EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
By and Between
POCAHONTAS BANCORP, INC.
And
MARKED TREE BANCSHARES, INC.
Dated as of November 27, 2002
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
Page
ARTICLE I CERTAIN DEFINITIONS..................................................1
Section 1.01 Definitions..................................................1
ARTICLE II THE MERGER AND EXCHANGE OF SHARES...................................5
Section 2.01 Conversion and Exchange of Shares............................5
Section 2.02 The Exchange Ratio...........................................6
Section 2.03 Surviving Corporation in the Company Merger..................6
Section 2.04 Authorization for Issuance of Pocahontas Bancorp Common Stock;
Exchange of Certificates...................................6
Section 2.05 No Fractional Shares.........................................8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF MARKED TREE BANCSHARES...........8
Section 3.01 Organization.................................................8
Section 3.02 Capitalization...............................................9
Section 3.03 Authority; No Violation......................................9
Section 3.04 Consents....................................................10
Section 3.05 Financial Statements........................................10
Section 3.06 Taxes.......................................................10
Section 3.07 No Material Adverse Effect..................................11
Section 3.08 Contracts...................................................11
Section 3.09 Ownership of Property; Insurance Coverage...................12
Section 3.10 Legal Proceedings...........................................12
Section 3.11 Compliance with Applicable Law..............................13
Section 3.12 Employee Benefit Plans......................................13
Section 3.13 Brokers, Finders and Financial Advisors.....................14
Section 3.14 Environmental Matters.......................................15
Section 3.15 Loan Portfolio..............................................15
Section 3.16 Information to be Supplied..................................15
Section 3.17 Related Party Transactions..................................15
Section 3.18 Schedule of Termination Benefits............................15
Section 3.19 Loans.......................................................15
Section 3.20 Anti-takeover Provisions Inapplicable.......................16
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF POCAHONTAS BANCORP...............16
Section 4.01 Organization................................................16
Section 4.02 Capitalization..............................................16
Section 4.03 Authority; No Violation.....................................17
Section 4.04 Consents....................................................17
Section 4.05 Financial Statements........................................18
Section 4.06 Taxes.......................................................18
Section 4.07 No Material Adverse Effect..................................18
Section 4.08 Ownership of Property.......................................18
Section 4.09 Legal Proceedings...........................................19
Section 4.10 Compliance with Applicable Law..............................19
Section 4.11 Information to be Supplied..................................19
Section 4.12 Securities Documents........................................19
Section 4.13 Loan Portfolio..............................................20
Section 4.14 Brokers, Finders and Financial Advisors.....................20
ARTICLE V COVENANTS OF THE PARTIES............................................20
Section 5.01 Conduct of Marked Tree Bancshares' Business.................20
Section 5.02 Access; Confidentiality.....................................22
Section 5.03 Regulatory Matters and Consents.............................23
Section 5.04 Taking of Necessary Action..................................23
Section 5.05 Certain Agreements..........................................24
Section 5.06 No Other Bids and Related Matters...........................25
Section 5.07 Duty to Advise; Duty to Update Marked Tree Bancshares'
Disclosure Schedule.......................................25
Section 5.08 Conduct of Pocahontas Bancorp's Business....................25
Section 5.09 Board and Committee Minutes.................................26
Section 5.10 Undertakings by Pocahontas Bancorp and Marked Tree
Bancshares................................................26
Section 5.11 Employee and Termination Benefits; Directors and
Management................................................27
Section 5.12 Duty to Advise; Duty to Update Pocahontas Bancorp's Disclosure
Schedule..................................................28
Section 5.13 Affiliate Letter............................................28
Section 5.14 Operation of Branches.......................................28
ARTICLE VI CONDITIONS.........................................................28
Section 6.01 Conditions to Marked Tree Bancshares' Obligations under this
Agreement.................................................28
Section 6.02 Conditions to Pocahontas Bancorp's Obligations under this
Agreement.................................................29
Section 6.03 Conditions to Each Party's Obligations under this
Agreement.................................................30
ARTICLE VII TERMINATION, WAIVER AND AMENDMENT.................................31
Section 7.01 Termination.................................................31
Section 7.02 Effect of Termination.......................................31
Section 7.03 Termination Fee.............................................31
ARTICLE VIII MISCELLANEOUS....................................................32
Section 8.01 Expenses....................................................32
Section 8.02 Non-Survival of Representations and Warranties..............32
Section 8.03 Amendment, Extension and Waiver; Alternative Structure......32
Section 8.04 Entire Agreement............................................32
Section 8.05 No Assignment...............................................32
Section 8.06 Notices.....................................................33
Section 8.07 Captions....................................................33
Section 8.08 Counterparts................................................33
Section 8.09 Severability................................................33
Section 8.10 Governing Law...............................................33
Exhibits:
Exhibit A Form of Marked Tree Bancshares Stockholder Voting
Agreement
Exhibit 2.01 Agreement and Plan of Merger
Exhibit 5.13 Marked Tree Bancshares Affiliate Letter
Exhibit 6.01(f) Form of Opinion of Counsel for Pocahontas Bancorp
Exhibit 6.01(g) Form of Tax Opinion of Baker, Donelson, Bearman &
Xxxxxxxx
Exhibit 6.02(f) Form of Opinion of Counsel for Marked Tree
Bancshares
Exhibit 6.02(g) Form of Tax Opinion of Xxxx Xxxxxx Xxxxxxxx &
Xxxxxx, P.C.
ii
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of November
27, 2002, is by and between Pocahontas Bancorp, Inc., a Delaware corporation
("Pocahontas Bancorp") and Marked Tree Bancshares, Inc., an Arkansas corporation
("Marked Tree Bancshares"). Each of Pocahontas Bancorp and Marked Tree
Bancshares is sometimes individually referred to herein as a "party," and
Pocahontas Bancorp and Marked Tree Bancshares are sometimes collectively
referred to herein as the "parties."
RECITALS
1. Pocahontas Bancorp, a unitary savings and loan holding company, with
principal offices in Jonesboro, Arkansas, owns all of the issued and outstanding
capital stock of First Community Bank, a federally chartered savings bank
("FCB"), with principal offices in Jonesboro, Arkansas.
2. Marked Tree Bancshares, a bank holding company, with principal offices
in Marked Tree, Arkansas, owns all of the issued and outstanding capital stock
of Marked Tree Bank, an Arkansas-chartered banking corporation ("Marked Tree
Bank"), with principal offices in Marked Tree, Arkansas.
3. The Board of Directors of each of Pocahontas Bancorp and Marked Tree
Bancshares deems it advisable and in the best interests of Pocahontas Bancorp
and Marked Tree Bancshares, respectively, and their respective stockholders, to
consummate the business combination contemplated by this Agreement in which
Marked Tree Bancshares shall be merged with and into Pocahontas Bancorp (the
"Company Merger"), with Pocahontas Bancorp being the surviving corporation, in a
stock-for-stock merger as set forth in Section 2.01 in this Agreement so that
the respective stockholders of Marked Tree Bancshares will have a continuing
equity ownership in Pocahontas Bancorp.
4. FCB and Marked Tree Bank will enter into an Agreement and Plan of Merger
(the "Bank Merger Agreement") providing for the merger (the "Bank Merger") of
Marked Tree Bank with and into FCB, with FCB as the surviving institution, and
it is intended that the Bank Merger be consummated immediately following
consummation of the Company Merger.
5. As a condition to, and simultaneously with, the execution of this
Agreement, the directors, certain executive officers and certain other
stockholders of Marked Tree Bancshares have agreed to enter into Stockholder
Voting Agreements with Pocahontas Bancorp, in the form attached hereto as
Exhibit A.
6. As an inducement to Pocahontas Bancorp to enter into this Agreement,
Marked Tree Bancshares will pay Pocahontas Bancorp a termination fee if this
Agreement is terminated under certain circumstances set forth herein.
7. The parties hereto desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with Company
Merger, and the other transactions contemplated by this Agreement, the Bank
Merger Agreement and the Stockholder Voting Agreements (collectively, the
"Merger Documents").
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained and intending to be
legally bound hereby, the parties hereto do hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.01 Definitions. Except as otherwise provided herein, as used in
this Agreement, the following terms shall have the indicated meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"Affiliate" means, with respect to any Person, any Person who
directly, or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person and, without
limiting the generality of the foregoing, includes any executive officer or
director of such Person and any Affiliate of such executive officer or
director.
"Agreement" means this Agreement, and any amendment or supplement
hereto.
"Applications" means the applications for regulatory approval that are
required by the transactions contemplated hereby.
"Bank Merger" means the merger of Marked Tree Bank with and into FCB,
with FCB as the surviving institution.
"Bank Merger Effective Date" means the date on which the articles of
combination for the Bank Merger are endorsed by the OTS pursuant to Section
552.12(k) of the OTS regulations.
"Base Market Value" means the closing price of Pocahontas Bancorp
Common Stock on the NASDAQ National Market (as reported on The Wall Street
Journal) on the date this Agreement is executed.
"BIF" means the Bank Insurance Fund, as administered by the FDIC.
"Closing Date" means the date mutually agreed upon by Pocahontas
Bancorp and Marked Tree Bancshares, but in no event later than thirty (30)
days after the last condition precedent pursuant to this Agreement has been
fulfilled or waived (including the expiration of any applicable waiting
period).
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Merger" means the merger of Marked Tree Bancshares with and
into Pocahontas Bancorp, with Pocahontas Bancorp being the surviving
corporation, in a tax-free, stock-for-stock merger transaction.
"Company Merger Effective Date" means that date upon which (i) the
certificate of merger is filed with the Delaware Secretary of State, or as
otherwise stated in the certificate of merger, in accordance with Section
251 of the DGCL, and (ii) articles of merger are filed with the Arkansas
Secretary of State in accordance with Section 4-26-1201 of the Arkansas
Business Corporation Act.
"Compensation and Benefit Plans" has the meaning given to such term in
Section 3.12 of this Agreement.
"DGCL" means the Delaware General Corporation Law.
"Environmental Laws" means any federal or state law, statute, rule,
regulation, code, order, judgment, decree, injunction, common law or
agreement with any federal or state governmental authority relating to (i)
the protection, preservation or restoration of the environment (including
air, water vapor, surface water, groundwater, drinking water supply,
surface land, subsurface land, plant and animal life or any other natural
resource), (ii) human health or safety, or (iii) exposure to, or the use,
storage, recycling, treatment, generation, transportation, processing,
handling, labeling, production, release or disposal of, hazardous
substances, in each case as amended and now in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated from time to time thereunder.
"Exchange Agent" means the entity selected by Pocahontas Bancorp and
agreed to by Marked Tree Bancshares, as provided in Section 2.01(b) of this
Agreement.
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"Exchange Ratio" has the meaning given to such term in Section 2.02 of
this Agreement.
"FDIA" means the Federal Deposit Insurance Act, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"GAAP" means generally accepted accounting principles as in effect at
the relevant date and consistently applied.
"IRC" means the Internal Revenue Code of 1986, as amended.
"IRS" means the Internal Revenue Service.
"Material Adverse Effect" shall mean, with respect to Pocahontas
Bancorp or Marked Tree Bancshares, any adverse effect on its assets,
financial condition or results of operations that is material to its
assets, financial condition or results of operations on a consolidated
basis, except for any material adverse effect caused by (i) any change in
the value of the assets of Pocahontas Bancorp or Marked Tree Bancshares
resulting from a change in interest rates generally, (ii) any individual or
combination of changes occurring after the date hereof in any federal or
state law, rule or regulation or in GAAP, which change(s) affect(s)
financial institutions generally, or (iii) actions and omissions of a party
(or any of its Subsidiaries) taken with the prior written consent of the
other party to this Agreement and the direct effects of compliance with
this Agreement on the operating performance of the party, including
expenses incurred by such party in consummating the transactions
contemplated by this Agreement.
"Merger Consideration" has the meaning given to that term in Section
2.01(a)(i) of this Agreement.
"Marked Tree Bancshares Common Stock" means the common stock of Marked
Tree Bancshares described in Section 3.02(a) of this Agreement.
"Marked Tree Bancshares Disclosure Schedules" means the disclosure
schedules delivered by Marked Tree Bancshares to Pocahontas Bancorp
pursuant to Article III of this Agreement.
"Marked Tree Bancshares Dissenting Shares" means any shares of Marked
Tree Bancshares Common Stock held by dissenting stockholders within the
meaning of Section 4-26-1007 of the Arkansas Business Corporation Act.
"Marked Tree Bancshares Financials" means (i) the audited consolidated
financial statements of Marked Tree Bancshares as of December 31, 2001 and
2000 and for the two years ended December 31, 2001, including the notes
thereto, and (ii) the unaudited interim financial statements of Marked Tree
Bancshares as of June 30, 2002 and 2001.
"Marked Tree Bancshares Perfected Dissenting Shares" means any Marked
Tree Bancshares Dissenting Shares that the holders thereof have not
withdrawn or caused to lose their status as Marked Tree Bancshares
Dissenting Shares.
"Marked Tree Bancshares Regulatory Reports" means the Quarterly FDIC
Financial Reports of Marked Tree Bank and accompanying schedules for each
calendar quarter, beginning with the quarter ended September 30, 2001,
through the Closing Date, as filed with the FDIC.
"Marked Tree Bancshares Subsidiary" means any corporation, 50% or more
of the capital stock of which is owned, either directly or indirectly, by
Marked Tree Bancshares or Marked Tree Bank, except any corporation the
stock of which is held in the ordinary course of the lending activities of
Marked Tree Bank.
"OTS" means the Office of Thrift Supervision.
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"Person" means any individual, corporation, partnership, joint
venture, association, trust or "group" (as that term is defined under the
Exchange Act).
"Pocahontas Bancorp Common Stock" has the meaning given to that term
in Section 4.02(a) of this Agreement.
"Pocahontas Bancorp Disclosure Schedules" means the disclosure
schedules delivered by Pocahontas Bancorp to Marked Tree Bancshares
pursuant to Article IV of this Agreement.
"Pocahontas Bancorp Financials" means (i) the audited consolidated
financial statements of Pocahontas Bancorp as of September 30, 2001 and
2000 and for the three years ended September 30, 2001, including the notes
thereto, and (ii) the unaudited interim consolidated financial statements
of Pocahontas Bancorp as of each calendar quarter thereafter included in
Securities Documents filed by Pocahontas Bancorp.
"Pocahontas Bancorp Regulatory Reports" means the Quarterly Thrift
Financial Reports of FCB and accompanying schedules, as filed with the OTS,
for each calendar quarter beginning with the quarter ended September 30,
2001, through the Closing Date, and any Current or Annual Reports on Form
H(b)-11 filed with the OTS by Pocahontas Bancorp since September 30, 2001.
"Pocahontas Bancorp Subsidiary" means any corporation, 50% or more of
the capital stock of which is owned, either directly or indirectly, by
Pocahontas Bancorp or FCB, except any corporation the stock of which is
held as security by FCB in the ordinary course of its lending activities.
"Prospectus/Proxy Statement" means the prospectus/proxy statement,
together with any supplements thereto, to be transmitted to holders of
Marked Tree Bancshares Common Stock in connection with the transactions
contemplated by this Agreement.
"Registration Statement" means the Registration Statement on Form S-4,
or other applicable form, including any pre-effective or post-effective
amendments or supplements thereto, as filed with the SEC under the
Securities Act with respect to the Pocahontas Bancorp Common Stock to be
issued in connection with the transactions contemplated by this Agreement.
"Regulatory Agreement" has the meaning given to that term in Section
3.11 of this Agreement.
"Regulatory Authority" means any agency or department of any federal
or state government, including without limitation the OTS, the FDIC, the
Arkansas State Bank Department, the SEC or the respective staffs thereof.
"Rights" means warrants, options, rights, convertible securities and
other capital stock equivalents that obligate an entity to issue its
securities.
"SAIF" means the Savings Association Insurance Fund, as administered
by the FDIC.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated from time to time thereunder.
"Securities Documents" means all registration statements, schedules,
statements, forms, reports, proxy material, and other documents required to
be filed under the Securities Laws.
"Securities Laws" means the Securities Act and the Exchange Act and
the rules and regulations promulgated from time to time thereunder.
4
"Subsidiary" means any corporation, 50% or more of the capital stock
of which is owned, either directly or indirectly, by another entity, except
any corporation the stock of which is held as security by either FCB or
Marked Tree Bank, as the case may be, in the ordinary course of its lending
activities.
"Valuation Period Market Value" means the average of the closing
prices of Pocahontas Bancorp Common Stock on the Nasdaq National Market
System (as reported by The Wall Street Journal) for the twenty (20)
consecutive trading days ending on the fifth business day before the
Closing Date.
ARTICLE II
THE MERGER AND EXCHANGE OF SHARES
Section 2.01 Conversion and Exchange of Shares.
(a) At the Company Merger Effective Date, by virtue of the Company Merger
and without any action on the part of Pocahontas Bancorp or Marked Tree
Bancshares or the holders of shares of Pocahontas Bancorp or Marked Tree
Bancshares Common Stock:
(i) Each share of Marked Tree Bancshares Common Stock issued and
outstanding at the Company Merger Effective Date, excluding any Marked Tree
Bancshares Perfected Dissenting Shares and except as provided in clause (a)
(ii) of this Section and Section 2.05 hereof, shall cease to be
outstanding, shall cease to exist and shall be converted into and represent
solely one share of Pocahontas Bancorp Common Stock multiplied by the
Exchange Ratio as determined below (rounded to the nearest fourth decimal)
(the "Merger Consideration").
(ii) Any shares of Marked Tree Bancshares Common Stock that are owned
or held by either party or any of their respective Subsidiaries (other than
in a fiduciary capacity or in connection with debts previously contracted)
at the Company Merger Effective Date shall cease to exist, the certificates
for such shares shall as promptly as practicable be canceled, such shares
shall not be converted into or represent any shares of Pocahontas Bancorp
Common Stock, and no shares of Pocahontas Bancorp capital stock shall be
issued or exchanged therefor.
(iii) Each share of Pocahontas Bancorp Common Stock issued and
outstanding immediately before the Company Merger Effective Date shall
remain an outstanding share of common stock of Pocahontas Bancorp as the
surviving corporation.
(iv) The holders of certificates representing shares of Marked Tree
Bancshares Common Stock shall cease to have any rights as stockholders of
Marked Tree Bancshares, except such rights, if any, as they may have
pursuant to applicable law.
(b) Prior to the Company Merger Effective Date, Pocahontas Bancorp shall
appoint a bank, trust company or other stock transfer agent selected by it and
agreed to by Marked Tree Bancshares as the Exchange Agent to effect the exchange
of certificates evidencing shares of Marked Tree Bancshares Common Stock (any
such certificate being hereinafter referred to as a "Certificate") for shares of
Pocahontas Bancorp Common Stock to be received in the Company Merger. On the
Company Merger Effective Date, Pocahontas Bancorp shall have granted the
Exchange Agent the requisite power and authority to effect for and on behalf of
Pocahontas Bancorp the issuance of the number of shares of Pocahontas Bancorp
Common Stock issuable in the Company Merger. The Exchange Agent shall accept
such Certificates upon compliance with such reasonable terms and conditions as
the Exchange Agent may impose to effect an orderly exchange thereof in
accordance with customary exchange practices.
(c) In connection with this Agreement, FCB and Marked Tree Bank shall enter
into the Agreement and Plan of Merger substantially in the form attached as
Exhibit 2.01 hereto.
(d) Marked Tree Bancshares Perfected Dissenting Shares shall not be
converted into shares of Pocahontas Bancorp Common Stock, but shall after the
Company Merger Effective Date, be entitled only to such rights as are granted
them by Section 4-26-1007 of the Arkansas Business Corporation Act. Each
dissenting stockholder who is entitled to payment for such stockholder's shares
of Marked Tree Bancshares Common Stock shall receive such payment therefor from
5
the surviving corporation of the Company Merger in an amount as determined
pursuant to Section 4-26-1007 of the Arkansas Business Corporation Act.
Section 2.02 The Exchange Ratio. For purposes of this Agreement, the
Exchange Ratio means the number of shares of Pocahontas Bancorp Common Stock
determined by dividing the stated book value per share of Marked Tree Bancshares
by the stated book value per share of Pocahontas Bancorp; provided, however, if
the Valuation Period Market Value is more than 15% higher or more than 15% lower
than the Base Market Value, then the Exchange Ratio shall be decreased by the
percentage by which the Valuation Period Market Value is higher than the Base
Market Value or increased by the percentage by which the Valuation Period Market
Value is lower than the Base Market Value, respectively. For the purposes of the
preceding sentence, stated book value per share shall be calculated as of the
last calendar quarter-end prior to the Closing Date and shall be calculated in
accordance with GAAP.
Section 2.03 Surviving Corporation in the Company Merger.
(a) Pocahontas Bancorp shall be the surviving corporation in the Company
Merger. The headquarters of the surviving corporation shall be located in
Jonesboro, Arkansas, or such other city in Arkansas as shall have been
designated by Pocahontas Bancorp's Board of Directors.
(b) The Certificate of Incorporation of Pocahontas Bancorp as in effect
immediately prior to the Company Merger Effective Date shall be the Certificate
of Incorporation of Pocahontas Bancorp as the surviving corporation, until
subsequently amended in accordance with the DGCL.
(c) At the Company Merger Effective Date, the Bylaws of Pocahontas Bancorp,
as then in effect, shall be the Bylaws of Pocahontas Bancorp as the surviving
corporation, until subsequently amended in accordance with the DGCL.
(d) The directors and executive officers of Pocahontas Bancorp as the
surviving corporation following the Company Merger shall be the directors and
executive officers of the surviving corporation.
(e) From and after the Company Merger Effective Date:
(i) Pocahontas Bancorp as the surviving corporation shall possess all
assets and property of every description, and every interest in the assets
and property, wherever located, and the rights, privileges, immunities,
powers, franchises, and authority, of a public as well as of a private
nature, of each of Pocahontas Bancorp and Marked Tree Bancshares, and all
obligations belonging or due to each of Pocahontas Bancorp and Marked Tree
Bancshares, all of which shall vest in Pocahontas Bancorp as the surviving
corporation without further act or deed. Title to any real estate or any
interest in the real estate vested in Pocahontas Bancorp or Marked Tree
Bancshares shall not revert or in any way be impaired by reason of the
Company Merger.
(ii) Pocahontas Bancorp as the surviving corporation will be liable
for all the obligations of each of Pocahontas Bancorp and Marked Tree
Bancshares. Any claim existing, or action or proceeding pending, by or
against Pocahontas Bancorp or Marked Tree Bancshares, may be prosecuted to
judgment, with right of appeal, as if the Company Merger had not taken
place, or Pocahontas Bancorp as the surviving corporation may be
substituted in its place.
(iii) All the rights of creditors of each of Pocahontas Bancorp and
Marked Tree Bancshares will be preserved unimpaired, and all liens upon the
property of Pocahontas Bancorp and Marked Tree Bancshares will be preserved
unimpaired only on the property affected by such liens immediately before
the Company Merger Effective Date.
Section 2.04 Authorization for Issuance of Pocahontas Bancorp Common Stock;
Exchange of Certificates.
(a) Pocahontas Bancorp shall reserve for issuance a sufficient number of
shares of its common stock for the purpose of issuing its shares to Marked Tree
Bancshares' stockholders in accordance with this Article II.
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(b) After the Company Merger Effective Date, holders of certificates
theretofore representing outstanding shares of Marked Tree Bancshares Common
Stock (other than as provided in Section 2.01(a)(ii) hereof), upon surrender of
such certificates to the Exchange Agent, shall be entitled to receive (i)
certificates for the number of whole shares of Pocahontas Bancorp Common Stock
into which shares of Marked Tree Bancshares Common Stock previously evidenced by
the certificates so surrendered shall have been converted, as provided in
Section 2.01 hereof, and (ii) cash payments in lieu of fractional shares, if
any, as provided in Section 2.05 hereof. As soon as practicable after the
Company Merger Effective Date, and in no event more than five (5) days
thereafter, the Exchange Agent will send a notice and transmittal form to each
Marked Tree Bancshares stockholder of record at the Company Merger Effective
Date whose Marked Tree Bancshares Common Stock shall have been converted into
Pocahontas Bancorp Common Stock, advising such stockholder of the effectiveness
of the Company Merger and the procedure for surrendering to the Exchange Agent
outstanding certificates previously representing Marked Tree Bancshares Common
Stock in exchange for new certificates for Pocahontas Bancorp Common Stock and
cash in lieu of fractional shares. Upon surrender, each certificate representing
Marked Tree Bancshares Common Stock shall be canceled.
(c) Until surrendered as provided in this Section 2.04, each outstanding
certificate which, before the Company Merger Effective Date, represented Marked
Tree Bancshares Common Stock (other than shares canceled at the Company Merger
Effective Date pursuant to Section 2.01(a)(ii) hereof) will be deemed for all
corporate purposes to represent the number of whole shares of Pocahontas Bancorp
Common Stock into which the shares of Marked Tree Bancshares Common Stock
formerly represented thereby were converted and the right to receive cash in
lieu of fractional shares. However, until such outstanding certificates formerly
representing Marked Tree Bancshares Common Stock are so surrendered, no dividend
or distribution payable to holders of record of Pocahontas Bancorp Common Stock
shall be paid to any holder of such outstanding certificates, but upon surrender
of such outstanding certificates by such holder there shall be paid to such
holder the amount of any dividends or distributions, without interest,
previously paid with respect to such whole shares of Pocahontas Bancorp Common
Stock, but not paid to such holder, and which dividends or distribution had a
record date occurring on or after the Company Merger Effective Date and the
amount of any cash, without interest, payable to such holder in lieu of
fractional shares pursuant to Section 2.05 hereof. After the Company Merger
Effective Date, there shall be no further registration of transfers on the
records of Marked Tree Bancshares of outstanding certificates formerly
representing shares of Marked Tree Bancshares Common Stock and, if a certificate
formerly representing such shares is presented to Pocahontas Bancorp, it shall
be forwarded to the Exchange Agent for cancellation and exchange for a
certificate representing shares of Pocahontas Bancorp Common Stock and cash for
fractional shares (if any), as herein provided. Following one year after the
Company Merger Effective Date, the Exchange Agent shall return to Pocahontas
Bancorp as the surviving corporation any certificates for Pocahontas Bancorp
Common Stock and cash remaining in the possession of the Exchange Agent
(together with any dividends in respect thereof) and thereafter stockholders of
Marked Tree Bancshares shall look exclusively to Pocahontas Bancorp for shares
of the Pocahontas Bancorp Common Stock and cash to which they are entitled
hereunder.
(d) All shares of Pocahontas Bancorp Common Stock and cash in lieu of any
fractional share issued and paid upon the conversion of Marked Tree Bancshares
Common Stock in accordance with the above terms and conditions shall be deemed
to have been issued and paid in full satisfaction of all rights pertaining to
such Marked Tree Bancshares Common Stock.
(e) If any new certificate for Pocahontas Bancorp Common Stock is to be
issued in a name other than that in which the certificate surrendered in
exchange thereof is registered, it shall be a condition of the issuance therefor
that the certificate surrendered in exchange shall be properly endorsed and
otherwise in proper form for transfer and that the person requesting such
transfer pay to the Exchange Agent any transfer or other taxes required by
reason of the issuance of a new certificate representing shares of Pocahontas
Bancorp Common Stock in any name other than that of the registered holder of the
certificate surrendered, or establish to the satisfaction of the Exchange Agent
that such tax has been paid or is not payable.
(f) Certificates surrendered for exchange by any person who is an
"affiliate" of Marked Tree Bancshares for purposes of Rule 145(c) under the
Securities Act shall not be exchanged for Certificates representing shares of
Pocahontas Bancorp Common Stock until Pocahontas Bancorp has received the
written agreement of such person contemplated by Section 5.13 hereof.
7
(g) In the event any certificate representing Marked Tree Bancshares Common
Stock shall have been lost, stolen or destroyed, the Exchange Agent shall issue
in exchange for such lost, stolen or destroyed certificate, upon the making of
an affidavit of that fact by the holder thereof, such shares of Pocahontas
Bancorp Common Stock and cash for fractional shares, if any, as may be required
pursuant hereto; provided, however, that Pocahontas Bancorp or the Exchange
Agent may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate to
deliver a bond in such sum as is reasonably necessary as indemnity against any
claim that may be made against Pocahontas Bancorp, Marked Tree Bancshares, the
Exchange Agent or any other party with respect to the certificate alleged to
have been lost, stolen or destroyed.
Section 2.05 No Fractional Shares. Notwithstanding any term or provision
hereof, no fractional shares of Pocahontas Bancorp Common Stock, and no
certificates or scrip therefor, or other evidence of ownership thereof, will be
issued upon the conversion of or in exchange for any shares of Marked Tree
Bancshares Common Stock; no dividend or distribution with respect to Pocahontas
Bancorp Common Stock shall be payable on or with respect to any fractional share
interest; and no such fractional share interest shall entitle the owner thereof
to vote or to any other rights of a stockholder of Pocahontas Bancorp as the
surviving corporation. In lieu of such fractional share interest, any holder of
Marked Tree Bancshares Common Stock who would otherwise be entitled to a
fractional share of Pocahontas Bancorp Common Stock will, promptly following
surrender of his certificate or certificates representing Marked Tree Bancshares
Common Stock outstanding immediately before the Company Merger Effective Date,
be paid the applicable cash value of such fractional share interest, which shall
be equal to the product of the fraction of the share to which such holder would
otherwise have been entitled and the Valuation Period Market Value. For the
purposes of determining any such fractional share interests, all shares of
Marked Tree Bancshares Common Stock owned by a Marked Tree Bancshares
stockholder shall be combined so as to calculate the maximum number of whole
shares of Pocahontas Bancorp Common Stock issuable to such Marked Tree
Bancshares stockholder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MARKED TREE BANCSHARES
Marked Tree Bancshares represents and warrants to Pocahontas Bancorp that
the statements contained in this Article III are correct and complete as of the
date of this Agreement and will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this Article III), except as set forth in the
Marked Tree Bancshares Disclosure Schedules delivered by Marked Tree Bancshares
to Pocahontas Bancorp on the date hereof.
Section 3.01 Organization.
(a) Marked Tree Bancshares is a corporation duly organized, validly
existing and in good standing under the laws of the State of Arkansas, with full
corporate power and authority to carry on its business as now conducted and is
duly licensed or qualified to do business in the states of the United States and
foreign jurisdictions where its ownership or leasing of property or the conduct
of its business requires such qualification, except where the failure to be so
licensed or qualified would not have a Material Adverse Effect on Marked Tree
Bancshares.
(b) Marked Tree Bank is an Arkansas-chartered banking corporation duly
organized and validly existing under the laws of the State of Arkansas. Except
as set forth in Marked Tree Bancshares Disclosure Schedule 3.01(b), Marked Tree
Bank is the only Marked Tree Bancshares Subsidiary. The deposits of Marked Tree
Bank are insured by the FDIC through the BIF to the fullest extent permitted by
law, and all premiums and assessments required to be paid in connection
therewith have been paid when due by Marked Tree Bank.
(c) The respective minute books of Marked Tree Bancshares and each Marked
Tree Bancshares Subsidiary accurately record, in all material respects, all
material corporate actions of their respective stockholders and boards of
directors (including committees) through the date of this Agreement.
(d) Prior to the date of this Agreement, Marked Tree Bancshares has
delivered to Pocahontas Bancorp true and correct copies of the articles of
incorporation and bylaws of Marked Tree Bancshares.
8
Section 3.02 Capitalization.
(a) The authorized capital stock of Marked Tree Bancshares consists of (i)
250,000 shares of common stock, $1.00 par value per share, of which 2,794.145
shares are outstanding as of the date hereof, validly issued, fully paid and
nonassessable and free of preemptive rights, and 899.375 shares are held by
Marked Tree Bancshares as treasury stock, and (ii) 100,000 shares of preferred
stock, $1.00 par value per share, none of which are issued or outstanding.
Except as set forth in Marked Tree Bancshares Disclosure Schedule 3.02(a)
neither Marked Tree Bancshares nor any Marked Tree Bancshares Subsidiary has
issued or is bound by any Right of any character relating to the purchase, sale
or issuance or voting of, or right to receive dividends or other distributions
on any shares of Marked Tree Bancshares Common Stock, Marked Tree Bancshares
preferred stock or any other security of Marked Tree Bancshares or any
securities representing the right to vote, purchase or otherwise receive any
shares of Marked Tree Bancshares Common Stock, Marked Tree Bancshares preferred
stock or any other security of Marked Tree Bancshares.
(b) Except as set forth in Marked Tree Bancshares Disclosure Schedule
3.02(b), Marked Tree Bancshares owns all of the capital stock of Marked Tree
Bank, free and clear of any lien or encumbrance. Except for the Marked Tree
Bancshares Subsidiaries, Marked Tree Bancshares does not possess, directly or
indirectly, any material equity interest in any corporation, except for equity
interests held in the investment portfolios of Marked Tree Bancshares
Subsidiaries, equity interests held by Marked Tree Bancshares Subsidiaries in a
fiduciary capacity, and equity interests held in connection with the lending
activities of Marked Tree Bank.
Section 3.03 Authority; No Violation.
(a) Marked Tree Bancshares has all requisite corporate power and authority
to execute and deliver this Agreement and, subject to approval by its
stockholders and receipt of all required regulatory approvals, to consummate the
transactions contemplated hereby. Marked Tree Bank has full corporate power and
authority to execute and deliver the Bank Merger Agreement and, subject to
receipt of all required regulatory approvals, to consummate the Bank Merger. The
execution and delivery of this Agreement by Marked Tree Bancshares and the
completion by Marked Tree Bancshares of the transactions contemplated hereby
have been duly and validly approved by the Board of Directors of Marked Tree
Bancshares and, except for approval of the stockholders of Marked Tree
Bancshares, no other corporate proceedings on the part of Marked Tree Bancshares
are necessary to complete the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by Marked Tree Bancshares and,
subject to approval by the stockholders of Marked Tree Bancshares and receipt of
the required approvals of Regulatory Authorities described in Section 4.04
hereof, constitutes the valid and binding obligation of Marked Tree Bancshares,
enforceable against Marked Tree Bancshares in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights
generally and except as the availability of the remedy of specific performance
or injunctive relief is subject to the discretion of the court, and subject, as
to enforceability, to general principles of equity. The Bank Merger Agreement,
upon its execution and delivery by Marked Tree Bank concurrently with the
execution and delivery of this Agreement, will constitute the valid and binding
obligation of Marked Tree Bank, enforceable against Marked Tree Bank in
accordance with its terms, except as such enforceability may be limited by
applicable conservatorship and receivership provisions of the FDIA, or
insolvency and similar laws affecting creditors' rights generally and except as
the availability of the remedy of specific performance or injunctive relief is
subject to the discretion of the court, and subject, as to enforceability, to
general principles of equity.
(b) (A) The execution and delivery of this Agreement by Marked Tree
Bancshares, (B) the execution and delivery of the Bank Merger Agreement by
Marked Tree Bank, (C) subject to receipt of approvals from the Regulatory
Authorities referred to in Section 4.04 hereof, Marked Tree Bancshares' and
Pocahontas Bancorp's compliance with any conditions contained therein and the
receipt of Marked Tree Bancshares' stockholder approval, the consummation of the
transactions contemplated hereby, and (D) compliance by Marked Tree Bancshares
or Marked Tree Bank with any of the terms or provisions hereof or of the Bank
Merger Agreement will not (i) conflict with or result in a breach of any
provision of the articles of incorporation or bylaws of Marked Tree Bancshares
or any Marked Tree Bancshares Subsidiary or the charter or bylaws of Marked Tree
Bank; (ii) violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to Marked Tree Bancshares or any
Marked Tree Bancshares Subsidiary or any of their respective properties or
assets; or (iii) violate, conflict with, result in a breach of any provisions
of, constitute a default (or an event which, with notice or lapse of time, or
9
both, would constitute a default), under, result in the termination of,
accelerate the performance required by, or result in a right of termination or
acceleration or the creation of any lien, security interest, charge or other
encumbrance upon any of the properties or assets of Marked Tree Bancshares or
Marked Tree Bank under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
investment or obligation to which Marked Tree Bancshares or Marked Tree Bank is
a party, or by which they or any of their respective properties or assets may be
bound or affected, except for such violations, conflicts, breaches or defaults
under clause (ii) or (iii) hereof which, either individually or in the
aggregate, will not have a Material Adverse Effect on Marked Tree Bancshares.
Section 3.04 Consents. Except for the consents, waivers, approvals, filings
and registrations from or with the Regulatory Authorities referred to in Section
4.04 hereof and compliance with any conditions contained therein, and the
approval of this Agreement by the requisite vote of the stockholders of Marked
Tree Bancshares, no consents, waivers or approvals of, or filings or
registrations with, any governmental authority are necessary, and, to Marked
Tree Bancshares' knowledge, no consents, waivers or approvals of, or filings or
registrations with, any other third parties are necessary, in connection with
(a) the execution and delivery of this Agreement by Marked Tree Bancshares, and
(b) the completion by Marked Tree Bank of the transactions contemplated hereby
or by the Bank Merger Agreement. Marked Tree Bancshares has no reason to believe
that (i) any required consents or approvals will not be received, or that (ii)
any public body or authority, the consent or approval of which is not required
or any filing with which is not required, will object to the completion of the
transactions contemplated by this Agreement.
Section 3.05 Financial Statements.
(a) Marked Tree Bancshares has previously delivered to Pocahontas Bancorp
the Marked Tree Bancshares Regulatory Reports. The Marked Tree Bancshares
Regulatory Reports have been, and will be, prepared in all material respects in
accordance with applicable regulatory accounting principles and practices
throughout the periods covered by such statements, and fairly present, and will
fairly present in all material respects, the consolidated financial position,
results of operations and changes in stockholders' equity of Marked Tree
Bancshares as of and for the periods ended on the dates thereof, in accordance
with applicable regulatory accounting principles applied on a consistent basis.
(b) Marked Tree Bancshares has previously delivered to Pocahontas Bancorp
the Marked Tree Bancshares Financials. The Marked Tree Bancshares Financials
have been, and will be, prepared in accordance with GAAP, and (including the
related notes where applicable) fairly present, and will fairly present, in each
case in all material respects (subject in the case of the unaudited interim
statements to normal year-end adjustments), the consolidated financial position,
results of operations and cash flows of Marked Tree Bancshares and the Marked
Tree Bancshares Subsidiaries as of and for the respective periods ending on the
dates thereof, in accordance with GAAP applied on a consistent basis during the
periods involved, except as indicated in the notes thereto.
(c) At the date of each balance sheet included in the Marked Tree
Bancshares Financials or the Marked Tree Bancshares Regulatory Reports, Marked
Tree Bancshares did not have any liabilities, obligations or loss contingencies
of any nature (whether absolute, accrued, contingent or otherwise) of a type
required to be reflected in such Marked Tree Bancshares Financials or Marked
Tree Bancshares Regulatory Reports or in the footnotes thereto that are not
fully reflected or reserved against therein or fully disclosed in a footnote
thereto, except for liabilities, obligations and loss contingencies that are not
material individually or in the aggregate and that are incurred in the ordinary
course of business, consistent with past practice, liabilities arising in
connection with the transactions contemplated by this Agreement and except for
liabilities, obligations and loss contingencies that are within the subject
matter of a specific representation and warranty herein and subject, in the case
of any unaudited statements, to normal, recurring audit adjustments.
Section 3.06 Taxes. Marked Tree Bancshares and the Marked Tree Bancshares
Subsidiaries are members of the same affiliated group within the meaning of IRC
Section 1504(a). Marked Tree Bancshares has duly filed or will file all federal,
state and material local tax returns required to be filed by or with respect to
Marked Tree Bancshares and all Marked Tree Bancshares Subsidiaries on or prior
to the Closing Date (all such returns being accurate and correct in all material
respects), and has duly paid or will pay, or made or will make, provisions for
the payment of all material federal, state and local taxes that have been
incurred by or are due or claimed to be due from Marked Tree Bancshares and any
Marked Tree Bancshares Subsidiary by any taxing authority or pursuant to any
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written tax sharing agreement on or prior to the Closing Date other than taxes
or other charges that (i) are not delinquent, (ii) are being contested in good
faith, or (iii) have not yet been fully determined.
Section 3.07 No Material Adverse Effect. Marked Tree Bancshares and the
Marked Tree Bancshares Subsidiaries, taken as a whole, have not suffered any
Material Adverse Effect since June 30, 2002.
Section 3.08 Contracts.
(a) Except as described in Marked Tree Bancshares Disclosure Schedule
3.08(a), neither Marked Tree Bancshares nor any Marked Tree Bancshares
Subsidiary is a party to or subject to: (i) any employment, consulting or
severance contract or material arrangement with any past or present officer,
director or employee of Marked Tree Bancshares or any Marked Tree Bancshares
Subsidiary, except for "at will" arrangements; (ii) any plan, arrangement or
contract providing for bonuses, pensions, options, deferred compensation,
retirement payments, profit sharing or similar arrangements for or with any past
or present officers, directors or employees of Marked Tree Bancshares or any
Marked Tree Bancshares Subsidiary; (iii) any collective bargaining agreement
with any labor union relating to employees of Marked Tree Bancshares or any
Marked Tree Bancshares Subsidiary; (iv) any agreement which by its terms limits
the payment of dividends by Marked Tree Bancshares; (v) any instrument
evidencing or related to material indebtedness for borrowed money whether
directly or indirectly, by way of purchase money obligation, conditional sale,
lease purchase, guaranty or otherwise, in respect of which Marked Tree
Bancshares or any Marked Tree Bancshares Subsidiary is an obligor to any person,
which instrument evidences or relates to indebtedness other than deposits,
repurchase agreements and bankers' acceptances established in the ordinary
course of business and transactions in "federal funds" or which contains
financial covenants or other restrictions (other than those relating to the
payment of principal and interest when due) which would be applicable on or
after the Closing Date to Pocahontas Bancorp or any Pocahontas Bancorp
Subsidiary; or (vi) any contract (other than this Agreement) limiting the
freedom, in any material respect, of Marked Tree Bancshares or Marked Tree Bank
to engage in any type of banking or bank-related business in which Marked Tree
Bancshares is permitted to engage under applicable law as of the date of this
Agreement.
(b) True and correct copies of agreements, plans, arrangements and
instruments referred to in Section 3.08(a), have been provided to Pocahontas
Bancorp on or before the date hereof, are listed on Marked Tree Bancshares
Disclosure Schedule 3.08(a) and are in full force and effect on the date hereof,
and neither Marked Tree Bancshares nor any Marked Tree Bancshares Subsidiary
(nor, to the knowledge of Marked Tree Bancshares, any other party to any such
contract, plan, arrangement or instrument) has breached any provision of, or is
in default in any respect under any term of, any such contract, plan,
arrangement or instrument which breach has resulted in or will result in a
Material Adverse Effect with respect to Marked Tree Bancshares. Except as set
forth in Marked Tree Bancshares Disclosure Schedule 3.08(b), no party to any
material contract, plan, arrangement or instrument will have the right to
terminate any or all of the provisions of any such contract, plan, arrangement
or instrument as a result of the execution of, and the transactions contemplated
by, this Agreement. None of the employees (including officers) of Marked Tree
Bancshares, possesses the right to terminate his/her employment as a result of
the execution of this Agreement. No plan, employment agreement, termination
agreement, or similar agreement or arrangement to which Marked Tree Bancshares
or any Marked Tree Bancshares Subsidiary is a party or under which Marked Tree
Bancshares or any Marked Tree Bancshares Subsidiary may be liable permit any
employee or independent contractor to terminate such plan, agreement or
arrangement without cause and continue to accrue future benefits thereunder. No
such agreement, plan or arrangement (x) provides for acceleration in the vesting
of benefits or payments due thereunder upon the occurrence of a change in
ownership or control of Marked Tree Bancshares or any Marked Tree Bancshares
Subsidiary absent the occurrence of a subsequent event; or (y) requires Marked
Tree Bancshares or any Marked Tree Bancshares Subsidiary to provide a benefit in
the form of Marked Tree Bancshares Common Stock or determined by reference to
the value of Marked Tree Bancshares Common Stock. No such agreement, plan or
arrangement with respect to officers of Marked Tree Bancshares, or to Marked
Tree Bancshares' knowledge, to its employees, provides for benefits which may
cause the disallowance of a federal income tax deduction under IRC Section 280G.
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Section 3.09 Ownership of Property; Insurance Coverage.
(a) Marked Tree Bancshares and the Marked Tree Bancshares Subsidiaries have
good and marketable title to all material assets and properties owned by Marked
Tree Bancshares or any Marked Tree Bancshares Subsidiary in the conduct of their
businesses, whether such assets and properties are real or personal, tangible or
intangible, including assets and property reflected in the balance sheets
contained in the Marked Tree Bancshares Regulatory Reports and in the Marked
Tree Bancshares Financials or acquired subsequent thereto (except to the extent
that such assets and properties have been disposed of in the ordinary course of
business, since the date of such balance sheets), subject to no material
encumbrances, liens, mortgages, security interests or pledges, except (i) those
items that secure liabilities for public or statutory obligations or any
discount with, borrowing from or other obligations to any Federal Reserve Bank
or any Federal Home Loan Bank, inter-bank credit facilities, or any transaction
by a Marked Tree Bancshares Subsidiary acting in a fiduciary capacity, (ii)
statutory liens for amounts not yet delinquent or which are being contested in
good faith, and (iii) items permitted under Article IV of this Agreement. Marked
Tree Bancshares and the Marked Tree Bancshares Subsidiaries, as lessees, have
the right under valid and subsisting leases of real and personal properties used
by Marked Tree Bancshares and its Subsidiaries in the conduct of their
businesses to occupy or use all such properties as presently occupied and used
by each of them. Such existing leases and commitments to lease constitute or
will constitute operating leases for both tax and financial accounting purposes
and the lease expense and minimum rental commitments with respect to such leases
and lease commitments are as disclosed in the notes to the Marked Tree
Bancshares Financials.
(b) With respect to all material agreements pursuant to which Marked Tree
Bancshares or any Marked Tree Bancshares Subsidiary has purchased securities
subject to an agreement to resell, if any, Marked Tree Bancshares or such Marked
Tree Bancshares Subsidiary, as the case may be, has a lien or security interest
(which to Marked Tree Bancshares' knowledge is a valid, perfected first lien) in
the securities or other collateral securing the repurchase agreement, and the
value of such collateral equals or exceeds the amount of the debt secured
thereby.
(c) Marked Tree Bancshares and each Marked Tree Bancshares Subsidiary
currently maintains insurance reasonable for their respective operations and
similar in scope and coverage to that customarily maintained by other businesses
similarly engaged in a similar location. Marked Tree Bancshares has not received
notice from any insurance carrier that (i) such insurance will be canceled or
that coverage thereunder will be reduced or eliminated, or (ii) premium costs
with respect to such policies of insurance will be substantially increased.
There are presently no material claims pending under such policies of insurance
and no notices have been given by Marked Tree Bancshares under such policies.
All such insurance is in full force and effect and is valid and enforceable,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights generally and except that the availability of the equitable remedy of
specific performance or injunctive relief is subject to the discretion of the
court before which any proceedings may be brought, and within the last three
years Marked Tree Bancshares has received each type of insurance coverage for
which it has applied and during such periods has not been denied indemnification
for any material claims submitted under any of its insurance policies.
Section 3.10 Legal Proceedings. Except as set forth in Marked Tree
Bancshares Disclosure Schedule 3.10, neither Marked Tree Bancshares nor any
Marked Tree Bancshares Subsidiary is a party to any, and there are no pending
or, to the best of Marked Tree Bancshares' knowledge, threatened legal,
administrative, arbitration or other proceedings, claims (whether asserted or
unasserted), actions or governmental investigations or inquiries of any nature
(i) against Marked Tree Bancshares or any Marked Tree Bancshares Subsidiary,
(ii) to which Marked Tree Bancshares' or any Marked Tree Bancshares Subsidiary's
assets are or may be subject, (iii) challenging the validity or propriety of any
of the transactions contemplated by this Agreement, or (iv) which could
adversely affect the ability of Marked Tree Bancshares to perform under this
Agreement, except for any proceedings, claims, actions, investigations or
inquiries referred to in clauses (i) or (ii) which, if adversely determined,
individually or in the aggregate, could not be reasonably expected to have a
Material Adverse Effect on Marked Tree Bancshares and the Marked Tree Bancshares
Subsidiaries, taken as a whole.
12
Section 3.11 Compliance with Applicable Law.
(a) Marked Tree Bancshares and Marked Tree Bancshares Subsidiaries hold all
licenses, franchises, permits and authorizations necessary for the lawful
conduct of their respective businesses under, and have complied in all material
respects with, applicable laws, statutes, orders, rules or regulations of any
federal, state or local governmental authority relating to them, other than
where such failure to hold or such noncompliance will neither result in a
limitation in any material respect on the conduct of their respective businesses
nor otherwise have a Material Adverse Effect on Marked Tree Bancshares and the
Marked Tree Bancshares Subsidiaries, taken as a whole.
(b) Except as set forth in Marked Tree Bancshares Disclosure Schedule
3.11(b), neither Marked Tree Bancshares nor any Marked Tree Bancshares
Subsidiary has received any notification or communication from any Regulatory
Authority (i) asserting that Marked Tree Bancshares or any Marked Tree
Bancshares Subsidiary is not in material compliance with any of the statutes,
regulations or ordinances which such Regulatory Authority enforces; (ii)
threatening to revoke any license, franchise, permit or governmental
authorization which is material to Marked Tree Bancshares or any Marked Tree
Bancshares Subsidiary; (iii) requiring or threatening to require Marked Tree
Bancshares or any Marked Tree Bancshares Subsidiary, or indicating that Marked
Tree Bancshares or any Marked Tree Bancshares Subsidiary may be required, to
enter into a cease and desist order, agreement or memorandum of understanding or
any other agreement with any federal or state governmental agency or authority
which is charged with the supervision or regulation of banks or engages in the
insurance of bank deposits restricting or limiting, or purporting to restrict or
limit, in any material respect the operations of Marked Tree Bancshares or any
Marked Tree Bancshares Subsidiary, including without limitation any restriction
on the payment of dividends (other than such restrictions or limitations
generally applicable to banking institutions as set forth in statutes or
regulations of such Regulatory Authorities); or (iv) directing, restricting or
limiting, or purporting to direct, restrict or limit, in any manner the
operations of Marked Tree Bancshares or any Marked Tree Bancshares Subsidiary,
including without limitation any restriction on the payment of dividends (other
than such restrictions or limitations generally applicable to banking
institutions as set forth in statutes or regulations of such Regulatory
Authorities) (any such notice, communication, memorandum, agreement or order
described in this sentence is hereinafter referred to as a "Regulatory
Agreement"). Neither Marked Tree Bancshares nor any Marked Tree Bancshares
Subsidiary has consented to or entered into any Regulatory Agreement.
Section 3.12 Employee Benefit Plans.
(a) Marked Tree Bancshares Disclosure Schedule 3.12 includes a list of all
existing bonus, incentive, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock option, stock appreciation, phantom stock,
severance, welfare and fringe benefit plans, employment, severance and change in
control agreements and all other benefit practices, policies and arrangements
maintained by Marked Tree Bancshares or Marked Tree Bank in which any employee
or former employee, consultant or former consultant or director or former
director of Marked Tree Bancshares or Marked Tree Bank participates or to which
any such employee, consultant or director is a party or is otherwise entitled to
receive benefits, other than plans and programs involving immaterial obligations
(the "Compensation and Benefit Plans"). Neither Marked Tree Bancshares nor
Marked Tree Bank has any commitment to create any additional Compensation and
Benefit Plan or to modify, change or renew any existing Compensation and Benefit
Plan, except as required to maintain the qualified status thereof. Marked Tree
Bancshares has made available to Pocahontas Bancorp true and correct copies of
the Compensation and Benefit Plans.
(b) Each Compensation and Benefit Plan has been operated and administered
in all material respects in accordance with its terms and with applicable law,
including, but not limited to, ERISA, the IRC, the Age Discrimination in
Employment Act, and any regulations or rules promulgated thereunder, and all
material filings, disclosures and notices required by ERISA, the IRC, the Age
Discrimination in Employment Act and any other applicable law have been timely
made. Except as set forth in Marked Tree Bancshares Disclosure Schedule 3.12(b),
each Compensation and Benefit Plan which is an "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA (a "Pension Plan") and which is
intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the IRS, or uses a regional prototype
document that has received a favorable determination letter, and Marked Tree
Bancshares is not aware of any circumstances that are reasonably likely to
result in revocation of any such favorable determination letter. There is no
pending or, to the knowledge of Marked Tree Bancshares, threatened action, suit
13
or claim relating to any of the Compensation and Benefit Plans (other than
routine claims for benefits). No prohibited transaction (which shall mean any
transaction prohibited by ERISA Section 406 and not exempt under ERISA Section
408 or any transaction prohibited under IRC Section 4975) has occurred within
the past six (6) years with respect to any employee benefit plan maintained by
Marked Tree Bancshares or any Marked Tree Bancshares Subsidiary that would
result in the imposition, directly or indirectly, of an excise tax under IRC
Section 4975 or other penalty under ERISA or the IRC which individually or in
the aggregate, has resulted in or will result in a Material Adverse Effect with
respect to Marked Tree Bancshares. The group health plans maintained by Marked
Tree Bancshares and Marked Tree Bancshares Subsidiaries provide continuation
coverage to participants in accordance with the provisions of IRC Section
4980B(f). Such group health plans comply in all material respects with Section
1862(b)(1) of the Social Security Act.
(c) Neither Marked Tree Bancshares nor Marked Tree Bank have established or
currently or formerly maintain any Compensation and Benefit Plan which is
subject to Title IV of ERISA, or any "single-employer plan" (as defined in
Section 4001(a) of ERISA), and no condition exists that presents a material risk
to Marked Tree Bancshares or any ERISA Affiliate of incurring a liability under
such Title.
(d) All material contributions required to be made under the terms of any
Compensation and Benefit Plan or any employee benefit arrangements to which
Marked Tree Bancshares or Marked Tree Bank is a party or a sponsor have been
timely made, and all anticipated contributions and funding obligations are
accrued monthly on Marked Tree Bancshares' consolidated financial statements.
Marked Tree Bancshares and its Subsidiaries have expensed and accrued as a
liability the present value of future benefits under each applicable
Compensation and Benefit Plan in accordance with GAAP consistently applied.
(e) Neither Marked Tree Bancshares nor Marked Tree Bank has any verbal or
written obligations to provide retiree health, life insurance, disability
insurance, or other retiree death benefits under any Compensation and Benefit
Plan, other than benefits mandated by Section 4980B of the Code to be provided
by such Plans.
(f) With respect to each Compensation and Benefit Plan, if applicable,
Marked Tree Bancshares has provided or made available to Pocahontas Bancorp
copies of the: (A) trust instruments and insurance contracts; (B) most recent
Form 5500 filed with the IRS; (C) most recent actuarial report and financial
statement; (D) the most recent summary plan description; (E) most recent
determination letter issued by the IRS; (F) any Form 5310 or Form 5330 filed
with the IRS; and (G) most recent nondiscrimination tests performed under ERISA
and the Code (including 401(k) and 401(m) tests).
(g) The consummation of the Company Merger or the Bank Merger will not,
directly or indirectly (including, without limitation, as a result of any
termination of employment or service at any time prior to or following the
Company Merger Effective Date or the Bank Merger Effective Date, as the case may
be) (A) entitle any employee, consultant or director to any payment or benefit
(including severance pay, change in control benefit, or similar compensation) or
any increase in compensation, (B) result in the vesting or acceleration of any
benefits under any Compensation and Benefit Plan or (C) result in any material
increase in benefits payable under any Compensation and Benefit Plan.
(h) Neither Marked Tree Bancshares nor Marked Tree Bank maintains any
compensation plans, programs or arrangements under which any payment is
reasonably likely to become non-deductible, in whole or in part, for tax
reporting purposes as a result of the limitations under Section 162(m) of the
Code and the regulations issued thereunder.
(i) The consummation of the Company Merger or the Bank Merger will not,
directly or indirectly (including without limitation, as a result of any
termination of employment or service at any time prior to or following the
Company Merger Effective Date or the Bank Merger Effective Date, as the case may
be), entitle any current or former employee, director or independent contractor
of Marked Tree Bancshares or Marked Tree Bank to any actual or deemed payment
(or benefit) which would constitute a "parachute payment" (as such term is
defined in Section 280G of the Code).
Section 3.13 Brokers, Finders and Financial Advisors. Neither Marked Tree
Bancshares nor any Marked Tree Bancshares Subsidiary, nor any of their
respective officers, directors, employees or agents, has employed any broker,
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finder or financial advisor in connection with the transactions contemplated by
this Agreement, or incurred any liability or commitment for any fees or
commissions to any such person in connection with the transactions contemplated
by this Agreement.
Section 3.14 Environmental Matters. To the knowledge of Marked Tree
Bancshares, neither Marked Tree Bancshares nor any Marked Tree Bancshares
Subsidiary, nor any properties owned or operated by Marked Tree Bancshares or
any Marked Tree Bancshares Subsidiary, has been or is in violation of or liable
under any Environmental Law, which violation or liability, individually or in
the aggregate, has resulted, or will result, in a Material Adverse Effect with
respect to Marked Tree Bancshares and its Subsidiaries taken as a whole. There
are no actions, suits or proceedings, or demands, claims, notices or, to Marked
Tree Bancshares' knowledge, investigations (including without limitation
notices, demand letters or requests for information from any environmental
agency) instituted or pending, or to the knowledge of Marked Tree Bancshares,
threatened, relating to the liability of any property owned or operated by
Marked Tree Bancshares or any Marked Tree Bancshares Subsidiary under any
Environmental Law.
Section 3.15 Loan Portfolio. The allowance for loan losses reflected, and
to be reflected, in the Marked Tree Bancshares Regulatory Reports, and shown,
and to be shown, on the balance sheets contained in the Marked Tree Bancshares
Financials have been, and will be, established in accordance with the
requirements of GAAP and all applicable regulatory criteria. Marked Tree
Bancshares Disclosure Schedule 3.15 sets forth all loans that are classified by
Marked Tree Bank or any bank regulatory or supervisory authority as "Special
Mention," "Substandard," "Doubtful," "Loss" or "Classified," as of October 31,
2002, together with the aggregate principal amount of and accrued and unpaid
interest on such loans, by category.
Section 3.16 Information to be Supplied. The information to be supplied by
Marked Tree Bancshares for inclusion in the Registration Statement (including
the Prospectus/Proxy Statement) will not, at the time the Registration Statement
is declared effective pursuant to the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein not misleading. The information supplied,
or to be supplied, by Marked Tree Bancshares for inclusion in the Applications
will, at the time such documents are filed with any Regulatory Authority, be
accurate and complete in all material aspects.
Section 3.17 Related Party Transactions. Except as disclosed in Marked Tree
Bancshares Disclosure Schedule 3.17, Marked Tree Bancshares is not a party to
any transaction (including any loan or other credit accommodation) with any
Affiliate of Marked Tree Bancshares (except a Marked Tree Bancshares
Subsidiary). All such transactions (a) were made in the ordinary course of
business, (b) were made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other Persons, and (c) did not involve more than the normal
risk of collectibility or present other unfavorable features. No loan or credit
accommodation to any Affiliate of Marked Tree Bancshares is presently in default
or, during the three year period prior to the date of this Agreement, has been
in default or has been restructured, modified or extended. Marked Tree
Bancshares has not been notified that principal and interest with respect to any
such loan or other credit accommodation will not be paid when due or that the
loan grade classification accorded such loan or credit accommodation by Marked
Tree Bancshares is inappropriate.
Section 3.18 Schedule of Termination Benefits. Marked Tree Bancshares
Disclosure Schedule 3.18 includes a schedule of all termination benefits and
related payments that would be payable to the individuals identified thereon
under any and all employment agreements, special termination agreements,
supplemental executive retirement plans, deferred bonus plans, deferred
compensation plans, salary continuation plans, or any compensation arrangement,
or other pension benefit or welfare benefit plan maintained by Marked Tree
Bancshares solely for the benefit of officers or directors of Marked Tree
Bancshares or Marked Tree Bancshares Subsidiaries (the "Benefits Schedule"),
assuming their employment or service is terminated as of September 30, 2002 and
the Closing Date occurs immediately prior to such termination. No other
individuals are entitled to benefits under any such plans.
Section 3.19 Loans. Each loan reflected as an asset in the Marked Tree
Bancshares Financial Statements (i) is evidenced by notes, agreements or other
evidences of indebtedness which are true, genuine and correct in all material
respects, (ii) to the extent secured, has been secured by valid liens and
security interests that have been perfected, and (iii) is the legal, valid and
binding obligation of the obligor named therein, enforceable in accordance with
15
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, in each case other than loans as to which the failure
to satisfy the foregoing standards would not have a Material Adverse Effect on
Marked Tree Bancshares and the Marked Tree Bancshares Subsidiaries taken as a
whole.
Section 3.20 Anti-takeover Provisions Inapplicable. The transactions
contemplated by this Agreement are not subject to any applicable state
anti-takeover law or regulation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF POCAHONTAS BANCORP
Pocahontas Bancorp represents and warrants to Marked Tree Bancshares that
the statements contained in this Article IV are correct and complete as of the
date of this Agreement and will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this Article IV), except as set forth in the
Pocahontas Bancorp Disclosure Schedules delivered by Pocahontas Bancorp to
Marked Tree Bancshares on the date hereof.
Section 4.01 Organization.
(a) Pocahontas Bancorp is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, with full
corporate power and authority to carry on its business as now conducted and is
duly licensed or qualified to do business in the states of the United States and
foreign jurisdictions where its ownership or leasing of property or the conduct
of its business requires such qualification, except where the failure to be so
licensed or qualified would not have a Material Adverse Effect on Pocahontas
Bancorp.
(b) FCB is a stock savings bank duly organized, validly existing and in
good standing under the laws of the United States. Except as set forth in
Pocahontas Bancorp Disclosure Schedule 4.01(b), FCB is the only Pocahontas
Bancorp Subsidiary. The deposits of FCB are insured by the FDIC through the SAIF
to the fullest extent permitted by law, and all premiums and assessments
required to be paid in connection therewith have been paid when due by FCB. Each
other Pocahontas Bancorp Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization.
(c) FCB is a member in good standing of the Federal Home Loan Bank of
Dallas and owns the requisite amount of stock therein.
(d) The respective minute books of Pocahontas Bancorp and each Pocahontas
Bancorp Subsidiary accurately record, in all material respects, all material
corporate actions of their respective stockholders and boards of directors
(including committees) through the date of this Agreement.
(e) Prior to the date of this Agreement, Pocahontas Bancorp has delivered
to Marked Tree Bancshares true and correct copies of the certificate of
incorporation and bylaws of Pocahontas Bancorp and FCB.
Section 4.02 Capitalization.
(a) The authorized capital stock of Pocahontas Bancorp consists of (i)
8,000,000 shares of common stock, par value $0.01 per share (the "Pocahontas
Bancorp Common Stock"), of which, at the date of this Agreement, 7,492,353
shares are validly issued, fully paid and nonassessable and 3,116,058 shares are
held by Pocahontas Bancorp as treasury stock, and (ii) 500,000 shares of
preferred stock, par value $0.01 per share, of which, at the date of this
Agreement, no shares were issued and outstanding. No shares of Pocahontas
Bancorp Common Stock were issued in violation of any preemptive rights.
Pocahontas Bancorp has no Rights authorized, issued or outstanding, other than
options to acquire 270,000 shares of Pocahontas Bancorp Common Stock under
Pocahontas Bancorp's employee benefit plans and stock option plans.
(b) Pocahontas Bancorp owns all of the capital stock of FCB, free and clear
of any lien or encumbrance. Except for the Pocahontas Bancorp Subsidiaries,
Pocahontas Bancorp does not possess, directly or indirectly, any material equity
interest in any corporation, except for equity interests held in the investment
16
portfolios of Pocahontas Bancorp Subsidiaries, equity interests held by
Pocahontas Bancorp Subsidiaries in a fiduciary capacity, and equity interests
held in connection with the lending activities of Pocahontas Bancorp
Subsidiaries.
(c) Pocahontas Bancorp has sufficient unissued shares of Pocahontas Bancorp
Common Stock that are not reserved for other purposes and are sufficient to
provide the aggregate number of shares of Pocahontas Bancorp Common Stock to be
issued in the Company Merger. The shares of Pocahontas Bancorp Common Stock to
be issued in the Company Merger have been duly authorized and when issued
pursuant to the Company Merger will be validly issued, fully paid and
non-assessable with the same rights as each other outstanding share of
Pocahontas Bancorp Common Stock.
Section 4.03 Authority; No Violation.
(a) Pocahontas Bancorp has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. FCB has full corporate power and authority to execute and deliver the
Bank Merger Agreement and to consummate the Bank Merger. The execution and
delivery of this Agreement by Pocahontas Bancorp and the completion by
Pocahontas Bancorp of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of Pocahontas Bancorp and no other
corporate proceedings on the part of Pocahontas Bancorp are necessary to
complete the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by Pocahontas Bancorp and, subject to receipt of
the required approvals of Regulatory Authorities described in Section 4.04
hereof, constitutes the valid and binding obligation of Pocahontas Bancorp,
enforceable against Pocahontas Bancorp in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
generally, and subject, as to enforceability, to general principles of equity.
The Bank Merger Agreement, upon its execution and delivery by FCB concurrently
with the execution and delivery of this Agreement, will constitute the valid and
binding obligation of FCB, enforceable against FCB in accordance with its terms,
subject to applicable conservatorship and receivership provisions of the FDIA,
or insolvency and similar laws affecting creditors' rights generally and
subject, as to enforceability, to general principles of equity.
(b) (A) The execution and delivery of this Agreement by Pocahontas Bancorp,
(B) the execution and delivery of the Bank Merger Agreement by FCB, (C) subject
to receipt of approvals from the Regulatory Authorities referred to in Section
4.04 hereof and Marked Tree Bancshares' and Pocahontas Bancorp's compliance with
any conditions contained therein, the consummation of the transactions
contemplated hereby, and (D) compliance by Pocahontas Bancorp or FCB with any of
the terms or provisions hereof or of the Bank Merger Agreement will not (i)
conflict with or result in a breach of any provision of the certificate of
incorporation or bylaws of Pocahontas Bancorp or any Pocahontas Bancorp
Subsidiary or the charter and bylaws of FCB; (ii) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to Pocahontas Bancorp or any Pocahontas Bancorp Subsidiary or any of
their respective properties or assets; or (iii) violate, conflict with, result
in a breach of any provisions of, 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, accelerate the performance required by, or result in a right
of termination or acceleration or the creation of any lien, security interest,
charge or other encumbrance upon any of the properties or assets of Pocahontas
Bancorp or FCB under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
investment or obligation to which Pocahontas Bancorp or FCB is a party, or by
which they or any of their respective properties or assets may be bound or
affected, except for such violations, conflicts, breaches or defaults under
clause (ii) or (iii) hereof which, either individually or in the aggregate, will
not have a Material Adverse Effect on Pocahontas Bancorp.
Section 4.04 Consents. Except for consents, approvals, filings and
registrations from or with the OTS and SEC, the Nasdaq Stock Market and state
"blue sky" authorities, and compliance with any conditions contained therein,
and the approval of the Plan of Merger by Pocahontas Bancorp as sole stockholder
of FCB, and by the FCB Board of Directors, the filing of a certificate of merger
with the Secretary of State of the State of Delaware pursuant to the DGCL, the
filing of articles of merger with the Secretary of State of the State of
Arkansas, and the filing of articles of combination with the OTS, no consents or
approvals of, or filings or registrations with, any public body or authority are
necessary, and no consents or approvals of any third parties are necessary, or
will be, in connection with (a) the execution and delivery of this Agreement by
Pocahontas Bancorp or the Bank Merger Agreement by FCB, and (b) the completion
by Pocahontas Bancorp or FCB of the transactions contemplated hereby or by the
17
Bank Merger Agreement. Pocahontas Bancorp has no reason to believe that (i) any
required consents or approvals will not be received or will be received with
conditions, limitations or restrictions unacceptable to it or which would
adversely impact Pocahontas Bancorp's ability to complete the transactions
contemplated by this Agreement or that (ii) any public body or authority, the
consent or approval of which is not required or any filing with which is not
required, will object to the completion of the transactions contemplated by this
Agreement.
Section 4.05 Financial Statements.
(a) Pocahontas Bancorp has previously delivered to Marked Tree Bancshares
the Pocahontas Bancorp Regulatory Reports. The Pocahontas Bancorp Regulatory
Reports have been, and will be, prepared in accordance with applicable
regulatory accounting principles and practices and fairly present, and will
fairly present, the consolidated financial position, results of operations and
changes in stockholders' equity of Pocahontas Bancorp as of and for the periods
ending on the dates thereof, in accordance with applicable regulatory accounting
principles. Pocahontas Bancorp will make the Pocahontas Bancorp Regulatory
Reports available to Marked Tree Bancshares for inspection.
(b) Pocahontas Bancorp has previously delivered to Marked Tree Bancshares
the Pocahontas Bancorp Financials. The Pocahontas Bancorp Financials have been,
and will be, prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered by such statements, and (including the related
notes where applicable) fairly present, and will fairly present (subject in the
case of the unaudited interim statements to normal year-end adjustments), the
consolidated financial position, results of operations and cash flows of
Pocahontas Bancorp and the Pocahontas Bancorp Subsidiaries as of and for the
respective periods ending on the dates thereof, in accordance with GAAP applied
on a consistent basis during the periods involved, except as indicated in the
notes thereto, or in the case of unaudited statements, as permitted by Form
10-Q.
(c) At the date of each balance sheet included in the Pocahontas Bancorp
Financials, or the Pocahontas Bancorp Regulatory Reports, Pocahontas Bancorp did
not have any liabilities, obligations or loss contingencies of any nature
(whether absolute, accrued, contingent or otherwise) of a type required to be
reflected in such Pocahontas Bancorp Financials or the Pocahontas Bancorp
Regulatory Reports or in the footnotes thereto which are not fully reflected or
reserved against therein or disclosed in a footnote thereto, except for
liabilities, obligations or loss contingencies which are not material in the
aggregate and which are incurred in the ordinary course of business, consistent
with past practice, and except for liabilities, obligations or loss
contingencies which are within the subject matter of a specific representation
and warranty herein and subject, in the case of any unaudited statements, to
normal recurring audit adjustments and the absence of footnotes.
Section 4.06 Taxes. Pocahontas Bancorp and the Pocahontas Bancorp
Subsidiaries are members of the same affiliated group within the meaning of IRC
Section 1504(a). Pocahontas Bancorp has duly filed, and will file, all federal,
state and local tax returns required to be filed by or with respect to
Pocahontas Bancorp and all Pocahontas Bancorp Subsidiaries on or prior to the
Closing Date (all such returns being accurate and correct in all material
respects) and has duly paid or will pay, or made or will make, provisions for
the payment of all federal, state and local taxes which have been incurred by or
are due or claimed to be due from Pocahontas Bancorp and any Pocahontas Bancorp
Subsidiary by any taxing authority or pursuant to any tax sharing agreement or
arrangement (written or oral) on or prior to the Closing Date other than taxes
which (i) are not delinquent, (ii) are being contested in good faith, or (iii)
have not yet been fully determined.
Section 4.07 No Material Adverse Effect. Pocahontas Bancorp and the
Pocahontas Bancorp Subsidiaries, taken as a whole, have not suffered any
Material Adverse Effect since June 30, 2002.
Section 4.08 Ownership of Property. Pocahontas Bancorp and the Pocahontas
Bancorp Subsidiaries have good and marketable title to all material assets and
properties owned by Pocahontas Bancorp or any of its Subsidiaries in the conduct
of their businesses, whether such assets and properties are real or personal,
tangible or intangible, including assets and property reflected in the balance
sheets contained in the Pocahontas Bancorp Financials or acquired subsequent
thereto (except to the extent that such assets and properties have been disposed
of for fair value, in the ordinary course of business, since the date of such
balance sheets), subject to no material encumbrances, liens, mortgages, security
interests or pledges, except (i) those items that secure liabilities for
borrowed money and that are described in the Pocahontas Bancorp Disclosure
Schedule 4.08, and (ii) statutory liens for amounts not yet delinquent or which
18
are being contested in good faith. Pocahontas Bancorp and the Pocahontas Bancorp
Subsidiaries, as lessees, have the right under valid and subsisting leases of
real and personal properties used by Pocahontas Bancorp and its Subsidiaries in
the conduct of their businesses to occupy and use all such properties as
presently occupied and used by each of them.
Section 4.09 Legal Proceedings. Neither Pocahontas Bancorp nor any
Pocahontas Bancorp Subsidiary is a party to any, and there are no pending or, to
the best of Pocahontas Bancorp's knowledge, threatened legal, administrative,
arbitration or other proceedings, claims, actions or governmental investigations
or inquiries of any nature (i) against Pocahontas Bancorp or any Pocahontas
Bancorp Subsidiary, (ii) to which Pocahontas Bancorp's or any Pocahontas Bancorp
Subsidiary's assets are or may be subject, (iii) challenging the validity or
propriety of any of the transactions contemplated by this Agreement, or (iv)
which could adversely affect the ability of Pocahontas Bancorp to perform under
this Agreement, except for any proceedings, claims, actions, investigations or
inquiries referred to in clauses (i) or (ii) which, individually or in the
aggregate, could not be reasonably expected to have a Material Adverse Effect on
Pocahontas Bancorp and the Pocahontas Bancorp Subsidiaries taken as a whole.
Section 4.10 Compliance with Applicable Law.
(a) Pocahontas Bancorp and the Pocahontas Bancorp Subsidiaries hold all
licenses, franchises, permits and authorizations necessary for the lawful
conduct of their businesses under, and have complied in all material respects
with, applicable laws, statutes, orders, rules or regulations of any federal,
state or local governmental authority relating to them, other than where such
failure to hold or such noncompliance will neither result in a limitation in any
material respect on the conduct of their businesses nor otherwise have a
Material Adverse Effect on Pocahontas Bancorp and its Subsidiaries taken as a
whole.
(b) Neither Pocahontas Bancorp nor any Pocahontas Bancorp Subsidiary has
received any notification or communication from any Regulatory Authority (i)
asserting that Pocahontas Bancorp or any Pocahontas Bancorp Subsidiary is not in
compliance with any of the statutes, regulations or ordinances which such
Regulatory Authority enforces; (ii) threatening to revoke any license,
franchise, permit or governmental authorization which is material to Pocahontas
Bancorp or any Pocahontas Bancorp Subsidiary; (iii) requiring or threatening to
require Pocahontas Bancorp or any Pocahontas Bancorp Subsidiary, or indicating
that Pocahontas Bancorp or any Pocahontas Bancorp Subsidiary may be required, to
enter into a cease and desist order, agreement or memorandum of understanding or
any other agreement restricting or limiting, or purporting to restrict or limit,
in any manner the operations of Pocahontas Bancorp or any Pocahontas Bancorp
Subsidiary, including without limitation any restriction on the payment of
dividends; or (iv) directing, restricting or limiting, or purporting to direct,
restrict or limit, in any manner the operations of Pocahontas Bancorp or any
Pocahontas Bancorp Subsidiary, including without limitation any restriction on
the payment of dividends (any such notice, communication, memorandum, agreement
or order described in this sentence is hereinafter referred to as a "Regulatory
Agreement"). Neither Pocahontas Bancorp nor any Pocahontas Bancorp Subsidiary
has consented or entered into any currently effective Regulatory Agreement.
Section 4.11 Information to be Supplied. The information to be supplied by
Pocahontas Bancorp for inclusion in the Registration Statement (including the
Prospectus/Proxy Statement) will not, at the time the Registration Statement is
declared effective pursuant to the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements therein not misleading. The information supplied, or to be
supplied, by Pocahontas Bancorp for inclusion in the Applications will, at the
time such documents are filed with any Regulatory Authority, be accurate and
complete in all material aspects.
Section 4.12 Securities Documents. Pocahontas Bancorp has delivered, or
will deliver, to Marked Tree Bancshares copies of its (i) annual reports on Form
10-K for the years ended September 30, 2001, 2000, and 1999, (ii) quarterly
reports on Form 10-Q for the quarters ended December 31, 2001, March 31, 2002
and June 30, 2002, (iii) the proxy statement dated January 7, 2002 used in
connection with its annual meeting of stockholders held on February 6, 2002,
(iv) reports on Form 8-K filed with the SEC since September 30, 2002, and (v)
reports filed with the SEC on Form 10-K, 10-Q and 8-K from the date of this
Agreement until the Closing Date. Such reports and such proxy materials complied
or will comply, at the time filed with the SEC, in all material respects, with
the Exchange Act and the applicable rules and regulations of the SEC.
19
Section 4.13 Loan Portfolio. The allowance for loan losses reflected, and
to be reflected, in the Pocahontas Bancorp Regulatory Reports, and shown, and to
be shown, on the balance sheets contained in the Pocahontas Bancorp Financials
have been, and will be, established in accordance with the requirements of GAAP
and all applicable regulatory criteria. Pocahontas Bancorp Disclosure Schedule
4.13 sets forth all loans that are classified by Pocahontas Bancorp or federal
bank regulatory or supervisory authority as "Special Mention," "Substandard,"
"Doubtful," "Loss" or "Classified," together with the aggregate principal amount
of and accrued and unpaid interest on such loans, by category.
Section 4.14 Brokers, Finders and Financial Advisors. Neither Pocahontas
Bancorp nor any Pocahontas Bancorp Subsidiary, nor any of their respective
officers, directors, employees or agents, has employed any broker, finder or
financial advisor in connection with the transactions contemplated by this
Agreement or the Bank Merger Agreement, or incurred any liability or commitment
for any fees or commissions to any such person in connection with the
transactions contemplated by this Agreement or the Bank Merger Agreement.
ARTICLE VCOVENANTS OF THE PARTIES
Section 5.01 Conduct of Marked Tree Bancshares' Business.
(a) From the date of this Agreement to the Closing Date, Marked Tree
Bancshares and Marked Tree Bank will conduct their business and engage in
transactions, including extensions of credit, only in the ordinary course and
consistent with past practice and policies, except as otherwise required or
contemplated by this Agreement or with the written consent of Pocahontas
Bancorp. Each of Marked Tree Bancshares and Marked Tree Bank will use its
commercially reasonable efforts to (i) preserve their business organizations
intact, (ii) maintain good relationships with employees, and (iii) preserve for
themselves the good will of their customers and others with whom business
relationships exist. From the date hereof to the Closing Date, except as
otherwise consented to or approved by Pocahontas Bancorp in writing, or as
contemplated or required by this Agreement (including the Marked Tree Bancshares
Disclosure Schedules), Marked Tree Bancshares will not, and Marked Tree
Bancshares will not permit any Marked Tree Bancshares Subsidiary to:
(i) amend or change any provision of its charter, articles of
incorporation or bylaws;
(ii) change the number of authorized or issued shares of its capital
stock or issue or grant any Right or agreement of any character relating to
its authorized or issued capital stock or any securities convertible into
shares of such stock, or split, combine or reclassify any shares of its
capital stock, or declare, set aside or pay any dividend or other
distribution in respect of its capital stock, or redeem or otherwise
acquire any shares of its capital stock. Marked Tree Bancshares shall not
make any dividend payments on Marked Tree Bancshares Common Stock without
the prior written consent of Pocahontas Bancorp;
(iii) except pursuant to the arrangements set forth in Marked Tree
Bancshares Disclosure Schedule 5.01, grant any severance or termination pay
(other than pursuant to written policies or written agreements of Marked
Tree Bancshares in effect on the date hereof and provided to Pocahontas
Bancorp prior to the date hereof) to, or enter into any new or amend any
existing employment agreement with, or increase the compensation of (except
for normal increases in the ordinary course of business consistent in
timing and amount with past practice), any employee, officer or director of
Marked Tree Bancshares or any Marked Tree Bancshares Subsidiary;
(iv) merge or consolidate Marked Tree Bancshares or any Marked Tree
Bancshares Subsidiary with any other corporation; sell or lease all or any
substantial portion of the assets or business of Marked Tree Bancshares or
any Marked Tree Bancshares Subsidiary; make any acquisition of all or any
substantial portion of the business or assets of any other person, firm,
association, corporation or business organization other than in connection
with foreclosures, settlements in lieu of foreclosure, troubled loan or
debt restructuring, or the collection of any loan or credit arrangement
between Marked Tree Bancshares, or any Marked Tree Bancshares Subsidiary,
and any other person; enter into a purchase and assumption transaction with
respect to deposits and liabilities; permit the revocation or surrender by
any Marked Tree Bancshares Subsidiary of its certificate of authority to
maintain, or file an application for the relocation of, any existing branch
office, or file an application for a certificate of authority to establish
a new branch office;
20
(v) issue, sell or grant any shares of capital stock of Marked Tree
Bancshares, or sell or otherwise dispose of any asset of Marked Tree
Bancshares or of any Marked Tree Bancshares Subsidiary other than in the
ordinary course of business consistent with past practice; subject any
asset of Marked Tree Bancshares or of any Marked Tree Bancshares Subsidiary
to a lien, pledge, security interest or other encumbrance (other than in
connection with deposits, repurchase agreements, or Marked Tree Bancshares
acceptances) other than in the ordinary course of business consistent with
past practice; incur any indebtedness for borrowed money (or guarantee any
indebtedness for borrowed money), except in the ordinary course of business
consistent with past practice;
(vi) take any action that would result in any of the representations
and warranties of Marked Tree Bancshares set forth in this Agreement
becoming untrue as of any date after the date hereof or in any of the
conditions set forth in Article VI hereof not being satisfied, except in
each case as may be required by applicable law;
(vii) change any method, practice or principle of accounting, except
as may be required from time to time by GAAP (without regard to any
optional early adoption date) or any Regulatory Authority responsible for
regulating Marked Tree Bancshares or Marked Tree Bank;
(viii) waive, release, grant or transfer any material rights of value
or modify or change in any material respect any existing material agreement
or indebtedness to which Marked Tree Bancshares or any Marked Tree
Bancshares Subsidiary is a party, other than in the ordinary course of
business, consistent with past practice;
(ix) implement any pension, retirement, profit sharing, bonus, welfare
benefit or similar plan or arrangement that was not in effect on the date
of this Agreement, or materially amend any existing plan or arrangement
except to the extent such amendments do not result in an increase in cost;
contribute to any pension, retirement, profit sharing, bonus, welfare
benefit or similar plan or arrangement other than in amounts and in a
manner consistent with past practice;
(x) purchase any security for its investment portfolio not rated "A"
or higher by either Standard & Poor's Corporation or Xxxxx'x Investor
Services, Inc.;
(xi) fail to review with a representative of Pocahontas Bancorp on a
regular basis proposed loans or other credit facility commitments
(including without limitation, lines of credit and letters of credit, but
excluding loans to be secured by mortgages on one- to four-family
residential real estate) to any borrower or group of affiliated borrowers
in excess of $200,000, or any increase, compromise, extension, renewal or
modification of any existing loan or commitment outstanding in excess of
$200,000;
(xii) enter into, renew, extend or modify any other transaction with
any Affiliate;
(xiii) enter into any interest rate swap or similar commitment,
agreement or arrangement;
(xiv) take any action that would give rise to a right of payment to
any individual under any employment agreement;
(xv) change its lending, investment, asset/liability management or
other material banking policies in any material respect except as may be
required by changes in applicable law or regulations or in response to
examination comments by a Regulatory Authority;
(xvi) enter into any new joint venture or partnership agreement or any
new land acquisition or real estate development project, or increase the
amount of credit that Marked Tree Bancshares or any Marked Tree Bancshares
Subsidiary is committed to extend to any joint venture or partnership in
connection with land acquisition or real estate development activities; or
(xvii) accept any "brokered" deposits (as that term is defined in 12
U.S.C. Section 1831f(g)); or
(xviii) agree to do any of the foregoing.
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For purposes of this Section 5.01, unless provided for in a business plan,
budget or similar document delivered to Pocahontas Bancorp prior to the date of
this Agreement, it shall not be considered in the ordinary course of business
for Marked Tree Bancshares or any Marked Tree Bancshares Subsidiary to do any of
the following: (i) make any capital expenditure of $25,000 or more not disclosed
on Marked Tree Bancshares Disclosure Schedule 5.01, without the prior written
consent of Pocahontas Bancorp; (ii) except as set forth in Marked Tree
Bancshares Disclosure Schedule 5.01, make any sale, assignment, transfer,
pledge, hypothecation or other disposition of any assets having a book or market
value, whichever is greater, in the aggregate in excess of $50,000, other than
pledges of assets to secure government deposits, to exercise trust powers, sales
of assets received in satisfaction of debts previously contracted in the normal
course of business, issuance of loans, sales of previously purchased government
guaranteed loans, or transactions in the investment securities portfolio by
Marked Tree Bancshares or a Marked Tree Bancshares Subsidiary or repurchase
agreements made, in each case, in the ordinary course of business; or (iii)
undertake or enter any lease, contract or other commitment for its account,
other than in the normal course of providing credit to customers as part of its
banking business, involving a payment by Marked Tree Bancshares or any Marked
Tree Bancshares Subsidiary of more than $25,000 annually, or containing a
material financial commitment and extending beyond 12 months from the date
hereof.
Section 5.02 Access; Confidentiality.
(a) From the date of this Agreement through the Closing Date, Marked Tree
Bancshares or Pocahontas Bancorp, as the case may be, shall afford to, and shall
cause each Marked Tree Bancshares Subsidiary or Pocahontas Bancorp Subsidiary to
afford to, the other party and its authorized agents and representatives, access
to their respective properties, assets, books and records and personnel, during
normal business hours and after reasonable notice; and the officers of Marked
Tree Bancshares and Pocahontas Bancorp will furnish any person making such
investigation on behalf of the other party with such financial and operating
data and other information with respect to the businesses, properties, assets,
books and records and personnel as the person making such investigation shall
from time to time reasonably request, provided that such investigation shall be
reasonably related to the transaction contemplated hereby and shall not
interfere unnecessarily with normal operations. None of the parties or their
respective subsidiaries shall be required to provide access to or to disclose
information where such access or disclosure would violate or prejudice the
rights of their respective customers, jeopardize the attorney-client privilege
of the institution or company in possession or control of such information, or
contravene any law, rule, regulation, order, judgment, decree, fiduciary duty or
binding agreement entered into prior to the date of this Agreement. The parties
hereto will make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the preceding sentence apply. The
parties will hold all such information delivered in confidence to the extent
required by, and in accordance with, the provisions of the Confidentiality
Agreement, dated July 24, 2002, between Marked Tree Bancshares and Pocahontas
Bancorp (the "Confidentiality Agreement").
(b) Marked Tree Bancshares and Pocahontas Bancorp each agree to conduct
such investigation and discussions hereunder in a manner so as not to interfere
unreasonably with normal operations and customer and employee relationships of
the other party.
(c) In addition to the access permitted by subparagraph (a) above, from the
date of this Agreement through the Closing Date, Marked Tree Bancshares shall
permit employees of Pocahontas Bancorp reasonable access to information relating
to problem loans, loan restructurings and loan work-outs of Marked Tree
Bancshares.
(d) If the transactions contemplated by this Agreement shall not be
consummated, Marked Tree Bancshares and Pocahontas Bancorp will each destroy or
return all documents and records obtained from the other party or its
representatives, during the course of its investigation and will cause all
information with respect to the other party obtained pursuant to this Agreement
or preliminarily thereto to be kept confidential, except to the extent such
information becomes public through no fault of the party to whom the information
was provided or any of its representatives or agents, and except to the extent
disclosure of any such information is legally required. Marked Tree Bancshares
and Pocahontas Bancorp shall each give prompt written notice to the other party
of any contemplated disclosure where such disclosure is so legally required so
that the other party may seek a protective order or other remedy and/or waive
compliance with this Section 5.02. If in the absence of a protective order or
other remedy or the receipt of a waiver by the other party, a party is
nonetheless, in the written opinion of counsel, legally compelled to disclose
any such confidential information to any tribunal or else stand liable for
22
contempt or suffer other censure or penalty, a party may, without liability
hereunder, disclose to such tribunal only that portion of the confidential
information that such counsel advises such party is legally required to be
disclosed; provided that such disclosing party uses its best efforts to preserve
the confidentiality of such confidential information, including without
limitation, by cooperating with the other party to obtain an appropriate
protective order or other reliable assurance that confidential treatment will be
accorded such confidential information by such tribunal.
Section 5.03 Regulatory Matters and Consents.
(a) Pocahontas Bancorp and FCB will prepare all Applications and make all
filings for, and use their best efforts to obtain as promptly as practicable
after the date hereof, all necessary permits, consents, approvals, waivers and
authorizations of all Regulatory Authorities necessary or advisable to
consummate the transactions contemplated by this Agreement.
(b) Marked Tree Bancshares will furnish Pocahontas Bancorp with all
information concerning Marked Tree Bancshares and Marked Tree Bancshares
Subsidiaries as may be reasonably necessary or advisable in connection with any
Application or filing made by or on behalf of Pocahontas Bancorp to any
Regulatory Authority in connection with the transactions contemplated by this
Agreement.
(c) Pocahontas Bancorp and Marked Tree Bancshares will promptly furnish
each other with copies of all material written communications to, or received by
them from any Regulatory Authority in respect of the transactions contemplated
hereby, except information which is filed by either party which is designated as
confidential.
(d) The parties hereto agree that they will consult with each other with
respect to the obtaining of all permits, consents, approvals and authorizations
of all third parties and Regulatory Authorities. Pocahontas Bancorp will furnish
Marked Tree Bancshares with (i) copies of all Applications prior to filing with
any Regulatory Authority and provide Marked Tree Bancshares a reasonable
opportunity to provide changes to such Applications and approve any information
included therein with respect to Marked Tree Bancshares, (ii) copies of all
Applications filed by Pocahontas Bancorp and (iii) copies of all documents filed
by Pocahontas Bancorp under the Exchange Act or the Securities Act.
(e) Marked Tree Bancshares will cooperate with Pocahontas Bancorp in the
foregoing matters and will furnish Pocahontas Bancorp with all information
concerning Marked Tree Bancshares and Marked Tree Bancshares Subsidiaries as may
be necessary or advisable in connection with any Application or filing
(including the Registration Statement and any report filed with the SEC) made by
or on behalf of Pocahontas Bancorp to any Regulatory Authority in connection
with the transactions contemplated by this Agreement, and such information will
be accurate and complete in all material respects. In connection therewith,
Marked Tree Bancshares will provide certificates and other documents reasonably
requested by Pocahontas Bancorp.
Section 5.04 Taking of Necessary Action.
(a) Pocahontas Bancorp and Marked Tree Bancshares shall each use its best
efforts in good faith, and each of them shall cause its Subsidiaries to use
their best efforts in good faith, to (i) furnish such information as may be
required in connection with the preparation of the documents referred to in
Section 5.03 and Section 5.04 of this Agreement, and (ii) take or cause to be
taken all action necessary or desirable on its part using its best efforts so as
to permit completion of the Company Merger and the Bank Merger including,
without limitation, (A) obtaining the consent or approval of each individual,
partnership, corporation, association or other business or professional entity
whose consent or approval is required or desirable for consummation of the
transactions contemplated hereby (including assignment of leases without any
change in terms), provided that neither Marked Tree Bancshares nor any Marked
Tree Bancshares Subsidiary shall agree to make any payments or modifications to
agreements in connection therewith without the prior written consent of
Pocahontas Bancorp, and (B) requesting the delivery of appropriate opinions,
consents and letters from its counsel and independent auditors. No party hereto
shall take, or cause, or to the best of its ability permit to be taken, any
action that would substantially impair the prospects of completing the Company
Merger and the Bank Merger pursuant to this Agreement and the Bank Merger
Agreement; provided that nothing herein contained shall preclude Pocahontas
Bancorp or Marked Tree Bancshares from exercising its rights under this
Agreement.
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(b) Pocahontas Bancorp shall prepare, subject to the review and consent of
Marked Tree Bancshares with respect to matters relating to Marked Tree
Bancshares and the transactions contemplated by this Agreement, a Registration
Statement on Form S-4 or other applicable form to be filed by Pocahontas Bancorp
with the SEC that will include the Prospectus/Proxy Statement to be mailed to
the stockholders of Marked Tree Bancshares in connection with the meeting of
Marked Tree Bancshares' stockholders and the transactions contemplated hereby,
which Registration Statement and Prospectus/Proxy Statement shall conform to all
applicable legal requirements. The parties shall cooperate with each other with
respect to the preparation of the Prospectus/Proxy Statement. Pocahontas Bancorp
shall, as promptly as practicable following the preparation thereof, file the
Registration Statement with the SEC and Marked Tree Bancshares and Pocahontas
Bancorp shall use all reasonable efforts to have the Registration Statement
declared effective under the Securities Act as promptly as practicable after
such filing. Pocahontas Bancorp will advise Marked Tree Bancshares, promptly
after Pocahontas Bancorp receives notice thereof, of the time when the
Registration Statement has become effective or any supplement or amendment has
been filed, of the issuance of any stop order or the suspension of the
qualification of the shares of capital stock issuable pursuant to the
Registration Statement, or the initiation or threat of any proceeding for any
such purpose, or of any request by the SEC for the amendment or supplement of
the Registration Statement or for additional information. Pocahontas Bancorp
shall use its best efforts to obtain, prior to the effective date of the
Registration Statement, all necessary state securities laws or "Blue Sky"
permits and approvals required to carry out the transactions contemplated by
this Agreement. Pocahontas Bancorp will provide Marked Tree Bancshares with as
many copies of such Registration Statement and all amendments thereto promptly
upon the filing thereof as Marked Tree Bancshares may reasonably request.
Section 5.05 Certain Agreements.
(a) From and after the Company Merger Effective Date through the third
anniversary thereof, Pocahontas Bancorp agrees to indemnify, defend and hold
harmless each present and former director and officer of Marked Tree Bancshares
and its Subsidiaries determined as of the Closing Date (the "Indemnified
Parties") against all losses, claims, damages, costs, expenses (including
reasonable attorneys' fees and expenses), liabilities, judgments or amounts paid
in settlement (with the approval of Pocahontas Bancorp, which approval shall not
be unreasonably withheld) or in connection with any claim, action, suit,
proceeding or investigation arising out of matters existing or occurring at or
prior to the Company Merger Effective Date, including, without limitation, the
transactions contemplated hereby (a "Claim") in which an Indemnified Party is,
or is threatened to be made, a party or a witness based in whole or in part on,
or arising in whole or in part out of, the fact that such person is or was a
director or officer of Marked Tree Bancshares or any of its Subsidiaries,
regardless of whether such Claim is asserted or claimed prior to, at or after
the Closing Date, to the fullest extent to which directors and officers of
Marked Tree Bancshares are entitled under Marked Tree Bancshares' articles of
incorporation and bylaws and applicable federal and state law (and Pocahontas
Bancorp shall pay expenses in advance of the final disposition of any such
action or proceeding to each Indemnified Party to the extent permissible under
applicable law and Marked Tree Bancshares' articles of incorporation and bylaws
as in effect on the date hereof; provided, that the person to whom expenses are
advanced provides an undertaking to repay such expenses if it is ultimately
determined that such person is not entitled to indemnification). All rights to
indemnification in respect of a Claim asserted or made within the period
described in the preceding sentence shall continue until the final disposition
of such Claim.
(b) Any Indemnified Party wishing to claim indemnification under Section
5.05(a) hereof, upon learning of any Claim, shall promptly notify Pocahontas
Bancorp, but the failure to so notify shall not relieve Pocahontas Bancorp of
any liability it may have to such Indemnified Party except to the extent that
such failure materially prejudices Pocahontas Bancorp. In the event of any
Claim, (1) Pocahontas Bancorp shall have the right to assume the defense thereof
(with counsel reasonably satisfactory to the Indemnified Party) and shall not be
liable to such Indemnified Parties for any legal expenses of other counsel or
any other expenses subsequently incurred by such Indemnified Parties in
connection with the defense thereof, except that, if Pocahontas Bancorp elects
not to assume such defense or counsel for the Indemnified Parties advises that
there are issues which raise conflicts of interest between Pocahontas Bancorp
and the Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and Pocahontas Bancorp shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received, provided further that Pocahontas Bancorp shall in all
cases be obligated pursuant to this paragraph to pay for only one firm of
counsel for all Indemnified Parties in any one jurisdiction, unless counsel for
any Indemnified Party advises in writing that there are substantive issues which
24
raise conflicts of interest between the Indemnified Parties, (2) the Indemnified
Parties will cooperate in the defense of any such Claim and (3) Pocahontas
Bancorp shall not be liable for any settlement effected without its prior
written consent.
(c) Pocahontas Bancorp shall use its best efforts to cause the persons
serving as officers and directors of Marked Tree Bancshares immediately prior to
the Company Merger Effective Date to be covered for a period of six years from
the Company Merger Effective Date by the directors' and officers' liability
insurance policy maintained by Marked Tree Bancshares (provided that Pocahontas
Bancorp 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 Company
Merger Effective Date that were committed by such officers and directors in
their capacity as such.
(d) In the event Pocahontas Bancorp or any of its successors or assigns (1)
consolidates with or merges into any other Person and shall not continue or
survive such consolidation or merger, or (2) 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 Pocahontas Bancorp assume the obligations set forth in
this Section 5.05.
(e) The provisions of this Section 5.05 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and his or her heirs and
representatives.
Section 5.06 No Other Bids and Related Matters. Marked Tree Bancshares will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties with respect to any Acquisition
Proposal (as hereinafter defined), will enforce any confidentiality agreements
and will take the necessary steps to inform the appropriate individuals or
entities referred to in the first sentence of this Section 5.06 of the
obligations undertaken in this Section 5.06. Marked Tree Bancshares agrees that
neither Marked Tree Bancshares nor any of its Subsidiaries shall, and that
Marked Tree Bancshares and its Subsidiaries shall direct and use all reasonable
efforts to cause their respective directors, officers, employees, agents and
representatives (including, without limitation, any investment banker, attorney
or accountant retained by it or any of its subsidiaries) not to, (i) initiate,
solicit or encourage, directly or indirectly, any inquiries or the making or
implementation of any proposal or offer with respect to a merger, acquisition,
consolidation or similar transaction involving, or any purchase of all or any
substantial part of the assets or any equity securities of, Marked Tree
Bancshares or any of its Subsidiaries (any such proposal or offer being
hereinafter referred to as an "Acquisition Proposal"); or (ii) engage in any
discussions or negotiations with, or provide any confidential information or
data to, any Person relating to an Acquisition Proposal, provided however, the
actions described in this clause (ii) are permissible before the Marked Tree
Bancshares stockholders' meeting to approve this Agreement but only to the
extent determined by the Marked Tree Bancshares Board of Directors, in good
faith, after receipt of an opinion from legal counsel that such actions are
required by the Board's fiduciary obligations under applicable law.
Section 5.07 Duty to Advise; Duty to Update Marked Tree Bancshares'
Disclosure Schedule. Marked Tree Bancshares shall promptly advise Pocahontas
Bancorp of any change or event having a Material Adverse Effect on it or on any
Marked Tree Bancshares Subsidiary or which it believes would or would be
reasonably likely to cause or constitute a material breach of any of its
representations, warranties or covenants set forth herein. Marked Tree
Bancshares shall update Marked Tree Bancshares' Disclosure Schedule as promptly
as practicable after the occurrence of an event or fact which, if such event or
fact had occurred prior to the date of this Agreement, would have been disclosed
in the Marked Tree Bancshares Disclosure Schedule. The delivery of such updated
Schedule shall not relieve Marked Tree Bancshares from any breach or violation
of this Agreement and shall not have any effect for the purposes of determining
the satisfaction of the condition set forth in Section 6.02(c) hereof.
Section 5.08 Conduct of Pocahontas Bancorp's Business.
(a) From the date of this Agreement to the Closing Date, Pocahontas Bancorp
will use its best efforts to (x) preserve its business organizations intact, (y)
maintain good relationships with employees, and (z) preserve for itself the
goodwill of customers of FCB. From the date of this Agreement to the Closing
Date, neither Pocahontas Bancorp nor FCB will (i) amend its certificate of
incorporation, charter or bylaws in any manner inconsistent with the prompt and
timely consummation of the transactions contemplated by this Agreement, (ii)
issue any equity securities except in connection with the exercise of any
25
employee or director stock options, (iii) take any action that would result in
any of the representations and warranties of Pocahontas Bancorp or FCB set forth
in this Agreement becoming untrue as of any date after the date hereof or in any
of the conditions set forth in Article VI hereof not being satisfied, except in
each case as may be required by applicable law, or (iv) agree to do any of the
foregoing.
(b) Except as set forth on Pocahontas Bancorp Disclosure Schedule 5.08(b),
from the date of this Agreement through the Closing Date, Pocahontas Bancorp
will not, nor will it permit FCB to, make or undertake any acquisition of any
company or business that could jeopardize the receipt of the approval of any
Regulatory Authority or materially delay the consummation of the Company Merger
or the Bank Merger, unless the prior written consent of Marked Tree Bancshares
is obtained, which consent shall not unreasonably be withheld.
Section 5.09 Board and Committee Minutes. Marked Tree Bancshares shall
provide to Pocahontas Bancorp within thirty (30) days after any meeting of its
Board of Directors, or any committee thereof, or any senior management
committee, a copy of the minutes of such meeting, except that with respect to
any meeting held within thirty (30) days of the Closing Date, such minutes shall
be provided prior to the Closing Date.
Section 5.10 Undertakings by Pocahontas Bancorp and Marked Tree Bancshares.
(a) From and after the date of this Agreement:
(i) Voting Agreements. Marked Tree Bancshares shall cause each member
of its Board of Directors, each of its executive officers (who is also a
stockholder) and each stockholder who holds 10% or more of the outstanding
shares of Marked Tree Bancshares Common Stock to enter into a Stockholder
Voting Agreement, the form of which is attached hereto as Exhibit A, dated
as of even date herewith.
(ii) Timely Review. If requested by Pocahontas Bancorp at Pocahontas
Bancorp's sole expense, Marked Tree Bancshares shall cause its independent
certified public accountants to perform a review of its unaudited
consolidated financial statements as of the end of any calendar quarter, in
accordance with Statement of Auditing Standards No. 36, and to issue their
report on such financial statements as soon as is practicable thereafter;
(iii) Outside Service Bureau Contracts. If requested to do so by
Pocahontas Bancorp, Marked Tree Bancshares shall use its commercially
reasonable efforts to obtain an extension of any contract with an outside
service bureau or other vendor of services to Marked Tree Bancshares, on
terms and conditions mutually acceptable to Marked Tree Bancshares and
Pocahontas Bancorp;
(iv) Board Meetings. Marked Tree Bancshares shall respond reasonably
and in good faith to any request of Pocahontas Bancorp to permit a
representative of Pocahontas Bancorp, who is reasonably acceptable to
Marked Tree Bancshares, to attend any meeting of Marked Tree Bancshares'
Board of Directors or the Executive Committee thereof, but only as a
non-voting observer, and not as a participant of any meeting; provided,
however, that the attendance of such representative shall not be permitted
(i) at any meeting, or portion thereof, for the sole purpose of discussing
the transaction contemplated by this Agreement or the obligations of Marked
Tree Bancshares or Marked Tree Bank under this Agreement, or (ii) during
the course of any meeting upon the determination of the Board of Directors
(following consultation with legal counsel) that such attendance would be
in violation of the directors' fiduciary duties;
(v) List of Nonperforming Assets. Marked Tree Bancshares shall provide
Pocahontas Bancorp, within ten (10) days of the end of each calendar month,
a written list of nonperforming assets (the term "nonperforming assets,"
for purposes of this subsection, means (i) loans that are "troubled debt
restructurings" as defined in Statement of Financial Accounting Standards
No. 15, "Accounting by Debtors and Creditors for Troubled Debt
Restructuring," (ii) loans on nonaccrual, (iii) real estate owned, (iv) all
loans ninety (90) days or more past due as of the end of such month and
(iv) impaired loans);
(vi) Reserves and Merger-Related Costs. On or before the Effective
Date, Marked Tree Bancshares shall establish such additional accruals and
reserves as may be necessary to conform the accounting reserve practices
and methods (including credit loss practices and methods) of Marked Tree
Bancshares to those of Pocahontas Bancorp (as such practices and methods
are to be applied to Marked Tree Bancshares from and after the Closing
26
Date) and Pocahontas Bancorp's plans with respect to the conduct of the
business of Marked Tree Bancshares following the Company Merger and
otherwise to reflect merger-related expenses and costs incurred by Marked
Tree Bancshares; provided, however, that Marked Tree Bancshares shall not
be required to take such action unless Pocahontas Bancorp agrees in writing
that all conditions to closing set forth in Section 6.02 hereof have been
satisfied or waived (except for the expiration of any applicable waiting
periods), and further provided that any such adjustments shall not reduce
Marked Tree Bancshares' stated book value for the purpose of calculating
the Exchange Ratio. Prior to the delivery by Pocahontas Bancorp of the
writing referred to in the preceding sentence, Marked Tree Bancshares shall
provide Pocahontas Bancorp a written statement, certified without personal
liability by the chief executive officer of Marked Tree Bancshares and
dated the date of such writing, that the representation made in Section
3.15 hereof is true as of such date or, alternatively, setting forth in
detail the circumstances that prevent such representation from being true
as of such date; and no accrual or reserve made by Marked Tree Bancshares
or any Marked Tree Bancshares Subsidiary pursuant to this subsection, or
any litigation or regulatory proceeding arising out of any such accrual or
reserve, shall constitute or be deemed to be a breach or violation of any
representation, warranty, covenant, condition or other provision of this
Agreement or to constitute a termination event within the meaning of
Section 7.01(b) hereof; and
(vii) Stockholders' Meeting. Marked Tree Bancshares shall submit this
Agreement to its stockholders for approval at a meeting to be held as soon
as practicable, and have its Board of Directors recommend approval of this
Agreement to its stockholders, subject to the Board of Directors fulfilling
its fiduciary duties under applicable law.
(b) From and after the date of this Agreement, Pocahontas Bancorp and
Marked Tree Bancshares shall each:
(i) Filings and Approvals. Cooperate with the other in the preparation
and filing, as soon as practicable, of (A) the Applications, (B) the
Registration Statement and related filings under state securities laws
covering the Pocahontas Bancorp Common Stock to be issued pursuant to the
Company Merger, (C) all other documents necessary to obtain any other
approvals and consents required to effect the completion of the Company
Merger and the Bank Merger, and (D) all other documents contemplated by
this Agreement; or
(ii) Public Announcements. Cooperate and cause its respective
officers, directors, employees and agents to cooperate in good faith,
consistent with their respective legal obligations, in the preparation and
distribution of, and agree upon the form and substance of, any press
release related to this Agreement and the transactions contemplated hereby,
and any other public disclosures related thereto, including without
limitation communications to Marked Tree Bancshares stockholders, Marked
Tree Bancshares' internal announcements and customer disclosures, but
nothing contained herein shall prohibit either party from making any
disclosure which its counsel deems necessary, provided that the disclosing
party notifies the other party reasonably in advance of the timing and
contents of such disclosure.
Section 5.11 Employee and Termination Benefits; Directors and Management.
(a) Employee Benefits. Marked Tree Bancshares and/or Marked Tree Bank, as
applicable, shall have taken all actions necessary to cause the termination of
all Compensation and Benefit Plans, effective as of the Company Merger Effective
Date. Except as specifically noted in this Section 5.11, employees of Marked
Tree Bancshares or Marked Tree Bank who continue as employees of Pocahontas
Bancorp or FCB after the Company Merger Effective Date ("Continuing Employees")
shall receive credit for service with Marked Tree Bancshares or Marked Tree Bank
(for purposes of eligibility and vesting determination but not for benefit
accrual purposes) under any similar existing Pocahontas Bancorp benefit plan or
new Pocahontas Bancorp benefit plan in which such employees or their dependents
would be eligible to enroll, on the same basis as it provides coverage to
employees of Pocahontas Bancorp and FCB except that any pre-existing condition,
eligibility waiting period or other limitations and exclusions otherwise
applicable under such plans to new employees shall not apply to such employees
or their covered dependents who were covered under a similar Marked Tree Bank
plan on the Company Merger Effective Date. Such service shall also apply for
purposes of satisfying any waiting periods, actively-at-work requirements and
evidence of insurability requirements.
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(b) Pocahontas Bancorp shall make available to Continuing Employees and
their dependents employer-provided health coverage on the same basis as it
provides such coverage to employees of Pocahontas Bancorp or FCB. Unless a
Continuing Employee affirmatively terminates coverage under a Marked Tree
Bancshares health plan prior to the time that such Continuing Employee becomes
eligible to participate in the Pocahontas Bancorp health plan, no coverage of
any of the Continuing Employees or their dependents shall terminate under any of
the Marked Tree Bancshares health plans prior to the time such Continuing
Employees and their dependents become eligible to participate in the health
plans, programs and benefits common to all employees of Pocahontas Bancorp or
FCB and their dependents. Continuing Employees whose employment is terminated
and qualified beneficiaries will have the right to continue coverage under group
health plans of Pocahontas Bancorp and/or Pocahontas Bancorp Subsidiaries in
accordance with Code Section 4980B(f). Continuing Employees who become covered
under a Pocahontas Bancorp health plan shall be required to satisfy the
deductible limitations of the Pocahontas Bancorp health plan for the plan year
in which the coverage commences, without offset for deductibles satisfied under
the Marked Tree Bancshares health plan.
(c) FCB shall cause its Board of Directors to be expanded by two members
and Pocahontas Bancorp shall cause Xxxxxx Xxxxxxxxxxxxx and Xxxxxx Xxxxxx to be
appointed to FCB's Board of Directors immediately following the Bank Merger
Effective Date. In the event that an appointee is unable to serve as a director
of FCB as a result of illness, death, resignation or any other reason,
Pocahontas Bancorp and Marked Tree Bancshares promptly shall mutually agree on a
substitute appointee to serve as a member of the Board of Directors of FCB.
(d) All employees of Marked Tree Bancshares or Marked Tree Bank on the
Closing Date shall be offered employment with Pocahontas Bancorp or FCB;
provided, the respective titles and responsibilities of such Continuing
Employees may be changed by Pocahontas Bancorp, in its discretion.
Section 5.12 Duty to Advise; Duty to Update Pocahontas Bancorp's Disclosure
Schedule. Pocahontas Bancorp shall promptly advise Marked Tree Bancshares of any
change or event having a Material Adverse Effect on it or on any Pocahontas
Bancorp Subsidiary or which it believes would or would be reasonably likely to
cause or constitute a material breach of any of its representations, warranties
or covenants set forth herein. Pocahontas Bancorp shall update Pocahontas
Bancorp's Disclosure Schedules as promptly as practicable after the occurrence
of an event or fact which, if such event or fact had occurred prior to the date
of this Agreement, would have been disclosed in the Pocahontas Bancorp
Disclosure Schedule. The delivery of such updated Schedule shall not relieve
Pocahontas Bancorp from any breach or violation of this Agreement and shall not
have any effect for the purposes of determining the satisfaction of the
condition set forth in Sections 6.01(c) hereof.
Section 5.13 Affiliate Letter. Marked Tree Bancshares shall use its best
efforts to cause to be delivered to Pocahontas Bancorp within fifteen business
days after the date of this Agreement the Letter Agreement attached hereto as
Exhibit 5.13, executed by each director, executive officer or other Affiliate of
Marked Tree Bancshares.
Section 5.14 Operation of Branches. Pocahontas Bancorp will not close or
relocate any Marked Tree Bank branch office ("Marked Tree Branch") in connection
with the Bank Merger, and such offices will continue to be operated and will be
operated under the trade name "Marked Tree Bank" for such period following the
Closing Date as Pocahontas Bancorp deems advisable in its sole discretion to
facilitate a smooth transition for Marked Tree Bank customers. Pocahontas
Bancorp will offer the full range of banking services currently available at FCB
full-service offices at the Marked Tree Branches. The provisions of this Section
5.14 shall be subject to the requirements of the Regulatory Authorities.
ARTICLE VICONDITIONS
Section 6.01 Conditions to Marked Tree Bancshares' Obligations under this
Agreement. The obligations of Marked Tree Bancshares hereunder shall be subject
to satisfaction at or prior to the Closing Date of each of the following
conditions, unless waived by Marked Tree Bancshares pursuant to Section 8.03
hereof:
(a) Corporate Proceedings. All action required to be taken by, or on the
part of, Pocahontas Bancorp and FCB to authorize the execution, delivery and
performance of this Agreement and the Bank Merger Agreement, respectively, and
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the consummation of the transactions contemplated by this Agreement and the Bank
Merger Agreement, shall have been duly and validly taken by Pocahontas Bancorp
and FCB;
(b) Covenants. The obligations and covenants of Pocahontas Bancorp required
by this Agreement to be performed by Pocahontas Bancorp at or prior to the
Closing Date shall have been duly performed and complied with in all respects,
except where the failure to perform or comply with any obligation or covenant
would not, either individually or in the aggregate, result in a Material Adverse
Effect with respect to Pocahontas Bancorp;
(c) Representations and Warranties. The representations and warranties of
Pocahontas Bancorp set forth in this Agreement shall be true and correct, as of
the date of this Agreement and as of the Closing Date, as though made on and as
of the Closing Date, except as to any representation or warranty (i) which
specifically relates to an earlier date or (ii) where the breach of the
representation or warranty would not, either individually or in the aggregate,
constitute a Material Adverse Effect with respect to Pocahontas Bancorp and FCB;
(d) No Material Adverse Effect. Since June 30, 2002, there shall not have
occurred any Material Adverse Effect with respect to Pocahontas Bancorp;
(e) Officer's Certificate. Pocahontas Bancorp shall have delivered to
Marked Tree Bancshares a certificate, dated the Closing Date and signed, without
personal liability, by its chairman of the board or president, to the effect
that the conditions set forth in subsections (a) through (d) of this Section
6.01 have been satisfied, to the best knowledge of the officer executing the
same;
(f) Opinion of Pocahontas Bancorp's Counsel. Marked Tree Bancshares shall
have received an opinion of Xxxx Xxxxxx Xxxxxxxx & Xxxxxx, P.C., counsel to
Pocahontas Bancorp, dated the Closing Date, in form and substance reasonably
satisfactory to Marked Tree Bancshares and its counsel to the effect set forth
on Exhibit 6.01(f) attached hereto;
(g) Tax Opinion. The stockholders of Marked Tree Bancshares shall have
received an opinion of Baker, Donelson, Bearman & Xxxxxxxx substantially to the
effect set forth on Exhibit 6.01(g) attached hereto;
(h) The Exchange Agent shall have delivered to Marked Tree Bancshares a
certificate dated as of the Company Merger Effective Date to the effect that the
Exchange Agent has received from Pocahontas Bancorp due authorization to issue
certificates for the required number of shares of Pocahontas Bancorp Common
Stock to be issued in the Company Merger and cash to cover fractional shares.
Section 6.02 Conditions to Pocahontas Bancorp's Obligations under this
Agreement. The obligations of Pocahontas Bancorp hereunder shall be subject to
satisfaction at or prior to the Closing Date of each of the following
conditions, unless waived by Pocahontas Bancorp pursuant to Section 8.03 hereof:
(a) Corporate Proceedings. All action required to be taken by, or on the
part of, Marked Tree Bancshares and Marked Tree Bank to authorize the execution,
delivery and performance of this Agreement and the Bank Merger Agreement,
respectively, and the consummation of the transactions contemplated by this
Agreement and the Bank Merger Agreement, shall have been duly and validly taken
by Marked Tree Bancshares and Marked Tree Bank;
(b) Covenants. The obligations and covenants of Marked Tree Bancshares,
required by this Agreement to be performed by it at or prior to the Closing Date
shall have been duly performed and complied with in all respects, except where
the failure to perform or comply with any obligation or covenant would not,
either individually or in the aggregate, result in a Material Adverse Effect
with respect to Marked Tree Bancshares;
(c) Representations and Warranties. The representations and warranties of
Marked Tree Bancshares set forth in this Agreement shall be true and correct as
of the date of this Agreement, and as of the Closing Date as though made on and
as of the Closing Date, except as to any representation or warranty (i) which
specifically relates to an earlier date or (ii) where the breach of the
representation or warranty would not, either individually or in the aggregate,
result in a Material Adverse Effect with respect to Marked Tree Bancshares;
29
(d) No Material Adverse Effect. Since June 30, 2002, there shall not have
occurred any Material Adverse Effect with respect to Marked Tree Bancshares;
(e) Officer's Certificate. Marked Tree Bancshares shall have delivered to
Pocahontas Bancorp a certificate, dated the Closing Date and signed, without
personal liability, by its chairman of the board or president, to the effect
that the conditions set forth in subsections (a) through (d) of this Section
6.02 have been satisfied, to the best knowledge of the officer executing the
same;
(f) Opinions of Marked Tree Bancshares' Counsel. Pocahontas Bancorp shall
have received an opinion of Baker, Donelson, Bearman & Xxxxxxxx, counsel to
Marked Tree Bancshares, dated the Closing Date, in form and substance reasonably
satisfactory to Pocahontas Bancorp and its counsel to the effect set forth on
Exhibit 6.02(f) attached hereto;
(g) Tax Opinion. Pocahontas Bancorp shall have received an opinion of Xxxx
Xxxxxx Xxxxxxxx & Xxxxxx, P.C., its counsel, substantially to the effect set
forth on Exhibit 6.02(g) attached hereto.
Section 6.03 Conditions to Each Party's Obligations under this Agreement.
The respective obligations of each of Pocahontas Bancorp and Marked Tree
Bancshares to consummate the Company Merger shall be subject to the satisfaction
at or prior to the Closing Date of each of the following conditions, unless
waived by the other of them pursuant to Section 8.03 hereof:
(a) Approval of Marked Tree Bancshares' Stockholders. This Agreement shall
have been duly adopted by the requisite vote of Marked Tree Bancshares'
stockholders;
(b) Approvals of Regulatory Authorities. All regulatory approvals required
to consummate the transactions contemplated hereby shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired and no such approval shall contain (i) any
conditions, restrictions or requirements that the Pocahontas Bancorp Board of
Directors reasonably determines would either before or after the Company Merger
Effective Date have or will have a Material Adverse Effect on Pocahontas Bancorp
after giving effect to the consummation of the Company Merger, or (ii) any
conditions, restrictions or requirements that are not customary and usual for
approvals of such type and that the Pocahontas Bancorp Board of Directors
reasonably determines would either before or after the Company Merger Effective
Date be unduly burdensome, provided, however, that any such conditions are not
imposed by regulatory authorities solely as a result of any action or omission
by Pocahontas Bancorp;
(c) No Injunction. No Regulatory Authority shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, judgment,
decree, injunction or other order that is in effect and prohibits consummation
of the transactions contemplated by this Agreement;
(d) Registration Statement. The Registration Statement shall have become
effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the SEC;
(e) Blue Sky Approvals. All permits and other authorizations under state
securities laws necessary to consummate the transactions contemplated hereby
shall have been received and be in full force and effect; and
(f) Nasdaq Listing. The shares of Pocahontas Bancorp Common Stock that will
be issued to the stockholders of Marked Tree Bancshares upon consummation of the
Company Merger shall have been authorized for listing on the Nasdaq National
Market System, subject to official notice of issuance.
30
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
Section 7.01 Termination. This Agreement may be terminated on or at any
time prior to the Closing Date:
(a) By the mutual written consent of the parties hereto; or
(b) By Pocahontas Bancorp or Marked Tree Bancshares:
(i) if there shall have been any breach of any representation,
warranty, covenant or other obligation of Pocahontas Bancorp which results
in a Material Adverse Effect with respect to Pocahontas Bancorp, on the one
hand, or of Marked Tree Bancshares which results in a Material Adverse
Effect with respect to Marked Tree Bancshares, on the other hand, and such
breach cannot be, or shall not have been, remedied within thirty (30) days
after receipt by such other party of notice in writing specifying the
nature of such breach and requesting that it be remedied;
(ii) if the Closing Date shall not have occurred on or before July 31,
2003, unless the failure of such occurrence shall be due to the failure of
the party seeking to terminate this Agreement to perform or observe its
agreements set forth in this Agreement required to be performed or observed
by such party on or before the Closing Date; or
(iii) if either party has been informed in writing by a Regulatory
Authority whose approval or consent has been requested that such approval
or consent is unlikely to be granted, unless the failure of such occurrence
shall be due to the failure of the party seeking to terminate this
Agreement to perform or observe its agreements set forth herein required to
be performed or observed by such party on or before the Closing Date; or
(iv) if the approval of the stockholders of Marked Tree Bancshares
required for the consummation of the Company Merger shall not have been
obtained by reason of the failure to obtain the required vote at a duly
held meeting of stockholders or at any adjournment or postponement thereof.
Section 7.02 Effect of Termination. If this Agreement is terminated
pursuant to Section 7.01 hereof, this Agreement shall forthwith become void
(other than Section 8.01 hereof, which shall remain in full force and effect),
and there shall be no further liability on the part of Pocahontas Bancorp or
Marked Tree Bancshares to the other, except that no party shall be relieved or
released from any liabilities or damages arising out of its willful breach of
any provision of this Agreement.
Section 7.03 Termination Fee. Marked Tree Bancshares shall pay to
Pocahontas Bancorp a termination fee in the amount of $115,000 if:
(a) this Agreement is terminated by Pocahontas Bancorp pursuant to Section
7.01(b)(i) or by Pocahontas Bancorp or Marked Tree Bancshares pursuant to
Section 7.01(b)(iv) and prior to such termination an Acquisition Proposal with
respect to Marked Tree Bancshares was commenced, publicly proposed or publicly
disclosed, and within 18 months after such termination Marked Tree Bancshares
shall have entered into an agreement relating to an Acquisition Proposal or any
Acquisition Proposal shall have been consummated; or
(b) after receiving an Acquisition Proposal, the Marked Tree Bancshares
Board of Directors does not take action within the time period set forth in
Section 7.01(b)(ii) to convene the meeting of stockholders of Marked Tree
Bancshares to vote on the Company Merger and recommend such stockholders adopt
this Agreement, and within 18 months after such receipt, Marked Tree Bancshares
shall have entered into an agreement relating to an Acquisition Proposal or any
Acquisition Proposal shall have been consummated.
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ARTICLE VIII
MISCELLANEOUS
Section 8.01 Expenses.
(a) Subject to Section 7.03 of this Agreement, each party hereto shall bear
and pay all costs and expenses incurred by it in connection with the
transactions contemplated hereby, including fees and expenses of its own
financial consultants, accountants and counsel.
(b) In the event of any termination of this Agreement by a party pursuant
to Section 7.01(b)(i) hereof based on a breach of a representation or warranty,
or the breach of a covenant, by the other party hereto, the breaching party
shall pay to the non-breaching party all out-of-pocket costs and expenses,
including, without limitation, reasonable legal and accounting fees and
expenses, incurred by the non-breaching party in connection with entering into
this Agreement and carrying out of any and all acts contemplated hereunder;
provided, however, that this clause shall not be construed to relieve or release
a breaching party from any additional liabilities or damages arising out of its
willful breach of any provision of this Agreement.
Section 8.02 Non-Survival of Representations and Warranties. All
representations, warranties and, except to the extent specifically provided
otherwise herein, agreements and covenants shall terminate on the Closing Date.
Section 8.03 Amendment, Extension and Waiver; Alternative Structure.
(a) Subject to applicable law, at any time prior to the consummation of the
transactions contemplated by this Agreement, the parties may (i) amend this
Agreement, (ii) extend the time for the performance of any of the obligations or
other acts of either party hereto, (iii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, or (iv) waive compliance with any of the agreements or
conditions contained in Articles V and VI hereof or otherwise. This Agreement
may not be amended except by an instrument in writing authorized by the
respective Boards of Directors and signed, by duly authorized officers, on
behalf of the parties hereto. Any agreement on the part of a party hereto to any
extension or waiver shall be valid only if set forth in an instrument in writing
signed by a duly authorized officer on behalf of such party, but such waiver or
failure to insist on strict compliance with such obligation, covenant, agreement
or condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
(b) Notwithstanding anything to the contrary contained in this Agreement,
prior to the Company Merger Effective Date, Pocahontas Bancorp shall be entitled
to revise the structure of the Company Merger, the Bank Merger and the other
transactions contemplated hereby and thereby provided, that (i) there are no
material adverse federal or state income tax consequences to Marked Tree
Bancshares' stockholders as a result of the modification; (ii) the consideration
to be paid to the holders of the shares of Marked Tree Bancshares Common Stock
under this Agreement is not thereby changed in kind or reduced in amount; (iii)
there are no material adverse changes to the benefits and other arrangements
provided to or on behalf of Marked Tree Bancshares' and Marked Tree Bank's
directors, officers and other employees; and (iv) such modification will not be
likely to delay materially or jeopardize receipt of any required regulatory
approvals or other consents and approvals relating to the consummation of the
Company Merger and the Bank Merger. This Agreement and any related documents
shall be appropriately amended in order to reflect any such revised structure.
Section 8.04 Entire Agreement. This Agreement, including the documents and
other writings referred to herein or delivered pursuant hereto, including the
Confidentiality Agreement, contains the entire agreement and understanding of
the parties with respect to its subject matter. This Agreement supersedes all
prior arrangements and understandings between the parties, both written or oral
with respect to its subject matter. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors;
provided, however, that nothing in this Agreement, expressed or implied, is
intended to confer upon any party, other than the parties hereto and their
respective successors, any rights, remedies, obligations or liabilities.
Section 8.05 No Assignment. Neither party hereto may assign any of its
rights or obligations hereunder to any other person, without the prior written
consent of the other party hereto.
32
Section 8.06 Notices. All notices or other communications hereunder shall
be in writing and shall be deemed given if delivered personally, mailed by
prepaid registered or certified mail (return receipt requested), or sent by
telecopy, addressed as follows:
(a) If to Pocahontas Bancorp, to:
Pocahontas Bancorp, Inc.
0000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxx Xxxxxx
President and Chief Executive Officer
with a copy to: Xxxx Xxxxxx Xxxxxxxx & Xxxxxx, PC
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Xxxx Xxxx, Esq.
(b) If to Marked Tree Bancshares, to:
Marked Tree Bancshares, Inc.
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Mr. E. Xxxxxx Xxxxxx
President and Chief Executive Officer
with a copy to: Baker, Donelson, Bearman & Xxxxxxxx
First Tennessee Building, 20th Floor
000 Xxxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx Xxxxxx, Esq.
Section 8.07 Captions. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
Section 8.08 Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
Section 8.09 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
Section 8.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic internal law (including the law of
conflicts of law) of the State of Delaware.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the day and year first above written.
POCAHONTAS BANCORP, INC.
By:
---------------------------------------------
ATTEST:
Name: Xxxxxx Xxxxxx
-------------------------------------
Title: President and Chief Executive Officer
------------------- -------------------------------------
MARKED TREE BANCSHARES, INC.
By:
---------------------------------------------
ATTEST:
Name: E. Xxxxxx Xxxxxx
--------------------------------------
Title: President and Chief Executive Officer
------------------- --------------------------------------
34
