EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
BETWEEN
BANCORPSOUTH, INC.
AND
PINNACLE BANCSHARES, INC.
DATED AS OF NOVEMBER 14, 2001
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TABLE OF CONTENTS
PAGE
ARTICLE I. THE MERGER......................................................... 1
1.1. The Merger......................................................... 1
1.2. Effective Time..................................................... 2
1.3. Effects of the Merger.............................................. 2
1.4. Conversion of Pinnacle Common Stock................................ 2
1.5. Stock Options...................................................... 5
1.6. BancorpSouth Common Stock.......................................... 5
1.7. Articles of Incorporation.......................................... 6
1.8. Bylaws............................................................. 6
1.9. Directors and Officers............................................. 6
1.10. Tax Consequences................................................... 6
ARTICLE II. EXCHANGE OF SHARES................................................. 6
2.1. BancorpSouth to Make Shares and Cash Available..................... 6
2.2. Exchange of Shares; Payment of Cash Consideration.................. 6
ARTICLE III. DISCLOSURE SCHEDULES; STANDARDS FOR REPRESENTATIONS AND
WARRANTIES......................................................... 9
3.1 Disclosure Schedules............................................... 9
3.2. Standards.......................................................... 9
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PINNACLE......................... 10
4.1. Corporate Organization............................................. 10
4.2. Capitalization..................................................... 11
4.3. Authority; No Violation............................................ 12
4.4. Consents and Approvals............................................. 13
4.5. Reports............................................................ 13
4.6. Financial Statements............................................... 13
4.7. Broker's Fees...................................................... 14
4.8. Absence of Certain Changes or Events............................... 14
4.9. Legal Proceedings.................................................. 14
4.10. Taxes.............................................................. 15
4.11. Employees.......................................................... 15
4.12. Pinnacle Information............................................... 17
4.13. Compliance with Applicable Law..................................... 18
4.14. Certain Contracts.................................................. 18
4.15. Agreements with Regulatory Agencies................................ 18
4.16. Business Combination Provision; Takeover Laws...................... 18
4.17. Environmental Matters.............................................. 19
4.18. Approvals.......................................................... 19
4.19. Insurance.......................................................... 19
4.20. Loan Portfolio..................................................... 20
4.21. Property........................................................... 20
4.22. Reorganization..................................................... 20
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF
BANCORPSOUTH....................................................... 20
5.1. Corporate Organization............................................. 21
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PAGE
5.2. Capitalization.................................................... 21
5.3. Authority; No Violation........................................... 22
5.4. Consents and Approvals............................................ 22
5.5. Reports........................................................... 23
5.6 Reorganization.................................................... 23
5.6. Financial Statements; SEC Reports................................. 23
5.8. Absence of Certain Changes or Events.............................. 24
5.9. Legal Proceedings................................................. 24
5.10. Buyer Information................................................. 24
5.11 Compliance with Applicable Law.................................... 24
5.12 Approvals......................................................... 24
ARTICLE VI. COVENANTS RELATING TO CONDUCT OF BUSINESS......................... 24
6.1. Covenants of Pinnacle............................................. 24
6.2. Covenants of BancorpSouth......................................... 27
ARTICLE VII. ADDITIONAL AGREEMENTS............................................. 27
7.1. Regulatory Matters................................................ 27
7.2. Access to Information............................................. 28
7.3. Shareholder Meeting............................................... 31
7.4. Legal Conditions to Merger........................................ 31
7.5. Affiliates........................................................ 31
7.6. NYSE Listing...................................................... 31
7.7. Employee Benefit Plans; Existing Agreements....................... 31
7.8. Indemnification of Pinnacle Officers and Directors................ 32
7.9. Additional Agreements............................................. 33
7.10. Coordination of Dividends......................................... 34
7.11 Reasonable Best Efforts........................................... 34
7.12. Tax-Free Qualification............................................ 34
ARTICLE VIII. CONDITIONS PRECEDENT.............................................. 34
8.1. Conditions to Each Party's Obligation to Effect the Merger........ 34
8.2. Conditions to Obligations of BancorpSouth......................... 35
8.3. Conditions to Obligations of Pinnacle............................. 35
ARTICLE IX. TERMINATION AND AMENDMENT......................................... 36
9.1. Termination....................................................... 36
9.2. Effect of Termination............................................. 37
9.3. Amendment......................................................... 37
9.4. Extension; Waiver................................................. 37
ARTICLE X. GENERAL PROVISIONS................................................ 37
10.1. Closing........................................................... 37
10.2. Nonsurvival of Representations, Warranties and Agreements......... 38
10.3. Expenses.......................................................... 38
10.4. Notices........................................................... 38
10.5. Interpretation.................................................... 38
10.6. Defined Terms..................................................... 39
10.7. Counterparts...................................................... 39
10.8. Entire Agreement.................................................. 39
10.9. Governing Law..................................................... 39
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10.10. Enforcement of Agreement.......................................... 40
10.11. Severability...................................................... 40
10.12. Publicity......................................................... 40
10.13. Assignment; Third Party Beneficiaries............................. 40
iii
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of November 14, 2001
("Agreement"), between BANCORPSOUTH, INC., a Mississippi corporation
("BancorpSouth"), and PINNACLE BANCSHARES, INC., an Arkansas corporation
("Pinnacle," and collectively with BancorpSouth, the "Holding Companies").
RECITALS:
WHEREAS, BancorpSouth is the parent corporation of BancorpSouth Bank, a
Mississippi banking corporation ("BancorpSouth Bank");
WHEREAS, Pinnacle is the sole shareholder of Pinnacle Bank, an Arkansas
banking corporation ("Pinnacle Bank");
WHEREAS, BancorpSouth and Pinnacle have determined that it is in the
best interests of their respective companies and their shareholders to
consummate the business combination transactions provided for herein in which
(i) Pinnacle will merge with and into BancorpSouth (the "Holding Company
Merger") and (ii) Pinnacle Bank will merge with and into BancorpSouth Bank (the
"Bank Merger"), each subject to the terms and conditions set forth herein (the
Holding Company Merger and the Bank Merger, collectively, the "Merger");
WHEREAS, the parties intend that the Merger be treated as a
reorganization under the provisions of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), and the rules and regulations promulgated
thereunder; and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I. THE MERGER
1.1. The Merger.
(a) Subject to the terms and conditions of this Agreement, in
accordance with the Mississippi Business Corporation Act (the "MBCA") and the
Arkansas Business Corporation Act of 1987 (the "ABCA"), at the Effective Time
(as defined in Section 1.2), Pinnacle shall merge with and into BancorpSouth.
BancorpSouth shall be the surviving corporation (hereinafter sometimes called
the "Surviving Corporation") in the Holding Company Merger, and shall continue
its corporate existence under the laws of the State of Mississippi. The name of
the Surviving Corporation shall continue to be "BancorpSouth, Inc." Upon
consummation of the Holding Company Merger, the separate corporate existence of
Pinnacle shall terminate.
(b) Subject to the terms and conditions of this Agreement, in
accordance with the Mississippi Banking Act (the "MBA") and the Arkansas Banking
Code of 1997 (the "ABA"), as applicable, at the Effective Time, Pinnacle Bank
shall merge with and into BancorpSouth Bank. BancorpSouth Bank shall be the
surviving banking corporation (hereinafter sometimes called the "Surviving
Bank") in the Bank Merger, and shall continue its corporate existence under the
laws of the State of Mississippi. The name of the Surviving Bank shall continue
to be "BancorpSouth Bank."
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Upon consummation of the Bank Merger, the separate corporate existence of
Pinnacle Bank shall terminate.
1.2. Effective Time.
(a) The Holding Company Merger shall become effective as set forth
in the articles of merger (the "Holding Company Articles of Merger") which shall
be filed on the Closing Date (as defined in Section 10.1) with the Secretary of
State of the State of Mississippi (the "Mississippi Secretary") and the
Secretary of State of the State of Arkansas (the "Arkansas Secretary") with
respect to the Holding Company Merger.
(b) The Bank Merger shall become effective as set forth in the
articles of merger (the "Bank Articles of Merger," and together with the Holding
Company Articles of Merger, the "Articles of Merger") which shall be filed on
the Closing Date (as defined in Section 10.1) with the Mississippi Department of
Banking and Consumer Finance (the "Mississippi Department"), the Arkansas State
Bank Department (the "Arkansas Department") and the Arkansas Secretary with
respect to the Bank Merger, but shall occur immediately after the Holding
Company Merger.
(c) The term "Effective Time" shall be the date and time when the
Merger becomes effective, as set forth in the Articles of Merger.
1.3. Effects of the Merger.
(a) At and after the Effective Time, the Holding Company Merger
shall have the effects set forth in Section 79-4-11.06 of the MBCA and Section
4-27-1106 of the ABCA.
(b) At and after the Effective Time, the Bank Merger shall have
the effects set forth in, as applicable, Section 81-5-85 of the MBA and Section
00-00-000 of the ABA.
1.4. Conversion of Pinnacle Common Stock.
(a) At the Effective Time, subject to Section 2.2(e) hereof, each
share of the common stock, par value $10.00 per share, of Pinnacle (the
"Pinnacle Common Stock") issued and outstanding immediately prior to the
Effective Time (other than Pinnacle Dissenting Shares as defined in this Section
below and other than shares of Pinnacle Common Stock held directly or indirectly
by BancorpSouth or Pinnacle or any of their respective Subsidiaries as defined
in Section 3.2 hereof (as adjusted below), except for Trust Account Shares and
DPC shares as such terms are defined in this Section below), shall, by virtue of
the Holding Company Merger, automatically and without any action on the part of
the holder thereof, become and be converted into, at the election of the holder,
either (i) the right to receive $1,134.10 in cash, without interest (the "Cash
Consideration," with such election referred to as a "Cash Election"), (ii) the
right to receive a number of shares of the common stock, par value $2.50 per
share, of BancorpSouth ("BancorpSouth Common Stock"), together with the number
of BancorpSouth Rights (as defined in Section 5.2 hereof) associated therewith
equal to the Exchange Ratio (as defined below) (the "Stock Consideration", with
such election referred to as a "Stock Election") or (iii) a combination of both
cash and shares of BancorpSouth Common Stock (with such election referred to as
a "Mixed Election"). Shares of Pinnacle Common Stock as to which no election has
been made are referred to herein as "No Election Shares" and shall receive the
mix of Merger Consideration specified in section (c)(iv) below. For purposes of
this Agreement, Cash Consideration, Stock Consideration and any combination
thereof shall be collectively referred to herein as "Merger Consideration."
Shares of Pinnacle Common Stock as to which a Cash Election has been made
(including pursuant to a Mixed Election) are referred to herein as "Cash
Election Shares." Shares of Pinnacle Common Stock as to which a Stock Election
has been made (including pursuant to a Mixed Election) are referred to herein as
"Stock Election Shares." All Pinnacle
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Dissenting Shares will be deemed Cash Election Shares for purposes of
determining the Cash Consideration available for distribution to other
shareholders.
(b) For purposes of this Agreement, the "Exchange Ratio" shall be
equal (rounded to the nearest ten-thousandth) to (x) 85.8516, if the Average
BancorpSouth Common Stock Price is less than or equal to $13.209, (y) 63.4639,
if the Average BancorpSouth Common Stock Price is greater than or equal to
$17.871, or (z) if the Average BancorpSouth Common Stock Price is between
$13.209 and $17.871, the result obtained by dividing $1,134.10 by the Average
BancorpSouth Common Stock Price. The "Average BancorpSouth Common Stock Price"
means the average of the closing price per share of BancorpSouth Common Stock on
the New York Stock Exchange (the "NYSE") at the end of the regular session as
reported on the Consolidated Tape, Network A, for the ten consecutive trading
days ending on the fifth trading day immediately preceding the Effective Time.
(c) (i) In the event that the sum of (x) the number of Cash
Election Shares plus (y) 49.0% of No Election Shares exceeds (z) 49.0% of the
issued and outstanding shares of Pinnacle Common Stock, then the holders of Cash
Election Shares will receive a combination of cash and shares of BancorpSouth
Common Stock to be determined as follows: (A) the number of Cash Election Shares
which shall be converted into the right to receive the Cash Consideration shall
equal the amount obtained by multiplying (I) the number of shares of Pinnacle
Common Stock covered by such Cash Election by (II) a fraction of which the
numerator shall be the cash required to be made available by BancorpSouth
(pursuant to clause (iv) below) and the denominator of which shall be $1,134.10
multiplied by the number of Cash Election Shares; and (B) the balance of such
Cash Election Shares shall be converted into the right to receive Stock
Consideration.
(ii) In the event that the sum of (x) the number of Stock
Election Shares plus (y) 51.0% of No Election Shares exceeds (z) 51.0% of the
issued and outstanding shares of Pinnacle Common Stock, then the holders of
Stock Election Shares will receive a combination of cash and shares of
BancorpSouth Common Stock to be determined as follows: (A) the number of Stock
Election Shares which shall be converted into the right to receive the Stock
Consideration shall equal the amount obtained by multiplying (I) the number of
shares of Pinnacle Common Stock covered by such Stock Election by (II) a
fraction of which the numerator shall be the number of shares of BancorpSouth
Common Stock required to be made available by BancorpSouth (pursuant to clause
(iv) below) and the denominator of which shall be the Stock Consideration
multiplied by the number of Stock Election Shares; and (B) the balance of such
Stock Election Shares shall be converted into the right to receive Cash
Consideration.
(iii) In the event neither of the foregoing clauses (i) or
(ii) is applicable, each holder of shares of Pinnacle Common Stock (A) that
makes a Stock Election will receive the Stock Consideration, (B) that makes a
Cash Election will receive the Cash Consideration or (C) that makes a Mixed
Election will receive the combination of BancorpSouth Common Stock and cash set
forth in such election.
(iv) For purposes of this Section, the amount of cash
required to be made available by BancorpSouth shall be equal to the difference
between (A) the amount obtained by multiplying (I) $1,134.10 by (II) 49% of the
number of outstanding shares of Pinnacle Common Stock minus (B) the amount of
Cash Consideration attributable to the Pinnacle Dissenting Shares, minus (C) the
amount of Cash Consideration required to be paid to No Election Shares. For
purposes of this Section, the number of shares of BancorpSouth Common Stock
required to be made available by BancorpSouth shall be equal to the difference
between (A) the number of shares obtained by multiplying (I) the Exchange Ratio
by (II) 51% of the number of outstanding shares of Pinnacle Common Stock minus
(B) the amount of Stock Consideration required to be paid to No Election Shares.
Regardless of the applicability of clauses (i), (ii) or (iii) above, each No
Election Share shall
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be converted in the Merger into the right to receive 51% Stock Consideration and
49% Cash Consideration.
(d) Notwithstanding any other provision contained in this
Agreement, it is intended that the Merger will qualify as a reorganization under
the provisions of Section 368(a) of the Code and, in order that the Merger will
not fail to satisfy the continuity of interest requirements under applicable
federal income tax principles relating to reorganizations under Section 368(a)
of the Code, as of the Effective Time, BancorpSouth may, but shall not be
obligated to, increase the Stock Consideration and decrease the Cash
Consideration proportionally (using the Average BancorpSouth Common Stock Price
to value the additional Stock Consideration) so that the Stock Consideration
measured at current fair market value as of the Effective Time will represent at
least 45% of the value of the aggregate Merger Consideration payable to Pinnacle
shareholders at the Effective Time.
(e) Each share of Pinnacle Common Stock converted into
BancorpSouth Common Stock pursuant to this Article I shall no longer be
outstanding and shall automatically be canceled and shall cease to exist, and
each certificate (each a "Certificate") previously representing any such shares
of Pinnacle Common Stock shall thereafter only represent the right to receive
(i) the number of whole shares of BancorpSouth Common Stock into which such
share is convertible pursuant to Section 1.4(a) and (ii) the cash in lieu of
fractional shares into which the shares of Pinnacle Common Stock represented by
such Certificate have been converted pursuant to Section 1.4(a) and Section
2.2(e) hereof, and (iii) Cash Consideration pursuant to Section 1.4(a) hereof.
Certificates previously representing shares of Pinnacle Common Stock shall be
exchanged for certificates representing whole shares of BancorpSouth Common
Stock and cash in lieu of fractional shares issued in consideration therefor and
Cash Consideration upon the surrender of such Certificates in accordance with
Section 2.2 hereof, without any interest thereon. If, between the date of this
Agreement and the Effective Time, the shares of BancorpSouth Common Stock shall
be changed into a different number or class of shares by reason of any
reclassification, recapitalization, split-up, combination, exchange of shares or
readjustment, or a stock dividend thereon shall be declared with a record date
within said period (any such event, an "Anti-Dilution Event"), the Exchange
Ratio and the Merger Consideration shall be adjusted to result in the same
aggregate consideration being delivered to Pinnacle's shareholders as would have
been received had such Anti-Dilution Event not occurred.
(f) At the Effective Time, all shares of Pinnacle Common Stock
that are owned directly or indirectly by BancorpSouth or Pinnacle or any of
their respective Subsidiaries, other than shares of Pinnacle Common Stock (i)
held directly or indirectly in trust accounts, managed accounts and the like or
otherwise held in a fiduciary capacity for the benefit of third parties (any
such shares, and shares of BancorpSouth Common Stock which are similarly held,
whether held directly or indirectly by BancorpSouth or Pinnacle, as the case may
be, being referred to herein as "Trust Account Shares") and (ii) held by
BancorpSouth or Pinnacle or any of their respective Subsidiaries in respect of a
debt previously contracted (any such shares of Pinnacle Common Stock, and shares
of BancorpSouth Common Stock which are similarly held, whether held directly or
indirectly by BancorpSouth or Pinnacle, being referred to herein as "DPC
Shares"), shall be canceled and shall cease to exist, and no stock of
BancorpSouth or other consideration shall be delivered in exchange therefor. All
shares of BancorpSouth Common Stock that are owned by Pinnacle or any of its
Subsidiaries (other than Trust Account Shares and DPC Shares) shall become
treasury stock of BancorpSouth.
(g) Notwithstanding anything in this Agreement to the contrary,
shares of Pinnacle Common Stock which are outstanding immediately prior to the
Effective Time and with respect to which dissenters' rights shall have been
properly demanded in accordance with Sections 4-27-1301 et seq. of the ABCA
("Pinnacle Dissenting Shares") shall not be converted into the right to receive,
or be exchangeable for, Merger Consideration or cash in lieu of fractional
shares but, instead, the holders thereof shall be entitled to payment of the
appraised value of such Pinnacle Dissenting Shares in
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accordance with the provisions of Sections 4-27-1301 et seq. of the ABCA;
provided, however, that (i) if any holder of Pinnacle Dissenting Shares shall
subsequently deliver a written withdrawal of his demand for appraisal of such
shares, or (ii) if any holder fails to establish his entitlement to dissenters'
rights as provided in Sections 4-27-1301 et seq. of the ABCA, such holder or
holders (as the case may be) shall forfeit the right to appraisal of such shares
of Pinnacle Common Stock and each of such shares shall thereupon be deemed to
have been converted into the right to receive, and to have become exchangeable
for, as of the Effective Time, Stock Consideration and/or cash in lieu of
fractional shares and/or Cash Consideration, without any interest thereon, as
provided in Sections 1.4(a) and 1.4(c) and Article II hereof.
(h) At the Effective Time, all shares of Pinnacle Bank common
stock shall be canceled and shall cease to exist and no stock of BancorpSouth or
BancorpSouth Bank or other consideration shall be delivered in exchange
therefor.
1.5. Stock Options. At the Effective Time, each option granted by Pinnacle
to purchase shares of Pinnacle Common Stock which is outstanding and unexercised
immediately prior thereto (each, a "Pinnacle Option") shall, by virtue of the
Merger and without any further action by the holder thereof, cease to represent
a right to acquire shares of Pinnacle Common Stock and shall be promptly
replaced by an option (the "New Option") issued under and subject to the
appropriate stock option plan of BancorpSouth to purchase shares of BancorpSouth
Common Stock in an amount and at an exercise price determined as provided below:
(a) The number of shares of BancorpSouth Common Stock to be
subject to the New Option shall be equal to the number of shares of BancorpSouth
Common Stock to which the holder of the Pinnacle Option would have been entitled
under Section 1.4(a) of this Agreement had the Pinnacle Option been exercised in
full immediately prior to the Effective Time and had such holder received only
Stock Consideration in the Merger, provided that any fractional shares of
BancorpSouth Common Stock resulting from such multiplication shall be rounded to
the nearest whole share; and
(b) The exercise price per share of BancorpSouth Common Stock
under the New Option shall be equal to the aggregate exercise price for the
shares of Pinnacle Common Stock otherwise purchasable under the Pinnacle Option
divided by the number of shares of BancorpSouth Common Stock issuable under the
New Option pursuant to Section 1.5(a), provided that any such exercise price
which would otherwise include a fraction of a cent shall be rounded to the
nearest whole cent. The adjustment provided herein with respect to any options
which are "incentive stock options" (as defined in section 422 of the Code)
shall be and is intended to be effected in a manner which is consistent with
section 424(a) of the Code and, to the extent it is not so consistent, such
section 424(a) shall override anything to the contrary contained herein. The
duration of the New Option shall be the same as the original option. All New
Options shall be currently exerciseable by the holder thereof to the extent
required by the option agreements for the Pinnacle Options.
(c) At or prior to the Effective Time, BancorpSouth shall take all
corporate action necessary to reserve for issuance a sufficient number of shares
of BancorpSouth Common Stock for delivery upon exercise of the New Options. At
or prior to the Effective Time, BancorpSouth shall take such action as is
necessary to ensure that a registration statement on Form X-0, X-0 or other
applicable form is effective to cover the shares of BancorpSouth Common Stock
subject to the New Options.
1.6. BancorpSouth Common Stock. Except for shares of BancorpSouth Common
Stock owned by Pinnacle or any of its Subsidiaries (other than Trust Account
Shares and DPC Shares), which shall be converted into treasury stock of
BancorpSouth as contemplated by Section 1.4 hereof, the shares
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of BancorpSouth Common Stock issued and outstanding immediately prior to the
Effective Time shall be unaffected by the Merger and such shares shall remain
issued and outstanding.
1.7. Articles of Incorporation. At the Effective Time, the Amended and
Restated Articles of Incorporation of BancorpSouth, as in effect at the
Effective Time, shall be the articles of incorporation of the Surviving
Corporation. At the Effective Time, the Amended and Restated Articles of
Association of BancorpSouth Bank, as in effect at the Effective Time, shall be
the articles of association of the Surviving Bank.
1.8. Bylaws. At the Effective Time, the Bylaws of BancorpSouth, as in
effect immediately prior to the Effective Time, shall be the bylaws of the
Surviving Corporation until thereafter amended in accordance with applicable law
and the articles of incorporation of the Surviving Corporation. At the Effective
Time, the Bylaws of BancorpSouth Bank, as in effect immediately prior to the
Effective Time, shall be the bylaws of the Surviving Bank until thereafter
amended in accordance with applicable law and the articles of association of the
Surviving Bank.
1.9. Directors and Officers. The directors and officers of BancorpSouth
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation, each to hold office in accordance with the articles
of incorporation and bylaws of the Surviving Corporation until their respective
successors are duly elected or appointed and qualified. The directors and
officers of BancorpSouth Bank immediately prior to the Effective Time shall be
the directors and officers of the Surviving Bank, each to hold office in
accordance with the articles of association and bylaws of the Surviving Bank
until their respective successors are duly elected or appointed and qualified.
1.10. Tax Consequences. It is intended that the Merger shall constitute a
reorganization within the meaning of Section 368(a) of the Code and that this
Agreement shall constitute a "plan of reorganization" for the purposes of
Section 368 of the Code.
ARTICLE II. EXCHANGE OF SHARES
2.1. BancorpSouth to Make Shares and Cash Available. At or prior to the
Effective Time, BancorpSouth shall deposit, or shall cause to be deposited, with
SunTrust Bank, Atlanta, N.A. or other bank or trust company (the "Exchange
Agent") selected by BancorpSouth and reasonably satisfactory to Pinnacle, for
the benefit of the holders of Certificates, for exchange in accordance with this
Article II, the Cash Consideration, certificates representing the shares of
BancorpSouth Common Stock constituting the Stock Consideration and the cash in
lieu of fractional shares (such cash and certificates for shares of BancorpSouth
Common Stock, together with any dividends or distributions with respect thereto,
being hereinafter referred to as the "Exchange Fund") to be issued pursuant to
Section 1.4 and paid pursuant to Section 2.2(a) in exchange for outstanding
shares of Pinnacle Common Stock.
2.2. Exchange of Shares; Payment of Cash Consideration.
(a) At the time of the mailing of the Proxy Statement and
Prospectus described in Section 7.1 hereof, BancorpSouth will cause the Exchange
Agent to send to each holder of record of shares of Pinnacle Common Stock on the
record date for the meeting of the stockholders of Pinnacle a letter of
transmittal and cash election form (collectively, the "Election Form") and other
appropriate materials providing for such holder, subject to the provisions of
Section 1.4 hereof, to elect to receive (i) Stock Consideration with respect to
all of such holder's shares of Pinnacle Common Stock, (ii) Cash Consideration
with respect to all of such holder's shares of Pinnacle Common Stock, or (iii)
Cash Consideration with respect to some of such holder's shares and the Stock
Consideration with respect to such holder's remaining shares, or to make no
election or indicate that such holder has no preference as to the receipt of the
Cash Consideration or the Stock
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Consideration. As of the Election Deadline (as defined below), any shares of
Pinnacle Common Stock with respect to which there shall not have been such
election by submission to the Exchange Agent of an effective, properly completed
Election Form shall be deemed to be No Election Shares.
(i) Any Cash Election, Stock Election or Mixed Election
shall have been validly made only if the Exchange Agent shall have received by
5:00 p.m., Central Time, on the second business day immediately preceding the
meeting of stockholders of Pinnacle described in Section 7.1 hereof (the
"Election Deadline"), an Election Form properly completed. An election by a
holder of shares of Pinnacle Common Stock shall be validly made only if the
Exchange Agent shall have received an Election Form properly completed and
executed (with the signature or signatures thereon guaranteed if required by the
Election Form) by such holder of shares of Pinnacle Common Stock. An Election
Form shall be deemed properly completed only if accompanied by one or more
Certificates (or customary affidavits and, if required by BancorpSouth,
indemnification regarding the loss or destruction of such Certificates or the
guaranteed delivery of such Certificates) representing all shares of Pinnacle
Common Stock covered by such Election Form, together with duly executed
transmittal materials included with the Election Form. BancorpSouth shall have
the right to make reasonable determinations and to establish reasonable
procedures (not inconsistent with the terms of this Agreement) in guiding the
Exchange Agent in its determination as to the validity of Election Forms and of
any revision, revocation or withdrawal thereof.
(ii) Two or more holders of shares of Pinnacle Common
Stock who are determined to constructively own shares owned by each other by
virtue of Section 318(a) of the Code and who so certify to BancorpSouth's
satisfaction, and any single holder of shares of Pinnacle Common Stock who holds
such shares in two or more different names and who so certifies to
BancorpSouth's satisfaction, may submit a joint Election Form covering the
aggregate shares of Pinnacle Common Stock owned by all such holders or by such
single holder, as the case may be. For all purposes of this Agreement, each such
group of holders which, and each such single holder who, submits a joint
Election Form shall be treated as a single holder of shares of Pinnacle Common
Stock.
(iii) Each holder of record of shares of Pinnacle Common
Stock who holds such shares as nominee, trustee or in other representative
capacities (each, a "Representative") may submit multiple Election Forms,
provided that such Representative certifies that each such Election Form covers
all shares of Pinnacle Common Stock held by that Representative for a particular
beneficial owner.
(iv) Any holder of shares of Pinnacle Common Stock who has
made an election by submitting an Election Form to the Exchange Agent may at any
time prior to the Election Deadline change such holder's election by submitting
a revised Election Form, properly completed and signed, that is received by the
Exchange Agent prior to the Election Deadline. Any holder of shares of Pinnacle
Common Stock may at any time prior to the Election Deadline revoke such holder's
election by written notice to the Exchange Agent received at any time prior to
the Election Deadline.
(b) As soon as practicable after the Election Deadline (the
"Allocation Date"), the Exchange Agent shall effectuate the allocation among the
holders of shares of Pinnacle Common Stock of rights to receive the Stock
Consideration, the Cash Consideration or a combination of both the Stock
Consideration and the Cash Consideration in the Merger in accordance with the
terms of this Section. As more fully set forth in Section 1.4 above, the number
of shares of Pinnacle Common Stock to be converted in the Merger into the right
to receive Cash Consideration may not exceed 49.0% of the outstanding shares of
Pinnacle Common Stock, and the number of shares of Pinnacle Common Stock to be
converted in the Merger into the right to receive Stock Consideration may not
exceed 51.0% of the total number of outstanding shares of Pinnacle Common Stock.
7
(c) No dividends or other distributions declared after the
Effective Time with respect to BancorpSouth Common Stock and payable to the
holders of record thereof shall be paid to the holder of any unsurrendered
Certificate until the holder thereof shall surrender such Certificate in
accordance with this Article II. After the surrender of a Certificate in
accordance with this Article II, the record holder thereof shall be entitled to
receive any such dividends or other distributions, without any interest thereon,
which theretofore had become payable with respect to shares of BancorpSouth
Common Stock represented by such Certificate.
(d) If any certificate representing shares of BancorpSouth Common
Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a condition of the
issuance thereof that the Certificate so surrendered shall be properly endorsed
(or accompanied by an appropriate instrument of transfer) and otherwise in
proper form for transfer, and that the person requesting such exchange shall pay
to the Exchange Agent in advance any transfer or other taxes required by reason
of the issuance of a certificate representing shares of BancorpSouth Common
Stock in any name other than that of the registered holder of the Certificate
surrendered, or required for any other reason, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(e) After the Effective Time, there shall be no transfers on the
stock transfer books of Pinnacle of the shares of Pinnacle Common Stock which
were issued and outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates representing such shares are presented for
transfer to the Exchange Agent, they shall be canceled and exchanged for
certificates representing shares of BancorpSouth Common Stock as provided in
this Article II.
(f) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of BancorpSouth Common
Stock shall be issued upon the surrender for exchange of Certificates, no
dividend or distribution with respect to BancorpSouth Common Stock shall be
payable on or with respect to any fractional share, and such fractional share
interests shall not entitle the owner thereof to vote or to any other rights of
a shareholder of BancorpSouth. In lieu of the issuance of any such fractional
share, BancorpSouth shall pay to each former stockholder of Pinnacle who
otherwise would be entitled to receive a fractional share of BancorpSouth Common
Stock an amount in cash equal to the product of (x) the Average BancorpSouth
Common Stock Price, times (y) the fraction of a share of BancorpSouth Common
Stock which such holder would otherwise be entitled to receive pursuant to
Article I hereof.
(g) Any portion of the Exchange Fund that remains unclaimed by the
shareholders of Pinnacle for 12 months after the Effective Time shall be paid to
BancorpSouth. Any shareholders of Pinnacle who have not theretofore complied
with this Article II shall thereafter look only to BancorpSouth for payment of
their portion of the Cash Consideration and their shares of BancorpSouth Common
Stock, cash in lieu of fractional shares and unpaid dividends and distributions
on BancorpSouth Common Stock deliverable in respect of each share of Pinnacle
Common Stock such stockholder holds as determined pursuant to this Agreement, in
each case, without any interest thereon. Notwithstanding the foregoing, none of
BancorpSouth, Pinnacle, the Exchange Agent or any other person shall be liable
to any former holder of shares of Pinnacle 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
BancorpSouth, the posting by such person of a bond in such amount as is
customarily required by BancorpSouth and Exchange Agent for other shareholders
of BancorpSouth 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
8
the shares of BancorpSouth Common Stock and cash in lieu of fractional shares
deliverable in respect thereof pursuant to this Agreement.
ARTICLE III. DISCLOSURE SCHEDULES; STANDARDS FOR
REPRESENTATIONS AND WARRANTIES
3.1. Disclosure Schedules. On or prior to the date hereof, each of
BancorpSouth and Pinnacle has delivered to the other party a schedule (in the
case of Pinnacle, the "Pinnacle Disclosure Schedule," and in the case of
BancorpSouth, the "BancorpSouth Disclosure Schedule," and, generally, a
"Disclosure Schedule") setting forth, among other things, items the disclosure
of which is necessary or appropriate either in response to an express disclosure
requirement contained in a provision hereof or as an exception to one or more of
such party's representations or warranties contained in Article IV, in the case
of Pinnacle, or Article V, in the case of BancorpSouth, or to one or more of
such party's covenants contained in Article VI; provided, however, that the mere
inclusion of an item in a Disclosure Schedule as an exception to a
representation or warranty shall not be deemed an admission by a party that such
item represents a material exception or material fact, event or circumstance or
that such item has had or could be reasonably expected to have a Material
Adverse Effect (as defined in Section 3.2 below) with respect to either Pinnacle
or BancorpSouth, respectively.
3.2. Standards.
(a) No representation or warranty of Pinnacle contained in Article
IV, or of BancorpSouth contained in Article V, shall be deemed untrue or
incorrect for any purpose under this Agreement as a consequence of the existence
or absence of any fact, circumstance or event, unless such fact, circumstance or
event, individually or when taken together with all other facts, circumstances
or events inconsistent with any representation or warranty contained in Article
IV, in the case of Pinnacle, or Article V, in the case of BancorpSouth, has had
or could be reasonably expected to have a Material Adverse Effect with respect
to (i) Pinnacle or (ii) BancorpSouth, respectively.
(b) As used in this Agreement, the term "Material Adverse Effect"
means, with respect to Pinnacle, (i) a change in the business of Pinnacle or its
Subsidiaries which, individually or in the aggregate has resulted or is
reasonably expected by BancorpSouth, in its reasonable discretion, to result in
losses, damages, liabilities, costs, expenses, judgments or fines in an amount
of $1,000,000 or greater; or (ii) a material adverse effect on (A) the business,
results of operations or financial condition of Pinnacle and its Subsidiaries
taken as a whole or (B) the ability of Pinnacle and its Subsidiaries to
consummate the transactions contemplated hereby; provided that, for purposes of
clauses (i) and (ii), Material Adverse Effect shall specifically exclude any
adverse effect attributable to or resulting from (1) any change in banking or
similar laws, rules or regulations of general applicability or interpretations
thereof by courts or governmental authorities, (2) any change in generally
accepted accounting principles ("GAAP") or regulatory accounting principles
applicable to banks or their holding companies generally, (3) any action or
omission of Pinnacle or any Subsidiary of Pinnacle taken with the express prior
written consent of BancorpSouth, (4) any expenses incurred by Pinnacle where
such expenses are contemplated by or reasonably incurred in connection with this
Agreement or the transactions contemplated hereby, (5) the fact that Pinnacle
does not meet the revenue, profit or balance sheet predictions set forth in
Pinnacle's internal projections separately delivered to BancorpSouth, (6) any
changes in general economic conditions or changes affecting the banking industry
generally, including adverse changes in the banking or financial markets
(provided such changes do not affect Pinnacle in a materially disproportionate
manner), or (7) other than those employees listed on Schedule 3.2(b), any
termination or resignation of employment by any employee of Pinnacle or Pinnacle
Bank as a result of the pendency of the Merger, including any termination
arising as a result of the employment package (including title, level of
responsibility, location of employment or compensation) offered to such
employees by BancorpSouth or BancorpSouth Bank.
9
(c) As used in this Agreement, the term "Material Adverse Effect"
means, with respect to BancorpSouth, a material adverse effect on (i) the
business, results of operations or financial condition of BancorpSouth and its
Subsidiaries taken as a whole or (ii) the ability of BancorpSouth and its
Subsidiaries to consummate the transactions contemplated hereby; provided that
Material Adverse Effect shall specifically exclude any adverse effect
attributable to or resulting from (A) any change in banking or similar laws,
rules or regulations of general applicability or interpretations thereof by
courts or governmental authorities, (B) any change in GAAP or regulatory
accounting principles applicable to banks or their holding companies generally,
(C) any action or omission of BancorpSouth or any Subsidiary of BancorpSouth
taken with the express prior written consent of Pinnacle, (D) any expenses
incurred by BancorpSouth where such expenses are contemplated by or reasonably
incurred in connection with this Agreement or the transactions contemplated
hereby, (E) the announcement of the pendency of the Merger, or (F) any changes
in general economic conditions or changes affecting the banking industry
generally, including adverse changes in the banking or financial markets
(provided such changes do not affect BancorpSouth in a materially
disproportionate manner). Changes in the market price of BancorpSouth Common
Stock shall not be considered Material Adverse Effects or otherwise considered a
material change or circumstance for any purpose.
(d) As used in this Agreement, the word "Subsidiary" when used
with respect to any party means any corporation, partnership, limited liability
company or other person, entity or organization, whether incorporated or
unincorporated, with respect to which such party owns, directly or indirectly,
50% or more of the equity or ownership interests, or an amount of voting
securities or ownership interests sufficient to elect at least a majority of its
board of directors or other governing body.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PINNACLE
Subject to Article III, Pinnacle hereby represents and warrants to
BancorpSouth as follows:
4.1. Corporate Organization.
(a) Pinnacle is a corporation duly organized, validly existing and
in good standing under the laws of the State of Arkansas. Pinnacle has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and is duly licensed
or qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary.
Pinnacle is duly registered as a bank holding company under the Bank Holding
Company Act of 1956, as amended (the "BHC Act"). The Articles of Incorporation
and Bylaws of Pinnacle, copies of which have previously been provided or will be
provided to BancorpSouth within seven days following the date hereof, are true
and correct copies of such documents as currently in effect. Pinnacle has no
Subsidiaries other than Pinnacle Bank and the following subsidiaries of Pinnacle
Bank: Pinnacle Bank Home Loan Company, Inc. ("Pinnacle Mortgage") and Pinnacle
Capital Resources, Inc. ("PCR") and, except for such entities, Pinnacle does not
own (other than in a bona fide fiduciary capacity or in satisfaction of a debt
previously contracted) beneficially, directly or indirectly (other than as set
forth in Section 4.1(a) of the Pinnacle Disclosure Schedule), any shares of
capital stock or any equity securities or similar interests of any person, or
any interest in a partnership or joint venture of any kind.
(b) Pinnacle Bank is an Arkansas state bank duly organized,
validly existing and in good standing under the laws of the State of Arkansas.
The deposit accounts of Pinnacle are insured by the Federal Deposit Insurance
Corporation (the "FDIC") through the Bank Insurance Fund (the "BIF") to the
fullest extent permitted by law, and all premiums and assessments required to be
paid
10
in connection therewith have been paid when due. Pinnacle Bank has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted and is duly licensed or
qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or the location of the properties and
assets owned or leased by it makes such licensing or qualification necessary.
The Articles of Association and Bylaws of Pinnacle Bank, copies of which have
previously been provided or will be provided to BancorpSouth within seven days
following the date hereof, are true and correct copies of such documents as
currently in effect. Except for Pinnacle Mortgage and PCR, Pinnacle Bank has no
Subsidiaries and does not own beneficially, directly or indirectly, any shares
of any equity securities or similar interests of any person, or any interest in
a partnership or joint venture of any kind.
(c) Pinnacle Mortgage is a corporation duly organized, validly
existing and in good standing under the laws of the State of Arkansas. Pinnacle
Mortgage has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or the location of
the properties and assets owned or leased by it makes such licensing or
qualification necessary. The Articles of Incorporation and Bylaws of Pinnacle
Mortgage, copies of which have previously been provided or will be provided to
BancorpSouth within seven days following the date hereof, are true and correct
copies of such documents as currently in effect. Pinnacle Mortgage has no
Subsidiaries and does not own beneficially, directly or indirectly, any shares
of any equity securities or similar interests of any person, or any interest in
a partnership or joint venture of any kind.
(d) PCR is a corporation duly organized, validly existing and in
good standing under the laws of the State of Arkansas. PCR has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted and is duly licensed or
qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or the location of the properties and
assets owned or leased by it makes such licensing or qualification necessary.
The Articles of Incorporation and Bylaws of PCR, copies of which have previously
been provided or will be provided to BancorpSouth within seven days following
the date hereof, are true and correct copies of such documents as currently in
effect. PCR has no Subsidiaries and does not own (other than in a bona fide
fiduciary capacity or in satisfaction of a debt previously contracted)
beneficially, directly or indirectly, any shares of any equity securities or
similar interests of any person, or any interest in a partnership or joint
venture of any kind.
(e) The minute books of Pinnacle and each of its Subsidiaries
contain true and correct records of all meetings and other corporate actions
held or taken since December 31, 1995 of their respective shareholders and
Boards of Directors (including committees of their respective Boards of
Directors).
4.2. Capitalization.
(a) The authorized capital stock of Pinnacle consists of 100,000
shares of Pinnacle Common Stock, $10.00 par value. There are 17,137 shares of
Pinnacle Common Stock issued and outstanding and 915 shares of Pinnacle Common
Stock held by Pinnacle as treasury stock. There are no shares of Pinnacle Common
Stock reserved for issuance upon exercise of outstanding stock options or
otherwise except for 1,721 shares of Pinnacle Common Stock reserved for issuance
under Pinnacle's Stock Option Plan, adopted August 30, 1996 and Pinnacle's
Non-Employee Director Stock Option Plan, effective as of January 1, 1998
(collectively, the "Pinnacle Option Plan"). There are no shares of Pinnacle
Preferred Stock issued or outstanding, held in Pinnacle's treasury or reserved
for issuance upon exercise of outstanding stock options or otherwise. All of the
issued and outstanding shares of Pinnacle Common Stock have been duly authorized
and validly issued and are fully paid, nonassessable, and were issued in
compliance with and are currently free of all preemptive rights,
11
with no personal liability attaching to the ownership thereof. Except for
options outstanding under the Pinnacle Option Plan to purchase a total of 1,721
shares of Pinnacle Common Stock (the "Plan Options"), Pinnacle does not have and
is not bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or issuance
of any shares of Pinnacle Common Stock or Pinnacle Preferred Stock or any other
equity security or capital stock of Pinnacle or any securities representing the
right to purchase or otherwise receive any shares of Pinnacle Common Stock or
any other equity security or capital stock of Pinnacle. Set forth in Section
4.2(a) of the Pinnacle Disclosure Schedule is a complete and correct list, for
each of the Plan Options, of the names of the optionees, the date of grant, the
number of shares subject to each such option, the expiration date of each such
option, and the price at which each such option may be exercised.
(b) Except as set forth in Section 4.2(b) of the Pinnacle
Disclosure Schedule, Pinnacle owns, directly or indirectly, all of the issued
and outstanding shares of the capital stock and equity securities of each of
Pinnacle's Subsidiaries, free and clear of all liens, charges, encumbrances and
security interests whatsoever, and all of such shares are duly authorized and
validly issued and are fully paid, nonassessable (except as otherwise provided
by applicable federal law) and free of preemptive rights, with no personal
liability attaching to the ownership thereof. Pinnacle's Subsidiaries are not
bound by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of capital stock or any other equity security of any of Pinnacle's Subsidiaries
or any securities representing the right to purchase or otherwise receive any
shares of capital stock or any other equity security of any of Pinnacle's
Subsidiaries. There are no outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character by which Pinnacle or any of its
Subsidiaries will be bound calling for the purchase or issuance of any shares of
the capital stock or equity securities of any of Pinnacle's Subsidiaries.
4.3. Authority; No Violation.
(a) Pinnacle has full corporate power and authority to execute and
deliver this Agreement and, upon the receipt of requisite approval by the
shareholders of Pinnacle of this Agreement, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
approved by the Board of Directors of Pinnacle. The Board of Directors of
Pinnacle has directed that this Agreement and the transactions contemplated
hereby be submitted to Pinnacle's shareholders for approval at a meeting of such
shareholders, and Pinnacle has approved, or promptly after the date hereof and
prior to the Closing Date will approve, this Agreement and the transactions
contemplated hereby, and the Board of Directors of Pinnacle has directed
officers of Pinnacle to so approve this Agreement and the transactions
contemplated herein in its capacity as the sole shareholder of Pinnacle Bank.
Except for the adoption of this Agreement by the requisite vote of Pinnacle's
shareholders, no other proceedings on the part of Pinnacle or its Subsidiaries
are necessary to approve this Agreement and to consummate the transactions
contemplated hereby, except for the approval, which will occur promptly after
the date hereof, of this Agreement by the board of directors of each of
Pinnacle's Subsidiaries as set forth in Section 6.3 herein. This Agreement has
been duly and validly executed and delivered by Pinnacle, and this Agreement
constitutes a valid and binding obligation of Pinnacle, enforceable against
Pinnacle in accordance with its terms, except as enforcement may be limited by
general principles of equity whether applied in a court of law or a court of
equity and by bankruptcy, insolvency and similar laws affecting creditors'
rights and remedies generally.
(b) Neither the execution and delivery of this Agreement, nor the
consummation by Pinnacle of the transactions contemplated hereby, nor compliance
by Pinnacle with any of the terms or provisions hereof or thereof, will (i)
violate any provision of the Articles of Incorporation or Bylaws
12
of Pinnacle or the articles of incorporation, bylaws or similar governing
documents of any of Pinnacle's Subsidiaries, or (ii) assuming that the consents
and approvals referred to in Section 4.4 hereof are duly obtained, (A) violate
any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Pinnacle or any of its Subsidiaries, or any of their
respective properties or assets, or (B) violate, conflict with, result in a
breach of any provision of or, except as provided in Section 4.14, the loss of
any benefit under, constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, result in the termination
of or a right of termination or cancellation under (except as provided in
Section 4.14), accelerate the performance required by, or result in the creation
of any lien, pledge, security interest, charge or other encumbrance upon any of
the respective properties or assets of Pinnacle or any of its Subsidiaries
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which Pinnacle or any of its Subsidiaries is a party, or by which
they or any of their respective properties or assets may be bound or affected.
4.4. Consents and Approvals. Except for (a) the filing of applications and
notices, as applicable, with the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"), the FDIC, the Federal Trade Commission
(the "FTC") and the Department of Justice ("DoJ"), and approval of such
applications and notices, (b) the filing of such applications, filings,
authorizations, orders and approvals as may be required under applicable state
law, (c) the filing with, and declaration of effectiveness by, the United States
Securities and Exchange Commission ("SEC") of a registration statement on Form
S-4 (such registration statement and any post-effective amendment thereto
relating to this transaction, or any other registration statement on Form S-4
used in connection with the Merger, the "S-4") in which will be included as a
prospectus a definitive proxy statement relating to the meeting of shareholders
of Pinnacle to be held in connection with this Agreement and the transactions
contemplated herein (the "Proxy Statement"), (d) the approval of this Agreement
by the requisite vote of the shareholders of Pinnacle, (e) the filing of the
Articles of Merger with, as applicable, the Mississippi Secretary, the Arkansas
Secretary, the Mississippi Department and the Arkansas Department and (f)
approval for listing of BancorpSouth Common Stock to be issued in the Merger on
the NYSE, no consents or approvals of or filings or registrations with any
court, administrative agency or commission or other governmental authority or
instrumentality (each a "Governmental Entity") or with any third party are
necessary in connection with (i) the execution and delivery by Pinnacle of this
Agreement and (ii) the consummation by Pinnacle and its Subsidiaries of the
Merger and the other transactions contemplated hereby.
4.5. Reports. Pinnacle and each of its Subsidiaries have timely filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that they were required to file since December 31,
1995 with (i) the Federal Reserve Board, (ii) the FDIC, (iii) any Federal
Reserve Bank, (iv) any state banking commissions, including without limitation
the Arkansas Department or any other state regulatory authority (each a "State
Regulator") and (v) any self-regulatory organization (collectively, the
"Regulatory Agencies"), and have paid all fees and assessments due and payable
in connection therewith. Except for normal examinations conducted by a
Regulatory Agency in the regular course of the business of Pinnacle and its
Subsidiaries, no Regulatory Agency has initiated any proceeding or, to the
knowledge of Pinnacle, investigation into the business or operations of Pinnacle
or any of its Subsidiaries since December 31, 1995. There is no unresolved
outstanding violation, criticism, or exception by any Regulatory Agency with
respect to any report or statement relating to any examinations of Pinnacle or
any of its Subsidiaries that cannot be resolved with reasonable effort and
within a reasonable time.
4.6. Financial Statements. The unaudited consolidated financial statements
of Pinnacle and its subsidiaries for the fiscal years ended December 31, 2000,
1999 and 1998, and for the nine-month period ended September 30, 2001
(collectively, the "Pinnacle Financial Statements"), including consolidated
statements of condition and statements of earnings, copies of which have been
13
previously provided to BancorpSouth, fairly present the consolidated financial
position of Pinnacle and its Subsidiaries as of the respective dates thereof,
and fairly present (subject, in the case of the unaudited statements, to
recurring audit adjustments normal in nature and amount) the results of the
consolidated operations and consolidated financial position of Pinnacle and its
Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth; each of such Pinnacle Financial Statements (including the
related notes, where applicable) complies with applicable accounting
requirements with respect thereto; and each of such Pinnacle Financial
Statements (including the related notes, where applicable) has been prepared in
accordance with GAAP consistently applied during the periods involved, except as
indicated in the notes thereto. The books and records of Pinnacle and its
Subsidiaries have been, and are being, maintained in accordance with GAAP and
any other applicable legal and accounting requirements.
4.7. Broker's Fees. Other than Xxxxxxxx Inc., neither Pinnacle nor any of
its Subsidiaries, nor any of their respective officers or directors, has
employed any broker or finder or incurred any liability for any broker's fees,
commissions or finder's fees in connection with any of the transactions
contemplated by this Agreement.
4.8. Absence of Certain Changes or Events.
(a) Except as set forth in Section 4.8(a) of the Pinnacle
Disclosure Schedule, since September 30, 2001, there has been no change or
development or combination of changes or developments which, individually or in
the aggregate, has had or is reasonably likely to have a Material Adverse Effect
with respect to Pinnacle.
(b) Except as set forth in Section 4.8(b) of the Pinnacle
Disclosure Schedule, since September 30, 2001, Pinnacle and its Subsidiaries
have carried on their respective businesses in the ordinary course consistent
with their past practices.
(c) Section 4.8(c) of the Pinnacle Disclosure Schedule sets forth
a true and correct list of all stock options granted since September 30, 2001.
Since September 30, 2001, except as set forth in Section 4.8(c) of the Pinnacle
Disclosure Schedule, neither Pinnacle nor any of its Subsidiaries has increased
the wages, salaries, compensation, pension, or other fringe benefits or
perquisites payable to any executive officer, employee, or director from the
amount thereof in effect as of September 30, 2001, granted any severance or
termination pay, entered into any contract to make or grant any severance or
termination pay, or paid any bonus (except for salary increases and bonus
payments made in cash and in the ordinary course of business consistent with
past practices) or granted any stock option.
4.9. Legal Proceedings. Section 4.9 of the Pinnacle Disclosure Schedule
lists all pending or, to Pinnacle's knowledge, threatened, legal,
administrative, arbitral or other proceedings, claims, actions or governmental
or regulatory investigations of any nature against Pinnacle or any of its
Subsidiaries or challenging the validity or propriety of the transactions
contemplated by this Agreement, other than regularly scheduled examinations and
similar routine investigations made by bank regulatory officials in the course
of their supervision of Pinnacle or any of its Subsidiaries. Neither Pinnacle
nor any of its Subsidiaries is a party to any, and there are no pending or, to
Pinnacle's knowledge, threatened, legal, administrative, arbitral or other
proceedings, claims, actions or governmental or regulatory investigations of any
nature against Pinnacle or any of its Subsidiaries or challenging the validity
or propriety of the transactions contemplated by this Agreement, other than
regularly scheduled examinations and similar routine investigations made by bank
regulatory officials in the course of their supervision of Pinnacle or any of
its Subsidiaries, which has had, or could reasonably be expected to have, a
Material Adverse Effect with respect to Pinnacle. There is no injunction, order,
judgment, decree or unique regulatory restriction imposed upon Pinnacle, any of
its Subsidiaries or the assets of Pinnacle or any of its Subsidiaries.
14
4.10. Taxes.
(a) (i) Each of Pinnacle and its Subsidiaries has duly and timely
filed all Tax Returns (as defined in this Section below) that it was required to
file, and all such Tax Returns are true, complete and accurate; (ii) Pinnacle
and each of its Subsidiaries has paid all Taxes (as defined in this Section
below) required to be paid by it, and has paid all Taxes that it was required to
withhold from amounts owing to any employee, creditor or third party; (iii)
there are no pending or, to the knowledge of Pinnacle, threatened audits,
examinations, investigations, deficiencies, claims or other proceedings in
respect of Taxes relating to Pinnacle or any Subsidiary of Pinnacle; (iv) there
are no liens for Taxes upon the assets of Pinnacle or any Subsidiary of
Pinnacle, other than liens for current Taxes not yet due; (v) neither Pinnacle
nor any of its Subsidiaries has requested any extension of time within which to
file any Tax Returns in respect of any taxable year which have not subsequently
been filed when due (pursuant to such extension), nor provided or been requested
to provide any waivers of the time to assess any Taxes that are pending or
outstanding; (vi) with respect to each taxable period of Pinnacle and its
Subsidiaries, the federal and state income Tax Returns of Pinnacle and its
Subsidiaries have either been audited by the Internal Revenue Service (the
"IRS") or appropriate state tax authorities or the time for assessing and
collecting income Tax with respect to such taxable period has closed and such
taxable period is not subject to review, except as disclosed in Section 4.10(a)
of the Pinnacle Disclosure Schedule; (vii) neither Pinnacle nor any of its
Subsidiaries has any liability for Taxes of any person (other than Pinnacle and
its Subsidiaries) under Treasury Regulation section 1.1502-6 (or any comparable
provision of state, local or foreign law) as a transferee or successor, by
contract, or otherwise; and (viii) neither Pinnacle nor any Subsidiary of
Pinnacle is a party to any tax allocation or sharing agreement.
(b) For the purposes of this Agreement, "Taxes" shall mean all
taxes, charges, fees, levies, penalties or other assessments imposed by any
federal, state, local or foreign taxing authority, including, but not limited to
income, excise, property, sales, transfer, franchise, payroll, withholding,
social security or other taxes, including any interest, penalties or additions
attributable thereto. For purposes of this Agreement, "Tax Return" shall mean
any return, report or similar statement (including any related or supporting
information) required to be filed with respect to any Taxes, including any
information return, claim for refund, amended return or declaration of estimated
Taxes.
4.11. Employees.
(a) Section 4.11(a) of the Pinnacle Disclosure Schedule sets forth
a true, complete and correct list (all of which are collectively referred to as
the "Employee Plans") of all "employee benefit plans" as defined by section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended, and the
rules and regulations promulgated thereunder (collectively, "ERISA"), all
specified fringe benefit plans as defined in section 6039D of the Code, and all
other bonus, incentive compensation, deferred compensation, profit sharing,
stock option, stock appreciation right, stock bonus, stock purchase, employee
stock ownership, savings, severance, supplemental unemployment, layoff, salary
continuation, retirement, pension, health, life insurance, disability, group
insurance, vacation, holiday, sick leave, fringe benefit, or welfare plan, or
employment, consulting, change in control, independent contractor, professional
services, confidentiality, or non-competition agreement or any other similar
plan, agreement, policy or understanding (whether written or oral, qualified or
nonqualified), and any trust, escrow or other agreement related thereto, which
(i) is now or was for the last five (5) years maintained or contributed to by
Pinnacle or an ERISA Affiliate (as hereinafter defined), or (ii) with respect to
which Pinnacle or any ERISA Affiliate has any obligations to any current or
former officer, Employee, service provider, or the dependents of any thereof,
regardless of whether funded, or (iii) which could result in the imposition of
any liability or obligation of any kind or nature, whether accrued, absolute,
contingent, direct, indirect, known or unknown, perfected or inchoate or
otherwise, and whether or not now due or to become due to Pinnacle or any ERISA
Affiliate.
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(b) Pinnacle has heretofore provided to BancorpSouth, with respect
to each of the Employee Plans, true and correct copies of each of the following
documents, as applicable: (i) the Employee Plan document, (ii) the actuarial
report, if any, for such Employee Plan for each of the last three (3) years,
(iii) the most recent determination letter from the IRS for such Employee Plan,
(iv) the IRS Form 5500 annual reports for such Employee Plan for each of the
last three (3) years, and (v) the most recent summary plan description and
related summaries of material modifications.
(c) Neither Pinnacle nor any ERISA Affiliate has been liable at
any time for contributions to a Plan that is subject to section 412 of the Code,
section 302 of ERISA and/or Title IV of ERISA.
(d) The form and operation of all Employee Plans is in compliance
with the applicable terms of ERISA, the Code, and any other applicable laws,
including the Americans with Disabilities Act of 1990, the Family Medical Leave
Act of 1993 and the Health Insurance Portability and Accountability Act of 1996,
and such Employee Plans have been operated in compliance with such laws and the
written Employee Plan documents. Neither Pinnacle nor any fiduciary of an
Employee Plan has violated the requirements of section 404 of ERISA. All
required reports and descriptions of the Employee Plans (including Internal
Revenue Service Form 5500 Annual Reports, Summary Annual Reports and Summary
Plan Descriptions and Summaries of Material Modifications) have been (when
required) timely filed with the IRS and the United States Department of Labor
(the "DOL") and distributed as required to all participants and beneficiaries,
and all notices required by ERISA or the Code with respect to the Employee Plans
have been appropriately given. There have been no prohibited transactions with
respect to the Employee Plans.
(e) Each Employee Plan that is intended to be qualified under
section 401(a) of the Code has received a favorable determination letter from
the IRS, and neither Pinnacle nor ERISA Affiliate has any knowledge of any
circumstances that will or could result in revocation of any such favorable
determination letter. Each trust created under any Employee Plan has been
determined to be exempt from taxation under section 501(a) of the Code, and
Pinnacle is not aware of any circumstance that will or could result in a
revocation of such exemption. Each Employee Plan that is an employee welfare
benefit plan (as defined in section 3(1) of ERISA) that utilizes a funding
vehicle described in section 501(c)(9) of the Code or is subject to the
provisions of section 505 of the Code has been the subject of a notification by
the IRS that such funding vehicle qualifies for tax-exempt status under section
501(c)(9) of the Code or that the Employee Plan complies with section 505 of the
Code, unless the IRS does not, as a matter of policy, issue such notification
with respect to the particular type of plan. With respect to each Employee Plan,
no event has occurred or condition exists that will or could give rise to a loss
of any intended tax consequence or to any tax under section 511 of the Code.
(f) There are no pending claims, lawsuits or actions relating to
any Employee Plan (other than ordinary course claims for benefits) and, to the
best knowledge of Pinnacle, none are threatened.
(g) No written or oral representations have been made to any
Employee or former Employee of Pinnacle or any ERISA Affiliate promising or
guaranteeing any employer payment or funding, and no Employee Plans provide, for
the continuation of medical, dental, life or disability insurance coverage for
any former Employee of Pinnacle or any ERISA Affiliate for any period of time
beyond the end of the current plan year (except to the extent of coverage
required under Title I, Part 6, of ERISA).
(h) Except for the possibility of full vesting of Code section
401(a) plan account balances which may be necessitated by Code section 411(d)(3)
in order for tax-qualified status to be retained, the consummation of the
transactions contemplated by this Agreement will not accelerate the time of
16
vesting, of payment, or increase the amount, of compensation to any Employee,
officer, former Employee or former officer of Pinnacle or any ERISA Affiliate.
Except as set forth in Section 4.11(h) of the Pinnacle Disclosure Schedule, no
wages, salaries, compensation, bonus, pension or other payments to any employee,
affiliate, officer, director or broker of Pinnacle or Pinnacle Bank will be
triggered by or result from the consummation of the transactions contemplated by
this Agreement. No Employee Plan or other contracts or arrangements, including
those contemplated in this Agreement, provide for payments or other benefits
that would be triggered by the consummation of the transactions contemplated by
this Agreement that would subject any person to excise tax under section 4999 of
the Code (i.e., "golden parachute" taxes). All compensation amounts that have
been paid or are payable are or will become deductible by Pinnacle or
BancorpSouth pursuant to section 162 of the Code.
(i) Pinnacle and each ERISA Affiliate have at all times complied
and currently comply in all material respects with the applicable continuation
requirements for their welfare benefit plans, including (1) section 4980B of the
Code (as well as its predecessor provision, section 162(k) of the Code) and
sections 601 through 608, inclusive, of ERISA, which provisions are hereinafter
referred to collectively as "COBRA" and (2) any applicable state statutes
mandating health insurance continuation coverage for employees. Section 3.7(i)
lists all of the former employees of Pinnacle or any ERISA Affiliate and their
beneficiaries who have elected or are eligible to elect COBRA continuation of
health insurance coverage under any Plan offering health insurance or medical
benefits.
(j) Neither Pinnacle nor any ERISA Affiliate has incurred any
liability to the DOL, the Pension Benefit Guaranty Corporation (the "PBGC") or
the IRS in connection with any of the Employee Plans, and, to the best knowledge
of Pinnacle, no condition exists that presents a risk to Pinnacle or any ERISA
Affiliate of incurring any liability to the DOL, the PBGC or the IRS.
(k) For the purpose of this Section 4.11, the term "ERISA
Affiliate" shall mean (i) any related company or trade or business that is
required to be aggregated with Pinnacle under Code sections 414(b), (c), (m) or
(o); (ii) any other company, entity or trade or business that has adopted or has
ever participated in any Employee Plan; and (iii) any predecessor or successor
company or trade or business of Pinnacle or any entity described in 4.11(k)(i)
and (k)(ii).
(l) For the purpose of this Section 4.11, the term "Employee"
shall be considered to include common law employees of Pinnacle or any ERISA
Affiliate, individuals rendering personal services to Pinnacle or any ERISA
Affiliate as independent contractors and leased employees of Pinnacle or any
ERISA Affiliate as defined in Code section 414(n) and the regulations
promulgated pursuant thereto.
(m) No lien, security interests or other encumbrances exist with
respect to any of the assets of Pinnacle or any ERISA Affiliate which were
imposed pursuant to the terms of the Code or ERISA and, to the knowledge of
Pinnacle, no condition exists or could occur that would result in the imposition
of such liens, security interests or encumbrances arising from or relating to
the Employee Plans.
4.12. Pinnacle Information. The information relating to Pinnacle and its
Subsidiaries which is provided to BancorpSouth by Pinnacle or its
representatives for inclusion in the Proxy Statement and the S-4, or in any
other document filed with any other regulatory agency in connection herewith,
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading. The S-4 and the Proxy
Statement (except for such portions thereof that relate only to BancorpSouth or
any of its Subsidiaries) will comply with the provisions of the Securities Act
of 1933, as amended
17
(the "Securities Act"), the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and the rules and regulations thereunder.
4.13. Compliance with Applicable Law. Pinnacle and each of its Subsidiaries
hold, and have at all times held, all licenses, franchises, permits and
authorizations necessary for the lawful conduct of their respective businesses
under and pursuant to all, and have complied with and are not in default in any
material respect under any, applicable law, statute, order, rule, regulation,
policy and/or guideline of any Governmental Entity relating to Pinnacle or any
of its Subsidiaries, and neither Pinnacle nor any of its Subsidiaries has
received notice, and Pinnacle does not know, of any violations of any of the
above.
4.14. Certain Contracts.
(a) Set forth in Section 4.14(a) of the Pinnacle Disclosure
Schedule is a list of any contract or agreement (whether written or oral) to
which, Pinnacle or any of its Subsidiaries is a party to or bound by any
contract or agreement (whether written or oral) (i) with respect to the
employment of any employees, officers, directors or consultants, (ii) which,
upon the consummation of the transactions contemplated by this Agreement, will
(either alone or upon the occurrence of any additional acts or events) result in
any payment or benefits (whether of severance pay or otherwise) becoming due, or
the acceleration or vesting of any rights to any payment or benefits, from
BancorpSouth, Pinnacle, the Surviving Corporation or any of their respective
Subsidiaries to any employee, officer, director or consultant thereof, (iii)
which is a material contract (as defined in Item 601(b)(10) of Regulation S-K of
the SEC to be performed after the date of this Agreement, (iv) which is not
terminable on 90 days or less notice involving the payment of more than $100,000
per annum, or (v) which materially restricts the conduct of any line of business
by Pinnacle or any of its Subsidiaries. Each contract, arrangement, commitment
or understanding of the type described in this Section 4.14(a) is referred to
herein as a "Pinnacle Contract." Pinnacle has previously provided to
BancorpSouth true and correct copies of each Pinnacle Contract.
(b) Each Pinnacle Contract described in clause (iii) of Section
4.14(a) is valid and binding and in full force and effect with respect to the
obligations of Pinnacle or its Subsidiaries and, to the knowledge of Pinnacle,
is valid and binding and in full force and effect with respect to the
obligations of the counterparties thereto. Pinnacle and each of its Subsidiaries
has performed all obligations required to be performed by it to date under each
Pinnacle Contract described in clause (iii) of Section 4.14(a). Except as set
forth in Section 4.14(b) of the Pinnacle Disclosure Schedule, no event or
condition exists which constitutes or, after notice or lapse of time or both,
would constitute, a default on the part of Pinnacle or any of its Subsidiaries
under any Pinnacle Contract described in clause (iii) of Section 4.14(a). No
other party to any Pinnacle Contract described in clause (iii) of Section
4.14(a) is, to the knowledge of Pinnacle, in default in any respect thereunder.
4.15. Agreements with Regulatory Agencies. Neither Pinnacle nor any of its
Subsidiaries is subject to any cease-and-desist or other order issued by, or is
a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any extraordinary supervisory letter from, or has adopted any board resolutions
at the request of (each, a "Regulatory Agreement") any Regulatory Agency or
other Governmental Entity that restricts the conduct of its business or that in
any manner relates to its capital adequacy, its credit policies, its management
or its business, nor has Pinnacle or any of its Subsidiaries been advised by any
Regulatory Agency or other Governmental Entity that it is considering issuing or
requesting any Regulatory Agreement.
4.16. Business Combination Provision; Takeover Laws. Pinnacle, its
Subsidiaries, and this Agreement and the transactions contemplated hereby, are
not subject to or are exempt from the
18
requirements of any "moratorium", "control share," "fair price" or other
anti-takeover laws and regulations (collectively, "Takeover Laws").
4.17. Environmental Matters.
(a) Except as disclosed in Section 4.17(a) of the Pinnacle
Disclosure Schedule, each of Pinnacle and its Subsidiaries and, to the knowledge
of Pinnacle, each of the Participation Facilities and the Loan Properties (each
as defined below), are in compliance with all applicable federal, state and
local laws, including common law, regulations and ordinances, and with all
applicable decrees, orders and contractual obligations relating to pollution or
the discharge of, or exposure to, Hazardous Materials (as hereinafter defined)
in the environment or workplace ("Environmental Laws");
(b) There is no suit, claim, action or proceeding, pending or, to
the knowledge of Pinnacle, threatened, before any Governmental Entity or other
forum in which Pinnacle, any of its Subsidiaries, or, to the knowledge of
Pinnacle, any Participation Facility or any Loan Property, has been or, with
respect to threatened proceedings, may be, named as a defendant (i) for alleged
noncompliance (including by any predecessor) with any Environmental Laws, or
(ii) relating to the release, threatened release or exposure to any Hazardous
Material whether or not occurring at or on a site owned, leased or operated by
Pinnacle or any of its Subsidiaries, any Participation Facility or any Loan
Property;
(c) Except as disclosed in Section 4.17(c) of the Pinnacle
Disclosure Schedule, to the knowledge of Pinnacle, during the period of (i)
Pinnacle's or any of its Subsidiaries' ownership or operation of any of their
respective current or former properties, (ii) Pinnacle's or any of its
Subsidiaries' participation in the management of any Participation Facility, or
(iii) Pinnacle's or any of its Subsidiaries' interest in a Loan Property, there
has been no release of Hazardous Materials in, on, under or affecting any such
property. To the knowledge of Pinnacle, prior to the period of (i) Pinnacle's or
any of its Subsidiaries' ownership or operation of any of their respective
current or former properties, (ii) Pinnacle's or any of its Subsidiaries'
participation in the management of any Participation Facility, or (iii)
Pinnacle's or any of its Subsidiaries' interest in a Loan Property, there was no
release of Hazardous Materials in, on, under or affecting any such property,
Participation Facility or Loan Property; and
(d) The following definitions apply for purposes of this Section
4.17: (i) "Hazardous Materials" means any chemicals, pollutants, contaminants,
wastes, toxic substances, petroleum or other regulated substances or materials,
(ii) "Loan Property" means any property in which Pinnacle or any of its
Subsidiaries holds a security interest, and, where required by the context, said
term means the owner or operator of such property; and (iii) "Participation
Facility" means any facility in which Pinnacle or any of its Subsidiaries
participates in the management and, where required by the context, said term
means the owner or operator of such property.
4.18. Approvals. Pinnacle knows of no reason why all regulatory approvals
required for the consummation of the transactions contemplated hereby
(including, without limitation, the Holding Company Merger and the Bank Merger)
should not be obtained.
4.19. Insurance. Pinnacle and its Subsidiaries are insured with reputable
insurers against such risks and in such amounts as Pinnacle's management
reasonably has determined to be prudent in accordance with industry practices.
All of such policies are in full force and effect; Pinnacle and its Subsidiaries
are not in material default thereunder; and all claims thereunder for which a
basis is known, or reasonably should be known, by Pinnacle have been filed in
due and timely fashion.
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4.20 Loan Portfolio.
(a) Except for matters disclosed in Section 4.20 of the Pinnacle
Disclosure Schedule, Pinnacle Bank is not a party to any written or oral (i)
loan agreement, note or borrowing arrangement (including, without limitation,
leases, credit enhancements, commitments, guarantees and interest-bearing
assets) (collectively, "Loans"), under the terms of which the obligor was, as of
September 30, 2001, over 90 days delinquent in payment of principal or interest
or in default of any other provision, or (ii) as of September 30, 2001, Loan
with any director, executive officer or five percent (5%) or greater shareholder
of Pinnacle, or to the knowledge of Pinnacle, any person, corporation or
enterprise controlling, controlled by or under common control with any of the
foregoing. Section 4.20 of the Pinnacle Disclosure Schedule sets forth (i) all
of the Loans of Pinnacle Bank that, as of September 30, 2001, were classified by
any bank examiner (whether regulatory or internal) as "Other Loans Specially
Mentioned", "Special Mention", "Substandard", "Doubtful", "Loss", "Classified",
"Criticized", "Credit Risk Assets", "Concerned Loans", "Watch List" or words of
similar import, together with the principal amount of and accrued and unpaid
interest on each such Loan and the identity of the borrower thereunder, (ii) by
category of Loan (i.e., commercial, consumer, etc.), all of the other Loans of
Pinnacle Bank that, as of September 30, 2001, were classified as such, together
with the aggregate principal amount of and accrued and unpaid interest on such
Loans by category and (iii) each asset of Pinnacle Bank that, as of September
30, 2001, was classified as "Other Real Estate Owned" and the book value
thereof.
(b) Each Loan (i) is evidenced by notes, agreements or other
evidences of indebtedness which are true, genuine and what they purport to be,
(ii) to the extent secured, has been secured by valid liens and security
interests which have been perfected and (iii) to the knowledge of Pinnacle, is
the legal, valid and binding obligation of the obligor named therein,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
4.21 Property. Pinnacle has good and marketable title, free and clear of all
liens, encumbrances, mortgages, pledges, charges, defaults or equitable
interests, to all of the properties and assets, real and personal, tangible or
intangible, which are reflected on the statement of financial condition of
Pinnacle as of December 31, 2001 or acquired after such date, except (i) liens
for taxes not yet due and payable or contested in good faith by appropriate
proceedings, (ii) pledges to secure deposits and other liens incurred in the
ordinary course of business, (iii) such imperfections of title, easements and
encumbrances, if any, as do not interfere with the use of the respective
property as such property is used on the date of this Agreement or the
marketability thereof, (iv) dispositions and encumbrances of, or on, such
properties or assets in the ordinary course of business or (v) mechanics',
materialmen's, workmen's, repairmen's, warehousemen's, carrier's and other
similar liens and encumbrances arising in the ordinary course of business. All
leases pursuant to which Pinnacle or any of its Subsidiaries as lessee leases
real or personal property are valid and enforceable in accordance with their
respective terms, and neither Pinnacle nor any of its Subsidiaries is, nor to
the knowledge of Pinnacle, is any other party thereto, in default thereunder.
4.22. Reorganization. Pinnacle has no reason to believe that the Merger will
fail to qualify as a reorganization under Section 368(a) of the Code.
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF BANCORPSOUTH
Subject to Article III, BancorpSouth hereby represents and warrants to
Pinnacle as follows:
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5.1. Corporate Organization.
(a) BancorpSouth is a corporation duly organized, validly existing
and in good standing under the laws of the State of Mississippi. BancorpSouth
has the corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted, and is duly
licensed or qualified to do business in each jurisdiction in which the nature of
the business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary.
BancorpSouth is duly registered as a bank holding company under the BHC Act. The
Amended and Restated Articles of Incorporation and Bylaws of BancorpSouth (the
"BancorpSouth Governing Documents"), copies of which have previously been made
available to Pinnacle, are true and correct copies of such documents as in
effect as of the date of this Agreement.
(b) BancorpSouth Bank is a Mississippi state bank validly existing
and in good standing. The deposit accounts of BancorpSouth Bank are insured by
the FDIC through the BIF or Savings Association Insurance Fund to the fullest
extent permitted by law, and all premiums and assessments required in connection
therewith have been paid when due. Each of BancorpSouth's other Subsidiaries is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Each Subsidiary of BancorpSouth has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and is duly licensed
or qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary.
The Amended and Restated Articles of Incorporation and Bylaws of BancorpSouth
Bank (the "BancorpSouth Bank Governing Documents"), copies of which have
previously been made available to Pinnacle, are true and correct copies of such
documents as in effect as of the date of this Agreement.
5.2. Capitalization.
(a) The authorized capital stock of BancorpSouth consists of
500,000,000 shares of BancorpSouth Common Stock. As of November 13, 2001,
85,793,477 shares of BancorpSouth Common Stock were issued, 4,426,812 shares of
BancorpSouth Common Stock were held in BancorpSouth's treasury and 81,366,665
shares of BancorpSouth Common Stock were outstanding. As of the date of this
Agreement, no shares of BancorpSouth Common Stock were reserved for issuance,
except shares reserved for issuance pursuant to employee benefit plans, stock
option plans and BancorpSouth's shareholder rights plan pursuant to which
holders of BancorpSouth Common Stock are granted certain attached rights that
are exercisable under certain circumstances (the "BancorpSouth Rights"). All of
the issued and outstanding shares of BancorpSouth Common Stock have been duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. Except for the plans and arrangements referred to above with respect to
reserved shares and BancorpSouth's dividend reinvestment plan, BancorpSouth does
not have and is not bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the purchase or
issuance of any shares of BancorpSouth Common Stock or any other equity
securities of BancorpSouth or any securities representing the right to purchase
or otherwise receive any shares of BancorpSouth Common Stock. The shares of
BancorpSouth Common Stock to be issued pursuant to the Merger will be duly
authorized and validly issued and, at the Effective Time, all such shares will
be fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof.
(b) Exhibit 21 to BancorpSouth's Annual Report on Form 10-K for
the year ended December 31, 2000 sets forth a true and correct list of all
material Subsidiaries of BancorpSouth as of the date of this Agreement.
BancorpSouth owns, directly or indirectly, all of the issued and
21
outstanding shares of capital stock of each of the Subsidiaries of BancorpSouth,
free and clear of all liens, charges, encumbrances and security interests
whatsoever, and all of such shares are duly authorized and validly issued and
are fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. No Subsidiary owned as of the date
hereof by BancorpSouth has or is bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character with any
party that is not a direct or indirect Subsidiary of BancorpSouth calling for
the purchase or issuance of any shares of capital stock or any other equity
security of such Subsidiary or any securities representing the right to purchase
or otherwise receive any shares of capital stock or any other equity security of
such Subsidiary.
5.3. Authority; No Violation.
(a) BancorpSouth has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by the
Board of Directors of BancorpSouth. BancorpSouth has approved, or promptly after
the date hereof and prior to the Closing Date will approve, this Agreement and
the transactions contemplated hereby, and the Board has directed officers of
BancorpSouth to so approve this Agreement and the transactions contemplated
herein in its capacity as the sole shareholder of the BancorpSouth Bank. Other
than the approval of the Board of Directors of BancorpSouth Bank, no other
corporate proceedings on the part of BancorpSouth or BancorpSouth's Subsidiaries
are necessary to approve this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by BancorpSouth and constitutes a valid and binding obligation of
BancorpSouth, enforceable against BancorpSouth in accordance with its terms,
except as enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally.
(b) Neither the execution and delivery of this Agreement by
BancorpSouth, nor the consummation by BancorpSouth of the transactions
contemplated hereby, nor compliance by BancorpSouth with any of the terms or
provisions hereof or thereof, will (i) violate any provision of the BancorpSouth
Governing Documents or the BancorpSouth Bank Governing Documents, or (ii)
assuming that the consents and approvals referred to in Section 5.4 are duly
obtained, (A) violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to BancorpSouth or any of its
Subsidiaries or any of their respective properties or assets, or (B) violate,
conflict with, result in a breach of any provision of or the loss of any benefit
under, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of or a right
of termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or assets of BancorpSouth or
any of its Subsidiaries under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which BancorpSouth or any of its Subsidiaries
is a party, or by which they or any of their respective properties or assets may
be bound or affected.
5.4. Consents and Approvals. Except for (a) the filing of applications and
notices, as applicable, with the Federal Reserve Board under the BHC Act, the
FDIC, the FTC, and the DoJ, and approval of such applications and notices, (b)
such applications, filings, authorizations, orders and approvals as may be
required under applicable state law, (c) the filing with, and declaration of
effectiveness by, the SEC of the S-4, (d) the filing of the Articles of Merger
with the Mississippi Secretary, the Arkansas Secretary, the Mississippi
Department and the Arkansas Department, (e) such filings and approvals as are
required to be made or obtained under the securities or "Blue Sky" laws of
various states in connection with the issuance of the shares of BancorpSouth
Common Stock pursuant to this
22
Agreement, (f) approval for listing of the BancorpSouth Common Stock to be
issued in the Merger on the NYSE, and (g) approval of the Board of Directors of
BancorpSouth Bank, no consents or approvals of or filings or registrations with
any Governmental Entity or with any third party are necessary in connection with
(i) the execution and delivery by BancorpSouth of this Agreement and (ii) the
consummation by BancorpSouth and BancorpSouth Bank of the Merger and the other
transactions contemplated hereby.
5.5. Reports. BancorpSouth and each of its Subsidiaries have timely filed
all reports, registrations and statements, together with any amendments required
to be made with respect thereto, that they were required to file since December
31, 1995 with any Regulatory Agency, and have paid all fees and assessments due
and payable in connection therewith. Except for normal examinations conducted by
a Regulatory Agency in the regular course of the business of BancorpSouth and
its Subsidiaries, no Regulatory Agency has initiated any proceeding or, to the
knowledge of BancorpSouth, investigation into the business or operations of
BancorpSouth or any of its Subsidiaries since December 31, 1995. There is no
unresolved violation, criticism, or exception by any Regulatory Agency with
respect to any report or statement relating to any examinations of BancorpSouth
or any of its Subsidiaries.
5.6. Reorganization. BancorpSouth has no reason to believe that the Merger
will fail to qualify as a reorganization under Section 368(a) of the Code.
5.7. Financial Statements; SEC Reports.
(a) The consolidated financial statements of BancorpSouth and its
subsidiaries (the "BancorpSouth Financial Statements"), including consolidated
statements of condition, statements of earnings, changes in shareholders' equity
and cash flows and related notes, included in the BancorpSouth SEC Reports (as
defined in this section below) fairly present the consolidated financial
position of BancorpSouth and its Subsidiaries as of the respective date thereof,
and fairly present (subject, in the case of the unaudited statements, to
recurring audit adjustments normal in nature and amount) the results of the
consolidated operations and consolidated financial position of BancorpSouth and
its Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth; each of such BancorpSouth Financial Statements (including the
related notes, where applicable) complies with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto; and each of such BancorpSouth Financial Statements (including
the related notes, where applicable) has been prepared in accordance with GAAP
consistently applied during the periods involved, except as indicated in the
notes thereto or, in the case of unaudited statements, as permitted by SEC Form
10-Q. The books and records of BancorpSouth and its Subsidiaries have been, and
are being, maintained in accordance with GAAP and any other applicable legal and
accounting requirements.
(b) BancorpSouth's Annual Reports on Form 10-K for the fiscal
years ended December 31, 2000, 1999 and 1998, and all other reports,
registration statements, definitive proxy statements or information statements
filed by BancorpSouth or any of its Subsidiaries subsequent to December 31, 2000
under the Securities Act, or under Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act, or under the securities regulations of the SEC, in the form filed
(collectively, the "BancorpSouth SEC Reports") with the SEC as of the date
filed, (i) complied in all material respects as to form with the applicable
requirements under the Securities Act or the Exchange Act, as the case may be,
and (ii) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. BancorpSouth has timely filed all BancorpSouth SEC Reports
and other documents required to be filed by it under the Securities Act and the
Exchange Act, and, as of their respective dates, all BancorpSouth SEC Reports
complied with the published rules and regulations of the SEC with respect
thereto.
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5.8. Absence of Certain Changes or Events. Except as disclosed in any
BancorpSouth SEC Report filed with the SEC prior to the date of this Agreement,
since December 31, 2000, BancorpSouth and its Subsidiaries have carried on their
respective businesses in the ordinary course consistent with their past
practices.
5.9. Legal Proceedings. Except as set forth in a BancorpSouth SEC Report,
neither BancorpSouth nor any of its Subsidiaries is a party to any and there are
no pending or, to BancorpSouth's knowledge, threatened, legal, administrative,
arbitral or other proceedings, claims, actions or governmental or regulatory
investigations of any nature against BancorpSouth or any of its Subsidiaries or
challenging the validity or propriety of the transactions contemplated by this
Agreement, other than regularly scheduled examinations and similar routine
investigations made by bank regulatory officials in the course of their
supervision of BancorpSouth or any of it Subsidiaries. There is no injunction,
order, judgment, decree or regulatory restriction imposed upon BancorpSouth, any
of its Subsidiaries or the assets of BancorpSouth or any of its Subsidiaries.
5.10. BancorpSouth Information. The information relating to BancorpSouth and
its Subsidiaries to be contained in the Proxy Statement and the S-4, or in any
other document filed with any other regulatory agency in connection herewith,
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading. The S-4 and the Proxy
Statement (except for such portions thereof that relate only to Pinnacle or any
of its Subsidiaries) will comply with the provisions of the Securities Act, the
Exchange Act and the rules and regulations thereunder.
5.11. Compliance with Applicable Law. BancorpSouth and each of its
Subsidiaries holds, and has at all times held, all licenses, franchises, permits
and authorizations necessary for the lawful conduct of their respective
businesses under and pursuant to all, and have complied with and are not in
default in any respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity relating to
BancorpSouth or any of its Subsidiaries, and neither BancorpSouth nor any of its
Subsidiaries knows of, or has received notice, and BancorpSouth does not know,
of any violations of any of the above.
5.12. Approvals. BancorpSouth knows of no reason why all regulatory approvals
required for the consummation of the transactions contemplated hereby
(including, without limitation, the Holding Company Merger and the Bank Merger)
should not be obtained.
ARTICLE VI. COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1. Covenants of Pinnacle. During the period from the date of this
Agreement and continuing until the Effective Time, except as expressly
contemplated or permitted by this Agreement or with the prior express written
consent of BancorpSouth, Pinnacle and its Subsidiaries shall carry on their
respective businesses in the ordinary course consistent with past practice.
Without limiting the generality of the foregoing, and except as set forth in
Section 6.1 of the Pinnacle Disclosure Schedule or as otherwise contemplated by
this Agreement or as expressly consented to in writing in advance by
BancorpSouth, Pinnacle shall not, and shall not permit any of its Subsidiaries
to:
(a) declare or pay any dividends on, or make other distributions
in respect of, any of its capital stock during any period, other than dividends
or distributions by a Subsidiary of Pinnacle to Pinnacle;
(b) (i) repurchase, redeem or otherwise acquire (except for the
acquisition of Trust Account Shares and DPC Shares, as such terms are defined in
Section 1.4(b) hereof) any shares of the capital stock of Pinnacle or any
Subsidiary of Pinnacle, or any securities convertible into or exercisable for
any shares of the capital stock of Pinnacle or any Subsidiary of Pinnacle, (ii)
split,
24
combine or reclassify any shares of its capital stock, or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for, shares of its capital stock, or (iii) issue, deliver or sell,
or authorize or propose the issuance, delivery or sale of, any shares of its
capital stock or any securities convertible into or exercisable for, or any
rights, warrants or options to acquire, any such shares, or enter into any
agreement with respect to any of the foregoing, except, in the case of clauses
(ii) and (iii), for the issuance of Pinnacle Common Stock upon the exercise or
fulfillment of rights or options issued or existing pursuant to the Pinnacle
Option Plans all to the extent outstanding and in existence on the date of this
Agreement and in accordance with their current terms;
(c) amend its Articles of Incorporation, Bylaws or other similar
governing documents;
(d) directly or indirectly, (i) solicit, initiate, encourage,
facilitate, entertain or accept any Acquisition Proposal (as defined in this
subsection below), or (ii) participate or engage in any discussions or
negotiations with any person or entity other than BancorpSouth or BancorpSouth
Bank relating or with respect to any Acquisition Proposal, or (iii) provide any
nonpublic information to any person or entity other than BancorpSouth or
BancorpSouth Bank relating or with respect to any Acquisition Proposal, or (iv)
make any Acquisition Proposal to any person or entity other than BancorpSouth
and BancorpSouth Bank, or (v) enter into any agreement with respect to any
Acquisition Proposal, or (vi) otherwise facilitate any effort or attempt to make
an Acquisition Proposal, or (vii) authorize or permit any of its officers,
directors, employees, representatives or agents to do any of the foregoing;
provided, however, that in response to an unsolicited, bona-fide written
Acquisition Proposal, Pinnacle, after giving notice of such to BancorpSouth, may
do the following if the Board of Directors of Pinnacle determines in good faith
that it must do so to comply with its fiduciary duties: (i) communicate
information about such Acquisition Proposal to Pinnacle's shareholders if
required under applicable law, and (ii) authorize and permit its officers,
directors, employees, representatives, investment bankers, attorneys,
accountants, financial advisors, or agents to (A) participate or engage in such
discussions or negotiations, or (B) provide or cause to be provided nonpublic
information. Pinnacle will immediately cease and cause to be terminated as of
the date of this Agreement any existing activities, discussions or negotiations
previously or currently conducted with any persons or entities other than
BancorpSouth and BancorpSouth Bank with respect to any Acquisition Proposal or
any of the foregoing. Pinnacle will notify BancorpSouth immediately if any
Acquisition Proposal is received by, any such information is requested from, or
any such negotiations or discussions are sought to be initiated or continued
with, Pinnacle, and Pinnacle will promptly (within 24 hours) inform BancorpSouth
in writing of all of the relevant details with respect to the foregoing,
including the material terms and conditions of such request or Acquisition
Proposal and the identity of the person or group making such request or
proposal. Pinnacle will keep BancorpSouth fully informed of the status and
details (including amendments or proposed amendments) of any such request or
Acquisition Proposal. Notwithstanding the foregoing, Pinnacle must submit the
Merger contemplated by this Agreement to its shareholders for approval prior to
the submission of any other Acquisition Proposal. In the event this Agreement is
terminated for any reason other than BancorpSouth's failure to perform its
obligations hereunder, after the expiration of any applicable cure periods (if
BancorpSouth fails to cure any such breach), if an Acquisition Proposal has been
made or is made at any time within a six (6) month period after such termination
of this Agreement, Pinnacle shall pay $500,000 in cash to BancorpSouth on
demand. For purposes of this Agreement, "Acquisition Proposal" shall mean any
tender or exchange offer, proposal for a merger, consolidation or other business
combination involving Pinnacle or any Subsidiary of Pinnacle or any proposal,
inquiry or offer to acquire in any manner all or 10% or greater equity interest
in, or all or a substantial portion of the assets of, Pinnacle or any Subsidiary
of Pinnacle, other than the transactions contemplated or permitted by this
Agreement;
(e) make any capital expenditures other than those which are (i)
set forth in Section 6.1 of the Pinnacle Disclosure Schedule or (ii) are made in
the ordinary course of business or are
25
necessary to maintain existing assets in good repair, and in any event are in an
amount of no more than $250,000 in the aggregate, or except as necessary to
comply with applicable regulatory guidelines or requirements;
(f) enter into any new line of business;
(g) acquire or agree to acquire, by merging or consolidating with,
or by purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, limited liability company, association or other business
organization or entity or division thereof, or otherwise acquire any assets,
which would be material, individually or in the aggregate, to Pinnacle, or which
could reasonably be expected to impede or delay consummation of the Merger,
other than in connection with foreclosures, settlements in lieu of foreclosure
or troubled loan or debt restructurings in the ordinary course of business
consistent with past practices;
(h) except as contemplated by Article III hereof or this Article
VI, take any action that is intended or may reasonably be expected to result in
any of its representations and warranties set forth in this Agreement being or
becoming untrue, or in any of the conditions to the Merger set forth in Article
VIII not being satisfied;
(i) change its methods of accounting in effect at December 31,
2000, except as required by changes in GAAP or regulatory accounting principles
as concurred to by Pinnacle's independent auditors;
(j) except as set forth in Section 7.7 hereof, as required by
applicable law or as required to maintain qualification pursuant to the Code,
(i) adopt, amend, or terminate any employee benefit plan (including, without
limitation, any Plan) or any agreement, arrangement, plan or policy between
Pinnacle or any Subsidiary of Pinnacle and one or more of its current or former
directors, officers or employees, (ii) except for normal increases in the
ordinary course of business consistent with past practice or except as required
by applicable law, increase in any manner the cash compensation or fringe
benefits of any director, officer or employee or pay any benefit not required by
any Plan or agreement as in effect as of the date hereof, or (iii) grant or
award any stock options, stock appreciation rights, restricted stock, restricted
stock units or performance units or shares;
(k) other than activities in the ordinary course of business
consistent with past practice, sell, lease, encumber, assign or otherwise
dispose of, or agree to sell, lease, encumber, assign or otherwise dispose of,
any of its material assets, properties or other rights or agreements;
(l) other than in the ordinary course of business consistent with
past practice, incur any indebtedness for borrowed money or assume, guarantee,
endorse or otherwise as an accommodation become responsible for the obligations
of any other individual, corporation or other entity;
(m) file any application to relocate or terminate the operations
of any banking office of it or any of its Subsidiaries;
(n) create, renew, amend or terminate or give notice of a proposed
renewal, amendment or termination of, any material contract, agreement or lease
for goods, services or office space to which Pinnacle or any of its Subsidiaries
is a party or by which Pinnacle or any of its Subsidiaries or their respective
properties is bound, other than the renewal in the ordinary course of business
of any lease the term of which expires prior to the Closing Date, or amend or
waive the provisions of any confidentiality or standstill agreement to which
Pinnacle or any of its affiliates is a party as of the date hereof;
26
(o) take any action or enter into any agreement that could
reasonably be expected to jeopardize or materially delay the receipt of any
Requisite Regulatory Approval (as defined in Section 8.1(c));
(p) enter or commit to enter into any new loans outside their
ordinary course of business, consistent with past practice, or in an original
principal amount in excess of $750,000, or renew, or commit to renew, any
existing loans in a principal amount in excess of $750,000, or enter into new
loan transactions subject to the requirements of Regulation O of the Federal
Reserve Board, 12 C.F.R. ss. 215 (or the equivalent) in excess of $500,000 in
the aggregate (each, an "Insider Loan") without having provided prior written
notice to BancorpSouth of the persons to whom such Insider Loans are made and
the terms and purposes of such Insider Loans; or
(q) agree or commit to do any of the foregoing.
6.2. Covenants of BancorpSouth. During the period from the date of this
Agreement and continuing until the Effective Time, except as expressly
contemplated or permitted by this Agreement or with the prior express written
consent of Pinnacle, BancorpSouth and its Subsidiaries shall carry on their
respective businesses in the ordinary course consistent with past practice.
Without limiting the generality of the foregoing, and except as set forth in
Section 6.2 of the BancorpSouth Disclosure Schedule or as otherwise contemplated
by this Agreement or as expressly consented to in writing in advance by
Pinnacle, BancorpSouth shall not, and shall not permit any of its Subsidiaries
to:
(a) except as contemplated by Article III hereof, take any action
that is intended or may reasonably be expected to result in any of its
representations and warranties set forth in this Agreement being or becoming
untrue, or in any of the conditions to the Merger set forth in Article VIII not
being satisfied;
(b) take any action or enter into any agreement that could
reasonably be expected to jeopardize or materially delay the receipt of any
Requisite Regulatory Approval;
(c) change its methods of accounting in effect at December 31,
2000, except in accordance with changes in GAAP or regulatory accounting
principles as concurred to by BancorpSouth's independent auditors; or
(d) agree or commit to do any of the foregoing.
6.3. Mutual Covenant. Each of Pinnacle and BancorpSouth shall cause the
boards of directors of each of Pinnacle's Subsidiaries and BancorpSouth Bank,
respectively, to consider and act to approve this Agreement promptly after the
date hereof and prior to the Closing Date.
ARTICLE VII. ADDITIONAL AGREEMENTS
7.1. Regulatory Matters.
(a) BancorpSouth and Pinnacle shall promptly prepare and file with
the SEC the Proxy Statement, and BancorpSouth shall promptly prepare and file
with the SEC the S-4, in which the Proxy Statement will be included as a
prospectus. Each of Pinnacle and BancorpSouth shall use its reasonable best
efforts to have the S-4 declared effective under the Securities Act as promptly
as practicable after such filing, and Pinnacle shall thereafter mail the Proxy
Statement to its shareholders as promptly as practicable. BancorpSouth shall
also use its reasonable best efforts to obtain all necessary state securities
law or "Blue Sky" permits and approvals required to carry out the transactions
contemplated by this Agreement.
27
(b) The parties hereto shall cooperate with each other and use
their reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including, without limitation, the Holding Company Merger and the
Bank Merger). Pinnacle and BancorpSouth shall have the right to review in
advance, and to the extent practicable each will consult the other on, in each
case subject to applicable laws relating to the exchange of information, all the
information relating to Pinnacle or BancorpSouth, as the case may be, and any of
their respective Subsidiaries, which appears in any filing made with, or written
materials submitted to, any third party or any Governmental Entity in connection
with the transactions contemplated by this Agreement. In exercising the
foregoing right, each of the parties hereto shall act reasonably and as promptly
as practicable. The parties hereto agree that they will consult with each other
with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the transactions contemplated by this Agreement and each
party will keep the other apprised of the status of matters relating to
completion of the transactions contemplated herein.
(c) BancorpSouth and Pinnacle shall, upon request, furnish each
other with all information concerning themselves, their Subsidiaries, directors,
officers and shareholders and such other matters as may be reasonably necessary
or advisable in connection with the Proxy Statement, the S-4 or any other
statement, filing, notice or application made by or on behalf of BancorpSouth,
Pinnacle or any of their respective Subsidiaries to any Governmental Entity in
connection with the Merger and the other transactions contemplated by this
Agreement.
(d) BancorpSouth and Pinnacle shall promptly furnish each other
with copies of written communications received by BancorpSouth or Pinnacle, as
the case may be, or any of their respective Subsidiaries, Affiliates or
Associates (as such terms are defined in Rule 12b-2 under the Exchange Act as in
effect on the date of this Agreement) from, or delivered by any of the foregoing
to, any Governmental Entity in respect of the transactions contemplated hereby.
7.2. Access to Information.
(a) Upon reasonable notice and subject to applicable laws relating
to the exchange of information, Pinnacle shall, and shall cause each of its
Subsidiaries to, afford to the officers, employees, accountants, attorneys,
financial advisors and other representatives (each, a "Representative") of
BancorpSouth, access during normal business hours during the period prior to the
Effective Time to all of its properties, books, contracts, commitments, records,
officers, employees, accountants, counsel and other representatives and, during
such period, it shall, and shall cause its Subsidiaries to, make available to
BancorpSouth all information concerning its business, properties and personnel
as BancorpSouth may reasonably request. In addition, Pinnacle and each of its
Subsidiaries shall permit a Representative of BancorpSouth to have access to the
premises and observe the operations of Pinnacle or any of its Subsidiaries, as
the case may be, without interfering with the operations of Pinnacle or any of
its Subsidiaries and only during normal business hours, and to attend each
meeting of their respective Boards of Directors and committees thereof (other
than during discussions regarding this Agreement and the transactions
contemplated hereby). Neither Pinnacle nor any of its Subsidiaries shall be
required to provide access to or to disclose information where such access or
disclosure would reasonably violate or prejudice the rights of its customers or
its relationship with such customers, reasonably jeopardize any attorney-client
privilege or contravene any law, rule, regulation, order, judgment, decree,
fiduciary duty or binding agreement entered into prior to the date of this
Agreement. Pinnacle shall identify the nature of any such limitation on access
and disclosure, and the parties hereto will make appropriate substitute
disclosure arrangements under circumstances in which the restrictions of the
preceding sentence apply.
28
(b) BancorpSouth agrees that it will not use Confidential
Information related to Pinnacle or its Subsidiaries or their predecessor
entities, subsidiaries or affiliates for any purpose other than assisting
BancorpSouth in consummating the transactions contemplated hereby. BancorpSouth
agrees not to disclose or allow disclosure to others of any such Confidential
Information, except that BancorpSouth may disclose Confidential Information to
its directors, officers, employees, partners, affiliates, agents, advisors or
representatives (collectively, "BancorpSouth Representatives"), to the extent
necessary to permit such BancorpSouth Representatives to assist BancorpSouth in
consummating the transactions contemplated hereby; provided, however, that
BancorpSouth shall require each such BancorpSouth Representative to be bound by
the terms of this Section to the same extent as if they were parties hereto, and
BancorpSouth shall be responsible for any breach of this Section by any of the
BancorpSouth Representatives. In addition, BancorpSouth agrees that it will not
make any disclosure that it is having or has had discussions concerning the
transactions contemplated hereby or any terms which have been or are being
discussed, that it has received Confidential Information or that it is
considering the transactions contemplated hereby; provided that it may make such
disclosure if it has received the written opinion of its counsel that such
disclosure must be made by it in order that it not commit a violation of law
and, prior to such disclosure, it promptly advises and consults with Pinnacle
and its legal counsel concerning the information it proposes to disclose. In the
event that BancorpSouth or anyone to whom BancorpSouth transmits any
Confidential Information in accordance with this Section is requested or
required (by deposition, interrogatories, requests for information or documents
in legal proceedings, subpoenas, civil investigative demand or similar process),
in connection with any proceeding, to disclose any Confidential Information,
BancorpSouth will give Pinnacle prompt written notice of such request or
requirement so that Pinnacle may seek an appropriate protective order or other
remedy and/or waive compliance with the provisions of this Section, and
BancorpSouth will cooperate with Pinnacle to obtain such protective order. In
the event that such protective order or other remedy is not obtained or Pinnacle
waives compliance with the relevant provisions of this Section, BancorpSouth (or
such other persons to whom such request is directed) will furnish only that
portion of the Confidential Information which, in the written opinion of
BancorpSouth's counsel, is legally required to be disclosed and, upon Pinnacle's
request, will use BancorpSouth's best efforts to obtain assurances that
confidential treatment will be accorded to such information.
(c) Pinnacle and its Subsidiaries agree that they will not use
Confidential Information related to BancorpSouth or its Subsidiaries or their
predecessor entities, subsidiaries or affiliates for any purpose other than
assisting Pinnacle in consummating the transactions contemplated hereby.
Pinnacle and its Subsidiaries agree not to disclose or allow disclosure to
others of any such Confidential Information, except that Pinnacle may disclose
Confidential Information to its directors, officers, employees, partners,
affiliates, agents, advisors or representatives (collectively, "Pinnacle
Representatives") only upon obtaining the prior written consent of BancorpSouth
with respect to any disclosure of such information to a particular Pinnacle
Representative, to the extent necessary to permit such Pinnacle Representatives
to assist Pinnacle in consummating the transactions contemplated hereby;
provided, however, that Pinnacle shall require each such Pinnacle Representative
to be bound by the terms of this Section to the same extent as if they were
parties hereto, and Pinnacle shall be responsible for any breach of this Section
by any of the Pinnacle Representatives. In addition, Pinnacle and their
Subsidiaries agree that they will not make any disclosure that they are having
or have had discussions concerning the transactions contemplated hereby or any
terms which have been or are being discussed, that they have received
Confidential Information or that they are considering the transactions
contemplated hereby; provided that they may make such disclosure if they have
received the written opinion of their counsel that such disclosure must be made
by them in order that they not commit a violation of law and, prior to such
disclosure, they promptly advise and consult with BancorpSouth and its legal
counsel concerning the information they propose to disclose. In the event that
Pinnacle or one of its Subsidiaries or anyone to whom Pinnacle or one of its
Subsidiaries transmits any Confidential Information in accordance
29
with this Section is requested or required (by deposition, interrogatories,
requests for information or documents in legal proceedings, subpoenas, civil
investigative demand or similar process), in connection with any proceeding, to
disclose any Confidential Information, Pinnacle will give BancorpSouth prompt
written notice of such request or requirement so that BancorpSouth may seek an
appropriate protective order or other remedy and/or waive compliance with the
provisions of this Section, and Pinnacle will cooperate with BancorpSouth to
obtain such protective order. In the event that such protective order or other
remedy is not obtained or BancorpSouth waives compliance with the relevant
provisions of this Section, Pinnacle (or such other persons to whom such request
is directed) will furnish only that portion of the Confidential Information
which, in the written opinion of Pinnacle's counsel, is legally required to be
disclosed and, upon BancorpSouth's request, will use Pinnacle's best efforts to
obtain assurances that confidential treatment will be accorded to such
information.
(d) For purposes of this Section, "Confidential Information" will
be deemed to include: (a) any information (including any technology, know-how,
patent application, test result, research study, business plan, budget, forecast
or projection) relating directly or indirectly to the business of Pinnacle or
BancorpSouth, respectively, any predecessor entity or any subsidiary or other
affiliate of Pinnacle or BancorpSouth (whether prepared by Pinnacle or
BancorpSouth or by any other person and whether or not in written form) that is,
has been or will be made available to another party hereto or its Representative
by or on behalf of Pinnacle or BancorpSouth or any Representative of Pinnacle or
BancorpSouth; (b) any memorandum, analysis, compilation, summary,
interpretation, study, report or other document, record or material that is, has
been or will be prepared by or for Pinnacle or BancorpSouth or any
Representative of Pinnacle or BancorpSouth and that contains, reflects,
interprets or is based directly or indirectly upon any information of the type
referred to in clause (a) of this sentence; (c) the existence and terms of this
Agreement and the proposed terms of any other agreement contemplated hereby and
the fact that information of the type referred to in clause (a) of this sentence
has been made available to Pinnacle or BancorpSouth or any of their respective
Representatives; and (d) the fact that discussions or negotiations are or may be
taking place with respect to a possible transaction involving Pinnacle and
BancorpSouth and the proposed terms of any such transaction. "Confidential
Information" will not be deemed to include: (i) any information that is or
becomes generally available to the public other than as a direct or indirect
result of the disclosure of any of such information by either a party hereto or
by any of such party's Representatives in violation of the terms hereof; (ii)
any information that was in a disclosing party's possession prior to the time it
was first made available to such party or any of such party's Representatives by
or on behalf of the other parties hereto or any of the other party's
Representatives, provided that the source of such information was not and is not
bound by any contractual or other obligation of confidentiality to the person to
whom such information relates or any other person with respect to any of such
information; or (iii) any information that becomes available on a
non-confidential basis from a source other than the other parties hereto,
provided that such source is not bound by any contractual or other obligation of
confidentiality to the party to whom the information relates or any other person
with respect to any of such information.
(e) If the transactions contemplated hereby are not consummated or
if, at any time, either Pinnacle or BancorpSouth (each a "Requesting Party")
requests, the other party and its Representatives will promptly deliver to the
Requesting Party any Confidential Information (and all copies thereof) obtained
or possessed by such other party or any of its Representatives. Notwithstanding
the delivery to the Requesting Party of Confidential Information pursuant to
this Section, the parties and their Representatives will continue to be bound by
their confidentiality obligations and other obligations under this Section.
(f) Notwithstanding anything in any other agreement to the
contrary, no investigation by BancorpSouth or its Representatives shall affect
the representations, warranties, covenants or
30
agreements of Pinnacle set forth herein, and the parties shall remain
responsible to the extent provided herein, subject to Section 10.2.
(g) The parties agree that the provisions of this Section 7.2
shall supersede any prior agreements between the parties with respect to the
subject matter hereof; provided however, that the provisions of the last
paragraph on page 2 of the Confidentiality Agreement, dated October 10, 2001,
between Pinnacle and BancorpSouth, shall survive the execution (or termination)
of this Agreement and remain in full force and effect for the term thereof.
7.3. Shareholder Meeting. Pinnacle shall take all steps in accordance with
applicable law necessary to duly call, give notice of, convene and hold a
meeting of its shareholders to be held as soon as is reasonably practicable
after the date on which the S-4 becomes effective for the purpose of voting upon
the approval and adoption of this Agreement. Pinnacle will, through its Board of
Directors, recommend to its shareholders approval of this Agreement and the
transactions contemplated hereby and such other matters as may be submitted to
its shareholders in connection with this Agreement; provided, however, that
Pinnacle's Board of Directors may submit this Agreement and the transactions
contemplated herein to its shareholders for approval without recommendation
pursuant to Section 4-27-1103 of the ABCA if Pinnacle's Board of Directors
determines in good faith that it must do so in order to comply with its
fiduciary duties.
7.4. Legal Conditions to Merger. Each of BancorpSouth and Pinnacle shall,
and shall cause its Subsidiaries to, use their reasonable best efforts (a) to
take, or cause to be taken, all actions necessary, proper or advisable to comply
promptly with all legal requirements which may be imposed on such party or its
Subsidiaries with respect to the Merger and, subject to the conditions set forth
in Article VIII hereof, to consummate the transactions contemplated by this
Agreement and (b) to obtain (and to cooperate with the other party to obtain)
any consent, authorization, order or approval of, or any exemption by, any
Governmental Entity and any other third party which is required to be obtained
by Pinnacle or BancorpSouth or any of their respective Subsidiaries in
connection with the Merger and the other transactions contemplated by this
Agreement, and to comply with the terms and conditions of such consent,
authorization, order or approval.
7.5. Affiliates. Pinnacle shall use its reasonable best efforts to cause
each director, executive officer and other person who is an "affiliate" (for
purposes of Rule 145 under the Securities Act) of such party to deliver to
BancorpSouth, as soon as practicable after the date of this Agreement, a written
agreement, in the form of Exhibit 7.5.
7.6. NYSE Listing. BancorpSouth shall make all filings required of it to
cause the shares of BancorpSouth Common Stock to be issued in the Merger to be
approved for listing on the NYSE, subject to official notice of issuance, as of
the Effective Time.
7.7. Employee Benefit Plans; Existing Agreements.
(a) As of the Effective Time, to the extent permissible under the
terms of the BancorpSouth Plans, the employees of Pinnacle and its Subsidiaries
(the "Pinnacle Employees") shall be eligible to participate in BancorpSouth's
employee benefit plans in which similarly situated employees of BancorpSouth or
BancorpSouth Bank participate, to the same extent as similarly situated
employees of BancorpSouth or BancorpSouth Bank (it being understood that
inclusion of Pinnacle Employees in BancorpSouth's employee benefit plans may
occur at different times with respect to different plans).
(b) With respect to each BancorpSouth Plan that is an "employee
benefit plan," as defined in section 3(3) of ERISA, for purposes of determining
eligibility to participate, and entitlement to benefits, including for severance
benefits and vacation entitlement (but not for vesting
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or accrual of pension benefits) service with Pinnacle (or predecessor employers
to the extent Pinnacle provides past service credit) shall be treated as service
with BancorpSouth; provided, however, that such service shall not be recognized
to the extent that such recognition would result in a duplication or increase of
benefits. Such service also shall apply for purposes of satisfying any waiting
periods, evidence of insurability requirements, or the application of any
preexisting condition limitations. Each BancorpSouth Plan shall waive
pre-existing condition limitations to the same extent waived under the
applicable Pinnacle Plan. Pinnacle Employees shall be given credit for amounts
paid under a corresponding benefit plan during the same period for purposes of
applying deductibles, copayments and out-of-pocket maximums as though such
amounts had been paid in accordance with the terms and conditions of the
BancorpSouth Plan.
(c) As of the Effective Time, except as described in Section
8.2(d) below and except as otherwise agreed, BancorpSouth shall assume and honor
and shall cause the appropriate Subsidiaries of BancorpSouth to assume and to
honor in accordance with their terms all employment, severance and other
compensation agreements and arrangements existing prior to the execution of this
Agreement which are between Pinnacle or any of its Subsidiaries and any
director, officer or employee thereof and which have been disclosed in the
Pinnacle Disclosure Schedule.
(d) BancorpSouth and Pinnacle agree to cooperate and take all
reasonable actions to effect the merger of any employee benefit plan that is
intended to be qualified under section 401(a) of the Code into the appropriate
tax-qualified retirement plan of BancorpSouth after the Merger is completed, so
that such plan merger satisfies the requirements of section 414(l) of the Code;
provided, however, that BancorpSouth shall not be obligated to effect such a
merger of a plan unless such plan is fully funded under section 412 of the Code
and section 302 of ERISA, to the extent applicable, and the merger would not
jeopardize the tax-qualified status of any BancorpSouth Plan.
(e) Notwithstanding the preceding paragraph, if requested by
BancorpSouth, prior to the Effective Time, Pinnacle shall freeze, terminate,
amend or take other action with respect to any Plan that BancorpSouth, in its
sole discretion, deems advisable and not inconsistent with this Agreement, and
provide all required notices to participants and appropriate governmental
agencies.
7.8. Indemnification of Pinnacle Directors and Officers.
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative,
including, without limitation, any such claim, action, suit, proceeding or
investigation in which any person who is now, or has been at any time prior to
the date of this Agreement, or who becomes prior to the Effective Time, a
director or officer of Pinnacle or any of its Subsidiaries (the "Indemnified
Parties") is, or is threatened to be, made a party based in whole or in part on,
or arising in whole or in part out of, or pertaining to (i) the fact that he or
she is or was a director or officer of Pinnacle, any of the Subsidiaries of
Pinnacle or any of their respective predecessors or affiliates or (ii) this
Agreement or any of the transactions contemplated hereby, whether in any case
asserted or arising before or after the Effective Time, the parties hereto agree
to cooperate and use their best efforts to defend against and respond thereto.
It is understood and agreed that, after the Effective Time, BancorpSouth shall
indemnify and hold harmless, as and to the fullest extent permitted by law, each
such Indemnified Party against any losses, claims, damages, liabilities, costs,
expenses (including reasonable attorney's fees and expenses in advance of the
final disposition of any claim, suit, proceeding or investigation to each
Indemnified Party to the fullest extent permitted by law upon receipt of any
undertaking required by applicable law), judgments, fines and amounts paid in
settlement in connection with any such threatened or actual claim, action, suit,
proceeding or investigation. In the event of any such threatened or actual
claim, action, suit, proceeding or investigation (whether asserted or arising
before or after the Effective Time), the Indemnified Parties may retain counsel
reasonably satisfactory to them after consultation with BancorpSouth; provided,
however, that (1)
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BancorpSouth shall have the right to assume the defense thereof and, upon such
assumption, BancorpSouth shall not be liable to any Indemnified Party for any
legal expenses of other counsel or any other expenses subsequently incurred by
any Indemnified Party in connection with the defense thereof, except that if
BancorpSouth elects not to assume such defense or if counsel for the Indemnified
Parties reasonably advises that there are issues which raise conflicts of
interest between BancorpSouth and the Indemnified Parties, the Indemnified
Parties may retain counsel reasonably satisfactory to them after consultation
with BancorpSouth, and BancorpSouth shall pay the reasonable fees and expenses
of such counsel for the Indemnified Parties, (2) BancorpSouth shall in all cases
be obligated pursuant to this paragraph to pay for only one firm of counsel for
all Indemnified Parties (unless an ethical conflict of interest arises for such
firm of counsel in representing all Indemnified Parties), (3) BancorpSouth shall
not be liable for any settlement effected without its prior written consent
(which consent shall not be unreasonably withheld) and (4) BancorpSouth shall
have no obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination shall
have become final and nonappealable, that indemnification of such Indemnified
Party in the manner contemplated hereby is prohibited by applicable law. Any
Indemnified Party wishing to claim Indemnification under this Section 7.8, upon
learning of any such claim, action, suit, proceeding or investigation, shall
promptly notify BancorpSouth thereof; provided that the failure to so notify
shall not affect the obligations of BancorpSouth under this Section 7.8 except
to the extent such failure to notify materially prejudices BancorpSouth.
BancorpSouth's obligations under this Section 7.8 shall continue in full force
and effect without time limit from and after the Effective Time.
(b) BancorpSouth shall cause each person serving as a director or
officer of Pinnacle immediately prior to the Effective Time to be covered for a
period of three years from the Effective Time by the directors' and officers'
liability insurance policy maintained by Pinnacle (provided that BancorpSouth
may substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are not less advantageous than such
policy) with respect to acts or omissions occurring prior to the Effective Time
which were committed by such officers and directors in their capacity as such;
provided, however, that in no event shall BancorpSouth be required to expend on
an annual basis more than 150% of the current amount expended by Pinnacle (the
"Insurance Amount") to maintain or procure insurance coverage, and further
provided that if BancorpSouth is unable to maintain or obtain the insurance
called for by this Section 7.8(b), BancorpSouth shall use all reasonable efforts
to obtain as much comparable insurance as is available for the Insurance Amount.
(c) In the event BancorpSouth or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of
BancorpSouth assume the obligations set forth in this Section.
(d) The provisions of this Section 7.8 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives.
7.9. Additional Agreements. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of any of the
parties to the Merger, the proper officers and directors of each party to this
Agreement and their respective Subsidiaries shall take all such necessary action
as may be reasonably requested by BancorpSouth.
33
7.10. Coordination of Dividends. After the date of this Agreement each of
BancorpSouth and Pinnacle shall coordinate with the other the declaration of any
dividends in respect of Pinnacle Common Stock and the record dates and payments
dates relating thereto, it being the intention of the parties that the holders
of Pinnacle Common Stock may (to the extent allowed by law and declared) receive
one, but not more than one, dividend for any calendar quarter or other period
with respect to their shares of Pinnacle Common Stock and any shares of
BancorpSouth Common Stock any holder of Pinnacle Common Stock receives in
exchange thereof in the Merger.
7.11. Reasonable Best Efforts. Subject to the terms and conditions of this
Agreement, each of BancorpSouth and Pinnacle agrees to use its respective
reasonable best efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation of
the Merger as promptly as practicable and otherwise to enable consummation of
the transactions contemplated hereby and shall cooperate fully with the other
party hereto to that end.
7.12. Tax-Free Qualification. Each of BancorpSouth and Pinnacle shall use its
reasonable best efforts not to, and shall use its reasonable best efforts not to
permit any of its Subsidiaries to, take any action that would reasonably be
expected to prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code.
ARTICLE VIII. CONDITIONS PRECEDENT
8.1. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) Shareholder Approval. This Agreement shall have been approved
and adopted by the requisite votes of the shareholders of Pinnacle under
applicable law.
(b) Listing of Shares. The shares of BancorpSouth Common Stock
which shall be issued to the shareholders of Pinnacle upon consummation of the
Merger shall have been authorized for listing on the NYSE, subject to official
notice of issuance.
(c) Other Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby (including the Merger) shall
have been obtained and shall remain in full force and effect and all statutory
waiting periods in respect thereof shall have expired (all such approvals and
the expiration of all such waiting periods being referred to herein as the
"Requisite Regulatory Approvals").
(d) S-4. The S-4 shall have become effective under the Securities
Act and no stop order suspending the effectiveness of the S-4 shall have been
issued and no proceedings for that purpose shall have been initiated or
threatened by the SEC.
(e) Minimum Age Requirements. All minimum age requirements with
respect to Pinnacle Bank arising under Section 23-48-503(a)(2) of the ABA shall
have lapsed.
(f) No Injunctions or Restraints; Illegality. No order, injunction
or decree issued by any court or agency of competent jurisdiction or other legal
restraint or prohibition (an "Injunction") preventing the consummation of the
Merger shall be in effect. No statute, rule, regulation, order, injunction or
decree shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits, restricts or makes illegal consummation of
the Merger.
34
8.2. Conditions to Obligations of BancorpSouth. The obligation of
BancorpSouth to effect the Merger is also subject to the satisfaction or waiver
by BancorpSouth at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Pinnacle set forth in Sections 4.2 and 4.8 of this Agreement shall
be true and correct in all respects without giving effect to Section 3.2 of this
Agreement, and those set forth elsewhere in this Agreement shall be true and
correct after giving effect to Section 3.2, in each case as of the date of this
Agreement and (except to the extent such representations and warranties speak
only as of an earlier date) as of the Closing Date as though made on and as of
the Closing Date. BancorpSouth shall have received a certificate signed on
behalf of Pinnacle by the Chief Executive Officer and the Chief Financial
Officer of Pinnacle to the foregoing effect.
(b) Performance of Obligations of Pinnacle. Pinnacle shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and BancorpSouth shall
have received a certificate signed on behalf of Pinnacle by the Chief Executive
Officer and the Chief Financial Officer of Pinnacle to such effect.
(c) No Pending Governmental Actions. No proceeding initiated by
any Governmental Entity seeking an Injunction shall be pending.
(d) Employment Agreements. The written employment agreements with
the employees listed on Schedule 3.2(b) (collectively, the "Employment
Agreements"), executed as of the date hereof, shall remain in full force and
effect, and BancorpSouth shall have no reasonable basis to believe that there is
a currently existing or anticipated breach of such Employment Agreements by any
such employees.
(e) Federal Tax Opinion. BancorpSouth shall have received an
opinion from Xxxxxx Xxxxxxx Xxxxxx & Xxxxx, PLLC, counsel to BancorpSouth
("BancorpSouth's Counsel"), in form and substance reasonably satisfactory to
BancorpSouth, dated the Effective Time, substantially to the effect that, on the
basis of facts, representations and assumptions set forth in such opinion which
are consistent with the state of facts existing at the Effective Time, the
Holding Company Merger will be treated as a reorganization within the meaning of
Section 368(a) of the Code and that BancorpSouth and Pinnacle will each be a
party to that reorganization. In rendering such opinion, BancorpSouth's Counsel
may require and rely upon representations and covenants, including those
contained in certificates of officers of BancorpSouth, Pinnacle and others,
reasonably satisfactory in form and substance to such counsel. BancorpSouth and
Pinnacle will cooperate with each other and BancorpSouth's Counsel in executing
and delivering to BancorpSouth's Counsel customary representations letters in
connection with such opinion.
8.3. Conditions to Obligations of Pinnacle. The obligation of Pinnacle to
effect the Merger is also subject to the satisfaction or waiver by Pinnacle at
or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
warranties of BancorpSouth set forth in this Agreement shall be true and correct
after giving effect to Section 3.2 of this Agreement as of the date of this
Agreement and (except to the extent such representations and warranties speak as
of an earlier date) as of the Closing Date as though made on and as of the
Closing Date. Pinnacle shall have received a certificate signed on behalf of
BancorpSouth by the Chief Executive Officer and the Chief Financial Officer of
BancorpSouth to the foregoing effect.
(b) Performance of Obligations of BancorpSouth. BancorpSouth shall
have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior
35
to the Closing Date, and Pinnacle shall have received a certificate signed on
behalf of BancorpSouth by the Chief Executive Officer and the Chief Financial
Officer of BancorpSouth to such effect.
(c) No Pending Governmental Actions. No proceeding initiated by
any Governmental Entity seeking an Injunction shall be pending.
(d) Federal Tax Opinion. Pinnacle shall have received an opinion
from Xxxxx Xxxx LLP ("Pinnacle's Counsel"), or other counsel reasonably
satisfactory to Pinnacle, in form and substance reasonably satisfactory to
Pinnacle, dated the Effective Time, substantially to the effect that, on the
basis of facts, representations and assumptions set forth in such opinion which
are consistent with the state of facts existing at the Effective Time, the
Holding Company Merger will be treated as a reorganization within the meaning of
Section 368(a) of the Code and that BancorpSouth and Pinnacle will each be a
party to that reorganization. In rendering such opinion, Pinnacle's Counsel may
require and rely upon representations and covenants, including those contained
in certificates of officers of BancorpSouth, Pinnacle and others, reasonably
satisfactory in form and substance to such counsel. BancorpSouth and Pinnacle
will cooperate with each other and Pinnacle's Counsel in executing and
delivering to Pinnacle's Counsel customary representations letters in connection
with such opinion.
ARTICLE IX. TERMINATION AND AMENDMENT
9.1. Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the shareholders of Pinnacle:
(a) By mutual consent of Pinnacle and BancorpSouth in a written
instrument, if the Board of Directors of each so determines by a vote of a
majority of the members of its entire Board;
(b) By either BancorpSouth or Pinnacle upon written notice to the
other party (i) 60 days after the date on which any request or application for a
Requisite Regulatory Approval shall have been denied or withdrawn at the request
or recommendation of the Governmental Entity which must grant such Requisite
Regulatory Approval, unless within the 60-day period following such denial or
withdrawal a petition for rehearing or an amended application has been filed
with the applicable Governmental Entity; provided, however, that no party shall
have the right to terminate this Agreement pursuant to this Section 9.1(b)(i) if
such denial or request or recommendation for withdrawal shall be due to the
failure of the party seeking to terminate this Agreement to perform or observe
the covenants and agreements of such party set forth herein or (ii) if any
Governmental Entity of competent jurisdiction shall have issued a final
nonappealable order enjoining or otherwise prohibiting the Merger;
(c) By BancorpSouth or Pinnacle upon written notice to the other
party if the Merger shall not have been consummated on or before April 30, 2002,
unless the failure of the Closing to occur by such date shall be due to the
failure of the party seeking to terminate this Agreement to perform or observe
the covenants and agreements of such party set forth herein;
(d) By BancorpSouth upon written notice to Pinnacle (provided that
BancorpSouth may not terminate if it is in material breach of any of its
obligations under Section 7.3) if any approval of the shareholders of Pinnacle
required for the consummation of the Merger shall not have been obtained by
reason of the failure to obtain the required vote at a respective duly held
meeting of such shareholders or at any adjournment or postponement thereof;
36
(e) By either BancorpSouth or Pinnacle upon written notice to the
other party (provided that the terminating party is not then in breach of any
representation or warranty (after giving effect to Section 3.2) or material
breach of any covenant or other agreement contained herein) in the event of
either: (i) if any of the representations or warranties set forth in this
Agreement on the part of the other party hereto shall be or become untrue or
incorrect (after giving effect to Section 3.2 hereof as provided in Article
VIII), and such representation is either incapable, by its nature, of being
cured or is not cured within 30 calendar days following the giving of written
notice thereof to the party making such representation; or (ii) a material
breach by the other party of any of the covenants or agreements contained in
this Agreement, and such breach is either incapable, by its nature, of being
cured or is not cured within 30 calendar days following the giving of written
notice thereof to such other party; or
(f) By BancorpSouth upon written notice to Pinnacle if Pinnacle's
Board of Directors shall have failed to recommend in the Proxy Statement that
Pinnacle's shareholders approve and adopt this Agreement, or Pinnacle's Board of
Directors shall have withdrawn, modified or changed, in a manner adverse to
BancorpSouth, its approval or recommendation of this Agreement and the
transactions contemplated hereby, or if Pinnacle enters into any letter of
intent, agreement in principle, or acquisition or similar agreement related or
with respect to any Acquisition Proposal.
9.2. Effect of Termination. In the event of termination of this Agreement by
either BancorpSouth or Pinnacle as provided in Section 9.1, this Agreement shall
forthwith become void and have no effect except (i) Sections 7.2(b)-(e) and (g),
9.2 and 10.3 shall survive any termination of this Agreement (ii) that
notwithstanding anything to the contrary contained in this Agreement, no party
shall be relieved or released from any liabilities or damages arising out of its
breach of any provision of this Agreement, and Pinnacle shall not be relieved or
released from any obligation to make payment to BancorpSouth pursuant to Section
6.1(d) hereof.
9.3. Amendment. Subject to compliance with applicable law, this Agreement
may be amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after approval of the
matters presented in connection with the Merger by the shareholders of Pinnacle;
provided, however, that after any approval of the transactions contemplated by
this Agreement by Pinnacle's shareholders, there may not be, without further
approval of such shareholders, any amendment of this Agreement which reduces the
amount or changes the form of the consideration to be delivered to such
shareholders hereunder other than as contemplated by this Agreement. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
9.4. Extension; Waiver. At any time prior to the Effective Time, each of the
parties hereto, by action taken or authorized by its Board of Directors, may, to
the extent legally allowed, (a) extend the time for the performance of any of
the obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions of the other party contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in a written instrument signed on behalf of
such party, but such extension or waiver or failure to insist on strict
compliance with an obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
ARTICLE X. GENERAL PROVISIONS
10.1. Closing. Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "Closing") will take place at 10:00 a.m. (Central
Time) on the first day which is at least two business days after the
satisfaction or waiver (subject to applicable law) of the last to occur of the
37
conditions set forth in Article VIII hereof (other than those conditions which
relate to actions to be taken at the Closing) (the "Closing Date"), at the
offices of Xxxxxx Xxxxxxx Xxxxxx & Xxxxx, PLLC, 000 Xxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxxx, Xxxxxxxxx 00000, or at such other time, date and place as is agreed
to by the parties hereto.
10.2. Nonsurvival of Representations, Warranties and Agreements. None of the
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement (other than Section 10.3
hereof) shall survive the Effective Time, except for those covenants and
agreements contained herein and therein which by their terms apply in whole or
in part after the Effective Time.
10.3. Expenses. All costs and expenses, including legal, accounting and
financial advisory fees and expenses, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses.
10.4. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to BancorpSouth, to: BancorpSouth, Inc.
Xxx Xxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxx 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
with a copy (which shall not
constitute notice) to: Xxxxxx Xxxxxxx Xxxxxx & Xxxxx,
A Professional Limited Liability Company
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
and
(b) if to Pinnacle, to: Pinnacle Bancshares, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Facsimile: (000) 000-0000
with a copy (which shall not
constitute notice) to: Xxxxx Xxxx LLP
Suite 1100, 000 Xxxx Xxxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
10.5. Interpretation.
(a) In this Agreement, unless a contrary intention appears, (i)
the words "herein," "hereof" and "hereunder" and other words of similar import
refer to this Agreement as a whole and
38
not to any particular Article, Section or other subdivision, and (ii) when a
reference is made in this Agreement to Articles, Sections, Exhibits or
Schedules, such reference shall be to an Article, Section of or Exhibit or
Schedule to this Agreement, as applicable. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." The phrases "the date of this
Agreement", "the date hereof" and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to November 14, 2001. Unless the
context otherwise requires, when used in this Agreement, (i) the singular shall
include the plural, the plural shall include the singular, and all nouns,
pronouns and any variations thereof shall be deemed to refer to the masculine,
feminine or neuter, as the identity of the person or persons may require, and
(ii) the term "or" shall mean "and/or." For purposes of this Agreement,
"knowledge" means, with respect to an individual, such individual is actually
aware, after reasonable inquiry, of the particular fact, matter, circumstance or
other item, and, with respect to any party, entity or other person other than an
individual, any individual who is serving as a director, chairman, chief
executive officer, president, chief operating officer, chief financial officer,
chief accounting officer, controller, chief credit officer, general counsel,
senior or executive vice president, or regional chairman of such party, entity
or other person or other officer, regardless of title, thereof charged with or
responsible for the oversight of a particular area, department or function to
which the subject matter relates, has or at any time had "knowledge" of such
fact, matter, circumstance or other item. References to any document (including
this Agreement) are references to that document as amended, consolidated,
supplemented, novated or replaced by the parties from time to time. References
to any party to this Agreement shall include references to its respective
successors and permitted assigns. References to law are references to that law
as amended, consolidated, supplemented or replaced from time to time, and shall
include references to any constitutional provision, treaty, decree, convention,
statute, act, regulation, rule, ordinance, subordinate legislation, rule of
common law and of equity and judgment and shall include the requirements of any
applicable stock exchange. References to a judgment shall include references to
any order, injunction, decree, determination or award of any court or tribunal.
References to any Governmental Entity or Regulatory Agency include any successor
to that Governmental Entity or Regulatory Agency.
(b) The table of contents and headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. The parties hereto have each negotiated the
terms hereof, reviewed this Agreement carefully, and discussed it with their
respective legal counsel. It is the intent of the parties that each word, phrase
and sentence and other part hereof shall be given its plain meaning. No
provision of this Agreement shall be interpreted or construed against any party
hereto solely because such party or its legal representative drafted such
provision.
10.6. Defined Terms. Certain terms used in this Agreement have the meanings
ascribed thereto herein, and shall be applicable to the singular and the plural
forms of such terms, except as otherwise provided herein.
10.7. Counterparts. This Agreement may be executed in counterparts, all of
which shall be considered one and the same instrument and shall become effective
when counterparts have been signed by each of the parties and delivered to the
other party hereto, it being understood that all parties need not sign the same
counterpart.
10.8. Entire Agreement. This Agreement (including the schedules, exhibits,
documents and instruments referred to herein) constitutes the entire agreement
and, except as specifically provided herein, supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof.
10.9. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Mississippi, without regard to the
conflicts of laws principles of any jurisdiction.
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The parties agree that the venue for resolution of any dispute arising out of
this Agreement shall be a court of competent jurisdiction in Mississippi.
10.10. Enforcement of Agreement. The parties hereto agree that irreparable
damage would occur in the event that the provisions contained in this Agreement
were not performed in accordance with its specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions thereof in any court of the United States
or any state having jurisdiction, without having to post bond therefor or prove
actual damages, this being in addition to any other remedy to which they are
entitled at law or in equity.
10.11. Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
10.12. Publicity. Except as otherwise required by law or the rules of the
NYSE, so long as this Agreement is in effect, neither BancorpSouth nor Pinnacle
shall, or shall permit any of its Subsidiaries to, issue or cause the
publication of any press release or other public announcement with respect to,
or otherwise make any public statement concerning, the transactions contemplated
by this Agreement without the consent of the other party, which such consent
shall not be unreasonably withheld or delayed.
10.13. Assignment; Successors; Third Party Beneficiaries. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns. Except
as otherwise expressly provided herein, this Agreement (including the documents
and instruments referred to herein) is not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder.
[THE FOLLOWING PAGE IS THE SIGNATURE PAGE.]
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IN WITNESS WHEREOF, each of the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first above written for themselves and their respective
Subsidiaries.
BANCORPSOUTH, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------------------
Xxxxxx X. Xxxxxxxxx
Chairman and Chief Executive Officer
PINNACLE BANCSHARES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Xxxxxx X. Xxxxxxx
President and Chief Executive Officer
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