<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 5, 1998
REGISTRATION NO. 333-...
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------------
COMPASS BANCSHARES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 63-0593897
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
15 SOUTH 20TH STREET
BIRMINGHAM, ALABAMA 35233
(205) 933-3000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
--------------------
JERRY W. POWELL, ESQUIRE
GENERAL COUNSEL
COMPASS BANCSHARES, INC.
15 SOUTH 20TH STREET
BIRMINGHAM, ALABAMA 35233
(205) 933-3000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------
Approximate date of commencement of proposed sale to the public:
FROM TIME TO TIME AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
--------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
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. [X]
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. [_]
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. [_]
--------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===================================================================================================================
PROPOSED PROPOSED
TITLE OF EACH CLASS AMOUNT MAXIMUM MAXIMUM
OF SECURITIES TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE (1) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCK, $2.00 PAR VALUE 728,074 SHARES $41.56 $30,258,755 $8,926
===================================================================================================================
</TABLE>
(1) ESTIMATED SOLELY FOR THE PURPOSE OF CALCULATING THE REGISTRATION FEE
PURSUANT TO RULE 457(c) ON THE BASIS OF THE AVERAGE OF THE HIGH AND LOW
SALES PRICES REPORTED THROUGH THE NASDAQ NATIONAL MARKET SYSTEM ON AUGUST
3, 1998.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
===============================================================================
<PAGE>
PROSPECTUS
728,074 SHARES
COMPASS BANCSHARES, INC.
COMMON STOCK
______________
The 728,074 shares ("Shares") of common stock, $2.00 par value ("Common
Stock"), of Compass Bancshares, Inc., a Delaware corporation (the "Company"),
offered hereby are being sold by certain stockholders of the Company ("Selling
Stockholders"). See "Selling Stockholders." The Company will not receive any
of the proceeds from the sale of the Shares by the Selling Stockholders.
Sales of Shares by the Selling Stockholders may be effected from time to
time in one or more transactions through the NASDAQ National Market System or
any other exchange on which the Common Stock may be admitted for trading
pursuant to and in accordance with the applicable rules thereof, in block
transactions, negotiated transactions or a combination of any such methods of
sale, at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Selling Stockholders may
be deemed to be "underwriters" within the meaning of the Securities Act of 1933,
as amended ("Securities Act"). See "Plan of Distribution".
The Common Stock of the Company is listed through the NASDAQ National
Market System under the symbol "CBSS". On August 3, 1998, the closing sales
price of the Common Stock as reported was $41.375 per share.
______________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
______________
THE DATE OF THIS PROSPECTUS IS AUGUST __, 1998.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, accordingly, files
reports, proxy statements and other information with the Commission. Such
reports, proxy statements and other information can be inspected and copied at
the Commission's public reference rooms located at 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549, and the public reference facilities in the New
York Regional Office, 13th Floor, Seven World Trade Center, New York, New York
10048, and the Chicago Regional Office, Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60621-2511. Copies of such
materials can be obtained at prescribed rates by writing to the Securities and
Exchange Commission, Public Reference Branch, 450 Fifth Street, N.W. Washington,
D.C. 20549. Such material may be accessed electronically by means of the
Commission's home page on the Internet at http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") under the Securities Act with respect to the
Common Stock offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which have
been omitted in accordance with the rules and regulations promulgated by the
Commission. For further information with respect to the Company and the Shares
offered hereby, reference is made to such Registration Statement and to the
exhibits thereto.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the Commission
are incorporated herein by reference:
(i) The Company's Annual Report on Form 10-K for the year ended
December 31, 1997 (File No. 0-6032);
(ii) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998 (File No. 0-6032);
(iii) The Company's Proxy Statement dated March 20, 1998, relating to its
annual meeting of shareholders held on April 20, 1998 (File No.
0-6032); and
(iv) The description of Compass Common Stock contained in its Proxy
Statement dated April 16, 1982, relating to its Annual Meeting held
May 17, 1982 (File No. 0-6032).
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering made hereby shall be deemed to be incorporated
by reference in this Prospectus and to be a part hereof from the date of the
filing of such documents. Any statement contained in this Prospectus, in a
supplement to this Prospectus, or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed supplement to this Prospectus or in any document
that also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed to constitute a part of this Prospectus, except as so modified or
superseded.
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus is delivered, on the written or oral request of
any such person, a copy of the documents incorporated by reference as a part of
the Registration Statement, other than exhibits to such documents. Requests for
such copies should be directed to the Controller of the Company at 15 South 20th
Street, Birmingham, Alabama 35223 (telephone no. (205) 558-5740).
-2-
<PAGE>
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of Shares by
the Selling Stockholders.
SELLING STOCKHOLDERS
The Selling Stockholders consist of former stockholders of Hill Country
Bank, a Texas banking association ("Hill Country Bank"). The Selling
Stockholders acquired the Shares in connection with the merger of Compass Hill
Country, Inc., a wholly owned subsidiary of the Company, with and into Hill
Country Bank on August 1, 1998, pursuant to an Agreement and Plan of Merger
dated as of April 22, 1998, as amended, between the Company and Hill Country
Bank (the "Merger Agreement"). In connection with the Merger Agreement, the
Company agreed to file the Registration Statement within three business days
after the consummation of the transactions contemplated by the Merger Agreement
and to bear the expenses of registration of the Shares. The Selling Stockholders
will bear any fees and disbursements of counsel of the Selling Stockholders and
any discounts, selling commissions or other selling expenses allocable to sales
of the Shares by the Selling Stockholders.
The table below sets forth the names of the Selling Stockholders, the
number of shares of Common Stock owned by each of the Selling Stockholders as of
August ___, 1998, the number of shares which may be offered by each Selling
Stockholder pursuant to this Prospectus and the number of shares of Common Stock
to be owned by the Selling Stockholders upon completion of the offering assuming
that all of the Shares are sold and no other shares of Common Stock are acquired
by the Selling Stockholders between August ___, 1998, and the date of the
completion of the offering. Any or all of the shares listed below may be
offered for sale by the Selling Stockholders from time to time.
<TABLE>
<CAPTION>
Amount of Amount of Amount of
Securities Securities Securities to
beneficially offered for be beneficially Percentage
owned prior Selling owned of
Selling Stockholder to offering (1) Stockholders after offering (2) Class
- ------------------- --------------- ------------ ------------------ ----------
<S> <C> <C> <C> <C>
Julia Wilkinson 371,318 371,318 -0- -0-
Stephen J. Wilkinson 356,756 356,756 -0- -0-
--------------- ------------ ------------------ ----------
Total 728,074 728,074 -0- -0-
=============== ============ ================== ==========
</TABLE>
(1) To the knowledge of the Company, the persons named in the table have sole
voting and sole investment power with respect to all shares of Common Stock
beneficially owned, subject to community property laws where applicable.
(2) Assumes that all Shares offered hereby by each Selling Stockholder are
actually sold and no other shares of Common Stock are acquired by the
Selling Stockholders.
PLAN OF DISTRIBUTION
Sales of Shares by the Selling Stockholders may be effected from time to
time in one or more transactions through the NASDAQ National Market System or
any other exchange on which the Common Stock may be admitted for trading
pursuant to and in accordance with the applicable rules thereof, in block
transactions, negotiated transactions or a combination of any such methods of
sale, at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
The Selling Stockholders may effect such transactions by selling shares of
Common Stock to or through broker-dealers, and such broker-dealers may sell the
shares of Common Stock as agent or may purchase such shares of Common Stock as
principal and resell them for their own account pursuant to this Prospectus.
Such broker-dealers may receive compensation in the form of underwriting
documents, concessions or commissions from the Selling Stockholders and/or
-3-
<PAGE>
purchasers of shares of Common Stock from whom they may act as agent (which
compensation may be in excess of customary commissions).
The Company has informed the Selling Stockholders that the antimanipulative
rules under the Exchange Act (Rules 10b-6 and 10b-7) may apply to their shares
of Common Stock offered by this Prospectus in the market. Also, the Company has
informed the Selling Stockholders of the need for delivery of copies of the
Prospectus in connection with any sale of securities registered hereunder in
accordance with applicable prospectus delivery requirements.
In connection with such sales, the Selling Stockholders and any
participating brokers or dealers may be deemed to be "underwriters" as defined
in the Securities Act and any profit on the sale by them of the shares of Common
Stock offered by this Prospectus and any discounts and commissions or
concessions received by them may be deemed to be underwriting discounts and
commissions under the Securities Act. In addition, any of the shares of Common
Stock that qualify for sale pursuant to Rule 144 may be sold under Rule 144
rather than pursuant to this Prospectus.
The Company will not receive any of the proceeds from the sale by the
Selling Stockholders of the shares of Common Stock offered by this Prospectus.
Certain of the fees and expenses of this Registration Statement will be borne by
the Company. See "Selling Stockholders."
In order to comply with certain state securities laws, if applicable, the
shares of Common Stock offered by this Prospectus will not be sold in a
particular state unless such securities have been registered or qualified for
sale in such state or an exemption from registration or qualification is
available and complied with, and, if so required, will only be sold in that
state through registered or licensed brokers or dealers.
The shares of Common Stock originally issued by the Company to the Selling
Stockholders bear legends as to their restricted transferability. Upon the
effectiveness of the Registration Statement of which this Prospectus is a part,
and the transfer by the Selling Stockholders of any of the shares of Common
Stock pursuant thereto, new certificates representing such shares will be issued
to the transferee, free of any such legends unless otherwise required by law.
LEGAL MATTERS
Certain legal matters in connection with the Shares offered hereby will be
passed upon for the Company by Jerry W. Powell, Esquire, General Counsel,
Secretary and employee of the Company. As of April 30, 1998, Mr. Powell was the
beneficial owner of an aggregate of approximately 90,455 shares of Common Stock.
EXPERTS
The financial statements of Compass Bancshares, Inc. as of December 31,
1997 and 1996, and for each of the years in the three-year period ended December
31, 1997 have been incorporated by reference herein and in the registration
statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
-4-
<PAGE>
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses payable by the Company in connection with the
offering described in this Registration Statement (other than underwriting
discounts and commissions) are as follows:
SEC registration fee.............................. $ 8,926
EDGAR and transmission expenses................... 1,800
Accounting fees and expenses...................... 1,500
Legal fees and expenses........................... 7,000
Miscellaneous..................................... 1,000
--------
Total........................................ $ 20,226
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 17 of Article V of the Company's By-Laws provides in part as
follows:
Without limitation, the Corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was a
director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding to the full extent
permitted by the General Corporation Law of Delaware, upon such
determination having been made as to his good faith and conduct as is
required by said General Corporation Law. Expenses incurred in defending a
civil or criminal action, suit or proceeding shall be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding to the extent, if any, authorized by the Board of Directors in
accordance with the provisions of said General Corporation Law, officer,
employee or agent to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Corporation.
Under Section 145 of the Delaware General Corporation Law (the "GCL"),
directors, advisory directors and officers of a Delaware corporation are
entitled to indemnification permitted by the statute as provided in such
corporation's certificate of incorporation, by-laws, resolutions and other
proper action.
In addition, Article 8 of Compass' Restated Certificate of Incorporation,
as amended, provides:
No director shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty of such
director, except (i) for breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of
law, (iii) pursuant to Section 174 of the Delaware General Corporation Law,
or (iv) for any transaction from which the director derived an improper
personal benefit. No amendment to or repeal of this Article 8 shall apply
to or have any effect on the liability or alleged liability of any director
of the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment or repeal.
This provision is identical to, and is authorized by, 1986 amendments to the
GCL, Section 102(b)(7).
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been
II-1
<PAGE>
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
ITEM 16. EXHIBITS.
2.1 Agreement and Plan of Merger dated as of April 22, 1998 by and between
Compass Bancshares, Inc. and Hill Country Bank.
2.2 Amendment to Agreement and Plan of Merger dated as of May 22, 1998 by
and between Compass Bancshares, Inc., Compass Hill Country, Inc. and
Hill Country Bank.
*4.1 Restated Certificate of Incorporation of Compass Bancshares, Inc.,
dated May 17, 1982 (filed with the December 31, 1982 Form 10-K of
Compass Bancshares, Inc. and incorporated herein by reference) (File
No. 0-6032)
*4.2 Certificate of Amendment, dated May 20, 1986, to Restated Certificate
of Incorporation of Compass Bancshares, Inc. (filed as Exhibit 4(b) to
Registration Statement on Form S-8, Registration No. 33-39095, and
incorporated herein by reference) (File No. 0-6032)
*4.3 Certificate of Amendment, dated May 15, 1987, to Restated Certificate
of Incorporation of Compass Bancshares, Inc. (filed as Exhibit 3.1.2
to Post-Effective Amendment No. 1 to Registration Statement on Form
S-4, Registration No. 33-10797, and incorporated herein by reference)
(File No. 0-6032)
*4.4 Certificate of Amendment, dated November 8, 1993, to the Restated
Certificate of Incorporation of Compass Bancshares, Inc. (filed as
Exhibit 3(d) to Registration Statement on Form S-4, Registration No.
33-51919, and incorporated herein by reference) (File No. 0-6032)
*4.5 Certificate of Amendment, dated September 19, 1994, to Restated
Certificate of Incorporation of Compass Bancshares, Inc. (filed as
Exhibit 3.5 to Registration No. 33-55899, and incorporated herein by
reference) (File No. 0-6032)
4.6 Certificate of Amendment, dated June 2, 1998, to Restated Certificate
of Incorporation of Compass Bancshares, Inc.
*4.7 Bylaws of Compass Bancshares, Inc. (Amended and Restated as of
March 15, 1982) (filed with the December 31, 1982 Form 10-K of Compass
Bancshares, Inc. and incorporated herein by reference) (File
No. 0-6032)
5.1 Opinion and consent of Jerry W. Powell, Esquire, as to the legality of
the securities being registered
23.1 Consent of KPMG Peat Marwick, LLP
23.2 Consent of Jerry W. Powell, Esquire (included in the opinion in
Exhibit 5.1)
24.1 Power of Attorney
24.2 Compass Board of Directors Resolutions
*Incorporated by reference.
ITEM 17. UNDERTAKINGS.
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:
II-2
<PAGE>
i) To include any prospectus required by section 10(a)(3) of the
Securities Act;
ii) 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 thereto) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
iii) 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 (i) and (ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
section 13(a) or section 15(d) of the Exchange Act that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, 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.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the Company's
annual report pursuant to section 13(a) or section 15(d) of the Exchange Act
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.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the provisions described under Item 15 above, or otherwise, the
Company has been advised that, in the opinion of the Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless, in the opinion of its counsel, the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
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 on 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 Birmingham, the State of Alabama, on August 5, 1998.
COMPASS BANCSHARES, INC.
By: *
------------------------------
D. Paul Jones, Jr., Director, Chairman
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
* Director, Chairman and August 5, 1998
- ------------------------------------------- Chief Executive Officer
D. Paul Jones, Jr.
* Chief Financial Officer August 5, 1998
- ------------------------------------------- (Principal Financial Officer and
Garrett R. Hegel Accounting Officer)
- ------------------------------------------- Director
Charles W. Daniel
* Director August 5, 1998
- --------------------------------------------
W. Eugene Davenport
Director
- --------------------------------------------
Jack C. Demetree
* Director August 5, 1998
- --------------------------------------------
Marshall Durbin, Jr.
* Director August 5, 1998
- --------------------------------------------
Tranum Fitzpatrick
Director
- --------------------------------------------
Carl J. Gessler, Jr., M.D.
* Director August 5, 1998
- --------------------------------------------
John S. Stein
* Director August 5, 1998
- --------------------------------------------
Robert J. Wright
* By: /s/ Daniel B. Graves
------------------------------------
(Daniel B. Graves, Attorney-in-Fact)
</TABLE>
II-4
<PAGE>
EXHIBIT 2.1
================================================================================
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
COMPASS BANCSHARES, INC.
AND
HILL COUNTRY BANK
Dated as of April 22, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I THE MERGER......................................................... 1
SECTION 1.1 The Merger................................................. 1
SECTION 1.2 Effective Time............................................. 1
SECTION 1.3 Certain Effects of the Merger.............................. 1
SECTION 1.4 Articles of Association and By-Laws........................ 1
SECTION 1.5 Directors and Officers..................................... 2
SECTION 1.6 Conversion of Shares....................................... 2
SECTION 1.7 Pooling Transfer Restrictions Agreement.................... 3
SECTION 1.8 Closing.................................................... 3
ARTICLE II EXCHANGE OF SHARES................................................. 3
SECTION 2.1 Exchange of Shares......................................... 3
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE BANK....................... 4
SECTION 3.1 Organization and Qualification............................. 4
SECTION 3.2 Bank Capitalization........................................ 5
SECTION 3.3 Other Securities........................................... 5
SECTION 3.4 Authority Relative to the Agreement........................ 5
SECTION 3.5 No Violation............................................... 5
SECTION 3.6 Consents and Approvals..................................... 6
SECTION 3.7 Regulatory Reports......................................... 6
SECTION 3.8 SEC Status; Securities Issuances........................... 6
SECTION 3.9 Financial Statements....................................... 6
SECTION 3.10 Absence of Certain Changes................................. 7
SECTION 3.11 Bank Indebtedness.......................................... 8
SECTION 3.12 Litigation................................................. 8
SECTION 3.13 Tax Matters................................................ 9
SECTION 3.14 Employee Benefit Plans.....................................10
SECTION 3.15 Employment Matters.........................................11
SECTION 3.16 Leases, Contracts and Agreements...........................12
SECTION 3.17 Related Bank Transactions..................................12
SECTION 3.18 Compliance with Laws.......................................13
SECTION 3.19 Insurance..................................................13
SECTION 3.20 Loans......................................................13
SECTION 3.21 Fiduciary Responsibilities.................................13
SECTION 3.22 Patents, Trademarks and Copyrights.........................13
SECTION 3.23 Environmental Compliance...................................13
SECTION 3.24 Regulatory Actions.........................................15
SECTION 3.25 Title to Properties; Encumbrances..........................15
SECTION 3.26 Shareholder List...........................................15
SECTION 3.27 Section 368 Representations................................16
SECTION 3.28 Employee Stock Options.....................................17
SECTION 3.29 Accounting Matters.........................................17
i
<PAGE>
SECTION 3.30 Investment Representations.................................17
SECTION 3.31 Year 2000 Representations..................................17
SECTION 3.32 Representations Not Misleading.............................17
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF COMPASS.........................17
SECTION 4.1 Organization and Authority.................................18
SECTION 4.2 Authority Relative to Agreement............................18
SECTION 4.3 Financial Reports..........................................19
SECTION 4.4 Capitalization.............................................19
SECTION 4.5 Consents and Approvals.....................................19
SECTION 4.6 Availability of Compass Common Stock.......................19
SECTION 4.7 Regulatory Reports.........................................20
SECTION 4.8 Representations Not Misleading.............................21
ARTICLE V. COVENANTS OF THE BANK..............................................21
SECTION 5.1 Affirmative Covenants of the Bank..........................21
SECTION 5.2 Negative Covenants of the Bank.............................22
ARTICLE VI. ADDITIONAL AGREEMENTS............................................25
SECTION 6.1 Access To, and Information Concerning, Properties
and Records................................................25
SECTION 6.2 Filing of Regulatory Approvals.............................25
SECTION 6.3 Miscellaneous Agreements and Consents......................25
SECTION 6.4 Best Good Faith Efforts....................................25
SECTION 6.5 Exclusivity................................................25
SECTION 6.6 Public Announcement........................................26
SECTION 6.7 Employee Benefit Plans.....................................26
SECTION 6.8 Merger of Bank.............................................27
SECTION 6.9 Environmental Investigation; Right to Terminate
Agreement..................................................27
SECTION 6.10 Director and Officer Indemnification......................28
SECTION 6.11 Certain Tax Matters........................................28
SECTION 6.12 Registration on Form S-3...................................29
SECTION 6.13 Employee Bonuses; Retention and Other Severance
Payments...................................................29
SECTION 6.14 Cooperation on Year 2000 Issues............................30
ARTICLE VII. CONDITIONS TO CONSUMMATION OF THE MERGER........................30
SECTION 7.1 Conditions to Each Party's Obligation to Effect
the Merger.................................................30
SECTION 7.2 Conditions to the Obligations of Compass and
Compass Texas to Effect the Merger.........................31
SECTION 7.3 Conditions to the Obligations of the Bank to
Effect the Merger..........................................32
ARTICLE VIII. TERMINATION; AMENDMENT; WAIVER.................................33
SECTION 8.1 Termination................................................33
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SECTION 8.2 Effect of Termination......................................34
SECTION 8.3 Amendment..................................................34
SECTION 8.4 Extension; Waiver..........................................34
ARTICLE IX. SURVIVAL.........................................................34
SECTION 9.1 Survival of Representations and Warranties.................34
ARTICLE X. MISCELLANEOUS.....................................................35
SECTION 10.1 Expenses...................................................35
SECTION 10.2 Brokers and Finders........................................35
SECTION 10.3 Entire Agreement; Assignment...............................35
SECTION 10.4 Further Assurances.........................................35
SECTION 10.5 Enforcement of the Agreement...............................35
SECTION 10.6 Severability...............................................35
SECTION 10.7 Notices....................................................36
SECTION 10.8 Governing Law..............................................37
SECTION 10.9 Descriptive Headings.......................................37
SECTION 10.10 Parties in Interest........................................37
SECTION 10.11 Counterparts...............................................37
SECTION 10.12 Incorporation by References................................37
SECTION 10.13 Certain Definitions........................................37
ATTACHMENTS
EXHIBITS
A. Letter of Transmittal
B. Pooling Transfer Restrictions Agreement
C. Pooling of Interest Criteria
D. Investment Representations Certificate
E. Opinion of Counsel for the Bank
F. Opinion of Counsel for Compass and Compass Texas
G. Compass Texas Representations Certificate
H. Release
I. Release
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LIST OF SCHEDULES
Schedule 3.1 Qualification
Schedule 3.2 Terms of the Undesignated Preferred Stock; Bank
Capitalization
Schedule 3.3 List of Equity Ownership
Schedule 3.5 Violations of Law; Conflicts of Interest; Share Litigation;
Termination of Existence
Schedule 3.6 Bank Prior Consents
Schedule 3.7 Regulatory Reports
Schedule 3.9 Liabilities and Obligations
Schedule 3.10 Absence of Material Changes or Adverse Effects
Schedule 3.12 Bank Legal Proceedings
Schedule 3.13 Tax Liabilities
Schedule 3.14(a) Employee Welfare Benefit Plans
Schedule 3.14(b) Employee Pension Benefit Plans
Schedule 3.14(c) Deferred Compensation, Bonus and Stock Purchase Plans
Schedule 3.14(l) Additional Payments Due Under Deferred Compensation, Bonus,
Employee Welfare Benefit Plans and Employee Pension Benefit
Plans
Schedule 3.15 Employment Contracts and Collective Bargaining Agreements
Schedule 3.16 Leases, Subleases, Contracts and Agreements; Participations;
Default of Contracts; Marketable Title
Schedule 3.17 Related Bank Transactions
Schedule 3.18 Compliance with Laws
Schedule 3.19 Insurance Policies
Schedule 3.20 Loans Exceeding Legal Lending Limit, Troubled Loans
Schedule 3.22 Patents, Trademarks and Copyrights
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Schedule 3.23 Environmental Compliance
Schedule 3.24 Regulatory Actions; Agreements
Schedule 3.25 Title to Properties; Title Policies; Property
Schedule 3.27 Bank Shareholders Disposing of Stock
Schedule 4.2 Compass Prior Consents
Schedule 5.1(i) List of Accounts and Safe Deposit Boxes
Schedule 5.1(j) List of Liabilities and Obligations of the Bank
Schedule 6.13(b) Retention Payments
Schedule 6.13(c) Conversion Payments
Schedule 6.13(d) Severance Payments
Schedule 6.13(c) Employees Receiving Special Severance Payments
Schedule 10.13 List of Officers with Knowledge
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement") dated as of April 22, 1998, by
and between Compass Bancshares, Inc. a Delaware corporation ("Compass"), and
Hill Country Bank, a Texas banking association ("Bank").
WHEREAS, Compass and the Bank believe that the Merger (as defined herein)
of the Bank with an existing or to-be-formed subsidiary ("Compass Texas") of
Compass incorporated under the laws of the State of Texas to be added as a party
to this Agreement after the date hereof in the manner provided by, and subject
to the terms and conditions set forth in, this Agreement and all exhibits,
schedules and supplements hereto is desirable and in the best interests of their
respective institutions and shareholders; and
WHEREAS, the respective boards of directors of the Bank and Compass have
approved this Agreement and the proposed transactions substantially on the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, hereby agree as follows:
ARTICLE I.
THE MERGER
SECTION 1.1 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the Texas Finance Code ("TBC") and the Texas
Business Corporation Act (the "TBCA"), Compass Texas shall be merged with and
into the Bank (the "Merger") as soon as practicable following the satisfaction
or waiver, if permissible, of the conditions set forth in Article VII hereof.
Following the Merger, the Bank shall continue as the surviving bank (the
"Surviving Bank") and the separate corporate existence of Compass Texas shall
cease. Compass shall not be deemed a party to the Merger for the purposes of
Article 5.06 of the TBCA or the General Corporation Law of the State of
Delaware.
SECTION 1.2 Effective Time. The Merger shall be consummated by the filing
by the Texas Secretary of State and the Texas Banking Commissioner
("Commissioner") of Articles of Merger, in the form required by and executed in
accordance with the relevant provisions of the TBCA and the TBC, and by the
issuance of a Certificate of Merger by the Secretary of State of Texas and the
Commissioner. (The date of such issuance and filing or such other time and date
as may be specified in the Articles of Merger shall be the "Effective Time").
SECTION 1.3 Certain Effects of the Merger. The Merger shall have the
effects set forth in Article 5.06 of the TBCA and Section 32.301 of the TBC.
SECTION 1.4 Articles of Association and By-Laws. The Articles of
Association and the By-Laws of the Bank, in each case as in effect at the
Effective Time, shall be the Articles of Association and By-Laws of the
Surviving Bank.
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SECTION 1.5 Directors and Officers. The directors and officers of Compass
Texas at the Effective Time shall be the directors and officers of the Surviving
Bank and shall hold office from the Effective Time until their respective
successors are duly elected or appointed and qualified in the manner provided in
the Articles of Association and By-Laws of the Surviving Bank, or as otherwise
provided by law.
SECTION 1.6 Conversion of Shares. (a) Each share of the Bank's common
stock, par value $100.00 per share ("Bank Common Stock" or "Shares"), issued and
outstanding immediately prior to the Effective Time ("Common Shares
Outstanding"), shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into and represent the right to receive the
consideration payable as set forth below (the "Merger Consideration") to the
holder of record thereof, without interest thereon, upon surrender of the
certificate representing such Share. For the purposes of determining the number
of Shares issued and outstanding, the number of Shares issued and outstanding
shall be increased by the number and class of Shares that may be acquired upon
exercise or conversion of any warrant, option, convertible debenture or other
security entitling the holder thereof to acquire Shares which is in effect or
outstanding prior to the Effective Time. At the Closing the Bank shall calculate
and certify to Compass the Common Shares Outstanding.
(b) (i) Subject to Subsections (ii) and (iii) below, in consideration for
the Merger, Compass will issue to the holders of the Shares an aggregate number
of shares of its common stock, par value $2.00 per share which is quoted under
the symbol "CBSS" on the NASDAQ National Market System ("Compass Common Stock"),
which is equal to $33,000,000 (the "Target Price") divided by the average
closing sale price of the Compass Common Stock as reported by the NASDAQ
National Market System for the twenty days of trading preceding the tenth
business day prior to the Effective Time (the "Share Determination Market
Value").
(ii) In the event that the Share Determination Market Value would result
in the number of shares of Compass Common Stock to be issued to be greater than
790,000, Compass will issue to the holders of the shares of Bank Common Stock
and the Bank will accept an aggregate number of shares of Compass Common Stock
equal to 790,000.
(iii) In the event the Share Determination Market Value would result in
the number of shares of Compass Common Stock to be issued to be less than
725,000, Compass will issue to the holders of the shares of Bank Common Stock
and the Bank will accept an aggregate number of shares of Compass Common Stock
equal to 725,000.
(iv) The ratio of the number of shares of Compass Common Stock to be
exchanged for each Share, respectively, and the share figures set forth in
subsections (ii) and (iii) above shall be adjusted appropriately to reflect any
dividends payable in stock or splits with respect to Compass Common Stock, where
the record date or payment occurs prior to the Effective Time.
(c) Compass will not issue any certificates for any fractional shares of
Compass Common Stock otherwise issuable pursuant to the Merger. In lieu of
issuing such fractional shares, Compass shall pay cash to any holder of Shares
otherwise entitled to receive such fractional share. Such cash payment shall be
based on the Share Determination Market Value.
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(d) Each share of capital stock of Compass Texas issued and outstanding
immediately before the Effective Time shall be converted into 8,375 shares of
common stock of the Surviving Bank.
SECTION 1.7 Pooling Transfer Restrictions Agreement. Within 30 days
after the date hereof, the Bank shall enter into and cause each Bank shareholder
who is an "affiliate" (as defined in Securities and Exchange Commission ("SEC")
Rule 405) of the Bank to enter into with Compass a written agreement
substantially in the form of Exhibit B attached hereto.
SECTION 1.8 Closing. Upon the terms and subject to the conditions
hereof, and the satisfaction or waiver, if permissible, of the conditions set
forth in Article VII hereof, the Bank and Compass Texas shall execute and
deliver the Articles of Merger, as described in Section 1.2, and the parties
hereto shall take all such other and further actions as may be required by law
to make the Merger effective; provided, however, that the Closing shall occur on
the first day of a calendar month unless otherwise agreed. Prior to the filing
referred to in this Section, a closing (the "Closing") will be held at the
office of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. in Houston, Texas (or
such other place as the parties may agree) for the purpose of confirming all of
the foregoing.
ARTICLE II.
EXCHANGE OF SHARES
SECTION 2.1 Exchange of Shares.
(a) At least 15 days prior to the Effective Time, Compass shall deliver
to each record holder (the "Shareholders") of an outstanding certificate or
certificates which as of the Effective Time will represent Shares (the
"Certificates"), a form letter of transmittal in substantially the form of
Exhibit A attached hereto approved by the Bank and Compass ("Letters 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 Compass) and instructions for use in effecting the surrender of
the Certificates for payment therefor. If the Shareholders provide Compass with
copies of completed Letters of Transmittal and Certificates, Compass shall
promptly, but in no event later than the fifth business day after the delivery
of such Letters of Transmittal, advise the Bank whether any defect, omission or
other issue exists, regarding the Letters of Transmittal or the Certificates,
that would prevent any Shareholder from receiving, at the Effective Time, cash
and Compass Common Stock in the amount provided for in Section 1.6. Upon
surrender to Compass of a Certificate, together with a properly executed and
completed Letter of Transmittal, the holder of such Certificate shall be
entitled to receive in exchange therefor cash and Compass Common Stock in the
amount provided in Section 1.6, and such Certificate shall forthwith be
canceled. No interest will be paid or accrued on the cash payable upon
surrender of the Certificate and no dividend will be disbursed with respect to
the shares of Compass Common Stock until the holder's Shares are surrendered in
exchange therefor. If payment or delivery of Compass Common Stock is to be made
to a person other than the person in whose name the Certificate surrendered is
registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the person requesting such payment shall pay any transfer or
other taxes required by reason of the payment and delivery of Compass Common
Stock to a person other than
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the registered holder of the Certificate surrendered or establish to the
satisfaction of the Surviving Bank that such tax has been paid or is not
applicable. Until surrendered in accordance with the provisions of this Section
2.1, each Certificate shall represent for all purposes the right to receive the
Merger Consideration without any interest thereon.
(b) After the Effective Time, the stock transfer ledger of the Bank shall
be closed and there shall be no transfers on the stock transfer books of the
Bank of the Shares which were outstanding immediately prior to such time of
filing. If, after the Effective Time, Certificates are presented to the
Surviving Bank, they shall be promptly presented to Compass and exchanged as
provided in this Article II.
(c) At the Closing, Compass shall deliver to the Shareholders who have
submitted to Compass on or prior to the Effective Time their Certificates,
accompanied by properly executed and completed Letters of Transmittal, cash and
Compass Common Stock in the amount provided for in Section 1.6.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE BANK
The Bank hereby makes the representations and warranties set forth in this
Article III to Compass. The Bank has delivered to Compass the Schedules to this
Agreement referred to in this Article III prior to the date hereof. The Bank
agrees at the Closing to provide Compass and Compass Texas with supplemental
Schedules reflecting any changes thereto between the date of such Schedules and
the date of the Closing.
SECTION 3.1 Organization and Qualification. The Bank is a Texas banking
association, duly organized, validly existing and in good standing under the
laws of the State of Texas, and is not a member of the Federal Reserve System.
The Bank has all requisite corporate power and authority to carry on its
business as now being conducted and to own, lease and operate its properties and
assets as now owned, leased or operated. Except as set forth on Schedule 3.17,
the Bank does not own or control any Affiliate (as defined in Section 3.17).
True and correct copies of the Articles of Association or Incorporation and
Bylaws of the Bank, with all amendments thereto through the date of this
Agreement, have been delivered by the Bank to Compass. Except as set forth on
Schedule 3.9, the nature of the business of the Bank and its activities, as
currently conducted, does not require it to be qualified to do business in any
jurisdiction other than the State of Texas.
SECTION 3.2 Bank Capitalization. As of the date hereof, the authorized
capital stock of the Bank consists solely of (a) 10,000 shares of Bank Common
Stock, of which 8,375 shares are issued and outstanding, and none of which are
held in treasury. There are no outstanding subscriptions, options, convertible
securities, rights, warrants, calls, or other agreements or commitments of any
kind issued or granted by, or binding upon, the Bank to purchase or otherwise
acquire any security of or equity interest in the Bank. There are no
outstanding subscriptions, options, rights, warrants, calls, convertible
securities or other agreements or commitments obligating the Bank to issue any
shares of the Bank, or to the knowledge of the Bank, irrevocable proxies or any
agreements restricting the transfer of or otherwise relating to shares of its
capital stock of any
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class. All of the Shares that have been issued have been duly authorized,
validly issued and are fully paid and non-assessable, and are free of preemptive
rights. There are no restrictions applicable to the payment of dividends on the
Shares except pursuant to the TBC and the TBCA and applicable banking laws and
regulations and all dividends declared prior to the date hereof have been paid.
SECTION 3.3 Other Securities. The Bank does not have any Subsidiaries.
Set forth on Schedule 3.3 hereto is a list of all equity ownership by the Bank
for the account of the Bank in any other person (the "Other Securities"). The
Bank owns each Other Security free and clear of any lien, encumbrance, security
interest or charge. The Other Securities represent less than five percent of
the outstanding equity securities of each such person.
SECTION 3.4 Authority Relative to the Agreement. The Bank has full
corporate power and authority, no further proceedings on the part of the Bank
are necessary, to execute and deliver this Agreement and to consummate the
transactions contemplated hereby which have been duly and validly authorized by
its Board of Directors and the shareholders. This Agreement has been duly
executed and delivered by the Bank and is a duly authorized, valid, legally
binding and enforceable obligation of the Bank, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium, or other similar laws
relating to creditors' rights generally and general equitable principles, and
subject to such approval of regulatory agencies and other governmental
authorities having authority over the Bank as may be required by statute or
regulation. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not conflict with, or
result in any violation or breach of or default under the respective Articles of
Association or Incorporation or By-Laws of the Bank.
SECTION 3.5 No Violation. Except as set forth on Schedule 3.5, neither
the execution, delivery nor performance of this Agreement in its entirety, nor
the consummation of all of the transactions contemplated hereby, following the
receipt of such approvals as may be required from the SEC, the Board of
Governors of the Federal Reserve System ("FRB"), the Federal Deposit Insurance
Corporation ("FDIC") and the Commissioner will (i) violate (with or without the
giving of notice or the passage of time), any law, order, writ, judgment,
injunction, award, decree, rule, statute, ordinance or regulation applicable to
the Bank or (ii) be in conflict with, result in a breach or termination of any
provision of, cause the acceleration of the maturity of any debt or obligation
pursuant to, constitute a default (or give rise to any right of termination,
cancellation or acceleration) under, or result in the creation of any security
interest, lien, charge or other encumbrance upon any property or assets of the
Bank pursuant to, any terms, conditions or provisions of any note, license,
instrument, indenture, mortgage, deed of trust or other agreement or
understanding or any other restriction of any kind or character, to which the
Bank is a party or by which any of its assets or properties are subject or
bound. Except as set forth on Schedule 3.5, there are no proceedings pending
or, to the knowledge of the Bank, threatened, against the Bank or involving the
Shares, at law or in equity or before or by any foreign, federal, state,
municipal or other governmental court, department, commission, board, bureau,
agency, instrumentality or other person which may result in liability to Compass
or Compass Texas upon the consummation of the transactions contemplated hereby
or which would prevent or delay such consummation. Except as set forth in
Schedule 3.5, or as contemplated hereby, the corporate existence, business
organization, assets, licenses, permits, authorizations and contracts of the
Bank will not be terminated or impaired by reason of the execution, delivery or
performance by the Bank of this Agreement or consummation by the Bank of the
transactions contemplated hereby, assuming the receipt of required regulatory
approvals.
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SECTION 3.6 Consents and Approvals. The Bank's Board of Directors (at a
meeting called and duly held) and the Bank's shareholders by written consent
have approved and adopted this Agreement. Except as described in Schedule 3.6
hereto, no prior consent, approval or authorization of, or declaration, filing
or registration with any person, domestic or foreign, is required of the Bank in
connection with the execution, delivery and performance by the Bank of this
Agreement and the transactions contemplated hereby, except the filing of the
Articles of Merger under the TBC and the TBCA, and such approvals as may be
required from the SEC, the FRB, the FDIC and the Commissioner.
SECTION 3.7 Regulatory Reports. Except as set forth on Schedule 3.7,
the Bank has filed all reports, registrations and statements, together with any
amendments required to be made thereto, that are required to be filed with the
FRB, the Commissioner, the FDIC, or any other regulatory authority having
jurisdiction over the Bank.
SECTION 3.8 SEC Status; Securities Issuances. The Bank is not subject
to the registration provisions of Section 12 of the Exchange Act nor the rules
and regulations of the SEC promulgated under Section 12 of the Exchange Act,
other than anti-fraud provisions of such act. All issuances of securities by
the Bank have been registered under the Securities Act, the Securities Act of
the State of Texas, the TBC, and all other applicable laws or were exempt from
any such registration requirements.
SECTION 3.9 Financial Statements. The Bank has provided Compass with a
true and complete copy of the audited statement of financial position of the
Bank as of December 31, 1996, and the related statements of income,
shareholders' equity and changes in cash flows for the years ended December 31,
1996 and 1995 and the statements of financial position of the Bank as of March
31, June 30 and September 30, 1997 and the related statements of income and
shareholders' equity for the three-, six- and nine-month periods ended March 31,
June 30 and September 30, 1997 and 1996, and promptly following their
availability the Bank will provide Compass with the Bank's audited statement of
financial position of the Bank as of December 31, 1997 and the related
statements of income, shareholders' equity and changes in cash flow for the year
ended December 31, 1997 (such statements of financial position and the related
statements of income, shareholders' equity and changes in cash flows and the
notes and schedules thereto are collectively referred to herein as the
"Financial Statements"). Except as described in the notes to the Financial
Statements, the Financial Statements, including the statement of financial
position and the related statements of income, shareholders' equity and changes
in cash flows (including the related notes thereto) of the Bank, fairly present
the financial position of the Bank as of the dates thereof and the results of
operations and changes in financial position of the Bank for the periods then
ended, in conformity with Generally Accepted Accounting Principles ("GAAP")
applied on a basis consistent with prior periods (subject, in the case of the
unaudited interim financial statements, to normal year-end adjustments and the
fact that they do not contain all of the footnote disclosures required by GAAP
and, subject further, that the Financial Statements for periods beginning
January 1, 1996 are not consistent with prior periods to the extent of the
changes in presentation therein resulting from the election of S corporation
status within the meaning of Section 1361 and 1362 of the Code, as hereinafter
defined) except as otherwise noted therein, and the accounting records
underlying the Financial Statements accurately and fairly reflect in all
material respects the transactions of the Bank. As of their dates, the Financial
Statements conformed, or will conform when delivered, in all material respects
with all applicable rules and regulations promulgated by the FRB, the
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Commissioner, and the FDIC. Except as set forth on Schedule 3.9, the Bank does
not have any liabilities or obligations of a type which should be included in or
reflected on the Financial Statements if prepared in accordance with GAAP,
whether related to tax or non-tax matters, accrued or contingent, due or not yet
due, liquidated or unliquidated, or otherwise, except as and to the extent
disclosed or reflected in the Financial Statements. The Bank will provide
Compass with the unaudited statements of financial position of the Bank as of
the end of each month hereafter, prepared on a basis consistent with prior
periods and promptly following their availability, the Bank will provide Compass
with the Reports of Condition and Statements of Income ("Call Reports") of the
Bank for all periods ending after September 30, 1997. The Bank has no off
balance sheet liabilities associated with financial derivative products or
potential liabilities associated with financial derivative products.
SECTION 3.10 Absence of Certain Changes. Except as and to the extent set
forth on Schedule 3.10, since December 31, 1997 (the "Balance Sheet Date") the
Bank has not:
(a) made any amendment to its Articles of Association or Incorporation or
Bylaws or changed the character of its business in any material manner;
(b) suffered any Material Adverse Effect (as defined in Section 10.13(b));
(c) entered into any agreement, commitment or transaction except in the
ordinary course of business and consistent with prudent banking practices;
(d) except in the ordinary course of business and consistent with prudent
banking practices, incurred, assumed or become subject to, whether directly or
by way of any guarantee or otherwise, any obligations or liabilities (absolute,
accrued, contingent or otherwise);
(e) permitted or allowed any of its property or assets to be subject to
any mortgage, pledge, lien, security interest, encumbrance, restriction or
charge of any kind (other than statutory liens not yet delinquent) except in the
ordinary course of business and consistent with prudent banking practices;
(f) except in the ordinary course of business and consistent with prudent
banking practices, canceled any debts, waived any claims or rights, or sold,
transferred, or otherwise disposed of any of its properties or assets;
(g) disposed of or permitted to lapse any rights to the use of any
trademark, service mark, trade name or copyright, or disposed of or disclosed to
any person other than its employees or agents, any trade secret not theretofore
a matter of public knowledge;
(h) except as set forth on Schedule 3.10 and except for regular salary
increases granted in the ordinary course of business within the Bank's' 1998
budget and consistent with prior practices, granted any increase in compensation
or paid or agreed to pay or accrue any bonus, percentage compensation, service
award, severance payment or like benefit to or for the credit of any director,
officer, employee or agent, or entered into any employment or consulting
contract or other agreement with any director, officer or employee or adopted,
amended or terminated any pension, employee welfare, retirement, stock purchase,
stock option, stock appreciation rights, termination, severance,
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income protection, golden parachute, savings or profit-sharing plan (including
trust agreements and insurance contracts embodying such plans), any deferred
compensation, or collective bargaining agreement, any group insurance contract
or any other incentive, welfare or employee benefit plan, program or agreement
maintained by the Bank, for the directors, employees or former employees of the
Bank ("Employee Benefit Plan");
(i) directly or indirectly declared, set aside or paid any dividend or
made any distribution in respect to its capital stock or redeemed, purchased or
otherwise acquired, or arranged for the redemption, purchase or acquisition of,
any shares of its capital stock or other of its securities, except for dividends
permitted by Section 5.2 of the Agreement;
(j) organized or acquired any capital stock or other equity securities or
acquired any equity or ownership interest in any person (except through
settlement of indebtedness, foreclosure, the exercise of creditors' remedies or
in a fiduciary capacity, the ownership of which does not expose the Bank to any
liability from the business, operations or liabilities of such person);
(k) issued, reserved for issuance, granted, sold or authorized the
issuance of any shares of its capital stock or subscriptions, options, warrants,
calls, rights or commitments of any kind relating to the issuance or sale of or
conversion into shares of its capital stock;
(l) made any or acquiesced with any change in any accounting methods,
principles or practices, except as required by changes in GAAP adopted after the
date hereof;
(m) experienced any material adverse change in the aggregate in relations
with customers or clients of the Bank;
(n) except for the transactions contemplated by this Agreement or as
otherwise permitted hereunder, entered into any transaction, or entered into,
modified or amended any contract or commitment, other than in the ordinary
course of business and consistent with prudent banking practices; or
(o) agreed, whether in writing or otherwise, to take any action the
performance of which would change the representations contained in this Section
3.10 in the future so that any such representation would not be true in all
material respects as of the Closing.
SECTION 3.11 Bank Indebtedness. The Bank does not have any indebtedness
("Bank Indebtedness") other than deposits.
SECTION 3.12 Litigation. Except as set forth on Schedule 3.12, there are
no actions, suits, or claims pending or, to the knowledge of the Bank, any
investigations, reviews or other proceedings pending or actions, suits, claims,
investigations, reviews or other proceedings threatened against the Bank or
involving any its properties or assets, at law or in equity or before or by any
foreign, federal, state, municipal, or other governmental court, department,
commission, board, bureau, agency, or other instrumentality or person or any
board of arbitration or similar entity ("Proceeding"). The Bank will notify
Compass immediately in writing of any Proceedings against the Bank.
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SECTION 3.13 Tax Matters. The Bank has duly filed all tax returns that
it was required to file (the "Filed Returns"). All such Filed Returns were
correct and complete in all material respects. The Bank has paid, or has
established adequate reserves for the payment of, all federal income taxes and
all state and local income taxes and all franchise, property, sales, employment,
foreign or other taxes required to be paid with respect to the periods covered
by the Filed Returns. With respect to the periods for which returns have not
yet been filed, the Bank has established adequate reserves determined in
accordance with GAAP for the payment of all federal income taxes and all state
and local income taxes and all franchise, property, sales, employment, foreign
or other taxes. Except as described in Schedule 3.13, the Bank has no direct or
indirect liability for the payment of federal income taxes, state and local
income taxes, and franchise, property, sales, employment or other taxes in
excess of amounts paid or reserves established. There are no liens for any
taxes on any of the assets of the Bank, except for liens for taxes not yet due
or for taxes being contested in good faith and for which adequate reserves have
been established in accordance with GAAP. The Bank has not entered into any tax
sharing agreement or other agreement regarding the allocation of the tax
liability of the Bank or similar arrangement. Set forth on Schedule 3.13 are
the dates of filing of all Filed Returns for all fiscal years since and
including January 1, 1990 and any amendments thereto which relate to federal or
state income or franchise taxes. The Bank has not filed any Internal Revenue
Service ("IRS") Forms 1139 (Application for Tentative Refund). Except as set
forth on Schedule 3.13, there are no pending questions raised in writing by the
IRS or other taxing authority for taxes or assessments of the Bank, nor are
there any outstanding agreements or waivers extending the statutory period of
limitation applicable to any tax assessment or deficiency against the Bank for
any period. The Bank has withheld from employee wages and paid over to the
proper governmental authorities all amounts required to be so withheld and paid
over. The Bank is neither obligated to make any payments, nor is it a party to
any agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"). The Bank has been a validly electing S
corporation within the meaning of Sections 1361 and 1362 of the Code at all
times after December 31, 1996 and will be a validly electing S corporation up to
and including the day before the Closing Date. Except as disclosed in Schedule
3.13, the Bank has never agreed to make, nor is the Bank required to make, any
adjustment under Section 481(a) of the Code by reason of a change in the method
of accounting or otherwise. The Bank has not, with regard to any assets held,
acquired or to be acquired, filed a consent to the application of Section 341(f)
of the Code. For the purposes of this Agreement, the term "tax" shall include
all federal, state, local and foreign taxes and related governmental charges and
any interest or penalties payable in connection with the payment of taxes.
SECTION 3.14 Employee Benefit Plans. With respect to all employee
benefit plans and programs in which employees of the Bank participate the
following are true and correct:
(a) Schedule 3.14(a) lists each "employee welfare benefit plan" (as
defined in Section 3(1) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) maintained by the Bank or to which the Bank contributes or
is required to contribute, including any multiemployer welfare plan (such
employee welfare benefit plans being hereinafter collectively referred to as the
"Welfare Benefit Plans") and sets forth (i) the amount of any liability of the
Bank for contributions more than thirty days past due with respect to each
Welfare Benefit Plan as of the date hereof and as of the end of any subsequent
month ending prior to the Closing and (ii) the annual cost attributable to each
of the Welfare Benefit Plans; no Welfare Benefit Plan provides for
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continuing benefits or coverage for any participant, beneficiary or former
employee after such participant's or former employee's termination of employment
except as may be required by Section 4980B of the Code and Sections 601-608 of
ERISA;
(b) Schedule 3.14(b) lists each "employee pension benefit plan" (as
defined in Section 3(2) of ERISA and not exempted under Section 4(b) or 201 of
ERISA) maintained by the Bank or to which the Bank contributes or is required to
contribute, including any multiemployer plan (as defined in Section 3(37) of
ERISA) (such employee pension benefit plans being hereinafter collectively
referred to as the "Pension Benefit Plans");
(c) Schedule 3.14(c) lists each deferred compensation plan, bonus plan,
stock option plan, employee stock purchase plan, restricted stock, excess
benefit plan, incentive compensation, stock bonus, cash bonus, severance pay,
golden parachute, life insurance, all nonqualified deferred compensation
arrangements, rabbi trusts, cafeteria plans, dependent care plans, all unfunded
plans and any other employee benefit plans or programs, agreements, arrangements
or commitments not required under a previous subsection to be listed (other than
normal policies concerning holidays, vacations and salary continuation during
short absences for illness or other reasons) maintained by the Bank (referred to
as "Other Programs");
(d) All of the Pension Benefit Plans and Welfare Benefit Plans and any
related trust agreements or annuity contracts (or any other funding instruments)
and all Other Programs comply currently, and have complied in the past, both as
to form and operation, with the provisions of ERISA, the Code and with all other
applicable laws, rules and regulations governing the establishment and operation
of the Pension Benefit Plans, Welfare Benefit Plans and all Other Programs; all
necessary governmental approvals relating to the establishment of the Pension
Benefit Plans have been obtained; and with respect to each Pension Benefit Plan
that is intended to be tax-qualified under Section 401(a) or 403(a) of the Code,
a favorable determination letter as to the qualification under the Code of each
such Pension Benefit Plan and each material amendment thereto has been issued by
the Internal Revenue Service (and nothing has occurred since the date of the
last such determination letter which resulted in, or is likely to result in the
revocation of such determination);
(e) Each Welfare Benefit Plan, each Pension Benefit Plan and each Other
Program has been administered in compliance with the requirements of the Code,
ERISA and all other applicable laws, and all reports and disclosures required by
ERISA, the Code and any other applicable laws with respect to each Welfare
Benefit Plan, each Pension Benefit Plan and each Other Program have been timely
filed;
(f) On and after January 1, 1975, neither the Bank, nor any plan fiduciary
of any Welfare Benefit Plan or Pension Benefit Plan has engaged in any
transaction in violation of Section 406 of ERISA (for which transaction no
exemption exists under Section 408 of ERISA) or in any "prohibited transaction"
as defined in Section 4975(c)(1) of the Code (for which no exemption exists
under Section 4975(c)(2) or 4975(d) of the Code);
(g) Neither the Bank, nor any corporation or other trade or business
controlled by or under common control with the Bank (as determined under
Sections 414(b) and 414(c) of the Code) ("Common Control Entity") is, or has
been within the past five years, a contributing sponsor (as
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defined in Section 4001(a)(13) of ERISA) of a Pension Benefit Plan subject to
the provisions of Title IV of ERISA, nor has the Bank or a Common Control Entity
maintained or participated in any employee pension benefit plan (defined in
Section 3(2) of ERISA) subject to the provision of Title IV of ERISA. In
addition, neither the Bank nor a Common Control Entity (i) is a party to a
collective bargaining agreement, (ii) has maintained or contributed to, or has
participated in or agreed to participate in, a multiemployer plan (as defined in
Section 3(37) of ERISA), or (iii) has made a complete or partial withdrawal from
a multiemployer plan (as defined in Section 3(37) of ERISA) so as to incur
withdrawal liability as defined in Section 4201 of ERISA (without regard to
subsequent reduction or waiver of such liability under Section 4207 or 4208 of
ERISA);
(h) True and complete copies of each Welfare Benefit Plan, each Pension
Benefit Plan and each Other Program, related trust agreements or annuity
contracts (or any other funding instruments), summary plan descriptions, the
most recent determination letter issued by the Internal Revenue Service with
respect to each Pension Benefit Plan, the most recent application for a
determination letter from the Internal Revenue Service with respect to each
Pension Benefit Plan and Annual Reports on Form 5500 Series filed with any
governmental agency for each Welfare Benefit Plan, Pension Benefit Plan and
Other Program for the two most recent plan years, have been furnished to
Compass;
(i) All Welfare Benefit Plans, Pension Benefit Plans, and Other Programs
related trust agreements or annuity contracts (or any other funding
instruments), are legally valid and binding and in full force and effect and
there are no promised increases in benefits (whether expressed, implied, oral or
written) under any of these plans nor any obligations, commitments or
understandings to continue any of these plans, (whether expressed, implied, oral
or written) except as required by Section 4980B of the Code and Sections 601-608
of ERISA;
(j) There are no claims pending with respect to, or under, any Pension
Benefit Plan, Welfare Benefit Plan or any Other Program, other than routine
claims for plan benefits, and there are no disputes or litigation pending or
threatened with respect to any such plans;
(k) No action has been taken, nor has there been a failure to take any
action that would subject any person or entity to any liability for any income,
excise or other tax or penalty in connection with any Pension Benefit Plan,
Welfare Benefit Plan or any Other Program, other than for income taxes due with
respect to benefits paid; and
(l) Except as otherwise set forth in Schedule 3.14(l), neither the
execution and delivery of this Agreement nor the consummation of the transaction
contemplated hereby will (i) result in any payment to be made by the Bank
(including, without limitation, severance, unemployment compensation, golden
parachute (defined in Section 280G of the Code), or otherwise) becoming due to
any employee, director or consultant, or (ii) increase any benefits otherwise
payable under any Welfare Benefit Plan, Pension Benefit Plan, or any Other
Program.
SECTION 3.15 Employment Matters. Except as disclosed on Schedule 3.15,
the Bank is not a party to any oral or written contracts or agreements granting
benefits or rights to employees or any collective bargaining agreement or to any
conciliation agreement with the Department of Labor, the Equal Employment
Opportunity Commission or any federal, state or local agency which requires
equal employment opportunities or affirmative action in employment. There are
no unfair
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labor practice complaints pending against the Bank before the National Labor
Relations Board and no similar claims pending before any similar state, local or
foreign agency. To the knowledge of the Bank, there is no activity or proceeding
of any labor organization (or representative thereof) or employee group to
organize any employees of the Bank, nor of any strikes, slowdowns, work
stoppages, lockouts, or threats thereof, by or with respect to any such
employees. The Bank is in compliance in all material respects with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and the Bank is not engaged in any
unfair labor practice.
SECTION 3.16 Leases, Contracts and Agreements. Schedule 3.16 sets forth,
as of the date set forth in Schedule 3.16 which shall be updated as of the
Closing Date, an accurate and complete description of all leases, subleases,
licenses, contracts and agreements to which the Bank is a party or by which the
Bank is bound which obligate or may obligate the Bank in the aggregate for an
amount in excess of $25,000 over the entire term of any such agreement or
related contracts of a similar nature which in the aggregate obligate or may
obligate the Bank in the aggregate for an amount in excess of $25,000 over the
entire term of such related contracts (the "Contracts"). The Bank has delivered
or made available to Compass true and correct copies of all Contracts. For the
purposes of this Agreement, the Contracts shall be deemed not to include loans
made by, repurchase agreements made by, spot foreign exchange transactions of,
bankers acceptances of, agreements with Bank customers for trust services, or
deposits by the Bank, but does include unfunded and partially funded loan
commitments and letters of credit issued by the Bank where the borrowers' total
direct and indirect indebtedness to the Bank is in excess of $25,000. Except as
set forth in Schedule 3.16, no participations or loans have been sold which have
buy back, recourse or guaranty provisions which create contingent or direct
liabilities of the Bank. All of the Contracts are legal, valid and binding
obligations of the parties to the Contracts enforceable in accordance with their
terms, subject to the effect of bankruptcy, insolvency, reorganization,
moratorium, or other similar laws relating to creditors' rights generally and to
general equitable principles, and are in full force and effect. Except as
described in Schedule 3.16, all rent and other payments by the Bank under the
Contracts are current, there are no existing defaults by the Bank under the
Contracts and no termination, condition or other event has occurred which
(whether with or without notice, lapse of time or the happening or occurrence of
any other event) would constitute a default. Except as set forth on Schedules
3.16, the Bank has a good and valid leasehold interest in each parcel of real
property leased by it free and clear of all mortgages, pledges, liens,
encumbrances and security interests.
SECTION 3.17 Related Bank Transactions. Except as set forth on Schedule
3.17, there are no agreements, instruments, commitments, extensions of credit,
tax sharing or allocation agreements or other contractual agreements of any kind
between or among the Bank, whether on its own behalf or in its capacity as
trustee or custodian for the funds of any employee benefit plan (as defined in
ERISA), and any of its Affiliates. The term "Affiliate" as used in this
Agreement means, with respect to any person, any person that, directly or
indirectly, controls, is controlled by, or is under common control with, such
person in question. For the purposes of this definition, "control" (including,
with correlative meaning, the terms "controlled by" and "under common control
with") as used with respect to any person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such person, whether through the ownership of voting securities
or by contract or otherwise.
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SECTION 3.18 Compliance with Laws. Except as set forth on Schedule 3.18,
the Bank is not in (i) default in respect to or is not in violation of any
judgment, order, writ, injunction or decree of any court or (ii) material
default in respect to or is not in material violation of any statute, law,
ordinance, rule, order or regulation of any governmental department, commission,
board, bureau, agency or instrumentality, federal, state or local, including
(for purposes of illustration and not limitation) capital and FRB reserve
requirements, capital ratios and loan limitations of the FRB, the FDIC or the
Commissioner; and the consummation of the transactions contemplated by this
Agreement will not constitute such a default or violation as to the Bank. The
Bank has all permits, licenses, and franchises from governmental agencies
required to conduct its business as it is now being conducted.
SECTION 3.19 Insurance. The Bank has in effect the insurance coverage
(including fidelity bonds) described in Schedule 3.19 and has had similar
insurance in force for the last 5 years. There have been no claims under such
bonds within the last 5 years and the Bank is not aware of any facts which would
form the basis of a claim under such bonds. The Bank does not have any reason
to believe that the existing fidelity coverage would not be renewed by its
carrier on substantially the same terms.
SECTION 3.20 Loans. Each loan reflected as an asset in the Financial
Statements is the legal, valid and binding obligation of the obligor of each
loan, enforceable in accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium, or other similar laws
relating to creditors' rights generally and to general equitable principles;
provided, however, that no representation or warranty is made as to the
collectibility of such loans. The Bank does not have in its portfolio any loan
exceeding its legal lending limit, and except as disclosed on Schedule 3.20, the
Bank has no known significant delinquent, substandard, doubtful, loss,
nonperforming or problem loans.
SECTION 3.21 Fiduciary Responsibilities. The Bank has performed in all
material respects all of its respective duties as a trustee, custodian, guardian
or as an escrow agent in a manner which complies in all respects with all
applicable laws, regulations, orders, agreements, instruments and common law
standards.
SECTION 3.22 Patents, Trademarks and Copyrights. Except as set forth in
Schedule 3.22, the Bank does not require the use of any material patent, patent
application, invention, process, trademark (whether registered or unregistered),
trademark application, trade name, service mark, copyright, or any material
trade secret for the business or operations of the Bank. The Bank owns or is
licensed or otherwise has the right to use the items listed in Schedule 3.22.
SECTION 3.23 Environmental Compliance. Except as set forth in Schedule
3.23:
(a) The Bank and any Property owned or operated by it are in material
compliance with all applicable Environmental Laws (as defined in Section
10.13(c)) and have obtained and are in material compliance with all permits,
licenses and other authorizations (individually a "Permit," and collectively,
"Permits") required under any Environmental Law. There is no past or present
event, condition or circumstance that would (1) interfere with the conduct of
the business of the Bank in the manner now conducted relating to such entity's
compliance with Environmental Laws, (2)
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constitute a material violation of any Environmental Law or (3) have a Material
Adverse Effect upon the Bank;
(b) The Bank does not currently lease, operate, own, or exercise
managerial functions at nor has it formerly leased, operated, owned, or
exercised managerial functions at any facility or real property that is subject
to any actual or, to the knowledge of the Bank, potential or threatened
Proceeding under any Environmental Law;
(c) There are no Proceedings pending or, to the knowledge of the Bank,
threatened against the Bank under any Environmental Law, or relating to the
release, threatened release, management, treatment, storage or disposal of, or
exposure to Polluting Substances (as defined in Section 10.13(d)), and the Bank
has not received any notice (whether from any regulatory body or private person)
of any claim under, or violation, or potential or threatened violation of, any
Environmental Law;
(d) There are no actions or Proceedings pending or, to the knowledge of
the Bank, threatened under any Environmental Law involving the release or threat
of release of any Polluting Substances at, on or under any property where
Polluting Substances generated by the Bank have been disposed, treated or
stored;
(e) There is no Controlled Property for which the Bank was required to
obtain any Permit under an Environmental Law to construct, demolish, renovate,
occupy, operate, or use such Property or any portion of it and there is no
Controlled Property or portion thereof which the Bank intends to construct,
demolish, renovate, occupy, operate or use for which a permit is required under
an Environmental Law;
(f) The Bank has not generated any Polluting Substances for which it was
required under an Environmental Law to execute any waste disposal manifest or
receipt;
(g) There has been no release of Polluting Substances at or under any
Property in violation of any Environmental Laws or which would require any
remediation or report or notification to any governmental or regulatory
authority;
(h) There are no underground or above ground storage tanks on or under any
Property which are not in compliance with Environmental Laws and any Property
previously containing such tanks has been remediated for any releases in
compliance with all Environmental Laws;
(i) There is no asbestos containing material present in any Controlled
Property (as defined below). The loan files of the Bank for Collateral Property
(as defined below) contain all information known to the Bank with respect to
asbestos containing material present in any Collateral Property and the Bank has
delivered to or made available to Compass all of the loan files for Collateral
Property; and
(j) The Bank has not received any notification that it has not complied in
all material respects with the guidelines issued by the FDIC on February 25,
1993, and any other governmental authority with jurisdiction over the Bank, that
directs banks to implement programs to reduce the
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potential for banks to incur liability under, or to assess the compliance of
borrowers or Collateral Property with, Environmental Laws;
(k) For purposes of this Section 3.23 and Section 6.9, "Property" includes
(1) any property (whether real or personal) which the Bank currently or in the
past has leased, operated or owned or managed in any manner including without
limitation any property acquired by foreclosure or deed in lieu thereof
("Controlled Property") and (2) property now held as security for a loan or
other indebtedness by the Bank or property currently proposed as security for
loans or other credit the Bank is currently evaluating whether to extend or has
committed to extend ("Collateral Property"). With respect to any Collateral
Property, the representations of this Section 3.23 shall be limited to the
knowledge of the Bank.
SECTION 3.24 Regulatory Actions. Except as set forth on Schedule 3.24,
there are no actions or proceedings pending or, to the knowledge of the Bank,
threatened against the Bank by or before the FRB, the FDIC, the Commissioner,
the Environmental Protection Agency, the Texas Natural Resource Conservation
Commission, or any other nation or government, any state or political
subdivision thereof, or any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government. Except
as set forth on Schedule 3.24, the Bank is not subject to a formal or informal
agreement, memorandum of understanding, enforcement action with or any type of
financial assistance by any regulatory authority having jurisdiction over such
entity. The Bank has not taken or agreed to take any action or has no knowledge
of any fact or circumstance that would materially impede or delay receipt of any
required regulatory approval. Except as set forth in Schedule 3.24, the Bank has
not received or been made aware of any complaints or inquiries under the
Community Reinvestment Act, the Fair Housing Act, the Equal Credit Opportunity
Act or any other state or federal anti-discrimination fair lending law and, to
the knowledge of the Bank, there is no fact or circumstance that would form the
basis of any such complaint or inquiry.
SECTION 3.25 Title to Properties; Encumbrances. Except as set forth on
Schedule 3.25, the Bank has unencumbered, good, legal, and indefeasible title to
all its properties and assets, real and personal, including, without limitation,
all the properties and assets reflected in the Financial Statements except for
those properties and assets disposed of for fair market value in the ordinary
course of business and consistent with prudent banking practice since the date
of the Financial Statements. Except as set forth on Schedule 3.25, the Bank has
a title policy in full force and effect from a title insurance company which, to
the best of Bank's knowledge, is solvent, insuring good and indefeasible title
to all real property owned by the Bank in favor of the Bank. The Bank has made
available to Compass all of the files and information in the possession of the
Bank concerning such properties, including any title exceptions which might
affect indefeasible title or value of such property. The Bank holds good and
legal title or good and valid leasehold rights to all assets that are necessary
for it to conduct its business as it is currently being conducted. Except as
set forth on Schedule 3.25, the Bank owns all furniture, equipment, art and
other property used to transact business presently located on its premises.
Except as set forth on Schedule 3.25, no Property has been deed recorded or
otherwise been identified in public records or should have been recorded or so
identified as containing Polluting Substances.
SECTION 3.26 Shareholder List. The Bank has provided to Compass prior
to the date of this Agreement a list of the holders of Shares and the holders
of any outstanding warrant, option,
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convertible debenture or other security entitling the holder thereof to acquire
Shares as of March 31, 1998 containing the names, addresses and number of Shares
or such other securities held of record, which is accurate in all respects as of
such date, and the Bank will promptly advise Compass of any significant changes
thereto.
SECTION 3.27 Section 368 Representations. (a) There is no plan or
intention by any Bank shareholder who is anticipated to receive one percent (1%)
or more of the total Merger Consideration ("1% Shareholder") and, to the
knowledge of the Bank and its directors, there is no plan or intention by any of
the remaining Bank shareholders, to sell or otherwise dispose of (i) shares of
the Bank prior to and in connection with the merger to the Bank, Compass or any
party related to the Bank or Compass and (ii) shares of Compass Common Stock to
be received pursuant to the Merger to Compass or any party related to Compass
that would reduce all such shareholders' holdings to a number of shares having a
total fair market value at the Effective Time of less than fifty percent (50%)
of the total fair market value of all of the Bank's capital stock outstanding
immediately prior to the Effective Time. For purposes of this Section 3.27,
shares of the Bank's capital stock surrendered by dissenting shareholders and
shares of the Bank's capital stock sold, redeemed or otherwise disposed of prior
or subsequent to and as a part of the overall transaction contemplated by the
Merger will be considered to be capital stock of the Bank outstanding
immediately prior to the Merger.
(b) The Bank has provided to Compass true and correct copies of statements
received from each 1% Shareholder with respect to his plan or intention to sell
or otherwise dispose of (i) shares of the Bank prior to and in connection with
the merger to the Bank, Compass or any party related to the Bank or Compass and
(ii) shares of the Compass Common Stock to be received pursuant to the Merger to
Compass or any party related to Compass, and has set forth on Schedule 3.27 all
knowledge of the Bank and its directors about the plans or intentions of any
other Bank shareholders to sell or otherwise dispose of the (i) shares of the
Bank prior to and in connection with the merger to the Bank, Compass or any
party related to the Bank or Compass and (ii) shares of Compass Common Stock to
be received pursuant to the Merger to Compass or any party related to Compass.
(c) Compass will not assume any debts or obligations of the holders of the
Shares as part of the Merger.
(d) Except as set forth on Schedule 3.27, there have not been any sales or
redemptions of the Bank's capital stock in contemplation of the Merger.
Schedule 3.27 sets forth all transactions in the capital stock of the Bank since
January 1, 1997.
(e) The liabilities of the Bank assumed by Compass as a part of the Merger
and the liabilities to which the transferred assets of the Bank are subject were
incurred by the Bank in the ordinary course of its business.
(f) The Bank and its shareholders will pay their own expenses which are
incurred in connection with the Merger.
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(g) The Bank has not disposed of any assets (either as a dividend or
otherwise) constituting more than 10% of the fair market value of all of its
assets (ignoring any liabilities) at any time either during the past twelve
months or in contemplation of the Merger.
(h) The Bank is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
(i) The Bank is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
SECTION 3.28 Employee Stock Options. There are no Bank employee stock
option plans or provisions in any other plan, program, or arrangement providing
for the issuance or grant of any other interest in respect of the capital stock
of the Bank.
SECTION 3.29 Accounting Matters. Neither the Bank nor any of its
affiliates has knowingly taken or agreed to take any action that would prevent
Compass from accounting for the business combination to be effected by the
Merger as a pooling of interests, including, without limitation, any action
inconsistent with the provisions of Exhibit C hereto.
SECTION 3.30 Investment Representations. The Shareholders have executed
and delivered to Compass investment representations in substantially the form of
Exhibit D attached hereto.
SECTION 3.31 Year 2000 Representations. The Bank's Year 2000 compliance
program has been reviewed by the FDIC and found by the FDIC to be satisfactory.
SECTION 3.32 Representations Not Misleading. No representation or
warranty by the Bank in this Agreement, nor any statement, summary, exhibit or
schedule furnished to Compass or Compass Texas by the Bank under and pursuant
to, or in anticipation of this Agreement, contains or will contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements contained herein or therein, in light of the circumstances in
which they were made, not misleading.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
OF COMPASS
Compass hereby makes the representations and warranties set forth in this
Article IV to the Bank.
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SECTION 4.1 Organization and Authority.
(a) Compass is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware, and has all requisite
corporate power and authority to conduct its business as now conducted, to own,
lease and operate its properties and assets as now owned, leased or operated and
to enter into and carry out its obligations under this Agreement.
(b) Compass is a bank holding company under its Bank Holding Company Act
of 1956, as amended, and in good standing under all laws, rules and regulations
applicable to bank holding companies. Compass is duly qualified or licensed and
in good standing in each jurisdiction which requires such qualification where it
owns or leases properties or conducts business.
SECTION 4.2 Authority Relative to Agreement. Compass has full corporate
power and authority and no further corporate proceedings on the part of Compass
are necessary to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, all of which have been duly and validly
authorized by Compass' Board of Directors. This Agreement has been duly
executed and delivered by Compass and is a duly authorized, valid, legally
binding and enforceable obligation of Compass, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium, or other similar laws
relating to creditors' rights generally and general equitable principles, and
subject to such approval of regulatory agencies and other governmental
authorities having authority over Compass as may be required by statute or
regulation. Compass is not in violation of or default under its Certificate of
Incorporation or By-Laws or any agreement, document or instrument under which
Compass is obligated or bound, or any law, order, judgment, injunction, award,
decree, statute, rule, ordinance or regulation applicable to Compass or any of
its Subsidiaries (as defined in Section 10.13(a)), the violation or breach of
which could have a Material Adverse Effect on Compass and its Subsidiaries taken
as a whole. Except as set forth on Schedule 4.2, neither the execution,
delivery nor performance of this Agreement in its entirety, nor the consummation
of all the transactions contemplated hereby, following the receipt of such
approvals as may be required from the SEC, the FRB, and the Commissioner will
(i) violate (with or without the giving of notice or passage of time), any law,
order, writ, judgment, injunction, award, decree, rule, statute, ordinance or
regulation applicable to Compass, or (ii) be in conflict with, result in a
breach or termination of any provision of, cause the acceleration of the
maturity of any debt or obligation pursuant to, constitute a default (or give
rise to any right of termination, cancellation or acceleration) under, or result
in the creation of any security interest, lien, charge or other encumbrance upon
any property or assets of Compass pursuant to, any terms, conditions or
provisions of any note, license, instrument, indenture, mortgage, deed of trust
or other agreement or understanding or any other restriction of any kind or
character, to which Compass is a party or by which any of its assets or
properties are bound. Except as set forth on Schedule 4.2, there are no
proceedings pending or, to the knowledge of Compass, threatened, against
Compass, at law or in equity or before any foreign, federal, state, municipal or
other governmental court, department, commission, board, bureau, agency,
instrumentality or other person which may result in liability to the Bank on the
consummation of the transactions contemplated hereby or which would prevent or
delay such consummation. Except as set forth in Schedule 4.2, or as
contemplated hereby, the corporate existence, business, organization, assets,
licenses, permits, authorizations and contracts of Compass will not be
terminated or impaired by reason of the execution, delivery or performance by
Compass of this Agreement or consummation by Compass of the transactions
contemplated hereby, assuming receipt of the required regulatory approvals.
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SECTION 4.3 Financial Reports. Compass has previously furnished the
Bank a true and complete copy of (i) the 1997 Annual Report to Shareholders,
which report (the "Compass 1997 Annual Report") includes, among other things,
consolidated balance sheets of Compass and its Subsidiaries as of December 31,
1997 and 1996, and the related consolidated statements of income, shareholders'
equity and cash flows for the years ended December 31, 1997, 1996 and 1995. The
financial statements contained in the Compass 1997 Annual Report have been
prepared in conformity with GAAP applied on a basis consistent with prior
periods. The consolidated balance sheets of Compass and its Subsidiaries as of
December 31, 1997 and 1996 contained in the Compass 1997 Annual Report fairly
present the consolidated financial condition of Compass and its Subsidiaries as
of the dates thereof, and the related consolidated statements of income,
shareholders' equity and cash flows of Compass and its Subsidiaries contained
therein fairly present the results of operations and cash flows thereof for the
fiscal years then ended. For the purposes of this Agreement, all financial
statements referred to in this Section 4.3 shall be deemed to include any notes
to such financial statements. Compass has made all filings required to be made
in compliance with the Exchange Act. None of the information contained in the
Compass 1997 Annual Report is false or misleading with respect to any material
fact, or omits to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Until Closing, Compass agrees to provide the Shareholders with
copies of all of the periodic filings filed by Compass after the date hereof
with the Securities and Exchange Commission pursuant to Section 13(a) of the
Securities Exchange Act of 1934, as amended, including, but not limited to, all
Forms 8-K, Forms 10-Q and Forms 10-K.
SECTION 4.4 Capitalization. The shares of Compass Common Stock to be
issued pursuant to this Agreement, when so issued, will be duly and validly
authorized and issued, fully paid and nonassessable, and not issued in violation
of any preemptive rights. As of January 31, 1998, Compass had 68,027,615 shares
of common stock, $2.00 per share par value, issued and outstanding. None of the
shares of Compass Common Stock to be issued pursuant to this Agreement will be
subject to any lien, charge, encumbrance, claim, rights of others, mortgage,
pledge or security interest, and none will be subject to any agreements or
understandings among any persons with respect to the voting or transfer of such
shares of Compass Common Stock except as contemplated hereby.
SECTION 4.5 Consents and Approvals. No prior consent, approval or
authorization of, or declaration, filing or registration with any person,
domestic or foreign, is required of or by Compass in connection with the
execution, delivery and performance by Compass of this Agreement and the
transactions contemplated hereby or the resulting change in control of the Bank,
except the filing of Articles of Merger under the TBC and the TBCA, the filing
of the Certificate of Merger under the GCL, and such approvals as may be
required from the SEC, the FRB, and the Commissioner.
SECTION 4.6 Availability of Compass Common Stock. Compass has available
a sufficient number of authorized and unissued shares of Compass Common Stock to
pay the Merger Consideration, and Compass will not take any action during the
term of this Agreement that will cause it not to have a sufficient number of
authorized and unissued shares of Compass Common Stock to pay the Merger
Consideration.
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SECTION 4.7 Regulatory Reports. Compass is not aware of any facts
(including Community Reinvestment Act ratings and Year 2000 compliance) that
could prevent or delay receipt of regulatory approval.
SECTION 4.8 Representations Not Misleading. No representation or
warranty by Compass in this Agreement, nor any statement or exhibit furnished to
the Bank under and pursuant to, or in anticipation of this Agreement, contains
or will contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements contained herein or therein, in
light of the circumstances in which they were made, not misleading.
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ARTICLE V.
COVENANTS OF THE BANK
SECTION 5.1 Affirmative Covenants of the Bank. For so long as this
Agreement is in effect, the Bank shall, from the date of this Agreement to the
Closing, except as specifically contemplated by this Agreement:
(a) operate and conduct its business in the ordinary course of business
and consistent with prudent banking practices;
(b) preserve intact its corporate existence, business organization,
assets, licenses, permits, authorizations, and business opportunities;
(c) comply with all material contractual obligations applicable to its
operations;
(d) maintain all its properties in good repair, order and condition,
reasonable wear and tear excepted, and maintain the insurance coverages
described in Schedule 3.19 (which shall list all Property insured by such
coverages) or obtain comparable insurance coverages from reputable insurers
which, in respect to amounts, types and risks insured, are adequate for the
business conducted by it and consistent with the existing insurance coverages;
(e) in good faith and in a timely manner (i) cooperate with Compass and
Compass Texas in satisfying the conditions in this Agreement, (ii) assist
Compass and Compass Texas in obtaining as promptly as possible all consents,
approvals, authorizations and rulings, whether regulatory, corporate or
otherwise, as are necessary for Compass and Compass Texas and the Bank (or any
of them) to carry out and consummate the transactions contemplated by this
Agreement, including all consents, approvals and authorizations required by any
agreement or understanding existing at the Closing between the Bank and any
governmental agency or other third party, (iii) furnish information concerning
the Bank not previously provided to Compass required for inclusion in any
filings or applications that may be necessary in that regard and (iv) perform
all acts and execute and deliver all documents necessary to cause the
transactions contemplated by this Agreement to be consummated at the earliest
possible date;
(f) timely file with the FRB, the Commissioner, and the FDIC, all
financial statements and other reports required to be so filed by it and to the
extent permitted by applicable law, promptly thereafter deliver to Compass
copies of all financial statements and other reports required to be so filed;
(g) comply in all material respects with all applicable laws and
regulations, domestic and foreign;
(h) between the date of this Agreement and Closing, promptly give written
notice to Compass upon obtaining knowledge of any event or fact that would cause
any of the representations or warranties of the Bank contained in or referred to
in this Agreement to be untrue or misleading in any material respect;
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(i) deliver to Compass a list (Schedule 5.1(i)), dated as of the Effective
Time, showing (i) the name of each bank or institution where the Bank has
accounts or safe deposit boxes, (ii) the name(s) in which such accounts or boxes
are held and (iii) the name of each person authorized to draw thereon or have
access thereto;
(j) deliver to Compass a list (Schedule 5.1(j)), dated as of the Effective
Time, showing all liabilities and obligations of the Bank, except those arising
in the ordinary course of its business, incurred since the Balance Sheet Date,
certified by an officer of Bank;
(k) promptly notify Compass of any material change or inaccuracies in any
data previously given or made available to Compass or Compass Texas pursuant to
this Agreement; and
(l) subject to Section 6.9(d), to the extent that the Bank has the right
to provide access, to any or all Property (as defined in Section 3.23) so as to
enable Compass to physically inspect any structure or components of any
structure on such Property, including without limitation surface and subsurface
testing and analyses.
SECTION 5.2 Negative Covenants of the Bank. Except with the prior
written consent of Compass or as otherwise specifically permitted by this
Agreement, the Bank will not, from the date of this Agreement to the Closing:
(a) make any amendment to its articles of incorporation or association or
bylaws;
(b) make any change in the methods used in allocating and charging costs,
except as may be required by applicable law, regulation or GAAP and after notice
to Compass;
(c) make any change in the number of shares of the capital stock issued
and outstanding, or issue, reserve for issuance, grant, sell or authorize the
issuance of any shares of its capital stock or subscriptions, options, warrants,
calls, rights or commitments of any kind relating to the issuance or sale of or
conversion into shares of its capital stock;
(d) contract to create any obligation or liability (absolute, accrued,
contingent or otherwise) except in the ordinary course of business and
consistent with prudent banking practices;
(e) contract to create any mortgage, pledge, lien, security interest or
encumbrances, restrictions, or charge of any kind (other than statutory liens
for which the obligations secured thereby shall not become delinquent), except
in the ordinary course of business and consistent with prudent banking
practices;
(f) cancel any debts, waive any claims or rights of value or sell,
transfer, or otherwise dispose of any of its material properties or assets,
except in the ordinary course of business and consistent with prudent banking
practices;
(g) sell any real estate owned as of the date of this Agreement or
acquired thereafter, which real estate qualifies as "other real estate owned"
under accounting principles applicable to it, except in the ordinary course of
business and consistent with prudent banking practices and applicable banking
laws and regulations;
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(h) dispose of or permit to lapse any rights to the use of any material
trademark, service mark, trade name or copyright, or dispose of or disclose to
any person other than its employees any material trade secret not theretofore a
matter of public knowledge;
(i) except as set forth on Schedules 6.13(b) and 6.13(c) and except for
regular salary increases granted in the ordinary course of business within the
Bank's 1998 budget and consistent with prior practices, grant any increase in
compensation or directors' fees, or pay or agree to pay or accrue any bonus or
like benefit to or for the credit of any director, officer, employee or other
person or enter into any employment, consulting or severance agreement or other
agreement with any director, officer or employee, or adopt (other than an at-
will employment arrangement to replace a departed employee whose salary or
benefits are part of the Bank's 1998 budget), amend or terminate any Employee
Benefit Plan or change or modify the period of vesting or retirement age for any
participant of such a plan;
(j) declare, pay or set aside for payment any dividend or other
distribution or payment in respect of shares of its capital stock other than the
payment of dividends consistent with the Bank's 1997 dividend payments; provided
that the Bank will not pay dividends to the extent that its resulting
shareholder equity would be an amount less than $10,300,000 at Closing
(provided, however, that the determination of resulting shareholder equity shall
not include (y) changes due to reduction in market value of available for sale
securities after September 30, 1997, or (z) charges or write-offs made at the
direction or request of Compass and provided further that the Bank may pay a
dividend based on a calendar month rather than a calendar quarter to facilitate
Closing);
(k) except through settlement of indebtedness, foreclosure, the exercise
of creditors' remedies or in a fiduciary capacity, acquire the capital stock or
other equity securities or interest of any person;
(l) except for emergency repairs, make any capital expenditure or a series
of expenditures of a similar nature in excess of $25,000 in the aggregate;
(m) make any income tax or franchise tax election or settle or compromise
any federal, state, local or foreign income tax or franchise tax liability, or,
except in the ordinary course of business consistent with prudent banking
practices, make any other tax election or settle or compromise any other
federal, state, local or foreign tax liability;
(n) except for negotiations and discussions between the parties hereto
relating to the transactions contemplated by this Agreement or as otherwise
permitted hereunder, enter into any transaction, or enter into, modify or amend
any contract or commitment other than in the ordinary course of business and
consistent with prudent banking practices;
(o) except as contemplated by this Agreement, adopt a plan of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization, or other reorganization or business combination of the Bank;
(p) issue any certificates of deposit except in the ordinary course of
business and in accordance with prudent banking practices;
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(q) make any investments except in the ordinary course of business and in
accordance with prudent banking practices;
(r) modify any outstanding loan, make any new loan, or acquire any loan
participation, unless such modification, new loan, or participation is made in
the ordinary course of business and in accordance with prudent banking
practices;
(s) sell or contract to sell any part of the Bank's premises;
(t) change any fiscal year or the length thereof;
(u) knowingly take or agree to take any action that would prevent Compass
from accounting for the business combination to be effected by the Merger as a
pooling of interests, including, without limitation, any action inconsistent
with the provisions of Exhibit C hereto;
(v) acquire or establish any Subsidiary;
(w) contract to create any Bank Indebtedness; or
(x) enter into any agreement, understanding or commitment, written or
oral, with any other person which is in any manner inconsistent with the
obligations of the Bank and its directors under this Agreement or any related
written agreement. Nothing contained in this Section 5.2 or in Section 5.1 is
intended to influence the general management or overall operations of the Bank
in a manner not permitted by applicable law and the provisions thereof shall
automatically be reduced in compliance therewith.
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ARTICLE VI.
ADDITIONAL AGREEMENTS
SECTION 6.1 Access To, and Information Concerning, Properties and
Records. During the pendency of the transactions contemplated hereby, the Bank
shall, to the extent permitted by law, give Compass, its legal counsel,
accountants and other representatives full access after reasonable notice,
during normal business hours, throughout the period prior to the Closing, to all
of the Bank's properties, books, contracts, commitments and records, permit
Compass to make such inspections (including without limitation physical
inspection of the surface and subsurface of any property thereof and any
structure thereon) as they may require and furnish to Compass during such period
all such information concerning the Bank and its affairs as Compass may
reasonably request. All information disclosed by the Bank to Compass which is
confidential shall be held confidential by Compass and its representatives,
except to the extent counsel to Compass has advised it such information is
required to or should be disclosed in filings with regulatory agencies or
governmental authorities and shall use such information only for purposes of
evaluating the transactions contemplated herein and the purpose of corporate and
regulatory approval. In the event this Agreement is terminated pursuant to the
provisions of Article VIII, upon the written request of the Bank, Compass agrees
to destroy or return to the Bank all copies of such confidential information.
SECTION 6.2 Filing of Regulatory Approvals. As soon as reasonably
practicable, Compass shall file all notices and applications to the FRB, the
Commissioner and the FDIC which Compass deems necessary or appropriate to
complete the transactions contemplated herein, including the merger of the
Surviving Bank and Compass Bank, Houston, Texas, ("Compass Bank"). Compass will
deliver to the Bank, and the Bank will deliver to Compass, copies of all non-
confidential portions of any such applications.
SECTION 6.3 Miscellaneous Agreements and Consents. Subject to the terms
and conditions of this Agreement, Compass and the Bank agree to use all
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper, or advisable under applicable
laws and regulations to consummate and make effective, as soon as practicable
after the date hereof, the transactions contemplated by this Agreement. Compass
and the Bank shall use their respective best efforts to obtain or cause to be
obtained consents of all third parties and governmental and regulatory
authorities necessary or desirable for the consummation of the transactions
contemplated herein.
SECTION 6.4 Best Good Faith Efforts. All parties hereto agree that the
parties will use their best good faith efforts to secure all regulatory
approvals necessary to consummate the Merger and other transactions provided
herein and to satisfy the other conditions to Closing contained herein.
SECTION 6.5 Exclusivity. The Bank shall not solicit, entertain or
negotiate with respect to any offer to acquire the Bank from any other person.
During the term of this Agreement, the Bank shall not provide information to any
other person in connection with a possible acquisition of the Bank. Immediately
upon receipt of any such unsolicited offer, the Bank will communicate to
Compass the terms of any proposal or request for information and the identity of
parties involved.
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SECTION 6.6 Public Announcement. Subject to written advice of counsel
with respect to legal requirements relating to public disclosure of matters
related to the subject matter of this Agreement, the timing and content of any
announcements, press releases or other public statements concerning the proposal
contained herein will occur upon, and be determined by, the mutual consent of
the Bank and Compass.
SECTION 6.7 Employee Benefit Plans. Compass presently intends that,
after the Merger, Compass and the Bank will not make additional contributions to
the employee benefit plans that were sponsored by the Bank immediately prior to
the Merger. Compass agrees that the employees of the Bank who are retained as
employees of Compass or Compass Bank will be entitled to participate as newly
hired employees (with prior service credit except as provided below) in the
employee benefit plans and programs maintained for employees of Compass and its
affiliates, in accordance with the respective terms of such plans and programs,
and Compass shall take all actions necessary or appropriate to facilitate
coverage of the Bank's employees in such plans and programs from and after the
Effective Time, subject to the following:
(i) Employee Welfare Benefit Plans and Programs: Each employee of the Bank
will be entitled to credit for prior service with the Bank for all purposes
(including for purposes of severance) under the employee welfare benefit plans
and other employee benefit plans and programs (other than those described in
subparagraph (ii) below and any stock option plans) sponsored by Compass to the
extent the Bank sponsored a similar type of plan which the Bank employee
participated in immediately prior to the Effective Time. Any preexisting
condition exclusion applicable to such plans and programs shall be waived with
respect to any Bank employee. For purposes of determining each Bank employee's
benefit for the year in which the Merger occurs under the Compass vacation
program, any vacation taken by a Bank employee preceding the Effective Time for
the year in which the Merger occurs will be deducted from the total Compass
vacation benefit available to such employee for such year. Compass agrees that
for purposes of determining the number of vacation days available with respect
to each Bank employee for the year in which the Merger occurs, that the number
of vacation days for such year shall be determined under the Bank vacation
policies in effect as of January 1, 1998. Notwithstanding the foregoing,
employees of the Bank will be entitled to receive credit for prior service with
the Bank under Compass' monthly investment plan, the military pay plan, the job
posting program and the bank card program.
(ii) Employee Pension Benefit Plans: Each Bank employee shall be entitled
to credit for past service with the Bank for the purpose of satisfying any
eligibility or vesting periods applicable to the Compass employee pension
benefit plans which are subject to Sections 401(a) and 501(a) of the Code
(including, without limitation, the Compass 401(k)/ESOP Plan). Notwithstanding
the foregoing, Compass shall not grant any prior years of service credit to
employees of the Bank with respect to any defined benefit pension plans
sponsored (or contributed to) by Compass; instead, Bank employees shall be
treated as newly hired employees of Compass as of the date following the
Effective Time for purposes of determining eligibility, vesting and benefit
accruals thereunder.
On or before, but effective as of the Effective Time, the Bank may take
such actions as may be necessary to cause each individual employed by the Bank
immediately prior to the Effective Time to have a fully vested and
nonforfeitable interest in such employee's account balance under the 401(k) plan
sponsored by the Bank as of the Effective Time.
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SECTION 6.8 Merger of Bank. Compass presently intends to cause the
Surviving Bank to merge into Compass Bank immediately after the Merger, and the
Bank agrees to execute documents and take actions (conditioned on the Merger
being effective) and otherwise cooperate with Compass during the time the Merger
transaction is pending in order to facilitate such merger of the Surviving Bank
into Compass Bank immediately after the Closing.
SECTION 6.9 Environmental Investigation; Right to Terminate Agreement.
(a) Compass and its consultants, agents and representatives, shall have the
right at Compass' sole cost and expense to the same extent that the Bank has
such right, but not the obligation or responsibility, to inspect any Property
acquired, leased, foreclosed, managed or controlled by the Bank after the date
hereof and any Property in which the Bank acquires a security interest after the
date hereof, including, without limitation, for the purpose of conducting
asbestos surveys and sampling, and other environmental assessments and
investigations ("Environmental Inspections"). Compass' right to conduct
Environmental Inspections shall include the right to sample and analyze air,
sediment, soil and groundwater of any Property to the same extent that the Bank
has such right. Compass may conduct such Environmental Inspections at any time
subject to Section 6.9(d) below.
(b) The Bank shall cause to be performed by an environmental consulting
firm acceptable to Compass an environmental investigation of any Property
acquired, leased, foreclosed, managed or controlled by the Bank between the date
hereof and the Closing Date, the scope and results of which shall be acceptable
to Compass in its sole discretion.
(c) The Bank shall cause to be performed by an environmental consulting
firm acceptable to Compass an environmental investigation of any Property in
which the Bank acquires a security interest between the date hereof and the
Closing Date, the scope and results of which shall be equivalent to the policies
of Compass with respect to acquiring security interests on real or personal
property and the adherence to such policy by the Bank shall be determined by
Compass in its sole discretion.
(d) Compass shall provide written notice to the Bank of any physical
inspections of Property which it intends to conduct, and the Bank may place
reasonable restrictions on the time of such inspections. Upon Compass'
notification to the Bank of the Property upon which it intends to conduct such
physical inspections, the Bank shall notify the owner of such Property and use
its best efforts to secure access to such Property for Compass. 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 Compass, Compass shall notify the Bank of
the Properties on which it intends to conduct a secondary investigation. The
Bank will provide notification to owners of Property on which Compass intends to
conduct secondary investigations and will use its best efforts to secure access
to such property for Compass. Compass shall notify the Bank of any Properties
that, in the sole discretion of Compass, are not acceptable and require
remediation.
(e) (1) With respect to any Controlled Property that Compass has notified
the Bank is not acceptable and requires remediation, the Bank shall promptly
prepare a remediation plan acceptable to Compass, and use its best efforts to
obtain approval of such remediation plan by the Texas Natural Resource
Conservation Commission or any other appropriate governmental authority
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("Environmental Regulatory Authority") on or prior to the 240th day after the
date hereof ("Remediation Completion Date").
(2) Notwithstanding the foregoing, and without limiting any rights of
Compass to terminate this Agreement, the Bank shall not be obligated to incur
aggregate expenditures in excess of $300,000 in connection with additional
assessment, remediation or monitoring of all Property, preparing and obtaining
approval by the appropriate Environmental Regulatory Authority of remediation
plans with respect to Controlled Properties, and in connection with making
allocations to the Bank's loan loss reserve.
(f) Each party hereto agrees to indemnify and hold harmless the other
party for any claims for damage to the Property or injury or death to persons in
connection with any Environmental Inspection or secondary investigation of the
Property to the extent such damage, injury or death is directly attributable to
the negligent actions or negligent omissions of such indemnifying party. Compass
shall have no 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, Compass shall have no
obligation to make any reports to any governmental authority of the results of
any Environmental Inspection, secondary investigation or other environmental
survey, but such reporting shall remain the responsibility of and within the
discretion of the Bank. Compass shall have no liability to the Bank for making
any report of such results to any governmental authority. Notwithstanding
anything to the contrary contained in this Section 6.9(f), this Section 6.9(f)
shall not constitute a representation or warranty as to the condition of any
Collateral Property.
(g) Compass shall have the right to terminate this Agreement in the
following circumstances:
Section 6.10 Director and Officer Indemnification. Compass agrees to
permit the Bank to obtain an extended reporting period (otherwise known as "tail
coverage") for three years under the Bank's existing director's and officer's
liability policy; provided, however, that the premium expense for such extended
reporting period shall not exceed $14,400. Compass agrees that all rights to
indemnification that the directors and officers of the Bank have pursuant to the
Articles of Association (and its Bylaws as of the date of this Agreement) of the
Bank shall survive the Merger and shall continue in full force and effect.
Nothing contained in this Section 6.10 shall require Compass to indemnify any
person who was a director or officer of the Bank to a greater extent than the
Bank is, as of the date of this Agreement, required to indemnify any such
person. The indemnification provisions currently contained in the Articles of
Association and Bylaws of the Bank shall not be amended after the date hereof.
SECTION 6.11 Certain Tax Matters.
(a) Tax Periods ending on or before the Closing Date.
Compass shall prepare or cause to be prepared and file or cause to be
filed all tax returns for the Bank for all periods ending on or prior to the
Closing Date which are filed after the Closing Date. Compass shall permit the
Shareholders to review and comment on each such tax
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return described in the preceding sentence prior to filing. To the extent
required by applicable law, the Shareholders shall include any income, gain,
loss, deduction or other tax items for such periods on their respective
individual tax returns in a manner consistent with the Schedule K-1s prepared by
Compass for such periods. Except for any accounting method changes pursuant to
applications that are approved by the IRS and reflected in Schedule 3.13, all
tax returns described in this Section 6.11(a), in the absence of a controlling
change in law or circumstance, shall be prepared on a basis consistent with the
elections, accounting methods, conventions and principles of taxation used for
the most recent taxable periods for which tax returns involving similar tax
items have been filed.
(b) Cooperation on Tax Matters.
Compass, the Bank and the Shareholders shall cooperate fully, as and
to the extent reasonably requested by the other party, in connection with the
filing of tax returns pursuant to this Section 6.11, and including without
limitation pursuant to any audit, litigation, or other proceeding with respect
to taxes. Such cooperation shall include the retention and (upon the other
party's request) the provision of records and information which are reasonably
relevant to any such audit, litigation or other proceeding and making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. The Bank and the Shareholders
agree (i) to retain all books and records with respect to tax matters relevant
to the Bank relating to any taxable period beginning before the Closing Date
until the expiration of the statute of limitations (and, to the extent notified
by Compass or the Shareholders, any extensions thereof) of the respective
taxable periods, and to abide by all record retention agreements entered into
with any taxing authority, and (ii) to give the other party reasonable written
notice prior to transferring, destroying or discarding any such books and
records and, if the other party so requests, the Bank or the Shareholders, as
the case may be, shall allow the other party to take possession of such books
and records. Compass, the Bank and the Shareholders further agree, upon
request, to use their best efforts to mitigate, reduce or eliminate any tax that
could be imposed (including, but not limited to, with respect to the
transactions contemplated hereby).
SECTION 6.12. Registration on Form S-3. On or before the fifth day prior
to Closing, Compass shall advise the Bank in writing as to whether Compass will
be prepared to file within three business days after the Closing Date a shelf
registration statement on Form S-3 (the "Registration Statement") for the
purpose of registering the sale of the Compass Common Stock received as Merger
Consideration hereunder. In the event Compass advises the Bank in writing that
it will file such a registration statement pursuant to the preceding sentence,
Compass agrees (i) to present the form of the Form S-3 to the Bank for review on
or before the Closing Date, (ii) that Compass will file such shelf registration
statement on Form S-3 within three business days after the Closing Date, and
(iii) that Compass will diligently pursue causing such registration statement to
be declared effective by the SEC as soon as practicable and to maintain the
effectiveness of such registration statement until the earlier of (x) the
disposition by the shareholder of all shares covered thereby or (y) two years
after the Closing Date.
SECTION 6.13 Employee Bonuses; Retention and Other Severance Payments.
(a) In lieu of bonuses under the Bank's 1998 bonus plan, at the Effective
Time, or within one week thereafter, Compass will pay each employee of the Bank
as of the Effective Time, except the acting president, a payment equal to 8% of
the employee's monthly salary multiplied by the
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lesser of the number of whole months from December 31, 1997 to the Effective
Time or the number of whole months from the employee's date of employment to the
Effective Time. The monthly salary of part-time employees shall be the average
of their monthly pay during the applicable computation period. Normal
withholding may be deducted from bonus payments.
(b) At the Effective Time, or within one week thereafter, Compass will pay
each employee of the Bank and each director listed on Schedule 6.13(b) who is
employed or serving at the Effective Time the retention payment set forth on
Schedule 6.13(b). Normal withholding may be deducted from retention payments.
(c) At the date of conversion ("Conversion") of the Bank's data processing
operations to Compass' data processing system, or within one week thereafter,
Compass will pay each of the Bank's employees listed on Schedule 6.13(c) (or any
Bank employee hired before March 31, 1998 who is subsequently assigned by the
Bank to perform the functions of an employee listed on Schedule 6.13(c) who has
resigned) and who is a Compass employee as of the date of Conversion the
retention payments set forth on Schedule 6.13(c) (by name or by substitution).
Normal withholding may be deducted from retention payments.
(d) In addition to any payments to which s/he may become entitled under
Compass' established severance policy and practice, Compass will pay each Bank
employee listed on Schedule 6.13(d) the amount set forth thereon should s/he be
terminated or otherwise become entitled to (and choose to accept) severance
benefits under Compass' established severance policy and practice within one
year after the Effective Time. Withholding will be as per Compass' severance
policy.
(e) Compass will pay each Bank employee listed on Schedule 6.13(e) twice
the amount to which s/he would otherwise be entitled under Compass' established
severance policy and practice should s/he be terminated or otherwise become
entitled to (and choose to accept) severance benefits under such policy and
practice from anytime after the Effective Time until one year after the date of
Conversion. Withholding will be as per Compass' severance policy.
(f) For the purposes of determining whether a Bank employee is entitled to
severance benefits under Compass' severance policy, "termination" (as used
herein and in Compass' severance policy) is understood to include the failure by
Compass to offer a displaced employee of the Bank an equivalent position, as
that concept has been interpreted under Compass' established severance policy
and practice, for which the employee is qualified in Travis and Williamson
Counties, Texas.
SECTION 6.14 Cooperation on Year 2000 Issues. The Bank will cooperate
and consult with Compass with respect to Year 2000 compliance issues.
ARTICLE VII.
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver of the following conditions prior to the Effective Time:
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(a) the receipt of regulatory approvals which approvals shall not have
imposed any condition or requirement which in the judgment of Compass would
materially and adversely impact the economic or business benefits of the
transactions contemplated by this Agreement or otherwise would in the judgment
of Compass be so burdensome as to render inadvisable the consummation of the
Merger, and the expiration of any applicable waiting period with respect
thereto; and
(b) the Closing will not violate any injunction, order or decree of any
court or governmental body having competent jurisdiction.
SECTION 7.2 Conditions to the Obligations of Compass and Compass Texas
to Effect the Merger.
The obligations of Compass and Compass Texas to effect the Merger are
subject to the satisfaction or waiver of the following conditions prior to the
Effective Time:
(a) all representations and warranties of the Bank shall be true and
correct in all material respects as of the date hereof and at and as of the
Closing, with the same force and effect as though made on and as of the Closing;
(b) the Bank shall have performed in all material respects all obligations
and agreements and in all material respects complied with all covenants and
conditions, contained in this Agreement to be performed or complied with by it
prior to the Effective Time; provided, however, that in the event of a material
breach by the Bank of a covenant or condition contained in this Agreement that
can be cured, the Bank shall have 30 days after the giving of written notice of
such breach to cure such breach;
(c) there shall not have occurred a Material Adverse Effect with respect
to the Bank;
(d) the directors of the Bank at the Effective Time shall have delivered
to Compass an instrument in the form of Exhibit H attached hereto dated the
Effective Time releasing the Bank from any and all claims of such directors
(except as to their deposits and accounts, and as to their rights of
indemnification pursuant to the Articles of Association or Bylaws of the Bank)
and shall have delivered to Compass their resignations as directors of the Bank;
(e) the Bank shall have used its best efforts to deliver to Compass an
instrument in the form of Exhibit H attached hereto dated the Effective Time
executed by the officers of the Bank at the Effective Time releasing the Bank
from any and all claims of such officers (except as to deposits and accounts and
accrued compensation permitted by their respective agreements with the Bank and
as to their rights of indemnification pursuant to the Articles of Association or
Bylaws of the Bank);
(f) Compass shall have received the opinions of counsel to the Bank
acceptable to it as to the matters set forth on Exhibit E attached hereto;
(g) Compass shall have received a letter from KPMG Peat Marwick, LLP,
dated as of the Effective Time, to the effect that the Merger will qualify for
pooling-of-interests accounting treatment if closed and consummated in
accordance with this Agreement;
31
<PAGE>
(h) there shall be no Bank Indebtedness;
(i) Compass shall have received from holders of the Bank's capital stock
receiving at least 50% of the total Merger Consideration a representation that
they have no plan or intention to sell or otherwise dispose of (i) shares of the
Bank prior to and in connection with the Merger to the Bank, Compass or any
party related to the Bank or Compass and (ii) shares of Compass Common Stock to
be received pursuant to the Merger to Compass or any party related to Compass.
(j) Compass shall have received an opinion of counsel satisfactory to it
on the basis of certain facts, representations, and assumptions set forth in
such opinion to the effect that the Merger will qualify as a reorganization
under Section 368(a) of the Code (in rendering such opinion, such counsel may
require and rely upon and may incorporate by reference representations and
covenants, including those contained in certificates of officers and/or
directors of Compass, the Bank, Compass Texas and others);
(k) the Bank shall have delivered to Compass a schedule of all
transactions in the capital stock (or instruments exercisable for or convertible
into capital stock) of the Bank of which the Bank has knowledge from and
including the date of this Agreement through the Effective Time;
(l) Compass shall have received an investment representation certificate
in substantially the form of Exhibit D from each of the Shareholders dated as of
the Effective Time;
(m) There shall be no warrants, options, convertible securities or other
securities or instruments entitling the holder thereof to acquire Shares;
(n) The Bank shall have received a title policy from a title company
reasonably acceptable to Compass for each owned bank premises insuring in the
Bank good and indefeasible title in the Bank in the book value amount of such
premises; and
(o) Compass shall have received certificates dated as of the Closing Date
executed by the Chairman of the Board of the Bank and the Secretary or Cashier
of the Bank, respectively, certifying in such reasonable detail as Compass may
reasonably request, to the effect described in Sections 7.2(a), (b), (c), (h),
(l) and (m).
SECTION 7.3 Conditions to the Obligations of the Bank to Effect the
Merger. The obligations of the Bank to effect the Merger are subject to the
satisfaction or waiver of the following conditions prior to the Effective Time:
(a) all representations and warranties of Compass shall be true and
correct in all material respects as of the date hereof and at and as of the
Closing, with the same force and effect as though made on and as of the Closing;
(b) Compass and Compass Texas shall have performed in all material
respects all obligations and agreements and in all material respects complied
with all covenants and conditions contained in this Agreement to be performed or
complied with by either of them prior to the Effective Time; provided, however,
that in the event of a material breach by Compass or Compass Texas of a covenant
or condition contained in this Agreement that can be cured, Compass and
32
<PAGE>
Compass Texas shall have 30 days after the giving of written notice of such
breach to cure such breach;
(c) the Bank shall have received the opinion of counsel to Compass and
Compass Texas acceptable to it, as to the matters set forth on Exhibit F
attached hereto;
(d) the Bank shall have delivered to the directors and officers of the
Bank who have delivered to the Bank a release pursuant to Section 7.2 (e) an
instrument in the form of Exhibit I attached hereto dated the Effective Time
releasing such directors and officers from any and all claims of the Bank
(except as to indebtedness or other contractual liabilities); provided, however,
that such releases shall not release an action against such directors and
officers by Compass or Compass Texas in connection with the transactions
contemplated by this Agreement;
(e) the Shareholders shall have received the Merger Consideration payable
pursuant to Section 1.6(b); and
(f) Compass shall have advised the Bank in writing that it will be
prepared to file the Registration Statement with the SEC within three business
days after the Closing Date; and
(g) the Bank shall have received certificates dated as of the Closing
Date, executed by appropriate officers of Compass and Compass Texas,
respectively, certifying, in such detail as the Bank may reasonably request, to
the effect described in Sections 7.3(a) and (b).
ARTICLE VIII.
TERMINATION; AMENDMENT; WAIVER
SECTION 8.1 Termination. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time notwithstanding approval
thereof by the shareholders of the Bank, but prior to the Effective Time:
(a) by mutual written consent duly authorized by the Boards of Directors
of Compass and the Bank;
(b) by Compass (i) if Compass learns or becomes aware of a state of facts
or breach or inaccuracy of any representation or warranty of the Bank contained
in Article III which constitutes a Material Adverse Effect; provided, however,
that in the event of a material breach or inaccuracy in any representation or
warranty of the Bank contained in Article III that can be cured, the Bank shall
have 30 days after the giving of written notice of such breach to cure such
breach; (ii) pursuant to Section 6.9 (g); or (iii) if any of the conditions to
Closing contained in Section 7.1 or 7.2 are not satisfied or waived in writing
by Compass;
(c) by the Bank if the conditions to Closing contained in Section 7.1 or
7.3 are not satisfied or waived in writing by the Bank;
33
<PAGE>
(d) by Compass or the Bank if the Effective Time shall not have occurred
on or before the expiration of nine months from the date of this Agreement or
such later date agreed to in writing by Compass and the Bank; or
(e) by Compass or the Bank if any court of competent jurisdiction in the
United States or other United States (federal or state) governmental body shall
have issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger and such order, decree, ruling or
other action shall have been final and nonappealable.
SECTION 8.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 8.1 hereof, this Agreement
shall forthwith become void and have no effect, without any liability on the
part of any party or its directors, officers or shareholders, other than the
provisions of this Sections 6.9, 8.2, 9.1, 10.1 and 10.8. Nothing contained in
this Section 8.2 shall relieve any party from liability for any breach of this
Agreement; provided, however, that in the event of termination of this
Agreement, no party shall have liability to the other party for the inaccuracy
of any representation or warranty made by such party in this Agreement unless
such party had actual knowledge that such representation or warranty was false.
SECTION 8.3 Amendment. (a) To the extent permitted by applicable law,
this Agreement may be amended by action taken by or on behalf of the Board of
Directors of the Bank, Compass and, if required, Compass Texas, but no amendment
shall be made which reduces the Merger Consideration or which materially and
adversely affects the rights of the Bank's shareholders hereunder without the
required approval of the shareholders of the Bank. This Agreement may not be
amended except by an instrument in writing signed on behalf of all the parties.
(b) The parties hereto hereby agree to enter into an amendment of this
Agreement for the purpose of adding Compass Texas as a party hereto, which
amendment shall be made prior to any submission of this Agreement to
shareholders of the Bank for their approval. As a condition to the Bank's entry
into such an amendment, Compass Texas shall deliver to the Bank a certificate in
substantially the form of Exhibit G attached hereto.
SECTION 8.4 Extension; Waiver. At any time prior to the Effective Time,
the parties may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document, certificate or writing delivered pursuant hereto, or (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE IX.
SURVIVAL
SECTION 9.1 Survival of Representations and Warranties. The parties
hereto agree that all of their respective representations and warranties
contained in this Agreement shall not survive after the Effective Time.
34
<PAGE>
ARTICLE X.
MISCELLANEOUS
SECTION 10.1 Expenses. All costs and expenses incurred in connection
with the transactions contemplated by this Agreement, including without
limitation, attorneys' fees, accountants' fees, other professional fees and
costs related to expenses of officers and directors of the Bank, shall be paid
by the party incurring such costs and expenses. Each party hereto hereby agrees
to and shall indemnify the other parties hereto against any liability arising
from any such fee or payment incurred by such party.
SECTION 10.2 Brokers and Finders. All negotiations on behalf of Compass
and the Bank relating to this Agreement and the transactions contemplated by
this Agreement have been carried on by the parties hereto and their respective
agents directly without the intervention of any other person in such manner as
to give rise to any claim against Compass, Compass Texas, or the Bank for
financial advisory fees, brokerage or commission fees, finder's fees or other
like payment in connection with the consummation of the transactions
contemplated hereby.
SECTION 10.3 Entire Agreement; Assignment. This Agreement (a)
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes all other prior agreements and understandings, both
written and oral, among the parties or any of them with respect to the subject
matter hereof, and (b) shall not be assigned by operation of law or otherwise,
provided that Compass may assign its rights and obligations or those of Compass
Texas to any direct or indirect, wholly-owned, subsidiary of Compass, but no
such assignment shall relieve Compass of its obligations hereunder if such
assignee does not perform such obligations.
SECTION 10.4 Further Assurances. From time to time as and when requested
by Compass or its successors or assigns, the Bank, the officers and directors of
the Bank in such capacities, shall execute and deliver such further agreements,
documents, deeds, certificates and other instruments and shall take or cause to
be taken such other actions, including those as shall be necessary to vest or
perfect in or to confirm of record or otherwise the Bank's title to and
possession of, all of its property, interests, assets, rights, privileges,
immunities, powers, franchises and authority, as shall be reasonably necessary
or advisable to carry out the purposes of and effect the transactions
contemplated by this Agreement.
SECTION 10.5 Enforcement of the Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof, this being in addition to
any other remedy to which they are entitled at law or in equity.
SECTION 10.6 Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
35
<PAGE>
SECTION 10.7 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered if in person, by cable, telegram or telex or by
telecopy, or five business days after mailing if delivered by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties as follows:
if to Compass or Compass Texas:
D. Paul Jones, Jr.
Chairman and Chief Executive Officer
Compass Bancshares, Inc.
15 South 20th Street
Birmingham, Alabama 35233
Telecopy No.: (205) 933-3043
Charles E. McMahen
Chairman and Chief Executive Officer
Compass Banks of Texas, Inc.
24 Greenway Plaza
Houston, Texas 77046
Telecopy No.: (713) 993-8500
with copies to:
Daniel B. Graves
Associate General Counsel
Compass Bancshares, Inc.
15 South 20th Street
Birmingham, Alabama 35233
Telecopy No.: (205) 933-3043
and
Annette L. Tripp
Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
3400 Chase Tower, 600 Travis
Houston, Texas 77002
Telecopy No.: (713) 223-3717
if to the Bank:
Stephen J. Wilkinson
Hill Country Bank
7709 RR 620 North
Austin, Texas 78726
Telecopy No.: (512) 258-3676
36
<PAGE>
with a copy to:
Duncan Osborne
Osborne, Lowe, Helman & Smith, L.L.P.
301 Congress, Suite 1900
Austin, Texas 78701
Telecopy No.: (512) 469-7711
and
Charles E. Greef
Jenkens & Gilchrist
1445 Ross Avenue, Suite 3200
Dallas, Texas 75202
Telecopy No.: (214) 855-4300
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION 10.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 10.9 Descriptive Headings. The descriptive headings are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
SECTION 10.10 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement, other than the Shareholders for purposes of Sections 6.7, 6.11, 6.12
and 6.13 of this Agreement.
SECTION 10.11 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 10.12 Incorporation by References. Any and all schedules,
exhibits, annexes, statements, reports, certificates or other documents or
instruments referred to herein or attached hereto are incorporated herein by
reference hereto as though fully set forth at the point referred to in the
Agreement.
SECTION 10.13 Certain Definitions.
(a) "Subsidiary" or "Subsidiaries" shall mean, when used with reference to
an entity, any corporation, a majority of the outstanding voting securities of
which are owned directly or indirectly
37
<PAGE>
by such entity or any partnership, joint venture or other enterprise in which
any entity has, directly or indirectly, any equity interest.
(b) "Material Adverse Effect" shall mean any material adverse
circumstance, event or series of events with respect to the financial condition,
assets, liabilities (absolute, accrued, contingent or otherwise), reserves,
business or results of operations of the Bank (or when the reference is to
Compass, to Compass and its Subsidiaries, taken as a whole); provided, however,
Material Adverse Effect shall not be deemed to include (i) the impact of changes
made at the direction or request of Compass, (ii) changes in general economic
conditions, (iii) changes in laws or regulations, or (iv) changes from interest
rates generally.
(c) "Environmental Laws" shall mean all federal, state and local laws,
ordinances, rules, regulations, guidance documents, directives, and decisions,
interpretations and orders of courts or administrative agencies or authorities,
relating to the release, threatened release, recycling, processing, use,
handling, transportation treatment, storage, disposal, remediation, removal,
inspection or monitoring of Polluting Substances or protection of human health
or safety or the environment (including, without limitation, wildlife, air,
surface water, ground water, land surface, and subsurface strata), including,
without limitation, the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986, as amended ("SARA"), the Resource Conservation and
Recovery Act of 1976, as amended ("RCRA"), Hazardous and Solid Waste Amendments
of 1984, as amended ("HSWA"), the Hazardous Materials Transportation Act, as
amended ("HMTA"), the Toxic Substances Control Act ("TSCA"), Occupational Safety
and Health Act ("OSHA"), Federal Water Pollution Control Act, Clean Air Act, and
any and all regulations promulgated pursuant to any of the foregoing.
(d) "Polluting Substances" shall mean those substances included within the
statutory or regulatory definitions, listings or descriptions of "pollutant,"
"contaminant," "toxic waste," "hazardous substance," "hazardous waste," "solid
waste," or "regulated substance" pursuant to CERCLA, SARA, RCRA, HSWA, HMTA,
TSCA, OSHA, and/or any other Environmental Laws, as amended, and shall include,
without limitation, any material, waste or substance which is or contains
explosives, radioactive materials, oil or any fraction thereof, asbestos, or
formaldehyde. To the extent that the laws or regulations of the State of Texas
establish a meaning for "hazardous substance," "hazardous waste," "hazardous
materials," "solid waste," or "toxic waste," which is broader than that
specified in any of CERCLA, SARA, RCRA, HSWA, HMTA, TSCA, OSHA or other
Environmental Laws such broader meaning shall apply.
(e) "Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing, discarding or abandoning.
(f) "Knowledge" or "known" -- For purposes of Section 8.2, an individual
shall be deemed to have "knowledge" or to have known a particular fact or other
matter if such individual is actually aware of such fact or other matter, and
for all other purposes under this Agreement, an individual shall be deemed to
have "knowledge" of or to have "known" a particular fact or other matter if (i)
such individual is actually aware of such fact or other matter, or (ii) a
prudent individual could be expected to discover or otherwise become aware of
such fact or other matter in the course of conducting a reasonably comprehensive
investigation in the ordinary course of business
38
<PAGE>
concerning the truth or existence of such fact or other matter. A corporation or
bank shall be deemed to have "knowledge" of or to have "known" a particular fact
or other matter if any individual who is serving, or who has at any time served,
as a director or officer with the title or serving in the capacity of the
officers set forth on Schedule 10.13 (or in any similar capacity) of the
corporation or bank, has, or at any time had, knowledge of such fact or other
matter.
[SIGNATURE PAGE FOLLOWS]
39
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
day and year first above written.
ATTEST: COMPASS BANCSHARES, INC.
By: /s/ Daniel B. Graves By: /s/ Garrett R. Hegel
-------------------------- -----------------------------------
Its: Assistant Secretary Its: Chief Financial Officer
ATTEST: HILL COUNTRY BANK
By: /s/ Lori Singleton By: /s/ Stephen J. Wilkinson
--------------------------- -----------------------------------
Its: Secretary Its: Chairman
40
<PAGE>
EXHIBIT 2.2
AMENDMENT TO AGREEMENT AND PLAN OF MERGER
This Amendment to Agreement and Plan of Merger (this "Amendment") dated as
of May 22, 1998 is entered into by and among Compass Bancshares, Inc.
("Compass"), Compass Hill Country, Inc. ("CHC") and Hill Country Bank (the
"Bank").
WHEREAS, Compass and the Bank entered into an Agreement and Plan of Merger
dated as of April 22, 1998 (the "Merger Agreement");
WHEREAS, the Merger Agreement requires that an existing or new subsidiary
of Compass shall be merged with the Bank, with the Bank being the surviving
entity;
WHEREAS, CHC is such existing or new subsidiary;
WHEREAS, Section 8.3 of the Merger Agreement requires Compass and the Bank
to amend the Merger Agreement for the purpose of making CHC a party thereto; and
WHEREAS, the parties desire to otherwise amend the Merger Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and in the Merger Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
1. Capitalized terms used herein and not defined herein shall have
the meanings set forth in the Merger Agreement.
2. Upon execution of this Amendment, CHC shall become a party to the
Merger Agreement, shall be deemed to be Compass Texas as defined in the Merger
Agreement, and shall succeed to the rights and become subject to the obligations
of Compass Texas as provided in the Merger Agreement.
3. The execution of this Amendment shall not relieve Compass of its
obligations under the Merger Agreement.
4. Except as herein provided, the terms of the Merger Agreement
shall remain in full force and effect.
5. This Amendment may be executed in several counterparts, and by
the parties on separate counterparts, and all such counterparts, when so
executed and delivered, shall constitute but one and the same agreement.
<PAGE>
IN WITNESS WHEREOF the parties have executed this Amendment as of the date
first written above.
ATTEST: COMPASS BANCSHARES, INC.
By: /s/ Daniel B. Graves By: /s/ Garrett R. Hegel
-------------------------------- ----------------------------
Its: Assistant Secretary Its: Chief Financial Officer
ATTEST: COMPASS HILL COUNTRY, INC.
By: /s/ Ben H. Riggs By: /s/ Charles E. McMahen
-------------------------------- ----------------------------
Its: Secretary Its: President
ATTEST: HILL COUNTRY BANK
By: /s/ Lori B. Singleton By: /s/ Stephen J. Wilkinson
-------------------------------- ----------------------------
Its: Secretary Its: Chairman & President
<PAGE>
EXHIBIT 4.6
------------------------------
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
COMPASS BANCSHARES, INC.
------------------------------
(Originally incorporated under the name "Central and State
National Corporation of Alabama" on December 8, 1970)
Compass Bancshares, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
FIRST: That at a meeting of the Board of Directors of Compass
Bancshares, Inc. a resolution was duly adopted setting forth the proposed
amendment to the Restated Certificate of Incorporation of said corporation,
declaring such amendment to be advisable and calling for the presentation of the
proposed amendment to the stockholders of the corporation at the next annual
meeting. The resolution setting forth the proposed amendment is as follows:
RESOLVED, that Article 4.1 of the corporation's Restated Certificate
of Incorporation be revised to read as follows:
"4.1 Authorized Stock. The total number of shares of all classes of
stock which the Corporation shall have the authority to issue is two
hundred twenty-five million (225,000,000), consisting of
(1) Twenty-five million (25,000,000) shares of preferred stock,
$0.10 par value per share (hereinafter "Preferred Stock"); and
(2) Two hundred million (200,000,000) shares of common stock,
$2.00 par value per share (hereinafter "Common Stock")."
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, the annual meeting of the stockholders of said corporation was duly
called and held, upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware, at which meeting the necessary number
of shares as required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: That the capital of said corporation will not be reduced under or
by reason of said amendment.
1
<PAGE>
IN WITNESS WHEREOF, Compass Bancshares, Inc. has caused this certificate to
be executed on this 15th day of May, 1998.
COMPASS BANCSHARES
By: /s/ D. Paul Jones, Jr.
--------------------------------------
D. Paul Jones, Jr.
Its Chairman and Chief Executive Officer
ATTEST:
By: /s/ Jerry W. Powell
--------------------
Jerry W. Powell
Its Secretary
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
I, the undersigned Notary Public in and for said County and State, do
hereby certify that on this 15th day of May, 1998, personally appeared before me
D. Paul Jones, Jr., who, being first duly sworn, declared that he is the
Chairman and Chief Executive Officer of Compass Bancshares, Inc., and that,
being informed of the contents, he voluntarily executed the foregoing instrument
in said capacity, as the act and deed of the Corporation, and that the
statements made in the foregoing instrument are true.
WITNESS my hand and official seal on the date aforesaid.
/s/ Daniel B. Graves
------------------------------------
Notary Public
My Commission Expires: April 15, 2002
NOTARIAL SEAL
2
<PAGE>
EXHIBIT 5.1
August 5, 1998
Board of Directors
Compass Bancshares, Inc.
15 South 20th Street
Birmingham, Alabama 35233
Re: Compass Bancshares, Inc. -- Registration of 728,074 Shares of Common
Stock $2.00 Per Share Par Value, on Securities and Exchange Commission
Form S-3
Gentlemen:
In connection with the registration under the Securities Act of 1933, as
amended, of 728,074 shares of common stock, $2.00 per share par value (the
"Company Stock") of Compass Bancshares, Inc., a Delaware corporation (the
"Company"), for issuance and sale in the manner described in the Company's
registration statement on Form S-3 filed with the Securities and Exchange
Commission, to which this opinion is an exhibit (the "Registration Statement"),
I, as General Counsel to the Company, have examined such corporate records,
certificates and other documents as I have considered necessary or appropriate
for the purposes of this opinion.
On the basis of the foregoing, I am of the opinion that the shares of the
Company Stock offered pursuant to the Registration Statement have been duly and
validly authorized and are duly and validly issued, fully paid and
nonassessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Yours very truly,
/s/ Jerry W. Powell
--------------------------------
Jerry W. Powell
<PAGE>
EXHIBIT 23.1
ACCOUNTANT'S CONSENT
The Board of Directors
Compass Bancshares, Inc.
We consent to the use of our report incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the Prospectus.
Birmingham, Alabama /s/ KPMG Peat Marwick LLP
August 4, 1998
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
WHEREAS, Compass Bancshares, Inc. (the "Company") has agreed to file a
registration statement and amendments thereto under the Securities Act of 1933,
as amended, with respect to the issuance and sale of shares of common stock of
the Company in connection with the acquisition by the Company of Hill Country
Bank, Austin, Texas;
NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS, that the Company and the
undersigned directors and officers of said Company, individually as a director
and/or as an officer of the Company, hereby make, constitute and appoint each of
D. Paul Jones, Jr., Garrett R. Hegel, Jerry W. Powell, and Daniel B. Graves
their true and lawful attorney-in-fact for each of them and in each of their
names, places and steads to sign and cause to be filed with the Securities and
Exchange Commission said registration statement and any appropriate amendments
thereto, to be accompanied by prospectuses and any appropriately amended
prospectuses and any necessary exhibits.
The Company hereby authorizes said persons or any one of them to execute
said registration statement and amendments thereto on its behalf as attorney-in-
fact for it and its authorized officers, and to file the same as aforesaid.
The undersigned directors and officers of the Company hereby authorize said
persons or any one of them to sign said registration statements on their behalf
as attorney-in-fact and to amend, or remedy any deficiencies with respect to,
said registration statements by appropriate amendment or amendments and to file
the same as aforesaid.
DONE as of this the 16th day of February, 1998.
COMPASS BANCSHARES, INC.
By: /s/ D. Paul Jones, Jr.
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D. Paul Jones, Jr.
Its Chairman and Chief Executive
Officer
/s/ D. Paul Jones, Jr.
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D. Paul Jones, Jr.
/s/ Garrett R. Hegel
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Garrett R. Hegel
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/s/ Michael A. Bean
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Michael A. Bean
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Jack C. Demetree
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Charles W. Daniel
/s/ W. Eugene Davenport
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W. Eugene Davenport
/s/ Marshall Durbin, Jr.
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Marshall Durbin, Jr.
/s/ Tranum Fitzpatrick
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Tranum Fitzpatrick
/s/ George W. Hansberry, M.D.
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George W. Hansberry, M.D.
/s/ John S. Stein
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John S. Stein
/s/ Robert J. Wright
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Robert J. Wright
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EXHIBIT 24.2
CERTIFICATE OF THE SECRETARY REGARDING
RESOLUTIONS OF THE BOARD OF DIRECTORS
OF COMPASS BANCSHARES, INC., RELATING TO
PROPOSED ACQUISITION OF HILL COUNTRY BANK, AUSTIN, TEXAS
I, the undersigned Secretary of Compass Bancshares, Inc., a Delaware
corporation, and the custodian of the minutes book and other records of the
Board of Directors of said Corporation, do hereby certify that the following
resolutions were adopted by the Board of Directors of said Corporation in a
meeting, duly called and held on February 16, 1998:
RESOLVED, that the Board of Directors of Compass Bancshares, Inc., a
Delaware corporation (the "Corporation"), has determined that it is
desirable and in the best interests of the Corporation and its stockholders
to acquire (the "Hill Country Acquisition") Hill Country Bank (the "Bank"),
the principal offices of which are located in Austin, Texas, in accordance
with the basic terms of such transaction as described to this Board by the
Chairman and Chief Executive Officer, the Chief Financial Officer, and/or
the General Counsel and Secretary of the Corporation at the meeting at
which these resolutions were adopted; and further
RESOLVED, that the proper officers of the Corporation, in consultation
with counsel, are authorized, empowered, and directed to negotiate the
terms and conditions of a definitive agreement and plan or plans of merger,
as well as any amendments or supplements thereto, among the Corporation the
Bank, and any subsidiary banks or subsidiary corporations of the
Corporation now in existence or to be formed for the purposes of
effectuating the acquisition by the Corporation of the Bank (referred to
collectively herein as the "Agreement"), and to execute, attest, and
deliver the Agreement in such form as they, in their sole discretion, shall
approve, such approval to be conclusively evidenced by their execution,
attestation, and delivery of the Agreement; and further
RESOLVED, that all negotiations and any other actions taken and things
done heretofore by the officers of the Corporation with respect to the
execution, attestation, and delivery of written agreements in principle or
definitive agreements relating to the acquisition of the Bank are hereby
ratified and approved; and further
RESOLVED, that the organization of one or more corporations as a
subsidiary or subsidiaries of the Corporation or as a subsidiary or
subsidiaries of an existing affiliate of the Corporation for the purpose of
effectuating the Hill Country Acquisition is hereby authorized, approved,
and ratified in the event that it shall be determined or has been
determined by the officers of the Corporation, after consultation with
counsel, that such organization of a subsidiary is necessary or appropriate
for the effectuation of the acquisition of the Bank; and further
RESOLVED, that to the extent that the approval of the Corporation as
the sole stockholder of any of its subsidiaries is required in connection
with the Hill
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Country Acquisition, the Corporation hereby waives any and all notice of a
meeting or meetings of stockholders of any such subsidiary or subsidiaries
for the purposes of approving the Hill Country Acquisition or the
Agreement, and the Board of Directors of the Corporation hereby approves,
authorizes, and ratifies the Hill Country Acquisition and the Agreement as
the stockholder of its subsidiaries now existing or to be organized, it
being the intent of the Board of Directors of the Corporation that the
approval by the Corporation set forth in this resolution shall constitute
any and all approval required by law for the approval of the Hill Country
Acquisition or the Agreement by the Corporation as a stockholder; and
further
RESOLVED, that the Corporation's and the Corporation's subsidiaries'
officers are authorized, empowered, and directed to prepare, or cause to be
prepared, and to execute, attest, and file all applications, or requests
for waiver of application requirements, which they shall deem necessary or
appropriate with the Board of Governors of the Federal Reserve System, the
Federal Deposit Insurance Corporation, the Office of Thrift Supervision,
the Office of the Comptroller of the Currency, the Texas Department of
Banking, and any other appropriate bank and bank holding company regulatory
authorities with respect to the Hill Country Acquisition; and further
RESOLVED, that, in the event that the Agreement shall contemplate that
the Corporation shall issue as consideration in connection with the Hill
Country Acquisition shares of its common stock or other securities of the
Corporation, the proper officers of the Corporation, in consultation with
counsel, are authorized and directed to prepare, execute, attest, and file
a Registration Statement on Form S-4 or other appropriate form for the
registration of securities (the "Registration Statement") with the United
States Securities and Exchange Commission (the "Commission") relating to
the Hill Country Acquisition and the proposed issuance of securities of the
Corporation as consideration in such transaction; and further
RESOLVED, that the proper officers of the Corporation are authorized,
empowered, and directed for and on behalf of the Corporation to do any and
all acts and things necessary or appropriate in connection with such filing
of the Registration Statement, including the execution, attestation, and
filing of any amendments or supplements thereto, to effectuate the
registration of securities of the Corporation to be issued in the Hill
Country Acquisition and the continuation of the effectiveness of the
Registration Statement; and further
RESOLVED, that each officer or director who may be required to execute
the Registration Statement or any amendment or supplement to the
Registration Statement (whether on behalf of the Corporation or as an
officer or director thereof) is hereby authorized to constitute and appoint
D. Paul Jones, Jr., Garrett R. Hegel, Jerry W. Powell, and Daniel B.
Graves, and each of them acting singularly, his true and lawful attorney-
in-fact and agent, with full power of substitution for him and in his name,
place, and stead, in any and all capacities, to sign the Registration
Statement and any and all amendments and supplements thereto; and further
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RESOLVED, that the proper officers of the Corporation are authorized
in the name and on behalf of the Corporation to take any and all action
that they deem necessary or appropriate in order to effect the
registration, qualification, or exemption from registration or
qualification of securities of the Corporation included in the Registration
Statement for issue, offer, sale, or trade under the "blue sky" or
securities laws of any of the states of the United States of America or the
securities laws of any jurisdiction or foreign country where such action
may be advisable or necessary, to effect the registration of securities of
the Corporation to issued in connection with the Hill Country Acquisition,
to execute, acknowledge, verify, deliver, file or cause to be published any
application, surety bonds, reports, irrevocable consents to service of
process, appointment of attorneys for service of process, and any other
documents or instruments that may be required under such laws, and to take
any and all further action that they may deem necessary or advisable in
order to maintain any such registration, qualification, or exemption for so
long as they deem necessary as required by law; and further
RESOLVED, that the Corporation hereby consents to service of process
in any state or jurisdiction in which such consent is required under the
blue sky laws as a precondition to the offer and sale of securities of the
Corporation to be issued in the Hill Country Acquisition, and that Jerry W.
Powell, General Counsel and Secretary of the Corporation, is hereby
designated as agent for service of process in connection with the
Registration Statement and any consent to service of process that may be
required by the blue sky laws of any jurisdiction as a precondition to the
offer and sale of such securities; and further
RESOLVED, that the appropriate officers of the Corporation are hereby
authorized, empowered, and directed to do any and all other or further
acts, and to prepare, or cause to be prepared, and to execute, attest, and
deliver all other or further instruments, certificates, applications,
reports, and documents, including without limitation obtaining any
necessary or appropriate regulatory approvals, all on behalf of the
Corporation as they, in their discretion, may deem necessary or appropriate
to effectuate the purposes of these resolutions, and that all acts and
things undertaken and completed heretofore by the proper officers of the
Corporation in connection with the Hill Country Acquisition as contemplated
by these resolutions are hereby approved, ratified, and confirmed.
I further certify that the foregoing resolutions have not been modified,
amended, or rescinded and that said resolutions are in full force and effect as
of the date of this certificate.
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IN WITNESS WHEREOF, I have hereunto set my hand and the seal of the
Corporation this the 5th day of August, 1998.
/s/ Jerry W. Powell
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Jerry W. Powell
Secretary
Compass Bancshares, Inc.
[Corporate Seal]
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