the
one hand, and First M&F and M&F Bank, on the other hand, shall each provide
to the other such proof of satisfaction of the conditions set forth in
Article 8 as the Party whose obligations are conditioned upon such
satisfaction may reasonably request, (ii) the certificates and letters
required by Article 8 shall be delivered, (iii) the appropriate officers of
the Parties shall complete the execution, acknowledgment and delivery of the
Merger Agreement and (iv) the Parties shall take such further action as is
required to consummate the transactions contemplated by this Agreement and
the Merger Agreement.
2.3 Effect of Merger. Upon consummation of the Merger, the separate
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corporate existence of Community Federal shall cease and First M&F shall
continue as the surviving corporation. The name of First M&F, as the surviving
corporation, shall by virtue of the Merger remain unchanged. On the Effective
Date, all of the assets and property of every kind and character, real, personal
and mixed, tangible and intangible, choses in action, rights and credits then
owned by Community Federal, or which would inure to it, shall immediately by
operation of law and without any conveyance or transfer or without any further
action or deed, be vested in and become the property of First M&F, which shall
have, hold and enjoy the same in its own right as fully and to the same extent
as the same were possessed, held and enjoyed by Community Federal prior to such
Merger, and First M&F shall be a continuation of the original entities and all
of the rights and obligations of Community Federal shall remain unimpaired, and
First M&F, on the Effective Date of the Merger shall succeed to all such rights,
obligations, duties and liabilities connected therewith.
2.4 Bank Merger. First M&F and Community Federal shall take all action
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necessary and appropriate to cause Community Federal Bank to merge into M&F Bank
simultaneously with or after the consummation of the Merger.
2.5 Stock Option Agreement. Simultaneously with the execution of this
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Agreement and as a condition thereto, the parties have executed a Stock Option
Agreement, providing First M&F an option to acquire up to 19.9% of the
outstanding shares of Community Federal, if certain triggering events occur.
ARTICLE 3
CONVERSION OF STOCK
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3.1 Conversion of Community Federal Stock.
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a. On the Effective Date, each share of the common stock, $5.00 par value,
of First M&F ("First M&F Common Stock") issued and outstanding immediately
prior to the Effective Date shall remain outstanding and shall represent one
share of First M&F Common Stock.
b. On the Effective Date, each share of common stock, $.01 par value, of
Community Federal ("Community Federal Common Stock") issued and outstanding
immediately prior to the Effective Date, other than shares of Community
Federal Common Stock owned by shareholders who pursuant to Section 262 of
the DGCL perfect appraisal rights, shall by virtue of the Merger be
converted into (i) .2855 shares of First M&F Common Stock, subject to
adjustment as set forth in Section 12.1g, and (ii) the right to receive
$8.8457 in cash (the "Exchange Ratio"). On the Effective Date, all shares of
Community Federal Common Stock held in treasury will be canceled and
terminated and will not be converted into shares of First M&F Common Stock.
The stock portion of the Exchange Ratio may be adjusted upward and the cash
portion of the Exchange Ratio reduced proportionally in a mutually
acceptable manner if necessary in the event neither ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Winter &
Stennis, P.A., nor Elias, Matz, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ L.L.P. can give an
opinion that the Merger qualifies as a reorganization within the meaning of
Section 368 of the Code.
c. The Exchange Ratio shall be subject to appropriate proportionate
adjustments in the event that, subsequent to the date of this Agreement but
prior to the Effective Date, the outstanding shares of First M&F Common
Stock shall have been increased, decreased, changed into or exchanged for a
different number or kind of shares or securities through reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse
stock split or other like changes in First M&F capitalization.
d. As a result of the Merger and without any action on the part of the
holder thereof, on the Effective Date, all shares of Community Federal
Common Stock shall cease to be outstanding and shall be canceled and retired
and shall cease to exist, and each holder of a certificate (a "Certificate")
representing any shares of Community Federal Common Stock shall thereafter
cease to have any rights with respect to such shares of Community Federal
Common Stock, except the right to receive, without interest, the First M&F
Common Stock and cash in accordance with Section 3.1b and c, and cash for
fractional shares of First M&F Common Stock in accordance with Section 3.2e
upon the surrender of such Certificate.
3.2 Exchange of Certificates Representing Community Federal Common Stock.
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a. As of the Effective Date, First M&F shall deposit, or shall cause to be
deposited, with Registrar and Transfer Company, as exchange agent (the
"Exchange Agent"), for the benefit of the holders of shares of Community
Federal Common Stock, for exchange in accordance with this Article 3,
certificates representing the shares of First M&F Common Stock and cash
(such certificates for shares of First M&F Common Stock and cash being
hereinafter referred to as the "Exchange Fund") to be issued pursuant to
Section 3.1 and paid pursuant to this Section 3.2 in exchange for
outstanding shares of Community Federal Common Stock.
b. Within five (5) business days after the Effective Date, First M&F shall
cause the Exchange Agent to mail to each holder of record of a Certificate
or Certificates (other than those representing shares with respect to which
the holder thereof has perfected appraisal rights under the DGCL and has not
subsequently lost, withdrawn or forfeited such rights) (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 First M&F may reasonably specify and (ii) instructions
for use in effecting the surrender of the Certificates in exchange for
certificates representing shares of First M&F Common Stock, cash in lieu of
fractional shares and $8.8457 in cash per share. Upon surrender of a
Certificate for cancellation to the Exchange Agent together with such letter
of transmittal, duly executed and completed in accordance with the
instructions thereto, the holder of such Certificate shall be entitled to
receive in exchange therefor (x) a certificate representing that number of
whole shares of First M&F Common Stock and (y) a check in the amount of cash
that such holder has the right to receive pursuant to this Agreement after
giving effect to any required withholding tax, and the Certificate so
surrendered shall forthwith be canceled. No interest will be paid or accrued
on the value of any First M&F Common Stock or cash payable to holders of
Certificates. In the event of a transfer of ownership of Community Federal
Common Stock which is not registered in the transfer records of Community
Federal, a certificate representing the proper number of shares of First M&F
Common Stock, together with a check in the amount of cash that such holder
has the right to receive pursuant to this Agreement after giving effect to
any required withholding tax, may be issued to such a transferee if the
Certificate representing such Community Federal Common Stock is presented to
the Exchange Agent, accompanied by all documents required to evidence and
effect such transfer and to evidence that any applicable stock transfer
taxes have been paid.
c. Notwithstanding any other provisions of this Agreement, no dividends on
First M&F Common Stock shall be paid with respect to any shares of Community
Federal Common Stock represented by a Certificate until such Certificate is
surrendered for exchange as provided herein. Following surrender of any such
Certificate, there shall be paid to the holder of the certificates
representing whole shares of First M&F Common Stock issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount of
dividends or other distributions with a record date after the Effective Date
payable with respect to such whole shares of First M&F Common Stock and not
paid, less the amount of any withholding taxes which may be required
thereon, and (ii) at the appropriate payment date, the amount of dividends
or other distributions with a record date after the Effective Date but prior
to surrender, and a payment date subsequent to surrender payable with
respect to such whole shares of First M&F Common Stock, less the amount of
any required withholding taxes.
d. On or after the Effective Date, there shall be no transfers on the stock
transfer books of Community Federal of the shares of Community Federal
Common Stock that were outstanding immediately prior to the Effective Date.
If, after the Effective Date, Certificates are presented to First M&F, they
shall be canceled and exchanged for shares of First M&F Common Stock and the
amount of cash that such holder has the right to receive pursuant to this
Agreement. Certificates surrendered for exchange by any person constituting
an "affiliate" of Community Federal for purposes of Rule 145(c) under the
Securities Act of 1933 (the "Securities Act") shall not be exchanged until
First M&F has received a written agreement from such person as provided in
Section 5.10.
e. No fractional shares of First M&F Common Stock shall be issued pursuant
to this Agreement. In lieu of the issuance of any fractional share of First
M&F Common Stock pursuant to Section 3.1b, cash will be paid equal to such
fractional proportion times the Average Market Price as defined in Section
12.1g.
f. Any portion of the shares of First M&F Common Stock and cash (including
the proceeds of any investments thereof and any shares of First M&F Common
Stock) that remains unclaimed by the former stockholders of Community
Federal one year after the Effective Date shall be delivered to First M&F.
Any former stockholders of Community Federal who have not complied with this
Article 3 before that date shall look only to First M&F for payment in
respect of their shares, without any interest thereon.
g. Neither the Parties nor the Exchange Agent or any other person shall be
liable to any former holder of shares of Community Federal Common Stock for
any amount properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
h. In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required by First M&F,
the posting by such person of a bond in such reasonable amount as First M&F
may direct as indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will issue in exchange for
such lost, stolen or destroyed Certificate cash and shares of First M&F
Common Stock as provided in Section 3.1 and cash in lieu of fractional
shares, and unpaid dividends and distributions on shares of First M&F Common
Stock as provided in Section 3.2c.
ARTICLE 4
TAX MATTERS
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4.1 Tax Consequences. It is the intention of the Parties hereto that the
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Merger shall constitute a reorganization within the meaning of Section 368(a) of
the Code, and that this Agreement shall constitute a "plan of merger" for
purposes of Section 368 of the Code.
4.2 Accounting and Tax Representations. Each Party hereto represents and
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warrants that the statements made with respect to it in the Statement of
Representations attached hereto as Schedule 4.2, are true and correct as of the
date hereof and will be true and correct on the Effective Date.
ARTICLE 5
COMMUNITY FEDERAL'S COVENANTS AND AGREEMENTS
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5.1 Operation of Business. Between the date hereof and the Effective Date,
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or until the termination of this Agreement, Community Federal covenants and
agrees that it will operate its business solely in the ordinary course
consistent with prudent business practices and in compliance with all applicable
laws, regulations and rules; and, Community Federal will cause Community Federal
Bank to operate its business solely in the ordinary course consistent with
prudent business practices and in compliance with all applicable laws,
regulations and rules; and without prior written consent (or in the case of
paragraphs h and i the oral consent) of First M&F, which consent will not be
unreasonably withheld, Community Federal will not, and Community Federal will
cause Community Federal Bank not to:
a. Amend or otherwise change its articles of incorporation, charter or
bylaws (except to the extent required in order to effect the Merger as
contemplated herein), as each such document is in effect on the date hereof;
b. Issue or sell, or authorize for issuance or sale, the shares of
Community Federal or Community Federal Bank or any additional shares of any
class of capital stock of Community Federal or Community Federal Bank
(except to the extent required to effect the Merger as contemplated herein);
c. Issue, grant, or enter into any subscription, option, warrant, right,
convertible security, or other agreement or commitment of any character
obligating Community Federal or Community Federal Bank to issue securities;
d. Declare, set aside, make, or pay any dividend or other distribution with
respect to its capital stock except (i) for each calender quarter in which
the record date for dividends on First M&F Common Stock precedes the
Effective Date, Community Federal may pay a regular quarterly dividend in
the amount of $.085 per share, and (ii) dividends from Community Federal
Bank to Community Federal to the extent necessary to pay necessary and
routine expenses of Community Federal (including expenses relating to the
transactions contemplated by this Agreement) and to fund regular dividends
by Community Federal to its stockholders to the extent permitted by this
paragraph;
e. Maintain a level of retained earnings of not less than $16,657,000, less
the costs associated with the Merger, and a loan loss reserve at Community
Federal Bank of not less than $800,000;
f. Redeem, purchase, or otherwise acquire, directly or indirectly, any of
its capital stock, respectively;
g. Authorize any capital expenditure(s) which, individually or in the
aggregate, exceed $50,000;
h. Extend any new, or renew any existing, loan, credit, lease, or other
type of financing which individually exceeds $500,000;
i. Renew any type of financing which individually exceeds $100,000 and does
not meet Community Federal Bank's loan policy requirements except in
connection with the workout of loans;
j. Except in the ordinary course of business, sell, pledge, dispose of, or
encumber, or agree to sell, pledge, dispose of, or encumber, any assets of
Community Federal or Community Federal Bank;
k. Excluding normal and customary banking transactions, incur any
indebtedness for borrowed money, issue any debt securities, or enter into or
modify any contract, agreement, commitment, or arrangement with respect
thereto;
l. Impose or suffer the imposition, on any share of stock held by Community
Federal in Community Federal Bank, of any material lien, charge, or
encumbrance, or permit any such lien to exist;
m. Establish or add any automated teller machines or branch or other
banking offices;
n. Acquire (by merger, consolidation, lease or other acquisition of stock,
ownership interests or assets) any corporation, partnership, or other
business organization or division thereof, or enter into any contract,
agreement, commitment, or arrangement with respect to any of the foregoing,
except to the extent required in order to effect the Merger as contemplated
herein and except in the ordinary course of business in connection with
foreclosures or similar actions;
o. Enter into, extend, or renew any lease for office or other space;
p. Except as required by law or permitted by this Agreement, enter into,
adopt or amend any bonus, profit sharing, compensation, stock option,
pension, retirement, deferred compensation, employment, or other employee
benefit plan, agreement, trust, fund, or arrangement for the benefit or
welfare of any officer, employee or representative of Community Federal or
Community Federal Bank;
▇. ▇▇▇▇▇ any increase in compensation to any director, officer, or employee
or representative of Community Federal or Community Federal Bank except in
the ordinary course of business consistent with past practice;
r. Enter into, amend, or terminate any employment agreement, relationship
or responsibilities with any director, officer, or key employee or
representative of Community Federal or Community Federal Bank, or enter
into, amend, or terminate any employment agreement with any other person
otherwise than in the ordinary course of business, or take any action with
respect to the grant or payment of any severance or termination pay except
as expressly consented to in writing by First M&F;
s. Take any action or omit to take any action which would cause any of
Community Federal's or Community Federal Bank's representations or
warranties to be untrue or misleading in any material respect or any
covenant of Community Federal or Community Federal Bank under this Agreement
incapable of being performed;
t. Take any action that would materially and adversely affect the ability
of any Party hereto to obtain the approvals necessary for consummation of
the transactions contemplated hereby or that would materially and adversely
affect Community Federal's ability to perform its covenants and agreements
hereunder; or
u. Agree in writing or otherwise to do any of the foregoing.
5.2 Preservation of Business. Between the date hereof and the Effective
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Date, Community Federal will, and will cause Community Federal Bank to, use its
best efforts to preserve its existing business and to keep its business
organization intact, including its present relationships with its employees and
customers and others having business relations with it.
5.3 Insurance. Pending the Closing, Community Federal shall cause the real
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property owned by Community Federal and Community Federal Bank to be insured
reasonably against all insurable risks under policies with reasonable
deductibles and in full compliance with any co-insurance provision.
5.4 Stockholders' Meeting. Community Federal will (i) take all steps
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necessary to call, give notice of, convene and hold a special meeting of its
shareholders as soon as practicable for the purpose of approving this Agreement
and the transactions contemplated hereby and for such other purposes as may be
necessary or desirable, and (ii) cooperate and consult with First M&F with
respect to each of the foregoing matters. Said notice shall include notice of
dissenter's rights, if any, and shall solicit stockholders' proxies in favor of
this Agreement, and all notices shall be given in accordance with all applicable
laws, regulations, and rules. Except as may be required by fiduciary
obligations, Community Federal and its directors will support and vote in favor
of a stockholder resolution approving this Agreement and the Merger.
Community Federal shall cooperate in preparing the Registration Statement
and the proxy statement, and will promptly furnish all such information relating
to it as First M&F may reasonably request for the purpose of including such
information in the Registration Statement.
5.5 Property Transfers. From time to time, as requested by First M&F and to
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the extent permitted by Mississippi law, the officers and directors of Community
Federal last in office shall be authorized to execute and deliver such deeds and
other instruments and shall take or cause to be taken such further or other
actions as shall be necessary in order to vest or perfect in or to confirm of
record or otherwise to First M&F title to, and possession of, all the property,
interests, assets, rights, privileges, immunities, powers, franchises, and
authorities of Community Federal, and otherwise to carry out the purposes of
this Agreement.
5.6 Community Federal and Community Federal Bank Financial and Other Reports.
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Community Federal shall (and shall cause Community Federal Bank to) make
available to First M&F and M&F Bank the following statements and other reports
and documents:
a. Community Federal's Consolidated Balance Sheets as of March 31, 1999 and
1998 (unaudited) and September 30, 1998, 1997 and 1996 (audited);
Consolidated Statements of Income and Changes in Stockholders' Equity and
Consolidated Statements of Cash Flows for the years ended September 30,
1998, 1997 and 1996 (audited) and Statements of Income for the six-month
periods ended March 31, 1999 and 1998 (unaudited) ("Community Federal
Financial Statements").
b. The thrift financial reports, consolidated reports of condition and
income, and accompanying schedules, filed by Community Federal Bank with the
OTS for each calendar quarter, beginning October 1, 1995, through March 31,
1999.
c. Such additional financial or other information as may be required for
the regulatory applications and the Registration Statement in connection
with the consummation of the Merger (subject to any legal limitations).
5.7 Access to Properties and Records. Community Federal shall (and shall
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cause Community Federal Bank to), upon reasonable notice, afford First M&F and
its officers, employees, counsel, accountants, and other authorized
representatives access, during normal business hours throughout the period prior
to the Effective Date, to all of its and Community Federal Bank's properties;
books, contracts, commitments, loan files, litigation files and records
(including, but not limited to, the minutes of the Boards of Directors of
Community Federal and Community Federal Bank and all committees thereof), and it
shall (and shall cause Community Federal Bank to), upon reasonable notice and to
the extent consistent with applicable law, furnish promptly to First M&F such
information as First M&F may reasonably request to perform such review. Similar
access shall be provided to Community Federal by First M&F. All information
obtained hereunder shall be subject to the confidentiality agreement heretofore
executed.
5.8 No Solicitation. Prior to the Effective Date, neither Community Federal
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nor Community Federal Bank shall authorize or knowingly permit any of their
officers, directors, employees, representatives, agents or other persons
controlled by Community Federal or Community Federal Bank to directly or
indirectly, encourage or solicit or, hold any discussions or negotiations with,
or provide any information to, any persons, entity or group concerning any
merger, consolidation, sale of substantial assets, sale of shares of capital
stock or similar transactions involving, directly or indirectly, Community
Federal or Community Federal Bank, except as contemplated by this Agreement or
as required by fiduciary obligations. Community Federal and Community Federal
Bank shall promptly communicate to First M&F the identity and terms of any
proposal which they may receive with respect to any such transaction.
5.9 Covenant Not to Compete. In addition to any restrictions which may be
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contained in any employment agreement between Community Federal, Community
Federal Bank and any director (other than ▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ who
have entered into separate Non-Competition Agreements pursuant to Section 8.3d
hereof), each of the directors of Community Federal and Community Federal Bank
agree that for the period from the date hereof until four (4) years after the
Effective Date, they will not become directly, indirectly or beneficially an
employee, five percent (5%) or more stockholder or director of any bank, savings
bank, savings association, trust company, financial institution or other similar
business enterprise which competes with M&F Bank (as successor to Community
Federal Bank) within ▇▇▇ County, Mississippi. The directors of Community Federal
and Community Federal Bank further agree not to initiate any action to induce
any employee of M&F Bank (as successor to Community Federal Bank) to leave M&F
Bank's employment or directly or indirectly assist any other person or entity in
requesting or inducing any such other employee of M&F Bank to leave such
employment for the period of the date hereof until four (4) years after the
Effective Date.
5.10 Affiliates. Community Federal and First M&F shall cooperate and use
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their best efforts to identify those persons who may be deemed to be
"affiliates" of Community Federal within the meaning of Rule 145(c) and Rule 144
under the Securities Act. Community Federal shall use its best efforts to cause
each person so identified to deliver to First M&F, not later than twenty (20)
days after execution of this Agreement, a written agreement in substantially the
form set forth in Exhibit B attached hereto. First M&F shall be entitled to
place appropriate legends on the certificates evidencing shares of First M&F
Common Stock to be received pursuant to this Agreement by such affiliates and to
issue appropriate stop transfer instructions to the transfer agent for First M&F
Common Stock.
ARTICLE 6
COMMUNITY FEDERAL'S REPRESENTATIONS AND WARRANTIES
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For purposes of this Agreement, except where the context requires otherwise,
any reference to Community Federal in this Article 6 shall be deemed to include
Community Federal and Community Federal Bank and any reference to "material,"
material adverse effect or a similar standard shall refer to the financial
condition, operations or other aspects of Community Federal and Community
Federal Bank taken as a whole. Community Federal represents and warrants to
First M&F and M&F Bank as follows:
6.1 Organization and Authority. Community Federal is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Delaware and Community Federal Bank is a federally chartered savings bank duly
organized, validly existing and in good standing under the laws of the United
States. Each of Community Federal and Community Federal Bank has the corporate
power and authority to own, lease and operate its properties and assets and to
carry on its business as it is now being conducted.
6.2 Authorization. The execution, delivery and performance of this Agreement
-------------
by Community Federal and Community Federal Bank and the consummation of the
transactions contemplated hereby have been duly authorized by the Boards of
Directors of Community Federal and Community Federal Bank, subject to regulatory
and stockholder approval. No other corporate proceedings on the part of
Community Federal or Community Federal Bank are necessary to authorize
consummation of this Agreement, except for the approval of the transaction by
Community Federal's stockholders, and the performance by Community Federal and
Community Federal Bank of the terms hereof. This Agreement is a valid and
binding obligation of Community Federal and Community Federal Bank enforceable
against Community Federal and Community Federal Bank in accordance with its
terms except as may be limited by applicable bankruptcy, insolvency,
reorganization or moratorium or other similar laws affecting creditors' rights
generally and except that the availability of equitable remedies is within the
discretion of the appropriate court and except that it is subject to approval by
its stockholders and applicable regulatory agencies.
Neither the execution, delivery or performance of this Agreement by
Community Federal, nor the consummation of the transactions contemplated hereby,
nor compliance by Community Federal with any of the provisions hereof, will (a)
in any material respect violate, conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under or result in the termination
of, or accelerate the performance required by, or result in a right of
termination or acceleration, or the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of Community Federal
or Community Federal Bank under any terms, conditions or provisions of (i)
Community Federal's or Community Federal Bank's Charter or Bylaws or (ii) except
as set forth on Schedule 6.2, any material note, bond, mortgage, indenture, deed
of trust, license, lease, agreement or other instrument or obligation to which
Community Federal or Community Federal Bank is a party or by which Community
Federal or Community Federal Bank may be bound, or to which Community Federal or
Community Federal Bank or the properties or assets of it may be subject, or (b)
violate in any material respect any judgment, ruling, order, writ, injunction,
decree, statute, rule or regulation applicable to Community Federal or Community
Federal Bank or any of its properties or assets.
6.3 Capital Structure of Community Federal. As of the date hereof, the
-----------------------------------------
authorized capital of Community Federal consists solely of 10,000,000 shares of
Community Federal Common Stock and 2,000,000 shares of preferred stock with no
par value. As of the date hereof, 4,266,150 shares of such authorized common
stock were issued and outstanding. The outstanding shares of capital stock of
Community Federal are validly issued and outstanding, fully paid and
nonassessable. Except as set forth on Schedule 6.3, there are no outstanding
options, conversion rights, warrants, calls, rights, commitments or agreements
to issue any form of stock or other security of Community Federal. There are no
outstanding obligations or commitments to purchase, redeem or otherwise acquire
any outstanding shares of Community Federal Common Stock.
6.4 Ownership of Other Organizations. Community Federal does not own,
-----------------------------------
directly or indirectly, five percent (5%) or more of the outstanding capital
stock or other voting securities of any corporation, bank, or other organization
except Community Federal Bank. The presently authorized capital of Community
Federal Bank consists of 15,000,000 shares of common stock of the par value of
$.01 each and 5,000,000 shares of preferred stock with no par value. As of the
date hereof, 100 shares of common stock were issued and outstanding. The
outstanding shares of common stock of Community Federal Bank are validly
issued and outstanding, fully paid and, nonassessable and, all of such shares
are owned by Community Federal, free and clear of all liens, claims and
encumbrances.
6.5 Community Federal Financial and Other Reports. Community Federal has
-----------------------------------------------
made available to First M&F true and correct copies of the consolidated balance
sheets as of September 30, 1998, 1997 and 1996 of Community Federal and its
consolidated subsidiaries ("the Community Federal Consolidated Group") and the
related consolidated statements of income, changes in shareholders' equity and
cash flows for the respective years then ended, the related notes thereto, and
the report of its independent public accountants with respect thereto (the
"Community Federal Audited Financial Statements") and the consolidated balance
sheets of March 31, 1999 and 1998 (unaudited), and consolidated statements of
income for the three-month periods ended March 31, 1999 and 1998 (unaudited).
Community Federal's Financial Statements (i) have been prepared in accordance
with generally accepted accounting principles ("GAAP"), consistently applied,
and (ii) present fairly the consolidated results of operations of the Community
Federal Consolidated Group for the periods covered thereby and the consolidated
financial condition of the Community Federal Consolidated Group as of the dates
thereof.
6.6 No Material Adverse Change. Since March 31, 1999, there has been no
----------------------------
event or condition of any character (whether actual, or to the knowledge of
Community Federal or Community Federal Bank, threatened or contemplated) that
has had or can reasonably be anticipated to have, a material adverse effect on
the financial condition (including the unrealized gain on securities available
for sale), results of operations, business or prospects of Community Federal and
Community Federal Bank taken as a whole, excluding changes in laws or
regulations that affect financial institutions generally and excluding costs
associated with the Merger.
6.7 Tax Liability. The amounts set up as liabilities for taxes in the
--------------
Community Federal Financial Statements are sufficient for the payment of all
respective taxes (including, without limitation, federal, state, local, and
foreign excise, franchise, property, payroll, income, capital stock, and sales
and use taxes) accrued in accordance with GAAP and unpaid at the respective
dates thereof.
6.8 Tax Returns; Payment of Taxes. All federal, state, local, and foreign
------------------------------
tax returns (including, without limitation, estimated tax returns, withholding
tax returns with respect to employees, and FICA and FUTA returns) required to be
filed by or on behalf of Community Federal or Community Federal Bank have been
timely filed or requests for extensions have been timely filed and granted and
have not expired for periods ending on or before March 31, 1999, and all returns
filed are complete and accurate to the best information and belief of their
respective managements and all taxes shown on filed returns have been paid. As
of the date hereof, there is no audit, examination, deficiency or refund
litigation or matter in controversy with respect to any taxes that might result
in a determination materially adverse to Community Federal or Community Federal
Bank, except as reserved against in the Community Federal Financial Statements.
All taxes, interest, additions and penalties due with respect to completed and
settled examinations or concluded litigation have been paid, and Community
Federal's reserves for bad debts at September 30, 1998, as filed with the
Internal Revenue Service were not greater than the maximum amounts permitted
under the provisions of Section 585 of the Code.
6.9 Litigation and Proceedings. Except as set forth on Schedule 6.9 hereto,
--------------------------
no litigation, proceeding or controversy before any court or governmental agency
is pending against Community Federal or Community Federal Bank that in the
opinion of its management is likely to have a material and adverse effect on the
business, results of operations or financial condition of Community Federal and
Community Federal Bank taken as a whole, and, to the best of its knowledge, no
such litigation, proceeding or controversy has been threatened or is
contemplated.
6.10 Brokers' or Finders' Fees. Except as set forth on Schedule 6.10 hereto,
-------------------------
no agent, broker, investment banker, investment or financial advisor or other
person acting on behalf of Community Federal or Community Federal Bank or under
their authority is entitled to any commission, broker's or finder's fee from any
of the Parties hereto in connection with any of the transactions contemplated by
this Agreement.
6.11 Contingent Liabilities. Except as disclosed on Schedule 6.11 hereto or
----------------------
as reflected in the Community Federal Financial Statements, and except in the
case of Community Federal Bank for unfunded loan commitments made in the
ordinary course of business consistent with past practices, as of March 31,
1999, neither Community Federal nor Community Federal Bank has any obligation or
liability (contingent or otherwise) that was material, or that when combined
with all similar obligations or liabilities would have been material, to
Community Federal and Community Federal Bank taken as a whole and there does not
exist a set of circumstances that, to the knowledge of Community Federal, could
reasonably be expected to result in any such material obligation or liability.
6.12 Title to Assets; Adequate Insurance Coverage.
--------------------------------------------
Except as described on Schedule 6.12:
a. As of March 31, 1999, Community Federal and Community Federal Bank had,
and except with respect to assets disposed of for adequate consideration in
the ordinary course of business since such date, now have, good and
merchantable title to all real property and good and merchantable title to
all other material properties and assets reflected in the Community Federal
Financial Statements, free and clear of all mortgages, liens, pledges,
restrictions, security interests, charges and encumbrances of any nature
except for (i) mortgages and encumbrances which secure indebtedness which is
properly reflected in the Community Federal Financial Statements or which
secure deposits of public funds as required by law; (ii) liens for taxes
accrued but not yet payable; (iii) liens arising as a matter of law in the
ordinary course of business with respect to obligations incurred after March
31, 1999, provided that the obligations secured by such liens are not
delinquent or are being contested in good faith; (iv) such imperfections of
title and encumbrances, if any, as do not materially detract from the value
or materially interfere with the present use of any of such properties or
assets or the potential sale of any such owned properties or assets; and (v)
capital leases and leases, if any, to third parties for fair and adequate
consideration. Community Federal and Community Federal Bank own, or have
valid leasehold interests in, all material properties and assets, tangible
or intangible, used in the conduct of its businesses. Any real property and
other material assets held under lease by Community Federal or Community
Federal Bank are held under valid, subsisting and enforceable leases with
such exceptions as are not material and do not interfere with the use made
or proposed to be made by First M&F in such lease of such property.
b. Except as disclosed on Schedule 6.12 with respect to each lease of any
real property or a material amount of personal property to which Community
Federal or Community Federal Bank is a party and except for financing leases
in which Community Federal or Community Federal Bank is lessor, (i) such
lease is in full force and effect in accordance with its terms; (ii) all
rents and other monetary amounts that have been due and payable thereunder
have been paid; (iii) there exists no default or event, occurrence,
condition or act which with the giving of notice, the lapse of time or the
happening of any further event, occurrence, condition or act would become a
default under such lease; and (iv) the Merger will not constitute a default
or a cause for termination or modification of such lease.
c. Neither Community Federal nor Community Federal Bank has any legal
obligation, absolute or contingent, to any other person to sell or otherwise
dispose of any substantial part of its assets or to sell or dispose of any
of its assets except in the ordinary course of business consistent with past
practices.
d. To the knowledge and belief of its management, the policies of fire,
theft, liability and other insurance maintained with respect to the assets
or businesses of Community Federal and Community Federal Bank provide
adequate coverage against loss and are insured in such amounts with such
deductibles and against such risks and losses as are in the opinion of
management adequate for the businesses engaged in by Community Federal and
Community Federal Bank.
6.13 Liabilities. To the best knowledge and belief of its management, all
-----------
liabilities of Community Federal and Community Federal Bank were, and will be
created, for good, valuable and adequate consideration in accordance with
prudent business standards and in substantial compliance with all laws,
regulations and rules and the accounts or evidence of ownership of accounts are
and will be genuine, true, valid and enforceable in accordance with their
written terms. Neither Community Federal nor Community Federal Bank has agreed
to any modification or extension of accounts or account terms or otherwise made
any agreements regarding such accounts except as disclosed in writing on the
books and records of Community Federal or Community Federal Bank; and Community
Federal and Community Federal Bank have no knowledge of any claim of ownership
to any account other than as shown on the written ownership records of Community
Federal and Community Federal Bank for each account, and Community Federal and
Community Federal Bank have no knowledge of any alleged improper or wrongful
withdrawal or payment of any such account.
6.14 Loans. To the best knowledge and belief of its management, each loan
-----
reflected as an asset of Community Federal in the Community Federal Financial
Statements, as of March 31, 1999, or acquired since that date, is the legal,
valid, and binding obligation of the obligor named therein, enforceable in
accordance with its terms, and no loan is subject to any asserted defense,
offset or counterclaim known to Community Federal, except as disclosed in
writing to First M&F on or prior to the date hereof.
6.15 Allowance for Loan Losses. The allowance for loan losses shown on the
-------------------------
consolidated balance sheets of Community Federal as of March 31, 1999 is
adequate in all material respects under the requirements of GAAP to provide for
reasonably anticipated losses on outstanding loans, net of recoveries.
6.16 Investments. Except as set forth on Schedule 6.16 and except for
-----------
investments classified as held-to-maturity as prescribed under the Financial
Accounting Standards Board Statement Number 115, and pledges to secure public or
trust deposits, none of the investments reflected in the Community Federal
Financial Statements under the heading "Investment Securities," and none of the
investments made by Community Federal or Community Federal Bank since March 31,
1999, and none of the assets reflected in the Community Federal Financial
Statements under the heading "Cash and Due From Banks," is subject to any
restriction, whether contractual or statutory, that materially impairs the
ability of Community Federal or Community Federal Bank freely to dispose of such
investment at any time except as disclosed on Schedule 6.16. With respect to all
repurchase agreements to which Community Federal or Community Federal Bank is a
party, Community Federal or Community Federal Bank, as the case may be, has a
valid, perfected first lien or security interest in the government securities or
other collateral securing each such repurchase agreement which equals or exceeds
the amount of debt secured by such collateral under such agreement.
6.17 Information for Registration and Proxy Statements. None of the
------------------------------------------------------
information supplied or to be supplied by Community Federal with respect to
Community Federal for inclusion in (a) the Registration Statement to be filed by
First M&F with the SEC, (b) the Notice of Meeting and Proxy Statement to be
mailed by Community Federal to stockholders in connection with the meetings
referred to in Section 5.4 hereof (the "Proxy Statement") and (c) any other
documents to be filed with the SEC or any regulatory agency in connection with
the transactions contemplated hereby will, as amended or supplemented at the
time the Registration Statement is filed with the SEC or at the time it becomes
effective, at the time the Proxy Statement is mailed to holders of Community
Federal's Common Stock, as may be amended at the time of Community Federal
Stockholders' Meeting, and at the time of filing of such other documents,
respectively, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. All documents, financial statements, or other information or
materials which Community Federal shall provide for filing with the SEC and any
regulatory agency in connection with the Merger will, to the extent applicable,
comply with GAAP.
6.18 Commitments and Contracts. Neither Community Federal nor Community
--------------------------
Federal Bank is a party or subject to any of the following (whether written or
oral, express or implied):
a. Except as listed on Schedule 6.18a attached hereto and with a complete
copy provided to First M&F, any employment contract (including any
obligations with respect to severance or termination pay liabilities or
fringe benefits) with any present or former officer, director, employee or
consultant (other than those which are terminable at will by Community
Federal or Community Federal Bank);
b. Except as listed on Schedule 6.18b attached hereto, with a complete copy
provided to First M&F, any plan or contract providing for any bonus,
pension, option, deferred compensation, retirement payment, profit sharing
or similar arrangement with respect to any present or former officer,
director, employee or consultant; or
c. Any contract not made in the ordinary course of business containing
covenants which limit the ability of Community Federal or Community Federal
Bank to compete in any line of business or with any person or which involves
any restriction of the geographical area in which, or method by which,
Community Federal or Community Federal Bank may carry on its respective
businesses (other than as may be required by law or applicable regulatory
authorities).
6.19 Employee Plans. To the best of Community Federal's knowledge and
---------------
belief, it, Community Federal Bank, and all "employee benefit plans," as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), that cover one or more employees employed by Community
Federal or Community Federal Bank:
i. are in compliance with all laws, regulations, reporting and
licensing requirements and orders applicable to its business or to such
plan or any of its employees (because of such employee's activities on
behalf of it), the breach or violation of which could have a material
adverse effect on such business; and
ii. have received no notification from any agency or department of
federal, state or local government or the staff thereof asserting that
any such entity is not in compliance with any of the statutes,
regulations or ordinances that such governmental authority enforces, or
threatening to revoke any license, franchise, permit or governmental
authorization, and is subject to no agreement with any such governmental
authority with respect to its assets or business.
6.20 Plan Liability. Except for liabilities to the Pension Benefit Guaranty
--------------
Corporation pursuant to Section 4007 of ERISA, all of which have been fully
paid, and except for liabilities to the Internal Revenue Service under Section
4971 of the Code, all of which have been fully paid, neither Community Federal
nor Community Federal Bank has any liability to the Pension Benefit Guaranty
Corporation or to the Internal Revenue Service with respect to any pension plan
qualified under Section 401 of the Code.
6.21 Vote Required. The affirmative vote of the holders of at least a
--------------
majority of the outstanding shares of Community Federal Common Stock is the only
vote of the stockholders of Community Federal necessary to approve the Merger
and related transactions contemplated hereby.
6.22 Continuity of Business Enterprise. Community Federal operates at least
---------------------------------
one significant historic business line, namely, financial services, and owns at
least a significant portion of its historic business assets within the meaning
of Treasury Regulation Section 1.368-1(d).
6.23 Environmental Matters. Except as set forth on Schedule 6.23, neither
----------------------
Community Federal nor Community Federal Bank nor, to the best knowledge of its
management, any previous owner or operator of any properties at any time owned
(including any properties owned or subsequently resold) leased, or occupied by
Community Federal or Community Federal Bank or used by Community Federal or
Community Federal Bank in their respective businesses ("Community Federal
Properties") used, generated, treated, stored, or disposed of any hazardous
waste, toxic substance, or similar materials on, under, or about Community
Federal Properties except in compliance with all applicable federal, state, and
local laws, rules and regulations pertaining to air and water quality, hazardous
waste, waste disposal, air omissions, and other environmental matters
("Environmental Laws"). Neither Community Federal nor Community Federal Bank has
received any notice of noncompliance with Environmental Laws, applicable laws,
orders, or regulations of any governmental authorities relating to waste
generated by any such party or otherwise or notice that any such party is liable
or responsible for the remediation, removal, or clean-up of any site relating to
Community Federal Properties.
6.24 Accuracy of Information. To the best of Community Federal's and its
------------------------
officers' and directors' knowledge, all information furnished by Community
Federal or Community Federal Bank to First M&F and M&F Bank relating to the
assets, liabilities, and this Agreement is accurate, and Community Federal has
not failed to disclose any information which is material to this Agreement.
6.25 Compliance with Applicable Law. Community Federal and Community Federal
------------------------------
Bank hold, and have at all times held, all licenses, franchises, permits and
authorizations necessary for the lawful conduct of their respective businesses
under and pursuant to all, and have complied with and are not in default in any
respect under any, applicable law, statute, order, rule, regulation, policy
and/or guideline of any governmental entity relating to Community Federal or
Community Federal Bank, and neither Community Federal or Community Federal Bank
knows of or has received notice of any violations of any of the above.
ARTICLE 7
FIRST M&F'S REPRESENTATIONS, WARRANTIES,
----------------------------------------
COVENANTS AND AGREEMENTS
------------------------
For purposes of this Agreement, except where the context requires otherwise,
any reference to First M&F in this Article 7 shall be deemed to include First
M&F and M&F Bank and any reference to "material," material adverse effect or a
similar standard shall refer to the financial condition, operations or other
aspects of First M&F and its subsidiaries including M&F Bank taken as a whole.
First M&F represents and warrants to Community Federal and covenants as follows:
7.1 Organization and Authority. Each of First M&F and M&F Bank is a
----------------------------
corporation or bank duly incorporated, validly existing and in good standing
under the laws of the State of Mississippi and has the corporate power and
authority to own, lease and operate its properties and assets and to carry on
its business as it is now being conducted.
7.2 Shares Fully Paid and Nonassessable. The outstanding shares of capital
------------------------------------
stock of First M&F are validly issued and outstanding, fully paid and
nonassessable. The shares of First M&F Common Stock to be issued in connection
with the Merger pursuant to this Agreement have been duly authorized and, when
issued in accordance with the terms of this Agreement, will be validly issued,
fully paid, and nonassessable, and will be, at the time of their delivery, free
and clear of all liens, charges, security interests, mortgages, pledges and
other encumbrances and any preemptive or similar rights.
7.3 Authorization. The execution, delivery and performance of this Agreement
-------------
by First M&F and M&F Bank and the consummation of the transactions contemplated
hereby have been duly authorized by the Boards of Directors of First M&F and M&F
Bank, subject to regulatory and stockholder approval. No other corporate
proceedings on the part of First M&F are necessary to authorize the execution
and delivery of this Agreement and the performance by First M&F of the terms
hereof, except for the approval of the transaction by the shareholders of First
M&F. This Agreement is a valid and binding obligation of First M&F enforceable
against First M&F in accordance with its terms except as may be limited by
applicable bankruptcy, insolvency, reorganization or moratorium or other similar
laws affecting creditors' rights generally and except that the availability of
equitable remedies is within the discretion of the appropriate court and except
that it is subject to approval of applicable regulatory agencies.
Neither the execution, delivery or performance of this Agreement by First
M&F, nor the consummation of the transactions contemplated hereby, nor
compliance by First M&F with any of the provisions hereof, will (a) in any
material respect violate, conflict with, or result in a breach of any provision
of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration, or the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of First M&F or M&F Bank under
any terms, conditions or provisions of (i) First M&F's or M&F Bank's Charter or
Bylaws or (ii) except as set forth on Schedule 7.3, any material note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which First M&F or M&F Bank is a party or by which
First M&F or M&F Bank may be bound, or to which First M&F or M&F Bank or the
properties or assets of it may be subject, or (b) violate in any material
respect any judgment, ruling, order, writ, injunction, decree, statute, rule or
regulation applicable to First M&F or M&F Bank or any of its properties or
assets.
7.4 No Material Adverse Change. Since March 31, 1999, there has been no
----------------------------
event or condition of any character (whether actual, or to the knowledge of
First M&F or M&F Bank, threatened or contemplated) that has had or can
reasonably be anticipated to have, or that, if concluded or sustained adversely
to First M&F would reasonably be anticipated to have, a material adverse effect
on the financial condition, results of operations, business or prospects of
First M&F or M&F Bank, excluding changes in laws or regulations that affect
financial institutions generally.
7.5 First M&F Financial and Other Reports. First M&F has made available to
--------------------------------------
Community Federal true and correct copies of the consolidated balance sheets as
of December 31, 1998, 1997 and 1996 of First M&F and its consolidated
subsidiaries ("the First M&F Consolidated Group") and the related consolidated
statements of income, changes in shareholders' equity and cash flows for the
respective years then ended, the related notes thereto, and the report of its
independent public accountants with respect thereto (the "First M&F Audited
Financial Statements") and the consolidated balance sheets of March 31, 1999 and
1998 (unaudited), and consolidated statements of income for the three-month
periods ended March 31, 1999 and 1998 (unaudited). First M&F's Audited Financial
Statements (i) have been prepared in accordance with generally accepted
accounting principles ("GAAP"), consistently applied, and (ii) present fairly
the consolidated results of operations of the First M&F Consolidated Group for
the periods covered thereby and the consolidated financial condition of the
First M&F Consolidated Group as of the dates thereof.
7.6 Registration Statement.
----------------------
a. First M&F will prepare and file on Form S-4 a Registration Statement
under the Securities Act (which will include the Proxy Statement) complying
with all the requirements of the Securities Act applicable thereto, for the
purpose, among other things, of registering the First M&F Common Stock which
will be issued to the holders of Community Federal Common Stock pursuant to
the Merger. First M&F shall use its best efforts to cause the Registration
Statement to become effective as soon as practicable, to qualify the First M&F
Common Stock under the securities or blue sky laws of such jurisdictions as
may be required and to keep the Registration Statement and such qualifications
current and in effect for so long as is necessary to consummate the
transactions contemplated hereby.
b. First M&F will indemnify and hold harmless each member of Community
Federal's Consolidated Group and each of their respective directors, officers,
agents and other persons, if any, who control Community Federal within the
meaning of the Securities Act from and against any losses, claims, damages,
liabilities or judgments, joint or several, to which they or any of them may
become subject under the Securities Act or any state securities or blue sky
laws or otherwise, insofar as such losses, claims, damages, liabilities, or
judgments (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in
the registration statement, or in any amendment or supplement thereto, or in
any state application for qualification, permit, exemption or registration as
a broker/dealer, or in any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and will reimburse each such person for any legal or other
expenses reasonably incurred by such person in connection with investigating
or defending any such action or claim; provided, however, that First M&F shall
not be liable, in any such case, to the extent that any such loss, claim,
damage, liability, or judgment (or action in respect thereof) arises out of or
is based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in the registration statement, or any such amendment or
supplement thereto, or in any such state application, or in any amendment or
supplement thereto, in reliance upon and in conformity with information
furnished in writing to First M&F by Community Federal.
7.7 Application to Regulatory Authorities. First M&F shall prepare, as
---------------------------------------
promptly as practicable, all regulatory applications and filings which are
required to be made with respect to the Merger and provide copies thereof to
Community Federal and its counsel.
7.8 Tax Liability. The amounts set up as liabilities for taxes in the First
-------------
M&F Audited Financial Statements are sufficient for the payment of all
respective taxes (including, without limitation, federal, state, local, and
foreign excise, franchise, property, payroll, income, capital stock, and sales
and use taxes) accrued in accordance with GAAP and unpaid at the respective
dates thereof.
7.9 Tax Returns; Payment of Taxes. All federal, state, local, and foreign
------------------------------
tax returns (including, without limitation, estimated tax returns, withholding
tax returns with respect to employees, and FICA and FUTA returns) required to be
filed by or on behalf of First M&F or M&F Bank have been timely filed or
requests for extensions have been timely filed and granted and have not expired
for periods ending on or before March 31, 1999, and all returns filed are
complete and accurate to the best information and belief of their respective
managements and all taxes shown on filed returns have been paid. As of the date
hereof, there is no audit, examination, deficiency or refund litigation or
matter in controversy with respect to any taxes that might result in a
determination materially adverse to First M&F or M&F Bank, except as reserved
against in the First M&F Audited Financial Statements. All taxes, interest,
additions and penalties due with respect to completed and settled examinations
or concluded litigation have been paid, and First M&F's reserves for bad debts
at September 30, 1998, as filed with the Internal Revenue Service were not
greater than the maximum amounts permitted under the provisions of Section 585
of the Code.
7.10 Litigation and Proceedings. Except as set forth on Schedule 7.10
----------------------------
hereto, no litigation, proceeding or controversy before any court or
governmental agency is pending against First M&F or M&F Bank that in the opinion
of its management is likely to have a material and adverse effect on the
business, results of operations or financial condition of First M&F and M&F Bank
taken as a whole, and, to the best of its knowledge, no such litigation,
proceeding or controversy has been threatened or is contemplated.
7.11 Contingent Liabilities. Except as disclosed on Schedule 7.11 hereto or
----------------------
as reflected in the First M&F Audited Financial Statements, and except in the
case of M&F Bank for unfunded loan commitments made in the ordinary course of
business consistent with past practices, as of March 31, 1999, neither First M&F
nor M&F Bank has any obligation or liability (contingent or otherwise) that was
material, or that when combined with all similar obligations or liabilities
would have been material, to First M&F and M&F Bank taken as a whole and there
does not exist a set of circumstances that, to the knowledge of First M&F, could
reasonably be expected to result in any such material obligation or liability.
7.12 Liabilities. To the best knowledge and belief of its management, all
-----------
liabilities of First M&F and M&F Bank were, and will be created, for good,
valuable and adequate consideration in accordance with prudent business
standards and in substantial compliance with all laws, regulations and rules and
the accounts or evidence of ownership of accounts are and will be genuine, true,
valid and enforceable in accordance with their written terms. Neither First M&F
nor M&F Bank has agreed to any modification or extension of accounts or account
terms or otherwise made any agreements regarding such accounts except as
disclosed in writing on the books and records of First M&F or M&F Bank; and
First M&F and M&F Bank have no knowledge of any claim of ownership to any
account other than as shown on the written ownership records of First M&F and
M&F Bank for each account, and First M&F and M&F Bank have no knowledge of any
alleged improper or wrongful withdrawal or payment of any such account.
7.13 Loans. To the best knowledge and belief of its management, each loan
-----
reflected as an asset of First M&F in the First M&F Audited Financial
Statements, as of March 31, 1999, or acquired since that date, is the legal,
valid, and binding obligation of the obligor named therein, enforceable in
accordance with its terms, and no loan is subject to any asserted defense,
offset or counterclaim known to First M&F, except as disclosed in writing to
Community Federal on or prior to the date hereof.
7.14 Allowance for Loan Losses. The allowance for loan losses shown on the
-------------------------
consolidated balance sheets of First M&F as of March 31, 1999 is adequate in all
material respects under the requirements of GAAP to provide for reasonably
anticipated losses on outstanding loans, net of recoveries.
7.15 Investments. Except as set forth on Schedule 7.15 and except for
-----------
investments classified as held-to-maturity as prescribed under the Financial
Accounting Standards Board Statement Number 115, and pledges to secure public or
trust deposits, none of the investments reflected in the First M&F Audited
Financial Statements under the heading "Investment Securities," and none of the
investments made by First M&F or M&F Bank since March 31, 1999, and none of the
assets reflected in the First M&F Audited Financial Statements under the heading
"Cash and Due From Banks," is subject to any restriction, whether contractual or
statutory, that materially impairs the ability of First M&F or M&F Bank freely
to dispose of such investment at any time except as disclosed on Schedule 7.15.
With respect to all repurchase agreements to which First M&F or M&F Bank is a
party, First M&F or M&F Bank, as the case may be, has a valid, perfected first
lien or security interest in the government securities or other collateral
securing each such repurchase agreement which equals or exceeds the amount of
debt secured by such collateral under such agreement.
7.16 Information for Registration and Proxy Statements. None of the
------------------------------------------------------
information supplied or to be supplied by First M&F with respect to First M&F
for inclusion in (a) the Registration Statement to be filed by First M&F with
the SEC, (b) the Notice of Meeting and Proxy Statement to be mailed by First M&F
to stockholders in connection with the meeting of stockholders and (c) any other
documents to be filed with the SEC or any regulatory agency in connection with
the transactions contemplated hereby will, as amended or supplemented at the
time the Registration Statement is filed with the SEC or at the time it becomes
effective, at the time the Proxy Statement is mailed to holders of First M&F's
Common Stock, as may be amended at the time of First M&F Stockholders' Meeting,
and at the time of filing of such other documents, respectively, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. All documents,
financial statements, or other information or materials which First M&F shall
provide for filing with the SEC and any regulatory agency in connection with the
Merger will, to the extent applicable, comply with GAAP.
7.17 Environmental Matters. Except as set forth on Schedule 7.17, neither
----------------------
First M&F nor M&F Bank nor, to the best knowledge of its management, any
previous owner or operator of any properties at any time owned (including any
properties owned or subsequently resold) leased, or occupied by First M&F or M&F
Bank or used by First M&F or M&F Bank in their respective businesses ("First M&F
Properties") used, generated, treated, stored, or disposed of any hazardous
waste, toxic substance, or similar materials on, under, or about First M&F
Properties except in compliance with all applicable federal, state, and local
laws, rules and regulations pertaining to air and water quality, hazardous
waste, waste disposal, air omissions, and other environmental matters
("Environmental Laws"). Neither First M&F nor M&F Bank has received any notice
of noncompliance with Environmental Laws, applicable laws, orders, or
regulations of any governmental authorities relating to waste generated by any
such party or otherwise or notice that any such party is liable or responsible
for the remediation, removal, or clean-up of any site relating to First M&F
Properties.
7.18 Accuracy of Information. To the best of First M&F's and its officers'
------------------------
and directors' knowledge, all information furnished by First M&F or M&F Bank to
Community Federal and Community Federal Bank relating to the assets,
liabilities, and this Agreement is accurate, and First M&F has not failed to
disclose any information which is material to this Agreement.
7.19 Compliance with Applicable Law. First M&F and M&F Bank hold, and have
-------------------------------
at all times held, all licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses under and
pursuant to all, and have complied with and are not in default in any respect
under any, applicable law, statute, order, rule, regulation, policy and/or
guideline of any governmental entity relating to First M&F or M&F Bank, and
neither First M&F or M&F Bank knows of or has received notice of any violations
of any of the above.
7.20 Title to Assets; Adequate Insurance Coverage.
--------------------------------------------
Except as described on Schedule 7.20:
a. As of March 31, 1999, First M&F and M&F Bank had, and except with
respect to assets disposed of for adequate consideration in the ordinary
course of business since such date, now have, good and merchantable title to
all material properties and assets reflected in the First M&F Audited
Financial Statements, free and clear of all mortgages, liens, pledges,
restrictions, security interests, charges and encumbrances of any nature
except for (i) mortgages and encumbrances which secure indebtedness which is
properly reflected in the First M&F Audited Financial Statements or which
secure deposits of public funds as required by law; (ii) liens for taxes
accrued but not yet payable; (iii) liens arising as a matter of law in the
ordinary course of business with respect to obligations incurred after March
31, 1999, provided that the obligations secured by such liens are not
delinquent or are being contested in good faith; (iv) such imperfections of
title and encumbrances, if any, as do not materially detract from the value
or materially interfere with the present use of any of such properties or
assets or the potential sale of any such owned properties or assets; and (v)
capital leases and leases, if any, to third parties for fair and adequate
consideration. First M&F and M&F Bank own, or have valid leasehold interests
in, all material properties and assets, tangible or intangible, used in the
conduct of its businesses. Any real property and other material assets held
under lease by First M&F or M&F Bank are held under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
interfere with the use made by First M&F or M&F Bank in such lease of such
property.
b. Except as disclosed on Schedule 7.20 with respect to each lease of any
material real property or a material amount of personal property to which
First M&F or M&F Bank is a party and except for financing leases in which
First M&F or M&F Bank is lessor, (i) such lease is in full force and effect
in accordance with its terms; (ii) all rents and other monetary amounts that
have been due and payable thereunder have been paid; (iii) there exists no
default or event, occurrence, condition or act which with the giving of
notice, the lapse of time or the happening of any further event, occurrence,
condition or act would become a default under such lease; and (iv) the
Merger will not constitute a default or a cause for termination or
modification of such lease.
c. Neither First M&F nor M&F Bank has any legal obligation, absolute or
contingent, to any other person to sell or otherwise dispose of any
substantial part of its assets or to sell or dispose of any of its assets
except in the ordinary course of business consistent with past practices.
d. To the knowledge and belief of its management, the policies of fire,
theft, liability and other insurance maintained with respect to the assets
or businesses of First M&F or M&F Bank provide adequate coverage against
loss and are insured in such amounts with such deductibles and against such
risks and losses as are in the opinion of management adequate for the
businesses engaged in by First M&F and M&F Bank.
ARTICLE 8
CONDITIONS TO CLOSING
---------------------
The obligations of the Parties under this Agreement, except as otherwise
provided herein, shall be subject to the satisfaction or waiver of the following
conditions on or prior to the Closing:
8.1 Conditions to Each Party's Obligations to Effect the Merger. The
-----------------------------------------------------------
respective obligation of each Party to effect the Merger shall be subject to
the following conditions:
a. Stockholder Approval. The Merger shall have been approved by the
--------------------
requisite vote of the holders of the outstanding shares of Community
Federal Common Stock and by the requisite vote of the holders of the
outstanding shares of First M&F Common Stock.
b. Regulatory Approvals. The transactions contemplated by this Agreement
---------------------
shall have been approved by all governing regulatory authorities, without
any condition or requirement which, in the reasonable good faith judgment of
the Boards of Directors of First M&F or Community Federal would so
materially adversely impact the economic or business benefits of the
transactions contemplated by this Agreement so as to render inadvisable the
consummation of the Merger, or which otherwise would have a material adverse
effect on the business, operations, properties, assets or financial
condition of First M&F, M&F Bank, Community Federal or Community Federal
Bank after the Effective Date, all conditions required to be satisfied shall
have been satisfied, and all waiting periods relating to such approvals
shall have expired.
c. Registration Statement. The Registration Statement shall have been
-----------------------
declared effective and shall not be subject to a stop order or any
threatened stop order, and all state securities and blue sky permits or
approvals required to consummate the transactions contemplated by this
Agreement shall have been received.
d. No Restraining Action. No action or proceeding shall have been
-----------------------
threatened or instituted before a court or other governmental body to
restrain or prohibit the transactions contemplated by the Merger Agreement
or this Agreement or to obtain damages or other relief in connection with
the execution of such agreements or the consummation of the transactions
contemplated hereby or thereby; and no governmental agency shall have given
notice to any Party hereto to the effect that consummation of the
transactions contemplated by this Agreement would constitute a violation of
any law or that it intends to commence proceedings to restrain consummation
of the Merger.
e. NASDAQ National Market System Listing. The shares of First M&F Common
-------------------------------------
Stock issuable pursuant to the Merger shall have been approved for listing
on the NASDAQ National Market System.
8.2 Conditions to Obligations of Community Federal to Effect the Merger.
-------------------------------------------------------------------
The obligations of Community Federal to effect the Merger shall be subject to
the following additional conditions:
a. Representations and Warranties. The representations and warranties of
-------------------------------
First M&F set forth in this Agreement shall be true and correct in all
material respects (except to the extent such representation or warranty is
qualified by materiality in which case such representation or warranty shall
be true and correct) as of the date of this Agreement and as of the Closing
as though made at and as of the Closing, except as otherwise contemplated by
this Agreement or consented to in writing by Community Federal, and First
M&F shall deliver at Closing an appropriate certificate to that effect.
b. Performance of Obligations. First M&F and M&F Bank shall have performed
--------------------------
in all material respects all obligations and complied with all covenants
required by it under this Agreement prior to the Closing and First M&F shall
deliver at Closing an appropriate certificate to that effect.
c. Tax Opinion. Community Federal shall have received from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------
Winter & Stennis, P.A. an opinion of counsel, dated the Closing Date as to
certain tax aspects of the transactions contemplated by this Agreement and
the Merger Agreement, including that such transactions as to stockholders of
Community Federal will constitute a tax-free reorganization under Section
368 of the Code.
8.3 Conditions to Obligations of First M&F to Effect the Merger. The
-----------------------------------------------------------------
obligations of First M&F to effect the Merger shall be subject to the following
additional conditions:
a. Representations and Warranties. The representations and warranties of
-------------------------------
Community Federal and Community Federal Bank set forth in this Agreement
shall be true and correct in all material respects (except to the extent
such representation or warranty is qualified by materiality in which case
such representation or warranty shall be true and correct) as of the date of
this Agreement and as of the Closing as though made at and as of the
Closing, except as otherwise contemplated by this Agreement or consented to
in writing by First M&F, and Community Federal shall deliver at Closing an
appropriate certificate to that effect.
b. Performance of Obligations. Community Federal and Community Federal Bank
--------------------------
shall have performed in all material respects all obligations and complied
with all covenants required by it under this Agreement prior to the Closing
and Community Federal shall deliver at Closing an appropriate certificate to
that effect.
c. Affiliate Agreement. An Affiliate Agreement substantially in the form
-------------------
specified on Exhibit B hereto (as contemplated by Section 5.10 hereof) shall
have been executed by each person who serves as an executive officer or
director of Community Federal.
d. Non-Competition Agreements. ▇▇. ▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇▇ shall have
--------------------------
executed and delivered the Non-Competition Agreements in the form of Exhibit
C hereto.
ARTICLE 9
CLOSING
-------
9.1 Closing. The Closing shall be held at the offices of M&F Bank or such
-------
other place as First M&F and Community Federal shall mutually designate.
9.2 Deliveries at Closing. At the Closing, all documents and instruments
---------------------
shall be duly and validly executed and delivered by all the Parties hereto, and
possession of all liabilities and assets shall be transferred and delivered
accordingly.
9.3 Documents. The Parties shall execute any and all documents reasonably
---------
requested by them or their legal counsel for the purpose of effecting the
transaction contemplated herein, including but not limited to the following:
a. endorsement, negotiation, and/or assignment of all original notes and
security agreements relating to all loans;
b. warranty deeds for the real property;
c. commitments for owners title insurance for the real property;
d. such other endorsements, assignments or other conveyances as may be
appropriate or necessary to effect the transfer to First M&F of the
assets, duties, responsibilities and obligations as referred to herein; and
e. listing of dissenting stockholders, if any, including name, address,
and number of shares owned.
ARTICLE 10
EMPLOYMENT MATTERS
------------------
10.1 Employees. Neither First M&F nor M&F Bank shall be obligated to retain
---------
in any capacity any of Community Federal's or Community Federal Bank's officers,
directors, or employees or to pay any stipulated compensation to any employees,
except as set forth in this Agreement. First M&F will make reasonable efforts to
maintain compensation levels for any retained personnel commensurate with the
employees' experience and qualifications, and in accordance with First M&F and
M&F Bank's salary administration program. First M&F will assume the obligations
of Community Federal and Community Federal Bank under the Severance Pay Plan for
Employees and the Key Employee Retention Plan, and the obligations of Community
Federal and Community Federal Bank arising on or prior to the Effective Date
under the Recognition and Retention Plan, the Team Incentive Plan, and the
Directors' Retirement Plan.
All employees of Community Federal and Community Federal Bank immediately
prior to the Effective Date who are employed by First M&F or M&F Bank (the
"Employers") immediately following the Effective Date ("Transferred Employees")
will be covered by the Employers' employee benefit plans on substantially the
same basis as any employee of the Employers in a comparable position.
Notwithstanding the foregoing, First M&F and M&F Bank may determine to continue
any of such benefit plans of Community Federal and Community Federal Bank for
Transferred Employees in lieu of offering participation in the Employers'
benefit plans providing similar benefits (e.g., medical hospitalization
benefits), to terminate any of such benefit plans, or to merge any such benefit
plans with the Employers' benefit plans, provided the result is the provision of
benefits to Transferred Employees that are substantially similar to the benefits
provided to the Employers' employees generally. Service to Community Federal and
Community Federal Bank by a Transferred Employee prior to the Effective Date
shall be recognized as service to the Employers for purposes of eligibility to
participate under the Employers' sick leave policies, paid vacation policies,
and medical, long-term disability and life insurance plans. For purposes of
participation, vesting and benefit accruals (but not accrual of benefits under
First M&F's tax-qualified defined benefit plans) under such employee benefit
plans, (i) service under any qualified defined benefit or contribution plans of
Community Federal or Community Federal Bank shall be treated as service under
First M&F's qualified defined benefit or contribution plans and (ii) service
under any other employee benefit plans of Community Federal or Community Federal
Bank shall be treated as service under any similar employee benefit plans
maintained by First M&F. First M&F and M&F Bank agree that any pre-existing
condition, limitation or exclusion in its medical, long-term disability and life
insurance plans shall not apply to Transferred Employees or their covered
dependents who are covered under a medical or hospitalization indemnity plan
maintained by Community Federal or Community Federal Bank on the Effective Date
and who then change coverage to the Employers' medical or hospitalization
indemnity health plan at the time such Transferred Employees are first given the
option to enroll.
10.2 ESOP. (1) Notwithstanding any provision to the contrary contained
----
herein, each participant in the Community Federal Bancorp, Inc. Employee Stock
Ownership Plan ("ESOP") not fully vested will, in accordance with the terms of
the ESOP, become fully vested in his or her ESOP account as of the Effective
Date. As soon as practicable after the execution of this Agreement, Community
Federal and First M&F will cooperate to cause the ESOP to be amended and other
action taken, in a manner reasonably acceptable to Community Federal and First
M&F, to provide that the ESOP will terminate upon the Effective Date. Between
the date of this Agreement and the Effective Date, the existing ESOP
indebtedness shall be paid in the ordinary course of business pursuant to the
existing loan amortization schedule and Community Federal or Community Federal
Bank shall make such contributions to the ESOP as necessary to fund such
payments. Any indebtedness of the ESOP remaining as of the Effective Date shall
be repaid from the Trust associated with the ESOP through application of the
First M&F Common Stock and cash as provided herein received by the ESOP;
provided, however, that (A) any related sale or distribution of shares by the
ESOP shall be effected in accordance with the requirements of federal and any
applicable state securities laws and regulations, including any rules of the
NASD, and (B) all stock distributions from the ESOP after the Effective Date
shall be in shares of First M&F Common Stock.
Upon the repayment of the ESOP loan, the remaining funds in the ESOP
suspense account will be allocated as earnings and not as "annual additions" to
ESOP participants (as determined under the terms of the ESOP) to the extent
permitted by the Code and ERISA. Community Federal and First M&F agree that,
subject to the conditions described herein, as soon as practicable after the
Effective Date and repayment of the ESOP loan, participants in the ESOP shall be
entitled at their election to have the amounts in their ESOP accounts either
distributed to them in a lump sum or rolled over to another tax-qualified plan
(including plans of First M&F to the extent permitted by First M&F) or
individual retirement account.
(2) The actions relating to termination of the ESOP will be adopted
conditioned upon the consummation of the Merger and upon receiving a favorable
determination letter from the IRS with regard to the continued qualification of
the ESOP after any required amendments (including the amendment which terminates
the ESOP). Community Federal and First M&F will cooperate in submitting
appropriate requests for any such determination letter to the IRS and will use
their best efforts to seek the issuance of such letter as soon as practicable
following the date of this Agreement. Community Federal and First M&F will adopt
such additional amendments to the ESOP as may be reasonably required by the IRS
as a condition to granting such determination letter, provided that such
amendments do not (A) substantially change the terms outlined herein, (B) have a
material adverse effect on Community Federal, or (C) result in an additional
material liability to First M&F.
(3) As of and following the Effective Date, First M&F shall cause the ESOP
to be maintained for the exclusive benefit of employees and other persons who
were participants or beneficiaries therein prior to the Effective Date and
proceed with termination of the ESOP through distribution of its assets in
accordance with its terms subject to the amendments described herein and as
otherwise may be required to comply with applicable law or to obtain a favorable
determination from the IRS as to the continuing qualified status of the ESOP,
provided, however, that no such termination distributions or the ESOP shall
occur after the Effective Date until a favorable termination letter has been
received from the IRS.
10.3 Recognition Plan. Each participant in the Community Federal Management
----------------
Recognition and Retention Plan ("RRP") not fully vested will, in accordance with
the terms of the RRP, become fully vested in plan share awards thereunder as of
the Effective Date. As soon as practicable after the execution of this
Agreement, Community Federal and First M&F will cooperate to cause the RRP to be
amended and other action taken, in a manner reasonably acceptable to Community
Federal and First M&F, to provide that the RRP will terminate upon the Effective
Date; provided, however, that (i) any distribution of shares under the RRP shall
be effected in accordance with the requirements, if any, of federal and state
securities laws and regulations, and (ii) all distributions from the RRP after
the Effective Date shall be in shares of First M&F Common Stock and cash as
provided herein. No action shall be taken that would adversely affect the rights
of plan participants who hold outstanding grants or awards of shares of
Community Federal Common Stock, whether before or after the Effective Date. No
further grants or awards shall be made under the RRP following the date of this
Agreement.
10.4 Pension Plan. Community Federal and Community Federal Bank currently
------------
maintain a Pension Plan (the "Pension Plan") which will remain operative and in
effect through the Effective Date of the Merger. The Pension Plan will either be
terminated as of the Effective Date of the Merger and distributed to vested
employees of Community Federal and Community Federal Bank in accordance with the
terms of the Pension Plan, or responsibility for the Pension Plan will be
assumed by First M&F or M&F Bank. If the Pension Plan is terminated, the trustee
for the Pension Plan will be responsible for the termination, allocation and
distribution of plan assets and related notices and other reporting
responsibilities to the IRS, Department of Labor and other government agencies.
All such termination costs will be paid from the Pension Plan's assets, if
permitted by law. No termination, merger or amendment of the Pension Plan shall
reduce or change any benefits that were vested at or immediately prior to the
Effective Date.
10.5 Stock Options. Community Federal maintains a stock option plan pursuant
-------------
to which options to acquire 462,875 shares have been issued (the "Options").
Community Federal agrees not to issue any additional options to acquire shares
of Community Federal Common Stock. On the Effective Date, each Option which is
then outstanding, whether or not exercisable, shall cease to represent a right
to acquire shares of Community Federal Common Stock and shall be converted
automatically into an option to purchase shares of First M&F Common Stock, and
First M&F shall assume each Community Federal Option, in accordance with the
terms of the Community Federal stock option plan and stock option agreement by
which it is evidenced, except that from and after the Effective Date, (i) First
M&F and its Board of Directors or a duly authorized committee thereof shall be
substituted for the Community Federal and Community Federal's Board of Directors
or duly authorized committee thereof administering the Community Federal stock
option plan, (ii) each Community Federal Option assumed by First M&F may be
exercised solely for shares of First M&F Common Stock, (iii) the number of
shares of First M&F Common Stock subject to such Community Federal Options shall
be equal to the number of shares of Community Federal Common Stock subject to
such Community Federal Options immediately prior to the Effective Date
multiplied by .5710, provided that any fractional shares of First M&F Common
Stock resulting from such multiplication shall be rounded down to the nearest
share, and (iv) the per share exercise price under each such Community Federal
Option shall be adjusted by dividing the per share exercise price under each
such Community Federal Option by .5710, provided that such exercise price shall
be rounded up to the nearest cent. Notwithstanding the preceding sentence, (i)
each Community Federal Option which is an"incentive stock option" shall be
adjusted as required by Section 424 of the Code, and the regulations promulgated
thereunder, so as not to constitute a modification, extension or renewal of the
option within the meaning of Section 424(h) of the Code and (ii) the Community
Federal Options held by H. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ on the Effective Date shall vest
pursuant to the terms set forth in Schedule 10.6(5).
First M&F and Community Federal agree to take all necessary steps to effect
the foregoing provisions of this Section. As soon as practicable after the
Effective Date, First M&F shall deliver to each participant in the Community
Federal stock option plan an appropriate notice setting forth such participant's
rights pursuant thereto and the grants subject to the Community Federal stock
option plan shall continue in effect on the same terms and conditions, including
without limitation the duration thereof, subject to the adjustments set forth
above. Within thirty (30) days after the Effective Date, First M&F shall file a
registration statement on Form S-3 or Form S-8, as the case may be (or any
successor or other appropriate forms), with respect to the shares of First M&F
Common Stock subject to such Options and shall use its reasonable best efforts
to maintain the current status of the prospectus or prospectuses contained
therein for so long as such Options remain outstanding.
10.6 Board and Management Matters.
----------------------------
a. First M&F agrees to take all actions necessary to appoint or elect to
the Board of Directors of First M&F, effective as of the Effective Date, ▇▇▇
▇▇▇▇▇▇ and two other persons serving as director of Community Federal
immediately prior to the Effective Date who are reasonably acceptable to
First M&F. Each person who is appointed or elected to the Board of Directors
of First M&F pursuant to the preceding sentence shall serve until the first
annual meeting of shareholders of First M&F following the Effective Date and
until his successor is elected and qualified. Subject to compliance with the
director qualification requirements set forth in First M&F's Bylaws and the
fiduciary duties of the Board of Directors of First M&F, First M&F shall
include each such person on the list of nominees for director presented by
the Board of Directors of First M&F and for which said Board shall solicit
proxies at the first annual meeting of shareholders of First M&F following
the Effective Date, which persons shall be allocated equally among the three
classes of directors of First M&F and nominated for election for three, two
or one-year terms, as applicable.
b. The remaining non-employee directors who are not elected as directors of
First M&F shall be requested by First M&F to serve as members of an Advisory
Board following the Effective Date, and each of such persons shall be paid
an Advisory Board fee equal to fees paid to other advisory board members of
First M&F.
c. At the Effective Date, in complete satisfaction of the obligations to
make the cash payments provided for by Section 5(c)(1) of their respective
employment agreements, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ shall receive a lump sum cash payment
of $355,000 and ▇▇▇ ▇▇▇▇▇▇ shall receive a lump sum cash payment of
$320,000. In addition, at the Effective Date, First M&F shall enter into a
consulting agreement with ▇▇. ▇▇▇▇▇▇ in the form of Exhibit D hereto, and
M&F Bank shall retain ▇▇. ▇▇▇▇▇▇▇▇▇ as President of its Tupelo Division
after the Effective Date on the terms set forth on Schedule 10.6.
10.7 Team Incentive Plan. Bonuses payable under the Team Incentive Plan for
-------------------
the plan year ending September 30, 1999 shall be paid in December 1999. If the
Effective Date is after October 31, 1999, then additional bonuses shall be paid
on the Effective Date on a pro rata basis to the participants in the Team
Incentive Plan based upon Community Federal Bank's income, before income taxes,
from October 1, 1999 through and including the last day of the calendar month
immediately preceding the Effective Date. The aggregate pro rata bonuses shall
not exceed the amount accrued by Community Federal Bank as a liability in the
ordinary course of business consistent with past practice. Following the payment
of the above bonuses, the Team Incentive Plan shall be terminated.
10.8 Directors' Retirement Plan. On the Effective Date, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.,
--------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇, III and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall be deemed to be
Participants in Community Federal Bank's Directors' Retirement Plan entitled to
receive, over a 10-year period in accordance with Sections 2.03 and 2.04 of the
Directors' Retirement Plan, the amounts accrued by Community Federal Bank as a
liability for such directors, as set forth on Schedule 10.8. All other current
directors of Community Federal Bank are currently Participants in the Directors'
Retirement Plan and shall receive their benefits over a 10-year period pursuant
to Article 2 of the Directors' Retirement Plan. On the Effective Date, the
Directors' Retirement Plan shall be terminated, provided that such termination
shall not affect the rights or benefits to which a director is entitled under
the Directors' Retirement Plan or as set forth above.
10.9 Notices. Community Federal and Community Federal Bank shall be
-------
responsible for notifying their employees of the terms of this Agreement as it
affects them and for complying with any applicable laws regarding such notices.
10.10 Directors' and Officers' Liability Insurance Coverage. First M&F shall
-----------------------------------------------------
maintain the existing directors' and officers' liability insurance policy of
Community Federal and Community Federal Bank, respectively, covering persons who
are currently covered by such insurance for a period of four (4) years after the
Effective Date on terms generally no less favorable than those in effect on the
date of this Agreement; provided, however, that First M&F may substitute
therefor policies providing at least comparable coverage containing terms and
conditions no less favorable than those in effect on the date of this Agreement.
10.11 Indemnification. From and after the Effective Date through the third
---------------
anniversary of the Effective Date, First M&F shall indemnify and hold harmless
each present and former director, officer and employee of Community Federal and
Community Federal Bank determined as of the Effective Date (the "Indemnified
Parties") against any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages or liabilities (collectively, "Costs")
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of matters existing or occurring at or prior to the Effective Date, whether
asserted or claimed prior to, at or after the Effective Date, to the fullest
extent to which such Indemnified Parties were entitled under Delaware law and
Community Federal's Certificate of Incorporation and Bylaws as in effect on the
date hereof.
Any Indemnified Party wishing to claim indemnification under this Section
10.11, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify First M&F, but the failure to so notify
shall not relieve First M&F of any liability it may have to such Indemnified
Party if such failure does not materially prejudice First M&F. In the event of
any such claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Date), (i) First M&F shall have the right to
assume the defense thereof and First M&F shall not be liable to such Indemnified
Parties for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnified Parties in connection with the defense
thereof, except that if First M&F elects not to assume such defense or counsel
for the Indemnified Parties advises that there are issues which raise conflicts
of interest between First M&F and the Indemnified Parties, the Indemnified
Parties may retain counsel which is reasonably satisfactory to First M&F, and
First M&F shall pay, promptly as statements therefor are received, the
reasonable fees and expenses of such counsel for the Indemnified Parties (which
may not exceed one firm in any jurisdiction unless the use of one counsel for
such Indemnified Parties would present such counsel with a conflict of
interest), (ii) the Indemnified Parties will cooperate in the defense of any
such matter, and (iii) First M&F shall not be liable for any settlement effected
without its prior written consent.
In the event that First M&F or any of its respective successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person, then, and in each such case, the successors and assigns of such entity
shall assume the obligations set forth in this Section 10.11, which obligations
are expressly intended to be for the irrevocable benefit of, and shall be
enforceable by, each of the Indemnified Parties and his or her heirs or
representatives.
ARTICLE 11
REMEDIES
--------
For purposes of this Agreement, any reference to First M&F in this Article
11 shall be deemed to include First M&F and M&F Bank and any reference to
Community Federal in this Article 11 shall be deemed to include Community
Federal and Community Federal Bank.
11.1 Parties' Joint Remedies. In the event regulatory authorities impose
-----------------------
requirements that do not meet the standards for termination as set forth in
Section 8.1b, then the Parties agree to amend this Agreement to conform to such
regulatory requirements, and specific performance shall be available as a remedy
for this purpose.
11.2 Community Federal's Remedies. In the event First M&F breaches this
------------------------------
Agreement, then Community Federal shall give First M&F notice of the breach, and
First M&F shall have fifteen (15) business days to cure the breach. If the
breach by First M&F results in a termination of the Agreement, First M&F shall
be liable for out-of-pocket costs incurred by Community Federal in connection
with this Agreement and the transactions contemplated thereby, but First M&F
shall not be liable for any other damages.
11.3 First M&F's Remedies. In the event Community Federal breaches this
---------------------
Agreement, then First M&F shall give Community Federal notice of the breach, and
Community Federal shall have fifteen (15) business days to cure the breach. If
the breach by Community Federal results in a termination of the Agreement,
Community Federal shall be liable for out-of-pocket costs incurred by First M&F
in connection with this Agreement and the transactions contemplated thereby, but
Community Federal shall not be liable for any other damages.
11.4 Attorney Fees. Each Party shall bear its own attorney fees except
--------------
attorney fees may be awarded by the presiding judge if the trier of fact finds
that the other Party has committed fraud against the other Party.
ARTICLE 12
TERMINATION
-----------
12.1 Termination. This Agreement may be terminated, either before or after
-----------
approval by the stockholders of Community Federal and Community Federal Bank as
follows:
a. Mutual Consent. At any time on or prior to the Effective Date, by the
--------------
mutual consent in writing of a majority of the members of each of the Board
of Directors of the Parties hereto;
b. Expiration of Time. By the Board of Directors of First M&F in writing or
------------------
by the Board of Directors of Community Federal in writing, if the Merger
shall have not become effective on or before March 31, 2000, unless the
absence of such occurrence shall be due to the failure of the Party seeking
to terminate this Agreement to perform each of its obligations under this
Agreement required to be performed by it on or prior to the Effective Date;
c. Breach of Representation, Warranty or Covenant. By either Party hereto,
-----------------------------------------------
in the event of a breach by the other Party (a) of any covenant or agreement
contained herein or (b) of any representation or warranty herein, if (i) the
facts constituting such breach reflect a material and adverse change in the
financial condition, results of operations, business, or prospects taken as
a whole, of the breaching Party, which in either case cannot be or is not
cured within sixty (60) days after written notice of such breach is given to
the Party committing such breach, or (ii) in the event of a breach of a
warranty or covenant, such breach results in a material increase in the cost
of the non-breaching Party's performance of this Agreement;
d. Regulatory Approval. By either Party hereto, at any time after the FRB,
-------------------
FDIC, or MDBCF has denied any application for any approval or clearance
required to be obtained as a condition to the consummation of the Merger and
the time period for all appeals or requests for reconsideration thereof has
run;
e. Shareholder Approval. By either Party hereto, if the Merger is not
--------------------
approved by the required vote of shareholders of Community Federal or by
the required vote of the shareholders of First M&F;
f. Dissenters. By First M&F, if holders of twenty percent (20%) or more of
----------
the outstanding Community Federal Common Stock exercise statutory appraisal
rights pursuant to Section 262 of the DGCL; and
g. Market Price. By the Board of Directors of Community Federal, if it
-------------
determines by a vote of a majority of the members of its entire Board, at
any time during the ten-day period commencing two (2) days after the
Determination Date (as defined below), if the Average Market Price (as
defined below) shall be less than $26.00; subject, however, to the following
three sentences. If Community Federal refuses to consummate the Merger
pursuant to this Section 12.1g, it shall give prompt written notice thereof
to First M&F; provided, that such notice of election to terminate may be
withdrawn at any time within the aforementioned ten-day period. During the
five-day period commencing with its receipt of such notice, First M&F shall
have the option to elect to increase the stock portion of the Exchange Ratio
to equal the quotient (rounded to the nearest one-ten-thousandth) obtained
by dividing 7.423 by the Average Market Price. If First M&F makes an
election contemplated by the preceding sentence, within such five-day
period, it shall give prompt written notice to Community Federal of such
election and the revised Exchange Ratio, whereupon no termination shall have
occurred pursuant to this Section 12.1g and this Agreement shall remain in
effect in accordance with its terms (except as the Exchange Ratio shall have
been so modified), and any references in this Agreement to "Exchange Ratio"
shall thereafter be deemed to refer to the Exchange Ratio as adjusted
pursuant to this Section 12.1g.
"Determination Date" means the later of the date on which (i) the approval
of the federal regulatory authority having jurisdiction over the Merger to
the Merger shall be received or (ii) the Community Federal and First M&F
stockholders approve the Merger.
The "Average Market Price" of the First M&F Common Stock shall be the
average of the closing per share trading prices of First M&F Common Stock as
reported by the NASDAQ National Market System (adjusted for any stock split
or similar transaction) on the last ten (10) consecutive trading days ending
on the third business day prior to the Determination Date.
ARTICLE 13
MISCELLANEOUS
-------------
13.1 Entire Agreement. This Agreement embodies the entire understanding of
----------------
the Parties in relation to the subject matter herein and supersedes all prior
understandings or agreements, oral or written, between the Parties hereto.
13.2 Effect of Termination or Consummation; Survival.
-----------------------------------------------
a. Upon termination of this Agreement pursuant to Article 12, the Merger
Agreement shall also terminate, and this Agreement and the Merger Agreement
shall be void and of no effect, and there shall be no liability by reason of
this Agreement or the Merger Agreement, or the termination thereof, on the
part of any party or their respective directors, officers, employees, agents
or shareholders except for any liability of a party hereto arising out of an
intentional breach of any representation, warranty or covenant in this
Agreement prior to the date of termination, except if such breach was required
by law or by any bank or bank holding company regulatory authority.
b. None of the representations and warranties in this Agreement or in any
instrument delivered pursuant hereto shall survive the Effective Date. Each
Party hereby agrees that its sole right and remedy with respect to any breach
of a representation or warranty or covenant by the other Party prior to the
Closing Date shall be not to close the transactions described herein if such
breach results in the nonsatisfaction of a condition set forth in Article 8
hereof; provided, however, that the foregoing shall not be deemed to be a
waiver of any claim for an intentional breach of a representation, warranty or
covenant or for fraud except if such breach is required by law or by any bank
or bank holding company regulatory authority. Each covenant of the Parties to
be performed after the Effective Date shall survive the Effective Date and may
be enforced by the person or persons in whose favor it runs.
13.3 Headings. The headings and subheadings in this Agreement, except the
--------
terms identified for definition in Article 1 and elsewhere in this Agreement,
are inserted for convenience only and shall not affect the meaning or
interpretation of this Agreement or any provision hereof.
13.4 Duplicate Originals. This Agreement may be executed in any number of
--------------------
duplicate originals, any one of which when fully executed by all Parties shall
be deemed to be an original without having to account for the other originals.
13.5 Governing Law. This Agreement and the rights and obligations
-------------
hereunder shall be governed and construed by the laws of the State of
Mississippi.
13.6 Successors; No Third Party Beneficiaries. All terms and conditions of
-----------------------------------------
this Agreement shall be binding on the successors and assigns of Community
Federal and First M&F. Except as otherwise specifically provided in this
Agreement, nothing expressed or referred to in this Agreement is intended or
shall be construed to give any person other than Community Federal and First M&F
any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provisions contained herein, it being the intention of the
Parties hereto that this Agreement, the obligations and statements of
responsibilities hereunder, and all other conditions and provisions hereof are
for the sole and exclusive benefit of Community Federal and First M&F and for
the benefit of no other person.
13.7 Modification; Assignment. No amendment or other modification of any
-------------------------
part of this Agreement shall be effective except pursuant to a written agreement
subscribed by the duly authorized representatives of all of the Parties hereto.
This Agreement may not be assigned without the express written consent of both
Parties.
13.8 Notice. Any notice, request, demand, consent, approval or other
------
communication to any Party hereof shall be effective when received and shall be
given in writing, and delivered in person against receipt thereof, or sent by
certified mail, postage prepaid or courier service at its address set forth
below or at such other address as it shall hereafter furnish in writing to the
others. All such notices and other communications shall be deemed given on the
date received by the addressee or its agent.
Community Federal
-----------------
Community Federal Bancorp, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: H. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Elias, Matz, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
First M&F
---------
First M&F Corporation
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Winter & Stennis, P.A.
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
13.9 Waiver. Community Federal and First M&F may waive their respective
------
rights, powers or privileges under this Agreement; provided that such waiver
shall be in writing; and further provided that no failure or delay on the part
of Community Federal or First M&F to exercise any right, power or privilege
under this Agreement will operate as a waiver thereof, nor will any single or
partial exercise of any right, power or privilege under this Agreement preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege by Community Federal or First M&F under the terms of this
Agreement, nor will any such waiver operate or be construed as a future waiver
of such right, power or privilege under this Agreement.
13.10 Costs, Fees and Expenses. Each Party hereto agrees to pay all costs,
-------------------------
fees and expenses which it has incurred in connection with or incidental to the
matters contained in this Agreement, including without limitation any fees and
disbursements to its accountants, financial advisors and counsel. First M&F will
be responsible for preparing the applications, regulatory filings and
Registration Statement necessary to obtain approval of the Merger and the
issuance of the First M&F Common Stock. Community Federal will be responsible
for the cost of its (and Community Federal Bank's) accountants and legal counsel
and will bear all costs related to conducting its stockholders' meetings and
obtaining stockholders' approval of the Merger.
13.11 Press Releases. Community Federal and First M&F shall consult with
---------------
each other as to the form and substance of any press release related to this
Agreement or the transactions contemplated hereby, and shall consult each other
as to the form and substance of other public disclosures related thereto,
provided, however, that nothing contained herein shall prohibit First M&F,
following notification to Community Federal, from making any disclosures which
its counsel deems necessary to conform with requirements of law or the rules of
the National Association of Securities Dealers Automated Quotation System.
13.12 Severability. If any provision of this Agreement is invalid or
------------
unenforceable then, to the extent possible, all of the remaining provisions of
this Agreement shall remain in full force and effect and shall be binding upon
the Parties hereto.
13.13 Mutual Covenant of Best Efforts and Good Faith. The Parties mutually
----------------------------------------------
covenant and agree with each other that they will use their best efforts to
consummate the transactions herein contemplated and that they will act and deal
with each other in good faith as to this Agreement and all matters arising from
or related to it.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.
COMMUNITY FEDERAL BANCORP, INC.
By:________________________________
Name:
Title:
Attest:
________________________________
FIRST M&F CORPORATION
By:________________________________
Name:
Title:
Attest:
________________________________
COMMUNITY FEDERAL BANK
By:________________________________
Name:
Title:
Attest:
________________________________
MERCHANTS & FARMERS BANK
By: _______________________________
Name:
Title:
Attest:
________________________________
EXHIBIT A
MERGER AGREEMENT
----------------
This Merger Agreement is made and entered into as of the 8th day of July,
1999, between First M&F Corporation, Kosciusko, Mississippi, a Mississippi
corporation ("First M&F") and Community Federal Bancorp, Inc., Tupelo,
Mississippi, a Delaware corporation ("Community Federal") (the
"Merger Agreement").
W I T N E S S E T H:
WHEREAS, First M&F and Community Federal (collectively, the "Constituent
Corporations") and their respective Boards of Directors deem it advisable that
Community Federal be merged into First M&F (the "Merger") pursuant to the
provisions of the Mississippi Business Corporation Act and the Delaware General
Corporation Law, and upon the terms and conditions hereinafter set forth and in
the Plan (as defined below); and
WHEREAS, the Constituent Corporations have entered into an Agreement and
Plan of Merger dated as of the date hereof (the "Plan") (the defined terms in
which are used herein as defined therein) setting forth certain representations,
warranties, covenants and conditions relating to the Merger;
NOW THEREFORE, the Constituent Corporations hereby make, adopt and approve
this Merger Agreement and prescribe the terms and conditions of the Merger and
the mode of carrying the Merger into effect as follows:
ARTICLE ONE
The Merger
----------
Upon the terms and subject to the conditions hereinafter set forth, on the
Effective Date (as defined in Article Two hereof) Community Federal shall be
merged with and into First M&F and the separate existence of Community Federal
shall cease.
ARTICLE TWO
Effective Date and Time
-----------------------
The Merger shall be effective as of the date and time stated in Articles of
Merger filed in the office of the Secretary of State of the State of Mississippi
and the Certificate of Merger filed in the office of the Secretary of State of
Delaware, such date to be determined by the resolution of the Board of Directors
of First M&F (such time and date being herein referred to as the "Effective
Time" and the "Effective Date," respectively).
ARTICLE THREE
Conversion and Cancellation of Shares
-------------------------------------
On the Effective Date, each share of the common stock, $5.00 par value, of
First M&F ("First M&F Common Stock") issued and outstanding immediately prior to
the Effective Date shall remain outstanding and shall represent one share of
Common Stock, $5.00 par value, of First M&F.
On the Effective Date, each share of common stock, $.01 par value, of
Community Federal ("Community Federal Common Stock") issued and outstanding
immediately prior to the Effective Date, other than shares of Community Federal
Common Stock owned by shareholders who pursuant to Section 262 of the Delaware
General Corporation Law perfect appraisal rights, shall by virtue of the Merger
be converted into (i) .2855 shares of First M&F Common Stock, subject to
adjustment as set forth in Section 12.1g, and (ii) the right to receive $8.8457
in cash (the "Exchange Ratio"). On the Effective Date, all shares of Community
Federal Common Stock held in treasury will be canceled and terminated and will
not be converted into shares of First M&F Common Stock.
The Exchange Ratio is subject to adjustment as set forth in the Plan.
The exchange of certificates representing First M&F Common Stock for
certificates formerly representing Community Federal Common Stock shall be
effected as provided in the Plan. No fractional shares of First M&F Common Stock
representing such fractional shares will be issued to the holders of Community
Federal Common Stock. Instead, a shareholder otherwise entitled to receive such
fractional shares shall be entitled to a cash payment (without interest) as
provided in the Plan.
ARTICLE FOUR
Effects of Merger
-----------------
The Merger shall have the effects set forth in Miss. Code ▇▇▇. Section
79-4-11.06 and Section 252 of the Delaware General Corporation Law.
The Articles of Incorporation and Bylaws of First M&F shall be the Articles
of Incorporation and Bylaws of the merged corporation following the Effective
Date of the Merger, unless and until the same shall be amended in accordance
with the provisions hereof and the Act. The members of the Board of Directors
and Officers of First M&F shall be the Board of Directors and Officers of the
merged corporation until their respective successors are elected and qualified.
The shares of common stock of First M&F as the surviving corporation outstanding
immediately prior to the Effective Date of the Merger shall remain outstanding.
ARTICLE FIVE
Miscellaneous
-------------
The obligations of the Constituent Corporations to effect the Merger shall
be subject to all of the terms and conditions of the Plan. At any time prior to
the Effective Date, this Merger Agreement may be terminated (a) by the mutual
agreement of the Boards of Directors of the Constituent Corporations or (b)
pursuant to the terms and provisions of the Plan.
IN WITNESS WHEREOF, the Parties hereto have caused this Merger Agreement to
be executed by their duly authorized representatives as of the date first above
written.
COMMUNITY FEDERAL BANCORP, INC.
By:________________________________
Name:
Title:
Attest:
________________________________
FIRST M&F CORPORATION
By:________________________________
Name:
Title:
Attest:
________________________________
EXHIBIT B
FORM OF AFFILIATE AGREEMENT
First M&F Corporation
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
I, the undersigned director, executive officer or significant stockholder
of Community Federal Bancorp, Inc. ("Community Federal") Tupelo, Mississippi,
acknowledge and understand that, as an affiliate of Community Federal, Rule 145
promulgated under the Securities Act of 1933, as amended (the "Act"), restricts
my ability to sell, pledge, transfer or otherwise dispose of the shares of First
M&F Corporation ("First M&F") common stock to be issued to me in the Agreement
and Plan of Merger ("Merger") between First M&F and Community Federal, unless
the requirements of Rule 145(d) are satisfied or the sale, transfer or
disposition is otherwise in compliance with the Act.
On the basis of the foregoing, and in consideration of the delivery to me
of the First M&F common stock into which my Community Federal common stock will
be converted, I agree that:
1. I expressly agree to the placement of a restrictive legend on any and
all certificates for shares of First M&F common stock received
pursuant to the Merger to the effect that the shares were received in
a transaction to which Rule 145 applies, as follows:
"The shares represented by this certificate have been issued or
transferred to the registered holder as a result of a transaction
to which Rule 145 under the Securities Act of 1933, as amended
(the "Act"), applies. The shares represented by this certificate
may not be sold, transferred, pledged or assigned, and the issuer
shall not be required to give effect to any attempted sale,
transfer or assignment, except in accordance with the
requirements of the Act and the other conditions specified in
that certain Affiliates Agreement dated as of _____________, 1999
between the issuer and the shareholder, a copy of which Agreement
will be furnished, without charge, by First M&F Corporation to
the holder of this certificate upon written request therefor."
2. I agree to be bound by the terms of this letter until the expiration
of the time period set forth in Rule 145(d)(2) or (3), whichever may
apply.
Sincerely,
_____________________________
Title:
Date:________________________________
Accepted and agreed to:
FIRST M&F CORPORATION
By:_____________________________
Title:__________________________
Number of Community Federal Shares owned:
EXHIBIT C
NON-COMPETITION AGREEMENT
This Non-Competition Agreement (this "Agreement") is made and entered
into this ____ day of July 1999, by and among ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Executive") and
Merchants & Farmers Bank, a bank chartered under the laws of the State of
Mississippi (the "Bank").
WITNESSETH THAT:
WHEREAS, the Agreement and Plan of Merger (the "Plan") dated as of the
date hereof between First M&F Corporation (the "Corporation"), the Bank,
Community Federal Bancorp, Inc. ("Community Bancorp") and Community Federal Bank
("Community Bank") provides that Community Bancorp will be merged into the
Corporation and that Community Bank will be merged into the Bank (the "Merger");
WHEREAS, the Executive is the Chief Executive Officer of each of
Community Bancorp and Community Bank;
WHEREAS, the personal involvement of the Executive with Community Bancorp
and Community Bank has added value to Community Bancorp and Community Bank;
WHEREAS, this Agreement is an essential component of the Plan necessary
to achieve the objectives of the transactions described in the Plan, and Section
8.3d of the Plan contemplates that the Executive will enter into this Agreement
as a condition to the obligations of the Corporation and the Bank to consummate
the transactions described therein;
NOW, THEREFORE, in consideration of the promises and mutual covenants and
agreements hereinafter set forth, the parties agree as follows:
1. EFFECTIVE DATE. The "Effective Date" of this Agreement shall be
--------------
the date on which the Effective Date (as defined in the Plan) occurs.
2. CONSIDERATION. The Bank shall pay to the Executive on the
-------------
Effective Date a lump sum cash amount of $75,000.
3. NON-COMPETITION.
---------------
(a) The Executive hereby agrees that from the Effective Date until
three years after he ceases to be a director of, or a consultant to, either the
Corporation or the Bank, the Executive will not (i) engage in the banking or
financial services business other than on behalf of the Corporation or the Bank
or their affiliates within the Market Area (as hereinafter defined), (ii)
directly or indirectly own, manage, operate, control, be employed by, or provide
management or consulting service in any capacity to any firm, corporation or
other entity (other than the Corporation or the Bank or their affiliates)
engaged in the banking or financial services business in the Market Area, or
(iii) directly or indirectly solicit or otherwise intentionally cause any
employee, officer or member of the respective Board of Directors of the
Corporation or the Bank or any of their affiliates to engage in any action
prohibited under (i) or (ii) of this Section 2(a); provided that the ownership
by the Executive as an investor of not more than five percent of the outstanding
shares of stock of any corporation whose stock is listed for trading on any
securities exchange or is quoted on the automated quotation system of the
National Association of Securities Dealers, Inc., or the shares of any
investment company as defined in Section 3 of the Investment Company Act of
1940, as amended, shall not in itself constitute a violation of the Executive's
obligations under this Section 2(a).
(b) The Executive acknowledges and agrees that irreparable injury
will result to the Bank in the event of a breach of any of the provisions of
this Section 2 (the "Designated Provisions") and that the Bank will have no
adequate remedy at law with respect thereto. Accordingly, in the event of a
material breach of any Designated Provision, and in addition to any other legal
or equitable remedy the Bank may have, the Bank shall be entitled to the entry
of a preliminary and permanent injunction to restrain the violation or breach
thereof by the Executive or any affiliates, agents or any other persons acting
for or with the Executive in any capacity whatsoever.
(c) It is the desire and intent of the parties that the provisions of
this Section 2 shall be enforced to the fullest extent permissible under the
laws and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, if any particular provision of this Section 2 shall be
adjudicated to be invalid or unenforceable, such provision shall be deemed
amended to delete therefrom the portion thus adjudicated to be invalid or
unenforceable, such deletion to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made. In
addition, should any court determine that the provisions of this Section 2 shall
be unenforceable with respect to scope, duration or geographic area, such court
shall be empowered to substitute, to the extent enforceable, provisions similar
hereto or other provisions so as to provide to the Bank, to the fullest extent
permitted by applicable law, the benefits intended by this Section 2.
(d) As used herein, "Market Area" shall mean the State of Mississippi.
4. NOTICES. All notices, consents , waivers or other communications
-------
which are required or permitted hereunder shall be in writing and deemed to have
been duly given if delivered personally or by messenger, transmitted by telex or
telegram, by express courier, or sent registered or certified mail, return
receipt requested, postage prepaid. All communications shall be addressed to
the appropriate address of each party as follows:
If to the Corporation or the Bank:
Merchants and Farmers Bank
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Chairman and CEO
If to the Executive:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
All such notices shall be deemed to have been given on the date delivered,
transmitted or mailed in the manner provided above.
5. ASSIGNMENT. Neither party may assign this Agreement or any rights
----------
or obligations hereunder without the consent of the other party.
6. GOVERNING LAW. This Agreement shall be governed by, construed and
-------------
enforced in accordance with the laws of the State of Mississippi, without giving
effect to the principles of conflict of law thereof. The parties hereby
designate ▇▇▇ County, Mississippi, to be proper jurisdiction and venue for any
suit or action arising out of this Agreement. Each of the parties consents to
personal jurisdiction in such venue for such a proceeding and agrees that he or
it may be served with process in any action with respect to this Agreement or
the transactions contemplated thereby by certified or registered mail, return
receipt requested, or to its registered agent for service of process in the
State of Mississippi. Each of the parties irrevocably and unconditionally waives
and agrees, to the fullest extent permitted by law, not to plead any objection
that it may now or hereafter have to the laying of venue or the convenience of
the forum of any action or claim with respect to the Agreement or the
transactions contemplated thereby brought in the courts aforesaid.
7. ENTIRE AGREEMENT. This Agreement constitutes the entire
----------------
understanding between the Bank and the Executive relating to the subject matter
hereof. Neither this Agreement nor any provisions hereof can be modified,
changed, discharged or terminated except by an instrument in writing signed by
the party against whom any waiver, change, discharge or termination is sought.
8. SEVERABILITY. If any provision or provisions of this Agreement
------------
shall be held to be invalid, illegal or unenforceable for any reason whatsoever:
(a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including, without limitation, each portion of any
section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable) shall not in any way be affected or impaired thereby;
and
(b) to the fullest extent possible, the provisions of this Agreement
(including, without limitation, each portion of any section of this Agreement
containing any such provisions held to be invalid, illegal or unenforceable)
shall be construed so as to give effect to the intent manifested by the
provision held invalid, illegal or unenforceable.
9. ARBITRATION. Subject to the right of each party to seek specific
-----------
performance (which right shall not be subject to arbitration), if a dispute
arises out of this Agreement, or the breach thereof, such dispute shall be
referred to arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association ("AAA"). A dispute subject to the
provisions of this section will exist if either party notifies the other party
in writing that a dispute subject to arbitration exists and states, with
reasonable specificity, the issue subject to arbitration (the "Arbitration
Notice"). The parties agree that, after the issuance of the Arbitration Notice,
the parties will try in good faith to resolve the dispute by mediation in
accordance with the Commercial Rules of Arbitration of AAA between the date of
the issuance of the Arbitration Notice and the date the dispute is set for
arbitration. If the dispute is not settled by the date set for arbitration,
then any controversy or claim arising out of this Agreement or the breach hereof
shall be resolved by binding arbitration and judgment upon any award rendered by
arbitrator(s) may be entered in a court having jurisdiction. Any person serving
as a mediator or arbitrator must have at least ten years' experience in
resolving commercial disputes through arbitration. In the event any claim or
dispute involves an amount in excess of $100,000, either party may request that
the matter be heard by a panel of three arbitrators; otherwise, all matters
subject to arbitration shall be heard and resolved by a single arbitrator. The
arbitrator shall have the same power to compel the attendance of witnesses and
to order the production of documents or other materials and to enforce discovery
as could be exercised by a United States District Court judge sitting in any
District Court in Mississippi. In the event of any arbitration, each party shall
have a reasonable right to conduct discovery after the date of the Arbitration
Notice to the same extent permitted under Mississippi law for matters involving
contractual disputes. Any provision in this Agreement to the contrary
notwithstanding, this section shall be governed by the Federal Arbitration Act
and the parties have entered into this Agreement pursuant to such Act.
10. AFFILIATION. A company will be deemed to be "affiliated" with
-----------
the Corporation, the Bank, Community Bancorp or Community Bank according to the
definition of "Affiliate" set forth in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended.
11. HEADINGS. The section headings herein have been inserted for
--------
convenience of reference only and shall in no way modify or restrict any of the
terms or provisions hereof.
IN WITNESS WHEREOF, the parties hereto executed or caused this Agreement
to be executed as of the day and year first above written.
MERCHANTS & FARMERS BANK
Attest:____________________________ By:______________________________
▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Chairman and CEO
EXECUTIVE
Attest:____________________________ By:______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
NON-COMPETITION AGREEMENT
This Non-Competition Agreement (this "Agreement") is made and entered
into this ____ day of July 1999, by and among ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ("Executive") and
Merchants & Farmers Bank, a bank chartered under the laws of the State of
Mississippi (the "Bank").
WITNESSETH THAT:
WHEREAS, the Agreement and Plan of Merger (the "Plan") dated as of the
date hereof between First M&F Corporation (the "Corporation"), the Bank,
Community Federal Bancorp, Inc. ("Community Bancorp") and Community Federal Bank
("Community Bank") provides that Community Bancorp will be merged into the
Corporation and that Community Bank will be merged into the Bank (the "Merger");
WHEREAS, the Executive is the President of each of Community Bancorp and
Community Bank;
WHEREAS, the personal involvement of the Executive with Community Bancorp
and Community Bank has added value to Community Bancorp and Community Bank;
WHEREAS, this Agreement is an essential component of the Plan necessary
to achieve the objectives of the transactions described in the Plan, and Section
8.3d of the Plan contemplates that the Executive will enter into this Agreement
as a condition to the obligations of the Corporation and the Bank to consummate
the transactions described therein;
NOW, THEREFORE, in consideration of the promises and mutual covenants and
agreements hereinafter set forth, the parties agree as follows:
1. EFFECTIVE DATE. The "Effective Date" of this Agreement shall be
--------------
the date on which the Effective Date (as defined in the Plan) occurs.
2. CONSIDERATION. The Bank shall pay to the Executive on the
-------------
Effective Date a lump sum cash amount of $75,000.
3. NON-COMPETITION.
---------------
(a) The Executive hereby agrees that from the Effective Date until
three years after he ceases to be an employee of either the Corporation or the
Bank, the Executive will not (i) engage in the banking or financial services
business other than on behalf of the Corporation or the Bank or their affiliates
within the Market Area (as hereinafter defined), (ii) directly or indirectly
own, manage, operate, control, be employed by, or provide management or
consulting service in any capacity to any firm, corporation or other entity
(other than the Corporation or the Bank or their affiliates) engaged in the
banking or financial services business in the Market Area, or (iii) directly or
indirectly solicit or otherwise intentionally cause any employee, officer or
member of the respective Board of Directors of the Corporation or the Bank or
any of their affiliates to engage in any action prohibited under (i) or (ii) of
this Section 2(a); provided that the ownership by the Executive as an investor
of not more than five percent of the outstanding shares of stock of any
corporation whose stock is listed for trading on any securities exchange or is
quoted on the automated quotation system of the National Association of
Securities Dealers, Inc., or the shares of any investment company as defined in
Section 3 of the Investment Company Act of 1940, as amended, shall not in itself
constitute a violation of the Executive's obligations under this Section 2(a).
(b) The Executive acknowledges and agrees that irreparable injury
will result to the Bank in the event of a breach of any of the provisions of
this Section 2 (the "Designated Provisions") and that the Bank will have no
adequate remedy at law with respect thereto. Accordingly, in the event of a
material breach of any Designated Provision, and in addition to any other legal
or equitable remedy the Bank may have, the Bank shall be entitled to the entry
of a preliminary and permanent injunction to restrain the violation or breach
thereof by the Executive or any affiliates, agents or any other persons acting
for or with the Executive in any capacity whatsoever.
(c) It is the desire and intent of the parties that the provisions of
this Section 2 shall be enforced to the fullest extent permissible under the
laws and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, if any particular provision of this Section 2 shall be
adjudicated to be invalid or unenforceable, such provision shall be deemed
amended to delete therefrom the portion thus adjudicated to be invalid or
unenforceable, such deletion to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made. In
addition, should any court determine that the provisions of this Section 2 shall
be unenforceable with respect to scope, duration or geographic area, such court
shall be empowered to substitute, to the extent enforceable, provisions similar
hereto or other provisions so as to provide to the Bank, to the fullest extent
permitted by applicable law, the benefits intended by this Section 2.
(d) As used herein, "Market Area" shall mean the State of Mississippi.
4. NOTICES. All notices, consents , waivers or other communications
-------
which are required or permitted hereunder shall be in writing and deemed to have
been duly given if delivered personally or by messenger, transmitted by telex or
telegram, by express courier, or sent registered or certified mail, return
receipt requested, postage prepaid. All communications shall be addressed to
the appropriate address of each party as follows:
If to the Corporation or the Bank:
Merchants and Farmers Bank
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Chairman and CEO
If to the Executive:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
All such notices shall be deemed to have been given on the date delivered,
transmitted or mailed in the manner provided above.
5. ASSIGNMENT. Neither party may assign this Agreement or any rights
----------
or obligations hereunder without the consent of the other party.
6. GOVERNING LAW. This Agreement shall be governed by, construed and
-------------
enforced in accordance with the laws of the State of Mississippi, without giving
effect to the principles of conflict of law thereof. The parties hereby
designate ▇▇▇ County, Mississippi, to be proper jurisdiction and venue for any
suit or action arising out of this Agreement. Each of the parties consents to
personal jurisdiction in such venue for such a proceeding and agrees that he or
it may be served with process in any action with respect to this Agreement or
the transactions contemplated thereby by certified or registered mail, return
receipt requested, or to its registered agent for service of process in the
State of Mississippi. Each of the parties irrevocably and unconditionally waives
and agrees, to the fullest extent permitted by law, not to plead any objection
that it may now or hereafter have to the laying of venue or the convenience of
the forum of any action or claim with respect to the Agreement or the
transactions contemplated thereby brought in the courts aforesaid.
7. ENTIRE AGREEMENT. This Agreement constitutes the entire
----------------
understanding between the Bank and the Executive relating to the subject matter
hereof. Neither this Agreement nor any provisions hereof can be modified,
changed, discharged or terminated except by an instrument in writing signed by
the party against whom any waiver, change, discharge or termination is sought.
8. SEVERABILITY. If any provision or provisions of this Agreement
------------
shall be held to be invalid, illegal or unenforceable for any reason whatsoever:
(a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including, without limitation, each portion of any
section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable) shall not in any way be affected or impaired thereby;
and
(b) to the fullest extent possible, the provisions of this Agreement
(including, without limitation, each portion of any section of this Agreement
containing any such provisions held to be invalid, illegal or unenforceable)
shall be construed so as to give effect to the intent manifested by the
provision held invalid, illegal or unenforceable.
9. ARBITRATION. Subject to the right of each party to seek specific
-----------
performance (which right shall not be subject to arbitration), if a dispute
arises out of this Agreement, or the breach thereof, such dispute shall be
referred to arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association ("AAA"). A dispute subject to the
provisions of this section will exist if either party notifies the other party
in writing that a dispute subject to arbitration exists and states, with
reasonable specificity, the issue subject to arbitration (the "Arbitration
Notice"). The parties agree that, after the issuance of the Arbitration Notice,
the parties will try in good faith to resolve the dispute by mediation in
accordance with the Commercial Rules of Arbitration of AAA between the date of
the issuance of the Arbitration Notice and the date the dispute is set for
arbitration. If the dispute is not settled by the date set for arbitration, then
any controversy or claim arising out of this Agreement or the breach hereof
shall be resolved by binding arbitration and judgment upon any award rendered by
arbitrator(s) may be entered in a court having jurisdiction. Any person serving
as a mediator or arbitrator must have at least ten years' experience in
resolving commercial disputes through arbitration. In the event any claim or
dispute involves an amount in excess of $100,000, either party may request that
the matter be heard by a panel of three arbitrators; otherwise, all matters
subject to arbitration shall be heard and resolved by a single arbitrator. The
arbitrator shall have the same power to compel the attendance of witnesses and
to order the production of documents or other materials and to enforce discovery
as could be exercised by a United States District Court judge sitting in any
District Court in Mississippi. In the event of any arbitration, each party shall
have a reasonable right to conduct discovery after the date of the Arbitration
Notice to the same extent permitted under Mississippi law for matters involving
contractual disputes. Any provision in this Agreement to the contrary
notwithstanding, this section shall be governed by the Federal Arbitration Act
and the parties have entered into this Agreement pursuant to such Act.
10. AFFILIATION. A company will be deemed to be "affiliated" with the
-----------
Corporation, the Bank, Community Bancorp or Community Bank according to the
definition of "Affiliate" set forth in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended.
11. HEADINGS. The section headings herein have been inserted for
--------
convenience of reference only and shall in no way modify or restrict any of the
terms or provisions hereof.
IN WITNESS WHEREOF, the parties hereto executed or caused
this Agreement to be executed as of the day and year first above
written.
MERCHANTS & FARMERS BANK
Attest:______________________________ By:______________________________
▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Chairman and CEO
EXECUTIVE
Attest:______________________________ By:______________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
EXHIBIT D
CONSULTING AGREEMENT
This Consulting Agreement ("Consulting Agreement") is dated as of the
______ day of _______ 1999 by and between First M&F Corporation (the "Company")
and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "Consultant").
WITNESSETH:
WHEREAS, the Company desires to have the Consultant provide, and the
Consultant is willing to provide the Company with, the consulting services
described below on the terms and conditions set forth herein;
WHEREAS, the Board of Directors of the Company is of the opinion that the
consulting services of the Consultant will be of substantial value to the
Company; and
WHEREAS, to retain such Consultant's services, the Company and the
Consultant have agreed to enter into this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants set forth herein
and other good and valuable consideration, the parties hereto agree as follows:
1. CONSULTANCY.
(a) Subject to the provisions of Section 1(e), below, the parties
hereto agree that, during the two-year period immediately following the date
hereof ("Consulting Period"), the Consultant undertakes to provide his personal
advice and counsel to the Company and its subsidiaries in connection with the
business of the Company and its subsidiaries, including consulting with the
Company regarding the operations and customer relationships of the Company and
providing introductions to customers (herein referred to as the "Consulting
Services"), subject to the terms and conditions which are set forth herein.
(i) In no event shall the Consultant be required to provide more than
80 hours of Consulting Services in any calendar month during the Consulting
Period.
(ii) The Consultant shall provide such Consulting Services
commensurate with the Consultant's prior experience as may be reasonably
requested by the Chief Executive Officer of the Company from time to time and at
mutually agreeable times. Such Consulting Services may be provided in person,
telephonically, electronically or by correspondence.
(iii) The Consultant shall not be required to provide Consulting
Services outside a 50 mile radius of Tupelo, Mississippi.
(b) In consideration of the Consultant's agreement to provide
Consulting Services hereunder, during the Consulting Period, the Company shall,
or shall cause one of its subsidiaries to (i) pay the Consultant consulting fees
at the rate of $75,000 per annum, payable in monthly installments on the last
business day of each month during such Consulting Period; (ii) provide life and
health insurance coverage substantially identical to the coverage provided by
Merchants & Farmers Bank to its employees; (iii) pay the country club dues for
the Consultant's current membership; and (iv) provide the Consultant with the
continued use of the car that Community Federal had provided to him immediately
prior hereto, plus the cost of gasoline, insurance, repairs and maintenance with
respect to such car.
(c) The Company shall reimburse the Consultant or otherwise provide
for or pay for all reasonable expenses incurred by the Consultant at the request
of the Company, subject to such reasonable documentation as may be established
by the Board of Directors of the Company. If such expenses are paid in the
first instance by the Consultant, the Company shall reimburse the Consultant
therefor.
(d) During the Consulting Period, the Consultant shall be treated as
an independent contractor and shall not be deemed to be an employee of the
Company or any other affiliate of the Company. However, all payments to be made
to the Consultant hereunder shall be subject to withholding of such amounts, if
any, relating to income tax and other payroll deductions as may be required by
law or regulation during the Consulting Period.
(e) If the Consultant (x) shall become disabled or incapacitated to
the extent that he is unable to perform his duties for a period of six (6)
consecutive months in any twelve (12) month period or (y) has materially
breached the terms of this Agreement, the Company may terminate the Consultant
by written notice of termination provided to the Consultant. Thereafter, the
Consultant shall be entitled to no further compensation or benefits under the
terms of this Agreement. The consulting services of the Consultant shall
automatically terminate by reason of the death of the Consultant and no notice
of termination shall be required. After his death, the estate and family of the
Consultant shall be entitled to no further compensation or benefits under the
terms of this Agreement.
2. PAYMENT OBLIGATION. Provided that the Consultant complies, in
all material respects, with his obligations pursuant to Section 1(a) hereof, the
Company's obligation to pay the Consultant benefits and payments provided in
Sections 1(b) and 1(c) hereof during the term of this Agreement shall be
absolute and unconditional and shall not be affected by any circumstances,
including, without limitation, any purported termination of this Agreement
(other than pursuant to Section 1(e) hereof), set-off, counterclaim, recoupment,
defense or other right which the Company may have against the Consultant or
anyone else, and each and every such payment made or benefit provided shall be
final and the Company shall not seek to recover all or any part of any such
payment or benefit from the Consultant or from whomsoever may be entitled
thereto for any reason whatsoever.
3. SUCCESSORS AND ASSIGNS. This Consulting Agreement will inure to
the benefit of and be binding upon the Consultant and the Company, including any
successor to the Company by merger or consolidation or any other change in form
or any other person or firm or corporation to which all or substantially all of
the assets and business of the Company may be sold or otherwise transferred.
This Consulting Agreement may not be assigned by any party hereto without the
consent of the other party.
4. NOTICES. Any communication to a party required or permitted under
this Consulting Agreement, including any notice, direction, designation,
consent, instruction, objection or waiver, shall be in writing and shall be
deemed to have been given at such time as it is delivered personally, or five
(5) days after mailing if mailed, postage prepaid, by registered or certified
mail, return receipt requested, addressed to such party at the address listed
below or at such other address as one such party may by written notice specify
to the other party or parties, as applicable:
If to the Consultant:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to the Company:
Secretary
First M&F Corporation
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
5. ADMINISTRATIVE ASSISTANT. The Company agrees to provide the
Consultant with access to an administrative assistant, reasonably acceptable to
the Consultant, who will provide assistance to the Consultant in the performance
of his duties hereunder.
6. SEVERABILITY. A determination that any provision of this
Consulting Agreement is invalid or unenforceable shall not affect the validity
or enforceability of any other provision hereof.
7. WAIVER. Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such term,
covenant or condition. A waiver of any provision of this Consulting Agreement
must be made in writing, designated as a waiver, and signed by the party against
whom its enforcement is sought. Any waiver or relinquishment of any right or
power hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.
8. COUNTERPARTS. This Consulting Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, and all of
which shall constitute one and the same Consulting Agreement.
9. GOVERNING LAW. This Consulting Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of
Mississippi.
10. HEADINGS. The headings of sections in this Consulting Agreement
are for convenience of reference only and are not intended to qualify the
meaning of any section. Any reference to a section number shall refer to a
section of this Consulting Agreement, unless otherwise stated.
IN WITNESS WHEREOF, the Company and the Consultant have entered into this
Consulting Agreement as of the day and year first above written.
FIRST M&F CORPORATION
By:______________________________
Name:
Title:___________________________
CONSULTANT
By:______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
