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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 4, 1998 (this
"Agreement"), between BancorpSouth, Inc., a Mississippi corporation
("BancorpSouth") and HomeBanc Corporation, an Alabama corporation (the
"Company," and together with BancorpSouth, the "Holding Companies").
WHEREAS, BancorpSouth is the sole shareholder of BancorpSouth Bank, a
Mississippi banking corporation ("BancorpSouth Bank");
WHEREAS, the Company is the sole shareholder of The Home Bank, an
Alabama banking corporation ("Home Bank," and together with BancorpSouth Bank,
the "Banks");
WHEREAS, BancorpSouth and the Company have determined that it is in the
best interests of their respective companies and their shareholders to
consummate the business combination transactions provided for herein in which
(i) the Company will merge with and into BancorpSouth (the "Holding Company
Merger") and (ii) Home Bank will merge with and into BancorpSouth Bank (the
"Bank Merger"), each subject to the terms and conditions set forth herein
(collectively, the "Merger"); and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger.
(a) Subject to the terms and conditions of this Agreement, in
accordance with the Mississippi Business Corporation Act (the "MBCA") and the
Alabama Business Corporation Act (the "ABCA"), at the Effective Time (as defined
in Section 1.2 hereof), the Company shall merge with and into BancorpSouth.
BancorpSouth shall be the surviving corporation (hereinafter sometimes called
the "Surviving Corporation") in the Holding Company Merger, and shall continue
its corporate existence under the laws of the State of Mississippi. The name of
the Surviving Corporation shall continue to be "BancorpSouth, Inc." Upon
consummation of the Holding Company Merger, the separate corporate existence of
the Company shall terminate.
(b) Subject to the terms and conditions of this Agreement, in
accordance with the Mississippi Banking Act (the "MBA") and the Alabama Banking
Code ("ABC") at the Effective Time (as defined in Section 1.2 hereof), Home Bank
shall merge with and into BancorpSouth Bank. BancorpSouth Bank shall be the
surviving banking corporation (hereinafter sometimes called the "Surviving
Bank") in the Bank Merger, and shall continue its corporate existence under the
laws of the State of Mississippi. The name of the Surviving Bank shall continue
to be "BancorpSouth Bank." Upon consummation of the Bank Merger, the separate
corporate existence of Home Bank shall terminate.
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1.2. Effective Time.
(a) The Holding Company Merger shall become effective as set
forth in the articles of merger (the "Company Articles of Merger") which shall
be filed on the Closing Date (as defined in Section 10.1) with the Secretary of
State of the State of Mississippi (the "Mississippi Secretary") and the
Secretary of State of the State of Alabama (the "Alabama Secretary") with
respect to the Holding Company Merger.
(b) The Bank Merger shall become effective as set forth in the
articles of merger (the "Home Bank Articles of Merger," and together with the
Company Articles of Merger, the "Articles of Merger") which shall be filed on
the Closing Date (as defined in Section 10.1) with the Mississippi Department of
Banking and Consumer Finance (the "Mississippi Department"), the Alabama Banking
Department ("Alabama Department") and the Alabama Secretary with respect to the
Bank Merger.
(c) The term "Effective Time" shall be the date and time when
the Merger becomes effective, as set forth in the Articles of Merger.
1.3. Effects of the Merger.
(a) At and after the Effective Time, the Holding Company
Merger shall have the effects set forth in Section 79-4-11.06 of the MBCA and
Section 10-2B-11.06 of the ABCA.
(b) At and after the Effective Time, the Bank Merger shall
have the effects set forth in Section 81-5-85 of the MBA.
1.4. Conversion of Company Common Stock.
(a) At the Effective Time, subject to Section 2.2(e) hereof,
each share of the common stock, par value $0.10 per share, of the Company (the
"Company Common Stock") issued and outstanding immediately prior to the
Effective Time (other than Company Dissenting Shares (as defined herein) and
other than shares of Company Common Stock held directly or indirectly by
BancorpSouth or the Company or any of their respective Subsidiaries (as defined
below) (except for Trust Account Shares and DPC shares, as such terms are
defined in Section 1.4(b) hereof), shall, by virtue of this Agreement and
without any action on the part of the holder thereof, be converted into and
exchangeable for 1.5747417 shares (the "Exchange Ratio") of the common stock,
par value $2.50 per share, of BancorpSouth ("BancorpSouth Common Stock"),
together with the number of BancorpSouth Rights (as defined in Section 5.2
hereof) associated therewith. There shall be no adjustment in the Exchange Ratio
in the event of any change in the price of BancorpSouth Common Stock or any
other matter, other than for "Adjustment Events" (as defined below).
(b) All of the shares of Company Common Stock converted into
BancorpSouth Common Stock pursuant to this Article I shall no longer be
outstanding and shall automatically be canceled and shall cease to exist, and
each certificate (each a "Certificate") previously representing any such shares
of Company Common Stock shall thereafter only represent the right to receive (i)
the number of whole shares of BancorpSouth Common Stock and (ii) the cash in
lieu of fractional shares into which the shares of Company Common Stock
represented by such Certificate have been converted pursuant to this Section 1.4
and Section 2.2(e) hereof. Company Certificates previously representing shares
of Company Common Stock shall be exchanged for certificates representing whole
shares of BancorpSouth Common Stock and cash in lieu of fractional shares issued
in consideration therefor upon the surrender of such Company Certificates in
accordance with Section 2.2 hereof, without any interest thereon. If, between
the date of this Agreement and the Effective Time, the shares of BancorpSouth
Common Stock shall be changed into a different number or class of shares by
reason of any reclassification, recapitalization, split-up, combination,
exchange of shares or
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readjustment, or a stock dividend thereon shall be declared with a record date
within said period (any such event, an "Adjustment Event"), The Exchange Ratio
shall be adjusted to result in the same aggregate consideration being delivered
to the Company's shareholders as would have been received had such Adjustment
Event not occurred.
(c) At the Effective Time, all shares of Company Common Stock
that are owned directly or indirectly by BancorpSouth or the Company or any of
their respective Subsidiaries (other than shares of Company Common Stock (i)
held directly or indirectly in trust accounts, managed accounts and the like or
otherwise held in a fiduciary capacity for the benefit of third parties (any
such shares, and shares of BancorpSouth Common Stock which are similarly held,
whether held directly or indirectly by BancorpSouth or the Company, as the case
may be, being referred to herein as "Trust Account Shares") and (ii) held by
BancorpSouth or the Company or any of their respective Subsidiaries in respect
of a debt previously contracted (any such shares of Company Common Stock, and
shares of BancorpSouth Common Stock which are similarly held, whether held
directly or indirectly by BancorpSouth or the Company, being referred to herein
as "DPC Shares")) shall be canceled and shall cease to exist and no stock of
BancorpSouth or other consideration shall be delivered in exchange therefor. All
shares of BancorpSouth Common Stock that are owned by the Company or any of its
Subsidiaries (other than Trust Account Shares and DPC Shares) shall become
treasury stock of BancorpSouth.
(d) Notwithstanding anything in this Agreement to the
contrary, shares of Company Common Stock which are outstanding immediately prior
to the Effective Time and with respect to which dissenters' rights shall have
been properly demanded in accordance with Article 13 of the ABCA ("Company
Dissenting Shares") shall not be converted into the right to receive, or be
exchangeable for, BancorpSouth Common Stock or cash in lieu of fractional shares
but, instead, the holders thereof shall be entitled to payment of the appraised
value of such Company Dissenting Shares in accordance with the provisions of
Section 13 of the ABCA, provided, however, that (i) if any holder of Company
Dissenting Shares shall subsequently deliver a written withdrawal of his demand
for appraisal of such shares, or (ii) if any holder fails to establish his
entitlement to dissenters' rights as provided in Section 13 of the ABCA, such
holder or holders (as the case may be) shall forfeit the right to appraisal of
such shares of Company Common Stock and each of such shares shall thereupon be
deemed to have been converted into the right to receive, and to have become
exchangeable for, as of the Effective Time, BancorpSouth Common Stock and/or
cash in lieu of fractional shares, without any interest thereon, as provided in
Section 1.4(a) and Article II hereof.
(e) BancorpSouth may terminate this Agreement if cash payments
in respect of fractional shares or dissenter's rights exceed the amount
permissible for the utilization of pooling of interests accounting treatment.
(f) At the Effective Time, all shares of Home Bank common
stock, par value $0.10 per share ("Home Bank Common Stock"), shall be canceled
and shall cease to exist and no stock of BancorpSouth, BancorpSouth Bank, or
other consideration shall be delivered in exchange therefor.
1.5. BancorpSouth Common Stock. Except for shares of BancorpSouth
Common Stock owned by the Company or any of its Subsidiaries (other than Trust
Account Shares and DPC Shares), which shall be converted into treasury stock of
BancorpSouth as contemplated by Section 1.4 hereof, the shares of BancorpSouth
Common Stock issued and outstanding immediately prior to
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the Effective Time shall be unaffected by the Merger and such shares shall
remain issued and outstanding.
1.6. Articles. At the Effective Time, the Amended and Restated Articles
of Incorporation of BancorpSouth, as in effect at the Effective Time, shall be
the articles of incorporation of the Surviving Corporation. At the Effective
Time, the Amended and Restated Articles of Association of BancorpSouth Bank, as
in effect at the Effective Time, shall be the articles of association of the
Surviving Bank.
1.7. By-Laws. At the Effective Time, the Bylaws of BancorpSouth, as in
effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation until thereafter amended in accordance with applicable
law. At the Effective Time, the Bylaws of BancorpSouth Bank, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Bank until thereafter amended in accordance with applicable law.
1.8. Directors and Officers. The directors and officers of BancorpSouth
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation, each to hold office in accordance with the Restated
Articles of Incorporation and Bylaws of the Surviving Corporation until their
respective successors are duly elected or appointed and qualified. The directors
and officers of BancorpSouth Bank immediately prior to the Effective Time shall
be the directors and officers of the Surviving Bank, each to hold office in
accordance with the Restated Articles of Association and Bylaws of the Surviving
Bank until their respective successors are duly elected or appointed and
qualified.
1.9. Tax Consequences; Accounting Treatment. It is intended that the
Merger shall (i) constitute a reorganization within the meaning of Section
368(a) of the Code and that this Agreement shall constitute a "plan of
reorganization" for the purposes of Section 368 of the Code, and (ii) be
accounted for as a "pooling of interests" under GAAP (as defined herein).
ARTICLE II
EXCHANGE OF SHARES
2.1. BancorpSouth to Make Shares Available. At or prior to the
Effective Time, BancorpSouth shall deposit, or shall cause to be deposited, with
a bank or trust company (the "Exchange Agent") selected by BancorpSouth and
reasonably satisfactory to the Company, for the benefit of the holders of
Certificates, for exchange in accordance with this Article II, certificates
representing the shares of BancorpSouth Common Stock and the cash in lieu of
fractional shares (such cash and certificates for shares of BancorpSouth Common
Stock, together with any dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund") to be issued pursuant to Section
1.4 and paid pursuant to Section 2.2(a) in exchange for outstanding shares of
Company Common Stock.
2.2. Exchange of Shares.
(a) As soon as practicable after the Effective Time, and in no
event more than three business days thereafter, the Exchange Agent shall mail to
each holder of record of a Certificate or Certificates a form letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent) and instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing the
shares of BancorpSouth Common Stock and the cash in lieu of fractional shares
into which the shares of Company Common Stock represented by such Certificate or
Certificates shall have been converted pursuant to this Agreement. The Company
shall have the right to review both the letter of transmittal and the
instructions prior to the Effective Time and provide reasonable comments
thereon. Upon surrender of a Certificate for exchange and
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cancellation to the Exchange Agent, together with such letter of transmittal,
duly executed, the holder of such Certificate shall be entitled to receive in
exchange therefor and the Exchange Agent shall mail to such holder within three
business days of such surrender to the Exchange Agent (x) a certificate
representing that number of whole shares of BancorpSouth Common Stock to which
such holder of Company Common Stock shall have become entitled pursuant to the
provisions of Article I hereof and (y) a check representing the amount of cash
in lieu of fractional shares, if any, which such holder has the right to receive
in respect of the Certificate surrendered pursuant to the provisions of this
Article II, and the Certificate so surrendered shall forthwith be canceled. No
interest will be paid or accrued on the cash in lieu of fractional shares and
unpaid dividends and distributions, if any, payable to holders of Certificates.
(b) No dividends or other distributions declared after the
Effective Time with respect to BancorpSouth Common Stock and payable to the
holders of record thereof shall be paid to the holder of any unsurrendered
Certificate until the holder thereof shall surrender such Certificate in
accordance with this Article II. After the surrender of a Certificate in
accordance with this Article II, the record holder thereof shall be entitled to
receive any such dividends or other distributions, without any interest thereon,
which theretofore had become payable with respect to shares of BancorpSouth
Common Stock represented by such Certificate.
(c) If any certificate representing shares of BancorpSouth
Common Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a condition of the
issuance thereof that the Certificate so surrendered shall be properly endorsed
(or accompanied by an appropriate instrument of transfer) and otherwise in
proper form for transfer, and that the person requesting such exchange shall pay
to the Exchange Agent in advance any transfer or other taxes required by reason
of the issuance of a certificate representing shares of BancorpSouth Common
Stock in any name other than that of the registered holder of the Certificate
surrendered, or required for any other reason, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(d) After the Effective Time, there shall be no transfers on
the stock transfer books of the Company of the shares of Company Common Stock
which were issued and outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates representing such shares are presented
for transfer to the Exchange Agent, they shall be canceled and exchanged for
certificates representing shares of BancorpSouth Common Stock as provided in
this Article II.
(e) Notwithstanding anything to the contrary contained herein,
no certificates or scrip representing fractional shares of BancorpSouth Common
Stock shall be issued upon the surrender for exchange of Certificates, no
dividend or distribution with respect to BancorpSouth Common Stock shall be
payable on or with respect to any fractional share, and such fractional share
interests shall not entitle the owner thereof to vote or to any other rights of
a shareholder of BancorpSouth. In lieu of the issuance of any such fractional
share, BancorpSouth shall pay to each former stockholder of the Company who
otherwise would be entitled to receive a fractional share of BancorpSouth Common
Stock an amount in cash equal to the product of (x) the BancorpSouth Price and
(y) the fraction of a share of BancorpSouth Common Stock which such holder would
otherwise be entitled to receive pursuant to Article I hereof. The "BancorpSouth
Price" means the last sale price of BancorpSouth Common Stock as reported on the
New York Stock Exchange ("NYSE") Composite Transactions tape (as reported in the
Wall Street Journal, or, if not reported therein, in another alternative
authoritative source mutually agreeable to the parties) at the closing of
trading on the trading day immediately preceding the Closing Date.
(f) Any portion of the Exchange Fund that remains unclaimed by
the shareholders of the Company for 12 months after the Effective Time shall be
paid to BancorpSouth. Any shareholders of the Company who have not theretofore
complied with this Article II shall thereafter look only to BancorpSouth for
payment of their shares of BancorpSouth Common Stock,
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cash in lieu of fractional shares and unpaid dividends and distributions on
BancorpSouth Common Stock deliverable in respect of each share of Company Common
Stock such stockholder holds as determined pursuant to this Agreement, in each
case, without any interest thereon. Notwithstanding the foregoing, none of
BancorpSouth, the Company, the Exchange Agent or any other person shall be
liable to any former holder of shares of Company Common Stock for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(g) In the event any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
BancorpSouth, the posting by such person of a bond in such amount as
BancorpSouth may direct as indemnity against any claim that may be made against
it with respect to such Certificate, the Exchange Agent will issue in exchange
for such lost, stolen or destroyed Certificate the shares of BancorpSouth Common
Stock and cash in lieu of fractional shares deliverable in respect thereof
pursuant to this Agreement.
ARTICLE III
DISCLOSURE SCHEDULES; STANDARDS
FOR REPRESENTATIONS AND WARRANTIES
3.1 Disclosure Schedules. The parties acknowledge that as of the date
of this Agreement, the Company has delivered the Company Disclosure Schedule and
BancorpSouth has delivered the BancorpSouth Disclosure Schedule (and, with the
Company Disclosure Schedule, the "Disclosure Schedules"). Notwithstanding
anything in this Agreement to the contrary, the mere inclusion of an item in a
Disclosure Schedule as an exception to a representation or warranty shall not be
deemed an admission by a party that such item represents a material exception or
material fact, event or circumstance or that such item has had or could be
reasonably expected to have a Material Adverse Effect (as defined herein) with
respect to either the Company or BancorpSouth, respectively.
3.2. Standards.
(a) No representation or warranty of the Company contained in
Article IV or of BancorpSouth contained in Article V shall be deemed untrue or
incorrect for any purpose under this Agreement as a consequence of the existence
or absence of any fact, circumstance or event, unless such fact, circumstance or
event, individually or when taken together with all other facts, circumstances
or events inconsistent with such representation or warranty contained in Article
IV, in the case of the Company, or Article V, in the case of BancorpSouth, has
had or could be reasonably expected to have a Material Adverse Effect with
respect to (i) the Company or (ii) BancorpSouth, respectively.
(b) As used in this Agreement, the term "Material Adverse
Effect" means, with respect to BancorpSouth or the Company, as the case may be,
a material adverse effect on (i) the business, results of operations or
financial condition of such party and its Subsidiaries taken as a whole, other
than any such effect attributable to or resulting from (w) any change in banking
or similar laws, rules or regulations of general applicability or
interpretations thereof by courts or governmental authorities, (x) any change in
GAAP or regulatory accounting principles applicable to banks or their holding
companies generally, (y) any action or omission of the Company or BancorpSouth
or any Subsidiary of either of them taken with the express prior written consent
of the other party hereto, or (z) any expenses incurred by such party where such
expenses are contemplated by or reasonably incurred in connection with this
Agreement or the transactions contemplated hereby or (ii) the ability of such
party and its Subsidiaries to consummate the transactions contemplated hereby.
As used in this Agreement, the word "Subsidiary" when used with respect to any
party means any corporation, partnership or other organization, whether
incorporated or unincorporated, which is consolidated with such party for
financial reporting purposes.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to Article III, the Company hereby represents and warrants to
BancorpSouth as follows:
4.1. Corporate Organization
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Alabama. The
Company has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary. The Company is duly registered as a bank holding
company under the Bank Holding Company Act of 1956, as amended (the "BHC Act").
The Articles of Incorporation and Bylaws of the Company, copies of which have
previously been made available to BancorpSouth, are true and correct copies of
such documents as in effect as of the date of this Agreement. The Company has no
Subsidiaries other than Home Bank and except for Home Bank, the Company does not
own (other than in a bona fide fiduciary capacity or in satisfaction of a debt
previously contracted) beneficially, directly or indirectly (other than as set
forth in Section 4.1(b) of the Company Disclosure Schedule), any shares of any
equity securities or similar interests of any person, or any interest in a
partnership or joint venture of any kind.
(b) Home Bank is an Alabama banking corporation duly
organized, validly existing and in good standing under the laws of the State of
Alabama. The deposit accounts of Home Bank are insured by the Federal Deposit
Insurance Corporation (the "FDIC") through the Bank Insurance Fund to the
fullest extent permitted by law, and all premiums and assessments required to be
paid in connection therewith have been paid when due. Home Bank has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted and is duly licensed
or qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or the location of the properties and
assets owned or leased by it makes such licensing or qualification necessary.
The Articles of Incorporation and Bylaws of Home Bank, copies of which have
previously been made available to BancorpSouth, are true and correct copies of
such documents as in effect as of the date of this Agreement. Other than as set
forth in Section 4.1(b) of the Company Disclosure Schedule, Home Bank has no
Subsidiaries and does not own (other than in a bona fide fiduciary capacity or
in satisfaction of a debt previously contracted) beneficially, directly or
indirectly, any shares of any equity securities or similar interests of any
person, or any interest in a partnership or joint venture of any kind except
shares in any Federal Home Loan Bank, any Federal Reserve Bank, the Student Loan
Marketing Association, The Bankers' Bank (Atlanta, GA) and other investment
securities held by Home Bank in the ordinary course of business as reflected on
the financial statements of Home Bank delivered to BancorpSouth.
(c) Valley Finance, Inc. is an Alabama corporation duly
organized, validly existing and in good standing under the laws of Alabama.
Valley Finance, Inc. is a consumer finance company under the laws of the State
of Alabama. Valley Finance, Inc. has the corporate power and authority to own or
lease all of its properties and assets and to carry on its business as it is now
being conducted and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or the location of the properties and assets owned or leased by it
makes such licensing or qualification necessary. The Articles of Incorporation
and Bylaws of Valley Finance, Inc., copies of which have previously been made
available to BancorpSouth, are true and correct copies of such documents as in
effect as of the date of this Agreement. Valley Finance has no Subsidiaries and
does not own (other than in a bona fide fiduciary capacity or in satisfaction of
a debt previously contracted) beneficially, directly or
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indirectly, any shares of any equity securities or similar interests of any
person, or any interest in a partnership or joint venture of any kind.
(d) The minute books of the Company, Home Bank and Valley
Finance contain true and correct records of all meetings and other corporate
actions held or taken since October 1, 1993 of their respective shareholders and
Boards of Directors (including committees of their respective Boards of
Directors).
4.2. Capitalization.
(a) The authorized capital stock of the Company consists of
1,500,000 shares of Company Common Stock. As the date hereof, there are
1,333,552 shares of Company Common Stock outstanding and 6,174 shares of Company
Common Stock held by the Company as treasury stock. There are no shares of
Company Common Stock reserved for issuance upon exercise of outstanding stock
options or otherwise except for 166,448 shares of Company Common Stock reserved
for issuance upon exercise of the option (the "Option") to be issued to
BancorpSouth pursuant to the Stock Option Agreement, to be entered into on the
date hereof, between BancorpSouth and Company (the "Stock Option Agreement").
All of the issued and outstanding shares of Company Common Stock have been duly
authorized and validly issued and are fully paid, nonassessable, and were issued
in compliance with and are currently free of all preemptive rights, with no
personal liability attaching to the ownership thereof. Except for options
outstanding under the Stock Option Agreement, the Company does not have and is
not bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or issuance
of any shares of Company Common Stock or any other equity security of the
Company or any securities representing the right to purchase or otherwise
receive any shares of Company Common Stock or any other equity security of the
Company.
(b) Other than as set forth in Section 4.2(b) of the Company
Disclosure Schedule, the Company owns, directly or indirectly, all of the issued
and outstanding shares of the capital stock of Home Bank, free and clear of all
liens, charges, encumbrances and security interests whatsoever, and all of such
shares are duly authorized and validly issued and are fully paid, nonassessable
and free of preemptive rights, with no personal liability attaching to the
ownership thereof. Home Bank is not bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling for
the purchase or issuance of any shares of capital stock or any other equity
security of Home Bank or any securities representing the right to purchase or
otherwise receive any shares of capital stock or any other equity security of
such Subsidiary.
(c) Home Bank owns, directly or indirectly, all of the issued
and outstanding shares of the capital stock of Valley Finance, Inc., free and
clear of all liens, charges, encumbrances and security interests whatsoever, and
all of such shares are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. Valley Finance, Inc. is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of capital
stock or any other equity security of Valley Finance, Inc. or any securities
representing the right to purchase or otherwise receive any shares of capital
stock or any other equity security of such Subsidiary.
4.3. Authority; No Violation.
(a) The Company has full corporate power and authority to
execute and deliver this Agreement and the Stock Option Agreement and, upon the
receipt of shareholder approval of the Agreement, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the Stock
Option Agreement and the consummation of the transactions contemplated hereby
and thereby have been duly and validly approved by the Board of Directors of the
Company.
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The Board of Directors of the Company has directed that this Agreement and the
transactions contemplated hereby be submitted to the Company's shareholders for
approval at a meeting of such shareholders and, except for the adoption of this
Agreement by the requisite vote of the Company's shareholders, no other
corporate proceedings on the part of the Company are necessary to approve this
Agreement and the Stock Option Agreement and to consummate the transactions
contemplated hereby and thereby. This Agreement and the Stock Option Agreement
have been duly and validly executed and delivered by the Company and constitutes
a valid and binding obligation of the Company, enforceable against the Company
in accordance with its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity and
by bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally.
(b) Neither the execution and delivery of this Agreement or
the Stock Option Agreement by the Company, nor the consummation by the Company
of the transactions contemplated hereby or thereby, nor compliance by the
Company with any of the terms or provisions hereof or thereof, will (i) violate
any provision of the Company Governing Documents or the Home Bank Governing
Documents, or (ii) assuming that the consents and approvals referred to in
Section 4.4 hereof are duly obtained, (x) violate any statute, code, ordinance,
rule, regulation, judgment, order, writ, decree or injunction applicable to the
Company or any of its Subsidiaries, or any of their respective properties or
assets, or (y) other than as set forth in Section 4.3(b) of the Company
Disclosure Schedule, violate, conflict with, result in a breach of any provision
of or the loss of any benefit under, constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under, result
in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of any lien,
pledge, security interest, charge or other encumbrance upon any of the
respective properties or assets of the Company or any of its Subsidiaries under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which the Company or any of its Subsidiaries is a party, or by
which they or any of their respective properties or assets may be bound or
affected.
4.4. Consents and Approvals. Except for (a) the filing of applications
and notices, as applicable, with the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") and the FDIC, and approval of such
applications and notices, (b) the filing of such applications, filings,
authorizations, orders and approvals as may be required under applicable state
law (including, without limitation, any applicable to consumer finance companies
under the laws of the State of Alabama), (c) the filing with the SEC of a proxy
statement in definitive form relating to the meetings of the Company's
shareholders to be held in connection with this Agreement and the transactions
contemplated hereby (the "Proxy Statement") and the filing and declaration of
effectiveness of a post-effective amendment to the BancorpSouth shelf
registration statement on Form S-4 (such shelf registration statement and any
post-effective amendment thereto relating to this transaction, or any other S-4
Registration Statement used in connection with the Merger, the "S-4") in which
the Proxy Statement will be included as a prospectus, (d) the approval of this
Agreement by the requisite vote of the shareholders of the Company, (e) the
filing of the Articles of Merger with the Mississippi Secretary, the Alabama
Secretary, the Mississippi Department and the Alabama Department, as applicable,
and (f) approval for listing of BancorpSouth Common Stock to be issued in the
Merger on the New York Stock Exchange ("NYSE"), no consents or approvals of or
filings or registrations with any court, administrative agency or commission or
other governmental authority or instrumentality (each a "Governmental Entity")
or, other than as set forth in Section 4.4 of the Company Disclosure Schedule,
with any third party are necessary in connection with (1) the execution and
delivery by the Company of this Agreement and the Stock Option Agreement and (2)
the consummation by the Company, Home Bank and Valley Finance, Inc. of the
Merger and the other transactions contemplated hereby and thereby.
4.5. Reports. The Company and Home Bank have timely filed all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that they
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were required to file since December 31, 1995 with (i) the Federal Reserve
Board, (ii) the FDIC, (iii) any Federal Reserve Bank, (iv) any state banking
commissions, including without limitation the Alabama Department, or any other
state regulatory authority (each a "State Regulator") and (v) any other
self-regulatory organization ("SRO") (collectively, the "Regulatory Agencies"),
and have paid all fees and assessments due and payable in connection therewith.
Except for normal examinations conducted by a Regulatory Agency in the regular
course of the business of the Company and its Subsidiaries, no Regulatory Agency
has initiated any proceeding or, to the knowledge of the Company, investigation
into the business or operations of the Company or any of its Subsidiaries since
December 31, 1995. Except as set forth in Section 4.5 of the Company Disclosure
Schedule, there is no unresolved violation, criticism, or exception by any
Regulatory Agency with respect to any report or statement relating to any
examinations of the Company or any of its Subsidiaries.
4.6. Financial Statements. The Company has previously made available to
BancorpSouth copies of (a) the consolidated statements of condition of the
Company and its Subsidiaries as of December 31 for the fiscal years 1996 and
1997, and the related consolidated statements of earnings, changes in
shareholders' equity and cash flows for the fiscal years 1996 through 1997,
inclusive, in each case accompanied by the audit report of Schauer, Taylor, Xxx
& Xxxxxxx, P.C., independent public accountants with respect to the Company. The
December 31, 1997 consolidated statement of condition of the Company (including
the related notes, where applicable) fairly presents the consolidated financial
position of the Company and its Subsidiaries as of the date thereof, and the
other financial statements referred to in this Section 4.6 (including the
related notes, where applicable) fairly present the results of the consolidated
operations and consolidated financial position of the Company and its
Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth; each of such statements (including the related notes, where
applicable) complies with applicable accounting requirements; and each of such
statements (including the related notes, where applicable) has been prepared in
accordance with generally accepted accounting principles ("GAAP") consistently
applied during the periods involved, except as indicated in the notes thereto.
The books and records of the Company and its Subsidiaries have been, and are
being, maintained in accordance with GAAP and any other applicable legal and
accounting requirements, except as set forth in Section 4.6 of the Company
Disclosure Schedule.
4.7. Broker's Fees. Except for Xxxx Xxxxxxxxxx & Co. Investment
Banking, the fees of which are set forth in that certain agreement dated May 13,
1998, neither the Company nor any Subsidiary of the Company nor any of their
respective officers or directors has employed any broker or finder or incurred
any liability for any broker's fees, commissions or finder's fees in connection
with any of the transactions contemplated by this Agreement or the Stock Option
Agreement.
4.8. Absence of Certain Changes or Events.
(a) Since June 30, 1998, except as set forth in Section 4.8 of
the Company Disclosure Schedule, (i) there has been no change or development or
combination of changes or developments which, individually or in the aggregate,
has had a Material Adverse Effect on the Company and (ii) the Company and its
Subsidiaries have carried on their respective businesses in the ordinary course
consistent with their past practices.
(b) Neither the Company nor any of its Subsidiaries has,
except as set forth in Section 4.8 of the Company Disclosure Schedule, (i)
increased the wages, salaries, compensation, pension, or other fringe benefits
or perquisites payable to any executive officer, employee, or director from the
amount thereof in effect as of June 30, 1998 (which amounts have been previously
disclosed to BancorpSouth), granted any severance or termination pay, entered
into any contract to make or grant any severance or termination pay, or paid any
bonus (except for salary and benefit increases and bonus payments made in the
ordinary course of business consistent with past practices), (ii) suffered any
strike, work stoppage, slow-down, or other labor disturbance, (iii) been a party
to a
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collective bargaining agreement, contract or other agreement or understanding
with a labor union or organization, or (iv) had any union organizing activities.
4.9. Legal Proceedings.
(a) Except as set forth in Section 4.9(a) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party
to any, and there are no pending or, to the Company's knowledge, threatened,
legal, administrative, arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against the Company or
any of its Subsidiaries or challenging the validity or propriety of the
transactions contemplated by this Agreement or the Stock Option Agreement, other
than regularly scheduled examinations and similar routine investigations made by
bank regulatory officials in the course of their supervision of the Company,
Home Bank and Valley Finance, Inc.
(b) There is no injunction, order, judgment, decree, or unique
regulatory restriction imposed upon the Company, any of its Subsidiaries or the
assets of the Company or any of its Subsidiaries.
4.10. Taxes.
(a) Each of the Company and its Subsidiaries has (i) duly and
timely filed (including applicable extensions granted) all Tax Returns (as
hereinafter defined) required to be filed at or prior to the Effective Time, and
such Tax Returns are true and correct, and (ii) paid in full or made adequate
provision in the financial statements (except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount) of the
Company (in accordance with GAAP) for all Taxes (as hereinafter defined) shown
to be due on such Tax Returns. Except as set forth in Section 4.10 of the
Company Disclosure Schedule, as of the date hereof neither the Company nor any
of its Subsidiaries has requested any extension of time within which to file any
Tax Returns in respect of any fiscal year which have not since been filed and no
request for waivers of the time to assess any Taxes are pending or outstanding.
(b) For the purposes of this Agreement, "Taxes" shall mean all
taxes, charges, fees, levies, penalties or other assessments imposed by any
United States federal, state, local or foreign taxing authority, including, but
not limited to income, excise, property, sales, transfer, franchise, payroll,
withholding, social security or other taxes, including any interest, penalties
or additions attributable thereto. For purposes of this Agreement, "Tax Return"
shall mean any return, report, information return or other document (including
any related or supporting information) with respect to Taxes.
4.11. Employees.
(a) Section 4.11(a) of the Company Disclosure
Schedule sets forth a true and correct list of each deferred compensation plan,
incentive compensation plan, equity compensation plan, "welfare" plan, fund or
program (within the meaning of section 3(l) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")); "pension" plan, fund or program
(within the meaning of section 3(2) of ERISA); each employment, termination or
severance agreement; and each other employee benefit plan, fund, program,
agreement or arrangement, in each case, that is sponsored, maintained or
contributed to or required to be contributed to (the "Plans") by the Company,
any of its Subsidiaries or by any trade or business, whether or not incorporated
(an "ERISA Affiliate"), all of which together with the Company would be deemed a
"single employer" within the meaning of Section 4001 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") or Section 414(b), (c), (m) or
(o) of the Code, for the benefit of any employee or former employee of the
Company, any Subsidiary thereof or any ERISA Affiliate.
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(b) The Company has heretofore made available to
BancorpSouth with respect to each of the Plans true and correct copies of each
of the following documents if applicable: (i) the Plan document; (ii) the
actuarial report, if any, for such Plan for each of the last two years, (iii)
the most recent determination letter from the Internal Revenue Service for such
Plan and (iv) the most recent summary plan description and related summaries of
material modifications.
(c) Except as set forth in Section 4.11(c) of the
Company Disclosure Schedule, each of the Plans is in compliance with the
applicable provisions of the Code and ERISA; each of the Plans intended to be
"qualified" within the meaning of section 401(a) of the Code has received a
favorable determination letter from the IRS and to the knowledge of the Company,
nothing has occurred which could reasonably be expected to result in the
revocation of such letter; no Plan has an accumulated or waived funding
deficiency within the meaning of section 412 of the Code; neither the Company
nor any ERISA Affiliate has incurred, directly or indirectly, any liability to
or on account of a Plan pursuant to Title IV of ERISA (other than PBGC
premiums); to the knowledge of the Company no proceedings have been instituted
to terminate any Plan that is subject to Title IV of ERISA; no "reportable
event," as such term is defined in section 4043(c) of ERISA, has occurred with
respect to any Plan (other than a reportable event with respect to which the
thirty day notice period has been waived); no condition exists that presents a
material risk to the Company of incurring a liability to or on account of a Plan
pursuant to Title IV of ERISA; no Plan is a multiemployer plan (within the
meaning of section 4001(a)(3) of ERISA) and no Plan is a multiple employer plan
as defined in Section 413 of the Code; and there are no pending, or to the
knowledge of the Company, threatened or anticipated claims (other than routine
claims for benefits) by, on behalf of or against any of the Plans or any trusts
related thereto.
(d) Except as set forth in Section 4.11(d) of the
Company Disclosure Schedule or as otherwise contemplated by this Agreement or
any other agreements entered into by any party hereto in connection with the
execution hereof, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
conjunction with any other event) (i) result in any payment (including, without
limitation, severance, unemployment compensation, "excess parachute payment"
within the meaning of Section 280G of the Code, forgiveness of indebtedness or
otherwise) becoming due to any officer, director or employee of the Company or
any of its Subsidiaries under any Plan or otherwise, (ii) increase any benefits
payable under any Plan or (iii) result in any acceleration of the time of
payment or vesting of any such benefits.
4.12. Company Information. The information relating to the Company and
its Subsidiaries which is provided to BancorpSouth by the Company or its
representatives for inclusion in the Proxy Statement and the S-4, or in any
other document filed with any other regulatory agency in connection herewith,
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading. The Proxy Statement
(except for such portions thereof that relate only to BancorpSouth or any of its
Subsidiaries) will comply with the provisions of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations thereunder.
4.13. Compliance with Applicable Law. Except as set forth in Section
4.13 of the Company Disclosure Schedule, the Company and each of its
Subsidiaries hold, and have at all times held, all licenses, franchises, permits
and authorizations necessary for the lawful conduct of their respective
businesses under and pursuant to all, and have complied with and are not in
default in any respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity relating to the
Company or any of its Subsidiaries, and neither the Company nor any of its
Subsidiaries has received notice, and the Company does not know, of any
violations of any of the above.
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4.14. Certain Contracts.
(a) Except as set forth in Section 4.14 of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party
to or bound by any contract (whether written or oral) (i) with respect to the
employment of any directors or consultants, (ii) which, upon the consummation of
the transactions contemplated by this Agreement, will (either alone or upon the
occurrence of any additional acts or events) result in any payment or benefits
(whether of severance pay or otherwise) becoming due, or the acceleration or
vesting of any rights to any payment or benefits, from BancorpSouth, the
Company, the Surviving Corporation or any of their respective Subsidiaries to
any director or consultant thereof, (iii) which is a material contract (as
defined in Item 601(b)(10) of Regulation S-K of the Securities and Exchange
Commission (the "SEC")) to be performed after the date of this Agreement, (iv)
which is a consulting agreement (including data processing, software programming
and licensing contracts) not terminable on 90 days or less notice involving the
payment of more than $50,000 per annum, or (v) which materially restricts the
conduct of any line of business by the Company or any of its Subsidiaries. Each
contract, arrangement, commitment or understanding of the type described in this
Section 4.14(a) is referred to herein as a "Company Contract". The Company has
previously delivered or made available to BancorpSouth true and correct copies
of each Company Contract.
(b) (i) Each Company Contract described in clause (iii) of
Section 4.14(a) is (x) valid and binding and in full force and effect with
respect to the obligations of the Company or its Subsidiaries and (y) to the
best knowledge of the Company after due inquiry, is valid and binding and in
full force and effect with respect to the obligations of the counterparties
thereto, (ii) the Company and each of its Subsidiaries has performed all
obligations required to be performed by it to date under each Company Contract
described in clause (iii) of Section 4.14(a), (iii) no event or condition exists
which constitutes or, after notice or lapse of time or both, would constitute, a
default on the part of the Company or any of its Subsidiaries under any Company
Contract described in clause (iii) of Section 4.14(a), and (iv) no other party
to any Company Contract described in clause (iii) of Section 4.14(a) is, to the
knowledge of the Company, in default in any respect thereunder.
4.15. Agreements with Regulatory Agencies. Neither the Company nor any
of its Subsidiaries is subject to any cease-and-desist or other order issued by,
or is a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any extraordinary supervisory letter from, or has adopted any board resolutions
at the request of (each, a "Regulatory Agreement"), any Regulatory Agency or
other Governmental Entity that restricts the conduct of its business or that in
any manner relates to its capital adequacy, its credit policies, its management
or its business, nor has the Company or any of its Subsidiaries been advised by
any Regulatory Agency or other Governmental Entity that it is considering
issuing or requesting any Regulatory Agreement.
4.16. Business Combination Provision; Takeover Laws. The Company has
taken all action required to be taken by it in order to exempt this Agreement
and the Stock Option Agreement and the transactions contemplated hereby and
thereby from, and this Agreement and the Stock Option Agreement and the
transactions contemplated hereby and thereby are exempt from, the requirements
of any "moratorium", "control share", "fair price" or other anti-takeover laws
and regulations (collectively, "Takeover Laws") of the State of Alabama or other
applicable jurisdiction.
4.17. Administration of Fiduciary Accounts. The Company and each of its
Subsidiaries has properly administered all accounts for which it acts as a
fiduciary, including but not limited to accounts for which it serves as a
trustee, agent, custodian, personal representative, guardian, conservator or
investment advisor, in accordance with the terms of the governing documents and
applicable state and federal law and regulation and common law. Neither the
Company nor any of its Subsidiaries nor any of their respective directors,
officers or employees has committed any breach of
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trust with respect to any such fiduciary account, and the accountings for each
such fiduciary account are true and correct and accurately reflect the assets of
such fiduciary account.
4.18. Environmental Matters.
(a) Except as set forth in Section 4.18 of the Company
Disclosure Schedule, to the knowledge of the Company, each of the Company and
its Subsidiaries and each of the Participation Facilities and the Loan
Properties (each as hereinafter defined), are in compliance with all applicable
federal, state and local laws, including common law, regulations and ordinances,
and with all applicable decrees, orders and contractual obligations relating to
pollution or the discharge of, or exposure to, Hazardous Materials (as
hereinafter defined) in the environment or workplace ("Environmental Laws");
(b) There is no suit, claim, action or proceeding, pending or,
to the knowledge of the Company, threatened, before any Governmental Entity or
other forum in which the Company, any of its Subsidiaries, any Participation
Facility or any Loan Property, has been or, with respect to threatened
proceedings, may be, named as a defendant (x) for alleged noncompliance
(including by any predecessor) with any Environmental Laws, or (y) relating to
the release, threatened release or exposure to any Hazardous Material whether or
not occurring at or on a site owned, leased or operated by the Company or any of
its Subsidiaries, any Participation Facility or any Loan Property;
(c) Except as set forth in Section 4.18 of the Company
Disclosure Schedule, to the knowledge of the Company, during the period of (x)
the Company's or any of its Subsidiaries' ownership or operation of any of their
respective current or former properties, (y) the Company's or any of its
Subsidiaries' participation in the management of any Participation Facility, or
(z) the Company's or any of its Subsidiaries' interest in a Loan Property, there
has been no release of Hazardous Materials in, on, under or affecting any such
property. To the knowledge of the Company, prior to the period of (x) the
Company's or any of its Subsidiaries' ownership or operation of any of their
respective current or former properties, (y) the Company's or any of its
Subsidiaries' participation in the management of any Participation Facility, or
(z) the Company's or any of its Subsidiaries' interest in a Loan Property, there
was no release of Hazardous Materials in, on, under or affecting any such
property, Participation Facility or Loan Property; and
(d) The following definitions apply for purposes of this
Section 4.18: (x) "Hazardous Materials" means any chemicals, pollutants,
contaminants, wastes, toxic substances, petroleum or other regulated substances
or materials, (y) "Loan Property" means any property in which the Company or any
of its Subsidiaries holds a security interest, and, where required by the
context, said term means the owner or operator of such property; and (z)
"Participation Facility" means any facility in which the Company or any of its
Subsidiaries participates in the management and, where required by the context,
said term means the owner or operator of such property.
4.19. Approvals. As of the date of this Agreement, the Company knows of
no reason why all regulatory approvals required for the consummation of the
transactions contemplated hereby (including, without limitation, the Merger)
should not be obtained.
4.20. Loan Portfolio.
(a) Except as set forth in Section 4.20 of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party
to any written or oral loan agreement, note or borrowing arrangement (including,
without limitation, leases, credit enhancements, commitments, guarantees and
interest-bearing assets) (collectively, "Loans"), other than Loans the unpaid
principal balance of which does not exceed $100,000, under the terms of which
the obligor was, as of September 30, 1998, over 90 days delinquent in payment of
principal or interest or in default of any other provision. Section 4.20 of the
Company Disclosure Schedule sets forth all of the
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Loans in original principal amount in excess of $100,000 of the Company or any
of its Subsidiaries that as of September 30, 1998, were classified as "Doubtful"
or "Loss", or words of similar import, together with the principal amount of and
accrued and unpaid interest on each such Loan and the identity of the borrower
thereunder.
(b) Each Loan in original principal amount in excess of
$100,000 (i) is evidenced by notes, agreements or other evidences of
indebtedness which are, to the best knowledge of the Company after appropriate
due diligence, true, genuine and what they purport to be, (ii) to the extent
secured, has been secured by valid liens and security interests which have been
perfected and (iii) to the best knowledge of the Company after appropriate due
diligence, is the legal, valid and binding obligation of the obligor named
therein, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
4.21. Property. Except as set forth in Section 4.21 of the Company
Disclosure Schedule, each of the Company and its Subsidiaries has good and
marketable title free and clear of all liens, encumbrances, mortgages, pledges,
charges, defaults or equitable interests to all of the properties and assets,
real and personal, tangible or intangible, which are reflected on the
consolidated statement of financial condition of the Company as of December 31,
1997 or acquired after such date, except (i) liens for taxes not yet due and
payable or contested in good faith by appropriate proceedings, (ii) pledges to
secure deposits and other liens incurred in the ordinary course of business,
(iii) such imperfections of title, easements and encumbrances, if any, as do not
interfere with the use of the respective property as such property is used on
the date of this Agreement, (iv) for dispositions and encumbrances of, or on,
such properties or assets in the ordinary course of business or (v) mechanics',
materialmen's, workmen's, repairmen's, warehousemen's, carrier's and other
similar liens and encumbrances arising in the ordinary course of business. All
leases pursuant to which the Company or any Subsidiary of the Company, as
lessee, leases real or personal property are valid and enforceable in accordance
with their respective terms and neither the Company nor any of its Subsidiaries
nor, to the knowledge of the Company, any other party thereto, is in default
thereunder.
4.22. Accounting for the Merger; Reorganization. As of the date of this
Agreement, the Company has no reason to believe that the Merger will fail to
qualify (i) for pooling-of-interests treatment under GAAP or (ii) as a
reorganization under Section 368(a) of the Code.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BANCORPSOUTH
Subject to Article III, BancorpSouth hereby represents and warrants to
the Company as follows:
5.1. Corporate Organization.
(a) BancorpSouth is a corporation duly organized, validly
existing and in good standing under the laws of the State of Mississippi.
BancorpSouth has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary. BancorpSouth is duly registered as a bank holding
company under the BHC Act. The Amended and Restated Articles of Incorporation
and Bylaws of BancorpSouth (the "BancorpSouth Governing Documents"), copies of
which have previously been made available to the Company, are true and correct
copies of such documents as in effect as of the date of this Agreement.
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(b) BancorpSouth Bank is a Mississippi state bank validly
existing and in good standing. The deposit accounts of BancorpSouth Bank are
insured by the FDIC through the Bank Insurance Fund or Savings Association
Insurance Fund to the fullest extent permitted by law, and all premiums and
assessments required in connection therewith have been paid when due. Each of
BancorpSouth's other Subsidiaries is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation. Each
Subsidiary of BancorpSouth has the corporate power and authority to own or lease
all of its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary. The Amended and Restated Articles of Association and
Bylaws of BancorpSouth Bank (the "Bank Governing Documents"), copies of which
have previously been made available to the Company, are true and correct copies
of such documents as in effect as of the date of this Agreement.
(c) The minute books of BancorpSouth and each of its
Subsidiaries contain true and correct records of all meetings and other
corporate actions held or taken since December 31, 1997 (or the date of
incorporation if later) of their respective shareholders and Boards of Directors
(including committees of their respective Boards of Directors).
5.2. Capitalization.
(a) The authorized capital stock of BancorpSouth consists of
500,000,000 shares of BancorpSouth Common Stock. As of September 30, 1998, there
were 44,792,042 shares of BancorpSouth Common Stock issued as of September 30,
1998, 129,936 shares of BancorpSouth Common Stock were held in BancorpSouth's
treasury and as of September 30, 1998, 44,662,106 shares of BancorpSouth Common
Stock was outstanding. As of the date of this Agreement, no shares of
BancorpSouth Common Stock were reserved for issuance, except with respect to
employee benefit plans, stock option plans, BancorpSouth's rights plan pursuant
to which shareholders have the right to receive common stock under certain
circumstances (the "BancorpSouth Rights"), (i) that certain Agreement and Plan
of Merger, dated as of May 2, 1998, between BancorpSouth and Merchants Capital
Corporation, (ii) that certain Merger Agreement, dated as of June 19, 1998 (as
amended), among BancorpSouth, Alabama Bancorp., Inc., Highland Bank, and First
Community Bank of the South, and (iii) that certain Agreement and Plan of
Merger, dated August 12, 1998, between BancorpSouth and The First Corporation,
and the transactions contemplated therein. All of the issued and outstanding
shares of BancorpSouth Common Stock have been duly authorized and validly issued
and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. Except as referred to
above with respect to reserved shares and for BancorpSouth's dividend
reinvestment plan, BancorpSouth does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of
BancorpSouth Common Stock or any other equity securities of BancorpSouth or any
securities representing the right to purchase or otherwise receive any shares of
BancorpSouth Common Stock. The shares of BancorpSouth Common Stock to be issued
pursuant to the Merger will be duly authorized and validly issued and, at the
Effective Time, all such shares will be fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof.
(b) Schedule 22 to BancorpSouth's Annual Report on Form 10-K
for the year ended December 31, 1997, sets forth a true and correct list of all
material BancorpSouth Subsidiaries as of the date of this Agreement.
BancorpSouth owns, directly or indirectly, all of the issued and outstanding
shares of capital stock of each of the Subsidiaries of BancorpSouth, free and
clear of all liens, charges, encumbrances and security interests whatsoever, and
all of such shares are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. As of the date of this Agreement, no
Subsidiary of BancorpSouth has or is bound by any outstanding subscriptions,
options, warrants,
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calls, commitments or agreements of any character with any party that is not a
direct or indirect Subsidiary of BancorpSouth calling for the purchase or
issuance of any shares of capital stock or any other equity security of such
Subsidiary or any securities representing the right to purchase or otherwise
receive any shares of capital stock or any other equity security of such
Subsidiary.
5.3. Authority; No Violation.
(a) BancorpSouth has full corporate power and authority to
execute and deliver this Agreement and the Stock Option Agreement and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Stock Option Agreement and the consummation
of the transactions contemplated hereby and thereby have been duly and validly
approved by the Board of Directors of BancorpSouth, and no other corporate
proceedings on the part of BancorpSouth are necessary to approve this Agreement
and the Stock Option Agreement and to consummate the transactions contemplated
hereby and thereby. Each of this Agreement and the Stock Option Agreement has
been duly and validly executed and delivered by BancorpSouth and constitutes a
valid and binding obligation of BancorpSouth, enforceable against BancorpSouth
in accordance with its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity and
by bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally.
(b) Neither the execution and delivery of this Agreement or
the Stock Option Agreement by BancorpSouth, nor the consummation by BancorpSouth
of the transactions contemplated hereby or thereby, nor compliance by
BancorpSouth with any of the terms or provisions hereof or thereof, will (i)
violate any provision of the BancorpSouth Governing Documents or the Bank
Governing Documents, or (ii) assuming that the consents and approvals referred
to in Sections 5.3(a) and 5.4 are duly obtained, (x) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to BancorpSouth or any of its Subsidiaries or any of their respective
properties or assets, or (y) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of any lien,
pledge, security interest, charge or other encumbrance upon any of the
respective properties or assets of BancorpSouth or any of its Subsidiaries
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which BancorpSouth or any of its Subsidiaries is a party, or by
which they or any of their respective properties or assets may be bound or
affected.
5.4. Consents and Approvals. Except for (a) the filing of applications
and notices, as applicable, with the Federal Reserve Board and the FDIC, and
approval of such applications and notices, (b) such applications, filings,
authorizations, orders and approvals as may be required under applicable state
law, (c) the filing with the SEC of the Proxy Statement and the filing and
declaration of effectiveness of the S-4, (d) the filing of the Articles of
Merger with the Mississippi Secretary, the Alabama Secretary, the Mississippi
Department and the Alabama Department, as applicable, (e) such filings and
approvals as are required to be made or obtained under the securities or "Blue
Sky" laws of various states in connection with the issuance of the shares of
BancorpSouth Common Stock pursuant to this Agreement and (f) approval for
listing of BancorpSouth Common Stock to be issued in the Merger on the NYSE, no
consents or approvals of or filings or registrations with any Governmental
Entity or with any third party are necessary in connection with (1) the
execution and delivery by BancorpSouth of this Agreement and (2) the
consummation by BancorpSouth of the Merger and the other transactions
contemplated hereby.
5.5. Reports. BancorpSouth and each of its Subsidiaries have timely
filed all reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file since
December 31, 1997 with any Regulatory Agency, and
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have paid all fees and assessments due and payable in connection therewith.
Except for matters disclosed pursuant to Section 5.16 and normal examinations
conducted by a Regulatory Agency in the regular course of the business of
BancorpSouth and its Subsidiaries, no Regulatory Agency has initiated any
proceeding or, to the knowledge of BancorpSouth, investigation into the business
or operations of BancorpSouth or any of its Subsidiaries since December 31,
1997. Except for matters disclosed pursuant to Section 5.16, there is no
unresolved violation, criticism, or exception by any Regulatory Agency with
respect to any report or statement relating to any examinations of BancorpSouth
or any of its Subsidiaries.
5.6. Financial Statements. BancorpSouth has previously made available
to the Company copies of (i) the consolidated balance sheets of BancorpSouth and
its Subsidiaries as of December 31 for the fiscal years 1996 and 1997 and the
related consolidated statements of income, changes in shareholders' equity and
cash flows for the fiscal years 1996 through 1997, inclusive, as reported in
BancorpSouth's Annual Report on Form 10-K for the fiscal year ended December 31,
1997, filed with the SEC under the Exchange Act, in each case accompanied by the
audit report of KPMG Peat Marwick LLP, independent public accountants with
respect to BancorpSouth, and (ii) the unaudited consolidated balance sheet of
BancorpSouth and its Subsidiaries as of March 31, 1998, June 30, 1998 and
September 30, 1998, and the related unaudited consolidated statements of income,
changes in shareholders' equity and cash flows for the periods ended March 31,
1998, June 30, 1998 and September 30, 1998 as reported in BancorpSouth's
Quarterly Report on Form 10-Q for the quarters ended March 31, 1998, June 30,
1998 and September 30, 1998, filed with the SEC under the Exchange Act. The
December 31, 1997 consolidated balance sheet of BancorpSouth (including the
related notes, where applicable) fairly presents the consolidated financial
position of BancorpSouth and its Subsidiaries as of the date thereof, and the
other financial statements referred to in this Section 5.6 (including the
related notes, where applicable) fairly present and the financial statements to
be filed with the SEC after the date hereof will fairly present (subject, in the
case of the unaudited statements, to recurring audit adjustments normal in
nature and amount), the results of the consolidated operations and changes in
shareholders' equity and consolidated financial position of BancorpSouth and its
Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth; each of such statements (including the related notes, where
applicable) complies, and the financial statements to be filed with the SEC
after the date hereof will comply, with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto; and
each of such statements (including the related notes, where applicable) has
been, and the financial statements to be filed with the SEC after the date
hereof will be, prepared in accordance with GAAP consistently applied during the
periods involved, except as indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q. The books and records of
BancorpSouth and its Subsidiaries have been, and are being, maintained in
accordance with GAAP and any other applicable legal and accounting requirements.
5.7. Broker's Fees. Neither BancorpSouth nor any Subsidiary of
BancorpSouth, nor any of their respective officers or directors, has employed
any broker or finder or incurred any liability for any broker's fees,
commissions or finder's fees in connection with any of the transactions
contemplated by this Agreement or the Stock Option Agreement.
5.8. Absence of Certain Changes or Events. Except as may be disclosed
in any BancorpSouth Report (as defined in Section 5.12) filed with the SEC prior
to the date of this Agreement, since December 31, 1997, there has been no change
or development or combination of changes or developments which, individually or
in the aggregate, has had a Material Adverse Effect on BancorpSouth.
5.9. Legal Proceedings.
(a) Except as set forth in BancorpSouth's Annual Report on
Form 10-K for the year ended December 31, 1997 or as disclosed pursuant to
Section 5.16 hereto, neither BancorpSouth
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nor any of its Subsidiaries is a party to any and there are no pending or, to
BancorpSouth's knowledge, threatened, legal, administrative, arbitral or other
proceedings, claims, actions or governmental or regulatory investigations of any
nature against BancorpSouth or any of its Subsidiaries or challenging the
validity or propriety of the transactions contemplated by this Agreement or the
Stock Option Agreement.
(b) There is no injunction, order, judgment, decree, or
regulatory restriction imposed upon BancorpSouth, any of its Subsidiaries or the
assets of BancorpSouth or any of its Subsidiaries.
5.10. Taxes. Except as set forth in Section 5.10 of BancorpSouth
Disclosure Schedule, each of BancorpSouth and its Subsidiaries has (i) duly and
timely filed (including applicable extensions granted) all Tax Returns required
to be filed at or prior to the Effective Time, and such Tax Returns are true and
correct, and (ii) paid in full or made adequate provision in the financial
statements of BancorpSouth (in accordance with GAAP) for all Taxes shown to be
due on such Tax Returns. Except as set forth in Section 5.10 of BancorpSouth
Disclosure Schedule, as of the date hereof, neither BancorpSouth nor any of its
Subsidiaries has requested any extension of time within which to file any Tax
Returns in respect of any fiscal year which have not since been filed and no
request for waivers of the time to assess any Taxes are pending or outstanding.
5.11. Employees.
(a) Section 5.11(a) of BancorpSouth Disclosure Schedule sets
forth a true and correct list of each deferred compensation plan, incentive
compensation plan, equity compensation plan, "welfare" plan, fund or program
(within the meaning of Section 3(1) of the ERISA); "pension" plan, fund or
program (within the meaning of Section 3(2) of ERISA); each employment,
termination or severance agreement; and each other employee benefit plan, fund,
program, agreement or arrangement, in each case, that is sponsored, maintained
or contributed to or required to be contributed to as of the date of this
Agreement (the "BancorpSouth Plans") by BancorpSouth, any of its Subsidiaries or
by any trade or business, whether or not incorporated (a "BancorpSouth ERISA
Affiliate"), all of which together with BancorpSouth would be deemed a "single
employer" within the meaning of Section 4001 of ERISA, for the benefit of any
employee or former employee of BancorpSouth, any Subsidiary or any BancorpSouth
ERISA Affiliate.
(b) Each of BancorpSouth Plans is in compliance with the
applicable provisions of the Code and ERISA; each of BancorpSouth Plans intended
to be "qualified" within the meaning of Section 401(a) of the Code has received
a favorable determination letter from the IRS and to the knowledge of
BancorpSouth, nothing has occurred which could reasonably be expected to result
in the revocation of such letter; no BancorpSouth Plan has an accumulated or
waived funding deficiency within the meaning of Section 412 of the Code; neither
BancorpSouth nor any BancorpSouth ERISA Affiliate has incurred, directly or
indirectly, any liability to or on account of a BancorpSouth Plan pursuant to
Title IV of ERISA (other than PBGC premiums); to the knowledge of BancorpSouth
no proceedings have been instituted to terminate any BancorpSouth Plan that is
subject to Title IV of ERISA; no "reportable event," as such term is defined in
Section 4043(c) of ERISA, has occurred with respect to any BancorpSouth Plan
(other than a reportable event with respect to which the thirty day notice
period has been waived); no condition exists that presents a material risk to
BancorpSouth of incurring a liability to or on account of a BancorpSouth Plan
pursuant to Title IV of ERISA; no BancorpSouth Plan is a multiemployer plan
(within the meaning of Section 4001(a)(3) of ERISA) and no BancorpSouth Plan is
a multiple employer plan as defined in Section 413 of the Code; and there are no
pending, or, to the knowledge of BancorpSouth, threatened or anticipated claims
(other than routine claims for benefits) by, on behalf of or against any of
BancorpSouth Plans or any trusts related thereto.
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5.12. SEC Reports. BancorpSouth has previously made available to the
Company a true and correct copy of each (a) final registration statement,
prospectus, report, schedule and definitive proxy statement filed since December
31, 1996 by BancorpSouth with the SEC pursuant to the Securities Act of 1933
(the "Securities Act") or the Exchange Act (the "BancorpSouth Reports") and (b)
communication mailed by BancorpSouth to its shareholders since December 31,
1996, and no such registration statement, prospectus, report, schedule, proxy
statement or communication contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances in which
they were made, not misleading, except that information as of a later date shall
be deemed to modify information as of an earlier date. BancorpSouth has timely
filed all BancorpSouth Reports and other documents required to be filed by it
under the Securities Act and the Exchange Act, and, as of their respective
dates, all BancorpSouth Reports complied with the published rules and
regulations of the SEC with respect thereto.
5.13. BancorpSouth Information. The information relating to
BancorpSouth and its Subsidiaries to be contained in the Proxy Statement and the
S-4, or in any other document filed with any other regulatory agency in
connection herewith, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances in which they are made, not misleading. The Proxy Statement
(except for such portions thereof that relate only to the Company or any of its
Subsidiaries) will comply with the provisions of the Exchange Act and the rules
and regulations thereunder. The S-4 will comply with the provisions of the
Securities Act and the rules and regulations thereunder.
5.14. Compliance with Applicable Law. BancorpSouth and each of its
Subsidiaries holds, and has at all times held, all licenses, franchises, permits
and authorizations necessary for the lawful conduct of their respective
businesses under and pursuant to all, and other than matters addressed by
Section 5.16 have complied with and are not in default in any respect under any,
applicable law, statute, order, rule, regulation, policy and/or guideline of any
Governmental Entity relating to BancorpSouth or any of its Subsidiaries and
neither BancorpSouth nor any of its Subsidiaries has received notice, and
BancorpSouth does not know, of any violations of any of the above.
5.15. Ownership of Company Common Stock; Affiliates and Associates. As
of the date hereof, neither BancorpSouth nor any of its affiliates or associates
(as such terms are defined under the Exchange Act) (i) beneficially owns,
directly or indirectly, or (ii) is a party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of any
shares of capital stock of the Company (other than Trust Account Shares and DPC
Shares).
5.16. Approvals. As of the date of this Agreement, BancorpSouth knows
of no reason why all regulatory approvals required for the consummation of the
transactions contemplated hereby (including, without limitation, the Merger)
should not be obtained.
5.17. Accounting for the Merger; Reorganization. As of the date of this
Agreement, BancorpSouth has no reason to believe that the Merger will fail to
qualify (i) for pooling-of-interests treatment under GAAP or (ii) as a
reorganization under Section 368(a) of the Code.
5.18. Agreements with Regulatory Agencies. Except as disclosed to the
Company orally or in writing, neither BancorpSouth nor any of its Subsidiaries
is subject to any cease-and-desist or other order issued by, or is a party to
any written agreement, consent agreement or memorandum of understanding with, or
is a party to any commitment letter or similar undertaking to, or is subject to
any order or directive by, or is a recipient of any extraordinary supervisory
letter from, or has adopted any board resolutions at the request of (each, a
"BancorpSouth Regulatory Agreement"), any Regulatory Agency or other
Governmental Entity that restricts the conduct of its business or that in any
manner relates to its capital adequacy, its credit policies, its management or
its business, nor has BancorpSouth or any of its Subsidiaries been advised by
any Regulatory Agency or other
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Governmental Entity that it is considering issuing or requesting any
BancorpSouth Regulatory Agreement.
5.19. Environmental Matters.
(a) Each of BancorpSouth and its Subsidiaries and, to the
knowledge of BancorpSouth, each of the Participation Facilities and the Loan
Properties (each as hereinafter defined), are in compliance with all
Environmental Laws;
(b) There is no suit, claim, action or proceeding, pending or,
to the knowledge of BancorpSouth, threatened, before any Governmental Entity or
other forum in which BancorpSouth, any of its Subsidiaries, any Participation
Facility or any Loan Property, has been or, with respect to threatened
proceedings, may be, named as a defendant (i) for alleged noncompliance
(including by any predecessor) with any Environmental Laws, or (ii) relating to
the release, threatened release or exposure to any Hazardous Material whether or
not occurring at or on a site owned, leased or operated by BancorpSouth or any
of its Subsidiaries, any Participation Facility or any Loan Property;
(c) To the knowledge of BancorpSouth during the period of (i)
BancorpSouth's or any of its Subsidiaries' ownership or operation of any of
their respective current or former properties, (ii) BancorpSouth's or any of its
Subsidiaries' participation in the management of any Participation Facility, or
(iii) BancorpSouth's or any of its Subsidiaries' interest in a Loan Property,
there has been no release of Hazardous Materials in, on, under or affecting any
such property. To the knowledge of BancorpSouth, prior to the period of (i)
BancorpSouth's or any of its Subsidiaries' ownership or operation of any of
their respective current or former properties, (ii) BancorpSouth's or any of its
Subsidiaries' participation in the management of any Participation Facility, or
(iii) BancorpSouth's or any of its Subsidiaries' interest in a Loan Property,
there was no release of Hazardous Materials in, on, under or affecting any such
property, Participation Facility or Loan Property; and
(d) The following definitions apply for purposes of this
Section 5.19: (i) "Loan Property" means any property in which BancorpSouth or
any of its Subsidiaries holds a security interest, and, where required by the
context, said term means the owner or operator of such property; and (ii)
"Participation Facility" means any facility in which BancorpSouth or any of its
Subsidiaries participates in the management and, where required by the context,
said term means the owner or operator of such property.
5.20. Property. Each of BancorpSouth and its Subsidiaries has good and
marketable title free and clear of all liens, encumbrances, mortgages, pledges,
charges, defaults or equitable interests to all of the properties and assets,
real and personal, tangible or intangible, and which are reflected on the
consolidated statement of financial condition of BancorpSouth as of December 31,
1997 or acquired after such date, except (i) liens for taxes not yet due and
payable or contested in good faith by appropriate proceedings, (ii) pledges to
secure deposits and other liens incurred in the ordinary course of business,
(iii) such imperfections of title, easements and encumbrances, if any, as do not
interfere with the use of the respective property as such property is used on
the date of this Agreement, (iv) for dispositions and encumbrances of, or on,
such properties or assets in the ordinary course of business or (v) mechanics',
materialmen's, workmen's, repairmen's, warehousemen's, carrier's and other
similar liens and encumbrances arising in the ordinary course of business. All
leases pursuant to which BancorpSouth or any Subsidiary of BancorpSouth, as
lessee, leases real or personal property are valid and enforceable in accordance
with their respective terms and neither BancorpSouth nor any of its Subsidiaries
nor, to the knowledge of BancorpSouth, any other party thereto is in default
thereunder.
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5.21. Loan Portfolio.
(a) Except as set forth in Section 5.21 of the BancorpSouth
Disclosure Schedule, neither BancorpSouth nor any of its Subsidiaries is a party
to any written or oral Loan, other than Loans the unpaid principal balance of
which does not exceed $100,000, under the terms of which the obligor was, as of
September 30, 1998, over 90 days delinquent in payment of principal or interest
or in default of any other provision. Section 5.21 of the BancorpSouth
Disclosure Schedule sets forth all Loans in original principal amounts in excess
of $100,000 of BancorpSouth or any of its Subsidiaries that were as of June 30,
1998, classified as "Doubtful" or "Loss", or words of similar import.
(b) Each Loan in original principal amount in excess of
$100,000 (i) is evidenced by notes, agreements or other evidences of
indebtedness which are true, genuine and what they purport to be, (ii) to the
extent secured, has been secured by valid liens and security interests which
have been perfected and (iii) is the legal, valid and binding obligation of the
obligor named therein, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1. Covenants of the Company. During the period from the date of this
Agreement and continuing until the Effective Time, except as expressly
contemplated or permitted by this Agreement and the Stock Option Agreement or
with the prior written consent of BancorpSouth, the Company and its Subsidiaries
shall carry on their respective businesses in the ordinary course consistent
with past practice. Without limiting the generality of the foregoing, and except
as set forth in Section 6.1 of the Company Disclosure Schedule or as otherwise
contemplated by this Agreement and the Stock Option Agreement or as consented to
in writing by BancorpSouth, the Company shall not, and shall not permit any of
its Subsidiaries to:
(a) declare or pay any dividends on, or make other
distributions in respect of any of its capital stock during any period;
provided, however, that the Company may declare and pay regular quarterly cash
dividends of $0.18 per share with usual and regular record and payment dates in
accordance with past practice.
(b) (i) repurchase, redeem or otherwise acquire (except for
the acquisition of Trust Account Shares and DPC Shares, as such terms are
defined in Section 1.4(b) hereof) any shares of the capital stock of the Company
or any Subsidiary of the Company, or any securities convertible into or
exercisable for any shares of the capital stock of the Company or any Subsidiary
of the Company, (ii) split, combine or reclassify any shares of its capital
stock or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock, or
(iii) issue, deliver or sell, or authorize or propose the issuance, delivery or
sale of, any shares of its capital stock or any securities convertible into or
exercisable for, or any rights, warrants or options to acquire, any such shares,
or enter into any agreement with respect to any of the foregoing, except, in the
case of clauses (ii) and (iii), for the issuance of Company Common Stock (x)
upon the exercise or fulfillment of rights or options issued or existing
pursuant to employee benefit plans, programs or arrangements, all to the extent
outstanding and in existence on the date of this Agreement and in accordance
with their present terms or (y) pursuant to the Stock Option Agreement;
(c) amend its Articles of Incorporation, Bylaws or other
similar governing documents;
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(d) authorize or permit any of its officers, directors,
employees or agents to directly or indirectly solicit, initiate, facilitate or
encourage any inquiries relating to, or the making of any proposal which
constitutes, a "takeover proposal" (as defined below), or participate in any
discussions or negotiations, or provide third parties with any nonpublic
information, relating to any such inquiry or proposal or otherwise facilitate
any effort or attempt to make a takeover proposal; provided, however, that the
Company may communicate information about any such takeover proposal to its
shareholders if, in the judgment of the Company's Board of Directors, based upon
the written advice of outside counsel addressed to the Company and BancorpSouth,
such communication is required under applicable law, provided further, however,
that the Company may, and may authorize and permit its officers, directors,
employees or agents to, (i) provide or cause to be provided such information,
and (ii) participate in such discussions or negotiations, if in the judgment of
the Company's Board of Directors, based upon the written advice of outside
counsel addressed to the Company and BancorpSouth, the failure to do so would
cause the members of such Board of Directors to breach their fiduciary duties
under applicable laws. The Company will immediately cease and cause to be
terminated any existing activities, discussions or negotiations previously
conducted with any parties other than BancorpSouth with respect to any of the
foregoing. The Company will take all actions necessary or advisable to inform
the appropriate individuals or entities referred to in the first sentence hereof
of the obligations undertaken in this Section 6.1(d). The Company will notify
BancorpSouth immediately if any such inquiries or takeover proposals are
received by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with, the Company, and the
Company will promptly (within 24 hours) inform BancorpSouth in writing of all of
the relevant details with respect to the foregoing including the material terms
and conditions of such request or takeover proposal and the identity of the
person or group making such request or proposal. The Company will keep
BancorpSouth fully informed of the status and details (including amendments or
proposed amendments) of any such request or takeover proposal. As used in this
Agreement, "takeover proposal" shall mean any tender or exchange offer, proposal
for a merger, consolidation or other business combination involving the Company
or any Subsidiary of the Company or any proposal or offer to acquire in any
manner a substantial equity interest in, or a substantial portion of the assets
of, the Company or any Subsidiary of the Company other than the transactions
contemplated or permitted by this Agreement and the Stock Option Agreement;
(e) make any capital expenditures other than those which are
set forth in Section 6.1 of the Company Disclosure Schedule or (i) are made in
the ordinary course of business or are necessary to maintain existing assets in
good repair and (ii) in any event are in an amount of no more than $100,000 in
the aggregate, or except as necessary to comply with regulatory guidelines or
requirements;
(f) enter into any new line of business;
(g) acquire or agree to acquire, by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire any assets, which would be material, individually or in the
aggregate, to the Company, or which could reasonably be expected to impede or
delay consummation of the Merger, other than in connection with foreclosures,
settlements in lieu of foreclosure or troubled loan or debt restructurings in
the ordinary course of business consistent with past practices;
(h) except as contemplated by Article III hereto, take any
action that is intended or may reasonably be expected to result in any of its
representations and warranties set forth in this Agreement being or becoming
untrue, or in any of the conditions to the Merger set forth in Article VIII not
being satisfied;
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(i) change its methods of accounting in effect December 31,
1997, except as required by changes in GAAP or regulatory accounting principles
as concurred to by the Company's independent auditors;
(j) except as set forth in Section 7.7 hereof, as required by
applicable law or as required to maintain qualification pursuant to the Code,
(i) adopt, amend, or terminate any employee benefit plan (including, without
limitation, any Plan) or any agreement, arrangement, plan or policy between the
Company or any Subsidiary of the Company and one or more of its current or
former directors, officers or (ii) except for normal increases and the payment
of incentive compensation to Home Bank officers and to Home Bank mortgage
originators and processors, in each case in the ordinary course of business
consistent with past practice or except as required by applicable law, increase
in any manner the compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any Plan or agreement as in effect
as of the date hereof (including, without limitation, the granting of stock
options, stock appreciation rights, restricted stock, restricted stock units or
performance units or shares).
(k) take or permit to be taken any action which would
disqualify the Merger as a "pooling of interests" for accounting purposes or a
reorganization under Section 368(a) of the Code;
(l) other than activities in the ordinary course of business
consistent with past practice, sell, lease, encumber, assign or otherwise
dispose of, or agree to sell, lease, encumber, assign or otherwise dispose of,
any of its material assets, properties or other rights or agreements, other than
sales of investment securities of Home Bank in accordance with prudent
asset/liability management practices;
(m) other than in the ordinary course of business consistent
with past practice, incur any indebtedness for borrowed money or assume,
guarantee, endorse or otherwise as an accommodation become responsible for the
obligations of any other individual, corporation or other entity;
(n) file any application to relocate or terminate the
operations of any banking office of it or any of its Subsidiaries;
(o) create, renew, amend or terminate or give notice of a
proposed renewal, amendment or termination of, any material contract, agreement
or lease for goods, services or office space to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries or
their respective properties is bound, other than the renewal in the ordinary
course of business of any lease the term of which expires prior to the Closing
Date, or amend or waive the provisions of any confidentiality or standstill
agreement to which the Company or any of its affiliates is a party as of the
date hereof;
(p) take any action or enter into any agreement that could
reasonably be expected to jeopardize or materially delay the receipt of any
Requisite Regulatory Approval (as defined in Section 8.1(c));
(q) enter into any Loans in an original principal amount in
excess of $2,000,000; or
(r) agree or commit to do any of the foregoing.
6.2. Covenants of BancorpSouth. Except as otherwise contemplated by
this Agreement or consented to in writing by the Company, BancorpSouth shall
not, and shall not permit any of its Subsidiaries to:
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(a) except as contemplated by Article III hereto, take any
action that is intended or may reasonably be expected to result in any of its
representations and warranties set forth in this Agreement being or becoming
untrue, or in any of the conditions to the Merger set forth in Article VIII not
being satisfied;
(b) take any action or enter into any agreement that could
reasonably be expected to jeopardize or materially delay the receipt of any
Requisite Regulatory Approval;
(c) change its methods of accounting in effect at December 31,
1997, except in accordance with changes in GAAP or regulatory accounting
principles as concurred to by BancorpSouth's independent auditors;
(d) take or permit to be taken any action which would
disqualify the Merger as a "pooling of interests" for accounting purposes or a
reorganization under Section 368(a) of the Code;
(e) take any action, including entering into any agreement
with any other party, the effect of which would be to require BancorpSouth to
authorize additional shares of BancorpSouth common stock in order to fulfill
both BancorpSouth's obligations to Company pursuant to this Agreement and
obligations to any such other party pursuant to any such agreement;
(f) during the period from the date of this Agreement and
continuing to the Effective Time, except as expressly contemplated and permitted
by this Agreement, or with the prior written consent of the Company, carry out
its businesses outside or the ordinary course or in a manner inconsistent with
past practice; or
(g) agree or commit to do any of the foregoing.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1. Regulatory Matters.
(a) BancorpSouth and the Company shall promptly prepare and
file with the SEC the Proxy Statement, and BancorpSouth shall promptly prepare
and file with the SEC the S-4, in which the Proxy Statement will be included as
a prospectus. Each of the Company and BancorpSouth shall use its reasonable best
efforts to have the S-4 declared effective under the Securities Act as promptly
as practicable after such filing, and the Company shall thereafter mail the
Proxy Statement to its shareholders. BancorpSouth shall also use its reasonable
best efforts to obtain all necessary state securities law or "Blue Sky" permits
and approvals required to carry out the transactions contemplated by this
Agreement.
(b) The parties hereto shall cooperate with each other and use
their reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including, without limitation, the Merger). The Company and
BancorpSouth shall have the right to review in advance, and to the extent
practicable each will consult the other on, in each case subject to applicable
laws relating to the exchange of information, all the information relating to
the Company or BancorpSouth, as the case may be, and any of their respective
Subsidiaries, which appears in any filing made with, or written materials
submitted to, any third party or any Governmental Entity in connection with the
transactions contemplated by this Agreement. In exercising the foregoing right,
each of the parties hereto shall act reasonably and as promptly as practicable.
The parties hereto agree that they will consult with each other with respect to
the obtaining of all permits, consents,
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approvals and authorizations of all third parties and Governmental Entities
necessary or advisable to consummate the transactions contemplated by this
Agreement and each party will keep the other apprised of the status of matters
relating to completion of the transactions contemplated herein.
(c) BancorpSouth and the Company shall, upon request, furnish
each other with all information concerning themselves, their Subsidiaries,
directors, officers and shareholders and such other matters as may be reasonably
necessary or advisable in connection with the Proxy Statement, the S-4 or any
other statement, filing, notice or application made by or on behalf of
BancorpSouth, the Company or any of their respective Subsidiaries to any
Governmental Entity in connection with the Merger and the other transactions
contemplated by this Agreement.
(d) BancorpSouth and the Company shall promptly furnish each
other with copies of written communications received by BancorpSouth or the
Company, as the case may be, or any of their respective Subsidiaries, Affiliates
or Associates (as such terms are defined in Rule 12b-2 under the Exchange Act as
in effect on the date of this Agreement) from, or delivered by any of the
foregoing to, any Governmental Entity in respect of the transactions
contemplated hereby.
7.2. Access to Information.
(a) Upon reasonable notice and subject to applicable laws
relating to the exchange of information, each party shall, and shall cause each
of its Subsidiaries to, afford to the officers, employees, accountants, counsel
and other representatives (each, a "Representative") of the other party, access
during normal business hours during the period prior to the Effective Time to
all its properties, books, contracts, commitments, records, officers, employees,
accountants, counsel and other representatives and, during such period, it
shall, and shall cause its Subsidiaries to, make available to the other party
all information concerning its business, properties and personnel as the other
party may reasonably request. In addition, the Company and Home Bank shall
permit a Representative of BancorpSouth to have access to the premises and
observe the operations of the Company or Home Bank, as the case may be, without
interfering with the operations of the Company or Home Bank and only during
normal business hours and to attend each meeting of their respective Boards of
Directors and committees thereof (other than during discussions regarding this
Agreement, the Stock Option Agreement, and the transactions contemplated hereby
and thereby). Neither party nor any of its Subsidiaries shall be required to
provide access to or to disclose information where such access or disclosure
would violate or prejudice the rights of its customers or its relationship with
such customers, jeopardize any attorney-client privilege or contravene any law,
rule, regulation, order, judgment, decree, fiduciary duty or binding agreement
entered into prior to the date of this Agreement. Such party shall identify the
nature of the limitation on access and disclosure, and the parties hereto will
make appropriate substitute disclosure arrangements under circumstances in which
the restrictions of the preceding sentence apply.
(b) All information furnished to BancorpSouth pursuant to
Section 7.2(a) shall be subject to, and BancorpSouth shall hold all such
information in confidence in accordance with, the provisions of the
confidentiality agreement dated July 30, 1998 (the "Confidentiality Agreement"),
between BancorpSouth and the Company. The Company shall have the same
obligations to BancorpSouth under the Confidentiality Agreement with respect to
information furnished to the Company pursuant to Section 7.2(a) as if the
Company were the receiving party under such Confidentiality Agreement.
(c) Notwithstanding anything in the Confidentiality Agreement
or any other agreement to the contrary, no provision of the Confidentiality
Agreement or investigation by either of the parties or their respective
representatives shall affect the representations, warranties, covenants or
agreements of the other set forth herein and the parties shall remain
responsible to the extent provided herein, subject to Section 10.2.
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7.3. Shareholder Meeting. The Company shall take all steps necessary to
duly call, give notice of, convene and hold a meeting of its shareholders to be
held as soon as is reasonably practicable after the date on which the S-4
becomes effective for the purpose of voting upon the approval and adoption of
this Agreement. The Company will, through its Board of Directors, recommend to
its shareholders approval of this Agreement and the transactions contemplated
hereby and such other matters as may be submitted to its shareholders in
connection with this Agreement.
7.4. Legal Conditions to Merger. Each of BancorpSouth and the Company
shall, and shall cause its Subsidiaries to, use their reasonable best efforts
(a) to take, or cause to be taken, all actions necessary, proper or advisable to
comply promptly with all legal requirements which may be imposed on such party
or its Subsidiaries with respect to the Merger and, subject to the conditions
set forth in Article VIII hereof, to consummate the transactions contemplated by
this Agreement and (b) to obtain (and to cooperate with the other party to
obtain) any consent, authorization, order or approval of, or any exemption by,
any Governmental Entity and any other third party which is required to be
obtained by the Company or BancorpSouth or any of their respective Subsidiaries
in connection with the Merger and the other transactions contemplated by this
Agreement, and to comply with the terms and conditions of such consent,
authorization, order or approval.
7.5. Affiliates. The Company shall use its reasonable best efforts to
cause each director, executive officer and other person who is an "affiliate"
(for purposes of Rule 145 under the Securities Act and for purposes of
qualifying the Merger for "pooling-of-interests" accounting treatment) of such
party to deliver to BancorpSouth, as soon as practicable after the date of this
Agreement, a written agreement, in the form of Exhibit 7.5(a).
7.6. Stock Exchange Listing. BancorpSouth shall make all filings
required of it to cause the shares of BancorpSouth Common Stock to be issued in
the Merger to be approved for listing on the NYSE, subject to official notice of
issuance, as of the Effective Time.
7.7. Employee Benefit Plans; Existing Agreements.
(a) As of the Effective Time, the employees of the Company and
its Subsidiaries (the "Company Employees") shall be eligible to participate in
BancorpSouth's employee benefit plans in which similarly situated employees of
BancorpSouth or BancorpSouth Bank participate, to the same extent as similarly
situated employees of BancorpSouth or BancorpSouth Bank (it being understood
that inclusion of Company Employees in BancorpSouth's employee benefit plans may
occur at different times with respect to different plans).
(b) With respect to each BancorpSouth Plan that is an
"employee benefit plan," as defined in Section 3(3)of ERISA, for purposes of
determining eligibility to participate, vesting, and entitlement to benefits,
including for severance benefits and vacation entitlement (but not for accrual
of pension benefits or 401(k) eligibility), service with the Company (or
predecessor employers to the extent the Company provides past service credit)
shall be treated as service with BancorpSouth; provided; however, that such
service shall not be recognized to the extent that such recognition would result
in a duplication or increase of benefits. Such service also shall apply for
purposes of satisfying any waiting periods, evidence of insurability
requirements, or the application of any preexisting condition limitations. Each
BancorpSouth Plan shall waive pre-existing condition limitations to the same
extent waived under the applicable Company Plan. Company Employees shall be
given credit for amounts paid under a corresponding benefit plan during the same
period for purposes of applying deductibles, copayments and out-of-pocket
maximums as though such amounts had been paid in accordance with the terms and
conditions of BancorpSouth Plan.
(c) As of the Effective Time, BancorpSouth shall assume and
honor and shall cause the appropriate Subsidiaries of BancorpSouth to assume and
to honor in accordance with their terms all employment, severance and other
compensation agreements and arrangements existing
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prior to the execution of this Agreement which are between the Company or any of
its Subsidiaries and any director, officer or employee thereof and which have
been disclosed in the Company Disclosure Schedule.
(d) BancorpSouth and the Company agree to cooperate and take
all reasonable actions to effect the merger of any employee benefit plan that is
intended to be qualified under Section 401(a) of the Code into the appropriate
tax-qualified retirement plan of BancorpSouth after the Merger is completed, so
that such plan merger satisfies the requirements of Section 414(l) of the Code;
provided, however, that BancorpSouth shall not be obligated to effect such a
merger of a plan unless such plan is fully funded under Section 412 of the Code
and Section 302 of ERISA, to the extent applicable, and the merger would not
jeopardize the tax-qualified status of any BancorpSouth Plan.
7.8. Indemnification.
(a) In the event of any threatened or actual claim, action,
suit, proceeding or investigation, whether civil, criminal or administrative,
including, without limitation, any such claim, action, suit, proceeding or
investigation in which any person who is now, or has been at any time prior to
the date of this Agreement, or who becomes prior to the Effective Time, a
director, officer or employee of the Company, the Home Bank, or any of their
Subsidiaries (the "Indemnified Parties") is, or is threatened to be, made a
party based in whole or in part on, or arising in whole or in part out of, or
pertaining to (i) the fact that he is or was a director, officer or employee of
the Company, Home Bank, any of the Subsidiaries of the Company or Home Bank, or
any of their respective predecessors or affiliates or (ii) this Agreement or any
of the transactions contemplated hereby, whether in any case asserted or arising
before or after the Effective Time, the parties hereto agree to cooperate and
use their best efforts to defend against and respond thereto. It is understood
and agreed that after the Effective Time, BancorpSouth shall indemnify and hold
harmless, as and to the extent permitted by law, each such Indemnified Party
against any losses, claims, damages, liabilities, costs, expenses (including
reasonable attorney's fees and expenses in advance of the final disposition of
any claim, suit, proceeding or investigation to each Indemnified Party to the
fullest extent permitted by law upon receipt of any undertaking required by
applicable law), judgments, fines and amounts paid in settlement in connection
with any such threatened or actual claim, action, suit, proceeding or
investigation, and in the event of any such threatened or actual claim, action,
suit, proceeding or investigation (whether asserted or arising before or after
the Effective Time), the Indemnified Parties may retain counsel reasonably
satisfactory to them after consultation with BancorpSouth; provided, however,
that (1) BancorpSouth shall have the right to assume the defense thereof and
upon such assumption BancorpSouth shall not be liable to any Indemnified Party
for any legal expenses of other counsel or any other expenses subsequently
incurred by any Indemnified Party in connection with the defense thereof, except
that if BancorpSouth elects not to assume such defense or if counsel for the
Indemnified Parties reasonably advises that there are issues which raise
conflicts of interest between BancorpSouth and the Indemnified Parties, the
Indemnified Parties may retain counsel reasonably satisfactory to them after
consultation with BancorpSouth, and BancorpSouth shall pay the reasonable fees
and expenses of such counsel for the Indemnified Parties, (2) BancorpSouth shall
in all cases be obligated pursuant to this paragraph to pay for only one firm of
counsel for all Indemnified Parties, (3) BancorpSouth shall not be liable for
any settlement effected without its prior written consent (which consent shall
not be unreasonably withheld) and (4) BancorpSouth shall have no obligation
hereunder to any Indemnified Party when and if a court of competent jurisdiction
shall ultimately determine, and such determination shall have become final and
nonappealable, that indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law. Any Indemnified Party
wishing to claim Indemnification under this Section 7.8, upon learning of any
such claim, action, suit, proceeding or investigation, shall promptly notify
BancorpSouth thereof, provided that the failure to so notify shall not affect
the obligations of BancorpSouth under this Section 7.8 except to the extent such
failure to
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notify materially prejudices BancorpSouth. BancorpSouth's obligations under this
Section 7.8 shall continue in full force and effect without time limit from and
after the Effective Time.
(b) BancorpSouth shall cause the persons serving as officers
and directors of the Company immediately prior to the Effective Time to be
covered for a period of three years from the Effective Time by the directors'
and officers' liability insurance policy maintained by the Company (provided
that BancorpSouth may substitute therefor policies of at least the same coverage
and amounts containing terms and conditions which are not less advantageous than
such policy) with respect to acts or omissions occurring prior to the Effective
Time which were committed by such officers and directors in their capacity as
such; provided, however, that in no event shall BancorpSouth be required to
expend on an annual basis more than 125% of the current amount expended by the
Company (the "Insurance Amount") to maintain or procure insurance coverage, and
further provided that if BancorpSouth is unable to maintain or obtain the
insurance called for by this Section 7.8(b), BancorpSouth shall use all
reasonable efforts to obtain as much comparable insurance as is available for
the Insurance Amount.
(c) In the event BancorpSouth or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its properties
and assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of
BancorpSouth assume the obligations set forth in this section.
(d) The provisions of this Section 7.8 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party and his or
her heirs and representatives.
7.9. Additional Agreements. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of any of the
parties to the Merger, the proper officers and directors of each party to this
Agreement and their respective Subsidiaries shall take all such necessary action
as may be reasonably requested by BancorpSouth.
7.10. Coordination of Dividends. After the date of this Agreement, each
of BancorpSouth and the Company shall coordinate with the other the declaration
of any dividends in respect of the Company Common Stock and the record dates and
payments dates relating thereto, it being the intention of the parties that the
holders of Company Common Stock may (to the extent allowed by law and declared)
receive one, but not more than one, dividend for any period with respect to
their shares of Company Common Stock and any shares of BancorpSouth Common Stock
any holder of Company Common Stock receives in exchange thereof in the Merger.
7.11. Stock Option Agreement. Contemporaneously with the execution and
delivery of this Agreement, the Company and BancorpSouth shall execute and
deliver the Stock Option Agreement.
7.12 Publication of Combined Results. As soon as practical after the
date that thirty days of combined financial results of the Company and
BancorpSouth are available, BancorpSouth shall publish such results by press
release or the making of an appropriate filing under the Exchange Act.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1. Conditions to Each Party's Obligation To Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
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(a) Shareholder Approvals. This Agreement shall have been
approved and adopted by the requisite vote of the shareholders of the Company
under applicable law.
(b) Listing of Shares. The shares of BancorpSouth Common Stock
which shall be issued to the shareholders of the Company upon consummation of
the Merger shall have been authorized for listing on the NYSE, subject to
official notice of issuance.
(c) Other Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby (including the Merger) shall
have been obtained and shall remain in full force and effect and all statutory
waiting periods in respect thereof shall have expired (all such approvals and
the expiration of all such waiting periods being referred to herein as the
"Requisite Regulatory Approvals").
(d) S-4. The S-4 shall have become effective under the
Securities Act and no stop order suspending the effectiveness of the S-4 shall
have been issued and no proceedings for that purpose shall have been initiated
or threatened by the SEC.
(e) No Injunctions or Restraints; Illegality. No order,
injunction or decree issued by any court or agency of competent jurisdiction or
other legal restraint or prohibition (an "Injunction") preventing the
consummation of the Merger shall be in effect. No statute, rule, regulation,
order, injunction or decree shall have been enacted, entered, promulgated or
enforced by any Governmental Entity which prohibits, restricts or makes illegal
consummation of the Merger.
8.2. Conditions to Obligations of BancorpSouth. The obligation of
BancorpSouth to effect the Merger is also subject to the satisfaction or waiver
by BancorpSouth at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. (i) Subject to Section
3.2, the representations and warranties of the Company set forth in this
Agreement (other than those set forth in Section 4.2) shall be true and correct
as of the date of this Agreement and (except to the extent such representations
and warranties speak as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date; and (ii) the representations and warranties
of the Company set forth in Section 4.2 of this Agreement shall be true and
correct in all material respects (without giving effect to Section 3.2 of this
Agreement) as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date. BancorpSouth shall have
received a certificate signed on behalf of the Company by the Chief Executive
Officer and the Chief Financial Officer of the Company to the foregoing effect.
(b) Performance of Obligations of the Company. The Company
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and
BancorpSouth shall have received a certificate signed on behalf of the Company
by the Chief Executive Officer and the Chief Financial Officer of the Company to
such effect.
(c) No Pending Governmental Actions. No proceeding initiated
by any Governmental Entity seeking an Injunction shall be pending.
(d) Federal Tax Opinion. BancorpSouth shall have received an
opinion from Xxxxxx Xxxxxxx Xxxxxx & Xxxxx, PLLC, counsel to BancorpSouth
("BancorpSouth's Counsel"), in form and substance reasonably satisfactory to
BancorpSouth, dated the Effective Time, substantially to the effect that, on the
basis of facts, representations and assumptions set forth in such opinion which
are consistent with the state of facts existing at the Effective Time, the
Merger will be treated
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as a reorganization within the meaning of Section 368(a) of the Code and that,
accordingly, for federal income tax purposes:
(i) No gain or loss will be recognized by
BancorpSouth or the Company as a result of the Merger;
(ii) No gain or loss will be recognized by the
shareholders of the Company who exchange all of their Company
Common Stock solely for BancorpSouth Common Stock pursuant to
the Merger (except with respect to cash received in lieu of a
fractional share interest in BancorpSouth Common Stock); and
(iii) The aggregate tax basis of BancorpSouth Common
Stock received by shareholders who exchange all of their
Company Common Stock solely for BancorpSouth Common Stock
pursuant to the Merger will be the same as the aggregate tax
basis of the Company Common Stock surrendered in exchange
therefor (reduced by any amount allocable to a fractional
share interest for which cash is received).
In rendering such opinion, BancorpSouth's Counsel may
require and rely upon representations and covenants, including those contained
in certificates of officers of BancorpSouth, the Company and others, reasonably
satisfactory in form and substance to such counsel.
(e) Payoff Letter. BancorpSouth shall have received a payoff
letter and any related documentation it may reasonably request from First
Tennessee Bank ("First Tennessee").
(f) Legal Opinion. BancorpSouth shall have received an opinion
from Company's counsel, in form and substance reasonably satisfactory to
BancorpSouth, dated the Effective Time, relating to the enforceability of this
Agreement and such other matters as BancorpSouth may reasonably request;
provided, however, that with respect to matters of Mississippi law, Company's
counsel may rely upon an opinion of Mississippi counsel addressed to it or may
cause such opinion to be issued directly to BancorpSouth.
(g) Pooling Treatment. KPMG Peat Marwick LLP, certified public
accountants for BancorpSouth, and Schauer, Taylor, Xxx & Xxxxxxx, P.C.,
certified public accountants for the Company, shall have each delivered a letter
dated the Closing Date and addressed to BancorpSouth, to the effect that the
Merger will qualify for pooling of interests accounting treatment under
applicable accounting standards if consummated in accordance with this
Agreement. The Company shall use its best efforts to procure drafts of such
letters from its accountants to BancorpSouth and its respective counsel no later
than 10 business days prior to the Closing Date.
(h) Employment Agreements. Xxxxx X. Xxxxxx and Xxx Xxxxxxxx
shall each have entered into a written Employment Agreement with BancorpSouth
Bank in form and substance similar to those agreements attached as Exhibit 8.2
hereto containing non-competition agreements mutually satisfactory to
BancorpSouth and the respective employee in their reasonable discretion.
8.3. Conditions to Obligations of the Company. The obligation of the
Company to effect the Merger is also subject to the satisfaction or waiver by
the Company at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. (i) Subject to Section
3.2, the representations and warranties of BancorpSouth set forth in this
Agreement (other than those set forth in Section 5.2) shall be true and correct
as of the date of this Agreement and (except to the extent such representations
and warranties speak as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date; and (ii) the representations and warranties
of
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BancorpSouth set forth in Section 5.2 of this Agreement shall be true and
correct in all material respects (without giving effect to Section 3.2 of this
Agreement) as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date. The Company shall have
received a certificate signed on behalf of BancorpSouth by the Chief Executive
Officer and the principal financial officer of BancorpSouth to the foregoing
effect.
(b) Performance of Obligations of BancorpSouth. BancorpSouth
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and the
Company shall have received a certificate signed on behalf of BancorpSouth by
the Chief Executive Officer and the principal financial officer of BancorpSouth
to such effect.
(c) No Pending Governmental Actions. No proceeding initiated
by any Governmental Entity seeking an Injunction shall be pending.
(d) Federal Tax Opinion. The Company shall have received an
opinion from Xxxxxxx Xxxxx Rose & White LLP (the "Company's Counsel"), in form
and substance reasonably satisfactory to the Company, dated the Effective Time,
substantially to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion which are consistent with the state of
facts existing at the Effective Time, the Merger will be treated as a
reorganization within the meaning of Section 368(a) of the Code and that,
accordingly, for federal income tax purposes:
(i) No gain or loss will be recognized by
BancorpSouth or the Company as a result of the Merger;
(ii) No gain or loss will be recognized by the
shareholders of the Company who exchange all of their Company
Common Stock solely for BancorpSouth Common Stock pursuant to
the Merger (except with respect to cash received in lieu of a
fractional share interest in BancorpSouth Common Stock); and
(iii) The aggregate tax basis of BancorpSouth Common
Stock received by shareholders who exchange all of their
Company Common Stock solely for BancorpSouth Common Stock
pursuant to the Merger will be the same as the aggregate tax
basis of the Company Common Stock surrendered in exchange
therefor (reduced by any amount allocable to a fractional
share interest for which cash is received).
In rendering such opinion, the Company's Counsel may
require and rely upon representations and covenants, including those contained
in certificates of officers of BancorpSouth, the Company and others, reasonably
satisfactory in form and substance to such counsel.
(e) Fairness Opinion. Prior to the mailing of Proxy Statement,
the Company shall have received an opinion from Xxxx Xxxxxxxxxx & Co. Investment
Banking to the effect that as of the date thereof and based upon and subject to
the matters set forth therein, the Merger is fair to the shareholders of the
Company from a financial point of view.
(f) Legal Opinion. The Company shall have received an opinion
from BancorpSouth's Counsel, in form and substance reasonably satisfactory to
the Company, dated the Effective Time, relating to the enforceability of this
Agreement, the validity of the shares of BancorpSouth Common Stock to be issued
in the Merger, and such other matters as the Company may reasonably request;
provided, however, that as to matters of Mississippi law, BancorpSouth's Counsel
may rely on an opinion of Mississippi counsel addressed to it or may cause such
opinion to be issued directly to the Company.
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ARTICLE IX
TERMINATION AND AMENDMENT
9.1. Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the shareholders of both the Company and
BancorpSouth:
(a) by mutual consent of the Company and BancorpSouth in a
written instrument, if the Board of Directors of each so determines by a vote of
a majority of the members of its entire Board;
(b) By either BancorpSouth or the Company upon written notice
to the other party (i) 60 days after the date on which any request or
application for a Requisite Regulatory Approval shall have been denied or
withdrawn at the request or recommendation of the Governmental Entity which must
grant such Requisite Regulatory Approval, unless within the 60-day period
following such denial or withdrawal a petition for rehearing or an amended
application has been filed with the applicable Governmental Entity, provided,
however, that no party shall have the right to terminate this Agreement pursuant
to this Section 9.1(b)(i) if such denial or request or recommendation for
withdrawal shall be due to the failure of the party seeking to terminate this
Agreement to perform or observe the covenants and agreements of such party set
forth herein or (ii) if any Governmental Entity of competent jurisdiction shall
have issued a final nonappealable order enjoining or otherwise prohibiting the
Merger;
(c) by either BancorpSouth or the Company if the Merger shall
not have been consummated on or before June 30, 1999 unless the failure of the
Closing to occur by such date shall be due to the failure of the party seeking
to terminate this Agreement to perform or observe the covenants and agreements
of such party set forth herein;
(d) by either BancorpSouth or the Company (provided that the
Company may not terminate if it is in material breach of any of its obligations
under Section 7.3) if any approval of the shareholders of the Company required
for the consummation of the Merger shall not have been obtained by reason of the
failure to obtain the required vote at a duly held meeting of such shareholders
or at any adjournment or postponement thereof;
(e) by either BancorpSouth or the Company (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if any of the
representations or warranties set forth in this Agreement on the part of the
other party shall be untrue or incorrect in any material respect, which is not
cured within thirty days following written notice to the party making such
representation, or which, by its nature, cannot be cured prior to the Closing;
provided, however, that neither party shall have the right to terminate this
Agreement pursuant to this Section 9.1(e) unless the representation or warranty,
together with all other representations and warranties that are untrue or
incorrect, would entitle the party receiving such representation not to
consummate the transactions contemplated hereby under Section 8.2(a) (in the
case of a representation or warranty by the Company) or Section 8.3(a) (in the
case of a representation or warranty by BancorpSouth);
(f) by either BancorpSouth or the Company (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have been
a material breach of any of the covenants or agreements set forth in this
Agreement on the part of the other party, which breach shall not have been cured
within thirty days following receipt by the breaching party of written notice of
such breach from the other party hereto, or which breach, by its nature, cannot
be cured prior to the Closing;
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(g) by BancorpSouth, if the Board of Directors of the Company
shall have failed to recommend in the Proxy Statement that the Company's
shareholders approve and adopt this Agreement, or shall have withdrawn, modified
or changed in a manner adverse to BancorpSouth its approval or recommendation of
this Agreement and the transactions contemplated hereby; or
(h) By the Company upon written notice to BancorpSouth at any
time during the three-day period commencing the day after the Determination
Date, if either (x) both of the following conditions are satisfied:
(1) the Average Closing Price shall be less than the
product of (i) 0.85 and (ii) the Starting Price; and
(2) (i) the quotient obtained by dividing the Average
Closing Price by the Starting Price (such number being
referred to herein as the "BancorpSouth Ratio") shall be less
than (ii) the quotient obtained by dividing the Index Price on
the Determination Date by the Index Price on the Starting Date
and subtracting 0.15 from the quotient in the clause (2)(ii)
(such number being referred to herein as the "Index Ratio");
or (y) the Average Closing Price shall be less than the product of (i) 0.75 and
(ii) the Starting Price.
For purposes of this Section 9.1(h), the following
terms shall have the meanings indicated:
"Average Closing Price" shall mean the average of the
daily last sales prices of BancorpSouth Common Stock as reported on the NYSE (as
reported by The Wall Street Journal or, if not reported thereby, another
authoritative source as chosen by BancorpSouth) for the 20 consecutive full
trading days in which such share are traded on the NYSE ending at the close of
trading on the Determination Date.
"Determination Date" shall mean the date on which the
consent of the FDIC shall be received.
"Index Group" shall mean the SNL Southeastern Bank
Index as published in The Bankinvestor, the common stocks of all of which shall
be publicly traded and as to which there shall not have been, since the Starting
Date and before the Determination Date, any public announcement of a proposal
for such company to be acquired or for such company to acquire another company
or companies in transactions with a value exceeding 25% of the acquiror's market
capitalization as of the Starting Date. In the event that any such company or
companies are removed from the Index Group as a result of any of the events
described in the preceding sentence, the weights (which shall be determined
based upon the number of outstanding shares of common stock) shall be
redistributed proportionately for purposes of determining the Index Price.
"Index Price" on a given date shall mean the weighted
average (weighted in accordance with the factors listed in the definition of
"Index Group") of the closing prices of the companies composing the Index Group.
"Starting Date" shall mean November 4, 1998.
"Starting Price" shall mean the daily last sales
price of BancorpSouth Common Stock as reported on the NYSE (as reported by The
Wall Street Journal or, if not reported thereby, another authoritative source as
chosen by BancorpSouth) on the Starting Date.
9.2. Effect of Termination. In the event of termination of this
Agreement by either BancorpSouth or the Company as provided in Section 9.1, this
Agreement shall forthwith become
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void and have no effect except (i) Sections 7.2(b), 9.2 and 10.3 shall survive
any termination of this Agreement and (ii) that notwithstanding anything to the
contrary contained in this Agreement, no party shall be relieved or released
from any liabilities or damages arising out of its breach of any provision of
this Agreement. In addition, in the event the Company exercises its termination
right under Section 9.1(h), the Company agrees to pay any and all third party
out-of-pocket expenses incurred by BancorpSouth; provided, however, that in no
event shall the Company be obligated to pay more than $150,000 pursuant to this
provision.
9.3. Amendment. Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto, by action taken or authorized by
their respective Boards of Directors, at any time before or after approval of
the matters presented in connection with the Merger by the shareholders of the
Company; provided, however, that after any approval of the transactions
contemplated by this Agreement by the Company's shareholders, there may not be,
without further approval of such shareholders, any amendment of this Agreement
which reduces the amount or changes the form of the consideration to be
delivered to the Company shareholders hereunder other than as contemplated by
this Agreement. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
9.4. Extension; Waiver. At any time prior to the Effective Time, each
of the parties hereto, by action taken or authorized by its Board of Directors,
may, to the extent legally allowed, (a) extend the time for the performance of
any of the obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions of the other party contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in a written instrument signed on behalf of
such party, but such extension or waiver or failure to insist on strict
compliance with an obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
ARTICLE X
GENERAL PROVISIONS
10.1. Closing. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the "Closing") will take place at 10:00 a.m. (Central
Standard Time) on the first day which is (a) the last business day of month and
(b) at least two business days after the satisfaction or waiver (subject to
applicable law) of the last to occur of the conditions set forth in Article VIII
hereof (other than those conditions which relate to actions to be taken at the
Closing) (the "Closing Date"), at Xxxxxx Xxxxxxx Xxxxxx & Xxxxx, PLLC, 000 Xxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxxxxxx 00000, or at such other time, date and
place as is agreed to by the parties hereto.
10.2. Nonsurvival of Representations, Warranties and Agreements. None
of the representations, warranties, covenants and agreements in this Agreement
or in any instrument delivered pursuant to this Agreement (other than pursuant
to the Stock Option Agreement which shall terminate in accordance with its
terms) shall survive the Effective Time, except for those covenants and
agreements contained herein and therein which by their terms apply in whole or
in part after the Effective Time.
10.3. Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses. Without limiting the foregoing, the Company
shall be solely responsible for the compensation, if any, owed to the financial
advisor referred to in Section 4.7 hereof.
10.4. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or
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certified mail (return receipt requested) or delivered by an express courier
(with confirmation) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to BancorpSouth, to:
BancorpSouth, Inc.
Xxx Xxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Facsimile: 601/680-2006
with a copy (which shall not constitute notice) to:
Xxxxxx Xxxxxxx Xxxxxx & Xxxxx
A Professional Limited Liability Company
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Facsimile: 615/244-6804
(b) if to the Company, to:
HomeBanc Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Facsimile: 256/582-7842
with a copy (which shall not constitute notice) to:
Xxxxxxx Xxxxx Xxxx & White LLP
0000 Xxxx Xxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxx, Esq.
Facsimile: 205/521-8800
10.5. Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated in such
specific provision. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". The phrases "the date of this
Agreement", "the date hereof" and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to November 4, 1998.
10.6. Counterparts. This Agreement may be executed in counterparts, all
of which shall be considered one and the same instrument and shall become
effective when counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart.
10.7. Entire Agreement. This Agreement (including the documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and
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understandings, both written and oral, among the parties with respect to the
subject matter hereof, other than the Stock Option Agreement.
10.8. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Mississippi, without regard to its
principles of conflicts of laws.
10.9. Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that the provisions contained in
7.2(b) of this Agreement were not performed in accordance with its specific
terms or were otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent breaches of Section
7.2(b) of this Agreement and to enforce specifically the terms and provisions
thereof 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.
10.10. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
10.11. Publicity. Except as otherwise required by law or the rules of
the NYSE, so long as this Agreement is in effect, neither BancorpSouth nor the
Company shall, or shall permit any of its Subsidiaries to, issue or cause the
publication of any press release or other public announcement with respect to,
or otherwise make any public statement concerning, the transactions contemplated
by this Agreement without the consent of the other party, which such consent
shall not be unreasonably withheld.
10.12. Assignment; Third Party Beneficiaries. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns. Except as otherwise
expressly provided herein, this Agreement (including the documents and
instruments referred to herein) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
[NEXT PAGE IS SIGNATURE PAGE.]
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IN WITNESS WHEREOF, BancorpSouth and the Company have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first above written for themselves and their respective
Subsidiaries.
BANCORPSOUTH, INC.
By: /s/ Xxxxxx X Xxxxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Chairman & Chief Executive
Officer
HOMEBANC CORPORATION
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
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