EXHIBIT 2.3
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AGREEMENT AND PLAN OF MERGER
BETWEEN
HOME BANCSHARES, INC.
AND
MARINE BANCORP, INC.
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DATED AS OF JANUARY 25, 2005
TABLE OF CONTENTS
RECITALS.................................................................. 1
DEFINITIONS............................................................... 2
ARTICLE I. MERGER......................................................... 8
1.1. THE MERGER....................................................... 8
1.2. DISSENTING SHARES................................................ 9
1.3. EFFECTIVE DATE................................................... 9
ARTICLE II. CONSIDERATION................................................. 9
2.1. MERGER CONSIDERATION............................................. 9
2.2. TRANSMITTAL PROCEDURES........................................... 11
2.3. MBI SHAREHOLDER RIGHTS; STOCK TRANSFERS.......................... 12
2.4. RESERVATION OF RIGHT TO REVISE TRANSACTION....................... 12
2.5. OPTIONS.......................................................... 13
ARTICLE III. ACTIONS PENDING CONSUMMATION................................. 13
3.1. CAPITAL STOCK.................................................... 13
3.2. DIVIDENDS, ETC................................................... 14
3.3. INDEBTEDNESS; LIABILITIES; ETC................................... 14
3.4. LINE OF BUSINESS; OPERATING PROCEDURES; ETC...................... 14
3.5. LIENS AND ENCUMBRANCES........................................... 14
3.6. COMPENSATION; EMPLOYMENT AGREEMENTS; ETC......................... 14
3.7. BENEFIT PLANS.................................................... 14
3.8. CONTINUANCE OF BUSINESS.......................................... 14
3.9. AMENDMENTS....................................................... 15
3.10. CLAIMS........................................................... 15
3.11. CONTRACTS........................................................ 15
3.12. LOANS............................................................ 15
ARTICLE IV. REPRESENTATIONS AND WARRANTIES................................ 15
4.1. REPRESENTATIONS AND WARRANTIES OF MBI............................ 15
4.2. REPRESENTATIONS AND WARRANTIES OF HBI............................ 26
ARTICLE V. COVENANTS...................................................... 30
5.1. BEST EFFORTS..................................................... 30
5.2. CORPORATE ACTIONS................................................ 30
5.3. SECURITIES LAW COMPLIANCE........................................ 31
5.4. PUBLICITY........................................................ 31
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5.5. ACCESS; DUE DILIGENCE INFORMATION; CONFIDENTIALITY............... 31
5.6. SOLE AGREEMENT TO SELL........................................... 32
5.7. HBI COMMON STOCK ADJUSTMENTS..................................... 33
5.8. STATE TAKEOVER LAW............................................... 34
5.9. NO RIGHTS TRIGGERED.............................................. 34
5.10. REGULATORY APPLICATIONS.......................................... 34
5.11. REGULATORY DIVESTITURES.......................................... 34
5.12. CURRENT INFORMATION.............................................. 34
5.13. DIRECTOR AND OFFICER LIABILITY INSURANCE......................... 35
ARTICLE VI. CONDITIONS TO CONSUMMATION OF THE MERGER...................... 35
6.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS........................... 35
6.2. CONDITIONS TO OBLIGATIONS OF HBI................................. 36
6.3. CONDITIONS TO OBLIGATIONS OF MBI................................. 38
ARTICLE VII. TERMINATION.................................................. 39
7.1. TERMINATION UPON CERTAIN CONDITIONS.............................. 39
7.2. TERMINATION FOR BREACH........................................... 40
ARTICLE VIII. OTHER MATTERS............................................... 41
8.1. SURVIVAL......................................................... 41
8.2. WAIVER; AMENDMENT................................................ 41
8.3. COUNTERPARTS..................................................... 41
8.4. GOVERNING LAW.................................................... 41
8.5. EXPENSES......................................................... 41
8.6. NOTICES.......................................................... 41
8.7. TIME IS OF THE ESSENCE........................................... 42
8.8. ASSIGNMENT....................................................... 42
8.9. BINDING EFFECT................................................... 42
8.10. SEVERABILITY..................................................... 42
8.11. ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES............... 42
8.12. ENFORCEMENT PROCEEDINGS.......................................... 43
8.13. BENEFIT PLANS.................................................... 43
8.14. HEADINGS......................................................... 43
LIST OF EXHIBITS
MBI SCHEDULES
HBI SCHEDULES
APPENDIX 1 CLASS B PREFERRED STOCK DESCRIPTION
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of the 25th day of January, 2005
(this "Agreement" or "Plan"), is by and between HOME BANCSHARES, INC. ("HBI"),
an Arkansas corporation, and MARINE BANCORP, INC. ("MBI"), a Florida
corporation.
RECITALS
(A) MBI. MBI is a corporation duly organized and existing in good standing
under the laws of the State of Florida, with its principal executive offices
located in Marathon, Florida. MBI is a registered bank holding company under the
Bank Holding Company Act of 1956, as amended. As of the date of this Plan, MBI
has 5,000,000 authorized shares of common stock, $0.10 par value ("MBI Common
Stock"), of which 635,208 shares of MBI Common Stock are issued and outstanding
(no other class of capital stock being authorized). As of September 30, 2004,
MBI had Capital (as hereafter defined) of $8,475,435, divided into common stock
of $63,521, additional paid in capital of $5,892,337, comprehensive
income/surplus of $141,941, and retained earnings of $2,661,564. As of the date
of this Plan, options covering 49,347 shares of MBI Common Stock are issued and
outstanding which options shall be exercised pursuant to Section 2.5 herein.
There are no other options issued and outstanding.
(B) MARINE BANK OF THE FLORIDA KEYS. Marine Bank of the Florida Keys
("Marine") is a Florida state bank duly organized and existing in good standing
under the laws of the State of Florida with its main office located in Marathon,
Florida. As of the date of this Plan, Marine has 1,000,000 authorized shares of
common stock, $5.00 par value per share ("Marine Common Stock") (no other class
of capital stock being authorized), of which 630,000 shares are issued and
outstanding. All of the issued and outstanding shares of Marine Common Stock are
owned by MBI.
(C) HBI. HBI is a corporation duly organized and existing in good standing
under the laws of the State of Arkansas, with its principal executive offices
located in Conway, Arkansas. HBI is a financial holding company subject to
regulation by the Federal Reserve Board. As represented in its unaudited
financial statements for the period ended September 30, 2004, HBI had Capital of
$107,178,288, divided into common stock of $266,250, preferred stock of $21,341,
preferred treasury stock of $(20,130), accumulated other comprehensive
income/surplus of $(481,807), capital surplus of $90,483,188 and retained
earnings of $16,909,446. As of the date of this Plan, HBI has 5,000,000
authorized shares of common stock, $0.10 par value ("HBI Common Stock"), of
which 2,662,495 shares are issued and outstanding. HBI has 5,500,000 authorized
shares of preferred stock, $0.01 par value, of which 2,500,000 shares of Class A
Preferred Stock are authorized and 2,134,068 are issued and outstanding, and
3,000,000 shares of Class B Preferred Stock are authorized, and none are issued
and outstanding.
(D) APPROVALS. At meetings of the respective Boards of Directors of MBI and
HBI, each such Board has approved and authorized the execution of this Plan in
counterparts.
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In consideration of their mutual promises and obligations, the Parties
further agree as follows:
DEFINITIONS
(A) DEFINITIONS. Capitalized terms used in this Plan have the following
meanings:
"A.C.A," means the Arkansas Code Annotated, as amended.
"Accredited Investor" has the meaning assigned to such term in Rule 501
promulgated under the Securities Act.
"Acquisition Proposal" has the meaning assigned to such term in Section
5.6(D).
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, Controls, is
Controlled by, or is under common Control with such Person.
"Appraisal Laws" means Fla. Stat. Section 607.1301 through Section
607.1333.
"Asset Classification" has the meaning assigned to such term in Section
4.1(U).
"Business Day" means any day other than a Saturday, Sunday, or a day on
which FSB is not open for business.
"Capital" means capital stock, surplus and retained earnings determined in
accordance with GAAP. Unrealized gains or losses in investment securities will
be included when determining Capital.
"Cash Consideration" has the meaning assigned to such term in Section 2.1
(A).
"CFG Merger" means the merger of Community Financial Group, Inc. with and
into CB Bancorp, Inc., with CB Bancorp, Inc. as the surviving corporation,
effective on December 6, 2003.
"Change of Control Transaction" has the meaning assigned to such term in
Section 7.3.
"Class B Preferred Stock" means the convertible Class B preferred stock to
be issued by HBI and exchanged pursuant to Section 2.1(C), and as described in
Appendix I.
"Code" has the meaning assigned to such term in Section 4.1(R)(2).
"Community Bank" means Community Bank of Cabot, Arkansas, an Arkansas
banking corporation and wholly-owned subsidiary bank of CB Bancorp, Inc., an
Arkansas corporation and registered bank holding company, that is an 80% owned
Subsidiary of HBI and is the surviving corporation in the CFG Merger.
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"Compensation and Benefit Plans" has the meaning assigned to such term in
Section
"Confidentiality Agreement" means that certain Confidentiality Agreement
executed by and between MBI and HBI on July 9, 2004.
"Contract" has the meaning assigned to such term in Section 4.1(O).
"Control" with respect to any Person means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting interests, by
Contract, or otherwise.
"Derivatives Contract" means an exchange-traded or over-the-counter swap,
forward, future, option, cap, floor or collar financial contract or any other
contract that (1) is not included on the balance sheet of the Financial Reports
of MBI, and (2) is a derivative contract (including various combinations
thereof).
"Dissenting Shares" means the shares of MBI Common Stock held by those
shareholders of MBI who have timely and properly exercised their dissenters'
rights in accordance with the Appraisal Laws.
"Dissenting Shareholder" has the meaning assigned to such term in Section
1.2.
"Effective Date" has the meaning assigned to such term in Section 1.3.
"Election" has the meaning assigned to such term in Section 2.1 (A).
"Environmental Law" means (1) any federal, state, and/or local law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, legal doctrine, order, judgment, decree, injunction,
requirement or agreement with any governmental entity, relating to (a) the
protection, preservation or restoration of the environment (including air, water
vapor, surface water, groundwater, drinking water supply, surface land,
subsurface land, plant and animal life or any other natural resource) or to
human health or safety, or (b) the exposure to, or the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production, release or disposal of Hazardous Material, in each case as amended
and as now in effect, including the Federal Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act, the Federal Water Pollution Control Act of 1972, the
Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource
Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste
Amendments thereto), the Federal Solid Waste Disposal and the Federal Toxic
Substances Control Act, and the Federal Insecticide, Fungicide and Rodenticide
Act, the Federal Occupational Safety and Health Act of 1970, and (2) any common
law or equitable doctrine (including injunctive relief and tort doctrines such
as negligence, nuisance, trespass and strict liability) that may impose
Liability or obligations for injuries or damages due to, or threatened as a
result of, the presence of or exposure to any Hazardous Material.
"ERISA" has the meaning assigned to such term in Section 4.1(R)(2).
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"ERISA Affiliate" has the meaning assigned to such term in Section
4.1(R)(3).
"ERISA Plans" has the meaning assigned to such term in Section 4.1(R)(2).
"Exception Shares" has the meaning ascribed to such term in Section 2.1(B).
"Exchange Agent" means FirsTrust Financial Services, Inc., an Arkansas
corporation whose principal address is 0000 Xxxxxxxx Xxxx, Xxxxxx Xxxx,
Xxxxxxxx, 00000.
"Expiration Date" has the meaning assigned to such term in Section 2.2(B).
"FDIC" means the Federal Deposit Insurance Corporation.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
System.
"Financial Reports" (1) as to MBI and HBI, means their respective audited
consolidated balance sheets and the related statements of income, changes in
shareholders' equity and cash flows for the fiscal years or periods ended
December 31, 2001, December 31, 2002 and December 31, 2003, and unaudited
consolidated balance sheets and the related statements of income, changes in
shareholders' equity and cash flows for the nine (9)-month period ended
September 30, 2004; (2) as to Marine, means its call reports for the fiscal
years ended December 31, 2001, December 31, 2002, and December 31, 2003; and (3)
all other financial reports filed or to be filed subsequent to December 31,
2003, in the form filed with the Federal Reserve Board, FDIC and the Florida
Department of Financial Services.
"Florida Banking Laws" means the Florida Interstate Banking Act, Fla. Stat.
Section 658.295, and if applicable Fla. Stat. Section 658.28.
"Fraction" has the meaning assigned to such term in Section 2.1(E).
"Fractional Share Consideration" has the meaning assigned to such term in
Section 2.1(E)
"FSB" means First State Bank, the wholly-owned subsidiary bank of HBI.
First State Bank is an Arkansas banking corporation with its principal office in
Conway, Arkansas.
"GAAP" means generally accepted accounting principles consistently applied.
"Governing Documents" means the articles of incorporation, charter, and
bylaws of the subject entity, including all amendments thereto.
"Hazardous Material" means any substance presently listed, defined,
designated or classified as hazardous, toxic, radioactive or dangerous, or
otherwise regulated, under any Environmental Law, whether by type or quantity,
including any oil or other petroleum product, toxic waste, pollutant,
contaminant, hazardous substance, toxic substance, hazardous waste, special
waste or petroleum or any derivative or by-product thereof, radon, radioactive
material,
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asbestos, asbestos containing material, urea formaldehyde foam insulation, lead
and polychlorinated biphenyl.
"HBI" means Home BancShares, Inc., an Arkansas corporation and registered
financial holding company.
"HBI Banks" means FSB and Community Bank.
"HBI Common Stock" has the meaning assigned to such term in paragraph (C)
of the Recitals.
"HBI Option" has the meaning assigned to such term in Section 2.5.
"HBI Transaction" means: (1) a merger, consolidation or similar transaction
involving HBI, where HBI is not the corporation surviving such transaction or
where a change of Control of HBI is otherwise effected, or (2) the disposition,
by sale, lease, exchange or otherwise, of assets or deposits of HBI or any of
its significant Subsidiaries representing in either case 25% or more of the
consolidated assets or deposits of HBI and its Subsidiaries, or (3) the
issuance, sale or other disposition (including by way of merger, consolidation,
share exchange or any similar transaction) of securities representing 25% or
more of the voting power of HBI or any of its significant Subsidiaries other
than the issuance of HBI Common Stock upon the exercise of then outstanding
options or the conversion of then outstanding convertible securities of HBI.
"Holder" means a holder of any of the shares of MBI Common Stock, excluding
Exception Shares and Dissenting Shares, on the Effective Date.
"Insured Depository Institution" has the meaning given it in the Federal
Deposit Insurance Act, as amended, and applicable regulations under such
statute.
"Intellectual Property Rights" has the meaning given such term in Section
4.1(L).
"Knowledge" (and "Know" or "Known") means the actual (but not the
constructive) knowledge of the Chairman, Chief Executive Officer, President,
Chief Financial Officer, and Chief Lending Officer of the entity.
"Liability" means any debts, liabilities, obligations and Contracts of the
Party, whether the same shall be matured or un-matured; whether accrued,
absolute, contingent or otherwise.
"Loan/Fiduciary Property" means any property owned or Controlled by MBI or
any of its Subsidiaries or in which MBI or any of its Subsidiaries holds a
security or other interest, and, where required by the context, includes any
such property where MBI or any of its Subsidiaries constitutes the owner or
operator of such property, but only with respect to such property.
"Mailing Date" has the meaning assigned to such term in Section 2.2(B).
"Marine" means Marine Bank of the Florida Keys, as set forth in paragraph
(D) of the Recitals.
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"Material" means, with respect to either Party, an event, occurrence or
circumstance (including (i) the making of any provisions for possible loan and
lease losses, write-downs of other real estate owned and taxes, and (ii) any
breach of a representation or warranty contained in this Plan by such Party)
that (a) has or is reasonably likely to have a material adverse effect on or
constitute a material adverse change in the financial condition, results of
operations, business, or future operations of such Party or, as applicable, its
Subsidiaries, or (b) would impair such Party's ability to perform its
obligations under this Plan or the consummation of any of the transactions
contemplated by this Plan; provided, however that the occurrence of the
following event or circumstance will not be deemed "Material": (i) acts of
terrorism or war (whether or not declared); (ii) a change in laws or regulations
applicable to MBI; or (iii) general business or financial condition effecting
the commercial banking industry generally. With respect to MBI, any such event,
occurrence or circumstance that has been previously disclosed to HBI in writing
prior to the date of this Agreement shall not be deemed Material.
"MBI" means Marine Bancorp, Inc., a Florida corporation as set forth in
paragraph (A) of the Recitals.
"MBI Common Stock" has the meaning assigned to such term in paragraph (A)
of the Recitals.
"MBI Option" has the meaning assigned to such term in Section 2.5.
"Merger" means the merger of MBI with and into HBI as described in Section
1.1.
"Merger Consideration" means the Stock Consideration, Cash Consideration,
Mixed Consideration or Fractional Share Consideration a Holder of MBI Common
Stock will receive pursuant to ARTICLE II.
"Mixed Consideration" has the meaning assigned to such term in Section 2.1
(A).
"Multiemployer Plans" has the meaning assigned to such term in Section
4.1(R)(2).
"Non-accredited Investor" means a Person who does not represent in
his/her/its Transmittal Form that he/she/it is an Accredited Investor or for
whom HBI does not have a reasonable belief that such person is an Accredited
Investor.
"Non-perfecting Dissenter" has the meaning assigned to such term in Section
2.1(G).
"Participation Facility" means any facility in which MBI or any of its
Subsidiaries participates in the management and, where required by the context,
includes the owner or operator of such facility.
"Party" means a party to this Plan.
"Pension Plan" has the meaning assigned to such term in Section 4.1 (R)(2).
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"Person" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, governmental
body, or other entity.
"Plan" means this Agreement and Plan of Merger, together with all Exhibits
and Schedules annexed hereto, and incorporated by specific reference, as apart
of this Plan.
"Proxy Statement" has the meaning assigned to such term in Section 5.2(B).
"Regulation D" means Regulation D promulgated under the Securities Act.
"Regulatory Authorities" means federal or state governmental agencies,
authorities or departments (1) charged with the supervision or regulation of
depository institutions or (2) engaged in the insurance of deposits.
"Required Rule 506 Representations" has the meaning assigned to such term
in Section 2.2(C).
"Required Rule 506 Restrictions" has the meaning assigned to such term in
Section 2.2(C).
"Restricted Securities" has the meaning assigned to such term in Regulation
D.
"Rights" means securities or obligations convertible into or exchangeable
for, or giving any Person any right to subscribe for or acquire, or any options,
calls or commitments relating to, shares of capital stock.
"Rule 506" means Rule 506 promulgated under Section 4(2) of the Securities
Act.
"Securities Act" means the Securities Act of 1933, as amended, together
with the rules and regulations promulgated under such statute.
"Stock Consideration" has the meaning assigned to such term in Section 2.1
(A).
"Subsidiary" means, with respect to any entity, each partnership, limited
liability company, or corporation the majority of the outstanding partnership
interests, membership interests, capital stock or voting power of which is (or
upon the exercise of all outstanding warrants, options and other rights would
be) owned, directly or indirectly, at the time in question by such entity.
"Superior Proposal" has the meaning assigned such term in Section 5.6(E).
"Surviving Corporation" has the meaning assigned to such term in Section
l.l(A).
"Takeover Restrictions" has the meaning assigned to such term in Section
4.1(Y).
"Tax Returns" has the meaning assigned to such term in Section 4.1(BB).
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"Taxes" means federal, state, local or foreign income, gross receipts,
windfall profits, severance, property, production, sales, use, license, excise,
franchise, employment, withholding or similar taxes imposed on the income,
properties or operations of the respective Party or its Subsidiaries, together
with any interest, additions, or penalties with respect thereto and any interest
in respect of such additions or penalties.
"Termination Date" has the meaning assigned to such term in Section 5.1.
"Termination Fee" has the meaning assigned to such term in Section 7.1(F).
"Third Party" means any person or group and their respective directors,
officers, employees, representatives, and agents other than HBI, MBI, or any of
their Subsidiaries, and their respective directors, officers, employees,
representatives, and agents.
"Transmittal Form" has the meaning assigned to such term in Section 2.2(B).
(B) GENERAL INTERPRETATION. Except as otherwise expressly provided in this
Plan or unless the context clearly requires otherwise, the terms defined in this
Plan include the plural as well as the singular; the word "including" means
including without limitation; the words "hereof," "herein," "hereunder," "in
this Plan" and other words of similar import refer to this Plan as a whole and
not to any particular Article, Section or other subdivision; and references in
this Plan to Articles, Sections, Schedules, and Exhibits refer to Articles and
Sections of and Schedules and Exhibits to this Plan. Unless otherwise stated,
references to Subsections refer to the Subsections of the Section in which the
reference appears. All pronouns used in this Plan include the masculine,
feminine and neuter gender, as the context requires. All accounting terms used
in this Plan that are not expressly defined in this Plan have the respective
meanings given to them in accordance with GAAP.
ARTICLE I. MERGER
1.1. THE MERGER. Subject to the provisions of this Plan, on the Effective
Date:
(A) SURVIVING CORPORATION. In accordance with the applicable
provisions of the Arkansas Business Corporation Act of 1987, A.C.A. Section
4-27-101, et seq., and of Fla. Stat. Section 6076.1107, MBI shall be merged with
and into HBI pursuant to the terms and conditions of this Plan and pursuant to
the Articles of Merger substantially in the form of EXHIBIT A. Upon consummation
of the Merger, the separate existence of MBI shall cease and HBI shall continue
as the surviving corporation (the "Surviving Corporation"') under the corporate
name it possesses immediately prior to the Effective Date.
(B) GOVERNING DOCUMENTS. The Governing Documents of the Surviving
Corporation shall be those of HBI, as in effect immediately prior to the Merger
becoming effective. The directors and officers of HBI in office immediately
prior to the Merger becoming effective shall be the directors and officers of
the Surviving Corporation, together with such additional directors and officers
as may thereafter be elected, who shall hold office until such time as their
successors are elected and qualified.
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(C) EFFECT OF THE MERGER. On the Effective Date, the effect of the
Merger shall be that (1) the title to all real estate and other property owned
by MBI is vested in the Surviving Corporation and shall not revert or be in any
way impaired by reason of the Merger; (2) the Surviving Corporation shall be
liable for all Liabilities of MBI, whether or not reflected or reserved against
in the balance sheets, other financial statements, books of account or records
of MBI, in the same manner as if the Surviving Corporation had itself incurred
such Liabilities or obligations; and (3) a proceeding pending by or against MBI
may be continued as if the Merger had not taken place, or the Surviving
Corporation may be substituted in place of MBI.
1.2. DISSENTING SHARES. Notwithstanding anything to the contrary in this
Plan, each Dissenting Share shall not be converted into a right to receive the
Merger Consideration, but the holder of such Dissenting Share shall be entitled
only to such rights as are granted by the Appraisal Laws unless and until such
holder shall have failed to perfect or shall have effectively withdrawn or lost
the right to payment under the Appraisal Laws, in which case each such share
shall be deemed to have been converted at the Effective Date into the right to
receive the Merger Consideration. MBI shall give HBI prompt notice upon receipt
by MBI of any such demands for payment of the fair value of such shares of MBI
Common Stock and of withdrawals of such notice and any other instruments
provided pursuant to applicable law (any shareholder duly making such demand
being called a "Dissenting Shareholder"). MBI shall not make any payment or
offer to settle any such demand or waive any failure by a Dissenting Shareholder
of a requirement of the Appraisal Laws. Each Dissenting Shareholder who becomes
entitled to payment for his MBI Common Stock pursuant to the provisions of the
Appraisal Laws shall receive payment for such Dissenting Shares from HBI (but
only after the amount thereof shall have been agreed upon or finally determined
pursuant to the Appraisal Laws).
1.3. EFFECTIVE DATE. Unless the Parties agree upon another date, the
"Effective Date" will be the tenth Business Day after the fulfillment or waiver
of each condition precedent set forth in, and the granting of each approval (and
expiration of any waiting period) required by, ARTICLE VI. If the Merger is not
consummated in accordance with this Plan on or prior to the Termination Date,
either Party may terminate this Plan in accordance with ARTICLE VII. On or
before the Effective Date, Articles of Merger will be filed with the Secretary
of State of Arkansas and Secretary of State of Florida in accordance with
applicable law.
ARTICLE II. CONSIDERATION
2.1. MERGER CONSIDERATION. On the Effective Date, without any action on the
part of HBI, MBI, or the holder of any of the shares of MBI Common Stock, the
Merger shall be effected in accordance with the following terms:
(A) METHOD OF PAYMENT. The total value paid for the MBI Common Stock
shall be represented as thirty-nine and one-half percent (39.5%) by Class B
Preferred Stock (the "Stock Consideration") and sixty and one-half percent
(60.5%) by cash (the "Cash Consideration"). Subject to the provisions of
Sections 2.1 and 2.2 of the Plan, a Holder may receive his Merger Consideration
as either all Stock Consideration, a combination of Stock Consideration and Cash
Consideration as the Holder may specify (the "Mixed Consideration"), or all Cash
Consideration, and shall state such Holder's preference (the "Election") on the
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Transmittal Form as provided in Section 2.2(C). Subject to Section 2.1(F), any
Holder who does not make such Election shall be entitled only to receive Cash
Consideration. However, all Elections for Mixed Consideration and all Cash
Consideration shall be subject to an adjustment by the Exchange Agent as
provided in Section 2.2(E).
(B) EXCEPTION SHARES. All shares of MBI Common Stock owned directly by
MBI (including treasury shares), or any of its Subsidiaries (in each case other
than shares in trust accounts or in another fiduciary capacity, managed accounts
and the like or shares held in satisfaction of a debt previously contracted)
(the "Exception Shares") shall be cancelled and retired as of the Effective Date
and shall not thereafter represent capital stock of the Surviving Corporation
and shall not be exchanged for Merger Consideration or any other consideration.
(C) STOCK CONSIDERATION. Subject to the provisions of Sections 2.1(A),
2.1(E) through (H), and 2.2, each Holder who elects to receive all or part of
his Merger Consideration as Stock Consideration shall receive the number of
whole shares of Class B Preferred Stock equal to the product of 0.644737 and the
number of shares of such Holder's MBI Common Stock surrendered for Stock
Consideration. The shares of Class B Preferred Stock issued as Stock
Consideration shall be valued for purposes of the exchange at Thirty-eight
Dollars ($38.00) per share. No interest shall be paid on any Stock
Consideration.
(D) CASH CONSIDERATION. A Holder who is not eligible for the Stock
Consideration pursuant to the provisions of Sections 2.1 or 2.2, or who, subject
to Sections 2.1(A) and 2.2(C), elects to receive Cash Consideration shall
receive an amount of cash equal to $38.00 multiplied by the product of 0.644737
and the number of shares of such Holder's MBI Common Stock surrendered for such
Cash Consideration. No interest shall be paid on any Cash Consideration.
(E) FRACTIONAL SHARE CONSIDERATION. Notwithstanding any other
provision of this Plan, no fractional shares of Class B Preferred Stock and no
certificates, scrip or other evidence of ownership of fractional shares will be
issued in the Merger. HBI shall pay to each Holder of MBI Common Stock who would
otherwise be entitled to a fractional or partial share of Class B Preferred
Stock (the "Fraction") an amount of cash equal to $38.00 multiplied by the
product of 0.644737 and the Fraction (the "Fractional Share Consideration"). No
such Holder shall be entitled to dividends, interest, or any other rights in
respect to such fractional shares and no interest shall be paid on the
Fractional Share Consideration.
(F) RULE 506 EXEMPTION. The offering of Class B Preferred Stock to
Holders of MBI Common Stock is being made pursuant to the exemption from
registration under Section 4(2) of the Securities Act and Rule 506. Each Holder
who does not make the Required Rule 506 Representations and/or does not agree to
the Required Rule 506 Restrictions as required hereby and in his Transmittal
Form by the Expiration Date shall receive only the Cash Consideration as Merger
Consideration. Pursuant to the exemption from registration provided by Rule 506,
no more than thirty-five (35) Holders who elect to receive Stock Consideration
or Mixed Consideration and who are Non-accredited Investors may receive Class B
Preferred Stock. In counting the 35 Holders who will be eligible to receive
Stock Consideration or Mixed
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Consideration, the Exchange Agent shall give priority to the Non-accredited
Investors making such Election who hold the largest number of shares of MBI
Common Stock. All other Holders who are Non-accredited Investors electing Stock
Consideration or Mixed Consideration will receive only Cash Consideration. In
addition, a Holder who lives in a state (other than Florida or Arkansas) which
would require HBI or its employees to register as a broker-dealer, agent, or
similar registration under applicable state securities laws in connection with
or as a condition to the offering of Class B Preferred Stock shall not be
eligible to receive Class B Preferred Stock and shall receive only Cash
Consideration.
(G) LIMITATION ON CLASS B PREFERRED SHARES ISSUED. Notwithstanding
that a Holder is otherwise eligible to receive Class B Preferred Stock as all or
part of such Holder's Merger Consideration, the Class B Preferred Stock will
only be issued to the first 200 such Holders who hold the largest number of
shares of MBI Common Stock, and as a result the issuance of the Class B
Preferred Stock is subject to the Adjustment provided in Section 2.2(E).
(H) NON-PERFECTING DISSENTERS. Shares of MBI Common Stock owned by a
Dissenting Shareholder who has either failed to perfect or effectively withdraws
or loses the right to payment under the Appraisal Laws (a "Non-perfecting
Dissenter") shall be deemed to have been converted at the Effective Date into
the right to receive as Merger Consideration only the Cash Consideration.
2.2. TRANSMITTAL PROCEDURES.
(A) TENDER OF SHARES OF MBI COMMON STOCK AND DELIVERY OF
CONSIDERATION. Any Merger Consideration into which shares of a Holder's MBI
Common Stock are converted on the Effective Date, and any dividends paid on
shares of Class B Preferred Stock issued as Stock Consideration for which the
record date for determination of shareholders entitled to such dividends is on
or after the Effective Date, will be delivered to such Holder only upon delivery
to the Exchange Agent of the certificates representing all of such Holder's
shares of MBI Common Stock (or an affidavit for indemnity satisfactory to the
Exchange Agent, in its judgment, if any of such certificates are lost, stolen or
destroyed). No interest shall be paid on any dividends to which such Holder
shall be entitled.
(B) TRANSMITTAL FORM. A form (the "Transmittal Form") shall be mailed
as soon as reasonably practicable after the Effective Date (the "Mailing Date")
to each Holder of record as of the Effective Date containing (i) applicable
instructions on transmittal of the Holder's MBI Common Stock, (ii) the Holder's
Election as to the Holder's preference for type of Merger Consideration, and
(iii) the required representations and agreements described in Section 2.2(C).
Each Holder shall submit to the Exchange Agent a properly completed Transmittal
Form on or before the expiration of thirty (30) days from the Mailing Date (the
"Expiration Date"), together with his certificate(s) evidencing shares of MBI
Common Stock owned by such Holder. Once submitted, the Transmittal Form is
irrevocable. Neither HBI nor the Exchange Agent shall be under any obligation to
notify any persons of any defect in a Transmittal Form.
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(C) REQUIRED REPRESENTATIONS AND AGREEMENTS, The Transmittal Form
shall request a Holder to (i) evidence whether or not they are an Accredited
Investor, (ii) make the representations required of persons who wish to acquire
securities pursuant to Rule 506 (the "Required Rule 506 Representations"), (iii)
agree to the restrictions required by Regulation D and Rule 506 and acknowledge
that each share of Class B Preferred Stock to be issued hereunder constitutes
Restricted Securities (collectively, the "Required Rule 506 Restrictions"), and
(iv) agree to any other restrictions contained in the Transmittal Form.
(D) MERGER CONSIDERATION ELECTION. The Holder shall make the Election
on the Transmittal Form as to the Holder's preference to receive the Merger
Consideration as all Stock Consideration, Mixed Consideration, or all Cash
Consideration. The Election is a preference only and is subject to an Adjustment
by the Exchange Agent as provided in Section 2.2(E).
(E) ADJUSTMENTS. All Elections may be subject to an adjustment
determined by the Exchange Agent to (1) achieve a minimum of 39.5% of the total
Merger Consideration being paid as Stock Consideration, (2) preserve the
exemption from registration pursuant to Rule 506 by limiting to 35 the number of
Non-accredited Investors who receive Stock Consideration or Mixed Consideration,
as provided in Section 2.1(F); and (3) limit to two hundred (200) the number of
Holders who receive Class B Preferred Stock as all or part of their Merger
Consideration, as provided in Section 2.1(G).
(F) IMPROPER TENDER. Any Holder who does not submit a properly
completed Transmittal Form to the Exchange Agent by the Expiration Date,
accompanied by one or more certificates (or such affidavits and indemnification
satisfactory to the Exchange Agent regarding the loss or destruction of such
certificates) representing all of the shares of MBI Common Stock covered by such
Transmittal Form, together with all other applicable transmittal materials,
shall receive only Cash Consideration for their shares of MBI Common Stock upon
surrender of their certificates of MBI Common Stock in the manner required by
the Exchange Agent.
2.3. MBI SHAREHOLDER RIGHTS; STOCK TRANSFERS. On the Effective Date,
holders of MBI Common Stock shall cease to be, and shall have no rights as,
shareholders of MBI other than to receive the consideration provided under this
ARTICLE II, or the rights of a Dissenting Shareholder who perfects those rights
under the Appraised Laws. On and after the Effective Date, there shall be no
transfers on the stock transfer books of MBI or the Surviving Corporation of the
shares of MBI Common Stock that were issued and outstanding immediately prior to
the Effective Date.
2.4. RESERVATION OF RIGHT TO REVISE TRANSACTION. In its sole discretion,
and notwithstanding any other provision in this Plan to the contrary, HBI may at
any time prior to the Effective Date revise the transaction as follows:
(A) HBI may change the method of effecting its acquisition of MBI
including, but not limited to, the formation of a subsidiary of HBI for the
purpose of acquiring MBI and becoming the Surviving Corporation in the Merger;
provided, however, that (i) no such change shall
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change the amount, value or kind of consideration to be generally issued to
Holders as provided for in this Plan and, provided further that the Merger
Consideration set forth in Section 2.1 is not reduced, (ii) no such change shall
result in the tax opinion required by Section 6.1(E) not being rendered, and
(iii) no delay caused by such a change shall be the basis upon which HBI
terminates this Plan pursuant to Section 7.1(B).
(B) HBI reserves the right at any time prior to the issuance of the
Class B Preferred Stock to offer such stock pursuant to a registration statement
filed with the Securities and Exchange Commission and, if required by state law,
with the appropriate securities administrators of all applicable states.
(C) If HBI elects to change the method of acquisition pursuant to this
Section 2.4, MBI will cooperate with and assist HBI with any necessary amendment
to this Plan, and with the preparation and filing of such applications,
documents, instruments and notices as may be necessary or desirable, in the
opinion of counsel for HBI, to obtain all necessary shareholder approvals and
approvals of any regulatory agency, administrative body or other governmental
entity.
2.5. OPTIONS. MBI has granted options to purchase 49,347 shares of MBI
Common Stock ("MBI Option"). On the Effective Date, by virtue of the Merger and
without any action on the part of any holder of an option, each MBI Option that
is then outstanding and unexercised shall immediately and automatically be
converted into and become an option to purchase Class B Preferred Stock ("HBI
Option") on the same terms and conditions as are in effect with respect to such
MBI Option immediately prior to the Effective Date, except that (A) each such
HBI Option may be exercised solely for shares of Class B Preferred Stock, (B)
the number of shares of Class B Preferred Stock subject to such HBI Option shall
be equal to the number of shares of MBI Common Stock subject to such MBI Option
immediately prior to the Effective Date multiplied by 0.644737, the product
being rounded, if necessary, up or down to the nearest whole share, and (C) the
per share exercise price under each such HBI Option shall be adjusted by
dividing the per share exercise price of MBI Option by 0.644737, and rounding up
or down to the nearest cent. The number of shares of MBI Common Stock that are
issuable upon exercise of MBI Options as of the date of this Plan and the names
of the holders of MBI Options are disclosed in Schedule 2.5.
ARTICLE III. ACTIONS PENDING CONSUMMATION
Unless HBI otherwise agrees in writing, MBI shall and shall cause its
Subsidiaries to conduct their respective business in the ordinary and usual
course consistent with past practice and MBI shall use its best efforts to
maintain and preserve MBI's and each of its Subsidiaries' business organization,
employees and advantageous business relationships and retain the services of
MBI's or, as applicable, its Subsidiaries' officers and key employees identified
by HBI, and neither MBI nor Marine, without the prior written consent of HBI,
will (or cause or allow any of its Subsidiaries to):
3.1. CAPITAL STOCK. Except for the exercise of outstanding MBI Options, or
as disclosed in Schedule 4.1(C). issue, sell or otherwise permit to become
outstanding any
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additional shares of capital stock of MBI or any of its Subsidiaries, or any
Rights with respect thereto, or enter into any agreement with respect to the
foregoing, or permit any additional shares of MBI Common Stock to become subject
to grants of employee stock options, stock appreciation rights or similar
stock-based employee compensation rights.
3.2. DIVIDENDS, ETC. Except for dividends made from the MBI Subsidiaries to
MBI consistent with past practices, make, declare or pay any dividend on or in
respect of, or declare or make any distribution on, or directly or indirectly
combine, split, subdivide, redeem, reclassify, purchase or otherwise acquire,
any shares of its capital stock or, other than as permitted in or contemplated
by this Plan, authorize the creation or issuance of, or issue, any additional
shares of its capital stock or any Rights with respect thereto.
3.3. INDEBTEDNESS; LIABILITIES; ETC. Other than in the ordinary and usual
course of business consistent with past practice, incur any indebtedness for
borrowed money, assume, guarantee, endorse or otherwise as an accommodation
become responsible or liable for the obligations of any other individual,
corporation or other entity.
3.4. LINE OF BUSINESS; OPERATING PROCEDURES: ETC. Except as may be directed
by any regulatory agency: (A) change its lending, investment, liability
management or other Material banking policies in any Material respect, or (B)
commit to incur any further capital expenditures beyond those disclosed in
Schedule 3.4 or incurred in the ordinary and usual course of business consistent
with past practices and not exceeding $15,000 individually or $25,000 in the
aggregate.
3.5. LIENS AND ENCUMBRANCES. Subject any of its assets to a lien, charge,
or encumbrance (including mortgage, pledge or security interest), or permit any
such lien, charge or encumbrance to exist.
3.6. COMPENSATION; EMPLOYMENT AGREEMENTS: ETC. Except as disclosed in
Schedule 3.6. enter into or amend any employment, severance or similar agreement
or arrangement with any of its directors, officers or employees, or grant any
salary or wage increase, amend the terms of any MBI Option or increase any
employee benefit (including incentive or bonus payments), except normal
individual increases in regular compensation to employees in the ordinary and
usual course of business consistent with past practice; provided, however, that
no increase of salary or compensation to an officer of MBI shall exceed fifteen
percent (15%) of such officer's current salary without the approval of HBI.
3.7. BENEFIT PLANS. Except as disclosed in Schedule 3.7, enter into or
modify (except as may be required by applicable law) any pension, retirement,
stock option, stock purchase, savings, profit sharing, deferred compensation,
consulting, bonus, group insurance or other employee benefit, incentive or
welfare contract, plan or arrangement, or any trust agreement related thereto,
in respect of any of its directors, officers or other employees, including
taking any action that accelerates the vesting or exercise of any benefits
payable thereunder.
3.8. CONTINUANCE OF BUSINESS. Except as disclosed in Schedule 3.6, dispose
of or discontinue any portion of its assets, business or properties, that is in
excess of $25,000
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individually or $100,000 in the aggregate, or merge or consolidate with, or
acquire all or any portion of, the business or property of any other entity
(except foreclosures or acquisitions by Marine in its fiduciary capacity, in
each case in the ordinary and usual course of business consistent with past
practice).
3.9. AMENDMENTS. Amend its Governing Documents.
3.10. CLAIMS. Settle any claim, litigation, action or proceeding involving
any Liability for money damages in excess of $25,000 or Material restrictions
upon the operations of MBI or any of its Subsidiaries.
3.11. CONTRACTS. Except as disclosed on Schedule 3.11, enter into, renew,
terminate or make any change in any Contract (excluding agreements and loans
permitted under Section 3.12) of a value or requiring payments during the life
of the Contract, including all options, in excess of $25,000, except in the
ordinary and usual course of business consistent with past practice with respect
to Contracts that are terminable by it without penalty on no more than 60 days
prior written notice.
3.12. LOANS. Extend credit or account for loans and leases other than in
accordance with existing written lending policies and accounting practices,
except that Marine shall not, without the prior notice and consultation with
HBI's Chairman or President make any new loan or renew any existing loan in a
principal amount in excess of $1,000,000 unless such loans are within MBI's
commercial loan policy. To the extent a loan by MBI would be a violation of this
Section 3.12, MBI shall give written notice to HBI of its desire to make such
loan and HBI will be permitted two business days to object to such loan. MBI,
however, may make such loan after such time period expires if no objection is
made by HBI.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
4.1. REPRESENTATIONS AND WARRANTIES OF MBI. MBI hereby represents and
warrants to HBI, now and as of the Effective Date, as follows:
(A) RECITALS. The facts set forth in the Recitals of this Plan with
respect to MBI and its Subsidiaries are true and correct.
(B) ORGANIZATION, STANDING AND AUTHORITY. Each of MBI, Marine, and any
other Subsidiary of MBI is in good standing under the laws of the jurisdiction
in which it is incorporated or organized and is duly qualified to do business
and is in good standing in the states of the United States and foreign
jurisdictions where the failure to be duly qualified, individually or in the
aggregate, is reasonably likely to have a Material effect on it. All of such
jurisdictions are set forth on Schedule 4.1(B). Each of MBI and Marine, and any
other Subsidiary of MBI has in effect all federal, state, local and foreign
governmental authorizations necessary for it to own or lease its properties and
assets and to carry on its business as it is now conducted. Marine is the only
Subsidiary of MBI that is an Insured Depository Institution, and its deposits
are insured by the Bank Insurance Fund of the FDIC. Except as disclosed in
Schedule 4.1(B), Marine is not subject to any orders, resolutions, commitments,
agreements,
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undertakings, understandings, or consents that affect its status as such Insured
Depository Institution.
(C) SHARES. The outstanding shares of MBI and its Subsidiaries'
capital stock are validly issued and outstanding, fully paid and non-assessable,
and subject to no preemptive rights. Except as disclosed in Schedule 4.1(C),
there are no shares of capital stock or other equity securities of MBI or its
Subsidiaries outstanding and no outstanding Rights with respect thereto.
(D) MBI SUBSIDIARIES. MBI has disclosed in Schedule 4.1(D) a list of
all of its Subsidiaries, and the number of authorized, issued, and outstanding
shares of each class of stock and the percentages of ownership of MBI or a MBI
Subsidiary. No equity securities of any of its Subsidiaries are or may become
required to be issued (other than to MBI or one of its Subsidiaries) by reason
of any Rights with respect thereto. There are no Contracts, commitments,
understandings or arrangements by which any of its Subsidiaries is or may be
bound to sell or otherwise issue any shares of such Subsidiary's capital stock,
and there are no Contracts, commitments, understandings or arrangements relating
to the rights of MBI or its Subsidiaries, as applicable, to vote or to dispose
of such shares. All of the shares of capital stock of each of its Subsidiaries
held by MBI or one of its Subsidiaries are fully paid and non assessable and are
owned by MBI or one of its Subsidiaries free and clear of any charge, mortgage,
pledge, security interest, restriction, claim, lien or encumbrance. Except as
disclosed in Schedule 4.1(D), MBI does not own beneficially, directly or
indirectly, any shares of any equity securities or similar interests of any
corporation, bank, partnership, joint venture, business trust, association or
other organization.
(E) CORPORATE POWER. Each of MBI and its Subsidiaries has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its Material properties and assets.
(F) CORPORATE AUTHORITY. Subject to any necessary receipt of approval
by its shareholders referred to in Section 6.1, this Plan has been authorized by
all necessary corporate action of MBI and this Plan is a valid and binding
agreement of MBI, enforceable against MBI in accordance with its terms, subject
to bankruptcy, insolvency and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(G) NO DEFAULTS. Subject to the approval by its shareholders referred
to in Section 6.1, the required regulatory approvals referred to in Section 6.1,
and any required filings under federal and state securities laws, and except as
disclosed in Schedule 4.1(G), the execution, delivery and performance of this
Plan and the consummation by MBI of the transactions contemplated by this Plan
do not and will not Materially (1) constitute a breach of, or violation of, or a
default under, any law, rule or regulation or any judgment, decree, order,
governmental permit or license, or agreement, indenture or instrument of MBI or
of any of its Subsidiaries or to which MBI or any of its Subsidiaries or its or
their properties is subject or bound, or (2) constitute a breach of, or
violation of, or a default under, the Governing Documents of it or any of its
Subsidiaries, or (3) require any consent or approval under any such law, rule,
regulation,
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judgment, decree, order, governmental permit or license or the consent or
approval of any other party to any such agreement, indenture or instrument.
(H) MBI FINANCIAL REPORTS. Except as disclosed in Schedule 4.1(H), the
Financial Reports of each of MBI and Marine: (a) did not and will not contain
any untrue statement of a Material fact or omit to state a Material fact
required to be stated therein or necessary in order to make the statements made
therein, and in light of the circumstances under which they were made, were not
misleading; (b) each of the balance sheets in or incorporated by reference into
the Financial Reports (including the related notes and schedules thereto) are
correct, complete, and in accordance with the books and records of and fairly
presents and will fairly present the financial position of the entity or
entities to which it relates as of its date; (c) each of the statements of
income and changes in shareholders' equity and cash flows or equivalent
statements in the Financial Reports (including any related notes and schedules
thereto) are correct, complete, and in accordance with the books and records of
and fairly presents and will fairly present the results of operations, changes
in shareholders' equity and cash flows, as the case may be, of the entity or
entities to which it relates for the periods set forth therein; and (d) in each
case in accordance with GAAP during the periods involved, except in each case as
may be noted therein, subject to normal and recurring year-end audit adjustments
in the case of unaudited statements.
(I) ABSENCE OF UNDISCLOSED LIABILITIES. Neither MBI nor any of its
Subsidiaries has any Material Liability, except (1) as disclosed on Schedule
4.1(I), (2) as reflected in its Financial Reports prior to the date of this
Plan, and (3) for commitments and obligations made, or Liabilities incurred, in
the ordinary and usual course of business consistent with past practice since
September 30, 2004 and which are fully reflected as liabilities on that entity's
books and records. Except as disclosed on Schedule 4.1(I), since September 30,
2004, neither MBI nor any of its Subsidiaries has incurred or paid any Material
Liability (including any Liability incurred in connection with any acquisitions
in which any form of direct financial assistance of the federal government or
any agency thereof has been provided to any Subsidiary).
(J) NO EVENTS. Except as disclosed on Schedule 4.1(J), since September
30, 2004, no event has occurred that, individually or in the aggregate, is
reasonably likely to have a Material effect on MBI or any of its Subsidiaries.
(K) PROPERTIES. Except as disclosed in Schedule 4.1(K), MBI and each
of its Subsidiaries have good and marketable title, free and clear of all liens,
encumbrances, charges, defaults, or equities of any character, to all of the
properties and assets, tangible and intangible, reflected in the Financial
Reports of MBI as being owned by MBI or its Subsidiaries as of the dates
thereof. All buildings and all Material fixtures, equipment, and other property
and assets that are held under leases or subleases by MBI or any of its
Subsidiaries are held under valid leases or subleases enforceable in accordance
with their respective terms, other than any such exceptions to validity or
enforceability as are disclosed on Schedule 4.1(K), Other than month-to-month
leases on operating equipment, all leases and subleases are identified on
Schedule 4.1(K), and except as disclosed on such schedule, are fully
transferable to HBI as the Surviving Corporation under this Plan. MBI further
represents, covenants and warrants that, except as disclosed in Schedule 4.1(K),
taking their age and ordinary wear and tear into account, the assets
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and properties of MBI or any of its Subsidiaries are in good operating condition
and repair and have been operated and maintained in the ordinary and usual
course of business, consistent with past practice, other than those items of
personal property not in use by MBI or its Subsidiaries as of the date hereof.
(L) INTELLECTUAL PROPERTY RIGHTS. Schedule 4.1(L) lists all patents,
patent rights, licenses, trade secrets, trademarks, service marks, trademark
rights, trade names or trade name rights, copyrights, inventions and other
intellectual property rights ("Intellectual Property Rights") necessary for the
ownership and operation of the business of MBI or any of its Subsidiaries in the
manner in which the business has been historically and currently owned and
operated by MBI or its Subsidiaries. None of the Intellectual Property Rights
interferes with, infringes upon, misappropriates, or violates any intellectual
property rights of third parties, and neither MBI nor any of its subsidiaries
has received any written charge, complaint, claim, demand, or notice alleging
any such interference, infringement, misappropriation, or violation. To MBI's
Knowledge, no third party has interfered with, infringed upon, misappropriated,
or violated any of the Intellectual Property Rights. Neither MBI nor any of its
Subsidiaries has received any written notice with respect to any outstanding
injunction, judgment, order, decree, ruling, or charge relating to any item of
the Intellectual Property Rights, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or, to the
Knowledge of MBI or any of its Subsidiaries, is threatened which challenges the
legality, validity, enforceability, use, or ownership of any of the Intellectual
Property Rights.
(M) LITIGATION: REGULATORY ACTION. Except as disclosed in Schedule
4.1(M), no litigation, proceeding or controversy before any court or
governmental agency is pending or threatened against MBI or any of its
Subsidiaries, including, without limitation, any litigation, proceedings, or
controversies that allege claims under any fair lending law or other law
relating to discrimination, including the Equal Credit Opportunity Act, the Fair
Housing Act, the Community Reinvestment Act and the Home Mortgage Disclosure
Act, or allege claims under any fair credit reporting laws or laws for the
protection of non-public personal information, including the Fair Credit
Reporting Act, and the Xxxxx-Xxxxx-Xxxxxx Act, and, to its Knowledge, no such
litigation, proceeding or controversy has been threatened; and except as
disclosed in Schedule 4.1(M), neither MBI nor any of its Subsidiaries or any of
its or their Material properties or their officers, directors or Controlling
persons is a party to or is subject to any order, decree, agreement, memorandum
of understanding or similar arrangement with, or a commitment letter or similar
submission to, any Regulatory Authority or other governmental authority, and
neither MBI nor any of its Subsidiaries has been advised by any of such
Regulatory Authorities or other governmental authority that such authority is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, decree, agreement, memorandum or
understanding, commitment letter or similar submission.
(N) COMPLIANCE WITH LAWS. Except as disclosed in Schedule 4.1(N), each
of MBI and its Subsidiaries:
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(1) Has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Regulatory Authorities or other governmental authority that are
required in order to permit it to own its businesses presently conducted
and that are Material to the business of it and its Subsidiaries taken as a
whole; all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect and, to its Knowledge, no suspension
or cancellation of any of them is threatened; and all such filings,
applications and registrations are current;
(2) Has received no notification or communication from any
Regulatory Authority or other governmental authority or the staff thereof
(a) asserting that MBI or any of its Subsidiaries is not in compliance with
any of the statutes, regulations or ordinances which such Regulatory
Authority or governmental authority enforces, (b) threatening to revoke any
license, franchise, permit or governmental authorization of MBI or any of
its Subsidiaries, or (c) requiring any of MBI or its Subsidiaries (or any
of its or their officers, directors or Controlling persons) to enter into a
cease and desist order, agreement or memorandum of understanding (or
requiring the board of directors thereof to adopt any resolution or
policy);
(3) Is not required to give prior notice to any federal banking
or thrift agency of the proposed addition of an individual to its Board of
Directors or the employment of an individual as a senior executive; and
(4) Is in compliance in all Material respects with all fair
lending laws or other laws relating to discrimination, including the Equal
Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment
Act and the Home Mortgage Disclosure Act, and all fair credit reporting
laws and laws for the protection of non-public personal information,
including the Fair Credit Reporting Act, the Xxxxx-Xxxxx-Xxxxxx Act, and
the Fair and Accurate Credit Transaction Act.
(O) MATERIAL CONTRACTS. Except as disclosed in Schedule 4.1(O) (and
with a true and complete copy of the document or other item in question attached
to such schedule), none of MBI or its Subsidiaries, nor any of their respective
assets, businesses or operations, is a party to, or is bound or affected by, or
receives benefits under, any written or oral contract, indenture, agreement,
lease, standby letter of credit, mortgage, loan or commitment ("Contract") or
Contracts obligating it or them to pay more than $25,000 in any year and which
can be terminated upon not less than sixty (60) days' notice, excluding those
Contracts evidencing loans actually made by Marine in the ordinary and usual
course of business in an amount less than $50,000. Except as disclosed in
Schedule 4.1(O), neither MBI nor any of its Subsidiaries is in default under any
such Contract to which it is a party, by which its respective assets, business
or operations may be bound or affected, or under which it or any of its
respective assets, business or operations receives benefits, and there has not
occurred any event that, with the lapse of time or the giving of notice or both,
would constitute such a default. Except as disclosed in Schedule 4.1(0), neither
MBI nor any of its Subsidiaries is subject to or bound by any Contract
containing covenants that limit the ability of MBI or any of its Subsidiaries to
compete in any line of business or with any Person or that involve any
restriction of geographical
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area in which, or method by which, MBI or any of its Subsidiaries may carry on
its business (other than as may be required by law or any applicable Regulatory
Authority).
(P) REPORTS. Since January 1, 2001 each of MBI and its Subsidiaries
has filed all reports and statements, together with any amendments required to
be made with respect thereto, that it was required to file with (1) the Florida
Department of Financial Services, (2) the FDIC, (3) the Federal Reserve Board,
and (4) any other Regulatory Authorities or other governmental authority having
jurisdiction with respect to MBI and its Subsidiaries. As of their respective
dates (and without giving effect to any amendments or modifications filed after
the date of this Plan with respect to reports and documents filed before the
date of this Plan), each of such reports and documents, including the financial
statements, exhibits and schedules thereto, complied in all Material respects
with all of the statutes, rules and regulations enforced or promulgated by the
Regulatory Authority with which they were filed and did not contain any untrue
statement of a Material fact or omit to state any Material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading.
(Q) BROKERS AND FINDERS. Except as set forth in Schedule 4.1(0),
neither MBI, Marine, any MBI Subsidiary, nor any of their respective officers,
directors or employees has employed any broker or finder, or agreed to pay any
fees to any director or former director or incurred any Liability for any
financial advisory fees, brokerage fees, commissions or finder's fees, and no
broker or finder, or director or former director of MBI and Marine, has acted
directly or indirectly for MBI, Marine or any MBI Subsidiary, in connection with
this Plan or the transactions contemplated hereby.
(R) EMPLOYEE BENEFIT PLANS.
(1) Schedule 4.1(R)(1) contains a complete list of all bonus,
deferred compensation, pension, retirement, profit-sharing, thrift savings,
employee stock ownership, stock bonus, stock purchase, restricted stock and
stock option plans, all employment or severance contracts, all medical,
dental, health and life insurance plans, all other employee benefit plans,
Contracts or arrangements and any applicable "change of control" or similar
provisions in any plan, Contract or arrangement maintained or contributed
to by MBI or any of its Subsidiaries for the benefit of employees, former
employees, directors, former directors or their beneficiaries (the
"Compensation and Benefit Plans"). True and complete copies of all
Compensation and Benefit Plans of MBI and its Subsidiaries, including any
trust instruments and/or insurance contracts, if any, forming a part
thereof, and all amendments thereto, have been supplied to HBI.
(2) All "employee benefit plans" within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), other than "multiemployer plans" within the meaning of Section
3(37) of ERISA ("Multiemplover Plans"), covering employees or former
employees of MBI and its Subsidiaries (the "ERISA Plans"), to the extent
subject to ERISA, are in substantial compliance with ERISA. Except as
disclosed in Schedule 4.1(R)(2) each ERISA Plan which is an "employee
pension benefit plan" within the meaning of Section 3(2) of
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ERISA ("Pension Plan") and which is intended to be qualified under Section
401 (a) of the Internal Revenue Code of 1986 (as amended, the "Code") has
received a favorable determination letter from the Internal Revenue
Service, and it is not aware of any circumstances reasonably likely to
result in the revocation or denial of any such favorable determination
letter or the inability to receive such a favorable determination letter.
There is no Material litigation relating to the ERISA Plans pending or, to
MBI's Knowledge, threatened. Neither MBI nor any of its Subsidiaries has
engaged in a transaction with respect to any ERISA Plan that could subject
MBI or any of its Subsidiaries to a tax or penalty imposed by either
Section 4975 of the Code or Section 502(i) of ERISA in an amount which
would be Material.
(3) No Liability under Subtitle C or D of Title IV of ERISA has
been or is expected to be incurred by MBI or any of its Subsidiaries with
respect to any ongoing, frozen or terminated "single-employer plan," within
the meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any of them, or the single- employer plan of any entity which
is considered one employer with MBI under Section 4001(a)(15) of ERISA or
Section 414 of the Code (an "ERISA Affiliate"). Neither MBI nor any of its
Subsidiaries presently contributes to a Multiemployer Plan, nor have they
contributed to such a plan within the past five calendar years. No notice
of a "reportable event," within the meaning of Section 4043 of ERISA for
which the 30-day reporting requirement has not been waived, has been
required to be filed for any Pension Plan or by any ERISA Affiliate within
the past 12-month period.
(4) All contributions required to be made under the terms of any
ERISA Plan have been timely made. Neither any Pension Plan nor any
single-employer plan of an ERISA Affiliate has an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412 of
the Code or Section 302 of ERISA, except as disclosed in Schedule
4.1(R)(4). Neither MBI nor any of its Subsidiaries has provided, or is
required to provide, security to any Pension Plan or to any single-employer
plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
(5) Except as disclosed in Schedule 4.1(R)(5), under each Pension
Plan which is a single-employer plan, as of the last day of the most recent
plan year, the actuarially determined present value of all "benefit
liabilities," within the meaning of Section 4001(a)(16) of ERISA (as
determined on the basis of the actuarial assumptions contained in the
plan's most recent actuarial valuation) did not exceed the then current
value of the assets of such plan, and there has been no Material change in
the financial condition of such plan since the last day of the most recent
plan year.
(6) Neither MBI nor any of its Subsidiaries has any obligations
for retiree health and life benefits under any plan, except as set forth in
Schedule 4.1(R)(6). There are no restrictions on the rights of MBI or any
of its Subsidiaries to amend or terminate any such plan without incurring
any Liability thereunder.
(7) Except as disclosed in Schedule 4.1(R)(7), neither the
execution and delivery of this Plan nor the consummation of the
transactions contemplated by this
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Plan will (a) result in any payment (including severance, unemployment
compensation, golden parachute or otherwise) becoming due to any director
or any employee of MBI or any of its Subsidiaries under any Compensation
and Benefit Plan or otherwise from MBI or any of its Subsidiaries, (b)
increase any benefits otherwise payable under any Compensation and Benefit
Plan, or (c) result in any acceleration of the time of payment or vesting
of any such benefit.
(S) NO KNOWLEDGE. MBI and its Subsidiaries Know of no reason why the
regulatory approvals referred to in Section 6.1 should not be obtained.
(T) LABOR AGREEMENTS. Neither MBI nor any of its Subsidiaries is a
party to or is bound by any collective bargaining agreement, Contract or other
agreement or understanding with a labor union or labor organization, nor is MBI
or any of its Subsidiaries the subject of a proceeding asserting that it or any
such Subsidiary has committed an unfair labor practice (within the meaning of
the National Labor Relations Act) or seeking to compel it or such Subsidiary to
bargain with any labor organization as to wages and conditions of employment,
nor is there any strike or other labor dispute involving it or any of its
Subsidiaries pending or, to its Knowledge, threatened, nor is it aware of any
activity involving its or any of the Subsidiaries' employees seeking to certify
a collective bargaining unit or engaging in any other organization activity.
(U) ASSET CLASSIFICATION. MBI and its Subsidiaries have disclosed in
Schedule 4.1(U) a list, accurate and complete in all Material respects, of the
aggregate amounts of loans, extensions of credit or other assets of MBI and its
Subsidiaries that have been classified by it as of September 30, 2004 (the
"Asset Classification"); and no amounts of loans, extensions of credit or other
assets that have been classified as of September 30, 2004 by any regulatory
examiner as "Other Loans Specially Mentioned," "Substandard," "Doubtful" "Loss,"
or words of similar import are excluded from the amounts disclosed in the Asset
Classification, other than amounts of loans, extensions of credit or other
assets that were charged off by MBI or any Subsidiary prior to September 30,
2004, and which are also disclosed on Schedule 4.1(U).
(V) ALLOWANCE FOR POSSIBLE LOAN LOSSES. Except as disclosed on
Schedule 4.1(V), the allowance for possible loan losses shown on the
consolidated balance sheets in the September 30, 2004 Financial Reports of MBI
and to be shown on subsequent Financial Reports of MBI was and, to the Knowledge
of MBI, shall be adequate to provide for possible losses, net of recoveries
relating to loans previously charged off, on loans outstanding (including
accrued interest receivable) as of the date thereof.
(W) INSURANCE. Each of MBI and its Subsidiaries has taken all
requisite action (including the making of claims and the giving of notices)
pursuant to its directors' and officers' liability insurance policy or policies
in order to preserve all rights thereunder with respect to all matters that are
Known to MBI, except for such matters that, individually or in the aggregate,
are not reasonably likely to have a Material adverse effect on MBI or its
Subsidiaries. Set forth in Schedule 4.1(W) is a list of all insurance policies
maintained by or for the benefit of MBI or its Subsidiaries or their respective
directors, officers, employees or agents.
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(X) BOOKS AND RECORDS. All books of account, minute books, stock
record books and other records of MBI and all of its Subsidiaries, all of which
have been made available to HBI, are complete and correct in all Material
respects and have been maintained in accordance with the laws of the State of
Florida for banks, bank holding companies, and corporations, and applicable
rules and regulations promulgated thereunder and in accordance with sound
business practices. The minute books of MBI and its Subsidiaries contain
accurate and complete records in all Material respects of all meetings held of,
and corporate action taken by, the shareholders, the Boards of Directors and
committees of the Boards of Directors of MBI or a Subsidiary of MBI (as
applicable), and no meeting of any such shareholders, Boards of Directors or
committees has been held for which minutes have not been prepared and are not
contained in such minute books. At the Effective Date, all of those books and
records shall be in the possession of MBI and shall be delivered to HBI.
(Y) STATE TAKEOVER LAWS; ARTICLES OF INCORPORATION. MBI and its
Subsidiaries have taken all necessary action to exempt (or ensure the continued
exemption of) this Plan and the transactions contemplated by this Plan from (1)
the provisions of Fla. Stat. Sections 607.0901 and 607.0902, (2) any other
applicable state takeover or similar laws, affecting or restricting the ability
of MBI to merge into HBI or otherwise consummate this Plan, and (3) any
takeover-related provisions of MBI's and its Subsidiaries' Governing Documents
(phrases (1), (2), and (3) collectively, the "Takeover Restrictions").
(Z) NO FURTHER ACTION. MBI and its Subsidiaries have taken all action
so that the entering into of this Plan and the consummation of the transactions
contemplated by this Plan, or any other action or combination of actions, or any
other transactions, contemplated by this Plan do not and will not (1) require a
vote of shareholders (other than as set forth in Section 6.1), or (2) result in
the grant of any rights to any Person under the Governing Documents of MBI or
any of its Subsidiaries or under any agreement to which MBI or any such
Subsidiaries is a party, or (iii) restrict or impair in any way the ability of
any Party to exercise the rights granted under this Plan.
(AA) ENVIRONMENTAL MATTERS.
(1) The Participation Facilities and the Loan/Fiduciary
Properties are, and have been, in compliance with all Environmental Laws,
except as disclosed on Schedule 4.1(AA)(1).
(2) There is no investigation or proceeding pending or, to MBI's
Knowledge, threatened by or before any court, governmental agency or board
or other forum in which MBI or any of its Subsidiaries or any Participation
Facility has been, or with respect to threatened investigations or
proceedings, reasonably would be expected to be, named as a defendant or
potentially responsible party (a) for alleged noncompliance (including by
any predecessor) with any Environmental Law, or (b) relating to the release
or threatened release into the environment of any Hazardous Material,
whether or not occurring at or on a site owned, leased or operated by MBI
or any of its Subsidiaries or any Participation Facility, except as
disclosed in Schedule 4.1(AA)(2).
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(3) There is no investigation or proceeding pending or, to MBI's
Knowledge, threatened by or before any court, governmental agency or board
or other forum in which any Loan/Fiduciary Property (or MBI or any of its
Subsidiaries in respect of any Loan/Fiduciary Property) has been, or with
respect to threatened investigations or proceedings, reasonably would be
expected to be, named as a defendant or potentially responsible party (a)
for alleged noncompliance (including by any predecessor) with any
Environmental Law, or (b) relating to the release or threatened release
into the environment of any Hazardous Material, whether or not occurring at
or on a Loan/Fiduciary Property, except for such investigations or
proceedings disclosed in Schedule 4.1(AA)(3).
(4) To MBI's Knowledge, there is no reasonable basis for any
investigation or proceeding of a type described in subparagraph (2) or (3)
of this paragraph (AA), except as has been disclosed in Schedule 41(AA)(4).
(5) To MBI's Knowledge, and except as disclosed on Schedule
4.1(AA)(5); during the period of (a) ownership or operation by MBI or any
of its Subsidiaries of any of their respective current properties, (b)
participation in the management of any Participation Facility by MBI or any
of its Subsidiaries, or (c) holding of a security or other interest in a
Loan/Fiduciary Property by MBI or any of its Subsidiaries, there have been
no releases of Hazardous Material in, on, under or affecting any such
property, Participation Facility or Loan/Fiduciary Property that violate
Environmental Laws.
(6) To MBI's Knowledge, and except as disclosed on Schedule
4.1(AA)(6); prior to the period of (a) ownership or operation by MBI or any
of its Subsidiaries of any of their respective current properties, (b)
participation in the management of any Participation Facility by MBI or any
of its Subsidiaries, or (c) holding of a security or other interest in a
Loan/Fiduciary Property by MBI or any of its Subsidiaries, there were no
releases of Hazardous Material in, on, under or affecting any such
property, Participation Facility or Loan Fiduciary Property.
(7) No underground storage tanks are located on any property of
MBI or any of its Subsidiaries, or any Participation Facility or any
Loan/Fiduciary Property except as disclosed in Schedule 4.1(AA)(7).
(8) To MBI's Knowledge, and except as disclosed in Schedule
4.1(AA)(8), neither MBI's nor any of its Subsidiaries' facilities have
building components containing friable asbestos.
(BB) TAX RETURNS. Except as disclosed in Schedule 4.1(BB), (1) all
reports and returns with respect to Taxes that are required to be filed by or
with respect to MBI or its Subsidiaries, including consolidated federal income
tax returns of MBI and its Subsidiaries (collectively, the "Tax Returns"), have
been duly filed, or requests for extensions have been timely filed and have not
expired, for periods ended on or prior to the most recent fiscal year-end, and
such Tax Returns were true, complete and accurate in all Material respects, (2)
all Taxes
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shown to be due on the Tax Returns have been paid in full, (3) the Tax Returns
have been examined by the Internal Revenue Service or the appropriate state,
local or foreign taxing authority, or the period for assessment of the Taxes in
respect of which such Tax Returns were required to be filed has expired, (4) all
Taxes due with respect to completed and settled examinations have been paid in
full, (5) no issues have been raised by the relevant taxing authority in
connection with the examination of any of the Tax Returns which are reasonably
likely, individually or in the aggregate, to result in a determination that
would have a Material effect on MBI or its Subsidiaries, except as reserved
against in the Financial Reports of MBI, and (6) no waivers of statutes of
limitations (excluding such statutes that relate to years under examination by
the Internal Revenue Service) have been given by or requested with respect to
any Taxes of MBI or its Subsidiaries.
(CC) ACCURACY OF INFORMATION. The statements with respect to MBI and
its Subsidiaries contained in this Plan, the Schedules and any other written
documents executed and delivered by or on behalf of MBI pursuant to the terms of
or relating to this Plan are now, except as specifically noted hereunder, and as
of the Effective Date true and correct in all Material respects, and do not omit
any Material fact necessary in order to make the statements contained therein,
in light of the circumstances under which they were made, now and as of the
Effective Date, not misleading.
(DD) DERIVATIVES CONTRACTS. None of MBI or its Subsidiaries is a party
to or has agreed to enter into a Derivatives Contract or owns securities that
are referred to as "structured notes" except for those Derivatives Contracts and
structured notes disclosed in Schedule 4.1(DD). Schedule 4.1(DD) includes a list
of any assets of MBI or its Subsidiaries that are pledged as security for each
such Derivatives Contract.
(EE) ACCOUNTING CONTROLS. Each of MBI and its Subsidiaries has devised
and maintained systems of internal accounting controls sufficient to provide
reasonable assurances that (1) all Material transactions are executed in
accordance with management's general or specific authorization in all material
respects, (2) all Material transactions are recorded as necessary to permit the
preparation of financial statements in conformity with GAAP in all material
respects, and to maintain proper accountability for items, (3) access to the
Material property and assets of MBI and its Subsidiaries is permitted only in
accordance with management's general or specific authorization, and (4) the
recorded accountability for items is compared with the actual levels at
reasonable intervals and appropriate action is taken with respect to any
differences.
(FF) COMMITMENTS AND CONTRACTS. Neither MBI nor any of its
Subsidiaries is a party or subject to any of the following (whether written or
oral, express or implied):
(1) except as disclosed in Schedule 4.1(FF)(1), any employment
Contract or understanding (including any understandings or obligations with
respect to severance or termination pay Liabilities or fringe benefits)
with any present or former officer, director or employee (other than those
which are terminable at will by MBI or any
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such Subsidiary without any obligation on the part of MBI or any such
Subsidiary to make any payment in connection with such termination);
(2) except as disclosed in Schedule 4A(FF)(2), any Contract,
commitment, or understanding with any Person related to or under the
Control of any present or former officer, director, or employee of MBI or
any of its Subsidiaries, to the extent that such Contract, commitment or
understanding Materially impacts the financial condition of any of MBI or
its Subsidiaries.
(3) except as disclosed in Schedule 4.1(FF)(3), any real or
personal property lease with annual rental payments aggregating $50,000 or
more; or
(4) except as disclosed in Schedule 4A(FF)(4), any Material
Contract with any Affiliate.
(GG) CLAIMS OF OFFICERS, DIRECTORS, AND EMPLOYEES. Except as disclosed
on Schedule 4.1(GG), no officer or director of MBI or any of its Subsidiaries
has any claims against MBI or any of its Subsidiaries, other than for their
regular accrued but unpaid salary and/or director's fee. Except as disclosed on
Schedule 4.1(GG), there are no outstanding or potential claims by a present or
former employee against MBI or any of its Subsidiaries under federal or state
law, under any employment agreement, or otherwise, other than for wages, salary,
or overtime pay owed in respect of the current pay period, or vacation or sick
pay or time off owed in respect of the current fiscal year.
4.2. REPRESENTATIONS AND WARRANTIES OF HBI. HBI hereby represents and
warrants to MBI now and as of the Effective Date as follows; provided, however,
that as to Community Bank no representations are made or warranties given for
any period prior to the effective date of the CFG Merger:
(A) RECITALS. The facts set forth in the Recitals of this Plan with
respect to HBI are true and correct.
(B) ORGANIZATION, STANDING AND AUTHORITY. Each of HBI, the HBI Banks,
and any other Subsidiary of HBI is in good standing under the laws of the
jurisdiction in which it is incorporated or organized, and is duly qualified to
do business and is in good standing in the states of the United States and
foreign jurisdictions where the failure to be duly qualified, individually or in
the aggregate, is reasonably likely to have a Material effect on it. All of such
jurisdictions are set forth on Schedule 4.2(B). Each of HBI, the HBI Banks, and
any other Subsidiary of HBI has in effect all federal state, local and foreign
governmental authorizations necessary for it to own or lease its properties and
assets and to carry on its business as it is now conducted.
(C) SHARES. The outstanding shares of HBI and its Subsidiaries'
capital stock are validly issued and outstanding, fully paid and non-assessable,
and subject to no preemptive rights. Except as disclosed in Schedule 4.2(C),
there are no shares of capital stock or
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other equity securities of HBI or its Subsidiaries outstanding and no
outstanding Rights with respect thereto.
(D) HBI SUBSIDIARIES. HBI has disclosed in Schedule 4.2(D) a list of
all of its Subsidiaries, and the number of authorized, issued, and outstanding
shares of each class of stock and the percentages of ownership of HBI or a HBI
Subsidiary. No equity securities of any of its Subsidiaries are or may become
required to be issued (other than to HBI or one of its Subsidiaries) by reason
of any Rights with respect thereto. There are no Contracts, commitments,
understandings or arrangements by which any of its Subsidiaries is or may be
bound to sell or otherwise issue any shares of such Subsidiary's capital stock,
and there are no Contracts, commitments, understandings or arrangements relating
to the rights of HBI or its Subsidiaries, as applicable, to vote or to dispose
of such shares. All of the shares of capital stock of each of its Subsidiaries
held by HBI or one of its Subsidiaries are fully paid and non-assessable and are
owned by HBI or one of its Subsidiaries free and clear of any charge, mortgage,
pledge, security interest, restriction, claim, lien or encumbrance. Each of its
Subsidiaries is in good standing under the laws of the jurisdiction in which it
is incorporated or organized. Except as disclosed in Schedule 4.2(D), HBI does
not own beneficially, directly or indirectly, any shares of any equity
securities or similar interests of any corporation, bank, partnership, joint
venture, business trust, association or other organization.
(E) CORPORATE POWER. Each of HBI and its Subsidiaries has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its Material properties and assets.
(F) CORPORATE AUTHORITY. This Plan has been authorized by all
necessary corporate action of HBI and this Plan is a valid and binding agreement
of HBI, enforceable against HBI in accordance with its terms, subject to
bankruptcy, insolvency and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(G) NO DEFAULTS. Subject to the approval by its shareholders referred
to in Section 6.1, the required regulatory approvals referred to in Section 6.1,
and any required filings under federal and state securities laws, and except as
disclosed in Schedule 4.2(G), the execution, delivery and performance of this
Plan and the consummation by HBI of the transactions contemplated by this Plan
do not and will not Materially (1) constitute a breach of, or violation of, or a
default under, any law, rule or regulation or any judgment, decree, order,
governmental permit or license, or agreement, indenture or instrument of HBI or
to which HBI or its properties is subject or bound, or (2) constitute a breach
of, or violation of, or a default under, the Governing Documents of HBI, or (3)
require any consent or approval under any such law, rule, regulation, judgment,
decree, order, governmental permit or license or the consent or approval of any
other party to any such agreement, indenture or instrument.
(H) HBI FINANCIAL REPORTS. Except as disclosed in Schedule 4.2(H), the
Financial Reports of HBI: (a) did not and will not contain any untrue statement
of a Material fact or omit to state a Material fact required to be stated
therein or necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not
-27-
misleading; (b) each of the balance sheets in or incorporated by reference into
the Financial Reports (including the related notes and schedules thereto) are
correct, complete, and in accordance with the books and records of and fairly
presents and will fairly present the financial position of the entity or
entities to which it relates as of its date; (c) each of the statements of
income and changes in shareholders' equity and cash flows or equivalent
statements in the Financial Reports (including any related notes and schedules
thereto) are correct, complete, and in accordance with the books and records of
and fairly presents and will fairly present the results of operations, changes
in shareholders' equity and cash flows, as the case may be, of the entity or
entities to which it relates for the periods set forth therein; and (d) in each
case in accordance with GAAP during the periods involved, except in each case as
may be noted therein, subject to normal and recurring year-end audit adjustments
in the case of unaudited statements.
(I) ABSENCE OF UNDISCLOSED LIABILITIES, HBI has no Material Liability,
except (1) as disclosed on Schedule 4.2(I). (2) as reflected in its Financial
Reports prior to the date of this Plan, and (3) for commitments and obligations
made, or Liabilities incurred, in the ordinary and usual course of business
consistent with past practice since September 30, 2004. Except as disclosed on
Schedule 4.2(I). or as fully reflected as liabilities on its books and records,
since September 30, 2004, HBI has not incurred or paid any Material Liability
(including any Liability incurred in connection with any acquisitions in which
any form of direct financial assistance of the federal government or any agency
thereof has been provided to any Subsidiary), that, individually or in the
aggregate, is reasonably likely to have a Material effect on it.
(J) NO EVENTS. Except as disclosed on Schedule 4,2(J)fl. since
September 30, 2004, no event has occurred that, individually or in the
aggregate, is reasonably likely to have a Material effect on HBI.
(K) LITIGATION: REGULATORY ACTION. Except as disclosed in Schedule
4.2(K). no litigation, proceeding or controversy before any court or
governmental agency is pending or, to the knowledge of HBI, threatened against
HBI that, individually, or in the aggregate, is reasonably likely to have a
Material effect on HBI's ability to consummate the Plan or any transaction
contemplated hereunder.
(L) NO KNOWLEDGE. HBI Knows of no reason why the regulatory approvals
referred to in Section 6.1 should not be obtained.
(M) ACCURACY OF INFORMATION. The statements with respect to HBI
contained in this Plan, the Schedules and any other written documents executed
and delivered by or on behalf of HBI pursuant to the terms of this Plan are now,
except as specifically noted hereunder, and as of the Effective Date true and
correct in all Material respects, and such statements and documents do not omit
any Material fact necessary in order to make the statements contained therein,
in light of the circumstances under which they were made, now and as of the
Effective Date, not misleading.
(N) COMPLIANCE WITH LAWS. Except as disclosed in Schedule 4.2(N).
each of HBI and its Subsidiaries:
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(1) Has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Regulatory Authorities or other governmental authority that are
required in order to permit it to own its businesses presently conducted
and that are Material to the business of it and its Subsidiaries taken as a
whole; all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect and, to its Knowledge, no suspension
or cancellation of any of them is threatened; and all such filings,
applications and registrations are current;
(2) Has received no notification or communication from any
Regulatory Authority or other governmental authority or the staff thereof
(a) asserting that HBI or any of its Subsidiaries is not in compliance with
any of the statutes, regulations or ordinances which such Regulatory
Authority or governmental authority enforces, (b) threatening to revoke any
license, franchise, permit or governmental authorization of HBI or any of
its Subsidiaries, or (c) requiring any of HBI or its Subsidiaries (or any
of its or their officers, directors or Controlling persons) to enter into a
cease and desist order, agreement or memorandum of understanding (or
requiring the board of directors thereof to adopt any resolution or
policy);
(3) Is not required to give prior notice to any federal banking
or thrift agency of the proposed addition of an individual to its Board of
Directors or the employment of an individual as a senior executive; and
(4) Is in compliance in all Material respects with all fair
lending laws or other laws relating to discrimination, including the Equal
Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment
Act and the Home Mortgage Disclosure Act, and all fair credit reporting
laws and laws for the protection of non-public personal information,
including the Fair Credit Reporting Act, the Xxxxx-Xxxxx-BIiley Act, and
the Fair and Accurate Credit Transaction Act.
(O) BROKERS AND FINDERS. Except as set forth in Schedule 4.2(O),
neither HBI and any HBI Subsidiary, nor any of their respective officers,
directors or employees has employed any broker or finder, or agreed to pay any
fees to any director or former director or incurred any Liability for any
financial advisory fees, brokerage fees, commissions or finder's fees, and no
broker or finder, or director or former director of HBI, has acted directly or
indirectly for HBI, or any HBI Subsidiary, in connection with this Plan or the
transactions contemplated hereby.
(P) ALLOWANCE FOR POSSIBLE LOAN LOSSES. Except as disclosed on
Schedule 4.2(P). the allowance for possible loan losses shown on the
consolidated balance sheets in the September 30, 2004 Financial Reports of HBI
and to be shown on subsequent Financial Reports of HBI was and, to the Knowledge
of HBI, shall be adequate to provide for possible losses, net of recoveries
relating to loans previously charged off, on loans outstanding (including
accrued interest receivable) as of the date thereof.
(Q) TAX RETURNS. Except as disclosed in Schedule 4.2(Q), (1) all
reports and returns with respect to Taxes that are required to be filed by or
with respect to HBI or its
-29-
Subsidiaries, including consolidated federal income tax returns of HBI and its
Subsidiaries (collectively, the "Tax Returns"), have been duly filed, or
requests for extensions have been timely filed and have not expired, for periods
ended on or prior to the most recent fiscal year-end, and such Tax Returns were
true, complete and accurate in all Material respects, (2) all Taxes shown to be
due on the Tax Returns have been paid in full, (3) the Tax Returns have been
examined by the Internal Revenue Service or the appropriate state, local or
foreign taxing authority, or the period for assessment of the Taxes in respect
of which such Tax Returns were required to be filed has expired, (4) all Taxes
due with respect to completed and settled examinations have been paid in full,
(5) no issues have been raised by the relevant taxing authority in connection
with the examination of any of the Tax Returns which are reasonably likely,
individually or in the aggregate, to result in a determination that would have a
Material effect on HBI or its Subsidiaries, except as reserved against in the
Financial Reports of HBI, and (6) no waivers of statutes of limitations
(excluding such statutes that relate to years under examination by the Internal
Revenue Service) have been given by or requested with respect to any Taxes of
HBI or its Subsidiaries.
ARTICLE V. COVENANTS
MBI hereby covenants to HBI, and HBI hereby covenants to MBI, as
applicable, that:
5.1. BEST EFFORTS.
Each Party shall use its best efforts in good faith to take, or cause to be
taken, all actions, and to do, or cause to be done, all other things necessary,
proper or desirable, or advisable under applicable laws, including, as to MBI,
the Takeover Restrictions and as to HBI, the Florida Banking Laws, so as to
permit consummation of the Merger by May 31, 2005, (the "Termination Date"), and
otherwise to enable consummation of the transactions contemplated by this Plan,
and shall cooperate fully with the Party to that end (it being understood that a
re-solicitation of proxies as a consequence of an HBI Transaction shall not
violate this covenant).
5.2. CORPORATE ACTIONS.
(A) SHAREHOLDER VOTE. MBI shall use its best efforts to solicit and
obtain votes of the holders of MBI Common Stock in favor of the Merger and of
its transactions contemplated by this Plan and, subject to the exercise of its
fiduciary duties, the Board of Directors of MBI shall recommend approval of the
Merger and such transactions by its shareholders. MBI shall call a special
meeting of the holders of MBI Common Stock to be held as soon as practicable for
voting on the transactions contemplated by this Plan (including the Merger).
(B) PROXY STATEMENT. Each Party shall promptly assist the other in the
preparation of a combination proxy statement and offering circular (the "Proxy
Statement") to be mailed to the holders of MBI Common Stock in connection with
their approval of the Merger and any other transactions contemplated by the
Plan. The Proxy Statement shall conform to all applicable legal requirements,
and shall include relevant disclosures regarding HBI and MBI as required by
applicable securities laws for the offering of Class B Preferred Stock.
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(C) HBI AMENDMENT. HBI shall, prior to the Effective Date, file an
amendment to its Restated Articles of Incorporation, pursuant to the requisite
approval of its Board of Directors, or if required by law, its shareholders,
containing the characteristics, rights, and preferences of the Class B Preferred
Stock to be issued as Merger Consideration, which characteristics, rights, and
preferences shall be, at a minimum, those specified in Appendix I.
5.3. SECURITIES LAW COMPLIANCE. HBI shall comply with all applicable
federal and state securities laws with regard to the offering, sale, and
issuance of the Class B Preferred Stock.
5.4. PUBLICITY. The Parties agree that (a) no communication of any kind,
whether written, electronic, or oral, to the shareholders of MBI or HBI or
otherwise regarding the Plan, including but not limited to, proxy statements and
prospectuses, shall be made without the express prior written consent of the
authorized officers of HBI and MBI, and (b) the contents of any such
communication shall conform in all respects, whether written, electronic or
oral, to the language agreed upon between the Parties; provided, however, if HBI
or MBI is required by federal or state securities laws or otherwise to make
disclosure of certain matters or take other action which would otherwise be
covered by the terms of this section, it may make such disclosure or
communication without the express prior written consent of the other Party,
after first giving the other Party what the disclosing Party, in the exercise of
its judgment, determines to be reasonable notice of such disclosure or
communication.
5.5. ACCESS; DUE DILIGENCE INFORMATION: CONFIDENTIALITY.
(A) Upon reasonable notice, each Party shall afford the other Party or
a Subsidiary of such Party and its officers, employees, counsel, accountants and
other authorized representatives, full access, during normal business hours
throughout the period up to the Effective Date, to all of their respective
properties, books, Contracts, commitments and records of the Party or its
Subsidiaries and shall furnish or cause to be furnished all such information as
such Party may reasonably request.
(B) Each Party agrees to complete its due diligence review by February
10, 2005 and to notify the other Party in writing whether its review was
satisfactory or unsatisfactory by February 15, 2005. Failure of a Party to
provide this notification in the time and manner required shall result in that
Party not having any right of termination under Section 7.1(E).
(C) HBI, MBI and their respective agents, attorneys and accountants
will maintain the confidentiality of all information provided in connection
herewith in accordance with the terms of the Confidentiality Agreement.
(D) Each Party (the "Disclosing Party") shall furnish promptly (and
cause its accountants and other agents to furnish promptly) to the other Party
(the "Requesting Party") a copy of each Material report, schedule and other
document filed by the Disclosing Party with any Regulatory Authority or other
governmental authority, and upon reasonable notice given by the Requesting
Party, any other information regarding the business, properties, and personnel
of the Disclosing Party as the Requesting Party may reasonably request, provided
that no investigation
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pursuant to this Section 5.5 shall affect or be deemed to modify or waive any
representation or warranty made by the Disclosing Party in this Plan or the
conditions to the obligations of the Disclosing Party to consummate the
transactions contemplated by this Plan.
5.6. SOLE AGREEMENT TO SELL.
(A) Without the prior written consent of HBI, MBI, so long as this
Plan is not terminated, shall not, and it shall cause its Subsidiaries not to,
solicit, initiate or encourage inquiries or proposals with respect to, or except
as otherwise provided in Section 5.6(B), furnish any nonpublic information
relating to or participate in any negotiations or discussions concerning, any
acquisition or purchase of all or a substantial portion of the assets of, or a
substantial equity interest in, MBI or any of its Subsidiaries or any merger or
other business combination with MBI or any of its Subsidiaries other than as
contemplated by this Plan. MBI shall instruct its and its Subsidiaries'
officers, directors, agents, advisors and Affiliates to refrain from doing any
of the foregoing and shall notify HBI immediately if any such inquiries or
proposals are received by, or any such negotiations or discussions are sought to
be initiated with, MBI or any of its Subsidiaries.
(B) Notwithstanding the foregoing, in response to a written
Acquisition Proposal that did not result from a breach of Section 5.6(A), MBI
may (i) request clarifications from (but not enter into negotiations with or
furnish nonpublic information to) any Third Party which makes such written
Acquisition Proposal if such action is taken solely for the purpose of obtaining
information reasonably necessary to ascertain whether such Acquisition Proposal
is a Superior Proposal (defined below) or (ii) participate in discussions and
negotiations with, request clarifications from, or furnish nonpublic information
to, any Third Party which makes such written Acquisition Proposal if (A) such
action is taken subject to a confidentiality agreement with terms not more
favorable to such Third Party than the terms of the Confidentiality Agreement,
(B) after consultation with outside legal counsel to MBI, a majority of the
members of the entire Board of Directors of MBI determines in good faith that
such Acquisition Proposal is a Superior Proposal and (C) a majority of the
members of the entire Board of Directors of MBI determines in good faith, after
receiving advice from outside legal counsel to MBI, that the taking of such
action is necessary or appropriate to comply with the fiduciary duties of the
Board of Directors under applicable law.
(C) Notwithstanding anything contained in this Plan to the contrary,
an exercise of MBI's or its Board of Directors' rights under Section 5.6(B)
shall not constitute a breach of this Agreement by MBI.
(D) The term "Acquisition Proposal" means any proposal or offer
(including, without limitation, any public proposal to stockholders of MBI) from
any Third Party relating to (i) any direct or indirect acquisition or purchase
of 20% or more of the consolidated assets of MBI and its subsidiaries or 10% or
more of any class of equity securities of MBI or any of its subsidiaries, (ii)
any tender offer or exchange offer that, if consummated, would result in any
Third Party beneficially owning 10% or more of any class of equity securities of
MBI or any of its subsidiaries, (iii) any merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving MBI or any of its subsidiaries or (iv) any
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transaction other than any transactions contemplated by this Plan, the
consummation of which would reasonably be expected to impede, interfere with,
prevent or materially delay the Merger.
(E) The term "Superior Proposal" means a bona fide written offer made
by a Third Party to acquire all of the MBI Common Stock pursuant to a tender
offer or a merger or to acquire all or substantially all of the assets of MBI
and its subsidiaries on terms which a majority of the members of the entire
Board of Directors of MBI determines in good faith to have a higher value than
the consideration to be received by the MBI shareholders pursuant to this Plan
(taking into account, among other things, all legal, financial, regulatory and
other aspects of such proposal, and including, without limitation, conditions
imposed by such Third Party on its obligations to consummate the transactions
contemplated by such offer).
(F) In addition to the obligations of MBI set forth in this Section
5.6, within Five Business Days of the receipt or occurrence of any Acquisition
Proposal by MBI, MBI shall advise HBI of the receipt or occurrence of such
Acquisition Proposal and MBI shall provide to HBI copies of any written
materials received by MBI in connection with such Acquisition Proposal,
including the identity of the Third Party making such Acquisition Proposal. MBI
shall keep HBI informed of the status and material details (including amendments
or proposed amendments) to any such Acquisition Proposal and keep HBI informed
as to the material details of any information requested of or provided by MBI
and as to the material details of all discussions or negotiations (if any) with
respect to any such Acquisition Proposal. MBI shall promptly provide to HBI any
non-public information concerning MBI provided to any Third Party in connection
with any Acquisition Proposal which had not previously been provided to HBI.
(G) If MBI determines (in accordance with this Section 5.6 or
otherwise) that it has received a Superior Proposal, which it desires to accept,
MBI shall provide a written notice to HBI of its intent to terminate to this
Plan and enter into an agreement to consummate the Superior Proposal, pursuant
to Section 7.1(F), such notice to be provided to HBI not less than fifteen (15)
Business Days prior to the date of the intended termination of this Plan. During
the 15 Business Days following delivery to HBI of such notice MBI shall
cooperate with HBI with the intent of enabling HBI and MBI to negotiate a
modification of the terms and conditions of this Plan so that the transactions
contemplated hereby may be consummated. At the end of such 15-Business Day
period, the Board of Directors of MBI shall meet to vote on the modifications
proposed by HBI, and if a majority of the members of the entire Board of
Directors of MBI continues to determine in good faith, taking into account such
modifications to this Plan offered by HBI, that termination of this Plan and
MBI's entering into an agreement to effect such Superior Proposal is necessary
or appropriate to comply with the fiduciary duties of the Board of Directors of
MBI under applicable law, MBI may terminate pursuant to the provisions of
Section 7.1(F), provided that on or prior to such termination HBI receives all
fees and expense reimbursements and the Termination Fee set forth in Section
7.1(F) by wire transfer in same day funds and simultaneously or substantially
simultaneously with such termination MBI enters into a definitive acquisition,
merger or similar agreement to effect such Superior Proposal.
5.7. HBI COMMON STOCK ADJUSTMENTS. In the event that HBI changes the number
of shares of HBI Common Stock issued and authorized prior to the time that a
holder of
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Class B Preferred Stock converts such Class B Preferred Stock to HBI Common
Stock as a result of a stock split, stock dividend, or similar transaction with
respect to the outstanding HBI Common Stock, the amount of HBI Common Stock to
be issued to the Class B Preferred Stock holder, as set forth in the Class B
Preferred Stock Description in Appendix I shall be adjusted accordingly.
5.8. STATE TAKEOVER LAW. MBI shall not take any action that would cause the
transactions contemplated by this Plan to be subject to any Takeover
Restrictions, and MBI shall take all necessary steps to exempt (or ensure the
continued exemption of) the transactions contemplated by this Plan from any
Takeover Restrictions.
5.9. NO RIGHTS TRIGGERED. Except for those consents of Third Parties
disclosed on Schedule 4.1(G), MBI shall take all necessary steps to ensure that
the entering into of this Plan and the consummation of the transactions
contemplated by this Plan (including the Merger) and any other action or
combination of actions, or any other transactions contemplated by this Plan, do
not and will not (A) result in the grant of any Rights to any Person under the
Governing Documents of MBI or under any agreement to which MBI or any of its
Subsidiaries is a party, or (B) restrict or impair in any way, including but not
limited to a violation of Section 5.8 with respect to Takeover Restrictions, the
ability of HBI to exercise the rights granted under this Plan.
5.10. REGULATORY APPLICATIONS. HBI shall (A) promptly prepare and submit
applications to the appropriate Regulatory Authorities for approval of the
Merger, including pursuant to the Florida Banking Laws, and (B) promptly make
all other appropriate filings to secure all other approvals, consents and
rulings that are necessary for the consummation of the Merger by HBI.
5.11. REGULATORY DIVESTITURES. No later than the Effective Date, MBI shall
cease engaging in such activities as HBI shall advise MBI in writing are not
permitted to be engaged in by HBI under applicable law following the Effective
Date and, to the extent required by any Regulatory Authority as a condition of
approval of the transactions contemplated by this Plan, MBI shall divest any
Subsidiary engaged in activities or holding assets that are impermissible for
HBI, on terms and conditions agreed to by HBI; provided, however, that prior to
MBI taking such action, HBI shall certify that the conditions to its obligations
under Sections 6.1 and 6.2 to consummate the transactions contemplated by this
Plan have been satisfied or waived.
5.12. CURRENT INFORMATION.
(A) During the period from the date of this Plan to the Effective
Date, each of MBI and HBI shall, and shall cause its representatives to, confer
on a regular and frequent basis with representatives of the other.
(B) Each of MBI and HBI shall promptly notify the other of (1) any
Material change in the business or operations of it or its Subsidiaries, (2) any
Material complaints, investigations or hearings (or communications indicating
that the same may be contemplated) of
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any Regulatory Authority or other governmental authority relating to it, or as
applicable its Subsidiaries, (3) the initiation or threat of Material litigation
involving or relating to it or its Subsidiaries, or (4) any Material event or
condition.
5.13. DIRECTOR AND OFFICER LIABILITY INSURANCE. Prior to the Effective
Date, MBI may obtain and prepay "tail" coverage on director and officer
liability insurance for a period of three (3) years following the Effective
Date, with policy limits not in excess of $2,000,000 per occurrence, on each
person serving as an officer or director of MBI and each MBI Subsidiary
immediately prior to the Effective Date against all damages, Liabilities,
judgments, and claims (and related expenses, including reasonable attorney fees
and amounts paid in settlement) with respect to acts or omissions of such
officers and directors based upon or arising from his or her capacity as an
officer or director of MBI or a MBI Subsidiary, occurring on or prior to the
Effective Date.
ARTICLE VI. CONDITIONS TO CONSUMMATION OF THE MERGER
6.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS. The obligation of each Party
to effect the transactions contemplated hereby shall be subject to the
fulfillment, at or prior to the Effective Date, of the following conditions:
(A) SHAREHOLDER VOTE. The shareholders of MBI shall have approved of
the transactions contemplated herein (including approval of the Merger) as
provided in Section 5.2.
(B) REGULATORY APPROVALS. The Parties shall have procured all
necessary regulatory consents and approvals by the appropriate Regulatory
Authorities, and any waiting periods relating thereto shall have expired;
provided, however, that no such approval or consent shall have imposed any
condition or requirement not normally imposed in such transactions that, in the
opinion of HBI, would deprive HBI of the Material economic or business benefits
of the transactions contemplated by this Plan.
(C) NO PENDING OR THREATENED CLAIMS. No claim, action, suit,
investigation or other proceeding shall be pending or threatened before any
court or governmental agency which presents a Material risk of the restraint or
the prohibition of the transactions contemplated by this Plan or the obtaining
of Material damages or other relief in connection therewith.
(D) NO INJUNCTION. There shall not be in effect any order, decree or
injunction of any court or agency of competent jurisdiction that enjoins or
prohibits consummation of any of the transactions contemplated by this Plan.
(E) TAX OPINION. Each Party shall have received an opinion from Xxxxx
and Xxxxxxxxx, P.A., in the form of EXHIBIT B to the effect that (1) the Merger
constitutes a reorganization under Section 368 of the Code, and (2) no gain or
loss will be recognized by shareholders of MBI to the extent they receive shares
of Class B Preferred Stock in exchange for their shares of MBI Common Stock,
except that gain or loss may be recognized as to cash
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received in lieu of fractional share interests, and, in rendering their opinion,
Xxxxx and Xxxxxxxxx, P.A. may require and rely upon representations contained in
certificates of officers of HBI, MBI and others.
6.2. CONDITIONS TO OBLIGATIONS OF HBI. Unless waived in writing by HBI, the
obligations of HBI to consummate the transactions contemplated by this Plan are
subject to the satisfaction at or prior to the Effective Date of the following
conditions:
(A) PERFORMANCE. Each of the acts, undertakings, and covenants and
other agreements of MBI to be performed at or before the Effective Date shall
have been duly performed, and MBI shall not have breached any of the
representations, warranties, covenants, and other agreements set forth herein.
(B) EXEMPTION FROM TAKEOVER RESTRICTIONS. MBI shall have taken all
steps necessary to exempt and to ensure the continued exemption of the
transactions contemplated herein as provided in Sections 4.1(Y) and 5.8.
(C) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of MBI contained in this Plan shall be true and correct, in all Material
respects, on and as of the Effective Date with the same effect as though made on
and at the Effective Date, except for any such representations and warranties
that specifically relate to an earlier date, which shall be true and correct as
of such earlier date.
(D) OFFICER'S CERTIFICATE. In addition to the documents described
elsewhere in this Plan, HBI shall have received the following documents and
instruments:
(i) A certificate signed by the Secretary or Assistant Secretary
of MBI certifying that: (A) MBI's Board of Directors and shareholders
have duly adopted resolutions (copies of which shall be attached to
such certificate) approving the substantive terms of this Plan and
authorizing the consummation of the transactions contemplated by this
Plan and certifying that such resolutions have not been amended and
remain in full force and effect; (B) each person executing this Plan
on behalf of MBI is an officer of MBI, holding the office or offices
specified therein, with full power and authority to execute this Plan
and any and all other documents in connection with the Plan, and the
signature of each person on such documents is his or her genuine
signature; and (C) the Governing Documents of MBI (copies of which
shall be attached to such certificate) remain in full force and
effect; and
(ii) A certificate signed by the President and Chief Financial
Officer of MBI dated the Effective Date stating that the conditions
set forth in Sections 6.2(A), 6.2(B), 6.2(C), and 6.2(F) of this Plan
have been satisfied as of the Effective Date.
(E) LEGAL OPINION. HBI shall have received a legal opinion, dated the
Effective Date, from Akerman Senterfitt, in substantially the form of EXHIBIT C.
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(F) NO MATERIAL CHANGE. During the period from September 30, 2004 to
the Effective Date, no Material change in the business, property, assets
(including loan portfolios), Liabilities, prospects, operations, liquidity,
income or condition (financial or otherwise) of MBI and/or Marine shall have
occurred.
(G) DESTRUCTION OF PROPERTY. Between the date of this Plan and the
Effective Date, there shall have been no damage to or destruction of real
property, improvements or personal property of MBI or Marine which Materially
reduces the market value of such property, and no zoning or other order,
limitation or restriction imposed against the same, that might have a Material
impact upon the operations, business, future operations, or prospects of MBI or
Marine; provided, however, that the availability of insurance coverage may be
taken into account in determining whether there has been such a Material impact
or Material reduction in market value.
(H) INSPECTIONS PERMITTED. Between the date of this Plan and the
Effective Date, MBI shall have afforded HBI and its authorized agents and
representatives reasonable access during normal business hours to the
properties, operations, books, records, Contracts, documents, loan files and
other information of or relating to MBI and Marine. MBI and Marine shall have
caused all MBI and Marine personnel to provide reasonable assistance to HBI in
its investigations of all matters related to MBI and Marine.
(I) OTHER BUSINESS COMBINATIONS. ETC. Other than as contemplated
hereunder, subsequent to the date of this Plan, neither MBI nor Marine shall
have entered into any agreement, letter of intent, understanding or other
arrangement pursuant to which MBI and Marine would merge, consolidate with,
effect a business combination with, or sell any substantial part of MBI's or
Marine's assets; acquire a significant part of the share of assets of any other
person or entity (financial or otherwise); or adopt any "poison pill" or other
type of anti-takeover arrangement, any shareholder rights provision, or any
"golden parachute" or similar program which would have the effect of Materially
decreasing the value of MBI or Marine or the benefits of acquiring MBI Common
Stock.
(J) MAINTENANCE OF CERTAIN COVENANTS. At the Effective Date: (i)
neither MBI nor Marine shall have issued or repurchased from the date hereof any
additional equity or debt securities, or any rights to purchase or repurchase
such securities (therefore, there shall be not more than the number of shares of
MBI Common Stock and MBI Options set forth in the Recitals of this Plan validly
issued and outstanding at the Effective Date); and (ii) from September 30, 2004,
there shall have been no extraordinary sale of assets by MBI or Marine.
(K) NO LITIGATION. Except as disclosed on Schedule 6.2(K), no action,
suit, or other proceeding before any court or any governmental authority
pertaining to the transactions contemplated by this Plan or against MBI or any
of its Subsidiaries or Materially affecting MBI or any of its Subsidiaries shall
have been instituted or threatened on or before the Effective Date.
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6.3. CONDITIONS TO OBLIGATIONS OF MBI. Unless waived in writing by MBI, the
obligations of MBI to consummate the transactions contemplated by this Plan are
subject to the satisfaction of MBI at or prior to the Effective Date of the
following conditions:
(A) PERFORMANCE. Each of the acts, undertakings, and covenants of HBI
to be performed at or before the Effective Date shall have been duly performed,
and HBI shall not have breached any of its respective representations,
warranties, covenants, and other agreements set forth herein.
(B) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of HBI contained in this Plan shall be true and correct, in all Material
respects, on and as of the Effective Date with the same effect as though made on
and at the Effective Date, except for any such representations and warranties
that specifically relate to an earlier date, which shall be true and correct as
of such earlier date.
(C) OFFICER'S CERTIFICATE. In addition to the documents described
elsewhere in this Plan, MBI shall have received the following documents and
instruments:
(i) A certificate signed by the Secretary or Assistant Secretary
of HBI certifying that: (A) HBFs Board of Directors and shareholders
have duly adopted resolutions (copies of which shall be attached to
such certificate) approving the substantive terms of this Plan and
authorizing the consummation of the transactions contemplated by this
Plan and certifying that such resolutions have not been amended and
remain in full force and effect; (B) each person executing this Plan
on behalf of HBI is an officer of HBI, holding the office or offices
specified therein, with full power and authority to execute this Plan
and any and all other documents in connection with the Plan, and the
signature of each person on such documents is his or her genuine
signature; and (C) the Governing Documents of HBI (copies of which
shall be attached to such certificate) remain in full force and
effect; and
(ii) A certificate signed by the President and Chief Financial
Officer of HBI dated the Effective Date stating that the conditions
set forth in Sections 6.3(A), 6.3(B), and 6.3(E) of this Plan have
been satisfied as of the Effective Date.
(D) LEGAL OPINION. MBI shall have received a legal opinion, dated the
Effective Date, from Mitchell, Williams, Xxxxx, Xxxxx & Xxxxxxxx, P.L.L.C, in
substantially the form of Exhibit D.
(E) NO MATERIAL CHANGE. During the period from September 30, 2004 to
the Effective Date, no Material change in the business, property, assets
(including loan portfolios), Liabilities, prospects, operations, liquidity,
income or condition (financial or otherwise) of HBI shall have occurred.
(F) FAIRNESS OPINION. MBI shall have received, within sixty (60) days
from the execution of this Agreement unless the parties agree in writing to a
different date, an
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opinion of Xxxxx Financial, LLC or such firm as MBI may determine, to the effect
that the financial terms of the Merger are fair from a financial point of view
to MBI's shareholders. Such opinion shall be updated prior to the mailing of the
Joint Proxy Statement to MBI's shareholders and shall not have been withdrawn
prior to the Effective Date.
(G) INSPECTIONS PERMITTED. Between the date of this Plan and the
Effective Date, HBI shall have afforded MBI and its authorized agents and
representatives reasonable access during normal business hours to the
properties, operations, books, records, Contracts, documents, loan files and
other information of or relating to HBI or the HBI Banks. HBI and the HBI Banks
shall have caused all HBI and the HBI Banks' personnel to provide reasonable
assistance to MBI in its investigations of all matters related to HBI and the
HBI Banks.
ARTICLE VII. TERMINATION
7.1. TERMINATION UPON CERTAIN CONDITIONS. In the event of the termination
or abandonment of this Plan pursuant to the provisions of Section 7.1, this Plan
shall become void and have no force or effect, without any further liability on
the part of either Party or its respective directors or officers or shareholders
with respect to this Plan. This Plan may be terminated prior to the Effective
Date, either before or after receipt of required shareholder approvals, under
the following conditions:
(A) MUTUAL CONSENT. By the mutual consent of the Parties, if the Board
of Directors of each Party so determines by vote of a majority of the members of
its entire board;
(B) DELAY. By either Party in the event the Merger is not consummated
by the Termination Date, unless the failure of the consummation of the
transactions to occur shall be due to the failure of the Party seeking to
terminate this Plan to perform its obligations hereunder in a timely manner;
provided, however, that neither party may terminate the Plan pursuant to this
Section 7.1(B), if such delay results from the resolicitation of proxies as a
consequence of an HBI Transaction, or any other acquisition or sale transaction,
or any offering of securities, in which HBI is involved, or (b) a change in the
method of acquisition pursuant to Section 2.4, and provided, further, that a
Party may not terminate the Plan pursuant to this Section 7.1 (B) if it is in
Material breach of any of the provisions of the Plan;
(C) NO FAIRNESS OPINION. By MBI in the event the fairness opinion
described in Section 6.3(F) is not provided; provided, however, that MBI may not
terminate the Plan pursuant to this Section 7.1(C) unless it has used its best
efforts to obtain such opinion in a timely manner;
(D) NO REGULATORY APPROVALS. By either Party, in the event that,
absent the Material breach of the terminating Party, any of the required
regulatory approvals set forth in Section 6.1(B) are denied (or should any such
required approval be conditioned upon a substantial deviation from the
transactions contemplated); provided, however, that either Party may extend the
term of this Plan for a sixty (60)-day period to prosecute diligently and
overturn
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such denial provided that such denial has been appealed within fifteen (15)
Business Days of the receipt thereof;
(E) UNSATISFACTORY DUE DILIGENCE. By either HBI or MBI, if on or
before February 25, 2005, either Party (i) during the course of its due
diligence review discovers events, occurrences or circumstances that, either
individually or in the aggregate, would be expected, in the exercise of that
Party's reasonable judgment, to cause a material adverse effect with respect to
the financial condition, results of operations, business or future operations of
the other Party and (ii) the discovering Party gives written notice to the other
Party that such Party is exercising the right of termination pursuant to this
Section 7.1(E).
(F) SECURITIES LAW EXEMPTION. By HBI, in the event it believes, in the
exercise of its or its counsel's reasonable judgment, that the issuance of the
Class B Preferred Stock (1) is not or may not be exempt from registration under
the Securities Act pursuant to Rule 506 or any applicable state securities laws,
or (2) would require HBFs registration as a broker-dealer, agent or similar
registration under any applicable state securities laws; provided, however, that
unless the termination by HBI was due to the issuance of the Class B Preferred
Stock not being exempt from registration under the Securities Act due to actions
or the failure to take action of one or more Holders or MBI, HBI may not
terminate this Agreement pursuant to this Section 7.1(E) until HBI has
reimbursed MBI in immediately available funds an amount, not in excess of One
Hundred Fifty Thousand and No/100 Dollars ($150,000), for the documented out-
of-pocket fees and expenses of MBI and its Subsidiaries incurred related to the
negotiations for and drafting of the Plan, and to the performance by HBI or its
Subsidiaries of obligations related to the transactions contemplated hereby
(including, without limitation, printing fees, filing fees and fees and expenses
of its legal and financial advisors); or
(G) ACCEPTANCE OF SUPERIOR PROPOSAL. By MBI, in order to accept a
Superior Proposal, provided that MBI has complied with the provisions of Section
5.6 and has reimbursed HBI in immediately available funds an amount, not in
excess of One Hundred Fifty Thousand and No/100 Dollars ($150,000), for the
documented out-of-pocket fees and expenses of HBI and its Subsidiaries incurred
related to the negotiations for and drafting of the Plan, and to the performance
by HBI or its Subsidiaries of obligations related to the transactions
contemplated hereby (including, without limitation, printing fees, filing fees
and fees and expenses of its legal and financial advisors), plus the sum of
Three Hundred Thousand and No/100 Dollars ($300,000) (the "Termination Fee").
7.2. TERMINATION FOR BREACH. This Plan may be terminated prior to the
Effective Date, either before or after receipt of required shareholder
approvals, by either Party if there has been a Material breach on the part of
the other Party of its representations, warranties, covenants, or other
agreements set forth herein or in any Schedule or certificate delivered pursuant
hereto. Solely for purposes of this Section 7.2, each of the representations and
warranties set forth in Section 4.2 shall be deemed to have been made with
respect to Community Bank for periods prior to the CFG Merger. The non-breaching
Party expressly reserves all rights and remedies available in law or equity if
this Agreement is terminated for breach, except that where the breach by HBI is
of its representations, warranties, covenants, or other agreements set forth
herein or in any Schedule or certificate delivered pursuant hereto with respect
to
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Xxxxxxxxx Xxxx for periods prior to the CFG Merger, the only remedy of MBI,
notwithstanding anything to the contrary stated herein shall be to terminate
this Plan, which shall be without liability to HBI or MBI.
7.3. TERMINATION FOR MAJOR TRANSACTION. In the event HBI enters into an
agreement to effect a Change of Control Transaction, MBI shall have the right to
terminate this Agreement. A "Change of Control Transaction" shall mean a
transaction or series of related transactions in which more than 40% of the
voting power of HBI is disposed of, or the consolidation, merger or other
business combination of HBI with or into any other entity where HBI or an
affiliate (prior to the consummation of a Change of Control Transaction) is not
the survivor.
ARTICLE VIII. OTHER MATTERS
8.1. SURVIVAL. Only the representations, warranties, covenants, or other
agreements contained in Articles I and II of this Plan shall survive the
Effective Date, regardless of whether a provision specifically states that such
provision survives. If the Merger is abandoned and this Plan is terminated, the
agreements of the Parties in Sections 5.5(B) and (C), 7.1, 8.5, and 8.12 shall
survive such abandonment and termination.
8.2. WAIVER; AMENDMENT. Prior to the Effective Date, any provision of this
Plan may be (A) waived in writing by the Party benefited by the provision, or
(B) amended or modified at any time (including the structure of the transactions
contemplated by this Plan) by an agreement in writing between the Parties
approved by their respective Boards of Directors and executed in the same manner
as this Plan, except that, after the vote by the shareholders of MBI, the
consideration to be received by a Holder of MBI Common Stock shall not thereby
be altered. Nothing contained in this Section 8.2 is intended to modify HBI's
rights pursuant to Section 2.4.
8.3. COUNTERPARTS. This Plan may be executed in one or more facsimile
counterparts, each of which shall be deemed to constitute an original. This Plan
shall become effective when one counterpart has been signed by each Party.
8.4. GOVERNING LAW. This Plan shall be governed by, and interpreted in
accordance with, the laws of the State of Arkansas, except as federal law may be
applicable.
8.5. EXPENSES. Each Party will bear all expenses incurred by it in
connection with this Plan and the transactions contemplated by this Plan, except
expenses of printing and mailing the Proxy Statement which shall be shared
equally between the Parties.
8.6. NOTICES. All notices, demands, and requests given or required to be
given by one Party to the other Party shall be in writing. All such notices,
demands, and requests shall be deemed to have been properly given if served in
person, sent by telefacsimile (and receipt confirmed) or by prepaid nationally
recognized overnight delivery service providing proof of delivery, addressed as
follows:
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If to HBI, to Home BancShares, Inc.
000 Xxxxxxxxx
Xxxxxx, Xxxxxxxx 00000
Attn: Xxx Xxxxxxxx, President
Fax: 000-000-0000
With a copy to: Xxxxxxxx Xxxxxxxx Xxxxx Xxxxx & Xxxxxxxx, P.L.L.C.
000 X. Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxx, Esq.
Fax: 000-000-0000
If to MBI, to: Marine Bancorp, Inc.
00000 Xxxxxxxx Xxx.
Xxxxxxxx, Xxxxxxx 00000
Attn: X. X. Xxxxxxx, President and Chairman
Fax: (000)000-0000
With a copy to: Akerman Senterfitt
Xxx Xxxxxxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxx, Xxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Fax: (000)000-0000
Notices, demands and requests sent pursuant to this section shall be
deemed to be received (A) on the date of delivery if received by telefacsimile
(and receipt confirmed) or by person and, (B) on the next Business Day if sent
by prepaid overnight delivery service.
8.7. TIME IS OF THE ESSENCE. The Parties hereto agree that time is of the
essence with respect to the Effective Date and each and every condition and
covenant contained herein.
8.8. ASSIGNMENT. The assignment of this Plan by a Party without the express
written consent of the other Party hereto shall be void; provided, however, that
this Section 8.8 is not intended to modify HBI's rights pursuant to Section 2.4.
8.9. BINDING EFFECT. This Agreement shall be binding upon the Parties and
their respective successors and assigns.
8.10. SEVERABILITY. The holding of any provision of this Plan invalid,
illegal, or unenforceable, in whole or in part, shall not affect the other
provisions of this Plan, which shall remain in full force and effect.
8.11. ENTIRE UNDERSTANDING: NO THIRD PARTY BENEFICIARIES. This Plan and the
Confidentiality Agreement represent the entire understanding of the Parties with
reference to transactions contemplated by this Plan and supersede any and all
other oral or
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written agreements previously made. Nothing in this Plan, expressed or implied,
is intended to confer upon any Person other than the Parties any rights,
remedies, obligations or Liabilities under or by reason of this Plan.
8.12. ENFORCEMENT PROCEEDINGS. The Parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Plan were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that each Party shall be entitled to an injunction or
injunctions to prevent breaches of this Plan and to enforce specifically the
terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity. In any action or proceeding in connection with
the enforcement of this Plan, the prevailing Party will be entitled to
reimbursement of its reasonable attorneys' fees and expenses from the
non-prevailing Party.
8.13. BENEFIT PLANS. Upon consummation of the Merger, all employees of MBI
and its Subsidiaries, except those with whom HBI enters into written employment
agreements, shall be deemed to be at-will employees of HBI. From and after the
Effective Date, employees of MBI and its Subsidiaries shall be entitled to
participate in the pension, employee benefit and similar plans (including stock
option, bonus or other incentive plans) on substantially the same terms and
conditions as similarly situated employees of HBI. With the exception of stock
option plans, where participation will be based upon years of service at HBI
(and type of personnel), for the purpose of determining eligibility to
participate in such plans and the vesting of benefits under such plans, HBI
shall give effect to years of service with MBI or its Subsidiaries, as the case
may be, as if such service were with HBI. Employees of MBI and its Subsidiaries
will be entitled to carry over unused vacation days and sick leave accrued as of
the Effective Date.
8.14. HEADINGS. The headings contained in this Plan are for reference
purposes only and are not part of this Plan.
(Signatures on page following.)
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IN WITNESS WHEREOF, the Parties have caused this instrument to be executed
in counterparts by their duly authorized officers, all as of the day and year
first above written.
MARINE BANCORP, INC.
By: /s/ X. X. Xxxxxxx
-------------------------------------
X. X. Xxxxxxx
President and Chairman
HOME BANCSHARES, INC.
By: /s/ Xxx X. Xxxxxxxx
------------------------------------
Xxx X. Xxxxxxxx
President and Chief Operating
Officer
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LIST OF EXHIBITS
EXHIBITS:
Exhibit A Articles of Merger
Exhibit B Tax Opinion of Xxxxx and Xxxxxxxxx, P.A.
Exhibit C Legal Opinion of Akerman Senterfitt
Exhibit D Legal Opinion of Mitchell, Williams, Xxxxx, Xxxxx & Xxxxxxxx, P.L.L.C.
APPENDIX 1
CLASS B PREFERRED STOCK DESCRIPTION
The characteristics and requirements of the Class B Preferred Stock (as defined
in the Plan) to be authorized and issued by HBI as set forth in Section 2.1(C)
of the Plan, all of which characteristics and requirements shall be set forth in
an Amendment to the Restated Articles of Incorporation of HBI to be adopted and
filed with the Arkansas Secretary of State prior to the Merger, shall be as
follows:
1. HBI shall issue as consideration in the Merger a number of shares of its
Class B Preferred Stock, $0.01 par value per share, up to the number of
shares required to equal 39.5% of the total consideration for the Merger.
Such shares of Class B Preferred Stock shall have a value for Stock
Conversion Ratio purposes of $38.00 (the "Stock Value") per share. The
Class B Preferred Stock shall be non-voting and shall yield an annual
non-cumulative dividend of 1.5% of the Stock Value payable if and when
declared, quarterly on the last day of January, April, July, and October.
No interest shall be payable on any declared and unpaid dividends.
2. No dividends shall be declared or paid on any common shares ("Common
Stock") or any other shares of capital stock of HBI, other than shares of
Class A Preferred Stock, until the foregoing dividend is paid on the Class
B Preferred Stock; provided, however, that the Class B Preferred Stock
shall be subordinate to HBI Class A Preferred Stock in the payment of
dividends.
3. In the event of any dissolution, liquidation or winding up of HBI, whether
voluntary or involuntary, the holders of the then outstanding Class B
Preferred Stock shall be entitled to receive, after the payment of any
declared and unpaid dividends to the holders of HBI Class A Preferred
Stock, (a) a sum equal to the amount of any declared and unpaid dividends
on the Class B Preferred Stock at the dividend rate set forth herein, and
(b) $38.00 per share on a parity with the payment of $10.00 per share to
holders of Class A Preferred Stock. The Class B Preferred Stock will rank
prior to any class or series of capital stock hereafter created. After
payment to the holders of preferred shares, the remaining assets and funds
of HBI shall be distributed pro rata among the holders of the Common Stock.
A consolidation, merger or reorganization of HBI with any other corporation
or corporations or a sale of all or substantially all of the assets of HBI
shall not be considered a dissolution, liquidation or winding up of HBI
within the meaning of these provisions.
4. The Class B Preferred Stock shall be convertible into Common Stock upon the
following terms and conditions:
(a) The holder of shares of Class B Preferred Stock shall have the right
to elect to convert such Class B Preferred Stock into Common Stock
upon the earliest to occur of:
Appendix 1, Page A-l
(i) July 6, 2006; or
(ii) two hundred ten (210) days after the date an underwritten initial
public offering of Common Stock is completed.
(b) HBI shall have the right to redeem all of the Class B Preferred Stock
in exchange for Common Stock at any time.
(c) In the event a holder of the Class B Preferred Stock elects to convert
such stock into Common Stock pursuant to (a) or HBI elects to redeem
such Class B Preferred Stock pursuant to (b), such Class B Preferred
Stock shall be converted or redeemed at an exchange ratio of one (1)
share of Common Stock in exchange for one share of Class B Preferred
Stock. Such Common Stock shall be HBI voting common stock as is
currently authorized under HBI's Articles of Incorporation subject to
such changes as may be made prior to the date of conversion or
redemption. In the event such conversion or redemption occurs prior to
the end of a quarter in which HBI's Board of Directors declares a
dividend, and subject to the priority in payment of dividends to the
Class A Preferred Stock, a holder of Class B Preferred Stock being
converted or redeemed shall be entitled to receive an amount of such
dividend, prorated for the number of days in the quarter prior to the
date of the notice of redemption.
(d) If prior to the conversion or redemption of Class B Preferred Stock,
the outstanding shares of Common Stock are increased or decreased or
are changed into a different number of shares or a different class by
reason of any merger, reclassification, stock split, or similar
transaction, or if a stock dividend shall be paid, an appropriate and
proportionate adjustment or adjustments will be made to the ratio by
which a share of Common Stock, or a fraction thereof, is to be issued
in exchange for each share of Class B Preferred Stock. In the event of
a merger of HBI for cash in which it is not the surviving corporation,
the holders of Class B Preferred Stock will be given the right to
convert their shares of Class B Preferred Stock for shares of Common
Stock, immediately prior to the conversion on a ratio of one (1) share
of Common Stock for one (1) share of Class B Preferred Stock.
Appendix 1, Page A-2
MBI SCHEDULES
Schedule 3.4 Changes or Commitments Respecting Line of Business or
Operating Procedures
Schedule 3.6 New or Changes to Compensation, Employment Agreements,
Etc.
Schedule 3.7 New or Changes to Benefit Plans
Schedule 3.11 New or Changes to Contracts
Schedule 4.1(B) Jurisdictions Where MBI and its Subsidiaries are
Qualified to do Business; Orders, etc. Affecting Status
Schedule 4.1(C) Shares Outstanding
Schedule 4.1(D) MBI Subsidiaries
Schedule 4.1(G) No Defaults - Agreements Requiring Third Party Consent
Schedule 4.1(H) MBI Financial Reports
Schedule 4.1(I) Undisclosed Liabilities of MBI
Schedule 4.1(J) No Events Causing Material Adverse Effect
Schedule 4.1(K) Properties: Leases, Subleases, Defects of Title or
Condition
Schedule 4.1(L) Intellectual Property Rights
Schedule 4.1(M) Litigation, Regulatory Action
Schedule 4.1(N) Compliance with Laws
Schedule 4.1(O) Material Contracts
Schedule 4.1(Q) Brokers and Finders
Schedule 4.1(R)(1) List of Employee Benefit Plans
Schedule 4.1(R)(2) Employee Benefit Plans Not Qualified Under ERISA
Schedule 4.1(R)(4) Pension Accumulated Funding Deficiency
Schedule 4.1(R)(5) Amount by Which Benefit Liabilities Exceed Plan Assets
Schedule 4.1(R)(6) Obligations for Retiree Health and Life Benefits
Schedule 4.1(R)(7) Agreements Resulting in Payments to Employees Under Any
Compensation and Benefit Plan with Respect to Proposed
Transaction
Schedule 4.1(U) Asset Classification
Schedule 4.1(V) Inadequate Allowance for Loan Losses
Schedule 4.1(W) Insurance
Schedule 4.1(AA)(1) Noncompliance with Environmental Laws
Schedule 4.1(AA)(2) Pending Proceedings with Respect to Environmental Matters
Schedule 4.1(AA)(3) Pending Proceedings with Respect to Environmental Matters
Involving Loan/Fiduciary Property
Schedule 4.1(AA)(4) Pending Proceedings with Respect to Environmental Matters
Listed in Sections 4.1(Z)(2) or (3)
Schedule 4.1(AA)(5) Actions During Ownership Which Could Have Material Adverse
Effect with Respect to Environmental Matters
Schedule 4.1(AA)(6) Actions Prior to Ownership Which could Have Material
Adverse Effect with Respect to Environmental Matters
Schedule 4.1(AA)(7) Underground Storage Tanks
Schedule 4.1(AA)(8) Building Components with Friable Asbestos
Schedule 4.1(BB) Tax Return Matters
Schedule 4.1(DD) Derivative Contracts, including a list of any assets
pledged as security for such Derivative Contracts
Schedule 4.1(FF)(1) Employment Contracts Requiring Payment In Connection with
Termination
Schedule 4.1(FF)(2) Contracts with Related Persons
Schedule 4.1(FF)(3) Leases with Aggregate Annual Rent Exceeding $50,000
Schedule 4.1(FF)(4) Material Contracts with Affiliates
Schedule 4.1(GG) Claims of Officers, Directors, Employees
Schedule 6.2(K) Litigation or Proceedings Materially Affecting MBI or its
Subsidiaries Prior to Effective Date
HBI SCHEDULES
Schedule 4.2(B) Jurisdictions Where HBI and its Subsidiaries are Qualified
to do Business; Orders, etc. Affecting Status
Schedule 4.2(C) Shares Outstanding
Schedule 4.2(D) HBI Subsidiaries
Schedule 4.2(G) No Defaults - Agreements Requiring Third Party Consent
Schedule 4.2(H) HBI Financial Reports
Schedule 4.2(1) Undisclosed Liabilities of HBI
Schedule 4.2(J) Events Causing Material Adverse Effect
Schedule 4.2(K) Litigation, Regulatory Action
Schedule 4.2(N) Compliance with Law
Schedule 4.2(O) Brokers and Finders
Schedule 4.2(Q) Tax Returns
