<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM 8-K
CURRENT REPORT
--------------
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) -- OCTOBER 20, 1998
SOUTHWEST BANCORPORATION OF TEXAS, INC.
(Name of Registrant as specified in its charter)
TEXAS 000-22007 76-0519693
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation or organization) Identification No.)
4400 POST OAK PARKWAY
HOUSTON, TEXAS 77027
(713) 235-8800
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
N/A
(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS.
After the close of business on October 20, 1998, Southwest Bancorporation
of Texas, Inc. (the "Registrant" and the "Company") executed a definitive
Agreement and Plan of Merger with Fort Bend Holding Corp. ("Fort Bend"),
providing for the merger of Fort Bend with and into the Company. The merger
provides that the shareholders of Fort Bend will receive 1.45 shares of
Southwest Common Stock, $1.00 par value, in exchange for each of their shares of
Fort Bend Common Stock, $.01 par value. The merger is structured as a tax-free
reorganization and is to be accounted for as a pooling-of-interests. It is
anticipated that it will close during the first quarter of 1999, subject to
approval of Fort Bend's shareholders, regulatory approvals and customary closing
conditions. The purpose of this Form 8-K Current Report is to file as exhibits,
a copy of the joint news release dated October 21, 1998 of the Company and Fort
Bend announcing the execution of the definitive Agreement and Plan of Merger and
a copy of the Agreement and Plan of Merger.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibits
2.1 - Agreement and Plan of Merger dated October 20, 1998, between
the Company and Fort Bend Holding Corp.
99.1 - News Release dated October 21, 1998, announcing the
execution of the Agreement and Plan of Merger between the
Company and Fort Bend Holding Corp.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SOUTHWEST BANCORPORATION OF TEXAS, INC.
Date: October 22, 1998 By /s/ R. John McWhorter
---------------------------------------
R. John McWhorter
Senior Vice President and Controller
<PAGE>
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BETWEEN
SOUTHWEST BANCORPORATION OF TEXAS, INC.
AND
FORT BEND HOLDING CORP.
Dated as of October 20, 1998
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TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
ARTICLE I
THE MERGER
Section 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . -6-
Section 1.2 Conversion of FBHC Common Stock and FBHC Stock Options . . -7-
Section 1.3 Surrender of FBHC Stock Certificates . . . . . . . . . . . -7-
ARTICLE II
THE CLOSING
Section 2.1 Closing Date . . . . . . . . . . . . . . . . . . . . . . . -9-
Section 2.2 Effective Time; Procedure. . . . . . . . . . . . . . . . . -9-
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FBHC
Section 3.1 Organization.. . . . . . . . . . . . . . . . . . . . . . .-10-
Section 3.2 Binding Effect . . . . . . . . . . . . . . . . . . . . . .-11-
Section 3.3 Capitalization . . . . . . . . . . . . . . . . . . . . . .-11-
Section 3.4 Financial Statements and Reports . . . . . . . . . . . . .-12-
Section 3.5 Compliance with Applicable Laws; Operating Authorities . .-13-
Section 3.6 Other Activities of FBHC . . . . . . . . . . . . . . . . .-14-
Section 3.7 Contracts and Commitments. . . . . . . . . . . . . . . . .-15-
Section 3.8 Broker's and Finder's Fees . . . . . . . . . . . . . . . .-16-
Section 3.9 Corporate Records; Other Information . . . . . . . . . . .-16-
Section 3.10 Real Property Owned or Leased . . . . . . . . . . . . . .-17-
Section 3.11 Personal Property . . . . . . . . . . . . . . . . . . . .-17-
Section 3.12 Accounting Records; Data Processing . . . . . . . . . . .-18-
Section 3.13 Absence of Certain Changes. . . . . . . . . . . . . . . .-18-
Section 3.14 Litigation. . . . . . . . . . . . . . . . . . . . . . . .-19-
Section 3.15 Tax Matters . . . . . . . . . . . . . . . . . . . . . . .-20-
Section 3.16 Employment and Similar Agreements; Obligations Upon
Change in Control . . . . . . . . . . . . . . . . . . .-21-
Section 3.17 Benefit Plans . . . . . . . . . . . . . . . . . . . . . .-22-
Section 3.18 Labor and Employment Matters. . . . . . . . . . . . . . .-24-
Section 3.19 Certain Interests . . . . . . . . . . . . . . . . . . . .-25-
Section 3.20 Registration Statement and Regulatory Applications. . . .-26-
Section 3.21 Insurance . . . . . . . . . . . . . . . . . . . . . . . .-26-
Section 3.22 Environmental Matters . . . . . . . . . . . . . . . . . .-27-
Section 3.23 Intellectual Property Rights. . . . . . . . . . . . . . .-28-
Section 3.24 Site Locations. . . . . . . . . . . . . . . . . . . . . .-28-
Section 3.25 Loans . . . . . . . . . . . . . . . . . . . . . . . . . .-28-
Section 3.26 Allowance for Losses. . . . . . . . . . . . . . . . . . .-29-
Section 3.27 Real Estate Owned . . . . . . . . . . . . . . . . . . . .-29-
Section 3.28 Interest Rate Risk Management Instruments . . . . . . . .-30-
Section 3.29 Disclosure. . . . . . . . . . . . . . . . . . . . . . . .-30-
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 Organization . . . . . . . . . . . . . . . . . . . . . . .-30-
Section 4.2 Binding Effect . . . . . . . . . . . . . . . . . . . . . .-31-
Section 4.3 Capitalization . . . . . . . . . . . . . . . . . . . . . .-31-
Section 4.4 Financial Statements and Reports . . . . . . . . . . . . .-32-
Section 4.5 Registration Statement and Regulatory Applications . . . .-33-
Section 4.6 Compliance with Applicable Laws; Operating Authorities . .-33-
Section 4.7 Absence of Certain Changes . . . . . . . . . . . . . . . .-34-
Section 4.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . .-34-
Section 4.9 Broker's and Finder's Fees . . . . . . . . . . . . . . . .-35-
Section 4.10 Tax Matters . . . . . . . . . . . . . . . . . . . . . . .-35-
Section 4.11 Environmental Matters . . . . . . . . . . . . . . . . . .-35-
Section 4.12 Allowance for Losses. . . . . . . . . . . . . . . . . . .-35-
Section 4.13 Disclosure. . . . . . . . . . . . . . . . . . . . . . . .-35-
ARTICLE V
COVENANTS OF THE PARTIES
Section 5.1 Preparation of Registration Statement and
Prospectus/Proxy Statement . . . . . . . . . . . . . . .-36-
Section 5.2 Pursuit of Regulatory Approvals. . . . . . . . . . . . . .-36-
Section 5.3 Other Consents . . . . . . . . . . . . . . . . . . . . . .-37-
Section 5.4 FBHC Activities Pending Closing. . . . . . . . . . . . . .-37-
Section 5.5 Ongoing Financial Disclosure . . . . . . . . . . . . . . .-39-
Section 5.6 Access to Information. . . . . . . . . . . . . . . . . . .-39-
Section 5.7 Confidentiality. . . . . . . . . . . . . . . . . . . . . .-40-
Section 5.8 Meeting of Shareholders. . . . . . . . . . . . . . . . . .-41-
Section 5.9 Stock Listing. . . . . . . . . . . . . . . . . . . . . . .-41-
Section 5.10 Affiliates' Letters . . . . . . . . . . . . . . . . . . .-41-
Section 5.11 Plan Amendments and Participation in Company Plans;
Option Registration . . . . . . . . . . . . . . . . . . .-41-
Section 5.12 Assumption of FBHC Stock Options. . . . . . . . . . . . .-42-
Section 5.13 Termination of Severance and Consulting Arrangements. . .-42-
Section 5.14 Certain Notifications . . . . . . . . . . . . . . . . . .-43-
Section 5.15 No Shopping . . . . . . . . . . . . . . . . . . . . . . .-43-
Section 5.16 No Inconsistent Actions; Pooling; Tax Treatment . . . . .-44-
Section 5.17 Taxes; Consent. . . . . . . . . . . . . . . . . . . . . .-44-
Section 5.18 Transactions with Affiliates and Insiders . . . . . . . .-44-
Section 5.19 Classification of Loans . . . . . . . . . . . . . . . . .-44-
Section 5.20 Compliance with Applicable Law. . . . . . . . . . . . . .-45-
Section 5.21 Certain Accounting Adjustments. . . . . . . . . . . . . .-45-
Section 5.22 Environmental Investigation; Right to Terminate
Agreement . . . . . . . . . . . . . . . . . . . . . . . .-45-
Section 5.23 Indemnification of Directors and Officers; Insurance. . .-46-
Section 5.24 Access to Information of the Company. . . . . . . . . . .-47-
Section 5.25 Further Assurances. . . . . . . . . . . . . . . . . . . .-48-
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ARTICLE VI
CONDITIONS TO CLOSING
Section 6.1 Conditions to FBHC's Obligation to Close . . . . . . . . .-49-
Section 6.2 Conditions to the Company's Obligations to Close . . . . .-51-
ARTICLE VII
TERMINATION
Section 7.1 Termination. . . . . . . . . . . . . . . . . . . . . . . .-54-
Section 7.2 Effect of Termination. . . . . . . . . . . . . . . . . . .-55-
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Non-Survival of Representations and Warranties . . . . . .-56-
Section 8.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . .-56-
Section 8.3 Governing Law. . . . . . . . . . . . . . . . . . . . . . .-57-
Section 8.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . .-57-
Section 8.5 Amendments and Waivers . . . . . . . . . . . . . . . . . .-57-
Section 8.6 Severability . . . . . . . . . . . . . . . . . . . . . . .-57-
Section 8.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . .-57-
Section 8.8 Interpretation of Agreement. . . . . . . . . . . . . . . .-58-
Section 8.9 Expenses . . . . . . . . . . . . . . . . . . . . . . . . .-58-
Section 8.10 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . .-58-
Section 8.11 Publicity . . . . . . . . . . . . . . . . . . . . . . . .-58-
Section 8.12 Binding Effect. . . . . . . . . . . . . . . . . . . . . .-59-
Section 8.13 Third Parties . . . . . . . . . . . . . . . . . . . . . .-59-
Section 8.14 Gender; Number. . . . . . . . . . . . . . . . . . . . . .-59-
Section 8.15 Certain Definitions . . . . . . . . . . . . . . . . . . .-59-
EXHIBITS
Exhibit A - Plan of Merger for the Bank Merger
Exhibit B - Form of Affiliates' Letter
Exhibit C - Form of Opinion of Counsel for the Company
Exhibit D - Form of Opinion of Counsel for FBHC
Exhibit E - Form of Release (Director)
Exhibit F - Form of Release (Officer)
</TABLE>
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<PAGE>
AGREEMENT AND PLAN OF MERGER
BETWEEN
SOUTHWEST BANCORPORATION OF TEXAS, INC.
AND
FORT BEND HOLDING CORP.
This Agreement and Plan of Merger ("Agreement") is entered into as of
October 20, 1998 between Southwest Bancorporation of Texas, Inc., a Texas
corporation (the "Company"), and Fort Bend Holding Corp., a Delaware corporation
("FBHC").
RECITALS
A. The parties hereto desire to effect a business combination pursuant to
which (i) FBHC will be merged with and into the Company, with the Company being
the surviving corporation (the "Merger"), and (ii) the shareholders of record,
as of the date of the Merger, of the common stock, $.01 par value, of FBHC
("FBHC Common Stock") (such holders of record of FBHC Common Stock are
hereinafter referred to as the "Shareholders") will receive shares of Common
Stock, $1.00 par value, of the Company ("Company Common Stock") in accordance
with the terms and conditions of this Agreement, all for the purpose of
effecting a tax-free reorganization pursuant to Section 368(a)(1) of the
Internal Revenue Code of 1986, as amended (the "Code").
B. In connection with the Merger, all options to purchase shares of FBHC
Common Stock outstanding as of the date of the Merger ("FBHC Stock Options")
pursuant to FBHC's 1993 Stock Option and Incentive Plan (as amended and restated
July 29, 1997) (the "FBHC Stock Option Plan") shall be converted into options to
purchase Company Common Stock as described herein.
C. The parties hereto also desire to effect a merger of Fort Bend Federal
Savings and Loan Association of Rosenberg (the "Association"), a federally
chartered savings and loan association and wholly-owned subsidiary of FBHC, with
and into Southwest Bank of Texas National Association ("SW Bank"), a national
banking association and wholly-owned subsidiary of the Company, pursuant to a
Plan of Merger between the Association and SW Bank, a form of which is attached
hereto as Exhibit A (the "Bank Plan of Merger") for the purpose of effecting a
tax-free reorganization pursuant to Section 368(a)(1) of the Code. Such merger
(the "Bank Merger") shall be effectuated on the same date as, and simultaneously
with, the effectiveness of the Merger.
D. The Merger and the Bank Merger require certain shareholder and
regulatory approvals as described herein and shall be effected only after the
necessary approvals have been obtained. Certain capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in Section 8.15 hereof.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
<PAGE>
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER.
(a) PROCEDURE FOR MERGER. The Merger shall take place upon the terms and
subject to the conditions of this Agreement, and in accordance with the
applicable provisions of the Texas Business Corporation Act (the "TBCA") and the
General Corporation Law of the State of Delaware (the "DGCL"), pursuant to
which, at the Effective Time:
(i) FBHC shall be merged with and into the Company by a statutory
merger; the separate corporate existence of FBHC shall thereupon cease; and
the Company shall continue as the surviving corporation in the Merger (the
"Surviving Corporation");
(ii) each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of the holder thereof, continue to be
outstanding as one share of Company Common Stock;
(iii) each share of FBHC Common Stock issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of the holder thereof, be canceled and
converted into the right to receive, upon surrender of the certificate
representing such share, 1.45 shares of Company Common Stock, as provided
in Section 1.2 hereof;
(iv) the Articles of Incorporation and the Bylaws of the Company
shall be unchanged and shall be the Articles of Incorporation and Bylaws of
the Surviving Corporation;
(v) the authorized capital stock of the Surviving Corporation
shall be unchanged, consisting of 1,000,000 shares of preferred stock, $.01
par value, and 50,000,000 shares of Company Common Stock, $1.00 par value;
(vi) the directors of the Company at the Effective Time shall be
the directors of the Surviving Corporation and the officers of the Company
at the Effective Time shall be the officers of the Surviving Corporation,
in each case until their respective successors are duly elected and
qualified;
(vii) the corporate existence of each of FBHC and the Company shall
be merged into and continued in the Surviving Corporation, and such
Surviving Corporation shall be deemed to be the same corporation as FBHC
and the Company; all rights, title and interests to all real estate and
other property owned by FBHC and the Company shall be vested in the
Surviving Corporation without reversion or impairment, without further act
or deed, and without any transfer or assignment having occurred, but
subject to any existing liens and other encumbrances thereon; and
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<PAGE>
(viii) the Merger shall have the other effects set forth in
Article 5.06 of the TBCA and Sections 259, 260 and 261 of the DGCL,
including, without limitation, that the Surviving Corporation shall be
liable for all liabilities of FBHC and the Company.
SECTION 1.2 CONVERSION OF FBHC COMMON STOCK AND FBHC STOCK OPTIONS.
(a) OUTSTANDING FBHC COMMON STOCK. At the Effective Time, each share of
FBHC Common Stock issued and outstanding immediately prior to the Effective Time
shall, by virtue of this Agreement and without any action on the part of the
holder thereof, be converted into and exchangeable for 1.45 (the "Exchange
Ratio") shares of Company Common Stock. All of the shares of FBHC Common Stock
converted into Company Common Stock pursuant to this Section 1.2(a) shall no
longer be outstanding and shall automatically be canceled and shall cease to
exist, and each certificate (each a "Certificate") previously representing any
such shares of FBHC Common Stock shall thereafter represent the right to receive
(i) the number of whole shares of Company Common Stock and (ii) cash in lieu of
fractional shares into which the shares of FBHC Common Stock represented by such
Certificate have been converted pursuant to this Section 1.2(a) and
Section 1.3(e) hereof. Certificates previously representing shares of FBHC
Common Stock shall be exchanged for certificates representing whole shares of
Company Common Stock and cash in lieu of fractional shares issued in
consideration therefor upon the surrender of such Certificates in accordance
with Section 1.3 hereof, without any interest thereon. If prior to the
Effective Time, the Company should split or combine the outstanding shares of
Company Common Stock, recapitalize, or pay a dividend or other distribution
payable in Company Common Stock, then the Exchange Ratio shall be appropriately
adjusted to reflect such split, recapitalization, combination, dividend or
distribution.
(b) TREASURY STOCK. At the Effective Time, all shares of FBHC Common
Stock that are held in FBHC's treasury or otherwise owned by FBHC as treasury
stock shall be canceled and shall cease to exist, and no stock of the Company or
other consideration shall be delivered in exchange therefor.
(c) FBHC STOCK OPTIONS. At the Effective Time, each FBHC Stock Option
shall, in accordance with its terms, be converted (automatically and without any
action on the part of the holder thereof) into an option, having the same terms
as such FBHC Stock Option, to purchase a number of shares of Company Common
Stock equal to the number of shares of FBHC Common Stock subject thereto
multiplied by the Exchange Ratio, at an exercise price per share equal to the
exercise price per share subject thereto divided by the Exchange Ratio. The
total number of shares subject to each FBHC Stock Option shall be rounded to the
nearest whole share, and all exercise prices shall be rounded to the nearest
whole cent.
SECTION 1.3 SURRENDER OF FBHC STOCK CERTIFICATES.
(a) As soon as practicable after the Effective Time, American Securities
Transfer & Trust, Inc., as Exchange Agent (the "Exchange Agent"), shall mail to
each holder of record of a Certificate or Certificates a form letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent) and instructions for use in effecting the
surrender of the
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Certificates in exchange for certificates representing the shares of Company
Common Stock and the cash in lieu of fractional shares into which the shares
of FBHC Common Stock represented by such Certificate or Certificates shall
have been converted pursuant to this Agreement. Upon surrender of a
Certificate for exchange and cancellation to the Exchange Agent, together
with such letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor (x) a
certificate representing that number of whole shares of Company Common Stock
to which such holder of FBHC Common Stock shall have become entitled pursuant
to the provisions of Section 1.2 hereof and (y) a check representing the
amount of cash in lieu of fractional shares, if any, which such holder has
the right to receive in respect of the Certificate surrendered pursuant to
the provisions of this Section 1.3, and the Certificate so surrendered shall
forthwith be canceled. No interest will be paid or accrued on the cash in
lieu of fractional shares and unpaid dividends and distributions, if any,
payable to holders of Certificates.
(b) No dividends or other distributions declared after the Effective Time
with respect to Company Common Stock and payable to the holders of record
thereof shall be paid to the holder of any unsurrendered Certificate until the
holder thereof shall surrender such Certificate in accordance with this
Section 1.3. After the surrender of a Certificate in accordance with this
Section 1.3, the record holder thereof shall be entitled to receive any such
dividends or other distributions, without any interest thereon, which
theretofore had become payable with respect to shares of Company Common Stock
represented by such Certificate.
(c) If any certificate representing shares of Company Common Stock is to
be issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance thereof
that the Certificate so surrendered shall be appropriately endorsed (or
accompanied by an appropriate instrument of transfer) and otherwise in proper
form (reasonably satisfactory to the Company) for transfer, and that the person
requesting such exchange shall pay to the Exchange Agent in advance any transfer
or other taxes required by reason of the issuance of a certificate representing
shares of Company Common Stock in any name other than that of the registered
holder of the Certificate surrendered, or required for any other reason, or
shall establish to the satisfaction of the Exchange Agent that such tax has been
paid or is not payable.
(d) At the Effective Time, the stock transfer books of FBHC shall be
closed, and no transfer of the shares of FBHC Common Stock shall thereafter be
recognized. If, after the Effective Time, Certificates representing such shares
are presented for transfer to the Exchange Agent, they shall be canceled and
exchanged for the certificates representing shares of Company Common Stock and
cash in lieu of fractional shares as provided in Section 1.2 hereof.
(e) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of Company Common Stock
shall be issued upon the surrender for exchange of Certificates, no dividend or
distribution with respect to Company Common Stock shall be payable on or with
respect to any fractional share, and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of a shareholder of the
Company. In lieu of the issuance of any such fractional share, the Company
shall pay to each former holder of FBHC Common Stock who otherwise would be
entitled to receive a fractional share of Company Common Stock an amount in cash
determined by multiplying (i) the Average Closing Price by (ii) the fraction of
a share of Company Common Stock which such holder would otherwise be entitled to
receive
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<PAGE>
pursuant to Section 1.2 hereof. The term "Average Closing Price" means the
average closing sales price per share of Company Common Stock on The Nasdaq
Stock Market ("Nasdaq"), (as reported by THE WALL STREET JOURNAL or, if not
reported thereby, another authoritive source selected by the Company), for
the five consecutive Nasdaq trading days immediately prior to the date of the
Shareholders' Meeting.
(f) None of the Company, FBHC, the Exchange Agent or any other person
shall be liable to any former holder of shares of FBHC Common Stock for any
Company Common Stock (or dividends or distributions with respect thereto) or
cash properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(g) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Company, the posting by such person of a bond in such amount as the Company may
direct as indemnity against any claim that may be made against it with respect
to such Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the shares of Company Common Stock and cash in
lieu of fractional shares deliverable in respect thereof pursuant to this
Agreement.
ARTICLE II
THE CLOSING
SECTION 2.1 CLOSING DATE. The closing (the "Closing") of the
transactions contemplated by this Agreement shall take place on a date to which
the Company and FBHC may agree (the "Closing Date"); PROVIDED, HOWEVER, that in
the absence of an agreement by the parties to the contrary, such Closing Date
shall be the last business day of the month in which the last of the conditions
to Closing set forth in Sections 6.1 and 6.2 have been satisfied, but in no
event later than the date specified in Section 7.1(h) hereof.
SECTION 2.2 EFFECTIVE TIME; PROCEDURE.
(a) The Company and FBHC shall, in accordance with Section 5.04 of the
TBCA and Sections 103 and 251(c) of the DGCL, file Articles of Merger with the
Secretary of State of Texas and a Certificate of Merger with the Secretary of
State of Delaware regarding the Merger. The Merger shall become effective as of
the close of business on the date on which both such filings have been completed
and the Secretary of State of Texas has issued a Certificate of Merger with
respect to the Merger (the "Effective Time"). The parties hereto shall take all
such other and further actions as may be required by Applicable Law to make the
Merger and the Bank Merger effective simultaneously at the Effective Time.
(b) If at any time the Company shall consider or be advised that any
further assignment or assurances in law or any other actions are reasonably
necessary or desirable to vest the title of any property or rights of FBHC in
the Surviving Corporation after the Effective Time, the last acting officers and
directors of FBHC (prior to the Effective Time) shall execute and make all such
proper
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<PAGE>
assignments and assurances and do all things necessary or proper to vest
title in such property or rights in the Surviving Corporation after the
Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FBHC
FBHC has delivered to the Company prior to the execution hereof a
disclosure schedule with respect to the representations and warranties set forth
below (the "Disclosure Schedule"). Sections of the Disclosure Schedule are
hereinafter sometimes referred to as a "Schedule." The representations and
warranties of FBHC made with respect to or subject to the Disclosure Schedule,
any exception taken therein or any information or documentation provided or
required to be provided thereby shall be deemed to have been made as of the date
of this Agreement. The Disclosure Schedule shall in each case specifically
reference the Section or subsection of this Agreement to which any exception,
information or documentation set forth therein applies (disclosure in any
Section or subsection of the Disclosure Schedule shall apply only to the
referenced Section or subsection of this Agreement).
FBHC hereby represents and warrants to the Company as follows:
SECTION 3.1 ORGANIZATION.
(a) FBHC is a corporation, duly organized, validly existing and in good
standing under the laws of the State of Delaware. FBHC is duly qualified to do
business as a foreign corporation and is in good standing in the State of Texas.
FBHC is a unitary savings and loan holding company subject to regulatory
oversight by the Office of Thrift Supervision (the "OTS").
(b) FBHC owns all of the outstanding capital stock of the Association, and
the Association is the only direct Subsidiary of FBHC. The Association is duly
organized and validly existing as a federally chartered savings and loan
association. The Association is a member of the Federal Home Loan Bank ("FHLB")
of Dallas, and its deposits are insured by the Savings Association Insurance
Fund ("SAIF") to the maximum extent permitted by law. The Association is duly
authorized by the OTS or otherwise by federal law to conduct a savings and loan
business at all locations at which it is now conducting business.
(c) Fairview, Inc. ("Fairview") and Mitchell Mortgage Corporation, LLC
("Mitchell") are the only Subsidiaries of the Association, and the Association
does not own any equity interest in any other entity other than stock in the
FHLB of Dallas and readily marketable securities. Fairview is a corporation,
duly organized, validly existing and in good standing under the laws of the
State of Texas. Mitchell is a limited liability company, duly organized,
validly existing and in good standing under the laws of the State of Texas. The
Association owns all of the outstanding capital stock of Fairview and 51% of the
outstanding equity interests in Mitchell.
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(d) Each of FBHC, the Association, Fairview and Mitchell has all requisite
power and authority to own or lease its properties and to carry on its business
as currently conducted. Except as set forth in Schedule 3.5(c), the nature of
the business of each such entity and its activities, as currently conducted, do
not require it to be qualified or registered to do business in any jurisdiction
other than the State of Texas.
(e) FBHC has the corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated herein, subject to receipt of the approval of the
Shareholders and any required Regulatory Approvals.
(f) FBHC has delivered to the Company true and complete copies of the
Certificate or Articles of Incorporation or Association and Bylaws (or
comparable organizational documents in the case of Mitchell) of FBHC, the
Association, Fairview and Mitchell and all amendments thereto. All such
documents are in full force and effect.
SECTION 3.2 BINDING EFFECT. Subject to receipt of Shareholder approval,
this Agreement has been duly and validly authorized, executed and delivered by
FBHC and constitutes the legal, valid and binding obligations of FBHC,
enforceable against FBHC in accordance with its terms (except as may be limited
by bankruptcy, insolvency, moratorium, reorganization or similar laws affecting
the rights of creditors generally and the availability of equitable remedies).
FBHC's Board of Directors has determined that the Merger is fair to, and in the
best interest of, FBHC's shareholders and has resolved to recommend approval and
adoption of this Agreement by FBHC's shareholders, subject to its fiduciary
duties. Except as otherwise disclosed on Schedule 3.2, neither the execution
and delivery of this Agreement by FBHC, nor the consummation by FBHC of the
transactions contemplated hereby, nor compliance with any of the provisions
hereof will (i) conflict with or result in the breach of any provision of FBHC's
Certificate of Incorporation or Bylaws or the organizational documents of any of
its Subsidiaries, (ii) conflict with or result in the breach of any term,
condition or provision of, or constitute a default under (upon the giving of
notice, the lapse of time or otherwise), or give rise to any right of
termination, cancellation or acceleration with respect to, or result in the
creation of any lien, charge or encumbrance upon any property or assets of FBHC
or any of its Subsidiaries or otherwise require the consent of any Person under
any agreement or obligation to which FBHC or any of its Subsidiaries is a party
or by which any of their properties or assets may be bound, which conflict,
breach, default, right, lien or right of consent could reasonably be expected to
cause a Material Adverse Effect on FBHC, or (iii) violate or conflict with (or
require any filing, notification, report, approval or other similar action
under) any Applicable Laws, subject to obtaining the approval of the
Shareholders and the Regulatory Approvals specified in Section 5.2(a).
SECTION 3.3 CAPITALIZATION.
(a) The authorized capital stock of FBHC consists of 1,000,000 shares of
serial preferred stock, $.01 par value, none of which are issued, and 4,000,000
shares of FBHC Common Stock. As of September 30, 1998, 1,866,304 shares of FBHC
Common Stock are issued and outstanding, 176,348 shares of FBHC Common Stock are
held in FBHC's treasury, 917,586 shares of FBHC Common Stock are reserved for
issuance upon conversion of the Company's 8% Convertible Subordinated Debentures
(the "FBHC Debentures"), a number of shares of Common Stock equal
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to up to 9.9% of the outstanding shares of FBHC Common Stock at any point in
time are reserved for issuance in exchange for the equity interests in
Mitchell which are not currently owned by the Association (the "Mitchell
Exchange") and 225,467 shares of which are reserved for issuance upon the
exercise of options granted under FBHC's Stock Option Plan. As of September
30, 1998, FBHC Debentures in the aggregate principal amount of $9,910,000 are
outstanding. All outstanding shares of FBHC Common Stock have been and are,
duly authorized and validly issued, fully paid and nonassessable and have not
been issued in violation of the preemptive rights of any person. There are
outstanding FBHC Stock Options to purchase 225,413 shares of FBHC Common
Stock. Schedule 3.3(a) sets forth a list of the exercise prices, vesting
schedules, expiration dates, holders of and numbers of shares subject to all
such FBHC Stock Options and any stock appreciation rights outstanding
thereunder. All FBHC Stock Options have been duly authorized and all FBHC
Stock Options (i) were granted at a per share price which was not less than
the fair market value per share of FBHC Common Stock at the date of grant and
(ii) all FBHC Stock Options intended to qualify as "incentive" stock options
under Section 422(b) of the Code meet all requirements under the Code for
such qualification.
(b) Except for the FBHC Stock Options, the FBHC Debentures, the Mitchell
Exchange or as otherwise disclosed on Schedule 3.3(a), there are no outstanding
or authorized subscriptions, options, warrants, convertible securities, calls,
rights, commitments or any other agreements of any character relating to the
issued or unissued capital stock or other securities of FBHC obligating FBHC to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other securities of FBHC or convertible security or
other similar agreement or commitment. There are no outstanding contractual
obligations of FBHC to repurchase, redeem or otherwise acquire any outstanding
shares of FBHC Common Stock and there are no outstanding stock appreciation
rights or similar rights granted by FBHC, except as otherwise disclosed on
Schedule 3.3(a). There are no voting trusts or other agreements with respect to
the voting of FBHC Common Stock (i) to which FBHC is a party or (ii) to FBHC's
knowledge, to which any other Person is a party. Except for the FBHC
Debentures, no bonds, debentures, notes or other indebtedness having the right
to vote (or convertible into or exercisable for securities having the right to
vote) on any matters on which Shareholders may vote are issued and outstanding,
and none will be outstanding as of the Effective Time. All outstanding FBHC
Common Stock was issued, and all shares of Common Stock issuable pursuant to
FBHC Stock Options, the FBHC Debentures and the Mitchell Exchange will be
issued, in compliance with or pursuant to an exemption from, Applicable Law.
Except as set forth in Schedule 3.3(b), no Person holds of record, or, to FBHC's
knowledge, beneficially, 5% or more of the outstanding shares of FBHC Common
Stock.
(c) There is no arrangement pursuant to which the stock of any corporation
is held in trust (whether express, resulting or otherwise) for the benefit of
the shareholders of FBHC.
SECTION 3.4 FINANCIAL STATEMENTS AND REPORTS.
(a) FBHC has delivered to the Company true and complete copies of its
(i) Annual Report on Form 10-KSB for the year ended March 31, 1998 (the "FBHC
Annual Report"), as filed with the SEC, which contains FBHC's audited
consolidated statements of financial condition as of March 31, 1998 and 1997 and
related consolidated statements of income, changes in stockholders' equity and
cash flows for the fiscal years ended March 31, 1998, 1997 and 1996, and
(ii) Quarterly
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Report on Form 10-QSB for the three month period ended June 30, 1998 (the
"FBHC Quarterly Report"), as filed with the SEC, which contains the unaudited
consolidated statements of financial condition and related consolidated
statements of income, changes in stockholders' equity and cash flows for the
three-month periods ended June 30, 1998 and 1997. Such financial statements
have been prepared from the books and records of FBHC, present fairly the
financial condition as of the relevant dates, and the results of operations
and cash flows for the relevant periods, all in accordance with generally
accepted accounting principles consistently applied throughout the periods
covered, except as stated therein (subject, in the case of unaudited
financial statements, to the exclusion of normal year-end adjustments and
footnote disclosures required by generally accepted accounting principles).
FBHC does not have any Liabilities of a type which should be included in or
reflected in such financial statements or the notes thereto, whether related
to tax or non-tax matters, accrued or contingent, due or not yet due,
liquidated or unliquidated, or otherwise, except (i) as to the extent
disclosed or reflected in such financial statements, (ii) Liabilities
incurred in the ordinary course of business since June 30, 1998, which
individually or in the aggregate would not result in a Material Adverse
Effect upon FBHC, or (iii) Liabilities under this Agreement and fees and
expenses related thereto. The FBHC Annual Report and the FBHC Quarterly
Report did not, at the respective times at which they were filed, contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
FBHC Annual Report and the FBHC Quarterly Report comply in all material
respects with the applicable requirements of the Exchange Act. FBHC has
delivered to the Company true and complete copies of all management letters
delivered to FBHC by PricewaterhouseCoopers LLP (or any predecessor thereto)
relating to the internal controls of FBHC during any period from and after
March 31, 1995.
(b) FBHC and its Subsidiaries have filed all material documents and
reports required to be filed by them with the OTS, the SEC, the FDIC and any
other Governmental Authority under all other Applicable Laws (the "Governmental
Filings"). All such Governmental Filings, as finally amended or corrected,
complied in all material respects at the time of filing and at the time of any
amended or supplemented filing with all requirements of their respective forms
and with all Applicable Laws.
(c) FBHC has not changed its independent auditing firm since March 31,
1995, and there has been no disagreement (as such term is used in Item 304 of
Regulation S-K promulgated under the Securities Act) between FBHC and its
independent auditing firm(s) since March 31, 1995 concerning any aspect of the
manner in which FBHC maintains its books and records or the manner in which it
has reported upon its financial condition and results of operations during such
period.
SECTION 3.5 COMPLIANCE WITH APPLICABLE LAWS; OPERATING AUTHORITIES.
(a) Except as described in Schedule 3.5(a), the business of FBHC and its
Subsidiaries and any advertising related to such business or otherwise conducted
by or on their behalf, including without limitation the business of originating,
acquiring, holding or disposing of assets and liabilities, is being conducted in
compliance in all material respects with all Applicable Laws, and the forms,
procedures, disclosures and practices now or previously used by it are or were
in compliance in all material respects with all Applicable Laws as in effect at
the relevant times. No formal investigation or review by any Governmental
Authority concerning any possible conflicts or
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violations of Applicable Laws is pending, nor to FBHC's knowledge, is any
such investigation threatened, nor has any such investigation occurred during
the last three years. Since March 31, 1995, no Governmental Authority has
delivered any written notice to FBHC or its Subsidiaries, or to FBHC's
knowledge, otherwise asserted an intention to conduct any such investigation
or review, nor, to FBHC's knowledge, is there any basis for any investigation
or review of the type described above.
(b) Neither FBHC nor any of its Subsidiaries is (i) a party to any written
agreement, stipulation, conditional approval, memorandum of understanding or
notice of determination with any Governmental Authority or (ii) subject to any
judgment, order, decree or directive of such a Governmental Authority which
specifically identifies FBHC or any of its Subsidiaries, that, in either case,
restricts or monitors the conduct of its business, or in any manner relates to
its capital adequacy, credit policies, management or customer base, other than
regular examination reports of regulatory authorities.
(c) FBHC and its Subsidiaries hold all material registrations, licenses,
permits and franchises as are required to conduct their business as now
conducted (including, without limitation, any insurance or securities
activities), and all such licenses, permits and franchises which they hold are
valid and in full force and effect. To FBHC's knowledge, no suspension of any
of the foregoing operating rights or cancellation thereof has been initiated or
threatened and all filings, applications and registrations with respect thereto
are current. Schedule 3.5(c) contains a list of and true, correct and complete
copies of all material registrations, licenses, permits and franchises currently
held by FBHC and its Subsidiaries.
(d) To the knowledge of FBHC, no Person or Persons acting in concert are
deemed to "control" FBHC under the Federal Deposit Insurance Act, as amended,
and the regulations promulgated thereunder.
SECTION 3.6 OTHER ACTIVITIES OF FBHC.
(a) FBHC and its Subsidiaries engage only in activities permissible under
the OTS and applicable FDIC regulations.
(b) Except as set forth on Schedule 3.6(b), FBHC and its Subsidiaries do
not engage in any insurance activities. Schedule 3.5(c) contains a list of and
true and correct copies of all licenses and approvals held by FBHC and its
Subsidiaries (and any of their officers, directors or employees) to conduct any
insurance activities, whether as principal, agent, broker or otherwise.
(c) Except as set forth in Schedule 3.6(c), FBHC and its Subsidiaries do
not engage in any securities sales, underwriting, brokerage, management or
dealing activities, whether as principal or agent, either directly or under
contractual or other arrangements with third parties. Schedule 3.5(c) contains
a list of and true and correct copies of all licenses and approvals held by FBHC
and its Subsidiaries (and any of their officers, directors or employees) to
conduct any such activities.
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(d) Except as set forth on Schedule 3.6(d), neither FBHC nor any of its
Subsidiaries, in connection with activities relating to funds transfers, (i) is
in default under any agreement to which it is a party relating to the transfer
of funds or settlement with respect to such transfers; or (ii) has agreed to be
or, to its knowledge, is liable for consequential damages for its error or delay
in acting on requests for the transfer of funds. FBHC and its Subsidiaries, to
the extent applicable, have adopted procedures to reduce the likelihood of such
errors and delay; have adopted reasonable security procedures for verifying the
authenticity of requests received for the transfer or funds, which procedures
are identified on or attached to Schedule 3.6(d); and are in compliance with
Applicable Law in all material respects relating to the transfer of funds and
settlement with respect thereto with the applicable operating laws of each funds
transfer system of which they are members or by which they are bound.
(e) FBHC and its Subsidiaries do not engage in any trust activities.
SECTION 3.7 CONTRACTS AND COMMITMENTS.
(a) Except for Plans, Employee Agreements, deposits, securities sold under
repurchase agreements, bankers' acceptances and loans and extensions of credit
by the Association in the ordinary course of business, Schedule 3.7(a) contains
a list of each agreement that: (i) obligates FBHC or any of its Subsidiaries to
pay an amount of $50,000 or more in any twelve-month period; (ii) binds FBHC or
any of its Subsidiaries and has an unexpired term in excess of two years and
requires aggregate payments by any party of $50,000 or more; (iii) relates to
the purchase or sale by FBHC or any of its Subsidiaries of any loan (including
any participation interest), lease or other extension or commitment to extend
credit or any interest therein, or the servicing rights or obligations with
respect thereto, in each case for an aggregate amount exceeding $50,000, whether
or not servicing rights or obligations have been retained by FBHC;
(iv) restricts FBHC or any of its Subsidiaries (or would, to FBHC's knowledge,
restrict the Company or any of its Subsidiaries after the Effective Time) from
carrying on their business or any part thereof anywhere in the world or from
competing in any line of business with any Person, (v) is a debt obligation of
FBHC or any of its Subsidiaries for borrowed money in excess of $50,000 to the
extent not itemized in the financial statements or notes thereto included as
part of the FBHC Annual Report or the FBHC Quarterly Report, including, without
limitation, guarantees of or agreements to acquire any such debt obligation of
others or for a leasing transaction of a type required to be capitalized in
accordance with SFAS No. 13 (in the case of any such leasing transaction, under
which payments to such third Person exceed $50,000 per annum); (vi) obligates
FBHC or any of its Subsidiaries as guarantor, surety, co-signer, endorser,
co-maker, indemnitor or otherwise (including any "recourse" sale of assets) in
respect of the obligations of any other Person (other than routine endorsements
and other routine bank collection obligations entered into in the ordinary
course of the operations of the Association) in the amount of $50,000 or more;
(vii) is an agreement involving the payment of a commission in the amount of
$10,000 or more per annum to any Person; (viii) obligates FBHC or any of its
Subsidiaries in an amount of $50,000 or more in respect of any capital
expenditure or commitment therefor for additions to property, facilities,
equipment or leasehold interests; (ix) is a lease of personal property involving
aggregate payments by or to FBHC or any of its Subsidiaries of $50,000 or more;
(x) is a mortgage, pledge, conditional sales contract, security agreement,
option or any other similar agreement with respect to any asset of FBHC or any
of its Subsidiaries (other than as mortgagee, secured party or deed of trust
beneficiary in the ordinary course of its lending
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business) in property having a value of $150,000 or more to the extent not
itemized in the financial statements or notes thereto included as part of the
FBHC Annual Report or the FBHC Quarterly Report; (xi) is an agreement for the
sale of any property or assets having a value of $150,000 or more in which
FBHC or any of its Subsidiaries has an ownership interest (other than
leasehold interests that do not become subject to termination upon such sale)
or for the grant of any preferential right to purchase any such property or
asset (excluding properties and assets in which FBHC or any of its
Subsidiaries hold a security interest granted in the ordinary course of their
lending business); or (xii) involves the ownership or licensing of software
or hardware or involves the provision of data processing services (other than
incidental software products involving annual expenditures of less than
$10,000). All items included or required to be included in Schedule 3.7(a)
are being referred to herein as "Scheduled Contracts." FBHC has delivered to
the Company true and complete copies of each of the Scheduled Contracts.
(b) Except as disclosed in Schedule 3.7(b), to the knowledge of FBHC, each
Scheduled Contract is a legal, valid and binding obligation enforceable in
accordance with its terms (except as may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the rights of creditors
generally and the availability of equitable remedies), and is in full force and
effect; FBHC or its applicable Subsidiary has duly performed all of its
obligations thereunder to the extent that such obligations to perform have
accrued; there are no breaches, violations, defaults (or events that have
occurred that with notice, lapse of time or the happening or occurrence of any
other event would constitute a default) or allegations or assertions of any of
the foregoing by FBHC or its applicable Subsidiary or, to FBHC's knowledge, any
other party under any such agreement, except for such non-performances,
breaches, violations or defaults which could not in the aggregate reasonably be
expected to cause a Material Adverse Effect on FBHC; each such agreement was
entered into in the ordinary course of business consistent with prudent banking
practice; and, except as disclosed in Schedule 3.7(b) or as a result of the
consummation of the Merger or the Bank Merger, no breaches disclosed therein,
individually, could reasonably be expected to result in a loss to FBHC in excess
of $50,000 and all of such breaches, in the aggregate, could not reasonably be
expected to result in a loss to FBHC in excess of $100,000.
SECTION 3.8 BROKER'S AND FINDER'S FEES. Except as disclosed in
Schedule 3.8, neither FBHC, nor anyone acting on its behalf has paid or become
obligated to pay any fee or commission to any broker, finder, intermediary,
financial advisor or financial consultant or other Person (other than legal and
accounting advisors acting as such) in connection with the transactions
contemplated hereby (including, without limitation, any restructuring of
obligations, refinancings or other transactions that have been entered into as
part of the transactions contemplated hereby) and, except as stated above, no
Person is entitled to receive from FBHC any such fee or commission.
SECTION 3.9 CORPORATE RECORDS; OTHER INFORMATION. The respective minute
books of FBHC and its Subsidiaries constitute complete and accurate records of
all material actions taken by their respective Boards of Directors, committees
of the Boards of Directors and shareholders. All documents and other written
information as to existing facts relating to FBHC and its Subsidiaries and their
respective assets and liabilities provided to the Company by FBHC or its agents
in connection with this Agreement are true and complete in all material respects
except to the extent that any documents or other written information was later
specifically supplemented or corrected
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prior to the date of this Agreement with additional documents or written
information that was provided to the Company.
SECTION 3.10 REAL PROPERTY OWNED OR LEASED.
(a) Other than Real Estate Owned, Schedule 3.10(a) contains a true,
correct and complete list of all real property owned or leased by FBHC and its
Subsidiaries (the "FBHC Real Property"). FBHC has delivered to the Company true
and complete copies of all of its deeds, leases and title insurance policies for
the properties referred to in Schedule 3.10(a).
(b) No lease with respect to any FBHC Real Property and no deed with
respect to any FBHC Real Property contains any restrictive covenant that
materially restricts the use, transferability or value of such FBHC Real
Property. To FBHC's knowledge, each of such leases is a legal, valid and binding
obligation enforceable in accordance with its terms (except as may be limited by
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the
rights of creditors generally and the availability of equitable remedies), and
is in full force and effect; there are no existing defaults by FBHC or any of
its Subsidiaries or, to FBHC's knowledge, the other party thereunder; to FBHC's
knowledge, there are no allegations or assertions of such by any party under
such agreement or any events that with notice, lapse of time or the happening or
occurrence of any other event would constitute a default thereunder.
(c) None of the buildings and structures located on any FBHC Real
Property, nor any appurtenances thereto or equipment therein, nor the operation
or maintenance thereof, violates in any material manner any restrictive
covenants or encroaches on any property owned by others, nor does any building
or structure of third parties encroach upon any FBHC Real Property, except for
those violations and encroachments which in the aggregate could not reasonably
be expected to cause a Material Adverse Effect on FBHC. No condemnation
proceeding is pending or, to FBHC's knowledge, threatened, which would preclude
or materially impair the use of any FBHC Real Property in the manner in which it
is currently being used.
(d) FBHC and its Subsidiaries have good and indefeasible title to, or a
valid and enforceable leasehold interest in, or a contract vendee's interest in,
FBHC Real Property, and such interest is free and clear of all liens, charges or
other encumbrances, except (i) statutory liens for amounts not yet delinquent or
which are being contested in good faith through proper proceedings and
(ii) those liens related to real property taxes, local improvement district
assessments, easements, covenants, restrictions and other matters of record
which do not individually or in the aggregate materially adversely affect the
use and enjoyment of the relevant real property.
(e) All buildings and other facilities used in the business of FBHC and
its Subsidiaries are adequately maintained and are free from defects which could
materially interfere with the current or future use of such facilities.
SECTION 3.11 PERSONAL PROPERTY. FBHC and its Subsidiaries have good title
to, or a valid leasehold interest in, all personal property, whether tangible or
intangible, used in the conduct of their business (the "FBHC Personalty"), free
and clear of all liens, charges or other encumbrances, except (a) statutory
liens for amounts not yet delinquent or which are being contested in good faith
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through proper proceedings and (b) such other liens, charges, encumbrances and
imperfections of title as do not individually or in the aggregate materially
adversely affect the use and enjoyment of the relevant FBHC Personalty. Subject
to ordinary wear and tear, the FBHC Personalty is in good operating condition
and repair and is adequate for the uses to which it is being put.
SECTION 3.12 ACCOUNTING RECORDS; DATA PROCESSING.
(a) FBHC and its Subsidiaries maintain records that accurately, validly
and fairly reflect their transactions and dispositions of assets and maintain a
system of internal accounting controls, policies and procedures sufficient to
insure that (i) such transactions are executed in accordance with their
management's general or specific authorization, (ii) such transactions are
recorded in such a manner as to permit preparation of financial statements in
accordance with generally accepted accounting principles and any other criteria
applicable to such statements and to maintain accountability for assets,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization, (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals as determined by FBHC and
its Subsidiaries and appropriate action is taken with respect to any differences
and (v) records of such transactions are retained, protected and duplicated in
accordance with prudent banking practices and applicable regulatory
requirements.
(b) The data processing equipment, data transmission equipment, related
peripheral equipment and software used by FBHC and its Subsidiaries in the
operation of their business to generate and retrieve such records (whether owned
or leased by FBHC or any of its Subsidiaries, or provided under any agreement or
other arrangement with a third party for data processing services) are adequate
for the needs of FBHC and its Subsidiaries.
SECTION 3.13 ABSENCE OF CERTAIN CHANGES. Except as disclosed in
Schedule 3.13, there has not been since June 30, 1998:
(a) any change in or effect on the business of FBHC and its Subsidiaries
or any occurrence, development or event of any nature, that has had or may
reasonably be expected to have, together with all such other changes and
effects, a Material Adverse Effect on FBHC;
(b) any direct or indirect redemption, purchase or other acquisition of
shares of FBHC's Common Stock, convertible securities or securities exercisable
for FBHC Common Stock or other capital stock of FBHC, by FBHC; any declaration,
setting aside or payment of any dividend by FBHC other than its regular
quarterly dividend in the amount of $.10 per share; or any alteration of any
right attaching to any shares of capital stock of FBHC; or any combination or
subdivision of any shares of capital stock of FBHC;
(c) any increase in the compensation or benefits payable or to become
payable by FBHC or any of its Subsidiaries, including, without limitation,
compensation or benefits under any Plan (as defined in Section 3.17 hereof)
other than as set forth in Schedule 3.13(c), pursuant to Employee Agreements, as
may be required to comply with Applicable Law or consistent with past practices;
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(d) any amendment or termination of any agreement to which FBHC is a
party, other than amendments or terminations which do not and will not,
individually or in the aggregate, have a Material Adverse Effect on FBHC;
(e) any adoption, assumption or entrance into any Plan or, except as
required by Applicable Law or the current provisions of any Plan, the amendment
or any other action including, but not limited to, acceleration of vesting and
waiver of performance criteria with respect to any Plan;
(f) any amendment to the Certificate of Incorporation or Bylaws of FBHC or
any of the organizational documents of any of the Subsidiaries;
(g) any change by FBHC in accounting principles or methods, except as
required by the Financial Accounting Standards Board ("FASB") or FDIC or OTS
regulations and listed on Schedule 3.13(g);
(h) any loss, damage or destruction (whether or not covered by insurance)
affecting any of the tangible assets or business of FBHC and its Subsidiaries
that may involve a loss of more than $50,000, individually, or $150,000, in the
aggregate (including deductibles), in excess of applicable insurance coverage;
or
(i) any sale, transfer or other disposition of any material properties or
assets of FBHC and its Subsidiaries except in the ordinary course of business.
SECTION 3.14 LITIGATION.
(a) Schedule 3.14(a) contains a true, correct and complete list, as of the
date of this Agreement, of all suits, claims, actions, investigations or
proceedings of any nature by any Person that are pending or, to FBHC's
knowledge, threatened (as used in this Agreement, the term "threatened" shall
include matters that are under consideration or investigation whether or not any
formal demand has been made) (i) against or otherwise involving, directly or
indirectly, FBHC or any of its Subsidiaries, or any of their properties
(including, without limitation, any such matter with respect to Taxes), or
(ii) against or otherwise involving, directly or indirectly, any officer,
director, employee or agent of FBHC or any of its Subsidiaries (in connection
with such officer's, director's, employee's or agent's activities on behalf of
them or that otherwise relate, directly or indirectly, to FBHC or any of its
Subsidiaries or any of their properties, securities or activities).
(b) Schedule 3.14(b) contains a true, correct and complete list as of the
date of this Agreement of all pending suits, claims, actions, investigations and
proceedings of any nature involving claims in the amount of $50,000 or more or
involving claims for specific performance or injunctive relief by or on behalf
of FBHC or any of its Subsidiaries, or any officer, director, employee or agent
thereof that relate, directly or indirectly, to FBHC or any of its Subsidiaries
or any of their properties, securities or activities, including, without
limitation, the types of actions referred to in Section 3.14(a), but excluding
routine collection actions involving single family home loans and consumer loans
in which the debtor has not asserted a counterclaim of $50,000 or more.
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SECTION 3.15 TAX MATTERS.
(a) DEFINITIONS. For purposes of this Agreement, the following
definitions shall apply:
(i) The term "Taxes" shall mean all taxes, however denominated,
including, without limitation, any interest, penalties or other additions
that may become payable in respect thereof, imposed by any Governmental
Authority, which taxes shall include, without limiting the generality of
the foregoing, all income or profits taxes (including, without limitation,
federal income taxes and state income taxes), payroll and employee
withholding taxes, back-up withholding and other withholding taxes,
unemployment insurance, social security taxes, sales and use taxes, AD
VALOREM taxes, excise taxes, franchise taxes, gross receipts taxes,
business license taxes, occupation taxes, real and personal property taxes,
stamp taxes, environmental taxes, transfer taxes, workers' compensation and
Pension Benefit Guaranty Corporation premiums, and other obligations of the
same or of a similar nature to any of the foregoing, which FBHC or any of
its Subsidiaries is required to pay, withhold or collect.
(ii) The term "Returns" shall mean all reports, estimates,
declarations of estimated tax, information statements and returns required
to be prepared or filed in connection with, any Taxes.
(b) RETURNS FILED AND TAXES PAID. FBHC and its Subsidiaries have filed
with the appropriate agencies all material Returns required to be filed, and
such Returns are true, correct and complete in all material respects. All Taxes
shown to be payable on the Returns or on subsequent assessments with respect
thereto have been paid in full on a timely basis, and no other Taxes are owing
or payable by FBHC or its Subsidiaries with respect to items or periods covered
by such Returns or with respect to any period prior to the date of this
representation and warranty. No security interests, liens, encumbrances,
attachments or similar interests exist on or with respect to any of the assets
of FBHC or its Subsidiaries that arose in connection with any failure or alleged
failure to pay any Taxes. FBHC and its Subsidiaries have withheld and paid all
Taxes required to have been withheld and paid in connection with amounts paid or
owing to any officer, director, employee or agent (including, without
limitation, any independent contractor, foreign Person or other third Person) in
compliance with all tax withholding provisions of applicable federal, state,
local and foreign law (including, without limitation, income, social security,
employment tax withholding, and withholding under Code Sections 1441 through
1445). FBHC and its Subsidiaries have timely complied in all material respects
with all requirements under Applicable Laws relating to information, reporting
and withholding and other similar matters for customer and other accounts
(including back-up withholding and furnishing of Forms 1099 and all similar
reports).
(c) TAX RESERVES. With respect to the periods for which Returns have not
yet been filed, FBHC and its Subsidiaries have established adequate reserves
determined in accordance with generally accepted accounting principles for the
payment of all material Taxes.
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(d) RETURNS FURNISHED. FBHC has delivered or made available to the
Company true and complete copies of FBHC's federal income tax returns for all
periods for which the statute of limitations has not expired. FBHC has made
available to the Company true and complete copies of all other Returns and other
reports and statements relating to Taxes arising during such periods, including,
without limitation, income tax audit reports, statements or income or gross
receipts tax, franchise tax, sales tax and transfer tax, deficiencies, and
closing or other agreements relating to income or gross receipts tax, franchise
tax, sales tax and transfer tax received by FBHC in the possession of FBHC or
any of its Subsidiaries. FBHC will promptly furnish to the Company true and
correct copies of any other Returns filed by FBHC or any of its Subsidiaries
prior to the Closing Date. Except as set forth on Schedule 3.15(d), neither
FBHC nor any of its Subsidiaries is (nor ever has been) a party to any tax
sharing agreement.
(e) TAX DEFICIENCIES; AUDITS; STATUTES OF LIMITATIONS. Except as set
forth in Schedule 3.15(e), (i) no deficiencies have been formally asserted with
respect to Taxes that remain unpaid; (ii) neither FBHC nor any of its
Subsidiaries is a party to any formal action or proceeding for assessment or
collection of Taxes, and no such action or proceeding has been asserted or
threatened against FBHC or any of its Subsidiaries or any of their assets; and
(iii) no waiver or extension of any statute of limitations is in effect with
respect to Taxes or Returns. Except as set forth in Schedule 3.15(e), the
Returns for all tax years for which the statute of limitations has not expired
have never been audited by a Governmental Authority (which term includes any
taxing authority), nor is any such audit in process, pending or threatened.
SECTION 3.16 EMPLOYMENT AND SIMILAR AGREEMENTS; OBLIGATIONS UPON CHANGE IN
CONTROL. Except as set forth in Schedule 3.16 or Schedule 3.17(a), there are no
written or oral employment, consulting, non-competition, retirement, parachutes,
severance or indemnification agreements or other agreements of any nature
whatsoever (collectively, "Employee Agreements") between FBHC or any of its
Subsidiaries, on the one hand, and any officer, director, employee or agent
thereof, or any of their respective family members, on the other hand,
including, without limitation, any such agreement concerning the continued
employment or use of such officer, director, employee, agent or family member
after the consummation of the transactions contemplated by this Agreement, or
any other benefits to be granted to any such officer, director, employee, agent
or family member, upon, after or in connection with the consummation of the
transactions contemplated by this Agreement. Except as set forth in
Schedule 3.16 and except for FBHC Stock Options and shares issued under the FBHC
Recognition and Retention Plan ("FBHC RRP"), there are no such Employee
Agreements or any other agreements under which the transactions contemplated by
this Agreement (including, without limitation, the change in control resulting
from the Merger) (i) will require any payment by FBHC or any of its Subsidiaries
to, or any consent or waiver from, any officer, director, employee or agent
thereof, or any other Person, or (ii) will result in a change of any nature in
the rights of any party under an agreement with any officer, director, employee
or agent of FBHC or any of its Subsidiaries, or any other Person, including,
without limitation, any acceleration or change in the award, grant, vesting or
determination of options, warrants, rights, severance payments, or other
contingent obligations of any nature whatsoever of FBHC or any of its
Subsidiaries. Except as set forth in Schedule 3.16, neither FBHC nor any of its
Subsidiaries has any agreements with any employee or officer that are
inconsistent with the status of all employees and officers thereof being
"at-will" employees. Each reference in this Agreement to "officer," "director,"
"employee" or "agent" of FBHC or any of its Subsidiaries, unless otherwise
specified, shall include,
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without limitation, consultants of FBHC or any of its Subsidiaries. FBHC has
delivered to the Company true, correct and complete copies of all Employee
Agreements.
SECTION 3.17 BENEFIT PLANS.
(a) FBHC has delivered to the Company true and complete copies of all
Plans (as defined below), and related trusts, if applicable, including all
amendments thereto. FBHC has also delivered to the Company, with respect to
each Plan required to file such report and/or description, the most recent
report on Form 5500 and/or the summary plan description, as applicable.
Further, FBHC has delivered the most recent determination letter, if any issued
by the Internal Revenue Service, with respect to any Plan intended to be
qualified under Section 401 of the Code. All Plans are listed on Schedule 3.16
or Schedule 3.18(a). There are no Plans of FBHC or any of its Subsidiaries
which are not evidenced by such written documents. The term "Plan" shall
include each of the following that are sponsored, maintained, or contributed to
by FBHC or any of its Subsidiaries for the benefit of any of the present or
former directors, officers, employees, agents, consultants, or other similar
representatives providing services to or for FBHC or any of its Subsidiaries in
connection with such service or any of the following that have been so sponsored
maintained, or contributed to within six years prior to the date of this
Agreement: (i) any "employee benefit plan" within the meaning of Section 3(3)
of ERISA, (ii) any plans that would be employee benefit plans within the meaning
of Section 3(3) of ERISA if they were subject to ERISA, such as foreign plans
and plans for directors or independent contractors, (iii) any profit-sharing,
pension, deferred compensation, incentive compensation, or bonus plan,
arrangement, contract, or agreement, (iv) any stock option, stock purchase,
stock bonus, stock ownership, stock appreciation rights, phantom stock, or other
stock plan (whether qualified or nonqualified), arrangement, contract, or
agreement, (v) any severance, retainer, consulting, "cafeteria" benefits under
Section 125 of the Code, health, welfare or incentive plan or agreement,
including any post-employment benefits, (iii) any plan, agreement, contract,
program, arrangement, or policy providing for "fringe benefits", including, but
not limited to, vacation, paid holidays, personal leave, employee discount,
educational benefit or similar programs and (iv) any Employee Agreement.
(b) With respect to each Plan:
(i) to the extent applicable, it has been administered in all
material respects in accordance with its terms and all Applicable Laws
applicable to the Plan, including, without limitation, ERISA and the Code;
(ii) no investigation by any Governmental Authority and no actions,
suits or claims (other than routine claims for benefits made in the
ordinary course of Plan administration) are pending, or to the knowledge of
FBHC, threatened or imminent against or with respect to the Plan, the
Plan's assets, FBHC or any employer who is participating (or who has
participated) in any Plan or any fiduciary of the Plan;
(iii) except with respect to Employee Agreements, it provides that
it may be amended or terminated at any time and, except for benefits
already accrued or which will have accrued at the time of Closing, claims
already incurred or benefits protected under Section 411(d) of the Code,
all benefits payable to current, terminated or retired employees
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or any beneficiary, including, without limitation, post-employment health
care or insurance benefits, if any, may be amended or terminated by FBHC
or the relevant employer at any time without liability;
(iv) no event has occurred and, to the knowledge of FBHC, there
exists no condition or set of circumstances in connection with which FBHC
or any of its Subsidiaries could be subject to any liability under the
terms of such Plan, ERISA, the Code, or any other Applicable Law, other
than any condition or set of circumstances that could not reasonably be
expected to have a Material Adverse Effect on FBHC; and
(v) to the knowledge of FBHC, there is no matter pending (other
than routine qualification determination filings) with respect to any Plan
before the Internal Revenue Service, the Department of Labor, or any other
Governmental Authority.
(c) With respect to each Plan which is an employee benefit plan, as
defined under Section 3(3) of ERISA:
(i) no prohibited transaction (as defined in Section 406 of ERISA
or Section 4975 of the Code) or breach of fiduciary responsibility has
occurred that could result in a Material Adverse Effect on FBHC; and
(ii) except as set forth in Schedule 3.17(c) and except for any
non-compliance that would not have a Material Adverse Effect on FBHC, all
reports, forms and other documents required to be filed with any
Governmental Authority or distributed to Plan participants (including,
without limitation, summary plan descriptions, Forms 5500 and summary
annual reports) have been timely filed (if applicable) and distributed (if
applicable) and were accurate. FBHC has made available for inspection by
the Company copies of all such reports, forms and documents required to
have been filed or distributed since January 1, 1995.
(d) Except as set forth in Schedule 3.17(d), each Plan that is intended to
qualify under Section 401(a) of the Code (i) satisfies in form the requirements
of such Section except to the extent amendments are not required by law to be
made yet, (ii) has received a favorable determination letter from the Internal
Revenue Service regarding such qualified status, (iii) has not, since receipt of
the most recent favorable determination letter, been amended, and (iv) has not
been operated in a way that would adversely affect its qualified status.
(e) Neither FBHC nor any of its Subsidiaries has within the past six years
(i) maintained or made any contribution to, (ii) been a member of a controlled
group which has maintained or contributed to, or (iii) been under common control
with an employer that maintained or contributed to, any Plan subject to Title IV
of ERISA, (including a Multiemployer Plan), Section 302 of ERISA or Section 412
of the Code.
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(f) All contributions required to be made to each Plan pursuant to its
terms and the provisions of ERISA, the Code, or any Applicable Law have been
timely made.
(g) All insurance premiums have been paid in full, subject only to normal
retrospective adjustments in the ordinary course, with regard to the Plans for
policy years or other applicable policy periods ending before the date of this
representation and have been paid as required under the policies for policy
years or other applicable policy periods beginning on or before the date of its
representation and ending on or after such Closing Date.
(h) All expenses and Liabilities relating to all of the Plans have been
properly accrued on FBHC's consolidated books and records in accordance with
generally accepted accounting principles.
(i) As to any Plan intended to be qualified under Section 401(a) of the
Code, there has been no termination or partial termination of the Plan within
the meaning of Section 411(d)(3) of the Code.
(j) In connection with the consummation of the transactions contemplated
by this Agreement, no payments of money or other property, acceleration of
benefits, or provision of other rights have been or will be made under any of
the Plans that would be reasonably likely to be nondeductible under Section 280G
of the Code, whether or not some other subsequent action or event would be
required to cause such payment, acceleration, or provision to be triggered.
(k) The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby will not (i) require FBHC or any of its
Subsidiaries to make a larger contribution to, or pay greater benefits or
provide other rights under any Plan (other than the FBHC Stock Options, the FBHC
RRP and the Employee Agreements) than it otherwise could, whether or not some
other subsequent action or event would be required to cause such payment or
provision to be triggered, or (ii) create or give rise to any additional vested
rights or service credits under any Plan (other than the FBHC Stock Options, the
FBHC RRP and the Employee Agreements), whether or not some subsequent action or
event would be required to cause such creation or acceleration to be triggered.
(l) No Plan provides retiree medical or retiree life insurance benefits to
any Person and neither FBHC nor any of its Subsidiaries is contractually or
otherwise obligated (whether or not in writing) to provide any Person with life
insurance or medical benefits upon retirement or termination of employment,
other than as required by the provisions of Sections 601 through 608 of ERISA
and Section 4980B of the Code.
(m) The written vacation policies of FBHC and its Subsidiaries do not
provide for carryover of vacation from one calendar year to the next.
SECTION 3.18 LABOR AND EMPLOYMENT MATTERS. Except to the extent set forth
in Schedule 3.18, (a) FBHC and its Subsidiaries are and have been in compliance
with all Applicable Laws respecting employment and employment practices, terms
and conditions of employment, wages and hours, including, without limitation,
the Immigration Reform and Control Act ("IRCA"), the
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Worker Adjustment and Retraining Notification Act ("WARN"), any Applicable
Law respecting employment discrimination, disability rights and benefits,
equal opportunity, plant closure issues, affirmative action, worker's
compensation, employee benefits, severance payments, labor relations,
employee leave issues, wage and hour standards, occupational safety and
health requirements and unemployment insurance and related matters, and is
not engaged in and has not engaged in any unfair labor practice, except for
such noncompliances which in the aggregate could not reasonably be expected
to cause a Material Adverse Effect on FBHC; (b) to the knowledge of FBHC, no
investigation or review by or before any Governmental Authority concerning
any possible conflicts with or violations of any such Applicable Law is
pending, nor is any such investigation threatened, nor has any such
investigation occurred during the last three years and no Governmental
Authority has provided any notice to FBHC or otherwise asserted an intention
to conduct any such investigation or review, nor is there any basis for any
such investigation or review; (c) there is no labor strike, dispute, slowdown
or stoppage actually pending or, to FBHC's knowledge, threatened against or
directly affecting FBHC or any of its Subsidiaries; (d) no union
representation question or, to FBHC's knowledge, union organizational
activity exists respecting the employees of FBHC or any of its Subsidiaries;
(e) no collective bargaining agreement exists which is binding on FBHC or any
of its Subsidiaries, nor has FBHC or any of its Subsidiaries been a party to
any collective bargaining agreement within the last ten years; (f) neither
FBHC nor any of its Subsidiaries has experienced any work stoppage or other
labor difficulties; (g) neither FBHC nor any of its Subsidiaries is
delinquent in payments to any of its officers, directors, employees or agents
for any wages, salaries, commissions, bonuses or other direct compensation
for any services performed by them or amounts required to be reimbursed to
such officers, directors, employees or agents; (h) except as provided in any
Plan or Employee Agreement, neither FBHC nor any of its Subsidiaries has done
anything or entered into any agreement that would cause FBHC or any of its
Subsidiaries, the Company or the Surviving Corporation to be liable to any of
said officers, directors, employees or agents, in the event of termination
for any reason of the employment of any said officers, directors, employees
or agents, for so-called "severance pay" or any other similar payments or
benefits, including, without limitation, post-employment healthcare (other
than pursuant to COBRA) or insurance benefits; and (i) within the three-year
period prior to the date hereof there has not been any termination of
employment of any officer, director, employee or agent of FBHC or any of its
Subsidiaries who receives salary or compensation in excess of $40,000 per
annum or any termination of any officer, director, employee or agent of FBHC
or any of its Subsidiaries that could result in a Liability to the Company in
excess of $40,000. In furtherance and not in limitation of the
representations and warranties set forth in Section 3.14, there are no
pending or, to FBHC's knowledge, threatened suits, claims, actions, charges,
investigations or proceedings of any nature (A) under or alleging violation
of IRCA, WARN or any Applicable Law respecting employment and employment
practices, including, without limitation, discrimination, disability rights
or benefits, equal opportunity, plant closures, affirmative action, worker's
compensation, employee benefits, severance payments, labor relations,
employee leave issues, wage and hour standards, occupational safety and
health requirements or unemployment insurance and related matters, (B)
relating to alleged unfair labor practices (or the equivalent thereof under
any Applicable Law).
SECTION 3.19 CERTAIN INTERESTS. Except as set forth in Schedule 3.19, to
FBHC's knowledge: (i) no officer, director, employee or agent of FBHC or any of
its Subsidiaries, any of their respective family members, any corporation or
organization (other than FBHC or any of its Subsidiaries) of which any of the
foregoing Persons is an officer, director or beneficial owner of 10%
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or more of any class of its equity securities, or any trust or other estate
in which any of the foregoing Persons has a substantial beneficial interest
or as to which such Person serves as a trustee or in a similar capacity, nor
any Affiliate of FBHC or any of its Subsidiaries, nor any current or former
beneficial owner of 5% or more of any of the outstanding stock of FBHC has
any material interest in any property, real or personal, tangible or
intangible, used in or pertaining to the business of FBHC or any of its
Subsidiaries or in any transaction or series of similar transactions to which
FBHC or any of its Subsidiaries is a party; (ii) no such Person is indebted
to FBHC or any of its Subsidiaries except for (A) normal business expense
advances and (B) loans that have been entered into in the ordinary course of
business on terms no less favorable to such Person, or the lender, as the
case shall be, than if the loan had been entered into on an arm's length
basis pursuant to normal commercial terms and conditions and in compliance
with Applicable Law; (iii) neither FBHC nor any of its Subsidiaries is
indebted to any such Person except for amounts due under normal salary or
reimbursement or ordinary business expenses; and (iv) no such Person is a
party to an agreement (other than an Employee Agreement, a Plan, FBHC Stock
Options or agreements under the FBHC RRP) with FBHC or any of its
Subsidiaries. Except as set forth in Schedule 3.19, to FBHC's knowledge,
none of the Persons or entities described in clause (i) hereto has any other
relationship or has engaged or proposes to engage in any other transaction or
series of transactions that would be required to be disclosed pursuant to
Item 404 of Regulation S-B under the Securities Act.
SECTION 3.20 REGISTRATION STATEMENT AND REGULATORY APPLICATIONS.
(a) When the Prospectus/Proxy Statement referred to in Section 5.1, or any
amendment or supplement thereto, shall be mailed to the Shareholders, and at all
times subsequent to such mailing up to and including the date of the
Shareholders' Meeting, (i) such Prospectus/Proxy Statement and all amendments or
supplements thereto, with respect to all information set forth therein provided
by FBHC or its Subsidiaries, will comply in all material respects with the
provisions (to the extent applicable) of the Securities Act and the Exchange Act
and the rules and regulations of the SEC thereunder and (ii) the information set
forth in the Prospectus/Proxy Statement with respect to FBHC and its
Subsidiaries, as filed with the SEC under the Securities Act and the Exchange
Act and the Registration Statement as filed with the SEC under the Securities
Act, will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
contained therein not misleading.
(b) When the applications for the Regulatory Approvals are filed, or
amended or supplemented, information that is provided to the Company by FBHC for
inclusion in applications for such Regulatory Approvals shall comply in all
material respects with all Applicable Laws and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading.
SECTION 3.21 INSURANCE.
(a) Schedule 3.21 contains an accurate and complete description of all
policies of general liability, theft, life, fire, worker's compensation, health,
directors and officers, and other forms of insurance owned or held by FBHC and
its Subsidiaries (other than title insurance, FHA mortgage insurance and private
mortgage insurance obtained in the ordinary course of business that, to FBHC's
knowledge, have been entered into on an arm's length basis pursuant to normal
commercial
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terms and conditions) specifying the insurer, amount of coverage, deductions,
exclusions, type of insurance, policy number and any pending claims
thereunder involving more than $50,000 of which FBHC has knowledge.
(b) All policies of general liability, theft, life, fire, worker's
compensation, health, directors and officers, and other forms of insurance owned
or held by FBHC and its Subsidiaries (i) are in full force and effect and all
premiums that are due and payable with respect thereto are currently paid;
(ii) are sufficient for compliance with all requirements of Applicable Law and
of all agreements to which FBHC or any of its Subsidiaries is a party;
(iii) are, to FBHC's knowledge, valid, outstanding and enforceable policies
(except as may be limited by bankruptcy, insolvency, moratorium, reorganization
or similar laws affecting the rights of creditors generally and the availability
of equitable remedies); and (iv) to FBHC's knowledge will remain in full force
and effect through the Closing Date. No insurer under any such policy or bond
has canceled or indicated an intention to cancel or not to renew any such policy
or bond effective at any time prior to the Closing Date or generally disclaimed
liability thereunder. Neither FBHC nor any of its Subsidiaries is in default
under any such policy or bond, and all material claims thereunder have been
filed in a timely fashion. Neither FBHC nor any of its Subsidiaries has been
denied or had revoked or rescinded any policy of insurance during the last three
fiscal years.
SECTION 3.22 ENVIRONMENTAL MATTERS. To the knowledge of FBHC, neither
FBHC nor any of its Subsidiaries, nor any properties or businesses owned or
operated by any of them, whether or not held in a fiduciary or representative
capacity, has been or is in violation of or liable under any Environmental Law
(as hereinafter defined). There are no actions, suits or proceedings, or
demands, claims, notices or investigations (including, without limitation,
notices, demand letters or requests for information from any environmental
agency) instituted, pending, or, to the knowledge of FBHC, threatened relating
to the liability of any properties or businesses owned or operated by FBHC or
any of its Subsidiaries, whether or not held in a fiduciary or representative
capacity, under any Environmental Law. To the knowledge of FBHC, neither FBHC
nor any of its Subsidiaries is responsible under any Environmental Law for any
release by any Person at or in the vicinity of real property of any contaminant,
pollutant, hazardous substance, hazardous waste, hazardous pollutant, toxic
pollutant, toxic waste or toxic substance ("Contaminant"), including, without
limitation, by spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping or disposing of any such
Contaminant into the environment (collectively, "Release") nor, to the knowledge
of FBHC is FBHC or any of its Subsidiaries responsible for any material costs of
any response action required by virtue of any Release of any Contaminant into
the environment including, without limitation, costs arising from investigation,
removal or remediation of Contaminants, security fencing, alternative water
supplies, temporary evacuation and housing and other emergency assistance
undertaken by any environmental regulatory body or any other person. The
representations contained in the foregoing three sentences are qualified to the
extent that there may be certain exceptions to such representations; however,
all exceptions to such representations in the aggregate could not reasonably be
expected to cause a Material Adverse Effect on FBHC. Notwithstanding the
foregoing, "Contaminant" shall not include materials employed in normal consumer
or office uses, such as gasoline, lubricants, printing materials, cleaners,
disinfectants, pesticides, building materials, fluorescent lights and ballasts,
batteries and refrigerants, as long as such materials are used and stored only
in quantities typical of consumer and office uses. "Environmental Law" means
any federal, state, local or foreign law, statute, ordinance, rule,
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regulation, code, license, permit, authorization, approval, consent, order,
judgment, decree, injunction or agreement with any Governmental Authority
relating to (i) the protection, preservation or restoration of the
environment (including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface soil, plant and
animal life or any other natural resource), and/or (ii) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release (or threatened release) or disposal of any
substance presently listed, defined, designated or classified as hazardous,
toxic, radioactive or dangerous by any Governmental Authority or otherwise
regulated, whether by type or by quantity, including any material containing
any such substance as a component.
SECTION 3.23 INTELLECTUAL PROPERTY RIGHTS. Schedule 3.23 contains a true,
correct and complete list of all registered trademarks, registered service
marks, trademark and service mark applications, trade names and registered
copyrights presently owned or held by FBHC and its Subsidiaries or used under
license by them in the conduct of their business (the "Intellectual Property").
FBHC and its Subsidiaries own or have the right to use and continue to use the
Intellectual Property in the operation of their business. Except as set forth
on Schedule 3.23, neither FBHC nor any of its Subsidiaries is infringing or
violating any patent, copyright, trademark, service mark, label filing or trade
name owned or otherwise held by any other party, nor has FBHC or any of its
Subsidiaries used any confidential information or any trade secrets owned or
otherwise held by any other party, without holding a valid licence for such use.
Neither FBHC nor any of its Subsidiaries is engaging, nor has it been charged
with engaging, in any kind of unfair or unlawful competition. Neither the
execution, delivery and performance of this Agreement nor the consummation of
the transactions contemplated hereby will in any way impair the right of FBHC or
any of its Subsidiaries or the Surviving Corporation to use, sell, license or
dispose of, or to bring any action for the infringement of, the Intellectual
Property.
SECTION 3.24 SITE LOCATIONS.
(a) Schedule 3.24(a) contains a true, correct and complete list of all
locations of offices in which FBHC and its Subsidiaries are doing business as of
the date hereof, including, without limitation, any branch, loan production and
agency offices. Except as disclosed on Schedule 3.24(a), the Association has
not applied for or received permission to open any additional offices at any
such location or any other locations.
(b) The Association has not filed any application, made any agreement or
taken any other action to discontinue operations at any existing branch or
agency, commence operations at any new branch or agency, or relocate any
existing branch or agency, except for such applications, agreements or other
actions as are set forth in Schedule 3.24(b).
SECTION 3.25 LOANS.
(a) Except as disclosed on Schedule 3.25(a) and except for those matters
which, in the aggregate, could not reasonably be expected to cause a Material
Adverse Effect on FBHC, (i) each outstanding loan, lease or other extension of
credit or commitment to extend credit of FBHC or any of its Subsidiaries is a
legal, valid and binding obligation, is in full force and effect and is
enforceable in accordance with its terms except as may be limited by bankruptcy,
insolvency,
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moratorium, reorganization or similar laws affecting the rights of creditors
generally or equitable principles limiting the right to obtain specific
performance or other similar relief; (ii) FBHC and its Subsidiaries have duly
performed all of their respective obligations thereunder to the extent that
such obligations to perform have accrued; (iii) all documents and agreements
necessary to FBHC or any of its Subsidiaries to enforce such loan, lease or
other extension of credit are in existence and in their possession; (iv) no
claims, counterclaims, set-off rights or other rights exist, nor do the
grounds for any such claim, counterclaim, set-off rights or other rights
exist, with respect to any such loans, leases or other extensions of credit
which could impair the collectability thereof; and (v) each such loan, lease
and extension of credit has been originated and served in accordance with the
lender's then applicable underwriting guidelines, the terms of the relevant
credit documents and agreements and Applicable Law. Except as set forth in
Schedule 3.25(a), as of June 30, 1998: (i) there are no loans, leases, other
extensions of credit or commitments to extend credit of the Association that
have been or, to FBHC's knowledge, should have been classified by the
Association in its reasonable determination as "Other Assets Especially
Mentioned," "Substandard," "Doubtful," "Loss" or any comparable
classification and (ii) as of August 31, 1998, there were no loans due to the
Association as to which any payment of principal, interest or any other
amount is 30 days or more past due.
(b) Schedule 3.25(b) lists all loan commitments of FBHC and its
Subsidiaries (with conforming single family loan commitments and consumer
commitments less than $500,000 listed in the aggregate only) outstanding as of
the date hereof.
SECTION 3.26 ALLOWANCE FOR LOSSES. To FBHC's knowledge, the Association's
allowance for possible credit losses is adequate in relation to the outstanding
loans, leases and other extensions of credit of the Association and is in
accordance with the safety and soundness standards administered by, and the
practices and procedures of, the OTS for federal stock savings and loan
associations, as such standards, practices and procedures may be amended from
time to time (the "OTS Standards").
SECTION 3.27 REAL ESTATE OWNED.
(a) Schedule 3.27(a) contains a true, correct and complete list of all
Real Estate Owned by FBHC and its Subsidiaries, stating with respect to each its
type and carrying value.
(b) All Real Estate Owned is booked at the lower of cost or "fair value."
(c) Except as set forth in Schedule 3.27(c) or reflected in the financial
statements or notes thereto included as part of the FBHC Annual Report or the
FBHC Quarterly Report, FBHC or one of its Subsidiaries has good and indefeasible
title to, or a valid and enforceable leasehold interest in, all of its Real
Estate Owned, and such interest is free and clear of all liens, charges or other
encumbrances, except those related to real property taxes, local improvement
district assessments, easements, covenants, restrictions and other matters of
record that do not individually or in the aggregate materially adversely affect
the use and enjoyment of the relevant real property.
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SECTION 3.28 INTEREST RATE RISK MANAGEMENT INSTRUMENTS.
(a) Schedule 3.28 contains a true, correct and complete list of all
interest rate swaps, caps, floors, and option agreements and other interest rate
risk management arrangements or financial derivative products to which FBHC or
one of its Subsidiaries is a party or by which any of their properties or assets
may be bound. True and complete copies of all such interest rate risk
management agreements and arrangements have been provided to the Company.
(b) All interest rate swaps, caps, floors and option agreements and other
interest rate risk management arrangements to which FBHC or one of its
Subsidiaries is a party or by which any of their properties or assets may be
bound were entered into in the ordinary course of business and, to FBHC's
knowledge, in accordance with prudent banking practice and all applicable rules,
regulations and policies of applicable Governmental Authorities with
counterparties believed to be financially responsible at the time and are legal,
valid and binding obligations enforceable in accordance with their terms (except
as may be limited by bankruptcy, insolvency, moratorium, reorganization or
similar laws affecting the rights of creditors generally and the availability of
equitable remedies), and are in full force and effect. FBHC and its
Subsidiaries have duly performed in all material respects all of their
obligations thereunder to the extent that such obligations to perform have
accrued; and to FBHC's knowledge, there are no breaches, violations or defaults
or allegations or assertions of such by any party thereunder.
SECTION 3.29 DISCLOSURE. Without limiting any of the representations and
warranties contained herein, no representation or warranty by FBHC in this
Agreement, no statement contained in any document (including, without
limitation, the financial statements, the Disclosure Schedule and the
information to be provided pursuant to Section 5.5 hereof), certificate or other
writing and no other information furnished or to be furnished by FBHC to the
Company or any of its representatives pursuant to the provisions hereof or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of material fact or omits or will omit to state any
material fact necessary in order to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby makes the following representations and warranties to
FBHC:
SECTION 4.1 ORGANIZATION.
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas. The Company is a registered
bank holding company pursuant to 12 U.S.C. Sections 1841 ET SEQ.
(b) SW Bank is a national banking association duly organized, validly
existing and in good standing under the laws of the United States of America.
The Company owns directly all of the outstanding capital stock of SW Bank. The
Company owns no other material Subsidiary.
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(c) Each of the Company and SW Bank has all requisite corporate power and
corporate authority to own or lease its properties and to carry on its business
as currently conducted. The nature of the business and activities of the
Company and SW Bank, as currently conducted, does not require either of them to
be qualified or registered to do business in any jurisdiction other than the
State of Texas.
(d) The Company has the corporate power and authority to execute and
deliver this Agreement and perform its obligations hereunder and to consummate
the transactions contemplated herein, subject to any required Regulatory
Approvals.
(e) The Company has delivered to FBHC true and complete copies of the
Articles of Incorporation and Bylaws of the Company and the Articles of
Association and Bylaws of SW Bank. All such documents are in full force and
effect.
SECTION 4.2 BINDING EFFECT. This Agreement has been duly and validly
authorized, executed and delivered by the Company and constitutes the legal,
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms (except as may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the rights of creditors
`generally and the availability of equitable remedies). Neither the execution
and delivery of this Agreement by the Company nor the consummation by the
Company of the transactions contemplated hereby, nor compliance with any of the
provisions hereof, will (i) conflict with or result in a breach of any provision
of the Company's Articles of Incorporation or Bylaws or the Articles of
Association or Bylaws of SW Bank, (ii) conflict with or result in the breach of
any term, condition or provision of, or constitute a default under (upon the
giving of notice, the lapse of time or otherwise), or give rise to any right of
termination, cancellation or acceleration with respect to, or result in the
creation of any lien, charge or encumbrance upon any property or assets of the
Company or SW Bank pursuant to, or otherwise require the consent of any Person
under, any agreement or obligation to which the Company or SW Bank is a party or
by which any of their properties or assets may be bound, which conflict, breach,
default, right, lien or right of consent could reasonably be expected to cause a
Material Adverse Effect on the Company, or (iii) violate or conflict with any
Applicable Laws applicable to the Company or SW Bank or any of their respective
properties or assets, subject to obtaining any necessary approvals of
Shareholders and the Regulatory Approvals specified in Section 5.2(a).
SECTION 4.3 CAPITALIZATION. The authorized capital stock of the Company
consists of 1,000,000 shares of preferred stock, $.01 par value, none of which
shares are issued, and 50,000,000 shares of Company Common Stock, of which
23,206,748 shares were issued and outstanding as of August 31, 1998. All
outstanding shares of Company Common Stock have been and are duly authorized and
validly issued, fully paid and nonassessable and have not been issued in
violation of the preemptive rights of any Person. The shares of Company Common
Stock to be issued to the Shareholders pursuant to the provisions of this
Agreement have been duly authorized, will be validly issued, fully paid and
nonassessable and will not be issued in violation of the preemptive rights of
any Person. At August 31, ,1998 options to purchase a total of 2,707,799 shares
of Company Common Stock were outstanding under the Company's stock option plans,
and a total of 447,093 additional such shares were available for future option
grants under such plans.
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SECTION 4.4 FINANCIAL STATEMENTS AND REPORTS. The Company has delivered
to FBHC true and complete copies of its (i) Annual Report on Form 10-K for the
year ended December 31, 1997 (the "Company Annual Report"), as filed with the
SEC, which contains the Company's audited consolidated balance sheets as of
December 31, 1997 and 1996 and related consolidated statements of income,
changes in shareholders' equity and cash flows for the years ended December 31,
1997, 1996 and 1995, and (ii) Quarterly Report on Form 10-Q for the six-month
period ended June 30, 1998 (the "Company Quarterly Report"), as filed with the
SEC, which contains the unaudited consolidated balance sheets and related
consolidated statements of income, changes in shareholders' equity and cash
flows for the six-month periods ended June 30, 1998 and 1997. Such financial
statements have been prepared from the books and records of the Company and its
Subsidiaries, present fairly the financial position and operating results of the
Company and its Subsidiaries as of the date and during the periods indicated and
have been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods covered, except as stated therein
(subject, in the case of unaudited financial statements, to the exclusion of
normal year-end adjustments and footnote disclosures required by generally
accepted accounting principles). The Company does not have any Liabilities of a
type that should be included in or reflected in such financial statements or the
notes thereto, whether related to tax or non-tax matters, accrued or contingent,
due or not yet due, liquidated or unliquidated, or otherwise, except (i) as to
the extent disclosed or reflected in such financial statements, (ii) Liabilities
incurred in the ordinary course of business since June 30, 1998, which
individually or in the aggregate would not result in a Material Adverse Effect
upon the Company, or (iii) Liabilities under this Agreement and fees and
expenses relating thereto. The Company Annual Report and the Company Quarterly
Report did not at the respective times at which they were filed contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
Company Annual Report and the Company Quarterly Report comply in all material
respects with the applicable requirements of the Exchange Act. The Company has
delivered to FBHC true and complete copies of all management letters delivered
to the Company by PricewaterhouseCoopers LLP (or any predecessor thereto)
relating to the internal controls of the Company during any period from and
after December 31, 1995.
(b) The Company and SW Bank have filed all material documents and reports
required to be filed by them with the OCC, the SEC, the FDIC and any other
Governmental Authority under all other Applicable Laws (the "Governmental
Filings"). All such Governmental Filings, as finally amended or corrected,
complied in all material respects at the time of filing and at the time of any
amended or supplemented filing with all requirements of their respective forms
and with all Applicable Laws.
(c) The Company has not changed its independent auditing firm since
December 31, 1995, and there has been no disagreement (as such term is used in
Item 304 of Regulation S-K promulgated under the Securities Act) between the
Company and its independent auditing firm(s) since December 31, 1995 concerning
any aspect of the manner in which the Company maintains its books and records or
the manner in which it has reported upon its financial condition and results of
operations during such period.
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SECTION 4.5 REGISTRATION STATEMENT AND REGULATORY APPLICATIONS.
(a) When the Prospectus/Proxy Statement referred to in Section 5.1, or any
amendment or supplement thereto, shall be mailed to the Shareholders, and at all
times subsequent to such mailing up to and including the date of the
Shareholders' Meeting, (i) such Prospectus/Proxy Statement and all amendments or
supplements thereto, with respect to all information set forth therein provided
by the Company and its Subsidiaries, will comply in all material respects with
the provisions (to the extent applicable) of the Securities Act and the Exchange
Act and the rules and regulations of the SEC thereunder and (ii) the information
relating to the Company and its Subsidiaries, set forth in the Prospectus/Proxy
Statement as filed with the SEC under the Securities Act and the Exchange Act
and the Registration Statement as filed with the SEC under the Securities Act,
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
contained therein not misleading.
(b) When the applications for the Regulatory Approvals are filed, or
amended or supplemented, the information relating to the Company and its
Subsidiaries or to this Agreement that is provided by the Company or any of its
Subsidiaries shall comply in all material respects with all Applicable Laws and
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
SECTION 4.6 COMPLIANCE WITH APPLICABLE LAWS; OPERATING AUTHORITIES.
(a) The business of the Company and SW Bank and any advertising related to
such business or otherwise conducted by or on their behalf, including without
limitation the business of originating, acquiring, holding or disposing of
assets and liabilities, is being conducted in compliance in all material
respects with all Applicable Laws, and the forms, procedures, disclosures and
practices now or previously used by them are or were in compliance in all
material respects with all Applicable Laws, as in effect at the relevant times.
No formal investigation or review by any Governmental Authority concerning any
possible conflicts or violations of Applicable Laws is pending, nor to the
Company's knowledge, is any such investigation threatened, nor has any such
investigation occurred during the last three years. Since December 31, 1995, no
Governmental Authority has delivered any written notice to the Company or SW
Bank, or to the Company's knowledge, otherwise asserted an intention to conduct
any such investigation or review, nor, to the Company's knowledge, is there any
basis for any investigation or review of the type described above.
(b) Neither the Company nor SW Bank is (i) a party to any written
agreement, stipulation, conditional approval, memorandum of understanding or
notice of determination with any Governmental Authority or (ii) subject to any
judgment, order, decree or directive of such a Governmental Authority, that, in
either case, restricts or monitors the conduct of its business, or in any manner
relates to its capital adequacy, credit policies, management or customer base.
(c) The Company and SW Bank hold all material registrations, licenses,
permits and franchises as are required to conduct their business as now
conducted (including, without limitation, any insurance or securities
activities), and all such licenses, permits and franchises which they hold are
valid and in full force and effect. To the Company's knowledge, no suspension
of any of the
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foregoing operating rights or cancellation thereof has been initiated or
threatened and all filings, applications and registrations with respect
thereto are current.
(d) To the Company's knowledge, no Person or Persons acting in concert are
deemed to "control" the Company under the Federal Deposit Insurance Act, as
amended, and the regulations promulgated thereunder.
SECTION 4.7 ABSENCE OF CERTAIN CHANGES. There has not been since June 30,
1998:
(a) any change in or effect on the business of the Company or SW Bank or
any occurrence, development or event of any nature, that has had or may
reasonably be expected to have, together with all such other changes and
effects, a Material Adverse Effect on the Company;
(b) any direct or indirect redemption, purchase or other acquisition of
shares of the Company's capital stock, convertible securities or securities
exercisable for capital stock of the Company by the Company, any declaration,
setting aside or payment of any dividend by the Company, any alteration of any
right attaching to any shares of capital stock of the Company, or any
combination or subdivision of any shares of capital stock of the Company;
(c) any amendment or termination of any agreement to which the Company or
SW Bank is a party, other than amendments or terminations which do not and will
not, individually or in the aggregate, have a Material Adverse Effect on the
Company;
(d) any amendment to the Articles of Incorporation or Bylaws of the
Company;
(e) any change by the Company in accounting principles or methods, except
as required by the FASB or OCC regulations;
(f) any loss, damage or destruction (whether or not covered by insurance)
affecting any of the tangible assets or business of the Company and SW Bank that
may involve a loss of more than $400,000, individually, or $1,000,000 in the
aggregate (including deductibles) in excess of applicable insurance coverage; or
(g) any sale, transfer or other disposition of any material properties or
assets of the Company or SW Bank except in the ordinary course of business.
SECTION 4.8 LITIGATION. As of the date of this Agreement there are no
suits, claims, actions, investigations or proceedings of any nature by any
Person which are pending or, to the Company's knowledge, threatened (i) against
or otherwise involving, directly or indirectly, the Company or SW Bank, or any
of their properties (including, without limitation, any such matter with respect
to Taxes), or (ii) against or otherwise involving, directly or indirectly, any
officer, director, employee or agent of the Company or SW Bank (in connection
with such officer's, director's, employee's or agent's activities on behalf of
them or that otherwise relate, directly or indirectly, to the Company or SW Bank
or any of their properties, securities or activities), which in the aggregate
have had or may reasonably be expected to have a Material Adverse Effect on the
Company.
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SECTION 4.9 BROKER'S AND FINDER'S FEES. Neither the Company nor anyone
acting on its behalf has paid or become obligated to pay any fee or commission
to any broker, finder, intermediary, financial advisor or financial consultant
or other Person (other than legal and accounting advisors acting as such and
Legg Mason Wood Walker, Incorporated) in connection with the transactions
contemplated hereby (including, without limitation, any restructuring of
obligations, financings or other transactions that have been entered into as
part of the transactions contemplated hereby) and, except as stated above, no
Person is entitled to receive from the Company any such fee or commission.
SECTION 4.10 TAX MATTERS. The Company has filed with the appropriate
agencies all material Returns required to be filed, and such Returns are true,
correct and complete in all material respects. All Taxes shown to be payable on
the Returns or on subsequent assessments with respect thereto have been paid in
full on a timely basis, and no other Taxes are owing or payable by the Company
with respect to items or periods covered by such Returns or with respect to any
period prior to the date of this representation and warranty.
SECTION 4.11 ENVIRONMENTAL MATTERS. To the knowledge of the Company,
neither the Company nor SW Bank, nor any properties or businesses owned or
operated by either of them, whether or not held in a fiduciary or representative
capacity, has been or is in violation of or liable under any Environmental Law.
There are no actions, suits or proceedings, or demands, claims, notices or
investigations (including, without limitation, notices, demand letters or
requests for information from any environmental agency) instituted, pending, or,
to the knowledge of the Company, threatened relating to the liability of any
properties or businesses owned or operated by the Company or SW Bank, whether or
not held in a fiduciary or representative capacity, under any Environmental Law.
The representations contained in this Section 4.11 are subject to the same
qualifications as those set forth in Section 3.22.
SECTION 4.12 ALLOWANCE FOR LOSSES. To the Company's knowledge, SW Bank's
allowance for possible credit losses is adequate in relation to the outstanding
loans, leases and other extensions of credit of SW Bank and is in accordance
with the safety and soundness standards administered by, and the practices and
procedures of, the OCC, as such standards, practices and procedures may be
amended from time to time.
SECTION 4.13 DISCLOSURE. Without limiting any of the representations and
warranties contained herein, no representation or warranty by the Company in
this Agreement, no statement contained in any document (including, without
limitation, the Company Annual Report and the Company Quarterly Report and the
information to be provided pursuant to Section 5.5 hereof), certificate or other
writing and no other information furnished or to be furnished by the Company to
FBHC or any of its representatives pursuant to the provisions hereof or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of material fact or omits or will omit to state any
material fact necessary in order to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading.
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ARTICLE V
COVENANTS OF THE PARTIES
SECTION 5.1 PREPARATION OF REGISTRATION STATEMENT AND PROSPECTUS/PROXY
STATEMENT. FBHC and the Company contemplate that a Registration Statement on
Form S-4 (the "Registration Statement") will be filed with the SEC under the
Securities Act for registration of the Company Common Stock to be issued in
connection with the transactions contemplated hereby and that the parties will
prepare a related Prospectus/Proxy Statement (the "Prospectus/Proxy Statement")
to be mailed to the shareholders of FBHC in connection with the Shareholders'
Meeting. The parties hereby agree to cooperate with each other in preparing and
filing such Registration Statement and Prospectus/Proxy Statement. The parties
hereby further agree (i) to file such Registration Statement with the SEC as
soon as reasonably practicable after the date hereof and (ii) to use their
reasonable efforts to obtain the clearance of the SEC and to issue such
Prospectus/Proxy Statement as soon as practicable thereafter. Without limiting
the generality of the foregoing, nothing shall be contained in the Registration
Statement or the Prospectus/Proxy Statement or any proxy soliciting materials
with respect to any party unless approved by such party, which approval shall
not be unreasonably withheld.
SECTION 5.2 PURSUIT OF REGULATORY APPROVALS.
(a) The parties shall cooperate and use their reasonable efforts (i) to
obtain all necessary approvals, consents, authorizations and the like from
Governmental Authorities required to consummate the Merger and the Bank Merger,
including, without limitation, the approval of the Federal Reserve, the OCC and
such other Persons as may be required under Applicable Law. In addition, the
consummation of the transactions contemplated hereby is subject to the
following:
(i) the expiration of any applicable waiting period with respect
to any of the foregoing matters (including, without limitation, any
extension thereof by reason of a request for additional information or as a
result of any pending or threatened action, suit or proceeding by the U.S.
Department of Justice or the Federal Trade Commission under federal
antitrust laws), and the publication of any notice required by Applicable
Law;
(ii) the declaration of effectiveness of the Registration
Statement, which must not be the subject of a stop order or threatened stop
order on the Closing Date; and
(iii) the shares of Company Common Stock being delivered by the
Company to the Shareholders in exchange for their shares of FBHC Common
Stock having been qualified or registered for offering and sale under the
securities or Blue Sky laws of each jurisdiction in which the Shareholders
reside (or having been exempted therefrom); provided that the Company shall
not be obligated to execute or file any general consent to service of
process or to qualify as a foreign corporation in any jurisdiction in which
it is not so qualified.
All such approvals, together with any other approvals of Governmental
Authorities that are necessary to effectuate the Merger and the Bank Merger, are
referred to herein as the "Regulatory Approvals."
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(b) The Company shall have primary responsibility for the preparation of
all Federal Reserve and OCC applications and filings required in connection with
Section 5.2(a) above, and the parties shall be jointly responsible for the
preparation of all applications and filings, if any, with the OTS required in
connection with Section 5.2(a) above. Each party shall cooperate with the other
party hereto in preparation of all applications for such Regulatory Approvals
and will furnish promptly upon request all documents, information, financial
statements or other materials as may be required in order to complete such
applications. Should the appearance of any of the officers, directors,
employees or agents of either of the parties hereto be requested by either of
the parties or by any Governmental Authority at any hearing or otherwise in
connection with any such application, such party shall promptly use its
reasonable efforts to arrange for those appearances.
SECTION 5.3 OTHER CONSENTS. FBHC and the Company agree to apply for and
reasonably and diligently seek to obtain all waivers, consents and approvals of
other Persons required in connection with the transactions contemplated by this
Agreement, including, without limitation, the consent of any Person which may be
required under any Scheduled Contract. FBHC will take or cause to be taken on a
timely basis all actions necessary with respect to the authorization, adoption
and approval by the Association of the Bank Merger. The Company will take or
cause to be taken on a timely basis all actions necessary with respect to the
authorization, adoption and approval by SW Bank of the Bank Merger.
SECTION 5.4 FBHC ACTIVITIES PENDING CLOSING. Except as otherwise
specifically provided in this Agreement and subject to Applicable Law, from the
date hereof to and including the Effective Time, FBHC and its Subsidiaries
shall, as long as this Agreement remains in effect or unless the Company
otherwise consents in writing (which consent shall not be unreasonably
withheld):
(a) conduct its affairs (including, without limitation, the making of or
agreeing to make any loans or other extensions of credit) only in the ordinary
course of business consistent with prudent banking practice and in accordance
with Applicable Laws and their compliance, loan and other policies, including,
without limitation, using its best efforts to make all changes required upon
completion of any regulatory examination, and use all reasonable efforts to
preserve intact their present business organizations, keep available the
services of their present officers, directors, key employees and agents and
preserve their relationships and goodwill with all Persons having business
dealings with them, PROVIDED that FBHC and its Subsidiaries shall not make or
agree to make any loans or other extensions of credit to any borrower in excess
of $500,000 without the prior consent of the Company, except that the following
types of loans in excess of $500,000 shall not require the prior consent of the
Company: (i) all single family loans of $650,000 or less which are underwritten
to usual and customary secondary market standards and are to be sold in the
secondary market pursuant to takeout commitments obtained in conjunction with
the funding of the loans; (ii) all commercial loans which are to be sold in the
secondary market for which there is an enforceable takeout commitment for the
full amount of such loans in place at the time of closing; and (iii) commercial
loans which are $1,000,000 or less and which are in the ordinary course of
business of FBHC and its Subsidiaries; and provided further, that if the Company
does not disapprove in writing any loan requiring the Company's prior approval
within two business days following its receipt of a request for approval, such
loan shall be deemed approved by the Company.
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(b) refrain from issuing or selling or obligating itself to issue or sell
any shares of its capital stock or any warrants, rights or options to acquire,
or any securities convertible into, any shares of its capital stock, except for
shares issued upon the exercise of FBHC Stock Options, the conversion of FBHC
Debentures or the Mitchell Exchange;
(c) except as set forth in Schedule 3.24(b), refrain from opening or
closing any branch office, or acquiring or selling or agreeing to acquire or
sell, any branch office or any deposit liabilities, and otherwise consult with
and seek the advice of the Company with respect to basic policies relating to
branching, site location and relocation;
(d) not enter into, amend or terminate (other than the annual renewal of
Employment Agreements consistent with past practice) any agreement of the type
that would be required to be disclosed on Schedule 3.7(a), or any other material
agreement, or acquire or dispose of any material amount of assets or
liabilities, except in the ordinary course of business consistent with prudent
banking practices;
(e) not grant any severance or termination pay (other than pursuant to
FBHC's policies in effect on the date hereof) to, or enter into any employment,
consulting, non-competition, retirement, parachute, severance or indemnification
agreement with, any officer, director, employee or agent of FBHC or its
Subsidiaries, either individually or as part of a class of similarly situated
persons;
(f) not cause or allow any of the things listed in Section 3.13 to occur
(except with respect to Section 3.13(a) and (h), FBHC and its Subsidiaries shall
use their best efforts to not cause or allow any of the things listed therein to
occur), except that FBHC may declare and pay a dividend to holders of FBHC
Common Stock with respect to the results for the quarters ended September 30,
1998 and December 31, 1998 in an amount equal to the cash dividend paid to such
holders for the quarter ended June 30, 1998 and FBHC may redeem the FBHC
Debentures in accordance with their terms;
(g) not foreclose upon or otherwise acquire any real property described in
Section 3.22 hereof or any non-residential property prior to receipt and
approval by the Company of a Phase I environmental review therefor;
(h) not change its deposit account interest rate pricing policies or its
loan pricing policies except in response to changes in the applicable market;
(i) not establish any new Subsidiary;
(j) not voluntarily make any material change in the interest rate risk
profile of the Association from that as of June 30, 1998;
(k) not materially deviate from policies and procedures existing as of the
date of this Agreement with respect to (i) classification of assets, (ii) the
allowance for possible credit losses and (iii) accrual of interest on assets,
except as otherwise required by the provisions of this Agreement; and
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(l) not make or agree to make any overdrafts in excess of $100,000 per
account, unless an overdraft line of credit is in place consistent with the
Association's ordinary course of business and policies and Applicable Laws.
SECTION 5.5 ONGOING FINANCIAL DISCLOSURE. FBHC shall provide to the
Company as soon as practicable but in no event later than twenty (20) days
following the end of each calendar month, from the date hereof through the
Closing Date, copies of all financial statements and other written information
provided to the Boards of Directors of FBHC or any of its Subsidiaries (other
than information relating to this Agreement and the transactions relating to
this Agreement), and, to the extent permitted by Applicable Law, all reports
filed by FBHC or any of its Subsidiaries with federal or state regulatory
agencies. The Company shall send to FBHC, promptly after they become publicly
available, copies of all Company filings from and after the date hereof made
under Sections 13(a) and 14 of the Exchange Act and copies of all news releases
made by the Company from and after the date hereof. The Company shall provide
to a single designee of FBHC copies of all non-public financial and other
written information provided to the Boards of Directors of the Company and SW
Bank, and, to the extent permitted by Applicable Law, all reports filed by the
Company or SW Bank with federal or state regulatory agencies. Such designee
shall not copy or circulate any such information to anyone without the prior
written consent of the Company, which consent shall not be unreasonably
withheld, and FBHC hereby acknowledges its obligations under the federal
securities laws with respect to maintaining the confidentiality of such
information and insider trading matters.
SECTION 5.6 ACCESS TO INFORMATION OF FBHC.
(a) During the period from the date hereof until the Effective Time, FBHC
shall provide the information and access described in paragraphs (b) and (c)
below during normal business hours, upon reasonable written or oral notice and
in such manner as will not unreasonably interfere with the conduct of the
business of FBHC and its Subsidiaries.
(b) To the extent permitted by law and consistent with Section 5.6(a),
FBHC shall authorize and permit the Company and its representatives, accountants
and counsel to have full and complete access to all of the properties, books,
records, branch operating reports, branch audit reports, customer accounts and
records, any reports of Governmental Authorities and responses thereto,
operating instructions and procedures (and all correspondence with Governmental
Authorities), tax returns, tax settlement letters, financial statements and
other financial information (including the work papers of PricewaterhouseCoopers
LLP used to audit FBHC's consolidated statements of condition as of March 31,
1998 and 1997 and its consolidated statements of income, changes in
stockholders' equity and cash flows for the years ended March 31, 1998, 1997 and
1996), contracts and documents of FBHC and its Subsidiaries and all other
information with respect to the business affairs, financial condition, assets
and Liabilities of FBHC and its Subsidiaries as the Company may from time to
time request, to make copies of such books, records and other documents, and to
discuss the business affairs, condition (financial and otherwise), assets and
Liabilities of FBHC and its Subsidiaries with such third persons, including,
without limitation, the directors, officers, employees, agents, accountants
(including PricewaterhouseCoopers LLP) and attorneys of FBHC and its
Subsidiaries, as the Company considers reasonably necessary or appropriate for
the purposes of familiarizing itself with the business and operations of FBHC
and
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its Subsidiaries, determining any breach of the representations, warranties
and covenants of FBHC set forth herein, obtaining any necessary orders,
consents or approvals of the transactions contemplated by this Agreement by
Governmental Authorities, conducting further evaluations of the assets and
Liabilities of FBHC and its Subsidiaries, and accomplishing the integration
of the business operations of FBHC and its Subsidiaries with those of the
Company and SW Bank at the earliest possible date.
(c) For purposes of the Company's investigation pursuant to this
Section 5.6, FBHC shall use its reasonable efforts to cause any service bureau,
accountant, third party servicer or other third party under contract to it to
furnish to the Company and its authorized representatives, at the Company's
cost, full access to such party's premises and all of its books, records and
properties, including, without limitation, all loan, investment, regulatory,
financial, accounting, tax and property records and files relating to the
operations of FBHC and its Subsidiaries including, without limitation, all
files, computer records and customer information, relating to assets serviced by
third parties or necessary for the conversion on the Closing Date of all
accounts, products and branch operating systems of FBHC and its Subsidiaries to
such systems as the Company may designate. FBHC shall use its reasonable
efforts to cause any service bureau, accountant, third party servicer or other
third party to provide adequate space and facilities and the cooperation of its
personnel at the Company's cost, including, without limitation, copying
facilities, to the end that such examination shall be completed expeditiously,
completely and accurately. FBHC shall, upon request, provide the Company and
its authorized representatives with reasonable access to any and all real and
personal properties securing loans made by FBHC, to the extent legally
permissible. Without limiting any of the foregoing, the Company and its
authorized representatives shall be specifically entitled to conduct at the
Company's own expense (and FBHC shall use its reasonable efforts to enable them
to conduct) such tests of accounts receivable and other matters as they deem
appropriate. Any examination or investigation made by the Company or other
Persons as contemplated by this Section shall not affect any of the
representations and warranties hereunder.
SECTION 5.7 CONFIDENTIALITY. Except as contemplated by this Agreement or
as necessary to carry out the transactions contemplated herein, all information
or documents furnished hereunder by any party hereto or any other party shall be
kept confidential by the party to whom it is furnished (and such party shall use
reasonable efforts to cause its agents and representatives to maintain the
confidentiality of such documents) and in the event such transactions are not
consummated, each shall return to the other or destroy all information furnished
hereunder and shall not thereafter use the same for any purpose until such time
as such information becomes publicly available, except to the extent (i) it was
known by such other party prior to being received other than through the
violation or breach of such party or any other Person of any duty of
confidentiality, (ii) it is or thereafter becomes lawfully obtainable from other
sources, (iii) it is necessary or appropriate to disclose the same to any
Governmental Authority having jurisdiction over the parties or their
Subsidiaries or as otherwise may be required by Applicable Laws (to the extent
permitted by law, the party intending to make disclosure in such circumstances
shall give the other party hereto prompt notice prior to making such disclosures
so that such other parties may seek a protective order or other appropriate
remedy prior to such disclosure), or (iv) such duty of confidentiality is waived
in writing by the other party, and that none of this information shall be used
for competitive purposes. Notwithstanding the foregoing, information and
documents furnished by or on behalf of FBHC hereunder may be disclosed by the
Company or SW Bank to the Federal Reserve, the OCC, the OTS
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and any other Governmental Authority whose approval, consent, authorization
or other action is necessary for the consummation of the Merger and the
transactions contemplated hereby.
SECTION 5.8 MEETING OF SHAREHOLDERS.
(a) FBHC shall duly call a meeting of its shareholders (the "Shareholders'
Meeting") for the purpose of obtaining the adoption of this Agreement, this
Agreement and all other matters necessary to consummate the transactions
contemplated by this Agreement, which meeting shall be held not earlier than 20
nor later than 30 business days following the date upon which the Registration
Statement shall have been declared effective. In connection with the
Shareholders' Meeting, the Board of Directors of FBHC shall recommend approval
of the transactions contemplated by this Agreement, indicate the determination
by the Board of Directors that the Merger is fair to and in the best interests
of FBHC's shareholders and use its reasonable efforts (including, without
limitation, soliciting proxies for such approvals) to obtain such shareholder
approval, subject to its fiduciary duties. Notice of the Shareholders' Meeting
shall be accompanied by the Prospectus/Proxy Statement.
(b) In obtaining the approval of shareholders referred to in this
Section 5.8, FBHC will comply, and will use reasonable efforts to cause its
officers, directors and 5% shareholders to comply, with applicable provisions of
and the rules and regulations under the Securities Act, the Exchange Act and any
other Applicable Law.
SECTION 5.9 STOCK LISTING. The Company shall, prior to the Effective
Time, notify Nasdaq with respect to the listing of the shares of Company Common
Stock to be issued pursuant to the Merger and shall obtain any approval required
by Nasdaq necessary in connection with the issuance of the Company Common Stock.
SECTION 5.10 AFFILIATES' LETTERS. No later than the 30th day following
the date hereof, FBHC shall deliver to the Company, after consultation with
legal counsel, a list of names and addresses of those persons who are
"Affiliates" of FBHC with respect to the Merger within the meaning of Rule 145
under the Securities Act. There shall be added to such list the names and
addresses of any other person (within the meaning of such Rule) which the
Company identifies (by written notice to FBHC within three business days after
receipt of such list) as possibly being a person who may be deemed to be an
"Affiliate" of FBHC within the meaning of Rule 145. FBHC shall use all
reasonable efforts to deliver, or cause to be delivered, to the Company, not
later than the Closing Date from each of the "Affiliates" of FBHC identified as
aforesaid, a letter dated as of the date of delivery thereof in the form of
Exhibit B attached hereto.
SECTION 5.11 PLAN AMENDMENTS AND PARTICIPATION IN COMPANY PLANS; OPTION
REGISTRATION.
(a) FBHC shall execute and deliver such instruments and take such other
actions as the Company may reasonably require in order to cause the amendment or
termination of any Plan on terms satisfactory to the Company and in accordance
with Applicable Law and effective as of the Effective Time. The Company agrees
that the employees of FBHC and its Subsidiaries who continue their employment
after the Effective Time (the "FBHC Employees") will be entitled to
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participate as newly hired employees in the employee benefit plans and
programs maintained for employees of the Company and SW Bank, in accordance
with the respective terms of such plans and programs, and the Company shall
take all actions necessary or appropriate to facilitate coverage of the FBHC
Employees in such plans and programs from and after the Effective Time,
subject to the following:
(i) Each FBHC Employee will be entitled to credit for prior
service with FBHC and its Subsidiaries for all purposes under the employee
welfare benefit plans and other employee benefit plans and programs (other
than those described in subparagraph (ii) below and any stock option plans)
sponsored by the Company and SW Bank to the extent FBHC and its
Subsidiaries sponsored a similar type of plan in which the FBHC Employees
participated immediately prior to the Effective Time. Any pre-existing
condition exclusion applicable to such plans and programs shall be waived
with respect to each FBHC Employee. For purposes of determining an FBHC
Employee's benefit for the calendar year in which the Merger occurs under
the Company's vacation program, any vacation taken by the FBHC Employee
immediately preceding the Effective Time for the calendar year in which the
Merger occurs will be deducted from the total Company vacation benefit
available to such FBHC Employee for such calendar year. The Company
further agrees to credit each FBHC Employee for the year during which
coverage under the Company's group health plan begins, with any deductibles
already incurred during such year, under FBHC's group health plan.
(ii) Each FBHC Employee shall be entitled to credit for past
service with FBHC and its Subsidiaries for the purpose of satisfying any
eligibility or vesting periods applicable to the Company employee benefit
plans which are subject to Sections 401(a) and 501(a) of the Code
(including, without limitation, the Company's 401(k) Savings Plan).
(b) Following the Effective Time and prior to the first date on which
"Affiliates" of FBHC may sell shares of Company Common Stock pursuant to
Rule 145, the Company shall (i) cause a registration statement on Form S-8
registering the shares of Company Common Stock issuable pursuant to the exercise
of the FBHC Options to be filed and to become effective under the Securities
Act, and (ii) use its best efforts to maintain the effectiveness of such
registration statement until all FBHC Options have been exercised or have
expired.
SECTION 5.12 ASSUMPTION OF FBHC STOCK OPTIONS. FBHC shall use its
reasonable efforts to cause each of the holders of FBHC Stock Options to execute
and deliver to the Company, at least 10 days prior to the Closing Date, an
acknowledgment that such holder's FBHC Stock Option shall be converted, in
accordance with its terms, into an option to purchase a number of shares of
Company Common Stock equal to the number of shares of FBHC Common Stock subject
thereto multiplied by 1.45, at an exercise price per share equal to the exercise
price per share subject thereto divided by 1.45, consistent with the provisions
of Section 1.2 hereof.
SECTION 5.13 TERMINATION OF SEVERANCE AND CONSULTING ARRANGEMENTS. On or
prior to the Closing Date, subject to Applicable Law, FBHC shall use its
reasonable efforts to terminate those arrangements other than the Employee
Agreements (pursuant to reasonable severance arrangements and subject to any
vested rights) as the Company shall notify FBHC in writing pursuant to which
FBHC or any of its Subsidiaries is or may be obligated to make payments after
the Closing Date to
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any Person pursuant to any employment, consulting, severance, employment
termination or other similar agreement with any current or former officer,
director, employee or agent of FBHC or any of its Subsidiaries.
SECTION 5.14 CERTAIN NOTIFICATIONS.
(a) Each party to this Agreement shall notify the other party promptly
both orally and in writing (i) after becoming aware of any misrepresentation or
breach of warranty on its part under this Agreement, (ii) after becoming aware
of the occurrence of, or the impending or threatened occurrence of, any event
that would constitute a breach on its part of any obligation under this
Agreement or the occurrence of any event that would cause any representation or
warranty made by it herein to be false or misleading in any material respect if
such representation and warranty were restated at such time, or (ii) upon the
occurrence of, or the discovery of, any event that could reasonably be expected
to cause it to be unable to satisfy a condition to any other party's obligation
to proceed with the Merger.
(b) Each party to this Agreement shall notify the other party promptly
both orally and in writing if it becomes aware that there exists a basis for any
material suit, claim, action, investigation or proceeding of any nature to be
brought against or by or on behalf of the notifying party, or any of its
properties.
SECTION 5.15 NO SHOPPING.
(a) FBHC shall not, directly or indirectly, through any officer, director,
employee or agent or otherwise, solicit, initiate or encourage any Acquisition
Proposal, or, except as otherwise required in the opinion of Silver, Freedman &
Taff, L.L.P. or such other nationally recognized, independent counsel in order
for its Board of Directors to fulfill its fiduciary duties, participate in any
negotiation in respect of or cooperate with (including, without limitation, by
way of furnishing any nonpublic information concerning the business, properties
or assets of FBHC or its Subsidiaries or any access to such properties or
assets) any Acquisition Proposal. FBHC shall notify the Company promptly by
telephone, and thereafter promptly confirm such notification in writing, if any
such information is requested from, or any Acquisition Proposal or inquiry with
respect to any Acquisition Proposal is received by, FBHC and shall provide the
Company with a reasonably detailed description of the contents thereof,
including without limitation, the identity of the other persons or entities
involved.
(b) Unless and until FBHC shall have exercised its right to terminate this
Agreement pursuant to Section 7.1(e) hereof (or shall exercise such right
simultaneously with any of the following), no Acquisition Proposal shall be
accepted, approved, adopted or recommended by the Board of Directors of FBHC, or
presented by FBHC, or by its Board of Directors or management, to the
shareholders of FBHC for vote or approval by written consent, the Board of
Directors of FBHC shall not rescind the approval of this Agreement or any of the
transactions contemplated hereby, and no such meeting of shareholders shall be
called by FBHC or noticed for purposes of taking shareholder action with respect
to any Acquisition Proposal.
(c) Unless and until FBHC shall have exercised its right to terminate this
Agreement pursuant to Section 7.1(e) hereof, or except as otherwise required by
any Governmental Authority
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having jurisdiction with respect to a party, FBHC shall not prepare or assist
in the preparation of or file or assist in the filing of any notice or
application to any Governmental Authority pertaining to or seeking approval
of any change in control incident to or which would result from any
Acquisition Proposal.
SECTION 5.16 NO INCONSISTENT ACTIONS; POOLING; TAX TREATMENT. None of the
parties hereto will voluntarily take or omit to take any action, the effect of
the taking or omission of which would reasonably be expected to cause any of its
representations and warranties herein to be inaccurate in any material respect
at the Closing or at any time prior to the Closing as if such representation and
warranty were restated at such time. Each party hereto shall use all reasonable
efforts to cause the Merger to be treated for financial accounting purposes as a
"pooling of interests," and shall not take, and shall use all reasonable efforts
to prevent any Affiliate of such party from taking, any actions which could
prevent the Merger from being treated as such for financial accounting purposes.
Each party hereto shall use all reasonable efforts to cause the Merger and the
Bank Merger to qualify, and shall not take, and shall use all reasonable efforts
to prevent any Affiliate of such party from taking, any actions which could
prevent the Merger or the Bank Merger from qualifying, as a reorganization under
the provisions of Section 368(a) of the Code.
SECTION 5.17 TAXES; CONSENT. FBHC shall prepare and timely file all
Returns and amendments thereto required to be filed by FBHC and its Subsidiaries
on or before the Closing Date. The Company shall have a reasonable opportunity
to review all Returns and amendments thereto prior to filing. FBHC shall pay
and discharge all Taxes, assessments and governmental charges upon or against it
or any of its properties or assets, and all liabilities at any time existing,
before the same shall become delinquent and before penalties accrue thereon,
except to the extent and as long as: (a) the same are being contested in good
faith and by appropriate proceedings pursued diligently and in such a manner as
not to cause any Material Adverse Effect on FBHC; and (b) FBHC shall have set
aside on its books reserves (segregated to the extent required by sound
accounting practice) in the amount of the demanded principal imposition
(together with interest and penalties relating thereto, if any).
SECTION 5.18 TRANSACTIONS WITH AFFILIATES AND INSIDERS. From the date
hereof until the Effective Time, FBHC shall not, without the prior written
consent of the Company, make, or allow any of its Subsidiaries to make, any loan
or establish any relationship, of the type or engage or propose to engage in any
transaction of the type that would be required to be disclosed on Schedule 3.19
had such loan been made, relationship been established or transaction been
entered into or proposed as of the date hereof.
SECTION 5.19 CLASSIFICATION OF LOANS. During the period from the
execution of this Agreement until the Effective Time, FBHC (i) to the extent
permitted by Applicable Law, shall promptly inform the Company of the amounts
and categories of any loans, leases or other extensions of credit that are
classified by any Governmental Authority or by the Association as "Other Assets
Especially Mentioned," "Substandard," "Doubtful," "Loss" or any comparable
classification; (ii) shall classify all assets in accordance with OTS Standards
and its own current internal classification system; and (iii) shall apply the
standards regarding accrual of interest set forth in the then most recent Thrift
Financial Report Instructions of the Federal Financial Institutions Examination
Council.
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SECTION 5.20 COMPLIANCE WITH APPLICABLE LAW. During the period from the
date of this Agreement until the Effective Time, FBHC shall take any and all
actions reasonably requested by the Company in order to conform the conduct of
the business of FBHC and its Subsidiaries, including, without limitation, the
business of originating, acquiring, holding or disposing of assets and
liabilities, with the requirements of any Applicable Law.
SECTION 5.21 CERTAIN ACCOUNTING ADJUSTMENTS. After the approval of the
Shareholders and all of the Regulatory Approvals have been obtained, FBHC shall,
if requested by the Company, make such accounting entries prior to the Effective
Time as the Company may reasonably request in order to conform the accounting
records of FBHC to the accounting policies and practices of the Company and its
Subsidiaries, subject to compliance with generally accepted accounting
principles and all appropriate regulatory requirements, such adjustments to be
effective immediately prior to the Effective Time. No such adjustment shall of
itself constitute grounds for termination of this Agreement or an acknowledgment
by FBHC (i) of any adverse circumstances for purposes of determining whether the
conditions to the Company's obligations under this Agreement have been
satisfied, or (ii) that such adjustment is required for purposes of determining
satisfaction of the condition to the Company's obligations under this Agreement
set forth in Section 6.2(a) hereof or (iii) that such adjustment has any bearing
on the number of shares of Company Common Stock issuable hereunder.
SECTION 5.22 ENVIRONMENTAL INVESTIGATION; RIGHT TO TERMINATE AGREEMENT.
(a) The Company and its designated consultants, agents and representatives
shall have the right to the same extent that FBHC has such right, but not the
obligation or responsibility, at the Company's expense, to inspect any FBHC Real
Property or Real Estate Owned, including, without limitation, conducting
asbestos surveys and sampling, environmental assessments and investigation, and
other environmental surveys and analyses including soil and ground sampling
("Environmental Inspections") at any time on or prior to [30 days after
execution of Agreement], 1998. The Company shall notify FBHC prior to any
physical inspections of any such properties, and FBHC may place reasonable
restrictions on the time of such inspections. (If, as a result of any such
Environmental Inspection, further investigation ("secondary investigation")
including, without limitation, test borings, soil, water and other sampling is
deemed desirable by the Company, the Company shall (i) notify FBHC of any
property for which it intends to conduct such a secondary investigation and the
reasons for such secondary investigation, and (ii) commence such secondary
investigation, on or prior to [60 days after execution of Agreement], 1998. All
secondary investigations must be approved in advance by FBHC. The Company shall
give reasonable notice to FBHC of such secondary investigations, and FBHC may
place reasonable time and place restrictions on such secondary investigations.
(b) FBHC agrees to indemnify and hold harmless the Company for any claims
for damage to property, or injury or death to persons, made as a result of any
Environmental Inspection or secondary investigation conducted by the Company or
its agents, which damage or injury is attributable solely to the negligent
actions or negligent omissions of FBHC or its agents. The Company agrees to
indemnify and hold harmless FBHC for any claims for damage to property, or
injury or death to persons, attributable solely to the negligent actions or
omissions of the Company or its agents in performing any Environmental
Inspection or secondary investigation except to the
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extent caused in whole or in part by the negligence of FBHC. In addition,
the Company shall, after any physical testing, restore such tested property
to its original condition at the Company's sole cost and expense. The
Company shall not have any liability or responsibility of any nature
whatsoever for the results, conclusions or other findings related to any
Environmental Inspection, secondary investigation or other environmental
survey. If this Agreement is terminated, then except as otherwise required
by law, reports to any governmental authority of the results of any
Environmental Inspection, secondary investigation or other environmental
survey shall be made by FBHC and not by the Company. The Company shall make
no such report prior to the Closing unless required to do so by law, and in
such case will give FBHC reasonable notice of the Company's intentions.
(c) The Company shall have the right to terminate this Agreement if
(i) FBHC has refused to allow the Company to conduct an Environmental Inspection
or secondary investigation in a manner that the Company reasonably considers
necessary; or (ii) the Environmental Inspection, secondary investigation or
other environmental survey identifies any past or present events, conditions or
circumstances (including but not limited to the presence of any
asbestos-containing material or underground storage tank) that would require
remedial or cleanup action at the expense of FBHC or any of its Subsidiaries in
an aggregate estimated cost which is in excess of $500,000 on an after-tax
basis. On or prior to [75 days after execution of Agreement], 1998, the Company
shall advise FBHC in writing if the Company intends to terminate this Agreement
because the Company disapproves of the results of the Environmental Inspection,
secondary investigation or other environmental survey.
(d) FBHC agrees to make available to the Company and its consultants,
agents and representatives all documents and other material relating to
environmental conditions of any FBHC Real Property and Real Estate Owned
including, without limitation, the results of other environmental inspections
and survey. FBHC also agrees that all engineers and consultants who prepared or
furnished such reports may discuss such reports and information with the Company
and shall be entitled to certify the same in favor of the Company and its
consultants, agents and representatives and make all other data available to the
Company and its consultants, agents and representatives.
SECTION 5.23 INDEMNIFICATION OF DIRECTORS AND OFFICERS; INSURANCE.
(a) The indemnification provisions contained in the Certificate of Incorporation
and Bylaws of the Company, the Articles of Association and Bylaws of SW Bank,
the Articles of Incorporation and Bylaws of Fairview and the organizational
documents of Mitchell shall not be amended, repealed or otherwise modified for a
period of six years after the Effective Time in any manner that would adversely
affect the rights thereunder of individuals who at any time prior to the
Effective Time were directors or officers of FBHC or any of its Subsidiaries in
respect of actions or omissions occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by this
Agreement), unless such modification is required by Applicable Law.
(b) From and after the Effective Time, the Company shall indemnify, defend
and hold harmless the present and former directors, officers, employees and
agents of FBHC and its Subsidiaries (collectively, the "Indemnified Parties")
against all losses, expenses, claims, damages, liabilities or amounts (including
all amounts paid in settlement with the approval of the Company, which approval
shall not unreasonably be withheld) in connection with, any claim, action, suit,
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proceeding or investigation (a "Claim"), based in whole or in part on the fact
that such person is or was a director, officer, employee or agent of FBHC or any
of its Subsidiaries and arising out of actions or omissions occurring at or
prior to the Effective Time (including, without limitation, the transactions
contemplated by this Agreement), in each case to the fullest extent permitted
under applicable law (and shall pay reasonable expenses in advance of the final
disposition of any such action or proceeding to each Indemnified Party to the
fullest extent permitted under applicable law, upon receipt from the Indemnified
Party to whom expenses are advanced an undertaking to repay such advances, if
any, contemplated by Applicable Law).
(c) Without limiting the foregoing, in the event any Claim is brought
against any Indemnified Party (whether arising before or after the Effective
Time) after the Effective Time (i) the Indemnified Parties may retain FBHC's
regularly engaged independent legal counsel, or other independent legal counsel
satisfactory to them provided that such other counsel shall be reasonably
acceptable to the Company, (ii) the Company shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received and (iii) the Company will use its reasonable efforts to
assist in the vigorous defense of any such matter, provided that the Company
shall not be liable for any settlement of any Claim effected without its written
consent, which consent shall not be unreasonably withheld. Any Indemnified
Party wishing to claim indemnification under this Section 5.23, upon learning of
any such Claim, shall notify the Company (although the failure so to notify the
Company shall not relieve the Company from any liability which the Company may
have under this Section 5.23 except to the extent such failure prejudices the
Company or SW Bank), and shall deliver to the Surviving Corporation the
undertaking to repay such advances, if any, contemplated by Applicable Law. The
Indemnified Parties as a group may retain one law firm to represent them with
respect to each such matter unless there is, under applicable standards of
professional conduct (as determined by counsel to the Indemnified Parties), a
conflict on any significant issue between the positions of any two or more
Indemnified Parties, in which event, such additional counsel as may be required
may be retained by the Indemnified Parties.
(d) After the Effective Time, the Company shall, at its election, either
cause to be maintained in effect FBHC's existing prepaid directors' and
officers' liability insurance policy, until its expiration date, or convert such
policy into "tail" coverage through such expiration date with terms and
conditions substantially similar to such current insurance policy, but only
covering claims arising from facts or events which occurred before the Effective
Time (including the transactions which are the subject of this Agreement).
(e) This Section 5.23 is intended to be for the benefit of, and shall be
enforceable by, the Indemnified Parties, their heirs and personal
representatives and shall be binding on the Company and the Surviving
Corporation and their representative successors and assigns.
SECTION 5.24 ACCESS TO INFORMATION OF THE COMPANY.
(a) During the period from the date hereof until the Effective Time, the
Company shall provide the information and access described in paragraphs (b) and
(c) below during normal business hours, upon reasonable written or oral notice
and in such manner as will not unreasonably interfere with the conduct of the
Company's or SW Bank's business.
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(b) To the extent permitted by law and consistent with Section 5.24(a),
the Company shall authorize and permit FBHC and its representatives, accountants
and counsel to have full and complete access to all of the properties, books,
records, branch operating reports, branch audit reports, customer accounts and
records, any reports of Governmental Authorities and responses thereto,
operating instructions and procedures (and all correspondence with Governmental
Authorities), tax returns, tax settlement letters, financial statements and
other financial information (including the work papers of PricewaterhouseCoopers
used to audit the Company's balance sheets as of December 31, 1997 and 1996 and
its statements of income, changes in shareholders' equity and cash flows for the
years ended December 31, 1997, 1996 and 1995), contracts and documents of the
Company and SW Bank and all other information with respect to the business
affairs, financial condition, assets and Liabilities of the Company and SW Bank
as FBHC may from time to time reasonably request, to make copies of such books,
records and other documents and to discuss the business affairs, condition
(financial and otherwise), assets and Liabilities of the Company and SW Bank
with such third persons, including, without limitation, the directors, officers,
employees, agents, accountants (including PricewaterhouseCoopers) and attorneys
of the Company and SW Bank, as FBHC considers reasonably necessary or
appropriate for the purposes of familiarizing itself with the business and
operations of the Company and SW Bank, determining any breach of the
representations, warranties and covenants of the Company and SW Bank set forth
herein, obtaining any necessary orders, consents or approvals of the
transactions contemplated by this Agreement by Governmental Authorities and
conducting further evaluations of the assets and Liabilities of the Company and
SW Bank.
(c) For purposes of FBHC's investigation pursuant to this Section 5.24,
the Company shall use its reasonable efforts to cause any service bureau,
accountant, third party servicer or other third party under contract to it to
furnish to FBHC and its authorized representatives, at FBHC's cost, full access
to such party's premises and all of its books, records and properties,
including, without limitation, all loan, investment, regulatory, financial,
accounting, tax and property records and files relating to the operations of the
Company and SW Bank including, without limitation, all files, computer records
and customer information, relating to assets serviced by third parties. The
Company shall use its reasonable efforts to cause any service bureau,
accountant, third party servicer or other third party to provide adequate space
and facilities and the cooperation of its personnel at FBHC's cost, including,
without limitation, copying facilities, to the end that such examination shall
be completed expeditiously, completely and accurately. Without limiting any of
the foregoing, FBHC and its authorized representatives shall be specifically
entitled to conduct at FBHC's own expense (and the Company and SW Bank shall use
their reasonable efforts to enable them to conduct) such tests of accounts
receivable and other matters as they deem appropriate. Any examination or
investigation made by FBHC or other Persons as contemplated by this Section
shall not affect any of the representations and warranties hereunder.
SECTION 5.25 FURTHER ASSURANCES. Each party hereto shall execute and
deliver such instruments and take such other actions as the other party may
reasonably require in order to carry out the intent of this Agreement.
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ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.1 CONDITIONS TO FBHC'S OBLIGATION TO CLOSE. The obligation of
FBHC to consummate the transactions contemplated by this Agreement is subject to
the satisfaction or waiver on or before the Closing Date (or as otherwise
provided below) of all of the following conditions.
(a) REPRESENTATIONS AND WARRANTIES.
(i) Except for such breaches of the representations and warranties
contained in Article IV hereof as have not had, and cannot reasonably be
expected to have, in the aggregate, a Material Adverse Effect on the
Company, all representations and warranties of the Company contained in
Article IV of this Agreement shall be true and correct on and as of the
Closing Date with the same force and effect as though such representations
and warranties were being made on and as of the Closing Date (except to the
extent such representations and warranties speak as of a specific date, in
which case they shall be deemed to have been made as of the Closing Date
but speaking only as of such specific date). Solely for purposes of this
Section and in determining compliance with the condition set forth herein,
any representation and warranty made by the Company in this Agreement shall
be read and interpreted as if the qualification set therein with respect to
materiality or Material Adverse Effect were not contained therein;
(ii) The Company shall have performed and satisfied in all material
respects all covenants and conditions required by this Agreement to be
performed and satisfied at or prior to the Closing Date;
(iii) There shall not have been instituted or threatened any suit,
claim, action, investigation or proceeding of any nature by any Person
that, individually or when aggregated with other suits, claims, actions,
investigations or proceedings, if any, and breaches, if any, of the
representations and warranties contained in Article IV hereof, has had, or
can reasonably be expected to have, a Material Adverse Effect on the
Company; and
(iv) There shall have been delivered to FBHC on the Closing Date, a
certificate executed by the Chief Executive Officer, the President or any
Executive Vice President, of the Company certifying compliance with all the
provisions of this Section 6.1(a).
(b) REGULATORY APPROVALS. All of the Regulatory Approvals for the
transactions contemplated by this Agreement shall have been obtained; such
Regulatory Approvals shall be in effect and no proceedings shall have been
initiated or threatened with respect thereto; all applicable waiting periods
with respect to such Regulatory Approvals shall have expired; and all conditions
and requirements prescribed by Applicable Law or by such Regulatory Approvals
shall have been satisfied.
(c) REGISTRATION STATEMENT. The Registration Statement, as it may have
been amended or supplemented, shall have become effective and no stop order
suspending the effectiveness of such
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Registration Statement shall have been issued and shall remain in effect, and
no proceedings for that purpose shall have been initiated or threatened by
the SEC the basis for which shall remain in effect.
(d) BOARD AND SHAREHOLDER APPROVAL.
(i) The Company shall have furnished FBHC with:
(A) a certified copy of the resolutions duly adopted by the
Board of Directors of the Company approving this Agreement, the Merger
and the transactions contemplated hereby and thereby; and
(B) certified copies of resolutions duly adopted by the
Board of Directors of SW Bank and the Company, as the sole shareholder
of SW Bank, approving the Bank Merger; and
(ii) At least a majority of the outstanding shares of FBHC Common
Stock entitled to vote shall have approved this Agreement, the Merger and
the transactions contemplated hereby and thereby.
(e) NO VIOLATIONS OF LAW, LITIGATION. The transactions contemplated by
this Agreement shall not violate any Applicable Law. There shall be no pending
or threatened suits, claims, actions, investigations or proceedings by any
Person or Governmental Authority (or determinations by any Governmental
Authority) challenging or in any manner seeking to restrict or prohibit the
transactions contemplated hereby or seeking to obtain any material damages
against any Person as a result of the transactions contemplated hereby.
(f) OPINIONS OF COUNSEL. FBHC shall have received an opinion addressed to
them of Vinson & Elkins L.L.P., counsel to the Company and SW Bank, dated the
Closing Date, substantially in the form of Exhibit C hereto.
(g) TAX OPINION. FBHC shall have received from Silver, Freedman & Taff,
an opinion of counsel reasonably satisfactory to FBHC to the effect that for
federal income tax purposes (i) the Merger will constitute a tax-free
reorganization within the meaning of Section 368(a) of the Code; (ii) the
Company and FBHC will each be a party to that reorganization; (iii) no gain or
loss will be recognized to the former Shareholders of FBHC who receive Company
Common Stock in exchange for their FBHC Common Stock, except to the extent they
receive cash; (iv) the basis of the Shareholders in the Company Common Stock
received in the Merger will be the same as the basis of FBHC Common Stock
surrendered in exchange therefor (reduced by the excess, if any, of the cash
received over the amount of gain recognized on the exchange); and (v) the
holding period of the shares of Company Common Stock received by a Shareholder
will include the holding period of the shares of FBHC Common Stock surrendered
therefor, provided that such FBHC Common Stock was held as a capital asset by
such Shareholder. In rendering any such opinion, such counsel may require and,
to the extent they deem necessary or appropriate, may rely upon representations
made in certificates of officers of FBHC and the Company, affiliates of the
foregoing, and others.
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SECTION 6.2 CONDITIONS TO THE COMPANY'S OBLIGATIONS TO CLOSE. The
obligations of the Company to consummate the transactions contemplated by this
Agreement are subject to the satisfaction or waiver on or before the Closing
Date (or as otherwise provided below) of all of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES; COVENANTS.
(i) Except for such breaches of the representations and warranties
contained in Article III hereof as have not had, and cannot reasonably be
expected to have, in the aggregate, a Material Adverse Effect on FBHC, all
representations and warranties of FBHC contained in Article III of this
Agreement shall be true and correct on and as of the Closing Date, with the
same force and effect as though such representations and warranties were
being made on and as of the Closing Date (except to the extent such
representations and warranties speak as of a specific date, in which case
they shall be deemed to have been made as of the Closing Date but speaking
only as of such specific date). Solely for purposes of this Section and in
determining compliance with the condition set forth herein, any
representation and warranty made by FBHC in this Agreement shall be read
and interpreted as if the qualification stated therein with respect to
materiality or Material Adverse Effect were not contained therein;
(ii) FBHC shall have performed and satisfied in all material
respects all covenants and conditions required by this Agreement to be
performed and satisfied at or prior to the Closing Date;
(iii) There shall not have been instituted or threatened any suit,
claim, action, investigation or proceeding of any nature by any Person that
would have been required to be listed on Schedule 3.14(a) hereto had such
suit, claim, action or proceeding been instituted or threatened as of the
date of this Agreement, and that, individually or in the aggregate, or when
aggregated with the breaches, if any, of representations and warranties
contained in Article III hereof, has had, or can reasonably be expected to
have, a Material Adverse Effect on FBHC; and
(iv) There shall have been delivered to the Company on the Closing
Date a certificate executed by the Chief Executive Officer of FBHC
certifying compliance with all the provisions of this Section 6.2(a).
(b) REGULATORY APPROVALS. All the Regulatory Approvals for the
transactions contemplated by this Agreement shall have been obtained without the
imposition of any non-standard conditions that are or would become applicable to
the Company, the Surviving Corporation, SW Bank or any other Subsidiary of the
Company after the Effective Time that the Company in good faith determines would
be unduly burdensome (in the context of the transactions contemplated by this
Agreement) upon the conduct of the business of the Company, the Surviving
Corporation, or SW Bank, as such businesses have been conducted prior to the
Effective Time or as such businesses are anticipated to be conducted after the
Effective Time, other than activity restrictions resulting from the activities
of FBHC or its Subsidiaries constituting non-permissible activities of a bank or
a bank holding company. All such Regulatory Approvals shall be in effect and
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no proceedings shall have been instituted or threatened with respect thereto;
all applicable waiting periods with respect to such Regulatory Approvals
shall have expired; and all conditions and requirements prescribed by
Applicable Law or by such Regulatory Approvals shall have been satisfied.
All other consents, approvals, waivers and other actions required from any
other Person pursuant to the Scheduled Contracts in connection with the
transactions contemplated by this Agreement shall have been obtained in form
satisfactory to the Company, except where the failure to obtain such
consents, approvals and waivers, and to take such other action, will not
result in a Material Adverse Effect.
(c) REGISTRATION STATEMENT. The Registration Statement, as it may have
been amended or supplemented, shall have become effective and shall remain in
effect, and no stop order suspending the effectiveness of such Registration
Statement shall have been issued, and no proceedings for that purpose shall have
been initiated or threatened by the SEC the basis for which shall remain in
effect.
(d) BOARD AND SHAREHOLDER APPROVAL.
(i) The holders of at least a majority of the outstanding shares
of FBHC Common Stock entitled to vote thereon shall have approved this
Agreement, the Merger and the transactions contemplated hereby and thereby;
and
(ii) FBHC shall have furnished the Company with:
(A) a certified copy of the resolutions duly adopted by the
Board of Directors of FBHC approving this Agreement, the Merger and
the transactions contemplated hereby and thereby and directing the
submission thereof to a vote of FBHC's shareholders;
(B) a certified copy of resolutions duly adopted by the
holders of at least a majority of the outstanding shares of FBHC
Common Stock entitled to vote thereon approving this Agreement, the
Merger and the transactions contemplated hereby and thereby; and
(C) certified copies of resolutions duly adopted by the
Board of Directors of the Association and by FBHC, as the sole
shareholder of the Association, approving the Bank Merger.
(e) NO VIOLATIONS OF LAW; NO LITIGATION. The transactions contemplated by
this Agreement shall not violate any Applicable Law. There shall be no pending
or threatened suits, claims, actions, investigations, or proceedings by any
Person or Governmental Authority (or determinations by any Governmental
Authority) challenging or in any manner seeking to restrict or prohibit the
transactions contemplated hereby or seeking to obtain any damages against any
Person as a result of the transactions contemplated hereby.
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(f) OPINION OF COUNSEL. The Company shall have received an opinion
addressed to them of Silver, Freedman & Taff, L.L.P., special counsel to FBHC,
dated the Closing Date, substantially in the form of Exhibit D hereto.
(g) TAX OPINION. The Company shall have received from Vinson & Elkins
L.L.P. an opinion of counsel, to the effect that for federal income tax purposes
(i) the Merger will constitute a tax-free reorganization within the meaning of
Section 368(a) of the Code; (ii) the Company and FBHC will each be a party to
that reorganization; (iii) no gain or loss will be recognized by the Company or
FBHC by reason of the Merger; (iv) the Bank Merger will constitute a tax free
reorganization within the meaning of Section 368(a) of the Code; (v) SW Bank and
the Association will each be a party to that reorganization; and (vi) no gain or
loss will be recognized by SW Bank or the Association by reason of the Bank
Merger. In rendering any such opinion, such counsel may require and, to the
extent they deem necessary or appropriate, may rely upon representations made in
certificates of officers of FBHC and the Company, affiliates of the foregoing,
and others.
(h) BANKING CRISIS. There shall not have occurred and be continuing any
general banking moratorium or general suspension of payments in respect of banks
in the United States, or any event that significantly and adversely affects the
normal functioning or operation of the convertibility of major European
currencies into United States dollars.
(i) FBHC STOCK OPTIONS. Each of the holders of FBHC Stock Options shall
have executed and delivered to the Company the agreement contemplated by
Section 5.12 hereof.
(j) RELEASES OF OFFICERS AND DIRECTORS.
(i) Each director of FBHC and its Subsidiaries shall have
delivered to the Company an instrument, substantially in the form of
Exhibit E hereto, dated as of the Effective Time, releasing FBHC and its
Subsidiaries from any and all claims of such directors (except as to their
deposits and accounts at FBHC and its Subsidiaries and as to their rights
under any benefit plans of FBHC, and as to rights of indemnification
pursuant to Applicable Law, this Agreement and the organizational documents
of FBHC and its Subsidiaries, which shall survive the Merger) and shall
have delivered to the Company their resignations as directors of FBHC and
its Subsidiaries.
(ii) Each executive officer of FBHC and its Subsidiaries shall have
delivered to the Company an instrument, substantially in the form of
Exhibit F hereto in form and substance satisfactory to the Company and
dated the Effective Time, releasing FBHC and its Subsidiaries from any and
all claims of such officers (except as to deposits and accounts, and as to
their rights under any Employee Agreements, severance arrangements or
benefit plans of FBHC, accrued compensation permitted by their respective
agreements and rights of indemnification pursuant to Applicable Law, this
Agreement and the organizational documents of FBHC and its Subsidiaries,
which shall survive the Merger).
(k) AFFILIATES' LETTERS. Each Affiliate of FBHC shall have delivered to
the Company an executed copy of the letter contemplated by Section 5.10 hereof.
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(l) POOLING OF INTERESTS. The Merger shall qualify as a "pooling of
interests" for financial accounting purposes, and the Company shall have
received appropriate opinions from PricewaterhouseCoopers LLP dated the Closing
Date to that effect.
(m) AGREEMENT AS TO MITCHELL EXCHANGE. The Company shall have received
from the holder of the equity interests in Mitchell which are not held by the
Association (the "Mitchell Equity Holder") an agreement in form and substance
satisfactory to the Company to the effect that the Mitchell Equity Holder will
not cause the Mitchell Exchange to occur at a time that would cause the Merger
to not qualify as a "pooling of interests" for financial accounting purposes.
ARTICLE VII
TERMINATION
SECTION 7.1 TERMINATION. This Agreement and the obligations of the
parties hereunder may be terminated:
(a) By mutual written consent of the parties at any time whether or not
theretofore approved by FBHC's shareholders;
(b) By the Company or FBHC upon the expiration of 15 days after any
Governmental Authority having jurisdiction over any of the transactions set
forth herein indicates that it intends to deny or to refuse to grant any
Regulatory Approval; provided, however, that in the case of a denial or refusal
to grant approval by any Governmental Authority other than the OCC or the
Federal Reserve Board, the parties shall use their reasonable efforts during
such 15 day period to obtain the withdrawal of such denial or refusal;
(c) By the Company immediately upon the expiration of 30 days from the
date that the Company has given notice to FBHC of FBHC's material failure to
satisfy any covenant or agreement herein, or of FBHC's breach of any warranties
or representations contained herein that in the aggregate represent a change in
FBHC from that represented to the Company that is equivalent to a Material
Adverse Effect on FBHC; PROVIDED, HOWEVER, that no termination under this
Section 7.1(c) shall take effect if FBHC shall have fully and completely
corrected the grounds for termination as specified in the aforementioned notice
within the earlier to occur of (i) 30 days after the date of receipt of such
notice and (ii) the date specified in paragraph (h) below, and PROVIDED FURTHER,
HOWEVER, that solely for purposes of this Section 7.1(c), any representation and
warranty made by FBHC in this Agreement shall be read and interpreted as if the
qualification stated therein with respect to materiality or Material Adverse
Effect were not contained therein;
(d) By FBHC immediately upon the expiration of 30 days from the date that
FBHC has given written notice to the Company of the Company's material failure
to satisfy any covenant or agreement contained herein, or of the Company's
breach of any warranties or representations contained herein that in the
aggregate represent a change in the Company from that represented to FBHC that
is equivalent to a Material Adverse Effect on the Company; PROVIDED, HOWEVER,
that no termination under this Section 7.1(d) shall take effect if the Company
shall have fully and completely corrected the grounds for termination as
specified in the aforementioned notice within the earlier to
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occur of (i) 30 days after the date of receipt of such notice and (ii) the
date specified in paragraph (h) below, and PROVIDED FURTHER, HOWEVER, that
solely for purposes of this Section 7.1(d), any representation and warranty
made by the Company in this Agreement shall be read and interpreted as if the
qualification stated therein with respect to materiality or Material Adverse
Effect were not contained therein;
(e) By either the Company or FBHC (provided that if the terminating party
is FBHC, FBHC shall not be in material breach of any of its obligations under
this Agreement) if any approval of the Shareholders required for the
consummation of the Merger shall not have been obtained by reason of the failure
to obtain the required vote at the Shareholders' Meeting or any adjournment or
postponement thereof or the Board of Directors of FBHC has determined not to
recommend approval of the Merger to the Shareholders pursuant to the exercise of
its fiduciary duties;
(f) By the Company, if there shall have occurred since June 30, 1998, any
change in or effect on the business of FBHC or its Subsidiaries or any
occurrence, development or event of any nature that has had or may reasonably be
expected to have, together with all such other changes and effects, a Material
Adverse Effect on FBHC;
(g) By FBHC, if there shall have occurred since June 30, 1998, any change
in or effect on the business of the Company or any occurrence, development or
event of any nature that has had or may reasonably be expected to have, together
with all such other changes and effects, a Material Adverse Effect on the
Company; or
(h) Notwithstanding any of the foregoing, immediately by a party hereto
that is not in default hereunder, if the Closing has not occurred on or before
March 31, 1999.
SECTION 7.2 EFFECT OF TERMINATION. In the event of a termination under
Section 7.1, this Agreement shall become void, and there shall be no liability
on the part of any party or any of such party's directors, officers, employees,
agents or shareholders to the other party or such other party's directors,
officers, employees, agents or shareholders; PROVIDED, HOWEVER, that the
obligations of any party under Sections 5.7, 5.22, 8.9, 8.10 and 8.11 shall
survive the termination of this Agreement; and PROVIDED FURTHER that a
termination under Section 7.1(c) or (d) shall not relieve any party of any
liability for breach of this Agreement or for any misrepresentation hereunder as
of the date of this Agreement or be deemed to constitute a waiver of any remedy
available for such breach or misrepresentation. Liability, if any, for an
inadvertent or non-intentional breach or misrepresentation under the foregoing
provisions shall be limited to the recovery of out-of-pocket costs and expenses
and shall not include punitive, special or consequential damages. The parties
acknowledge and agree that breaches of representations and warranties that in
the aggregate do not give rise to a right of termination hereunder shall not
give any right to any party as to offset or any other remedy or right hereunder.
ARTICLE VIII
MISCELLANEOUS
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SECTION 8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations, warranties, conditions, covenants and agreements of the parties
contained in this Agreement or in any instrument of transfer or other document
delivered in connection with the transactions contemplated hereby shall survive
the Closing, except for those covenants and agreements that are contemplated by
their terms to be performed after the Closing. No party, including any of its
directors, officers, employees, agents and shareholders, shall be under any
liability whatsoever with respect to such representations, warranties,
conditions and covenants following the Closing, except that the Company shall be
responsible for all of its covenants and agreements that are contemplated by
their terms to be performed after the Closing.
SECTION 8.2 NOTICES. Any notice or communication required or permitted
hereunder shall be sufficiently given if in writing and (i) delivered in person
or by overnight delivery or courier service (ii) sent by facsimile or
(iii) deposited in the United States mail, by certified mail postage prepaid and
return receipt requested (provided that any notice given pursuant to clause (ii)
is also confirmed by the means described in clause (i) or (iii)), as follows:
To the Company:
Southwest Bancorporation of Texas, Inc.
4400 Post Oak Parkway
Houston, Texas 77027
Attention: Paul B. Murphy, Jr.
President and Chief Operating Officer
Fax: (713) 439-5905
With a copy to:
Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin Street
Houston, Texas 77002-6760
Attention: Michael P. Finch, Esq.
Fax: (713) 615-5282
To FBHC:
Fort Bend Holding Corp.
3400 Avenue H
Rosenberg, Texas 77471
Attention: Lane Ward
Vice Chairman, President
and Chief Executive Officer
Fax: (281) 238-7071
With a copy to:
Silver, Freedman & Taff, L.L.P.
1100 New York Avenue, N.W.
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7th Floor, East Tower
Washington, D. C. 20005
Attention: Martin L. Meyrowitz, P.C.
Fax: (202) 682-0354
Such notice or other communication shall be deemed given when so delivered
personally, or sent by facsimile transmission, or, if sent by overnight delivery
or courier service, the business day after being sent from within the United
States, or if mailed, four days after the date of deposit in the United States
mails.
SECTION 8.3 GOVERNING LAW. Except as otherwise provided in any exhibit
hereto, this Agreement and the legal relations between the parties shall be
governed by and construed in accordance with the internal laws of the State of
Texas without taking into account provisions regarding choice of law.
SECTION 8.4 ENTIRE AGREEMENT. All exhibits and schedules (including,
without limitation, the Disclosure Schedule) referred to in this Agreement are
integral parts hereof, and this Agreement, together with such exhibits and
schedules (including, without limitation, the Disclosure Schedule), constitutes
the entire agreement among the parties hereto with respect to the matters herein
and therein and supersedes all prior agreements and understandings between the
parties with respect thereto, including, without limitation, the Letter
Agreement dated September 15, 1998 between FBHC and the Company.
SECTION 8.5 AMENDMENTS AND WAIVERS. This Agreement may not be amended
except upon a written consent authorized and approved by the board of directors
of each party hereto. By an instrument in writing, the Company may waive
compliance by FBHC and FBHC may waive compliance by the Company with any term or
provision of this Agreement that such other party was or is obligated to comply
with or perform; PROVIDED, HOWEVER, that such waiver shall not operate as a
waiver of, or estoppel with respect to, any other or subsequent failure. No
failure to exercise and no delay in exercising any right, remedy or power
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy or power hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy or power provided
herein or by law or in equity. The waiver by any party of the time for
performance of any act or condition hereunder does not constitute a waiver of
the act or condition itself. Unless required by Applicable Law, no such waiver,
amendment or modification effected after approval of this Agreement by the
shareholders of FBHC shall require any further shareholder approval.
SECTION 8.6 SEVERABILITY. If any provision of this Agreement, or the
application thereof to any Person, place or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other Persons,
places and circumstances shall remain in full force and effect only if, after
excluding the portion deemed to be unenforceable, the remaining terms shall
provide for the consummation of the transactions contemplated hereby in
substantially the same manner as originally set forth at the later of the date
this Agreement was executed or last amended.
SECTION 8.7 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall constitute one and the same instrument.
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SECTION 8.8 INTERPRETATION OF AGREEMENT. The article, section and other
headings used in this Agreement are for reference purposes only and shall not
constitute a part hereof or affect the meaning or interpretation of this
Agreement. References herein to the transactions contemplated by this Agreement
or other similar words shall include, without limitation, the Merger, the Bank
Merger and all of the other transactions contemplated hereunder.
SECTION 8.9 EXPENSES.
(a) Subject to paragraphs (b) through (d) below and except as otherwise
provided in this Agreement, whether or not the Merger is consummated, all costs
and expenses incurred in connection with the Merger and the Bank Merger and all
other terms and conditions of this Agreement, and the transactions contemplated
hereby, will be paid by the party incurring such costs and expenses.
(b) In the event this Agreement is terminated pursuant to Section 7.1
hereof, all out-of-pocket costs and expenses of the parties relating to the
printing, filing, shipping and distribution of the Registration Statement and
Prospectus/Proxy Statement shall be borne equally by the Company, on the one
hand, and FBHC, on the other hand.
(c) In the event this Agreement is terminated pursuant to Section 7.1(e)
hereof and the Board of Directors of FBHC has either failed to recommend, or has
recommended against, approval of the Merger because of the receipt by FBHC of an
Acquisition Proposal, the parties agree that FBHC shall pay to the Company,
concurrently with such termination, a termination fee of $3,000,000 (the
"Damages"). The Company hereby agrees that its sole remedy in such case shall
be such termination fee.
FBHC acknowledges that the agreements contained in this Section 8.9(c) are
an integral part of the transactions contemplated in this Agreement, and that
without these agreements, the Company would not enter into this Agreement;
accordingly, if FBHC fails to promptly pay such termination fee when due, FBHC
shall in addition thereto pay to the Company all costs and expenses (including
fees and disbursements of counsel) incurred in collecting such termination fee,
together with interest thereon (or any unpaid portion thereof) from the date
such payment was required to be made to the date such payment is received by the
Company at the prime rate of SW Bank as in effect from time to time during such
period.
(d) Except as provided in paragraph (c) above, the rights and remedies
provided in this Section 8.9 are cumulative and not exclusive of any rights and
remedies provided by Applicable Law.
SECTION 8.10 ATTORNEYS' FEES. In addition to the rights granted pursuant
to Section 8.9, if any legal action is brought for the enforcement of this
Agreement or because of an alleged dispute, breach or default in connection with
this Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees and other costs incurred in such action or proceeding, in
addition to any other relief to which it may be entitled.
SECTION 8.11 PUBLICITY. The parties hereto will consult with each other
with regard to the terms and substance of any and all press releases,
announcements or other public statements with respect to the transactions
contemplated hereby. The parties agree further that neither of them will
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release any such press release, announcement or other public statement without
the prior approval of the other party, unless such release is required by law
and the parties cannot reach agreement upon a mutually acceptable form of
release, in which event the party releasing the information, announcement or
public statement shall not be deemed to be in breach of this Agreement. The
parties agree further that such approval will not be unreasonably withheld, and
they pledge to make a good faith effort to reach agreement expeditiously on the
terms of any such press release, announcement or other public statement.
SECTION 8.12 BINDING EFFECT. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns.
SECTION 8.13 THIRD PARTIES. Except as otherwise provided herein, each
party intends that this Agreement shall not benefit or create any right or cause
of action or remedy of any nature whatsoever in any Person other than the
parties to this Agreement, including, without limitation, conferring upon any
Person the right to remain an employee of FBHC, the Company or any of their
Subsidiaries, or restraining FBHC, the Surviving Corporation or any of their
Subsidiaries from changing the terms and conditions of employment of any Person
or terminating such Person's employment, following the Effective Time.
SECTION 8.14 GENDER; NUMBER. Whenever the context of this Agreement
requires, the masculine gender shall include the feminine or neuter, and the
singular number shall include the plural.
SECTION 8.15 CERTAIN DEFINITIONS.
"ACQUISITION PROPOSAL" shall mean any proposal for a merger or other
business combination involving FBHC or for the acquisition of a substantial
equity interest in, or a substantial portion of the assets of, FBHC.
"AFFILIATE" or "ASSOCIATE" shall have the meaning assigned thereto in
Rule 405, as presently promulgated under the Securities Act of 1933, as amended.
"AGENT" of FBHC shall have the meaning as defined in Section 3.16 hereof.
"AGREEMENT" shall mean this Agreement and Plan of Merger.
"AGREEMENT" shall mean with respect to any Person any note, bond,
indenture, license, agreement, lease, contract, indenture, mortgage, deed of
trust, lien, instrument, commitment, arrangement or other understanding, whether
written or oral, to which such Person is a party or by which its properties or
assets may be bound or affected or under which it or its respective business,
properties or assets receive benefits.
"APPLICABLE LAW" shall mean any domestic or foreign, federal, state or
local statute, law, ordinance, rule, administrative interpretation, regulation,
order, writ, injunction, directive, judgment, decree or other requirement of any
Governmental Authority applicable, in the case of FBHC, to FBHC or its
properties, assets, officers, directors, employees or agents (in connection with
such officers', directors', employees' or agents' activities on behalf of it),
and, in the case of the Company, SW Bank or any other Subsidiary of the Company,
to the Company, SW Bank, or such
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other Subsidiary of the Company, respectively, or the respective properties,
assets, officers, directors, employees or agents (in connection with such
officers', directors', employees' or agents' activities on behalf of them) of
any of them.
"BANK MERGER" shall have the meaning as defined in Recital C hereof.
"CERTIFICATE" shall have the meaning as defined in Section 1.2(a) hereof.
"CLOSING" shall have the meaning as defined in Section 2.1 hereof.
"CLOSING DATE" shall have the meaning as defined in Section 2.1 hereof.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of
1986.
"COMPANY" shall mean Southwest Bancorporation of Texas, Inc., a Texas
corporation.
"COMPANY COMMON STOCK" shall mean the Company's Common Stock, $1.00 par
value.
"CONTAMINANT" shall have the meaning as defined in Section 3.22 hereof.
"DAMAGES" shall mean all demands, claims, actions or causes of action,
assessments, losses, damages, Liabilities, judgments, awards, fines, sanctions,
penalties, charges, and amounts paid in settlement of any such matter,
including, without limitation, interest, penalties, costs, fees and expenses of
attorneys, experts, witnesses, investigators and any other agents.
"DIRECTOR" of FBHC shall have the meaning as defined in Section 3.16
hereof.
"DISCLOSURE SCHEDULE" shall have the meaning as defined in Article III
hereof.
"EFFECTIVE TIME" shall have the meaning as defined in Section 2.2(a)
hereof.
"EMPLOYEE" of FBHC shall have the meaning as defined in Section 3.16
hereof.
"EMPLOYEE AGREEMENTS" shall have the meaning as defined in Section 3.16
hereof.
"ENVIRONMENTAL LAW" shall have the meaning as defined in Section 3.22
hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"EXCHANGE AGENT" shall have the meaning as defined in Section 1.3(a)
hereof.
"EXCHANGE RATIO" shall have the meaning as defined in Section 1.2(a)
hereof.
"FASB" shall have the meaning as defined in Section 3.13(g) hereof.
-56-
<PAGE>
"FBHC" shall mean Fort Bend Holding Corp., a Delaware corporation.
"FBHC COMMON STOCK" shall mean the common stock, $.01 par value, of FBHC.
"FBHC PERSONALTY" shall have the meaning as defined in Section 3.11 hereof.
"FBHC REAL PROPERTY" shall have the meaning as defined in Section 3.10 (a).
"FBHC RRP" shall mean the FBHC Recognition and Retention Plan.
"FBHC STOCK OPTIONS" shall have the meaning as defined in Recital B hereof.
"FBHC STOCK OPTION PLAN" shall have the meaning as defined in Recital B
hereof.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"FHA" shall mean the U.S. Federal Housing Authority.
"FHLB" shall mean the Federal Home Loan Bank.
"GOVERNMENTAL AUTHORITY" shall mean any foreign, domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, court, government or self-regulatory organization, commission,
tribunal, organization or any regulatory, administrative or other agency, or any
political or other subdivision, department or branch of any of the foregoing.
"GOVERNMENTAL FILINGS" shall have the meaning as defined in Section 3.4(b)
hereof.
"IRCA" shall have the meaning as defined in Section 3.18 hereof.
"JOINT VENTURE" shall mean with respect to an entity any general or limited
partnership or joint venture interest which is owned directly or indirectly by
such entity.
"KNOWLEDGE" when used with respect to any party means actual knowledge of
any current executive officer or director of such party or any of its
Subsidiaries or any other officer with supervising responsibility for the matter
to which knowledge refers.
"LIABILITIES" shall mean obligations of any nature (absolute, accrued,
contingent or otherwise, and whether due or to become due) that are required to
be reflected in financial statements under generally accepted accounting
principles consistently applied.
"Material Adverse Effect" shall mean any change or effect that would be
material and adverse to the consolidated business, operations, condition
(financial or other), properties or results of operations of a specified Person
and its Subsidiaries taken as a whole; PROVIDED, HOWEVER, that Material Adverse
Effect shall not be deemed to include the impact of (a) changes in banking and
similar laws of general applicability or interpretations thereof by courts or
governmental authorities, (b) changes in generally accepted accounting
principles or regulatory accounting requirements applicable to financial
institutions and their holding companies generally, (c) any modifications or
changes to valuation policies and practices and connection with the Merger or
restructuring charges
-57-
<PAGE>
taken in connection with the Merger, in each case in accordance with
generally accepted accounting principles, and (d) changes in general economic
conditions or interest rates applicable generally to financial institutions
located in the Texas Gulf coast area.
"MERGER" shall have the meaning as defined in Recital A hereof.
"MITCHELL EXCHANGE" shall have the meaning as defined in Section 3.3
hereof.
"MULTIEMPLOYER PLAN" shall mean a plan described in Section 3(37) of ERISA.
"NASDAQ" shall have the meaning as defined in Section 1.3(e) hereof.
"OCC" shall mean the Office of the Comptroller of the Currency.
"OFFICER" of FBHC shall have the meaning as defined in Section 3.16 hereof.
"OTS" shall mean the Office of Thrift Supervision.
"OTS STANDARDS" shall have the meaning as defined in Section 3.26 hereof.
"PERSON" shall include any individual, partnership, joint venture,
corporation, trust or unincorporated organization, any other business entity and
any Governmental Authority, in each case whether acting in an individual,
fiduciary or other capacity.
"PLANS" shall have the meaning as defined in Section 3.17(a) hereof.
"PROSPECTUS/PROXY STATEMENT" shall have the meaning as defined in
Section 5.1 hereof.
"REAL ESTATE OWNED" shall mean all real property acquired through
foreclosure or deed in lieu of foreclosure.
"REGISTRATION STATEMENT" shall have the meaning as defined in Section 5.1
hereof.
"REGULATORY APPROVALS" shall have the meaning as defined in Section 5.2(a)
hereof.
"RELEASE" shall have the meaning as defined in Section 3.22 hereof.
"RETURNS" shall have the meaning as defined in Section 3.15(a)(ii) hereof.
"SCHEDULED CONTRACTS" shall have the meaning as defined in Section 3.7(a)
hereof.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SFAS" shall mean a Statement of Financial Accounting Standards,
promulgated by the Financial Accounting Standards Board.
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<PAGE>
"SHAREHOLDERS" shall have the meaning as defined in Recital A hereof.
"SHAREHOLDERS' MEETING" shall have the meaning as defined in Section 5.8
hereof.
"SUBSIDIARY" shall mean, as to any particular parent corporation, any
corporation as to which more than 50% of the outstanding stock having ordinary
voting rights or power (and excluding stock having voting rights only upon the
occurrence of a contingency unless and until such contingency occurs and such
rights are to be exercised) at the time is owned or controlled, directly or
indirectly, by such parent corporation and/or by one or more Subsidiaries, and
any general partnership, limited partnership, association, joint venture
arrangement or trust of any kind with respect to which such parent corporation
or any Subsidiary thereof has an equity or management interest or as to which
any such entity serves as trustee.
"SURVIVING CORPORATION" shall mean the Company, after consummation of the
Merger.
"SW BANK" shall mean Southwest Bank of Texas National Association, a
national banking association.
"TAXES" shall have the meaning as defined in Section 3.15(a)(i) hereof.
"TBCA" shall have the meaning as defined in Section 1.1(a) hereof.
"THREATENED" shall have the meaning as defined in Section 3.14(a) hereof.
"WARN" shall have the meaning as defined in Section 3.18 hereof.
-59-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
SOUTHWEST BANCORPORATION OF TEXAS, INC.
By: /S/ PAUL B. MURPHY, JR.
-------------------------------------------
Paul B. Murphy, Jr.
President and Chief Operating Officer
FORT BEND HOLDING CORP.
By: /s/ LANE WARD
--------------------------------------------
Lane Ward
Vice Chairman, President and Chief Executive
Officer
-60-
<PAGE>
EXHIBIT A
PLAN OF MERGER
PLAN OF MERGER dated the _____ day of ___________, 1998, between Southwest
Bank of Texas National Association, Houston, Texas ("SW Bank"), and Fort Bend
Federal Savings and Loan Association of Rosenberg, Rosenberg, Texas (the
"Association").
W I T N E S S E T H:
SW Bank is a national banking association duly organized under the laws of
the United States of America and has its principal office in Houston, Texas,
Harris County, Texas. The Association is a savings and loan association duly
organized under the laws of the United States of America and has its principal
office in Rosenberg, Fort Bend County, Texas. SW Bank has authorized capital
stock of 5,000,000 shares, $5.00 par value ("SW Bank Stock"), of which 3,090,349
shares are issued and outstanding on the date hereof, all of which are owned by
Southwest Bancorporation of Texas, Inc., a Texas corporation having its
principal office in Houston, Harris County, Texas ("Southwest"). The
Association has authorized capital stock of 2,500,000 shares, 2,000,000 of which
shares are common stock, $.01 par value, and 500,000 of which shares are serial
preferred stock, $.01 par value ("Association Stock"), of which _________ shares
are issued and outstanding on the date hereof, all of which are owned by Fort
Bend Holding Corp., a Delaware corporation having its principal office in
Rosenberg, Fort Bend County, Texas ("FBHC").
Southwest and FBHC have entered into an Agreement and Plan of Merger, dated
as of October 20, 1998 (the "Merger Agreement"), which contemplates the merger
provided for by this Plan of Merger (the "Merger"). The Merger Agreement also
contemplates the merger of FBHC with and into Southwest, which is to be
effectuated on the same date as, and simultaneously with, the merger provided
for by this Plan of Merger.
A majority of the entire Board of Directors of SW Bank and two-thirds of
the entire Board of Directors of the Association have, respectively, approved
and made this Plan of Merger and authorized its execution.
At or prior to the time the Merger becomes effective (hereinafter called
the "Effective Date"), SW Bank and the Association shall take all such action as
may be necessary or appropriate in order to effectuate the Merger.
In consideration of the premises contained herein, SW Bank and the
Association hereby make this Plan of Merger and prescribe the terms and
conditions of the Merger of SW Bank and the Association and the mode of carrying
it into effect, as follows:
1. The Association shall be merged with and into SW Bank (which, as the
receiving association, is herein referred to as the "Continuing Bank" whenever
reference is made to it on or after the Effective Date) which shall continue to
be governed by the laws of the United States of America. The Merger shall be
pursuant to the provisions of, and with the effect provided in 12 U.S.C. Section
215c and 1828(c), and pursuant to the provisions of, and with the effect
provided in 12 C.F.R. Sections 552.13 and 563.22.
A-1
<PAGE>
2. At the Effective Date, the Articles of Association and Bylaws of SW
Bank as in effect at the Effective Date shall become the Articles of Association
and Bylaws of the Continuing Bank until altered, amended or repealed as therein
provided.
3. Until changed by the Board of Directors of the Continuing Bank, the
established office and facilities of the Continuing Bank shall be the
established office and facilities of SW Bank and the Association as at the
Effective Date, and until thereafter changed in accordance with law or the
Articles of Association or Bylaws of the Continuing Bank, all corporate acts,
plans, policies, contracts, approvals and authorizations of SW Bank and its
stockholders, board of directors, committees elected or appointed thereby,
officers and agents, which were valid and effective immediately prior to the
Effective Date, shall be taken for all purposes as the acts, plans, policies,
contracts, approvals and authorizations of the Continuing Bank and shall be as
effective and binding thereon as the same were with respect to SW Bank. The
locations of the offices of the Continuing Bank are set forth in the Application
to Merge relating to the Merger filed with the Office of the Comptroller of the
Currency.
4. At the Effective Date, the corporate existence of SW Bank and the
Association shall, as provided in 12 U.S.C. Section 215c and the Office of
Thrift Supervision regulations heretofore mentioned, be merged into and
continued in the Continuing Bank, the Continuing Bank shall be deemed to be the
same association as SW Bank and the Association, and the separate existence of
the Association shall terminate. All rights, franchises and interests of SW
Bank and the Association, respectively, in and to every type of property (real,
personal and mixed) and choses in action shall be transferred to and vested in
the Continuing Bank by virtue of such merger without any deed or other transfer,
and the Continuing Bank, without any order or action on the part of any court or
otherwise, shall hold and enjoy all rights and property, franchises and
interests, including appointments, designations and nominations, and all other
rights and interests as trustee, executor, administrator, registrar of stocks
and bonds, guardian of estates, assignee, receiver and committee of estates of
lunatics, and in every other fiduciary capacity, in the same manner and to the
same extent as such rights, franchises and interests were held or enjoyed by SW
Bank and the Association, respectively, at the Effective Date, subject, however,
to the condition that, where SW Bank or the Association, at the Effective Date,
was acting under appointment of any court as trustee, executor, administrator,
registrar of stocks and bonds, guardian of estates, assignee, receiver or
committee of estates of lunatics, or in any other fiduciary capacity, the
Continuing Bank shall be subject to removal by a court of competent jurisdiction
in the same manner and to the same extent as was SW Bank or the Association.
5. At the Effective Date, the Continuing Bank shall be liable for all
liabilities of SW Bank and the Association including the liquidation account
established by the Association pursuant to 12 C.F.R. Section 563b.3(c)(13); and
all deposits, debts, liabilities and contracts of SW Bank and of the
Association, respectively, matured or unmatured, whether accrued, absolute,
contingent or otherwise, and whether or not reflected or reserved against on
balance sheets, books of accounts or records of SW Bank or the Association, as
the case may be, shall be those of the Continuing Bank and shall not be released
or impaired by the Merger; and all savings accounts of the Association shall
continue in place and unimpaired as savings accounts of the Continuing Bank; and
all rights of creditors and other obligees and all liens on property of either
SW Bank or the Association shall be preserved unimpaired.
A-2
<PAGE>
6. The mode of carrying into effect and the manner and basis of
converting or exchanging the shares of SW Bank and the Association into shares
of the Continuing Bank in the Merger shall be as follows:
(a) The shares of SW Bank Stock issued and outstanding at the
Effective Date shall continue to be issued and outstanding shares of the
Continuing Bank, shall be unaffected by the Merger, and the holder thereof
shall retain its rights therein.
(b) Each share of Association Stock which shall be outstanding on the
Effective Date and all rights in respect thereof shall, without any action
on the part of the holder thereof, be cancelled.
(c) The Continuing Bank shall have capital, surplus and undivided
profits equal to the combined capital structures of SW Bank and the
Association immediately prior to the Effective Date. All such amounts of
surplus and undivided profits shall be adjusted for normal earnings and
expenses, and for any accounting adjustments relating to the Merger.
7. At the Effective Date, the Continuing Bank will adopt and continue all
insurance policies maintained by SW Bank and the Association and which are in
effect immediately prior to the Effective Date, including all group and employee
benefit insurance policies.
8. Subject to qualification of directors as required by statute, the
board of directors and the principal officers of the Continuing Bank at the
Effective Date shall consist of all persons who are directors or principal
officers of SW Bank immediately prior to the Effective Date.
9. SW Bank and the Association shall proceed expeditiously and cooperate
fully in the procurement of any other consents and approvals and the taking of
any other action, and the satisfaction of all other requirements prescribed by
law or otherwise, necessary for consummation of the Merger on the terms herein
provided, including, without limitation, the preparation and submission of an
application to the Comptroller of the Currency for approval as required by law.
In addition, the Merger shall not become effective until notification of the
Merger has been provided to the Office of Thrift Supervision pursuant to and in
accordance with 12 C.F.R. Section 563.22(h).
10. Effectuation of the Merger herein provided is conditioned upon
fulfillment or waiver of the conditions precedent set forth in Article VI of the
Merger Agreement.
11. This Plan of Merger may be terminated in the manner set forth in
Article VII of the Merger Agreement and may be amended in the manner set forth
in Section 8.5 of the Merger Agreement.
12. Subject to the terms and upon satisfaction of all requirements of law
and the conditions specified in this Plan of Merger including, among other
conditions, receipt of the approval of the Comptroller of the Currency, the
Merger shall become effective on the date specified in the certificate to be
issued by the Comptroller of the Currency under the seal of his office approving
the Merger. Such date is herein referred to as the "Effective Date."
A-3
<PAGE>
IN WITNESS WHEREOF, SW Bank and the Association have caused this Plan of
Merger to be executed in counterparts by their duly authorized officers and
their corporate seals to be hereunto affixed as of the date first above written.
SOUTHWEST BANK OF TEXAS
NATIONAL ASSOCIATION
By
----------------------------------------------
Paul B. Murphy, Jr.
President and Chief Operating Officer
FORT BEND FEDERAL SAVINGS AND LOAN
ASSOCIATION OF ROSENBERG
By
----------------------------------------------
Lane Ward
Vice Chairman, President and Chief Executive
Officer
A-4
<PAGE>
EXHIBIT B
[To be dated the closing date]
Southwest Bancorporation of Texas, Inc.
4400 Post Oak Parkway
Houston, Texas 77027
Gentlemen:
I have been advised that as of the date hereof I am an "affiliate" of Fort
Bend Holding Corp., a Delaware Corporation ("FBHC"), as that term is defined for
purposes of paragraphs (c) and (d) of Rule 145 of the Rules and Regulations (the
"Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933 (the "Act"). Pursuant to the
terms of the Agreement and Plan of Merger dated October 20, 1998 (the
"Agreement"), between Southwest Bancorporation of Texas, Inc., a Texas
corporation (the "Company"), and FBHC, providing for the merger of FBHC with and
into the Company (the "Merger"), as a result of which I will receive shares of
Company Common Stock (the "Company Shares") in exchange for the shares of FBHC
Common Stock owned by me at the Effective Time of the Merger as defined in the
Agreement.
I represent and warrant that:
A. I shall not make any sale, transfer or other disposition of the
Company Shares in violation of the Act or the Rules and Regulations.
B. [The following sentence to be included only if the affiliate is a
record or beneficial owner of 5% or more of the outstanding FBHC Common Stock.]
I have no present plan or intention to sell, exchange, transfer, distribute
(including, without limitation, a distribution by a partnership to its partners
or by a corporation to its stockholders), pledge or otherwise dispose of, reduce
the risk of loss by short sale or otherwise, enter into any contract or
arrangement with respect thereto, or consent to the sale, exchange, transfer,
distribution or other disposition of any interest in (i) shares of FBHC Common
Stock in a transaction the consideration for which is to be provided by FBHC,
the Company, or any party related to FBHC or the Company or (ii) shares of
Company Common Stock to be received in the Company Merger in a transaction the
consideration for which is to be provided by the Company or any part related to
the Company.
C. I have been advised that the issuance of the Company Shares to me
pursuant to the Merger has been registered by the Company under the Act on a
Registration Statement on Form S-4. However, I have also been advised that,
since at the time the Agreement was submitted for a vote of the shareholders of
FBHC, I was an "affiliate" of FBHC, any public offering or sale by me of any of
the Company Shares will, under current law, require either (i) the further
registration under the Act of the Company Shares to be sold or (ii) compliance
with Rule 145 promulgated under the Act or (iii) the availability of another
exemption from such registration.
D. I have carefully read this letter and discussed its requirements and
other applicable limitations upon the sale, transfer or other disposition of the
Company Shares, to the extent I felt necessary, with my counsel or counsel for
FBHC.
B-1
<PAGE>
E. I have carefully read the Agreement and discussed its requirements and
impact upon my ability to sell, transfer or otherwise dispose of the Company
Shares, to the extent I felt necessary, with my counsel or counsel for FBHC.
F. I have been informed by the Company that the distribution by me of the
Company Shares has not been registered under the Act and that the Company Shares
must be held by me indefinitely unless (i) such distribution of the Company
Shares has been registered under the Act, (ii) a sale of the Company Shares is
made in conformity with the volume and other limitations of Rule 145 promulgated
by the Commission under the Act, or (iii) in the opinion of counsel acceptable
to the Company, some other exemption from registration is available with respect
to any such proposed sale, transfer or other disposition of the Company Shares.
G. I have been informed by the Company that I may not transfer, or in any
way reduce my risk with respect to, the Company Shares between the period
starting thirty (30) days prior to the Effective Time and ending at such time as
the Company shall have publicly released its first regular earnings report after
the Effective Time which includes the results of the combined operations of the
Company and FBHC for a period of at least thirty (30) days subsequent to the
Effective Time.
H. I understand that the Company is under no obligation to register the
sale, transfer or other disposition of the Company Shares by me or on my behalf,
or to take any other action necessary in order to make compliance with an
exemption from registration available, other than as set forth in the Agreement.
I. I also understand that stop transfer instructions will be given to the
Company's transfer agent with respect to the Company Shares and that there will
be placed on the certificates for the Company Shares, or any substitutions
therefor, a legend stating in substance:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities Act of
1933 applies. The shares represented by this certificate may only be
transferred in accordance with the terms of an agreement dated
______________, 1999, between the registered holder hereof and
Southwest Bancorporation of Texas, Inc., a copy of which agreement is
on file at the principal office of Southwest Bancorporation of Texas,
Inc."
J. I also understand that unless the transfer by me of my Company Shares
has been registered under the Act or is a sale made in conformity with the
provisions of Rule 145, the Company reserves the right to put the following
legend on the certificates issued to my transferee:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 and were acquired from a
person who received such shares in a transaction to which Rule 145
promulgated under the Securities Act of 1933 applies. The shares have
been acquired by the holder not with a view to, or for resale in
connection with, any distribution thereof, within the meaning of the
Securities Act of 1933 and may not be sold, pledged or otherwise
transferred except in accordance with an exemption from the
registration requirements of the Securities Act of 1933."
B-2
<PAGE>
It is understood and agreed that the legend set forth in paragraphs I and J
above shall be removed by delivery of substitute certificates without such
legend (i) if the undersigned shall have delivered to the Company a copy of a
letter from the staff of the Commission or an opinion of counsel in form and
substance satisfactory to the Company to the effect that such legend is not
required for purposes of the Act or (ii) upon request of the undersigned at any
time after two years following the Effective Time, provided that the undersigned
has not been an "affiliate" of the Company within the three-month period
immediately prior to the date of such request.
Very truly yours,
-----------------------------------------
ACCEPTED this _____ day
of ____________, 1999, by
SOUTHWEST BANCORPORATION OF TEXAS, INC.
By
--------------------------
David C. Farries
Executive Vice President
and
Chief Financial Officer
B-3
<PAGE>
EXHIBIT C
OPINION OF COUNSEL FOR THE COMPANY
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas. SW Bank is a national
banking association duly organized, validly existing and in good standing under
the laws of the United States of America. The Company owns directly all of the
outstanding capital stock of SW Bank. Each of the Company and SW Bank has the
corporate power to own or lease its properties and to carry on its business as
currently conducted and is not required to be licensed or qualified to do
business as a foreign corporation in any jurisdiction in which the failure to be
so licensed, qualified or in good standing would have a Material Adverse Effect
on the Company.
2. The authorized capital stock of the Company consists of 1,000,000
shares of Preferred Stock, $.01 par value, none of which shares are issued, and
50,000,000 shares of Company Common Stock, of which ___________ shares were
issued and outstanding as of ________, 1998. All outstanding shares of Company
Common Stock have been duly authorized and validly issued, are fully paid and
nonassessable and have not been issued in violation of the preemptive rights of
any person. The shares of Company Common Stock to be issued to the Shareholders
pursuant to the provisions of the Agreement have been duly authorized, will be
validly issued, fully paid and nonassessable and will not be issued in violation
of the preemptive rights of any person.
3. The Company has full corporate power and authority to execute and
deliver the Agreement and to consummate the transactions contemplated thereby.
The Agreement has been duly authorized by all necessary corporate action on the
part of the Company, has been duly and validly executed and delivered by and
constitutes the valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, except to the extent that such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors' rights
generally and by general principles of equity (whether applied at law or in
equity).
4. The Company and SW Bank have received approval from all necessary
governmental agencies and authorities (including the Federal Reserve and the
OCC) for the consummation of the transactions contemplated by the Agreement.
Neither the execution nor delivery of the Agreement nor the consummation by the
Company and SW Bank of the transactions contemplated thereby, nor the compliance
with and fulfillment of the terms and provisions thereof by the Company and SW
Bank will conflict with, or result in a breach of, any term, condition or
provisions of, or constitute a default under, (a) the Articles of Incorporation
or Bylaws of the Company, (b) the Articles of Association or Bylaws of SW Bank,
(c) to our knowledge, any material agreement or instrument to which the Company
or SW Bank is a party or by which either of them is bound, or (d) to our
knowledge, any material order, judgment, or decree to which the Company or SW
Bank is subject, or result in the creation of any material lien, charge or
encumbrance on any properties of the Company or SW Bank.
C-1
<PAGE>
EXHIBIT D
OPINION OF COUNSEL FOR FBHC
1. FBHC is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. FBHC is duly qualified to do
business as a foreign corporation and is in good standing under the laws of
the State of Texas, has the corporate power to own or lease its properties
and to carry on its business as currently conducted, and is not required to
be licensed or qualified to do business as a foreign corporation in any
other jurisdiction in which the failure to be so licensed, qualified or in
good standing would have a Material Adverse Effect on FBHC. FBHC is a
unitary savings and loan holding company subject to regulatory oversight by
the Office of Thrift Supervision. The Association is a savings and loan
association duly organized, validly existing and in good standing under the
laws of the United States of America. FBHC owns directly all the
outstanding capital stock of the Association. The Association has the
corporate power to own or lease its properties and to carry on its business
as currently conducted, and is not required to be licensed or qualified to
do business as a foreign corporation in any jurisdiction in which the
failure to be so licensed, qualified or in good standing would have a
Material Adverse Effect on FBHC.
2. The authorized capital stock of FBHC consists of 1,000,000 shares of serial
preferred stock, $.01 par value, none of which are issued, and 4,000,000
shares of FBHC Common Stock, of which, ____________ shares are issued and
outstanding. All such shares have been duly authorized and validly issued,
are fully paid and nonassessable, and have not been issued in violation of
the preemptive rights of any person. To our knowledge, there are no
outstanding options, warrants, subscriptions, calls, contracts or other
rights, arrangements or commitments of any kind, however denominated,
relating to the purchase or other acquisition of capital stock of FBHC, or
securities convertible into, capital stock of FBHC, except for the
outstanding FBHC Stock Options to purchase _________ shares of FBHC Common
Stock. The FBHC Stock Option Plan and FBHC Stock Options have been duly
authorized by all necessary corporate action on part of FBHC and constitute
valid and legally binding obligations of FBHC, enforceable in accordance
with their terms, except to the extent that such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting enforcement of creditors' rights generally and by
general principles of equity (whether applied at law or in equity). [FBHC
Debentures, Mitchell exchange]
3. FBHC has full corporate power and authority to execute and deliver the
Agreement and to consummate the transactions contemplated thereby. The
Agreement has been duly authorized by all necessary corporate action on the
part of FBHC, has been duly and validly executed and delivered by and
constitutes the valid and binding agreement of FBHC, enforceable against
FBHC in accordance with its terms, except to the extent that such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors' rights
generally and by general principles of equity (whether applied at law or in
equity).
4. Neither the execution nor delivery of the Agreement nor the consummation by
FBHC of the transactions contemplated thereby, nor the compliance with and
fulfillment of the terms and provisions thereof by FBHC will conflict with,
or result in a breach of, any term, condition, or provision of, or
constitute a default under, (a) the Certificate of Incorporation or Bylaws
D-1
<PAGE>
of FBHC, (b) the Articles of Association or Bylaws of the Association,
(c) to our knowledge, any material agreement or instrument to which FBHC or
the Association is a party or by which either of them is bound, or (d) to
our knowledge, any material order, judgment, or decree to which FBHC or the
Association is subject, or result in the creation of any material lien,
charge or encumbrance on any properties of FBHC or the Association.
5. To our knowledge, except as disclosed on the Disclosure Schedule, there is
no action, suit, proceeding or claim pending, or any investigation by any
government or governmental agency or instrumentality, domestic or foreign,
pending or threatened, against FBHC or any of its Subsidiaries or any
employee benefit plan maintained by it or the assets, business or goodwill
of FBHC or any of its Subsidiaries before any court, government or
governmental agency or instrumentality, domestic or foreign, nor is there
any outstanding order, writ, judgment, stipulation, injunction, decree,
determination, award or other order of any court, government or
governmental agency or instrumentality, domestic or foreign, against FBHC
or any of its Subsidiaries.
D-2
<PAGE>
EXHIBIT E
RELEASE
(Director)
This Release (the "Release"), dated as of ___________, 1999, is made by
______________ (the "Director"), in favor of Fort Bend Holding Corp., a Delaware
corporation ("FBHC"), and its Subsidiaries (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to that certain Agreement and Plan of Merger (the "Merger
Agreement"), dated as of October 20, 1998, by and between FBHC and Southwest
Bancorporation of Texas, Inc., it is a condition to the consummation of the
transactions contemplated by the Merger Agreement that the Director shall have
executed and delivered to FBHC an instrument releasing FBHC and its Subsidiaries
(as defined in the Merger Agreement) from any and all claims of such Director;
WHEREAS, the purpose of this Release is to serve as the instrument referred
to in Section 6.2(j)(i) of the Merger Agreement as discussed above;
WHEREAS, the Director desires to enter into this Release in consideration
of the matters set forth herein;
NOW, THEREFORE, for and in consideration of $1.00 and other good and
valuable consideration, the receipt and sufficiency of which is hereby expressly
acknowledged, the Director agrees as follows:
1. The Director acknowledges that he has no existing claims or defenses,
personal or otherwise, or rights of set off whatsoever against FBHC or any of
its Subsidiaries, except as a result of the Director's capacity as a depositor
with Fort Bend Federal Savings and Loan Association of Rosenberg (the
"Association"). The Director for himself and on behalf of his heirs and assigns
(the "Director Releasing Parties") releases, acquits and forever discharges FBHC
and each of its Subsidiaries (the "Released Parties"), their predecessors,
successors, assigns, officers, directors, employees, agents and servants, and
all persons, natural or corporate, in privity with them or any of them, from any
and all claims or causes of action of any kind whatsoever, at common law,
statutory or otherwise, which the Director Releasing Parties, or any of them,
has now or might have in the future, known or unknown, now existing or that
might arise hereafter, except such claims or causes of action as may exist as a
result of or may arise out of (i) the Director's capacity as a depositor with
the Association, (ii) any claim for indemnification by the Released Parties the
Director may have in the future pursuant to applicable laws or the
organizational documents of the Released Parties (a "Statutory Indemnification")
or the indemnity and insurance covenants contained in the Merger Agreement (a
"Contractual Indemnification"), or (iii) the matters set forth on Schedule A
hereto. It is intended that this Release shall release all claims of any kind
or nature that any of the Director Releasing Parties might have against those
hereby released whether asserted or not and except as may exist as a result of
or may arise out of (i) the Director's capacity as a depositor with the
Association or (ii) Statutory Indemnifications and Contractual Indemnifications.
E-1
<PAGE>
2. It is expressly understood and agreed that the terms hereof are
contractual and not merely recitals, and that the agreements herein contained
and the consideration herein transferred is to compromise doubtful and disputed
claims, if any, and that no releases made or other consideration given hereby or
in connection herewith shall be construed as an admission of liability, all
liability being expressly denied by the Released Parties. The Director hereby
represents and warrants that the consideration hereby acknowledged for entering
into this Release and the transactions contemplated hereby is greater than the
value of all claims, demands, actions and causes of action, if any, herein
relinquished, released, renounced, abandoned, acquitted, waived and/or
discharged, and that this Release is in full settlement, satisfaction and
discharge of any and all such claims, demands, actions and causes of action that
the Director may have or be entitled to against the Released Parties, and its
predecessors, assigns, legal representatives, officers, directors, employees,
attorneys and agents.
3. The Director represents and warrants that he has full power and
authority to enter into, execute and deliver this Release, all proceedings
required to be taken to authorize the execution, delivery and performance of
this Release and the agreements and undertakings relating hereto and the
transactions contemplated hereby have been validly and properly taken and this
Release constitutes a valid and binding obligation of the Director in the
capacity in which executed. The Director further represents and warrants that
he has entered into this Release freely of his own accord and without reliance
on any representations of any kind or character not set forth herein. The
Director enters into this release upon the advice of and in concurrence with
legal counsel.
4. This Release shall be construed and enforced in accordance with the
laws of the State of Texas, and to the extent applicable, the laws of the United
States. If any provision of this Release or the application thereof to any
person or circumstances shall be determined to be invalid or unenforceable to
any extent, such provision shall be deemed severable, the remainder of this
Release and the application of all other provisions shall not be affected
thereby and shall be enforced to the greatest extent permitted by law,
consistent with the intent of the parties hereto to enter into a mutual release.
This Release is executed as of the date first above written. As used herein,
the singular includes the plural, the masculine includes the feminine and
neuter, and vice versa.
THE DIRECTOR:
---------------------------------------
Print Name:
----------------------------
E-2
<PAGE>
STATE OF TEXAS Section
Section
COUNTY OF HARRIS Section
This instrument was acknowledged before me on _________________, 1998, by
_______________________, Individually.
-------------------------------------------
Notary Public in and for the State of Texas
Printed Name:
-------------------------------
My Commission Expires:
----------------------
E-3
<PAGE>
EXHIBIT F
RELEASE
(Officer)
This Release (the "Release"), dated as of ___________, 1999, is made by
______________ (the "Officer"), in favor of Fort Bend Holding Corp., a Delaware
corporation ("FBHC"), and its Subsidiaries (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to that certain Agreement and Plan of Merger (the "Merger
Agreement"), dated as of October 20, 1998, by and between FBHC and Southwest
Bancorporation of Texas, Inc., it is a condition to the consummation of the
transactions contemplated by the Merger Agreement that the Officer shall have
executed and delivered to FBHC an instrument releasing FBHC and its Subsidiaries
(as defined in the Merger Agreement) from any and all claims of such Officer;
WHEREAS, the purpose of this Release is to serve as the instrument referred
to in Section 6.2(j)(ii) of the Merger Agreement as discussed above;
WHEREAS, the Officer desires to enter into this Release in consideration of
the matters set forth herein;
NOW, THEREFORE, for and in consideration of $1.00 and other good and
valuable consideration, the receipt and sufficiency of which is hereby expressly
acknowledged, the Officer agrees as follows:
1. The Officer acknowledges that he or she has no existing claims or
defenses, personal or otherwise, or rights of set off whatsoever against FBHC or
any of its Subsidiaries, except as a result of the Officer's capacity as a
depositor with Fort Bend Federal Savings and Loan Association of Rosenberg (the
"Association"), or for salary or bonus due to such Officer in the ordinary
course of business. The Officer for himself or herself and on behalf of his
heirs or her heirs and assigns (the "Officer Releasing Parties") releases,
acquits and forever discharges FBHC and each of its Subsidiaries (the "Released
Parties"), their predecessors, successors, assigns, officers, directors,
employees, agents and servants, and all persons, natural or corporate, in
privity with them or any of them, from any and all claims or causes of action of
any kind whatsoever, at common law, statutory or otherwise, which the Officer
Releasing Parties, or any of them, has now or might have in the future, known or
unknown, now existing or that might arise hereafter, except such claims or
causes of action as may exist as a result of or may arise out of (i) the
Officer's capacity as a depositor with the Association, (ii) for salary, bonus
and other compensation and benefits due to such Officer in the ordinary course
of business, (iii) any claim for indemnification by the Released Parties the
Officer may have in the future pursuant to applicable law or the organizational
documents of the Released Parties (a "Statutory Indemnification") or the
indemnity and insurance covenants contained in the Merger Agreement (a
"Contractual Indemnification"), or (iv) the matters set forth on Schedule A
hereto. It is intended that this Release shall release all claims of any kind
or nature that any of the Officer Releasing Parties might have against those
hereby released whether asserted or not and except as may exist as a result of
or may arise out of (i) the Officer's capacity as a depositor with the
Association, for salary, bonus and other compensation and benefits due to such
Officer in
F-1
<PAGE>
the ordinary course of business or (ii) for Statutory Indemnifications and
Contractual Indemnifications.
2. It is expressly understood and agreed that the terms hereof are
contractual and not merely recitals, and that the agreements herein contained
and the consideration herein transferred is to compromise doubtful and disputed
claims, if any, and that no releases made or other consideration given hereby or
in connection herewith shall be construed as an admission of liability, all
liability being expressly denied by the Released Parties. The Officer hereby
represents and warrants that the consideration hereby acknowledged for entering
into this Release and the transactions contemplated hereby is greater than the
value of all claims, demands, actions and causes of action, if any, herein
relinquished, released, renounced, abandoned, acquitted, waived and/or
discharged, and that this Release is in full settlement, satisfaction and
discharge of any and all such claims, demands, actions and causes of action that
the Officer may have or be entitled to against the Released Parties, and its
predecessors, assigns, legal representatives, officers, directors, employees,
attorneys and agents.
3. The Officer represents and warrants that he or she has full power and
authority to enter into, execute and deliver this Release, all proceedings
required to be taken to authorized the execution, delivery and performance of
this Release and the agreements and undertakings relating hereto and the
transactions contemplated hereby have been validly and properly taken and this
Release constitutes a valid and binding obligation of the Officer in the
capacity in which executed. The Officer further represents and warrants that he
or she has entered into this Release freely of his or her own accord and without
reliance on any representations of any kind or character not set forth herein.
The Officer enters into this release upon the advice of and in concurrence with
legal counsel.
4. This Release shall be construed and enforced in accordance with the
laws of the State of Texas, and to the extent applicable, the laws of the United
States. If any provision of this Release or the application thereof to any
person or circumstances shall be determined to be invalid or unenforceable to
any extent, such provision shall be deemed severable, the remainder of this
Release and the application of all other provisions shall not be affected
thereby and shall be enforced to the greatest extent permitted by law,
consistent with the intent of the parties hereto to enter into a mutual release.
This Release is executed as of the date first above written. As used herein,
the singular includes the plural, the masculine includes the feminine and
neuter, and vice versa.
THE OFFICER:
---------------------------------------
Print Name:
----------------------------
F-2
<PAGE>
STATE OF TEXAS Section
Section
COUNTY OF HARRIS Section
This instrument was acknowledged before me on ______________, 1998, by
______________________, Individually.
-------------------------------------------
Notary Public in and for the State of Texas
Printed Name:
------------------------------
My Commission Expires:
---------------------
F-3
<PAGE>
EXHIBIT 99.1
FOR IMMEDIATE RELEASE CONTACT: JANE POWELL
(713) 974-9300
SOUTHWEST BANCORPORATION OF TEXAS, INC.
ANNOUNCES MERGER WITH FORT BEND HOLDING CORP.
HOUSTON (October 21, 1998) -- Southwest Bancorporation of Texas, Inc.
(Nasdaq: SWBT) and Fort Bend Holding Corp. (Nasdaq: FBHC) have announced the
execution of a definitive merger agreement in which Fort Bend Holding Corp. will
be merged with and into Southwest Bancorporation of Texas, Inc. Fort Bend
Holding Corp. is the parent company of Fort Bend Federal Savings & Loan
Association of Rosenberg and the majority owner of Mitchell Mortgage Company,
L.L.C.
Fort Bend Holding Corp. and its subsidiary, Fort Bend Federal Savings &
Loan Association of Rosenberg, founded in 1933, will add approximately $330
million in assets and approximately $280 million in deposits to Southwest's $2.0
billion in assets and $1.6 billion in deposits as of September 30, 1998. Fort
Bend currently has six branches in the Houston metropolitan area and has the
number-one-ranked deposit market share in Fort Bend County. Through the merger,
Southwest will acquire Fort Bend's 51 percent ownership interest in Mitchell
Mortgage Company, L.L.C., a full-service mortgage banking affiliate of The
Woodlands Operating Company, L.P., located in fast growing Montgomery County.
Fort Bend acquired a controlling interest in Mitchell Mortgage in 1997.
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<PAGE>
Page 2/Southwest Bancorporation of Texas, Inc.
"This partnership allows Southwest to expand into Fort Bend and Montgomery
counties, the two most dynamic counties that are contiguous to Harris County,"
said Paul B. Murphy, Jr., president and COO of Southwest Bank of Texas. "As
Houston's growth naturally progresses west and north, Southwest Bank of Texas is
positioning itself to aggressively pursue the commercial lending and private
banking opportunities throughout all of greater Houston.
"According to the 1995 U.S. Census Bureau's interim census, Fort Bend is
the third-fastest growing county in the nation. The Greater Fort Bend Economic
Development Council recently had the county ranked against all 3,091 counties in
the United States to measure for economic and demographic excellence. In the 16
categories measured, the county ranked in the top 10 percent of all counties in
14 categories.
"The Woodlands is a very successful master planned community 27 miles north
of Houston. It has been the number one selling community in Texas every year
since 1990. A thriving business community, this 26,000-acre development, is
home to over 50,000 residents today with a projected population in excess of
100,000, leaving an attractive pipeline in the years ahead for Mitchell
Mortgage.
"Southwest is especially excited about gaining a physical presence in these
strong markets as a platform for continued growth in its commercial loan
portfolio. We will also build on Fort Bend's and Mitchell Mortgage's mortgage
origination expertise to grow our
(more)
<PAGE>
Page 3/Southwest Bancorporation of Texas, Inc.
mortgage lending operations," concluded Murphy.
"Fort Bend's customers can look forward to the outstanding services now
offered to Southwest Bank customers," said Lane Ward, vice chairman,
president & CEO of Fort Bend Holding Corp. "Southwest Bank is the
independent banking leader in the Houston area, and we are extremely
impressed by its performance. Together, we will be able to provide the
highest quality of customer service in Fort Bend, Montgomery, Harris and
surrounding counties."
Mr. Ward will serve as vice chairman of the board in the combined
organization and will maintain management responsibility for mortgage
operations. Dale Andreas, president of Mitchell Mortgage, will continue in
that role.
The transaction, is structured to be accounted for as a pooling of
interests, and is anticipated to close during the first quarter of 1999,
subject to approval of Fort Bend's shareholders, regulatory approvals and
customary closing conditions. It is structured as a tax-free fixed exchange
of 1.45 shares of Southwest common stock for each share of Fort Bend common
stock and convertible equivalent. At Southwest's closing stock price of
$15.00 on October 20, 1998, the transaction would be valued at approximately
$65 million, based upon Fort Bend's current capital structure, including the
assumed conversion of $9.9 million of Fort Bend's converted subordinated debt
and the assumed exercise of Mitchell Mortgage's minority shareholder option.
Accordingly Fort Bend shareholders would receive a value of $21.75 for each
share of Fort Bend common stock. This valuation equates to approximately 1.8
times Fort Bend's book value and approximately 20 times Fort Bend's trailing
twelve months earnings.
(more)
<PAGE>
Page 4/Southwest Bancorporation of Texas, Inc.
Fort Bend has total shares outstanding of 1.86 million, 918,000 shares
issuable upon the conversion of outstanding convertible subordinated debt and
220,000 shares issuable upon the exercise of an option granted to the
minority owner of Mitchell Mortgage Company, L.L.C. All outstanding options
to purchase Fort Bend common stock will be converted to Southwest options
with appropriate adjustments.
Southwest expects the merger with Fort Bend will be accretive to
Southwest's 1999 earnings per share (excluding merger-related expenses) by
recognizing operating and organizational efficiencies. The merger will also
be immediately accretive to Southwest Bank's book value per share.
Southwest Bancorporation of Texas, is the largest independent
bankholding company headquartered in Houston, Texas, based on assets of $2.0
billion as of September 30, 1998. The combination of Southwest
Bancorporation and Fort Bend will form a financial institution with
approximately $2.3 billion in assets, a loan limit of $25 million and 25
branches (one of which is scheduled to open in early 1999) throughout the
Houston metropolitan area.
This release is not an offer to sell or a solicitation of an offer to
buy any shares of Southwest common stock. The offering to the shareholders
of Fort Bend Holding Corp. will be made only by means of a prospectus.
# # #
(more)
<PAGE>
Page 5/Southwest Bancorporation of Texas, Inc.
This press release includes forward-looking statements that are subject
to risks and uncertainties. Actual results might differ materially from
those projected in the forward-looking statements. Additional information
concerning factors that could cause actual results to materially differ from
those in the forward-looking statements is contained in the Securities and
Exchange Commission filings of both companies.
FOR ADDITIONAL INFORMATION, PLEASE CONTACT SUSAN P. ECKEL OF SOUTHWEST
BANCORPORATION AT (713) 235-8800.
