SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 7, 1995
INTERNATIONAL BANCSHARES CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Commission File Number 0-9439
TEXAS 74-2157138
(State or other Jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1200 SAN BERNARDO, LAREDO, TEXAS 78040-1359
(Address of principal executive office) (ZIP Code)
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) (210) 722-7611
NONE
(Former name or former address, if changed since last report)
Page: 1
Total Pages: 64
Exhibit Index on Page: 4
<PAGE>
ITEM 5. OTHER EVENTS
Effective June 7, 1995, the state of incorporation of International
Bancshares Corporation (the "Company") was changed from Delaware to Texas. The
primary purpose of the reincorporation was to enable the Company to realize
savings in state franchise taxes.
The reincorporation was effected by means of a merger of the Company into
a wholly-owned Texas subsidiary formed for that purpose. The reincorporation
will not cause any change in the name, business, management, capital structure
or location of operations of the Company.
As a result of the reincorporation, shareholders of the Company became
shareholders of a corporation governed by Texas law and articles of
incorporation and by-laws adopted thereunder. Certificates which previously
represented shares of the Company's capital stock or other securities continue
to represent a like number of shares of capital stock or amounts of other
securities of the Texas successor to the Company.
The reincorporation and its consequences are described in the Company's
Proxy Statement dated April 20, 1995, a copy of which is filed as an exhibit to
this report and is incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
c. Exhibits
The following exhibits are filed as part of this report:
2. Agreement and Plan of Merger dated as of June 7, 1995, by and
between International Bancshares Corporation, a Delaware
corporation, and International Bancshares Corporation, a Texas
corporation.
3.1. Articles of Incorporation of International Bancshares
Corporation.
3.2. By-Laws of International Bancshares Corporation.
99. Proxy Statement of International Bancshares Corporation dated
April 20, 1995.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INTERNATIONAL BANCSHARES CORPORATION
(Registrant)
By: /s/ DENNIS E. NIXON
Dennis E. Nixon, President
and Chief Executive Officer
Date: June 15, 1995
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<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
2 Agreement and Plan of Merger dated as of June 7, 1995, by and
between International Bancshares Corporation, a Delaware
corporation, and International Bancshares Corporation, a Texas
corporation
3.1 Articles of Incorporation of International Bancshares
Corporation
3.2 By-Laws of International Bancshares Corporation
99 Proxy Statement of International Bancshares Corporation dated
April 20, 1995
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EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made and entered into
as of the 7th day of June, 1995 by and between INTERNATIONAL BANCSHARES
CORPORATION, a Delaware corporation (hereinafter referred to as "IBC Delaware"),
and INTERNATIONAL BANCSHARES CORPORATION, a Texas corporation (hereinafter
referred to as "IBC Texas") being sometimes hereinafter together referred to as
the "Constituent Corporations."
RECITALS:
WHEREAS, IBC Delaware is a corporation duly organized and existing under
the laws of the State of Delaware, and having authorized capital stock
consisting of 15,000,000 shares of Common Stock, par value $1.00 per share, of
which 5,492,086 shares are outstanding;
WHEREAS, IBC Texas is a corporation duly organized and existing under the
laws of the State of Texas, and having an authorized capital stock consisting of
15,000,000 shares of Common Stock, par value $1.00 per share, of which 1,000
shares are outstanding;
WHEREAS, all of the outstanding shares of IBC Texas are held by IBC
Delaware;
WHEREAS, the Board of Directors of each of the Constituent Corporations
deems it advisable for the general welfare and to the benefit of such
corporations and their respective shareholders that IBC Delaware merge with and
into IBC Texas pursuant to the provisions of Section 253 of the Delaware General
Corporate Law (the "DGCL") and Sections 5.01 ET SEQ. of the Texas Business
Corporation Act (the "TBCA");
WHEREAS, the respective Boards of Directors of the Constituent
Corporations have, by resolutions duly adopted, approved this Agreement and
directed that it be executed by the undersigned officers and that it be
submitted to the shareholders of IBC Delaware for approval; and
WHEREAS, it is the intention of the Constituent Corporations that the
Merger shall be a tax-free reorganization pursuant to the provisions of the
Internal Revenue Code of 1986, as amended;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereby agree, in accordance with the applicable
provisions of the laws of the States of Delaware and Texas, that the Constituent
Corporations shall be merged into a single corporation, to-wit: International
Bancshares Corporation, a Texas corporation, one of the Constituent
Corporations, and the terms and conditions of the merger hereby agreed upon
(hereafter called the "Merger") which the parties covenant to observe, keep and
perform, and the mode of carrying the same into effect are and shall be as
hereafter set forth:
SECTION 1. MERGER AND THE SURVIVING CORPORATION. (a) Subject to the terms
and conditions of this Agreement, IBC Delaware shall be merged into IBC Texas in
accordance with the applicable provisions of the DGCL and the TBCA. The Merger
shall become effective upon the filing with the Secretary of State of the State
of Texas of the articles of merger with respect thereto. For purposes hereof,
the term "EFFECTIVE TIME" shall mean the time when such articles of merger are
filed with the Texas Secretary of State, and the term "SURVIVING CORPORATION"
shall mean IBC Texas as the corporation surviving in the Merger which will be
governed by the laws of the State of Texas.
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(b) At the Effective Time, by virtue of the Merger, all the rights,
privileges, immunities and franchises, of a public as well as of a private
nature, of each of the Constituent Corporations and all property, real, personal
and mixed, and all debts due on whatever account, including choses in action,
and all and every other interest of or belonging to or due to each of the
Constituent Corporations shall be taken and deemed to be transferred to and
vested in the Surviving Corporation without further act or deed, and the
Surviving Corporation shall thenceforth be responsible and liable for all the
liabilities and obligations of each of said Constituent Corporations, all with
the full effect provided for in the DGCL and TBCA.
(c) All corporate acts, policies, resolutions, approvals and
authorizations of the shareholders, Board of Directors, committees elected or
appointed by the Board of Directors, officers and agents of IBC Delaware, which
were valid and effective immediately prior to the Merger shall be taken for all
purposes as the acts, plans, policies, resolutions, approvals and authorizations
of the Surviving Corporation and shall be as effective and binding thereon as
the same were with respect to IBC Delaware. The employees of IBC Delaware shall
become the employees of the Surviving Corporation and continue to be entitled to
the same rights and benefits which they enjoyed as employees of IBC Delaware.
(d) The Articles of Incorporation of IBC Texas in effect immediately prior
to the Effective Time shall be the Articles of Incorporation of the Surviving
Corporation until further amended in accordance with the provisions thereof and
the TBCA.
(e) The By-Laws of IBC Texas in effect immediately prior to the Effective
Time shall be the By-Laws of the Surviving Corporation, until altered, amended
or repealed as provided therein and in the Articles of Incorporation of the
Surviving Corporation.
(f) The directors of IBC Delaware immediately prior to the Effective Time
shall constitute the directors of the Surviving Corporation immediately
following the Effective Time. Such directors shall hold their positions until
their resignation or removal or until their successors are elected in accordance
with the By-Laws of the Surviving Corporation and shall have duly qualified.
(g) The officers of IBC Delaware immediately prior to the Effective Time
shall constitute the officers of the Surviving Corporation immediately following
the Effective Time. Such officers shall hold their offices until their
resignation or removal or until their successors are elected or appointed in
accordance with the By-Laws of the Surviving Corporation and shall have duly
qualified.
SECTION 2. CONVERSION OF STOCK. At the Effective Time:
SECTION 2.1 IBC TEXAS. Each share of the common stock, par value $1.00 per
share, of IBC Texas ("IBC Texas Common Stock") which shall be issued and
outstanding immediately prior to the Effective Time shall, at the Effective
Time, be cancelled and retired, all rights in respect thereof shall cease to
exist and no shares of IBC Texas Common Stock or other securities of the
Surviving Corporation shall be issuable with respect thereto.
SECTION 2.2 IBC DELAWARE. (a) Each share of the common stock, par value
$1.00 per share, of IBC Delaware ("IBC Delaware Common Stock") which shall be
issued and outstanding immediately prior to the Effective Time shall, at the
Effective Time, be converted into and become one (1) share of IBC Texas Common
Stock.
2
(b) Each of the outstanding stock options granted by IBC Delaware which is
outstanding immediately prior to the Effective Time shall be changed and
converted into a stock option of IBC Texas having the same terms and conditions
as were in effect immediately prior to the Effective Date, provided, that each
such option shall be exercisable for a number of shares of IBC Texas Common
Stock equal to the number of shares of IBC Delaware Common Stock into which such
option was exercisable immediately prior to the Effective Time.
SECTION 2.3 STOCK CERTIFICATES. Each outstanding certificate that
immediately prior to the Effective Time represented outstanding shares of IBC
Delaware Common Stock shall from and after the Effective Time be deemed for all
purposes to evidence ownership of and to represent the number of shares of IBC
Texas Common Stock into which the shares of IBC Delaware Common Stock
represented by such certificate shall have been converted as provided herein and
shall be so registered on the books and records of IBC Texas or its transfer
agents. The registered owner of any such outstanding stock certificate shall,
until such certificate shall have been surrendered for transfer or conversion or
otherwise accounted for to IBC Texas or its transfer agent, have and be entitled
to exercise any voting and other rights with respect to and to receive any
dividend and other distributions upon the shares of IBC Texas Common Stock
evidenced by such outstanding certificate as provided above. It will not be
necessary for holders of IBC Delaware Common Stock to exchange their existing
stock certificates for certificates of IBC Texas Common Stock in connection with
the Merger. However, shareholders may exchange their certificates if they so
choose.
SECTION 3. ACCOUNTING MATTERS. The assets and liabilities of the
Constituent Corporations, as of the Effective Time of the Merger, shall be taken
upon the books of the Surviving Corporation at the amounts at which they shall
be carried at that time on the books of the respective Constituent Corporations,
subject to such adjustments or eliminations of inter-company items as may be
appropriate in giving effect to the Merger. The amount of the capital surplus
and earned surplus accounts, if any, of the Surviving Corporation after the
Merger shall be determined by the Board of Directors of the Surviving
Corporation in accordance with the laws of the State of Texas and with generally
accepted accounting principles.
SECTION 4. CONDITIONS PRECEDENT. The obligations of the parties to effect
the Merger shall be subject to (a) the approval of this Agreement by the Board
of Directors of each of the Constituent Corporations and (b) the approval of
this Agreement by the affirmative vote of the holders of at least a majority of
the outstanding shares of IBC Delaware Common Stock entitled to vote thereon at
a meeting of IBC Delaware stockholders duly called and held. Thereupon, Articles
of Merger shall be duly filed and recorded in Texas and a Certificate of Merger
shall be duly filed and recorded in Delaware.
SECTION 5. AMENDMENT AND TERMINATION. (a) This Agreement and the Articles
of Incorporation of the Surviving Corporation may be amended by the parties
hereto, with the approval of their respective Boards of Directors, at any time
prior to the Effective Time, whether before or after approval of this Agreement
by the stockholders of IBC Delaware, but, after such approval by the
stockholders of IBC Delaware, no amendment shall be made which (1) alter or
change the current rate of exchange of one share of IBC Texas Common Stock for
each outstanding share of IBC Delaware Common Stock, (2) alter or change any
term of the IBC Texas Articles (except revisions made to change the registered
agent or registered office of IBC Texas or to reduce the number of authorized
shares of IBC Texas Common Stock in the event the Increase in Authorized Shares
Proposal is not approved by the IBC Delaware stockholders at IBC
3
Delaware's 1995 Annual Meeting of Shareholders), or (3) would adversely affect
the shareholders of IBC Delaware, without further approval of the shareholders.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
(b) This Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval hereof by the stockholders of IBC
Delaware, by the Board of Directors of either IBC Texas or IBC Delaware.
(c) If this Agreement is terminated for any reason, no party hereto shall
have any liability hereunder of any nature whatsoever to the others.
SECTION 6. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.
SECTION 7. FURTHER ASSURANCES. From time to time after the Effective Time
as and when requested by the Surviving Corporation and to the extent permitted
by law, the officers and directors of each of IBC Texas and IBC Delaware last in
office shall execute and deliver such assignments, deeds and other instruments
and shall take or cause to be taken such further or other actions as shall be
necessary in order to vest or perfect in or to confirm of record or otherwise to
the Surviving Corporation title to, and possession of, all of the assets,
rights, franchises and interests of each of IBC Texas and IBC Delaware in and to
every type of property (real, personal and mixed) and choses in action, and
otherwise to carry out the purposes of this Agreement, and the proper officers
and directors of the Surviving Corporation are fully authorized to take any and
all such actions in the name of IBC Texas or IBC Delaware or otherwise.
SECTION 8. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts, which together shall constitute a single agreement.
IN WITNESS WHEREOF, IBC Texas and IBC Delaware have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
INTERNATIONAL BANCSHARES CORPORATION,
a Texas corporation
By: /s/ DENNIS E. NIXON
Dennis E. Nixon, President
ATTEST:
By: /s/ ARNOLDO CISNEROS
Arnoldo Cisneros, Secretary
INTERNATIONAL BANCSHARES CORPORATION,
a Delaware corporation
By: /s/ DENNIS E. NIXON
Dennis E. Nixon, President
ATTEST:
By: /s/ ARNOLDO CISNEROS
Arnoldo Cisneros, Secretary
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EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
INTERNATIONAL BANCSHARES CORPORATION
------------------------------
Pursuant to the provisions of Article 3.01 of the Texas Business
Corporation Act (the "TBCA"), the undersigned Incorporator adopts the following
Articles of Incorporation:
ARTICLE I
The name of the corporation is International Bancshares Corporation.
ARTICLE II
The period of duration of the corporation is perpetual.
ARTICLE III
The purpose for which the corporation is organized is to transact any or
all lawful business for which corporations may be organized under the TBCA.
ARTICLE IV
The aggregate number of shares which the corporation shall have the
authority to issue is Fifteen Million (15,000,000) shares of Common Stock of the
par value of One Dollar ($1.00) per share.
ARTICLE V
The corporation will not commence business until it has received for the
issuance of its shares consideration of the value of at least One Thousand
Dollars ($1,000.00), consisting of money, labor done or property actually
received.
ARTICLE VI
The street address of the initial registered office of the corporation is
1200 San Bernardo, Laredo, Texas 78041, and the name of the initial registered
agent for the corporation at such address is Dennis E. Nixon.
1
<PAGE>
ARTICLE VII
The initial Board of Directors of the corporation shall consist of nine
members, whose names and addresses are as follows:
Name Address
---- -------
Dennis E. Nixon 1200 San Bernardo
Laredo, Texas 78041
Alberto A. Santos 1200 San Bernardo
Laredo, Texas 78041
R. David Guerra 1200 San Bernardo
Laredo, Texas 78041
Leonardo Salinas 1200 San Bernardo
Laredo, Texas 78041
Roy Jennings, Jr. 1200 San Bernardo
Laredo, Texas 78041
Lester Avigael 1200 San Bernardo
Laredo, Texas 78041
Richard E. Haynes 1200 San Bernardo
Laredo, Texas 78041
Irving Greenblum 1200 San Bernardo
Laredo, Texas 78041
Sioma Neiman 1200 San Bernardo
Laredo, Texas 78041
ARTICLE VIII
The undersigned Incorporator, Dennis E. Nixon, is a natural person of the
age of eighteen (18) years or more whose address is 1200 San Bernardo, Laredo,
Texas 78041.
ARTICLE IX
The corporation shall indemnify to the fullest extent permitted by the
TBCA, as presently in effect and as hereafter amended, any person who was, is,
or is threatened to be made a named defendant or respondent to an action, suit
or proceeding, whether criminal, civil, administrative or investigative, by
reason of the fact that the person (i) is or was a director or officer of the
corporation, or (ii) while a director or officer of the corporation, is or was
serving at the request of the corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent or similar functionary of another
foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding. Such right of indemnification shall be a
contract right which may be enforced in any manner desired by such person. The
corporation shall have the power to purchase and maintain liability insurance
for those persons or make other arrangements on such persons' behalf as and to
the fullest extent permitted by the TBCA, as presently in effect and as
hereafter amended.
2
ARTICLE X
Cumulative voting by the shareholders of the corporation at any election
for directors or upon any other matter is expressly prohibited, and the
directors of the corporation shall be elected by plurality vote of the
shareholders entitled to vote at such election.
ARTICLE XI
A director of the corporation shall not be personally liable to the
corporation or its shareholders for monetary damages for an act or omission in
the director's capacity as a director, except for liability for (a) a breach of
the director's duty of loyalty to the corporation or its shareholders; (b) an
act or omission not in good faith or that involves intentional misconduct or a
knowing violation of the law; (c) a transaction from which the director received
an improper benefit, whether or not the benefit resulted from an action taken
within the scope of the director's office; or (d) an act or omission for which
the liability of the director is expressly provided by an applicable statute.
If the TBCA or the Texas Miscellaneous Corporation Laws Act (the "TMCLA")
hereafter is amended to authorize further elimination or limitation of the
liability of directors, then the liability of a director of the corporation, in
addition to the limitation on the personal liability provided herein, shall be
limited to the fullest extent permitted by the TBCA, as amended and the TMCLA,
as amended. Any repeal or modification of this Article XI by the shareholders of
the corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director at the time of such repeal or
modification.
ARTICLE XII
No shareholder of the corporation shall, by reason of his holding shares
of any class of the capital stock of the corporation, have any preemptive or
preferential right, other than such preemptive or preferential rights, if any,
as the Board of Directors in its discretion may fix, to purchase, subscribe to
or otherwise acquire any unissued or treasury shares of any class of the capital
stock of the corporation, now or hereafter to be authorized, or any notes,
debentures, bonds or other securities convertible into, exchangeable for, or
carrying or accompanied by warrants, options or rights to purchase or subscribe
to shares of any class of the capital stock of the corporation, now or hereafter
to be authorized, whether or not the issuance of any such shares of capital
stock or such notes, debentures, bonds or other securities would adversely
affect the dividend or voting rights of such shareholder, and the Board of
Directors may issue shares of any class of the capital stock of the corporation,
now or hereafter to be authorized, or any notes, debentures, bonds or other
securities convertible into, exchangeable for, or carrying or accompanied by
warrants, options or rights to purchase or subscribe to shares of any class of
the capital stock of the corporation, now or hereafter to be authorized, without
offering any such shares of any class of capital stock of the corporation,
either in whole or in part, to the existing shareholders of any class of the
capital stock of the corporation.
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ARTICLE XIII
Any action required by the TBCA, as presently in effect and as hereafter
amended, to be taken at any annual or special meeting of shareholders, or any
action which may be taken at any annual or special meeting of shareholders, may
be taken without a meeting, without prior notice, and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holder or holders of shares having not less than the minimum
number of votes that would be necessary to take such action at a meeting at
which the holders of all shares entitled to vote on the action were present and
voted.
ARTICLE XIV
Special meetings of the shareholders may be called only by (i) the Board
of Directors, the President, or such other person(s) so authorized by the
by-laws of the corporation or (ii) the holders of at least fifty percent of the
outstanding shares entitled to vote at the proposed special meeting.
ARTICLE XV
With respect to any matter for which the affirmative vote of the holders
of a specified portion of the shares entitled to vote is required by TBCA, as
presently in effect and as hereafter amended, the act of the shareholders on
that matter shall only require the affirmative vote of the holders of at least a
majority of the shares entitled to vote on such matter, rather than the
affirmative vote otherwise required by the TBCA, as presently in effect and
hereafter amended.
EXECUTED this 6th day of June, 1995.
/s/ DENNIS E. NIXON
Dennis E. Nixon, Incorporator
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EXHIBIT 3.2
BY-LAWS
OF
INTERNATIONAL BANCSHARES CORPORATION
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The principal office of the Corporation shall
be in Laredo, Texas.
Section 2. OTHER OFFICES. The Corporation may also have offices at such
other places both within and without the State of Texas as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
SHAREHOLDERS
Section 1. ANNUAL MEETINGS. The annual meeting of the shareholders for the
election of directors and for the transaction of such other business as properly
may come before such meeting shall be held on the third Thursday in May or on
such date, and at such time and place, within or without the State of Texas, as
may be designated by the Board of Directors.
Section 2. SPECIAL MEETINGS. Special meetings of the shareholders for any
proper purpose or purposes may be called at any time by the Board of Directors,
the Chairman of the Board of Directors, or the President, to be held on such
date and at such time and place, within or without the State of Texas, as the
Board of Directors, the Chairman of the Board of Directors or the President,
whichever has called the meeting, shall direct. A special meeting of the
shareholders shall be called by the Chairman of the Board of Directors,
President, or Secretary whenever shareholders holding at least fifty percent
(50%) of all the shares entitled to vote at the proposed special meeting make
application therefor in writing. Any such request shall state the proper purpose
or purposes of the meeting and shall be delivered to the Chairman of the Board
of Directors or the President.
<PAGE>
Section 3. NOTICE. Written or printed notice stating the place, day and
hour of any shareholders' meeting, and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten (10) nor more than sixty
(60) days before the date of the meeting, either personally or by mail, by or at
the direction of the President, Secretary, or the officer or person calling the
meeting, to each shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail, postage prepaid, to the shareholder at his address as it appears on
the stock transfer books of the Corporation. Any notice required to be given to
a shareholder pursuant to this Section 3 or any other provision of these
By-Laws, the Articles of Incorporation of the Corporation or any provision of
the Texas Business Corporation Act (herein called the "Act") need not be given
to such shareholder if (a) notice of two (2) consecutive annual meetings of
shareholders of the Corporation, and all notices of meetings of shareholders of
the Corporation held during the period between such annual meetings, if any, or
(b) all (but in no event less than two (2)) payments (if sent by first class
mail) of distributions or interest on securities of the Corporation during any
twelve-month period, have been mailed to such shareholder at his address as
shown on the share transfer records of the Corporation and have been returned
undeliverable, and any action or meeting of shareholders of the Corporation
taken or held without notice to such shareholder shall have the same force and
effect as if notice had been duly given to such shareholder; provided, however,
that if such shareholder delivers to the Corporation a written notice setting
forth his or her then current address, the requirement that notice be given to
such shareholder shall be reinstated.
Section 4. RECORD DATE. The Board of Directors may fix in advance a record
date for the purpose of determining shareholders entitled to notice of or to
vote at a meeting of shareholders, such record date to be not less than ten (10)
nor more than sixty (60) days prior to such meeting, or the Board of Directors
may close the stock transfer records for such purpose for a stated period of not
less than ten (10) nor more than sixty (60) days prior to such meeting. In the
absence of any action by the Board of Directors, the date upon which the notice
of the meeting is mailed shall be the record date. In the event that a special
meeting of shareholders is called by shareholders, the record date for
determining shareholders entitled to call such meeting shall be the date on
which the first shareholder calling such special meeting signs the call or
notice of that meeting. A determination of shareholders of record entitled to
notice of or to vote at a meeting of shareholders shall apply to any adjournment
of the meeting except where the determination has been made through the closing
of the share transfer records and the stated period of closing has expired.
Section 5. LIST OF SHAREHOLDERS. The officer or agent of the Corporation
having charge of the stock transfer records for shares of the Corporation shall
make, at least ten (10) days before each meeting of the shareholders, a complete
list of the shareholders 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, which list, for a period of ten (10) days prior to
such meeting, shall be kept on file at the registered office of the Corporation
and shall be subject to inspection by any such shareholder at any time during
usual business hours. 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
shareholder during the whole time of the meeting. The original stock transfer
records shall be prima facie evidence as to who are the shareholders entitled to
examine such list or transfer records or to vote at any meeting of shareholders.
Section 6. QUORUM. The holders of a majority of the issued and outstanding
shares entitled to vote thereat, present in person or represented by proxy,
shall constitute a quorum at all meetings of the shareholders for the
transaction of business, except as otherwise provided by the Act. If, however,
such quorum shall not be present or represented at any meeting of the
shareholders, the shareholders entitled to vote, present in person or
represented by proxy, shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present or represented. When any adjourned meeting is reconvened and a quorum
shall be present or represented, any business may be transacted which might have
been transacted at the meeting as originally noticed. Once a quorum is
constituted, the shareholders present or represented by proxy at a meeting may
continue to transact business until adjournment, notwithstanding the subsequent
withdrawal therefrom of such number of shareholders as to leave less than a
quorum.
Section 7. VOTING. When a quorum is present at any meeting, the vote of
the holders of a majority of the shares present or represented by proxy at such
meeting and entitled to vote shall be the act of the shareholders, unless the
vote of a different number is required by the Act, the Articles of Incorporation
of the Corporation or these By-Laws. Each shareholder shall at every meeting of
the shareholders be entitled to one vote in person or by proxy for each share
having voting power held by such shareholder.
Section 8. PROXY. Every proxy must be executed in writing by the
shareholder or by his duly authorized attorney-in-fact, and shall be filed with
the Secretary of the Corporation prior to or at the time of the meeting. No
proxy shall be valid after eleven (11) months from the date of its execution
unless otherwise provided therein. Each proxy shall be revocable unless the
proxy form conspicuously states that the proxy is irrevocable and the proxy is
coupled with an interest. Proxies coupled with an interest include the
appointment as proxy of:
(a) a pledgee;
(b) a person who purchased or agreed to purchase, or owns or holds an
option to purchase, the shares covered by such proxy;
(c) a creditor of the Corporation who extended credit to the Corporation
under terms requiring appointment of the creditor as proxy;
(d) an employee of the Corporation whose employment contract requires
appointment of the employee as proxy; and
(e) a party to a voting agreement entered into pursuant to and in
compliance with applicable provisions of the Act.
Section 9. JUDGES OF ELECTION. The Board of Directors may appoint judges
of election to serve at any election of directors and at balloting on any other
matter that may properly come before a meeting of shareholders. If no such
appointment shall be made, or if any of the judges so appointed shall fail to
attend, or refuse or be unable to serve, then such appointment may be made by
the presiding officer at the meeting.
Section 10. ACTION BY WRITTEN CONSENT. Any action required or permitted to
be taken at any meeting of the shareholders may be taken without a meeting,
without prior notice and without a vote, if a consent or consents in writing,
setting forth the action so taken, shall be signed by the holder or holders of
outstanding shares having not less than the minimum number of votes that would
be necessary to take such action at a meeting at which the holders of all shares
entitled to vote on the action were present and voted. Prompt notice of the
taking of any corporate action without a meeting by less than unanimous written
consent shall be given to those shareholders who shall not have consented
thereto in writing.
Section 11. MEETINGS BY CONFERENCE TELEPHONE. Shareholders may participate
in and hold meetings of shareholders by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in such a meeting shall
constitute presence in person at such meeting, except where a person
participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
<PAGE>
ARTICLE III
DIRECTORS
Section 1. NUMBER OF DIRECTORS. The number of directors which shall
constitute the whole Board of Directors shall be fixed from time to time by
resolution of the Board of Directors but shall not be less than three. No
decrease in the number of directors shall have the effect of reducing the term
of any incumbent director. Directors shall be elected at the annual meeting of
the shareholders, except as provided in Section 2 of this Article III, and each
director shall hold office until his successor is elected and qualified.
Directors need not be shareholders of the Corporation or residents of the State
of Texas.
Section 2. VACANCIES; REMOVAL. Notwithstanding the fact that the remaining
directors may constitute less than a quorum of the Board of Directors as fixed
by Section 9 of this Article, the affirmative vote of a majority of the
remaining directors may fill any vacancy occurring in the Board of Directors
and, during the period between any two successive annual meetings of the
shareholders, may fill a maximum of two (2) vacant directorships resulting from
an increase in the number of directors. A director elected to fill a vacancy
shall be elected for the unexpired term of his predecessor in office. A
directorship to be filled by reason of an increase in the number of directors
may be filled by the Board of Directors for a term of office continuing only
until the next election of one or more directors by the shareholders. Any
directorship to be filled by reason of an increase in the number of directors
may also be filled by election at an annual meeting or at a special meeting of
shareholders called for that purpose. At any special meeting of shareholders
called for such purpose, any director may be removed from office, for or without
cause, though his term may not have expired, by an affirmative vote of the
holders of shares representing a majority of votes of all the shares of stock
outstanding and entitled to vote for the election of directors.
Section 3. GENERAL POWERS. The business and affairs of the Corporation
shall be managed by its Board of Directors, which may exercise any and all
powers of the Corporation and do any and all such lawful acts and things as are
not by the Act, the Articles of Incorporation of the Corporation or by these
By-Laws directed or required to be exercised or done by the shareholders.
Section 4. CHAIRMAN OF THE BOARD. The Board of Directors shall appoint one
of its members to be Chairman of the Board to serve at the pleasure of the
Board. He shall preside at all meetings of the Board of Directors. The Chairman
of the Board shall have no responsibility or duties with respect to the
management of the day to day affairs of the Corporation and shall not be deemed
to be or considered an officer of the Corporation.
Section 5. PLACE OF MEETINGS. The directors of the Corporation
may hold their meetings, both regular and special, either within or
without the State of Texas.
Section 6. ANNUAL MEETINGS. A meeting of the Board of Directors shall be
held for organization, for the election of officers and for the transaction of
such other business as may properly come before the meeting, within thirty days
after each annual election of directors.
Section 7. REGULAR MEETINGS. The Board of Directors by resolution may
provide for the holding of regular meetings and may fix the times and places at
which such meetings shall be held. Notice of regular meetings shall not be
required to be given, provided that whenever the time or place of regular
meetings shall be fixed or changed, notice of such action shall be mailed
promptly to each director who shall not have been present at the meeting at
which such action was taken, addressed to him at his residence or usual place of
business.
Section 8. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by the Chairman of the Board of Directors, the President or any
three directors. Except as otherwise required by statute, notice of each special
meeting shall be mailed to each director, addressed to him at his residence or
usual place of business, or shall be sent to him at such place by telegram,
electronic facsimile, radio or cable, or telephoned or delivered to him
personally, not later than two days before the day on which the meeting is to be
held. Such notice shall state the time and place of such meeting, but, unless
otherwise required by statute, the Articles of Incorporation or these By-laws,
need not state the purposes thereof.
Section 9. QUORUM AND VOTING. At all meetings of the Board of Directors
the presence of at least one-third of the number of directors fixed by or in the
manner provided in, Section 1 of this Article, but in no event less than two
(2), shall be necessary and sufficient to constitute a quorum for the
transaction of business, and the affirmative vote of at least a majority of the
number of directors present at any meeting at which there is a quorum shall be
the act of the Board of Directors, except as may be otherwise specifically
provided by the Act, the Articles of Incorporation of the Corporation or these
By-Laws. If a quorum shall not be present at any meeting of directors, a
majority of 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 10. COMPENSATION OF DIRECTORS. Directors shall receive such
reasonable compensation for their services as such, whether in the form of
salary or a fixed fee for attendance at meetings, with expenses, if any, as the
Board of Directors may from time to time determine. Nothing herein contained
shall be construed to preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor.
Section 11. ACTION BY WRITTEN CONSENT. Any action required or permitted to
be taken at any meeting of the Board of Directors or of any committee designated
by the Board of Directors may be taken without a meeting if a written consent,
setting forth the action so taken, is signed by all the members of the Board of
Directors or of such committee, and such consent shall have the same force and
effect as a unanimous vote at a meeting.
Section 12. MEETINGS BY CONFERENCE TELEPHONE. Members of the Board of
Directors or members of any committee designated by the Board of Directors may
participate in and hold a meeting of such Board or committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in
such a meeting shall constitute presence in person at such meeting, except where
a person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
Section 13. RESIGNATIONS. Each director shall have the right to resign at
any time upon written notice of such resignation to the Board of Directors, the
Chairman of the Board of Directors, the President, any Vice-President or the
Secretary of the Corporation. Unless otherwise specified in such written notice,
the resignation shall take effect upon the receipt thereof, and acceptance of
such resignation shall not be necessary to make same effective.
Section 14. 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 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. Advisory directors may be appointed
by the Board of Directors to serve as members of the Executive Committee (as
hereinafter defined) but shall not have the right to vote on any question or
issue considered by said Committee.
The Board of Directors may designate advisory directors from time to time whose
residence, citizenship or principal place of business is not the United States.
These directors shall be called "international directors" and will have the same
function as advisory directors.
<PAGE>
ARTICLE IV
COMMITTEES OF THE BOARD
Section 1. EXECUTIVE COMMITTEE. There shall be an Executive Committee
consisting of the Chairman of the Board and the President of the Corporation as
ex-officio members, and such other directors as the Board of Directors may from
time to time select. Members of the Executive Committee shall serve until the
next annual meeting of the Board of Directors and until their successors are
appointed. The Board of Directors shall designate one of the members of the
Executive Committee as Chairman of the Committee and one or more additional
members as Vice Chairman of the Committee, and the Chairman of the Executive
Committee shall preside at meetings of the Executive Committee. The Executive
Committee shall have and may exercise such powers and authority in the
management of the business and affairs of the Corporation as the Board shall
specifically delegate to it consistent with the corporate law of the State of
Texas.
Section 2. AUDIT COMMITTEE. There shall be an Audit Committee consisting
of three (3) of the directors of the Corporation who are not serving as officers
of the Corporation. The Board of Directors shall designate one of the members of
the Audit Committee as Chairman of the Committee and one or more additional
members as Vice Chairman of the Committee, and the Chairman of the Audit
Committee shall preside at meetings of the Audit Committee. The Audit Committee
shall meet periodically (not less than once annually) with the independent
public accounting firm serving as auditors of the Corporation and the internal
auditing staff of the Corporation and its subsidiaries to discuss their
procedures and findings and hear their recommendations with respect to financial
accounting matters.
Section 3. OTHER COMMITTEES. The Board of Directors may from time to time,
by resolution adopted by a majority of the whole board, designate one or more
other committees, each committee to consist of two or more directors of the
Corporation. Any such committee shall exercise such powers as may be assigned to
it by the Board of Directors.
ARTICLE V
NOTICES
Section 1. FORM OF NOTICE. Whenever under the provisions of the Act, the
Articles of Incorporation of the Corporation or these By-Laws notice is required
to be given to any director or shareholder, and no provision is made as to how
such notice shall be given, notice shall not be construed to mean personal
notice, but any such notice may be given in writing, by mail, postage prepaid,
addressed to such director or shareholder at such address as appears on the
books of the Corporation, or by telex, telegraph or mailgram. Any notice
required or permitted to be given by mail shall be deemed to be given at the
time when the same is deposited, postage prepaid, in the United States mail as
aforesaid.
Section 2. WAIVER. Whenever any notice is required to be given to any
director or shareholder of the Corporation under the provisions of the Act, the
Articles of Incorporation of the Corporation or these By-Laws, a waiver thereof
in writing signed by the person or persons entitled to such notice, whether
signed before or after the time stated in such waiver, shall be deemed
equivalent to the giving of such notice. Attendance of a director at a meeting
of the Board of Directors or any committee thereof shall constitute a waiver of
notice of such meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business on the ground
that the meeting is not lawfully called or convened.
ARTICLE VI
OFFICERS
Section 1. IN GENERAL. The officers of the Corporation shall be elected by
the Board of Directors and shall be a President, one or more Vice Presidents, a
Secretary and a Treasurer. The Board of Directors may also, if it chooses to do
so, elect one or more Assistant Secretaries, one or more Assistant Treasurers
and such other officers and agents as it shall deem necessary, all of whom shall
also be officers of the Corporation. Two or more offices may be held by the same
person, except where otherwise provided by statute or the Articles of
Incorporation of the Corporation.
Section 2. ELECTION, TERM AND QUALIFICATIONS. Each officer shall be
elected by the Board of Directors and shall hold his office until the first
meeting of the Board of Directors following the next annual meeting of
shareholders and until his successor shall have been elected, or until his
death, or until he shall have resigned or shall have been removed in the manner
provided in these By-laws. Any officer elected or appointed by the Board of
Directors may be removed, for or without cause, at any time by a majority vote
of the whole Board of Directors. Election or appointment of an officer or agent
shall not of itself create contract rights.
Section 3. RESIGNATIONS. Each officer shall have the right to resign at
any time upon written notice of such resignation to the President or the Board
of Directors, the Chairman of the Board of Directors, the President, any
Vice-President or the Secretary. Unless otherwise specified in such written
notice, the resignation shall take effect upon the receipt thereof, and
acceptance of such resignation shall not be necessary to make same effective.
Section 4. VACANCIES. A vacancy in any office by reason of death,
resignation, removal, disqualification or any other cause shall be filled for
the unexpired portion of the term in the manner prescribed by these By-laws for
regular election or appointment to such office.
Section 5. PRESIDENT. The President shall be the chief executive officer
of the Corporation, shall have general and active management of the business of
the Corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect. He shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the Corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent of the Corporation.
Section 6. VICE PRESIDENTS. In the absence of the President or in the
event of his inability or refusal to act, the Vice Presidents, in the order of
their seniority, shall perform the duties of the President, and when so acting,
shall have all the powers of and be subject to all the restrictions upon the
President. The Vice Presidents shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
Section 7. SECRETARY. The Secretary shall attend all meetings of the Board
of Directors and all meetings of the shareholders and shall record the
proceedings of the meetings in books to be kept for that purpose. He shall give,
or cause to be given, notice of all meetings of the shareholders and special
meetings of the Board of Directors, and shall perform such other duties as may
be prescribed by the Board of Directors or by the President, under whose
supervision he shall be. He shall have custody of the corporate seal and he, or
an Assistant Secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such Assistant Secretary. The Board of Directors may give general
authority to any other officer to affix the corporate seal and to attest the
affixing by his signature.
Section 8. ASSISTANT SECRETARIES. The Assistant Secretaries, in the order
of their seniority, shall, in the absence of the Secretary or in the event of
his inability or refusal to act, perform the duties and exercise the powers of
the Secretary and shall perform such other duties and have such other powers as
the Board of Directors may from time to time prescribe.
<PAGE>
Section 9. TREASURER. The Treasurer shall have 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 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 President and the Board of Directors, when the Board so requires, an account
of all his transactions as Treasurer and of the financial condition of the
Corporation.
Section 10. ASSISTANT TREASURERS. The Assistant Treasurers, in the order
of their seniority, shall, in the absence of the Treasurer or in the event of
his inability or refusal to act, perform the duties and exercise the powers of
the Treasurer and shall perform such other duties and have such other powers as
the Board of Directors may from time to time prescribe.
Section 11. SALARIES. The salaries of the officers of the Corporation
shall be fixed from time to time by the Board of Directors. No officer shall be
prevented from receiving such salary by reason of the fact that he is also a
director of the Corporation.
ARTICLE VII
CERTIFICATES REPRESENTING SHARES
Section 1. FORM OF CERTIFICATES. The Corporation shall deliver
certificates representing all shares to which shareholders are entitled.
Certificates representing shares of the Corporation shall be in such form as
shall be determined by the Board of Directors and shall be numbered
consecutively and entered in the stock transfer records of the Corporation as
they are issued. Each certificate shall state on the face thereof the holder's
name, the number and class of shares, and the par value of the shares or a
statement that the shares are without par value. Each certificate shall be
signed by the President or a Vice President and the Secretary or an Assistant
Secretary of the Corporation, and may be sealed with the seal of the Corporation
or a facsimile thereof if the Corporation shall then have a seal. The signatures
of the Corporation's officers on any such certificate or certificates may be
facsimiles. In case any officer or officers who have signed, or whose facsimile
signature or signatures have been used on, such certificate or certificates
shall cease to be such officer or officers of the Corporation, whether because
of death, resignation or otherwise, before such certificate or certificates have
been issued, such certificate or certificates may nevertheless be issued by the
Corporation with the same effect as if the person or persons who signed the
certificate or certificates or whose facsimile signature or signatures have been
used thereon had not ceased to be such officer or officers of the Corporation.
Section 2. LOST CERTIFICATES. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or his legal representative, to advertise the same in such manner
as the Board shall require and/or to give the Corporation a bond in such sum as
the Board may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost, stolen or
destroyed.
Section 3. TRANSFER OF SHARES. Shares of stock shall be transferable only
on the books of the Corporation by the holder or holders thereof in person or by
his, her or their duly authorized attorney or attorneys and, upon surrender to
the Corporation or to the transfer agent of the Corporation of a certificate
representing shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
Corporation or the transfer agent 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 4. REGISTERED SHAREHOLDERS. The Corporation shall be entitled to
recognize the holder or holders of record of any share or shares of stock as the
holder or holders in fact thereof, and, accordingly, 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 law.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. INSTRUMENTS. The Chairman of the Board of Directors, the
President, any Vice President, the Secretary or the Treasurer, subject to the
approval of the Board of Directors, may enter into any contract or execute and
deliver any instrument in the name and on behalf of the Corporation. The Board
of Directors may authorize any officer or officers, or agent or agents, to enter
into any contract or to execute and deliver any instrument in the name and on
behalf of the Corporation, and any such authorization may be general or confined
to specific instance.
Section 2. BORROWING. No loans or advances shall be obtained or contracted
for, by or on behalf of the Corporation and no negotiable paper shall be issued
in its name, unless and except as authorized by the Board of Directors. Such
authorization may be general or confined to specific instances. Any officer or
agent of the Corporation thereunto so authorized may obtain loans and advances
for the Corporation, and for such loans and advances may make, execute and
deliver promissory notes, bonds or other evidence of indebtedness of the
Corporation. Any officer or agent of the Corporation thereunto so authorized may
pledge, hypothecate or transfer as security for the payment of any and all
loans, advances, indebtedness and liabilities of the Corporation, any and all
stocks, bonds, other securities and other personal property at any time held by
the Corporation, and to that end may endorse, assign and deliver the same and do
every act and thing necessary or proper in connection therewith.
Section 3. DEPOSITS. All funds of the Corporation not otherwise employed
shall be deposited from time to time to its credit in such banks or trust
companies or with such bankers or other depositories as the Board of Directors
may select or as may be selected by any officer or officers or agent or agents
authorized so to do by the Board of Directors. Endorsements for deposit to the
credit of the Corporation in any of its duly authorized depositories shall be
made in such manner as the Board of Directors from time to time may determine.
Section 4. CHECKS. All checks 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. DIVIDENDS AND OTHER DISTRIBUTIONS. Dividends and other
distributions made upon or with respect to the outstanding shares of the
Corporation, subject to the provisions of the Act and of the Articles of
Incorporation of the Corporation, may be declared by the Board of Directors at
any regular or special meeting. Dividends may be declared and paid in cash, in
property or in shares of the Corporation, and other distributions may be
declared and paid in cash or property, provided that all such declarations and
payments of dividends and other distributions shall be in strict compliance with
all applicable laws and the Articles of Incorporation of the Corporation. The
Board of Directors may fix in advance a record date for the purposes of
determining shareholders entitled to receive payment of any dividend or other
distribution, such record date to be not more than sixty (60) days prior to the
payment date of such dividend or other distribution, or the Board of Directors
may close the stock transfer records for such purpose for a period of not more
than sixty (60) days prior to the payment date of such dividend or other
distribution. In the absence of any action by the Board of Directors, the date
upon which the Board of Directors adopts the resolution declaring such dividend
or other distribution shall be the record date. Any dividend or other
distribution declared pursuant to this Section 5 shall be payable to the persons
registered as shareholders of the Corporation in the Corporation's stock
transfer records as of the record date for such dividend or other distribution
as set pursuant to this Section 5, and the person in whose name shares are
registered in the stock transfer records of the Corporation as of such record
date shall be deemed to be the owner of the shares so registered in his name at
such time.
Section 6. FISCAL YEAR. The fiscal year of the Corporation shall be fixed
by resolution of the Board of Directors.
Section 7. SEAL. The Corporation may by resolution of the Board of
Directors adopt and have a seal, and said seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any manner reproduced. Any
officer of the Corporation shall have authority to affix the seal to any
document requiring it.
ARTICLE IX
INDEMNITY
Section 1. INDEMNIFICATION. The Corporation shall indemnify to the fullest
extent permitted by the Act any person who was, is or is threatened to be made a
named defendant or respondent to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that the person
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
he reasonably believed to be, in the case of conduct in his official capacity as
a director, officer, employee or agent of the Corporation, that his conduct was
in the Corporation's best interests, and in all other cases, that his conduct
was at least 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 proceeding by judgment, order,
settlement, or 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 the case of conduct
in his official capacity as a director, officer, employee or agent of the
Corporation, in the Corporation's best interests, and in all other cases, at
least 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.
Section 2. INDEMNIFICATION NOT EXCLUSIVE. The indemnification provided by
this Article IX shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under the Articles of Incorporation of
the Corporation, any by-laws, agreement or vote of shareholders or as a matter
of law or otherwise.
Section 3. INSURANCE. 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 IX.
ARTICLE X
BY-LAWS
Section 1. AMENDMENTS. These By-Laws may be altered, amended or repealed
and new By-Laws may be adopted by the shareholders or the Board of Directors at
any regular meeting of the shareholders or of the Board of Directors, or at any
special meeting of the shareholders or of the Board of Directors, if notice of
such alteration, amendment, repeal or adoption be contained in the notice of
such special meeting.
Section 2. WHEN BY-LAWS SILENT. It is expressly recognized that
when the By-Laws are silent as to the manner of performing any
corporate function, the provisions of the Act shall control.
I, Arnoldo Cisneros, certify that (1) I am the duly constituted Secretary
of the Board of Directors of International Bancshares Corporation, and as such
officer am the official custodian of its records; (2) the foregoing By-Laws are
the By-Laws of said corporation, and all of them, are now lawfully in force and
effect.
IN TESTIMONY WHEREOF, I have hereunto affixed my official signature in the
City of Laredo, Texas, on the 7th day of June, 1995.
/s/ ARNOLDO CISNEROS
Arnoldo Cisneros
SCHEDULE 14A
(RULE 14A - 101)
INFORMATION IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X] [ ] Confidential, for Use
Filed by a Party other of the Commission Only
than the Registrant [ ] (as permitted by Rule 14a-(e)(2))
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
INTERNATIONAL BANCSHARES CORPORATION
(Name of Registrant as Specified In Its Charter)
DENNIS E. NIXON, PRESIDENT
(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(1)(l), 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 (Set forth the amount on which
the filing fee is calculated and sate how it was determined:
_________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_________________________________________________________________
Set forth the amount on which the filing fee is calculated and state how
it was determined.
[ ] Fee paid previously with preliminary materials.
[ ] 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:
_________________________________________________________________
2) Form, Schedule or Registration Statement No.:
_________________________________________________________________
3) Filing Party:
_________________________________________________________________
4) Date Filed:
_________________________________________________________________
<PAGE>
INTERNATIONAL BANCSHARES CORPORATION
Post Office Drawer 1359
Laredo, Texas 78042-1359
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 18, 1995
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
International Bancshares Corporation (the "Company") will be held at the offices
of the Company, 1200 San Bernardo, Laredo, Texas, on May 18, 1995 at 7:00 p.m.
for the following purposes:
(1) To elect ten (10) directors of the Company to serve until the next
Annual Meeting of Shareholders and until their successors shall have
been duly elected and qualified;
(2) To approve the appointment of independent auditors for the 1995
fiscal year;
(3) To consider and vote upon a proposal to amend the Certificate of
Incorporation of the Company to increase the number of authorized
shares of Common Stock of the Company;
(4) To approve and adopt an Agreement and Plan of Merger providing for the
merger of the Company into a wholly-owned Texas subsidiary for purposes
of changing the state of incorporation of the Company from Delaware to
Texas and effecting certain changes in the Certificate of Incorporation
and the By-Laws of the Company; and
(5) To transact such other business as may lawfully come before the meeting
or any adjournment thereof.
The record date for the meeting has been fixed at April 3, 1995. Only
shareholders of record at the close of business on that date will be entitled to
vote at the meeting or any adjournment thereof.
In order to ensure the representation of a quorum at the meeting,
shareholders who do not expect to attend the meeting in person are urged to sign
the enclosed proxy and return it promptly to the Trust Division, International
Bank of Commerce, P. O. Drawer 1359, Laredo, Texas 78042-1359. A return envelope
is enclosed for that purpose.
INTERNATIONAL BANCSHARES CORPORATION
DENNIS E. NIXON
President
Dated: April 20, 1995
<PAGE>
INTERNATIONAL BANCSHARES CORPORATION
1200 San Bernardo Avenue
Laredo, Texas 78040
PROXY STATEMENT
SOLICITATION AND REVOCATION OF PROXIES
The accompanying proxy is solicited by the Board of Directors of
International Bancshares Corporation, a Delaware Corporation (the "Company") to
be voted at the 1995 Annual Meeting of Shareholders to be held on May 18, 1995
at 7:00 p.m. at the offices of the Company, 1200 San Bernardo, Laredo, Texas.
The Company will bear the cost of such solicitation. It is expected that the
solicitation of proxies will be primarily by mail. Proxies may be solicited
personally by regular employees of the Company at a nominal cost. Any
shareholder giving a proxy has the power to revoke it at any time prior to the
voting of the proxy by giving notice in person or in writing to the Secretary of
the Company or by appearing at the annual meeting and voting in person. The
approximate date on which this proxy statement and the accompanying form of
proxy are first sent or given to security holders is April 20, 1995.
VOTING AT MEETING
Only holders of record of common stock, par value $1.00 per share ("Common
Stock"), of the Company at the close of business on April 3, 1995, shall be
entitled to vote at the meeting. There were 5,492,086 shares of Common Stock
issued and outstanding on the record date held of record by approximately 1,175
shareholders. Each share of Common Stock is entitled to one vote.
All shares entitled to vote represented by a properly executed and
unrevoked proxy received in time for the meeting will be voted at the meeting in
accordance with the instructions given, but in the absence of instructions to
the contrary, such shares will be voted affirmatively. Persons empowered as
Proxies will also be empowered to vote in their discretion upon such other
matters as may properly come before the meeting or any adjournment thereof. If
any nominee shall be unable to serve, which is not now contemplated, the proxies
will be voted for such substitute nominee(s) as the Board of Directors
recommends.
A quorum for the transaction of business at the Annual Meeting consists of
a majority of the outstanding shares of the Common Stock, present in person or
by proxy. The election of directors shall be determined by a plurality of the
votes cast at the meeting and all other standard proposals shall be determined
by a majority of the votes cast on such proposal. Shares of Common Stock of the
Company for which an abstention is indicated or a broker non-vote is received
will be treated as shares that are present and entitled to vote for purposes of
determining the quorum; however, such shares will not be considered to be a vote
cast in connection with the approval of any proposal.
1
<PAGE>
PROPOSAL - 1
ELECTION OF DIRECTORS
Ten directors, constituting the entire Board of Directors, are to be
elected at the Annual Meeting. Each director is to hold office until the next
Annual Meeting and until his successor is elected and qualified. The Proxies
named in the accompanying proxy, who have been designated by the Board of
Directors of the Company, intend to vote for the following nominees, all of whom
are currently directors, unless otherwise instructed in such proxy. All of the
nominees are currently directors, except for Mr. Sanchez. Certain information
concerning such nominees is set forth below including information regarding
their positions with International Bank of Commerce, the Company's lead bank
("IBC"):
Served as
Nominee for Director
Director Since (1) Age Principal Occupation (2)
----------- --------- --- ------------------------
Lester Avigael 1966 68 Retail Merchant
(Las Novedades, Inc.)
R. David Guerra 1993 42 Vice President of the Company
since 1986 and President of the
IBC branch in McAllen, Texas and
Director of IBC since 1990
Irving Greenblum 1981 65 Retail Merchant (Muebleria
Mexico, S.A.), Advisory Director
of IBC since 1977
Richard E. Haynes 1977 52 Attorney at Law; Real Estate
Investments
Roy Jennings Jr. 1966 71 Vice Chairman of the Board of
IBC; Investments
Sioma Neiman 1981 67 International entrepreneur;
Advisory Director of IBC
since 1976
Dennis E. Nixon 1975 52 Chairman of the Board since
May 1992 and President of the
Company since 1979; President
and Chief Executive Officer
of IBC
Leonardo Salinas 1976 61 Vice President of the Company
since 1982; Senior Executive
Vice President and Director
of IBC
Antonio R. Sanchez Jr. - 52 Chairman of the Board of Sanchez
O'Brien Oil & Gas Corporation;
Investments
Alberto A. Santos 1966 67 Investments; Director of IBC
- ------------
(1) Includes time served as director of IBC. The Company became the successor
issuer to IBC on July 28, 1980.
(2) Except as otherwise noted, each nominee has held the office indicated or
other offices in the same company for the last five years.
None of the nominees for director and none of the executive officers have a
family relationship with any of the other nominees for director or executive
officers, except for Leonardo Salinas and Alberto A. Santos, who are first
cousins.
2
None of the above nominees is a director of any other company which has a
class of securities registered under, or is required to file reports under, the
Securities Exchange Act of 1934 or of any company registered under the
Investment Company Act of 1940, except for Mr. Sanchez who is Chairman of the
Board of Sanchez O'Brien Oil & Gas Corporation.
EXECUTIVE OFFICERS
The executive officers of the Company are Dennis E. Nixon, President and
Chairman of the Board; Leonardo Salinas, Vice President; R. David Guerra, Vice
President; and Arnoldo Cisneros, Secretary-Treasurer, all of whom are nominees
for director except for Arnoldo Cisneros. Arnoldo Cisneros, age 43, is presently
Secretary-Treasurer of the Company and Executive Vice President of IBC and has
served both organizations since 1982.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Audit Committee of the Board of Directors during 1994 consisted of
Lester Avigael, Alberto A. Santos and Richard E. Haynes. The Committee met four
times during the 1994 fiscal year. Each member of the Committee attended all
four meetings, except Lester Avigael who attended only two. The functions of the
Audit Committee are to recommend the appointment of the independent auditors; to
review the annual plan of the internal and independent auditors; to review
annual and quarterly financial reports and to review the results of examinations
by the internal auditor and the independent auditors, including recommendations
regarding internal controls and operating procedures, along with management's
response and follow-up to ensure any necessary corrective action has been
implemented. Under applicable law, the Audit Committee is required to review
with management and the independent auditors the basis for all financial
reports.
The Compensation Committee of the Board of Directors during 1994 consisted
of Lester Avigael, Roy Jennings Jr., Richard E. Haynes and Alberto A. Santos.
The Committee met once during the 1994 fiscal year. The primary function of the
Compensation Committee is the administration of the Company's 1987 Key
Contributor Stock Option Plan.
The Board of Directors of the Company does not have a standing nominating
committee or a committee which performs similar functions.
During 1994, the Board of Directors held five meetings. All of the
directors attended 100% of the aggregate of the total number of meetings of the
board and of committees on which they served, except for Lester Avigael and
Richard E. Haynes who missed one meeting and Sioma Neiman who attended fewer
than 75% of such meetings.
PRINCIPAL SHAREHOLDERS
Insofar as is known to the Company, no person beneficially owned, as of
April 3, 1995, more than five percent of the outstanding Common Stock of the
Company, except as follows:
Shares of Common Stock Percent
Name and Address Beneficially Owned as of
of Beneficial Owner of April 3, 1995 Class
------------------- ---------------------- ------
Alicia M. Sanchez (1) 1,036,356 18.86%
2119 Guerrero Street
Laredo, Texas 78040
A. R. Sanchez Jr. (2) 551,136 10.03%
P.O. Box 2986
Laredo, Texas 78041
3
- ------------
(1) Mrs. Alicia M. Sanchez serves as independent trustee for several trusts.
Mrs. Sanchez has the sole power to vote and to dispose of all of the shares
owned under these trusts; however, 202,723 shares are held by her as
trustee for trusts in which certain of her children and grandchildren have
a vested interest in the income and corpus of the trusts.
(2) A. R. Sanchez Jr. owns directly and has the sole power to vote and to
dispose of 21,187 shares owned beneficially by him. Mr. Sanchez has the
shared power to vote and to dispose of 306,217 shares, which shares are
held in the name of a revocable trust for which Mr. Sanchez is the settlor
of the trust and his children are the beneficiaries. The trust, as the
registered owner of such shares, acting by and through its trustee, has the
power to vote such shares, provided that said trustee obtains the prior
written consent of one of two designated investment advisors for the trust.
As a practical matter, because the trust is revocable at will, Mr. Sanchez
controls the voting of the shares held by the trust, and all decisions with
respect to the voting of such shares are made with his approval. Mr.
Sanchez holds and controls the disposition of the remaining 223,732 shares
as trustee for other trusts which his children have a vested interest in
the income and corpus and George M. Sanchez, the brother of Mr. Sanchez,
has the power to vote the 223,732 shares.
SECURITY OWNERSHIP OF MANAGEMENT
Based upon information received from the persons concerned, each of whom is
a nominee for director, the following individuals and all directors and
executive officers of the Company as a group owned beneficially as of April 3,
1995, the number and percentage of outstanding shares of Common Stock of the
Company indicated in the following table:
Name of Individual Shares Beneficially Owned Percent
or Identity of Group as of April 3, 1995 of Class
-------------------- ------------------------- --------
Lester Avigael (1) 62,591 1.14%
Irving Greenblum (2) 54,046 1.00%
R. David Guerra (3) 46,517 + *
Richard E. Haynes 6,772 *
Roy Jennings Jr. (4) 85,578 1.56%
Sioma Neiman (5) 222,432 4.05%
Dennis E. Nixon (6) 262,315 + 4.77%
Leonardo Salinas (7) 22,577 + *
A. R. Sanchez Jr (8) 551,136 10.03%
Alberto A. Santos 42,598 *
All Directors and Executive Officers
as a group (11 persons) (9) 1,369,391 24.92%
* Ownership of less than one percent
+ Include shares which are issuable upon the exercise of currently
exercisable, but unexercised, stock options under the Company's 1987 Key
Contributor Stock Option Plan.
(1) The holdings shown for Mr. Avigael include 1,217 shares which he holds as
trustee for the benefit of his grandchildren.
(2) The holdings shown for Mr. Greenblum include 6,413 shares in the name of
his wife.
(3) The holdings shown for Mr. Guerra include 42,861 shares which he and his
wife hold in their names jointly. Total holdings for Mr. Guerra include
3,656 shares which are issuable upon the exercise of currently exercisable,
but unexercised, stock options under the Company's 1987 Key Contributor
Stock Option Plan.
4
(4) The holdings shown for Mr. Jennings include 27,135 shares which he and his
wife hold in their names jointly, and 13,632 shares held in the name of his
wife.
(5) The holdings shown for Mr. Neiman include 222,432 shares in the name of
Inar Investments, Corp., of which he is the Managing Director.
(6) The holdings shown for Mr. Nixon include 32,812 shares which are issuable
upon the exercise of currently exercisable, but unexercised, stock options
under the Company's 1987 Key Contributor Stock Option Plan. The holdings
shown for Mr. Nixon also include 290 shares held in the name of his wife.
(7) The holdings shown for Mr. Salinas include 2,578 shares which are issuable
upon the exercise of currently exercisable, but unexercised, stock options
under the Company's 1987 Key Contributor Stock Option Plan.
(8) The holdings shown for Mr. A. R. Sanchez Jr. include 306,217 shares which
are held in the name of a revocable trust for which Mr. Sanchez is the
settlor of the trust and his children are the beneficiaries. The holdings
shown for Mr. A. R. Sanchez Jr. also include 223,732 shares for other
trusts which his children have a vested interest and Mr. Sanchez is the
trustee.
(9) The holdings shown for all directors and executive officers as a group
include 40,364 shares which are issuable upon the exercise of currently
exercisable, but unexercised, stock options under the Company's 1987 Key
Contributor Stock Option Plan.
Except as reflected in the notes to the preceding table, each of the
individuals listed in the table owns directly the number of shares indicated in
the table and has the sole power to vote and to dispose of such shares.
EXECUTIVE COMPENSATION
Summary
The following table contains information concerning the compensation
awarded during each of the last three years for the CEO and the other most
highly compensated executive officers of the Company whose total annual salary
and bonus exceeded $100,000 in 1994.
<TABLE>
<CAPTION>
Long Term
Compensation All Other
Name and Annual Compensation Stock Options Compensation
Principal Position Year Salary (1) Bonus (in shares) (2)
- ------------------ ---- ---------- ----- ------------- -------------
<S> <C> <C> <C> <C> <C>
Dennis E. Nixon 1992 $251,977 $375,000 15,000 $11,691
President and Director of 1993 275,554 450,000 - 11,394
the Company and of IBC 1994 298,580 500,000 - 7,291
Leonardo Salinas 1992 135,699 22,800 2,500 6,657
Vice President and 1993 139,799 19,191 - 6,379
Director of the Company; 1994 144,099 19,581 - 6,302
Director and Senior
Executive Vice President
of IBC
R. David Guerra 1992 137,600 30,057 4,000 6,593
Vice President of the 1993 152,430 31,844 - 6,449
Company; President of IBC 1994 162,687 33,558 - 6,461
branch in McAllen, Texas
and Director of IBC
</TABLE>
5
(1) These amounts do not include certain perquisites and other personal
benefits, securities or property received by the officers which did not
exceed the lesser of $50,000 or 10% of such executive officer's total
salary and bonus set forth in the table; however, such amounts include
directors fees as well as certain expense allowances.
(2) All amounts shown in this column consist of funds contributed or
allocated by the Company pursuant to the Company's Employee Profit
Sharing Plan and Trust.
Each director of the Company and each director of IBC receives compensation
for his services as a director in the amount of $700 for each meeting of the
Board he attends and $200 for each meeting of a committee of the Board he
attends. Salaried officers who are directors are not compensated for committee
meetings. The director fees paid to the named executive officers are included in
the salary totals set forth in the table.
Stock Options
During 1994, the Company did not grant any options to the executive
officers of the Company.
The following table sets forth certain information regarding individual
exercises of stock options during 1994 by each of the named executive officers.
AGGREGATED OPTION EXERCISES IN 1994
AND FY-END OPTION VALUES
Number of
Underlying Value of
Shares of Unexercised
Unexercised In-the-Money
Options at Options at
Shares 12/31/94 12/31/94
Acquired on Value Exercisable/ Exercisable/
Exercise Realized Unexercisable Unexercisable
Name (#) ($) (1) (#) ($) (1)
---- ----------- -------- ------------- -------------
Dennis E. Nixon - - 32,812/ 1,350,600/
22,265 853,250
Leonardo Salinas - - 2,578/ 101,900/
3,328 129,400
R. David Guerra 6,375 224,875 3,656/ 148,800/
6,656 258,800
(1) Market value of underlying shares at exercise, minus aggregate exercise
price.
REPORT OF THE SALARY AND STEERING COMMITTEE
The Company's compensation package for each of its executive officers
consists of base salary, annual discretionary bonus and a discretionary
incentive stock option grant. Stock option grants are determined by the
Company's Compensation Committee and are discussed under the Committee's
separate report below. All cash compensation paid to executive officers of the
Company is paid by IBC. Base salary levels and annual bonuses are recommended by
the Salary and Steering Committee of IBC (the "Committee").
6
The Committee's recommendations regarding each executive officer's
compensation is subjective with regard to both the base salary and bonus. The
annual financial performance of IBC is the most important factor in the
subjective analysis. The bonus program is intended to compensate each executive
officer for the officer's contribution to IBC's financial performance during the
previous year. At the end of each year based on the financial performance of IBC
and the perceived contribution by each executive officer, a base salary
recommendation for the next year and a bonus recommendation for the previous
year is made for each executive officer by the Committee. The overall bonus pool
for executive officers is affected by the earnings performance of IBC for the
previous year. All base salary and bonus recommendations of the Committee are
subject to final approval of the Board of Directors of IBC.
With respect to the compensation of Mr. Nixon, the CEO of the Company, the
Committee recommends to the Board of Directors the CEO's salary and bonus based
on its subjective determination. In determining the CEO compensation, the
Committee reviews the objectives of the Company for the previous year and the
attainment thereof, principally including the Company's financial performance.
Mr. Nixon received a bonus award of $500,000 for 1994, which determination was
largely affected by the financial results of the Company during 1994, which
included net income of $37.8 million, or $6.65 per share, an amount which
represents a 25% increase in earnings per share compared to the previous year.
Also, a key element in Mr. Nixon's performance compensation is the Company's
excellent return on assets of 1.63% and its very strong return on equity of
21.62%.
The Salary and Steering Committee has considered the limitations on
deductibility of certain compensation under Section 162(m) of the Internal
Revenue Code. The Steering Committee's current policy is to ensure that all
compensation is deductible under Section 162(m) when paid.
Lester Avigael Roy Jennings, Jr.
Richard E. Haynes Dennis E. Nixon
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors determines the stock
option grants to executive officers and key salaried employees of the Company.
During 1994, the Compensation Committee did not meet and none of the executive
officers or key salaried employees of the Company were granted stock options.
The primary purpose of the Company's 1987 Key Contributor Stock Option Plan is
to increase the interest of the executive and key salaried employees of the
Company and the subsidiary banks in its future growth and success through the
added incentive created by the opportunity afforded for stock ownership under
the Plan. Over the last few years, the market value of the Common stock has
increased significantly and this increase has influenced the decision of the
Compensation Committee not to grant any stock options during the last two years.
Lester Avigael Roy Jennings Jr.
Richard E. Haynes Alberto A. Santos
SALARY AND STEERING AND COMPENSATION COMMITTEES INTERLOCKS
AND INSIDER PARTICIPATION
The Salary and Steering Committee members are Lester Avigael, Richard E.
Haynes, Roy Jennings, Jr. and Dennis E. Nixon. Mr. Nixon, President and Chairman
of the Board of the Company and President and CEO of IBC, participates in the
compensation decisions for all executives and key salaried employees other than
himself. The Compensation Committee members are Lester Avigael, Richard E.
Haynes, Roy Jennings Jr. and Alberto A. Santos. Messrs. Richard E. Haynes,
Dennis E. Nixon and Alberto A. Santos each have total indebtedness outstanding
with the subsidiary banks of the Company in an amount which exceeds $60,000,
which indebtedness is fully performing and is included in the summary disclosure
regarding the aggregate amount receivable to the banks from certain related
parties of the Company set forth on page 8, under the caption "Interest of
Management in Certain Transactions".
7
Financial Performance
The graph below summarizes cumulative return experienced by the Company's
shareholders over the years 1989 through 1994, compared to the S&P 500 Stock
Index and the S & P Regional Banks Index. The calculations were prepared on a
dividendsreinvestment basis.
TOTAL RETURN ANALYSIS
INTERNATIONAL BANCSHARES CORPORATION
VS. MARKET INDICES
YEAR END: 12/31/89 TO 12/31/94
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
1989 1990 1991 1992 1993 1994
---- ------ ------ ------ ------ ------
Int. Bchs. Corp. ....... 100 122.22 157.07 214.37 229.75 249.75
S&P 500 ................ 100 96.89 126.42 136.05 149.76 151.74
S&P Regional Banks ..... 100 71.33 127.61 162.5 172.28 163.06
INTEREST OF MANAGEMENT IN
CERTAIN TRANSACTIONS
Some of the directors, executive officers and nominees for directors of the
Company and IBC and principal shareholders of the Company and their immediate
families and the companies with which they are associated were customers of, and
had banking transactions with, the Company's subsidiary banks in the ordinary
course of the subsidiary banks' business during 1994, and the Company
anticipates that such banking transactions will continue in the future. All
loans and commitments to loan included in such banking transactions were made in
the ordinary course of business, in compliance with applicable laws and on
substantially the same terms, including interest rates and collateral, as those
prevailing in the industry at the time for comparable transactions with
non-insiders, and, in the opinion of management of the Company, did not involve
more than a normal risk of collectibility or present other unfavorable features.
8
At December 31, 1994, loans outstanding made by all subsidiary banks to
directors, executive officers and nominees for directors of the Company and
principal shareholders of the Company and to persons or entities affiliated with
such individuals aggregated $ 15,997,343.35. At December 31, 1994, all of such
loans were current with respect to principal and interest.
As of July 15, 1994, IBC had sold approximately 44% of its other real
estate portfolio to IBC Partners, Ltd., a Texas real estate limited partnership
(the "Partnership") owned by certain shareholders of the Company and as a result
thereof IBC's total other real estate dropped from $10,831,000 to $6,119,000.
Lester Avigael, Roy Jennings Jr., Dennis E. Nixon, A. R. Sanchez, Jr. and
Alberto Santos serve as the five managers of IBC Properties, L.C., the general
partner of IBC Partners Management, Ltd., which is the general partner of the
Partnership. During 1994, the Partnership entered into banking transactions with
IBC. All loans and commitments to loan included in such banking transactions
were made in the ordinary course of business, in compliance with applicable laws
and on substantially the same terms, including interest rates and collateral, as
those prevailing in the industry at the time for comparable transactions with
non-insiders and, in the opinion of management of the Company, did not involve
more than a normal risk of collectibility or present other unfavorable features.
FILING OF BENEFICIAL OWNERSHIP REPORTS
Under the securities laws of the United States, the Company's directors,
its executive officers and any persons holding more than ten percent of the
Company's Common Stock are required to report their initial ownership of the
Company's Common Stock and any subsequent changes in that ownership to the
Securities and Exchange Commission. Specific due dates for these reports have
been established and the Company is required to disclose in this proxy statement
any failure to file by the applicable dates during 1994. The Company believes
that all of these filing requirements were timely satisfied. In making these
disclosures, the Company has relied solely on written representations of its
directors, executive officers and its ten percent holders and copies of the
reports that they have filed with the Commission.
PROPOSAL - 2
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed the firm of KPMG Peat
Marwick LLP to audit the accounts of the Company for the 1995 fiscal year. The
firm has audited the books of the Company and its predecessor, IBC, annually
since 1979.
Audit services rendered by KPMG Peat Marwick LLP for the fiscal year ended
December 31, 1994 included the annual examination of the Company's financial
statements, including reports to shareholders and the Securities and Exchange
Commission; and consultation on accounting and related matters and services
performed in connection with the registration of securities and other regulatory
filings.
Representatives of KPMG Peat Marwick LLP are expected to be present at the
annual meeting of shareholders with the opportunity to make a statement if they
desire to do so and are expected to be available to respond to appropriate
questions.
Approval of the appointment of independent auditors is not a matter which
is required to be submitted to a vote of shareholders, but the Board of
Directors considers it appropriate for the shareholders to express whether they
approve or withhold their approval of the appointment. If shareholder approval
should be withheld, the Board of Directors would consider an alternative
appointment for the succeeding fiscal year. The Board of Directors of the
Company recommends that the shareholders approve the appointment of KPMG Peat
Marwick LLP as the independent auditors. A majority of the votes cast will
constitute approval.
9
PROPOSAL - 3
INCREASE IN AUTHORIZED SHARES PROPOSAL
INTRODUCTION
The Company is proposing to amend its Certificate of Incorporation to
increase the authorized number of shares of Common Stock, $1.00 par value per
share, from 7,000,000 to 15,000,000 (the "Increase in Authorized Shares
Proposal"). The Company is requesting its shareholders to approve the proposed
increase in the number of authorized shares of Common Stock.
For the reasons set forth below, the Board of Directors believes that the
best interests of the Company and its shareholders will be served if the
Company's Certificate of Incorporation is amended to increase the authorized
number of shares of Common Stock, $1.00 par value per share, from 7,000,000 to
15,000,000 shares. The Board of Directors has unanimously approved and
recommends a vote "For" the Increase in Authorized Shares Proposal.
AMENDMENT TO CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED SHARES OF
COMMON STOCK
The Board of Directors has approved for submission to the shareholders a
proposal relating to the amendment of Article Fourth of the Certificate of
Incorporation of the Company to increase the number of authorized shares of
Common Stock, par value $1.00 per share, from 7,000,000 to 15,000,000. The
additional 8,000,000 shares of Common Stock, which will be authorized if this
proposal is approved, will increase the number of authorized, unissued and
unreserved shares of Common Stock of the Company. Currently, before the proposed
increase, the number of authorized, unissued, and nontreasury shares of Common
Stock of the Company is 1,506,776. Of this amount, 300,000 shares are reserved
for issuance pursuant to the exercise of certain stock options of the Company.
The newly authorized shares would, if and when issued, have the same rights and
privileges as the shares of Common Stock presently outstanding. The holders of
Common Stock have no preemptive rights to acquire any of the Company's Common
Stock under the existing Certificate of Incorporation and will not have any such
rights if this proposal is approved.
The Board of Directors believes that it is desirable to have the
additional authorized shares of Common Stock available for stock dividends or
splits, stock options, future financing and acquisition transactions, and other
general corporate purposes, as well as to enable the Company to take advantage
of favorable opportunities which may arise in the future. The additional shares
of Common Stock would be available for issuance without further action by the
shareholders and without the accompanying delay and expense involved in calling
a special meeting of shareholders, except as may otherwise be required by law.
The issuance of any additional shares of Common Stock may result in a dilution
of the voting power of the shareholders, as well as their respective equity
interests in the Company. At the date of this Proxy Statement, the Company has
no arrangements, commitments or plans with respect to the sale or issuance of
any of the additional shares of Common Stock as to which authorization is
sought, except for a 25% stock split-up effected through a stock dividend
declared on April 3, 1995, subject to approval by the shareholders of the
Increase in Authorized Shares Proposal.
The proposed amendment to the Company's Certificate of Incorporation would
cause Article Fourth thereof to read in its entirety as follows:
Fourth: The total number of shares of stock which the Corporation shall
have authority to issue is fifteen million (15,000,000) shares of the par
value of One Dollar ($1.00) per share, amounting in the aggregate to
Fifteen Million Dollars ($15,000,000). All such shares are of one class
and are designated as Common Stock.
10
VOTE REQUIRED FOR APPROVAL
Approval of the Amendment to Article Fourth requires the affirmative vote
of the holders of a majority of the outstanding shares of Common Stock
represented in person or by proxy at the Annual Meeting. THE BOARD OF DIRECTORS
HAS APPROVED AND RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSED AMENDMENT TO
ARTICLE FOURTH OF THE COMPANY'S CERTIFICATE OF INCORPORATION. Unless otherwise
specified, all properly executed proxies received by the Company will be voted
in favor of the approval of the amendment.
PROPOSAL - 4
REINCORPORATION PROPOSAL
INTRODUCTION
For the reasons set forth below, the Board of Directors believes that the
best interests of the Company and its shareholders will be served by changing
the state of incorporation of the Company from Delaware to Texas (the
"Reincorporation" or the "Reincorporation Proposal"). The Board of Directors has
unanimously approved and recommends a vote "FOR" the Reincorporation Proposal.
The primary purpose of the Reincorporation is to enable the Company to realize a
significant savings in state franchise taxes. Shareholders are urged to read
carefully the following sections of this Proxy Statement, including the related
appendices, before voting on the Reincorporation Proposal. As used herein, the
term "IBC Delaware" refers to the Company as it now exists as a Delaware
corporation, the term "IBC Texas" refers to the Texas corporation to be formed
by IBC Delaware in connection with the Reincorporation, which corporation will
be a wholly-owned subsidiary of IBC Delaware. IBC Texas, through the
Reincorporation, will become the successor to the business of IBC Delaware.
After the Reincorporation, the name of the Company will continue to be
"International Bancshares Corporation." The term "Company" as used herein refers
to either or both of IBC Delaware and IBC Texas as the context requires.
If the Increase in Authorized Shares Proposal is approved by the
shareholders, the Company's authorized number of shares of common stock, par
value $1.00 per share, will be increased from 7,000,000 to 15,000,000. The form
of Articles of Incorporation of IBC Texas, which will be the Articles of the
Company after the Reincorporation (the "IBC Texas Articles"), currently
authorize 15,000,000 shares of common stock, par value $1.00 per share ("IBC
Texas Common Stock"). If, however, the Reincorporation Proposal is approved, but
the Increase in Authorized Shares Proposal is not approved, the number of
authorized shares of IBC Texas Common Stock will be decreased to reflect IBC
Delaware's currently authorized 7,000,000 shares. The Increase in Authorized
Shares Proposal and the reasons for such proposal are described separately in
this Proxy Statement. See "Increase in Authorized Shares Proposal" (Proposal
Three).
The discussion contained herein is qualified by reference to the form of
the Agreement and Plan of Merger (the "Merger Agreement") by and between IBC
Delaware and IBC Texas and the form of the IBC Texas Articles in substantially
the form attached hereto attached hereto as Appendices "A" and "B,"
respectively. The IBC Texas Articles in substantially the form attached hereto
have been or will be filed with the Texas Secretary of State. The provisions of
the IBC Texas By-Laws are substantially similar to the IBC Delaware By-Laws. The
Company will provide a copy of the IBC Texas By-Laws, which will be the By-Laws
of the Company after the Reincorporation, to any shareholder of the Company who
submits a request in writing, mailed or delivered to the Secretary at the
corporate offices of the Company prior to the Annual Meeting. Please see the
discussion below entitled "Certain Differences Between the Corporate Statues of
Delaware and Texas" for more information regarding the Articles and By-Laws of
IBC Texas.
REINCORPORATION OF THE COMPANY
The Reincorporation will be effectuated by merging (the "Merger") IBC
Delaware with and into IBC Texas, a Texas corporation being formed by IBC
Delaware for the purpose of the Reincorporation. Upon completion of the Merger,
IBC Delaware will cease to exist and IBC Texas will continue to operate the
business of the Company under the name "International Bancshares Corporation."
11
Shareholders of IBC Delaware will automatically become shareholders of IBC
Texas, and their rights will be governed by Texas law and the IBC Texas Articles
and the IBC Texas By-Laws rather than by Delaware law and the existing
Certificate of Incorporation and By-Laws of IBC Delaware. If approved by the
shareholders of IBC Delaware and if certain other conditions set forth in the
Merger Agreement are satisfied, the Reincorporation will become effective upon
the filing of Articles of Merger with the Texas Secretary of State (the
"Effective Date").
The Reincorporation is intended to be consummated as soon as practicable
following the Annual Meeting, and the Company will publicly announce the
consummation of the Reincorporation promptly after its completion. However,
pursuant to the Merger Agreement, at any time before the Effective Date, the
Merger Agreement may be terminated and the Reincorporation may be abandoned for
any reason whatsoever by the Board of Directors of either IBC Delaware or IBC
Texas. In addition, the Merger Agreement, as well as the IBC Texas Articles, may
be amended by the Boards of Directors of IBC Delaware and IBC Texas at any time
prior to the Effective Date, provided that an amendment made subsequent to the
approval and adoption of the Merger Agreement by the shareholders of IBC
Delaware shall not: (1) alter or change the current rate of exchange of one
share of IBC Texas Common Stock for each outstanding share of Company Common
Stock ("IBC Delaware Common Stock"), (2) alter or change any term of the IBC
Texas Articles (except revisions made to change the registered agent or
registered office of IBC Texas or to reduce the number of authorized shares of
IBC Texas Common Stock in the event the Increase in Authorized Shares Proposal
is not approved), or (3) alter or change any of the terms and conditions of the
Merger Agreement, if such alteration or change would adversely affect the
shareholders of IBC Delaware, without further approval of the shareholders.
Further, the Boards of Directors of IBC Delaware and IBC Texas may make any
necessary amendments to the Merger Agreement, the IBC Texas Articles or the IBC
Texas By-Laws in response to the comments of the Delaware Secretary of State,
the Texas Secretary of State or the Federal Reserve Bank of Dallas.
Pursuant to the Merger Agreement, on the Effective Date the outstanding
shares of IBC Delaware Common Stock will automatically be converted on the basis
of one (1) share of IBC Texas Common Stock for one (1) share of IBC Delaware
Common Stock, and each outstanding option of IBC Delaware to purchase shares of
IBC Delaware Common Stock will, by operation of law, be assumed by IBC Texas and
will be deemed to constitute an option to purchase, on the same terms and
conditions as were applicable under such option immediately prior to the
Effective Date, the same number of shares of IBC Texas Common Stock. Each stock
certificate representing issued and outstanding shares of IBC Delaware Common
Stock will continue to represent the same number and class of shares of IBC
Texas Common Stock. It will not be necessary for shareholders to exchange their
existing stock certificates for certificates of IBC Texas Common Stock. However,
shareholders may exchange their certificates if they so choose. The Company
expects that shares of IBC Texas Common Stock will be traded in the
over-the-counter market and reported in the National Quotation Bureau's "Pink
Sheets" (the "Pink Sheets"), as is currently the case with the IBC Delaware
Common Stock.
PRINCIPAL REASONS FOR THE REINCORPORATION
The Board of Directors and management believe that it is in the best
interests of the Company and its shareholders to change the state of
incorporation of the Company from Delaware to Texas. The Board of Directors has
determined that the Company can reincorporate in the State of Texas and maintain
substantially all of the initially desired benefits of doing business as a
Delaware corporation without the significant tax burden of the State of
Delaware. Absent the Delaware franchise tax burden upon the Company, management
and the Board of Directors would not be recommending the Reincorporation at this
time.
Delaware imposes an annual franchise tax on corporations incorporated in
that state. The Delaware franchise tax is assessed based on the lesser value
determined by either of two complex equations. The Company's annual franchise
tax in Delaware is based on the number of authorized shares and gross assets of
the Company. If the Company were to increase its authorized shares of Common
Stock to 15,000,000, as proposed in the Increase in Authorized Shares Proposal,
the annual franchise tax in Delaware would be approximately $75,000. Based on
the current 7,000,000 authorized shares, the annual Delaware franchise tax is
approximately $35,000. Texas also imposes an annual franchise tax on its
corporations. However, the Company is already subject
12
to the Texas franchise tax laws because the Company has qualified to do business
in the State of Texas as a foreign corporation. Thus, the Reincorporation would
eliminate the Company's Delaware franchise tax liability while not subjecting
the Company to any Texas franchise tax to which it is not already subject.
Moreover, Texas does not calculate franchise tax liability based on the number
of shares a Company has authorized for issuance, a method which, due to the
Company's capital structure, currently results in a high franchise tax liability
in Delaware. Therefore, significant franchise tax savings will be recognized
through the Reincorporation.
The Board of Directors and management believe that the business
corporation law set forth in the Texas Business Corporation Act ("TBCA") is a
modern corporate body of law that will meet the business needs of the Company
once the Reincorporation is effectuated. Texas has comprehensive, modern,
flexible corporate statutes that are periodically updated and reviewed to meet
changing business needs. Due to a concerted effort by the Texas Legislature over
the last decade, Texas has become a significantly more desirable jurisdiction in
which to incorporate. In view of these corporate law developments and the fact
that the Company is a bank holding company with all of its bank operations in
Texas, the Board of Directors recommends that the Company reincorporate in
Texas. The Board of Directors believes that the Reincorporation will allow the
Company to continue to plan the legal aspects of its future activities with
certainty and without the additional cost of the Delaware franchise tax
provisions.
POSSIBLE ADVERSE EFFECTS ON SHAREHOLDERS
Notwithstanding the belief of the Board of Directors and management as to
the benefits to shareholders of the Reincorporation, shareholders should realize
that there are certain possible adverse effects of the Reincorporation. The
primary adverse effect is the lack of predictability resulting from a more
limited body of case law interpreting the TBCA as compared to the established
body of case law interpreting the Delaware General Corporation Law (the "DGCL").
The Delaware courts have developed considerable expertise in dealing with
corporate issues, and a substantial body of case law has developed construing
Delaware law and establishing public policies with respect to Delaware
corporations. Thus, the DGCL and the court decisions construing it are widely
regarded as the most extensive and well-defined body of corporate law in the
United States, although some commentators believe the Delaware courts establish
principles that often create more questions than they resolve. Conversely, there
is substantially less case law in Texas interpreting the TBCA. For a detailed
summary of significant differences between Delaware and Texas corporate law, see
"Certain Differences Between the Corporation Statutes of Delaware and Texas" set
forth below.
NO CHANGE IN BUSINESS, MANAGEMENT, ASSETS, LIABILITIES OR NET WORTH
The Reincorporation will effect a change in the legal domicile of IBC
Delaware from Delaware to Texas It will also produce those changes resulting
from the difference between Delaware and Texas law and between IBC Delaware's
Certificate of Incorporation and By-Laws and the IBC Texas Articles and By-Laws
and other changes of a legal nature, certain of which are described in this
Proxy Statement. The changes that will result from the Reincorporation include:
(a) a substantial annual savings in state franchise taxes; (b) the Company will
be subject to Texas law; and (c) the increase in the number of authorized shares
of Common Stock to 15,000,000 (if the Increase in Authorized Shares Proposal is
approved by the shareholders).
The Reincorporation will not result in any change in the business,
management, location of the principal facilities, fiscal year, assets,
liabilities or net worth of the Company and will have no material accounting
implications. Upon completion of the Merger, all of the previously outstanding
shares of IBC Delaware Common Stock will be automatically converted into the
same number and class of shares of IBC Texas Common Stock. The 1987
International Bancshares Corporation Key Contributor Stock Option Plan, as
Amended and Restated, will be continued by IBC Texas. The Company's employee
benefit arrangements will be continued by IBC Texas upon the terms and subject
to the conditions then currently in effect. The directors of IBC Texas will be
the same as the directors of IBC Delaware immediately preceding the Merger;
accordingly, only those individuals elected as directors of IBC Delaware at the
Annual Meeting will serve as directors of IBC Texas after the Merger.
13
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Company intends to treat the Merger for federal income tax purposes as
an event from which the Company will recognize no taxable income or loss.
Furthermore, the shareholders should recognize no gain or loss on the exchange
of their shares of IBC Delaware Common Stock for shares of IBC Texas Common
Stock, and the tax basis in and the holding period (provided that the shares of
IBC Delaware Common Stock held by such exchanging shareholder are held as a
capital asset) of each such shareholder's shares of IBC Texas Common Stock will
be the same as the basis in and holding period of such shareholder in the shares
of IBC Delaware Common Stock exchanged therefor.
THE FOREGOING IS INTENDED ONLY AS A SUMMARY OF CERTAIN FEDERAL INCOME TAX
ASPECTS OF THE REINCORPORATION AND IS BASED ON THE INTERNAL REVENUE CODE OF
1986, AS AMENDED, THE REGULATIONS PROMULGATED THEREUNDER, PUBLISHED REVENUE
RULINGS AND CASES IN EFFECT AT THE TIME OF THIS PROXY STATEMENT. THERE CAN BE NO
ASSURANCE THAT FUTURE CHANGES IN THE FOREGOING PRECEDENTS WILL NOT ADVERSELY
AFFECT THE TAX CONSEQUENCES DISCUSSED HEREIN OR THAT THERE WILL NOT BE
DIFFERENCES OF OPINION AS TO THE INTERPRETATION OF SUCH PRECEDENTS. ACCORDINGLY,
SHAREHOLDERS SHOULD CONSULT THEIR OWN ADVISERS AS TO THE TAX TREATMENT WHICH MAY
BE ANTICIPATED TO RESULT FROM THE REINCORPORATION REGARDING THEIR PARTICULAR
CIRCUMSTANCES, INCLUDING THE APPLICATION OF STATE AND LOCAL LAWS.
ACCOUNTING TREATMENT
The Reincorporation will have no impact on the carrying amount of assets
or liabilities of the Company as currently reported.
CERTAIN SECURITIES LAW CONSEQUENCES
The shares of IBC Texas Common Stock to be issued in exchange for shares
of IBC Delaware Common Stock will not be registered under the Securities Act of
1933, as amended (the "Securities Act"). In that respect, IBC Texas will rely on
Rule 145(a)(2) promulgated under the Securities Act, which provides that a
merger which has as its sole purpose a change in the domicile of a corporation
does not involve the sale of securities for purposes of the Securities Act.
After the Merger, IBC Texas will be deemed to be registered pursuant to Section
12(g) of the Securities Exchange Act of 1934, as amended, as a successor issuer
to IBC Delaware, and it will be required to file with the Securities and
Exchange Commission and provide to its shareholders the same type of information
that IBC Delaware has previously been required to file with the Securities and
Exchange Commission and provide to its shareholders. The IBC Texas Common Stock
is expected to be reported in the National Quotation Bureau's "Pink Sheets."
Shareholders whose stock in IBC Delaware is freely tradable before the Merger
will receive freely tradable shares of IBC Texas. Shareholders holding
restricted securities of IBC Delaware will continue to hold restricted
securities of IBC Texas, and, if they decide to exchange their certificates,
will receive stock certificates of IBC Texas bearing substantially the same
restrictive legend as appears on their present stock certificates. For purposes
of computing compliance with the holding period of Rule 144, shareholders will
be deemed to have acquired their shares of IBC Texas Common Stock on the date
they acquired their shares of IBC Delaware Common Stock. In summary, IBC Texas
and its shareholders will be in the same respective position under the federal
securities laws after the Merger as were IBC Delaware and its shareholders prior
to the Merger.
CERTAIN DIFFERENCES BETWEEN THE CORPORATE STATUTES OF
DELAWARE AND TEXAS
Although the DGCL and the TBCA are similar in many respects, there are a
number of differences between the two statutes which should be carefully
considered by the shareholders in evaluating the proposed Reincorporation. The
following summary, which sets forth certain material differences between the two
statutes, does not purport to be a complete statement of all differences between
the DGCL and the TBCA, nor does it purport to be a complete statement of the
provisions of the two statutes which it compares.
14
The following summary is qualified in its entirety by the laws of Delaware
and Texas, and reference is made to those laws for a complete statement of their
provisions. Certain of the significant differences between the provisions of the
DGCL and the TBCA that could materially affect the rights of shareholders are
discussed below.
MERGERS
Under the DGCL, a merger or consolidation must be approved by the
board of directors and by the holders of a majority of outstanding stock
of the corporation entitled to vote thereon, provided that no vote of
shareholders of a constituent corporation surviving a merger is required
(unless the corporation's certificate of incorporation provides otherwise)
if (a) the merger agreement does not amend the existing certificate of
incorporation, (b) each share of stock of the surviving corporation
outstanding before the merger is an identical outstanding share after the
merger, and (c) either no shares of common stock of the surviving
corporation and no shares, securities or obligations convertible into such
stock are to be issued or delivered under the plan of merger, or the
authorized, unissued shares or the treasury shares of common stock of the
surviving corporation to be issued or delivered under the plan of merger
plus those initially issuable upon conversion of any other shares,
securities or obligations to be issued or delivered under such plan do not
exceed 20% of the shares of common stock of such constituent corporation
outstanding immediately prior to the effective date of the merger.
Under the TBCA, shareholders generally have the right, subject to
certain exceptions, to vote on mergers to which the corporation is a
party. In certain circumstances, different classes of securities may be
entitled to vote separately as classes with respect to such mergers.
Unless the articles of incorporation provide otherwise, approval of the
holders of at least two-thirds of all outstanding shares entitled to vote
is required by Texas law to approve a merger. The IBC Texas Articles
contain a provision limiting the vote required to a majority of the shares
entitled to vote on such matter. The approval of the shareholders of the
surviving corporation in a merger is not required under Texas law if (i)
the corporation is the sole surviving corporation in the merger; (ii)
there is no amendment to the corporation's articles of incorporation;
(iii) each shareholder holds the same number of shares after the merger as
before with identical designations, preferences, limitations and relative
rights; (iv) the voting power of the shares outstanding after the merger
plus the voting power of the shares issued in the merger does not exceed
the voting power of the shares outstanding prior to the merger by more
than 20%; (v) the number of shares outstanding after the merger plus the
shares issued in the merger does not exceed the number of shares
outstanding prior to the merger by more than 20%; and (vi) the board of
directors of the surviving corporation adopts a resolution approving the
plan of merger. Additionally, under the TBCA certain mergers involving a
corporation and its wholly-owned subsidiary do not require the approval of
the shareholders of one or both corporations.
SALE OF ASSETS
Under the DGCL, a corporation may sell, lease or exchange all or
substantially all of its property and assets when and as authorized by a
majority of the holders of the outstanding stock of the corporation
entitled to vote thereon, unless the corporation's certificate of
incorporation provides otherwise. IBC Delaware's Certificate of
Incorporation is silent on this matter, so the applicable provisions of
the DGCL apply.
The TBCA provides that the sale, lease, exchange or other
disposition (not including any pledge, mortgage, deed of trust or trust
indenture, unless otherwise provided in the articles of incorporation) of
all, or substantially all, the property and assets of a corporation, if
15
not made in the usual and regular course of its business, requires the
approval of the holders of at least two-thirds of the outstanding shares
of the corporation, unless the corporation's articles of incorporation
specify another proportion. The IBC Texas Articles contain a provision
limiting the vote required to a majority of the shares entitled to vote on
such matter.
DISSENTER'S RIGHTS
Under the DGCL, a shareholder in certain mergers or consolidations
may, under varying circumstances, be entitled to appraisal rights pursuant
to which such shareholder may receive cash in the amount of the fair
market value of his or her shares in lieu of the consideration he or she
would otherwise receive in the transaction. Appraisal rights are not
available under the DGCL with respect to certain mergers involving
corporations and their wholly-owned subsidiaries and with respect to
certain other types of mergers. Shareholders of IBC-Delaware will have no
appraisal rights in connection with the Reincorporation. See "Appraisal
Rights of Dissenting Shareholders."
Under the TBCA, a shareholder is entitled, with certain exceptions,
to dissent from and, upon perfection of the shareholder's appraisal
rights, to obtain the fair value of his or her shares in the event of
certain corporate actions, including certain mergers, share exchanges,
sales of substantially all the assets of the corporation, and certain
amendments to the corporation's articles of incorporation that materially
and adversely affect shareholder rights.
PROVISIONS AFFECTING CONTROL SHARE ACQUISITIONS AND BUSINESS COMBINATIONS
The DGCL prohibits a Delaware corporation from engaging in a
"business combination" with an "interested shareholder" for three years
following the date that such person becomes an interested shareholder.
With certain exceptions, an interested shareholder is a person or group
who or which owns 15% or more of the corporation's outstanding voting
stock or is an affiliate or associate of the corporation and was the owner
of 15% or more of such voting stock at any time within the previous three
years. A Delaware corporation may elect not to be governed by this
restriction through a provision of its original certificate of
incorporation or an amendment thereto or to the bylaws, which amendment
must be approved by majority shareholder vote and may not be further
amended by the board of directors. IBC Delaware has not opted out of this
restriction.
The TBCA does not have a provision similar to this restriction.
ACTIONS WITHOUT A MEETING
Under the DGCL, unless a corporation's certificate of incorporation
provides otherwise, any action to be taken by shareholders may be taken
without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, is 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. The
Certificate of Incorporation of IBC Delaware is silent on this matter.
Under the TBCA, any action to be taken by shareholders at a meeting
may be taken without a meeting if all shareholders entitled to vote on the
matter consent to the action in writing. In addition, a Texas
corporation's articles of incorporation may provide that shareholders may
take action by a consent in writing 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. The IBC Texas
Articles contain such a provision.
16
REMOVAL OF DIRECTORS
Under the DGCL, unless otherwise provided in a corporation's
certificate of incorporation or by-laws, any director or the entire board
of directors may be removed, with or without cause, by the holders of a
majority of the shares then entitled to vote at an election of directors,
except (i) in the case of a corporation having a classified board, and
unless the certificate of incorporation provides otherwise, shareholders
may affect such removal only for cause, and (ii) in the case of a
corporation having cumulative voting, if less than the entire board is to
be removed, no director may be removed without cause if the votes cast
against his removal would be sufficient to elect him if they were
cumulatively voted at an election of the entire board of directors.
The TBCA provides that if a corporation's articles of incorporation
or bylaws so provide, at a meeting of shareholders called for that
purpose, any director or the entire board of directors may be removed with
or without cause, by the vote of the holders of the portion of shares
specified in the corporation's articles of incorporation or bylaws, but
not less than a majority of the shares entitled to vote at an election of
directors. The IBC Texas By-Laws provide that at any special meeting of
shareholders called for that purpose, directors may be removed with or
without cause by the holders of a majority of the shares entitled to vote
for the election of directors.
VACANCIES IN BOARD OF DIRECTORS
Under the DGCL, unless a corporation's certificate of incorporation
or bylaws provide otherwise, vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be
filled by a majority of the directors then in office.
Under the TBCA, any vacancy occurring in the board of directors of a
corporation may be filled by the shareholders or by the affirmative vote
of a majority of the remaining directors. A directorship to be filled by
reason of an increase in the number of directors may be filled by the
shareholders or by the board of directors for a term of office continuing
only until the next election of one or more directors by the shareholders,
provided that the board of directors may not fill more than two such
directorships during the period between any two successive annual meetings
of shareholders.
INSPECTION OF BOOKS AND RECORDS
The DGCL permits any shareholder of record to inspect a
corporation's stock ledger, the shareholder list and its other books and
records for any purpose reasonably related to such person's interest as a
shareholder provided that his written demand under oath is directed to the
company's registered office in Delaware or to its principal place of
business.
The TBCA permits any person who shall have been a shareholder for at
least six months immediately preceding his demand, or who is the holder of
at least 5% of the outstanding stock of the corporation, upon written
demand stating the purpose thereof, to examine the relevant books and
records of account, minutes, and share transfer records of the
corporation.
RIGHT TO CALL SPECIAL MEETINGS OF SHAREHOLDERS
Under the DGCL, special meetings of the shareholders may be called
by the board of directors or such other persons authorized in the
certificate of incorporation or bylaws.
17
Under the TBCA, a special meeting of shareholders may be called by
the president, board of directors or shareholders as may be authorized in
the articles of incorporation or bylaws of the corporation or by the
holders of at least 10% of all the shares entitled to vote at the proposed
special meeting, unless the articles of incorporation provide for a number
of shares greater than or less than 10%, in which event, special meetings
of the shareholders may be called by the holders of at least the
percentage of shares so specified in the articles of incorporation, but in
no event shall the articles of incorporation provide for a number of
shares greater than 50%.
Under the By-Laws of IBC Delaware and the IBC Texas Articles and
ByLaws, special meetings of the shareholders may be called by the Board of
Directors, the Chairman of the Board of Directors, the President, or the
holders of at least a majority (or 50% in the case of IBC Texas) of the
outstanding shares entitled to vote at the proposed special meeting.
AMENDMENTS TO CERTIFICATE OR ARTICLES OF INCORPORATION
Under the DGCL, an amendment to a corporation's certificate of
incorporation must be approved by a majority of the board of directors and
by the holders of a majority of the corporation's stock entitled to vote
thereon, unless the certificate of incorporation provides for a greater
number. The Certificate of Incorporation of IBC Delaware does not provide
for such a greater number.
Under the TBCA, an amendment to a corporation's articles of
incorporation requires the approval of the holders of at least two-thirds
of the outstanding shares of the corporation, unless a different amount,
not less than a majority, is specified in the articles of incorporation.
The IBC Texas Articles contain a provision limiting the vote required to a
majority of the shares entitled to vote on such matter.
CUMULATIVE VOTING
Under the DGCL, cumulative voting is not available unless so
provided in a corporation's certificate of incorporation. The Certificate
of Incorporation of IBC Delaware does not provide for cumulative voting.
Under the TBCA, cumulative voting is available unless prohibited by
the articles of incorporation. The IBC Texas Articles expressly prohibit
cumulative voting.
DIVIDENDS, STOCK REPURCHASES AND REDEMPTIONS
The DGCL provides that a corporation may, unless otherwise
restricted by its certificate of incorporation, declare and pay dividends
out of surplus, or if no surplus exists, out of net profits for the
current and/or preceding fiscal year so long as the amount of capital of
the corporation following the declaration and payment of the dividend is
not less than the aggregate amount of the capital represented by the
issued and outstanding stock of all classes having a preference upon the
distribution of assets. Additionally, the DGCL generally provides that a
corporation may redeem or repurchase its shares only if such redemption or
repurchase would not impair the capital of the corporation. The ability of
a Delaware corporation to pay dividends on, or to make repurchases or
redemptions of, its shares is dependent on the financial status of the
corporation standing alone and not on a consolidated basis.
The TBCA provides that, subject to restrictions in a corporation's
articles of incorporation, the board of directors of the corporation may
authorize, and the corporation may make, distributions. A distribution may
not be made by a corporation, however, if after giving effect thereto the
corporation would be insolvent or the distribution exceeds the surplus
18
of the corporation, provided, however, that if the net assets of the
corporation are not less than the amount of the proposed distribution, the
corporation may make a distribution involving a purchase or redemption if
made by the corporation to: (a) eliminate fractional shares; (b) collect
or compromise indebtedness owed by or to the corporation; (c) pay
dissenting shareholders entitled to payment for their shares under Texas
law; or (d) effect the purchase or redemption of redeemable shares in
accordance with the TBCA.
LIMITATION ON DIRECTOR LIABILITY
The DGCL permits a corporation to include in its certificate of
incorporation a provision eliminating or limiting a director's liability
to the corporation or its shareholders for monetary damages for breaches
of fiduciary duty, including conduct which could be characterized as
negligence or gross negligence. The DGCL expressly provides, however, that
the liability for breaches of the director's duty of loyalty, acts or
omissions not in good faith or involving intentional misconduct or knowing
violations of the law, the unlawful purchase or redemption of stock or
payment of unlawful dividends or the receipt of improper personal benefits
cannot be eliminated or limited in this manner. The DGCL further provides
that no such provision shall eliminate or limit the liability of a
director for any act or omission occurring prior to the date when such
provision becomes effective. The Certificate of Incorporation of IBC
Delaware contains a provision eliminating director liability to the extent
permitted by the DGCL.
Texas law permits a corporation to include in its articles of
incorporation a provision that a director of the corporation is not liable
to the corporation or its shareholders for monetary damages for an act or
omission in the director's capacity as a director, except that such a
provision cannot eliminate or limit the liability of a director for (a) a
breach of a director's duty of loyalty to the corporation or its
shareholders; (b) an act or omission not in good faith that constitutes a
breach of duty of the director to the corporation or an act or omission
that involves intentional misconduct or a knowing violation of the law;
(c) a transaction from which a director received an improper benefit,
whether or not the benefit resulted from an action taken within the scope
of the director's office; or (d) an act or omission for which the
liability of a director is expressly provided for by statute. The IBC
Texas Articles contain a provision eliminating director liability to the
fullest extent provided by Texas law.
INDEMNIFICATION
Both Texas and Delaware permit corporations to indemnify their
directors and officers for liabilities incurred by them by reason of
serving as directors or officers of their corporations or of other
corporations and entities at the request of their corporations.
Under the TBCA, a corporation may indemnify a director for
liabilities and expenses in respect to actions brought against him by
reason of serving as a director of officer of the corporation (or of
another entity at the request of the corporation) if he conducted himself
in good faith and reasonably believed that (i) in the case of conduct in
his official capacity as a director, his conduct was in the corporation's
best interests, and (ii) in all other cases, that his conduct was at least
not opposed to the best interest of the corporation. Indemnification for
criminal actions also requires the director to have had no reasonable
cause to believe his conduct was unlawful. Expenses may also be advanced
to a director in respect of a proceeding if the corporation receives a
written affirmation of his good faith belief that he has met the standards
for indemnification and undertakes to reimburse the corporation for the
expenses if it is ultimately determined that he did not meet the standard
19
or is otherwise not entitled to indemnity. In addition, if the director is
found liable to the corporation on the basis that a personal benefit was
improperly received by him, indemnification will be limited to expenses
actually incurred and will not be available if the director is found
liable for willful or intentional misconduct in the performance of his
duty to the corporation. The IBC Texas Articles and By-Laws provide for
the mandatory indemnification of directors, officers and certain other
persons to the extent permitted by the TBCA.
Under the DGCL, a director or officer may be indemnified 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, in the case of a
criminal action or proceeding had no reasonable ground to believe his
conduct was unlawful. If the action is in the name of the corporation, no
indemnification may be provided if the person is adjudged liable unless
the court determines that such indemnification is proper. Expenses may
also be advanced to a director or officer upon receipt of an undertaking
by or on behalf of such director or officer to repay such amounts advanced
if it is ultimately determined the director or officer is not entitled to
indemnification. The DGCL provides that the indemnification permitted by
statute is not exclusive. The Certificate of Incorporation and By-Laws of
IBC Delaware provide for the mandatory indemnification of directors,
officers and certain other persons.
PREEMPTIVE RIGHTS
Under the DGCL, shareholders of a corporation have no preemptive
rights to subscribe to additional issues of stock or to any security
convertible into such stock unless, and except to the extent that, such
rights are expressly provided in the corporation's certificate of
incorporation. The Certificate of Incorporation of IBC Delaware does not
provide for preemptive rights.
Under the TBCA, shareholders of a corporation have a preemptive
right to acquire additional, unissued, or treasury shares of the
corporation, or securities of the corporation convertible into or carrying
a right to subscribe to or acquire shares, except to the extent limited or
denied by statute or by the corporation's articles of incorporation. The
IBC Texas Articles expressly deny preemptive rights.
DISSOLUTION
The TBCA requires that voluntary dissolution occur upon the
affirmative vote of the holders of two-thirds of the outstanding shares
entitled to vote thereon, unless a different amount, not less than a
majority, is specified in the articles of incorporation. The IBC Texas
Articles contain a provision limiting the vote required to a majority of
the shares entitled to vote on such matter. Under the DGCL, voluntary
dissolution of a corporation requires the adoption of a resolution by a
majority of the board of directors and the affirmative vote of a majority
of the outstanding shares entitled to vote thereon, together with a
majority vote of the outstanding shares of each class or series entitled
to vote as a class. Alternatively, both the TBCA and the DGCL permit the
voluntary dissolution of a corporation without the approval of the board
of directors pursuant to the written consent of all shareholders.
20
APPRAISAL RIGHTS OF DISSENTING SHAREHOLDERS
Under some circumstances, a shareholder of a Delaware corporation has the
right under Delaware law to object to a merger and to demand payment in cash for
the fair value of his shares. Such right does not apply in a short form merger
involving the merger of a parent corporation into a wholly-owned subsidiary
corporation. Consequently, shareholders of the Company will have no appraisal
rights with respect to the Merger.
REGULATORY APPROVAL
Other than the issuance of Certificates of Merger by the Secretary of
State of Delaware and the Secretary of State of Texas and the approval of the
waiver request submitted to the Federal Reserve Bank of Dallas in connection
with the Merger, the Company knows of no approval or consent required by any
governmental agency or unit in connection with the Merger.
VOTE REQUIRED FOR APPROVAL
The Reincorporation Proposal has been approved by the Board of Directors,
which unanimously recommends a vote "FOR" the Reincorporation Proposal. The
Reincorporation will require the affirmative vote of the holders of at least a
majority of the outstanding shares of Common Stock represented in person or by
proxy at the Annual Meeting. All of the directors and executive officers of the
Company have advised the Company that they will vote their shares of Common
Stock "FOR" the Reincorporation Proposal. As of April 3, 1995, these individuals
beneficially owned an aggregate of 1,329,027 shares of Common Stock, or
approximately 24.19% of the shares of Common Stock outstanding and entitled to
vote at the Annual Meeting. APPROVAL OF THE REINCORPORATION PROPOSAL BY
SHAREHOLDERS WILL CONSTITUTE APPROVAL OF THE MERGER AGREEMENT, THE
REINCORPORATION, AND THE IBC TEXAS ARTICLES. THE BOARD OF DIRECTORS RECOMMENDS
THAT SHAREHOLDERS VOTE "FOR" THE REINCORPORATION PROPOSAL. UNLESS OTHERWISE
SPECIFIED, ALL PROPERLY EXECUTED PROXIES RECEIVED BY THE COMPANY WILL BE VOTED
IN FAVOR OF THE REINCORPORATION PROPOSAL.
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
The 1996 annual meeting of shareholders will be held on May 17, 1996.
Proposals from shareholders intended to be presented at the 1995 annual meeting
must be received in writing by the Company at its principal executive offices
not later than December 22, 1995. The Company's principal executive offices are
located at 1200 San Bernardo Avenue, Laredo, Texas 78040.
OTHER MATTERS
No business other than the matters set forth in this proxy statement is
expected to come before the meeting, but should any other matters requiring a
vote of shareholders arise, including a question of adjourning the meeting, the
persons named in the accompanying proxy will vote thereon according to their
best judgment in the interest of the Company. In the event that any of the
nominees for director should withdraw or otherwise become unavailable for
reasons not presently known, the persons named as Proxies will vote for such
substitute nominee(s) as the Board of Directors recommends, or in the absence of
such recommendation, such other persons as they consider to be in the best
interests of the Company.
INTERNATIONAL BANCSHARES CORPORATION
Dennis E. Nixon
President
Dated: April 20, 1995
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THE COMPANY WILL PROVIDE SHAREHOLDERS WITH A COPY OF THE COMPANY'S ANNUAL REPORT
ON FORM 10-K, FOR THE PERIOD ENDED DECEMBER 31, 1994, INCLUDING FINANCIAL
STATEMENTS AND SCHEDULES, WITHOUT CHARGE, UPON WRITTEN REQUEST ADDRESSED TO THE
SECRETARY OF THE COMPANY, MR. ARNOLDO CISNEROS AT:
INTERNATIONAL BANCSHARES CORPORATION
P. O. DRAWER 1359
LAREDO, TEXAS 78042-1359
(210) 722-7611 EXTENSION 675
22
<PAGE>
APPENDIX A
FORM OF
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made and entered into
as of the ________ day of MAY, 1995 by and between INTERNATIONAL BANCSHARES
CORPORATION, a Delaware corporation (hereinafter referred to as "IBC Delaware"),
and INTERNATIONAL BANCSHARES CORPORATION, a Texas corporation (hereinafter
referred to as "IBC Texas") being sometimes hereinafter together referred to as
the "Constituent Corporations."
RECITALS:
WHEREAS, IBC Delaware is a corporation duly organized and existing under
the laws of the State of Delaware, and having authorized capital stock
consisting of 15,000,000 shares of Common Stock, par value $1.00 per share, of
which ____________ shares are outstanding;
WHEREAS, IBC Texas is a corporation duly organized and existing under the
laws of the State of Texas, and having an authorized capital stock consisting of
15,000,000 shares of Common Stock, par value $1.00 per share, of which 1,000
shares are outstanding;
WHEREAS, all of the outstanding shares of IBC Texas are held by IBC
Delaware;
WHEREAS, the Board of Directors of each of the Constituent Corporations
deems it advisable for the general welfare and to the benefit of such
corporations and their respective shareholders that IBC Delaware merge with and
into IBC Texas pursuant to the provisions of Section 253 of the Delaware General
Corporate Law (the "DGCL") and Sections 5.01 ET SEQ. of the Texas Business
Corporation Act (the "TBCA");
WHEREAS, the respective Boards of Directors of the Constituent
Corporations have, by resolutions duly adopted, approved this Agreement and
directed that it be executed by the undersigned officers and that it be
submitted to the shareholders of IBC Delaware for approval; and
WHEREAS, it is the intention of the Constituent Corporations that the
Merger shall be a tax-free reorganization pursuant to the provisions of the
Internal Revenue Code of 1986, as amended;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereby agree, in accordance with the applicable
provisions of the laws of the States of Delaware and Texas, that the Constituent
Corporations shall be merged into a single corporation, to-wit: International
Bancshares Corporation, a Texas corporation, one of the Constituent
Corporations, and the terms and conditions of the merger hereby agreed upon
(hereafter called the "Merger") which the parties covenant to observe, keep and
perform, and the mode of carrying the same into effect are and shall be as
hereafter set forth:
SECTION 1. MERGER AND THE SURVIVING CORPORATION. (a) Subject to the terms
and conditions of this Agreement, IBC Delaware shall be merged into IBC Texas in
accordance with the applicable provisions of the DGCL and the TBCA. The Merger
shall become effective upon the filing with the Secretary of State of the State
of Texas of the articles of merger with respect thereto. For purposes hereof,
the term "EFFECTIVE TIME" shall mean the time when such articles of merger are
filed with the Texas Secretary of State, and the term "SURVIVING CORPORATION"
shall mean IBC Texas as the corporation surviving in the Merger which will be
governed by the laws of the State of Texas.
1
(b) At the Effective Time, by virtue of the Merger, all the rights,
privileges, immunities and franchises, of a public as well as of a private
nature, of each of the Constituent Corporations and all property, real, personal
and mixed, and all debts due on whatever account, including choses in action,
and all and every other interest of or belonging to or due to each of the
Constituent Corporations shall be taken and deemed to be transferred to and
vested in the Surviving Corporation without further act or deed, and the
Surviving Corporation shall thenceforth be responsible and liable for all the
liabilities and obligations of each of said Constituent Corporations, all with
the full effect provided for in the DGCL and TBCA.
(c) All corporate acts, policies, resolutions, approvals and
authorizations of the shareholders, Board of Directors, committees elected or
appointed by the Board of Directors, officers and agents of IBC Delaware, which
were valid and effective immediately prior to the Merger shall be taken for all
purposes as the acts, plans, policies, resolutions, approvals and authorizations
of the Surviving Corporation and shall be as effective and binding thereon as
the same were with respect to IBC Delaware. The employees of IBC Delaware shall
become the employees of the Surviving Corporation and continue to be entitled to
the same rights and benefits which they enjoyed as employees of IBC Delaware.
(d) The Articles of Incorporation of IBC Texas in effect immediately prior
to the Effective Time shall be the Articles of Incorporation of the Surviving
Corporation until further amended in accordance with the provisions thereof and
the TBCA.
(e) The By-Laws of IBC Texas in effect immediately prior to the Effective
Time shall be the By-Laws of the Surviving Corporation, until altered, amended
or repealed as provided therein and in the Articles of Incorporation of the
Surviving Corporation.
(f) The directors of IBC Delaware immediately prior to the Effective Time
shall constitute the directors of the Surviving Corporation immediately
following the Effective Time. Such directors shall hold their positions until
their resignation or removal or until their successors are elected in accordance
with the By-Laws of the Surviving Corporation and shall have duly qualified.
(g) The officers of IBC Delaware immediately prior to the Effective Time
shall constitute the officers of the Surviving Corporation immediately following
the Effective Time. Such officers shall hold their offices until their
resignation or removal or until their successors are elected or appointed in
accordance with the By-Laws of the Surviving Corporation and shall have duly
qualified.
SECTION 2. CONVERSION OF STOCK. At the Effective Time:
SECTION 2.1 IBC TEXAS. Each share of the common stock, par value $1.00 per
share, of IBC Texas ("IBC Texas Common Stock") which shall be issued and
outstanding immediately prior to the Effective Time shall, at the Effective
Time, be cancelled and retired, all rights in respect thereof shall cease to
exist and no shares of IBC Texas Common Stock or other securities of the
Surviving Corporation shall be issuable with respect thereto.
SECTION 2.2 IBC DELAWARE. (a) Each share of the common stock, par value
$1.00 per share, of IBC Delaware ("IBC Delaware Common Stock") which shall be
issued and outstanding immediately prior to the Effective Time shall, at the
Effective Time, be converted into and become one (1) share of IBC Texas Common
Stock.
2
(b) Each of the outstanding stock options granted by IBC Delaware which is
outstanding immediately prior to the Effective Time shall be changed and
converted into a stock option of IBC Texas having the same terms and conditions
as were in effect immediately prior to the Effective Date, provided, that each
such option shall be exercisable for a number of shares of IBC Texas Common
Stock equal to the number of shares of IBC Delaware Common Stock into which such
option was exercisable immediately prior to the Effective Time.
SECTION 2.3 STOCK CERTIFICATES. Each outstanding certificate that
immediately prior to the Effective Time represented outstanding shares of IBC
Delaware Common Stock shall from and after the Effective Time be deemed for all
purposes to evidence ownership of and to represent the number of shares of IBC
Texas Common Stock into which the shares of IBC Delaware Common Stock
represented by such certificate shall have been converted as provided herein and
shall be so registered on the books and records of IBC Texas or its transfer
agents. The registered owner of any such outstanding stock certificate shall,
until such certificate shall have been surrendered for transfer or conversion or
otherwise accounted for to IBC Texas or its transfer agent, have and be entitled
to exercise any voting and other rights with respect to and to receive any
dividend and other distributions upon the shares of IBC Texas Common Stock
evidenced by such outstanding certificate as provided above. It will not be
necessary for holders of IBC Delaware Common Stock to exchange their existing
stock certificates for certificates of IBC Texas Common Stock in connection with
the Merger. However, shareholders may exchange their certificates if they so
choose.
SECTION 3. ACCOUNTING MATTERS. The assets and liabilities of the
Constituent Corporations, as of the Effective Time of the Merger, shall be taken
upon the books of the Surviving Corporation at the amounts at which they shall
be carried at that time on the books of the respective Constituent Corporations,
subject to such adjustments or eliminations of inter-company items as may be
appropriate in giving effect to the Merger. The amount of the capital surplus
and earned surplus accounts, if any, of the Surviving Corporation after the
Merger shall be determined by the Board of Directors of the Surviving
Corporation in accordance with the laws of the State of Texas and with generally
accepted accounting principles.
SECTION 4. CONDITIONS PRECEDENT. The obligations of the parties to effect
the Merger shall be subject to (a) the approval of this Agreement by the Board
of Directors of each of the Constituent Corporations and (b) the approval of
this Agreement by the affirmative vote of the holders of at least a majority of
the outstanding shares of IBC Delaware Common Stock entitled to vote thereon at
a meeting of IBC Delaware stockholders duly called and held. Thereupon, Articles
of Merger shall be duly filed and recorded in Texas and a Certificate of Merger
shall be duly filed and recorded in Delaware.
SECTION 5. AMENDMENT AND TERMINATION. (a) This Agreement and the Articles
of Incorporation of the Surviving Corporation may be amended by the parties
hereto, with the approval of their respective Boards of Directors, at any time
prior to the Effective Time, whether before or after approval of this Agreement
by the stockholders of IBC Delaware, but, after such approval by the
stockholders of IBC Delaware, no amendment shall be made which (1) alter or
change the current rate of exchange of one share of IBC Texas Common Stock for
each outstanding share of IBC Delaware Common Stock, (2) alter or change any
term of the IBC Texas Articles (except revisions made to change the registered
agent or registered office of IBC Texas or to reduce the number of authorized
shares of IBC Texas Common Stock in the event the Increase in Authorized Shares
Proposal is not approved by the IBC Delaware stockholders at IBC
3
Delaware's 1995 Annual Meeting of Shareholders), or (3) would adversely affect
the shareholders of IBC Delaware, without further approval of the shareholders.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
(b) This Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval hereof by the stockholders of IBC
Delaware, by the Board of Directors of either IBC Texas or IBC Delaware.
(c) If this Agreement is terminated for any reason, no party hereto shall
have any liability hereunder of any nature whatsoever to the others.
SECTION 6. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.
SECTION 7. FURTHER ASSURANCES. From time to time after the Effective Time
as and when requested by the Surviving Corporation and to the extent permitted
by law, the officers and directors of each of IBC Texas and IBC Delaware last in
office shall execute and deliver such assignments, deeds and other instruments
and shall take or cause to be taken such further or other actions as shall be
necessary in order to vest or perfect in or to confirm of record or otherwise to
the Surviving Corporation title to, and possession of, all of the assets,
rights, franchises and interests of each of IBC Texas and IBC Delaware in and to
every type of property (real, personal and mixed) and choses in action, and
otherwise to carry out the purposes of this Agreement, and the proper officers
and directors of the Surviving Corporation are fully authorized to take any and
all such actions in the name of IBC Texas or IBC Delaware or otherwise.
SECTION 8. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts, which together shall constitute a single agreement.
IN WITNESS WHEREOF, IBC Texas and IBC Delaware have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
INTERNATIONAL BANCSHARES CORPORATION,
a Texas corporation
By: ______________________________
Dennis E. Nixon, President
ATTEST:
By: ___________________________
Arnoldo Cisneros, Secretary
INTERNATIONAL BANCSHARES CORPORATION,
a Delaware corporation
By: ______________________________
Dennis E. Nixon, President
ATTEST:
By: ___________________________
Arnoldo Cisneros, Secretary
4
<PAGE>
APPENDIX B
FORM OF
ARTICLES OF INCORPORATION
OF
INTERNATIONAL BANCSHARES CORPORATION
------------------------------
Pursuant to the provisions of Article 3.01 of the Texas Business
Corporation Act (the "TBCA"), the undersigned Incorporator adopts the following
Articles of Incorporation:
ARTICLE I
The name of the corporation is International Bancshares Corporation.
ARTICLE II
The period of duration of the corporation is perpetual.
ARTICLE III
The purpose for which the corporation is organized is to transact any or
all lawful business for which corporations may be organized under the TBCA.
ARTICLE IV
The aggregate number of shares which the corporation shall have the
authority to issue is Fifteen Million (15,000,000) shares of Common Stock of the
par value of One Dollar ($1.00) per share.
ARTICLE V
The corporation will not commence business until it has received for the
issuance of its shares consideration of the value of at least One Thousand
Dollars ($1,000.00), consisting of money, labor done or property actually
received.
ARTICLE VI
The street address of the initial registered office of the corporation is
1200 San Bernardo, Laredo, Texas 78041, and the name of the initial registered
agent for the corporation at such address is Dennis E. Nixon.
1
<PAGE>
ARTICLE VII
The initial Board of Directors of the corporation shall consist of nine
members, whose names and addresses are as follows:
Name Address
---- -------
Dennis E. Nixon 1200 San Bernardo
Laredo, Texas 78041
Alberto A. Santos 1200 San Bernardo
Laredo, Texas 78041
R. David Guerra 1200 San Bernardo
Laredo, Texas 78041
Leonardo Salinas 1200 San Bernardo
Laredo, Texas 78041
Roy Jennings, Jr. 1200 San Bernardo
Laredo, Texas 78041
Lester Avigael 1200 San Bernardo
Laredo, Texas 78041
Richard E. Haynes 1200 San Bernardo
Laredo, Texas 78041
Irving Greenblum 1200 San Bernardo
Laredo, Texas 78041
Sioma Neiman 1200 San Bernardo
Laredo, Texas 78041
ARTICLE VIII
The undersigned Incorporator, Dennis E. Nixon, is a natural person of the
age of eighteen (18) years or more whose address is 1200 San Bernardo, Laredo,
Texas 78041.
ARTICLE IX
The corporation shall indemnify to the fullest extent permitted by the
TBCA, as presently in effect and as hereafter amended, any person who was, is,
or is threatened to be made a named defendant or respondent to an action, suit
or proceeding, whether criminal, civil, administrative or investigative, by
reason of the fact that the person (i) is or was a director or officer of the
corporation, or (ii) while a director or officer of the corporation, is or was
serving at the request of the corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent or similar functionary of another
foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding. Such right of indemnification shall be a
contract right which may be enforced in any manner desired by such person. The
corporation shall have the power to purchase and maintain liability insurance
for those persons or make other arrangements on such persons' behalf as and to
the fullest extent permitted by the TBCA, as presently in effect and as
hereafter amended.
2
ARTICLE X
Cumulative voting by the shareholders of the corporation at any election
for directors or upon any other matter is expressly prohibited, and the
directors of the corporation shall be elected by plurality vote of the
shareholders entitled to vote at such election.
ARTICLE XI
A director of the corporation shall not be personally liable to the
corporation or its shareholders for monetary damages for an act or omission in
the director's capacity as a director, except for liability for (a) a breach of
the director's duty of loyalty to the corporation or its shareholders; (b) an
act or omission not in good faith or that involves intentional misconduct or a
knowing violation of the law; (c) a transaction from which the director received
an improper benefit, whether or not the benefit resulted from an action taken
within the scope of the director's office; or (d) an act or omission for which
the liability of the director is expressly provided by an applicable statute.
If the TBCA or the Texas Miscellaneous Corporation Laws Act (the "TMCLA")
hereafter is amended to authorize further elimination or limitation of the
liability of directors, then the liability of a director of the corporation, in
addition to the limitation on the personal liability provided herein, shall be
limited to the fullest extent permitted by the TBCA, as amended and the TMCLA,
as amended. Any repeal or modification of this Article XI by the shareholders of
the corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director at the time of such repeal or
modification.
ARTICLE XII
No shareholder of the corporation shall, by reason of his holding shares
of any class of the capital stock of the corporation, have any preemptive or
preferential right, other than such preemptive or preferential rights, if any,
as the Board of Directors in its discretion may fix, to purchase, subscribe to
or otherwise acquire any unissued or treasury shares of any class of the capital
stock of the corporation, now or hereafter to be authorized, or any notes,
debentures, bonds or other securities convertible into, exchangeable for, or
carrying or accompanied by warrants, options or rights to purchase or subscribe
to shares of any class of the capital stock of the corporation, now or hereafter
to be authorized, whether or not the issuance of any such shares of capital
stock or such notes, debentures, bonds or other securities would adversely
affect the dividend or voting rights of such shareholder, and the Board of
Directors may issue shares of any class of the capital stock of the corporation,
now or hereafter to be authorized, or any notes, debentures, bonds or other
securities convertible into, exchangeable for, or carrying or accompanied by
warrants, options or rights to purchase or subscribe to shares of any class of
the capital stock of the corporation, now or hereafter to be authorized, without
offering any such shares of any class of capital stock of the corporation,
either in whole or in part, to the existing shareholders of any class of the
capital stock of the corporation.
3
ARTICLE XIII
Any action required by the TBCA, as presently in effect and as hereafter
amended, to be taken at any annual or special meeting of shareholders, or any
action which may be taken at any annual or special meeting of shareholders, may
be taken without a meeting, without prior notice, and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holder or holders of shares having not less than the minimum
number of votes that would be necessary to take such action at a meeting at
which the holders of all shares entitled to vote on the action were present and
voted.
ARTICLE XIV
Special meetings of the shareholders may be called only by (i) the Board
of Directors, the President, or such other person(s) so authorized by the
by-laws of the corporation or (ii) the holders of at least fifty percent of the
outstanding shares entitled to vote at the proposed special meeting.
ARTICLE XV
With respect to any matter for which the affirmative vote of the holders
of a specified portion of the shares entitled to vote is required by TBCA, as
presently in effect and as hereafter amended, the act of the shareholders on
that matter shall only require the affirmative vote of the holders of at least a
majority of the shares entitled to vote on such matter, rather than the
affirmative vote otherwise required by the TBCA, as presently in effect and
hereafter amended.
EXECUTED this ____ day of May, 1995.
_______________________________
Dennis E. Nixon, Incorporator
4
