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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
May 29, 1998
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Date of Report (Date of earliest event reported)
Independent Bankshares, Inc.
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(Exact name of Registrant as specified in its charter)
Texas 0-10196 75-1717279
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(State or Other (Commission File (IRS Employer
Jurisdiction of Number) Identification No.)
Incorporation)
547 Chestnut Street
P. O. Box 3296
Abilene, Texas 79604 79604
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(Address of principal (Zip Code)
executive offices)
(915) 677-5550
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 5. Other Events
On May 29, 1998, Independent Bankshares, Inc. (the
"Company") entered into a definitive agreement ("Agreement") to
acquire all of the issued and outstanding capital stock of Azle
Bancorp and its subsidiary bank, Azle State Bank, Azle, Texas
("Azle State"), for $19,025,000 in cash. The Company anticipates
that it will raise the funds necessary to consummate the
acquisition through a combination of an underwritten stock
offering and borrowings. Details of such potential offering and
borrowings are yet to be determined.
At March 31, 1998, Azle State had total assets of
$89,560,000, total loans, net of unearned income, of $44,398,000,
total deposits of $78,709,000 and stockholders' equity of
$9,830,000.
Consummation of the acquisition is subject to the approval
of the shareholders of Azle Bancorp, certain regulatory approvals
and certain other conditions. If the approvals are received and
the other conditions satisfied, the transaction will probably be
consummated during the third or fourth quarter of 1998.
The Company believes that had the acquisition been
consummated as of January 1, 1997, after making certain
assumptions regarding the number and price of the shares to be
sold in the proposed offering, the amount of borrowings to be
made for the acquisition, amortization of intangibles and expense
savings, the combined organization would have had pro forma net
income of approximately $2,793,000 or $1.09 diluted earnings per
share, for the year ended December 31, 1997, compared to actual
reported results for the Company of $2,110,000, or $1.03 diluted
earnings per share. The Company believes that had the
acquisition been consummated as of January 1, 1998, after making
similar assumptions, the combined organization would have had pro
forma net income of approximately $655,000, or $0.25 diluted
earnings per share, for the quarter ended March 31, 1998,
compared to actual reported results for the Company of $455,000,
or $0.22 diluted earnings per share. As of March 31, 1998, the
combined organization would have had total assets of
approximately $362,594,000, total loans, net of unearned income,
of approximately $184,445,000, total deposits of approximately
$325,519,000 and stockholder's equity of approximately
$29,607,000.
No material relationship exists between Azle Bancorp or Azle
State and the Company or any of its affiliates, any directors or
officers of the Company, or any associate of any such director or
officer.
The summary of the Agreement is qualified in its entirety by
reference to the Agreement and Plan of Reorganization, which is
included in this Current Report on Form 8-K as Exhibit 1.1.
This report, other than historical information, contains
certain forward-looking statements and information relating to
the Company, its subsidiaries, the proposed transaction, industry
trends and certain other matters that are based on the beliefs of
the Company's management as well as assumptions made by and
information currently available to the
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Company's management. These statements are made under the"safe
harbor" provisions of the Private Securities Litigation Act
of 1995 and involve risks and uncertainties that could cause
actual results to differ materially from those in the forward-
looking statements. When used in this release, the words
"anticipate," "believe," "estimate," "expect" and "intend," and
words or phrases of similar import, as they relate to the
Company, its subsidiaries, Company management, or the proposed
transaction are intended to identify forward-looking statements.
Such statements reflect the current view of the Company with
respect and assumptions related to certain factors including,
without limitation, competitive factors, general economic
conditions, customer relations, the interest rate environment,
governmental regulation and supervision, nonperforming asset
levels, loan concentrations, changes in industry practices, one
time events and other factors that may disrupt the Company's
business, and other important factors disclosed from time to time
in the Company's Form 10-K and Form 10-Q and other Securities and
Exchange Commission filings, which can be obtained by contacting
the Company. Based upon changing conditions, should any one or
more of these risks or uncertainties materialize, or should any
underlying assumptions prove incorrect, actual results may vary
materially from those described herein as anticipated, believed,
estimated, expected or intended. The Company does not intend to
update these forward-looking statements.
ITEM 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(c) Exhibits
Exhibit
No. Document Description
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1.1 Agreement and Plan of
Reorganization dated May
29, 1998, between the
Company and Azle Bancorp
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SIGNATURE
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.
INDEPENDENT BANKSHARES, INC.
Date: June 19, 1998 By: /s/ BRYAN STEPHENSON
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Bryan Stephenson, President and
Chief Executive Officer
<PAGE>
INDEX TO EXHIBITS
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Exhibit No. Description
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1.1 Agreement and Plan of Reorganization
dated May 29, 1998, between the Company and
Azle Bancorp
PURSUANT TO ITEM 601(b)(2) OF REGULATION S-K,
THIS EXHIBIT OMITS THE EXHIBITS AND SCHEDULES
COMPRISING A PART OF THE ORIGINAL DOCUMENT. THE
REGISTRANT AGREES TO SUPPLEMENTALLY FURNISH A
COPY OF ANY OF THE OMITTED ITEMS TO THE
SECURITIES AND EXCHANGE COMMISSION UPON REQUEST.
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
INDEPENDENT BANKSHARES, INC.
ABILENE, TEXAS
AND
AZLE BANCORP
AZLE, TEXAS
Dated as of May 29, 1998
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TABLE OF CONTENTS
ARTICLE I.ACQUISITION OF AZLE BY INDEPENDENT 2
SECTION 1.01 Merger of New Azle with and into Azle 2
SECTION 1.02 Effects of the Merger 2
SECTION 1.03 Articles of Incorporation and Bylaws 2
SECTION 1.04 Directors and Officers 2
SECTION 1.05 Merger Consideration 2
SECTION 1.06 Conversion of the Azle Stock 3
SECTION 1.07 Azle Shareholders' Meeting 3
SECTION 1.08 Delivery of Consideration 4
SECTION 1.09 Anti-Dilution Provisions 5
ARTICLE II.THE CLOSING AND THE CLOSING DATE 5
SECTION 2.01 Time and Place of the Closing and
Closing Date 5
SECTION 2.02 Actions to be Taken at the Closing
by Azle 5
SECTION 2.03 Actions to be Taken at the Closing
by Independent 7
SECTION 2.04 Further Assurances 8
SECTION 2.05 Effective Date 8
ARTICLE III.REPRESENTATIONS AND WARRANTIES OF AZLE 8
SECTION 3.01 Organization and Qualification 9
SECTION 3.02 Execution and Delivery 9
SECTION 3.03 Azle Capitalization 9
SECTION 3.04 Compliance with Laws, Permits
and Instruments 10
SECTION 3.05 Azle Financial Statements 10
SECTION 3.06 The Bank 11
SECTION 3.07 Litigation 12
SECTION 3.08 Consents and Approvals 12
SECTION 3.09 Undisclosed Liabilities 12
SECTION 3.10 Title to Assets 12
SECTION 3.11 Absence of Certain Changes or
Events 13
SECTION 3.12 Contracts 15
SECTION 3.13 Taxes 17
SECTION 3.14 Insurance 18
SECTION 3.15 No Adverse Change 18
SECTION 3.16 Proprietary Rights 18
SECTION 3.17 Transactions with Certain Persons
and Entities 18
SECTION 3.18 Evidences of Indebtedness 19
SECTION 3.19 Employee Relationships 19
SECTION 3.20 Condition of Assets 19
SECTION 3.21 Environmental Compliance 19
SECTION 3.22 Regulatory Compliance 20
SECTION 3.23 Absence of Certain Business Practices 21
SECTION 3.24 Azle Proxy Statement 21
SECTION 3.25 Dissenting Shareholders 21
SECTION 3.26 Books and Records 21
SECTION 3.27 Forms of Instruments, Etc. 21
SECTION 3.28 Fiduciary Responsibilities 21
SECTION 3.29 Guaranties 22
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SECTION 3.30 Voting Trust or Buy-Sell Agreements 22
SECTION 3.31 Employee Benefit Plans 22
SECTION 3.32 Year 2000 22
SECTION 3.33 Representations Not Misleading 23
ARTICLE IV.REPRESENTATIONS AND WARRANTIES OF INDEPENDENT 23
SECTION 4.01 Organization and Qualification 23
SECTION 4.02 Execution and Delivery 23
SECTION 4.03 Compliance with Laws, Permits
and Instruments 24
SECTION 4.04 Litigation 24
SECTION 4.05 Consents and Approvals 24
SECTION 4.06 Azle Proxy Statement 24
SECTION 4.07 Representations Not Misleading 24
ARTICLE V.COVENANTS OF AZLE 25
SECTION 5.01 Best Efforts 25
SECTION 5.02 Merger Agreements 25
SECTION 5.03 Information for Applications 25
SECTION 5.04 Required Acts of Azle and the Bank 25
SECTION 5.05 Prohibited Acts of Azle and the Bank 26
SECTION 5.06 Access; Pre-Closing Investigation 29
SECTION 5.07 Invitations to and Attendance
at Directors' and Committee
Meetings 29
SECTION 5.08 Additional Financial Statements. 29
SECTION 5.09 Untrue Representations 30
SECTION 5.10 Litigation and Claims 30
SECTION 5.11 Adverse Changes 30
SECTION 5.12 No Negotiation with Others 30
SECTION 5.13 Consents and Approvals 31
SECTION 5.14 Environmental Investigation; Right
to Terminate Agreement 31
SECTION 5.16 Proxies 32
SECTION 5.17 Noncompetition Agreement 32
ARTICLE VI.COVENANTS OF INDEPENDENT 32
SECTION 6.01 Best Efforts 32
SECTION 6.02 Incorporation and Organization of
New Azle 32
SECTION 6.03 Merger Agreements 32
SECTION 6.04 Information for Applications 33
SECTION 6.05 Acts of New Azle 33
SECTION 6.06 Untrue Representations 33
SECTION 6.07 Litigation and Claims 33
SECTION 6.08 Regulatory and Other Approvals 33
SECTION 6.09 Adverse Change 34
ARTICLE VII.CONDITIONS PRECEDENT TO THE OBLIGATIONS OF AZLE 34
SECTION 7.01 Compliance with Representations,
Warranties and Agreements 34
SECTION 7.02 Shareholder Approval 34
SECTION 7.03 Government and Other Approvals 34
SECTION 7.04 No Litigation 34
SECTION 7.05 Opinion of Legal Counsel to
Independent 35
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ARTICLE VIII.CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF INDEPENDENT 35
SECTION 8.01 Compliance with Representations,
Warranties and Agreements 35
SECTION 8.02 Shareholder Approval 35
SECTION 8.03 Government and Other Approvals 35
SECTION 8.04 No Litigation 36
SECTION 8.05 Forced Share Exchange with Bank
Minority Shareholders 36
SECTION 8.06 Opinion of Legal Counsel to Azle 36
SECTION 8.07 Accounting Treatment 36
SECTION 8.08 Releases 37
SECTION 8.09 No Material Adverse Change 37
SECTION 8.10 Financing 37
SECTION 8.11 Delivery of Agreements 37
ARTICLE IX.TERMINATION AND ABANDONMENT 37
SECTION 9.01 Right of Termination 37
SECTION 9.02 Notice of Termination 39
SECTION 9.03 Effect of Termination 39
ARTICLE X.CONFIDENTIAL INFORMATION 39
SECTION 10.01 Definition of "Recipient,"
"Disclosing Party" and
"Representative" 39
SECTION 10.02 Definition of "Subject Information" 39
SECTION 10.03 Confidentiality 40
SECTION 10.04 Securities Law Concerns 40
SECTION 10.05 Return of Subject Information 40
SECTION 10.06 Specific Performance/Injunctive
Relief 40
ARTICLE XI.MISCELLANEOUS 41
SECTION 11.01 Survival of Representations
and Warranties 41
SECTION 11.02 Fees and Expenses 41
SECTION 11.03 Brokerage Fees and Commissions 41
SECTION 11.04 Entire Agreement 42
SECTION 11.05 Further Cooperation 42
SECTION 11.06 Severability 42
SECTION 11.07 Notices 42
SECTION 11.08 GOVERNING LAW 44
SECTION 11.09 Multiple Counterparts 44
SECTION 11.10 Certain Definitions 44
SECTION 11.11 Specific Performance 45
SECTION 11.12 Attorneys' Fees and Costs 45
SECTION 11.13 Rules of Construction 45
SECTION 11.14 Binding Effect; Assignment 46
SECTION 11.15 Public Disclosure 46
SECTION 11.16 Extension; Waiver 46
SECTION 11.17 Amendments 47
SECTION 11.18 Delivery of Schedules 47
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EXHIBITS
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Exhibit A - Merger Agreement
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Exhibit B - Voting Agreement and Irrevocable Proxy
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Exhibit C - Opinion of Counsel to Independent
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Exhibit D - Opinion of Counsel to Azle
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Exhibit E - Form of Release to Be Executed
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Exhibit F - Form of Release to Be Executed
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Exhibit G - Noncompetition Agreement
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SCHEDULES
Schedule 3.04 - Compliance with Laws, Permits
and Instruments
Schedule 3.06 - Subsidiaries of the Bank
Schedule 3.07 - Litigation
Schedule 3.08 - Consents and Approvals
Schedule 3.09 - Undisclosed Liabilities
Schedule 3.10 - Liens, Mortgages, Security
Interests and Encumbrances
Schedule 3.11 - Certain Changes or Events
Schedule 3.12 - Contracts
Schedule 3.13 - Tax Matters
Schedule 3.14 - Insurance
Schedule 3.16 - Proprietary Rights
Schedule 3.17 - Transactions With Insiders
Schedule 3.18 - Credit Information
Schedule 3.20 - Condition of Assets
Schedule 3.21 - Environmental Compliance
Schedule 3.22 - Regulatory Compliance
Schedule 3.30 - Voting Trust or Buy-Sell Agreements
Schedule 3.31 - Employee Benefit Plans
Schedule 4.05 - Consents and Approvals
Schedule 5.05T - Branch Budget
Schedule 5.16 - Proxies
Schedule 5.17 - Persons to Execute Noncompetition
Agreement
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AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement")
is made and entered into as of the 29th day of May, 1998, by
and between Independent Bankshares, Inc., a Texas corporation and
registered bank holding company with its principal offices in
Abilene, Texas ("Independent"), and Azle Bancorp, a Texas
corporation and registered bank holding company with its
principal offices in Azle, Texas ("Azle").
W I T N E S S E T H:
WHEREAS, Azle owns all of the stock of Azle Holdings, Inc.,
a Delaware corporation and registered bank holding company with
its principle offices in Azle, Texas ("Azle Holdings"), and Azle
Holdings owns 96.88% of the stock of Azle State Bank, Azle,
Texas, a Texas banking association with its principle offices in
Azle, Texas (the "Bank"); and
WHEREAS, Independent desires to acquire all of the issued
and outstanding stock of Azle through the merger of New Azle,
Inc., a wholly-owned subsidiary of Independent ("New Azle") with
and into Azle (the "Merger"); and
WHEREAS, Independent and Azle believe that the Merger, as
provided for and subject to the terms and conditions set forth in
this Agreement and all exhibits, schedules and supplements
hereto, is in the best interests of Independent, Azle and their
respective shareholders; and
WHEREAS, Independent and Azle desire to set forth certain
representations, warranties and covenants made by each to the
other as an inducement to the execution and delivery of this
Agreement and certain additional agreements related to the
transactions contemplated hereby; and
WHEREAS, the respective boards of directors of Independent
and Azle have approved this Agreement and the proposed
transactions substantially on the terms and conditions set forth
in this Agreement.
NOW, THEREFORE, for and in consideration of the foregoing
and of the mutual representations, warranties, covenants and
agreements contained in this Agreement, and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and subject to the conditions set forth
below, Independent and Azle undertake, promise, covenant and
agree with each other as follows:
<PAGE>
ARTICLE I.
ACQUISITION OF AZLE BY INDEPENDENT
SECTION 1.01 MERGER OF NEW AZLE WITH AND INTO AZLE.
Subject to the terms and conditions of this Agreement and the
Agreement and Plan of Merger to be entered into between Azle and
New Azle (the "Merger Agreement"), attached hereto as Exhibit A,
Independent shall cause New Azle to be merged with and into Azle
pursuant to the provisions of Part Five of the Texas Business
Corporation Act (the "TBCA") and with the effect provided in
Article 5.06 of the TBCA.
SECTION 1.02 EFFECTS OF THE MERGER. The Merger shall have
the effects set forth in Article 5.06 of the TBCA. Following the
Merger, Azle shall continue as the corporation resulting from the
Merger (the "Resulting Corporation"), and the separate corporate
existence of New Azle shall cease. The name of the Resulting
Corporation shall be "Azle Bancorp." The existing offices and
facilities of Azle immediately preceding the Merger shall be the
principal offices and facilities of the Resulting Corporation
following the Merger. At the Effective Date, all rights, title
and interests to all real estate and other property owned by each
of New Azle and Azle shall be allocated to and vested in the
Resulting Corporation without reversion or impairment, without
further act or deed, and without any transfer or assignment
having occurred, but subject to any existing liens or
encumbrances thereon. At the Effective Date, all liabilities and
obligations of New Azle and Azle shall be allocated to the
Resulting Corporation, and the Resulting Corporation shall be the
primary obligor therefor and no other party to the Merger shall
be liable therefor. At the Effective Date, a proceeding pending
by or against either New Azle or Azle may be continued as if the
Merger did not occur, or the Resulting Corporation may be
substituted in the proceedings.
SECTION 1.03 ARTICLES OF INCORPORATION AND BYLAWS. The
Articles of Incorporation and Bylaws, respectively, of the
Resulting Corporation shall be as set forth in the Merger
Agreement.
SECTION 1.04 DIRECTORS AND OFFICERS. The directors and
officers, respectively, of the Resulting Corporation shall be as
set forth in the Merger Agreement.
SECTION 1.05 MERGER CONSIDERATION. In exchange for all of
the issued and outstanding common stock of Azle (the "Azle Common
Stock"), Independent shall pay the aggregate amount of
$18,431,420 (the "Merger Consideration"), which Merger
Consideration shall be paid in cash at Closing (as defined
below);
A. provided, however, that in the event that Azle is
unable to obtain the approval of seventy-five percent (75%)
of the holders of Azle Common Stock of the payments made to
Mr. Carl E. Campbell, Jr. pursuant to certain agreements
with the Bank, then the amount of the Merger Consideration
shall be reduced by an amount equal to the tax effect of
such failure to obtain shareholder approval; and
B. provided, further, in the event that the Merger is
not consummated on or prior to October 1, 1998, the Merger
Consideration shall be increased by an amount equal to
Azle's net income (after taxes) for the period between
October 1, 1998 and the end of the month preceding the
Closing Date. In the event the Closing does not occur prior
to
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October 1, 1998, the parties agree (i) that the Closing
shall not occur prior to November 1, 1998 and (ii) that the
Closing shall not occur after the fifteenth day of any month
after November 1998.
SECTION 1.06 CONVERSION OF THE AZLE STOCK. At the
Effective Date by virtue of this Agreement and without any
further action on the part of any holder:
A. Each share of the Azle Common Stock issued and
outstanding immediately prior to the Effective Date shall
cease to be outstanding, and other than shares with respect
to which dissenters' rights have been perfected, shall be
converted into and become the right to receive cash equal to
$27.9779 (the "Per Share Consideration"), which amount shall
be adjusted pursuant to the terms of Section 1.05B, if
applicable.
B. The number of shares of common stock of New Azle
(the "New Azle Common Stock") outstanding at the Effective
Date shall, at the Effective Date and by virtue of the
Merger and without any action on the part of Independent or
any other party as holder thereof, be converted into a like
number of shares of common stock of the Resulting
Corporation with a par value of $1.00 per share, with the
effect that the number of shares of the common stock of the
Resulting Corporation outstanding immediately after the
Effective Date shall be equal to the aggregate number of
shares of New Azle Common Stock outstanding immediately
before the Effective Date. The authorized number of shares
of common stock of the Resulting Corporation shall be the
same as the authorized number of shares of New Azle Common
Stock immediately prior to the Effective Date.
C. On or following the Effective Date, each holder of
the Azle Common Stock shall be required to surrender its
shares of Azle Common Stock to Independent as the exchange
agent (the "Exchange Agent") and, upon such surrender, each
such holder shall be entitled to receive from Independent an
amount of cash as determined pursuant to Section 1.06(A).
Until so surrendered, each such outstanding certificate
representing shares of Azle Common Stock shall be deemed for
all purposes, subject only to dissenters' rights under
applicable law, to evidence solely the right to receive such
consideration from Independent as described in
Section 1.06(A).
SECTION 1.07 AZLE SHAREHOLDERS' MEETING. Azle, acting
through its Board of Directors, shall, in accordance with
applicable law:
A. Duly call, give notice of, convene and hold a
meeting of its shareholders (the "Azle Shareholders'
Meeting") as soon as practicable for the purpose of
approving and adopting the Merger and the Merger Agreement
and the transactions contemplated hereby and thereby.
B. Require no greater than the minimum vote of each
class of stock of Azle required by the terms of each class
of stock and applicable law in order to approve the Merger
and the Merger Agreement.
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C. Subject to its fiduciary duties to the
shareholders of Azle, include in the Azle Proxy Statement
(defined in Section 1.10(D)) the recommendation of its Board
of Directors that the shareholders of Azle vote in favor of
the approval and adoption of the Merger and the Merger
Agreement and the transactions contemplated hereby and
thereby.
D. Cause the Azle Proxy Statement to be mailed to the
shareholders of Azle as soon as practicable, and use its
best efforts to obtain the approval and adoption of the
Merger and the Merger Agreement by shareholders holding at
least the minimum number of shares of each class of the
stock of Azle entitled to vote at the Azle Shareholders'
Meeting necessary to approve the Merger and the Merger
Agreement under applicable law. The letter to shareholders,
notice of meeting, prospectus, proxy statement and form of
proxy to be distributed to shareholders of Azle in
connection with the Merger and the Merger Agreement shall be
in form and substance satisfactory to Independent and are
collectively referred to herein as the "Azle Proxy
Statement."
SECTION 1.08 DELIVERY OF CONSIDERATION. The Exchange Agent
shall send to each holder of the Azle Common Stock a letter of
transmittal for use in exchanging such holder's certificates for
the Merger Consideration. Thirty (30) days prior to the Closing
Date, Azle shall provide Independent with a shareholder list,
which list shall be certified by the Secretary of Azle. Provided
that all necessary shareholder and regulatory approvals have been
obtained, Independent shall forward letters of transmittal to all
of the shareholders on the certified shareholder list at least
twenty (20) days prior to the Closing Date unless Azle and
Independent shall mutually agree to send such letters at a later
date. Promptly after receipt of such certificates and letter of
transmittal, Independent shall review the executed letters of
transmittal in order to verify proper execution. Provided that
the letter of transmittal is properly completed, accompanied by
all of the appropriate stock certificates and made available for
review by the Exchange Agent by twelve noon on the business day
before the Closing Date, on the Closing Date, New Azle shall pay
to such shareholder the consideration set forth in
Section 1.06(A), with respect to shares of the Azle Common Stock.
If a shareholder does not provide properly completed letters of
transmittal and all appropriate stock certificates to Independent
on the business day before the Closing Date, then, provided that
the letter of transmittal is properly completed and accompanied
by all of the appropriate stock certificates, New Azle promptly,
but in no event later than two (2) business days following
receipt of those documents by Independent, shall pay to such
shareholder the consideration set forth in Section 1.06A with
respect to such shares of the Azle Company Stock. In the event
that a letter of transmittal contains an error, is incomplete or
is not accompanied by all appropriate stock certificates, then
Independent will notify the shareholder promptly of the need for
further information. If any record shareholder of Azle is unable
to locate any certificate evidencing the Azle Common Stock, such
shareholder shall submit an Indemnity Agreement to the Exchange
Agent in a form acceptable to Independent in lieu of such
certificate. Notwithstanding the foregoing, neither the Exchange
Agent nor any other party to this Agreement shall be liable to
any holder of certificates representing the Azle Common Stock for
any amount paid to a public official pursuant to any applicable
abandoned property, escheat or similar law. No interest shall be
payable with respect to the payment of the Merger Consideration.
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SECTION 1.09 ANTI-DILUTION PROVISIONS. In the event that
Azle changes the number of shares of Azle Common Stock issued and
outstanding prior to the Effective Date as a result of a stock
split, stock dividend, recapitalization, or similar transaction
with respect to such stock, the Per Share Consideration shall be
adjusted proportionately.
ARTICLE II.
THE CLOSING AND THE CLOSING DATE
SECTION 2.01 TIME AND PLACE OF THE CLOSING AND CLOSING
DATE. On a date mutually agreeable to Azle and Independent
within thirty (30) days after the receipt of all necessary
regulatory, corporate and other approvals and the expiration of
any mandatory waiting periods (herein called the "Closing Date"),
a meeting (the "Closing") will take place at which the parties to
this Agreement will exchange certificates, opinions, letters and
other documents in order to determine whether all of the
conditions set forth in Articles VII and VIII of this Agreement
have been satisfied or waived or whether any condition exists
that would permit a party to this Agreement to terminate this
Agreement. If no such condition then exists or if no party
elects to exercise any right it may have to terminate this
Agreement, then and thereupon the appropriate parties shall
execute such documents and instruments as may be necessary or
appropriate in order to effect the transactions contemplated by
this Agreement.
The Closing shall take place at the offices of Jenkens &
Gilchrist, a Professional Corporation, 1445 Ross Avenue, Suite
3200, Dallas, Texas 75202 on the Closing Date, or at such other
place to which the parties may agree.
SECTION 2.02 ACTIONS TO BE TAKEN AT THE CLOSING BY AZLE.
At the Closing, Azle shall execute and acknowledge (where
appropriate) and deliver to Independent, such documents and
certificates necessary to carry out the terms and provisions of
this Agreement, including without limitation, the following (all
of such actions constituting conditions precedent to
Independent's obligations to close hereunder):
A. True, correct and complete copies of the Articles
of Incorporation of Azle and all amendments thereto, duly
certified as of a recent date by the Secretary of State of
the State of Texas.
B. True, correct and complete copies of the Articles
of Association of the Bank and all amendments thereto, duly
certified as of a recent date by the Texas Department of
Banking (the "TDB").
C. Good standing and existence certificates of a
recent date, issued by the appropriate state officials, duly
certifying as to the existence and good standing of Azle in
Texas.
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D. A certificate to do business, dated as of a recent
date, issued by the TDB, duly certifying as to the authority
of the Bank to transact the business of banking under the
laws of the State of Texas.
E. A certificate of good standing, dated as of a
recent date, issued by the Texas Comptroller of Public
Accounts, duly certifying as to the good standing of the
Bank in the State of Texas.
F. A certificate, dated as of a recent date, issued
by the Federal Deposit Insurance Corporation (the "FDIC"),
duly certifying that the deposits of the Bank are insured by
the FDIC pursuant to the Federal Deposit Insurance Act
(the "FDIA").
G. A certificate duly executed by the Secretary or an
Assistant Secretary of Azle, acting solely in his or her
capacity as an officer of Azle, pursuant to which Azle shall
certify (a) the due adoption by the Board of Directors of
Azle of corporate resolutions attached to such certificate
authorizing the execution and delivery of this Agreement and
the other agreements and documents contemplated hereby,
including, but not limited to, the Merger Agreement, and the
taking of all actions contemplated hereby and thereby;
(b) the due adoption by the shareholders of Azle authorizing
the transactions and the execution and delivery of this
Agreement and the other agreements and documents
contemplated hereby and the taking of all actions
contemplated hereby and thereby; (c) the incumbency and true
signatures of those officers of Azle duly authorized to act
on its behalf in connection with the transactions
contemplated by this Agreement and to execute and deliver
this Agreement and other agreements and documents
contemplated hereby and the taking of all actions
contemplated hereby and thereby on behalf of Azle, and
(d) that the copy of the Bylaws of Azle attached to such
certificate is true and correct and such Bylaws have not
been amended except as reflected in such copy.
H. A certificate duly executed by the Cashier or an
Assistant Cashier of the Bank, acting solely in his or her
capacity as an officer of the Bank, pursuant to which the
Bank shall certify that the copy of the Bylaws attached to
such certificate is true and correct and such Bylaws have
not been amended except as reflected in such copy.
I. A certificate duly executed by a duly authorized
officer of Azle, acting solely in his or her capacity as an
officer of Azle, dated as of the Closing Date, pursuant to
which Azle shall certify that all of the representations and
warranties made in Article III of this Agreement are true
and correct on and as of the date of such certificate as if
made on such date and that except as expressly permitted by
this Agreement there shall have been no Material Adverse
Change since December 31, 1997.
J. All consents required to be obtained by Azle from
third parties to consummate the transactions contemplated by
this Agreement, including, but not limited to, those listed
on Schedule 3.08.
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K. An opinion of counsel to Azle in accordance with
this Agreement; and
L. All other documents required to be delivered to
Independent by Azle under the provisions of this Agreement,
and all other documents, certificates and instruments as are
reasonably requested by Independent or its counsel.
SECTION 2.03 ACTIONS TO BE TAKEN AT THE CLOSING BY
INDEPENDENT. At the Closing, Independent shall execute and
acknowledge (where appropriate) and deliver to Azle, such
documents and certificates necessary to carry out the terms and
provisions of this Agreement, including without limitation, the
following (all of such actions constituting conditions precedent
to Azle's obligations to close hereunder):
A. True, correct and complete copies of Independent's
Articles of Incorporation and all amendments thereto, duly
certified as of a recent date by the Secretary of State of
the State of Texas.
B. True, correct and complete copies of New Azle's
Articles of Incorporation and all amendments thereto, duly
certified as of a recent date by the Secretary of State of
the State of Texas.
C. Good standing and existence certificates for
Independent and New Azle, dated as of a recent date, issued
by the appropriate state officials, duly certifying as to
the existence and good standing of Independent in the State
of Texas.
D. A certificate, dated as of the Closing Date,
executed by the Secretary or an Assistant Secretary of
Independent, acting solely in his or her capacity as an
officer of Independent, pursuant to which Independent shall
certify (a) the due adoption by the Board of Directors of
Independent of corporate resolutions attached to such
certificate authorizing the execution and delivery of this
Agreement and the other agreements and documents
contemplated hereby and the taking of all actions
contemplated hereby and thereby; (b) the incumbency and true
signatures of those officers of Independent duly authorized
to act on its behalf in connection with the transactions
contemplated by this Agreement and to execute and deliver
this Agreement and other agreements and documents
contemplated hereby and the taking of all actions
contemplated hereby and thereby on behalf of Independent,
and (c) that the copy of the Bylaws of Independent attached
to such certificate is true and correct and such Bylaws have
not been amended except as reflected in such copy.
E. A certificate duly executed by the Secretary or an
Assistant Secretary of New Azle, acting solely in his or her
capacity as an officer of New Azle, pursuant to which New
Azle shall certify (a) the due adoption by the Board of
Directors of New Azle of corporate resolutions attached to
such certificate authorizing the execution and delivery of
the Merger Agreement and the taking of all
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actions contemplated thereby; (b) the incumbency and true
signatures of those officers of New Azle duly authorized to
act on its behalf in connection with the transactions
contemplated by the Merger Agreement and to execute and
deliver the Merger Agreement and the taking of all actions
contemplated thereby on behalf of New Azle, and (c) that the
copy of the Bylaws of New Azle attached to such certificate
is true and correct and such Bylaws have not been amended
except as reflected in such copy.
F. True, correct and complete copies of the
Certificate of Merger of New Azle with and into Azle, duly
certified as of a recent date by the Secretary of State of
the State of Texas.
G. A certificate, dated as of the Closing Date,
executed by a duly authorized officer of Independent, acting
solely in his or her capacity as an officer of Independent,
pursuant to which Independent shall certify that all of the
representations and warranties made in Article IV of this
Agreement are true and correct on and as of the date of such
certificate as if made on such date.
H. All consents required to be obtained by
Independent or New Azle from third parties to consummate the
transactions contemplated by this Agreement, including, but
not limited to, those listed on Schedule 4.05.
I. An opinion of counsel to Independent in accordance
with this Agreement; and
J. All other documents required to be delivered to
Azle by Independent under the provisions of this Agreement,
and all other documents, certificates and instruments as are
reasonably requested by Azle or its counsel.
SECTION 2.04 FURTHER ASSURANCES. At any time and from time
to time after the Closing, at the request of any party to this
Agreement and without further consideration, any party so
requested will execute and deliver such other instruments and
take such other action as the requesting party may reasonably
deem necessary or desirable in order to effectuate the
transactions contemplated hereby. In case at any time after the
Closing any further action is necessary or desirable to carry out
the purposes of this Agreement, each party hereto shall take or
cause to be taken all such action.
SECTION 2.05 EFFECTIVE DATE. The "Effective Date" as that
term is used in this Agreement means the effective date of the
Merger under the Merger Agreement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF AZLE
Azle hereby makes the representations and warranties set
forth in this Article III to Independent. Azle agrees at the
Closing to provide Independent with supplemental schedules
reflecting any material changes thereto between the date of this
Agreement and the Closing Date.
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SECTION 3.01 ORGANIZATION AND QUALIFICATION. Azle is a
bank holding company registered under the Bank Holding Company
Act of 1956, as amended. Azle is a corporation, duly organized,
validly existing and in good standing under the laws of the State
of Texas. Azle has all requisite corporate power and authority
(including all licenses, franchises, permits and other
governmental authorizations as are legally required) to carry on
its business as now being conducted, to own, lease and operate
its properties and assets, including, but not limited to, the
Bank, as now owned, leased or operated and to enter into and
carry out its obligations under this Agreement. True and
complete copies of the Articles of Incorporation and Bylaws of
Azle as amended to date, certified by the Secretary of Azle, have
been delivered to Independent. Azle does not own or control any
Affiliate (as defined in Section 11.10) or Subsidiary (as defined
in Section 11.10), other than Azle Holdings and the Bank. The
nature of the business of Azle and its activities do not require
it to be qualified to do business in any jurisdiction other than
the State of Texas. Azle has no equity interest, direct or
indirect, in any other bank or corporation or in any partnership,
joint venture or other business enterprise or entity, other than
Azle Holdings or the Bank or as acquired through settlement of
indebtedness, foreclosure, the exercise of creditors' remedies or
in a fiduciary capacity, and the business carried on by Azle has
not been conducted through any other direct or indirect
subsidiary or affiliate of Azle other than the Bank.
SECTION 3.02 EXECUTION AND DELIVERY. Azle has taken all
corporate action necessary to authorize the execution, delivery
and (provided the required regulatory and shareholder approvals
are obtained) performance of this Agreement and the other
agreements and documents contemplated hereby to which it is a
party, including, but not limited to, the Merger Agreement. This
Agreement has been, and the other agreements and documents
contemplated hereby, including, but not limited to, the Merger
Agreement, have been or at Closing will be, duly executed by Azle
and each constitutes the legal, valid and binding obligation of
Azle, enforceable in accordance with its respective terms and
conditions, except as enforceability may be limited by
bankruptcy, conservatorship, insolvency, moratorium,
reorganization, receivership or similar laws and judicial
decisions affecting the rights of creditors generally and by
general principles of equity (whether applied in a proceeding at
law or in equity).
SECTION 3.03 AZLE CAPITALIZATION. The entire authorized
capital stock of Azle consists solely of (i) 1,000,000 shares of
Azle Common Stock, par value $1.00 per share, of which 662,595
shares are issued and 658,784 shares are issued and outstanding
and (ii) 1,000,000 shares of preferred stock, $1.00 par value per
share, none of which are issued and outstanding. There are no
(i) other outstanding equity securities of any kind or character,
(ii) outstanding subscriptions, options, convertible securities,
rights, warrants, calls or other agreements or commitments of any
kind issued or granted by, or binding upon, Azle to purchase or
otherwise acquire any security of or equity interest in Azle,
obligating Azle to issue any shares of, restricting the transfer
of or otherwise relating to shares of its capital stock of any
class. All of the issued and outstanding shares of Azle Common
Stock have been duly authorized, validly issued and are fully
paid and nonassessable, and have not been issued in violation of
the preemptive rights of any person. Such shares of Azle Common
Stock have been issued in compliance with the securities laws of
the United States and other jurisdictions having applicable
securities laws. There are no restrictions applicable to the
payment of
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dividends on the shares of Azle Common Stock except pursuant to
applicable laws and regulations, and all dividends declared prior
to the date of this Agreement have been paid.
SECTION 3.04 COMPLIANCE WITH LAWS, PERMITS AND INSTRUMENTS.
Except as disclosed on Schedule 3.04, Azle and the Bank have in
all material respects performed and abided by all obligations
required to be performed by it to the date hereof, and have
complied with, and are in compliance with, and are not in default
(or with the giving of notice or the passage of time will be in
default) under, or in violation of, (i) any provision of the
Articles of Incorporation or Association or Bylaws of Azle or the
Bank, (ii) any material provision of any material mortgage,
indenture, lease, contract, agreement or other instrument
applicable to Azle, the Bank or their respective assets,
operations, properties or businesses now conducted or heretofore
conducted or (iii) any permit, concession, grant, franchise,
license, authorization, judgment, writ, injunction, order,
decree, award, statute, federal, state or local law, ordinance,
rule or regulation of any court, arbitrator or any federal,
state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality applicable to Azle, the
Bank or their respective assets, operations, properties or
businesses now conducted or heretofore conducted.
Except as set forth on Schedule 3.04, the execution,
delivery and (provided the required regulatory and shareholder
approvals are obtained) performance of this Agreement and the
other agreements contemplated hereby, including, but not limited
to the Merger Agreement, and the consummation of the transactions
contemplated hereby and thereby will not conflict with, or
result, by itself or with the giving of notice or the passage of
time, in any violation of or default or loss of a benefit under,
(i) any provision of the Articles of Incorporation or Association
or Bylaws of Azle or the Bank, (ii) any material mortgage,
indenture, lease, contract, agreement or other instrument
applicable to Azle, the Bank or their respective assets,
operations, properties or businesses or (iii) any permit,
concession, grant, franchise, license, authorization, judgment,
writ, injunction, order, decree, statute, law, ordinance, rule or
regulation applicable to Azle, the Bank or their respective
assets, operations, properties or businesses.
SECTION 3.05 AZLE FINANCIAL STATEMENTS. Azle has furnished
to Independent true and complete copies of the audited
consolidated balance sheets of Azle as of December 31, 1995, 1996
and 1997, and the related audited consolidated statements of
income, stockholders' equity and cash flows for the years ended
December 31, 1995, 1996 and 1997 and unaudited consolidated
balance sheets of Azle as of March 31, 1998 and the related
unaudited consolidated statements of income and cash flows for
the three-month period ended March 31, 1998 (such consolidated
balance sheets and the related statements of income,
stockholders' equity and cash flows are collectively referred to
herein as the "Financial Statements"). Except as described in
the notes to the Financial Statements, the Financial Statements
fairly present, in all material respects, the financial position
of Azle as of the respective dates thereof and the results of
operations and changes in financial position of Azle for the
periods then ended, in conformity with generally accepted
accounting principles ("GAAP"), applied on a basis consistent
with prior periods (subject, in the case of the unaudited interim
financial statements, to normal year-end adjustments and the fact
that they do not contain all of the footnote disclosures required
by GAAP), except as otherwise noted therein, and the accounting
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records underlying the Financial Statements accurately and fairly
reflect in all material respects the transactions of Azle. The
Financial Statements do not contain any items of special or
nonrecurring income or any other income not earned in the
ordinary course of business except as expressly specified
therein.
SECTION 3.06 THE BANK.
A. The Bank is a Texas banking association, duly
organized, validly existing and in good standing under the
laws of the State of Texas. The Bank has all requisite
corporate power and authority (including all licenses,
franchises, permits and other governmental authorizations as
are legally required) to carry on its business as now being
conducted, to own, lease and operate its properties and
assets as now owned, leased or operated and to enter into
and to carry on the business and activities now conducted by
it. True and complete copies of the Articles of Association
and Bylaws of the Bank, as amended to date, have been
delivered to Independent. The Bank is an insured bank as
defined in the Federal Deposit Insurance Act. Except as set
forth in Schedule 3.06, the Bank does not own or control any
Affiliate or Subsidiary. The nature of the business of the
Bank does not require it to be qualified to do business in
any jurisdiction other than the State of Texas. The Bank
has no equity interest, direct or indirect, in any other
bank or corporation or in any partnership, joint venture or
other business enterprise or entity, except as acquired
through settlement of indebtedness, foreclosure, the
exercise of creditors' remedies or in a fiduciary capacity,
and the business carried on by the Bank has not been
conducted through any other direct or indirect Subsidiary or
Affiliate of the Bank.
B. The entire authorized capital stock of the Bank
consists solely of 150,000 shares of common stock of the
Bank, par value $5.00 per share (the "Bank Stock"), all of
which are issued and outstanding. All of the issued and
outstanding shares of the Bank Stock have been duly
authorized, validly issued and are fully paid and
nonassessable, and have not and will not have been issued in
violation of the preemptive rights of any person. The
securities of the Bank have been issued in compliance with
the securities laws of the United States and the State of
Texas. Azle Holdings is, and as of the Closing Date will
be, the lawful record and beneficial owner of 96.88% of the
outstanding securities of the Bank, free and clear of any
liens, claims, encumbrances, security interests or
restrictions of any kind. There are no outstanding
subscriptions, options, warrants, calls, contracts, demands,
commitments, convertible securities or other agreements or
arrangements of any character or nature whatever under which
Azle or the Bank is or may become obligated to issue, assign
or transfer any securities of the Bank. There are no
restrictions applicable to the payment of dividends on the
shares of the Bank Stock except pursuant to applicable laws
and regulations. Azle has furnished Independent with a
shareholder list for the Bank.
C. Azle has furnished Independent with a true and
complete copy of the Report of Condition and Income as of
March 31, 1998 (the "Call Report"), for the Bank. The Call
Report fairly presents, in all material respects, the
financial position of the Bank and the results of its
operations at the date and for the period indicated in
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conformity with the Instructions for the Preparation of Call
Reports as promulgated by applicable regulatory authorities.
The Call Report does not contain any items of special or
nonrecurring income or any other income not earned in the
ordinary course of business except as expressly specified
therein. The Bank has calculated its allowance for loan
losses in accordance with regulatory accounting principles
("RAP") as applied to banking institutions and in accordance
with all applicable rules and regulations. The allowance
for loan losses account for the Bank is, and as of the
Closing Date will be, adequate in all material respects to
provide for all losses, net of recoveries relating to loans
previously charged off, on all outstanding loans of the
Bank.
SECTION 3.07 LITIGATION. Except as set forth on Schedule
3.07, there are no actions, claims, suits, investigations,
reviews or other legal, quasi-judicial or administrative
proceedings of any kind or nature now pending or, to the best
knowledge of Azle, threatened against or affecting Azle or the
Bank at law or in equity, or by or before any federal, state or
municipal court or other governmental or administrative
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, that in any manner involve Azle or the Bank
or any of their properties or capital stock that might reasonably
be anticipated to result in a Material Adverse Change or
materially and adversely affect the transactions contemplated by
this Agreement, and neither Azle nor the Bank know or have any
reason to be aware of any basis for the same. No legal action,
suit or proceeding or judicial, administrative or governmental
investigation is pending or, to the knowledge of Azle, threatened
against Azle or the Bank that questions or might question the
validity of this Agreement or the agreements contemplated hereby,
including, but not limited to, the Merger Agreement, or any
actions taken or to be taken by Azle or the Bank pursuant hereto
or thereto or seeks to enjoin or otherwise restrain the
transactions contemplated hereby or thereby.
SECTION 3.08 CONSENTS AND APPROVALS. Azle's Board of
Directors (at a meeting duly called and held) has resolved to
recommend approval and adoption of the Merger and the Merger
Agreement. Except as disclosed in Schedule 3.08, no approval,
consent, order or authorization of, or registration, declaration
or filing with, any governmental authority or other third party
is required on the part of Azle or the Bank in connection with
the execution, delivery or performance of this Agreement or the
agreements contemplated hereby, including, but not limited to,
the Merger Agreement or the consummation by Azle and the Bank of
the transactions contemplated hereby or thereby.
SECTION 3.09 UNDISCLOSED LIABILITIES. Neither Azle nor the
Bank has any material liability or obligation, accrued, absolute,
contingent or otherwise and whether due or to become due
(including, without limitation, unfunded obligations under any
Employee Benefit Plan (as defined in Section 3.31 of this
Agreement) or liabilities for federal, state or local taxes or
assessments or liabilities under any tax sharing agreements (as
described in Section 3.17 of this Agreement)) that are not
reflected in or disclosed in the Financial Statements or the Call
Report, except (i) those liabilities and expenses incurred in the
ordinary course of business and consistent with prudent business
practices since the date of the Financial Statements or the Call
Report, respectively or (ii) as disclosed on Schedule 3.09.
SECTION 3.10 TITLE TO ASSETS. True and complete copies of
all existing deeds, leases and title insurance policies for all
real property owned or leased by either Azle or the Bank and
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all mortgages, deeds of trust, security agreements and other
documents describing encumbrances to which such property is
subject have been made available to Independent. Each of Azle
and the Bank has good and indefeasible title to all of its assets
and properties including, without limitation, all personal and
intangible properties reflected in the Financial Statements or
the Call Report or acquired subsequent thereto, subject to no
liens, mortgages, security interests, encumbrances or charges of
any kind except (i) as described in Schedule 3.10, (ii) as noted
in the Financial Statements or the Call Report or as set forth in
the documents delivered to Independent pursuant to this
Section 3.10, (iii) statutory liens not yet delinquent, (iv)
consensual landlord liens (v) minor defects and irregularities in
title and encumbrances that do not materially impair the use
thereof for the purpose for which they are held, (vi) pledges of
assets in the ordinary course of business to secure public funds
deposits, and (vii) those assets and properties disposed of for
fair value in the ordinary course of business since the dates of
the Financial Statements or the Call Report.
SECTION 3.11 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except
as disclosed on Schedule 3.11, since December 31, 1997, each of
Azle and the Bank has conducted its business only in the ordinary
course and has not, other than in the ordinary course of business
and consistent with past practices and safe and sound banking
practices:
A. Incurred any obligation or liability, absolute,
accrued, contingent or otherwise, whether due or to become
due, except deposits taken and federal funds purchased and
current liabilities for trade or business obligations, none
of which, individually or in the aggregate, result in a
Material Adverse Change;
B. Discharged or satisfied any lien, charge or
encumbrance or paid any obligation or liability, whether
absolute or contingent, due or to become due;
C. Declared or made any payment of dividends or other
distribution to its shareholders, except for dividends of
(i) $330,000 in the aggregate for 1998 in the event that the
Closing occurs on or prior to October 1, 1998, or (ii)
$495,000 in the aggregate for 1998 in the event that the
Closing occurs after October 1, 1998, provided that the
after tax earnings (calculated in accordance with GAAP) of
Azle for the quarter in which a dividend is declared and
paid is at least $250,000, or purchased, retired or
redeemed, or obligated itself to purchase, retire or redeem,
any of its shares of capital stock or other securities;
D. Issued, reserved for issuance, granted, sold or
authorized the issuance of any shares of its capital stock
or other securities or subscriptions, options, warrants,
calls, rights or commitments of any kind relating to the
issuance thereto;
E. Acquired any capital stock or other equity
securities or acquired any equity or ownership interest in
any bank, corporation, partnership or other entity (except
(i) through settlement of indebtedness, foreclosure, or the
exercise of creditors' remedies or (ii) in a fiduciary
capacity, the ownership of which does not expose it to any
liability from the business, operations or liabilities of
such person);
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F. Mortgaged, pledged or subjected to lien, charge,
security interest or any other encumbrance or restriction
any of its property, business or assets, tangible or
intangible except (i) as described in Schedule 3.09, (ii)
statutory liens not yet delinquent, (iii) consensual
landlord liens, (iv) minor defects and irregularities in
title and encumbrances that do not materially impair the use
thereof for the purpose for which they are held, (v) pledges
of assets to secure public funds deposits, and (vi) those
assets and properties disposed of for fair value since the
dates of the Financial Statements or the Call Report.
G. Sold, transferred, leased to others or otherwise
disposed of any of its assets (except for assets disposed of
for fair value) or canceled or compromised any debt or
claim, or waived or released any right or claim (except
pursuant to the settlement of litigation described in
Section 3.11(L)) of material value;
H. Terminated, canceled or surrendered, or received
any notice of or threat of termination or cancellation of
any contract, lease or other agreement or suffered any
damage, destruction or loss (whether or not constituting, or
reasonably anticipated to constitute, a Material Adverse
Change covered by insurance), which, in any case or in the
aggregate, may result in a Material Adverse Change;
I. Disposed of, permitted to lapse, transferred or
granted any rights under, or entered into any settlement
regarding the breach or infringement of, any United States
or foreign license or Proprietary Right (as defined in
Section 3.16) or modified any existing rights with respect
thereto;
J. Made any change in the rate of compensation,
commission, bonus or other direct or indirect remuneration
payable, or paid or agreed or orally promised to pay,
conditionally or otherwise, any bonus, extra compensation,
pension or severance or vacation pay, to or for the benefit
of any of its shareholders, directors, officers, employees
or agents, or entered into any employment or consulting
contract or other agreement with any director, officer or
employee or adopted, amended in any material respect or
terminated any pension, employee welfare, retirement, stock
purchase, stock option, stock appreciation rights,
termination, severance, income protection, golden parachute,
savings or profit-sharing plan (including trust agreements
and insurance contracts embodying such plans), any deferred
compensation, or collective bargaining agreement, any group
insurance contract or any other incentive, welfare or
employee benefit plan or agreement maintained by it for the
benefit of its directors, employees or former employees;
K. Except for improvements or betterments relating to
Properties (as defined in Section 3.21), made any capital
expenditures or capital additions or betterments in excess
of an aggregate of $25,000;
L. Instituted, had instituted against it, settled or
agreed to settle any litigation, action or proceeding before
any court or governmental body relating to its property
other than routine collection suits instituted by it to
collect amounts owed or suits in which the amount in
controversy is less than $25,000;
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M. Suffered any change, event or condition that, in
any case or in the aggregate, has caused or may result in a
Material Adverse Change, or any Material Adverse Change in
earnings or costs or relations with its employees, agents,
depositors, loan customers, correspondent banks or
suppliers;
N. Except for the transactions contemplated by this
Agreement or as otherwise permitted hereunder, entered into
any transaction, or entered into, modified or amended any
contract or commitment;
O. Entered into or given any promise, assurance or
guarantee of the payment, discharge or fulfillment of any
undertaking or promise made by any person, firm or
corporation;
P. Sold, or knowingly disposed of, or otherwise
divested itself of the ownership, possession, custody or
control, of any corporate books or records of any nature
that, in accordance with sound business practice, normally
are retained for a period of time after their use, creation
or receipt, except at the end of the normal retention
period;
Q. Made any, or acquiesced with any, change in any
accounting methods, principles or material practices except
as required by GAAP or RAP;
R. Sold (provided, however, that payment at maturity
is not deemed a sale) or purchased any investment securities
in excess of an aggregate amount of $100,000;
S. Made, renewed, extended the maturity of, or
altered any of the material terms of any loan to any single
borrower and his or her related interests in excess of the
principal amount of $100,000; or
T. Entered into any agreement or made any commitment
whether in writing or otherwise to take any of the types of
action described in subsections A. through S. above.
SECTION 3.12 CONTRACTS. Schedule 3.12 includes a list
identifying:
A. All collective bargaining agreements involving
Azle or the Bank and all other agreements with employees, as
a group, of Azle or the Bank;
B. All bonus, deferred compensation, pension, profit
sharing, stock options, stock purchase, incentive or
retirement plans or other employee benefit arrangements of
Azle or the Bank. Schedule 3.12 reflects all such plans
together with all relevant trust agreements, the latest
report of the trustee or insurance company of the value of
the assets or the cash surrender value of the assets of such
plans, and the latest actuarial evaluation or statement of
individual accounts with respect to such plans;
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C. All employment agreements, contracts or
commitments, not terminable at will without contractual
penalty, with or between Azle or the Bank and a director,
officer or employee of Azle or the Bank;
D. All agreements of guaranty or indemnification,
other than signature guaranties and bank items presented for
collection in the ordinary course of business, running from
Azle or the Bank to any person or entity in excess of
$5,000;
E. All agreements, contracts or commitments
containing any covenant limiting the right of Azle or the
Bank to engage in any line of business or compete with any
person or entity;
F. All agreements, contracts, or commitments to which
Azle or the Bank is a party or by which either of them is
bound evidencing or providing for loans (other than student
loans or loans secured by real property or savings accounts
and made in the ordinary course of business) in excess of
$100,000 or purchase of receivables or other financing in
excess of $50,000;
G. All agreements, contracts or commitments of Azle
or the Bank relating to material capital expenditures or
involving material future payments, excluding real estate
borrowings made in the ordinary course of business or
existing leases;
H. All agreements, contracts or commitments relating
to the acquisition of assets or capital stock of any
business enterprise other than assets acquired in the
ordinary course of business of Azle or the Bank;
I. All agreements, contracts or commitments involving
Azle or the Bank relating to the syndication or underwriting
of conventional or government or other guaranteed mortgages,
loans or mortgage loan pools or other securities other than
such agreements, contracts or commitments made in the
ordinary course of business;
J. All agreements, contracts or commitments to which
Azle or the Bank is a party and that may require consent by
any other person or entity in connection with the
consummation of the transactions contemplated hereby either
to prevent a breach or to continue the effectiveness
thereof;
K. All letters of credit, whether direct pay or
contingent, and all other commitments undertaken by the Bank
in excess of $50,000; and
L. Each lease with a third party where total annual
lease payments are in excess of $5,000 to which Azle or the
Bank is a party. Each such lease or agreement is in full
force and effect and constitutes the legal, valid and
binding obligation of the respective parties thereto
enforceable in accordance with its terms except as
enforceability may be limited by bankruptcy,
conservatorship, insolvency, moratorium, reorganization,
receivership or similar laws and judicial decisions
affecting the rights of
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creditors generally and by general principles of equity
(whether applied in a proceeding at law or equity). Neither
Azle nor the Bank has received any notice of material
default or any notice of material noncompliance, including,
without limitation, noncompliance with any applicable
federal, state or local obligation as lessee that it has not
fully performed, or is aware of any expenditure required
under the provisions of any such lease for any purpose other
than payment. For each lease in which Azle or the Bank is
named as lessee, such party is the owner and holder of all
the leasehold estates or other rights and interest purported
to be granted by such instruments, in each case free and
clear of any security interests, claims, liens (including
tax liens), forfeitures, mortgages, pledges, penalties,
encumbrances, assignments or charges whatsoever except as
established by the lease or applicable law. Azle and the
Bank, respectively, enjoy peaceful and undisturbed
possession under all leases under which they are currently
operating.
SECTION 3.13 TAXES. Except as set forth on Schedule 3.13,
each of Azle and the Bank has duly and timely filed with the
appropriate federal, state and local governmental agencies all
tax returns and reports required to be filed, including, without
limitation, income, excise, property, sales, use, franchise,
value added, unemployment, employees' income withholding and
social security taxes, imposed by the United States or by any
foreign country or by any state, municipality, subdivision or
instrumentality of the United States or of any foreign country,
or by any other taxing authority, and has paid, or has
established adequate reserves for the payment of, all taxes and
assessments that are or are claimed to be due, payable or owed by
Azle or the Bank, or for which Azle or the Bank may have
liability, whether as a result of their own activities or by
virtue of their affiliation with other entities and all interest
and penalties thereon, whether disputed or not. Except as set
forth on Schedule 3.13, all such tax returns and reports are
accurately prepared and all deposits required by law to be made
by Azle or the Bank, with respect to employees' withholding taxes
have been duly made. Except set forth on Schedule 3.13, neither
Azle nor the Bank is or has been delinquent in the payment of any
foreign or domestic tax, assessment or governmental charge or
deposit and has no tax deficiency or claim outstanding, proposed
or assessed against it, and there is no basis for any such
deficiency or claim. Within the last four (4) years, except as
set forth on Schedule 3.13, neither Azle's nor the Bank's federal
income tax return has been audited or examined and no such audit
is currently pending or threatened. Except as set forth on
Schedule 3.13, neither Azle nor the Bank has granted any
extension of time with respect to the date on which any tax
return was or is due to be filed by or with respect to either
Azle or the Bank, or any waiver or agreement by any such entity
for the extension of time for the assessment or collection of any
tax. Except as set forth on Schedule 3.13, neither Azle nor the
Bank has committed any violation of any applicable federal,
state, local or foreign tax laws.
The amounts set up as provisions for current or deferred
taxes on the Financial Statements and the Call Report are
sufficient for the payment of all unpaid federal, state, county,
local, foreign or other taxes (including any interest or penal
ties) of or on behalf of Azle and the Bank applicable to the
periods covered by each entity's financial statements, and all
years and periods prior thereto. True and complete copies of the
federal income tax returns of Azle and the Bank as filed with the
Internal Revenue Service (the "IRS") for the years ended December
31, 1995, 1996, and 1997, have been delivered to Independent.
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SECTION 3.14 INSURANCE. Schedule 3.14 contains an accurate
and complete list and brief description of all policies of
insurance, including fidelity and bond insurance, of Azle and the
Bank. All such policies (a) are sufficient for compliance by
Azle and the Bank with all requirements of law and all agreements
to which Azle or the Bank is a party, (b) are valid, outstanding
and enforceable except as enforceability may be limited by
bankruptcy, conservatorship, insolvency, moratorium,
reorganization, receivership, or similar laws and judicial
decisions affecting the rights of creditors generally and by
general principles of equity (whether applied in a proceeding at
law or equity), (c) will not in any significant respect be
affected by, and will not terminate or lapse by reason of, the
transactions contemplated by this Agreement, and (d) are
presently in full force and effect, no notice has been received
of the cancellation, or threatened or proposed cancellation, of
any such policy and there are no unpaid premiums due thereon.
Neither Azle nor the Bank is in default with respect to the
provisions of any such policy and has not failed to give any
notice or present any claim hereunder in a due and timely
fashion. Neither Azle nor the Bank has been refused any
insurance with respect to its assets or operations, nor has its
insurance been limited by any insurance carrier to which such
entity has applied for any such insurance within the last five
(5) years. Each material property of Azle is insured for the
benefit of Azle in amounts deemed adequate by Azle's management
against risks customarily insured against. Except as set forth
on Schedule 3.14, there has been no single claim in excess of
$10,000 under any fidelity bond and there have been no claims in
the aggregate in excess of $50,000 under any fidelity bonds of
Azle or the Bank within the last five (5) years and Azle is not
aware of any facts that would form the basis of a claim under
such bonds.
SECTION 3.15 NO ADVERSE CHANGE. Except as disclosed in the
representations and warranties made in this Article III, there
has not been any Material Adverse Change since December 31, 1997,
nor has any event or condition occurred that has resulted in, or
has a reasonable possibility of resulting in the future, in a
Material Adverse Change.
SECTION 3.16 PROPRIETARY RIGHTS. Except as set forth on
Schedule 3.16, neither Azle nor the Bank owns or requires the use
of any patent, patent application, patent right, invention,
process, trademark (whether registered or unregistered),
trademark application, trademark right, trade name, service name,
service mark, copyright or any trade secret ("Proprietary
Rights") for the business or operations of Azle or the Bank.
Neither Azle nor the Bank are infringing upon or otherwise acting
adversely to, and have not in the past three (3) years infringed
upon or otherwise acted adversely to, any Proprietary Right owned
by any other person or persons. There is no claim or action by
any such person pending, or to the knowledge of Azle or the Bank
threatened, with respect thereto.
SECTION 3.17 TRANSACTIONS WITH CERTAIN PERSONS AND
ENTITIES. Except as disclosed in Schedule 3.17, neither Azle nor
the Bank owes any amount to (excluding deposit liabilities), or
has any loan, contract, lease, commitment or other obligation
from or to any of the present or former directors or officers
(other than compensation for current services not yet due and
payable and reimbursement of expenses arising in the ordinary
course of business) of Azle or the Bank, and none of such persons
owes any amount to Azle or the Bank. Except as set forth on
Schedule 3.17, there are no agreements, instruments, commitments,
extensions of credit,
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tax sharing or allocation agreements or other contractual
agreements of any kind between or among Azle, whether on its own
behalf or in its capacity as trustee or custodian for the funds
of any employee benefit plan (as defined in the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) and
any of its Affiliates other than the Bank.
SECTION 3.18 EVIDENCES OF INDEBTEDNESS. All evidences of
indebtedness and leases that are reflected as assets of Azle or
the Bank are legal, valid and binding obligations of the
respective obligors thereof, enforceable in accordance with their
respective terms (except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting
creditors generally and the availability of injunctive relief,
specific performance and other equitable remedies) and are not
subject to any known or threatened defenses, offsets or
counterclaims that may be asserted against Azle, the Bank or the
present holder thereof, except as disclosed in Schedule 3.18.
The credit files of the Bank contain all material information
(excluding general, local or national industry, economic or
similar conditions) known to Azle or the Bank that is reasonably
required to evaluate in accordance with generally prevailing
practices in the banking industry the collectibility of the loan
portfolio of the Bank (including loans that will be outstanding
if the Bank advances funds that it is obligated to advance).
Azle has disclosed all of the substandard, doubtful, loss,
nonperforming or problem loans on the internal watch list of Azle
and the Bank, a copy of which as of March 31, 1998, has been
provided to Independent.
SECTION 3.19 EMPLOYEE RELATIONSHIPS. Each of Azle and the
Bank has complied with all applicable material laws relating to
its relationships with its employees, and Azle believes that the
relationships between Azle and its employees and between the Bank
and its employees are good. To the best knowledge of Azle, no
key executive officer or manager of any of the operations
operated by Azle or the Bank or any group of employees of Azle or
the Bank has or have any present plans to terminate their
employment with Azle or the Bank.
SECTION 3.20 CONDITION OF ASSETS. Except as set forth on
Schedule 3.20, all tangible assets used by Azle or the Bank are
in good operating condition, ordinary wear and tear excepted, and
conform with all applicable ordinances, regulations, zoning and
other laws, whether federal, state or local. Neither Azle's nor
the Bank's premises or equipment are in need of maintenance or
repairs other than ordinary routine maintenance and repairs that
are not material in nature or cost.
SECTION 3.21 ENVIRONMENTAL COMPLIANCE. Except as disclosed
on Schedule 3.21:
A. Azle and all of the Properties and Azle's
operations are in compliance with all Environmental Laws (as
defined in Section 11.10). Neither Azle nor the Bank is
aware of, nor has Azle or the Bank received notice of, any
past, present, or future conditions, events, activities,
practices or incidents that may interfere with or prevent
the compliance of Azle or the Bank with all Environmental
Laws.
B. Azle and the Bank have obtained all material
permits, licenses and authorizations that are required under
all Environmental Laws.
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C. No Hazardous Materials (as defined in Section
11.10) exist on, about or within any of the Properties, nor
have any Hazardous Materials previously existed on, about or
within or been used, generated, stored, transported,
disposed of, on or released from any of the Properties
during the period from their respective dates of acquisition
by Azle or the Bank to the present, nor, to the best
knowledge of Azle, have any Hazardous Materials previously
existed on, about or within or been used, generated, stored,
transported, disposed of, on or released from any of the
Properties prior to their respective dates of acquisition by
Azle or the Bank. The use that Azle and the Bank make and
intend to make of the Properties will not result in the use,
generation, storage, transportation, accumulation, disposal
or release of any Hazardous Material on, in or from any of
the Properties.
D. There is no action, suit, proceeding,
investigation, or inquiry before any court, administrative
agency or other governmental authority pending or, to the
best knowledge of Azle, threatened, against Azle or the Bank
relating in any way to any Environmental Law. Neither Azle
nor the Bank has any liability for remedial action under any
Environmental Law. Neither Azle nor the Bank has received
any request for information by any governmental authority
with respect to the condition, use or operation of any of
the Properties nor has Azle or the Bank received any notice
of any kind from any governmental authority or other person
with respect to any violation of or claimed or potential
liability of any kind under any Environmental Law
(including, without limitation, any letter, notice or
inquiry from any person or governmental entity informing
Azle or the Bank that they are or may be liable in any way
under CERCLA (as defined in Section 11.10) or requesting
information to enable such a determination to be made).
E. As used in this Section 3.21, the term "Property"
or "Properties" shall include all real property owned or
leased by Azle or the Bank, including, but not limited to
properties that the Bank has foreclosed on as well as their
respective premises and all improvements and fixtures
thereon.
SECTION 3.22 REGULATORY COMPLIANCE. Except as set forth on
Schedule 3.22, all reports, records, registrations, statements,
notices and other documents or information required to be filed
by Azle and the Bank with any federal or state regulatory
authority, including, without limitation, the Board of Governors
of the Federal Reserve System (the "Federal Reserve"), the TDB,
the FDIC and the IRS have been duly and timely filed and all
information and data contained in such reports, records or other
documents are true, accurate, correct and complete. Except as
set forth on Schedule 3.22, neither Azle nor the Bank is now or
has been within the last six (6) years subject to any memorandum
of understanding, cease and desist order, written agreement or
other formal or informal administrative action with any such
regulatory bodies. Azle does not believe any such regulatory
bodies have any present intent to place Azle or the Bank under
any such administrative action. Except as set forth on Schedule
3.22, there are no actions or proceedings pending or threatened
against Azle or the Bank by or before any such regulatory bodies
or any other nation, state or subdivision thereof, or any other
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
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SECTION 3.23 ABSENCE OF CERTAIN BUSINESS PRACTICES.
Neither Azle nor the Bank, nor any officer, employee or agent of
Azle or the Bank, nor any other person acting on their behalf,
has, directly or indirectly, within the past six (6) years, given
or agreed to give any gift or similar benefit to any customer,
supplier, governmental employee or other person who is or may be
in a position to help or hinder the business of Azle or the Bank
(or assist Azle or the Bank in connection with any actual or
proposed transaction) that (i) might subject Azle or the Bank to
any damage or penalty in any civil, criminal or governmental
litigation or proceeding, (ii) if not given in the past, might
have resulted in a Material Adverse Change or (iii) if not
continued in the future might result in a Material Adverse Change
or might subject the Bank to suit or penalty in any private or
governmental litigation or proceeding.
SECTION 3.24 AZLE PROXY STATEMENT. None of the information
supplied or to be supplied by Azle, the Bank, or any of their
directors, officers, employees or agents for inclusion in the
Azle Proxy Statement, or any amendment thereof or supplement
thereto, will be false or misleading with respect to any material
fact, or omit to state any material fact necessary in order to
make the statements therein, in light of the circumstances under
which they were made, not misleading, or at the time of the Azle
Shareholders' Meeting, be false or misleading with respect to any
material fact, or omit to state any material fact necessary to
correct any statement in any earlier communication with respect
to the solicitation of any proxy for the Azle Shareholders'
Meeting. All documents that Azle or the Bank are responsible for
filing with any regulatory or governmental agency in connection
with the Merger will comply in all material respects with the
provisions of applicable law.
SECTION 3.25 DISSENTING SHAREHOLDERS. Azle has no
knowledge of any plan or intention on the part of any Azle
shareholders to make written demand for payment of the fair value
of their shares of the Azle Common Stock in the manner provided
by applicable law.
SECTION 3.26 BOOKS AND RECORDS. The minute books, stock
certificate books and stock transfer ledgers of Azle and the Bank
(i) have been kept accurately in the ordinary course of business,
(ii) are complete and correct in all material respects, (iii) the
transactions entered therein represent bona fide transactions,
and (iv) there have been no transactions involving the business
of Azle or the Bank that properly should have been set forth
therein and that have not been accurately so set forth.
SECTION 3.27 FORMS OF INSTRUMENTS, ETC. Azle has made, and
will make, available to Independent copies of all standard forms
of notes, mortgages, deeds of trust and other routine documents
of a like nature used on a regular and recurring basis by Azle or
the Bank in the ordinary course of their respective businesses.
SECTION 3.28 FIDUCIARY RESPONSIBILITIES. Azle and the Bank
have performed in all material respects all of their respective
duties as a trustee, custodian, guardian or as an escrow agent in
a manner that complies in all material respects with all
applicable laws, regulations, orders, agreements, instruments and
common law standards, where the failure to so perform would
result in a Material Adverse Change or materially and adversely
affect the transactions
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contemplated by this Agreement, and neither Azle nor the Bank has
any reason to be aware of any basis for the same.
SECTION 3.29 GUARANTIES. Except for items in the process
of collection in the ordinary course of the Bank's business, none
of the obligations or liabilities of Azle or the Bank are
guaranteed by any other person, firm or corporation, nor, except
in the ordinary course of business, according to prudent business
practices and in compliance with applicable law, has Azle or the
Bank guaranteed the obligations or liabilities of any other
person, firm or corporation.
SECTION 3.30 VOTING TRUST OR BUY-SELL AGREEMENTS. Except
as set forth on Schedule 3.30, Azle is not aware of any agreement
between any of its shareholders relating to a right of first
refusal with respect to the purchase or sale by any such
shareholder of capital stock of Azle or any voting agreement or
voting trust with respect to shares of capital stock of Azle.
SECTION 3.31 EMPLOYEE BENEFIT PLANS. Schedule 3.31 lists
all Employee Benefit Plans of Azle and the Bank. "Employee
Benefit Plans" means all present (and those terminated,
transferred or assigned within the sixty (60) months prior to the
Closing Date) plans, programs, agreements, arrangements, and
methods of contribution or compensation providing any
remuneration or benefits by any member of the Control Group, as
hereafter defined, other than current cash compensation, to any
current or former employee of the Control Group or to any other
person who provides services to the Control Group, whether or not
such plan or plans, programs, agreements, arrangements, and
methods of contribution or compensation are qualified under the
Internal Revenue Code of 1986, as amended (the "Code"), and such
term includes, but is not limited to plans that are, or are in
the nature of pension, retirement, profit sharing, bonus, stock
option, employee stock purchase plan, restricted stock awards,
excess benefit plan, incentive compensation awards, severance
pay, golden parachute, 401(k), deferred compensation, medical,
dental, workers' compensation, health insurance, life insurance,
incentive, vacation benefits, rabbi trusts, and fringe benefits
(other than normal policies concerning holidays, vacations and
salary continuation during short absences for illness or other
reasons). "Control Group" means, individually and collectively,
any member of any "affiliated service group" as defined in
section 414(m) of the Code, any "trades or businesses under
common control" as defined in section 414(c) of the Code, any
"controlled group of corporations" as defined under section
414(b) of the Code, or any group described pursuant to section
414(o) of the Code, in each case where the group includes Azle or
the Bank. None of the Employee Benefit Plans in which employees
of Azle or the Bank participate are subject to ERISA.
SECTION 3.32 YEAR 2000. Azle has disclosed to Independent
a complete and accurate copy of Azle's plan, including an
estimate of the anticipated associated costs, for implementing
modifications to Azle's hardware, software, and computer systems,
chips, and microprocessors, to ensure proper execution and
accurate processing of all date-related data, whether from years
in the same century or in different centuries. Between the date
of this Agreement and the Effective Date, Azle shall endeavor to
continue its efforts to implement such plan.
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SECTION 3.33 REPRESENTATIONS NOT MISLEADING. All material
facts relating to the business operations, properties, assets,
liabilities (contingent or otherwise) and financial condition of
Azle and the Bank have been disclosed to Independent in or in
connection with this Agreement. No representation or warranty by
Azle contained in this Agreement, nor any statement, exhibit or
schedule furnished to Independent by Azle under and pursuant to,
or in anticipation of this Agreement, contains or will contain on
the Closing Date any untrue statement of a material fact or omits
or will omit to state a material fact necessary to make the
statements contained herein or therein, in light of the
circumstances under which it was or will be made, not misleading
and such representations and warranties would continue to be true
and correct following disclosure to any governmental authority
having jurisdiction over Azle or its properties of the facts and
circumstances upon which they were based. Except as disclosed
herein, there is no matter that materially adversely affects, or
to the knowledge of Azle, will in the future result in a Material
Adverse Change, other than general economic conditions. No
information material to the Merger, and that is necessary to make
the representations and warranties herein contained not
misleading, has been withheld by Azle.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF INDEPENDENT
Independent hereby makes the representations and warranties
set forth in this Article IV to Azle.
SECTION 4.01 ORGANIZATION AND QUALIFICATION. Independent
is a corporation, duly organized, validly existing under the laws
of the State of Texas, and in good standing under all laws,
rules, and regulations applicable to corporations located in the
State of Texas. Independent has all requisite corporate power
and authority (including all licenses, franchises, permits and
other governmental authorizations as are legally required) to
carry on its business as now being conducted, to own, lease and
operate its properties and assets as now owned, leased or
operated and to enter into and carry out its obligations under
this Agreement.
SECTION 4.02 EXECUTION AND DELIVERY. Independent has taken
all corporate action necessary to authorize the execution,
delivery and (provided the required regulatory approvals are
obtained) performance of this Agreement and the other agreements
and documents contemplated hereby to which it is a party,
including, but not limited to, the Merger Agreement. This
Agreement has been, and the other agreements and documents
contemplated hereby, including, but not limited to, the Merger
Agreement, have been or at Closing will be, duly executed by
Independent and each constitutes the valid and binding obligation
of Independent, enforceable in accordance with its respective
terms and conditions, except as enforceability may be limited by
bankruptcy, conservatorship, insolvency, moratorium,
reorganization, receivership or similar laws and judicial
decisions affecting the rights of creditors generally and by
general principles of equity (whether applied in a proceeding at
law or in equity).
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SECTION 4.03 COMPLIANCE WITH LAWS, PERMITS AND INSTRUMENTS.
The execution, delivery and (provided the required regulatory and
corporate approvals are obtained) performance of this Agreement
and the other agreements contemplated hereby, including, but not
limited to the Merger Agreement, and the consummation of the
transactions contemplated hereby and thereby, will not conflict
with, or result, by itself or with the giving of notice or the
passage of time, in any violation of or default or loss of a
benefit under, (i) any provision of the Articles of Incorporation
or Bylaws of Independent, (ii) any material provision of any
mortgage, indenture, lease, contract, agreement or other
instrument applicable to Independent or its assets, operations,
properties or businesses now conducted or heretofore conducted or
(iii) any statute, law, ordinance, rule or regulation applicable
to Independent.
SECTION 4.04 LITIGATION. No legal action, suit or
proceeding or judicial, administrative or governmental
investigation is pending or, to the knowledge of Independent,
threatened against Independent that questions or might question
the validity of this Agreement or the agreements contemplated
hereby, including, but not limited to, the Merger Agreement, or
any actions taken or to be taken by Independent pursuant hereto
or thereto or seeks to enjoin or otherwise restrain the
transactions contemplated hereby or thereby.
SECTION 4.05 CONSENTS AND APPROVALS. Except for regulatory
approvals as disclosed in Schedule 4.05, no approval, consent,
order or authorization of, or registration, declaration or filing
with, any governmental authority or other third party is required
on the part of Independent in connection with the execution,
delivery or performance of this Agreement or the agreements
contemplated hereby, including, but not limited to, the Merger
Agreement or the consummation by Independent of the transactions
contemplated hereby or thereby.
SECTION 4.06 AZLE PROXY STATEMENT. None of the information
supplied or to be supplied by Independent or any of its
directors, officers, employees or agents for inclusion in the
Azle Proxy Statement, or any amendment thereof or supplement
thereto, will be false or misleading with respect to any material
fact, or omit to state any material fact necessary in order to
make the statements therein, in light of the circumstances under
which they were made, not misleading, or at the time of the Azle
Shareholders' Meeting, be false or misleading with respect to any
material fact, or omit to state any material fact necessary to
correct any statement in any earlier communication with respect
to the solicitation of any proxy for the Azle Shareholders'
Meeting. All documents that Independent is responsible for
filing with any regulatory or governmental agency in connection
with the Merger will comply in all material respects with the
provisions of applicable law.
SECTION 4.07 REPRESENTATIONS NOT MISLEADING. No
representation or warranty by Independent contained in this
Agreement, nor any statement, exhibit or schedule furnished to
Azle or the Bank by Independent under and pursuant to, or in
anticipation of this Agreement, contains or will contain on the
Closing Date any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the
statements contained herein or therein, in light of the
circumstances under which it was or will be made, not misleading
and such representations and warranties would continue to be true
and correct following disclosure to any governmental authority
having jurisdiction over Independent of the facts and
circumstances upon which they were based. No information
material to the Merger and that is necessary to make the
representations and warranties herein contained not misleading
has been withheld by Independent.
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ARTICLE V.
COVENANTS OF AZLE
Azle hereby makes the covenants set forth in this Article V
to Independent.
SECTION 5.01 BEST EFFORTS. Azle will use its best efforts
to cause the consummation of the transactions contemplated hereby
in accordance with the terms and conditions of this Agreement.
SECTION 5.02 MERGER AGREEMENTS. Azle will, as soon as
practicable after the execution of this Agreement, duly authorize
and enter into the Merger Agreement, the form of which is
attached hereto as Exhibit A, and perform all of its obligations
thereunder.
SECTION 5.03 INFORMATION FOR APPLICATIONS AND STATEMENTS.
Azle will, and will cause the Bank to, promptly, but in no event
later than ten (10) business days after receipt of a request by
Independent, furnish to Independent all information concerning
Azle and the Bank, including, but not limited to, financial
statements, required for inclusion in (i) any proxy statement,
prospectus or offering document to be used by Independent in
connection with the approval of the shareholders of Independent
of the transactions contemplated hereby and (ii) any application
or statement to be made by Independent to or filed by Independent
with any governmental body in connection with the transactions
contemplated by this Agreement, or in connection with any
unrelated transactions during the pendency of this Agreement, and
Azle represents and warrants that all information so furnished
for such statements and applications shall be true and correct in
all material respects and shall not omit any material fact
required to be stated therein or necessary to make the statements
made, in light of the circumstances under which they were made,
not misleading. Azle and the Bank shall otherwise fully
cooperate with Independent in the filing of any applications or
other documents necessary to consummate the transactions
contemplated by this Agreement, including the Merger.
SECTION 5.04 REQUIRED ACTS OF AZLE AND THE BANK. Prior to
the Closing, Azle and the Bank shall, unless otherwise permitted
in writing by Independent:
A. Operate only in the ordinary course of business
and consistent with prudent banking practices;
B. Except as required by prudent business practices,
use all reasonable efforts to preserve its business
organization intact and to retain its present customers,
depositors, suppliers, correspondent banks, officers,
directors, employees and agents;
C. Act in a manner intended to preserve or attempt to
preserve its goodwill;
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D. Perform all of its obligations under contracts,
leases and documents relating to or affecting its assets,
properties and business except such obligations as Azle may
in good faith reasonably dispute;
E. Except as required by prudent business practices,
maintain all offices, machinery, equipment, materials,
supplies, inventories, vehicles and other properties owned,
leased or used by it (whether under its control or the
control of others), in good operating condition and repair,
ordinary wear and tear excepted;
F. Maintain in full force and effect all insurance
policies now in effect or renewals thereof and, except as
required by prudent business practices that do not
jeopardize insurance coverage, give all notices and present
all claims under all insurance policies in due and timely
fashion;
G. Timely file all reports required to be filed with
governmental authorities and observe and conform to all
applicable laws, rules, regulations, ordinances, codes,
orders, licenses and permits, except those being contested
in good faith by appropriate proceedings;
H. Timely file all tax returns required to be filed
by it and promptly pay all taxes, assessments, governmental
charges, duties, penalties, interest and fines that become
due and payable, except those being contested in good faith
by appropriate proceedings;
I. Withhold from each payment made to each of its
employees the amount of all taxes (including, but not
limited to, federal income taxes, FICA taxes and state and
local income and wage taxes) required to be withheld
therefrom and pay the same to the proper tax receiving
officers; and
J. Continue to follow and implement policies,
procedures and practices regarding the identification,
monitoring, classification and treatment of all assets in
substantially the same manner as it has in the past.
SECTION 5.05 PROHIBITED ACTS OF AZLE AND THE BANK. Prior
to the Closing, neither Azle nor the Bank shall, without the
prior written consent of Independent (provided that Azle can show
evidence of its attempt to contact Independent, such consent will
be deemed to have been given five (5) business days after actual
receipt by Independent of notice with respect to such act, unless
Independent sooner objects to such act):
A. Introduce any new material method of management or
operation;
B. Take any action that could reasonably be
anticipated to result in a Material Adverse Change;
C. Take or fail to take any action that would cause
or permit the representations and warranties made in Article
III hereof to be inaccurate at the time of the Closing or
preclude Azle from making such representations and
warranties at the time of the Closing;
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D. Mortgage, pledge or subject to lien, charge,
security interest or any other encumbrance or restriction
any of its property, business or assets, tangible or
intangible except in the ordinary course of business and
consistent with prudent banking practices;
E. Cause or allow the loss of insurance coverage,
unless replaced with coverage which is substantially similar
(in amount and insurer) to that now in effect;
F. Incur any obligation or liability, whether
absolute or contingent, except in the ordinary course of
business and consistent with prudent banking practices;
G. Discharge or satisfy any lien, charge or
encumbrance or pay any obligation or liability, whether
absolute or contingent, due or to become due, except in the
ordinary course of business consistent with prudent banking
practices;
H. Issue, reserve for issuance, grant, sell or
authorize the issuance of any shares of its capital stock or
other securities or subscriptions, options, warrants, calls,
rights or commitments of any kind relating to the issuance
thereto;
I. Purchase or redeem any of its stock or declare or
pay any distribution on its outstanding capital stock,
except for dividends of (i) $330,000 in the aggregate for
1998 in the event that the Closing occurs on or prior to
October 1, 1998, or (ii) $495,000 in the aggregate for 1998
in the event that the Closing occurs after October 1, 1998,
provided that the after tax earnings (calculated in
accordance with GAAP) of Azle for the quarter in which a
dividend is declared and paid is at least $250,000, or
purchased, retired or redeemed, or obligated itself to
purchase, retire or redeem, any of its shares of capital
stock or other securities;
J. Change its articles or bylaws or its authorized
capital stock;
K. Sell, transfer, lease to others or otherwise
dispose of any of its assets or cancel or compromise any
debt or claim, or waive or release any right or claim of
material value, except in the ordinary course of business
and consistent with past practices and safe and sound
banking principles;
L. Enter into any transaction other than in the
ordinary course of business;
M. Enter into or give any promise, assurance or
guarantee of the payment, discharge or fulfillment of any
undertaking or promise made by any other person, firm or
corporation;
N. Sell or knowingly dispose of, or otherwise divest
itself of the ownership, possession, custody or control, of
any corporate books or records of any nature that, in
accordance with sound business practice, normally are
retained for a period of time after their use, creation or
receipt, except at the end of the normal retention period;
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O. Make any change in the rate of compensation,
commission, bonus or other direct or indirect remuneration
payable, or pay or agree or orally promise to pay,
conditionally or otherwise, any bonus, extra compensation,
pension or severance or vacation pay, to or for the benefit
of any of its shareholders, directors, officers, employees
or agents, or enter into any employment or consulting
contract (other than as contemplated by this Agreement) or
other agreement with any director, officer or employee or
adopt, amend in any material respect or terminate any
pension, employee welfare, retirement, stock purchase, stock
option, stock appreciation rights, termination, severance,
income protection, golden parachute, savings or
profit-sharing plan (including trust agreements and
insurance contracts embodying such plans), any deferred
compensation, or collective bargaining agreement, any group
insurance contract or any other incentive, welfare or
employee benefit plan or agreement maintained by it for the
benefit of its directors, employees or former employees,
except (i) for the funding of the Carl E. Campbell, Jr.
Deferred Compensation Plan and (ii) in the ordinary course
of business and consistent with past practices and safe and
sound banking principles;
P. Except as explicitly permitted hereunder or in
accordance with applicable law, engage in any transaction
with any affiliated person or allow such persons to withdraw
any assets from Azle or the Bank except in the form of
wages, salaries and reimbursement of expenses and by loans
secured by liquid collateral having a fair market value at
least equal to the principal balance due on such loan to its
officers, directors and employees in the ordinary course of
business;
Q. Acquire any capital stock or other equity
securities or acquire any equity or ownership interest in
any bank, corporation, partnership or other entity (except
(i) through settlement of indebtedness, foreclosure, or the
exercise of creditors' remedies or (ii) in a fiduciary
capacity, the ownership of which does not expose it to any
liability from the business, operations or liabilities of
such person);
R. Terminate, cancel or surrender any contract, lease
or other agreement or suffer any damage, destruction or loss
(whether or not constituting, or reasonably anticipated to
constitute, a Material Adverse Change covered by insurance),
which, in any case or in the aggregate, may result in a
Material Adverse Change;
S. Dispose of, permit to lapse, transfer or grant any
rights under, or breach or infringe upon, any United States
or foreign license or Proprietary Right or modify any
existing rights with respect thereto, except in the ordinary
course of business and consistent with past practices and
safe and sound banking principles;
T. Except for improvements or betterments relating to
Properties, specifically including expenditures in
connection with the establishment of a new branch in Azle,
Texas, which expenditures shall not exceed the budget for
such branch outlined in Schedule 5.05T, make any capital
expenditures or capital additions or betterments in excess
of an aggregate of $25,000;
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U. Hire or employ any person with an annual salary
equal to or greater than $40,000;
V. Make any, or acquiesce with any, change in any
accounting methods, principles or material practices;
W. Sell or purchase any investment securities in an
aggregate amount of $100,000 between the date of the
Agreement and the Closing Date; or
X. With the exception of loans secured solely by
automobiles made in accordance with the Bank's policies and
procedures with respect to such loans, make, renew, extend
the maturity of, or alter any of the material terms of any
loan to any single borrower and his or her related interests
in excess of the principal amount of $150,000; provided,
however, that Azle shall provide Independent with written
notice of any new loan or change in the terms of an existing
loan in excess of the principal amount of $100,000.
SECTION 5.06 ACCESS; PRE-CLOSING INVESTIGATION. Subject to
the provisions of Article X, Azle shall afford the officers,
directors, employees, attorneys, accountants, investment bankers
and authorized representatives of Independent full access to the
properties, books, contracts and records of Azle and the Bank,
permit Independent to make such inspections (including without
limitation with regard to such properties physical inspection of
the surface and subsurface thereof and any structure thereon) as
they may require and furnish to Independent during such period
all such information concerning Azle and the Bank and their
respective affairs as Independent may reasonably request, in
order that Independent may have full opportunity to make such
reasonable investigation as it shall desire to make of the
affairs of Azle and the Bank, including, without limitation,
access sufficient to verify the value of the assets and the
liabilities of Azle and the Bank and the satisfaction of the
conditions precedent to Independent's obligations described in
Article VIII of this Agreement. Azle agrees at any time, and
from time to time, to furnish to Independent as soon as
practicable, any additional information that Independent may
reasonably request.
SECTION 5.07 INVITATIONS TO AND ATTENDANCE AT DIRECTORS'
AND COMMITTEE MEETINGS. Azle shall give notice, and shall cause
the Bank to give notice, to two designees of Independent, and
shall invite such persons to attend all regular and special
meetings of the board of directors of Azle and the Bank and all
regular and special meetings of any senior management committee
of Azle or the Bank; provided, however, that such designees of
Independent shall be excluded from the portion of the meetings at
which the sole matter to be considered is action related to the
Merger.
SECTION 5.08 ADDITIONAL FINANCIAL STATEMENTS. Azle shall
promptly furnish Independent with (i) unaudited statements of
condition and income of Azle as of June 30, 1998, and September
30, 1998, and (ii) true and complete copies of each additional
Report of Condition and Income of the Bank, as soon as such
reports are made available to the FDIC.
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SECTION 5.09 UNTRUE REPRESENTATIONS. Azle shall promptly
notify Independent in writing if Azle becomes aware of any fact
or condition that makes untrue, or shows to have been untrue, in
any material respect, any schedule or any other information
furnished to Independent or any representation or warranty made
in or pursuant to this Agreement or that results in Azle's
failure to comply with any covenant, condition or agreement
contained in this Agreement.
SECTION 5.10 LITIGATION AND CLAIMS. Azle shall promptly
notify Independent in writing of any litigation, or of any claim,
controversy or contingent liability that might be expected to
become the subject of litigation, against Azle or the Bank or
affecting any of their properties, if such litigation or
potential litigation might, in the event of an unfavorable
outcome, result in a Material Adverse Change, and Azle shall
promptly notify Independent of any legal action, suit or
proceeding or judicial, administrative or governmental
investigation, pending or, to the knowledge of Azle, threatened
against Azle or the Bank that questions or might question the
validity of this Agreement or the agreements contemplated hereby,
including, but not limited to, the Merger Agreement, or any
actions taken or to be taken by Azle or the Bank pursuant hereto
or thereto or seeks to enjoin or otherwise restrain the
transactions contemplated hereby or thereby.
SECTION 5.11 ADVERSE CHANGES. Azle shall promptly notify
Independent in writing if any change shall have occurred or been
threatened (or any development shall have occurred or been
threatened involving a prospective change) in the business,
financial condition, operations or prospects of Azle or the Bank
that has or may reasonably be expected to have or lead to a
Material Adverse Change. Notwithstanding the disclosure to
Independent of any such change, Azle shall not be relieved of any
liability to Independent pursuant to this Agreement for, nor
shall the providing of such information by Azle to Independent be
deemed a waiver by Independent of, the breach of any
representation or warranty of Azle contained in this Agreement.
SECTION 5.12 NO NEGOTIATION WITH OTHERS. Azle shall not,
directly or indirectly, nor shall it permit the Bank or its
officers, directors, employees, representatives or agents to,
directly or indirectly (i) encourage, solicit or initiate
discussions or negotiations with, or (ii) except upon advice of
counsel to the extent required to fulfill the fiduciary duties
owed to the shareholders of Azle, entertain, discuss or negotiate
with, or provide any information to, or cooperate with, any
corporation, partnership, person or other entity or group (other
than Independent or its Affiliates or associates or officers,
partners, employees or other authorized representatives of
Independent or such Affiliates or associates) concerning any
merger, tender offer or other takeover offer, sale of substantial
assets, sale of shares of capital stock or similar transaction
involving Azle or the Bank (any such proposal or offer being
hereinafter referred to as an "Acquisition Proposal").
Immediately upon receipt of any unsolicited offer, Azle will
communicate to Independent the terms of any proposal or request
for information and the identity of the parties involved.
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SECTION 5.13 CONSENTS AND APPROVALS. Azle shall use its
best efforts to obtain all consents and approvals from third
parties, including those listed on Schedule 3.08, at the earliest
practicable time.
SECTION 5.14 ENVIRONMENTAL INVESTIGATION; RIGHT TO
TERMINATE AGREEMENT.
A. Independent and its consultants, agents and
representatives shall have the right to the same extent that
Azle or the Bank has such right, but not the obligation or
responsibility, to inspect any Property, including, without
limitation, conducting asbestos surveys and sampling,
environmental assessments and investigation, and other
environmental surveys and analyses including soil and ground
sampling ("Environmental Inspections") at any time on or
prior to July 23, 1998. Independent shall notify Azle prior
to any physical inspections of the Property, and Azle may
place reasonable restrictions on the time of such
inspections. If, as a result of any such Environmental
Inspection, further investigation ("secondary
investigation") including, without limitation, test borings,
soil, water and other sampling is deemed desirable by
Independent, Independent shall (i) notify Azle of any
Property for which it intends to conduct such a secondary
investigation and the reasons for such secondary
investigation, and (ii) commence such secondary
investigation, on or prior to August 10, 1998. Independent
shall give reasonable notice to Azle of such secondary
investigations, and Azle may place reasonable time and place
restrictions on such secondary investigations.
B. Independent shall have the right to terminate this
Agreement if (i) the factual substance of any warranty or
representation set forth in Section 3.21 is not true and
accurate; (ii) the results of such Environmental Inspection,
secondary investigation or other environmental survey are
disapproved by Independent because the environmental
inspection, secondary investigation or other environmental
survey identifies violations or potential violations of
Environmental Laws; (iii) Azle or the Bank has refused to
allow Independent to conduct an Environmental Inspection or
secondary investigation in a manner that Independent
reasonably considers necessary; (iv) the Environmental
Inspection, secondary investigation or other environmental
survey identifies any past or present event, condition or
circumstance that would or potentially would require
remedial or cleanup action or result in a Material Adverse
Change; (v) the Environmental Inspection, secondary
investigation or other environmental survey identifies the
presence of any underground or above ground storage tank in,
on or under any Property that is not shown to be in
compliance with all Environmental Laws applicable to the
tank either now or at a future time certain, or that has had
a release of petroleum or some other Hazardous Material that
has not been cleaned up to the satisfaction of the relevant
governmental authority or any other party with a legal right
to compel cleanup; or (vi) the Environmental Inspection,
secondary investigation or other environmental survey
identifies the presence of any asbestos-containing material
in, on or under any Property, the removal of which would
result in a Material Adverse Change. On or prior to August
31, 1998, Independent shall advise Azle in writing as to
whether Independent intends to terminate this Agreement
because Independent disapproves of the results of the
Environmental Inspection, secondary
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investigation or other environmental survey. Azle shall
have the opportunity to correct any objected to violations
or conditions to Independent's reasonable satisfaction prior
to September 15, 1998. In the event that Azle fails to
demonstrate its satisfactory correction of the violations or
conditions to Independent, Independent may terminate the
Agreement on or before September 30, 1998.
C. Azle agrees to make available to Independent and
its consultants, agents and representatives all documents
and other material relating to environmental conditions of
any Property including, without limitation, the results of
other environmental inspections and surveys. Azle also
agrees that all engineers and consultants who prepared or
furnished such reports may discuss such reports and
information with Independent and shall be entitled to
certify the same in favor of Independent and its
consultants, agents and representatives and make all other
data available to Independent and its consultants, agents
and representatives.
D. For purposes of this Section, the term "Property"
or "Properties" shall have the same meaning given in Section
3.21(E).
SECTION 5.16 PROXIES. Azle and each of the persons set
forth on Schedule 5.16 shall execute the Voting Agreement and
Irrevocable Proxy in the form of Exhibit B attached hereto, and
Azle acknowledges that such persons have agreed that they will
vote the shares of the Azle Common Stock owned by them in favor
of the Merger Agreement and the Merger and the transactions
contemplated hereby and thereby, subject to required regulatory
approvals.
SECTION 5.17 NONCOMPETITION AGREEMENT. Azle shall use its
best efforts to cause the persons set forth on Schedule 5.17 to
execute the Noncompetition Agreement in the form of Exhibit G
attached hereto.
ARTICLE VI.
COVENANTS OF INDEPENDENT
Independent hereby makes the covenants set forth in this
Article VI to Azle.
SECTION 6.01 BEST EFFORTS. Independent agrees to use its
best efforts to cause the consummation of the transactions
contemplated hereby in accordance with the terms and conditions
of this Agreement.
SECTION 6.02 INCORPORATION AND ORGANIZATION OF NEW
AZLE. Independent will incorporate, charter and organize New
Azle as a Texas corporation.
SECTION 6.03 MERGER AGREEMENTS. Independent will, as soon
as practicable after the execution of this Agreement, enter into
the Merger Agreement, the form of which is attached hereto as
Exhibit A, and shall perform all of its obligations thereunder.
Independent will, as soon as practicable after the execution of
this Agreement, cause New Azle to duly authorize and enter into
the Merger Agreement and shall cause New Azle to perform all of
its obligations thereunder. Independent shall vote all of the
stock of New Azle in favor of the Merger and the Merger
Agreement.
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SECTION 6.04 INFORMATION FOR APPLICATIONS AND STATEMENTS.
Independent will promptly furnish to Azle all information
concerning Independent and New Azle, including, but not limited
to, financial statements, required for inclusion in (i) any proxy
statement, prospectus or offering document to be used by Azle in
connection with the approval of the shareholders of Azle of the
transactions contemplated hereby and (ii) any application or
statement to be made by Azle or filed by Azle with any
governmental body in connection with the transactions
contemplated by this Agreement, or in connection with any
unrelated transactions during the pendency of this Agreement, and
Independent represents and warrants that all information so
furnished for such statements and applications shall be true and
correct in all material respects and shall not omit any material
fact required to be stated therein or necessary to make the
statements made, in light of the circumstances under which they
were made, not misleading. Independent shall otherwise fully
cooperate with Azle and the Bank in the filing of any
applications or other documents necessary to consummate the
transactions contemplated by this Agreement, including the
Merger.
SECTION 6.05 ACTS OF NEW AZLE. Prior to the Closing,
Independent shall not cause New Azle to take any action or
execute any agreement, document or certificate except as
contemplated by this Agreement and the other agreements
contemplated hereby, including, but not limited to, the Merger
Agreement.
SECTION 6.06 UNTRUE REPRESENTATIONS. Independent shall
promptly notify Azle in writing if Independent becomes aware of
any fact or condition that makes untrue, or shows to have been
untrue, in any material respect, any schedule or any other
information furnished to Azle or any representation or warranty
made in or pursuant to this Agreement or that results in
Independent's failure to comply with any covenant, condition or
agreement contained in this Agreement.
SECTION 6.07 LITIGATION AND CLAIMS. Independent shall
promptly notify Azle of any legal action, suit or proceeding or
judicial, administrative or governmental investigation, pending
or, to the knowledge of Independent, threatened against
Independent or New Azle that questions or might question the
validity of this Agreement or the agreements contemplated hereby,
including, but not limited to, the Merger Agreement, or any
actions taken or to be taken by Independent or New Azle pursuant
hereto or thereto or seeks to enjoin or otherwise restrain the
transactions contemplated hereby or thereby.
SECTION 6.08 REGULATORY AND OTHER APPROVALS. Independent
shall promptly file or cause to be filed applications for all
regulatory approvals required to be obtained by Independent or
New Azle in connection with this Agreement and the other
agreements contemplated hereby. Independent shall promptly
furnish Azle with copies of all such regulatory filings and all
correspondence for which confidential treatment has not been
requested. Independent shall use its best efforts to obtain all
such regulatory approvals and any other approvals from third
parties, including those listed on Schedule 4.05, at the earliest
practicable time.
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SECTION 6.09 ADVERSE CHANGE. Independent shall promptly
notify Azle in writing if any change shall have occurred or been
threatened (or any development shall have occurred or been
threatened involving a prospective change) that would adversely
affect, prevent or delay consummation of the transactions
contemplated by this Agreement or the other agreements
contemplated hereby.
ARTICLE VII.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF AZLE
All obligations of Azle under this Agreement are subject to
the fulfillment, prior to or at the Closing, of each of the
following conditions, any or all of which may be waived in whole
or in part by Azle:
SECTION 7.01 COMPLIANCE WITH REPRESENTATIONS, WARRANTIES
AND AGREEMENTS. All representations and warranties made by
Independent in this Agreement or in any document or schedule
delivered to Azle pursuant hereto shall have been true and
correct in all material respects when made and shall be true and
correct in all material respects as of the Closing with the same
force and effect as if such representations and warranties were
made at and as of the Closing, except with respect to those
representations and warranties specifically made as of an earlier
date (in which case such representations and warranties shall be
true as of such earlier date). Independent shall have performed
or complied in all material respects with all agreements, terms,
covenants and conditions required by this Agreement to be
performed or complied with by Independent prior to or at the
Closing.
SECTION 7.02 SHAREHOLDER APPROVAL. The holders of at least
two-thirds of the Azle Common Stock shall have approved the
Merger and the Merger Agreement.
SECTION 7.03 GOVERNMENT AND OTHER APPROVALS. Independent
shall have received approvals, acquiescence or consents, all on
terms and conditions reasonably acceptable to Independent in its
sole discretion, of the transactions contemplated by this
Agreement and the Merger Agreement, from all necessary
governmental agencies and authorities and other third parties,
including but not limited to the Federal Reserve, and all
applicable waiting periods shall have expired, and the approvals
and consents of all third parties required to consummate this
Agreement and the other agreements contemplated hereby,
including, but not limited to, the Merger Agreement and the
transactions contemplated hereby and thereby, including all
consents described on Schedules 3.08 and 4.05. Such approvals
and the transactions contemplated hereby shall not have been
contested or threatened to be contested by any federal or state
governmental authority or by any other third party (except
shareholders asserting statutory dissenters' appraisal rights) by
formal proceedings.
SECTION 7.04 NO LITIGATION. No action shall have been
taken, and no statute, rule, regulation or order shall have been
promulgated, enacted, entered, enforced or deemed applicable to
the acquisition by any federal, state or foreign government or
governmental authority or by any court, domestic or foreign,
including the entry of a preliminary
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or permanent injunction, that would (a) make the Agreement or any
other agreement contemplated hereby, including, but not limited
to, the Merger Agreement, or the transactions contemplated hereby
or thereby illegal, invalid or unenforceable, (b) impose material
limits in the ability of any party to this Agreement to
consummate the Agreement or any other agreement contemplated
hereby, including, but not limited to, the Merger Agreement, or
the transactions contemplated hereby or thereby, or (c) if the
Agreement or any other agreement contemplated hereby, including,
but not limited to, the Merger Agreement, or the transactions
contemplated hereby or thereby are consummated, subject Azle or
the Bank or subject any officer, director, shareholder or
employee of Azle or the Bank to criminal or civil liability. No
action or proceeding before any court or governmental authority,
domestic or foreign, by any government or governmental authority
or by any other person, domestic or foreign, shall be threatened,
instituted or pending that would reasonably be expected to result
in any of the consequences referred to in clauses (a) through (c)
above.
SECTION 7.05 OPINION OF LEGAL COUNSEL TO INDEPENDENT. Azle
shall have received an opinion of counsel to Independent in
connection with the transactions contemplated by this Agreement,
dated the Closing Date and addressed to Azle, as described in
Exhibit C.
ARTICLE VIII.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF INDEPENDENT
All obligations of Independent under this Agreement are
subject to the fulfillment, prior to or at the Closing, of each
of the following conditions, any or all of which may be waived in
whole or in part by Independent.
SECTION 8.01 COMPLIANCE WITH REPRESENTATIONS, WARRANTIES
AND AGREEMENTS. All representations and warranties made by Azle
in this Agreement or in any schedule delivered to Independent
pursuant hereto shall have been true and correct when made and
shall be true and correct as of the Closing with the same force
and effect as if such representations and warranties were made at
and as of the Closing, except with respect to those
representations and warranties specifically made as of an earlier
date (in which case such representations and warranties shall be
true as of such earlier date). Azle shall have performed or
complied in all material respects with all agreements, terms,
covenants and conditions required by this Agreement to be
performed or complied with by Azle prior to or at the Closing.
SECTION 8.02 SHAREHOLDER APPROVAL. The holders of at least
two-thirds of the Azle Common Stock shall have approved the
Merger and the Merger Agreement.
SECTION 8.03 Government and Other Approvals. Independent
shall have received approvals, acquiescence or consents, all on
terms and conditions acceptable to Independent in its sole
discretion, of the transactions contemplated by this Agreement
and the Merger Agreement from all necessary governmental agencies
and authorities, including but not limited to the Federal
Reserve, and all applicable waiting periods shall have expired,
and the approvals and consents of all third parties required to
consummate this Agreement and the other agreements contemplated
hereby, including, but not limited to, the Merger Agreement and
the transactions contemplated hereby and thereby, including all
consents described on Schedules
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3.08 and 4.05. Such approvals and the transactions contemplated
hereby shall not have been contested or threatened to be
contested by any federal or state governmental authority or by
any other third party (except shareholders asserting statutory
dissenters' appraisal rights) by formal proceedings. It is
understood that, if such contest is brought by formal
proceedings, the Independent may, but shall not be obligated to,
answer and defend such contest or otherwise pursue this
transaction over such objection.
SECTION 8.04 NO LITIGATION. No action shall have been
taken, and no statute, rule, regulation or order shall have been
promulgated, enacted, entered, enforced or deemed applicable to
this Agreement, the Merger, or the transactions contemplated
hereby or thereby by any federal, state or foreign government or
governmental authority or by any court, domestic or foreign,
including the entry of a preliminary or permanent injunction,
that would (a) make this Agreement or any other agreement
contemplated hereby, including, but not limited to, the Merger
Agreement, or the transactions contemplated hereby or thereby
illegal, invalid or unenforceable, (b) require the divestiture of
a material portion of the assets of Azle or the Bank, (c) impose
material limits in the ability of any party to this Agreement to
consummate the Agreement or any other agreement contemplated
hereby, including, but not limited to, the Merger Agreement, or
the transactions contemplated hereby or thereby, (d) otherwise
result in a Material Adverse Change or (e) if this Agreement or
any other agreement contemplated hereby, including, but not
limited to, the Merger Agreement, or the transactions
contemplated hereby or thereby are consummated, subject
Independent or New Azle or subject any officer, director,
shareholder or employee of Independent or New Azle to criminal or
civil liability. No action or proceeding before any court or
governmental authority, domestic or foreign, by any government or
governmental authority or by any other person, domestic or
foreign, shall be threatened, instituted or pending that would
reasonably be expected to result in any of the consequences
referred to in clauses (a) through (e) above.
SECTION 8.05 FORCED SHARE EXCHANGE WITH BANK MINORITY
SHAREHOLDERS. Azle will have consummated a Forced Share
Exchange, in which Independent will join, with the minority
shareholders of the Bank with the effect that Azle owns 100% of
the Bank immediately prior to consummation of the Merger. The
terms of the Forced Share Exchange will provide that the minority
shareholders will receive an aggregate of $593,580 (as adjusted
pursuant to the terms hereof, the "Exchange Consideration").
Provided that the consummation of the Merger occurs
simultaneously, Independent will pay the Exchange Consideration
to the minority shareholders of the Bank.
SECTION 8.06 OPINION OF LEGAL COUNSEL TO AZLE. Independent
shall have received an opinion of counsel to Azle in connection
with the transactions contemplated by this Agreement, dated the
Closing Date and addressed to Independent, as described in
Exhibit D.
SECTION 8.07 ACCOUNTING TREATMENT. All accounting and tax
treatment, entries and adjustments in connection with the
transactions contemplated by this Agreement and the other
agreements contemplated hereby shall be satisfactory to
Independent, Independent shall not have received notification
from any proper regulatory authority that Independent's
accounting and tax treatment, entries and adjustments used in
connection with the Merger are improper,
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and Independent shall not have been required by any such
regulatory authority to make any accounting or tax adjustments
that would constitute a Material Adverse Change.
SECTION 8.08 RELEASES. Independent shall have received
from each of the directors of Azle and the Bank an instrument
dated the Closing Date releasing Azle and the Bank from any and
all claims of such directors (except to their deposits and
accounts), the form of which is attached as Exhibit E.
Independent shall have received from each of the officers of Azle
and the Bank an instrument dated the Closing Date releasing Azle
and the Bank from any and all claims of such officers (except as
to accrued compensation permitted by this Agreement and their
deposits and accounts), the form of which is attached as Exhibit
F.
SECTION 8.09 NO MATERIAL ADVERSE CHANGE. There shall have
been no Material Adverse Change since December 31, 1997.
SECTION 8.10 FINANCING. Independent shall have succeeded
in raising the funds necessary to finance the payment of the
Merger Consideration and the Exchange Consideration pursuant to
an offering of either its common or preferred stock. In either
event that (i) Independent cannot raise the necessary funds on
terms and conditions acceptable to Independent in its sole
discretion and Independent chooses to terminate the Agreement
pursuant to this Section 8.10, or (ii) Independent shall not have
received all necessary regulatory approval, Independent shall pay
to Azle all out-of-pocket expenses incurred by Azle in connection
with negotiating and implementing a transaction with Independent.
If Independent terminates this Agreement pursuant to this Section
8.10, then Azle shall provide Independent with a detailed listing
of all of its out-of-pocket expenses. Independent shall pay such
expenses by wire transfer in same-day funds within two (2)
business days of Independent's receipt of such detailed listing.
Notwithstanding the foregoing, Independent shall not be required
to pay any out-of-pocket expenses to Azle if Independent's
failure to obtain regulatory approval is caused in whole or in
part by any act or omission of Azle.
SECTION 8.11 DELIVERY OF AGREEMENTS. Azle shall have
delivered to Independent at the same time as the delivery of the
Schedules pursuant to the timing requirements outlined in Section
11.18, the executed Voting Agreement and Irrevocable Proxy and
all of the executed Noncompetition Agreements.
ARTICLE IX.
TERMINATION AND ABANDONMENT
SECTION 9.01 RIGHT OF TERMINATION. This Agreement and the
transactions contemplated hereby may be terminated and abandoned
at any time prior to or at the Closing (notwithstanding approval
thereof by the shareholders of Azle), as follows, and in no other
manner:
A. By the mutual consent of Azle and Independent,
duly authorized by the board of directors of each of Azle
and Independent.
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B. By either Azle or Independent if the conditions
precedent to such parties' obligations to close specified in
Articles VII and VIII, respectively, hereof have not been
met or waived by January 31, 1999, or such later date as has
been approved by Azle and Independent.
C. By either Azle or Independent if any of the
transactions contemplated by this Agreement or the Merger
Agreement are disapproved by any regulatory authority whose
approval is required to consummate such transactions or if
any court of competent jurisdiction in the United States or
other United States (federal or state) governmental body
shall have issued an order, decree or ruling or taken any
other action restraining, enjoining, invalidating or
otherwise prohibiting the Agreement or the transactions
contemplated hereby and such order, decree, ruling or other
action shall have been final and nonappealable.
D. By Independent if it reasonably determines, in
good faith and after consulting with counsel, there is
substantial likelihood that any necessary regulatory
approval will not be obtained or will be obtained only upon
a condition or conditions that make it inadvisable to
proceed with the transactions contemplated by this
Agreement.
E. By Independent if there shall have been any
Material Adverse Change.
F. By Independent if Azle shall fail to comply in any
material respect with any of its covenants or agreements con
tained in this Agreement or in any other agreement
contemplated hereby, including, but not limited to, the
Merger Agreement, and such failure shall not have been cured
within a period of ten (10) calendar days after notice from
Independent, or if any of the representations or warranties
of Azle contained herein or therein shall be inaccurate in
any material respect.
G. By Azle if Independent shall fail to comply in any
material respect with any of its covenants or agreements con
tained in this Agreement or in any other agreement
contemplated hereby and such failure shall not have been
cured within a period of ten (10) calendar days after notice
from Azle, or if any of the representations or warranties of
Independent contained herein or therein shall be inaccurate
in any material respect.
H. By Azle, at any time prior to the Effective Date,
by action of the Board of Directors of Azle if Azle receives
an Acquisition Proposal on terms that Azle's Board of
Directors (after consultation with its independent financial
advisors) determines in good faith to be more favorable to
the holders of the Azle Common Stock than the terms of the
Merger, and Azle's Board of Directors determines, upon the
reasoned advice of its legal counsel and investment advisor,
that to continue to recommend that the holders of Azle
Common Stock vote in favor of the Merger, notwithstanding
the receipt of such offer with respect to an Acquisition
Proposal, or to fail to recommend or accept the Acquisition
Proposal, would violate the fiduciary duties of Azle's Board
of Directors; provided, however, that Azle shall not be
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permitted to terminate this Agreement pursuant to this
Section 9.01H unless it has provided Independent with three
(3) business days prior written notice of its intent to so
terminate this Agreement together with a detailed summary of
the terms and conditions (including proposed financing, if
any) of such Acquisition Proposal; provided, further, that
Independent shall receive the fees set forth in Section
11.02B immediately prior to or concurrently with any
termination pursuant to this Section 9.01H by wire transfer
in same day funds.
SECTION 9.02 NOTICE OF TERMINATION. The power of
termination provided for by Section 9.01 hereof may be exercised
only by a notice given in writing, as provided in Section 11.07
of this Agreement.
SECTION 9.03 EFFECT OF TERMINATION. Without limiting any
other relief to which either party hereto may be entitled for
breach of this Agreement, in the event of the termination and
abandonment of this Agreement pursuant to the provisions of
Section 9.01 hereof, no party to this Agreement shall have any
further liability or obligation in respect of this Agreement,
except for (a) liability of a party for expenses pursuant to
Section 11.02 hereof, and (b) the provisions of Article X hereof
shall remain applicable.
ARTICLE X.
CONFIDENTIAL INFORMATION
SECTION 10.01 DEFINITION OF "RECIPIENT," "DISCLOSING PARTY"
AND "REPRESENTATIVE". For purposes of this Article X, the term
"Recipient" shall mean the party receiving the Subject
Information (as defined in Section 10.02) and the term
"Disclosing Party" shall mean the party furnishing the Subject
Information. The terms "Recipient" or "Disclosing Party", as
used herein, include: (1) all persons and entities related to or
affiliated in any way with the Recipient or the Disclosing Party,
as the case may be, and (2) any person or entity controlling,
controlled by or under common control with the Recipient or the
Disclosing Party, as the case may be. The term "Representative"
as used herein, shall include all directors, officers,
shareholders, employees, representatives, advisors, attorneys,
accountants and agents of any of the foregoing. The term
"person" as used in this Article X shall be broadly interpreted
to include, without limitation, any corporation, company, group,
partnership, governmental agency or individual.
SECTION 10.02 DEFINITION OF "SUBJECT INFORMATION". For
purposes of this Article X, the term "Subject Information" shall
mean all information furnished to the Recipient or its
Representatives (whether prepared by the Disclosing Party, its
Representatives or otherwise and whether or not identified as
being nonpublic, confidential or proprietary) by or on behalf of
the Disclosing Party or its Representatives relating to or
involving the business, operations or affairs of the Disclosing
Party or otherwise in possession of the Disclosing Party. The
term "Subject Information" shall not include information that
(i) was already in the Recipient's possession at the time it was
first furnished to Recipient by or on behalf of Disclosing Party,
provided that such information is not known by the Recipient to
be subject to another confidentiality agreement with or other
obligation of secrecy to the Disclosing Party, its
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Subsidiaries or another party, or (ii) becomes generally
available to the public other than as a result of a disclosure by
the Recipient or its Representatives, or (iii) becomes available
to the Recipient on a non-confidential basis from a source other
than the Disclosing Party, its Representative or otherwise,
provided that such source is not known by the Recipient to be
bound by a confidentiality agreement with or other obligation of
secrecy to the Disclosing Party, its Representative or another
party.
SECTION 10.03 CONFIDENTIALITY. Each Recipient hereby
agrees that the Subject Information will be used solely for the
purpose of reviewing and evaluating the transactions contemplated
by this Agreement and the other agreements contemplated hereby,
including the Merger Agreement, and that the Subject Information
will be kept confidential by the Recipient and the Recipient's
Representatives and shall not be disclosed to any Person except
as expressly permitted by this Section 10.03; provided, however,
that (i) any of such Subject Information may be disclosed to the
Recipient's Representatives (including, but not limited to, the
Recipient's accountants, attorneys and investment bankers) who
need to know such information for the purpose of evaluating any
such possible transaction between the Disclosing Party and the
Recipient (it being understood that such Representatives shall be
informed by the Recipient of the confidential nature of such
information and that the Recipient shall direct and cause such
persons to treat such information confidentially); and (ii) any
disclosure of such Subject Information may be made to which the
Disclosing Party consents in writing prior to any such disclosure
by Recipient.
SECTION 10.04 SECURITIES LAW CONCERNS. Each Recipient
hereby acknowledges that the Recipient is aware, and the
Recipient will advise the Recipient's Representatives who are
informed as to the matters that are the subject of this
Agreement, that the United States securities laws prohibit any
person who has received material, non-public information from an
issuer of securities from purchasing or selling securities of
such issuer or from communicating such information to any other
person under circumstances in which it is reasonably foreseeable
that such person is likely to purchase or sell such securities.
SECTION 10.05 RETURN OF SUBJECT INFORMATION. In the event
of termination of this Agreement or the Merger Agreement, for any
reason, the Recipient shall promptly return to the Disclosing
Party all written material containing or reflecting any of the
Subject Information other than information contained in any
application, notice or other document filed with any governmental
agency and not returned to the Recipient by such governmental
agency. In making any such filing, the Recipient will request
confidential treatment of such Subject Information included in
any application, notice or other document filed with any
governmental agency.
SECTION 10.06 SPECIFIC PERFORMANCE/INJUNCTIVE RELIEF. Each
Recipient acknowledges that the Subject Information constitutes
valuable, special and unique property of the Disclosing Party
critical to its business and that any breach of Article X of this
Agreement by it will give rise to irreparable injury to the
Disclosing Party that is not compensable in damages.
Accordingly, each Recipient agrees that the Disclosing Party
shall be entitled to obtain specific performance and/or
injunctive relief against the breach or threatened breach of
Article X of this Agreement by the Recipient or its
Representatives. Each Recipient further
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agrees to waive, and use its reasonable efforts to cause its
Representatives to waive, any requirement for the securing or
posting of any bond in connection with such remedies. Such
remedies shall not be deemed the exclusive remedies for a breach
of Article X of this Agreement, but shall be in addition to all
other remedies available at law or in equity to the Disclosing
Party.
ARTICLE XI.
MISCELLANEOUS
SECTION 11.01 SURVIVAL OF REPRESENTATIONS AND
WARRANTIES. The parties hereto agree that all of their
respective representations and warranties contained in this
Agreement shall not survive the Closing Date except for the
representations and warranties contained in Section 3.10, which
shall survive without limitation.
SECTION 11.02 FEES AND EXPENSES.
A. Subject to the terms of subparagraph B. below,
Independent shall pay all of its expenses and costs
(including, without limitation, all counsel fees and
expenses) and Azle shall pay all of its expenses and costs
(including, without limitation, all counsel fees and
expenses), incurred in connection with this Agreement and
the consummation of the transactions contemplated hereby,
including the costs associated with the issuance of shares
of common stock of Independent in order to finance the
Merger.
B. If Azle shall have terminated this Agreement
pursuant to Section 9.01H, then Azle shall promptly (in
accordance with the terms of Section 9.01H) reimburse
Independent for the documented fees and expenses of
Independent and New Azle arising out of or related to this
Agreement and the transactions contemplated hereby and an
additional fee of $600,000 which amounts shall be payable by
wire transfer in same day funds. Azle acknowledges that the
agreements contained in this Section 11.02B are an integral
part of the transactions contemplated in this Agreement, and
that, without these agreements, Independent would not enter
into this Agreement; accordingly, if Azle fails to pay
promptly the amounts due pursuant to this Section 11.02B,
and in order to obtain such payments, Independent commences
a suit against Azle for the fees set forth in this Section
11.02B, the prevailing party shall pay to the other party
its costs and expenses (including attorneys' fees and
expenses) in connection with such suit, together with
interest on the amount thereof at the prime rate at
Citibank, N.A. on the date such payment was required to be
made.
SECTION 11.03 BROKERAGE FEES AND COMMISSIONS. Independent
hereby represents to Azle that no agent, representative or broker
has represented Independent in connection with the transactions
described in this Agreement. Azle shall not have any
responsibility or liability for any fees, expenses or commissions
payable to any agent, representative or broker of Independent,
and Independent hereby agrees to indemnify and hold Azle harmless
for any amounts owed to any agent, representative or broker of
Independent. Azle hereby represents
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to Independent that, except for the representation by Hoefer &
Arnett, Inc., no agent, representative or broker has represented
Azle, the Bank or any or all of the shareholders in connection
with the transactions described in this Agreement. Independent
shall have no responsibility or liability for any fees, expenses
or commissions payable to any agent, representative or broker of
Azle, the Bank or any shareholder of Azle, and Azle hereby agrees
to indemnify and hold Independent harmless for any amounts owed
to any agent, representative or broker of Azle, the Bank or any
shareholder of Azle.
SECTION 11.04 ENTIRE AGREEMENT. This Agreement and the
other agreements, documents, schedules and instruments executed
and delivered by the parties to each other at the Closing
constitute the full understanding of the parties, a complete
allocation of risks between them and a complete and exclusive
statement of the terms and conditions of their agreement relating
to the subject matter hereof and supersede any and all prior
agreements, whether written or oral, that may exist between the
parties with respect thereto. Except as otherwise specifically
provided in this Agreement, no conditions, usage of trade, course
of dealing or performance, understanding or agreement purporting
to modify, vary, explain or supplement the terms or conditions of
this Agreement shall be binding unless hereafter or
contemporaneously herewith made in writing and signed by the
party to be bound, and no modification shall be effected by the
acknowledgment or acceptance of documents containing terms or
conditions at variance with or in addition to those set forth in
this Agreement.
SECTION 11.05 FURTHER COOPERATION. The parties agree that
they will, at any time and from time to time after the Closing,
upon request by the other and without further consideration, do,
perform, execute, acknowledge and deliver all such further acts,
deeds, assignments, assumptions, transfers, conveyances, powers
of attorney, certificates and assurances as may be reasonably
required in order to fully consummate the transactions
contemplated hereby in accordance with this Agreement or to carry
out and perform any undertaking made by the parties hereunder.
SECTION 11.06 SEVERABILITY. In the event that any
provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws, then (a) such
provision shall be fully severable and this Agreement shall be
construed and enforced as if such illegal, invalid or
unenforceable provision were not a part hereof; (b) the remaining
provisions of this Agreement shall remain in full force and
effect and shall not be affected by such illegal, invalid or
unenforceable provision or by its severance from this Agreement;
and (c) there shall be added automatically as a part of this
Agreement a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible and still
be legal, valid and enforceable.
SECTION 11.07 NOTICES. Any and all payments (other than
payments at the Closing), notices, requests, instructions and
other communications required or permitted to be given under this
Agreement after the date hereof by any party hereto to any other
party may be delivered personally or by nationally recognized
overnight courier service or sent by mail or (except in the case
of payments) by telex or facsimile transmission, at the
respective addresses or transmission numbers set forth below and
shall be effective (a) in the case of personal delivery, telex or
facsimile transmission, when received; (b) in the case of mail,
upon the
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earlier of actual receipt or five (5) business days after deposit
in the United States Postal Service, first class certified or
registered mail, postage prepaid, return receipt requested; and
(c) in the case of nationally-recognized overnight courier
service, one (1) business day after delivery to such courier
service together with all appropriate fees or charges and
instructions for such overnight delivery. The parties may change
their respective addresses and transmission numbers by written
notice to all other parties, sent as provided in this Section
11.07. All communications must be in writing and addressed as
follows:
IF TO AZLE:
Carl Campbell, Jr.
President
Azle Bancorp
150 Industrial Avenue
P.O. Box 1499
Azle, Texas 76020
Telecopy: (817) 444-0142
WITH A COPY TO:
Mr. Mark Haynie
Haynie, Rake & Repass, P.C.
14651 Dallas Parkway
Suite 136
Dallas, Texas 75240
Telecopy: (214) 716-1850
IF TO INDEPENDENT:
Mr. Bryan Stephenson
President
Independent Bankshares, Inc.
547 Chestnut
P.O. Box 3296
Abilene, Texas 79604
Telecopy: (915) 677-5943
WITH A COPY TO:
Mr. Peter Weinstock
Jenkens & Gilchrist, P.C.
1445 Ross Avenue, Suite 3200
Dallas, Texas 75202-2799
Telecopy: (214) 855-4300
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SECTION 11.08 GOVERNING LAW. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF TEXAS (INCLUDING THOSE LAWS RELATING TO CHOICE OF LAW)
APPLYING TO CONTRACTS ENTERED INTO AND TO BE PERFORMED WITHIN THE
STATE OF TEXAS, WITHOUT REGARD FOR THE PROVISIONS THEREOF
REGARDING CHOICE OF LAW. VENUE FOR ANY CAUSE OF ACTION ARISING
FROM THIS AGREEMENT SHALL LIE IN ABILENE, TEXAS.
SECTION 11.09 MULTIPLE COUNTERPARTS. For the convenience
of the parties hereto, this Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all
counterparts hereof so executed by the parties hereto, whether or
not such counterpart shall bear the execution of each of the
parties hereto, shall be deemed to be, and shall be construed as,
one and the same Agreement. A telecopy or facsimile transmission
of a signed counterpart of this Agreement shall be sufficient to
bind the party or parties whose signature(s) appear thereon.
SECTION 11.10 CERTAIN DEFINITIONS.
A. "Affiliate" means, with respect to any person, any
person that, directly or indirectly, controls, is controlled
by, or is under common control with, such person in
question. For the purposes of this definition, "control"
(including, with correlative meaning, the terms "controlled
by" and "under common control with") as used with respect to
any person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of
the management and policies of such person, whether through
the ownership of voting securities or by contract or
otherwise.
B. "Subsidiary" means, when used with reference to an
entity, any corporation, a majority of the outstanding
voting securities of which are owned directly or indirectly
by such entity or any partnership, joint venture or other
enterprise in which any entity has, directly or indirectly,
any equity interest.
C. "Material Adverse Change" means any material
adverse change in the financial condition, assets,
properties, liabilities (absolute, accrued, contingent or
otherwise), reserves, business or results of operations or
prospects of Azle or the Bank and specifically includes any
change that reduces the shareholders' equity of Azle and the
Bank (on a consolidated basis) by an amount equaling or
exceeding $50,000. Notwithstanding the preceding sentence,
any act contemplated by this Agreement, including without
limitation, the funding of the Carl E. Campbell Deferred
Compensation Plan, shall not be a Material Adverse Change.
D. "Environmental Laws" mean all federal, state and
local laws, regulations, statutes, ordinances, codes, rules,
decisions, orders or decrees relating or pertaining to the
public health and safety or the environment, or otherwise
governing the generation, use, handling, collection,
treatment, storage, transportation, recovery, recycling,
removal, discharge or disposal of Hazardous Materials,
including, without limitation, the Solid Waste Disposal Act,
42 U.S.C. 6901 et seq., as amended
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("SWDA," also known as "RCRA" for a subsequent amending
act), (b) the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. 9601 et seq., as
amended ("CERCLA"), (c) the Clean Water Act, 33 U.S.C. 1251
et seq., as amended ("CWA"), (d) the Clean Air Act, 42
U.S.C. 7401 et seq., as amended ("CAA"), (e) the Toxic
Substances Control Act, 15 U.S.C. 2601 et seq., as amended
("TSCA"), (f) the Emergency Planning and Community Right to
Know Act, 15 U.S.C. 2601 et seq., as amended ("EPCRKA"),
and (g) the Occupational Safety and Health Act, 29 U.S.C.
651 et seq., as amended.
E. "Hazardous Material" means, without limitation, (a)
any "hazardous wastes" as defined under RCRA, (b) any
"hazardous substances" as defined under CERCLA, (c) any
toxic pollutants as defined under CWA, (d) any hazardous air
pollutants as defined under CAA, (e) any hazardous chemicals
as defined under TSCA, (f) any hazardous substances or
extremely hazardous substances as defined under EPCRKA, (g)
asbestos, (h) polychlorinated biphenyls, (i) underground
storage tanks, whether empty, filled or partially filled
with any substance, (j) any substance the presence of which
on the property in question is prohibited under any
Environmental Law, and (k) any other substance which under
any Environmental Law requires special handling or
notification of or reporting to any federal, state or local
governmental entity in its generation, use, handling,
collection, treatment, storage, re-cycling, treatment,
transportation, recovery, removal, discharge or disposal.
SECTION 11.11 SPECIFIC PERFORMANCE. Each of the parties
hereto acknowledges that the other parties would be irreparably
damaged and would not have an adequate remedy at law for money
damages in the event that any of the covenants contained in this
Agreement were not performed in accordance with its terms or
otherwise were materially breached. Each of the parties hereto
therefore agrees that, without the necessity of proving actual
damages or posting bond or other security, the other party shall
be entitled to temporary and/or permanent injunction or
injunctions to prevent breaches of such performance and to
specific enforcement of such covenants in addition to any other
remedy to which they may be entitled, at law or in equity.
SECTION 11.12 ATTORNEYS' FEES AND COSTS. In the event
attorneys' fees or other costs are incurred to secure performance
of any of the obligations herein provided for, or to establish
damages for the breach thereof, or to obtain any other
appropriate relief, whether by way of prosecution or defense, the
prevailing party shall be entitled to recover reasonable
attorneys' fees and costs incurred therein.
SECTION 11.13 RULES OF CONSTRUCTION. Each use herein of
the masculine, neuter or feminine gender shall be deemed to
include the other genders. Each use herein of the plural shall
include the singular and vice versa, in each case as the context
requires or as it is otherwise appropriate. The word "or" is
used in the inclusive sense. All articles and sections referred
to herein are articles and sections, respectively, of this
Agreement and all exhibits and schedules referred to herein are
exhibits and schedules, respectively, attached to this Agreement.
Descriptive headings as to the contents of particular sections
are for convenience only and shall not control or affect the
meaning, construction or interpretation of any provision
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of this Agreement. Any and all schedules, exhibits, annexes,
statements, reports, certificates or other documents or
instruments referred to herein or attached hereto are and shall
be incorporated herein by reference hereto as though fully set
forth herein verbatim.
SECTION 11.14 BINDING EFFECT; ASSIGNMENT. All of the
terms, covenants, representations, warranties and conditions of
this Agreement shall be binding upon, and inure to the benefit of
and be enforceable by, the parties hereto and their respective
successors, representatives and permitted assigns. Nothing
expressed or referred to herein is intended or shall be construed
to give any person other than the parties hereto any legal or
equitable right, remedy or claim under or in respect of this
Agreement, or any provision herein contained, it being the
intention of the parties hereto that this Agreement, the
assumption of obligations and statements of responsibilities
hereunder, and all other conditions and provisions hereof are for
the sole benefit of the parties to this Agreement and for the
benefit of no other person. Nothing in this Agreement shall act
to relieve or discharge the obligation or liability of any third
party to any party to this Agreement, nor shall any provision
give any third party any right of subrogation or action over or
against any party to this Agreement. No party to this Agreement
shall assign this Agreement, by operation of law or otherwise, in
whole or in part, without the prior written consent of the other
parties. Any assignment made or attempted in violation of this
Section 11.14 shall be void and of no effect.
SECTION 11.15 PUBLIC DISCLOSURE. Neither Azle nor
Independent will make, issue or release any announcement,
statement, press release, acknowledgment or other public
disclosure of the existence of, or reveal the terms, conditions
or the status of, this Agreement or the transactions contemplated
hereby without the prior written consent of the other parties to
this Agreement; provided, however, that notwithstanding the
foregoing, Azle and Independent will be permitted to make any
public disclosures or governmental filings as legal counsel may
deem necessary to maintain compliance with or to prevent
violations of applicable federal or state laws or regulations or
that may be necessary to obtain regulatory approval for the
transactions contemplated hereby.
SECTION 11.16 EXTENSION; WAIVER. At any time prior to the
Closing Date, the parties may (i) extend the time for the
performance of any of the obligations or other acts of the other
parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any
document, certificate or writing delivered pursuant hereto, or
(iii) waive compliance with any of the agreements or conditions
contained herein. Such action shall be evidenced by a signed
written notice given in the manner provided in Section 11.07
hereof. No party to this Agreement shall by any act (except by a
written instrument given pursuant to Section 11.07 hereof) be
deemed to have waived any right or remedy hereunder or to have
acquiesced in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising any
right, power or privilege hereunder by any party hereto shall
operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder shall preclude any other
or further exercise thereof or the exercise of any other right,
power or privilege. A waiver of any party of any right or remedy
on any one occasion shall not be construed as a bar to any right
or remedy that such party would otherwise have on any future
occasion or to any right or remedy that any other party may have
hereunder.
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SECTION 11.17 AMENDMENTS. To the extent permitted by
applicable law, this Agreement may be amended by action taken by
or on behalf of the Board of Directors of Independent and Azle at
any time before or after adoption of this Agreement by the
shareholders of Azle but, after any submission of this Agreement
to such shareholders for approval, no amendment shall be made
that (i) affects the consideration to be paid for the Azle Common
Stock as set forth in Section 1.05 or that materially and
adversely affects the rights of Azle's shareholders hereunder
without the requisite approval of such shareholders. This
Agreement may be amended, modified or supplemented only by an
instrument in writing executed by the party against which
enforcement of the amendment, modification or supplement is
sought.
SECTION 11.18 DELIVERY OF SCHEDULES. In order to provide
for the prompt execution of this Agreement, the parties hereto
agree that with respect to the schedules to this Agreement:
A. Full and complete originals of all of the
schedules to this Agreement described in Article III of this
Agreement shall be delivered to Independent pursuant to
Section 11.07, within ten (10) days after the date of this
Agreement.
B. Independent will have five (5) business days after
receipt of the schedules to this Agreement to review such
schedules to determine whether they are in form and
substance satisfactory to Independent in its sole
discretion. If such schedules are satisfactory, then this
Agreement shall remain in full force and effect and the
parties shall proceed in accordance with their respective
rights and obligations hereunder. If such schedules are not
satisfactory to Independent, in its sole discretion,
Independent shall have the unconditional right to terminate
this Agreement and all of its obligations hereunder by
providing Azle notice of such termination in accordance with
the terms of Section 11.07 of the Agreement no later than
6:00 p.m., Abilene, Texas time on the fifth business day
after receipt of the schedules to this Agreement.
B. Schedules 4.05, 5.16 and 5.17 to the Agreement, as
well as all exhibits to the Agreement, are satisfactory to
the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers as of
the date first above written.
INDEPENDENT BANKSHARES, INC.
By: /s/ BRYAN STEPHENSON
----------------------------------
Bryan Stephenson, President
AZLE BANCORP
By: /s/ CARL CAMPBELL, JR.
-----------------------------------
Carl Campbell, Jr., President
