<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
(X) Preliminary Proxy Statement
( ) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.1a-11(c) or Section 240.1a-12
BANCTEXAS GROUP INC.
------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
BANCTEXAS GROUP INC.
------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
( ) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)
( ) $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11;*
4) Proposed maximum aggregate value of transaction:
* Set forth amount on which the filing is calculated and state how it was
determined.
(X) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount previously paid: $125.00
2) Form, Schedule or Registration Statement No.: Schedule 14A
3) Filing Party: BancTexas Group, Inc.
4) Date Filed: 6-7-94
<PAGE> 2
Preliminary Copy
BANCTEXAS GROUP INC.
P. O. BOX 802527
DALLAS, TEXAS 75380-2527
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD THURSDAY, AUGUST 18, 1994
To the Stockholders of BancTEXAS Group Inc.:
Notice is hereby given that the 1994 Annual Meeting of Stockholders
(the "Annual Meeting") of BancTEXAS Group Inc., a Delaware corporation ("BTX"),
will be held at The Harvey Hotel - Addison, 14315 Midway Road, Dallas, Texas,
located approximately two miles north of Interstate 635 (LBJ Freeway), on
Thursday, August 18, 1994 at 10:00 a.m., Dallas, Texas time, for the following
purposes:
(1) To approve a transaction whereby BTX will issue
37,500,000 shares of Class B Common Stock to First Banks, Inc. for
total consideration of thirty million dollars ($30,000,000.00) cash;
(2) To amend BTX's Restated Certificate of Incorporation
(a) to authorize the issuance of up to 60,000,000 shares of a new
class of stock to be designated as "Class B Common Stock", 37,500,000
shares of which are to be issued in the transaction referred to in
paragraph (1) above; (b) to increase the number of authorized shares
of BTX's existing common stock from 50,000,000 to 100,000,000; (c) to
enact certain other amendments to the Certificate of Incorporation
including an amendment authorizing cumulative voting in the election
of directors; and (d) to adopt a Restated Certificate of Incorporation
incorporating such amendments;
(3) To elect six directors to serve until the next Annual
Meeting and until their successors have been duly elected and
qualified; and
(4) To transact any and all other business as may
properly be presented at the meeting and any adjournment(s) thereof.
The Board of Directors has fixed the close of business on July 14,
1994, as the record date (the "Record Date") for the determination of
stockholders entitled to notice of and to vote at the Annual Meeting or any
adjournment(s) thereof. The stock transfer books will not be closed. A list
of stockholders entitled to vote at the meeting will be available for
examination at the main office of BTX for ten (10) days prior to the meeting.
<PAGE> 3
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. HOWEVER,
WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE MEETING, YOU ARE URGED TO PROMPTLY
MARK, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED,
SELF-ADDRESSED, STAMPED ENVELOPE SO THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE
WITH YOUR WISHES AND IN ORDER THAT THE PRESENCE OF A QUORUM MAY BE ASSURED AT
THE ANNUAL MEETING. YOUR PROXY WILL BE RETURNED TO YOU IF YOU SHOULD REQUEST
SUCH RETURN IN THE MANNER PROVIDED FOR REVOCATION OF PROXIES ON PAGE 2 OF THE
ENCLOSED PROXY STATEMENT. PROMPT RESPONSE BY OUR STOCKHOLDERS WILL REDUCE THE
TIME AND EXPENSE OF SOLICITATION.
By Order of the Board of Directors,
Dallas, Texas RICHARD H. BRAUCHER
July ___, 1994 Secretary
<PAGE> 4
Preliminary Copy
BANCTEXAS GROUP INC.
P. O. BOX 802527
DALLAS, TEXAS 75380-2527
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 18, 1994
__________________
SOLICITATION AND REVOCABILITY OF PROXIES
This Proxy Statement is being furnished to stockholders of BancTEXAS
Group Inc. ("BTX") in connection with the solicitation by the Board of
Directors of BTX of proxies to be voted at the 1994 Annual Meeting of
Stockholders (the "Annual Meeting") to be held on Thursday, August 18, 1994, at
the time and place and for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders, and at any adjournment(s) thereof. This Proxy
Statement and applicable form of proxy is first being sent to the stockholders
of BTX on or about July _____, 1994.
The accompanying form of proxy is designed to permit each holder of
BTX's common stock, par value $.01 per share (the "Common Stock"), to vote for
or against each of the following proposals:
Proposal No. 1: To approve a transaction whereby BTX will
issue 37,500,000 shares of a new class of common stock to be
known as "Class B Common Stock" to First Banks, Inc. for total
consideration of thirty million dollars ($30,000,000.00) cash;
Proposal No. 2: To amend BTX's Restated Certificate of
Incorporation (a) to authorize the issuance of up to
60,000,000 shares of a new class of stock to be designated as
"Class B Common Stock", 37,500,000 shares of which are to be
issued in the transaction contemplated by Proposal No. 1
above; (b) to increase the number of authorized shares of
BTX's existing common stock from 50,000,000 to 100,000,000;
(c) to enact certain other amendments to the Restated
Certificate of Incorporation, including an amendment
authorizing cumulative
<PAGE> 5
voting in the election of directors; and (d) to adopt a
Restated Certificate of Incorporation incorporating such
amendments;
to vote for or withhold voting for any or all of the six nominees for election
as directors of BTX listed on the proxy (Proposal No. 3); and to authorize the
named proxies to vote in their discretion with respect to any other proposal
properly presented at the Annual Meeting.
The executive officers and directors of BTX beneficially own in the
aggregate 121,288 shares of Common Stock. BTX has been informed that all of
such shares will be voted in favor of Proposals No. 1, 2 and 3 at the Annual
Meeting.
When a stockholder's proxy specifies a choice with respect to a voting
matter, the shares will be voted accordingly. If no such specifications are
made, the accompanying form of proxy will be voted at the Annual Meeting and
any adjournment(s) thereof: (i) FOR approval of the transaction whereby BTX
will issue 37,500,000 shares of Class B Common Stock to First Banks, Inc. as
described herein (see the discussion of PROPOSAL NO. 1 beginning on page 5
hereof); (ii) FOR approval of PROPOSAL NO. 2, the amendments to BTX's Restated
Certificate of Incorporation as discussed under the heading "Proposal No. 2 -
Amendments to BTX's Certificate of Incorporation"; (iii) FOR the election of
the nominees listed herein under the caption "PROPOSAL NO. 3: Election of
Directors"; and (iv) at the discretion of the proxies on any other business
which may be properly presented at the Annual Meeting and any adjournment(s)
thereof. However, proxies which are voted against Proposal No. 1, Proposal No.
2 or Proposal No. 3 will not be voted pursuant to the discretionary authority
granted in such proxies in favor of an adjournment of the meeting for the
purpose of soliciting further proxies in support of such proposal.
BTX encourages the personal attendance of its stockholders at the
Annual Meeting, and execution of the accompanying proxy will not affect a
stockholder's right to attend the Annual Meeting and to vote in person. Any
stockholder giving a proxy has the right to revoke it by giving written notice
of revocation to the Secretary of BTX at its principal executive offices at any
time before the proxy is voted, or by executing and delivering a later-dated
proxy, or by attending the Annual Meeting and voting his or her shares in
person. No such notice of revocation or later-dated proxy, however, will be
effective until received by BTX at or prior to the Annual Meeting. Such
revocation will not affect a vote on any matters taken prior to receipt of the
revocation. Mere attendance at the Annual Meeting will not of itself revoke
the proxy.
The total cost of the solicitation of proxies pursuant to this Proxy
Statement will be borne by BTX. Proxies may be solicited by directors,
officers and employees of BTX without special remuneration. BTX has engaged
the services of a proxy solicitation firm, Beacon Hill Partners, Inc., and has
agreed to pay the sum of $7,500 (plus the reimbursement of expenses) to such
firm, for assistance in the solicitation of proxies. Banks, brokerage houses
and other custodians, nominees and fiduciaries who forward soliciting material
to the beneficial owners of shares of Common Stock entitled to vote at the
meeting will be reimbursed by BTX for their out-of-pocket expenses incurred in
this connection. In addition to the mails and other delivery services, proxies
may be solicited by personal interviews, telephone or telegraph.
The Annual Report to Stockholders covering BTX's fiscal year ended
December 31, 1993, including audited financial statements, has been previously
mailed. The Annual Report does not form any part of the proxy solicitation
material. Additional copies of the 1993 Annual Report to Stockholders may be
obtained without charge upon written request to Richard H. Braucher, Senior
Vice President, General Counsel and Secretary, BancTEXAS Group Inc., P.O. Box
802527, Dallas, Texas 75380-2527.
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VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
GENERAL
The Board of Directors of BTX has fixed the close of business on July
14, 1994, as the record date (the "Record Date") for the Annual Meeting. Only
holders of record of outstanding shares of Common Stock at the close of
business on the Record Date are entitled to notice of, and to vote at, the
Annual Meeting or any adjournment(s) thereof. At the close of business on the
Record Date, there were issued and outstanding 20,047,025 shares of Common
Stock. The Common Stock is the only class of stock outstanding and is the only
class of stock entitled to vote at the Annual Meeting.
A stockholder is entitled to one vote, in person or by proxy, at the
Annual Meeting for each share of Common Stock held of record in his or her name
at the close of business on the Record Date. The presence, in person or by
proxy, of the holders of a majority of the issued and outstanding shares of
Common Stock entitled to vote at the Annual Meeting or any adjournment(s)
thereof is necessary to constitute a quorum to transact business at the Annual
Meeting and any adjournment(s) thereof.
On each proposed action, proxies marked as withheld votes or
abstentions and broker non-votes will not be voted but will be treated as
present and entitled to vote. Such proxies will therefore have the same effect
as votes against the proposed action. Directors will be elected by a plurality
of the votes of the shares present in person or represented by proxy and
entitled to vote on such election.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of June 30, 1994, certain information
with respect to the beneficial ownership of the Common Stock of BTX by each
person known to the company to be the beneficial owner of more than five
percent of the outstanding Common Stock, by each director, by certain executive
officers and by all executive officers and directors of BTX as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT
RELATIONSHIP OF BENEFICIAL OF
NAME OF TO THE OWNERSHIP OF CLASS
BENEFICIAL OWNER COMPANY COMMON STOCK (1) (13)
---------------- ------------- ---------------- ---------
<S> <C> <C> <C>
Richard L. Brown Director 108,525 (2) *
Nathan C. Collins Chairman of the Board, President 971,600 (3) 4.74%
and Chief Executive Officer;
Director
Charles A. Crocco, Jr. Director 109,100 (4) *
Joseph J. Leszczynski Director 83,000 (5) *
Thomas A. Stanzel Director 115,500 (6) *
Edward T. Story, Jr. Director 107,750 (7) *
</TABLE>
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<TABLE>
<S> <C> <C> <C>
Richard H. Braucher Senior Vice President, Secretary & 50,413 (8) *
General Counsel of BTX
D. Kert Moore Senior Vice President, Treasurer 27,250 (9) *
and Chief Financial Officer of BTX
David F. Weaver Regional President - South of 75,400 (10) *
BankTEXAS N.A.
Jerry V. Garrett Senior Vice President, Consumer 45,000 (11) *
Lending of BankTEXAS N.A.
John G. Sprengle Senior Vice President, Chief 61,000 (12) *
Credit Officer of BankTEXAS N.A.
All executive officers
and directors as a
group (11 persons) 1,754,538 8.14%
</TABLE>
____________________________
* Less than one half of one percent.
(1) Includes shares subject to vested stock options granted under the 1990
Stock Option Plan. Except for Mr. Moore, 100% of the options granted
in 1990 are vested and could be exercised at any time by the optionee.
(2) Brown has a vested option covering 100,000 shares; he owns directly
8,525 shares.
(3) Collins has a vested option covering 900,000 shares; he owns directly
71,600 shares.
(4) Crocco has a vested option covering 100,000 shares; he owns directly
9,100 shares.
(5) Leszczynski has a vested option covering 75,000 shares; he owns
directly 8,000 shares.
(6) Stanzel has a vested option covering 100,000 shares; he owns directly
15,500 shares.
(7) Story has a vested option covering 100,000 shares; he owns directly
7,750 shares.
(8) Braucher has a vested option covering 50,000 shares; he owns directly
413 shares.
(9) Moore has a vested option covering 27,250 shares.
(10) Weaver has a vested option covering 75,000 shares; he owns directly
400 shares.
(11) Garrett has a vested option covering 45,000 shares.
(12) Sprengle has a vested option covering 61,000 shares.
(13) For purposes of calculating the indicated percentages, it is assumed
that Mr. Collins' options are exercised and the number of shares
outstanding are adjusted to include the shares to be issued on such
exercise. With respect to executive officers and directors as a
group, all vested options held by persons in the group are assumed to
be exercised, and the number of shares outstanding is adjusted to
include all of the shares to be issued upon the exercise of all of
such options.
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<PAGE> 8
PROPOSAL NO. 1: APPROVAL OF PROPOSED TRANSACTION WITH FIRST BANKS, INC.
The Board of Directors of BTX unanimously recommends that the proposed
transaction whereby First Banks, Inc. ("First Banks") will acquire 37,500,000
shares of Class B Common Stock, par value $.01 per share, for total
consideration of $30 million, be approved by BTX's stockholders.
In order for the proposed transaction to be consummated, it is
necessary for stockholders to approve both Proposal No. 1 which is discussed in
detail in this portion of the Proxy Statement, and Proposal No. 2, which
involves amendments to BTX's Restated Certificate of Incorporation which would,
among other things, authorize the issuance of a new class of voting stock, to
be designated "Class B Common Stock", shares of which are to be issued to First
Banks. Reference is made to the discussion of such amendments under the
heading "PROPOSAL NO. 2 -- Amendments to BTX's Certificate of Incorporation,"
for an explanation of the proposed amendments.
Included with this Proxy Statement are the complete texts of the
following three documents which are discussed in this section and in the
section describing Proposal No. 2.
Appendix I - Stock Purchase and Operating Agreement dated
May 19, 1994 by and between BancTEXAS Group
Inc. and First Banks, Inc. (referred to herein
as the "Agreement").
Appendix II - Opinion of McKenna & Company, BTX's investment
banking firm, regarding the fairness of the
proposal transaction with First Banks (referred
to herein as the "Opinion of Financial
Advisor.")
Appendix III - Restatement of the Certificate of Incorporation
of BancTEXAS Group Inc. as of _________________,
1994, setting forth the provisions of the BTX
Restated Certificate of Incorporation as
the same will read when amended as discussed
under the heading "PROPOSAL NO. 2: Amendments to
BTX's Certificate of Incorporation." The
proposed restatement, including the proposed
amendments, is referred to herein as the
"Proposed Certificate of Incorporation."
BACKGROUND OF BTX
BTX was the subject of a major restructuring in 1987 (the "1987
Restructuring") which followed several years of substantial losses in the
subsidiary banks then owned by BTX. The transaction involved "open bank
assistance" from the Federal Deposit Insurance Corporation (the "FDIC") whereby
none of the subsidiary banks failed, but the FDIC contributed $150 million and
private parties invested $50 million in order to recapitalize BTX. Unlike most
FDIC-assisted transactions, the subsidiary banks did not transfer, or receive
financial protection against losses arising out of, their nonperforming loans
and other assets. In exchange for the
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<PAGE> 9
financial assistance which it provided, the FDIC received warrants to purchase
1,970,033 shares of common stock at an exercise price of $5.41.
BTX emerged from the 1987 Restructuring with a relatively high level
of capital (8.8% of total assets as of December 31, 1987), but also with an
inordinate amount of nonperforming assets (25% of total loans and foreclosed
property at December 31, 1987). BTX continued to experience substantial losses
which were attributable to several factors, including principally (i) the
continuing drag on earnings from nonperforming and underperforming assets
retained by BTX's subsidiary banks; (ii) the extended recession in Texas and
the related failures of numerous financial institutions throughout the state,
which had a depressing effect on collateral values and the ability of some
borrowers to repay loans; and (iii) increased competition arising from the
entry into the Texas banking market of large, out of state financial
institutions with aggressive growth strategies. In 1990 BTX's largest
subsidiary bank failed, and BTX ultimately agreed to reduce the exercise price
of the warrants held by the FDIC from $5.41 to $.05 in consideration for the
FDIC's decision not to assess BTX's remaining bank subsidiaries for the costs
attributable to that bank failure.
Since 1987, in order to avoid the types of credit quality problems
which had adversely affected BTX (and most large Texas banking organizations)
in the 1980's, BTX focused its lending efforts on establishment of a low-cost,
high volume consumer installment lending program principally involving
purchases of automobile loans from dealers. This process has produced steady
improvement in the credit quality of the loan portfolio, but also led to
relatively narrow net interest margins as compared with higher yielding, but
riskier, types of loans.
BTX has sought for the past several years to attract capital from
outside sources and to increase its profitability by growth and diversification
of its operations through acquisition of additional banking operations and/or
companies engaged in complementary businesses such as finance companies. To
date, most of BTX's efforts have been concentrated on potential target banks
operating within market areas served by the existing offices of the Bank (i.e.,
Houston, Dallas and McKinney, Texas) because of the operational advantages of
increasing the assets and personnel under management within a compact
geographic area. Aside from the 1992 acquisition for BTX common stock of First
Bank/Las Colinas, a small, well-capitalized bank in Irving, Texas, BTX has been
unable to complete any acquisitions.
BTX has found that a significant impediment to some potential
acquisitions has been the inability to offer cash to potential sellers of
banks. Although BTX common stock can potentially be issued in exchange for
shares in a bank to be acquired (sometimes in a tax-free reorganization that
offers certain tax advantages to sellers), several potential sellers have
rejected BTX's overtures because they preferred to consider cash-only
transactions.
BTX continues to believe that the opportunity for expansion through
prudent acquisition of additional banks represents the most effective means of
increasing its market share and achieving desirable diversification of assets
and economies of scale. While many small and mid-sized Texas banking
organizations have been acquired by larger companies in the past few years,
Texas still has a substantial number of independent banks, and there are a
significant number of such banks within, or near, the Bank's existing market
areas. The principal purpose of the proposed transaction for both BTX and
First Banks is to enable BTX to offer cash when
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<PAGE> 10
appropriate to prospective sellers of banks determined by BTX to be desirable
acquisition candidates. It is also contemplated that BTX will be in a position
to acquire banks for stock if a prospective seller prefers that alternative.
In general, the availability of cash is intended to increase BTX's flexibility
in offering cash, stock or a combination thereof in order to make future
acquisition offers as attractive as possible to prospective sellers.
DESCRIPTION OF FIRST BANKS
First Banks, a Missouri corporation, is a privately controlled bank
holding company headquartered in St. Louis County, Missouri. As of December
31, 1993 First Banks had approximately $2 billion in assets, $1.36 billion in
total loans (net of unearned discount), $1.78 billion in total deposits and
$201.8 million in stockholders' equity. First Banks currently operates
primarily in Missouri and Illinois, through two subsidiary banks and two
subsidiary thrift institutions.
DISCUSSIONS AND NEGOTIATIONS WITH FIRST BANKS
In January, 1994 the majority owner of a Dallas bank made it known
that he would be interested in selling the bank. A group of possible investors
were invited to an exploratory meeting held February 4, 1994. Mr. Collins and
one of BTX's outside directors were included in discussions of a possible
transaction whereby the target bank would be acquired by BTX and,
simultaneously, a proposed investor group (which was in the process of being
assembled but was subsequently determined by BTX not to be viable) would invest
approximately $10 million in BTX in order to fund that acquisition. Also
attending this meeting was James F. Dierberg, Chairman of the Board and Chief
Executive Officer of First Banks. As that meeting proceeded, neither Mr.
Dierberg nor Mr. Collins found the proposed transaction or the affiliation with
the other potential investors appealing, but they believed that the mutual
interests of BTX and First Banks could be better served by further discussions
between First Banks and BTX. That evening Messrs. Dierberg and Collins began
acquainting each other regarding their respective companies. That discussion
centered on the BTX's vision of expansion in Texas and First Bank's pattern of
acquisitions and profitable growth in the Missouri and Illinois markets. The
following day, discussions continued and the two visited the three Dallas area
branch banks of BTX.
On February 8 Mr. Collins traveled to St. Louis for two reasons.
First, he toured several of First Banks' branches and its operations center and
met with several of its senior officials. Second, accompanied by a tax
consultant, Mr. Collins explained to Mr. Dierberg and First Banks' chief
financial officer the ramifications of the sizeable net operating losses that
BTX had accumulated over the years. The parties executed mutual
confidentiality agreements and First Banks delivered a due diligence request to
Mr. Collins, specifying various records and documents of BTX which it desired
to review. These were subsequently supplied to First Banks.
On February 15 Mr. Collins returned to St. Louis with John J. McKenna,
a principal of McKenna & Company, BTX's investment banking firm, to explore a
variety of structures for possible transactions involving First Banks and BTX.
During the week of February 21 First Banks' due diligence team traveled to
Dallas and reviewed the present condition of BTX.
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<PAGE> 11
At its regular meeting on February 17, the Board of Directors of BTX
created a Capital Formation Committee consisting of three outside directors,
Messrs. Crocco, Leszczynski and Story (as Chairman) to be actively involved in
reviewing any proposals received from First Banks or others and to be available
on short notice, if necessary, to address or respond to potential proposals
prior to consideration by the full Board of Directors. At the same Board
meeting Mr. Collins reported the substance of his two meetings with Mr.
Dierberg. While no proposal had been received from First Banks, First Banks
had expressed interest in making a substantial capital investment in BTX if
these funds could be utilized by BTX to make advantageous acquisitions of other
Texas banks or other financial institutions. The Board reviewed the
implications of such an investment and preliminarily determined that the
benefits to BTX and its existing stockholders from such a transaction could
outweigh any negative implication such as control by a single stockholder. The
consensus of the Board was that, with a sizeable capital infusion, BTX's
capital position would be greatly enhanced, its profitability could be
significantly increased, its ability to complete acquisitions would be markedly
improved and additional efficiencies of operations could result. Accordingly,
the Board directed Mr. Collins to pursue further discussions with First Banks
and to keep the Board, and particularly the members of the Capital Formation
Committee, advised of the progress of future discussions.
During the first week of March, Mr. Dierberg called Mr. Collins to
indicate an interest in investing between $15 and $30 million in BTX if a
proper structure could be developed and a satisfactory price agreed upon.
First Banks' investment bankers, Stifel, Nicolaus & Company Incorporated had
been retained to assist Mr. Dierberg with future negotiations. On March 7,
1994 an incomplete term sheet was presented to BTX by First Banks, outlining a
possible investment in BTX ranging between $20 and $30 million.
On March 16, Mr. Dierberg came to Dallas and met with the BTX's
directors informally to discuss his vision of how a combination of First Banks
and BTX could be advantageous, especially by the use of First Banks' capital
infusion and its broader array of products to increase the size and
profitability of BTX.
BTX's Capital Formation Committee met on March 17 with Mr. McKenna and
John Daniels, BTX's special counsel. The committee reviewed in detail the
company's history and financial progress between 1987 and 1994. In particular,
it concentrated on the recent unprofitable status of BTX and the reasons
therefor. With assistance from Mr. McKenna, the committee reviewed the list of
financial institutions with which BTX or its authorized representatives had had
contacts regarding a merger or acquisition, or an injection of capital, and
then analyzed the reasons why none of these contacts (except First Bank/Las
Colinas) had led to completed transactions. The committee requested that both
Messrs. Collins and McKenna prepare written reports on this subject for the
committee to review at a future meeting.
Later that same day, Mr. Dierberg attended a portion of BTX's Board
meeting. At this time he shared his goals and objectives related to a possible
capital investment in BTX. In response to a question, he agreed to prepare and
submit to BTX's Board of Directors his suggestions regarding ways by which
First Banks could assist BTX to become more profitable, including those
services which First Banks now offers in its markets which could in the future
be offered by BTX in Texas. He also expressed his philosophy with regard to
possible future acquisition activities in Texas.
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<PAGE> 12
On April 13, Messrs. Collins and McKenna returned to St. Louis to meet
with First Banks and its investment bankers in an attempt to create a sharper
focus regarding the nature of the transaction being considered. At that time
BTX informed First Banks that its original offered price of $.75 per share and
certain other terms were unsatisfactory to BTX. BTX said that the price needed
to be higher, and that BTX would make a counter-offer containing other terms
and conditions that BTX desired be included in any possible transaction. In
the discussions that followed, Messrs. Dierberg and Collins reached the
conclusion that a proposed investment of approximately $30 million would be
appropriate.
On April 21, the Capital Formation Committee met and received detailed
reports from Mr. Collins and Mr. McKenna regarding their discussions and
negotiations with First Banks. They reviewed with the committee the structure
which had been discussed, including the fact that a possible price of $.80 per
share had been discussed but not agreed to, and the pricing options for an
antidilution provision that First Banks had suggested. They also explained
that First Banks had requested a "lockup" option and a breakup fee in the event
that, after an agreement had been executed, BTX failed to consummate the
transaction. Finally, they described the regulatory conditions which, in the
opinion of First Banks, made it imperative that First Banks' percentage
ownership of BTX voting stock never be reduced below 50%.
The Capital Formation Committee also reviewed: (1) the written
reports from Mr. Collins and McKenna & Company detailing their merger,
acquisition and capital formation efforts; and (2) financial information
related to First Banks as well as pro forma information prepared by McKenna &
Company. These projected the financial benefit to BTX and its stockholders
which might reasonably be anticipated from a capital injection of $30 million
as well as the additional benefits which could result from both efficiencies of
scale and enhanced earnings which could result from an affiliation with First
Banks.
On the same day BTX's Board of Directors reviewed the reports and data
which the Capital Formation Committee had received regarding First Banks and
its possible capital investment in BTX. The directors also discussed whether a
rights offering directed at BTX's current stockholders, either independently or
in conjunction with a capital infusion from First Banks, might be reasonably
expected to generate a meaningful amount of new capital. In this regard, Mr.
McKenna was requested to study this issue and report promptly. The Board
outlined for Messrs. Collins and McKenna its positions on several of the
unresolved issues being discussed with the representatives of First Banks and
authorized the communication of these to Mr. Dierberg. The Board indicated its
willingness to continue serious discussions and negotiations with First Banks
and urged that a draft of a proposed stock purchase agreement be prepared so
that both parties could better understand on which issues they were close to
agreement and where the two parties had clearly divergent positions or views.
On May 6, BTX received a draft of the Agreement, which had been
prepared by First Banks' legal counsel. Senior officials of BTX and Messrs.
McKenna and Daniels reviewed this thoroughly and prepared written comments and
revisions incorporating BTX's suggested changes thereto, which were transmitted
to First Banks' counsel on May 11 and 12. These comments and suggested
revisions were also transmitted to BTX's directors to keep them apprised of the
status of negotiations.
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On May 13, representatives of BTX and Messrs. McKenna and Daniels
conducted a lengthy telephone conference call with representatives of First
Banks and its counsel. At this time the parties freely exchanged their ideas
on numerous provisions contained in the document, stated their respective
positions on each and, in some cases, were able to reach mutual agreement. At
the end of that conference call, there were a number of yet unresolved issues.
On the evening of May 13, a telephone meeting of the Capital Formation
Committee was convened in order for Messrs. Collins, Daniels and McKenna to
inform the committee members regarding the unresolved issues and to seek their
guidance concerning the appropriate method of proceeding with further
negotiations. After discussion and consideration, the Capital Formation
Committee determined BTX's position regarding each of these unresolved issues
and directed Mr. Daniels to communicate those positions to First Banks' counsel
on the next morning.
On May 14, following the communication between Mr. Daniels and First
Banks' counsel, Messrs. Collins and Dierberg had a series of telephonic
conferences regarding these issues. Many of the remaining issues were resolved
that day by Messrs. Collins and Dierberg, as each conferred separately with
their respective advisors and Mr. Collins conferred with members of the Capital
Formation Committee. Tentative agreement was reached by the parties, subject
to satisfactory revisions of the Agreement by legal counsel, and final review
by and approval of all terms by their respective Board of Directors (and, in
BTX's case, by the members of the Capital Formation Committee).
As a result of the negotiations regarding the terms of the Agreement,
there were numerous changes made in the provisions of the Agreement from the
specific provisions initially suggested by First Banks in the draft of the
Agreement that was presented to BTX on May 6. The vast majority of such changes
were not material. Those changes believed by BTX to represent material
differences between the terms as proposed by First Banks on May 6 and the terms
of the Agreement related to (i) limitations of the scope of some of the
representations and warranties given by BTX; (ii) additions to the
representations and warranties given by First Banks; (iii) narrowing of the
scope of some of the conditions which must be satisfied prior to the
consummation of the proposed transaction; (iv) elimination of a provision that
would have purported to limit the circumstances under which BTX might be put
in a position of considering competing offers, and addition of provisions
recognizing the fiduciary duties of BTX's directors in the event of the receipt
by BTX of a competing proposal or an inquiry from another potential investor
or acquirer; (v) the amount and composition of a "break-up" fee which would
become payable to First Banks under certain circumstances, and the specific
occurrences which would make such a fee payable; (vi) the addition to the
proposed amendments to the Proposed Certificate of Incorporation of a provision
requiring prior approval of the holders of shares of BTX's existing common stock
of any change in the terms of the Class B Common Stock; (vii) a reduction from
10 years to 7 1/2 years of the period during which First Banks will have the
right to purchase at a price determined by formula additional shares of Class B
Common Stock or of Common Stock, and related changes in the formula for
determining the future purchase price for such shares; (viii) deletion of a
proposal that would have required BTX to acquire, prior to closing of the
proposed transaction, the warrants now owned by the FDIC; and (ix) revisions to
certain of the limitations on BTX's business operations prior to closing to
accommodate BTX's need to engage in certain types of transactions on an ongoing
basis. Additional information regarding the provisions of the Agreement is set
forth under the heading "Terms of the Stock Purchase" below.
On May 18, the Board of Directors of First Banks met, reviewed and
considered the final version of the Agreement. This Board unanimously approved
the Agreement at that meeting.
On May 19, the Board of Directors of BTX met and reviewed and
considered the final version of the Agreement. During this meeting they
consulted with Messrs. Daniels and McKenna. Pursuant to the recommendations of
the Capital Formation Committee, the BTX Board of Directors unanimously
approved the Agreement and authorized Mr. Collins to execute it on behalf of
BTX.
BTX and First Banks executed the Agreement on May 19, 1994 and issued
a joint news release describing the terms of the Stock Purchase.
TERMS OF THE STOCK PURCHASE
BTX and First Banks executed the Agreement on May 19, 1994. The
following discussion is a summary of the material terms and conditions
contained in the Agreement and is qualified in its entirety by the text of the
Agreement, which is incorporated herein by reference and appears as Appendix I
to this Proxy Statement.
The Agreement provides that First Banks is to purchase 37,500,000
shares of a new class of BTX capital stock, to be designated "Class B Common
Stock" (referred to in this discussion as the "Class B Stock"), as
distinguished from the outstanding common stock now owned by BTX's stockholders
and traded on the New York Stock Exchange ("NYSE"), (which is referred to in
this discussion as "Regular Common Stock") for $30,000,000, or $.80 per share
(the
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"Stock Purchase"). Each share of Class B Stock to be issued to First Banks
will be convertible after five years at First Banks' option into one share of
Regular Common Stock. In addition, the Proposed Certificate of Incorporation
provides that the Class B Stock may be converted into Regular Common Stock by
the BTX Board of Directors in its sole discretion (i.e., without First Banks'
approval) if it determines that legislation or regulations are enacted or any
judicial or administrative determination is made which would prohibit the
listing, quotation or trading of the Regular Common Stock on the NYSE or the
National Association of Securities Dealers Automated Quotation System because
of the existence of more than one class of outstanding BTX common stock, or
that the same would otherwise have a material adverse effect on BTX. BTX does
not have any reason to believe that such mandatory conversion of the Class B
Stock will be necessary or appropriate.
The Class B Stock will not be registered with the SEC or listed for
trading on the NYSE for at least five years. Thereafter, First Banks will have
the right to require BTX to register with the SEC for resale all or a portion
of the shares of Regular Common Stock to be obtained by First Banks upon
conversion of its Class B Stock. First Banks also agreed to significant
restrictions on any transfer of the Class B Stock for the first five years of
its ownership, so that, unless a proposed transfer is presented to and approved
by a committee of the BTX Board of Directors consisting entirely of directors
who are not directors, officers or employees of First Banks or its subsidiaries
(other than BTX), the transfer may only be made to a subsidiary or affiliated
entity of First Banks. The purpose of these restrictions is to provide an
assurance to BTX stockholders that First Banks intends to hold the shares as a
long term investor.
The terms of the Class B Stock are to be established by amendments to
BTX's Certificate of Incorporation which must be approved by BTX's
stockholders; the substance of the proposed amendments is described in this
Proxy Statement under the heading "PROPOSAL NO. 2: Amendments to BTX's
Certificate of Incorporation." In order to assure that such terms will not be
changed so as to affect adversely the holders of Regular Common Stock, the
amendments provide that such terms cannot be amended for five years unless any
amendments are approved by holders of a majority of the outstanding shares of
Regular Common Stock, voting as a separate class. This requirement is in
addition to any other vote required by applicable law.
The Class B Stock will have dividend rights that are inferior to the
Regular Common Stock, although it is not contemplated that BTX will be in a
position to pay dividends in the near future. Under an agreed formula, when
BTX is in a position to pay dividends and if the Board of Directors determines
that it is appropriate to declare and pay them, holders of the Regular Common
Stock must be paid three cents per share per year before any dividends are paid
on Class B Stock. Any additional dividends would be paid in equal amounts per
share to holders of Regular Common Stock and Class B Stock.
First Banks has indicated that it intends to maintain in excess of 50%
ownership of the total number of shares of BTX voting stock issued and
outstanding. In that regard, certain federal regulations applicable to bank
holding companies would penalize First Banks if its percentage ownership were
to decline below 50% by making the portion of its capital invested in BTX
ineligible for inclusion in the amount of First Banks' capital that must be
maintained to satisfy regulatory requirements. To address this issue, BTX and
First Banks agreed that, for a period of 7 1/2 years following the consummation
of the Stock Purchase, if BTX issues additional shares of Regular Common Stock
or another voting security, First Banks will have the right to purchase
additional shares of Class B Stock or, at its option, shares of Regular Common
Stock so as to maintain at least 55% percent ownership of the total number of
voting shares to be outstanding on a fully-diluted basis. The price was set
according to a formula based on the book
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<PAGE> 15
value per share of the Regular Common Stock and the Class B Stock at the time
of future issuances of stock. For five years, First Banks will be required to
pay 106.67% of tangible common equity per primary share if it exercises its
right to maintain the 55% ownership level. In the sixth year the price will
increase to the lesser of 113% of BancTEXAS' tangible common equity per primary
share or the market price per share. Thereafter, the price will increase to
the lesser of 120% of BTX's tangible common equity per primary share or the
market price.
It should be noted that this provision protecting First Banks against
future dilution of its control (which appears as Section 6.02 of the Agreement)
will only become operative in the event that BTX decides to issue additional
voting stock. It was included in the Agreement in recognition of the
possibility that BTX will in future years be issuing additional shares of
Regular Common Stock, either to raise capital through the sales of stock or to
be issued in acquisition transactions in exchange for shares in acquired banks.
From BTX's perspective, the provision is intended to make such future stock
issuances feasible while addressing First Banks' requirement that it maintain
majority ownership.
The Agreement provides that, pending completion of the Stock Purchase,
BTX and its subsidiaries will generally conduct their businesses in the
ordinary course. Further, BTX will not, without the prior approval of First
Banks, engage in various specified categories of transactions and will refrain
from other types of transactions involving amounts above certain specified
dollar limits. These limitations are set forth in Section 4.01 of the
Agreement. BTX does not anticipate that any of such limitations will interfere
with its ongoing business activities during the period prior to completion of
the Stock Purchase and, in any event, BTX expects that First Banks would agree
to permit any transaction exceeding such limitations if it would be desirable
and prudent to engage in the transaction.
The Stock Purchase is subject to the satisfaction or waiver of various
conditions before the respective parties are required to proceed to consummate
the transaction. In the case of First Banks, these conditions are as follows:
(i) the truthfulness on the closing date of the representations
and warranties made by BTX in the Agreement;
(ii) the compliance by BTX with all of its obligations under the
Agreement;
(iii) the absence of any litigation or administrative proceeding
wherein an unfavorable judgment would have any of the following consequences:
prevention or inhibition of the Stock Purchase, causing the rescission of any
of the transactions incident thereto, adversely affecting First Banks' right to
own the Class B Stock, adversely affecting the right of BTX or its subsidiaries
to own its assets or operate its businesses, causing the Regular BTX Common
Stock to cease to be listed on the NYSE (unless BTX causes such Common Stock to
be listed on the American Stock Exchange or to be eligible for trading in the
NASDAQ National Market System), holding one or more directors of BTX liable for
a breach of their fiduciary duties in connection with the Agreement, or
adversely affecting the financial condition, results of operations or business
or prospects of BTX and its subsidiaries taken as a whole;
(iv) the absence of any statutory, regulatory or administrative
action (an "Adverse Regulatory Action"), including enactment of a statute,
adoption of a rule or regulation or the entry of an order which would make the
Stock Purchase illegal;
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<PAGE> 16
(v) the receipt of all necessary regulatory approvals in order
to permit the Stock Purchase to be consummated, including the approvals of
BTX's stockholders and of the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board") and the Texas Department of Banking;
(vi) the receipt by First Banks of all documents required to be
received from BTX, in form and substance reasonably satisfactory to First Banks
(these documents include the requisite amendments to BTX's Certificate of
Incorporation as described in detail elsewhere in this Proxy Statement,
amendments to BTX's Bylaws, and a legal opinion of counsel to BTX with respect
to specified matters);
(vii) the absence of any adjustment in the number of shares of
Regular Common Stock to be received by the FDIC upon exercise of warrants held
by the FDIC to purchase 1,970,033 shares; and
(viii) the receipt by BTX of an opinion of BTX's investment
banking firm, McKenna & Company, to the effect that the Stock Purchase,
considered as a whole, is fair from a financial point of view to BTX and its
stockholders. The requisite opinion has been received by BTX and is discussed
herein under the heading "Opinion of Financial Advisor"; the full text of such
opinion appears as Appendix B to this Proxy Statement.
The obligation of BTX to consummate the Stock Purchase is subject to
the satisfaction or waiver of the following conditions:
(i) the truthfulness on the closing date of the representations
and warranties made by First Banks in the Agreement:
(ii) the compliance by First Banks with all of its obligations
under the Agreement;
(iii) the absence of any litigation or administrative proceeding
in which an unfavorable judgment would prevent, prohibit or inhibit the Stock
Purchase;
(iv) the absence of an Adverse Regulatory Action;
(v) the receipt of all necessary regulatory approvals in order
to permit the Stock Purchase to be consummated, including the approvals of
BTX's stockholders and of the Federal Reserve Board and the Texas Department of
Banking;
(vi) the receipt by BTX of the purchase price for the Class B
Stock and of all documents required to be received from First Banks, in form
and substance reasonably satisfactory to BTX (these documents include a legal
opinion of counsel to First Banks with respect to specified matters); and
(vii) the receipt by BTX of the opinion of its investment banking
firm, McKenna & Company, which is discussed herein under the heading "Opinion
of Financial Advisor". The requisite opinion has been received by BTX, and the
full text of the opinion appears as Appendix B to this Proxy Statement.
As of the date of mailing of this Proxy Statement, First Banks had
filed its applications for the requisite approvals of the Stock Purchase by the
Board of Governors of the Federal Reserve System (the "FRB") and the Texas
Department of Banking. Although neither of such approvals has been granted, BTX
believes that the prospects for such approval are favorable. There is a
mandatory waiting period of thirty (30) days following the receipt of approval
of the FRB before the Stock Purchase may be lawfully consummated.
Once the Stock Purchase has been completed, First Banks will have the
ability to elect a majority of members of the Board of Directors of BTX.
Section 6.01 of the Agreement requires that, following the closing of the Stock
Purchase, three directors of BTX shall resign,
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<PAGE> 17
and the remaining three directors shall take action to fill three vacancies on
the Board with three affiliates of First Banks: James F. Dierberg, Allen H.
Blake, and Mark T. Turkcan. Accordingly, the proposal for election of
directors contained elsewhere in this Proxy Statement (see the discussion under
the heading "PROPOSAL NO. 3: Election of Directors") contemplates that three
of the current BTX directors (Messrs. Brown, Leszczynski and Stanzel) will
resign their positions as directors of BTX immediately after the closing of the
Stock Purchase.
The proposed amendments to the BTX Certificate of Incorporation
provide for a change in the method of voting for the election of directors
which, if enacted, will become effective at the 1995 Annual Meeting of
Stockholders. This change would authorize cumulative voting by stockholders,
which may increase the possibility that BTX stockholders other than First Banks
will be able to elect one or more (but less than a majority) of the directors
of BTX. This change is discussed under the heading "PROPOSAL NO. 2: Amendments
to BTX's Certificate of Incorporation - Cumulative Voting."
Either party may terminate the Agreement under certain specified
conditions, which principally relate to the breach of the Agreement by the
other party, the failure of the other party to satisfy a condition precedent to
the completion of the Stock Purchase, the denial of a required regulatory
approval and the lapse of any time period during which such denial may be
appealed, or an unfavorable vote on the transaction by BTX's stockholders.
First Banks would also have the right to terminate the Agreement in the event
BTX or any of its subsidiaries were to become subject to an enforcement action,
regulatory agreement or supervisory agreement imposed by a bank regulatory
agency. Finally, the Agreement provides that it may be terminated by the
mutual consent of BTX and First Banks or by either party acting unilaterally if
the Stock Purchase has not been consummated on or before February 28, 1995.
Because of the fact that First Banks will be incurring significant
expenses to proceed toward the consummation of the Stock Purchase and will
necessarily forego other possible transactions which may represent desirable
investments, First Banks sought assurances that it would receive a benefit in
the event that the Stock Purchase is not consummated due to the actions of a
third party who consummates a competing transaction with BTX (a merger or
consolidation, a purchase from BTX of substantially all of its assets, or a
transaction in which such third party directly or indirectly acquires
beneficial ownership of 25% of BTX's outstanding voting stock). In that
regard, Section 9.02 of the Agreement would require that, if such an event
occurs within 21 months following termination of the Agreement in a transaction
announced publicly within 9 months after such termination, BTX will be liable
to pay First Banks the sum of $1,500,000 as a "break up" or termination fee.
The amount of this fee and the circumstances under which it would become
payable were resolved after lengthy negotiations in which BTX sought to provide
to First Banks a reasonable incentive to enter into the Agreement while
limiting the impact on BTX in the event that it is ultimately required to make
such a payment.
BTX'S REASONS FOR THE STOCK PURCHASE
BancTEXAS' Board of Directors believes that the investment by First Banks will:
(i) establish and maintain an appropriate level of capital
allowing room for anticipated growth;
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(ii) allow BTX to utilize certain of the products and services
of First Banks to increase revenues, reduce costs and increase earnings per
share;
(iii) enable BTX to pursue potential future cash acquisitions
(which it has not had the resources to do in the past) as well as to compete
more effectively in the market for stock-for-stock acquisitions and to offer
combined cash and stock acquisition proposals where appropriate; and
(iv) provide the opportunity for BTX to increase the level of
its banking activities necessary to cover its overhead including the costs of
being a publicly traded company.
BTX's Board of Directors believes that the increased financial,
operational, competitive and capital strength of BTX after the investment,
combined with the new product offerings and potential cost reductions brought
by First Banks, has the potential to increase earnings, return on assets and
return on equity and to enable BTX to take advantage of future acquisition
opportunities that would not otherwise be available.
The Board of Directors has received an opinion from McKenna & Company,
the investment banking firm engaged by BTX, stating that the terms of the Stock
Purchase, when taken as a whole, are fair, from a financial point of view, to
the holders of BTX Common Stock. Pursuant to its engagement letter with
McKenna & Company, BTX has paid McKenna & Company a fee of $200,000, has agreed
to pay it a fee of $100,000 at the closing of the Stock Purchase, and has
agreed to reimburse it for its reasonable out-of-pocket expense incurred in
connection with the rendering of its opinion and to indemnify it against
certain liabilities and expenses in connection with its services as financial
advisor to BTX, including certain liabilities under securities laws. See
"Opinion of Financial Advisor."
OPINION OF FINANCIAL ADVISOR
McKenna & Company is a regional investment banking firm with
experience in private equity transactions similar to the Stock Purchase and is
familiar with BTX, its business, its management and its relationship with
various bank regulators. As part of its investment banking business, McKenna &
Company is engaged in the valuation of businesses and their securities in
connection with mergers, acquisitions, private placements and valuations for
distribution of such securities.
McKenna & Company delivered its written opinion to the Board of
Directors on June 7, 1994 stating that, as of such date, the terms of the Stock
Purchase, when taken as a whole, are fair to the holders of BTX Common Stock
from a financial point of view. A copy of McKenna & Company's opinion is
attached as Appendix II hereto and should be read in its entirety by holders of
Regular Common Stock. No limitations were imposed on McKenna & Company by the
Board of Directors or management of BTX with respect to the investigation made
or procedures used by McKenna & Company in preparing or rendering its opinion,
and BTX, First Banks and their respective managements cooperated fully with
McKenna & Company in connection therewith. In rendering its opinion, McKenna &
Company relied, without independent verification, upon the accuracy and
completeness of the financial and other information publicly available or
furnished by BTX and First Banks for the purposes of such opinion. McKenna &
Company did not make or obtain any independent appraisal or valuation of any
assets or liabilities of either BTX or First Banks. McKenna & Company was not
asked to consider, and its opinion does not address, the relative merits of the
Stock Purchase as
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compared to any alternative business strategies that might exist for BTX or the
effect of any other business combinations in which BTX might engage. McKenna &
Company was not requested to seek, and has not sought, offers which are
competitive with the terms of the Stock Purchase; however, McKenna & Company
did participate on behalf of BTX in a number of negotiations with potential
acquisition partners and equity investors over the past two years, which
culminated in the present proposed Stock Purchase.
The Board of Directors of BTX originally engaged McKenna & Company in
July 1991 to assist BTX in its efforts to raise additional capital and to make
acquisitions. Such engagement agreement was extended by mutual agreement
through the most recent such extension dated February 28, 1994. Such
engagement entitled McKenna & Company to a fee equal to $100,000 plus 2% of the
value of all consideration received in an acquisition, merger or sale of BTX or
5% of the value of securities sold in a capital raising transaction including a
transaction such as the Stock Purchase. In March 1994, BTX and McKenna &
Company decided that it would be inappropriate for McKenna & Company to charge
a 5% fee with respect to the Stock Purchase and, because BTX required
assistance in negotiating the terms of the Stock Purchase and its Board of
Directors required a fairness opinion with respect to the terms of the Stock
Purchase, McKenna & Company and BTX negotiated a fee of $300,000 for the
services of McKenna & Company, including the preparation and delivery of a
fairness opinion.
During the negotiations with First Banks, which were conducted
principally by Mr. Collins on behalf of BTX and Mr. Dierberg on behalf of First
Banks, Mr. McKenna served as an advisor to Mr. Collins regarding various
financial issues which were discussed. He also provided BTX and First Banks and
their representatives with information during the negotiations regarding such
issues, primarily relating to the factors considered in determining the
purchase price to be paid by First Banks, the formula for determination of the
price at which First Banks is to have the right to purchase shares of BTX stock
in the future, the amount of the "break-up" fee and the circumstances under
which it could become payable.
In rendering its opinion, McKenna & Company reviewed (i) certain
publicly available business and financial information relating to BTX and First
Banks as well as pro forma and financial forecasts and other data for BTX that
were provided by BTX; (ii) the terms of the Stock Purchase as set forth in the
Agreement in relation to, among other things, current and historical market
prices and trading values of BTX; BTX's earnings, book value, return on assets,
return on equity and equity to assets ratio; the historical and projected
growth rates of BTX, and the capitalization and financial condition of BTX and
First Banks; (iii) the financial terms of certain other recent transactions
involving other parties, which McKenna & Company considered comparable to the
Stock Purchase; (iv) certain financial, stock market, and other publicly
available information relating to the business of other companies whose
operations McKenna & Company considered comparable to BTX; (v) reductions and
revenue enhancements available to BTX from its affiliation with First Banks
after the Stock Purchase; (vi) the results of and responses received in numerous
attempts since January 1993 to raise equity for BTX or to arrange
stock-for-stock mergers or acquisitions; (vii) and such other financial,
economic, and market criteria as McKenna & Company deemed necessary in arriving
at its opinion. McKenna & Company also met with certain senior officers and
other representatives of BTX and First Banks to discuss the business,
operations, and prospects of BTX and First Banks after the Stock Purchase is
made.
The following is a summary of the analyses which McKenna & Company
presented to the BTX Board of Directors on March 17, April 21, and May 19, 1994
and in written material supplied with the opinion and includes a discussion of
the material factors which formed the basis for the written opinion delivered
on June 7, 1994.
Previous Capital Raising and Merger and Acquisition Activities. Over
the course of the past 18 months (since the BTX acquisition of First Banks/Las
Colinas on December 31, 1992), BTX has pursued an active program to acquire
capital through equity raising and merger and acquisition activities ("Equity
Transactions") and to better utilize its net operating losses (NOLs). McKenna
& Company, acting as a representative of BTX, and BTX acting independently,
have approached or have been approached by approximately 28 parties since
January 1993 with
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respect to such possible Equity Transactions. In approximately 20 of such
contacts there was no substantive result of the approach. BTX and McKenna &
Company concluded that such lack of interest in discussing an Equity
Transaction was due in part to the approached party's lack of interest in
accepting BTX Common Stock at the then current market prices.
In eight of the approximately 28 approaches there was a level of
interest which led BTX to pursue additional discussions and varying levels of
negotiation with the other party, as follows:
January 1993 - BTX entered into confidentiality agreements and made
an offer to acquire for stock a profitable,
overcapitalized bank in Dallas with approximately $60
million in total assets. The offer, which was priced
at approximately 1.9 times book value (at a time
when BTX stock was trading at approximately $2.00 per
share) was turned down by the Dallas bank for, among
other reasons, the value it placed on BTX stock which
was trading in excess of 3.0 times fully diluted book
value. It was believed by BancTEXAS that in
evaluating the offer the target bank placed a value
on BTX's stock of approximately book value.
February 1993 - BTX and McKenna & Company negotiated with an investor
group to invest approximately $5,000,000 in BTX in
the form of a part stock, part debenture offering
which might be combined with a rights offering to
stockholders. This negotiation failed when BTX could
not convince the investors of BTX's financial
capacity to service the projected subordinated debt
or to pay preferred dividends.
July 1993 - BTX entered into confidentiality agreements, met with
and conducted mutual due diligence sessions with
respect to a potential merger of equals with a
privately held Houston bank holding company with
assets of approximately $175 million. In these
discussions, representatives of BTX's Board of
Directors met with and discussed the merger with
representatives of the Board of Directors of the
Houston bank. The proposed merger terms were
ultimately unacceptable to BTX because the Houston
bank offered to exchange its stock at a premium to
its book value while it anticipated making negative
adjustments to the BTX book value prior to the
exchange of stock, such that the exchange ratio would
be dilutive to BTX stockholders and would give the
Houston bank a controlling interest both in the
number of fully diluted shares and in the number of
seats on the resulting Board of Directors.
August 1993 - BTX entered into confidentiality agreements and
conducted mutual due diligence sessions with respect
to the acquisition of a Houston bank with assets of
approximately $75 million. Representatives of BTX
met with the Executive Committee of the Houston bank
and submitted an indication of interest in acquiring
the bank at approximately 1.75 times book value for
the bank, payable in BTX common stock. This offer
was ultimately found to be unacceptable
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to the target bank's Board of Directors, who
counter-offered that the owners would accept BTX
stock valued at the lower of market price or 2.07
times fully diluted book value (then equal to $1.28
per share), with the valuation of their bank at 2.07
times book value. During the negotiation, the
Houston bank accepted a competing offer for a price
of approximately 2.12 times book value and did not
ask that other bank to arbitrarily mark down the
price of its common stock exchanged in the
stock-for-stock acquisition.
Late 1993
through January
1994 - BTX entered into discussions with a Texas bank with
assets in excess of $100 million with respect to a
proposed transaction wherein BTX and the other bank
would be merged and an investor group would invest
approximately $10 million to purchase common stock
sufficient to meet regulatory capital requirements
for the combined banks. The Texas bank had marginal
capital and had a relatively large non-performing
loan portfolio. It was originally anticipated by the
investor group that they would invest money in the
Texas bank for a controlling interest in the bank at
a price that was at or below book value and would
then merge the newly capitalized bank into BTX at
approximately 2.0 times book value. After
considerable discussion and negotiations, including
review by the BTX Board of Directors, it was
determined that such a transaction would be dilutive
to BTX stockholders and not fair because it would
permit a short term capital gain of approximately $10
million to benefit the investor group. In January
1994 BTX made a proposal to this bank to combine both
banks and, after the merger, to sell the investor
group BTX common stock at approximately $1.00 per
share. Ultimately, however, without formal rejection
of the proposed terms, the investor group did not
make its investment in the other bank and BTX did not
believe it was prudent to continue discussions of a
merger without proof that the investment would ever
occur. In January 1994 the discussions were formally
terminated.
December 1993
through February
1994 - Representatives of BTX negotiated a confidentiality
agreement, conducted due diligence, met with the
Board of Directors of and made an offer to acquire a
Texas based non-bank financial institution in a
stock-for-stock transaction. In this transaction BTX
offered to issue approximately 3,700,000 of its
shares to acquire the financial institution at
approximately 1.8 times the $3,100,000 net book value
of the institution (or approximately $5,600,000).
After considerable analysis by its Board of Directors
and its investment banker, the other financial
institution counter-offered, proposing a transaction
in which it would receive 11,242,000 BTX
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shares (with a market value of approximately
$16,900,000). The BTX Board rejected the
counter-offer as significantly dilutive to its
stockholders and in excess of the fair consideration
for the assets that would have been acquired.
February 1994 - BTX met with management, negotiated a confidentiality
agreement and analyzed due diligence information with
respect to the acquisition of a profitable $230
million multi-branch Houston bank that was seeking an
acquirer in a negotiated auction. BTX indicated its
desire to make a proposal at a significant premium to
book value (at or slightly in excess of 2.0 times
book value) in a stock-for-stock transaction. The
target bank subsequently accepted a cash offer from
another bank holding company at approximately 1.6
times book value.
March 1994 - BTX supplied financial statements to a large Texas
based subsidiary of one of the largest bank holding
companies in the United States with respect to a
possible all cash acquisition of BTX. After analysis
of such information, the potential acquirer indicated
that because of BTX's earnings record and book value
per share, it could not proceed to make an offer to
acquire BTX at or close to its then current stock
market price of approximately $1.50 per share.
As a result of the responses of other financial institutions regarding
these potential Equity Transactions, BTX and McKenna & Company concluded that
BTX has only limited prospects of successfully concluding transactions of the
sort contemplated over this 18 month period. The reasons for not closing these
previous attempts have been numerous; however, the general theme in each
possible Equity Transaction has been the unwillingness of other parties to
accept BTX stock, or pay BTX stockholders a price that is reasonable in light
of the average market value of BTX common stock during this period of
approximately $1.50 per share, which is approximately 2.0 times book value per
primary share and approximately 2.4 times book value per fully diluted share.
Analysis of Potential Rights Offering. McKenna & Company analyzed the
costs and potential benefits of a rights offering of Class B Stock to BTX
stockholders simultaneously with the Stock Purchase. The Agreement provides
that First Banks has the right to maintain a minimum 55% ownership. Therefore
the amount of a potential rights offering to BTX stockholders would be only up
to approximately 5.7 million shares or approximately $4.6 million if priced at
$.80 per share. In the opinion of McKenna & Company, the terms of the Class B
Stock, including non-transferability, the absence of liquidity and reduced
dividends for the first five years, made a potential investment in shares of
the Class B Stock generally unsuitable for individual stockholders. In any
event, First Banks' requirement that it maintain an ownership position of at
least 55% of all BTX voting stock also indicated that a rights offering would
not be feasible. For these reasons, McKenna & Company advised that the
anticipated low acceptance rate of a rights offering would generally make it
uneconomic to offer such a proposal to BTX's stockholders. In view of the
advice received from McKenna & Company and its assessment that a rights
offering would add costs and delays to the transaction without
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<PAGE> 23
necessarily producing a commensurate benefit to BTX, the BTX Board of Directors
decided not to pursue a rights offering in connection with the Stock Purchase.
Comparable Break-up Fee Analysis. McKenna & Company analyzed 14
recent cash acquisition transactions involving banks of similar size in the
Texas market. The total consideration in such transactions ranged from
$7,800,000 to $187,000,000. In three such transactions where break-up fees
were negotiated, the break-up fee ranged from $1,000,000 (3.64% of total
consideration) to $6,000,000 (7.41% of total consideration) with an average of
$3,333,333 (5.18% of total consideration) versus the $1,500,000 (5.00% of total
consideration) as proposed in connection with the Stock Purchase.
Comparable Transaction Analysis with Respect to Price Per Share.
Terms of the Stock Purchase generally are not similar to other recent
transactions where control of a bank has been acquired by a purchaser. McKenna
& Company reviewed one other preferred stock and one debenture offering and 15
all cash bank acquisitions in Texas from February 1992 to the present for banks
with total assets under $900,000,000 (the "Peer Group"). The total
consideration for such transactions ranged from $590,000 to $58,000,000.
McKenna & Company calculated, among other variables, multiples of the
price per share of the Stock Purchase and the transaction value for each of the
comparable Peer Group transactions with respect to each company's respective
net income, book value, total assets, return on assets ("ROA"), return on
equity ("ROE") and equity to assets ratio. These transaction values were
compared with those that would result from the Stock Purchase at $.80 per
share, generating an implied price to book value for the Stock Purchase on a
per share basis. Such valuation was found on an overall basis to be
substantially above the range of the multiples for the Peer Group and therefore
beneficial to stockholders of BTX. This analysis produced an implied valuation
of the premium to book value per share based generally on the respective ROA,
ROE of the Peer Group transactions as follows:
(A) For the Peer Group, the ROA as compared to the valuation of
BTX based on the price to book value of the Stock Purchase was
as follows:
PEER GROUP BANK ROA PRICE TO BOOK VALUE
--------------- --- -------------------
High 2.57% 1.60
Low .08% .74
Mean 1.21% 1.15
Median 1.15% 1.07
BTX(a) .07% 1.08(a)
BTX(b) .07% 1.29(b)
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<PAGE> 24
(B) For the Peer Group, the ROE as compared to the valuation of
BTX based on the price to book value of the Stock Purchase was
as follows:
PEER GROUP BANK ROE PRICE TO BOOK VALUE
--------------- --- -------------------
High 34.14% 1.60
Low .88% .74
Mean 13.99% 1.15
Median 12.89% 1.07
BTX(a) 1.49% 1.08(a)
BTX(b) 1.49% 1.29(b)
______________________________
(a) Price to book value using $.80 per share based on primary shares
outstanding.
(b) Price to book value using $.80 per share based on fully diluted
shares.
The results of these analyses show that for BTX, with earnings of $.01
per share for the year ended December 31, 1993, ROA of .07% and ROE of 1.49%,
the price per share of $.80 paid by First Banks for the Stock Purchase is
priced at 1.08 times book value per primary share and 1.29 times book value per
fully diluted share, which is a significant premium to other comparable
transactions in the Peer Group and is beneficial to BTX stockholders.
Reasonableness of the Price Per Share of the Antidilution Provision.
McKenna & Company analyzed the reasonableness of the premium of book value per
share available to First Banks in the proposed 7 1/2 year period during which
First Banks will have the right to purchase additional stock to maintain 55%
ownership of the voting stock of BTX, for consolidation of BTX by First Banks
for Federal Reserve Board regulatory accounting purposes. Such additional
shares can be purchased at 106.67% of tangible primary book value in years one
to five, 113% of tangible primary book value in year six and 120% of tangible
primary book value thereafter in connection with future issuances of Regular
Common Stock or other voting securities by BTX.
In its analysis of premiums to book value in future years, McKenna &
Company estimated the premium that acquirers have recently paid in Peer Group
transactions when correlated against the ROA and ROE of the acquired bank.
McKenna & Company then correlated such premiums to book value to the ROA and
ROE of BTX pro forma after the effect of enhancements, to the actual ROA and
ROE of First Banks and to projected ROA and ROE of the top tier of banks in the
Peer Group. The result of this analysis shows that, based on recent Peer Group
premiums to book value at various ROA and ROE results, if such premiums are
similar in future years, then the premiums proposed in the antidilution
provision, when factored with the other terms of the Stock Purchase, are
reasonable.
Relationship of Current Market Value to the Price of the Stock
Purchase. McKenna & Company analyzed the $.80 per share price of the Stock
Purchase to the current stock price of $1.25 per share on the date that the
Stock Purchase was announced. Due to (i) BTX's low level of profitability and
the significant premium of the stock price to, among other things, BTX's book
value and multiple of its earnings per share, (ii) lack of success in a number
of previous
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<PAGE> 25
potential transactions where potential acquirers of BTX stock concluded that
the then current market price of the BTX common stock was substantially higher
than the price at which such acquirers were willing to accept BTX stock, (iii)
the prevailing market for private equity of smaller publicly traded companies,
(iv) the terms of the Class B Stock which among other provisions included no
liquidity for five years, limited transferability, reduced dividend privileges,
parri passu treatment with the Regular Common Stock in liquidation or sale and
the assumption that First Banks would make additional cash investments in BTX
to maintain its ability to consolidate its investment for bank regulatory
purposes, McKenna & Company concluded that the approximate 38% discount to the
market price on the date of announcement of the Stock Purchase was reasonable.
No Peer Group company or transaction used in the above analysis is
wholly comparable to BTX or First Banks, or to the contemplated Stock Purchase.
Accordingly, an analysis of the results of the foregoing is not mathematical;
rather it involves complex considerations and judgments concerning differences
in operations and financial characteristics of the parties, the Stock Purchase,
acquisition comparables and other factors that could affect the public trading
and acquisition values of the companies in the Peer Group analysis.
The summary of McKenna & Company's analyses set forth above is a
general description of the material issues addressed in its presentation to the
BTX Directors on March 17, April 21 and May 19, 1994 and in additional written
material distributed to the Board of Directors with the delivery of its
opinion. The summary is not, however, a complete description of the analyses
performed, or the matters considered by McKenna & Company in rendering its
opinion.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. McKenna &
Company believes that the analyses must be considered as a whole and that
selecting portions of the analyses, without considering all of the analyses,
would create an incomplete view of the processes underlying its opinion. In
its analyses, McKenna & Company made numerous assumptions with respect to
industry and company performance, general business and economic conditions, and
other matters, many of which are beyond the control of BTX. The analyses by
McKenna & Company are not necessarily indicative of actual values, which may be
significantly more or less favorable than those suggested by such analyses.
Additionally, analyses relating to the Stock Purchase do not purport to be
appraisals nor do they necessarily reflect the prices at which transactions in
BTX common stock have taken or will take place. Because such analysis and the
corresponding impact on BTX common stock price are inherently subject to
uncertainty, none of BTX or McKenna & Company management, the Board of
Directors of BTX or Partners of McKenna & Company, or any other person makes
any representation or offers any assurance regarding such matters.
OPERATIONS AFTER THE STOCK PURCHASE; POTENTIAL EFFECTS OF THE TRANSACTION
Immediately following the consummation of the Stock Purchase, it is
anticipated that the composition of the BTX Board of Directors will change, as
discussed elsewhere in this Proxy Statement, with Messrs. Dierberg, Blake and
Turkcan being appointed as directors. It is not anticipated that there will be
any significant changes in the management of BTX or BankTEXAS N.A., its
subsidiary bank.
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<PAGE> 26
It should be noted that the Stock Purchase will change the nature of
BTX's ownership structure from that of a widely-held company with no dominant
or even 5% stockholder to one in which First Banks will have the power to exert
control. Consideration was given by management and the Board of Directors to
whether this change would adversely affect the interests of BTX's stockholders.
In particular, the Board recognized that the new structure would impede any
potential takeover of BTX by a third party (who would have no ability to
acquire control unless First Banks were to voluntarily agree to sell its
position).
However, management and the Board of Directors concluded that,
particularly in light of BTX's experiences in seeking to identify potential
investors and/or acquisition partners (see the discussion of such efforts in
the section above under the heading "Opinion of Financial Advisor"), the Stock
Purchase and the potential positive effects thereof on BTX's long-term
prospects represent a more favorable step for existing stockholders than other
feasible alternatives.
The following is a brief discussion of the material income tax effects
of the Stock Purchase. For federal income tax purposes, BTX currently has
approximately $65 million in NOLs which have accumulated in past years and
expire between 1994 and 2008 (with approximately $20 million expiring in 1994).
To the extent that BTX is able to generate net income that would otherwise be
taxable, the NOLs may generally be used to offset such taxable income (subject
to certain limitations and exceptions). However, the amount of NOLs that may
be used to offset income in any year is substantially restricted to the extent
that a corporation such as BTX undergoes an "ownership change" as such term is
defined in applicable federal income tax rules.
The Stock Purchase is likely to result in an ownership change for the
purposes of such rules, although the determination of whether or not such a
change will occur will depend upon various factors, particularly the market
value of the outstanding Regular Common Stock at the time that the Stock
Purchase occurs. The Board of Directors considered the possible impact on BTX
if an ownership change were deemed to occur as a result of the Stock Purchase
and determined that the potential benefits of the transaction outweigh any
adverse effects which might accrue if there is an ownership change. BTX's
recent earnings have not been sufficient to utilize a meaningful amount of
expiring NOLs, and, despite the efforts of management to improve BTX's
performance, its current prospects do not suggest that this situation will
improve substantially in the foreseeable future. While BTX has investigated
various possible transactions which would enable BTX to utilize a greater
amount of the NOLs than has occurred in the past, possibly in one or more
transactions with outside investors, the rules and limitations applicable to
such transactions are extremely complex, and there is considerable doubt that
such transactions could be successfully undertaken.
Furthermore, the Board of Directors considered that, even with an
ownership change, the annual limitation on the amount of NOLs that could be
used in future years to offset net income (the actual amount of which will not
be determinable until after the Stock Purchase has been completed, determined
through a calculation based on the deemed fair market value of BTX for this
purpose and a benchmark long-term rate for tax-exempt securities) should
permit BTX to obtain some ongoing benefit from the NOLs. In that regard, BTX
believes that the capital infusion to be realized from the Stock Purchase
should have a positive effect on BTX's earnings, for reasons discussed
elsewhere in this Proxy Statement, and thereby enhance the long-term prospects
of utilizing a meaningful portion of the NOLs.
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<PAGE> 27
RECOMMENDATION OF THE BTX BOARD OF DIRECTORS
Under rules of the New York Stock Exchange, approval of BTX's
stockholders is required for any transaction or series of transactions in which
20% or more of the voting stock of BTX is to be issued. The favorable vote of
the holders of a majority of the shares of Common Stock represented at the
Annual Meeting, in person or by proxy, is necessary in order to approve the
Stock Purchase.
Although Proposal No. 1 and Proposal No. 2 are presented as separate
proposals, they are closely related. The resolutions to be presented at the
Annual Meeting will provide that both proposals must be approved or else
neither will go into effect. If Proposal No. 1 is not enacted at the Annual
Meeting, then Proposal No. 2 would not be presented for a vote, and no
amendments to BTX's Restated Certificate of Incorporation would be enacted.
The Board of Directors of BTX unanimously recommends that the
stockholders vote FOR Proposal No. 1, approval of the Stock Purchase.
PROPOSAL NO. 2: AMENDMENTS TO BTX'S CERTIFICATE OF INCORPORATION
Proposal No. 2 embodies several amendments to the BTX Restated
Certificate of Incorporation (the "Certificate of Incorporation") which are
required by the Agreement (collectively, the "Amendments"). Appendix III
included with this Proxy Statement sets forth the text of the Proposed
Certificate of Incorporation incorporating the proposed amendments. This
discussion is qualified in its entirety by the text of the Proposed Certificate
of Incorporation, which is incorporated herein by reference.
Authorization of Class B Stock. Article Fourth of the Proposed
Certificate of Incorporation would authorize the issuance of up to 60,000,000
shares of Class B Stock, of which 37,500,000 shares are to be issued to First
Banks in the Stock Purchase. The remaining 22,500,000 shares would be
available for issuance in any future transaction authorized by the Board of
Directors, although it is not presently contemplated that such additional
shares would be used except for future issuances of Class B Stock if and when
First Banks exercises its rights to purchase additional shares in connection
with a future issuance of shares of Regular Common Stock by BTX pursuant to
Section 6.02 of the Agreement, as discussed above under "Proposal No. 1 -
Approval of the Stock Purchase - Terms of the Agreement." Article Fourth also
sets forth the powers, rights and preferences of the Class B Stock with regard
to voting, dividends, conversion into shares of Regular Common Stock and other
related matters, the material terms of which are described elsewhere in this
Proxy Statement.
In addition, Article Eighth of the Proposed Certificate of
Incorporation would provide that BTX's Bylaws may not be amended without the
approval of First Banks.
Authorization of Additional Shares of Regular Common Stock. Article
Fourth would also be amended to increase from 50,000,000 to 100,000,000 the
number of shares of Regular Common Stock which are available for issuance. As
of June 30, 1994, 20,047,025 shares of Regular Common Stock were issued and
outstanding, and 4,879,070 shares were reserved for issuance upon the exercise
of presently outstanding options, warrants and debentures.
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<PAGE> 28
The terms of the Class B Stock will require that BTX immediately
reserve for issuance 37,500,000 shares of Regular Common Stock which will
become issuable upon conversion of the same number of shares of Class B Stock
by First Banks once the Class B Stock becomes convertible, and it is necessary
for holders of Regular Common Stock to authorize additional shares of Regular
Common Stock in order to do so. In addition, the proposed amendment is
intended to establish a substantial number of authorized shares to enable the
Board of Directors, without the necessity of seeking further approval by
stockholders, to issue additional shares of Regular Common Stock if attractive
opportunities to do so arise (such as potential acquisitions of desirable
target banks for stock or for a combination of cash and stock).
Finally, it is appropriate to authorize additional shares of Regular
Common Stock to allow for the fact that First Banks may acquire additional
shares of Class B Stock in the future, and it will be necessary to have
authorized but unissued shares of Regular Common Stock available to be reserved
for issuance upon conversion of such Class B Stock.
There is no specific pending or proposed transaction, except for the
Stock Purchase, which is under consideration by BTX which would involve issuance
of the additional shares of Regular Common Stock proposed to be authorized.
Cumulative Voting. Article Fourth (B) 2(b) of the Proposed
Certificate of Incorporation provides for cumulative voting by the holders of
shares of Regular Common Stock and of Class B Stock. This means that, in any
election of directors after the adoption of this amendment, each holder would
have the right to cast as many votes as equals the product of the number of
directors to be elected times the number of shares held by such stockholder,
and to cast all of such votes for one candidate or divide the votes among
candidates in any amounts chosen by that stockholder. For example, if in a
particular election there were to be six directors elected and a stockholder
were to own 100 shares of Regular Common Stock, then he or she could cast a
total of 600 votes; all 600 votes could be cast for one nominee, or the 600
votes could be distributed among the nominees for the six seats on the Board in
any combination chosen by the stockholder.
The general effect of the adoption of cumulative voting with respect
to a company such as BTX, which after the Stock Purchase will be subject to
First Banks' control, is to increase somewhat the possibility that stockholders
whose holdings amount to less than a majority of the outstanding voting stock
may elect one or more (but less than a majority) of the directors.
In the absence of cumulative voting, First Banks, as owner of a
majority of all outstanding voting shares of BTX (i.e., Regular Common Stock
plus Class B Stock) would have the power to elect all of the members of the
Board of Directors (irrespective of the number of directors to be elected at
any given meeting). However, in a contested election in which cumulative
voting were permitted and a sufficient number of minority stockholders chose to
allocate their votes in a coordinated manner, such minority stockholders could
elect one or more directors even if such election were opposed by First Banks.
The actual results in any election contest would depend upon several
factors, including the number of stockholders who would choose to take
advantage of cumulative voting and the number of directors to be elected (in an
election governed by cumulative voting, the relative number of votes needed to
elect at least one director declines as the total number of directors to be
elected increases). It should also be noted that cumulative voting would never
affect the
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<PAGE> 29
outcome of an election unless there were more nominees for the position of
director than the number of positions to be filled.
The favorable vote of the holders of a majority of the outstanding
stock entitled to vote is necessary in order to approve the Amendments.
The Board of Directors of BTX unanimously recommends that the
stockholders vote FOR Proposal No. 2, the adoption of the Amendments.
PROPOSAL NO. 3: ELECTION OF DIRECTORS
The Board of Directors recommends that the stockholders vote to
re-elect Messrs. Brown, Collins, Crocco, Leszczynski, Stanzel and Story as
directors for a one year term. If Proposals No. 1 and 2 are approved by BTX's
stockholders, simultaneously with the consummation of the Stock Purchase
authorized by Proposal No. 1, Messrs. Brown, Leszczynski and Stanzel have
indicated that they intend to resign as directors, and the remaining directors
have indicated that they will elect James F. Dierberg, Allen H. Blake and Mark
T. Turkcan to fill the vacancies caused by such resignations. It is
anticipated that Messrs. Dierberg, Blake and Turkcan will then serve as
directors of BTX until the 1995 Annual Meeting of Stockholders.
NOMINEES
The Board of Directors currently consists of six members. Six
directors are to be elected at the Annual Meeting. Each of the nominees is
presently a director of BTX.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING LAST
DIRECTOR OF FIVE YEARS AND DIRECTORSHIPS
NAME AGE BTX SINCE OF PUBLIC COMPANIES
---- --- ----------- --------------------------------
<S> <C> <C> <C>
Richard L. Brown (1)(2)(3) 55 1987 President and Chief Executive Officer of Houston
General Insurance Group Inc., Fort Worth, Texas
since 1986.
Nathan C. Collins (1)(4) 59 1987 Chairman of the Board, President and Chief
Executive Officer of BTX since November 1, 1987;
prior thereto, Mr. Collins served as an executive
officer of Valley National Bank of Arizona for more
than ten years.
Charles A. Crocco, Jr. 55 1988 Partner in the law firm of Lunney, Crocco, De Maio
& Camardella, P.C., New York City since 1968;
director of The Hallwood Group Incorporated
(merchant banking) since January 1981; director of
Showbiz Pizza Time, Inc. since January 1988.
Joseph J. Leszczynski (1)(2) 62 1987 Chairman of the Board of T.E.L. Associates, Inc., a
management consulting firm; from April 1986 until
December 1990 Chairman of the Board and Chief
Executive Officer of Optic-Electronics Corporation
(night vision devices).
Thomas A. Stanzel 64 1987 Private investor, Dallas, Texas since 1982.
</TABLE>
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<PAGE> 30
<TABLE>
<S> <C> <C> <C>
Edward T. Story, Jr. (2)(4) 50 1987 President and Chief Executive Officer of SOCO
International, Inc., a majority-owned subsidiary of
Snyder Oil Corporation, engaged in international
oil and gas operations, since August 1991; from
August 1990 until August 1991, Chairman of Thaitex
Petroleum Company (oil and gas exploration and
production); from August 1981 to August 1990 Vice
Chairman and Chief Financial Officer of Conquest
Exploration Company (oil and gas exploration and
production); director of Hi-Lo Automotive, Inc., an
auto parts company, since 1987.
</TABLE>
________________________________
(1) Member of the Executive Committee.
(2) Member of the Audit Committee.
(3) Member of the Personnel Committee.
(4) Member of the Nominating Committee.
Although BTX does not anticipate that any of the above-named nominees
will refuse or be unable to accept or serve as a director of BTX, the persons
named in the enclosed form of proxy intend, if any nominee becomes unavailable,
to vote the shares represented by the proxy for the election of such other
person or persons as may be nominated or designated by management, unless they
are directed by proxy to do otherwise.
Assuming the presence of a quorum, the affirmative vote of the holders
of a majority of the shares of common stock represented at the Annual Meeting
is required for the election of directors.
Although Messrs. Dierberg, Blake and Turkcan are not nominees for
director, certain biographical information regarding each of them is presented
in the table below in light of the fact that, if Proposals No. 1 and 2 are
approved, they will be appointed to the Board of Directors of BTX shortly after
the Annual Meeting. None of such persons is a director of any publicly-held
company other than First Banks.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
NAME AGE AND POSITIONS HELD WITH FIRST BANKS, INC.
---- --- -------------------------------------------
<S> <C> <C>
James F. Dierberg 56 Chairman of the Board and Chief Executive Officer of First
Banks since 1988; director of First Banks since 1979;
President of First Banks, 1979-1992 and May 1994-present.
Various positions as officer and/or director of corporations
owned by Mr. Dierberg and/or family members since 1957.
Allen H. Blake 51 Senior Vice President of First Banks since 1992; Secretary and
Director of First Banks since 1988; joined First Banks as Vice
President and Chief Financial Officer in 1984.
</TABLE>
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<PAGE> 31
<TABLE>
<S> <C> <C>
Mark T. Turkcan 38 Senior Vice President, Retail Banking of First Banks, 1994;
Vice President, Mortgage Banking of First Banks since 1990;
joined First Banks when Clayton Savings and Loan Association,
St. Louis, Missouri (now First Bank A Savings Bank) for whom
Mr. Turkcan was employed in various capacities since 1985, was
acquired by First Banks in 1990.
</TABLE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
ELECTION OF EACH OF THE INDIVIDUALS NOMINATED FOR ELECTION AS A DIRECTOR.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors has an Executive Committee, an Audit Committee,
a Personnel Committee and a Nominating Committee, the members of which are
listed above under "Election of Directors - Nominees." Set forth below is a
description of the functions of those committees.
Executive Committee. The Executive Committee exercises all the power
and authority of the Board of Directors in the management of the business and
affairs of BTX in the interim between meetings of the Board of Directors.
Audit Committee. The duties of the Audit Committee include the making
of recommendations to the Board of Directors for engaging and discharging BTX's
independent auditors; reviewing and approving the engagement of the independent
auditors for audit and nonaudit services and considering the independence of
the auditors prior to engaging them; reviewing with the independent auditors
the fee, scope and timing of the audit and nonaudit services; reviewing the
completed audit with the independent auditors regarding the conduct of the
audit, accounting adjustments, recommendations for improving internal controls
and any other significant findings during the audit; meeting periodically with
management and BTX's internal auditor to discuss internal auditing, accounting
and financial controls; reviewing internal accounting and auditing procedures
with BTX's financial staff; and initiating and supervising any special
investigations it deems necessary.
Personnel Committee. The Personnel Committee reviews the compensation
of the executive officers, administers the severance plans, administers and
interprets the BancTEXAS Group Inc. 1990 Stock Option Plan and is authorized to
grant stock options and to take other actions under such plans.
This committee also reviews the compensation and benefits for the
senior managers of BTX on an individual basis and reviews and sets guidelines
for salary administration and various benefit programs for all employees. It
also advises and assists management in formulating and implementing policies
designed to assure the selection, development and retention of key personnel.
On behalf of the Board of Directors of BTX, this committee reviews the
performance
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<PAGE> 32
and administration of the Pension Plan and the adequacy of its funding and the
performance and administration of the 401-K Plan.
Nominating Committee. The Nominating Committee periodically reviews
the size and composition of the Board of Directors and is responsible for
recommending nominees to serve on the Board of Directors. Nominees will be
selected on the basis of recognized achievements and their ability to bring
various skills and experience to the deliberations of the Board. In carrying
out its responsibilities, it is expected that the Nominating Committee will
consider candidates recommended by other directors, officers and stockholders.
Written suggestions for candidates, accompanied by a written consent of the
proposed candidate to serve as a director if nominated and elected, a
description of his or her qualifications and other relevant biographical
information must be sent to the Secretary of BTX at its principal executive
offices and received by BTX on or before December 31, 1994, to be considered
for next year's Annual Meeting of Stockholders.
Board and Committee Meetings. The Board of Directors held 12 meetings
in 1993, including regular and special meetings. During 1993, there were four
meetings of the Audit Committee, no meetings of the Executive Committee, two
meetings of the Personnel Committee and one meeting of the Nominating
Committee. During 1993, all directors of the Company attended more than 90% of
the aggregate of the number of meetings of the Board of Directors and the
meetings held by all committees of the Board of Directors on which they served.
DIRECTOR COMPENSATION
During 1993, each director of BTX (excluding Mr. Collins who was not
paid for his services as a director) was paid $5,000 as an annual retainer and
was paid $750 for each meeting of the Board of Directors attended. In
addition, the chairman of each committee was paid an annual retainer of $2,000
and each member of a committee was paid $500 for each committee meeting
attended. Also, directors traveling more than 75 miles to attend a meeting
were reimbursed for their actual travel expenses. On September 5, 1990 the
Company entered into a consulting agreement with Edward T. Story, Jr., whereby
he is, when requested by the Chairman of the Board, obligated to assist with
certain capital formation projects. Pursuant to this agreement Mr. Story was
paid $1,000 in 1992 and zero in 1993.
During 1993 each director of BTX also served as director of BANKTEXAS
N.A., the company's wholly-owned banking subsidiary (the "Bank"). With the
exception of Mr. Collins, who was not paid for his services as a director, each
director received an annual retainer of $2,500 from the Bank and was paid $250
for each Board meeting attended. Since all of the meetings of the Bank's Board
were held on the same day as those for the BTX Board none of the directors was
reimbursed any additional sums for travel.
EXECUTIVE MANAGEMENT
The executive management of BTX as of June 30, 1994 was as follows:
NATHAN C. COLLINS, 59, was elected Chairman of the Board, President
and Chief Executive Officer of the BTX effective November 1, 1987. Since
November 1987, Mr. Collins has served as Chairman of the Board of BankTEXAS
N.A. and its predecessors. In April 1992 he was elected President and Chief
Executive Officer of the Bank. From 1986 to October 1987,
-29-
<PAGE> 33
Mr. Collins was Executive Vice President, Manager of the Asset/Liability
Management Group and Senior Credit Officer of Valley National Bank of Arizona.
Prior to that time, he served for more than ten years in various positions as
an executive officer of Valley National Bank of Arizona.
RICHARD H. BRAUCHER, 58, was elected Senior Vice President of BTX in
July 1981. Prior to that time, Mr. Braucher served as a Vice President of BTX
in addition to his present role as both General Counsel to and Secretary of BTX
and the Bank. Mr. Braucher has been with BTX since 1979.
D. KERT MOORE, 46, joined BTX in January 1983. Mr. Moore served as
Senior Vice President, Controller and Cashier of BancTEXAS Dallas from October
1985 until January 1990. Mr. Moore was elected Controller, Treasurer and Chief
Accounting Officer of BTX in February 1990. He was elected Chief Financial
Officer of BTX in April 1992. He has also served as Senior Vice President and
Controller of the Bank since 1990 and was elected Chief Financial Officer and
Cashier of the Bank in April 1992.
FAMILY RELATIONSHIPS
There is no family relationship between any of the nominees, directors
and any executive officer of BTX or its subsidiaries.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
BankTEXAS N.A. has had since January 1, 1993, and it expects to have
in the future, loan transactions in the ordinary course of business with
directors of BTX and their respective affiliates. These loan transactions have
been and will be on the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with unaffiliated
persons and did not involve more than the normal risk of collectibility or
present other unfavorable features. At December 31, 1993, such loans totalled
$46,000 and represented 0.31% of stockholders' equity. None of the
indebtedness has been classified in any manner by regulatory authorities or
charged-off by the Bank. The Bank does not extend credit to officers of BTX or
of the Banking Subsidiary except extensions of credit secured by mortgages on
personal residences, loans to purchase automobiles and personal credit card
accounts.
Certain of the directors and officers of BTX and their respective
affiliates have deposit accounts with the Bank. It is the policy of BankTEXAS
N.A. not to permit any officers or directors of BTX or their affiliates to
overdraw their respective deposit accounts unless that person has been
previously approved for overdraft protection under a plan whereby a credit
limit has been established in accordance with the Bank's standard credit
criteria.
During 1993 the Bank engaged in a series of repurchase transactions
with Edward T. Story, Jr., a director of BTX and of the Bank. These
transactions are short-term in nature and involve the deposit with the Bank of
U.S. government securities, subject to agreements to repurchase. The principal
amounts of the repurchase transactions have varied and the largest principal
amount of any transaction in 1993 was $262,100. All of the transactions with
Mr. Story have been at market interest rates and, in the opinion of management,
have been on terms as favorable to the Bank as are available in transactions
with unaffiliated persons.
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<PAGE> 34
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
earned during the year ended December 31, 1993, and specified information with
respect to the two preceding years, by the chief executive officer and each of
the four other most highly compensated executive officers of BTX, as determined
based upon salary and bonus earned during 1993.
-31-
<PAGE> 35
SUMMARY COMPENSATION TABLE FOR YEAR ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
Long-Term Compensation
----------------------
Annual Compensation Awards Payouts
-------------------------------------- --------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Restricted Securities
Name and Annual Stock underlying LTIP All Other
Principal Salary Bonus Compensation Award(s) Options/SARs Payouts Compensation
Position Year ($) ($) ($)(1) ($) (#) ($) ($)(2)
- ----------------------------------------------------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Nathan C. 1993 250,000 -0- N/A none none none 899
Collins,
Chairman 1992 250,000 23,200 N/A none none none 1,000
of the
Board, 1991 250,000 25,000 N/A none none none N/A
President
& Chief
Executive
Officer of
BTX
David F. 1993 107,500 -0- N/A none none none 840
Weaver,
Regional 1992 107,500 10,750 N/A none none none 2,942
President
- South of 1991 107,500 10,750 N/A none none none N/A
BankTEXAS
N.A.
Richard H. 1993 91,800 -0- N/A none none none 459
Braucher,
Senior 1992 91,800 9,180 N/A none none none -0-
Vice
President, 1991 91,800 9,180 N/A none none none N/A
Secretary
& General
Counsel of
BTX
Jerry V. 1993 90,000 -0- N/A none none none 473
Garrett,
Senior 1992 90,000 5,000 N/A none none none 900
Vice
President 1991 90,000 5,000 N/A none none none N/A
- Consumer
Lending of
BankTEXAS
N.A.
John G. 1993 84,500 -0- N/A none none none 899
Sprengle,
Senior 1992 84,500 8,450 N/A none none none 1,743
Vice
President 1991 84,500 8,450 N/A none none none N/A
& Chief
Credit
Officer of
BankTEXAS
N.A.
</TABLE>
______________________________
(1) No response is required for years prior to 1992. For 1993 the total
of all other annual compensation for each of the named officers is
less than the amount required to be reported, which is the lesser of
(a) $50,000 or (b) ten percent (10%) of the total of the annual salary
and bonus paid to that person in 1993.
(2) No response is required for years prior to 1992. All items reported
are BTX's matching contributions to the 401(k) Plan for the year
indicated except that in 1992, the total for Mr. Weaver is comprised
of $1,592 as relocation assistance to cover mortgage rate differential
and $1,350 as BTX's contribution to the 401(k) Plan.
-32-
<PAGE> 36
OPTION EXERCISES DURING 1993 AND YEAR-END OPTION VALUES
The following table indicates the number of options, if any, exercised by
the named executive officers during the year ended December 31, 1993 and the
number and value of options held as of December 31, 1993. BTX does not have
any outstanding stock appreciation rights.
OPTION EXERCISES AND YEAR-END VALUE TABLE
<TABLE>
<CAPTION>
Aggregated Option Exercises in Fiscal Year Ended 12-31-93, and FY-End Option Value
----------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of Securities Value of Unexercised
Underlying In-the-Money
Unexercised Options Options at FY-End
at FY-End (#) ($)
Name and Principal Shares Acquired Value Realized Exercisable/ Exercisable/
Position on Exercise (#) ($)(1) Unexercisable Unexercisable
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nathan C. Collins, 100,000 $125,000 900,000 shares $1,237,500
Chairman of the Board, exercisable
President & Chief
Executive Officer of none - unexercisable
BTX
David F. Weaver, none none 75,000 shares $103,125
Regional President - exercisable
South of BankTEXAS N.A.
none - unexercisable
Richard H. Braucher, 25,000 $50,000 50,000 shares $68,750
Senior Vice President, exercisable
Secretary & General
Counsel of BTX none - unexercisable
Jerry V. Garrett, 30,000 $33,750 45,000 shares $61,875
Senior Vice President - exercisable
Consumer Lending of
BankTEXAS N.A. none - unexercisable
John G. Sprengle, 14,000 $35,000 61,000 shares $83,875
Senior Vice President & exercisable
Chief Credit Officer of
BankTEXAS N.A. none - unexercisable
</TABLE>
_______________________
(1) Value realized is before applicable taxes, based on the
difference between exercise prices and closing prices on the dates of exercise.
BTX has omitted from this Proxy Statement the tables intended to
disclose information regarding options granted during 1993 and Long Term
Incentive Plan awards. No options were granted in 1993 and BTX does not
currently have any Long Term Incentive Plan.
STOCK PERFORMANCE GRAPH
The following graph sets forth a comparison of the cumulative total
shareholder returns of BTX Regular Common Stock, the New York Stock Exchange
Market Value Index (designated as "Broad Market" in the graph) and the Media
General Index of Banks located in the West South Central Region (designated as
"Peer Group" in the graph), for the five year period from December 31, 1988
through December 31, 1993. The Company's common stock and the securities of 27
other banks primarily located Texas, Louisiana, Oklahoma and Arkansas are
-33-
<PAGE> 37
included in the "Peer Group" index. The graph and the table which follows are
based on the assumption that the value of the investment in BTX common stock
and in each index was $100 at December 31, 1988 and that all dividends were
reinvested (BTX did not pay any dividends during such period).
(INSERT PERFORMANCE GRAPH)
<TABLE>
<CAPTION>
VALUE OF $100 INVESTED DECEMBER 31, 1988 ON:
--------------------------------------------
12/31/89 12/31/90 12/31/91 12/31/92 12/31/93
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
BancTEXAS Group Inc. 41.67 31.25 54.17 233.33 183.33
NYSE Market Value 127.57 122.36 158.35 165.80 188.25
Index
Media General West 123.53 74.09 124.91 213.56 250.52
South Central Banks
</TABLE>
BTX EMPLOYEE BENEFIT PLANS
BTX maintains various employee benefit plans. Directors are not eligible
to participate in such plans (except the 1990 Stock Option Plan) unless they
are also employees of BTX or one of its subsidiaries.
Pension Plan. The BancTEXAS Group Inc. and Subsidiaries' Employees
Retirement Plan (the "Pension Plan") is a noncontributory, defined benefit plan
for all eligible officers and employees of BTX and its subsidiaries. Benefits
under the Pension Plan are based upon annual base salaries and years of service
and are payable only upon retirement or disability and, in some instances, at
death. An employee is eligible to participate in the Pension Plan after
completing one year of employment if he or she was hired before attaining age
60, is at least 21 years of age and worked 1,000 hours or more in the first
year of employment. A participant who has fulfilled the eligibility and tenure
requirements will receive, upon reaching the normal retirement age of 65,
monthly benefits based upon average monthly compensation during the five
consecutive calendar years out of his or her last ten calendar years that
provided the highest average compensation.
BTX utilizes the unit-credit cost method to compute its annual
contribution requirements under the Pension Plan. Under this method,
past-service costs are aggregated to determine the total past-service cost of
the Pension Plan. The excess of the total past-service cost over the assets of
the Pension Plan equals BTX's unfunded past-service cost, which is funded over
a period of years in accordance with regulations of the Internal Revenue
Service. Because this method determines Pension Plan costs in the aggregate,
costs have not been allocated to the individuals in the Summary Compensation
Table.
-34-
<PAGE> 38
Effective December 1, 1986, the Board of Directors of BTX amended the
Pension Plan to provide: (1) that all persons in the Pension Plan would be
vested with the number of service years actually credited by December 31, 1986,
regardless of the number of years they had participated in the plan; and (2)
that all persons qualifying to participate in the Pension Plan after December
1, 1986, would become 100% vested after five years of service.
The following table sets forth, based upon certain assumptions, the
approximate annual benefits payable under the Pension Plan at normal retirement
age to persons retiring with the indicated average base salaries and years of
credited service:
<TABLE>
<CAPTION>
REMUNERATION (1) YEARS OF CREDITED SERVICE (2)
---------------- ---------------------------------------------------------------
10 15 20 25 30 35
------ ------ ------ ------ ------ ------
<S> <C> <C> <C>
$100,000 $14,700 $22,050 $29,400 (same as amounts payable
150,000 22,200 33,300 44,400 after 20 years; no additional
200,000 29,700 44,550 59,400 credit may be earned)
235,840 (3) 35,076 52,614 70,152
</TABLE>
______________________________
(1) Compensation covered by the Pension Plan is equal to the salary shown
in the Summary Compensation Table for each of the executive officers
shown, except that Mr. Collins' compensation covered by the Pension
Plan is limited to $235,840 (see footnote (3)).
(2) Benefits shown are computed based on straight life annuities with a
10-year guarantee and are not subject to deduction for social
security, but are subject to withholding for federal income tax
purposes.
(3) Maximum annual retirement income of $115,641 is permitted under the
Internal Revenue Code, as amended; the maximum compensation allowed
for retirement benefit computations is $235,840.
-35-
<PAGE> 39
The amounts of current annual covered compensation and the credited years
of service under the Pension Plan at December 31, 1993, for each of the
executive officers of BTX named in the Summary Compensation Table are as
follows:
<TABLE>
<CAPTION>
CURRENT ANNUAL
COMPENSATION CREDITED YEARS
COVERED BY THE OF SERVICE AT
NAME OF INDIVIDUAL PENSION PLAN DECEMBER 31, 1993
------------------ -------------- -----------------
<S> <C> <C>
Nathan C. Collins $235,840 6
David F. Weaver 107,500 6
John G. Sprengle 84,500 6
Richard H. Braucher 91,800 15
Jerry V. Garrett 90,000 6
</TABLE>
EMPLOYMENT AGREEMENT
In 1987 Mr. Collins entered into an employment agreement with BTX to serve
as the Chairman of the Board, President and Chief Executive Officer of BTX for
the period from November 1, 1987 to January 2, 1991. For services rendered
under the agreement, Collins received an annual salary of $250,000, a bonus of
$100,000 for 1988 payable on January 2, 1989, use of an automobile, and
reimbursement of reasonable business expenses. He also participated in all
benefits provided generally to employees of BTX.
As additional compensation, in 1987 BTX granted to Collins 109,500 shares
of Common Stock as a stock grant and options to purchase 109,500 shares of
Common Stock. These options were canceled in 1990. The agreement also
provides that BTX will indemnify and advance expenses to Collins to the maximum
extent permitted by applicable law with respect to any legal proceedings
arising from his employment, provided his conduct meets specified standards.
Prior to the expiration of its stated term, the agreement will terminate upon
death or disability and may be terminated by Collins, by BTX with or without
cause or upon request by any regulatory authority with specified severance
arrangements.
In 1990 the Board of Directors of BTX entered into a restatement and
extension of the 1987 employment agreement with Collins. Under this contract,
Collins' employment was extended through January 2, 1993, at an annual salary
of $250,000. As additional compensation, Collins
-36-
<PAGE> 40
was granted options to purchase 1,000,000 shares of Common Stock at an exercise
price of 25 cents per share, the fair market value at the date of grant.
In May of 1991 the Board of Directors, in order to insure that BTX would
continue to have Mr. Collins' service and leadership for several reasons,
including the need to complete the Company's financial turnaround and to
facilitate its search for additional capital, amended his employment agreement
to provide that the term shall be automatically extended each month so that at
all times the remaining term is 24 months. The contract was also amended to
provide that Collins will be paid a bonus for any year in which the Company has
positive operating earnings or meets other predetermined objectives established
by the Board of Directors. Usually the bonus will be equal to 5% of the
Company's net operating earnings as determined by the Board but other factors
may be used in making the final determination. Nevertheless, under no
circumstances can the bonus in any one year exceed $100,000. Pursuant to this
contract, Collins was paid a bonus of $25,000 in 1992 with respect to BTX's
1991 results and $23,200 in 1993 with respect to BTX's 1992 results. He was
paid zero in 1994 with respect to BTX's 1993 results.
The Board of Directors also established a depository agreement with an
independent trust company whereby BTX deposited approximately $150,000 of U.S.
Government securities with that trust company to insure that BTX will honor its
obligation to pay severance to Mr. Collins in the event that BTX were to
terminate his contract prematurely.
In the event of a "change of Control" of BTX, Mr. Collins would be
entitled to receive a termination benefit of $500,000 if he is terminated or if
his position is materially diminished or reduced during the term of the
contract. A "change of control" is defined as either the acquisition of 25% or
more of the outstanding voting securities of BTX pursuant to any transaction or
combination of transactions by any person or group within the meaning of the
Securities Exchange Act of 1934, or the change within any one-year period in a
majority of the members of the Board of Directors. If Proposal No. 1 is
approved by the stockholders a "change of control" will occur. BTX has no
reason to believe that First Banks has any intention to terminate Mr. Collins
or diminish or reduce his position and, in fact, the owner of First Banks has
indicated that he intends to retain Mr. Collins in his present position for at
least two years. Nevertheless, if the Board of Directors of BTX were to
terminate Mr. Collins without cause during the term of his employment contract,
he would be entitled to receive a severance payment of $500,000.
COMPENSATION COMMITTEE REPORT
INTRODUCTION
The Board of Directors' Personnel Committee serves as BTX's
Compensation Committee (the "Committee"). The Committee has among its duties
the responsibility for establishing and reviewing the compensation and benefits
of the senior managers of BTX and its subsidiaries, including the compensation
of the Chairman and the other executive officers. The Committee actively
advises and assists management in formulating and in implementing policies
designed to assure the selection, development and retention of key personnel.
Under the guidance of the Committee, BTX's compensation policies have
been cast within the larger framework of managing the company toward overall
enhanced profitability and increased stockholder value. Accordingly, two
principles at the core of BTX's compensation policy for senior managers are (i)
aligning the financial interests of the senior managers with those of the BTX's
stockholders and (ii) rewarding the senior managers for corporate and personal
performance. These principles are reflected in the structure of BTX's
compensation program for senior managers which consists of three basic
components: base salary, cash bonus, and awards under the 1990 Stock Option
Plan (the "Option Plan"). In creating this structure, the Committee has
consciously placed an increasing emphasis on the "at risk" elements of
-37-
<PAGE> 41
compensation for senior managers. As a result, base salaries for the Chairman
and most of the other senior managers have been frozen at 1987 levels. Cash
bonuses and awards under the Option Plan are variable and tied to corporate and
individual performance in a manner that is believed by the Committee to
encourage managers to continually focus on increasing the profitability of BTX
and, thereby, enhancing long-term stockholder value.
BASE SALARY
Due to BTX's lack of profitability, the base salary for the Chairman
(Nathan C. Collins) and most of the other senior managers has not been
increased since they were hired as part of the team assembled between 1987 and
1989 (after the restructuring of BTX in 1987) and which was geared toward
returning BTX to profitable operations, while increasing capital and providing
quality service to customers and enhancing the value of the stockholders'
investment. On an extremely selective basis, the salaries for a few senior
managers have been increased modestly due to changes in the nature and extent
of their responsibilities, although there were no such increases in 1993.
Annually the Chairman and the Committee review each manager's performance
against various pre-established objectives and the Committee makes a similar
assessment of the Chairman's performance (see the separate discussion on the
Chairman's Compensation). Salary levels are not directly related to BTX's
profitability performance. The pre-established objectives for the executive
officers of BTX vary widely, one from the other, and usually are different for
each officer each year. The objectives are used to measure the performance of
each individual but have no relationship to the salary paid to that individual.
There have been no increases in any of the salaries of the five highest paid
executives of BTX since 1988.
CASH BONUSES
Near the end of each year the Board of Directors formulates a bonus
program for the senior managers for the following fiscal year which is tied to
specific corporate performance objectives for that fiscal year. To enhance the
"team approach" these objectives have been concentrated on profitable
operations for BTX and its financial turnaround rather than specific objectives
for each manager. For the 1993 fiscal year the target was a specific dollar
amount of profit for BTX. Since that objective was not met, no cash bonuses
were paid with respect to BTX's financial results for 1993. One senior officer
was awarded a $5,000 cash bonus as a result of the Committee's assessment of
his individual performance and his extraordinary contribution to BTX's
earnings. For a discussion of the cash bonus for the Chairman, see "The
Chairman's Compensation" below.
In the last year for which bonuses were paid (1992), the Board of
Directors had established a goal of total profits of $1 million. Since that
goal was met, the Board authorized payment of a cash bonus equal to ten percent
of the base salary to each of the nine senior managers who report directly to
the Chief Executive Officer. Mr. Collins, pursuant to his employment contract,
was paid a cash bonus of $23,200, equal to 5% of only BTX's net operating
earnings (which is determined based on net income, excluding the effects of
adjustments not arising from banking operations). The profitability goal for
1993 was not met and no cash bonuses were paid to the nine senior managers,
except that the Board approved a $5,000 bonus to Mr. Garrett in recognition of
his extraordinary performance during the year in managing the Bank's consumer
lending division and consummating sales of pools of loans to unrelated parties.
The calculation regarding Mr. Collins' bonus for 1993, which was waived, is
discussed below under the heading "The Chairman's Compensation for 1993."
In December of each year, after the Board has reviewed and evaluated
the proposed budget for the next fiscal year, the Board establishes the level
of profitability above which cash bonuses can be earned by the senior managers
if BTX, in fact, achieves that profit goal in that following fiscal year.
Although the procedure has differed from year to year, in December of 1993 the
Board established three tiers within the 1994 bonus program. If BTX's net
profit level for 1994 exceeds 50 basis points on average total assets, a bonus
equal to 5% of base salary may be awarded; if the net profit level achieved
exceeds 75 basis points, a bonus equal to 10% of base salary may be awarded;
and if the net profit level achieved exceeds 100 basis points, a bonus equal to
20% of base salary may be awarded. In all cases, no bonuses are paid until the
Board reviews and evaluates the Company's actual results for the year in
question and decides to award bonuses.
OPTION PLAN AWARDS
In 1990 the Board of Directors formulated the 1990 Stock Option Plan
in order to establish a long-term incentive component of total compensation for
the senior managers. This was designed to align the financial interest of
these managers and BTX's stockholders more closely and to enable the Chairman
to retain the team of managers which he had carefully selected in order to
facilitate the company's turnaround, growth and return to profitability. While
no grants have been made since 1991, the Committee will periodically review the
desirability of making additional grants as circumstances may warrant.
-38-
<PAGE> 42
THE CHAIRMAN'S COMPENSATION
The FDIC's recapitalization of BancTEXAS Group Inc. in 1987 mandated
the recruitment of a new Chief Executive Officer. The Board of Directors
engaged both outside bank consultants and an executive recruiting firm to
assist them in establishing hiring criteria and recommending compensation
guidelines. The Board found difficulty in recruiting candidates for this
position who could meet the high standards set by the Board and in clearing
potential candidates with the various banking regulators. BTX was experiencing
operational difficulties and the senior staff had been significantly eroded
because of concerns as to the viability of BTX. The Board decided that its
candidate would need broad banking experiences including credit administration,
branch banking, marketing, bank operations, asset and liability management, as
well as overall management and leadership skills. It was recognized that,
despite the large capital infusion in 1987, BTX was still a high-risk company
and that in order to secure a qualified Chairman a creative compensation
package including a significant salary and an employment contract along with
standard benefits and some performance incentives would have to be offered.
The ultimate compensation package for the Chairman (which was designed in
consultation with both the banking consultants and the search firm) was
reviewed by the federal bank regulatory agencies and was then adopted by the
Board.
In January 1990 the company's flagship bank at that time (BancTEXAS
Dallas) was declared insolvent and placed in FDIC receivership. Because of
this, there arose serious questions about BTX's ability to continue to fund the
Chairman's contract. The Board determined that it was imperative to retain the
Chairman due to the extremely fragile nature of BTX's financial position in
1990 and in hopes of saving the remainder of the company's value. The
Directors elected to extend the employment contract for two years and provide
some assurances that cash would be available to meet that obligation by funding
the contract in a specialized trust account managed by an outside third party.
Despite the failure of the Dallas bank, the directors could see that solid
progress was underway, but that it was critical to maintain the current
leadership of the company if a complete turnaround were ever to be achieved.
In May 1991 the Board of Directors, in order to insure that BTX would
continue to have Mr. Collins' service and leadership for several reasons,
including the need to complete the Company's financial turnaround and to
facilitate its search for additional capital, amended his employment agreement
to provide that the term shall be automatically extended each month so that at
all times the remaining term is 24 months. A specific bonus plan was also
incorporated in Mr. Collins' revised employment contract. This bonus is
payable based on BTX's profits and the achievement of other specific goals for
Mr. Collins, set annually by the Board, as yet another incentive to keep his
management skills and leadership in place.
-39-
<PAGE> 43
THE CHAIRMAN'S COMPENSATION FOR 1993
For 1993, Mr. Collins was paid his contractual salary of $250,000.
The cash bonus for the Chairman is to be determined separately pursuant to the
terms of his employment contract. Under that contract, he is entitled to
receive a cash bonus equal to five percent (5%) of the company's operating
income. In 1993 BTX's operating income (excluding the $592,000 special charge
resulting from the settlement of a lawsuit) was $811,000; accordingly, Mr.
Collins was contractualy entitled to receive $40,500. Mr. Collins waived his
right to receive this cash bonus because of the company's overall financial
results for 1993.
In recognition of BTX's disappointing financial results for 1993 and
the continuing squeeze on the interest rate margin being suffered by the
company and its bank, Mr. Collins proposed that for 1994 his salary be reduced
to $200,000 without otherwise waiving any contractual rights which he has.
Accordingly, Mr. Collins is currently being paid at that reduced rate.
THE FOREGOING REPORT HAS BEEN PRESENTED BY THE PERSONNEL COMMITTEE OF
THE BOARD OF DIRECTORS CONSISTING OF MESSRS. RICHARD L. BROWN AND THOMAS A.
STANZEL.
INDEPENDENT AUDITORS
Representatives of Deloitte & Touche, the independent public
accountants of BTX for the 1991, 1992 and 1993 fiscal years, are expected to be
present at the Annual Meeting and such representatives will have the
opportunity to make a statement if they desire to do so and will be available
to respond to appropriate questions.
OTHER BUSINESS
Management knows of no other business to be presented at the Annual
Meeting. If, however, other matters should properly be presented at the Annual
Meeting or any adjournment(s) thereof, the person or person voting such proxy
will vote the proxy as in their discretion they may deem appropriate.
STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as
amended, stockholders may present proper proposals for inclusion in BTX's proxy
statement for consideration at its Annual Meeting of Stockholders by submitting
proposals to BTX in a timely manner. In order to be so included for the 1994
Annual Meeting of Stockholders, stockholder proposals must be received by BTX
by December 31, 1994 and must otherwise comply with the requirements of Rule
14a-8.
-40-
<PAGE> 44
The Bylaws of BTX provide that stockholders may only present proposals
for consideration at an Annual Meeting if the proposal is a proper subject for
action by stockholders and if they present such proposals to the Company's
Secretary during a prescribed time period in advance of such Annual Meeting.
In order to have proper proposals considered at the 1994 Annual Meeting, such
proposals must be received by the Secretary of BTX by December 31, 1994.
By Order of the Board of Directors,
RICHARD H. BRAUCHER
Secretary
Dallas, Texas
July _____, 1994
-41-
<PAGE> 45
================================================================================
APPENDIX I
STOCK PURCHASE AND OPERATING AGREEMENT
by and between
BANCTEXAS GROUP INC.
a Delaware corporation,
and
FIRST BANKS, INC.,
a Missouri corporation,
Dated May 19, 1994
================================================================================
<PAGE> 46
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE ONE TERMS OF STOCK PURCHASE AND CLOSING
Section 1.01 Purchase and Sale of Class B Common Stock . . . . . . . 1
Section 1.02 Closing . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.03 Closing Date . . . . . . . . . . . . . . . . . . . . . 1
Section 1.04 Actions At Closing . . . . . . . . . . . . . . . . . . 1
ARTICLE TWO REPRESENTATIONS OF BTX
Section 2.01 Organization and Capital Stock . . . . . . . . . . . . 3
Section 2.02 Authorization: No Defaults . . . . . . . . . . . . . . 4
Section 2.03 Subsidiaries . . . . . . . . . . . . . . . . . . . . . 4
Section 2.04 Financial Information . . . . . . . . . . . . . . . . . 4
Section 2.05 Absence of Changes . . . . . . . . . . . . . . . . . . 5
Section 2.06 Regulatory Enforcement Matters . . . . . . . . . . . . 5
Section 2.07 Tax Matters . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.08 Litigation . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.09 Employment Agreements . . . . . . . . . . . . . . . . . 6
Section 2.10 Reports . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.11 Investment Portfolio . . . . . . . . . . . . . . . . . 6
Section 2.12 Loan Portfolio . . . . . . . . . . . . . . . . . . . . 6
Section 2.13 Employee Matters and ERISA . . . . . . . . . . . . . . 7
Section 2.14 Title to Properties; Insurance . . . . . . . . . . . . 8
Section 2.15 Environmental Matters . . . . . . . . . . . . . . . . . 8
Section 2.16 Compliance with Law . . . . . . . . . . . . . . . . . . 9
Section 2.17 Brokerage . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.18 Statements True and Correct . . . . . . . . . . . . . . 9
Section 2.19 Commitments and Contracts . . . . . . . . . . . . . . . 9
Section 2.20 Material Interest of Certain Persons . . . . . . . . . 10
Section 2.21 Conduct to Date . . . . . . . . . . . . . . . . . . . . 10
ARTICLE THREE REPRESENTATIONS OF FBI
Section 3.01 Organization . . . . . . . . . . . . . . . . . . . . . 11
Section 3.02 Authorization . . . . . . . . . . . . . . . . . . . . . 11
Section 3.03 Available Funds . . . . . . . . . . . . . . . . . . . . 11
Section 3.04 Financial Information . . . . . . . . . . . . . . . . . 11
Section 3.05 Absence of Changes . . . . . . . . . . . . . . . . . . 12
Section 3.06 Litigation . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.07 Compliance with Law . . . . . . . . . . . . . . . . . . 12
Section 3.08 Statements True and Correct . . . . . . . . . . . . . . 12
</TABLE>
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<TABLE>
<S> <C> <C>
Section 3.09 No Defaults..........................................12
Section 3.10 Regulatory Enforcement Matters.......................12
Section 3.11 Brokerage............................................13
Section 3.12 Investment Intention, Accreditation..................13
ARTICLE FOUR PRE-CLOSING AGREEMENTS OF BTX
Section 4.01 Business in Ordinary Course..........................13
Section 4.02 Breaches.............................................15
Section 4.03 Submission to Stockholders...........................15
Section 4.04 Consummation of Agreement............................16
Section 4.05 Environmental Reports................................16
Section 4.06 Access to Information................................17
Section 4.07 Consents and Notices.................................17
ARTICLE FIVE PRE-CLOSING AGREEMENTS OF FBI
Section 5.01 Regulatory Approvals.................................17
Section 5.02 Breaches.............................................17
Section 5.03 Consummation of Agreement............................17
ARTICLE SIX POST-CLOSING OPERATING AGREEMENTS
Section 6.01 Board of Director Representation.....................18
Section 6.02 Antidilution.........................................18
Section 6.03 Registration Rights..................................19
Section 6.04 Restriction on Transfer..............................21
ARTICLE SEVEN CONDITIONS PRECEDENT TO STOCK PURCHASE
Section 7.01 Conditions to FBI's Obligations......................21
Section 7.02 Conditions to BTX's Obligations......................22
ARTICLE EIGHT TERMINATION OR ABANDONMENT
Section 8.01 Mutual Agreement.....................................23
Section 8.02 Breach of Agreements.................................23
Section 8.03 Failure of Conditions................................23
Section 8.04 Approval Denial......................................23
Section 8.05 Shareholder Approval Denial..........................24
Section 8.06 Regulatory Enforcement Matters.......................24
Section 8.07 Automatic Termination................................24
ARTICLE NINE CERTAIN PAYMENTS UPON TERMINATION OR ABANDONMENT
Section 9.01 Liabilities upon Termination of Agreement............24
Section 9.02 Payment Upon Occurrence of Triggering Event..........24
</TABLE>
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<TABLE>
<S> <C> <C>
ARTICLE TEN GENERAL
Section 10.01 Confidential Information....................................25
Section 10.02 Publicity...................................................25
Section 10.03 Return of Documents.........................................25
Section 10.04 Notices.....................................................25
Section 10.05 Nonsurvival of Representations, Warranties and Agreements..26
Section 10.06 Costs and Expenses..........................................26
Section 10.07 Entire Agreement............................................27
Section 10.08 Headings and Captions.......................................27
Section 10.09 Waiver, Amendment or Modification...........................27
Section 10.10 Rules of Construction.......................................27
Section 10.11 Counterparts................................................27
Section 10.12 Successors and Assigns......................................27
Section 10.13 Governing Law; Assignment...................................27
</TABLE>
EXHIBIT 1.04(a) - BTX's Legal Opinion
EXHIBIT 1.04(b) - FBI's Legal Opinion
EXHIBIT 4.03(a) - BTX Restated Certificate of Incorporation
EXHIBIT 4.03(b) - BTX Restated Bylaws
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STOCK PURCHASE AND OPERATING AGREEMENT
This is a STOCK PURCHASE AND OPERATING AGREEMENT (this "Agreement")
made and entered into as of May 19, 1994, by and between FIRST BANKS, INC., a
Missouri corporation, ("FBI"), and BANCTEXAS GROUP INC., a Delaware
corporation, ("BTX").
RECITALS
A. BTX is a bank holding company organized under the laws of the
State of Delaware and FBI is a bank holding company organized under the laws
of the State of Missouri.
B. Upon the terms and subject to the conditions of this
Agreement, BTX desires to sell to FBI, and FBI desires to purchase from BTX,
37,500,000 shares of a new class of common stock to be authorized by BTX and
designated Class B Common Stock (the "Class B Common Stock"). The purchase and
sale referred to in the preceding sentence is hereinafter referred to as the
"Stock Purchase".
In consideration of the premises and the mutual terms and provisions
set forth in this Agreement, the parties agree as follows:
ARTICLE ONE
TERMS OF STOCK PURCHASE AND CLOSING
SECTION 1.01. PURCHASE AND SALE OF CLASS B COMMON STOCK. Upon the
terms and subject to the conditions of this Agreement, at the Closing (as
defined in Section 1.02 hereof) on the Closing Date (as defined in Section 1.03
hereof), FBI shall purchase from BTX, and BTX shall sell to FBI, 37,500,000
shares of Class B Common Stock to be authorized and issued by BTX as provided
in Section 4.03 hereof, for a purchase price of Thirty Million Dollars
($30,000,000) (the "Purchase Price").
SECTION 1.02. CLOSING. The closing of the Stock Purchase (the
"Closing") shall take place at the main offices of FBI in St. Louis, Missouri,
at 10:00 a.m. Central Time on the Closing Date.
SECTION 1.03. CLOSING DATE. The Closing shall take place on a date
mutually agreeable to FBI and BTX, but in no event more than twenty (20)
business days, after all of the conditions in Sections 7.01(d) and 7.02(d) have
been satisfied or waived by the appropriate party (the "Closing Date").
SECTION 1.04. ACTIONS AT CLOSING.
(a) At the Closing, BTX shall deliver to FBI:
(i) one or more certificates representing the Class B Common
Stock registered in the name of FBI;
(ii) A copy of the BTX Restated Certificate of Incorporation
(as defined in Section 4.03(a) and attached hereto as Exhibit 4.03(a))
certified, as of a recent date, as true and correct by the Secretary
of State of the State of Delaware);
<PAGE> 50
(iii) A copy of the BTX Restated Bylaws (as defined in Section
4.03(b) and attached hereto as Exhibit 4.03(b)) certified, as of the
Closing Date, as true and correct by the Secretary of BTX;
(iv) A Certificate of the Delaware Secretary of State, dated a
recent date, stating that BTX is in good standing;
(v) a Certificate signed by an appropriate officer of BTX
stating that (A) each of the representations and warranties contained
in Article Two is true and correct in all material respects at the
time of the Closing with the same force and effect as if such
representations and warranties had been made at Closing, and (B) all
of the conditions set forth in Sections 7.01(b) and 7.01(d) have been
satisfied or waived as provided therein;
(vi) a certified copy of the resolutions of BTX's Board of
Directors and stockholders, as required for valid approval of the
execution of this Agreement and the consummation of the Stock
Purchase, the Amendments (as defined in Section 4.03(b) hereof) and
the other transactions contemplated hereby;
(vii) a legal opinion of counsel for BTX, in form reasonably
acceptable to FBI's counsel, opining with respect to the matters
listed on Exhibit 1.04(a) hereto.
(b) At the Closing, FBI shall deliver to BTX:
(i) the Purchase Price by wire transfer of immediately
available funds to the account of BTX that BTX shall designate at
least two (2) business days prior to the Closing Date;
(ii) a Certificate signed by an appropriate officer of FBI
stating that (A) each of the representations and warranties contained
in Article Three is true and correct in all material respects at the
time of the Closing with the same force and effect as if such
representations and warranties had been made at Closing and (B) all of
the conditions set forth in Sections 7.02(b) and 7.02(d) (but only
with respect to approvals other than by BTX' stockholders) have been
satisfied or waived as provided therein;
(iii) a certified copy of the resolutions of FBI's Board of
Directors authorizing the execution of this Agreement and the
consummation of the transactions contemplated hereby; and
(iv) a legal opinion of counsel for FBI, in form reasonably
acceptable to BTX's counsel, opining with respect to the matters
listed on Exhibit 1.06(b) hereto.
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ARTICLE TWO
REPRESENTATIONS OF BTX
BTX hereby makes the following representations and warranties:
SECTION 2.01. ORGANIZATION AND CAPITAL STOCK.
(a) BTX is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the corporate
power to own all of its property and assets, to incur all of its liabilities
and to carry on its business as now being conducted.
(b) As of the date hereof, the authorized capital stock of BTX
consists of (i) 50,000,000 shares of common stock, par value $0.01 per share
(the "Common Stock"), of which, as of the date hereof, 20,047,025 shares are
issued and outstanding, and (ii) 3,000,000 shares of preferred stock, par value
$1.00 per share, of BTX (the "BTX Preferred") of which no shares are issued and
outstanding. All of the issued and outstanding shares of Common Stock are duly
and validly issued and outstanding and are fully paid and non-assessable. None
of the outstanding shares of Common Stock has been issued in violation of any
preemptive rights of the current or past stockholders of BTX. As of the date
hereof, BTX had granted and outstanding (i) stock options representing the
right to acquire an aggregate of 1,921,500 shares of Common Stock for an
aggregate exercise price of $483,500 (the "BTX Stock Options"): (ii) warrants,
dated November 30, 1990 (the "F.D.I.C. Warrants") granting the Federal Deposit
Insurance Corporation (the "F.D.I.C.") the right to acquire an aggregate of
1,970,033 shares of Common Stock at a price of $0.05 per share (the "F.D.I.C.
Warrants"); and (iii) warrants, dated July 17, 1987, granting the following
financial institutions the right to acquire an aggregate of 984,943 shares of
Common Stock at a price of $5.41 per share (the "Lender Warrants") (a) the
F.D.I.C. as receiver for Continental Illinois National Bank and Trust Company
of Chicago (warrants to purchase 347,646 shares), (b) Bankers Trust Company
(warrants to purchase 200,686 shares), (c) Irving Trust Company (warrants to
purchase 85,020 shares), (d) Bank of America NT&SA (warrants to purchase
113,751 shares), (e) Citibank, N.A. (warrants to purchase 128,920 shares), and
(f) Liberty National Bank and Trust Company (warrants to purchase 108,920
shares)). As of the date hereof, BTX had reserved 4,876,476 shares for these
purposes. Except as disclosed in Section 2.01(b) of that certain written
document delivered by BTX to FBI and executed by both BTX and FBI concurrently
with the delivery and execution of this Agreement (the "Disclosure Schedule"),
each Certificate representing, shares of Common Stock issued by BTX in
replacement of any Certificate theretofore issued by it which was claimed by
the record holder thereof to have been lost, stolen or destroyed was issued by
BTX only upon receipt of an affidavit of lost stock certificate and a bond
sufficient to indemnify BTX against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such Certificate or
the issuance of such replacement Certificate.
(c) Except as set forth in subsection 2.01(b), and as contemplated
by this Agreement, there are no shares of capital stock or other equity
securities of BTX issued or outstanding and there are no outstanding options,
warrants, rights to subscribe for, calls, or commitments of any character
whatsoever relating to, or securities or rights convertible into or
exchangeable for, shares of the capital stock of BTX or contracts, commitments,
understandings or arrangements by which BTX is or may be obligated to issue
additional shares of its capital stock or options, warrants or rights to
purchase or acquire any additional shares of its capital stock.
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<PAGE> 52
(d) The shares of Class B Common Stock that are to be issued to
FBI pursuant hereto will be, when so authorized and issued in accordance with
the terms of this Agreement, validly issued and outstanding, fully paid and
nonassessable, with no personal liability attaching to the ownership thereof.
SECTION 2.02. AUTHORIZATION: NO DEFAULTS.
(a) BTX's Board of Directors has, by all appropriate action,
approved this Agreement, the Stock Purchase and the Amendments and authorized
the execution hereof and thereof on its behalf by its duly authorized officers
and the performance by BTX of its obligations hereunder and thereunder,
subject, in the case of obligations contemplated hereby to be satisfied after
the approvals of the transaction contemplated by this Agreement by BTX's
shareholders and applicable regulatory authorities, to receipt of such
approvals.
(b) Nothing in the Restated Certificate of Incorporation or Bylaws
of BTX, as amended, or any other agreement, instrument, decree, proceeding,
law or regulation (except as specifically referred to in or contemplated by
this Agreement) by or to which it or any of its subsidiaries are bound or
subject would prohibit or inhibit BTX from consummation this Agreement, the
Stock Purchase and the Amendments on the terms and conditions (including
without limitation the requisite approval of BTX's stockholders) herein and
therein contained. This Agreement has been duly and validly executed and
delivered by BTX and constitutes a legal, valid and binding obligation of
BTX, enforceable against BTX in accordance with its terms (including without
limitation the terms hereof requiring the necessary approval of BTX's
stockholders). BTX and its subsidiaries are neither in default under nor in
violation of any provision of their articles or certificates of incorporation,
bylaws, or any promissory note, indenture or any evidence of indebtedness or
security therefor, lease, contract, purchase or other commitment or any other
agreement which is material to BTX and its subsidiaries taken as a whole.
SECTION 2.03. SUBSIDIARIES. BTX's banking subsidiary, BankTEXAS N.A.
(the "Bank"), and BTX's other direct or indirect subsidiaries (hereinafter
referred to collectively as the "subsidiaries"), the names and jurisdiction of
incorporation of which are disclosed in Section 2.03 of the Disclosure
Schedule, are each duly organized, validly existing and in good standing under
the laws of the jurisdiction of their incorporation and each of the
subsidiaries has the corporate power to own its respective properties and
assets, to incur its respective liabilities and to carry on its respective
business as now being conducted. The number of issued and outstanding shares of
capital stock of each such subsidiary is set forth in Section 2.03 of the
Disclosure Schedule, all of which shares (except as may be otherwise there
specified) are owned by BTX or BTX's subsidiaries, as the case may be, free and
clear of all liens, encumbrances, rights of first refusal, options or other
restrictions of any nature whatsoever, except for assessibility under 12 U.S.C.
Section 55 and as may be disclosed in Section 2.03 of the Disclosure Schedule.
There are no options, warrants or rights outstanding to acquire any capital
stock of any of BTX's subsidiaries and no person or entity has any other right
to purchase or acquire any unissued shares of stock of any of BTX's
subsidiaries, nor does any such subsidiary have any obligation of any nature
with respect to its unissued shares of stock. Except as may be disclosed in
Section 2.03 of the Disclosure Schedule, neither BTX nor any of BTX's
subsidiaries is a party to any partnership or joint venture or owns an equity
interest in any other business or enterprise.
SECTION 2.04. FINANCIAL INFORMATION. The audited consolidated balance
sheets of BTX and its subsidiaries as of December 31, 1993 and 1992 and related
consolidated income statements and statements of changes in shareholders'
equity and of cash flows for the three years ended December 31, 1993,
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<PAGE> 53
together with the notes thereto, included in BTX's Annual Report on Form 10-K
for the year ended December 31, 1993, as currently on file with the Securities
and Exchange Commission (the "S.E.C."), and the unaudited consolidated balance
sheets of BTX and its subsidiaries as of March 31, 1994 and the related
unaudited consolidated income statements and statements of changes in
shareholders' equity and cash flows for the three months then ended included in
BTX's Quarterly Report on Form 10-Q for the quarter then ended, as currently on
file with the S.E.C. (the "BTX 3/31 10-Q"), and the year-end and quarterly
Reports of Condition and Report of Income of Bank for 1993 and the quarter
ended March 31, 1994, as filed with the Office of the Comptroller of the
Currency (the "O.C.C.") (together, the "BTX Financial Statements"), have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis (except as may be disclosed therein and except for
regulatory reporting differences required by Bank's reports) and fairly present
the consolidated financial position and the consolidated results of operations,
changes in shareholders' equity and cash flows of the respective entity and its
respective consolidated subsidiaries as of the dates and for the periods
indicated (subject, in the case of interim financial statements, to normal
recurring year-end adjustments, none of which will be material).
SECTION 2.05. ABSENCE OF CHANGES. Since December 31, 1993, except to
the extent of any disclosures made in the BTX 3/31 10-Q, there has not been any
material adverse change in the financial condition, the results of operations
or the business or prospects of BTX and its subsidiaries taken as a whole, nor
have there been any events or transactions having such a material adverse
effect which should be disclosed in order to make the BTX Financial Statements
not misleading. Since January 31, 1994 (the date of the most recent OCC
examination), there has been no material adverse change in the financial
condition, the results of operations or the business of Bank except for any
such changes as may be disclosed in Bank's Reports of Condition and Income
filed with the O.C.C since such date and prior to the date hereof.
SECTION 2.06. REGULATORY ENFORCEMENT MATTERS. Neither BTX nor any of
its subsidiaries is subject to, or has received any notice or advice that it
may become subject to, any order, agreement, memorandum of understanding or
other regulatory enforcement action or proceeding with or by any federal or
state agency charged with the supervision or regulation of banks or bank
holding companies or engaged in the insurance of bank deposits or any other
governmental agency having supervisory or regulatory authority with respect to
BTX or any of its subsidiaries.
SECTION 2.07. TAX MATTERS. BTX's federal income tax returns have not
been audited. BTX and its subsidiaries have filed all federal, state and
material local tax returns due in respect of any of their businesses or
properties in a timely fashion and have paid or made provision for all amounts
due shown on such returns. All such returns fairly reflect the information
required to be presented therein. All provisions for accrued but unpaid taxes
contained in the BTX Financial Statements were made in accordance with
generally accepted accounting principles and in the aggregate do not materially
fail to provide for potential tax liabilities. Except as may be disclosed in
Section 2.07 of the Disclosure Schedule, there are no agreements, waivers or
other arrangements providing for an extension of time with respect to the
assessment of any tax or deficiency against BTX or any of its subsidiaries nor
are there any actions, suits, proceedings, investigations or claims now pending
or, to the knowledge of BTX, threatened, against BTX or any of its subsidiaries
in respect to any tax or assessment, or any matters under discussion with any
federal, state, foreign or local authority relating to any taxes or
assessments, or any claims for any additional taxes or assessments asserted by
any such authority.
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SECTION 2.08. LITIGATION. Except as may be disclosed in Section 2.08 of
the Disclosure Schedule, there is no litigation, claim or other proceeding
pending or, to the knowledge of BTX, threatened, against BTX or any of its
subsidiaries, or of which the property of BTX or any of its subsidiaries is or
would be subject.
SECTION 2.09. EMPLOYMENT AGREEMENTS. Except as may be disclosed in
Section 2.09 of the Disclosure Schedule, neither BTX nor any of its
subsidiaries is a party to or bound by any contract for the employment,
retention or engagement, or with respect to the severance, of any officer,
employee, agent, consultant or other person or entity which, by its terms, is
not terminable by BTX or such subsidiary on thirty (30) days written notice or
less without the payment of any amount by reason of such termination. A true,
accurate and complete copy of each written agreement disclosed in Section 2.09
of the Disclosure Schedule and any and all amendments or supplements thereto
has been made available to FBI.
SECTION 2.10. REPORTS. Except as may be disclosed in Section 2.10
of the Disclosure Schedule, since January 1, 1992 (or, in the case of
subsidiaries of BTX, the date of acquisition thereof by BTX, if later) BTX and
each of its subsidiaries has filed all reports and statements, together with
any amendments required to be made with respect thereto, that it was required
to file with (i) the S.E.C.; (ii) the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"); (iii) the O.C.C.; (iv) the F.D.I.C.; (v)
any state securities or banking authorities having jurisdiction; (vi) the New
York Stock Exchange, Inc. (the " N.Y.S.E."), and (vii) any other governmental
authority with jurisdiction over BTX or any of its subsidiaries, As of their
respective dates, each of such reports and documents, including any financial
statements, exhibits and schedules thereto, complied in all material respects
with the relevant statutes, rules and regulations enforced or promulgated by
the regulatory authority with which they were filed, and did not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
SECTION 2.11. INVESTMENT PORTFOLIO. All United States Treasury
securities, obligations of other United States Government agencies and
corporations, obligations of States and political subdivisions of the United
States and other investment securities held by BTX and its subsidiaries, as
reflected in the latest consolidated balance sheet of BTX included in the BTX
Financial Statements, are carried in accordance with generally accepted
accounting principles.
SECTION 2.12. LOAN PORTFOLIO. Except as may be disclosed in Section
2.12 of the Disclosure Schedule, (i) all loans and discounts shown on the BTX
Financial Statements at December 31, 1993 or which were entered into after
December 31, 1993, but before the Closing Date were and will be made in all
material respects for good, valuable and adequate consideration in the ordinary
course of the business of BTX and its subsidiaries, in accordance in all
material respects with sound banking practices, and are not subject to any
material known defenses, setoffs or counterclaims (except such defenses,
setoffs or counterclaims as may be specifically noted in a loan or litigation
file of Company made available to FBI prior to the date hereof), including
without limitation any such as are afforded by usury or truth in lending laws,
except as may be provided by bankruptcy, insolvency or similar laws or by
general principles of equity and except that, in the case of loan workouts and
restructurings, some of such loans may not meet normal, prudent underwriting
criteria for new loans; (ii) the notes or other evidences of indebtedness
evidencing such loans and all forms of pledges, mortgages and other collateral
documents and security agreements are and will be, in all material respects,
enforceable, valid, true and genuine and
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what they purport to be; and (iii) BTX and its subsidiaries have complied and
will prior to the Closing Date comply with all laws and regulations relating to
such loans, or to the extent there has not been such compliance, such failure
to comply will not materially interfere with the collection of any such loan.
SECTION 2.13. EMPLOYEE MATTERS AND ERISA.
(a) Neither BTX nor any of its subsidiaries has entered into any
collective bargaining agreement with any labor organization with respect to any
group of employees of BTX or any of its subsidiaries and to the knowledge of
BTX there is no present effort nor existing proposal to attempt to unionize any
group of employees of BTX or any of its subsidiaries.
(b) (i) BTX and its subsidiaries are and have been in material
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, including,
without limitation, any such laws respecting employment discrimination and
occupational safety and health requirements, and neither BTX nor any of its
subsidiaries is engaged in any unfair labor practice; (ii) there is no material
unfair labor practice complaint against BTX or any subsidiary pending or, to the
knowledge of BTX, threatened before the National Labor Relations Board; (iii)
there is no labor dispute, strike, slowdown or stoppage actually pending or,
to the knowledge of BTX, threatened against or directly affecting BTX or any
subsidiary; and (iv) neither BTX nor any subsidiary has experienced any
material work stoppage or other material labor difficulty during the past five
years.
(c) Except as may be disclosed in Section 2.13(c) of the
Disclosure Schedule, neither BTX nor any subsidiary maintains, contributes to
or participates in or has any liability under any employee benefit plans, as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("E.R.I.S.A."), or any nonqualified employee benefit plans or
deferred compensation, bonus, stock or incentive plans, or other employee
benefit or fringe benefit programs for the benefit of former or current
employees of BTX or any subsidiary (the "Employee Plans"). To the knowledge of
BTX, no present or former employee of BTX or any subsidiary has been charged
with breaching nor has breached a fiduciary duty under any of the Employee
Plans. Neither BTX nor any of its subsidiaries participates in, nor has it in
the past five years participated in, nor has it any present or future
obligation or liability under, any multiemployer plan (as defined at Section
3(37) of E.R.I.S.A.). Except as may be separately disclosed in Section 2.13(c)
of the Disclosure Schedule, neither BTX nor any subsidiary maintains,
contributes to, or participates in, any plan that provides health, major
medical, disability or life insurance benefits to former employees of BTX or
any subsidiary.
(d) All liabilities of the Employee Plans have been funded on the
basis of consistent methods in accordance with sound actuarial assumptions and
practices. and no Employee Plan, at the end of any plan year, or at December
31, 1993, had or has had an accumulated funding deficiency. No actuarial
assumptions have been changed since the last written report of actuaries on
such Employee Plans. All insurance premiums (including premiums to the Pension
Benefit Guaranty Corporation) have been paid in full, subject only to normal
retrospective adjustments in the ordinary course. Except as may be noted on
the BTX Financial Statements, BTX and its subsidiaries have no contingent or
actual liabilities under Title IV of E.R.I.S.A. No accumulated funding
deficiency (within the meaning of Section 302 of E.R.I.S.A. or Section 412 of
the Internal Revenue Code of 1986, as amended (the "Code")) has been incurred
with respect to any of the Employee Plans, whether or not waived. No
reportable event (as defined in Section 4043 of E.R.I.S.A.) has occurred with
respect to any of the Employee Plans as to
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which a notice would be required to be filed with the Pension Benefit Guaranty
Corporation. No claim is pending, or to the knowledge of BTX threatened or
imminent with respect to any Employee Plan (other than a routine claim for
benefits for which plan administrative review procedures have not been
exhausted) for which BTX or any of its subsidiaries would be liable after
December 31, 1993, except as is reflected on the BTX Financial Statements.
After December 31, 1993, BTX and its subsidiaries have no liability for excise
taxes under Sections 4971, 4975, 4976, 4977, 4979 or 4980B of the Code or for a
fine under Section 502 of E.R.I.S.A. with respect to any Employee Plan. All
Employee Plans have been operated, administered and maintained materially in
accordance with the terms thereof and in material compliance with the
requirements of all applicable laws, including, without limitation, E.R.I.S.A.
SECTION 2.14. TITLE TO PROPERTIES; INSURANCE. With respect to all
real estate owned by BTX and its subsidiaries except for Other Real Estate
Owned ("O.R.E.O."), as such real estate is internally classified on the books
of BTX and its subsidiaries. BTX and its subsidiaries have marketable title,
free and clear of all liens, charges and encumbrances (except taxes which are a
lien but not yet payable and liens, charges or encumbrances reflected in the
BTX Financial Statements and easements, rights-of-way, and other restrictions
which are not material) to all of their real properties. With respect to
O.R.E.O., BTX and its subsidiaries have such title thereto as is stated in the
respective policy of title insurance thereon, a copy of each of which such
policies has been made available to FBI. All leasehold interests for real
property and any material personal property used by BTX and its subsidiaries in
their businesses are held pursuant to lease agreements which are valid and
enforceable in accordance with their terms. All such properties comply in all
material respects with all applicable private agreements, zoning requirements
and other governmental laws and regulations relating thereto and there are no
condemnation proceedings pending or, to the knowledge of BTX, threatened with
respect to such properties. BTX and its subsidiaries have valid title or other
ownership rights under licenses to all material intangible personal or
intellectual property used by BTX or its subsidiaries in their business, free
and clear of any claim, defense or right of any other person or entity which is
material to such property, subject only to rights of the licensors pursuant to
applicable license agreements, which rights do not materially adversely
interfere with the use of such property. All material insurable properties
owned or held by BTX and its subsidiaries are adequately insured by financially
sound and reputable insurers in such amounts and against fire and other risks
insured against by extended coverage and public liability insurance, as is
customary with bank holding companies of similar size. Section 2.14 of the
Disclosure Schedule includes a description of each parcel of real property
(including O.R.E.O.) owned, leased or operated by BTX or its subsidiaries or in
which any of them acts or has the power to act in a fiduciary capacity.
SECTION 2.15. ENVIRONMENTAL MATTERS.
(a) As used in this Agreement, "Environmental Laws" means all
local, state and federal environmental, health and safety laws and regulations
in all jurisdictions in which BTX and its subsidiaries have done business or
owned, leased or operated property, including, without limitation, the Federal
Resource Conservation and Recovery Act, the Federal Comprehensive Environmental
Response, Compensation and Liability Act, the Federal Clean Water Act, the
Federal Clean Air Act, and the Federal Occupational Safety and Health Act.
(b) Except as may be disclosed in Section 2.15 of the Disclosure
Schedule, neither the conduct nor operation of BTX or its subsidiaries nor any
condition of any property presently or previously owned, leased or operated by
any of them on their own behalf or in a fiduciary capacity violates or
violated
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Environmental Laws in any respect material to the business of BTX and its
subsidiaries taken as a whole and no condition or event has occurred with
respect to any of them or any such property that, with notice or the passage of
time, or both, would constitute a violation material to the business of BTX and
its subsidiaries taken as a whole of Environmental Laws or obligate (or
potentially obligate) BTX or its subsidiaries to remedy, stabilize, neutralize
or otherwise alter the environmental condition of any such property where the
aggregate cost of such actions would be material to BTX and its subsidiaries
taken as a whole. Except as may be disclosed in Section 2.15 of the Disclosure
Schedule, neither BTX nor any of its subsidiaries has received any notice from
any person or entity that BTX or its subsidiaries or the operation or condition
of any property ever owned, leased or operated by any of them on their own
behalf or in a fiduciary capacity are or were in violation of any Environmental
Laws or that BTX or its subsidiaries are responsible (or potentially
responsible) for remedying, or the cleanup of, any pollutants, contaminants, or
hazardous or toxic wastes, substances or materials at, on or beneath any such
property.
SECTION 2.16. COMPLIANCE WITH LAW. BTX and its subsidiaries have all
licenses, franchises, permits and other governmental authorizations that are
legally required to enable them to conduct their respective businesses in all
material respects and are in compliance in all material respects with all
applicable laws and regulations.
SECTION 2.17. BROKERAGE. Except for fees payable to McKenna & Company
by BTX, there are no existing claims or agreements for brokerage commissions,
finders' fees, or similar compensation in connection with the transactions
contemplated by this Agreement payable by BTX or its subsidiaries.
SECTION 2.18. STATEMENTS TRUE AND CORRECT. None of the information
supplied or to be supplied by BTX for inclusion in (i) the Proxy Statement (as
defined in Section 4.03); and (iii) any other documents to be filed with the
S.E.C. or any banking or other regulatory authority in connection with the
transactions contemplated hereby, will, at the respective times such documents
are filed, and, in the case of the Proxy Statement, when first mailed to the
stockholders of BTX, be false or misleading with respect to any material fact,
or omit to state any material fact necessary in order to make the statements
therein not misleading, or, in the case of the Proxy Statement or any amendment
thereof or supplement thereto, at the time of the Stockholders' Meeting, (as
defined in Section 4.03), be false or misleading with respect to any material
fact, or omit to state any material fact required to be stated in order to
correct any statement in any earlier communication with respect to the
solicitation of any proxy for the Stockholders' Meeting. All documents that
BTX is responsible for filing with the S.E.C. or any other regulatory authority
in connection with the transactions contemplated hereby will comply as to form
in all material respects with the provisions of applicable law and the
applicable rules and regulations thereunder.
SECTION 2.19. COMMITMENTS AND CONTRACTS.
(a) Except as set forth in Section 2.19 of the Disclosure
Schedule, (and with a true and correct copy of the document or other item in
question made available to FBI for inspection), neither BTX nor any of its
subsidiaries is a party or subject to any of the following, (whether written or
oral, express or implied):
(i) any agreement, arrangement or commitment not made in
the ordinary course of business;
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(ii) any agreement, indenture or other instrument not
reflected in the BTX Financial Statements relating to the borrowing of
money by BTX or any of its subsidiaries or the guarantee by BTX or any
of its subsidiaries of any such obligation (other than trade payables
or instruments related to transactions entered into in the ordinary
course of business by BTX or any of its subsidiaries, such as
deposits, Fed Funds borrowings, FHL Bank advances and repurchase
agreements), other than such agreements, indentures or instruments
providing for annual payments of less than $10,000;
(iii) any contract containing covenants which limit the
ability of BTX to compete in any line of business or with any person
or containing any restriction of the geographical area in which, or
method by which, BTX or any of its subsidiaries may carry on its
business (other than as may be required by law or any applicable
regulatory authority); or
(iv) any lease with annual rental payments aggregating
$25,000 or more.
SECTION 2.20. MATERIAL INTEREST OF CERTAIN PERSONS. Except as set
forth in Section 2.20 of the Disclosure Schedule:
(a) No officer or director of BTX or any "associate" (as such term
is defined in Rule 14a-1 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) of any such officer or director, has any material
interest in any material contract or property (real or personal, tangible or
intangible), used in or pertaining to the business of BTX and its subsidiaries.
(b) All outstanding loans in excess of $100.000 from Bank to any
present officer, director, employee or any associate or related interest of any
such person which was or would be required under any rule or regulation to be
approved by or reported to Bank's Board of Directors ("Insider Loans") were
approved by or reported to the such Board of Directors in accordance with
applicable law and regulations.
SECTION 2.21. CONDUCT TO DATE. Except as set forth in Section 2.21 of
the Disclosure Schedule, from and after December 31, 1993, through the date of
this Agreement, neither BTX nor any of its subsidiaries has (i) failed to
conduct its business in the ordinary and usual course consistent with past
practices; (ii) issued, sold, granted, conferred or awarded any common or other
stock, or any corporate debt securities which would be classified under
generally accepted accounting principles applied on a consistent basis as
long-term debt on the balance sheets of BTX or any of its subsidiaries; (iii)
effected any stock split or adjusted, combined, reclassified or otherwise
changed its capitalization; (iv) declared, set aside or paid any dividend or
other distribution in respect of its capital stock, or purchased, redeemed,
retired, repurchased, or exchanged, or otherwise acquired or disposed of,
directly or indirectly, any of its capital stock; (v) incurred any material
obligation or liability (absolute or continent), except normal trade or
business obligations or liabilities incurred in the ordinary course of
business, or subjected to lien any of its assets or properties other than in
the ordinary course of business consistent with past practice; (vi) discharged
or satisfied any material lien or paid any material obligation or liability
(absolute or contingent), other than in the ordinary course of business; (vii)
sold, assigned, transferred, leased, exchanged, or other-wise disposed of any
of its properties or assets other than for a fair consideration in the ordinary
course of business; (viii) except as required by contract or law, (A) increased
the rate of compensation of, or paid any bonus to, any of its directors,
officers, or other employees, except merit or promotion increases in accordance
with existing policy, (B) entered into any new, or amended or supplemented any
existing, employment, management, consulting, deferred compensation. severance,
or
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other similar contract, (C) entered into, terminated or substantially modified
any of the Employee Plans, or (D) agreed to do any of the foregoing; (ix)
suffered any material damage, destruction, or loss, whether as the result of
fire, explosion, earthquake, accident, casualty, labor trouble, requisition, or
taking, of property by any regulatory authority, flood, windstorm, embargo,
riot, act of God or the enemy, or other casualty or event, and whether or not
covered by insurance; (x) canceled or compromised any debt, except for debts
charged off or compromised in accordance with past practice; (xi) entered into
any material transaction, contract or commitment outside the ordinary course of
its business and (xii) made or guaranteed any loan to any of the Employee
Plans.
ARTICLE THREE
REPRESENTATIONS OF FBI
FBI hereby makes the following representations and warranties:
SECTION 3.01. ORGANIZATION. FBI is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Missouri
with full corporate power and authority to carry on its business as it is now
being conducted.
SECTION 3.02. AUTHORIZATION. Nothing in the articles of incorporation
or bylaws of FBI, as amended, or any other agreement, instrument, decree,
proceeding, law or regulation (except as specifically referred to in or
contemplated by this Agreement) by or to it or any of its subsidiaries are
bound or subject would prohibit or inhibit FBI from entering into and
consummating this Agreement and the Stock Purchase on the terms and conditions
herein contained. This Agreement has been duly and validly executed and
delivered by FBI and constitutes a legal, valid and binding obligation of FBI,
enforceable against FBI in accordance with its terms except as may be limited
by bankruptcy, insolvency or similar laws or by (general principles of equity
and no other corporate acts or proceedings are required to be taken by FBI to
authorize the execution, delivery and performance of this Agreement except as
contemplated hereby. Except for the requisite approvals of the Federal Reserve
Board and the Texas Department of Banking, no notice to, filing with,
authorization by, or consent or approval of, any federal or state regulatory
authority is necessary for the execution and delivery of this Agreement or
consummation of the Stock Purchase by FBI.
SECTION 3.03. AVAILABLE FUNDS. At the Closing Date FBI will have
available cash resources sufficient to pay the Purchase Price.
SECTION 3.04. FINANCIAL INFORMATION. The audited consolidated balance
sheets of FBI and its subsidiaries as of December 31, 1993 and 1992 and related
consolidated income statements and statements of changes in shareholders'
equity and of cash flows for the three years ended December 31, 1993, together
with the notes thereto, included in FBI's Annual Report on Form 10-K for the
year ended December 31, 1993, as currently on file with the S.E.C., and the
unaudited consolidated balance sheets of FBI and its subsidiaries as of March
31, 1994 and the related unaudited consolidated income statements and
statements of changes in shareholders' equity and cash flows for the three
months then ended included in FBI's Quarterly Report on Form 10-Q for the
quarter then ended, as currently on file with the S.E.C. (together, the "FBI
Financial Statements"), have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except as may be
disclosed therein) and fairly present the consolidated financial position and
the consolidated results of operations, changes in shareholders'
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equity and cash flows of FBI and its consolidated subsidiaries as of the dates
and for the periods indicated (subject, in the case of interim financial
statements, to normal recurring year-end adjustments, none of which will be
material).
SECTION 3.05. ABSENCE OF CHANGES. Since December 31, 1993, there has
not been any material adverse change in the financial condition, the results of
operations or the business or prospects of FBI and its subsidiaries taken as a
whole, nor have there been any events or transactions having such a material
adverse effect which should be disclosed in order to make the FBI Financial
Statements not misleading.
SECTION 3.06. LITIGATION. There is no litigation, claim or other
proceeding pending, or, to the knowledge of FBI, threatened, against FBI or any
of its subsidiaries which would prevent FBI from consummating the Stock
Purchase.
SECTION 3.07. COMPLIANCE WITH LAW. FBI and its subsidiaries have all
licenses, franchises, permits and other governmental authorizations that are
legally required to enable them to conduct their respective businesses in all
material respects and are in compliance in all material respects with all
applicable laws and regulations.
SECTION 3.08. STATEMENTS TRUE AND CORRECT. None of the information
supplied or to be supplied by FBI for inclusion in (i) the Proxy Statement; and
(iii) any other documents to be filed with the S.E.C. or any banking or other
regulatory authority in connection with the transactions contemplated hereby,
will, at the respective times such documents are filed, and, in the case of the
Proxy Statement, when first mailed to the stockholders of BTX, be false or
misleading with respect to any material fact, or omit to state any material
fact necessary in order to make the statements therein not misleading, or, in
the case of the Proxy Statement or any amendment thereof or supplement thereto,
at the time of the Stockholders' Meeting, be false or misleading with respect
to any material fact, or omit to state any material fact necessary to correct
any statement in any earlier communication with respect to the solicitation of
any proxy for the Stockholders' Meeting. All documents that FBI is responsible
for filing with the S.E.C. or any other regulatory authority in connection with
the transactions contemplated hereby will comply as to form in all material
respects with the provisions of applicable law and the applicable rules and
regulations thereunder.
SECTION 3.09. NO DEFAULTS. FBI and its subsidiaries are neither in
default under nor in violation of any provision of their articles or
certificates of incorporation, bylaws, or any promissory note, indenture or any
evidence of indebtedness or security therefor, lease, contract, purchase or
other commitment or any other agreement which is material to FBI and its
subsidiaries taken as a whole.
SECTION 3.10. REGULATORY ENFORCEMENT MATTERS. Neither FBI nor any of
its subsidiaries is subject to, or has received any notice or advice that it
may become subject to, any order, agreement, memorandum of understanding or
other regulatory enforcement action or proceeding with or by any federal or
state agency charged with the supervision or regulation of banks or bank
holding companies or engaged in the insurance of bank deposits or any other
governmental agency having supervisory or regulatory authority with respect to
FBI or any of its subsidiaries.
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SECTION 3.11. BROKERAGE. Except for fees payable by FBI to Stifel
Nicolaus & Co., there are no existing claims or agreements for brokerage
commissions, finders' fees, or similar compensation in connection with the
transactions contemplated by this Agreement payable by FBI or its subsidiaries.
SECTION 3.12. INVESTMENT INTENTION; ACCREDITATION. FBI is acquiring
the shares of Class B Common Stock pursuant to this Agreement for its own
account and without any view to a distribution thereof. FBI further represents
and warrants to BTX that it is an "accredited investor" within the meaning of
Regulation D under the Securities Act of 1933, as amended. FBI has been
afforded an adequate opportunity to meet with and question the management of
BTX and has obtained the information it has requested.
ARTICLE FOUR
PRE-CLOSING AGREEMENTS OF BTX
SECTION 4.01. BUSINESS IN ORDINARY COURSE.
(a) BTX shall not declare or pay any dividend or make any other
distribution to stockholders, whether in cash, stock or other property, after
the date of this Agreement and prior to the Closing.
(b) Except as contemplated hereby, BTX shall, and shall cause each
of its subsidiaries to, continue to carry on after the date hereof and through
the Closing Date its respective business and the discharge or incurrence of
obligations and liabilities, only in the usual, regular and ordinary course of
business, as heretofore conducted, and by way of amplification and not
limitation, BTX and each of its subsidiaries will not, without the prior
written consent of FBI (which shall not be unreasonably withheld):
(i) issue any Common Stock or other capital stock or any
options, warrants, or other rights to subscribe for or purchase Common
Stock or any other capital stock or any securities convertible into or
exchangeable for any capital stock (except for the issuance of Common
Stock pursuant to the exercise of BTX Stock Options, to purchase the
same which are outstanding on the date of this Agreement or pursuant
to the Warrant Agreement or pursuant to the F.D.I.C. Warrants and the
Lender Warrants to the extent of the exercise thereof after the date
hereof); or
(ii) directly or indirectly redeem, purchase or otherwise
acquire any Common Stock or any other capital stock of BTX or its
subsi diaries; or
(iii) effect a reclassification, recapitalization, splitup,
exchange of shares, readjustment or other similar change in or to any
capital stock or otherwise reorganize or recapitalize; or
(iv) change its certificate of incorporation or
association, as the case may be, or bylaws; or
(v) grant any increase (other than ordinary and normal
increases consistent with past practices) in the compensation payable
or to become payable to officers or salaried employees, grant any
stock options or, except as required by law, adopt or make any change
in any bonus, insurance, pension, or other Employee Plan, agreement,
payment or arrangement made to, for or with any of such officers or
employees; or
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(vi) borrow or agree to borrow any amount of funds except
in the ordinary course of business, or directly or indirectly
guarantee or agree to guarantee any obligations of others (for the
purpose hereof, it is understood and agreed that the incurrence of
obligations under repurchase agreements shall be considered as
transactions in the ordinary course of business); or
(vii) make or commit to make any new loan or letter of
credit or any new or additional discretionary advance under any
existing line of credit, in principal amounts in excess of Two Million
Five Hundred Thousand Dollars ($2,500,000) or that would increase the
aggregate credit outstanding to any one borrower (or group of
affiliated borrowers) to more than Two Million Five Hundred Thousand
Dollars ($2,500,000) (excluding, for this purpose any accrued interest
or overdrafts), without the prior written consent of FBI, acting
through Allen H. Blake or such other designee as FBI may give notice
of to BTX; or
(viii) purchase or otherwise acquire any investment security
for its own account having an average remaining life to maturity
greater than five years, any asset-backed securities other than those
issued or guaranteed by the Government National Mortgage Association,
the Federal National Mortgage Association or the Federal Home Loan
Mortgage Corporation having an expected average life to maturity of
greater than five years or any interest only, principal only, residual
or stripped securities; or
(ix) enter into any agreement, contract or commitment out
of the ordinary course of business or having a term in excess of three
(3) months other than letters of credit, loan agreements, deposit
agreements, and other lending, credit and deposit agreements and
documents made in the ordinary course of business; or
(x) except in the ordinary course of business (which
includes pledges of securities in connection with public funds
deposits and pledges of securities to dealers and/or the Federal Home
Loan Bank of Dallas), place on any of its assets or properties any
mortgage, pledge, lien, charge, or other encumbrance; or
(xi) except in the ordinary course of business, cancel or
accelerate any indebtedness of more than $100,000 owing to BTX or its
subsidiaries or any claims which BTX or its subsidiaries may possess
or waive any material rights of substantial value; or
(xii) sell or otherwise dispose of any real property or any
material amount of any tangible or intangible personal property other
than (A) properties acquired in foreclosure or otherwise in the
ordinary collection of indebtedness to BTX and its subsidiaries or (B)
sales of pools of loans in accordance with past practices; or
(xiii) purchase, foreclose upon or otherwise take title to
or possession or control of any real property without first obtaining
a phase one environmental report thereon which indicates that the
property is free of pollutants, contaminants or hazardous or toxic
waste materials; provided, however, that BTX and its subsidiaries
shall not be required to obtain such a report with respect to single
family, non-agricultural residential property of one acre or less to
be foreclosed upon unless it has reason to believe that such property
might contain any such waste materials or otherwise might be
contaminated; or
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(xiv) commit any act or fail to do any act which will cause
a breach of any agreement, contract or commitment and which will have
a material adverse effect on BTX's and its subsidiaries' business,
financial condition, or earnings; or
(xvii) knowingly violate any law, statute, rule,
governmental regulation, or order, which violation might have a
material adverse effect on BTX's and its subsidiaries' business,
financial condition, or earnings; or
(xviii) purchase any real or personal property or make any
other capital expenditure where the amount paid or committed therefor
is in excess of Three Hundred Thousand Dollars ($300,000).
(c) BTX and its subsidiaries shall not, without the prior written
consent of FBI, engage in any transaction or take any action that would render
untrue in any material respect any of the representations and warranties of BTX
contained in Article Two hereof, if such representations and warranties were
given as of the date of such transaction or action.
(d) BTX shall promptly notify FBI, making reference to this
section, of the occurrence of any matter or event known to and directly
involving BTX, which would not include any changes in conditions that affect
the banking industry generally in the markets in which BTX and its subsidiaries
operate, that is materially adverse to the business, operations, properties,
assets, or condition (financial or otherwise) of BTX and its subsidiaries taken
as a whole.
(e) BTX shall promptly advise FBI of its receipt of any proposal
(or inquiry concerning any possible such proposal) regarding an acquisition of
all or any substantial portion of the business, assets or stock of BTX and its
subsidiaries and, subject to the fulfillment of the fiduciary duties of the
Board of Directors of BTX, the substance of such proposal or inquiry.
SECTION 4.02. BREACHES. BTX shall, in the event it has knowledge of
the occurrence, or impending or threatened occurrence, of any event or
condition which would cause or constitute a breach (or would have caused or
constituted a breach had such event occurred or been known prior to the date
hereof) of any of its representations or agreements contained or referred to
herein, give prompt written notice thereof to FBI and use its best efforts to
prevent or promptly remedy the same.
SECTION 4.03. SUBMISSION TO STOCKHOLDERS AND RELATED MATTERS.
(a) BTX shall, prior to the Closing, take all actions necessary to
amend and restate its Restated Certificate of Incorporation to read in its
entirety as set forth on Exhibit 4.03(a) attached hereto (as amended and
restated, the "BTX Restated Certificate of Incorporation").
(b) BTX shall, prior to the Closing, take all actions necessary to
amend and restate its Bylaws to read in its entirety as set forth on Exhibit
4.03(b) attached hereto (as amended and restated, the "BTX Restated Bylaws";
the BTX Restated Certificate of Incorporation and the BTX Restated Bylaws are
referred to herein collectively as the "Amendments").
(c) BTX shall cause to be duly called and held, on the earliest
practicable date selected by BTX, a meeting of its stockholders (such meeting
together with any adjournments thereof referred to as
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"Stockholders' Meeting") for submission and approval of the transactions
contemplated by this Agreement and the BTX Restated Certificate of
Incorporation of such stockholders as required by the Delaware General
Corporation Law and Restated Certificate of Incorporation of BTX.
(d) In connection with the Stockholders' Meeting, (i) BTX shall
prepare and file, at its sole cost and expense, a Proxy Statement (the "Proxy
Statement") with the S.E.C. and the N.Y.S.E. and BTX shall mail it to its
stockholders; and (ii) the Board of Directors of BTX, subject to the
fulfillment of their fiduciary duties, shall unanimously recommend to its
stockholders the approval of the transactions contemplated by this Agreement,
and the Amendments contemplated hereby and use its best efforts to obtain such
stockholder approval.
(e) BTX shall promptly and properly prepare and file any other
filings required under the Exchange Act relating to this Agreement, the Stock
Purchase and the Amendments and the transactions contemplated herein and
therein. Except as contemplated by Section 6.03 hereof, BTX shall have no
obligation to register the issuance or sale of the Class B Common Stock under
the Securities Act of 1933, as amended (the "Securities Act").
SECTION 4.04. CONSUMMATION OF AGREEMENT. Subject to the fulfillment
of the fiduciary duties of the board of directors of BTX, BTX shall use its
best efforts to perform and fulfill all conditions and obligations on its part
to be performed or fulfilled under this Agreement and to effect the Stock
Purchase and the other transactions contemplated hereby in accordance with the
terms and provisions hereof. BTX shall furnish to FBI in a timely manner all
information, data and documents in the possession of BTX requested by FBI as
may be required to obtain any necessary regulatory or other approvals of the
Stock Purchase and shall otherwise cooperate fully with FBI to carry out the
purpose and intent of this Agreement.
SECTION 4.05. ENVIRONMENTAL REPORTS. BTX shall provide to FBI, as
soon as reasonably practical, but not later than ten (10) days after the date
hereof, a list of all real property owned, leased or operated by BTX or its
subsidiaries or in which any of them acts or has the power to act in a
fiduciary capacity as of the date hereof (other than space in retail and
similar establishments leased by the BTX for automatic teller machines) (the
"Property List") and within ten (10) days after the acquisition, lease or
operation of any real property acquired, leased or operated by BTX or its
subsidiaries on their own behalf or in a fiduciary capacity after the date
hereof (other than space in retail and similar establishments leased or
operated by the BTX for automatic teller machines), BTX shall notify FBI that
such property has been acquired or leased or that the BTX or its subsidiaries
have begun to operate such property. BTX has made available and will continue
to make available to FBI all of the information in BTX's possession regarding
the environmental condition of every property on the Property List. FBI shall,
within ten (10) days after its receipt of the Property List, notify BTX if FBI
believes that it is necessary and appropriate to obtain any environmental
report or other environmental information concerning any property identified on
the Property List. If FBI notifies BTX of its desire to obtain additional
information or reports with respect to any property, then FBI and BTX shall
cooperate in jointly determining the course of action to be taken, including
the nature of any report to be obtained and the appropriate method of sharing
the costs of obtaining such report. In the event that the parties are unable
to agree BTX shall take any necessary steps to enable FBI to obtain any
environmental report it elects to obtain, and BTX and FBI shall share equally
the costs and expenses thereof.
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SECTION 4.06. ACCESS TO INFORMATION. BTX shall permit FBI reasonable
access in a manner which will avoid undue disruption or interference with BTX's
normal operations to its properties and shall disclose and make available to
FBI all books, documents, papers and records relating to its assets, stock
ownership, properties, operations, obligations and liabilities, including, but
not limited to, all books of account (including the general ledger), tax
records, minute books of directors' and stockholders' meetings, organizational
documents, material contracts and agreements, loan files, filings with any
regulatory authority, accountants' workpapers (if available and subject to the
respective independent accountants' consent), litigation files, plans affecting
employees, and any other business activities or prospects in which FBI may have
a reasonable and legitimate interest in furtherance of the transactions
contemplated by this Agreement. BTX shall deliver to FBI within ten (10) days
after the date hereof a true, accurate and complete copy of each written plan
or program disclosed in Section 2.13(c) of the Disclosure Schedule and, with
respect to each such plan or program, all (i) amendments or supplements
thereto; (ii) summary plan descriptions; (iii) lists of all current
participants and all participants with benefit entitlements; (iv) contracts
relating to plan documents; (v) actuarial valuations for any defined benefit
plan; (vi) valuations for any plan as of the most recent date; (vii)
determination letters from the Internal Revenue Service; (viii) the most recent
annual report filed with the Internal Revenue Service; (ix) registration
statements on Form S-8 and prospectuses; and (x) trust agreements. FBI will
hold any such information which is nonpublic in confidence in accordance with
the provisions of Section 10.01 hereof.
SECTION 4.07. CONSENTS AND NOTICES. BTX shall obtain all necessary
consents and provide all necessary notices with respect to all interests of BTX
and its subsidiaries in any material leases, licenses, contracts, instruments
and rights which require the consent of, or notice to, another person as a
result of the Stock Purchase or the other transactions contemplated hereby,
including, without limitation, if required, notice to the F.D.I.C. under
Section 12 of the F.D.I.C. Warrant.
ARTICLE FIVE
PRE-CLOSING AGREEMENTS OF FBI
SECTION 5.01. REGULATORY APPROVALS. FBI shall file all regulatory
applications required in order to consummate the Stock Purchase, including but
not limited to the necessary applications for the prior approval of the Federal
Reserve Board and the Texas Department of Banking. FBI shall keep BTX
reasonably informed as to the status of such applications and make available to
BTX, upon reasonable request by BTX from time to time, copies of such
applications and any supplementally filed materials.
SECTION 5.02. BREACHES. FBI shall, in the event it has knowledge of
the occurrence, or impending or threatened occurrence, of any event or
condition which would cause or constitute a breach (or would have caused or
constituted a breach had such event occurred or been known prior to the date
hereof) of any of its representations or agreements contained or referred to
herein, give prompt written notice thereof to BTX and use its best efforts to
prevent or promptly remedy the same.
SECTION 5.03. CONSUMMATION OF AGREEMENT. FBI shall use its best
efforts to perform and fulfill all conditions and obligations on its part to be
performed or fulfilled under this Agreement and to effect the Stock Purchase in
accordance with the terms and conditions of this Agreement.
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ARTICLE SIX
POST-CLOSING OPERATING AGREEMENTS
SECTION 6.01. BOARD OR DIRECTOR REPRESENTATION. After the Closing on
the Closing Date, BTX shall cause to be held a special meeting of its Board of
Directors (the "Special Directors Meeting"). At the Special Directors Meeting,
all but three of the then-serving directors of BTX shall resign and such
remaining three then-serving directors of BTX (two of whom shall be outside
directors as determined under the rules of the N.Y.S.E.) shall accept such
resignations and take appropriate action to fill three of the then-existing
vacancies on the BTX Board of Directors with the following affiliates of FBI:
James F. Dierberg, Allen H. Blake and Mark Turkcan, each of whom shall be
appointed to serve until the next annual meeting of BTX stockholders.
SECTION 6.02. ANTIDILUTION.
(a) After the Closing and during the period of ninety (90) months
after the Closing Date, BTX shall not issue any shares of Common Stock, Class B
Common Stock, voting preferred stock or any other voting security (collectively
referred to herein as "Voting Stock"), or grant any option, warrant, call or
other right to subscribe for or acquire Voting Stock or enter into any
agreement providing for any such issuance or grant, if upon the issuance of
such Voting Stock the FBI Shares (as defined in Section 6.02(b)(i) hereof)
would constitute less than fifty-five percent (55%) of the total outstanding
shares of Fully-Diluted Voting Stock (as defined in Section 6.02(b)(ii)
hereof); provided, however, that, notwithstanding the foregoing, BTX may issue
additional shares of Voting Stock or grant an option, warrant, call or other
right to subscribe for or acquire Voting Stock or enter into an agreement
providing for such issuance or grant as aforesaid if, at such time, BTX also
grants to FBI an option or warrant to acquire, at any time during the twelve
(12) month period commencing upon the issuance by BTX of such additional Voting
Stock, shares of Common Stock or Class B Common Stock in an amount sufficient
to cause the total number of FBI Shares to equal fifty-five percent (55%) of
the total outstanding shares of Fully-Diluted Voting Stock at such time, with
such option or warrant providing for an exercise price per share (the "Exercise
Price") of an amount equal to (i) if such option or warrant is granted by BTX
to FBI during the period of sixty (60) months after the Closing Date, one
hundred six and two-thirds percent (106.67%) of the tangible common equity per
share (as defined in Section 6.02(b)(iii) hereof), on a primary basis as of the
end of the preceding quarter, as adjusted to give effect to the issuance by BTX
of such additional Voting Stock (the "Adjusted Quarter-End Equity"), or (ii) if
such option or warrant is granted by BTX to FBI during the sixty-first (61st)
through the seventy-second (72nd) months of the aforesaid ninety (90) month
period after the Closing Date, one hundred thirteen percent (113%) of the
Adjusted Quarter-End Equity, or (iii) if such option is granted by BTX to FBI
during the seventy-third (73rd) month through the end of the aforesaid ninety
(90) month period after the Closing Date, one hundred twenty percent (120%) of
the Adjusted Quarter-End Equity; provided, further, however, that the Exercise
Price determined pursuant to clause (ii) or (iii) above shall not exceed, and
shall be limited to, the average closing price of a share of BTX Common Stock
on the N.Y.S.E. (or the American Stock Exchange or the NASDAQ National Market
System, as the case may be at such time) during the sixty (60) day trading
period ending on the last trading day immediately preceding the grant of such
warrant or option by BTX to FBI.
(b) As used herein, the term (i) "FBI Shares" shall mean and
include the sum of (A) the number of shares of Common Stock, Class B Common
Stock or other Voting Stock then held by FBI, (B) the number of shares of
Common Stock, Class B Common Stock or other Voting Stock issuable to
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FBI pursuant to an option or warrant granted by BTX to FBI upon the exercise
thereof, plus (C) the number of shares of Common Stock, Class B Common Stock or
other Voting Stock sold by FBI at any time; (ii) "Fully-Diluted Voting Stock"
shall mean, at any time, the then outstanding shares of Common Stock, voting
preferred stock (with a share of such stock having multiple votes per share
being deemed to be that number of shares as equals its number of votes) plus
(without duplication) all shares of Common Stock or voting preferred stock
issuable, whether at such time or upon the passage of time or the occurrence of
future events, upon the exercise, conversion, or exchange of all then
outstanding rights, warrants, options, convertible securities (including the
Class B Common Stock) or indebtedness, exchangeable securities or indebtedness,
or other rights, exercisable for or convertible or exchangeable into, directly
or indirectly, Common Stock or voting preferred stock and securities
convertible or exchangeable into Common Stock or voting preferred stock,
whether at the time of issuance or upon the passage of time or the occurrence
of some future event; and (iii) "tangible common equity per share" shall mean
the quotient of (A) the total amount of stockholders' equity of BTX determined
in accordance with generally accepted accounting principles, less the amount of
any preferred stock outstanding and less intangible assets resulting from
acquisitions accounted for as purchases (which shall include in all cases the
total of the excess of cost over net assets acquired of each purchased
subsidiary), divided by (B) the total number of shares of Common Stock and
Class B Common Stock outstanding.
SECTION 6.03. REGISTRATION RIGHTS.
(a) If at any time after the fifth (5th) anniversary of the
Closing Date, BTX shall receive a written request therefor from FBI, BTX shall
prepare and file with the S.E.C. a registration statement complying with the
Securities Act covering all or a portion of any shares of Common Stock issued
to FBI upon conversion of the Class B Common Stock as FBI shall specify in the
request and shall use its best efforts to cause such registration statement to
become effective; provided, however, that FBI shall only have the right to
request three such registrations. Without the written consent of FBI, neither
BTX nor any other holder of securities of BTX may include in such registrations
any BTX securities other than such specified number of shares of Class B Common
Stock (or shares of Common Stock issued to FBI upon conversion of the Class B
Common Stock).
(b) On or after the fifth (5th) anniversary of the Closing Date,
each time BTX shall determine to proceed with the actual preparation and filing
of a registration statement in connection with the proposed offer and sale for
cash of any of its securities (other than in connection with a dividend
reinvestment, employee stock purchase, stock option or similar plan or an
offering in connection with an acquisition of a business) by it or any of its
stockholders, BTX will give written notice of its determination to FBI. Upon
the written request of FBI given within ten (10) business days after receipt of
any such notice from BTX, BTX will, except as herein provided, cause to be
included in such registration all shares of Common Stock issued to FBI upon
conversion of any Class B Common Stock which FBI shall request; provided,
however, that nothing herein shall prevent BTX from, at any time, abandoning or
delaying any registration. If any offering pursuant to this Section 6.03(b)
shall be underwritten in whole or in part, BTX may require that shares of
Common Stock issued to FBI upon conversion of the Class B Common Stock)
requested for inclusion pursuant to this Section 6.03(b) be included in the
underwriting on the same terms and conditions as the securities otherwise being
sold through the underwriters. In the event that the shares of Common Stock
issued to FBI upon conversion of the Class B Common Stock) requested for
inclusion pursuant to this Section 6.03(b) would constitute more than thirty
percent (30%) of the total number of shares to be included in a proposed
underwritten public offering, and if in the good faith judgment of the managing
underwriter of such public offering
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(the "Underwriter") the inclusion of all of such shares of Common Stock issued
to FBI upon conversion of the Class B Common Stock would interfere with the
successful marketing of the shares of stock offered by BTX, the number of
shares of Common Stock issued to FBI upon conversion of the Class B Common
Stock otherwise to be included in the underwritten public offering may be
reduced; provided, however, that after any such required reduction the shares
of Common Stock issued to FBI upon conversion of the Class B Common Stock to be
included in such offering for the account of FBI shall constitute at least
fifteen percent (15%) of the total number of shares to be included in such
offering.
(c) If and whenever BTX is required by the provisions of Sections
6.03(a) or (b) hereof to effect on behalf of FBI a public offering of any
shares of Common Stock issued to FBI upon conversion of the Class B Common
Stock under the Securities Act, BTX shall: (i) prepare and file with the S.E.C.
a registration statement with respect to such securities, and use its best
efforts to cause such registration statement to become and remain effective for
such period as may be reasonably necessary to effect the sale of such
securities, not to exceed six (6) months; (ii) prepare and file with the S.E.C.
such amendments to such registration statement and supplements thereto as may
be necessary to keep such registration statement effective for such period as
may be reasonably necessary to effect the sale of such securities, not to
exceed six (6) months; (iii) furnish to FBI and to any underwriters of the
securities being registered such reasonable number of copies of the prospectus
(preliminary or final, as appropriate) contained in such registration statement
and such other documents as FBI or such underwriters may reasonably request in
order to facilitate the public offering of such securities; (iv) use its best
efforts to register or qualify the securities covered by such registration
statement under such state securities or blue sky laws of such jurisdictions as
FBI or such underwriters may reasonably request; provided that BTX shall not be
required by virtue hereof to submit to general jurisdiction in any state; (v)
notify FBI, promptly after BTX shall receive notice thereof, of the time when
such registration statement has become effective or a supplement thereto has
been filed; (vi) notify FBI promptly of any comments or requests by the S.E.C.
relating to such registration statement; (vii) prepare and file with the
S.E.C., promptly upon the request of FBI, any amendments or supplements to such
registration statement which, in the opinion of counsel for FBI, is required
under the Securities Act or the rules or regulations thereunder in connection
with the distribution of the Shares by FBI; (viii) prepare and promptly file
with the S.E.C. such amendment or supplement to such registration statement (or
included prospectus) as may be necessary to correct any statements or omissions
if, at the time when such prospectus is required to be delivered under the
Securities Act, any event shall have occurred as the result of which such
prospectus as then in effect would include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances in which they were made, not
misleading; (ix) advise FBI, promptly after it shall receive notice or obtain
knowledge thereof, of the issuance of any stop order by the S.E.C. suspending
the effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best
efforts to prevent the issuance of any stop order or to obtain its withdrawal
if such stop order should be issued; and (x) at the request of FBI, furnish on
the date or dates provided for in any underwriting agreement: (1) an opinion or
opinions of the counsel representing BTX for the purposes of such registration,
addressed to the underwriters and to FBI, covering such matters as such
underwriters and FBI may reasonably request and are customarily covered by
BTX's counsel at that time; and (2) a letter or letters from the independent
certified public accountants of BTX, addressed to the underwriters and to FBI
covering such matters as such underwriters of FBI may reasonably request, in
which letters such accountants shall state (without limiting the generality of
the foregoing) that they are independent certified public accountants within
the meaning of the Securities Act and that, in the opinion of such accountants,
the financial statements and other financial data of BTX included in the
registration statement and included prospectus,
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as amended or supplemented, comply in all material respects with the applicable
accounting requirements of the S.E.C.
(d) With respect to the offering requested pursuant to Section
6.03(a) hereof and with respect to each inclusion of shares of Common Stock
issued to FBI upon conversion of the Class B Common Stock in a registration
statement pursuant to Section 6.03(b) hereof and subject to the last clause of
the second sentence of Section 6.03(b), BTX shall bear its relative costs and
expenses and FBI shall bear its relative costs and expenses based upon the
relative amount of shares sold by each party, for the following fees, costs and
expenses: all registration and filing fees, printing expenses, fees and
disbursements of counsel and accountants for BTX, fees and disbursements of
counsel for the underwriter or underwriters of such securities (if BTX and/or
FBI are required to bear such fees and disbursements), and all legal fees and
disbursements and other expenses of complying with state securities or blue sky
laws of any jurisdictions in which the securities to be offered are to be
registered or qualified. Fees and disbursements of counsel and accountants for
FBI, underwriting discounts and commissions and transfer taxes exclusively for
FBI and any other expenses incurred by FBI not expressly included above shall
be borne by FBI.
(e) In the event of any registered offering of shares pursuant to
Sections 6.03(a) or (b) hereof, BTX, any underwriter and FBI shall agree to
indemnification and contribution rights and obligations as are customary or as
may be required by the underwriter.
SECTION 6.04. RESTRICTIONS ON TRANSFER. FBI shall not sell, assign or
transfer any shares of Class B Common prior to the fifth (5th) anniversary of
the Closing Date, except (i) to direct or indirect subsidiaries of FBI, or (ii)
to entities under common control with FBI, provided that the shares sold or
transferred to such entities shall not exceed, in the aggregate, 24.99% of the
outstanding Voting Stock, or (iii) with the prior written approval of BTX,
acting for this purpose through a committee of the Board of Directors of BTX
consisting entirely of directors who are not also directors, officers or
employees of FBI or any of its subsidiaries (excluding BTX and its subsidiaries
as subsidiaries of FBI for this purpose). The certificates for the shares of
Class B Common issued to FBI shall contain an appropriate legend disclosing the
restriction on transfer contemplated by this Section 6.04.
ARTICLE SEVEN
CONDITIONS PRECEDENT TO STOCK PURCHASE
SECTION 7.01. CONDITIONS TO FBI'S OBLIGATIONS. FBI's obligations to
effect the Stock Purchase and the other transactions contemplated by this
Agreement shall be subject to the satisfaction (or waiver by FBI) prior to or
on the Closing Date of the following conditions:
(a) The representations and warranties made by BTX in this
Agreement shall be true in all material respects on and as of the Closing Date
with the same effect as though such representations and warranties had been
made or given on and as of the Closing Date;
(b) BTX shall have performed and complied in all material respects
with all of its obligations and agreements required to be performed prior to
the Closing Date under this Agreement;
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(c) No action, suit or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency (including any bank
regulatory authority) of any federal, state, local or foreign jurisdiction or
before any arbitrator wherein an unfavorable injunction (preliminary or
permanent), temporary restraining order, judgment, order, decree, or charge
would (i) prevent, prohibit or inhibit consummation of any of the transactions
contemplated by this Agreement; (ii) cause any of the transactions contemplated
by this Agreement to be rescinded following consummation; (iii) adversely
affect the right of FBI to own the Class B Common Stock; (iv) affect adversely
the right of any of BTX and its subsidiaries to own its assets and operate its
businesses; (v) cause the Common Stock of BTX to cease being listed on the
N.Y.S.E. (unless BTX causes the Common Stock to be listed on the American Stock
Exchange or to be eligible for trading in the NASDAQ National Market System);
(vi) hold any one or more of the directors of BTX liable for a breach of their
fiduciary duties in connection with this Agreement or any of the transactions
contemplated hereby; or (vii) adversely affect the financial condition, the
results of operations or the business or prospects of BTX and its subsidiaries
taken as a whole (and no such injunction (preliminary or permanent), temporary
restraining order, judgment, order, decree, or charge shall be in effect). For
purposes of the preceding sentence, FBI and BTX agree that a pending or
threatened action, suit or proceeding shall not be deemed to satisfy the
standard set forth therein unless FBI in the exercise of reasonable judgment
determines, after consultation with BTX and BTX's counsel, that such action,
suit or proceeding has a significant prospect of resulting in one or more of
the unfavorable outcomes enumerated in such sentence. There shall not be any
action taken, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the Stock Purchase which makes the
consummation of the Stock Purchase or the other transactions contemplated
hereby illegal;
(d) All necessary regulatory approvals, consents, authorizations
and other approvals, including the requisite approval of this Agreement, the
Stock Purchase and the Amendments by the stockholders of BTX required by law
for consummation of the Stock Purchase and the other transactions contemplated
hereby shall have been obtained and all waiting periods required by law shall
have expired;
(e) FBI shall have received all documents required to be received
from BTX on or prior to the Closing Date, all in form and substance reasonably
satisfactory to FBI;
(f) The FDIC Warrants shall not be adjusted on account of the
transactions contemplated by this Agreement to represent the right to purchase
more than 1,970,033 shares of BTX Common Stock, and
(g) BTX shall have received an opinion, dated as of or shortly
prior to the date of mailing of the Proxy Statement to the stockholders of BTX
for the Stockholders' Meeting, of its investment banking firm, McKenna and
Company, to the effect that the transaction contemplated by this Agreement,
considered as a whole, is fair from a financial point of view to BTX and its
stockholders.
SECTION 7.02. CONDITIONS TO BTX'S OBLIGATIONS. BTX's obligation to
effect the Stock Purchase and the other transactions contemplated by this
Agreement shall be subject to the satisfaction (or waiver by BTX) prior to or
on the Closing Date of the following conditions:
(a) The representations and warranties made by FBI in this
Agreement shall be true in all material respects on and as of the Closing Date
with the same effect as though such representations and warranties had been
made or given on the Closing Date;
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(b) FBI shall have Performed and complied in all material respects
with all of its obligations and agreements hereunder required to be performed
prior to the Closing Date under this Agreement;
(c) No action, suit or proceeding shall be pending or threatened
before any court or quasijudicial or administrative agency (including any bank
regulatory authority) of any federal, state, local or foreign jurisdiction or
before any arbitrator wherein an unfavorable injunction (preliminary or
permanent), temporary restraining order, judgment, order, decree, or charge
would prevent, prohibit or inhibit consummation of any of the transactions
contemplated by this Agreement. There shall not be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Stock Purchase which makes the consummation of the Stock
Purchase or the other transactions contemplated hereby illegal;
(d) All necessary regulatory approvals, consents, authorizations
and other approvals (including the requisite approval of this Agreement, the
Stock Purchase and the Amendments by the stockholders of BTX) required by law
for consummation of the Stock Purchase and the other transactions contemplated
hereby shall have been obtained and all waiting periods required by law shall
have expired;
(e) BTX shall have received all documents required to be received
from FBI on or prior to the Closing Date, all in form and substance reasonably
satisfactory to BTX; and
(f) BTX shall have received an opinion, dated as of or shortly
prior to the date of mailing of the Proxy Statement to the stockholders of BTX
for the Stockholders' Meeting, of its investment banking firm, McKenna and
Company, to the effect that the transaction contemplated by this Agreement,
considered as a whole, is fair from a financial point of view to BTX and its
stockholders.
ARTICLE EIGHT
TERMINATION OR ABANDONMENT
SECTION 8.01. MUTUAL AGREEMENT. This Agreement may be terminated by
the mutual written agreement of the parties at any time prior to the Closing
Date, regardless of whether stockholder approval of this Agreement, the Stock
Purchase and the Amendments by the stockholders of BTX shall have been
previously obtained.
SECTION 8.02. BREACH OF AGREEMENTS. In the event that there is a
material breach in any of the representations and warranties or agreements of
FBI or BTX, which breach is not cured within thirty (30) days after notice to
cure such breach is given to the breaching party by the non-breaching party,
then the non-breaching party, regardless of whether stockholder approval of
this Agreement, the Stock Purchase and the Amendments shall have been
previously obtained, may terminate and cancel this Agreement by providing
written notice of such action to the other party hereto.
SECTION 8.03. FAILURE OF CONDITIONS. In the event that any of the
conditions to the obligations of either party are not satisfied or waived on or
prior to the Closing Date, and if any applicable cure period provided in
Section 8.02 hereof has lapsed, then such party may, regardless of whether
stockholder approval of the transactions contemplated by this Agreement and the
Amendments shall have been previously obtained, terminate and cancel this
Agreement by delivery of written notice of such action to the other party on
such date.
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SECTION 8.04. APPROVAL DENIAL. If any regulatory application filed
pursuant to Section 5.01 hereof should be finally denied or disapproved by the
respective regulatory authority, then this Agreement thereupon shall be deemed
terminated and canceled; provided, however, that a request for additional
information or undertaking by FBI, as a condition for approval, shall not be
deemed to be a denial or disapproval so long as FBI diligently provides the
requested information or undertaking. In the event an application is denied
pending an appeal, petition for review, or similar such act on the part of FBI
(hereinafter referred to as the "appeal") then the application will be deemed
denied unless FBI prepares and timely files such appeal and continues the
appellate process for purposes of obtaining the necessary approval.
SECTION 8.05. SHAREHOLDER APPROVAL DENIAL. If the transactions
contemplated by this Agreement and the Amendments are not approved by the
requisite vote of the stockholders of BTX at the Stockholders' Meeting, then
either party may terminate this Agreement.
SECTION 8.06. REGULATORY ENFORCEMENT MATTERS. In the event that BTX or
any of its subsidiaries shall become a party or subject to any new or amended
written agreement, memorandum of understanding, cease and desist order,
imposition of civil money penalties or other regulatory enforcement action or
proceeding with any federal or state agency charged with the supervision or
regulation of banks or bank holding companies after the date of this Agreement,
then FBI may terminate this Agreement.
SECTION 8.07. AUTOMATIC TERMINATION. If the Closing Date does not
occur on or prior to February 28, 1995, then this Agreement may be terminated
by either party by giving written notice to the other.
ARTICLE NINE
CERTAIN PAYMENTS UPON TERMINATION OR ABANDONMENT
SECTION 9.01. LIABILITIES UPON TERMINATION OF AGREEMENT. In the event
that this Agreement is terminated or the Stock Purchase is abandoned pursuant
to the provisions of Article Eight hereof, no party hereto shall have any
liability to any other party for costs, expenses, damages or otherwise;
provided, however, that, notwithstanding the foregoing, in the event that this
Agreement is terminated by BTX or FBI pursuant to Section 8.02 hereof, on
account of a knowing and material breach in any of the representations and
warranties or any material breach of any of the agreements of the other party
hereto, then the non-breaching party shall be entitled to institute an action
for appropriate damages against such breaching party.
SECTION 9.02. PAYMENT UPON OCCURRENCE OF TRIGGERING EVENT.
(a) Upon the occurrence of a Triggering Event (as defined in
Section 9.02(b) hereof), BTX shall upon request of FBI pay to FBI the sum of
One Million Five Hundred Thousand Dollars ($1,500,000.00) in cash as full
liquidated damages hereunder to FBI for such event.
(b) As used herein, the term "Triggering Event" shall mean the
consummation of any transaction announced before or within nine (9) months
after the termination of this Agreement (the "Termination Date") and
consummated within twenty-one (21) months after the Termination Date, whereby a
third party has acquired, merged or consolidated with BTX, purchased all or
substantially all
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of BTX's assets or directly or indirectly acquired beneficial ownership of
twenty-five percent (25%) or more of the outstanding shares of voting stock of
BTX.
ARTICLE TEN
GENERAL
SECTION 10.01. CONFIDENTIAL INFORMATION. The parties acknowledge the
confidential and proprietary nature of the "Information" (as herein described)
which has heretofore been exchanged and which will be received from each other
hereunder and agree to hold and keep the same confidential, unless such
information becomes subject to a legal obligation of disclosure. Such
Information will include any and all financial, technical, commercial,
marketing, customer or other information concerning the business, operations
and affairs of a party that may be provided to the other, irrespective of the
form of the communications, by such party's employees or agents. Such
Information shall not include information which is or becomes generally
available to the public other than as a result of a disclosure by a party or
its representatives in violation of this Agreement. The parties agree that the
Information will be used solely for the purposes contemplated by this Agreement
and that such Information will not be disclosed to any person other than
employees and agents of a party who are directly involved in evaluating the
transaction. The Information shall not be used in any way detrimental to a
party, including use directly or indirectly in the conduct of the other party's
business or any business or enterprise in which such party may have an
interest, now or in the future, and whether or not now in competition with such
other party.
SECTION 10.02. PUBLICITY. FBI and BTX shall cooperate with each other
in the development and distribution of all news releases and other public
disclosures concerning this Agreement and the Stock Purchase. Neither party
shall issue any news release or make any other public disclosure without the
prior consent of the other party, unless such is required by law upon the
written advice of counsel or is in response to published newspaper or other
mass media reports regarding the transaction contemplated hereby, in which such
latter event the parties shall consult with each other to the extent
practicable regarding such responsive public disclosure, or unless the
circumstances require that a party make a public disclosure and such party, in
good faith, despite reasonable efforts is unable to obtain the consent of the
other.
SECTION 10.03. RETURN OF DOCUMENTS. Upon termination of this Agreement
without the Stock Purchase becoming effective, each party shall deliver to the
other originals and all copies of all Information made available to such party
and will not retain any copies, extracts or other reproductions in whole or in
part of such Information.
SECTION 10.04. NOTICES. Any notice or other communication shall be in
writing and shall be deemed to have been given or made on the date of delivery,
in the case of hand delivery, or three (3) business days after deposit in the
United States Registered Mail, postage prepaid, or upon receipt if transmitted
by facsimile telecopy or any other means, addressed (in any case) as follows:
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(a) if to FBI:
First Banks, Inc.
135 North Meramec Ave.
Clayton, Missouri 63105
Attention: Mr. James F. Dierberg
Facsimile: (314) 854-5454
with a copy to:
Lewis, Rice & Fingersh
500 North Broadway, Suite 2000
St. Louis, Missouri 63102
Attention: Thomas C. Erb, Esq.
Facsimile: (314) 241-6056
and
(b) if to BTX:
BancTexas Group, Inc.
13747 Montfort Drive, Suite 300
Dallas, Texas 75240
Attention: Nathan C. Collins
Facsimile: (214) 701-4790
with copies to:
John S. Daniels, Attorney at Law
222 West Las Colinas Blvd., Suite 2025
Irving, Texas 75039
Facsimile: (214) 432-9101
or to such other address as any party may from time to time designate by notice
to the others.
SECTION 10.05. NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. Except for and as provided in this Section 10.05, no
representation, warranty or agreement contained in this Agreement shall survive
the Closing Date or the earlier termination of this Agreement. The agreements
set forth in Sections 6.01, 6.02 and 6.03 shall survive the Closing Date and
the agreements set forth in Sections 9.01, 9.02, 10.01, 10.03 and 10.06 shall
survive the Closing Date or the earlier termination of this Agreement.
SECTION 10.06. COSTS AND EXPENSES. Except as may be otherwise provided
herein, each party shall pay its own costs and expenses incurred in connection
with this Agreement and the matters contemplated hereby, including without
limitation all fees and expenses of attorneys, accountants, brokers, financial
advisors and other professionals.
26
<PAGE> 75
SECTION 10.07. ENTIRE AGREEMENT. This Agreement and the Warrant
Agreement constitute the entire agreement between the parties and supersedes
and cancels any and all prior discussions, negotiations, undertakings,
agreements in principle and other agreements between the parties relating to
the subject matter hereof.
SECTION 10.08. HEADINGS AND CAPTIONS. The captions of Articles and
Sections hereof are for convenience only and shall not control or affect the
meaning or construction of any of the provisions of this Agreement.
SECTION 10.09. WAIVER, AMENDMENT OR MODIFICATION. The conditions of
this Agreement which may be waived may only be waived by notice to the other
party waiving such condition. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner affect the right
at a later time to enforce the same. This Agreement not be amended or modified
except by a written document duly executed by the parties hereto.
SECTION 10.10. RULES OF CONSTRUCTION. Unless the context otherwise
requires: (a) a term has the meaning assigned to it; (b) an accounting term not
otherwise defined has the meaning assigned to it in accordance with generally
accepted accounting principles; (c) "or" is not exclusive; and (d) words in the
singular may include the plural and in the plural include the singular.
SECTION 10.11. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
shall be deemed one and the same instrument.
SECTION 10.12. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. There shall be no third party beneficiaries hereof.
SECTION 10.13. GOVERNING LAW; ASSIGNMENT. This Agreement shall be
governed by the laws of the State of Texas (except to the extent that the
Delaware General Corporation Law governs transactions involving BancTexas
Group, Inc. by virtue of its status as a Delaware corporation) and applicable
federal laws and regulations. This Agreement may not be assigned by either of
the parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
FIRST BANKS, INC.
By /s/ JAMES F. DIERBERG
----------------------
James F. Dierberg
Chairman
27
<PAGE> 76
BANCTEXAS GROUP INC.
By:/s/ NATHAN C. COLLINS
-----------------------
Nathan C. Collins
Chairman, President and
Chief Executive Officer
28
<PAGE> 77
EXHIBIT 1.04(a)
BTX LEGAL OPINION MATTERS
1. The due incorporation, valid existence and good standing of BTX
under the laws of the State of Delaware, its power and authority to own and
operate its properties and to carry on its business as now conducted, and its
power and authority to enter into the Agreement, to consummate the Stock
Purchase in accordance with the terms of the Agreement, and to effect the
Amendments and to consummate the other transactions contemplated by the
Agreement.
2. The due organization of Bank as a national banking association and
the valid existence of Bank under the laws of the United States, its power and
authority to own and operate its properties and the possession of all licenses,
permits and authorizations necessary to carry on its business as now conducted.
3. The due incorporation or organization, valid existence and good
standing of each of the subsidiaries of BTX (other than Bank) and any
subsidiary of any such subsidiary listed in Section 2.03 of the Disclosure
Schedule, their power and authority to own and operate their properties, the
possession of all licenses, permits and authorizations necessary to carry
on their respective businesses as now conducted.
4. With respect to BTX, (i) the number of authorized, and issued and
outstanding shares of capital stock of BTX immediately prior to the Closing,
(ii) the nonexistence of any violation of the preemptive or subscription rights
of any person, (iii) the nonexistence of any outstanding options, warrants, or
other rights to acquire, or securities convertible into, any equity security of
BTX (otherwise than as disclosed in the Disclosure Schedule), (iv) the
nonexistence of any obligation, contingent or otherwise, to reacquire any
shares of capital stock of BTX, and (v) the nonexistence of any outstanding
stock appreciation, phantom stock or similar rights.
5. With respect to BTX's subsidiaries, (i) the number of authorized,
issued and outstanding shares of capital stock of such subsidiary immediately
prior to the Closing, (ii) the nonexistence of any violation of the preemptive
or subscription rights of any person, (iii) the nonexistence of any outstanding
options, warrants, or other rights to acquire, or securities convertible into,
any equity securities of any such subsidiary, (iv) the nonexistence of any
obligation, contingent or otherwise, to acquire any shares of capital stock of
any such subsidiary, and (v) the nonexistence of any outstanding stock
appreciation, phantom stock or similar rights.
6. BTX's valid ownership of and title to all of the issued and
outstanding shares of capital stock of Bank, free and clear of liens, security
interests and encumbrances.
7. The number of authorized, issued and outstanding shares of capital
stock of the subsidiaries listed in Section 2.03 of the Disclosure Schedule,
and the ownership by BTX or Bank of all outstanding shares thereof, free and
clear of any claims, liens, security interests and encumbrances.
8. The due authorization and, when issued to FBI in accordance with
the terms of the Agreement, the valid issuance of the shares of Class B Common
Stock to be issued pursuant to the Stock
Ex-1.04(a) - 1
<PAGE> 78
Purchase, such shares being fully paid and nonassessable, with no personal
liability attaching to the ownership thereof.
9. The due and proper performance of all corporate acts and other
proceedings necessary or required to be taken by BTX to authorize the
execution, delivery and performance of the Agreement and the other transactions
contemplated thereby, the due execution and delivery of the Agreement by BTX,
and the Agreement as a valid and binding obligation of the BTX, enforceable
against BTX in accordance with its terms (subject to the provisions of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
similar laws affecting the enforceability of creditors' rights generally from
time to time in effect, and equitable principles relating to the granting of
specific performance and other equitable remedies as a matter of judicial
discretion).
10. The execution of the Agreement by BTX, and the consummation of the
Stock Purchase and the other transactions contemplated therein (including the
Amendments), does not violate or cause a default under its articles of
incorporation or bylaws, or any statute, regulation or rule or any judgment,
order or decree against or any material agreement binding upon BTX (including,
without limitation, its listing agreement with the N.Y.S.E.).
11. The receipt of all required consents, approvals, orders or
authorizations of, or registrations, declaration or filings with or notices to,
any court, administrative agency or commission or other governmental authority
or instrumentality, domestic or foreign, or any other person or entity required
to be obtained or made by BTX, Bank and the other subsidiaries in connection
with the execution and delivery of the Agreement and the Amendments or the
consummation of the transactions contemplated therein.
12. The nonexistence of any material actions, suits, proceedings,
orders, investigations or claims pending or threatened against or affecting
BTX, Bank or their subsidiaries which, if adversely determined, would have a
material adverse effect upon their respective properties or assets or the
transactions contemplated by the Agreement.
Ex-1.04(a) - 2
<PAGE> 79
EXHIBIT 1.04(b)
FBI LEGAL OPINION MATTERS
1. The due incorporation, valid existence and good standing of FBI
under the laws of the State of Missouri, and its power and authority to enter
into the Agreement and to consummate the Stock Purchase and the other
transactions contemplated thereby.
2. The due and proper performance of all corporate acts and other
proceedings required to be taken by FBI to authorize the execution, delivery
and performance of the Agreement, the due execution and delivery of the
Agreement by FBI, and the Agreement as a valid and binding obligation of FBI,
enforceable against FBI in accordance with its terms (subject to the provisions
of bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforceability of creditors' rights generally from time to time
in effect, and equitable principles relating to the granting of specific
performance and other equitable remedies as a matter of judicial discretion).
3. The execution and delivery of the Agreement by FBI, and the
consummation of the transactions contemplated therein, as neither conflicting
with, in breach of or in default under, resulting in the acceleration of,
creating in any party the right to accelerate, terminate, modify or cancel, or
violate, any provision of FBI's articles of incorporation or bylaws, or any
statute, regulation, rule, judgment, order or decree binding upon FBI which
would be prohibit or inhibit the consummation of the Stock Purchase.
4. The receipt of all required consents, approvals, orders or
authorizations of, or registrations, declarations or filings with or without
notices to, any court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, or any other
person or entity required to be obtained or made by or with respect to FBI in
connection with the execution and delivery of the Agreement or the consummation
of the transactions contemplated thereby.
Ex-1.04(b) - 1
<PAGE> 80
EXHIBIT 4.03(a)
{Exhibit 4.03(a) consists of the Restatement of the Certificate of
Incorporation of BancTEXAS Group Inc. as of ___________________, 1994
(as proposed to be amended at the 1994 Annual Meeting of Stockholders to
be held July 28, 1994). Such exhibit is omitted, but the text of the
Proposed Certificate of Incorporation is included as Appendix III to this
Proxy Statement.}
<PAGE> 81
EXHIBIT 4.03(b)
AMENDED AND RESTATED
BY-LAWS
OF
BancTEXAS GROUP INC.
ARTICLE I
Section 1. Registered Office. The registered office of the
Corporation shall be in the City of Wilmington, County of New Castle, State of
Delaware.
Section 2. Other Offices. The Corporation may also have offices at
such other places, both within and without the State of Delaware, as the Board
of Directors may from time to time determine or the business of the Corporation
may require.
ARTICLE II
Meetings of Stockholders
Section 1. Place of Meetings. All meetings of the stockholders for
the election of directors shall be held in the City of Dallas, State of
Texas, at such place within such city as may be fixed by the Board of
Directors. Meetings of stockholders for any other purpose may be held at such
time and place, within or without the State of Delaware, as shall be stated in
the notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meetings. An annual meeting of stockholders shall
be held on such day in each fiscal year of the Corporation at such time as may
be fixed by the Board of Directors, at which meeting the stockholders shall
elect a Board of Directors and transact such other business as may properly be
brought before the meeting.
Section 3. Notice of Annual Meeting. Written or printed notice of
the annual meeting, stating the place, day and hour thereof, shall be given to
each stockholder entitled to vote thereat at such address as appears on the
books of the Corporation, not less than ten days nor more than sixty days
before the date of the meeting.
Section 4. Special Meetings. Special meetings of the stockholders,
for any purpose or purposes, unless otherwise prescribed by statute or the
Restated Certificate of Incorporation, may be called by the Chairman of the
Board or by the President, and shall be called by the President or the
Secretary at the request in writing of a majority of the Board of Directors, or
at the request in writing of stockholders of record owning at least twenty
percent in amount of the entire capital stock of the Corporation issued and
outstanding and entitled to vote at such meeting. Such request shall state the
purpose or purposes of the proposed meeting.
Ex-4.03 (b) - 1
<PAGE> 82
Section 5. Notice of Special Meetings. Written or printed notice
of a special meeting of stockholders, stating the place, day and hour and
purpose or purposes thereof, shall be given to each stockholder entitled to
vote thereat at such address as appears on the books of the Corporation, not
less than ten days nor more than sixty days before the date of the meeting.
Section 6. Business at Meetings.
(a) Business transacted at all special meetings of
stockholders, shall be confined to the purpose or purposes stated in the notice
thereof.
(b) No business may be presented at any annual meeting by a
stockholder unless presented in writing, delivered or mailed by first class
United States mail, postage prepaid, to the Secretary of the Corporation not
less than 14 days nor more than 50 days prior to any annual meeting; provided,
however, that if less than 21 days' notice of the meeting is given to
stockholders, such written notice shall be delivered or mailed, as prescribed.
to the Secretary of the Corporation not later than the close of the seventh day
following the day on which notice of the meeting was mailed to stockholders.
(c) Each notice under subsection (b) shall set forth the
issue with specificity. Discussion at the annual meeting shall be limited to
the description of the proposed issue.
(d) If notice of the proposed issue is not made in
accordance with the foregoing procedure or the proposed issue is not a proper
subject for action by stockholders, the proposed issue shall not be voted on or
discussed at the meeting.
Section 7. Stockholder List. At least ten days before each meeting
of stockholders, a complete list of the stockholders entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of voting shares held by each, shall be prepared by
the Secretary or other officer of the Corporation who shall have charge of its
stock ledger, either directly or through another officer of the Corporation
designated by him or through a transfer agent appointed by the Board of
Directors. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for such
ten day period, either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meeting, or, if not
so specified, at the place where the meeting is to be held. Such list shall
also be produced and kept open at the time and place of the meeting and shall
be subject to the inspection of any stockholder during the whole time of the
meeting.
Section 8. Quorum. The holders of a majority of the votes
attributed to the shares of capital stock issued and outstanding and entitled
to vote thereat, represented in person or by proxy, shall constitute a quorum
at all meetings of the stockholders for the transaction of business except as
otherwise provided by statute, the Restated Certificate of Incorporation or
these By-laws. The stockholders present may adjourn the meeting despite the
absence of a quorum. When a meeting is adjourned for less than thirty days in
any one adjournment and a new record date is not fixed for the adjourned
meeting, it shall not be necessary to give any notice of the adjourned meeting
if the time and place to which the meeting is adjourned are announced at the
meeting at which the adjournment is taken, and at the adjourned meeting any
business may be transacted that might have been transacted on the original date
of the meeting. When a meeting is adjourned for thirty days or more, or when
after the adjournment a new record date is fixed for the adjourned meeting,
notice of the adjourned meeting shall be given as in the case of an original
meeting.
Ex-4.03(b) - 2
<PAGE> 83
Section 9. Majority Vote. When a quorum is present at any meeting,
the vote of the holders of a majority of the shares having voting power
represented in person or by proxy shall decide any question brought before such
meeting, unless the question is one upon which, by express provision of
statute, the Restated Certificate of Incorporation or these By-laws, a
different vote is required, in which case such express provision shall govern
and control the decision of such question.
Section 10. Proxies. At any meeting of the stockholders, every
stockholder having the right to vote shall be entitled to vote in person or by
proxy appointed by an instrument in writing subscribed by such stockholder or
his duly authorized attorney in fact and bearing a date not more than three
years prior to said meeting, unless said instrument provides for a longer
period.
Section 11. Voting. Unless otherwise provided by statute or the
Restated Certificate of Incorporation, each stockholder shall have one vote for
each share of stock having voting power, registered in his name on the books of
the Corporation; provided, however, that in all elections for directors of the
Corporation, each shareholder shall have the right to cast as many votes in the
aggregate as shall equal the number of voting shares held by him or her in the
Corporation, multiplied by the number of directors to be elected by the class
to which he or she belongs at such election, and each shareholder may cast the
whole number of votes, either in person or by proxy, for one candidate or
distribute them among two or more candidates.
Section 12. Conduct of Meetings.
(a) The Chairman of the meeting may, either before or during
any meeting of stockholders, prescribe rules which will govern the orderly
conduct, presentation, discussion, tabling, and voting, including the
procedures for the presentation, revocation and counting of proxies, at the
meeting with respect to issues to be presented at the meeting and all other
aspects of any annual or special meeting of stockholders.
(b) The Chairman's determination shall be in his reasonable
discretion and shall be final, unless the Restated Certificate of
Incorporation, By-laws, resolution of the Board, or applicable law establish
rules governing a particular matter, in which case such provision shall be
dispositive, or unless the Chairman's ruling is overruled by the affirmative
vote of the holders of two-thirds of the issued and outstanding capital stock
of the Corporation entitled to vote on such matters at the meeting and present
at the meeting in person or by proxy.
Section 13. Consent of Stockholders in Lieu of Meeting. Any action
required to be taken at any annual or special meeting of stockholders, or any
action which may be taken at any annual or special meeting of stockholders, may
be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted. Prompt notice of
the taking of the corporate action without a meeting by less than unanimous
written consent shall be given to those stockholders who have not consented in
writing.
Ex-4.03(b) - 3
<PAGE> 84
ARTICLE III
Board of Directors
Section 1. Powers. The business and affairs of the Corporation shall be
managed by a Board of Directors. The Board of Directors may exercise all such
powers of the Corporation and do all such lawful acts and things as are not by
statute, by the Restated Certificate of Incorporation or these By-laws directed
or required to be exercised or done by the stockholders.
Section 2. Number of Directors. The number of directors to constitute
the Board of Directors shall be six; provided, however, that the number of
directors which shall constitute the whole Board shall be fixed from time to
time by resolution of the Board of Directors, provided that such number shall
not be less than three and; provided further, that there shall be added to such
number of directors as so fixed any number of directors who are elected solely
by the holders of any class of stock of the Corporation pursuant to the terms
of the constituent instrument establishing such class.
Section 3. Election and Term. Except as provided in Section 4 of this
Article III, each director shall be elected to serve until the next annual
meeting and until his successor (if any) shall have been elected and shall
qualify, or until his death, resignation or removal from office.
Section 4. Vacancies and Newly Created Directorships. If the office
of any director or directors becomes vacant by reason of death, resignation,
retirement, disqualification, removal from office, or otherwise, or the number
of directors constituting the whole Board shall be increased, a majority of the
remaining or existing directors. though less than a quorum, may choose a
successor or successors or the director or directors to fill the new
directorships, who shall hold office for the unexpired term in respect to which
such vacancy occurred or, in the case of a new directorship or directorships,
until the next annual meeting of the stockholders.
Section 5. Removal. The stockholders may remove a director either for
or without cause at any meeting of stockholders, provided notice of the
intention to act upon such matter shall have been given in the notice calling
such meeting.
ARTICLE IV
Meetings of Board of Directors
Section 1. First Meeting. The first meeting of each newly elected
Board of Directors shall be held at the location of and immediately following
the annual meeting of stockholders, and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present; or the Board of Directors may meet
at such place and time as shall be fixed by the consent in writing of all the
directors.
Section 2. Other Meetings. The directors of the Corporation may hold
their meetings, both regular and special, either within or without the State of
Delaware.
Ex-4.03 (b) - 4
<PAGE> 85
Section 3. Regular Meetings. Regular meetings of the Board of Directors
may be held at such time and place and on such notice, if any, as shall be
determined from time to time by the Board of Directors.
Section 4. Special Meetings. Special meetings of the Board of Directors
may be called by the Chairman of the Board or the President on twenty-four
hours' notice to each director, delivered either personally or by mail or
telegram. Special meetings of the Board of Directors shall be called by the
President or the Secretary in like manner and on like notice on the written
request of a majority of the directors constituting the whole Board of
Directors.
Section 5. Quorum and Voting. At all meetings of the Board of Directors,
a majority of the directors at the time in office shall be necessary and
sufficient to constitute a quorum for the transaction of business; and the act
of four (4) or more of the directors present at any meeting at which there is a
quorum shall be necessary to constitute the act of the Board of Directors,
except as may be otherwise specifically provided by statute, the Restated
Certificate of Incorporation or these By-laws. If a quorum shall not be present
at any meeting of directors, the directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
Section 6. Telephone Meetings. At any meeting of the Board of Directors
or any committee thereof, members may attend by conference telephone, radio,
television or similar means of communication by means of which all persons
participating in the meeting can hear each other, and all members so attending
shall be deemed present at the meeting for all purposes including the
determination of whether a quorum is present.
Section 7. Action by Written Consent. Any action required or permitted
to be taken by the Board of Directors or any committee thereof, under the
applicable provisions of the statutes, the Restated Certificate of
Incorporation, or these By-laws, may be taken without a meeting if a consent in
writing, setting forth the action so taken, is signed by all the members of the
Board of Directors or committee, as the case may be.
Section 8. Advisory Directors. Any number of persons may be appointed
"Advisory Directors" by a vote of a majority of the directors present at any
meeting. An Advisory Director shall have the right to attend and to participate
in any and all meetings of the Board of Directors to the same extent as any
director, except that an Advisory Director shall not have the right to vote on
any question or issue considered by the Board of Directors.
ARTICLE V
Committees
Section 1. Executive Committee. The Board of Directors, by resolution
adopted by a majority of the whole Board, may designate three or more directors
to constitute an Executive Committee, which Committee, to the extent provided
in such resolution, shall have and may exercise all of the authority of the
Board of Directors in the business and affairs of the Corporation, and may have
power to authorize the seal of the Corporation to be affixed to all papers
which may require it, except where action by the Board of Directors is
expressly required by statute. The Executive Committee shall keep regular
minutes of its proceedings and report the same to the Board of Directors when
required.
Ex-4.03(b) - 5
<PAGE> 86
Section 2. Other Committees. The Board of Directors may similarly
create other committees for such terms and with such powers and duties as the
Board of Directors deems appropriate.
Section 3. Committee Rules; Quorum. Each committee may adopt rules
governing the method of calling and time and place of holding its meetings.
Unless otherwise provided by the Board of Directors, a majority of any
committee shall constitute a quorum for the transaction of business, and the
act of a majority of the members of such committee present at a meeting at
which a quorum is present shall be the act of such committee.
ARTICLE VI
Compensation of Directors
Section 1. Attendance Fees. Directors, as such, shall not receive any
stated salary for their services, but by resolution of the Board of Directors a
fixed sum and expenses of attendance may be allowed for attendance at each
regular or special meeting of the Board: however, this provision shall not
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor. Members of committees may receive such
compensation, if any, as may be determined by the Board of Directors.
ARTICLE VII
Notices
Section 1. Methods of Notice. Whenever any notice is required to be
given to any stockholder, director or committee member under the provisions of
any statute, the Restated Certificate of Incorporation or these Bylaws, such
notice shall be delivered personally or shall be given in writing by mail
addressed to such stockholder, director or committee member at such address as
appears on the books of the Corporation, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail
with postage thereon prepaid. Notice to directors and committee members may
also be given by telegram, and notice given by such means shall be deemed to be
given at the time it is delivered to the telegraph office.
Section 2. Waiver of Notice. Whenever any notice is required to be
given to any stockholder, director or committee member under the provisions of
any statute, the Restated Certificate of Incorporation or these By-laws, a
waiver thereof in writing signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. Attendance at any meeting shall
constitute a waiver of notice thereof except as otherwise provided by statute.
ARTICLE VIII
Officers
Section 1. Executive Officers. The executive officers of the
Corporation shall consist of a Chairman of the Board, a President, one or more
Vice Presidents, one or more of whom may be designated Executive or Senior Vice
Presidents and may also have such descriptive titles as the Board of Directors
shall deem appropriate, a Secretary and a Treasurer, each of whom shall be
elected by the
Ex-4.03(b) - 6
<PAGE> 87
Board of Directors. Any two or more offices may be held by the same person
except the offices of President and Secretary.
Section 2. Election and Qualification. The Board of Directors at its
first meeting after each annual meeting of stockholders may elect a Chairman of
the Board from its members, shall elect a President from its members, and shall
elect one or more Vice Presidents, a Secretary and a Treasurer, none of whom
need be a member of the Board of Directors.
Section 3. Other Officers and Agents. The Board of Directors may
elect or appoint Assistant Vice Presidents, Assistant Secretaries and Assistant
Treasurers, and such other officers and agents as it shall deem necessary, or
may vest the appointment of any such Assistant Vice Presidents, Assistant
Secretaries and Assistant Treasurers or other officers (except executive
officers) and agents in such of the executive officers as it deems appropriate,
subject in all cases to the control of the Board of Directors.
Section 4. Salaries. The salaries of all officers of the Corporation
shall be fixed by the Board of Directors except as otherwise directed by the
Board.
Section 5. Term, Removal and Vacancies. The officers of the
Corporation shall hold office until their successors are chosen and qualify.
Any officer or agent of the Corporation may be removed at any time by the
affirmative vote of a majority of the Board of Directors, or by the executive
officer having power to appoint his successor. Any vacancy occurring in any
office of the Corporation may be filled by the Board of Directors or otherwise
as provided in this Article VIII.
Section 6. Execution of Instruments. Either the Chairman of the
Board or the President or the Executive Vice President and Chief Financial
Officer may execute in the name of the Corporation bonds, notes debentures and
other evidences of indebtedness, stock certificates, deeds, mortgages, deeds
of trust, indentures, loan and credit agreements, checks, drafts, leases,
purchase contracts, and all other terms of agreements, contracts and
instruments and may bind this Corporation thereto without the seal of this
Corporation being affixed thereon and without the signature of the Chairman of
the Board or the President or Executive Vice President and Chief Financial
officer being attested. Any Senior Vice President may execute in the name of
the Corporation any of the documents and instruments described in the preceding
sentence, except where such documents or instruments are required by these
By-laws, by law or by specific delegation or designation to be otherwise
executed. Nothing in this Section shall override the duties and authorities
conferred on any officer of this corporation elsewhere in these By-laws or by
any resolution adopted by the Board of Directors.
Section 7. Duties of Officers. The duties and powers of the officers
of the Corporation shall be as provided in these By-laws, or as provided for
pursuant to these By-laws, or (except to the extent inconsistent with these
By-laws or with any provision made pursuant thereto) shall be those customarily
exercised by corporate officers holding such offices.
Section 8. Chairman of the Board. The Chairman of the Board shall
preside when present at all meetings of the Board of Directors. He shall advise
and counsel the President and other officers of the Corporation and shall
exercise such powers and perform such duties as shall be assigned to or
required of him from time to time by the Board of Directors. The Chairman of
the Board shall, if so designated by the Board of Directors, be the Chief
Executive Officer of the Corporation; in such event he shall have all of the
powers granted by the By-laws to the President, including the power to make and
sign contracts and agreements in the name and on behalf of the Corporation, and
from time to time may
Ex-4.03(b) - 7
<PAGE> 88
delegate all, or any, of his powers and duties to the President.
Section 9. President. Unless such powers have been conferred upon the
Chairman of the Board by the Board of Directors, the President shall have the
powers of Chief Executive Officer of the Corporation, and as Chief Executive
Officer, the President shall have general supervision of the affairs of the
Corporation and shall have general and active control of all of its business.
In the absence of any other person designated thereto by these Bylaws,
the President shall preside at all meetings of the stockholders. He shall have
authority to cause the employment or appointment of such employees and agents
of the Corporation as the proper conduct of operations may require, and to fix
their compensation, subject to the provisions of these By-laws; to remove or
suspend any employee or agent who shall have been employed or appointed under
his authority or under authority of any officer subordinate to him; to suspend
for cause, pending final action by the authority which shall have supervisory
power over him, any officer subordinate to the President, and in general, to
exercise all the powers usually appertaining to the office of President of a
corporation, except as otherwise provided in these By-laws. In the event the
Chairman of the Board has been designated Chief Executive Officer of the
Corporation, the President shall, subject to the powers of supervision and
control thereby conferred upon the Chairman of the Board, be the chief
operating officer of the Corporation and shall have all necessary powers to
discharge such responsibility including all powers heretofore in this paragraph
enumerated.
The President shall perform all the duties and have all the powers of the
Chairman of the Board in the absence of the Chairman of the Board.
Section 10. Vice Presidents. The Vice Presidents in the order
determined by the Board of Directors shall, in the absence or disability of the
President, perform the duties and exercise the powers of the President, and
shall perform such other duties as the Board of Directors and the Chief
Executive Officer may prescribe.
Section 11. Secretary. The Secretary shall attend all meetings of the
Board of Directors and all meetings of the stockholders and record all votes
and the minutes of all proceedings in a book to be kept for the purpose and
shall perform like duties for the committees of the Board of Directors when
required. He shall give or cause to be given, notice of all meetings of the
stockholders and special meetings of the Board of Directors, and shall perform
such other duties as may be prescribed by the Board of Directors and the Chief
Executive Officer. He shall keep in safe custody the seal of the Corporation
and shall have authority to affix the same to any instrument requiring it, and
when so affixed it may be attested by his signature. The Board of Directors may
give general authority to any other officer to affix the seal of the
Corporation and to attest the affixing by his signature.
Section 12. Assistant Secretaries. The Assistant Secretaries in the
order determined by the Board of Directors shall, in the absence or disability
of the Secretary, perform the duties and exercise the powers of the Secretary
and shall perform such other duties as the Board of Directors and the Chief
Executive Officer may prescribe.
Section 13. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all monies and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. He shall disburse
Ex-4.03(b) - 8
<PAGE> 89
the funds of the Corporation as may be ordered by the Board of Directors,
taking proper vouchers for such disbursements, and shall render to the Board of
Directors and the Chief Executive Officer, whenever they may require it, an
account of all of his transactions as Treasurer and of the financial condition
of the Corporation.
Section 14. Assistant Treasurers. The Assistant Treasurers in the
order determined by the Board of Directors shall, in the absence or disability
of the Treasurer, perform the duties and exercise the powers of the Treasurer
and shall perform such other duties as the Board of Directors and the Chief
Executive Officer may prescribe.
ARTICLE IX
Shares and Stockholders
Section 1. Certificates Representing Shares. Every holder of stock in
the Corporation shall be entitled to have a certificate, signed by, or in the
name of the Corporation by, the Chairman of the Board or the President or a
Vice President and the Treasurer or an Assistant Treasurer or the Secretary or
an Assistant Secretary of the Corporation, certifying the number of shares
owned by him in the Corporation. The signature of any such officer may be
facsimile if the certificate is countersigned by a transfer agent or registered
by a registrar, other than the Corporation itself or an employee of the
Corporation. In case any officer who has signed or whose facsimile signature
has been placed upon such certificate shall have ceased to be such officer
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer at the date of its issuance. If the
Corporation shall be authorized to issue more than one class of stock or more
than one series of any class, the powers, designations, preferences and
relative, participating, optional or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions of
such preferences and/or rights shall be set forth in full or summarized on the
face or back of the certificate which the Corporation shall issue to represent
such class or series of stock, provided, that, except as otherwise provided in
Section 202 of the General Corporation Law of the State of Delaware, in lieu of
the foregoing requirements, there may be set forth on the face or back of the
certificate which the Corporation shall issue to represent such class or series
of stock a statement that the Corporation will furnish without charge to each
stockholder who so requests the designations, preferences and relative,
participating, option or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights.
Section 2. Transfer of Shares. Subject to valid transfer
restrictions and to stop-transfer restrictions and to stop-transfer orders
directed in good faith by the Corporation to any transfer agent to prevent
possible violations of federal or state securities laws, rules or regulations,
or for any other lawful purpose, upon surrender to the Corporation of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
Corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
Section 3. Fixing Record Date. For the purpose of determining
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversions or exchange of stock or for the purpose of
any other lawful action, the Board of Directors
Ex-4.03(b) - 9
<PAGE> 90
may fix, in advance, a record date, which shall not be more than sixty nor less
than ten days before the date of such meeting, or more than sixty days prior to
any other action. If no record date is fixed, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders
shall be at the close of business on the day next preceding the day on which
notice is given, or, if notice is waived, at the close of business on the day
next preceding the day on which the meeting is held; the record date for
determining stockholders entitled to express consent to corporate action in
writing without a meeting, when no prior action by the Board of Directors is
necessary, shall be the day on which first written consent is expressed; and
the record date for determining stockholders for any other purpose shall be at
the close of business on the day on which the Board of Directors adopts the
resolution relating thereto. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to
any adjournment of the meeting; provided, however, that the Board of Directors
may fix a new record date for the adjourned meeting.
Section 4. Registered Stockholders. The Corporation shall be
entitled to recognize the exclusive right of a person registered on its books
as the owner of any share or shares to receive dividends, and to vote as such
owner, and for all other purposes as such owner; and the Corporation shall not
be bound to recognize any equitable or other claim to or interest in such share
or shares on the part of any other person, whether or not it shall have express
or other notice thereof, except as otherwise provided by the laws of the State
of Delaware.
ARTICLE X
Indemnification
Section 1. Indemnification.
(a) 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 (other than an action by or in the right of the Corporation)
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 if he acted
in good faith and in a manner reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) 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 or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, 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) actually and reasonably incurred by him in
connection with
Ex-4.03(b) - 10
<PAGE> 91
the defense or settlement of such action or suit if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation and except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his duty to the Corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a person who is or was a director,
officer, employee or agent of the Corporation, or a person who 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 another
enterprise, has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b), or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(d) Any indemnification under subsections (a) and (b) (unless
ordered by a court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee, agent or other person is proper in the circumstances because
he has met the applicable standard of conduct set forth in subsections (a) and
(b). Such determination shall be made (1) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by stockholders.
(e) Expenses incurred in defending a civil or criminal action,
suit or proceeding, or a threatened action, suit or proceeding, may be paid by
the Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board of Directors in the specific case upon
receipt of an undertaking by or on behalf of the director, officer, employee,
agent or other person to repay the such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Corporation as
authorized in this Article X.
(f) The indemnification provided by this Article X shall not
be deemed exclusive of any other rights to which those seeking indemnification
may be entitled under any agreement or vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue
as to a person who has ceased to be a director, officer, employee or agent
and shall inure to the benefit of the heirs, executors and administrators
of such a person.
(g) The Corporation shall have the power to purchase and
maintain insurance on behalf of any person who 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 any liability
asserted against him and incurred by him in any such capacity, or arising out
of his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article X.
Ex-4.03(b) - 11
<PAGE> 92
(h) For purposes of this Article X, references to "the
Corporation" shall include, in addition to the resulting corporation, any
constituent absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was
a director, officer, employee or agent of such constituent corporation, or is
or was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the
provisions of this Article X with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if
its separate existence had continued.
ARTICLE XI
General
Section 1. Dividends. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Restated Certificate of
Incorporation, if any, or of the resolutions, if any, providing for any series
of stock, may be declared by the Board of Directors at any meeting thereof, or
by the Executive Committee at any meeting thereof. Dividends may be paid in
cash, in property, or in shares of the capital stock of the Corporation,
subject to the provisions of the Restated Certificate of Incorporation or the
resolutions, if any, providing for any series of stock.
Section 2. Reserves. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, deem
proper as a reserve fund to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the Corporation, or for such other
purpose or purposes as the directors shall think conducive to the interests of
the Corporation, and the directors may modify or abolish any such reserve in
the manner in which it was created.
Section 3. Shares of Other Corporations. The President, or in his
absence, any Vice President, is authorized to vote, represent and exercise on
behalf of the Corporation all rights incident to any and all shares of any
other corporation, bank, banking association or other entity standing in the
name of the Corporation. The authority herein granted to said officer may be
exercised either by said officer in person or by any person authorized so to do
by proxy or power of attorney duly executed by said officer. Notwithstanding
the above, however, the Board of Directors, in its discretion, may designate by
resolution any additional person to vote or represent said shares of other
corporations, banks, banking associations and other entities.
Section 4. Checks. All checks, drafts, bills of exchange or demands
for money of the Corporation shall be signed by such officer or officers or
such other person or persons as the Board of Directors may from time to time
designate.
Section 5. Corporate Records. The Corporation shall keep at its
registered office or principal place of business or at the office of its
transfer agent or registrar, a record of its stockholders giving the names and
addresses of all stockholders and the number and class and series, if any, of
shares held by each. All other books and records of the Corporation may be kept
at such place or places within or without the State of Delaware as the Board of
Directors may determine.
Section 6. Seal. The corporate seal shall have inscribed thereon the
name of the
Ex-4.03(b) - 12
<PAGE> 93
Corporation. The seal may be used by causing it or a facsimile thereof to be
impressed, affixed or reproduced.
Section 7. Fiscal Year. The fiscal year of the Corporation shall be
fixed by the Board of Directors; if not so fixed it shall be the calendar year.
ARTICLE XII
Amendments
Section 1. Amendment. These By-laws may be altered, amended or
repealed or new By-laws may be adopted at any annual meeting of the stockholders
or at any special meeting of the stockholders at which a quorum is present or
represented, by the affirmative vote of the holders of a majority of the shares
entitled to vote at such meeting and present or represented thereat, or, with
the affirmative vote of the holders of a majority of the shares of the Class B
Common Stock, by the affirmative vote of a majority of the whole Board of
Directors at any regular meeting of the Board, or at any special meeting of the
Board, provided notice of the proposed alteration, amendment or repeal or the
adoption of the new By-laws is set forth in the notice of such meeting.
Ex-4.03(b) - 13
<PAGE> 94
APPENDIX II
McKENNA & COMPANY
June 7, 1994
2500 TEXAS COMMERCE TOWER
HOUSTON, TEXAS 77002
TELEPHONE (713) 237-1353
TELEFAX (713) 237-8018
The Board of Directors
BancTEXAS Group Inc.
13747 Montfort Drive, Suite 300
Dallas, Texas 75240
Gentlemen:
You have requested our opinion as to the fairness from a
financial point of view, to the stockholders ("Stockholders")
of BancTEXAS Group Inc. ("BancTEXAS"), of the proposed
issuance to First Banks, Inc. ("First Banks") of Class B
Common Stock (the "Stock Purchase") pursuant to the terms and
subject to the conditions as set forth in the Stock Purchase
and Operating Agreement dated as of May 19, 1994 (the
"Agreement"), between BancTEXAS and First Banks.
The Agreement provides that First Banks will purchase
37,500,000 shares of BancTEXAS Class B Common Stock for
$30,000,000 or $.80 per share. Class B Common Stock will not
be convertible into BancTEXAS Common Stock for five years,
will have no trading market liquidity, will be subject to
restrictions on transferability and will carry certain
additional conditions and privileges as outlined in the
Agreement.
In arriving at our opinion, we have reviewed the Agreement and
have met with certain senior officers and other
representatives of BancTEXAS and First Banks to discuss the
business, operations and prospects of BancTEXAS and First
Banks. We have examined certain publicly available business
and financial information relating to BancTEXAS and First
Banks which was provided to us by BancTEXAS and First Banks.
We have reviewed the terms of the Stock Purchase as set forth
in the Agreement in relation to, among other things: current
and historical market prices and trading volume of BancTEXAS
Common Stock; BancTEXAS' earnings, book value, return on
assets, return on equity and equity to assets ratio; the
historical growth rates of BancTEXAS and the capitalization
and financial condition of BancTEXAS and First Banks. We have
also considered, to the extent publicly available, the
financial terms of certain other recent business combinations
involving companies whose operations we considered comparable
to those of BancTEXAS. In addition to the foregoing, we have
conducted such other analyses and examinations, and have
considered such other financial, economic and market criteria
as we deemed necessary in arriving at our opinion. In our
review, we have assumed and relied upon without independent
verification the accuracy and completeness of the financial
and other information publicly available or furnished to us by
BancTEXAS and First Banks.
<PAGE> 95
June 7, 1994
The Board of Directors
BancTEXAS Group Inc.
Page 2
Our opinion, as set forth herein, relates to the Stock
Purchase only. We are not expressing any opinion as to what
the value of BancTEXAS' Regular Common Stock actually will be
when the Class B Common Stock is issued to First Banks
pursuant to the Agreement or the price at which BancTEXAS'
Regular Common Stock will trade subsequent to the Agreement.
We have not made an independent evaluation or appraisal of the
capital stock, assets or liabilities of BancTEXAS or First
Banks nor were such evaluations or appraisals provided to us,
nor have we made any physical inspection of the properties or
assets of BancTEXAS or First Banks. We have not been asked to
consider and our opinion does not address the relative merits
of the Stock Purchase as compared to any alternative business
strategies that might exist for BancTEXAS or the effect of any
other business combination in which BancTEXAS might engage. We
were not requested to seek and have not sought other offers
which are competitive with the terms of the Stock Purchase;
however, we have participated as financial advisor on behalf
of BancTEXAS in a number of negotiations with potential
acquisition partners and equity investors over the past two
years. Our opinion herein is based upon circumstances existing
and disclosed to us as of the date hereof.
McKenna & Company has been engaged to deliver an opinion in
connection with the Stock Purchase and will receive a fee upon
delivery of this opinion and a subsequent fee at the closing
of the Stock Purchase. McKenna & Company has provided
investment banking services to BancTEXAS in the past and may
continue to do so in the future.
Our opinion expressed herein is provided solely for your
benefit in connection with the proposed Stock Purchase and is
not provided on behalf of, and is not intended to confer
rights or remedies upon First Banks, any stockholder of
BancTEXAS or First Banks, or any person other than BancTEXAS'
Board of Directors.
Based upon and subject to the foregoing, our experience as
investment bankers, our work described above and other factors
we have deemed relevant, we are of the opinion that as of the
date hereof the terms of the Stock Purchase pursuant to the
Agreement, when taken as a whole, are fair from a financial
point of view to the Stockholders of BancTEXAS.
Very truly yours,
/s/ McKENNA & COMPANY
McKENNA & COMPANY
<PAGE> 96
APPENDIX III
RESTATEMENT
OF
THE
CERTIFICATE OF INCORPORATION
OF
BANCTEXAS GROUP INC.
AS OF
__________, 1994
Pursuant to the provisions of Section 245 of the General
Corporation Law of the State of Delaware, the undersigned, BANCTEXAS GROUP
INC., a Delaware corporation (the "Corporation"), incorporated on January 25,
1978, hereby amends and restates its Restated Certificate of Incorporation as
follows:
1. The present name of the corporation is BancTexas Group Inc.
The name under which the corporation was originally organized was Commerce
Southwest Inc.
2. An Amendment to the Restated Certificate of Incorporation of
the Corporation and this Restatement of the Certificate of Incorporation of the
Corporation was adopted by the Corporation's stockholders on _________, 1994,
to become immediately effective upon the filing of this Restatement of the
Certificate of Incorporation of the Corporation with the office of the Delaware
Secretary of State.
3. The Certificate of Incorporation of the Corporation is hereby
restated in its entirety to read as follows:
FIRST: The name of the Corporation is BancTEXAS Group Inc.
SECOND: The address of its registered office in the State of Delaware
is 1209 Orange Street in the City of Wilmington, County of New Castle. The name
of its registered agent at such address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: (A) The total number of shares of all classes of capital stock
which the Corporation shall have authority to issue is one hundred sixty-three
million (163,000,000) shares consisting of (a) three million (3,000,000) shares
of a class designated as Preferred Stock, par value $1.00 per share ("Preferred
Stock"), (b) one hundred million (100,000,000) shares of a class designated
Common Stock, par value $.01 per share ("Common Stock"), and (c) sixty million
(60,000,000) shares of a class designated Class B Common Stock, par value $0.01
per share ("Class B Common Stock").
(B) The designations and the powers, preference, rights,
qualifications, limitations, and restriction of the Preferred Stock, the Common
Stock, and the Class B Common Stock are as follows:
<PAGE> 97
1. Provisions Relating to the Preferred Stock. Shares of
Preferred Stock may be issued in one or more series as determined from time to
time by the Board of Directors. All shares of any one series of Preferred Stock
will be identical, except as to the dates of issue and the dates from which
dividends on shares of the series issued on different dates will cumulate, if
dividends on the shares of such series are cumulative. Authority is hereby
expressly granted to the Board of Directors to authorize the issuance of one or
more series of Preferred Stock, and to fix by one or more resolutions providing
for the issuance of each such series the voting powers, designations,
preferences and relative, participating, optional, redemption, conversion,
exchange or other special rights, qualifications, limitations or restrictions
of such series, and the number of shares in such series, to the full extent now
or hereafter permitted by law.
2. Provisions Relating to the Common Stock and the Class
B Common Stock.
(a) General. Except as otherwise provided
herein, or as otherwise provided by applicable law, all shares of Common Stock
and Class B Common Stock shall have identical rights and privileges in every
respect.
(b) Voting. The Common Stock and the Class B
Common Stock shall each be fully voting stock entitled to one vote per share
with respect to the election of directors and for all other purposes. The
holders of Common Stock and Class B Common Stock shall, unless otherwise
required by law or by another provision of this Restated Certificate of
Incorporation, vote as a single class on all matters. In all elections for
directors of the Corporation, each stockholder shall have the right to cast as
many votes in the aggregate as shall equal the number of voting shares held by
such stockholder in the Corporation, multiplied by the number of Directors to
be elected by the class to which such stockholder belongs at such election, and
each stockholder may cast the whole number of votes, either in person or by
proxy, for one candidate or distribute them among two or more candidates.
(c) Dividends. Subject to the limitations
prescribed herein, holders of Common Stock and Class B Common Stock shall
participate equally in any dividends (whether payable in cash, stock or
property) when and as declared by the board of directors of the Corporation out
of the assets of the Corporation legally available therefor and the Corporation
shall treat the Common Stock and Class B Common Stock identically in respect of
any subdivisions or combinations (for example, if the Corporation effects a
two-for-one stock split with respect to the Common Stock, it shall at the same
time effect a two-for-one stock split with respect to the Class B Common
Stock): provided, however, that (i) with respect to dividends payable in cash
by the Corporation, the holders of Class B Common Stock shall participate
equally per share only if and to the extent such cash dividends exceed $0.03
per share on the Common Stock per calendar year (for example, if the board of
directors declares and the Corporation pays a dividend of $0.05 per share of
Common Stock for a given calendar year, holders of Class B Common Stock shall
be entitled to a dividend of $0.02 per share); and (ii) dividends payable in
shares of Common Stock (or rights to subscribe for or purchase shares of Common
Stock or securities or indebtedness convertible into shares of Common Stock)
shall be paid only on shares of Common Stock and dividends payable in shares of
Class B Common Stock (or rights to subscribe for or purchase shares of Class B
Common Stock or securities or indebtedness convertible into shares of Class B
Common Stock) shall be paid only an shares of Class B Common Stock (for
example, if the board of directors declares and the Corporation pays a five
percent (5%) stock dividend on the Common Stock, payable in shares of Common
Stock, at the same time the board of directors shall declare and the
Corporation shall
<PAGE> 98
pay a five percent (5%) stock dividend on the Class B Common Stock payable in
shares of Class B Common Stock).
(d) Liquidation. In the event the Corporation is
liquidated, dissolved or wound up, whether voluntary or involuntary, the
holders of the Common Stock and the Class B Common Stock shall participate
equally in any distribution.
(e) Voluntary Conversion of Class B Common Stock.
(i) Conversion Rights. Each share of
Class B Common Stock may be converted into one (1) share of Common Stock at the
option of any holder thereof at any time after the fifth (5th) anniversary of
the date of its issuance by the Corporation. For the foregoing purpose, a share
of Class B Common Stock issued as a stock dividend or pursuant to a stock
split, reclassification or other combination, shall be deemed to have been
issued on the date of the share of Class B Common Stock with respect to which
it is so issued.
(ii) Conversion Procedures. Any holder of
Class B Common Stock desiring to exercise such holder's option to convert such
Class B Common Stock in accordance with the foregoing shall surrender the
certificate or certificates representing the Class B Common Stock to be
converted, duly endorsed to the Corporation or in blank, at the principal
executive office of the Corporation, and shall give written notice to the
Corporation at such office that such holder elects to convert the number of
shares represented by such certificate or certificates, or a specified number
thereof. As promptly as practicable after the surrender for conversion of any
Class B Common Stock, the Corporation shall execute and deliver or cause to be
executed and delivered to the holder of such Class B Common Stock certificates
representing the shares of Common Stock issuable upon such conversion. In case
any certificate or certificates representing shares of Class B Common Stock
shall be surrendered for conversion for only a part of the shares represented
thereby, the Corporation shall execute and deliver to the holders of the
certificate or certificates for shares of Class B Common Stock so surrendered a
new certificate or certificates representing the shares of Class B Common Stock
not converted, dated the same date as the certificate or certificates
representing the Common Stock. Shares of the Class B Common Stock converted as
aforesaid shall be deemed to have been converted immediately prior to the close
of business on the date such shares are duly surrendered for conversion, and
the person or persons entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the recordholder or
holders of such shares of Common Stock as of such date.
(iii) Recapitalization, Consolidation, or
Merger of the Corporation. In the event that the Corporation shall be
recapitalized, consolidated with, or merged with or into any other corporation
(a "Reorganization") and the terms thereof shall provide (i) that the Class B
Common Stock shall remain outstanding after such Reorganization and (ii) for
any change in or conversion of the Common Stock, then the terms of such
Reorganization shall include a provision to the effect that each share of Class
B Common Stock after such Reorganization shall thereafter be entitled to
receive upon conversion the same kind and amount of securities or assets as
shall be distributable upon such Reorganization with respect to one share of
Common Stock.
(iv) Reservation of Shares. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of Class B Common Stock as herein provided, such number of shares of
<PAGE> 99
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding shares of Class B Common Stock and shall take all such
corporate action as may be necessary to assure that such shares of Common Stock
may be validly and legally issued upon conversion of all of the outstanding
shares of Class B Common Stock; and if, at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect the
conversion of the Class B Common Stock, the Corporation shall take such
corporate action as may be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purpose.
(v) Retirement of Shares. Shares of
Class B Common Stock which have been issued and have been converted into Common
Stock, repurchased, or reacquired in any other manner by the Corporation shall
not be reissued.
(f) Mandatory Conversion of Class B Common Stock.
If, at any time while there are shares of Class B Common Stock issued and
outstanding, it shall be determined by the board of directors, in its sole
discretion, that legislation or regulations are enacted or any judicial or
administrative determination is made which would prohibit the listing,
quotation or trading of the Common Stock on the New York Stock Exchange or the
National Association of Securities Dealers Automated Quotation System, or would
otherwise have a material adverse effect on the Corporation, in any such case
due to the Corporation having more than one class of common shares outstanding,
then the board of directors may by resolution convert all outstanding shares of
Class B Common Stock into shares of Common Stock on a share-for-share basis. To
the extent practicable, notice of such conversion of Class B Common Stock
specifying the date fixed for said conversion shall be mailed, postage
pre-paid, at least ten (10) days but not more than thirty (30) days prior to
said conversion date to the holders of record of Common Stock and Class B
Common Stock at their respective addresses as the same shall appear on the
books of the Corporation; provided, however, that no failure or inability to
provide such notice shall limit the authority or ability of the board of
directors to convert all outstanding shares of Class B Common Stock into shares
of Common Stock. Immediately prior to the close of business on said conversion
date (or, if said conversion date is not a business day, on the next succeeding
business day) each outstanding share of Class B Common Stock shall thereupon
automatically be converted into a share of Common Stock and each certificate
theretofore representing shares of Class B Common Stock shall thereupon and
thereafter represent a like number of shares of Common Stock.
(g) Class Voting Under Certain Circumstances.
None of the provisions hereof affecting the powers, preferences, rights,
qualifications, limitations or restrictions of the Class B Common Stock may be
amended or repealed unless, in addition to any other vote required by law or
this Restated Certificate of Incorporation, such amendment shall be approved by
the affirmative vote of the holders of a majority of the shares of the Common
Stock then outstanding, voting as a separate class.
3. General. Subject to the foregoing provisions of this
Restated Certificate of Incorporation, the Corporation may issue shares of its
Preferred Stock, Common Stock, and Class B Common Stock from time to time for
such consideration (not less than the par value thereof) as may be fixed by the
board of directors of the Corporation, which is expressly authorized to fix the
same in its absolute and uncontrolled discretion, subject to the foregoing
conditions. Shares so issued for which the consideration shall have been paid
or delivered to the Corporation shall be deemed fully paid stock and shall not
be liable to any further call or assessment thereon, and the holders of such
shares shall not be liable for any further payments in respect of such shares.
<PAGE> 100
SIXTH: The Corporation shall have perpetual existence.
SEVENTH: The number of directors of the Corporation shall be fixed in
the By-laws.
EIGHTH: The Board of Directors of the Corporation shall have power to
make, alter or repeal the By-Laws of the Corporation only with the prior
approval of the holders of a majority of the shares of Class B Common Stock,
subject to such restrictions upon the exercise of such power as may be imposed
by the stockholders in any By-Laws adopted by them from time to time.
NINTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in the Certificate of Incorporation or any
amendment thereof in the manner now or hereafter prescribed by statute, and ail
rights conferred upon stockholders herein are granted subject to this
reservation.
TENTH:
(A) Whereby under the laws of the State of Delaware a vote of
stockholders is required to approve or authorize any of the transactions set
forth below, then the affirmative vote or consent of 75% of the capital stock
of this Corporation entitled to vote in elections of directors, voting as a
single class, shall be required to authorize or approve such transactions:
(1) a merger or consolidation with or into any
other corporation, or
(2) any sale, lease or exchange of all or
substantially all of the property and assets of this
Corporation to any other corporation, person or other entity,
or
(3) any purchase or lease of all or substantially
all of the assets of any corporation, person or other entity
by this Corporation, or
(4) any combination of the outstanding shares of
Common Stock of this Corporation into a smaller number of
shares,
if as of the record date for the determination of stockholders entitled to
notice thereof and to vote thereon or consent thereto (i) such other
corporation, person or entity which is a party to a transaction described in
clauses (1), (2) or (3) above is the beneficial owner, directly or indirectly,
of at least 5 % of the total outstanding shares of stock of this Corporation
entitled to vote in elections of directors, considered for this purpose as one
class, or (ii) any combination of the outstanding shares of Common Stock into a
smaller number of shares as described in clause (4) above is proposed, directly
or indirectly, by a person, corporation or entity which is the beneficial
owner, directly or indirectly, of at least 5 % of the total outstanding shares
of stock of this Corporation entitled to vote in elections of directors,
considered for this purpose as one class. Such affirmative vote or consent
shall be in addition to the vote or consent of the holders of the stock of this
Corporation otherwise required by law or any agreement between this Corporation
and any national securities exchange.
(B) For purposes of this Article Tenth any corporation, person or
other entity shall be deemed to be the beneficial owner of any shares of stock
of this Corporation.
<PAGE> 101
(1) which it owns directly, whether or not of
record, or
(2) which it has the right to acquire pursuant to
any agreement or understanding or upon exercise of conversion
rights, warrants, options or otherwise, or
(3) which are beneficially owned, directly or
indirectly (including shares deemed to be owned through
application of clause (2) above), by any affiliate (a person
that directly, or indirectly through one or more
intermediaries, controls, or is controlled by or is under
common control with any such corporation, person or other
entity) or associate (any corporation or organization of which
such person is an officer or partner or is, directly or
indirectly, the beneficial owner of 10% or more of any class
of equity security; any trust or other estate in which such
person has a substantial beneficial interest or as to which
such person serves as trustee or in a similar fiduciary
capacity; and any relative or spouse of such person or any
relative of such spouse, who has the same home as such person
or who is a director or officer of the corporation or any of
its parents or subsidiaries), or
(4) which are beneficially owned, directly or
indirectly (including shares deemed owned through application
of clause (2) above), by any other corporation, person or
entity with which it or its affiliate or associates (as such
terms are defined in clause (3) above) has any agreement or
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of stock of this Corporation.
For the purposes of this Article Tenth, the total outstanding shares
of any class of stock of this Corporation shall be deemed to include shares
owned through the application of clauses (B)(2), (3) and (4) above for the
purposes of calculating the percentage of ownership of such corporation,
person, or other entity, but shall not be deemed to include any other shares
which may be issuable pursuant to any agreement or upon exercise of conversion
rights, warrants, options or otherwise.
(C) The Board of Directors shall have the power and duty to
determine for the purpose of this Article Tenth on the basis of information
known to this Corporation, whether
(1) such other corporation, person or other
entity beneficially owns more than 5% of the total outstanding
shares of stock of this Corporation entitled to vote in
elections of directors,
(2) a corporation, person, or entity is an
"affiliate" or "associate" (as defined in paragraph (B) above)
of another, and
(3) the memorandum of understanding referred to
in paragraph (D)(1) below is substantially consistent with the
transaction covered thereby.
Any such determination shall be conclusive and binding for all
purposes of this Article Tenth.
(D) The provisions of this Article Tenth shall not apply to
<PAGE> 102
(1) any merger or similar transaction with any
corporation, if the Board of Directors of this Corporation has
approved a memorandum of understanding with such other
corporation with respect to such transaction prior to the time
that such other corporation shall have become a beneficial
owner of 5% or more of the total outstanding shares of stock
of this Corporation entitled to vote in elections of
directors: or
(2) any merger or consolidation of this
Corporation with, or any sale or lease to this Corporation or
any subsidiary thereof of any assets of, or any sale or lease
by this Corporation or any subsidiary thereof of any assets
to, any corporation of which a majority of the outstanding
shares of all classes of stock entitled to vote in elections
of directors of such corporation is owned of record or
beneficially by this Corporation and its subsidiaries.
(E) Except as may be otherwise provided by this Article Tenth, or
required by statute, an agreement of merger or consolidation may be approved by
a majority vote of the shares issued and outstanding, taken at a meeting called
for the purpose of such approval.
(F) Notwithstanding any other provision of this Restated
Certificate of Incorporation or by the By-Laws of this Corporation (and in
addition to any other vote that may be required by law, this Restated
Certificate of Incorporation or the By-Laws of this Corporation) the
affirmative vote of 75% of the capital stock of this Corporation entitled to
vote in elections of directors, voting as a single class, shall be required to
amend, alter, change, or repeal this Article Tenth.
ELEVENTH: No director shall be personally liable to the Corporation or
any stockholder for monetary damages for breach of fiduciary duty as a
director, except for any matter in respect of which such director shall be
liable under Section 174 of the Delaware General Corporation Law or any
amendment thereto or successor provision thereto or shall be liable by reason
that, in addition to any and all other requirements for such liability, he (i)
shall have breached his duty of loyalty to the Corporation or its stockholders,
(ii) shall not have acted in good faith, (iii) shall have acted in a manner
involving intentional misconduct or a knowing violation of law or, in failing
to act, shall have acted in a manner involving intentional misconduct or a
knowing violation of law or (iv) shall have derived an improper personal
benefit. Neither the amendment nor repeal of Article Eleventh, nor the adoption
of any provision of the Certificate of Incorporation inconsistent with this
Article Eleventh, shall eliminate or reduce the effect of this Article Eleventh
in respect of any matter occurring, or any cause of action, suit or claim that,
but for this Article Eleventh, would accrue or arise prior to such amendment,
repeal or adoption of an inconsistent provision.
IN WITNESS WHEREOF, said BancTEXAS Group Inc. has caused this
Certificate to be duly executed this ____ day of _________, 1994.
BancTEXAS Group, Inc.
By:______________________________________
Nathan C. Collins
Chairman of the Board of Directors
President and Chief Executive Officer
<PAGE> 103
ATTEST:
______________________________________
Richard H. Braucher
Senior Vice President and Secretary
<PAGE> 104
Preliminary Copy
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
BANCTEXAS GROUP INC.
ANNUAL MEETING OF STOCKHOLDERS--JULY 28, 1994
The undersigned hereby appoints Nathan C. Collins and Richard H. Braucher and
each of them with full power of substitution, the attorney and proxy of the
undersigned to attend the Annual Meeting of Stockholders of BancTEXAS Group
Inc. ("BTX") to be held in Dallas, Texas on July 28, 1994 at 10:00 a.m. local
time and at any adjournment thereof, and to vote the stock of the undersigned
with all powers the undersigned would possess if present upon the following
matters and upon any other business that may properly come before the meeting
or any adjournment thereof.
The proxy when properly executed will be voted as specified herein. If no
specification is made with respect to any particular proposal, it is the
intention of the proxies to vote FOR each of the following proposals.
SEE REVERSE SIDE
<PAGE> 105
__________________________
COMMON
<TABLE>
<S> <C> <C>
1. To approve proposed transaction 2. To amend and restate Certificate 3. Election of Directors
with First Banks, Inc. of Incorporation.
FOR AGAINST WITHHOLD
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN all all all
/ / / / / / / / / / / / nominees nominees nominees
/ / / / / /
NOMINEES: Richard L. Brown, Nathan C. Collins,
Charles A. Crocco, Jr., Joseph J. Leszczynski,
Thomas A. Stanzel, Edward T. Story, Jr.
INSTRUCTION: To withhold authority to vote for
any individual nominee, write that nominee's
name below:
_______________________________________________
4. In their discretion, upon any other
matters which may properly come before
the meeting or any adjournments
thereof, hereby revoking any proxy
heretofore given by the undersigned for
such meeting.
________________________________________
Signature
________________________________________
Signature if owned jointly
Dated: _________________________________
</TABLE>
