<PAGE> 1
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BETWEEN
SOUTHWEST BANCORPORATION OF TEXAS, INC.
AND
CITIZENS BANKERS, INC.
Dated as of October 16, 2000
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TABLE OF CONTENTS
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ARTICLE I.........................................................................................................2
Section 1.1 The Merger........................................................................................2
Section 1.2 Conversion of Citizens Common Stock...............................................................3
Section 1.3 Surrender of Citizens Stock Certificates..........................................................4
ARTICLE II........................................................................................................6
Section 2.1 Closing Date......................................................................................6
Section 2.2 Effective Time; Procedure.........................................................................6
ARTICLE III.......................................................................................................6
Section 3.1 Organization......................................................................................7
Section 3.2 Binding Effect....................................................................................8
Section 3.3 Capitalization....................................................................................8
Section 3.4 Financial Statements and Reports..................................................................9
Section 3.5 Compliance with Applicable Laws; Operating Authorities...........................................10
Section 3.6 Other Activities of Citizens.....................................................................11
Section 3.7 Contracts and Commitments........................................................................12
Section 3.8 Broker's and Finder's Fees.......................................................................13
Section 3.9 Corporate Records; Other Information.............................................................13
Section 3.10 Real Property Owned or Leased...................................................................13
Section 3.11 Personal Property...............................................................................14
Section 3.12 Accounting Records; Data Processing.............................................................15
Section 3.13 Absence of Certain Changes......................................................................15
Section 3.14 Litigation......................................................................................16
Section 3.15 Tax Matters.....................................................................................17
Section 3.16 Employment and Similar Agreements; Obligations Upon Change in Control...........................18
Section 3.17 Benefit Plans...................................................................................19
Section 3.18 Labor and Employment Matters....................................................................21
Section 3.19 Certain Interests...............................................................................22
Section 3.20 Offering Memorandum/Proxy Statement and Regulatory Applications.................................23
Section 3.21 Insurance.......................................................................................23
Section 3.22 Environmental Matters...........................................................................24
Section 3.23 Intellectual Property Rights....................................................................25
Section 3.24 Site Locations..................................................................................25
Section 3.25 Loans...........................................................................................25
Section 3.26 Allowance for Losses............................................................................26
Section 3.27 Real Estate Owned...............................................................................26
Section 3.28 Interest Rate Risk Management Instruments.......................................................27
Section 3.29 Regulation D Offering...........................................................................27
Section 3.30 Disclosure......................................................................................27
ARTICLE IV.......................................................................................................28
Section 4.1 Organization.....................................................................................28
Section 4.2 Binding Effect...................................................................................28
Section 4.3 Capitalization...................................................................................29
Section 4.4 Financial Statements and Reports.................................................................29
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Section 4.5 Offering Memorandum/Proxy Statement and Regulatory Applications..................................30
Section 4.6 Compliance with Applicable Laws; Operating Authorities...........................................31
Absence of Certain Changes.......................................................................31
Section 4.8 Litigation.......................................................................................32
Section 4.9 Broker's and Finder's Fees.......................................................................32
Section 4.10 Tax Matters.....................................................................................32
Section 4.11 Environmental Matters...........................................................................32
Section 4.12 Allowance for Losses............................................................................33
Section 4.13 Disclosure......................................................................................33
Section 4.14 Insurance.......................................................................................33
Section 4.15 Company Benefit Plans...........................................................................33
Section 4.16 No Defaults.....................................................................................34
Section 4.17 Commitments and Contracts.......................................................................34
Section 4.18 Regulatory Approvals............................................................................34
Section 4.19 Loans...........................................................................................35
Section 4.20 Interest Rate Risk Management Instruments.......................................................35
ARTICLE V........................................................................................................35
Section 5.1 Preparation of Offering Memorandum/Proxy Statement...............................................35
Section 5.2 Pursuit of Regulatory Approvals..................................................................36
Section 5.3 Other Consents...................................................................................36
Section 5.4 Citizens Activities Pending Closing..............................................................37
Section 5.5 Ongoing Financial Disclosure.....................................................................38
Section 5.6 Access to Information of Citizens................................................................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..............................................42
Section 5.12 Termination of Severance and Consulting Arrangements............................................42
Section 5.13 Certain Notifications...........................................................................43
Section 5.14 No Shopping.....................................................................................43
Section 5.15 No Inconsistent Actions; Pooling; Tax Treatment.................................................44
Section 5.16 Taxes; Consent..................................................................................44
Section 5.17 Transactions with Affiliates and Insiders.......................................................44
Section 5.18 Classification of Loans.........................................................................44
Section 5.19 Compliance with Applicable Law..................................................................45
Section 5.20 Certain Accounting Adjustments..................................................................45
Section 5.21 Environmental Investigation; Right to Terminate Agreement.......................................45
Section 5.22 Indemnification of Directors and Officers; Insurance............................................47
Section 5.23 Access to Information of the Company............................................................48
Section 5.24 Employment Agreements...........................................................................49
Section 5.25 Further Assurances..............................................................................49
Section 5.26 Preparation of Shelf Registration Statement.....................................................49
Section 5.27 Shareholders' Agreements as to Registration Statement...........................................50
Section 5.28 Indemnification by the Company..................................................................51
Section 5.30 Combined Report.................................................................................53
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Section 5.31 Legends on Certificates.........................................................................53
Section 5.31 Best Efforts for December Closing...............................................................53
Section 5.32 Split-Dollar Life Insurance.....................................................................53
ARTICLE VI.......................................................................................................54
Section 6.1 Conditions to Citizens' Obligation to Close......................................................54
Section 6.2 Conditions to the Company's Obligations to Close.................................................56
ARTICLE VII......................................................................................................60
Section 7.1 Termination......................................................................................60
Section 7.2 Effect of Termination............................................................................61
ARTICLE VIII.....................................................................................................62
Section 8.1 Non-Survival of Representations and Warranties...................................................62
Section 8.2 Notices..........................................................................................62
Section 8.3 Governing Law....................................................................................63
Section 8.4 Entire Agreement.................................................................................63
Section 8.5 Amendments and Waivers...........................................................................63
Section 8.6 Severability.....................................................................................64
Section 8.7 Counterparts.....................................................................................64
Section 8.8 Interpretation of Agreement......................................................................64
Section 8.9 Expenses.........................................................................................64
Section 8.10 Attorneys' Fees.................................................................................65
Section 8.11 Publicity.......................................................................................65
Section 8.12 Binding Effect..................................................................................65
Section 8.13 Third Parties...................................................................................65
Section 8.14 Gender; Number..................................................................................65
Section 8.15 Certain Definitions.............................................................................65
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EXHIBITS
Exhibit A - Plan of Merger for the Delaware Merger
Exhibit B - Plan of Merger for the Bank Merger
Exhibit C - Form of Affiliates' Letter
Exhibit D - Form of Employment Agreements
Exhibit E - Form of Opinion of Counsel for the Company
Exhibit F - Form of Opinion of Counsel for Citizens
Exhibit G - Form of Release (Director)
Exhibit H - Form of Release (Officer)
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AGREEMENT AND PLAN OF MERGER
BETWEEN
SOUTHWEST BANCORPORATION OF TEXAS, INC.
AND
CITIZENS BANKERS, INC.
This Agreement and Plan of Merger ("Agreement") is entered into as of
October 16, 2000 between Southwest Bancorporation of Texas, Inc., a Texas
corporation (the "Company"), and Citizens Bankers, Inc., a Texas corporation
("Citizens").
RECITALS
A. The parties hereto desire to effect a business combination pursuant
to which (i) Citizens 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, $100 par value, of
Citizens ("Citizens Common Stock") (such holders of record of Citizens 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. The parties hereto also desire to effect the merger of Citizens
Bankers of Delaware, Inc., a Delaware corporation and wholly-owned subsidiary of
Citizens ("Citizens Delaware"), with and into Southwest Holding Delaware, Inc.,
a Delaware corporation and wholly-owned subsidiary of the Company ("SW
Delaware"), pursuant to a Plan of Merger between Citizens Delaware and SW
Delaware, a form of which is attached hereto as Exhibit A (the "Delaware Plan of
Merger") for the purpose of effecting a tax-free reorganization pursuant to
Section 368(a)(1) of the Code. Such merger (the "Delaware Merger") shall be
effectuated on the same date as, and simultaneously with, the effectiveness of
the Merger.
C. The parties hereto also desire to effect the merger of each of
Citizens Bank and Trust Company of Baytown, a Texas banking association
("CB&T"), Baytown State Bank, a Texas banking association ("Baytown"), and
Pasadena State Bank, a Texas banking association ("Pasadena"), each of which is
a wholly-owned subsidiary of Citizens Delaware, with and into Southwest Bank of
Texas National Association, a national banking association and wholly-owned
subsidiary of Southwest Delaware ("SW Bank"), pursuant to a Plan of Merger among
CB&T, Baytown, Pasadena and SW Bank, a form of which is attached hereto as
Exhibit B (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. In connection with the execution of this Agreement, the Company will
enter into a Purchase Agreement with Citizens Bankers Limited Partnership, a
Texas limited partnership (the "Partnership"), dated the date hereof (the
"Purchase Agreement"), providing for the purchase by the Company of the entire
business and all of the property and assets of the Partnership in exchange for
<PAGE> 7
shares of Company Common Stock and the assumption by the Company of
substantially all of the liabilities and obligations of the Partnership, to be
followed by the liquidation of the Partnership, the distribution of the Company
Common Stock to the general partner and limited partners of the Partnership in
accordance with their respective interests, and the dissolution of the
Partnership, all upon the terms and subject to the conditions therein set forth.
E. The transactions contemplated hereby 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:
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"),
pursuant to which, at the Effective Time:
(i) Citizens shall be merged with and into the Company by a
statutory merger; the separate corporate existence of Citizens 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 Citizens 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
cancelled and converted into the right to receive, upon surrender of
the certificate representing such share, the number of shares of
Company Common Stock equal to the Adjusted Company Shares divided by
15,610.165. The "Adjusted Company Shares" shall be a number equal to
(A) $126,550,000 divided by (B) the Company Measurement Price. The
"Company Measurement Price" is defined as the average of the closing
prices of a share of Company Common Stock as reported by Nasdaq during
the period of 15 trading days ending on the day that is five business
days preceding the Closing Date (the "Determination Period"), provided,
however, that (i) if the Company Measurement Price is equal to or
greater than $32.50, it shall be deemed to be equal to $32.50 (the
"Maximum Company Measurement Price"), and (ii) if the Company
Measurement Price is equal to or less than $30.2326, it shall be deemed
to be equal to $30.2326 (the "Minimum Company Measurement Price").
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(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 75,000,000 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 Citizens and the
Company shall be merged into and continued in the Surviving
Corporation, and the Surviving Corporation shall be deemed to be the
same corporation as Citizens and the Company; all rights, title and
interests to all real estate and other property owned by Citizens 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
(viii) the Merger shall have the other effects set forth in
Article 5.06 of the TBCA, including, without limitation, that the
Surviving Corporation shall be liable for all liabilities of Citizens
and the Company.
SECTION 1.2 CONVERSION OF CITIZENS COMMON STOCK.
(a) Outstanding Citizens Common Stock. At the Effective Time, each
share of Citizens Common Stock issued and outstanding immediately prior to the
Effective Time (other than Dissenting Shares, as defined in Section 8.15) shall,
by virtue of this Agreement and without any action on the part of the holder
thereof, be converted into and exchangeable for the number of shares of Company
Common Stock equal to the Adjusted Company Shares divided by 15,610.165 (the
"Exchange Ratio"). All of the shares of Citizens 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 Citizens 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 Citizens 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 Citizens 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, between the date hereof and the
Effective Time of the Merger, shares of Company Common Stock shall be changed
into a different number of shares or a different class of shares by reason of
any reclassification, recapitalization, split-up, combination, exchange of
shares or readjustment, or if a stock dividend thereon shall be declared with a
record date within such period
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(a "Common Stock Adjustment"), then (i) the Minimum Company Measurement Price,
the Maximum Company Measurement Price and the Exchange Ratio will be
appropriately and proportionately adjusted so that the number of such shares of
Company Common Stock into which a share of Citizens Common Stock shall be
converted will equal the number of shares of Company Common Stock which holders
of shares of Citizens Common Stock would have received pursuant to such Common
Stock Adjustment had the record date therefor been immediately following the
Effective Time of the Merger, and (ii) the Termination Price will likewise be
appropriately and proportionately adjusted.
(b) Treasury Stock. At the Effective Time, all shares of Citizens
Common Stock that are held in Citizens' treasury or otherwise owned by Citizens
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) Dissenters. Each Shareholder who is entitled to dissenters' rights
pursuant to the TBCA on the date of the Shareholders Meeting, and who continues
to be so entitled as of the Effective Time is referred to herein as a
"Dissenter." Each Dissenting Share shall be converted into the rights provided
by the TBCA.
SECTION 1.3 SURRENDER OF CITIZENS STOCK CERTIFICATES.
(a) As soon as practicable after the Effective Time, Computershare
Investor Services, 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
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
Citizens 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 Citizens 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.
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<PAGE> 10
(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 Citizens shall
be closed, and no transfer of the shares of Citizens 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 Citizens 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 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, Citizens, the Exchange Agent or any other
person shall be liable to any former holder of shares of Citizens 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.
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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 Citizens 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 Citizens shall, in accordance with Section 5.04 of
the TBCA, file Articles of Merger with the Secretary of State of Texas regarding
the Merger. The Merger shall become effective as of the close of business on the
date on which such filing has 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, the Delaware 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 Citizens
in the Surviving Corporation after the Effective Time, the last acting officers
and directors of Citizens (prior to the Effective Time) shall execute and make
all such proper 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 CITIZENS
Citizens 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 Citizens 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).
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Citizens hereby represents and warrants to the Company as follows:
SECTION 3.1 ORGANIZATION.
(a) Citizens is a corporation, duly organized, validly existing and in
good standing under the laws of the State of Texas. Citizens is a registered
bank holding company pursuant to 12 U.S.C. Sections 1841 et seq.
(b) Citizens owns all of the outstanding capital stock of Citizens
Delaware and Baytown Land Corporation, a Texas corporation, and such
Subsidiaries are the only direct Subsidiaries of Citizens. Citizens Delaware is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Citizens Delaware is a registered bank holding
company pursuant to 12 U.S.C. Sections 1841 et. seq.
(c) CB&T, Baytown, Pasadena and First National Bank of Bay City ("Bay
City") are the only material Subsidiaries of Citizens Delaware. Schedule 3.1(c)
sets forth a list of all other Subsidiaries of Citizens Delaware, the
jurisdiction, the type of entity and the percentage ownership interest of
Citizens Delaware. Each of CB&T, Baytown and Pasadena is a banking association
duly organized, validly existing and in good standing under the laws of the
State of Texas. Bay City is a national banking association duly organized,
validly existing and in good standing under the laws of the United States of
America. Citizens Delaware owns all of the outstanding capital stock of CB&T,
Baytown and Pasadena and 57.834% of the outstanding capital stock of Bay City.
(d) Each of Citizens and its Subsidiaries has all requisite corporate
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, other than Citizens Delaware, 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. The
nature of the business of Citizens Delaware 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 Delaware.
(e) Citizens 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) Citizens Delaware has the corporate power and authority to execute
and deliver the Delaware Plan of Merger, to perform its obligations thereunder
and to consummate the transactions contemplated therein.
(g) Each of CB&T, Baytown and Pasadena has the corporate power and
authority to execute and deliver the Bank Plan of Merger, to perform its
obligations thereunder and to consummate the transactions contemplated therein,
subject to receipt of all required Regulatory Approvals.
(h) Citizens has delivered to the Company true and complete copies of
the Certificate or Articles of Incorporation or Association and Bylaws of
Citizens, Citizens Delaware, CB&T,
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<PAGE> 13
Baytown, Pasadena, Bay City and each of its other Subsidiaries 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
Citizens and constitutes the legal, valid and binding obligation of Citizens,
enforceable against Citizens 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). Citizens' Board of Directors has unanimously determined that the
Merger is in the best interest of, Citizens' shareholders and has unanimously
resolved to recommend approval and adoption of this Agreement by Citizens'
shareholders, subject to its fiduciary duties. Neither the execution and
delivery of this Agreement by Citizens, nor the consummation by Citizens 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
Citizens' Articles 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
Citizens or any of its Subsidiaries or otherwise require the consent of any
Person under any agreement or obligation to which Citizens 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 Citizens, 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 Citizens consists of 100,000 shares
of Citizens Common Stock. As of the date hereof, 15,610.165 shares of Citizens
Common Stock are issued and outstanding, 3,442.167 shares of Citizens Common
Stock are held in Citizens' treasury, and no shares of Citizens Common Stock are
reserved for issuance for any reason whatsoever. All outstanding shares of
Citizens 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.
(b) 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 Citizens obligating Citizens to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other securities of Citizens or convertible security or other similar agreement
or commitment. There are no outstanding contractual obligations of Citizens to
repurchase, redeem or otherwise acquire any outstanding shares of Citizens
Common Stock and there are no outstanding stock appreciation rights or similar
rights granted by Citizens. Except as indicated on Schedule 3.3(b), there are no
voting trusts or other agreements with respect to the voting of Citizens Common
Stock (i) to which Citizens is a party or (ii) to Citizens' knowledge, to which
any other Person is a party. No bonds, debentures, notes or other indebtedness
having the right to vote (or convertible into or exercisable for securities
having
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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 shares of Citizens Common Stock were issued in compliance with or
pursuant to an exemption from, Applicable Law. Schedule 3.3(b) sets forth a true
and complete list of the names and addresses of each shareholder of record of
Citizens, indicating the number of shares of Citizens Common Stock held by each
such shareholder. Also indicated on Schedule 3.3(b) are all persons known to
Citizens to own "beneficially" (as that term is defined in Rule 13d-3 under the
Exchange Act) 5% or more of the outstanding shares of Citizens 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 Citizens.
SECTION 3.4 FINANCIAL STATEMENTS AND REPORTS.
(a) Citizens has delivered to the Company true and complete copies of
its (i) audited consolidated balance sheets as of December 31, 1999, 1998 and
1997 and related consolidated statements of income, changes in stockholders'
equity and cash flows for the years then ended, and (ii) unaudited consolidated
balance sheets as of September 30, 2000 and 1999 and related consolidated
statements of income, changes in stockholders' equity and cash flows for the
nine-month periods then ended. Such financial statements have been prepared from
the books and records of Citizens, 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). Citizens 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
September 30, 2000, which individually or in the aggregate would not result in a
Material Adverse Effect upon Citizens, or (iii) Liabilities under this Agreement
and fees and expenses related thereto. Citizens has delivered to the Company
true and complete copies of all management letters delivered to Citizens by
Tiller and Company (or any predecessor thereto) relating to the internal
controls of Citizens during any period from and after December 31, 1996.
(b) Citizens has delivered to the Company true and complete copies of
each of CB&T's, Baytown's and Pasadena's (i) audited balance sheets as of
December 31, 1999 and 1998 and related statements of income, changes in
stockholders' equity and cash flows for the years then ended, and (ii) unaudited
balance sheets as of September 30, 2000 and 1999 and related statements of
income, changes in stockholders' equity and cash flows for the nine-month
periods then ended. Citizens has delivered to the Company true and complete
copies of Bay City's (i) audited balance sheet as of December 31, 1999 and
related statement of income, changes in stockholders' equity and cash flows for
the year then ended, (ii) unaudited balance sheet as of December 31, 1998 and
related statement of income, changes in stockholders' equity and cash flows for
the year then ended, and (iii) unaudited balance sheets as of September 30, 2000
and 1999 and related statements of income, changes in stockholders' equity and
cash flows for the nine-month periods then ended. Such
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<PAGE> 15
financial statements have been prepared from the books and records of each such
bank, 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). None
of such banks has 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 September 30, 2000, which individually or in the aggregate
would not result in a Material Adverse Effect upon such bank. Citizens has
delivered to the Company true and complete copies of all management letters
delivered to each such bank, by its independent auditors relating to the
internal controls of such bank during any period from and after December 31,
1996.
(c) Citizens and its Subsidiaries have filed all material documents and
reports required to be filed by them with the FRB, the TDB, the OCC, 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.
(d) Citizens has not changed its independent auditing firm since
December 31, 1996, and there has been no disagreement (as such term is used in
Item 304 of Regulation S-K under the Securities Act) between Citizens and its
independent auditing firm(s) since December 31, 1996 concerning any aspect of
the manner in which Citizens 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 Citizens
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 violations of
Applicable Laws is pending, nor to Citizens' knowledge, is any such
investigation threatened, nor has any such investigation occurred during the
last three years. Since December 31, 1996, no Governmental Authority has
delivered any written notice to Citizens or its Subsidiaries, or to Citizens'
knowledge, otherwise asserted an intention to conduct any such investigation or
review, nor, to Citizens' knowledge, is there any basis for any investigation or
review of the type described above.
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(b) Neither Citizens 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 Citizens 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) Citizens 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 Citizens' 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 Citizens and its Subsidiaries.
(d) Except as disclosed in Schedule 3.5(d), to the knowledge of
Citizens, no Person or Persons acting in concert are deemed to "control"
Citizens under the Bank Holding Company Act, as amended, and the regulations
promulgated thereunder.
SECTION 3.6 OTHER ACTIVITIES OF CITIZENS.
(a) Citizens and its Subsidiaries engage only in activities permissible
under laws and regulations applicable to bank holding companies, Texas banking
associations and national banking associations and under applicable FDIC
regulations.
(b) Except as set forth on Schedule 3.6(b), Citizens 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
Citizens 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), Citizens 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 Citizens and its Subsidiaries (and any of their officers, directors or
employees) to conduct any such activities.
(d) Except as set forth on Schedule 3.6(d), neither Citizens 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. Citizens 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
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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) The trust activities engaged in by Citizens and its Subsidiaries
are described generally on Schedule 3.6(e).
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 Citizens' Subsidiaries in the ordinary course of business, Schedule
3.7(a) contains a list of each agreement that: (i) obligates Citizens or any of
its Subsidiaries to pay an amount of $75,000 or more in any twelve-month period;
(ii) binds Citizens or any of its Subsidiaries and has an unexpired term in
excess of two years and requires aggregate payments by any party of $75,000 or
more; (iii) relates to the purchase or sale by Citizens 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 $75,000, whether or not servicing rights or
obligations have been retained by Citizens; (iv) restricts Citizens or any of
its Subsidiaries (or would, to Citizens' 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 Citizens or any of its Subsidiaries
for borrowed money in excess of $75,000 to the extent not itemized in the
financial statements or notes thereto delivered to the Company hereunder,
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 $75,000 per
annum); (vi) obligates Citizens 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 its Subsidiaries) in the amount of
$75,000 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 Citizens
or any of its Subsidiaries in an amount of $75,000 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 Citizens or any of its
Subsidiaries of $75,000 or more; (x) is a mortgage, pledge, conditional sales
contract, security agreement, option or any other similar agreement with respect
to any asset of Citizens or any of its Subsidiaries (other than as mortgagee,
secured party or deed of trust beneficiary in the ordinary course of its lending
business) in property having a value of $150,000 or more to the extent not
itemized in the financial statements or notes thereto delivered to the Company
hereunder; (xi) is an agreement for the sale of any property or assets having a
value of $150,000 or more in which Citizens 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
Citizens 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
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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." Citizens 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
Citizens, 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; Citizens 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 Citizens or its applicable Subsidiary or,
to Citizens' 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 Citizens;
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, the Delaware Merger or
the Bank Merger, no breaches disclosed therein, individually, could reasonably
be expected to result in a loss to Citizens in excess of $75,000 and all of such
breaches, in the aggregate, could not reasonably be expected to result in a loss
to Citizens in excess of $150,000.
SECTION 3.8 BROKER'S AND FINDER'S FEES. Except as disclosed in Schedule
3.8, neither Citizens, 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 Citizens any such fee or commission.
SECTION 3.9 CORPORATE RECORDS; OTHER INFORMATION. The respective minute
books of Citizens 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 Citizens and its
Subsidiaries and their respective assets and liabilities provided to the Company
by Citizens 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 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 Citizens and
its Subsidiaries (the "Citizens Real Property"). Citizens 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).
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(b) No lease with respect to any Citizens Real Property and no deed
with respect to any Citizens Real Property contains any restrictive covenant
that materially restricts the use, transferability or value of such Citizens
Real Property. To Citizens' 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
Citizens or any of its Subsidiaries or, to Citizens' knowledge, the other party
thereunder; to Citizens' 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 Citizens 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 Citizens Real Property, except
for those violations and encroachments which in the aggregate could not
reasonably be expected to cause a Material Adverse Effect on Citizens. No
condemnation proceeding is pending or, to Citizens' knowledge, threatened, which
would preclude or materially impair the use of any Citizens Real Property in the
manner in which it is currently being used.
(d) Except as disclosed in Schedule 3.10(d), Citizens and its
Subsidiaries have good and indefeasible title to, or a valid and enforceable
leasehold interest in, or a contract vendee's interest in, all Citizens 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 Citizens
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. Citizens 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 "Citizens
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 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
Citizens Personalty. Subject to ordinary wear and tear, the Citizens Personalty
is in good operating condition and repair and is adequate for the uses to which
it is being put.
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SECTION 3.12 ACCOUNTING RECORDS; DATA PROCESSING.
(a) Citizens 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 Citizens 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 Citizens and its Subsidiaries in the
operation of their business to generate and retrieve such records (whether owned
or leased by Citizens 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 Citizens and its Subsidiaries.
SECTION 3.13 ABSENCE OF CERTAIN CHANGES. Except as disclosed in
Schedule 3.13, there has not been since September 30, 2000:
(a) any change in or effect on the business of Citizens 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 Citizens;
(b) any direct or indirect redemption, purchase or other acquisition of
shares of Citizens' Common Stock, convertible securities or securities
exercisable for Citizens Common Stock or other capital stock of Citizens, by
Citizens; any declaration, setting aside or payment of any dividend by Citizens
other than its quarterly dividend in the amount of $50.00 per share paid in
October, 2000; or any alteration of any right attaching to any shares of capital
stock of Citizens; or any combination or subdivision of any shares of capital
stock of Citizens;
(c) any increase in the compensation or benefits payable or to become
payable by Citizens 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;
(d) any amendment or termination of any agreement to which Citizens 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 Citizens;
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(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 Articles of Incorporation or Bylaws of
Citizens or any of the organizational documents of any of the Subsidiaries;
(g) any change by Citizens in accounting principles or methods, except
as required by the Financial Accounting Standards Board ("FASB") or FDIC or FRB
regulations or as 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 Citizens 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 Citizens 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 Citizens'
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, Citizens 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 Citizens 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 Citizens 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 Citizens or any of its Subsidiaries, or any officer, director,
employee or agent thereof that relate, directly or indirectly, to Citizens 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 Citizens 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. Citizens 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 Citizens 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 Citizens or its Subsidiaries that arose in connection with any failure or
alleged failure to pay any Taxes. Citizens 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). Citizens 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, Citizens 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. Citizens has delivered or made available to the
Company true and complete copies of Citizens' federal income tax returns for all
periods for which the statute of limitations has not expired. Citizens 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 Citizens in the possession of
Citizens or any of its Subsidiaries. Citizens will promptly furnish to the
Company true and correct copies of any other Returns filed by Citizens or any of
its Subsidiaries prior to the Closing Date. Except as set forth on Schedule
3.15(d), neither Citizens 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 Citizens 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 Citizens 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 Citizens 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, 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
Citizens 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 Citizens 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 Citizens or any of its Subsidiaries. Except as set forth in
Schedule 3.16, neither Citizens 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 Citizens or any of
its Subsidiaries, unless otherwise specified,
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shall include, without limitation, consultants of Citizens or any of its
Subsidiaries. Citizens has delivered to the Company true, correct and complete
copies of all Employee Agreements.
SECTION 3.17 BENEFIT PLANS.
(a) Citizens has delivered to the Company true and complete copies of
all Plans (as defined below), and related trusts, if applicable, including all
amendments thereto. Citizens 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,
Citizens 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 Citizens 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 Citizens 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 Citizens 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, (vi) 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 (vii) 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 Citizens, threatened or imminent against or with respect
to the Plan, the Plan's assets, Citizens 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 Citizens or the relevant employer at any time without liability;
(iv) no event has occurred and, to the knowledge of Citizens,
there exists no condition or set of circumstances in connection with
which Citizens 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
Citizens; and
(v) to the knowledge of Citizens, 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 Citizens; 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
Citizens, 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. Citizens 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 Citizens 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.
(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.
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(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 Citizens' 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 Citizens or any of
its Subsidiaries to make a larger contribution to, or pay greater benefits or
provide other rights under any Plan 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, 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 Citizens 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 Citizens 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) Citizens 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 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
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unfair labor practice, except for such noncompliances which in the aggregate
could not reasonably be expected to cause a Material Adverse Effect on Citizens;
(b) to the knowledge of Citizens, 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 Citizens 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 Citizens' knowledge, threatened
against or directly affecting Citizens or any of its Subsidiaries; (d) no union
representation question or, to Citizens' knowledge, union organizational
activity exists respecting the employees of Citizens or any of its Subsidiaries;
(e) no collective bargaining agreement exists which is binding on Citizens or
any of its Subsidiaries, nor has Citizens or any of its Subsidiaries been a
party to any collective bargaining agreement within the last ten years; (f)
neither Citizens nor any of its Subsidiaries has experienced any work stoppage
or other labor difficulties; (g) neither Citizens 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 Citizens nor any of its Subsidiaries has done
anything or entered into any agreement that would cause Citizens 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 Citizens 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 Citizens 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 Citizens' 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 Citizens' knowledge: (i) no officer, director, employee or agent of Citizens
or any of its Subsidiaries, any of their respective family members, any
corporation or organization (other than Citizens or any of its Subsidiaries) of
which any of the foregoing Persons is an officer, director or beneficial owner
of 10% 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 Citizens or any of its Subsidiaries, nor any
current or former beneficial owner of 5% or more of any of the outstanding stock
of Citizens has any material interest in any property, real or personal,
tangible or intangible, used in or pertaining to the business
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of Citizens or any of its Subsidiaries or in any transaction or series of
similar transactions to which Citizens or any of its Subsidiaries is a party;
(ii) no such Person is indebted to Citizens 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 Citizens 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 a Plan) with Citizens or any of its
Subsidiaries. Except as set forth in Schedule 3.19, to Citizens' 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-K under the Securities Act.
SECTION 3.20 OFFERING MEMORANDUM/PROXY STATEMENT AND REGULATORY
APPLICATIONS.
(a) When the Offering Memorandum/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 Offering Memorandum/Proxy
Statement and all amendments or supplements thereto, with respect to all
information set forth therein provided by Citizens 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 Offering
Memorandum/Proxy Statement with respect to Citizens and its Subsidiaries 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 Citizens
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 Citizens
and its Subsidiaries (other than title insurance, FHA mortgage insurance and
private mortgage insurance obtained in the ordinary course of business that, to
Citizens' knowledge, have been entered into on an arm's length basis pursuant to
normal commercial 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 Citizens 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 Citizens and its Subsidiaries (i)
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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 Citizens or any of
its Subsidiaries is a party; (iii) are, to Citizens' 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
Citizens' 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 Citizens 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 Citizens 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 Citizens,
neither Citizens 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 Citizens,
threatened relating to the liability of any properties or businesses owned or
operated by Citizens or any of its Subsidiaries, whether or not held in a
fiduciary or representative capacity, under any Environmental Law. To the
knowledge of Citizens, neither Citizens 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 Citizens is Citizens 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 Citizens. 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, 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)
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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 Citizens and its Subsidiaries or used
under license by them in the conduct of their business (the "Intellectual
Property"). Citizens 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 Citizens 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 Citizens 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 license for such use. Neither Citizens 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 Citizens 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 Citizens 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), none of
Citizens' Subsidiaries has applied for or received permission to open any
additional offices at any such location or any other locations.
(b) None of Citizens' Subsidiaries has 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 Citizens, (i) each outstanding loan, lease or other
extension of credit or commitment to extend credit of Citizens 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, 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) Citizens 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 for Citizens 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, to the
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knowledge of Citizens, 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; provided,
however, that no representation or warranty is made as to the sufficiency of the
collateral securing or the collectability of such loans. Except as set forth in
Schedule 3.25(a), as of September 30, 2000: (i) there were no loans, leases,
other extensions of credit or commitments to extend credit of any of Citizens'
Subsidiaries that have been or, to Citizens' knowledge, should have been
classified by the applicable Subsidiary in its reasonable determination as
"Other Assets Especially Mentioned," "Substandard," "Doubtful," "Loss" or any
comparable classification and (ii) as of September 30, 2000, there were no loans
due to any of Citizens' Subsidiaries 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 Citizens 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 Citizens' knowledge, its
allowance for possible credit losses is adequate in relation to its outstanding
loans, leases and other extensions of credit and is in accordance with the
safety and soundness standards administered by, and the practices and procedures
of, the FDIC for state nonmember banks or the FRB for state member banks, as
applicable, as such standards, practices and procedures may be amended from time
to time (the "Regulatory Loan 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 Citizens 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 delivered to the Company hereunder,
Citizens 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 Citizens
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 Citizens 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 Citizens'
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. Citizens 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 Citizens' knowledge, there are no breaches, violations or
defaults or allegations or assertions of such by any party thereunder.
SECTION 3.29 REGULATION D OFFERING. Citizens acknowledges that the
Merger will be structured as an offering of Company Common Stock to the
Shareholders that is exempt from registration under Regulation D. In that
connection, Citizens has appointed Keefe, Bruyette & Woods, Inc. to act as the
"Purchaser Representative," as defined in Rule 501(h) under the Securities Act,
for those Shareholders who are not "accredited investors," as defined in Rule
501(a) of Regulation D. To the knowledge of Citizens, at least 22 of the 47
Shareholders are accredited investors.
SECTION 3.30 DISCLOSURE. Without limiting any of the representations
and warranties contained herein, no representation or warranty by Citizens 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 Citizens 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.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby makes the following representations and warranties
to Citizens:
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 Delaware is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. The Company owns
directly all of the outstanding capital stock of SW Delaware.
(c) SW Bank is a national banking association duly organized, validly
existing and in good standing under the laws of the United States of America. SW
Delaware owns directly all of the outstanding capital stock of SW Bank.
(d) Each of the Company, SW Delaware 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. The nature of the business and activities of SW
Delaware, as currently conducted, does not require it to be qualified or
registered to do business in any jurisdiction other than the State of Delaware.
(e) The Company has the corporate power and authority to execute and
deliver this Agreement, perform its obligations hereunder and to consummate the
transactions contemplated herein, subject to the receipt of any required
Regulatory Approvals.
(f) The Company has delivered to Citizens true and complete copies of
the Articles of Incorporation and Bylaws of the Company, the Certificate of
Incorporation and Bylaws of SW Delaware 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, SW Delaware's Certificate of
Incorporation or Bylaws or the Articles of Association or Bylaws of SW
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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, SW
Delaware or SW Bank pursuant to, or otherwise require the consent of any Person
under, any agreement or obligation to which the Company, SW Delaware 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, SW Delaware 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 75,000,000 shares of Company Common Stock, of which
28,635,969 shares were issued and outstanding as of September 30, 2000. 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.
SECTION 4.4 FINANCIAL STATEMENTS AND REPORTS.
(a) The Company has delivered to Citizens true and complete copies of
its (i) Annual Report on Form 10-K for the year ended December 31, 1999 (the
"Company Annual Report"), as filed with the SEC, which contains the Company's
audited consolidated balance sheets as of December 31, 1999 and 1998 and related
consolidated statements of income, changes in shareholders' equity and cash
flows for the years ended December 31, 1999, 1998 and 1997, (ii) Quarterly
Report on Form 10-Q for the six-month period ended June 30, 2000 (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, 2000 and 1999, and (iii) press release containing unaudited financial
statements for the nine-month period ending September 30, 2000. 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 September 30, 2000, 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
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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, and
nothing has come to the attention of the Company since those dates that would
cause it to believe that such statements were untrue or misleading when made.
During the past 12 months, the Company has timely filed all reports required to
be filed with the SEC.
(b) The Company and its Subsidiaries have filed all material documents
and reports required to be filed by them with the FRB, the OCC, the FDIC and any
other Governmental Authority under all other Applicable Laws. 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 supplemental
filing with all requirements of their respective forms and with all Applicable
Laws.
SECTION 4.5 OFFERING MEMORANDUM/PROXY STATEMENT AND REGULATORY
APPLICATIONS.
(a) When the Offering Memorandum/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 Offering Memorandum/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 Offering Memorandum/Proxy Statement 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.
(c) The Company 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 the Company'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.
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SECTION 4.6 COMPLIANCE WITH APPLICABLE LAWS; OPERATING AUTHORITIES.
(a) The business of the Company 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 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, 1996, 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 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, 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 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 the Company'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.
SECTION 4.7 ABSENCE OF CERTAIN CHANGES. Except as disclosed in Schedule
4.7, there has not been since September 30, 2000:
(a) any change in or effect on the business of the Company or any of
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 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 any of its Subsidiaries 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;
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(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 or as listed on Schedule
4.7(e);
(f) any loss, damage or destruction (whether or not covered by
insurance) affecting any of the tangible assets or business of the Company or
any of its Subsidiaries that may involve a loss of more than $400,000,
individually, or $1,200,000 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 any of its Subsidiaries 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 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 the Company
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 the Company or any of its Subsidiaries 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.
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 Legg Mason Wood Walker, Incorporated and legal and
accounting advisors acting as such) 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 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 the Company 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.
SECTION 4.11 ENVIRONMENTAL MATTERS. To the knowledge of the Company,
neither the Company 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. There are no actions, suits or proceedings, or demands,
claims, notices or investigations (including, without limitation, notices,
demand letters or requests
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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 any of its Subsidiaries,
whether or not held in a fiduciary or representative capacity, under any
Environmental Law. To the knowledge of the Company, neither the Company 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 nor, to
the knowledge of the Company is the Company 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 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
Citizens 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.
SECTION 4.14 INSURANCE. The Company and each of its Subsidiaries is
presently insured or self-insured, and during each of the past five calendar
years (or during such lesser period of time as the Company has owned its
Subsidiaries) has been insured or self-insured, for reasonable amounts with
financially sound and reputable insurance companies against such risks as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured and has maintained all insurance required by
applicable law and regulation.
SECTION 4.15 COMPANY BENEFIT PLANS.
(i) For purposes of this Section 4.15, the term "Company Plan"
means all employee benefit plans as defined in Section 3(3) of ERISA,
to which the Company contributes, sponsors, or otherwise has any
obligations.
(ii) No Company Plan is a "multiemployer plan" within the
meaning of Section 3(37) or ERISA.
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(iii) Each Company Plan is and has been in all material
respects operated and administered in accordance with its provisions
and applicable law, including, if applicable, ERISA and the Code.
(iv) Each Company Plan intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service stating that the Company Plan (including
all amendments) is tax qualified under Section 401(a) of the Code and
the Company knows of no reason that any such Company Plan is not
qualified within the meaning of Section 401(a) of the Code and knows of
no reason that each related Company Plan trust is not exempt from
taxation under Section 501(a) of the Code.
(v) All contributions, premium payments and other payments
required to be made in connection with the Company Plans as of the date
of this Agreement have been made.
(vi) The Company has no Plan that is subject to Title IV of
ERISA, Section 301 of ERISA or Section 412 of the Code.
SECTION 4.16 NO DEFAULTS. Neither the Company nor any of its
Subsidiaries is in default, nor has any event occurred which, with the passage
of time or the giving of notice, or both, would constitute a default under any
material agreement, indenture, loan agreement or other instrument to which it is
a party or by which it or any of its assets is bound or to which any of its
assets is subject, the result of which has had or could reasonably be expected
to have a Material Adverse Effect upon the Company. To the Company's knowledge,
all parties with whom the Company or any of its Subsidiaries has material
leases, agreements or contracts or who owe to the Company or any of its
Subsidiaries material obligations other than with respect to those arising in
the ordinary course of the banking business of the Company's Subsidiaries are in
compliance therewith in all material respects.
SECTION 4.17 COMMITMENTS AND CONTRACTS. Except for those contracts
which have been filed with the SEC and those listed in Schedule 4.17, as of
September 30, 2000 neither the Company nor any of its Subsidiaries is a party or
subject to any of the following (whether written or oral, express or implied):
(i) any labor contract or agreement with any labor union;
(ii) any contract not made in the ordinary course of business
containing covenants which materially limit the ability of the Company
or any of its Subsidiaries to compete in any line of business or with
any person or which involve any material restriction of the
geographical area in which, or method by which, the Company or any of
its Subsidiaries may carry on its business (other than as may be
required by law or applicable regulatory authorities); or
(iii) any other contract or agreement which is a "material
contract" within the meaning of Item 601(b)(10) of Regulation S-K.
SECTION 4.18 REGULATORY APPROVALS. The Company knows of no reason why
it would not be able to obtain the Regulatory Approvals in a timely manner.
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SECTION 4.19 LOANS. Except as disclosed on Schedule 4.19 and except for
those matters which, in the aggregate, could not reasonably be expected to cause
a Material Adverse Effect on the Company, (i) each outstanding loan, lease or
other extension of credit or commitment to extend credit of the Company 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, 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) the Company
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 for the Company 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, to the knowledge of the Company, 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; provided, however, that no representation or
warranty is made as to the sufficiency of the collateral securing or the
collectability of such loans.
SECTION 4.20 INTEREST RATE RISK MANAGEMENT INSTRUMENTS. All interest
rate swaps, caps, floors and option agreements and other interest rate risk
management arrangements to which the Company 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 the Company'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. The Company 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 the Company's
knowledge, there are no breaches, violations or defaults or allegations or
assertions of such by any party thereunder.
ARTICLE V
COVENANTS OF THE PARTIES
SECTION 5.1 PREPARATION OF OFFERING MEMORANDUM/PROXY STATEMENT.
Citizens and the Company contemplate that the shares of Company Common Stock to
be issued in connection with the transactions contemplated hereby will be issued
in a private transaction that is exempt from registration under the Securities
Act pursuant to Regulation D thereunder and that the parties will prepare a
related Offering Memorandum/Proxy Statement (the "Offering Memorandum/Proxy
Statement") to be mailed to the shareholders of Citizens in connection with the
Shareholders' Meeting. The parties hereby agree to cooperate with each other in
preparing such Offering Memorandum/Proxy Statement and in ensuring that the
Offering Memorandum contains all
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information required by Rule 502(b) of Regulation D. Citizens will use its best
efforts to obtain from each of its Shareholders such executed representation
letters and other documents furnished by the Company for the purpose of ensuring
compliance with Regulation D. Without limiting the generality of the foregoing,
nothing shall be contained in the Offering Memorandum/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 best efforts (i) to
obtain all necessary approvals, consents, authorizations and the like from
Governmental Authorities required to consummate the Merger, the Delaware Merger
and the Bank Merger, including, without limitation, the approval of the Federal
Reserve, the OCC, the TDB and such other Persons as may be required under
Applicable Law. In addition, the consummation of the transactions contemplated
hereby is subject to 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.
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."
(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 TDB required in
connection with Section 5.2(a) above. The Company shall use its best efforts to
prepare and file such applications as soon as practicable and shall promptly
provide Citizens with copies of all non-confidential portions of such
applications, filings and correspondence with Governmental Authorities related
to obtaining such Regulatory Approvals. 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 best
efforts to arrange for those appearances.
SECTION 5.3 OTHER CONSENTS. Citizens 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. Citizens will take or cause to be
taken on a timely basis all actions necessary with respect to the authorization,
adoption and approval (i) by CB&T, Baytown and Pasadena of the Bank Merger and
(ii) by Citizens Delaware of the Delaware Merger. The Company will take or cause
to be taken on a timely basis all actions
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necessary with respect to the authorization, adoption and approval (i) by SW
Bank of the Bank Merger and (ii) by SW Delaware of the Delaware Merger.
SECTION 5.4 CITIZENS 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, Citizens and its Subsidiaries
other than Bay City 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 its best 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 Citizens and its Subsidiaries (other than Bay
City) shall not make or agree to make any loans or other extensions of credit to
any borrower in excess of $500,000 (except (i) pursuant to commitments made
prior to the date of this Agreement, (ii) loans fully secured by a certificate
of deposit at CB&T, Baytown or Pasadena and (iii) renewals, extensions and
consolidations of any loans other than those loans listed on Schedule 5.4(a))
without the prior consent of the Company (which consent shall not be
unreasonably withheld); provided, however, 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.
(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;
(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 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
Citizens' 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
Citizens or its Subsidiaries (other than Bay City), either individually or as
part of a class of similarly situated persons;
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(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), Citizens and its
Subsidiaries shall use their best efforts to not cause or allow any of the
things listed therein to occur, and with respect to Section 3.13(b) if the
Effective Time does not occur by January 15, 2001, Citizens may pay its fourth
quarter regular quarterly dividend of $50.00 per share to the shareholders of
record on January 15, 2001);
(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 any of its Subsidiaries from that as of September 30, 2000;
(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
(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
Subsidiary's ordinary course of business and policies and Applicable Laws.
(m) not change any of its policies with respect to its general
oversight of Bay City, including loan approval, asset writedowns, membership on
Bay City's Board of Directors and any committees thereof and similar matters.
Notwithstanding the foregoing, prior to the Effective Time Citizens and its
Subsidiaries may terminate the two leases of real property in LaSalle County,
Texas, that are used primarily for hunting purposes and are listed and so noted
in Schedule 3.10(a).
SECTION 5.5 ONGOING FINANCIAL DISCLOSURE. Citizens 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 Citizens or any of its Subsidiaries
(other than information relating to this Agreement and the transactions relating
to this Agreement, or where such information relates to litigation and counsel
for Citizens has advised Citizens that such disclosure may jeopardize the
attorney-client privilege), and, to the extent permitted by Applicable Law, all
reports filed by Citizens or any of its Subsidiaries with federal or state
regulatory agencies. The Company shall send to Citizens, 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
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Company shall provide to a single designee of Citizens 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 Citizens 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 CITIZENS.
(a) During the period from the date hereof until the Effective Time,
(i) Citizens 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 Citizens and its Subsidiaries and (ii) subject to compliance
with Section 5.7, two representatives of the Company shall be entitled to attend
all meetings of the Board of Directors of Citizens and the respective Boards of
Directors of CB&T, Baytown and Pasadena (except for those parts of such meetings
where matters related to this Agreement are discussed and where litigation
regarding Citizens is being discussed and counsel for Citizens has advised
Citizens that the presence of Company representatives may jeopardize the
attorney-client privilege).
(b) To the extent permitted by law and consistent with Section 5.6(a),
Citizens 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 Tiller
and Company used to audit Citizens' consolidated balance sheets as of December
31, 1999, 1998 and 1997 and its consolidated statements of income, changes in
stockholders' equity and cash flows for the years then ended), contracts and
documents of Citizens and its Subsidiaries and all other information with
respect to the business affairs, financial condition, assets and Liabilities of
Citizens and its Subsidiaries as the Company 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 Citizens and its Subsidiaries with such third persons, including,
without limitation, the directors, officers, employees, agents, accountants
(including Tiller and Company) and attorneys of Citizens and its Subsidiaries,
as the Company considers reasonably necessary or appropriate for the purposes of
familiarizing itself with the business and operations of Citizens and its
Subsidiaries, determining any breach of the representations, warranties and
covenants of Citizens 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
Citizens and its Subsidiaries, and accomplishing the integration of the business
operations of Citizens and its Subsidiaries with those of the Company and its
Subsidiaries at the earliest possible date.
(c) For purposes of the Company's investigation pursuant to this
Section 5.6, Citizens shall use its best 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
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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 Citizens 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 Citizens and its
Subsidiaries to such systems as the Company may designate. Citizens shall use
its best 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. Citizens 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
Citizens, 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 Citizens shall use its
best 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 its best 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 Citizens hereunder may be disclosed by
the Company or SW Bank to the FRB, the OCC, the FDIC, the TDB 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.
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SECTION 5.8 MEETING OF SHAREHOLDERS.
(a) Citizens shall duly call a meeting of its shareholders (the
"Shareholders' Meeting") for the purpose of obtaining the adoption of 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 days following the date upon which the notice of the
Shareholders' meeting is mailed to the Shareholders. In connection with the
Shareholders' Meeting, the Board of Directors of Citizens shall recommend
approval of the transactions contemplated by this Agreement, indicate the
determination by the Board of Directors that the Merger is in the best interests
of Citizens' shareholders and use its best 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 Offering Memorandum/Proxy Statement.
(b) In obtaining the approval of shareholders referred to in this
Section 5.8, Citizens will comply, and will use its best 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, Citizens shall deliver to the Company, after consultation with
legal counsel, a list of names and addresses of those persons who are
"Affiliates" of Citizens with respect to the Merger within the meaning of Rule
144 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 Citizens within three business days
after receipt of such list) as possibly being a person who may be deemed to be
an "Affiliate" of Citizens within the meaning of Rule 144. Citizens shall use
its best efforts to deliver, or cause to be delivered, to the Company, not later
than the Closing Date from each of the "Affiliates" of Citizens identified as
aforesaid, a letter dated as of the date of delivery thereof in the form of
Exhibit C attached hereto.
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SECTION 5.11 PLAN AMENDMENTS AND PARTICIPATION IN COMPANY PLANS.
Citizens 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 Citizens and its Subsidiaries who continue their
employment after the Effective Time (the "Citizens Employees") will be entitled
to participate as newly hired employees in the employee benefit plans and
programs (including any severance plan) 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 Citizens Employees in such plans and programs from and after the
Effective Time, subject to the following:
(i) Each Citizens Employee will be entitled to credit for
prior service with Citizens and its Subsidiaries for all purposes under
the employee welfare benefit plans and other employee benefit plans and
programs (other than stock option plans), sponsored by the Company and
SW Bank to the extent Citizens and its Subsidiaries sponsored a similar
type of plan in which the Citizens 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 Citizens Employee. For purposes of determining Citizens Employee's
benefit for the calendar year in which the Merger occurs under the
Company's vacation program, any vacation taken by the Citizens 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 Citizens Employee for such calendar year. The
Company further agrees to credit each Citizens Employee for the year
during which coverage under the Company's group health plan begins,
with any deductibles already incurred during such year, under Citizens'
group health plan.
(ii) Each Citizens Employee shall be entitled to credit for
past service with Citizens 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).
(iii) Employees of Citizens and its Subsidiaries who are
terminated as of or within six months after the Effective Time because
their jobs are eliminated due to merger related consolidations will be
entitled to treatment under the Severance Benefits Summary attached
hereto as Schedule 5.11 and will be entitled to credit for prior
service with Citizens and its Subsidiaries as described therein.
SECTION 5.12 TERMINATION OF SEVERANCE AND CONSULTING ARRANGEMENTS. On
or prior to the Closing Date, subject to Applicable Law, Citizens shall use its
best 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 Citizens in writing pursuant to which Citizens or
any of its Subsidiaries is or may be obligated to make payments after the
Closing Date to any Person pursuant to any employment, consulting, severance,
employment termination or other
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similar agreement with any current or former officer, director, employee or
agent of Citizens or any of its Subsidiaries.
SECTION 5.13 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 5.14 NO SHOPPING.
(a) Citizens 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
Bracewell & Patterson, 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 Citizens or its Subsidiaries or any access
to such properties or assets) any Acquisition Proposal. Citizens 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, Citizens 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 Citizens 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
Citizens, or presented by Citizens, or by its Board of Directors or management,
to the shareholders of Citizens for vote or approval by written consent, the
Board of Directors of Citizens 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 Citizens or noticed for purposes of taking
shareholder action with respect to any Acquisition Proposal.
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(c) Unless and until Citizens 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 having jurisdiction with
respect to a party, Citizens 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 5.15 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 its best efforts to cause the Merger to be treated for financial accounting
purposes as a "pooling of interests," and shall not take, and shall use its best
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 its best efforts to cause the Merger and
the Bank Merger to qualify, and shall not take, and shall use its best 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 5.16 TAXES; CONSENT. Citizens shall prepare and timely file all
Returns and amendments thereto required to be filed by Citizens 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.
Citizens 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 Citizens; and (b)
Citizens 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 5.17 TRANSACTIONS WITH AFFILIATES AND INSIDERS. From the date
hereof until the Effective Time, Citizens shall not, without the prior written
consent of the Company, make, or allow any of its Subsidiaries (other than Bay
City) to make, any loan (other than renewals, extensions and consolidations of
loans) 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. To the extent
Citizens can prevent Bay City from taking any of the foregoing actions through
its current oversight authority over Bay City, Citizens will not allow Bay City
to take any such actions prior to the Effective Time.
SECTION 5.18 CLASSIFICATION OF LOANS. During the period from the
execution of this Agreement until the Effective Time, Citizens and the Company
(i) to the extent permitted by Applicable Law, shall each promptly inform the
other of the amounts and categories of any of its loans, leases or other
extensions of credit that are classified by any Governmental Authority or by
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any of its Subsidiaries as "Other Assets Especially Mentioned," "Substandard,"
"Doubtful," "Loss" or any comparable classification; (ii) shall classify all
assets in accordance with Regulatory 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 Call Report Instructions of the
Federal Financial Institutions Examination Council.
SECTION 5.19 COMPLIANCE WITH APPLICABLE LAW. During the period from the
date of this Agreement until the Effective Time, Citizens shall take any and all
actions reasonably requested by the Company in order to conform the conduct of
the business of Citizens 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 5.20 CERTAIN ACCOUNTING ADJUSTMENTS. After the approval of the
Shareholders and all of the Regulatory Approvals have been obtained, Citizens
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 Citizens 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 or be deemed to be a breach, violation or
failure to satisfy any representation, warranty, covenant, condition or other
provision or constitute grounds for termination of this Agreement or be an
acknowledgment by Citizens (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. No adjustment shall (i) require any prior filing with
any governmental agency or regulatory authority or (ii) violate any law, rule or
regulation applicable to Citizens.
SECTION 5.21 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 Citizens has such
right, but not the obligation or responsibility, at the Company's expense, to
inspect any Citizens 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
November 15, 2000. The Company shall notify Citizens prior to any physical
inspections of any such properties, and Citizens 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 Citizens 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 December 15, 2000. All secondary investigations
must be approved in advance by Citizens. The Company shall give reasonable
notice to Citizens of such secondary investigations, and Citizens may place
reasonable time and place restrictions on such secondary investigations.
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(b) Citizens 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 Citizens or its agents. The Company
agrees to indemnify and hold harmless Citizens 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. 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 Citizens 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 Citizens reasonable notice of the Company's
intentions.
(c) The Company shall have the right to terminate this Agreement if (i)
Citizens 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 Citizens 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 December 30, 2000, the Company shall advise Citizens 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. Notwithstanding the foregoing, if
the Company elects to terminate this Agreement pursuant to clause (ii) of the
first sentence of this Section 5.21(c), Citizens may elect, within three
business days of its receipt of such notice of termination, to reduce the total
number of shares of Company Common Stock to be received by the shareholders of
Citizens pursuant to the Merger by the quotient of the excess of the Company's
estimated remedial or clean up cost over $500,000 on an after-tax basis divided
by the Company Measurement Price, and proceed with the Merger (without obtaining
any additional approval from the shareholders of Citizens if they have already
approved the Merger). In such event, the Company and Citizens shall execute an
amendment to this Agreement to reflect the appropriate reduction in the Exchange
Ratio.
(d) Citizens agrees to make available to the Company and its
consultants, agents and representatives all documents and other material
relating to environmental conditions of any Citizens Real Property and Real
Estate Owned including, without limitation, the results of other environmental
inspections and survey. Citizens 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.
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SECTION 5.22 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 and the
Articles of Association and Bylaws of Bay City 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 Citizens 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 Citizens 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, 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 Citizens 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 whether or not asserted
before the Effective Time.
(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 Citizens'
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 best 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 5.22, 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 5.22 except to the extent such failure prejudices the Company
or SW Bank), and shall deliver to the Surviving Corporation an undertaking to
repay all expenses paid by the Company if such indemnification is not permitted
under 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.
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(d) For a period of four years and six months after the Effective Time,
the Company shall cause to be maintained in effect a "tail" directors' and
officers' liability insurance policy with terms and conditions substantially
similar to Citizens' 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) The provisions of this Section 5.22 shall survive the Effective
Time and are 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.
(f) If the Company or any of its successors or assigns (A) shall
consolidate with or merge into any other corporation or entity and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger; or (B) shall transfer all or substantially all of its properties and
assets to any individual, corporation, or other entity, then and in each such
case the Company shall make proper provision so that the successors and assigns
of the Company shall assume the obligations set forth in this Section 5.22.
SECTION 5.23 ACCESS TO INFORMATION OF THE COMPANY.
(a) During the period from the date hereof until the Effective Time,
(i) 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 and (ii) subject to compliance with Section
5.7, two representatives of Citizens shall be entitled to attend all meetings of
the Board of Directors of the Company and the Board of Directors of SW Bank
(except for those parts of such meetings where matters related to this Agreement
are discussed and where litigation regarding the Company is being discussed and
counsel for the Company has advised the Company that the presence of Citizens'
representatives may jeopardize the attorney-client privilege).
(b) To the extent permitted by law and consistent with Section 5.23(a),
the Company shall authorize and permit Citizens 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, 1999 and 1998 and its statements of income, changes in shareholders' equity
and cash flows for the years ended December 31, 1999, 1998 and 1997), 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 Citizens 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 Citizens
considers reasonably necessary or appropriate for the purposes of familiarizing
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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 Citizens' investigation pursuant to this Section
5.23, the Company shall use its best efforts to cause any service bureau,
accountant, third party servicer or other third party under contract to it to
furnish to Citizens and its authorized representatives, at Citizens' 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 best 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 Citizens' 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, Citizens and its authorized representatives shall be specifically
entitled to conduct at Citizens' own expense (and the Company and SW Bank shall
use their best efforts to enable them to conduct) such tests of accounts
receivable and other matters as they deem appropriate. Any examination or
investigation made by Citizens or other Persons as contemplated by this Section
shall not affect any of the representations and warranties hereunder.
SECTION 5.24 EMPLOYMENT AGREEMENTS. The Company shall use its best
efforts to enter into Employment Agreements with John H. Echols, Andrew C.
Echols, Hugh A. Echols, Conrad W. Magouirk, Sam T. Schultz, E. Reginald Brewer,
Michael Wilson and Mark Himsel substantially in the forms set forth in Exhibit D
hereto effective as of the Effective Time.
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.
SECTION 5.26 PREPARATION OF SHELF REGISTRATION STATEMENT. As soon as
practicable following the Closing Date (but no later than ten days following the
later of the Closing Date or the date on which the Company has received all
requisite information from substantially all of the Shareholders), the Company
will prepare and file with the SEC, at its expense (including, without
limitation, all NASD registration and filing fees, fees and expenses of
compliance with securities or blue sky laws, listing fees, printing expenses,
messenger and delivery expenses, all fees and disbursements of counsel,
independent certified public accountants, consultants, advisors and experts for
the Company, and all other expenses of the type ordinarily incurred to register
securities, but not including any underwriting discounts or commissions, or
expenses of Shareholders or underwriters), a continuous or "shelf" registration
statement on Form S-3 (the "Registration Statement") pursuant to Rule 415 under
the Securities Act for registration of the resale by the Shareholders of the
shares of Company Common Stock to be issued in connection with the transactions
contemplated hereby. The parties hereby agree (i) to cooperate with each other
in preparing and filing such Registration Statement, and (ii) to use its best
efforts to cause such Registration Statement to be declared effective
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by the SEC by the date on which the Company first publishes an earnings report
that reflects at least 30 days of combined operations of the Company and
Citizens (the "Expiration Date"), such earnings report being referred to herein
as the "Combined Report." The Company agrees to maintain the effectiveness of
the Registration Statement for a period of two years following the Closing Date.
Without limiting the generality of the foregoing, nothing shall be contained in
the Registration Statement or with respect to any party unless approved by such
party, which approval shall not be unreasonably withheld. The Company shall
furnish without charge to each Shareholder such number of copies of the
prospectus (including each preliminary prospectus) included in the Registration
Statement, and such other documents as the Shareholder may reasonable request in
order to facilitate the disposition of shares of Company Common Stock by each
Shareholder, including, without limitation, all documents incorporated by
reference in the Registration Statement. The Company shall also promptly notify
each Shareholder, after becoming aware thereof, of the issuance by the SEC of
any stop order suspending the effectiveness of the Registration Statement or the
happening of any event which makes the Registration Statement or any
post-effective amendment thereto, related prospectus or any amendment or
supplement thereto, or any document incorporated therein by reference, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein in the
light of the circumstances under which they were made not misleading. The
Company shall use its best efforts to register or qualify such shares under the
securities or blue sky laws of such states and the District of Columbia as the
Shareholders may reasonably request to enable them to dispose in such states and
the District of Columbia of the shares owned by them; and otherwise use its best
efforts to comply with all Applicable Laws to enable the Shareholders to
consummate the disposition of the shares owned by them.
The Company shall prepare and file with the SEC all such amendments and
supplements to the Registration Statement and each prospectus used in connection
therewith as may be necessary to keep the Registration Statement effective for
the two-year period specified above in this Section 5.26 and as may be necessary
to comply with the provisions of the Securities Act with respect to the
disposition of all shares of Company Common Stock covered by the Registration
Statement in accordance with the intended method of disposition (which shall
include underwritten offerings) set forth in the Registration Statement.
SECTION 5.27 SHAREHOLDERS' AGREEMENTS AS TO REGISTRATION STATEMENT.
Citizens understands that each Shareholder must furnish the Company with such
information regarding the Shareholder and pertinent to the disclosure
requirements relating to the registration and distribution of his shares of
Company Common Stock as the Company may from time to time reasonably request in
writing and hereby agrees to assist the Company in that regard. Citizens
understands and agrees that in order to sell any shares of Company Common Stock
pursuant to the Registration Statement, the selling Shareholder or the broker
effectuating any such sale must deliver a copy of the current prospectus
included in the Registration Statement to the purchaser of such shares prior to
or simultaneously with the delivery of the confirmation for such sale to such
purchaser. Citizens understands that any sale which fails to comply with the
requirements of the preceding sentence will not be in compliance with the
Securities Act and must be rescinded. Citizens understands that, upon receipt of
any notice from the Company of the happening of any event described in the sixth
sentence of Section 5.26 hereof, each Shareholder must immediately discontinue
disposition of his shares of Company Common Stock pursuant to the Registration
Statement until the lifting of such
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stop order or the Shareholder's receipt of the copies of the supplemented or
amended prospectus, as applicable.
SECTION 5.28 INDEMNIFICATION BY THE COMPANY. The Company shall
indemnify, defend and hold harmless each Shareholder and each underwriter, if
any, and each Affiliate of each Shareholder or any such underwriter
(collectively, the "Shareholder Indemnified Parties") against any and all
losses, claims, damages or liabilities, and expenses to which any such
Shareholder Indemnified Party may become subject under the Securities Act,
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof, whether commenced or threatened)
arise out of or are based upon (i) any untrue statement of any material fact
contained in the Registration Statement, any preliminary, final or summary
prospectus contained therein (except where errors or omissions in such
preliminary prospectus are corrected in the final prospectus and the Shareholder
fails to timely deliver such final prospectus) or in any amendment or supplement
thereto or any document incorporated by reference therein or (ii) any omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and the Company will reimburse the
Shareholder Indemnified Party for any legal or any other expenses reasonably
incurred by him in connection with investigating or defending any such loss,
claim, liability, action or proceeding; provided, that the Company shall not be
liable to the Shareholder Indemnified Party in any such case to the extent that
any such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon any untrue statement or
omission made in the Registration Statement or amendment or supplement thereto
or in any such preliminary, final or summary prospectus in reliance upon and in
conformity with written information with respect to the Shareholder or the
Shareholder's underwriter furnished to the Company by the Shareholder or the
Shareholder's underwriter specifically for use in the preparation thereof. The
indemnity agreements contained in this Section 5.28 shall not apply to amounts
paid in settlement of claims if such settlement is effectuated without the
consent of the Company (which consent shall not be unreasonably withheld). Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Shareholder or any Shareholder Indemnified Party.
(b) Indemnification by the Shareholder. Each Shareholder shall
indemnify, defend and hold harmless, the Company and each Affiliate of the
Company and their respective directors and officers (and the directors,
officers, affiliates and controlling persons thereof, as defined in Section 15
of the Securities Act or Section 20 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), (collectively, the "Company Indemnified
Parties"), against any and all losses, claims, damages or liabilities, and
expenses to which any such Company Indemnified Party may become subject under
the Securities Act, common law or otherwise, insofar as such losses, claims,
damages or liabilities,(or actions or proceedings in respect thereof, whether
commenced or threatened) arise out of or are based upon any statement in or
omission from the Registration Statement, any preliminary, final or summary
prospectus contained therein, or any amendment or supplement, if such statement
or omission was made in reliance upon and in conformity with written information
with respect to the Shareholder furnished to the Company by the Shareholder
specifically for use in the preparation of the Registration Statement,
preliminary, final or summary prospectus or amendment or supplement, or a
document incorporated by reference into any of the foregoing; provided, however,
that the indemnity agreement contained in this Section 5.28 shall not apply to
amounts paid in settlement of any loss, claim, damage, liability or action
arising if such
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settlement is effected without the consent of the Shareholder (which consent
shall not be unreasonably withheld). Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the Company
or any other Company Indemnified Party.
(c) Notices of Claims, Etc. Promptly after receipt by a Shareholder or
a Company Indemnified Party (collectively, an "Indemnified Party") hereunder or
written notice of the commencement of any action or proceeding with respect to
which a claim for indemnification may be made pursuant to this Section 5.28,
such Indemnified Party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the commencement of
such action; provided, that the failure of such Indemnified Party to give notice
as provided herein shall not relieve the indemnifying party of its obligations
under the preceding sections of this Section 5.28, except to the extent that the
indemnifying party is actually prejudiced by such failure to give notice, and in
no event shall such omission relieve the indemnifying party from any other
liability it may have to such Indemnified Party. In case any such action is
brought against any Indemnified Party, unless in such Indemnified Party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, the indemnifying party
will be entitled to participate in and to assume the defense thereof, jointly
with any other indemnifying party similarly notified to the extent that it may
wish, with counsel reasonably satisfactory to such Indemnified Party, and after
notice from the indemnifying party to such Indemnified Party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
Indemnified Party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof. No indemnifying party will
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof, the giving by the claimant or
plaintiff to such Indemnified Party or a release from all liability in respect
to such claim or litigation.
(d) Contribution. If the indemnification provided for in this Section
5.28 from the indemnifying party is unavailable to an Indemnified Party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to herein, then the indemnifying party, in lieu of indemnifying such
Indemnified Party shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and such Indemnified Party in connection with the actions
that resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and an Indemnified Party shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by such indemnifying party or by such Indemnified Party.
The parties hereto agree that it would not be just and equitable if
contributions pursuant to this Section 5.28(d) were determined: (i) by pro rata
allocation or (ii) by any other method of allocation that does not take account
of the equitable considerations referred to in this Section 5.28(d). The amount
paid or payable by an Indemnified Party as a result of the losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) referred
to above shall be deemed to include (subject to the limitations set forth in
Section 5.28(c) hereof) any legal or other fees or expenses reasonably incurred
by such Indemnified Party in connection with investigating or defending any such
action, proceeding or claim. No party guilty of fraudulent misrepresentation
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(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any party who was not guilty of such fraudulent
misrepresentation.
(e) Non-Exclusivity. The obligations of the parties under this Section
5.28 shall be in addition to any liability which any party may otherwise have to
any other party.
SECTION 5.29 COMBINED REPORT. The Company agrees to publish the
Combined Report without undue delay, but in no event later than 30 days after
the last day of the first full month of combined operations of the Company and
Citizens, and thereupon to notify the Shareholders of the occurrence of the
Expiration Date.
SECTION 5.30 LEGENDS ON CERTIFICATES. In order to comply with the
requirements of the Securities Act and the Texas Business Corporation Act,
Southwest may give stop transfer instructions to its transfer agent with respect
to the shares of Company Common Stock issuable hereunder and shall place on each
certificate representing any such shares (and any substitution therefor) a
legend stating in substance:
"The securities represented by this certificate were issued
without registration under the Securities Act of 1933 (the "Act") or
any applicable state securities laws and may be sold, transferred or
otherwise disposed of only upon receipt by the Company of an opinion of
counsel acceptable to it that an exemption from registration under the
Act and any such state securities laws is available, or pursuant to a
registration statement under the Act."
The legend set forth above shall be removed by delivery of substitute
certificates without such legend, and any related stop transfer instructions
shall be lifted forthwith, provided that the Shares have been sold under the
Registration Statement and the prospectus delivery requirements set forth in
Section 5.27 have been satisfied. In addition, such legend shall be so removed,
and any related stop transfer instructions shall be lifted forthwith, upon the
Company's receipt of a request therefor from any Shareholder at least two years
following the Effective Time, unless the Company deems the Shareholder at the
time to be an affiliate of the Company or to have been such an affiliate within
the preceding three months.
SECTION 5.31 BEST EFFORTS FOR DECEMBER CLOSING. The Company and
Citizens shall use their best efforts to cause the Effective Time to occur on or
prior to December 31, 2000.
SECTION 5.32 SPLIT-DOLLAR LIFE INSURANCE. Following the Effective Time,
John C. Echols shall have the option of purchasing from SW Bank (as the
successor to CB&T) the split-dollar life insurance policy maintained by CB&T,
then in effect covering his life, and Douglas W. Stewart shall have the option
of purchasing from SW Bank the two second-to-die split-dollar life insurance
policies maintained by CB&T then in effect covering his life and the life of his
spouse. In each case, the purchase price of such policy shall be paid in cash
and shall be equal to CB&T's investment in the policy as defined in the Split
Dollar Agreement relating to such policy and as reflected as an asset on CB&T's
balance sheet (the "CB&T Investment"). If either such option is not exercised
within 10 days following the Effective Time, SW Bank may terminate such policy
and retain the
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CB&T Investment from the cash surrender value thereof. In no event shall the
Company or any of its Subsidiaries make any further payments on either such
policy following the Effective Time.
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.1 CONDITIONS TO CITIZENS' OBLIGATION TO CLOSE. The obligation
of Citizens 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 Citizens 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.
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(c) Fairness Opinion. Citizens shall have received a written opinion
from Keefe, Bruyette and Woods, Inc. dated as of the date of this Agreement and
reaffirmed as of the date of the Offering Memorandum/Proxy Statement that the
Exchange Ratio is fair to the Shareholders from a financial point of view.
(d) Board and Shareholder Approval.
(i) The Company shall have furnished Citizens 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;
(B) certified copies of resolutions duly adopted by
the Board of Directors of SW Delaware and the Company, as the
sole shareholder of SW Delaware, approving the Delaware
Merger; and
(C) certified copies of resolutions duly adopted by
the Board of Directors of SW Bank and SW Delaware, as the sole
shareholder of SW Bank, approving the Bank Merger; and
(ii) The holders of at least 66 2/3% of the outstanding shares
of Citizens 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. Citizens shall have received an opinion
addressed to them of Vinson & Elkins L.L.P., counsel to the Company, SW Delaware
and SW Bank, dated the Closing Date, substantially in the form of Exhibit E
hereto.
(g) Tax Opinion. Citizens shall have received from Bracewell &
Patterson, L.L.P., an opinion of counsel reasonably satisfactory to Citizens 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 Citizens will each be a party to that reorganization; (iii) no
gain or loss will be recognized to the former Shareholders of Citizens who
receive Company Common Stock in exchange for their Citizens 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
Citizens 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)
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the holding period of the shares of Company Common Stock received by a
Shareholder will include the holding period of the shares of Citizens Common
Stock surrendered therefor, provided that such Citizens 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 Citizens and the Company,
affiliates of the foregoing, and others.
(h) Employment Agreements. The employment agreements referred to in
Section 5.24 shall have been executed and shall be delivered simultaneously with
the Closing.
(i) Purchase Agreement. The purchase of assets and assumption of
liabilities of the Partnership by the Company shall be consummated
simultaneously with the Closing.
(j) Nasdaq Listing. The shares of Company Common Stock to be delivered
to the Shareholders of Citizens pursuant to this Agreement shall have been
authorized for listing on Nasdaq.
(k) 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.
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 Citizens, all representations and warranties of Citizens
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 Citizens 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) Citizens 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;
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(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 Citizens; and
(iv) There shall have been delivered to the Company on the
Closing Date a certificate executed by the Chief Executive Officer of
Citizens 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 Citizens or its Subsidiaries constituting non-permissible activities of a
bank or a bank holding company. All such Regulatory Approvals shall be in effect
and 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) Board and Shareholder Approval.
(i) The holders of at least 66 2/3% of the outstanding shares
of Citizens Common Stock entitled to vote thereon shall have approved
this Agreement, the Merger and the transactions contemplated hereby and
thereby; and
(ii) Citizens shall have furnished the Company with:
(A) a certified copy of the resolutions duly adopted
by the Board of Directors of Citizens approving this
Agreement, the Merger and the transactions contemplated hereby
and thereby and directing the submission thereof to a vote of
Citizens' shareholders;
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(B) a certified copy of resolutions duly adopted by
the holders of at least 66 2/3% of the outstanding shares of
Citizens Common Stock entitled to vote thereon approving this
Agreement, the Merger and the transactions contemplated hereby
and thereby;
(C) a certified copy of resolutions duly adopted by
the Board of Directors of Citizens Delaware and Citizens, as
the sole shareholder of Citizens Delaware, approving the
Delaware Merger; and
(D) certified copies of resolutions duly adopted by
the Board of Directors of CB&T, Baytown and Pasadena and by
Citizens Delaware, as the sole shareholder of CB&T, Baytown
and Pasadena, approving the Bank Merger.
(d) 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.
(e) Opinion of Counsel. The Company shall have received an opinion
addressed to them of Bracewell & Patterson, L.L.P., special counsel to Citizens
and its Subsidiaries, dated the Closing Date, substantially in the form of
Exhibit F hereto.
(f) 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 Citizens will each be a party
to that reorganization; (iii) no gain or loss will be recognized by the Company
or Citizens by reason of the Merger; (iv) the Delaware Merger will constitute a
tax free reorganization within the meaning of Section 368(a) of the Code; (v) SW
Delaware and Citizens Delaware will each be a party to that reorganization; (vi)
no gain or loss will be recognized by SW Delaware or Citizens Delaware by reason
of the Delaware Merger; (vii) the Bank Merger will constitute a tax free
reorganization within the meaning of Section 368(a) of the Code, (viii) SW Bank
and CB&T, Baytown and Pasadena will each be a party to that reorganization; and
(ix) no gain or loss will be recognized by SW Bank, CB&T, Baytown or Pasadena 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 Citizens and the Company,
affiliates of the foregoing, and others.
(g) 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.
(h) Releases of Officers and Directors.
(i) Each director of Citizens and its Subsidiaries (other than
Bay City) shall have delivered to the Company an instrument,
substantially in the form of Exhibit G hereto, dated
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as of the Effective Time, releasing Citizens and its Subsidiaries from
any and all claims of such directors (except as to their deposits and
accounts at Citizens and its Subsidiaries and as to their rights under
any benefit plans of Citizens, and as to rights of indemnification
pursuant to Applicable Law, this Agreement and the organizational
documents of Citizens and its Subsidiaries, which shall survive the
Merger) and shall have delivered to the Company their resignations as
directors of Citizens and its Subsidiaries.
(ii) Each executive officer of Citizens and its Subsidiaries
(other than Bay City) shall have delivered to the Company an
instrument, substantially in the form of Exhibit H hereto in form and
substance satisfactory to the Company and dated the Effective Time,
releasing Citizens 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 Citizens, accrued compensation permitted by their respective
agreements and rights of indemnification pursuant to Applicable Law,
this Agreement and the organizational documents of Citizens and its
Subsidiaries, which shall survive the Merger).
(i) Affiliates' Letters. Each Affiliate of Citizens shall have
delivered to the Company an executed copy of the letter contemplated by Section
5.10 hereof.
(j) Pooling of Interests. The Merger and the transactions consummated
by the Purchase Agreement shall qualify as a "pooling of interests" for
financial accounting purposes, and the Company shall have received an opinion
from PricewaterhouseCoopers LLP dated the Closing Date to that effect, and
Tiller and Company shall have delivered its opinion to the Company dated as of
the Closing Date that it knows of no facts with regard to Citizens that would
not allow the Merger and the transactions consummated by the Purchase Agreement
to qualify as a "pooling-of-interests."
(k) Regulation D Documentation. The Company shall have received
representation letters from each Shareholder who is an accredited investor as to
his status as such and written acknowledgements (which may be included in the
proxy executed by such Shareholder) from substantially all other Shareholders as
to their receipt of the Offering Memorandum/Proxy Statement and acknowledging
that Keefe, Bruyette & Woods, Inc. is the Purchaser Representative. Such letters
and acknowledgements shall be in form and substance reasonably satisfactory to
the Company.
(l) Dissenters. The holders of no more than 10% of the outstanding
shares of Citizens Common Stock shall have demanded or be entitled to demand
payment of the fair value of their shares as Dissenters.
(m) Purchase Agreement. The purchase of assets and assumption of
liabilities of the Partnership by the Company shall be consummated
simultaneously with the Closing.
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ARTICLE VII
TERMINATION
SECTION 7.1 TERMINATION. This Agreement and the obligations of the
parties hereunder will terminate automatically upon any termination of the
Purchase Agreement pursuant to Article VII thereof. In addition, this Agreement
and the obligations of the parties hereunder may be terminated:
(a) by mutual written consent of the Company and Citizens at any time
whether or not theretofore approved by Citizens' shareholders;
(b) by the Company or Citizens 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 best 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 Citizens of Citizens' material failure
to satisfy any covenant or agreement herein, or of Citizens' breach of any
warranties or representations contained herein that in the aggregate represent a
change in Citizens from that represented to the Company that is equivalent to a
Material Adverse Effect on Citizens; provided, however, that no termination
under this Section 7.1(c) shall take effect if Citizens 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 (i) below,
and provided further, however, that solely for purposes of this Section 7.1(c),
any representation and warranty made by Citizens 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 Citizens immediately upon the expiration of 30 days from the
date that Citizens 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
Citizens 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
occur of (i) 30 days after the date of receipt of such notice and (ii) the date
specified in paragraph (i) 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 Citizens (provided that if the terminating
party is Citizens, Citizens 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
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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 Citizens has determined not to recommend approval of the Merger to
the Shareholders or has determined to withdraw such recommendation of approval
pursuant to the exercise of its fiduciary duties;
(f) by the Company, if there shall have occurred since September 30,
2000, any change in or effect on the business of Citizens 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 Citizens;
(g) by Citizens, if there shall have occurred since June 30, 2000, 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;
(h) by Citizens, within three business days after the end of the
Company Measurement Period, if the Company Measurement Price is less than $25.00
(the "Termination Price") without regard for the Minimum Company Measurement
Price (the "Arithmetic Company Measurement Price");
(i) immediately by either party hereto that is not in default
hereunder, if the Closing has not occurred on or before March 31, 2001.
Notwithstanding the foregoing, if Citizens elects to terminate the
Agreement pursuant to clause (h) above, the Company shall have the right, but
not the obligation, to nullify such termination by increasing the number of
Adjusted Company Shares to be issued in connection with the Merger by
multiplying the number of Adjusted Company Shares determined pursuant to Section
1.5(a) by the quotient of the Termination Price divided by the Arithmetic
Company Measurement Price (which increase would result in a corresponding
increase in the Exchange Ratio). If the Company exercises the right described in
the preceding sentence, it must notify Citizens of such exercise within two
business days following its receipt of Citizens' election to terminate the
Agreement pursuant to clause (h) above, whereupon no such termination shall have
occurred and this Agreement shall remain in effect in accordance with its terms
(except that the Adjusted Company Shares and the Exchange Ratio shall have been
so modified), and any references in this Agreement to "Adjusted Company Shares"
and "Exchange Ratio" shall thereafter be deemed to refer to such terms as
adjusted pursuant to this paragraph.
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, 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
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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
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 Executive 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
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To Citizens:
Citizens Bankers, Inc.
1300 Rollingbrook
Baytown, Texas 77521
Attention: John H. Echols
Fax: (832) 556-7299
With a copy to:
Bracewell & Patterson, L.L.P.
2900 South Tower, Pennzoil Place
711 Louisiana Street
Houston, Texas 77002
Attention: William T. Luedke IV
Fax: (713) 221-1212
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.
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 Citizens and Citizens 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
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waiver, amendment or modification effected after approval of this Agreement by
the shareholders of Citizens 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.
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
Delaware 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, the Delaware 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 Offering Memorandum/Proxy
Statement shall be borne equally by the Company, on the one hand, and Citizens,
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 Citizens has either failed to
recommend, or has recommended against, approval of the Merger because of the
receipt by Citizens of an Acquisition Proposal, the parties agree that Citizens
shall pay to the Company, concurrently with such termination, a termination fee
of $5,000,000. The Company hereby agrees that its sole remedy in such case shall
be such termination fee.
Citizens 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 Citizens fails to promptly pay such termination fee
when due, Citizens 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
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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 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 Citizens, the Company or any of their
Subsidiaries, or restraining Citizens, 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.
"accredited investor" shall have the meaning as defined in Section 3.29
hereof.
"Acquisition Proposal" shall mean any proposal for a merger or other
business combination involving Citizens or for the acquisition of a substantial
equity interest in, or a substantial portion of the assets of, Citizens.
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"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 Citizens 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 Citizens or any of its
Subsidiaries, to Citizens or such Subsidiary, 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, and, in the case of the Company, SW Bank or any other Subsidiary
of the Company, to the Company, SW Bank, or such 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.
"Baytown" shall mean Baytown State Bank, a Texas banking association.
"CB&T" shall mean Citizens Bank and Trust Company of Baytown, a Texas
banking association.
"Certificate" shall have the meaning as defined in Section 1.2(a)
hereof.
"Citizens" shall mean Citizens Bankers, Inc., a Texas corporation.
"Citizens Common Stock" shall mean the common stock, $100 par value, of
Citizens.
"Citizens Delaware" shall mean Citizens Bankers of Delaware, Inc., a
Delaware corporation.
"Citizens Personalty" shall have the meaning as defined in Section 3.11
hereof.
"Citizens Real Property" shall have the meaning as defined in Section
3.10 (a).
"Closing" shall have the meaning as defined in Section 2.1 hereof.
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"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.
"Combined Report" shall have the meaning as defined in Section 5.26
hereof.
"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.
"Delaware Merger" shall have the meaning as defined in Recital B
hereof.
"director" of Citizens shall have the meaning as defined in Section
3.16 hereof.
"Disclosure Schedule" shall have the meaning as defined in Article III
hereof.
"Dissenter" shall have the meaning as defined in Section 1.2(c) hereof.
"Dissenting Shares" shall mean outstanding shares of Citizens Common
Stock that were not voted in favor of, or otherwise consented to, the Merger and
for which there has been compliance with all of the relevant provisions of
Article 5.12 of the TBCA for asserting appraisal rights.
"Effective Time" shall have the meaning as defined in Section 2.2(a)
hereof.
"employee" of Citizens 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.
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"Expiration Date" shall have the meaning as defined in Section 5.27
hereof.
"FASB" shall have the meaning as defined in Section 3.13(g) hereof.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"FHA" shall mean the U.S. Federal Housing Authority.
"FRB" shall mean the Board of Governors of the Federal Reserve 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, and (c) any modifications or
changes or restructuring charges taken in connection with the Merger, in each
case in accordance with generally accepted accounting principles.
"Maximum Company Measurement Price" shall have the meaning as defined
in Section 1.1(a)(iii) hereof.
"Merger" shall have the meaning as defined in Recital A hereof.
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"Minimum Company Measurement Price" shall have the meaning as defined
in Section 1.1(a)(iii) 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.
"Offering Memorandum/Proxy Statement shall have the meaning as defined
in Section 5.1 hereof.
"officer" of Citizens shall have the meaning as defined in Section 3.16
hereof.
"Pasadena" shall mean Pasadena State Bank, a Texas banking association.
"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.
"Purchaser Representative" shall have the meaning as defined in Section
3.29 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.
"Regulation D" shall mean Regulation D promulgated under the Securities
Act.
"Regulatory Approvals" shall have the meaning as defined in Section
5.2(a) hereof.
"Regulatory Standards" shall have the meaning as defined in Section
3.26 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.
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"SFAS" shall mean a Statement of Financial Accounting Standards,
promulgated by the Financial Accounting Standards Board.
"Shareholders" shall have the meaning as defined in Recital A hereof.
"Shareholders' Meeting" shall have the meaning as defined in Section
5.8 hereof.
"Start Date" shall mean August 18, 2000.
"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.
"SW Delaware" shall mean "Southwest Holding Delaware, Inc., a Delaware
corporation.
"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.
"TDB" shall mean the Texas Department of Banking.
"Termination Price" shall have the meaning as defined in Section 7.1(h)
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.
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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 Executive Officer
CITIZENS BANKERS, INC.
By: /s/ JOHN H. ECHOLS
------------------
John H. Echols
President
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EXHIBIT A
AGREEMENT OF MERGER
AGREEMENT OF MERGER, dated this _____ day of __________, 2000, pursuant
to Section 251 of the General Corporation Law of Delaware, between Southwest
Holding Delaware, Inc., a Delaware corporation and Citizens Bankers of Delaware,
Inc., a Delaware corporation.
WITNESSETH that:
WHEREAS, both of the constituent corporations desire to merge into a
single corporation, as hereinafter specified; and
WHEREAS, the registered office of said Southwest Holding Delaware, Inc.
in the State of Delaware is located at c/o CT Corporation System,1209 Orange St.
in the City of Wilmington, County of New Castle, and the name of its registered
agent at such address is Mark A. Ferrucci, and the registered office of Citizens
Bankers of Delaware, Inc. in the State of Delaware is located at c/o CT
Corporation System, 1209 Orange St. in the City of Wilmington, County of New
Castle, and the name of its registered agent at such addressed is
_____________________________.
NOW, THEREFORE, the corporations, parties to this Agreement, in
consideration of the mutual covenants, agreements and provisions hereinafter
contained do hereby prescribe the terms and conditions of said merger and mode
of carrying the same into effect as follows:
FIRST: Southwest Holding Delaware, Inc. hereby merges into itself
Citizens Bankers of Delaware, Inc. and said Citizens Bankers of Delaware, Inc.
shall be and hereby is merged into Southwest Holding Delaware, Inc. which shall
be the surviving corporation.
SECOND: The Certificate of Incorporation of Southwest Holding Delaware,
Inc. which is the surviving corporation, as heretofore amended and as in effect
on the date of the merger provided for in this Agreement, shall continue in full
force and effect as the Certificate of Incorporation of the corporation
surviving this merger.
THIRD: The manner of converting the outstanding shares of the capital
stock of each of the constituent corporations into the shares or other
securities of the surviving corporation shall be as follows:
(a) Each share of common stock of the merged corporation which shall be
issued and outstanding on the effective date of this merger, and all rights in
respect thereof shall, without any action on the part of the holder thereof, be
cancelled.
(b) The shares of common stock of Southwest Holding Delaware, Inc.
issued and outstanding on the effective date of this merger shall continue to be
issued and outstanding shares of the surviving corporation, shall be unaffected
by the merger, and the holder thereof shall retain its rights therein.
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FOURTH: The terms and conditions of the merger are as follows:
(a) The bylaws of the surviving corporation as they shall exist on the
effective date of this merger shall be and remain by the bylaws of the surviving
corporation until the same shall be altered, amended or repealed as therein
provided.
(b) The directors and officers of the surviving corporation shall
continue in office until the next annual meeting of stockholders and until their
successors shall have been elected and qualified.
(c) This merger shall become effective as of the close of business on
____________.
(d) Upon the merger becoming effective, all the property, rights,
privileges, franchises, patents, trademarks, licenses, registrations and other
assets of every kind and description of the merged corporation shall be
transferred to, vested in and devolve upon the surviving corporation without
further act or deed and all property, rights, and every other interest of the
surviving corporation and the merged corporation shall be as effectively the
property of the surviving corporation as they were of the surviving corporation
and the merged corporation respectively. The merged corporation hereby agrees
from time to time, as and when requested by the surviving corporation or by its
successors or assigns, to execute and deliver or cause to be executed and
delivered all such deeds and instruments and to take or cause to be taken such
further or other action as the surviving corporation may deem necessary or
desirable in order to vest in and confirm to the surviving corporation title to
and possession of any property of the merged corporation acquired or to be
acquired by reason of or as a result of the merger herein provided for and
otherwise to carry out the intent and purposes hereof, and the proper officers
and directors of the merged corporation and the proper officers and directors of
the merged corporation are fully authorized in the name of the merged
corporation or otherwise to take any and all such action.
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IN WITNESS WHEREOF, the parties to this Agreement, pursuant to the
approval and authority duly given by resolutions adopted by their respective
Board of Directors and that fact having been certified on said Agreement of
Merger by the Secretary (or Assistant Secretary) of each corporate party
thereto, have caused these presents to be executed by the President of each
party hereto as the respective act, deed and agreement of each of said
corporations, on this _____ day of _____________, 2000.
SOUTHWEST HOLDING DELAWARE, INC.
By:
--------------------------------
R. John McWhorter
President
CITIZENS BANKERS OF DELAWARE, INC.
By:
--------------------------------
I, R. John McWhorter, Secretary of Southwest Holding Delaware, Inc., a
corporation organized and existing under the laws of the State of Delaware,
hereby certify, as such Secretary, that the Agreement of Merger to which this
Certificate is attached, after having been first duly signed on behalf of the
said corporation and having been signed on behalf of Citizens Bankers of
Delaware, Inc., a corporation of the State of Delaware, was duly adopted
pursuant to section 228 of the General Corporation Law of Delaware by the
unanimous written consent of the stockholders holding 100% of the shares of the
capital stock of the corporation, same being all of the shares issued and
outstanding having voting power, which Agreement of Merger was thereby adopted
as the act of the stockholders of said Southwest Holding Delaware, Inc. and the
duly adopted agreement and act of the said corporation.
WITNESS, my hand on this _____ day of ____________, 2000.
---------------------------------------
Secretary
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EXHIBIT B
PLAN OF MERGER
PLAN OF MERGER dated the _____ day of ___________, 2000, is entered
into by and among Southwest Bank of Texas National Association, Houston, Texas
("SW Bank"), Citizens Bank and Trust Company of Baytown, Texas, a Texas banking
association (CB&T"), Baytown State Bank, a Texas banking association
("Baytown"), and Pasadena State Bank, a Texas banking association ("Pasadena").
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, Harris
County, Texas. Citizens, Baytown and Pasadena are banking associations duly
organized under the laws of the State of Texas. The principal offices of
Citizens and Baytown are located in Baytown, Harris County, Texas, and the
principal office of Pasadena is located in Pasadena, Harris 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 Holding Delaware, Inc., a
Delaware corporation having its principal office in Wilmington, New Castle
County, Delaware ("Southwest Delaware"). All of the outstanding shares of
capital stock of Southwest Delaware are owned by Southwest Bancorporation of
Texas, Inc., a Texas corporation having its principal office in Houston, Harris
County, Texas ("Southwest").
CB&T has authorized capital stock of 40,000 shares of common stock,
$100.00 par value ("CB&T Stock"), all of which shares are issued and outstanding
on the date hereof. Baytown has authorized capital stock of 175,000 shares of
common stock, $10.00 par value ("Baytown Stock"), all of which shares are issued
and outstanding on the date hereof. Pasadena has authorized capital stock of
6,250 shares of common stock, $100.00 par value ("Pasadena Stock"), all of which
shares are issued and outstanding on the date hereof. All outstanding shares of
CB&T Stock, Baytown Stock and Pasadena Stock are owned by Citizens Bankers of
Delaware, Inc., a Delaware corporation having its principal office in
Wilmington, New Castle County, Delaware ("Citizens Delaware"). All of the
outstanding shares of capital stock of Citizens Delaware are owned by Citizens
Bankers, Inc., a Texas corporation having its principal office in Baytown,
Harris County, Texas ("Citizens").
Southwest and Citizens have entered into an Agreement and Plan of
Merger, dated as of October __, 2000 (the "Merger Agreement"), which
contemplates the merger provided for by this Plan of Merger (the "Merger"). The
Merger Agreement also contemplates the merger of Citizens with and into
Southwest and the merger of Citizens Delaware with and into Southwest Delaware,
which are to be effectuated on the same date as, and simultaneously with, the
merger provided for by this Plan of Merger.
A majority of each of the entire Boards of Directors of SW Bank, CB&T,
Baytown and Pasadena have, respectively, approved and made this Plan of Merger
and authorized its execution.
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At or prior to the time the Merger becomes effective (hereinafter
called the "Effective Date"), SW Bank, CB&T, Baytown and Pasadena 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, CB&T,
Baytown and Pasadena hereby make this Plan of Merger and prescribe the terms and
conditions of the Merger of SW Bank, CB&T, Baytown and Pasadena and the mode of
carrying it into effect, as follows:
1. Each of CB&T, Baytown and Pasadena 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 215a , and pursuant to the provisions of, and with
the effect provided in Section 32.501 of the Texas Banking Act.
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, CB&T, Baytown and Pasadena 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, CB&T,
Baytown and Pasadena shall, as provided in 12 U.S.C. Section 215a and the Texas
Banking Act 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,
CB&T, Baytown and Pasadena, and the separate existences of CB&T, Baytown and
Pasadena shall terminate. All rights, franchises and interests of SW Bank, CB&T,
Baytown and Pasadena, 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, CB&T, Baytown and Pasadena, respectively, at the Effective Date, subject,
however, to the condition that, where SW Bank, CB&T, Baytown or Pasadena, at the
Effective Date, was acting
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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, CB&T, Baytown or Pasadena.
5. At the Effective Date, the Continuing Bank shall be liable for all
liabilities of SW Bank, CB&T, Baytown and Pasadena, and all deposits, debts,
liabilities and contracts of SW Bank, CB&T, Baytown and Pasadena, 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, CB&T, Baytown or Pasadena, as the case may be,
shall be those of the Continuing Bank and shall not be released or impaired by
the Merger; and all rights of creditors and other obligees and all liens on
property of SW Bank, CB&T, Baytown or Pasadena shall be preserved unimpaired.
6. The mode of carrying into effect and the manner and basis of
converting or exchanging the shares of SW Bank, CB&T, Baytown and Pasadena 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 CB&T Stock, Baytown Stock and Pasadena 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,
CB&T, Baytown and Pasadena 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, CB&T, Baytown and Pasadena 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, CB&T, Baytown and Pasadena 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.
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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."
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IN WITNESS WHEREOF, SW Bank, CB&T, Baytown and Pasadena 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 Executive Officer
CITIZENS BANK AND TRUST COMPANY OF
BAYTOWN, TEXAS
By:
------------------------------------
BAYTOWN STATE BANK
By:
------------------------------------
PASADENA STATE BANK
By:
------------------------------------
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<PAGE> 85
EXHIBIT C
[Form of Affiliates' Letter]
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
Citizens Bankers, Inc., a Texas corporation ("Citizens"), as that term is
defined in Rule 144 ("Rule 144") 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 __, 2000 (the "Agreement"), between Southwest
Bancorporation of Texas, Inc., a Texas corporation (the "Company"), and
Citizens, providing for the merger of Citizens 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 Citizens 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. I have been advised that the issuance of the Company Shares to me
pursuant to the Merger has not been registered by the Company under the Act but
that the Company has agreed to file a "shelf" registration statement on Form S-3
(the "Registration Statement") after the Effective Time of the Merger that would
register the resale of my Company Shares. I hereby agree to furnish the Company
with such information regarding myself and pertinent to the disclosure
requirements relating to the registration and distribution of my Company Shares
as the Company may reasonably request in writing. I hereby acknowledge and agree
that in order to sell any of my Company Shares pursuant to the Registration
Statement, I or the broker effectuating any such sale must deliver a copy of the
current prospectus included in the Registration Statement to the purchaser of
such shares prior to or simultaneously with the delivery of the confirmation for
such sale to such purchaser. I further understand that any sale which fails to
comply with the requirement of the preceding sentence will not be in compliance
with the Act and must be rescinded. I also hereby agree that, upon my receipt of
any notice from the Company of the issuance by the Securities and Exchange
Commission (the "SEC") of any stop order suspending the effectiveness of the
Registration Statement or the happening of any event which makes the
Registration Statement or any post-effective amendment thereto, related
prospectus or any amendment or supplement thereto, or any document incorporated
therein by reference, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein in the light of the circumstances under which they were made
not misleading, I will immediately discontinue
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<PAGE> 86
disposition of my Company Shares pursuant to the Registration Statement until
the lifting of such stop order or my receipt of the copies of the supplemented
or amended prospectus, as applicable.
C. 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 earnings report after the
Effective Time which includes the results of the combined operations of the
Company and Citizens for a period of at least thirty (30) days subsequent to the
Effective Time.
D. [The following sentence to be included only if the affiliate is a
record or beneficial owner of 5% or more of the outstanding Citizens 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
Citizens Common Stock in a transaction the consideration for which is to be
provided by Citizens, the Company, or any party related to Citizens or the
Company or (ii) shares of Company Common Stock to be received in the Merger in a
transaction the consideration for which is to be provided by the Company or any
party related to the Company.
E. I have carefully read this letter and the Agreement and have
discussed their requirements and other applicable limitations upon my sale,
transfer or other disposition of the Company Shares, to the extent I felt
necessary, with my counsel or counsel for Citizens.
F. 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.
G. 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 have not been
registered under the Securities Act of 1933 (the "Act") or any
applicable state securities laws and may be sold, transferred or
otherwise disposed of only upon receipt by the Company of an opinion of
counsel acceptable to it that an exemption from registration under the
Act and any such state securities laws is available, or pursuant to a
registration statement under the Act."
It is understood and agreed that the legend set forth in paragraph G
above shall be removed by delivery of substitute certificates without such
legend (i) if the Company Shares have been sold under the Registration Statement
and the prospectus delivery requirements set forth in paragraph B above have
been satisfied, or (ii) upon the Company's receipt of a request by the
undersigned for such removal at least two years following the Effective Time of
the Merger, provided that the
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undersigned has not been an "affiliate" of the Company (as defined in Rule 144)
within the three-month period preceding the date of such request.
Very truly yours,
---------------------------------
ACCEPTED this _____ day
of ____________, 2000, by
SOUTHWEST BANCORPORATION OF TEXAS, INC.
By __________________________
David C. Farries
Executive Vice President
and
Chief Financial Officer
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<PAGE> 88
EXHIBIT D
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made by and between
SOUTHWEST BANCORPORATION OF TEXAS, INC. ("Company") and Conrad W. Magouirk
("Executive").
W I T N E S E T H:
WHEREAS, Company is desirous of employing Executive as a senior
executive of the Company's wholly owned subsidiary, SOUTHWEST BANK OF TEXAS
NATIONAL ASSOCIATION (the "Bank"), on the terms and conditions, and for the
consideration, hereinafter set forth and Executive is desirous of being employed
by Company on such terms and conditions and for such consideration;
WHEREAS, references herein to Executive's employment by Company shall
also mean his employment by Bank, and references herein to payments of any
nature to be made by Company to Executive shall mean that either Company will
make such payments or it will cause Bank to make such payments to Executive;
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and obligations contained herein, Company and Executive agree as
follows:
ARTICLE 1
EMPLOYMENT AND DUTIES
1.1 EMPLOYMENT; EFFECTIVE DATE. Company agrees to employ Executive and
Executive agrees to be employed by Company, beginning as of the Effective Date
(as hereinafter defined) and continuing for the period of time set forth in
Article 2 of this Agreement, subject to the terms and conditions of this
Agreement. For purposes of this Agreement, the "Effective Date" shall be the
"Effective Time" as defined in the Agreement and Plan of Merger dated October
__, 2000, between Company and Citizens Bankers, Inc. (the "Merger Agreement").
1.2 POSITION. From and after the Effective Date, Company shall employ
Executive in the capacity of President Baytown Region of Bank, or in such other
positions as the parties mutually may agree.
1.3 DUTIES AND SERVICES. Executive agrees to serve as a full-time
employee of the Company in the capacities referred to in paragraph 1.2 and to
perform diligently and to the best of his abilities the duties and services
appertaining to such offices, as well as such additional duties and services
appropriate to such offices which the parties mutually may agree upon from time
to time. Executive's employment shall also be subject to the policies maintained
and established by Company, as the same may be amended from time to time.
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1.4 OTHER INTERESTS. Executive agrees, during the period of his
employment by Company, to devote substantially all of his time, energy and best
efforts during normal business hours (with allowances for vacation and sick
leave) to the business and affairs of Company and Bank and not to engage,
directly or indirectly, in any other business or businesses, whether or not
similar to that of Company, except with the consent of the Board of Directors of
Company (the "Board of Directors"). The foregoing notwithstanding, the parties
recognize and agree that Executive may engage in passive personal investments
and other passive business activities that do not conflict with the business and
affairs of Company or interfere with Executive's performance of his duties
hereunder.
1.5 DUTY OF LOYALTY. Executive acknowledges and agrees that Executive
owes a fiduciary duty of loyalty, fidelity and allegiance to act at all times in
the best interests of Company and to do no act which would injure the business,
interests, or reputation of Company or any of its subsidiaries or affiliates. In
keeping with these duties, Executive shall make full disclosure to Company of
all business opportunities pertaining to Company's business and shall not
appropriate for Executive's own benefit business opportunities concerning the
subject matter of the fiduciary relationship.
ARTICLE 2
TERM AND TERMINATION OF EMPLOYMENT
2.1 TERM. Unless sooner terminated pursuant to other provisions hereof,
Company agrees to employ Executive for the period beginning on the Effective
Date and ending on the third anniversary of the Effective Date.
2.2 COMPANY'S RIGHT TO TERMINATE. Notwithstanding the provisions of
paragraph 2.1, Company shall have the right to terminate Executive's employment
under this Agreement at any time for any of the following reasons:
(i) upon Executive's death;
(ii) if Executive is unable to perform the essential functions
of his job (with or without reasonable accommodation) because he has
become permanently disabled within the meaning of, and actually begins
to receive disability benefits pursuant to, the long-term disability
plan in effect for senior executives or, if applicable, employees of
the Company at that time;
(iii) for cause, which for purposes of this Agreement shall
mean Executive (A) has engaged in gross negligence or willful
misconduct in the performance of the duties required of him hereunder,
(B) has been convicted of a misdemeanor involving moral turpitude or
convicted of a felony, (C) has willfully refused without proper legal
reason to perform the duties and responsibilities required of him
hereunder (continuing three business days after receipt of written
notice of need to cure), (D) has breached any material written
corporate
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<PAGE> 90
policy or code of conduct established by Company, or (E) has willfully
engaged in conduct that he knows or should know is materially injurious
to Company or any of its affiliates;
(iv) for Executive's breach of any provision of this Agreement
which, if correctable, remains uncorrected for 10 days following
written notice to Executive by Company of such breach; or
(v) for any other reason whatsoever, in the sole discretion of
the Board of Directors.
2.3 EXECUTIVE'S RIGHT TO TERMINATE. Notwithstanding the provisions of
paragraph 2.1, Executive shall have the right to terminate his employment under
this Agreement at any time for any of the following reasons:
(i) a breach by Company of any provision of this Agreement
which, if correctable, remains uncorrected for 10 days following
written notice of such breach by Executive to Company;
(ii) for any other reason whatsoever, in the sole discretion
of Executive.
(iii) following a Change in Control (as defined in the form of
Change in Control Agreement effective as of January 1, 2000, between
Company and certain of its executives in the form filed as Exhibit 10.2
to Company's Quarterly Report on Form 10-Q for the six months ended
June 30, 2000, as filed with the Securities and Exchange Commission), a
material adverse change in the nature or scope of the authorities,
powers, functions, responsibilities, or duties attached to the position
with Company that the Executive held immediately prior to the Change of
Control, a reduction in the aggregate of Executive's base salary and
bonus received from Company, termination of Executive's rights to any
other company benefit described in Section 3.3(ii), or a reduction in
the scope or value thereof (subject to the limitation set forth in the
second sentence of 3.3(ii)) without the prior written consent of
Executive, and which is not remedied within 10 calendar days after
receipt by Company of written notice from Executive of such change,
reduction, or termination, as the case may be;
(iv) following a Change in Control, the liquidation,
dissolution, merger, consolidation, or reorganization of Company or
transfer of all or a significant portion of its business and/or assets,
unless the successor or successors (by liquidation, merger,
consolidation, reorganization, or otherwise) to which all or a
significant portion of its business and/or assets have been transferred
(directly or by operation of law) shall have assumed all duties and
obligations of Company under this Agreement; or
(v) following a Change in Control, Company shall require
Executive to have his principal location of work changed to any
location that is in excess of 50 miles from the location thereof
immediately prior to the Change of Control or to travel away from his
office in the course of discharging his responsibilities or duties
hereunder significantly more (in
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terms of either consecutive days or aggregate days in any calendar
years) that was required of him prior to the Change of Control without,
in either case, his prior written consent.
2.4 NOTICE OF TERMINATION. If Company or Executive desires to terminate
Executive's employment hereunder at any time prior to expiration of the term of
employment as provided in paragraph 2.1, it or he shall do so by giving written
notice to the other party that it or he has elected to terminate Executive's
employment hereunder and stating the effective date and reason for such
termination, provided that no such action shall alter or amend any other
provisions hereof or rights arising hereunder, including, without limitation,
the provisions of Articles 4 and 5 hereof.
ARTICLE 3
COMPENSATION AND BENEFITS
3.1 BASE SALARY. For the period from the Effective Date [until the
earlier of (i) 120 days following the Effective Date or (ii) the date on which
Executive first sells any Common Stock, $1.00 par value, of the Company
("Company Common Stock") received by Executive pursuant to the Merger Agreement
(the "Initial Period"), Executive shall receive an annual base salary of
$_______ ($_________ per month). Following the Initial Period]* through the
third anniversary of the Effective Date, Executive shall receive an annual base
salary of $_______ ($______ per month). Executive's annual base salary shall be
paid in equal installments in accordance with Company's standard policy
regarding payment of compensation to executives but no less frequently than
monthly.
3.2 BONUSES. At the end of each calendar year during the term of this
Agreement, Executive may be entitled to a bonus of up to __% of his then current
annual base salary. The amount of such bonus, if any, shall be entirely
discretionary with the Compensation Committee of the Board of Directors. In
making its determination as to the amount of any such bonus, the Compensation
Committee of the Board of Directors shall consider the same criteria as that
used for determining bonuses for other senior executives of Company, from time
to time. It is contemplated that such criteria shall include Bank's financial
performance as well as the performance of the Company Common Stock as compared
to other members of its peer group.
3.3 OTHER PERQUISITES. During his employment hereunder, Executive shall
be afforded the following benefits as incidences of his employment:
(i) Business and Entertainment Expenses. Subject to Company's
standard policies and procedures with respect to expense reimbursement
as applied to its executive employees generally, Company shall
reimburse Executive for, or pay on behalf of Executive, reasonable and
appropriate expenses incurred by Executive for business related
purposes, including dues and fees to industry and professional
organizations and costs of entertainment and business development.
(ii) Other Company Benefits. Executive and, to the extent
applicable, Executive's spouse, dependents and beneficiaries, shall be
allowed to participate in all
---------------
* Bracketed language applies only to contracts for John H. Echols, Andrew Echols
and Hugh Echols.
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benefits, plans and programs, including improvements or modifications
of the same, which are now, or may hereafter be, available to all other
executive employees of Company, and Executive will be entitled to
credit for prior service with Citizens Bankers, Inc. and its
subsidiaries ("Citizens") for all purposes under such benefits, plans
and programs. Such benefits, plans and programs may include, without
limitation, 401(k) plans, health insurance or health care plan,
disability insurance, supplemental retirement plans, vacation and sick
leave benefits, and the like. Executive shall also be entitled to
either the use of a Company automobile or an automobile allowance of
$500 per month, as determined by the Company. Company shall not,
however, by reason of this paragraph be obligated to institute,
maintain, or refrain from changing, amending, or discontinuing, any
such benefit plan or program, so long as such changes are similarly
applicable to executive employees generally. This Section 3.3(ii) does
not apply to cash bonuses, which are addressed in Section 3.2.
(iii) Stock Options. Company's Management will request that
the Compensation Committee of the Board of Directors award an option to
Executive to purchase _________ shares of Company Common Stock under
Company's 1996 Stock Option Plan, within two weeks following the
Effective Date, such incentive option to be subject to the same terms
and provisions (including vesting) as those awarded to other executives
under such plan.
ARTICLE 4
CONFIDENTIAL INFORMATION
4.1 IN GENERAL. Company will disclose to Executive, or place Executive
in a position to have access to or develop, trade secrets or confidential
information of Company or its affiliates; and/or will entrust Executive with
business opportunities of Company or its affiliates; and/or will place Executive
in a position to develop business good will on behalf of Company or its
affiliates. Executive recognizes and acknowledges that Executive will have
access to certain information of Company and that such information is
confidential and constitutes valuable, special and unique property of Company.
Executive shall not at any time, either during or subsequent to the term of
employment with Company, disclose to others, use, copy or permit to be copied,
except in pursuance of Executive's duties for and on behalf of Company, its
successors, assigns or nominees, any Confidential Information of Company
(regardless of whether developed by Executive) without the prior written consent
of Company. The term "Confidential Information" means any secret or confidential
information or know-how and shall include, but shall not be limited to, the
plans, customers, costs, prices, uses, corporate opportunities, research,
financial data, evaluations, prospects, and applications of products and
services, results of investigations or studies owned or used by Company, and all
apparatus, products, processes, compositions, samples, formulas, computer
programs, computer hardware designs, computer firmware designs, and servicing,
marketing or manufacturing methods and techniques at any time used, developed,
investigated, made or sold by Company, before or during the term of employment
with Company, that are not readily available to the public or that are
maintained as confidential by Company. Executive shall maintain in confidence
any Confidential Information of third parties received as a result of
Executive's employment with Company in accordance with Company's obligations to
such third parties and the policies established by Company.
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4.2 REMEDIES. Executive acknowledges that money damages would not be
sufficient remedy for any breach of this Article by Executive, and Company shall
be entitled to enforce the provisions of this Article by terminating payments
then owing to Executive under this Agreement and/or to specific performance and
injunctive relief as remedies for such breach or any threatened breach. Such
remedies shall not be deemed the exclusive remedies for a breach of this
Article, but shall be in addition to all remedies available at law or in equity
to Company, including the recovery of damages from Executive and his agents
involved in such breach and remedies available to Company pursuant to other
agreements with Executive.
ARTICLE 5
NON-COMPETITION OBLIGATIONS
5.1 IN GENERAL. As part of the consideration for the compensation and
benefits to be paid to Executive hereunder; to protect the Confidential
Information of Company and its affiliates that has been and will in the future
be disclosed or entrusted to Executive, the business good will of Company and
its affiliates that has been and will in the future be developed in Executive,
or the business opportunities that have been and will in the future be disclosed
or entrusted to Executive by Company and its affiliates; and as an additional
incentive for Company to enter into this Agreement, Company and Executive agree
to the non-competition obligations hereunder. Executive shall not, directly or
indirectly for Executive or for others, in any geographic area or market where
Company or any of its affiliates are conducting any business as of the date of
the termination of the employment relationship or have during the previous
twelve months conducted such business:
(i) engage in any business competitive with the business
conducted by Company in any county in which the Company maintains an
office;
(ii) render advice or services to, or otherwise assist, any
other person, association, or entity who is engaged, directly or
indirectly, in any business competitive with the business conducted by
Company with respect to such competitive business; or
(iii) induce any employee of Company or any of its affiliates
to terminate his or her employment with Company or such affiliates, or
hire or assist in the hiring of any such employee by any person,
association, or entity not affiliated with Company.
These non-competition obligations shall apply during the period that Executive
is receiving benefits pursuant to Article 3 hereunder and shall extend one year
after termination of the employment relationship if such termination is by
Company pursuant to Section 2.2(iii) or (iv) or by Executive pursuant to Section
2.3(ii).
5.2 ENFORCEMENT AND REMEDIES. Executive understands that the
restrictions set forth in paragraph 5.1 may limit Executive's ability to engage
in certain businesses anywhere in the world during the period provided for
above, but acknowledges that Executive will receive sufficiently high
remuneration and other benefits under this Agreement to justify such
restriction. Executive acknowledges that money damages would not be sufficient
remedy for any breach of this Article by Executive, and Company shall be
entitled to enforce the provisions of this Article by terminating any
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payments then owing to Executive under this Agreement and/or to specific
performance and injunctive relief as remedies for such breach or any threatened
breach. Such remedies shall not be deemed the exclusive remedies for a breach of
this Article, but shall be in addition to all remedies available at law or in
equity to Company, including without limitation, the recovery of damages from
Executive and Executive's agents involved in such breach and remedies available
to Company pursuant to other agreements with Executive.
5.3 REFORMATION. It is expressly understood and agreed that Company and
Executive consider the restrictions contained in this Article to be reasonable
and necessary to protect the proprietary information of Company. Nevertheless,
if any of the aforesaid restrictions are found by a court having jurisdiction to
be unreasonable, or overly broad as to geographic area or time, or otherwise
unenforceable, the parties intend for the restrictions therein set forth to be
modified by such court so as to be reasonable and enforceable and, as so
modified by the court, to be fully enforced.
ARTICLE 6
STATEMENTS CONCERNING COMPANY
6.1 IN GENERAL. Executive shall refrain, both during the employment
relationship and after the employment relationship terminates, from publishing
any oral or written statements about Company, any of its affiliates, or any of
such entities' officers, employees, agents or representatives that are
slanderous, libelous, or defamatory; or that disclose private or CONFIDENTIAL
information about Company, any of its affiliates, or any of such entities'
business affairs, officers, employees, agents, or representatives; or that
constitute an intrusion into the seclusion or private lives of Company, any of
its affiliates, or any of such entities' officers, employees, agents, or
representatives; or that give rise to unreasonable publicity about the private
lives of Company, any of its affiliates, or any of such entities' officers,
employees, agents, or representatives; or that place Company, any of its
affiliates, or any of such entities' officers, employees, agents, or
representatives in a false light before the public; or that constitute a
misappropriation of the name or likeness of Company, any of its affiliates, or
any of such entities' officers, employees, agents, or representatives. A
violation or threatened violation of this prohibition may be enjoined by the
courts. The rights afforded Company and its affiliates under this provision are
in addition to any and all rights and remedies otherwise afforded by law.
ARTICLE 7
EFFECT OF TERMINATION ON COMPENSATION
7.1 BY EXPIRATION. If Executive's employment hereunder shall terminate
upon expiration of the term provided in paragraph 2.1 hereof, then all
compensation and all benefits to Executive hereunder shall terminate
contemporaneously with termination of his employment (except to the extent
benefits continue pursuant to the specific terms of any plan or program).
7.2 BY COMPANY. If Executive's employment hereunder shall be terminated
by Company prior to expiration of the term provided in paragraph 2.1, then, upon
such termination,
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regardless of the reason therefor, all compensation and benefits to Executive
hereunder shall terminate contemporaneously with the termination of such
employment (except to the extent benefits continue pursuant to the specific
terms of any plan or program); provided, however, that if such termination shall
be for any reason other than those encompassed by paragraphs 2.2(i), (ii),
(iii), or (iv), then Company shall (i) pay Executive the Termination Payments
and (ii) provide Executive with Continuation Benefits. For purposes of this
Agreement, (A) the term "Termination Payments" shall mean continuation of
Executive's annual base salary as provided in paragraph 3.1 and continuation of
Executive's bonuses as provided in paragraph 3.2 at the average percentage of
annual base salary paid to Executive within the two-year period preceding his
termination of employment with Company, as if he had remained employed by
Company through the third anniversary of the Effective Date and (B) the term
"Continuation Benefits" shall mean continued coverage under Company's medical
and dental plans and life insurance for Executive and his dependents (including
his spouse) who were covered under such plans and insurance on the day prior to
Executive's termination of employment with Company as if he had remained
employed by Company through the third anniversary date of the Effective Date
(provided, however, that (1) such coverage shall terminate if and to the extent
Executive becomes eligible to receive medical, dental and life insurance
coverage from a subsequent employer (and any such eligibility shall be promptly
reported to Company by Executive), (2) if Executive (and/or his spouse) would
have been entitled to retiree medical, dental, and/or life insurance coverage
under Company's plans had he voluntarily retired on the date of such
termination, then such coverages shall be continued as provided under such
plans, and (3) in the event that continued participation in any such Company
plan is for whatever reason impermissible, Company shall arrange upon comparable
terms benefits substantially equivalent to those that may not be so provided
under the plan maintained by Company). Notwithstanding the preceding provisions
of this paragraph 7.2, as a condition to the receipt of any Termination Payments
and/or Continuation Benefits pursuant to this paragraph 7.2, Executive must
first execute a release and agreement which shall release Company, its
affiliates and their officers, directors, employees and agents from any and all
claims and from any and all causes of action of any kind or character, including
but not limited to all claims or causes of action arising out of Executive's
employment with Company and the termination of such employment.
7.3 BY EXECUTIVE. If Executive's employment hereunder shall be
terminated by Executive prior to expiration of the term provided in paragraph
2.1, then, upon such termination, regardless of the reason therefor, all
compensation and benefits to Executive hereunder shall terminate
contemporaneously with the termination of such employment (except to the extent
benefits continue pursuant to the specific terms of any plan or program);
provided, however, that if such termination shall be pursuant to paragraph
2.3(i), (iii), (iv) or (v), then Company shall (i) pay Executive the Termination
Payments and (ii) provide Executive with Continuation Benefits, subject to
Executive's execution of a release and agreement as described in the last
sentence of Section 7.2.
7.4 LIQUIDATED DAMAGES. In light of the difficulties in estimating the
damages for an early termination of this Agreement, Company and Executive hereby
agree that the payments, if any, to be received by Executive pursuant to this
Article 7 shall be received by Executive as liquidated damages.
7.5 INCENTIVE AND DEFERRED COMPENSATION. This Agreement governs the
rights and obligations of Executive and Company with respect to Executive's base
salary, bonus, life insurance
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and certain perquisites of employment. Executive's rights and obligations both
during the term of his employment and thereafter with respect to stock options,
restricted stock, and incentive and deferred compensation shall be governed by
the separate agreements, plans and other documents and instruments governing
such matters.
ARTICLE 8
MISCELLANEOUS
8.1 NOTICES. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
IF TO COMPANY TO: Compensation Committee
c/o Paul B. Murphy, Jr.
Southwest Bancorporation of Texas, Inc.
4400 Post Oak Parkway
Houston, Texas 77027
IF TO EXECUTIVE TO:
or to such other address as either party may furnish to the other in writing in
accordance herewith, except that notices of changes of address shall be
effective only upon receipt.
8.2 APPLICABLE LAW. This Agreement is entered into under, and shall be
governed for all purposes by, the laws of the State of Texas.
8.3 NO WAIVER. No failure by either party hereto at any time to give
notice of any breach by the other party of, or to require compliance with, any
condition or provision of this Agreement shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.
8.4 SEVERABILITY. If a court of competent jurisdiction determines that
any provision of this Agreement is invalid or unenforceable, then the invalidity
or unenforceability of that provision shall not affect the validity or
enforceability of any other provision of this Agreement, and all other
provisions shall remain in full force and effect.
8.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.
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8.6 WITHHOLDING OF TAXES AND OTHER EMPLOYEE DEDUCTIONS. Company may
withhold from any benefits and payments made pursuant to this Agreement all
federal, state, city and other taxes as may be required pursuant to any law or
governmental regulation or ruling and all other normal employee deductions made
with respect to Company's employees generally.
8.7 HEADINGS. The paragraph headings have been inserted for purposes of
convenience and shall not be used for interpretive purposes.
8.8 GENDER AND PLURALS. Wherever the context so requires, the masculine
gender includes the feminine or neuter, and the singular number includes the
plural and conversely.
8.9 AFFILIATE. As used in this Agreement, the term "affiliate" shall
mean any entity which owns or controls, is owned or controlled by, or is under
common ownership or control with, Company.
8.10 SUCCESSOR OBLIGATIONS. This Agreement shall be binding upon and
inure to the benefit of Company and any successor of Company, by merger or
otherwise.
8.11 ASSIGNMENT. Except as provided in paragraph 8.10, this Agreement,
and the rights and obligations of the parties hereunder, are personal and
neither this Agreement, nor any right, benefit, or obligation of either party
hereto, shall be subject to voluntary or involuntary assignment, alienation or
transfer, whether by operation of law or otherwise, without the prior written
consent of the other party.
8.12 TERM. This Agreement has a term co-extensive with the term of
employment provided in paragraph 2.1. Termination shall not affect any right or
obligation of any party which is accrued or vested prior to such termination.
Without limiting the scope of the preceding sentence, the provisions of Articles
4, 5, and 6 shall survive any termination of the employment relationship and/or
of this Agreement.
8.13 ENTIRE AGREEMENT. Except as provided in (i) the written benefit
plans and programs referenced in paragraph 3.3(ii) and (ii) any signed written
agreement contemporaneously or hereafter executed by Company and Executive, this
Agreement constitutes the entire agreement of the parties with regard to the
subject matter hereof, and contains all the covenants, promises,
representations, warranties and agreements between the parties with respect to
employment of Executive by Company. Without limiting the scope of the preceding
sentence, all prior understandings and agreements among the parties hereto
relating to the subject matter hereof are hereby null and void and of no further
force and effect. Any modification of this Agreement shall be effective only if
it is in writing and signed by the party to be charged.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the Effective Date.
SOUTHWEST BANCORPORATION OF TEXAS, INC.
By:
-------------------------------------
Paul B. Murphy, Jr.
President and Chief Executive Officer
"COMPANY"
------------------------------------------
"EXECUTIVE"
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EXHIBIT E
OPINION OF COUNSEL FOR THE COMPANY
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Texas. SW Delaware is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. SW Bank is a national banking association duly
incorporated, 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 Delaware. SW Delaware owns directly all of the outstanding capital
stock of SW Bank. Each of the Company, SW Delaware 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 ________, 2000. 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. SW Delaware has full corporate power and authority to execute and
deliver the Delaware Plan of Merger and to consummate the transactions
contemplated thereby. The Delaware Plan of Merger has been duly authorized by
all necessary corporate action on the part of SW Delaware, has been duly and
validly executed and delivered by and constitutes the valid and binding
agreement of SW Delaware, enforceable against SW Delaware in accordance with its
terms, except to the extent that such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws of
affecting enforcement of creditors' rights generally and by general principles
of equity (whether applied at law or in equity).
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5. SW Bank has full corporate power and authority to execute and
deliver the Bank Plan of Merger and to consummate the transactions contemplated
thereby. The Bank Plan of Merger has been duly authorized by all necessary
corporate action on the part of SW Bank, has been duly and validly executed and
delivered by and constitutes the valid and binding agreement of SW Bank,
enforceable against SW Bank 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).
6. The Company and SW Bank have received approval from all necessary
governmental agencies and authorities (including the FRB, the OCC and the Texas
Department of Banking) for the consummation of the transactions contemplated by
the Agreement. Neither the execution nor delivery of the Agreement nor the
consummation by the Company, SW Delaware and SW Bank of the transactions
contemplated thereby, nor the compliance with and fulfillment of the terms and
provisions thereof by the Company, SW Delaware 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 Certificate of Incorporation or Bylaws of SW Delaware, (c) the Articles of
Association or Bylaws of SW Bank, (d) to our knowledge, any material agreement
or instrument to which the Company, SW Delaware or SW Bank is a party or by
which either of them is bound, or (e) 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, SW Delaware or SW Bank.
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EXHIBIT F
OPINION OF COUNSEL FOR CITIZENS
1. Citizens is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Texas. Citizens 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 Citizens.
Citizens is a registered bank holding company pursuant to 12
U.S.C.Sections 1841 et. seq. Citizens Delaware is a corporation duly
incorporated, validly existing and in good standing under the laws of
the State of Delaware. Citizens Delaware 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 in any jurisdiction other than the State of Delaware. Citizens
Delaware is a registered bank holding company pursuant to 12 U.S.C.
Sections 1841 et. seq. Citizens owns directly all of the outstanding
capital stock of Citizens Delaware and Baytown Land Corporation, a
Texas corporation. Citizens Delaware owns directly all the outstanding
capital stock of CB&T, Baytown and Pasadena and 57.834% of the
outstanding capital stock of Bay City. Citizens Delaware also owns
directly all of the outstanding capital stock of [LIST OTHER
SUBSIDIARIES]. Each Subsidiary 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
Citizens. Each of CB&T, Baytown and Pasadena is a banking association
duly incorporated, validly existing and in good standing under the laws
of the State of Texas. Bay City is a banking association duly
incorporated, validly existing and in good standing under the laws of
the United States of America.
2. The authorized capital stock of Citizens consists of 100,000 shares of
Citizens Common Stock, of which, 15,610.165 shares are issued and
outstanding and 3,442.167 shares are held in Citizens' treasury. 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
Citizens, or securities convertible into, capital stock of Citizens.
3. Citizens 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 Citizens, has been duly and validly executed and
delivered by and constitutes the valid and binding agreement of
Citizens, enforceable against Citizens 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).
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4. Citizens Delaware has full corporate power and authority to execute
and deliver the Delaware Plan of Merger and to consummate the
transactions contemplated thereby. The Delaware Plan of Merger has been
duly authorized by all necessary corporate action on the part of
Citizens Delaware, has been duly and validly executed and delivered by
and constitutes the valid and binding agreement of Citizens Delaware,
enforceable against Citizens Delaware 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).
5. Each of CB&T, Baytown and Pasadena has full corporate power and
authority to execute and deliver the Bank Plan of Merger and to
consummate the transactions contemplated thereby. The Bank Plan of
Merger has been duly authorized by all necessary corporate action on
the part of each of CB&T, Baytown and Pasadena, has been duly and
validly executed and delivered by and constitutes the valid and binding
agreement of each of CB&T, Baytown and Pasadena, enforceable against
each of them 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).
6. Citizens, CB&T, Baytown and Pasadena have received approval from all
necessary governmental agencies and authorities (including the FRB, the
OCC and the Texas Department of Banking) required to be received by
Citizens, CB&T, Baytown and Pasadena for the consummation of the
transactions contemplated by the Agreement. Neither the execution nor
delivery of the Agreement nor the consummation by Citizens, Citizens
Delaware, CB&T, Baytown and Pasadena of the transactions contemplated
thereby, nor the compliance with and fulfillment of the terms and
provisions thereof by Citizens, Citizens Delaware, CB&T, Baytown and
Pasadena will conflict with, or result in a breach of, any term,
condition, or provision of, or constitute a default under, (a) the
Articles of Incorporation or Bylaws of Citizens, (b) the Certificate of
Incorporation or Bylaws of Citizens Delaware, (c) the Articles of
Association or Bylaws of CB&T, Baytown or Pasadena, (d) to our
knowledge, any material agreement or instrument to which Citizens or
any of its Subsidiaries is a party or by which any of them is bound, or
(e) to our knowledge, any material order, judgment, or decree to which
Citizens or any of its Subsidiaries is subject, or result in the
creation of any material lien, charge or encumbrance on any properties
of Citizens or any of its Subsidiaries.
7. 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 Citizens or any of its
Subsidiaries or any employee benefit plan maintained by it or the
assets, business or goodwill of Citizens 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 Citizens or any of its
Subsidiaries.
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EXHIBIT G
RELEASE
(Director)
This Release (the "Release"), dated as of ___________, 2000, is made by
______________ (the "Director"), in favor of Citizens Bankers, Inc., a Texas
corporation ("Citizens"), 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 September __, 2000, by and between Citizens 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 Citizens an instrument releasing Citizens 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
Citizens or any of its Subsidiaries, except as a result of the Director's
capacity as a depositor with one or more Subsidiaries. The Director for himself
and on behalf of his heirs and assigns (the "Director Releasing Parties")
releases, acquits and forever discharges Citizens 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 one or more Subsidiaries, (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 one or more Subsidiaries, (ii) Statutory
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Indemnifications and Contractual Indemnifications or (iii) the matters set forth
on Schedule A hereto.
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.
5. The Director hereby resigns all positions he may hold as a director
of Citizens and all of its Subsidiaries, effective as of the Effective Time of
the Merger (as defined in the Merger Agreement).
THE DIRECTOR:
-------------------------------------------
Print Name:
-------------------------------
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<PAGE> 105
STATE OF TEXAS )
)
COUNTY OF HARRIS )
This instrument was acknowledged before me on _________________, 2000,
by _______________________, Individually.
-------------------------------------------
Notary Public in and for the State of Texas
Printed Name:
-----------------------------
My Commission Expires:
--------------------
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<PAGE> 106
EXHIBIT H
RELEASE
(Officer)
This Release (the "Release"), dated as of ___________, 2000, is made by
______________ (the "Officer"), in favor of Citizens Bankers, Inc., a Texas
corporation ("Citizens"), 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 September __, 2000, by and between Citizens 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 Citizens an instrument releasing Citizens 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
Citizens or any of its Subsidiaries, except as a result of the Officer's
capacity as a depositor with one or more Subsidiaries, or for salary, bonus or
benefits 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 Citizens
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 one or
more Subsidiaries, (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
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<PAGE> 107
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 (ii) for salary, bonus
and other compensation and benefits due to such Officer in the ordinary course
of business, (iii) for Statutory Indemnification and Contractual Indemnification
or (iv) the matters set forth on Schedule A hereto.
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:
-----------------------------
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<PAGE> 108
STATE OF TEXAS )
)
COUNTY OF HARRIS )
This instrument was acknowledged before me on ______________, 1998, by
______________________, Individually.
------------------------------------------
Notary Public in and for the State of Texas
Printed Name:
----------------------------
My Commission Expires:
-------------------
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