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As filed with the Securities and Exchange Commission on December 30, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PROSPERITY BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
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Texas 74-2331986
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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3040 Post Oak Boulevard
Houston, Texas 77056
(713) 993-0002
(Address, including zip code, and telephone
number, including area code, of registrant's principal
executive offices)
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Tracy T. Rudolph
Chairman of the Board
Prosperity Bancshares, Inc.
3040 Post Oak Boulevard
Houston, Texas 77056
(713) 993-0002
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copy to:
William T. Luedke IV
Bracewell & Patterson, L.L.P.
711 Louisiana, Suite 2900
Houston, Texas 77002
(713) 223-2900
Approximate date of commencement of proposed sale to the public: As soon as
possible after the effective date of this Registration Statement.
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If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [X]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] _____________
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If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
[ ] _______________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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Title of each class of Proposed maximum Proposed maximum
securities to be Amount to be offering price per aggregate offering Amount of registration
registered registered(1) share(2) price(2) fee
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Shares of Common
Stock, $1.00 par value 900,000 $16.25 $14,625,000 $3,861
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(1) Plus such additional number of shares as may be required in the event
of a stock dividend, reverse stock split, split-up, recapitalization or
other similar event.
(2) Estimated solely for the purpose of computing the registration fee and
calculated pursuant to Rule 457(h)(1) by multiplying the number of
shares to be registered by the average of the high and low prices of a
share of Common Stock as reported on The Nasdaq Stock Market, Inc. on
December 28, 1999, which was $16.25.
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PROSPECTUS
DIVIDEND REINVESTMENT PLAN
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PROSPERITY BANCSHARES, INC.
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900,000 SHARES OF COMMON STOCK
We are offering a maximum of 900,000 shares of our $1.00 par value common stock
issuable through our Dividend Reinvestment Plan, which was adopted by our Board
of Directors on September 15, 1999. The plan provides you with an economical and
convenient method of investing both cash dividends and voluntary cash
contributions in additional shares of common stock without payment of any
brokerage commissions, service charges or other costs.
The price of the shares purchased with reinvested dividends and voluntary cash
contributions, if any, will be the market price of the shares as determined
under the plan. Our stock is traded on The Nasdaq Stock Market, Inc. National
Market System under the symbol "PRSP".
Our transfer agent, American Securities Transfer & Trust, Inc., will administer
the plan. Registered shareholders of the company may enroll in the plan by
completing the enclosed participant card.
This prospectus should be retained for future reference.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
CASH DIVIDENDS, VOLUNTARY CASH CONTRIBUTIONS AND SHARES OF COMMON STOCK
PURCHASED PURSUANT TO THE PLAN ARE NOT SAVINGS OR DEPOSIT ACCOUNTS AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND OR
ANY OTHER GOVERNMENTAL AGENCY.
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The date of this prospectus is December 30, 1999
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WHERE YOU CAN FIND MORE INFORMATION
Prosperity Bancshares, Inc. has filed with the Securities and Exchange
Commission a registration statement on Form S-3 to register the Prosperity
Bancshares, Inc. common stock to be issued pursuant to the Dividend Reinvestment
Plan. As allowed by Commission rules, this prospectus does not contain all the
information you can find in the registration statement or the exhibits thereto.
The registration statement, including its exhibits and schedules, contains
additional relevant information about us and our common stock. This prospectus
is a part of the registration statement.
In addition to filing this registration statement with the Commission, we file
reports, proxy statements and other information with the Commission under the
Securities Exchange Act of 1934. You may read and copy the information at the
following locations of the Commission:
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Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
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You may obtain information on the operation of the Public Reference Room by
calling the Commission at 1-800-SEC-0330. The Commission also maintains an
Internet world wide web site that contains reports, proxy statements and other
information about issuers, like Prosperity Bancshares, Inc., who file
electronically with the Commission. The address of that site is
http://www.sec.gov.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Commission allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring to those documents. The information incorporated by reference is
considered to be an important part of this prospectus. In addition, information
that we file later with the Commission will automatically update and supersede
the information in this prospectus and incorporated by reference.
We incorporate by reference the documents listed below and any future filings
made with the Commission under Sections 13(a), 14 or 15(d) of the Securities
Exchange Act of 1934 until we no longer issue securities under the plan:
1. Our Annual Report on Form 10-K for the year ended December 31,
1998;
2. Our Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1999, June 30, 1999 and September 30, 1999; and
3. Our Registration Statement on Form 8-A filed with the
Commission on November 10, 1998, as updated in any amendment
or report filed for that purpose.
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We will promptly furnish you, at no cost, a copy of any and all of the
information that we have incorporated by reference in this prospectus (without
exhibits, unless such exhibits are specifically incorporated by reference) upon
your oral or written request to:
David Hollaway
Chief Financial Officer
1301 N. Mechanic
El Campo, Texas 77437
(409) 543-2200
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DESCRIPTION OF THE PROSPERITY BANCSHARES, INC. DIVIDEND REINVESTMENT PLAN
On September 15, 1999, the Board of Directors of the company voted to adopt this
plan which provides for the issuance and sale by the company of authorized but
unissued $1.00 par value common stock of the company to shareholders of the
company. The plan also provides for the purchase of the company's common stock
on the open market. The company has reserved 900,000 shares of its common stock
for issuance and sale under the plan and pursuant to this prospectus.
The following is a question and answer statement explaining the provisions of
the plan. A copy of the plan may be obtained from the company at 1301 N.
Mechanic, El Campo, Texas 77437, Attention: Chief Financial Officer. In the
event of any conflict between the answers to these questions and the plan, the
more detailed provisions of the plan will control.
Purpose
1. WHAT IS THE PURPOSE OF THE PLAN?
The purpose of the plan is to provide the shareholders of the company
with a simple and convenient method of investing cash dividends and
voluntary cash contributions in additional shares of the common stock
of the company without payment of any brokerage commissions, service
charges or other costs. The plan is intended to benefit long-term
investors who wish to increase their investment in the common stock. To
the extent that shares are purchased from the company rather than in
the open market, the plan will assist the company in raising funds for
general corporate purposes.
Advantages and Disadvantages to Plan Participants
2. WHAT ARE THE ADVANTAGES OF THE PLAN?
o FULL INVESTMENt. The plan permits you to acquire shares of the
common stock automatically without incurring any brokerage
commission costs. You may reinvest all cash dividends paid on
your shares because the plan allows you to purchase fractional
shares. Fractional shares will earn dividends in the same
manner as whole shares.
o COST SAVINGs. The plan provides you with the opportunity to
make additional voluntary cash contributions in amounts not
less than $100 nor more than $30,000 during any dividend
period, to purchase shares of common stock, without the
payment of service charges or brokerage commissions.
o EASE OF RECORDKEEPINg. Your recordkeeping will be simplified
because you will receive a detailed statement of your account,
including the cost basis of the shares purchased, after each
investment is made.
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o SAFEKEEPING. The plan provides you with free safekeeping
services for the certificates representing the shares
purchased and credited to your account.
3. WHAT ARE THE DISADVANTAGES OF THE PLAN?
If you reinvest dividends paid on shares of common stock, you will be
treated for federal income tax purposes as having received a dividend
but will not receive cash to pay any tax payment obligations. In
addition, you will have limited control regarding the specific timing
of purchases of common stock made for your accounts.
Administration
4. WHO ADMINISTERS THE PLAN?
The plan is administered by American Securities Transfer & Trust, Inc.,
Lakewood, Colorado (the "plan agent"). The plan agent also serves as
the company's stock transfer agent. The plan agent will keep records,
send statements of account to you and perform other duties related to
the plan. The company may replace the plan agent at any time.
The plan agent may be contacted at:
American Securities Transfer & Trust, Inc.
P.O. Box 1576
Denver, Colorado 80201-1596
(303) 984-4042
Participation
5. WHO IS ELIGIBLE TO PARTICIPATE IN THE PLAN?
All holders of record of the common stock are eligible to participate
in the plan. A beneficial owner of common stock whose shares are
registered in a name other than his own must become a shareholder of
record by having all or a part of such shares transferred into his own
name, or arrange for the holder of record of such shares to enroll in
the plan, in order to participate in the plan.
6. HOW DOES AN ELIGIBLE SHAREHOLDER ENROLL IN THE PLAN?
You may enroll in the plan by completing and signing the participant
card accompanying this prospectus and returning it to the plan agent.
You may obtain additional participant cards at any time by written or
oral request to the plan agent. Upon enrollment, your participation
continues automatically until you terminate it or until the plan is
terminated by the company.
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7. WHEN MAY AN ELIGIBLE SHAREHOLDER ENROLL IN THE PLAN?
You may enroll in the plan at any time. If your participant card
requesting reinvestment of dividends is received by the plan agent on
or before the record date established for a particular dividend,
reinvestment will commence with that dividend. If the plan agent
receives your participant card after the record date established for a
particular dividend, the reinvestment of dividends will begin with the
dividend following the next record date, if you are still a holder of
record.
All voluntary cash contributions received prior to an investment date
will be invested at that investment date. Voluntary cash contributions
made on or after an investment date will be invested for the next
investment date. (See Questions 10 through 12.)
8. MAY A SHAREHOLDER ENROLL AS TO SOME, BUT NOT ALL, SHARES HELD OF
RECORD BY HIM?
Yes, you may enroll in the plan as to some, but not all, shares of
common stock you own of record. The participant card allows you to
determine the extent to which you want to participate in the plan.
You may invest your cash dividends in additional shares of common stock
by electing either one of the following two investment options:
a. "FULL DIVIDEND REINVESTMENT" directs the plan agent
to invest dividends on all shares of common stock you
hold or which are held for you pursuant to the plan.
b. "PARTIAL DIVIDEND REINVESTMENT" directs the plan
agent to invest dividends only with respect to the
number of shares of common stock you identify on the
participant card and with respect to any additional
shares of common stock held for you pursuant to the
plan.
9. MAY A PARTICIPANT CHANGE THE EXTENT OF HIS OR HER PARTICIPATION IN
THE PLAN?
You may change your investment option under the plan at any time by
completing and returning to the plan agent a new participant card.
Voluntary Cash Contributions
10. HOW MAY VOLUNTARY CASH CONTRIBUTIONS TO THE PLAN BE MADE?
You may make optional cash contributions to the plan of not less than
$100 and not more than $30,000 during any single dividend period. The
same amount need not be invested in each period. You are under no
obligation to make any voluntary cash contributions.
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You may make a voluntary cash payment by forwarding a check or money
order, payable to the plan agent, with a completed participant card
when enrolling. In addition, you may make a voluntary cash payment at
any time if it is accompanied by the transmittal form for mailing
voluntary cash contributions that will be included with each statement
of your account. Employees of the company and First Prosperity Bank may
make voluntary cash contributions by completing a Payroll Deduction
Authorization Form and returning it to the company's payroll
administrator, who in turn will make the requested payroll deduction
and send the funds to the plan agent.
Voluntary cash payments may only be made during a dividend period in
which a dividend is actually paid. If the company does not pay a
dividend during any dividend period, the plan agent will not purchase
shares of common stock pursuant to any voluntary cash payments.
11. HOW WILL VOLUNTARY CASH CONTRIBUTIONS BE USED?
The plan agent will apply any voluntary cash contribution received from
you before a record date to the purchase of common stock for your
account on the next date that a dividend is actually paid by the
company (the "investment date"). A voluntary cash contribution will not
be deemed to have been made by you or received by the plan agent until
the funds so contributed are actually collected. Interest will not be
paid on voluntary cash contributions. For this reason, it is to your
benefit to mail payments so that they are received by the plan agent
immediately prior to the next investment date.
12. MAY VOLUNTARY CASH CONTRIBUTIONS BE RETURNED TO A PARTICIPANT?
Yes. Voluntary cash contributions will be returned to you upon written
request to the plan agent, provided that the request is received not
later than 48 hours prior to the next scheduled investment date.
Any voluntary cash contributions in an amount less than the $100
minimum will be returned. If a voluntary cash contribution exceeds the
$30,000 maximum, the excess above $30,000 will be returned.
Purchases
13. WHAT IS THE SOURCE OF THE COMMON STOCK PURCHASED UNDER THE PLAN?
The source of shares of common stock to be purchased under the plan
will be either (i) authorized but unissued shares or treasury shares of
the company or (ii) shares of common stock purchased in the open
market, as determined by the company's Board of Directors. The plan
agent will not exercise any direct or indirect control over the prices
or timing of purchases it makes.
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14. HOW WILL THE PRICE OF SHARES PURCHASED UNDER THE PLAN BE DETERMINED?
When the plan agent purchases shares of common stock under the plan,
the purchases will be made, in the company's discretion, either
directly from the company or in the open market. The price per share of
shares of common stock purchased directly from the company will be the
closing price as reported on the Nasdaq National Market System for a
share of common stock on the day preceding the relevant investment
date. If no shares were traded on that day, the previous day's reported
closing price will be used.
The price per share of shares purchased on the open market will be the
weighted average cost per share (excluding brokerage commissions) to
the plan agent of such purchases for the applicable investment date.
15. HOW WILL THE NUMBER OF SHARES PURCHASED FOR EACH PARTICIPANT BE
DETERMINED?
The number of shares to be purchased for you by the plan agent will
depend on the amount of the dividend you received and any voluntary
cash payment you made, and the price of the shares. Your account will
be credited with the number of whole and fractional shares equal to the
amount to be invested divided by the applicable purchase price.
Fractional shares shall be calculated to seven (7) decimal places.
16. WHEN WILL SHARES BE PURCHASED?
Shares of common stock may be purchased at any time but generally not
later than five (5) days after the investment date. Temporary
suspension of purchases may occur at any time when, in the judgment of
the plan agent, the purchase of shares would violate any governmental,
judicial, securities exchange or National Association of Securities
Dealers, Inc. order. Dividend and voting rights will commence upon
settlement of the purchase. For the purposes of making purchases, the
plan agent will commingle your funds with those of all other
participants.
Dividends
17. HOW WILL DIVIDENDS BE PAID ON SHARES HELD BY THE PLAN AGENT?
As record holder of the shares held in participants' account under the
plan, the plan agent will receive dividends on all such shares held on
each record date, will credit such dividends to participants' accounts
on the basis of whole or fractional shares held in each account and
will automatically reinvest these dividends in shares of common stock.
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Costs
18. WHAT ARE THE COSTS TO A PARTICIPANT IN THE PLAN?
You will incur no brokerage commissions, service charges or other
expenses in connection with purchases of common stock under the plan.
We will pay all costs of administration of the plan; however, we may
charge you $25.00 when you withdraw from the plan or request a share
certificate.
Reports to Participants
19. WHAT KIND OF REPORTS WILL BE SENT TO PARTICIPANTS IN THE PLAN?
As soon as practicable after completion of each investment on your
behalf, the plan agent will mail you a statement showing
o the amount of the dividend and voluntary cash contribution, if
any, applied toward such investment,
o the taxes withheld, if any,
o the net amount invested,
o the number of shares purchased,
o the average cost per share,
o the total shares accumulated under the plan, computed to seven
(7) decimal places,
o the cost basis of whole and fractional shares purchased, and
o the date of purchase.
You will receive annually an Internal Revenue Service Form 1099, or any
successor form, for the purpose of reporting dividend income received
and other relevant information.
Certificates for Shares
20. WILL CERTIFICATES BE ISSUED FOR SHARES PURCHASED?
No. Certificates for shares purchased under the plan ("plan shares")
will be issued to you only if you request such certificates in writing
from the plan agent. Certificates for the number of whole plan shares
you specify will be issued to you within fifteen (15) days of your
signed written request. Any remaining whole or fractional plan shares
will continue to
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be held by the plan agent as your agent. Certificates for fractional
shares will not be issued under any circumstances.
All plan shares will be registered in the name of the plan agent or its
nominee, as agent for the participants. You may not pledge or assign
any plan shares. If you want to pledge or assign your plan shares, you
must request that a certificate for those shares be issued to you.
21. MAY I WITHDRAW SHARES HELD UNDER THE PLAN?
Yes. You may withdraw any number of whole shares held in your account
by requesting certificates for those shares as described in Question
20. Withdrawing some of your shares will not terminate your
participation in the plan.
22. WILL DIVIDENDS ON SHARES WITHDRAWN FROM THE PLAN CONTINUE TO BE
REINVESTED?
If you authorized "Full Dividend Reinvestment" on your participant
card, cash dividends on the shares withdrawn from the plan will
continue to be reinvested.
If you authorized "Partial Dividend Reinvestment" on your participant
card, dividends will only be reinvested on the number of shares you
specified on your participant card. You may change the number of shares
on which dividends are reinvested by completing a new participant card.
Voting Rights
23. HOW WILL SHARES HELD BY THE PLAN AGENT BE VOTED?
For each meeting of shareholders, you will be sent a proxy for the
purpose of voting all whole shares owned by you (both plan and non-plan
shares). You may not vote fractional shares.
Stock Dividends; Stock Splits; Rights Offerings
24. WHAT HAPPENS IF THE COMPANY DECLARES A STOCK DIVIDEND OR A STOCK SPLIT?
Any stock dividends or split shares distributed by the company on your
plan shares will be added to your account with the plan agent as
additional plan shares. Stock dividends or split shares distributed
with respect to shares of common stock registered in your name will be
mailed directly to you in the same manner as to shareholders who do not
participate in the plan.
25. WHAT HAPPENS IF THE COMPANY MAKES A RIGHTS OFFERING?
In the event of a rights offering by the company, the plan agent will
sell rights received with respect to plan shares held of record by the
plan agent as custodian, or in its discretion, may
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distribute rights to participants. If the plan agent sells all rights
received with respect to plan shares, the plan agent will invest the
proceeds of such sales in additional shares of common stock, which
will be retained by the plan agent as custodian and credited
proportionately to the accounts of the participants. Participants who
wish to exercise such rights must request the plan agent to forward a
share certificate to the participant (See Question 20 above). Such
request must be made prior to the record date for exercising such
rights. Rights on shares of common stock registered in the name of a
participant will be mailed directly to the participant.
Termination of Participation
26. HOW AND WHEN MAY A PARTICIPANT TERMINATE PARTICIPATION IN THE PLAN?
You may terminate your participation in the plan at any time by giving
written notice of termination to the plan agent. Any notice received
less than fifteen (15) days prior to a record date shall not be
effective until dividends and other accumulated funds, if any, have
been invested and credited to your account.
Within a reasonable time after termination, the plan agent will deliver
to you
o a certificate for all whole shares held under the plan, and
o a check representing any uninvested dividends and voluntary
cash contributions.
A check in lieu of the issuance of any fractional share in your
account, equal to the fractional share held under the plan multiplied
by the fair market value per share of common stock, determined pursuant
to the plan, on the date that you terminate participation in the plan,
will be delivered to you on the next succeeding investment date. You
may be taxed on any cash received for a fractional share. See Question
29.
27. IF I AM AN EMPLOYEE OF THE COMPANY OR THE BANK, WHAT HAPPENS IF I
TERMINATE MY EMPLOYMENT?
Termination of employment does not automatically terminate
participation in the plan. If you terminate employment with the company
or the bank, dividends on shares held in the plan for you will continue
to be reinvested until you terminate participation in the plan. Of
course, voluntary cash payments through payroll deductions will no
longer be possible once you terminate employment.
Amendment and Termination of Plan
28. MAY THE PLAN BE AMENDED OR TERMINATED?
Yes. The company may amend, supplement, suspend, modify or terminate
the plan at any time without the approval of the participants. You will
be sent thirty (30) days notice of
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any suspension or material amendment, and in all such events, you have
the right to withdraw from the plan.
Federal Income Tax Consequences
29. WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF PARTICIPATING IN
THE PLAN?
The following discussion summarizes the principal federal income tax
consequences, under current law, of participation in the plan. It does
not address all potentially relevant federal income tax matters,
including consequences peculiar to persons subject to special
provisions of federal income tax law (such as tax-exempt organizations,
insurance companies, and foreign persons). The discussion is based on
various rulings of the Internal Revenue Service regarding several types
of dividend reinvestment plans. No ruling, however, has been issued or
requested regarding the plan. The following discussion is for your
general information only, and you are urged to consult your own tax
advisor to determine the particular tax consequences that may result
from your participation in the plan and in the disposition of any
shares of common stock purchased pursuant to the plan.
Reinvested Dividends
Dividends that are reinvested to acquire shares of common stock will be
taxable to you (including any fractional share), as if you received the
dividends. For federal income tax purposes, you will have to report the
receipt of dividend income equal to the fair market value of the common
stock purchased with reinvested dividends. For example, if $100 of your
dividends are reinvested to purchase shares of common stock with a fair
market value of $100, the total amount of the dividend you will be
treated as receiving for federal income tax purposes will be $100.
The initial tax basis of shares of common stock you acquire with
reinvested dividends will equal the amount of the dividend you are
treated as having received. Consequently, your initial basis in a share
acquired with reinvested dividends will be the share's purchase price.
The holding period for shares of common stock acquired with reinvested
dividends will begin the later of the day after the date the shares are
purchase for you, which may be later than the dividend payment date. A
whole share resulting from the acquisition of two or more fractional
shares on different dates will have a split holding period, with the
holding period for each fractional component beginning the day after
the purchase date when the fraction was acquired.
Optional Cash Payments
The purchase of shares of common stock under the plan with your
optional cash payments will not be considered a taxable dividend. The
initial tax basis in shares of common stock acquired with an optional
cash payment will be the purchase price. The holding period for shares
acquired with optional cash payments under the plan will begin the day
after the purchase date. A share consisting of fractional shares
purchased on different dates will have
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a split holding period, with the holding period for each fractional
component beginning the day after its purchase date.
Receipt of Share Certificates and Cash
You will not realize any income when you receive certificates for whole
shares credited to your account under the plan. Any cash received for a
fractional share held in your account will be treated as an amount
realized on the sale of the fractional share. You therefore will
recognize gain or loss equal to any difference between the amount of
cash received for a fractional share and your tax basis in the
fractional share.
Inquiries Concerning the Plan
30. WHO SHOULD BE CONTACTED WITH QUESTIONS CONCERNING THE PLAN?
All inquiries concerning the plan should be directed to:
American Securities Transfer & Trust, Inc.
P.O. Box 1576
Denver, Colorado 80201-1596
Attention: John G. Harmann
(303) 984-4042
Interpretation of the Plan
31. WHO WILL INTERPRET THE PROVISIONS OF THE PLAN?
Any question of interpretation arising under the plan will be
determined by our Board of Directors pursuant to applicable federal and
state law and the rules and regulations of all regulatory authorities,
and such determination shall be final and binding on all participants
and the plan agent.
Responsibility of the Company and the Plan Agent
32. WHAT ARE THE RESPONSIBILITIES OF THE COMPANY AND THE PLAN AGENT WITH
RESPECT TO THE PLAN?
Neither the company, the plan agent nor its nominees shall have any
responsibility beyond the exercise of ordinary care for any action
taken or omitted pursuant to the plan, nor shall they have any duties,
responsibilities or liabilities except such as are expressly set forth
in the plan.
Neither the company nor the plan agent shall be liable for any act done
in good faith, or for any good faith omission to act, including,
without limitation, any claim or liability (i) arising out of failure
to terminate a participant's account upon such participant's death
prior to receipt
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of notice in writing of his or her death, (ii) with respect to the
prices at which shares are purchased, the times when purchases or
sales are made or any inability to purchase or sell common stock for
any reason or (iii) for any fluctuation in the market value of the
common stock. The participants must realize that neither the company
nor the plan agent can provide any assurance of a profit or protection
against loss on any shares purchased under the plan.
USE OF PROCEEDS
The proceeds of all purchases of common stock sold by the company pursuant to
the plan will be used by the company for general corporate purposes.
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the registrant has been
informed that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed upon
for the company by Bracewell & Patterson, L.L.P., Houston, Texas.
EXPERTS
The consolidated financial statements of the company incorporated in this
prospectus and Registration Statement by reference to the company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998 have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report with respect thereto, and are incorporated herein by reference in
reliance upon such report given upon their authority as experts in accounting
and auditing.
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<PAGE> 17
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. THE
COMPANY HAS NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. IF
ANYONE PROVIDES YOU WITH DIFFERENT OR INCONSISTENT INFORMATION, YOU SHOULD NOT
RELY ON IT. WE ARE NOT MAKING AN OFFER TO SELL THESE SECURITIES IN ANY STATE
WHERE THE OFFER OR SALE IS NOT PERMITTED.
YOU SHOULD ASSUME THAT THE INFORMATION APPEARING IN THIS PROSPECTUS OR THE
DOCUMENTS INCORPORATED BY REFERENCE ARE ACCURATE AS OF THE DATE ON THE FRONT
COVER OF THIS PROSPECTUS OR THOSE DOCUMENTS ONLY.
Summary Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Where You Can Find More Information...............................................................................2
Incorporation of Certain Information by Reference.................................................................2
Description of the Prosperity Bancshares, Inc. Dividend Reinvestment Plan.........................................4
Use of Proceeds..................................................................................................14
Indemnification..................................................................................................14
Legal Matters....................................................................................................14
Experts ........................................................................................................14
</TABLE>
[LOGO]
PROSPERITY BANCSHARES, INC.
COMMON STOCK
($1.00 PAR VALUE)
DIVIDEND REINVESTMENT AND
STOCK PURCHASE PLAN
PROSPECTUS
DECEMBER 30, 1999
-15-
<PAGE> 18
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is an estimate of all expenses expected to be incurred by the
Registrant in connection with the issuance and distribution of the securities
registered hereby:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee.............................. $ 3,861
Transfer agent fees.............................................................. 4,000
Printing expenses................................................................ 1,500
Legal fees and expenses of counsel for Registrant................................ 7,500
Accounting fees and expenses..................................................... 2,500
Miscellaneous.................................................................... 639
TOTAL $20,000
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Prosperity's Articles of Incorporation and Bylaws require Prosperity to
indemnify officers and directors of Prosperity to the fullest extent permitted
by Article 2.02-1 of the Business Corporation Act of the State of Texas (the
"TBCA"). Generally, Article 2.02-1 of the TBCA permits a corporation to
indemnify a person who was, is, or is threatened to be made a named defendant or
respondent in a proceeding because the person was or is a director or officer if
it is determined that such person (i) conducted himself in good faith, (ii)
reasonably believed (a) in the case of conduct in his official capacity as a
director or officer of the corporation, that his conduct was in the
corporation's best interests, or (b) in other cases, that his conduct was at
least not opposed to the corporation's best interests, and (iii) in the case of
any criminal proceeding, had no reasonable cause to believe that his conduct was
unlawful. In addition, the TBCA requires a corporation to indemnify a director
or officer for any action that such director or officer is wholly successfully
in defending on the merits.
Prosperity's Articles of Incorporation provide that a director of Prosperity
will not be liable to the corporation for monetary damages for an act or
omission in the director's capacity as a director, except to the extent not
permitted by law. Texas law does not permit exculpation of liability in the case
of (i) a breach of the director's duty of loyalty to the corporation or its
shareholders, (ii) an act or omission not in good faith that constitutes a
breach of duty of the director to the corporation or an act or omission that
involves intentional misconduct or a knowing violation of the law, (iii) a
transaction from which a director received an improper benefit, whether or not
the benefit resulted from an action taken within the scope of the director's
office or (iv) an act or omission for which the liability of the director is
expressly provided by statute.
Prosperity may provide liability insurance for each director and officer for
certain losses arising from claims or changes made against them while action in
their capabilities as directors or officers of Prosperity, whether or not
Prosperity would have the power to indemnify such person against such liability,
as permitted by law.
II-1
<PAGE> 19
ITEM 16. EXHIBITS
The following documents are filed as exhibits to this Registration Statement:
<TABLE>
<CAPTION>
Exhibit Number Description of Exhibit
- - -------------- ----------------------
<S> <C>
5.1 Opinion of Bracewell & Patterson, L.L.P. as to the legality of the securities being registered
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Bracewell & Patterson, L.L.P. (included in the opinion filed as Exhibit 5.1)
24.1 Powers of Attorney (included on page II-3).
99.1 Prosperity Bancshares, Inc. Dividend Reinvestment Plan.
</TABLE>
ITEM 17. UNDERTAKINGS
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement:
(a) To include any prospectus required by
Section 10(a)(3) of the Securities Act of
1933;
(b) To reflect in the prospectus any facts or
events arising after the effective date of
the registration statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the registration
statement. Notwithstanding the foregoing,
any increase or decease in volume of
securities offered (if the total dollar
value of securities offered would not exceed
that which was registered) and any deviation
from the low or high and of the estimated
maximum offering range may be reflected in
the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and
price represent no more than 20% change in
the maximum aggregate offering price set
forth in the "Calculation of Registration
Fee" table in the effective registration
statement.
(c) To include any material information with
respect to the plan of distribution not
previously disclosed in the registration
statement or any material change to such
information in the registration statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of
this section do not apply if the registration statement is on
Form S-3, Form S-8 or Form F-3, and the information required
to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference n the registration
statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
II-2
<PAGE> 20
B. The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section
15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT
TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF HOUSTON, STATE OF TEXAS, ON DECEMBER 30, 1999.
Prosperity Bancshares, Inc.
(Registrant)
By: /s/ Tracy T. Rudolph
----------------------------------------
Tracy T. Rudolph
Chairman of the Board and President
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints Tracy
T. Rudolph or David Zalman with full power to each of them to act without the
other, as the undersigned's true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for the undersigned and in the
undersigned's name, place and stead, in any and all capacities (until revoked in
writing), to sign this Registration Statement and any and all amendments
(including post-effective amendments) thereto, to file the same, together with
all exhibits thereto and documents in connection therewith, with the Securities
and Exchange Commission, to sign any and all applications, registration
statements, notices and other documents necessary or advisable to comply with
the applicable state securities authorities, granting unto said attorney-in-fact
and agent, or his or their substitute or substitutes, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done in order to effectuate the same as fully to all intents and purposes as the
undersigned might or could do if personally present, thereby ratifying and
confirming all that said attorneys-in-fact and agents, or his or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED
ON DECEMBER 30, 1999.
<TABLE>
<CAPTION>
Signature Title
- - --------- -----
<S> <C>
/s/ Tracy T. Rudolph Chairman of the Board and President
- - ----------------------------------- (principal executive officer)
Tracy T. Rudolph
/s/ David Hollaway Chief Financial Officer
- - ----------------------------------- (principal financial officer and
David Hollaway principal accounting officer)
/s/ Harry Bayne Director
- - -----------------------------------
Harry Bayne
</TABLE>
II-3
<PAGE> 21
<TABLE>
<S> <C>
/s/ James A. Bouligny Director
- - -----------------------------------
James A. Bouligny
/s/ J. T. Herin Director
- - -----------------------------------
J. T. Herin
/s/ Charles M. Slavik Director
- - -----------------------------------
Charles M. Slavik
/s/ Harrison Stafford Director
- - -----------------------------------
Harrison Stafford
/s/ Robert Steelhammer Director
- - -----------------------------------
Robert Steelhammer
/s/ David Zalman Director
- - -----------------------------------
David Zalman
</TABLE>
II-4
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description of Exhibit
- - -------------- ----------------------
<S> <C>
5.1 Opinion of Bracewell & Patterson, L.L.P. as to the legality of the securities being registered
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Bracewell & Patterson, L.L.P. (included in the opinion filed as Exhibit 5.1)
24.1 Powers of Attorney (included on page II-3).
99.1 Prosperity Bancshares, Inc. Dividend Reinvestment Plan.
</TABLE>
<PAGE> 1
EXHIBIT 5.1
[BRACEWELL & PATTERSON L.L.P. LETTERHEAD]
December 30, 1999
Prosperity Bancshares, Inc.
3040 Post Oak Boulevard, Suite 150
Houston, Texas 77056
Ladies and Gentlemen:
We have acted as counsel to Prosperity Bancshares, Inc., a Texas corporation
(the "Company"), in connection with the registration and proposed issuance of up
to 900,000 shares (the "Shares") of its common stock, par value $1.00 per share
(the "Common Stock") in connection with the Prosperity Bancshares, Inc. Dividend
Reinvestment Plan (the "Plan"). The Company is filing with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended, a Registration Statement on Form S-3 relating to the Shares (the
"Registration Statement").
We have examined originals or copies of (1) the Registration Statement; (2) the
Articles of Incorporation of the Company, as amended; (3) the Bylaws of the
Company, as amended; (4) certain resolutions of the Board of Directors of the
Company; and (5) such other documents and records as we have deemed necessary
and relevant for purposes hereof. In addition, we have relied upon certificates
of officers of the Company and telegrams of public officials as to certain
matters of fact relating to this opinion and have made such investigations of
law as we have deemed necessary and relevant as a basis hereof. In such
examination, we have assumed the genuineness of all signatures, the authenticity
of all documents, certificates and records submitted to us as originals, the
conformity to original documents, certificates and records of all documents,
certificates and records submitted to us as copies, and the truthfulness of all
statements of fact contained therein.
Based on the foregoing, and subject to the limitations set forth herein, and
having due regard for such legal considerations as we deem relevant, we are of
the opinion that the Shares have been duly and validly authorized and when
issued and paid for in accordance with the terms of each of the Plans, for a
consideration at least equal to the par value thereof, the Shares will be
validly issued, fully paid and nonassessable.
<PAGE> 2
Prosperity Bancshares, Inc.
December 30, 1999
Page 2
The foregoing opinion is based on and is limited to the law of the State of
Texas and the relevant law of the United States of America, and we render no
opinion with respect to the laws of any other jurisdiction.
We hereby consent to the filing of this opinion with the Securities and Exchange
Commission as an exhibit to the Registration Statement and to the use of our
name therein. By giving such consent, we do not admit that we are experts with
respect to any part of the Registration Statement, including this Exhibit within
the meaning of the term "expert" as used in the Securities Act of 1933, as
amended, or the rules and regulations thereunder.
Very truly yours,
/s/ BRACEWELL & PATTERSON, L.L.P.
---------------------------------
Bracewell & Patterson, L.L.P.
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Prosperity Bancshares, Inc. on Form S-3 of our report dated February 18, 1999,
appearing in the Annual Report on Form 10-K of Prosperity Bancshares, Inc. for
the year ended December 31, 1998 and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
/s/ DELOITTE & TOUCHE LLP
Houston, Texas
December 30, 1999
<PAGE> 1
Exhibit 99.1
PROSPERITY BANCSHARES, INC.
DIVIDEND REINVESTMENT PLAN
I. PURPOSE OF THE PLAN
The purpose of this Dividend Reinvestment Plan (the "Plan") is to provide the
participating shareholders of Prosperity Bancshares, Inc. (the "Company") with a
convenient method of investing cash dividends and voluntary cash contributions
in additional shares of the Common Stock of the Company without payment of any
brokerage commissions, service charges or other costs.
II. DEFINITIONS.
For purposes of the Plan, the following words or phrases shall have meanings
assigned to them below:
A. "Bank" shall mean First Prosperity Bank.
B. "Common Stock" shall mean the $1.00 par value Common Stock of the
Company.
C. "Company" shall mean Prosperity Bancshares, Inc.
D. "Dividend Reinvestment Committee" shall mean the committee so
designated by the Board of Directors of the Company. The Dividend
Reinvestment Committee shall be composed of at least three (3)
persons, one of whom shall be the chief executive officer of the
Company.
E. "Employee" shall mean an employee of the Bank or the Company.
F. "Fair Market Value" shall mean the value of the Common Stock
determined by the Dividend Reinvestment Committee as follows:
1. During such time as the Common Stock is listed on an
established stock exchange or exchanges, the fair market
value shall be deemed to be the closing price of the
Common Stock on the stock exchange(s) on the applicable
date or, if no sale of the Common Stock has been made on
any exchange on that day, the fair market value shall be
determined by reference to such prices on the next
preceding day on which Common Stock was traded.
2. During such time as the Common Stock is not listed on an
established stock exchange but is listed in the Nasdaq
National Market, the fair market value per share shall be
the average of the highest and lowest trading prices for
the
<PAGE> 2
Common Stock on the applicable date or, if no trade of
Common Stock occurred on that day, the fair market value
shall be determined by reference to such price on the next
preceding day on which the Common Stock was traded.
3. During such time as the Common Stock is not listed on an
established stock exchange or on the Nasdaq National
Market but is quoted by Nasdaq, the fair market value per
share shall be the average of the closing dealer "bid" and
"ask" prices for the Common Stock, as quoted by Nasdaq for
the applicable day or, if no "bid" and "ask" prices are
quoted for that day, the fair market value shall be
determined by reference to such prices on the next
preceding day on which such prices were quoted.
4. During such time as the Common Stock is not listed on an
established stock exchange or quoted by Nasdaq, the fair
market value per share shall be the average of the lowest
"bid" and highest "ask" quotations of the Common Stock on
the applicable date, as reported by one or more brokerage
firms which then make a market in the Common Stock or, in
the absence of either a "bid" or "ask" quotation, the
quotation (or average of the quotations, if several)
reported on the applicable date, whether "bid" or "ask".
5. In the event the Common Stock is not traded on an
established stock exchange or quoted by Nasdaq and no
"bid" and "ask" prices are available or if, in the
determination of the Dividend Reinvestment Committee, the
value determined pursuant to subparagraph 4 above does not
accurately reflect the fair market value of the Common
Stock, the fair market value of the Common Stock shall be
as determined in good faith by the Dividend Reinvestment
Committee.
G. "Investment Date" shall mean the date a dividend is actually paid
by the Company.
H. "Participant" shall mean a holder of Common Stock of the Company
who has elected to participate in the Plan by delivering an
executed Participant Card to the Plan Agent.
I. "Participant Card" shall mean the card or other document
designated by the Plan Agent as the required evidence of a
shareholder's election to participate in the Plan.
J. "Payroll Deduction Authorization Form" shall mean the form or
other document designated by the Company as the required evidence
of an Employee's election to make voluntary cash contributions
through an automatic payroll deduction mechanism.
K. "Plan" shall mean this Dividend Reinvestment Plan.
-2-
<PAGE> 3
L. "Plan Agent" shall mean American Securities Transfer & Trust,
Inc. and shall also mean any other entity to which the Plan Agent
has delegated all or any part of its responsibilities hereunder,
with the exception of purchasing Plan Shares pursuant to the
Plan.
M. "Plan Shares" shall mean shares of Common Stock that have been
purchased by a Participant under the Plan and which are held by
the Plan Agent in a custodial account.
N. "Purchasing Agent" shall mean any entity designated by the Plan
Agent to purchase Plan Shares for the Participants.
O. "Record Date" shall mean the date on which a person must be
registered as a shareholder on the stock books of the Company in
order to receive a dividend.
III. ADMINISTRATION
The Plan shall be administered by the Plan Agent, however, the purchase of Plan
Shares may be delegated to an unaffiliated third party (the "Purchasing Agent").
All Plan Shares will be registered in the name of the Plan Agent (or its
nominee) as agent for the Participants. The Plan Shares will be credited to the
accounts of the respective Participants as their interest may appear.
IV. PARTICIPATION
Subject to the provisions of Sections 4, 5, and 17 herein, all holders of record
of the Common Stock of the Company are eligible to participate in the Plan. A
beneficial owner whose shares are registered in a name other than his own must
first become a shareholder of record by having all or a part of such shares
transferred into his own name in order to participate in the Plan.
The Company reserves the right not to offer participation in the Plan to those
holders of record who reside in jurisdictions which require (i) registration or
qualification of the Common Stock to be issued pursuant to the Plan with the
securities commission of that jurisdiction, or (ii) registration or
qualification of the Company or the Plan Agent, or any of their respective
officers or employees, as a broker, dealer, salesman or agent.
V. ENROLLMENT
A shareholder of record may enroll in the Plan at any time, unless (i) the Plan
Agent or any Purchasing Agent has reason to believe that such enrollment is not,
at such time, permitted under the laws of the jurisdiction in which such
shareholder resides or under the laws of the United States, or (ii) the Plan is
suspended or terminated as hereinafter provided, by completing and signing a
Participant Card and returning it to the Plan Agent. If a Participant Card
requesting reinvestment of dividends is received by the Plan Agent on or before
the Record Date established for a particular dividend, reinvestment will
commence with that dividend. If a Participant Card is received from a
shareholder after the Record Date established for a particular dividend, the
reinvestment of dividends
-3-
<PAGE> 4
will begin on the Investment Date following the next Record Date if the
shareholder is still a holder of record. A shareholder who elects to enroll in
the Plan may participate with respect to some, but not all shares of Common
Stock owned of record by that shareholder. Once a shareholder has enrolled in
the Plan, his participation continues with respect to his participating shares
until terminated by such shareholder or by the Company pursuant to the terms of
the Plan.
VI. VOLUNTARY CASH CONTRIBUTIONS
Each Participant may make voluntary cash contributions to the Plan of not less
than $100.00 nor more than $30,000.00 during any single dividend period.
Participants need not invest the same amounts during each dividend period.
Participants are under no obligation to make any cash contributions.
A voluntary cash contribution shall be made by forwarding a check or money
order, payable to the Plan Agent, with a completed Participant Card when
enrolling, or thereafter, accompanied by the transmittal form for mailing
voluntary cash contributions that will be included with each statement of
account furnished to Participants pursuant to Section 11. Employees may make
voluntary cash contributions by completing a Payroll Deduction Authorization
Form and returning it to the Company. The Plan Agent will apply each voluntary
cash contribution received from a Participant before an Investment Date to the
purchase of Common Stock for the account of that Participant on the next
Investment Date. A voluntary cash contribution will not be deemed to have been
made by a Participant or received by the Plan Agent until the funds contributed
are actually collected.
Interest will not be paid on voluntary cash contributions. Voluntary cash
contributions will be returned to a Participant upon written request to the Plan
Agent, provided that the request is received not later than 48 hours prior to
the next scheduled Investment Date.
A voluntary cash contribution in an amount less than $100.00 will be returned to
the Participant. If a voluntary cash contribution exceeds $30,000.00, the excess
amount above $30,000.00 will be returned to the Participant.
Voluntary cash contributions may only be made during a dividend period in which
a dividend is actually paid. If the Company does not pay a dividend during any
dividend period, the Plan Agent will not purchase shares of Common Stock
pursuant to any voluntary cash contributions.
VII. PURCHASES
On each Investment Date, the Company will pay to the Plan Agent the total amount
of dividends payable on each Participant's shares of Common Stock enrolled in
the Plan (including Plan Shares) and, except as otherwise directed by the
Company, the Plan Agent shall use that amount, in addition to the Participant's
voluntary cash contributions, if any, for either, as directed by the Company:
(i) the purchase from the Company out of the Company's authorized but
unissued shares or treasury shares of Common Stock, such number
of shares of Common Stock as the
-4-
<PAGE> 5
Company is then willing to sell to the Plan Agent for purposes of
investing such dividends in Company Common Stock; or
(ii) the purchase of shares of Company Common Stock in the open
market, which purchases may be made from time to time after the
dividend payment date but shall be made no later than the last
day of the first calendar month after the dividend payment date.
The purchase price of shares of Common Stock purchased directly from the Company
will be the closing price as reported on the Nasdaq National Market System for a
share of Common Stock on the day preceding the relevant Investment Date. If no
shares were traded on that day, the previous day's reported closing price will
be used.
The price of shares purchased on the open market will be the weighted average
cost per share (excluding brokerage commissions) to the Plan Agent of such
purchases for the applicable Investment Date.
Purchases will be made as soon as possible after the applicable Investment Date,
but no more than five (5) days after such date. No Common Stock will be
allocated to a Participant's account until the date on which the Plan Agent has
purchased sufficient shares of Common Stock to cover purchases for all
Participants in the Plan. If purchases occur at different prices, the purchase
price per share of Common Stock to all Participants will be based upon the
average of the prices of all shares of Common Stock purchased.
Each Participant's account will be credited with the number of whole and
fractional shares (calculated to seven (7) decimal places) equal to the amount
to be invested divided by the applicable purchase price.
VIII. TEMPORARY CURTAILMENT OF PURCHASES OR SALES
Temporary curtailment or suspension of purchases or sales of shares may be made
at any time when such purchases or sales would, in the judgment of the Plan
Agent, contravene or be restricted by applicable regulations, interpretations or
orders of the Securities and Exchange Commission, or any other governmental
commission, agency or instrumentality, of any court or securities exchange or of
the National Association of Securities Dealers, Inc. The Plan Agent shall not be
accountable or otherwise liable for failure to make purchases or sales at such
times.
IX. DIVIDENDS ON PLAN SHARES
As record holder of the Plan Shares held in Participants' accounts under the
Plan, the Plan Agent will receive dividends on all Plan Shares held on each
dividend record date, will credit such dividends to Participants' accounts on
the basis of whole or fractional shares held in each account and will
automatically reinvest these dividends in the Common Stock of the Company.
-5-
<PAGE> 6
X. COSTS
All brokerage commissions for purchases of Common Stock and costs of
administration of the Plan will be borne by the Company; however, a reasonable
service charge may be assessed at the time of a Participant's withdrawal from
the Plan or at any time a share certificate is requested by a Participant.
Participants will be charged the full actual cost, including any brokerage
commissions, of all shares of Common Stock sold upon a Participant's request
from such Participant's account.
XI. REPORTS TO PARTICIPANTS
As soon as practicable after completion of each investment on behalf of a
Participant, the Plan Agent will mail to such Participant a statement of account
showing:
(i) the amount of the dividend and voluntary cash contribution, if
any, applied toward such investment,
(ii) the taxes withheld, if any,
(iii) the net amount invested,
(iv) the number of shares purchased,
(v) the average cost per share,
(vi) the total shares accumulated under the Plan, computed to seven
(7) decimal places,
(vii) the cost basis of whole and fractional shares purchased, and
(viii) the date of purchase.
Each Participant will receive annually Internal Revenue Service Form 1099, or
any successor form, for the purpose of reporting dividend income received and
other relevant information.
XII. VOTING OF SHARES
For each meeting of shareholders, each Participant will receive a proxy for the
purpose of voting all whole shares owned (both Plan Shares and non-plan shares).
Fractional shares will not be voted. The Plan Shares of a Participant who does
not return a proxy will not be voted.
XIII. CERTIFICATES FOR SHARES
All Plan Shares will be registered in the name of the Plan Agent or its nominee,
as agent for the Participants. Certificates for Plan Shares will not be issued
to Participants unless requested in writing. Certificates for any number of
whole Plan Shares will be issued to a Participant within fifteen (15) days of a
written request to the Plan Agent signed by the Participant. A reasonable fee
-6-
<PAGE> 7
may be charged for each certificate requested. Any remaining whole or fractional
Plan Shares will continue to be held by the Plan Agent as the agent for the
Participant. Certificates for fractional shares will not be issued under any
circumstances.
Certificates will, however, be issued to Participants upon withdrawal of Plan
Shares or upon termination of participation in the Plan. Certificates will be
registered in the name or names in which the Participant's account is
maintained.
A Participant may not pledge or assign shares held in the Plan. In order to
pledge or assign Plan Shares, the Participant must request a certificate for
those shares from the Plan Agent.
XIV. TERMINATION OF ACCOUNT AND WITHDRAWALS
A Participant may terminate his account at any time by giving written notice of
termination to the Plan Agent, however, any notice received between a Record
Date and an Investment Date shall not be effective until dividends and other
accumulated funds, if any, have been invested and credited to his account. The
Plan Agent may terminate any account by written notice to the Participant.
Within a reasonable time after termination, the Plan Agent will deliver to the
Participant (i) a certificate for all whole Plan Shares held under the Plan,
(ii) a check for any uninvested dividends and voluntary cash contributions, and
(iii) a check in lieu of the issuance of a fractional share equal to the
fractional Plan Share multiplied by the Fair Market Value per share of the
Common Stock on the date of termination. The Participant shall have no right to
draw checks or drafts against his account or to give instructions to the Plan
Agent with respect to any Plan Shares or cash held in the Participant's account
except as expressly provided in the Plan. The Participant may be charged a
reasonable fee for issuance of the certificate.
A Participant may withdraw any number of whole Plan Shares credited to his
account by requesting certificates for those shares. A withdrawal of Plan Shares
does not automatically terminate participation in the Plan unless written notice
of such termination is provided as described above.
If a Participant authorized "Full Dividend Reinvestment" on the Participant
Card, cash dividends received on the shares which were withdrawn from the Plan
will continue to be reinvested. If a Participant authorized "Partial Dividend
Reinvestment", dividends will be reinvested only on the number of shares the
Participant specified on the Participant Card.
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XV. DISPOSITION OF SHARES
If a Participant disposes of all shares of Common Stock registered in his name
other than shares under the Plan, the Plan Agent will, unless otherwise
instructed by the Participant, continue to reinvest the dividends on the shares
still credited to the Participant's account under the Plan. However, if a
Participant, has only a fractional share of Common Stock credited to his account
under the Plan on the Record Date for any cash dividend on the Common Stock, the
Company reserves the right not to reinvest any additional dividends on such
fractional share and pay the Participant in cash for such fractional share and
any dividend thereon. The cash payment for the fractional share will be based
upon the closing market price of the Common Stock as reported by the Nasdaq
National Market for the business day prior to the date the Company elects to
make such cash payment to the Participant.
XVI. STOCK DIVIDENDS; STOCK SPLITS; RIGHTS OFFERINGS
Any stock dividends or split shares distributed by the Company with respect to
the Plan Shares of a Participant will be added to his account with the Plan
Agent as additional Plan Shares. Stock dividends or split shares distributed
with respect to shares of Common Stock registered in a Participant's name will
be mailed directly to the Participant in the same manner as to shareholders who
do not participate in the Plan.
In the event of a rights offering by the Company, the Plan Agent may either sell
all rights received with respect to Plan Shares held of record by the Plan Agent
as custodian, or, in its discretion, may distribute rights to Participants. If
the Plan Agent sells all rights received with respect to Plan Shares, the Plan
Agent will invest the proceeds of such sales in additional shares of Common
Stock, which will be retained by the Plan Agent as custodian and credited
proportionately to the accounts of the Participants. Participants who wish to
exercise rights with respect to Plan Shares must request the Plan Agent to
forward a share certificate to the Participant as provided in Section 13 of the
Plan. Such request must be made prior to the record date for exercising such
rights. Rights on shares of Common Stock registered in the name of a Participant
will be mailed directly to the Participant.
XVII. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN
The Company may amend, supplement, suspend, modify or terminate the Plan at any
time without the approval of the Participants. Thirty (30) days notice of any
suspension or material amendment shall be sent to all Participants, who shall in
all events have the right to withdraw from the Plan.
XVIII. INTERPRETATION OF THE PLAN
Any question of interpretation arising under the Plan will be determined by the
Board of Directors of the Company pursuant to applicable federal and state law
and the rules and regulations of all regulatory authorities, and such
determination shall be final and binding on all Participants and the Plan Agent.
XIX. NOTICES
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All communications with or notices to the Participants may be given by letter
addressed to the Participant at the Participant's last address of record with
the Company. The Participant agrees to give prompt written notice to the Company
of any change of address.
All communications with or notices required to be given to the Plan Agent should
be addressed to:
IF MAILED:
American Securities Transfer & Trust, Inc.
P.O. Box 1596
Denver, Colorado 80210-1596
IF DELIVERED:
American Securities Transfer & Trust, Inc.
12039 West Alameda Parkway, Suite Z-2
Lakewood, Colorado 80228
Additional Participant Cards may be requested and inquiries made about the Plan
by writing to the mailing address shown above or by calling the Plan Agent at
(303) 984-4042.
In the event of any change in or substitution of the Plan Agent, a notice of the
new Plan Agent's address and telephone number shall be sent to all Participants
and this Section 19 shall be amended accordingly.
XX. DUTIES AND RESPONSIBILITIES
Neither the Company, the Plan Agent nor its nominees shall have any
responsibility beyond the exercise of ordinary care for any action taken or
omitted pursuant to the Plan, nor shall they have any duties, responsibilities
or liabilities except such as are expressly set forth herein. Neither the
Company nor the Plan Agent shall be liable for any act done in good faith, or
for any good faith omission to act, including, without limitation, any claims of
liability (i) with respect to the time or prices at which Common Stock is
purchased or sold for a Participant's account, or any inability o purchase or
sell Common Stock, for any reason, (ii) for any fluctuation in the market value
after purchase or sale of Common Stock, or (iii) arising out of failure to
terminate a Participant's account upon such Participant's death prior to receipt
of notice in writing of his or her death.
XXI. GOVERNING LAW
The Plan is governed by the laws of the State of Texas.
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XXII. NO TERMINATION BY OPERATION OF LAW
The delivery by a Participant of a signed Participant Card to the Plan Agent
shall constitute an irrevocable appointment of the Plan Agent as such
Participant's agent, which appointment can be terminated by terminating such
Participant's account in the manner provided in Section 14. The authority
conferred by the Participant Card shall not be terminated by operation of law,
whether by the death or incapacity of the Participant, the termination of any
trust, the dissolution of any corporation or the occurrence of any other event.
XXIII. GENDER AND NUMBER
Except when otherwise indicated by the context, the masculine gender shall also
include the feminine gender, and the definition of any term herein in the
singular shall also include the plural.
XXIV. EFFECTIVE DATE
The foregoing Plan was adopted by the Company's Board of Directors on September
15, 1999 and is effective as of December 30, 1999.
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