<PAGE> 1
================================================================================
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
September 30, 1996
---------------------------------
Date of Report
(Date of earliest event reported)
CORPUS CHRISTI BANCSHARES, INC.
----------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
TEXAS 0-13668 74-2351663
- ---------------------------- ------------------------ -------------------
(State or other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
2402 LEOPARD STREET
CORPUS CHRISTI, TEXAS 78408
- ---------------------------- -------------------
(Address of Principal (Zip Code)
Executive Offices)
(512) 887-3000
----------------------------------------------------
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
Corpus Christi Bancshares, Inc., a Texas corporation ("CCB"), Cullen/Frost
Bankers, Inc., a Texas corporation ("Cullen/Frost"), and its wholly owned
subsidiary, R.E. Holding Corporation, a Texas corporation ("R.E. Holding"),
have entered into an Agreement and Plan of Merger dated as of September 30,
1996 (the "Merger Agreement") whereby Cullen/Frost has agreed to acquire CCB
for a cash purchase price of $18.84 per outstanding share of CCB's common
stock.
Consummation of the acquisition is subject to a number of conditions
including approval of the acquisition by the shareholders of CCB and regulatory
review. Subject to the satisfaction of such conditions, the acquisition is
expected to be completed in the first quarter of 1997. The Merger Agreement
provides for the payment of a termination fee of $1,150,000 by CCB to
Cullen/Frost under certain circumstances.
The Merger Agreement is filed as an exhibit to this Report and is
incorporated herein by reference. The foregoing summary is qualified in its
entirety by reference to the Merger Agreement.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a)-(b) Not applicable
(c) Exhibits
2.1 The Merger Agreement
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Corpus Christi Bancshares, Inc.
By: /s/ R. JAY PHILLIPS
-------------------------------------
R. Jay Phillips
President and Chief Executive Officer
October 16, 1996
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EXHIBIT INDEX
Exhibit
Number Description Page
--------- ----------- ----
2.1 Agreement and Plan of Merger dated as of the 30th
day of September, 1996 by and among Cullen/Frost
Bankers, Inc., R.E. Holding Corporation, and
Corpus Christi Bancshares, Inc.
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<PAGE> 1
EXECUTION COPY
================================================================================
AGREEMENT AND PLAN OF MERGER
DATED AS OF THE 30TH DAY OF SEPTEMBER, 1996
BY AND AMONG
CULLEN/FROST BANKERS, INC.
R.E. HOLDING CORPORATION
AND
CORPUS CHRISTI BANCSHARES, INC.
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
Page
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I. THE MERGERS
SECTION 1.1. Structure of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2. Effect on Outstanding Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.3. Exchange Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.4. Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.5. Alternative Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 1.6. Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE II. CONDUCT PENDING THE MERGER
SECTION 2.1. Conduct of the Company's Business Prior to the Effective Time . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.2. Forbearance by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.3. Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III. REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.2. Representations and Warranties of the Acquiror and Merger Sub . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE IV. COVENANTS
SECTION 4.1. Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 4.2. Certain Policies of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.3. Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.4. Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.5. Ancillary Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.6. Certain Filings, Consents and Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.7. Indemnification; Directors' and Officers' Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.8. Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.9. Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.10. Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.11. Shareholders' Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.12. Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.13. No Acquisitions of Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
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ARTICLE V. CONDITIONS TO CONSUMMATION
<TABLE>
<S> <C>
SECTION 5.1. Conditions to All Parties' Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 5.2. Conditions to the Obligations of the Acquiror and Merger Sub . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.3. Conditions to the Obligation of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE VI. TERMINATION
SECTION 6.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 6.2. Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 6.3. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE VII. EFFECTIVE DATE AND EFFECTIVE TIME
SECTION 7.1. Effective Date and Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE VIII. OTHER MATTERS
SECTION 8.1. Certain Definitions; Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.2. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.3. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.4. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.5. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.6. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.7. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.8. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.9. Entire Agreement; Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.10. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
LIST OF ANNEXES
Annex 1 - Company Rights (Recital D)
Annex 2 - Amendment to Rights Plan (Section 3.1(ll))
Annex 3 - Form of Opinion of Jones, Day, Reavis & Pogue
(Section 5.2(c))
</TABLE>
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<TABLE>
<CAPTION>
INDEX OF DEFINED TERMS
<S> <C>
Acquiror . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Acquiror Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Acquiror Subsidiary Holding Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Acquiror's Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Acquisition Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Acquisition Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Alternative Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
beneficial ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
BHC Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
BIF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Company Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Company Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Company Subsidiary Holding Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Continued Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Covered Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Dissenters' Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Dissenting Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Environmental Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ERISA Affiliate Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
FDIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Federal Reserve Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Government Regulators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Hazardous Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Loan Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Maximum Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
National Bancshares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
OREO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Participation Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
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<TABLE>
<S> <C>
person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Preliminary Purchase Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Purchase Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Qualified Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Regulatory Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Securities Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SRO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
State Corporation Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
State Regulator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
</TABLE>
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<PAGE> 6
AGREEMENT AND PLAN OF MERGER, dated as of the 30th day of
September, 1996 (this "Plan"), by and among CULLEN/FROST BANKERS, INC. (the
"Acquiror"), R.E. HOLDING CORPORATION ("Merger Sub"), and CORPUS CHRISTI
BANCSHARES, INC. (the "Company").
RECITALS:
A. The Acquiror. The Acquiror is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Texas, with its principal executive offices located in San Antonio, Texas.
The Acquiror is a bank holding company duly registered with the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board") under the
Bank Holding Company Act of 1956, as amended (the "BHC Act").
B. Merger Sub. Merger Sub is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Texas,
with its principal executive offices located in San Antonio, Texas. All the
outstanding shares of the capital stock of Merger Sub are owned directly by the
Acquiror. By its execution of this Plan, Acquiror, in its capacity as sole
shareholder of Merger Sub, approves this Plan.
C. The Company. The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Texas,
with its principal executive offices located in Corpus Christi, Texas. As of
the date hereof, the Company has 4,000,000 authorized shares of common stock,
par value $5.00 per share ("Company Common Stock"), of which no more than
1,600,200 shares were outstanding as of the date hereof (including 200 shares
to be issued upon the completion of the exercise of certain options), and has
no other class of capital stock authorized. The Company is a bank holding
company duly registered with the Federal Reserve Board under the BHC Act.
D. Rights, Etc. The Company does not have any shares of its
capital stock reserved for issuance, any outstanding option, call or commitment
relating to shares of its capital stock or any outstanding securities,
obligations or agreements convertible into or exchangeable for, or giving any
person any right (including, without limitation, preemptive rights) to
subscribe for or acquire from it, any shares of its capital stock
(collectively, "Rights"), except pursuant to the Rights Agreement, dated as of
October 18, 1995 (the "Rights Agreement"), between the Company and Chemical
Mellon Shareholder Services, L.L.C., as Rights Agent, and as set forth on Annex
1 (which includes details on the terms and conditions of any such Rights,
including the grantee, vesting periods and exercise prices of any options).
<PAGE> 7
E. Board Approvals. The respective Boards of Directors of the
Acquiror, Merger Sub and the Company have duly approved this Plan and have duly
authorized its execution and delivery.
In consideration of their mutual promises and obligations
hereunder, the parties hereto adopt and make this Plan and prescribe the terms
and conditions hereof and the manner and basis of carrying it into effect,
which shall be as follows:
ARTICLE I. THE MERGERS
SECTION 1.1. Structure of the Merger. On the Effective Date (as
defined in Section 7.1), Merger Sub will merge (the "Merger") with and into the
Company, with the Company being the surviving corporation (the "Surviving
Corporation"), pursuant to the provisions of, and with the effect provided in
the Texas Business Corporation Act (the "State Corporation Law"). The separate
corporate existence of Merger Sub shall thereupon cease. The Surviving
Corporation shall continue to be governed by the State Corporation Law and its
separate corporate existence with all of its rights, privileges, immunities,
powers and franchises shall continue unaffected by the Merger. At the
Effective Time (as defined in Section 7.1), the articles of incorporation and
by-laws of the Surviving Corporation shall be the articles of incorporation and
by-laws of the Company immediately prior to the Effective Time.
SECTION 1.2. Effect on Outstanding Shares. (a) At the
Effective Time, automatically and without any action on the part of any holder
thereof, each share of Company Common Stock issued and outstanding at the
Effective Time (other than shares held by holders (each, a "Dissenting
Shareholder") who perfect their rights to dissent under applicable state law
(the "Dissenters' Shares")), shall be converted into the right to receive
$18.84 in cash (one cent (1c.) of which is attributable to the redemption price
of the associated right under the Rights Agreement) without interest (the
"Merger Consideration"). At the Effective Time, each share of Company Common
Stock held as treasury stock of the Company shall be cancelled and retired and
shall cease to exist and no exchange or payment shall be made with respect
thereto. Upon the payment by the Surviving Corporation of the "fair value" of
any Dissenters' Shares in accordance with the State Corporation Law, such
Dissenters' Shares shall be cancelled and retired and shall cease to exist, and
no exchange or further payment shall be made with respect thereto.
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(b) At the Effective Time, the shares of common stock of Merger
Sub issued and outstanding immediately prior to the Effective Time shall be
converted into shares of common stock of the Surviving Corporation and shall
thereafter constitute all of the issued and outstanding shares of capital stock
of the Surviving Corporation.
SECTION 1.3. Exchange Procedures. (a) At and after the
Effective Time, each certificate theretofore representing shares of Company
Common Stock (each, a "Certificate") shall represent only the right to receive
the Merger Consideration in cash without interest.
(b) As of the Effective Time, the Acquiror shall deposit, or
shall cause to be deposited, with such bank or trust company as the Acquiror
shall elect (which may be a subsidiary of the Acquiror) (the "Exchange Agent"),
for the benefit of the holders of shares of Company Common Stock, for exchange
in accordance with this Section 1.3, the Merger Consideration to be paid
pursuant to Section 1.2 and deposited pursuant to this Section 1.3 in exchange
for outstanding shares of Company Common Stock.
(c) As soon as practicable after the Effective Time, the
Acquiror shall cause the Exchange Agent to mail to each holder of record of a
Certificate or Certificates the following: (i) a letter of transmittal
specifying that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent, which shall be in a form and contain any other customary provisions as
the Acquiror may determine; and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the Merger Consideration. Upon
the proper surrender of a Certificate to the Exchange Agent, together with a
properly completed and duly executed letter of transmittal, the holder of such
Certificate shall be entitled to receive in exchange therefor a check
representing the Merger Consideration which such holder has the right to
receive in respect of the Certificate surrendered pursuant to the provisions
hereof, and the Certificate so surrendered shall forthwith be cancelled. No
interest will be paid or accrued on the Merger Consideration. In the event of
a transfer of ownership of any shares of Company Common Stock not registered in
the transfer records of the Company, a check for the Merger Consideration may
be issued to the transferee if the Certificate representing such Company Common
Stock is presented to the Exchange Agent, accompanied by documents sufficient,
in the discretion of the Acquiror and the Exchange Agent, (i) to evidence and
effect such transfer and (ii) to evidence that all applicable stock transfer
taxes have been paid.
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(d) From and after the Effective Time, there shall be no
transfers on the stock transfer records of the Company of any shares of Company
Common Stock that were outstanding immediately prior to the Effective Time. If
after the Effective Time Certificates are presented to the Acquiror or the
Surviving Corporation, they shall be canceled and exchanged for the Merger
Consideration deliverable in respect thereof pursuant to this Plan in
accordance with the procedures set forth in this Section 1.3.
(e) Any portion of the aggregate Merger Consideration or the
proceeds of any investments thereof that remains unclaimed by the shareholders
of the Company for six months after the Effective Time shall be repaid by the
Exchange Agent to the Acquiror. Any shareholder of the Company who has not
theretofore complied with this Section 1.3 shall thereafter be entitled to look
only to the Acquiror for payment of the Merger Consideration deliverable in
respect of each share of Company Common Stock held by such shareholder without
any interest thereon. If outstanding certificates for shares of Company Common
Stock are not surrendered or the payment for them is not claimed prior to the
date on which such payments would otherwise escheat to or become the property
of any governmental unit or agency, the unclaimed items shall, to the extent
permitted by abandoned property and any other applicable law, become the
property of the Acquiror (and to the extent not in its possession shall be paid
over to the Acquiror), free and clear of all claims or interest of any person
previously entitled to such claims. Notwithstanding the foregoing, none of the
Acquiror, the Surviving Corporation, the Exchange Agent or any other person
shall be liable to any former holder of Company Common Stock for any amount
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
(f) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Exchange Agent, the posting by such person of a bond in such amount as the
Exchange Agent may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate a check for the Merger
Consideration deliverable in exchange therefor.
SECTION 1.4. Dissenters' Rights. Any Dissenting Shareholder who
shall be entitled to be paid the "fair value" of his or her Dissenters' Shares,
as provided in
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Article 5.12 of the State Corporation Law, shall not be entitled to the Merger
Consideration in respect thereof unless and until such Dissenting Shareholder
shall have failed to perfect or shall have effectively withdrawn or lost such
Dissenting Shareholder's right to dissent from the Merger under the State
Corporation Law, and shall be entitled to receive only the payment provided for
by Article 5.12 of the State Corporation Law with respect to such Dissenters'
Shares. If any Dissenting Shareholder shall fail to perfect or shall have
effectively withdrawn or lost such right to dissent, the Dissenters' Shares
held by such Dissenting Shareholder shall thereupon be treated as though such
Dissenters' Shares had been converted into the right to receive the Merger
Consideration pursuant to Section 1.2.
SECTION 1.5. Alternative Structure. Notwithstanding anything in
this Plan to the contrary, the Acquiror may specify that, before or after the
Merger, the Company, the Acquiror, the Company Bank, the Acquiror Bank and any
other subsidiaries of the Acquiror and the Company shall enter into
transactions other than those described in Article I hereof in order to effect
the purposes of this Plan, and the Company and the Acquiror shall take all
action necessary and appropriate to effect, or cause to be effected, such
transactions; provided, however, that no such specification shall materially
and adversely affect the timing of the consummation of the transactions
contemplated herein or the tax effect or economic benefits of the Merger to the
holders of Company Common Stock.
SECTION 1.6. Options. At the Effective Time, each option
granted by the Company to directors, officers and employees of the Company and
its subsidiaries to purchase shares of Company Common Stock which is
outstanding and exercisable immediately prior to the Effective Time and has not
been exercised at the Effective Time shall be terminated and each grantee
thereof shall be entitled to receive, in lieu of each share of Company Common
Stock that would otherwise have been issuable upon the exercise thereof and
without payment of any exercise price therefor, an amount in cash computed by
multiplying (i) the difference between (x) the per share amount of the Merger
Consideration (i.e., $18.84) and (y) the per share exercise price applicable to
such option by (ii) the number of such shares of Company Common Stock subject
to such option. The Company agrees to take or cause to be taken all action
necessary under such options to provide for such termination, including
obtaining any necessary consents from grantees. As soon as practicable after
the Effective Time, the
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Surviving Corporation will make the payments required to be made to grantees of
options under this Section 1.6.
ARTICLE II. CONDUCT PENDING THE MERGER
SECTION 2.1. Conduct of the Company's Business Prior to the
Effective Time. Except as expressly provided in this Plan, during the period
from the date of this Plan to the Effective Time, the Company shall, and shall
cause each of its subsidiaries to, (i) conduct its business in the usual,
regular and ordinary course of business consistent with past practice, (ii) use
its reasonable best efforts to maintain and preserve intact its business
organization, properties, leases, employees and advantageous business
relationships and retain the services of its officers and key employees, (iii)
take no action which would adversely affect or delay the ability of the
Company, the Acquiror, Merger Sub or any subsidiary thereof to obtain any
necessary approvals, consents or waivers of any governmental authority required
for the transactions contemplated hereby or to perform its covenants and
agreements on a timely basis under this Plan and (iv) take no action that is
reasonably likely to have a Material Adverse Effect (as defined in Section 8.1
hereof) on the Company.
SECTION 2.2. Forbearance by the Company. During the period from
the date of this Plan to the Effective Time, the Company shall not, and shall
not permit any of its subsidiaries, without the prior written consent of the
Acquiror, to:
(a) other than in the ordinary course of business consistent
with past practice, make any loan or advance or incur any indebtedness
for borrowed money, assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of any other
person;
(b) adjust, split, combine or reclassify any capital stock;
make, declare or pay any dividend or make any other distribution on, or
directly or indirectly redeem, purchase or otherwise acquire, any shares
of its capital stock or any securities or obligations convertible into
or exchangeable for any shares of its capital stock, or grant any stock
appreciation rights or grant, sell or issue to any individual,
corporation or other person any right or option to acquire, or
securities evidencing a right to convert into or acquire, any shares of
its capital stock, except for regular quarterly cash dividends both (i)
at
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a rate per share of Company Common Stock not in excess of $0.075 per
share and (ii) having record dates and payment dates consistent with
past practice as described in the letter referred to in the introduction
to Section 3.1 provided, however, that the Company may not declare any
regular quarterly cash dividends in any quarter if with respect to such
quarter the amount of the dividend exceeds the amount of net income for
such quarter; or issue any additional shares of capital stock except
pursuant to the exercise of stock options outstanding as of the date
hereof as set forth on Annex 1 and on the terms in effect on the date
hereof;
(c) other than in the ordinary course of business consistent
with past practice and pursuant to policies currently in effect, sell,
transfer, mortgage, encumber or otherwise dispose of any of its
properties, leases or assets to any person, or cancel, release or assign
any indebtedness of any such person, except pursuant to contracts or
agreements in force as of the date of this Plan;
(d) make any capital expenditures, other than capital
expenditures made in the ordinary course of business consistent with
past practice in amounts not exceeding $25,000, individually or in the
aggregate;
(e) increase in any manner the compensation or fringe benefits
of any of its employees or directors, or create or institute, or make
any payments pursuant to, any severance plan or package, or pay any
pension or retirement allowance not required by any existing plan or
agreement to any such employees or directors, or become a party to,
amend or commit itself to or fund or otherwise establish any trust or
account related to any Employee Plan (as defined in Section 3.1(p)),
with or for the benefit of any employee, other than general increases in
compensation in the ordinary course of business consistent with past
practice not in excess of 6% in any 12-month period or any amendment
required by applicable law (provided that any such amendment shall
provide the least increase to cost permitted under such applicable law),
or voluntarily accelerate the vesting of any stock options or other
compensation or benefit;
(f) (i) other than in the ordinary course of business
consistent with past practice in individual amounts not to exceed
$100,000 or in securities transactions as provided in (f)(ii) below,
make any investment either by contributions to capital, property
transfers, or purchase of any property or assets of any
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person, provided that the Company shall make no acquisition of business
operations without the Acquiror's prior consent; or
(ii) other than purchases of direct obligations of the United
States of America with a remaining maturity at the time of purchase of
two years or less, purchase or acquire securities of any type; provided,
however, that, in the case of investment securities, the Company may
purchase (or permit a Company Subsidiary to purchase) investment
securities if, within one business day after the Company requests in
writing (which notice shall describe in detail the investment securities
to be purchased and the price thereof) that the Acquiror consent to the
making of any such purchase, the Acquiror has approved such request in
writing or has not responded in writing to such request;
(g) enter into or terminate any contract or agreement, or make
any change in any of its leases or contracts, other than with respect to
those involving aggregate payments of less than, or the provision of
goods or services with a market value of less than, $25,000;
(h) settle any claim, action or proceeding involving any
liability of the Company or any of its subsidiaries for money damages in
excess of $25,000 or material restrictions upon the operations of the
Company or any of its subsidiaries;
(i) except in the ordinary course of business and in amounts
less than $100,000, waive or release any material right or collateral or
cancel or compromise any extension of credit or other debt or claim;
provided, however, that the Company may take (or permit a Company
Subsidiary to take) any such action if, within two business days after
the Company requests in writing (which request shall include information
and analyses sufficient for Acquiror to assess the proposed action) that
the Acquiror consent to the taking of such action, the Acquiror has
approved such request in writing or has not responded in writing to such
request;
(j) make, renegotiate, renew, increase, extend or purchase any
loan, lease (credit equivalent), advance, credit enhancement or other
extension of credit, or make any commitment in respect of any of the
foregoing, except (i) unsecured loans, advances or commitments in
amounts less than $100,000 made in the ordinary course
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<PAGE> 14
of business consistent with past practice and made in conformity with
all applicable policies and procedures, (ii) secured loans, advances or
commitments in an amount less than $200,000 and (iii) loans or advances
as to which the Company has a legally binding obligation to make such
loan or advance as of the date hereof and a description of which has
been provided by the Company in writing to the Acquiror prior to the
execution of this Plan; provided, however, that the Company may take (or
permit a Company Subsidiary to take) any such action if, within 24 hours
after receiving a request from a person to take any such action that the
Company intends to act upon, the Company notifies the Acquiror in
writing of such request and within 24 hours after the Company requests
in writing (which request shall include information and analyses
sufficient for Acquiror to assess the proposed action) that the Acquiror
consent to the taking of such action, the Acquiror has approved such
request in writing or has not responded in writing to such request;
(k) except as contemplated by Section 4.2, change its method
of accounting as in effect at December 31, 1995, except as required by
changes in generally accepted accounting principles as concurred in by
the Company's independent auditors;
(l) enter into any new activities or lines of business, or
cease to conduct any activities or lines of business that it conducts
on the date hereof, or conduct any business activity not consistent with
past practice;
(m) amend its articles of incorporation or its by-laws; or
(n) agree to, or make any commitment to, take any of the
actions prohibited by this Section 2.2.
SECTION 2.3. Cooperation. The Company shall, and the Company
shall cause the Company Subsidiary Holding Company and the Company Bank to,
cooperate with Acquiror and Merger Sub in completing the transactions
contemplated hereby and shall not take, cause to be taken or agree or make any
commitment to take any action: (i) that would cause any of the representations
or warranties of it that are set forth in Article III hereof not to be true and
correct, or (ii) that is inconsistent with or prohibited by Section 2.1 or
Section 2.2.
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ARTICLE III. REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of the Company. The
Company represents and warrants to the Acquiror and Merger Sub, that, except as
specifically disclosed in a letter of the Company delivered to the Acquiror
prior to the date hereof (and making specific reference to the Section of this
Plan for which an exception is taken):
(a) Recitals True. The facts set forth in the Recitals of this
Plan with respect to the Company are true and correct.
(b) Capital Stock. All outstanding shares of capital stock of
the Company, the Company Subsidiary Holding Company and the Company Bank
have been duly authorized and validly issued, are fully paid and non-
assessable and are not subject to any preemptive rights.
(c) Due Organization. C.S.B.C.C., Inc. (the "Company
Subsidiary Holding Company") is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware.
Citizens State Bank (the "Company Bank") is a state chartered bank duly
organized, validly existing and in good standing under the laws of the
State of Texas. The Company Subsidiary Holding Company is a bank
holding company duly registered with the Federal Reserve Board under the
BHC Act. The Company Bank is a member of the Bank Insurance Fund
("BIF") of the Federal Deposit Insurance Corporation (the "FDIC") and
all of its deposits are subject to assessment by the BIF.
(d) Authority. Each of the Company and its subsidiaries has
the corporate power and authority, and is duly qualified in all
jurisdictions (except for such qualifications the absence of which, in
the aggregate, would not have a Material Adverse Effect on the Company)
where such qualification is required, to carry on its business as it is
now being conducted and to own all its properties and assets, and it has
all federal, state, local, and foreign governmental authorizations
necessary for it to own or lease its properties and assets and to carry
on its business as it is now being conducted.
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<PAGE> 16
(e) Subsidiaries; Significant Investments. The only
subsidiaries of the Company are the Company Subsidiary Holding Company
and the Company Bank. All of the shares of capital stock of the Company
Subsidiary Holding Company are owned directly and of record by the
Company and all of the shares of capital stock of the Company Bank are
owned directly and of record by the Company Subsidiary Holding Company,
in each such case free and clear of all liens, claims, encumbrances and
restrictions on transfer and there are no Rights with respect to any
such capital stock. None of the Company or any of such subsidiaries
owns any equity securities, any security convertible or exchangeable
into an equity security or any rights to acquire any equity security,
except for shares of the Company Subsidiary Holding Company held by the
Company, shares of the Company Bank held by the Company Subsidiary
Holding Company, shares of capital stock of the Federal Home Loan Bank
of Dallas and shares of Texas Independent Bank.
(f) Shareholder Approvals. (i) Subject to the receipt of
required shareholder approval of this Plan, this Plan and the
transactions contemplated herein have been duly authorized by all
necessary corporate action of the Company. In addition, the Company has
received the written opinions of FinSer Corporation and Alex Sheshunoff
& Co. Investment Banking to the effect that the Merger Consideration to
be received by the shareholders of the Company is fair to such
shareholders from a financial point of view and has provided true and
complete copies of such opinions to the Acquiror. Subject to receipt of
(A) such shareholder approval and (B) the required approvals, consents
or waivers of governmental authorities referred to in Section 5.1(b),
this Plan is a valid and binding agreement of the Company enforceable
against it in accordance with its terms, subject as to enforcement to
applicable bankruptcy, insolvency, receivership, conservatorship,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to
general equity principles.
(ii) The affirmative vote of two thirds of the
outstanding shares of Company Common Stock entitled to vote on this Plan
is the only shareholder vote required for approval of the Plan and
consummation of the Merger and the other transactions contemplated
hereby.
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<PAGE> 17
(g) No Violations. The execution, delivery and performance of
this Plan by the Company do not, and the consummation of the
transactions contemplated hereby or thereby by the Company, the Company
Subsidiary Holding Company and the Company Bank will not, constitute (i)
a breach or violation of, or a default under, any law, rule or
regulation or any judgment, decree, order, governmental permit or
license to which the Company or any of its subsidiaries (or any of their
respective properties) is subject, or enable any person to enjoin the
Merger or the other transactions contemplated hereby, (ii) a breach or
violation of, or a default under, the articles of incorporation or
by-laws or similar organizational documents of the Company or any
subsidiary of the Company or (iii) a breach or violation of, or a
default under (or an event which with due notice or lapse of time or
both would constitute a default under), or result in the termination of,
accelerate the performance required by, or result in the creation of any
lien, pledge, security interest, charge or other encumbrance upon any of
the properties or assets of the Company or any subsidiary of the Company
under, any of the terms, conditions or provisions of any note, bond,
indenture, deed of trust, loan agreement or other agreement, instrument
or obligation to which the Company or any subsidiary of the Company is a
party, or to which any of their respective properties or assets may be
bound or affected; and the consummation of the transactions contemplated
hereby will not require any approval, consent or waiver under any such
law, rule, regulation, judgment, decree, order, governmental permit or
license or the approval, consent or waiver of any other party to any
such agreement, indenture or instrument, other than (i) the required
approvals, consents and waivers of governmental authorities referred to
in Section 5.1(b), (ii) the approval of the shareholders of the Company
referred to in Section 3.1(f) and (iii) such approvals, consents or
waivers as are required under federal securities laws in connection with
the transactions contemplated by this Plan.
(h) Reports. (i) As of their respective dates, neither the
Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1995, nor any other document filed by the Company
subsequent to December 31, 1995 under Section 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934, as amended (the "Securities
Exchange Act"), each in the form (including exhibits) filed with the
Securities and Exchange Commission (the "SEC") (collectively, the
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<PAGE> 18
"Reports"), contained or will contain any untrue statement of a material
fact or omitted or will omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in
light of the circumstances under which they were made, not misleading.
Each of the consolidated balance sheets contained or incorporated by
reference in the Reports (including in each case any related notes and
schedules) fairly presented in all material respects the financial
position of the entity or entities to which it relates as of its date
and each of the consolidated statements of income, consolidated
statements of shareholders' equity and consolidated statement of cash
flows contained or incorporated by reference in the Reports (including
in each case any related notes and schedules) fairly presented in all
material respects the results of operations, shareholders' equity and
cash flows, as the case may be, of the entity or entities to which it
relates for the periods set forth therein (subject, in the case of
unaudited interim statements, to normal year-end audit adjustments that
are not material in amount or effect), in each case in accordance with
generally accepted accounting principles consistently applied during the
periods involved, except as may be noted therein.
(ii) The Company and each of its subsidiaries have each
timely filed all reports, registrations and statements, together with
any amendments required to be made with respect thereto, if any, that
they were required to file since December 31, 1993 with (i) the SEC,
(ii) the Federal Reserve Board, (iii) the FDIC, (iv) the BIF, (v) any
state banking commission or other regulatory authority (each, a "State
Regulator") (such entities collectively, the "Regulatory Agencies"), and
(vi) the National Association of Securities Dealers, Inc. and any other
self-regulatory organization (an "SRO"), and all other material reports
and statements required to be filed by them since December 31, 1993,
including, without limitation, any report or statement required to be
filed pursuant to the laws, rules or regulations of the United States,
the Federal Reserve Board, the FDIC, the BIF, any State Regulator or any
SRO, and have paid all fees and assessments due and payable in
connection therewith.
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<PAGE> 19
(i) Absence of Undisclosed Liabilities and Certain Changes or
Events. Since December 31, 1995, the Company and its subsidiaries have
not incurred any material liability, except in the ordinary course of
their business consistent with past practice. Since June 30, 1996,
there has not been any change in the condition (financial or other),
properties, business, results of operations or prospects of the Company
or its subsidiaries which, individually or in the aggregate, has had, or
is reasonably likely to have, a Material Adverse Effect on the Company
(other than changes (i) in banking laws or regulations, or
interpretations thereof, that affect the banking industry generally,
(ii) in the general level of interest rates, (iii) in GAAP, or (iv)
which would reasonably be expected to occur as a consequence of the
Merger, including, without limitation, the consequences of employee
resignations, employee relations difficulties and deposit run-offs).
(j) Guarantees; Suretyships; Contingent Liabilities. The
letter referred to in the introduction to Section 3.1 lists and briefly
describes all guarantees, matters of suretyship and similar contingent
liabilities, other than loan commitments, of the Company and its
subsidiaries.
(k) Taxes. All federal, state, local, and foreign tax returns
required to be filed by or on behalf of the Company or any of its
subsidiaries have been timely filed or requests for extensions have been
timely filed and any such extension shall have been granted and not have
expired, and all such filed returns are complete and accurate in all
material respects. All taxes shown on such returns have been paid in
full or adequate provision has been made for any such taxes on the
Company's balance sheet (in accordance with generally accepted
accounting principles). There is no audit examination, deficiency, or
refund litigation with respect to any taxes of the Company or any of its
subsidiaries. All taxes, interest, additions, and penalties due with
respect to completed and settled examinations or concluded litigation
relating to it have been paid in full or adequate provision has been
made for any such taxes on the Company's balance sheet (in accordance
with generally accepted accounting principles). Neither the Company nor
any of its subsidiaries has executed an extension or waiver of any
statute of limitations on the assessment or collection of any tax due
that is currently in effect. For purposes of this
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paragraph (k), "taxes" includes all federal, state, local or foreign
income, gross receipts, windfall profits, severance, property,
production, sales, use, license, excise, franchise, employment,
withholding or similar taxes imposed on the income, properties or
operations of the Company of any of its subsidiaries, together with any
interest additions or penalties with respect thereto and any interest in
respect of such additions or penalties.
(l) Absence of Claims. As of the date hereof and except as
disclosed in the letter referred to in the introduction to Section 3.1,
there is no pending litigation, controversy, claim, action or proceeding
against the Company or any of its subsidiaries before any court or
governmental agency, and, to the best of the Company's knowledge after
reasonable inquiry, no such litigation, proceeding, controversy, claim
or action has been threatened or is contemplated. As of the Effective
Time and except as disclosed in the letter referred to in the
introduction to Section 3.1, there is no pending litigation,
controversy, claim, action or proceeding against the Company or any of
its subsidiaries before any court or governmental agency, which is
reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect on the Company or to hinder or delay consummation of the
transactions contemplated hereby and, to the best of the Company's
knowledge after reasonable inquiry, no such litigation, proceeding,
controversy, claim or action has been threatened or is contemplated.
(m) Absence of Regulatory Actions. Neither the Company nor
any of its subsidiaries is a party to any cease and desist order,
written agreement or memorandum of understanding with, or a party to any
commitment letter or similar undertaking to, or is subject to any order
or directive by, or is a recipient of any extraordinary supervisory
letter from, or has adopted any board resolutions at the request of,
federal or state governmental authorities charged with the supervision
or regulation of depository institutions or depositary institution
holding companies or engaged in the insurance of bank and/or savings and
loan deposits ("Government Regulators") nor has it been advised by any
Government Regulator that it is contemplating issuing or requesting (or
is considering the appropriateness of issuing or requesting) any such
order, directive, written agreement, memorandum of understanding,
extraordinary supervisory letter, commitment letter, board resolutions
or similar undertaking.
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(n) Agreements. (i) Except for this Plan and arrangements
made in the ordinary course of business, the Company and its
subsidiaries are not bound by any material contract (as defined in Item
601(b)(10) of Regulation S-K) to be performed after the date hereof that
has not been filed with or incorporated by reference in the Reports.
Except as disclosed in the Reports filed prior to the date of this Plan,
neither the Company nor any of its subsidiaries is a party to an oral or
written (A) consulting agreement (other than data processing, software
programming and licensing contracts entered into in the ordinary course
of business) not terminable on 30 days' or less notice involving the
payment of more than $25,000 per annum, in the case of any such
agreement with an individual, or $50,000 per annum, in the case of any
other such agreement, (B) agreement with any executive officer or other
key employee of the Company or any of its subsidiaries the benefits of
which are contingent, or the terms of which are materially altered, upon
the occurrence of a transaction involving the Company or any of its
subsidiaries of the nature contemplated by this Plan and which provides
for the payment of in excess of $50,000, (C) agreement with respect to
any executive officer of the Company or any of its subsidiaries
providing any term of employment or compensation guarantee extending for
a period longer than one year and for the payment of in excess of
$50,000 per annum, (D) agreement or plan, including any stock option
plan, stock appreciation rights plan, restricted stock plan or stock
purchase plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence
of any of the transactions contemplated by this Plan or the value of any
of the benefits of which will be calculated on the basis of any of the
transactions contemplated by this Plan or (E) agreement containing
covenants that limit the ability of the Company or any of its
subsidiaries to compete in any line of business or with any person, or
that involve any restriction on the geographic area in which, or method
by which, the Company (including any successor thereof) or any of its
subsidiaries may carry on its business (other than as may be required by
law or any regulatory agency).
(ii) Neither the Company nor any of its subsidiaries is
in default under or in violation of any provision of any note, bond,
indenture, mortgage, deed of trust, loan agreement or other agreement to
which it
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<PAGE> 22
is a party or by which it is bound or to which any of its respective
properties or assets is subject.
(o) Labor Matters. Neither the Company or any of its
subsidiaries is a party to, or is bound by, any collective bargaining
agreement, contract, or other agreement or understanding with a labor
union or labor organization, nor is the Company or any of its
subsidiaries the subject of any proceeding asserting that it has
committed an unfair labor practice or seeking to compel it or any such
subsidiary to bargain with any labor organization as to wages and
conditions of employment, nor is there any strike, other labor dispute
or organizational effort involving the Company or any of its
subsidiaries pending or threatened.
(p) Employee Benefit Plans. The letter referred to in the
introduction to Section 3.1 contains a complete and correct list as of
the date hereof of the names and current annual salary, bonus,
commission and perquisite arrangements, written or unwritten, for each
director, officer and employee of the Company and each of its
subsidiaries. The letter referred to in the introduction to Section 3.1
also contains a complete list of all pension, retirement, stock option,
stock purchase, stock ownership, savings, stock appreciation right,
profit sharing, deferred compensation, consulting, bonus, group
insurance, severance and other benefit plans, contracts, agreements,
arrangements, including, but not limited to, "employee benefit plans",
as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), incentive and welfare policies,
contracts, plans and arrangements and all trust agreements related
thereto in respect to any present or former directors, officers, or
other employees of the Company or any of its subsidiaries (hereinafter
referred to collectively as the "Employee Plans"). (i) All of the
Employee Plans comply in all material respects with all applicable
requirements of ERISA, the Code and other applicable laws; neither the
Company nor any of its subsidiaries has engaged in a "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) with respect to any Employee Plan which could subject the Company
or any subsidiary to a material tax or penalty under Section 4975 of the
Code or Section 502(i) of ERISA; and all contributions required to be
made under the terms of any Employee Plan have been timely made or have
been reflected on the Company's balance sheet; (ii) no liability to the
Pension Benefit Guaranty Corporation (the "PBGC") has
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<PAGE> 23
been or is expected by the Company or any of its subsidiaries to be
incurred with respect to any Employee Plan which is subject to Title IV
of ERISA (a "Pension Plan"), or with respect to any "single-employer
plan" (as defined in Section 4001(a)(15) of ERISA) currently or formerly
maintained by the Company or any entity (an "ERISA Affiliate") which is
considered one employer with the Company under Section 4001 of ERISA or
Section 414 of the Code (an "ERISA Affiliate Plan"); and no proceedings
have been instituted to terminate any Pension Plan or ERISA Affiliate
Plan and no condition exists that presents a material risk of the
institution of such proceedings; (iii) no Pension Plan or ERISA
Affiliate Plan had an "accumulated funding deficiency" (as defined in
Section 302 of ERISA (whether or not waived)) as of the last day of the
end of the most recent plan year ending prior to the date hereof; the
fair market value of the assets of each Pension Plan and ERISA Affiliate
Plan exceeds the present value of the "benefit liabilities" (as defined
in Section 4001(a)(16) of ERISA) under such Pension Plan or ERISA
Affiliate Plan as of the end of the most recent plan year with respect
to the respective Pension Plan or ERISA Affiliate Plan ending prior to
the date hereof, calculated on the basis of the actuarial assumptions
used in the most recent actuarial valuation for such Pension Plan or
ERISA Affiliate Plan prior to the date hereof, and there has been no
material change in the financial condition of any such Pension Plan or
ERISA Affiliate Plan since the last day of the most recent plan year;
and no notice of a "reportable event" (as defined in Section 4043 of
ERISA) for which the 30-day reporting requirement has not been waived
has been required to be filed for any Pension Plan or ERISA Affiliate
Plan within the 12-month period ending on the date hereof; (iv) neither
the Company nor any subsidiary of the Company has provided or is
required to provide, security to any Pension Plan or to any ERISA
Affiliate Plan pursuant to Section 401(a)(29) of the Code; (v) neither
the Company, its subsidiaries, nor any ERISA Affiliate has contributed
to any "multiemployer plan", as defined in Section 3(37) of ERISA, on or
after September 26, 1980; (vi) each Employee Plan of the Company or any
of its subsidiaries which is an "employee pension benefit plan" (as
defined in Section 3(2) of ERISA) has requested within the applicable
remedial amendment period or has received a favorable determination
letter from the Internal Revenue Service deeming such plan (a "Qualified
Plan") to be qualified under Section 401(a) of the Code; and neither the
Company nor its subsidi-
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<PAGE> 24
aries are aware of any circumstances likely to result in revocation of
any such favorable determination letter; (vii) each Qualified Plan which
is an "employee stock ownership plan" (as defined in Section 4975(e)(7)
of the Code) has satisfied all of the applicable requirements of
Sections 409 and 4975(e)(7) of the Code and the regulations thereunder;
all Employee Plans covering foreign participants comply in all material
respects with applicable local law, and there are no material unfunded
liabilities with respect to any Employee Plan which covers foreign
employees; (viii) there is no pending or, to the Company's knowledge,
threatened litigation, administrative action or proceeding relating to
any Employee Plan; (ix) there has been no announcement or commitment by
the Company or any subsidiary of the Company to create an additional
Employee Plan, or to amend an Employee Plan except for amendments
required by applicable law which do not increase the cost of such
Employee Plan; and the Company and its subsidiaries do not have any
obligations for retiree health and life benefits under any Employee Plan
except as set forth in the letter referred to in the introduction to
Section 3.1, and there are no such Employee Plans that cannot be amended
or terminated without incurring any liability thereunder; (x) with
respect to the Company or any of its subsidiaries, except as
specifically identified in the letter referred to in the introduction to
Section 3.1, the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not result in
any payment or series of payments by the Company or any subsidiary of
the Company to any person which is an "excess parachute payment" (as
defined in Section 280G of the Code) under any Employee Plan, increase
or secure (by way of a trust or other vehicle) any benefits payable
under any Employee Plan, or accelerate the time of payment or vesting of
any such benefit, and (xi) with respect to each Employee Plan, the
Company has supplied to the Acquiror a true and correct copy, if
applicable, of (A) the two most recent annual reports on the applicable
form of the Form 5500 series filed with the Internal Revenue Service
(the "IRS"), (B) such Employee Plan, including amendments thereto, (C)
each trust agreement and insurance contract relating to such Employee
Plan, including amendments thereto, (D) the most recent summary plan
description for such Employee Plan, including amendments thereto, if the
Employee Plan is subject to Title I of ERISA, (E) the most recent
actuarial report or valuation if such Employee Plan is a Pension Plan,
(F) the most recent
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<PAGE> 25
determination letter issued by the IRS if such Employee Plan is a
Qualified Plan and (G) the most recent financial statements and
auditor's report.
(q) Real Property. (i) The letter referred to in the
introduction to Section 3.1 contains a complete and correct list of (A)
all real property or premises owned on the date hereof, in whole or in
part by the Company or any of its subsidiaries and all indebtedness
secured by any encumbrance thereon, and (B) all real property or
premises leased in whole or in part by the Company or any of its
subsidiaries, together with a list of all applicable leases, the name of
the lessor and any requirement of consent of the lessor to the
transactions contemplated herein. None of such premises or properties
have been condemned or otherwise taken by any public authority and no
condemnation or taking is threatened or contemplated and none thereof is
subject to any claim, contract or law which might affect its use or
value for the purposes now made of it. None of the premises or
properties of the Company or any of its subsidiaries is subject to any
current or potential interests of third parties or other restrictions or
limitations that would impair or be inconsistent with the current use of
such property by the Company or any of its subsidiaries.
(ii) Each of the leases referred to in such letter is valid and
existing and in full force and effect, and no party thereto is in
default and no notice of a claim of default by any party has been
delivered to the Company or any of its subsidiaries or is now pending,
and there does not exist any event that with notice or the passing of
time, or both, would constitute a default or excuse performance by any
party thereto, provided that with respect to matters relating to any
party other than the Company the foregoing representation is based on
the best knowledge of the Company.
(r) Title. The Company and each of its subsidiaries has good
title to its properties and assets (other than (i) property as to which
it is lessee and (ii) real estate owned as a result of foreclosure,
transfer in lieu of foreclosure or other transfer in satisfaction of a
debtor's obligation previously contracted).
(s) Knowledge as to Conditions. As of the date hereof, the
Company knows of no reason why the approvals, consents and waivers of
governmental
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<PAGE> 26
authorities referred to in Section 5.1(b) should not be obtained without
the imposition of any condition of the type referred to in the provisos
thereto.
(t) Compliance with Laws. Since December 31, 1993, the
Company and each of its subsidiaries have complied in all material
respects with all applicable laws. The Company and each of its
subsidiaries has all permits, licenses, certificates of authority,
orders and approvals of, and has made all filings, applications and
registrations with, federal, state, local and foreign governmental or
regulatory bodies that are required in order to permit it to carry on
its business as it is presently conducted; all such permits, licenses,
certificates of authority, orders and approvals are in full force and
effect, and, to the best knowledge of the Company, no suspension or
cancellation of any of them is threatened.
(u) Fees. Other than in respect of financial advisory
services performed for the Company by FinSer Corporation and Alex
Sheshunoff & Company Investment Banking, in amounts and pursuant to
agreements previously disclosed to the Acquiror, neither the Company nor
any of its subsidiaries, nor any of their respective officers,
directors, employees or agents, has employed any broker or finder or
incurred any liability for any financial advisory fees, brokerage fees,
commissions, or finder's fees, and no broker or finder has acted
directly or indirectly for the Company or any subsidiary of the Company,
in connection with the Plan or the transactions contemplated hereby.
(v) Environmental Matters. (i) With respect to the Company
and each of its subsidiaries:
(A) Each of the Company and its subsidiaries, the
Participation Facilities, and the Loan Properties (each as
defined below) are, and have been, in substantial compliance with
all Environmental Laws (as defined below);
(B) Except as disclosed in the letter referred to in the
introduction to Section 3.1, there is no suit, claim, action,
demand, executive or administrative order, directive or
proceeding pending or, to the best of the Company's knowledge,
threatened, before any court, governmental agency or board or
other forum against it or any of its subsidiaries or any
Participation Facility (x) for alleged
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<PAGE> 27
noncompliance (including by any predecessor) with, or liability
under, any Environmental Law or (y) relating to the presence of
or release into the environment of any Hazardous Material (as
defined below) or oil, whether or not occurring at or on a site
owned, leased or operated by it or any of its subsidiaries or any
Participation Facility;
(C) There is no suit, claim, action, demand, executive or
administrative order, directive or proceeding pending or, to the
best of the Company's knowledge, threatened, before any court,
governmental agency or board or other forum relating to or
against any Loan Property (or the Company or any of its
subsidiaries in respect of such Loan Property) (x) relating to
alleged noncompliance (including by any predecessor) with, or
liability under, any Environmental Law or (y) relating to the
presence of or release into the environment of any Hazardous
Material or oil whether or not occurring at or on a site owned,
leased or operated by a Loan Property;
(D) To the best of the Company's knowledge, there is no
reasonable basis for any suit, claim, action, demand, executive
or administrative order, directive or proceeding of a type
described in Section 3.1(s)(i)(B) or (C);
(E) To the best of the Company's knowledge, and except as
disclosed in the letter referred to in the introduction to
Section 3.1, the properties currently or formerly owned or
operated by the Company or any of its subsidiaries (including,
without limitation, soil, groundwater or surface water on, under
or adjacent to the properties, and buildings thereon) do not
contain any Hazardous Material (as defined below) other than as
permitted under applicable Environmental Law (provided, however,
that with respect to properties formerly owned or operated by the
Company or any of its subsidiaries, such representation is
limited to the period the Company or any such subsidiary owned or
operated such properties);
(F) To the best of the Company's knowledge, none of it or
any of its subsidiaries has received any notice, demand letter,
executive or administrative order, directive or request for
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<PAGE> 28
information from any Federal, state, local or foreign
governmental entity or any third party indicating that it may be
in violation of, or liable under, any Environmental Law;
(G) Except as disclosed in the letter referred to in the
introduction to Section 3.1, there are no underground storage
tanks on, in or under any properties or Participation Facility
and no underground storage tanks have been closed or removed from
any properties or Participation Facility which are or have been
in the ownership of it or any of its subsidiaries;
(H) During the period of (l) its or any of its
subsidiaries' ownership or operation of any of their respective
current properties, (m) its or any of its subsidiaries'
participation in the management of any Participation Facility, or
(n) its or any of its subsidiaries' holding of a security
interest in a Loan Property, there has been no contamination by
or release of Hazardous Material or oil in, on, under or
affecting such properties, except in compliance with, and as
would not result in liability under, any applicable Environmental
Law. To the best of the Company's knowledge, prior to the period
of (x) its or any of its subsidiaries' ownership or operation of
any of their respective current properties, (y) its or any of its
subsidiaries' participation in the management of any
Participation Facility, or (z) its or any of its subsidiaries'
holding of a security interest in a Loan Property, there was no
contamination by or release of Hazardous Material or oil in, on,
under or affecting any such property, Participation Facility or
Loan Property, except in compliance with, and as would not result
in liability under, any applicable Environmental Law; and
(I) Except as disclosed in the letter referred to in the
introduction to Section 3.1, none of it or its subsidiaries
participates in the management of a Loan Property or
Participation Facility to an extent that it would be deemed an
"owner or operator" as defined in 42 U.S.C. Section 9601 or any
similar Environmental Law.
(ii) The following definitions apply for purposes of this
Section 3.1(s): (w) "Loan Property" means any property in which the
applicable party (or a
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<PAGE> 29
subsidiary of it) holds a security interest, and, where required by the
context, includes the owner or operator of such property, but only with
respect to such property; (x) "Participation Facility" means any
facility in which the applicable party (or a subsidiary of it)
participates in the management (including all property held as trustee
or in any other fiduciary or agency capacity) and, where required by the
context, includes the owner or operator of such property; (y)
"Environmental Law" means (i) any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, executive or administrative order, judgment,
decree, injunction, requirement or agreement with any governmental
entity, (A) relating to the protection, preservation or restoration of
the environment (which includes, without limitation, air, water vapor,
surface water, groundwater, drinking water supply, structures, soil,
surface land, subsurface land, plant and animal life or any other
natural resource), or to human health or safety, or (B) the exposure to,
or the use, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of,
Hazardous Materials, in each case as amended and as now in effect. The
term Environmental Law includes, without limitation, the Federal
Comprehensive Environmental Response Compensation and Liability Act of
1980, the Superfund Amendments and Reauthorization Act, the Federal
Water Pollution Control Act of 1972, the Federal Clean Air Act, the
Federal Clean Water Act, the federal Resource Conservation and Recovery
Act of 1976 (including the Hazardous and Solid Waste Amendments
thereto), the Federal Solid Waste Disposal Act and the federal Toxic
Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, the Federal Occupational Safety and Health Act of 1970,
the Federal Hazardous Materials Transportation Act, or any so-called
"Superfund" or "Superlien" law, each as amended and as now in effect,
and (ii) any common law or equitable doctrine (including, without
limitation, injunctive relief and tort doctrines such as negligence,
nuisance, trespass and strict liability) that may impose liability or
obligations for injuries or damages due to, or threatened as a result
of, the presence of or exposure to any Hazardous Material; and (z)
"Hazardous Material" means any substance in any concentration which is
or could be detrimental to human health or safety or to the environment,
currently listed, defined, designated or classified as hazardous, toxic,
radioactive or dangerous, or otherwise regulated, under
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<PAGE> 30
any Environmental Law, whether by type or by quantity, including any
substance containing any such substance as a component. Hazardous
Material includes, without limitation, any toxic waste, pollutant,
contaminant, hazardous substance, toxic substance, hazardous waste,
special waste, industrial substance, oil or petroleum or any derivative
or by-product thereof, radon, radioactive material, asbestos,
asbestos-containing material, urea formaldehyde foam insulation, lead
and polychlorinated biphenyl.
(w) Allowance. The allowance for possible loan losses shown
on the Company's unaudited balance sheet as of June 30, 1996 was, and
the allowance for possible loan losses shown on the balance sheets in
its Reports for periods ending after the date of this Plan will be,
adequate, as of the date thereof, under generally accepted accounting
principles applicable to banks and bank holding companies. The Company
has disclosed to the Acquiror in writing prior to the date hereof the
amounts of all loans, leases, advances, credit enhancements, other
extensions of credit, commitments and interest-bearing assets of the
Company and its subsidiaries that have been classified as "Other Assets
Specially Mentioned", "Substandard", "Doubtful", "Loss", "Classified",
"Criticized", "Credit Risk Assets" or words of similar import. The
Other Real Estate Owned ("OREO") included in any non-performing assets
of the Company or any of its subsidiaries is carried net of reserves at
the lower of cost or market value based on independent appraisals
consistent with applicable regulatory requirements.
(x) Antitakeover Provisions Inapplicable. The provisions of
Article 6 of the Company's articles of incorporation requiring an 80%
shareholder vote do not and will not apply to this Plan or the Merger or
any amendment or revision thereto or the transactions contemplated
hereby or thereby. The Company has taken all actions required to exempt
the Plan and the Merger and any amendment or revision thereto and the
transactions contemplated hereby or thereby from any applicable state
antitakeover laws.
(y) Material Interests of Certain Persons. Except as
disclosed in the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1995, no officer or director of the Company, or any
"associate" (as such term is defined in Rule 12b-2 under the Securities
Exchange Act) of any such officer or director, has any material interest
in any material
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<PAGE> 31
contract or property (real or personal), tangible or intangible, used in
or pertaining to the business of the Company or any of its subsidiaries.
(z) Insurance. The Company and its subsidiaries are presently
insured, and since December 31, 1993, have been insured, for reasonable
amounts with financially sound and reputable insurance companies,
against such risks as companies engaged in a similar business would, in
accordance with good business practice, customarily be insured. All of
the insurance policies and bonds maintained by the Company and its
subsidiaries are in full force and effect, the Company and its
subsidiaries are not in default thereunder and all material claims
thereunder have been filed in due and timely fashion. Since December
31, 1993, no claim by the Company or any of its subsidiaries on or in
respect of an insurance policy or bond has been declined or refused by
the relevant insurer or insurers. In the best judgment of the Company's
management, such insurance coverage is adequate and will be available in
the future under terms and conditions substantially similar to those in
effect on the date hereof. Between the date hereof and the Effective
Time, the Company and its subsidiaries will maintain the levels of
insurance coverage in effect on the date hereof and will submit all
potential claims existing prior to the Effective Time to its insurance
carrier on or before the Effective Time. The letter referred to in the
introduction to Section 3.1 lists all insurance policies maintained by
or for the benefit of the Company, of its subsidiaries or its directors,
officers, employees or agents, specifying the (i) type of policy, (ii)
policy limits and (iii) self insurance amounts.
(aa) Investment Securities. Except for pledges to secure public
and trust deposits and reverse repurchase agreements entered into in
arm's-length transactions pursuant to normal commercial terms and
conditions and other pledges required by law, none of the investments
reflected in the consolidated balance sheet of the Company included in
the Company's Report on Form 10-QSB for the quarter ended June 30, 1996,
and none of the material investments made by it or any of its
subsidiaries since December 31, 1995, is subject to any restriction
(contractual, statutory or otherwise) that would materially impair the
ability of the entity holding such investment freely to dispose of such
investment at any time.
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<PAGE> 32
(bb) Derivatives. Neither the Company nor any of its
subsidiaries is currently a party to any interest rate swap, cap, floor,
option agreement, other interest rate risk management arrangement or
agreement or derivative-type security or derivative arrangement or
agreement.
(cc) Registration Obligations. Neither the Company nor any of
its subsidiaries is under any obligation, contingent or otherwise, to
register any of its securities under the Securities Act of 1933, as
amended.
(dd) Books and Records. The books and records of the Company
and its subsidiaries have been, and are being, maintained in accordance
with applicable legal and accounting requirements and reflect in all
material respects the substance of events and transactions that should
be included therein.
(ee) Corporate Documents. The Company has delivered to the
Acquiror true and complete copies of (i) its amended articles of
incorporation and amended by-laws and (ii) the charter and by-laws of
the Company Subsidiary Holding Company and the Company Bank.
(ff) Company Action. The Board of Directors of the Company has
adopted resolutions recommending that this Plan be approved by the
shareholders of the Company and directing that this Plan be submitted
for consideration by the Company's shareholders at the Company Meeting.
(gg) Indemnification. Neither the Company nor any Company
Subsidiary is a party to any indemnification agreement with any of its
present or future directors, officers, employees, individual agents or
other individuals who serve or served in any other capacity with any
other enterprise at the request of the Company or a subsidiary of the
Company (a "Covered Person"), and to the best knowledge of the Company,
there are no claims for which any Covered Person would be entitled to
indemnification under Section 4.7 if such provisions were deemed to be
in effect.
(hh) Loans. Each loan, other than loans secured by an
owner-occupied one-to-four family residential property and other loans
the aggregate amount of which does not exceed $500,000, reflected as an
asset on the Company's balance sheet as of December 31, 1995 and
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<PAGE> 33
each balance sheet date subsequent thereto (i) is evidenced by notes,
agreements or other evidences of indebtedness which are true, genuine
and what they purport to be, (ii) is the legal, valid and binding
obligation of the obligor named therein, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent conveyance and
other laws of general applicability relating to or affecting creditors'
rights and to general equity principles, and (iii) to the knowledge of
the Company and Company Bank, will not be subject to any defenses which
may be asserted against Company Bank. All loans and extensions of
credit that have been made by Company Bank and that are subject to
Sections 22(h), 23A and 23B of the Federal Reserve Act comply therewith.
(ii) Fair Lending; Community Reinvestment Act. As of the date
hereof, with the exception of routine investigation of consumer
complaints, neither the Company nor any of its subsidiaries has been
advised that it is or may be in violation of the Equal Credit
Opportunity Act or the Fair Housing Act or any similar federal or state
statute. The Company Bank received a CRA rating of "outstanding" in its
most recent CRA examination.
(jj) No Omission of Material Fact. No representation or
warranty by the Company in this Plan or under any documents,
instruments, certificates or schedules delivered or to be delivered
pursuant hereto or in connection with the transactions contemplated
hereby contains any untrue statement of material fact, or omits to state
a material fact necessary to make the statements or facts contained
herein or therein not misleading. None of the information regarding the
Company or any of its subsidiaries or the transactions contemplated
hereby supplied or to be supplied by the Company or any of its
subsidiaries for inclusion in any documents or filings to be filed with
any regulatory authority in connection with the transactions
contemplated hereby will contain any untrue statement of material fact,
or omit to state a material fact necessary to make the statements or
facts contained therein not misleading.
(kk) Rights Agreement. (i) The Company has duly adopted an
amendment to the Rights Agreement in the form of Annex 2, as a result of
which neither the Acquiror nor Merger Sub nor any affiliate or associate
will become an "Acquiring Person" and no "Distribution Date" (as such
terms are defined in the Rights
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<PAGE> 34
Agreement) will occur, and the rights issued under the Rights Agreement
will not become separable, distributable, unredeemable or exercisable as
a result of the approval, execution or delivery of this Plan or the
consummation of the transactions contemplated hereby or at any time
thereafter.
(ii) The board of directors of the Company has irrevocably
redeemed all of the rights issued and outstanding under the Rights
Agreement for 1c. per right, such redemption to be effective immediately
prior to the Effective Time, and such redemption price shall be payable
as part of the Merger Consideration as set forth in Article I.
SECTION 3.2. Representations and Warranties of the Acquiror and
Merger Sub. The Acquiror represents and warrants to the Company that:
(a) Recitals True. The facts set forth in the Recitals of this
Plan with respect to the Acquiror and Merger Sub are true and correct.
(b) Corporate Organization and Qualification. The Acquiror
Subsidiary Holding Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware.
The Acquiror Bank is a national banking association duly organized,
validly existing and in good standing under the laws of the United
States of America. Each of the Acquiror, Merger Sub, the Acquiror
Subsidiary Holding Company and the Acquiror Bank is in good standing as
a foreign corporation in each jurisdiction where the properties owned,
leased or operated, or the business conducted by it, requires such
qualification, except for such failure to qualify or be in such good
standing which, when taken together with all other such failures, would
not have a Material Adverse Effect on the Acquiror. Each of the
Acquiror, Merger Sub, the Acquiror Subsidiary Holding Company and the
Acquiror Bank has the requisite corporate and other power and authority
(including all federal, state, local and foreign government
authorizations) to carry on its respective businesses as they are now
being conducted and to own or lease their respective properties and
assets. The Acquiror owns all of the shares of capital stock of Merger
Sub.
(c) Corporate Authority. Each of the Acquiror and Merger Sub
has the requisite corporate power and authority and has taken all
corporate action necessary
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<PAGE> 35
in order to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement is a valid and binding
agreement of the Acquiror and Merger Sub enforceable against the
Acquiror and Merger Sub in accordance with its terms. This Plan and the
transactions contemplated hereby do not require the approval of the
Acquiror's shareholders.
(d) No Violations. The execution, delivery and performance of
this Agreement by the Acquiror and Merger Sub do not, and the
consummation of the transactions contemplated hereby by the Acquiror and
Merger Sub will not, constitute (i) a breach or violation of, or a
default under, any law, rule or regulation or any judgment, decree,
order, governmental permit or license, or agreement, indenture or
instrument of the Acquiror or Merger Sub or to which the Acquiror or
Merger Sub (or any of their respective properties) is subject, which
breach, violation or default would have a Material Adverse Effect on the
Acquiror, or enable any person to enjoin the Merger, the Second Merger,
the Subsidiary Holding Company Merger or the Bank Merger, (ii) a breach
or violation of, or a default under, the articles of incorporation or
by-laws of the Acquiror or Merger Sub or (iii) a breach or violation of,
or a default under (or an event which with due notice or lapse of time
or both would constitute a default under), or result in the termination
of, accelerate the performance required by, or result in the creation of
any lien, pledge, security interest, charge or other encumbrance upon
any of the properties or assets of the Acquiror or Merger Sub under, any
of the terms, conditions or provisions of any note, bond, indenture,
deed of trust, loan agreement or other agreement, instrument or
obligation to which the Acquiror or Merger Sub is a party, or to which
any of their respective properties or assets may be bound or affected,
except for any of the foregoing that, individually or in the aggregate,
would not have a Material Adverse Effect on the Acquiror; and the
consummation of the transactions contemplated hereby will not require
any approval, consent or waiver under any such law, rule, regulation,
judgment, decree, order, governmental permit or license or the approval,
consent or waiver of any other party to any such agreement, indenture or
instrument, other than (i) the required approvals, consents and waivers
of governmental authorities referred to in Section 5.1(b), (ii) any such
approval, consent or waiver that already has been obtained, and (iii)
any other approvals,
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consents or waivers the absence of which, individually or in the
aggregate, would not result in a Material Adverse Effect on the Acquiror
or enable any person to enjoin the Merger, the Second Company Merger,
the Subsidiary Holding Company Merger or the Bank Merger.
(e) Access to Funds. The Acquiror has, or on the Closing Date
will have, all funds necessary to consummate the Merger and pay the
aggregate Merger Consideration.
(f) Knowledge as to Conditions. As of the date hereto, the
Acquiror knows of no reason why the approvals, consents and waivers of
governmental authorities referred to in Section 5.1(b) should not be
obtained without the imposition of any condition of the type referred to
in the provisos thereto.
(g) Fees. Neither the Acquiror nor any of its subsidiaries,
nor any of their respective officers, directors, employees or agents,
has employed any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions, or finder's fees,
and no broker or finder has acted directly or indirectly for the
Acquiror or any subsidiary of the Acquiror, in connection with the Plan
or the transactions contemplated hereby.
ARTICLE IV. COVENANTS
SECTION 4.1. Acquisition Proposals. The Company agrees that
neither it nor any of its subsidiaries nor any of the respective officers and
directors of the Company or its subsidiaries shall, and the Company shall
direct and use its reasonable best efforts to cause its employees, agents and
representatives (including, without limitation, any investment banker, attorney
or accountant retained by it or any of its subsidiaries) not to, initiate,
solicit or encourage, directly or indirectly, any inquiries or the making of
any proposal or offer (including, without limitation, any proposal or offer to
shareholders of the Company) with respect to a merger, consolidation or similar
transaction involving, or any purchase of all or any significant portion of the
assets or any equity securities of, the Company or any of its subsidiaries (any
such proposal or offer being hereinafter referred to as an "Acquisition
Proposal") or, except to the extent legally required for the discharge by the
board of directors of its fiduciary duties as advised in writing by such
board's counsel, engage in any negotiations concerning, or provide any
confidential
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information or data to, or have any discussions with, any person relating to an
Acquisition Proposal, or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal. The Company will immediately cease and
cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing and
shall make all reasonable efforts to enforce any confidentiality agreements to
which it or any of its subsidiaries is a party. The Company will take the
necessary steps to inform the appropriate individuals or entities referred to
in the first sentence hereof of the obligations undertaken in this Section 4.1.
The Company will notify the Acquiror immediately if any such inquiries or
proposals are received by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or continued with the
Company.
SECTION 4.2. Certain Policies of the Company. At the written
request of the Acquiror, the Company shall modify and change its loan,
litigation and real estate valuation policies and practices (including loan
classifications and levels of reserves) immediately prior to the Effective Time
so as to be consistent on a mutually satisfactory basis with those of the
Acquiror and generally accepted accounting principles. The Company's
representations, warranties and covenants contained in this Plan shall not be
deemed to be untrue or breached in any respect for any purpose as a consequence
of any modifications or changes undertaken solely on account of this Section
4.2.
SECTION 4.3. Employees. (a) Each person employed by the
Company or any of its subsidiaries prior to the Effective Time who remains an
employee of the Surviving Corporation or its subsidiaries following the
Effective Time (each a "Continued Employee"), shall be entitled, as an employee
of a subsidiary of the Acquiror, to participate in whatever employee benefit
plans or fringe benefit programs that may be in effect generally for employees
of Acquiror's subsidiaries from time to time (including Acquiror's 401(k)
savings plan, in which the Continued Employees shall be able to participate as
of the first day of the first month following the Effective Time) (all such
plans collectively, the "Acquiror's Plans"), if such Continued Employee shall
be eligible (or, with respect to discretionary Acquiror's Plans, selected) for
participation therein and otherwise shall not be participating in a similar
plan which continues to be maintained by the Surviving Corporation and its
subsidiaries. Continued Employees will be eligible to participate on the same
basis as similarly situated employees of Acquiror or Acquiror's subsidiaries.
All such
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participation shall be subject to such terms of such plans as may be in effect
from time to time.
(b) The Acquiror or Acquiror's subsidiaries shall, solely for
purposes of vesting and eligibility to participate in Acquiror's Plans,
recognize credit for each Continued Employee's term of service with the Company
and the Company's subsidiaries. Notwithstanding the preceding sentence, no
Continued Employee shall participate in any defined benefit pension plan
maintained by the Acquiror or its subsidiaries until such Continued Employee
has completed one year of service with Acquiror and its subsidiaries. The
Acquiror will waive all pre-existing condition limitations for Continued
Employees with respect to its health and dental plans.
(c) Acquiror shall use its reasonable best efforts to determine
the likely role of the individual employees of the Company and its subsidiaries
by November 15, 1996 and to communicate its determination to the Company by
such date. Thereafter, the Acquiror and the Company shall mutually agree on a
method for communicating such determinations to individual employees and shall
do so as promptly as practicable.
SECTION 4.4. Access and Information. Upon reasonable notice,
the Company shall (and shall cause its subsidiaries to) afford to the Acquiror
and its representatives (including, without limitation, directors, officers and
employees of the Acquiror and its affiliates, and counsel, accountants and
other advisors retained by the Acquiror and its affiliates) such access
(including, without limitation, for the purpose of conducting supplemental due
diligence reviews) during normal business hours throughout the period prior to
the Effective Time to the books, records (including, without limitation, loan
and credit files, tax returns and work papers of independent auditors),
properties, personnel and to such other information as the Acquiror may
reasonably request; provided, however, that no investigation pursuant to this
Section 4.4 shall affect or be deemed to modify any representation or warranty
made herein. The Acquiror will not, and will cause its representatives not to,
use any information obtained pursuant to this Section 4.4 for any purpose
unrelated to the consummation of the transactions contemplated by this Plan.
Subject to the requirements of law, the Acquiror will keep confidential, and
will cause its representatives to keep confidential, all information and
documents obtained pursuant to this Section 4.4 unless such information (i) was
already known to the Acquiror or an affiliate of the Acquiror prior to the date
of the confidentiality agreement
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between the Company and the Acquiror in effect prior to the date hereof, (ii)
becomes available to the Acquiror or an affiliate of the Acquiror from other
sources not known by such party to be bound by a confidentiality agreement,
(iii) is disclosed with the prior written approval of the Company or (iv) is or
becomes readily ascertainable from published information or trade sources. In
the event that this Plan is terminated or the transactions contemplated by this
Plan shall otherwise fail to be consummated, each party shall promptly cause
all copies of documents or extracts thereof containing information and data as
to another party hereto (or an affiliate of any party hereto) to be returned to
the party which furnished the same.
SECTION 4.5. Ancillary Transactions. At the request of the
Acquiror, the Company shall take, and shall cause each of its subsidiaries to
take, all actions reasonably necessary (including, without limitation, the
entering into of merger agreements and the filing of any necessary regulatory
applications) to facilitate the occurrence subsequent to the Effective Time of
(i) the merger of the Surviving Corporation and The New Galveston Company, a
Delaware corporation (the "Acquiror Subsidiary Holding Company"), (ii) the
merger of the Company Subsidiary Holding Company and the Acquiror Subsidiary
Holding Company, and (iii) the merger of the Company Bank and Frost National
Bank, a national banking association (the "Acquiror Bank"). The receipt of any
regulatory approvals required to consummate such transactions shall not be a
condition to the Acquiror's and Merger Sub's obligation to consummate the
Merger.
SECTION 4.6. Certain Filings, Consents and Arrangements. The
Acquiror, Merger Sub and the Company shall (a) as soon as practicable make any
filings and applications required to be filed in order to obtain all approvals,
consents and waivers of governmental authorities necessary or appropriate for
the consummation of the transactions contemplated hereby and shall use their
reasonable best efforts to cause the applications for the approvals described
in clauses (i) and (ii) of Section 5.1(b) to be initially filed on or before
October 31, 1996, (b) cooperate with one another (i) in promptly determining
what filings are required to be made or approvals, consents or waivers are
required to be obtained under any relevant federal, state or foreign law or
regulation and (ii) in promptly making any such filings, furnishing information
required in connection therewith and seeking timely to obtain any such
approvals, consents or waivers and (c) deliver to the other copies of the
publicly available
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portions of all such filings and applications promptly after they are filed.
SECTION 4.7. Indemnification; Directors' and Officers'
Insurance. (a) From and after the Effective Time through the sixth
anniversary of the Effective Date, the Acquiror agrees to indemnify and hold
harmless each present and former director and officer of the Company or any
subsidiary of the Company determined as of the Effective Time (the "Indemnified
Parties"), against any costs or expenses (including reasonable attorneys'
fees), judgments, fines, losses, claims, damages or liabilities (collectively,
"Costs") incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative,
arising out of matters existing or occurring at or prior to the Effective Time
(including with respect to this Plan or any of the transactions contemplated
hereby), whether asserted, claimed or arising prior to, at or after the
Effective Time, to the extent to which such Indemnified Parties were entitled
under Texas law and the Company's articles of incorporation or by-laws in
effect on the date hereof, and the Acquiror shall also advance expenses as
incurred to the extent permitted under Texas law and the Company's articles of
incorporation and by-laws.
(b) Any Indemnified Party wishing to claim indemnification under
Section 4.7(a), upon learning of any such claim, action, suit, proceeding or
investigation, shall as promptly as possible notify the Acquiror thereof, but
the failure to so notify shall not relieve the Acquiror of any liability it may
have to such Indemnified Party if such failure does not materially prejudice
the indemnifying party. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the Effective
Time), (i) the Acquiror shall have the right to assume the defense thereof and
the Acquiror shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except that if the
Acquiror elects not to assume such defense or counsel for the Indemnified
Parties advises that there are issues which raise conflicts of interest between
the Acquiror and the Indemnified Parties, the Indemnified Parties may retain
counsel satisfactory to them, and the Acquiror shall pay the reasonable fees
and expenses of one such counsel for the Indemnified Parties in any
jurisdiction promptly as statements thereof are received unless the use of one
counsel for such Indemnified Parties would present such counsel with a conflict
of interest, (ii) the Indemnified Parties will cooperate in the defense of any
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such matter and (iii) the Acquiror shall not be liable for any settlement
effected without its prior written consent; and provided, further, that the
Acquiror shall not have any obligation hereunder to any Indemnified Party when
and if a court of competent jurisdiction shall ultimately determine, and such
determination shall have become final and nonappealable, that the
indemnification of such Indemnified Party in the manner contemplated hereby is
not permitted or is prohibited by applicable law.
(c) For a period of three years after the Effective Time, the
Acquiror shall use its reasonable best efforts to cause to be maintained in
effect the current policies of directors' and officers' liability insurance
maintained by the Company (provided that the Acquiror may substitute therefor
policies of comparable coverage with respect to claims arising from facts or
events which occurred before the Effective Time); provided, however, that in no
event shall the Acquiror be obligated to expend, in order to maintain or
provide insurance coverage pursuant to this Subsection 4.7(c), any amount per
annum in excess of 125% of the amount of the annual premiums paid as of the
date hereof by the Company for such insurance (the "Maximum Amount"). If the
amount of the annual premiums necessary to maintain or procure such insurance
coverage exceeds the Maximum Amount, the Acquiror shall use all reasonable
efforts to maintain the most advantageous policies of directors' and officers'
insurance obtainable for an annual premium equal to the Maximum Amount.
Notwithstanding the foregoing, prior to the Effective Time, the Acquiror may
request the Company to, and the Company shall, purchase insurance coverage, on
such terms and conditions as shall be acceptable to the Acquiror, extending for
a period of three years the Company's directors' and officers' liability
insurance coverage in effect as of the date hereof (covering past or future
claims with respect to periods before the Effective Time) and such coverage
shall satisfy the Acquiror's obligations under this Subsection (c).
(d) If Acquiror or any of its successors or assigns (i) shall
consolidate with or merge into any other corporation or entity and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) shall transfer all or substantially all of its properties and
assets to any individual, corporation or other entity, then and in each such
case, proper provision shall be made so that the successors and assigns of
Acquiror shall assume the obligations set forth in this Section 4.7.
(e) The provisions of this Section 4.7 are intended to be for
the benefit of, and shall be enforceable
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by, each Indemnified Party and his or her heirs and representatives.
SECTION 4.8. Additional Agreements. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use its
reasonable efforts to take promptly, or cause to be taken promptly, all actions
and to do promptly, or cause to be done promptly, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Plan as soon as practicable,
including using efforts to obtain all necessary actions or non-actions,
extensions, waivers, consents and approvals from all applicable governmental
entities, effecting all necessary registrations, applications and filings
(including, without limitation, filings under any applicable state securities
laws) and obtaining any required contractual consents and regulatory approvals.
SECTION 4.9. Publicity. The initial press release announcing
this Plan shall be a joint press release and thereafter the Company and the
Acquiror shall consult with each other in issuing any press releases or
otherwise making public statements with respect to the other or the
transactions contemplated hereby and in making any filings with any
governmental entity or with any national securities exchange with respect
thereto.
SECTION 4.10. Proxy Statement. As soon as practicable after the
date hereof, the Company shall prepare a proxy statement to take shareholder
action on the Merger and this Plan (the "Proxy Statement"), file the Proxy
Statement with the SEC, respond to comments of the staff of the SEC and
promptly thereafter mail the Proxy Statement to all holders of record (as of
the applicable record date) of shares of Company Common Stock. The Company
represents and covenants that the Proxy Statement and any amendment or
supplement thereto, at the date of mailing to shareholders of the Company and
the date of the meeting of the Company's shareholders to be held in connection
with the Merger, will be in compliance in all material respects with all
relevant rules and regulations of the SEC and will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. The Acquiror
and the Company shall cooperate with each other in the preparation of the Proxy
Statement. The Company shall employ Morrow & Company to assist it in
contacting shareholders in connection with the vote on the Merger. The
Acquiror covenants that all information supplied by it in
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writing to the Company expressly for use in the Proxy Statement will be
accurate and complete in all material respects.
SECTION 4.11. Shareholders' Meeting. The Company shall take all
action necessary, in accordance with applicable law and its articles of
incorporation and by-laws, to convene a meeting of the holders of Company
Common Stock (the "Company Meeting") as promptly as practicable for the purpose
of approving this Plan. Except to the extent legally required for the
discharge by the board of directors of its fiduciary duties as advised in
writing by such board's counsel, the board of directors of the Company shall
recommend at the Company Meeting that this Plan be approved by the shareholders
of the Company.
SECTION 4.12. Notification of Certain Matters. Each party shall
give prompt notice to the others of: (a) any notice of, or other communication
relating to, a default or event that, with notice or lapse of time or both,
would become a default, received by it or any of its subsidiaries subsequent to
the date of this Plan and prior to the Effective Time, under any contract
material to the financial condition, properties, businesses or results of
operations of the Company and its subsidiaries taken as a whole to which the
Company or any subsidiary is a party or is subject; and (b) any material
adverse change in the condition (financial or other), properties, assets,
business, results of operations or prospects of it and its subsidiaries taken
as a whole or the occurrence of any event which, so far as reasonably can be
foreseen at the time of its occurrence, is reasonably likely to result in any
such change. Each of the Company, the Acquiror and Merger Sub shall give
prompt notice to the other party of any notice or other communication from any
third party alleging that the consent of such third party is or may be required
in connection with the transactions contemplated by this Plan.
SECTION 4.13. No Acquisitions of Company Common Stock. Prior to
the earlier of (i) immediately prior to the Effective Time and (ii) the
termination of this Plan in accordance with Article VI, the Acquiror shall not
and shall cause its affiliates not to, directly or indirectly acquire any
shares of Company Common Stock, other than shares acquired in a fiduciary or
agency capacity or in satisfaction of a debt or debts previously contracted.
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ARTICLE V. CONDITIONS TO CONSUMMATION
SECTION 5.1. Conditions to All Parties' Obligations. The
respective obligations of the Acquiror, Merger Sub and the Company to effect
the Merger shall be subject to the satisfaction or waiver prior to the
Effective Time of the following conditions:
(a) The Plan and the transactions contemplated hereby shall
have been approved by the requisite vote of the shareholders of the
Company.
(b) The Acquiror and the Company shall have procured the
approvals, consents or waivers with respect to the Plan and the
transactions contemplated hereby (i) by the Texas Banking Commissioner
pursuant to Texas law, and (ii) by the Federal Reserve Board, and all
applicable statutory waiting periods shall have expired; and the parties
shall have procured all other regulatory approvals, consents or waivers
of governmental authorities or other persons that, in the opinion of
counsel for the Acquiror, are necessary or appropriate for the
consummation of the transactions contemplated by the Plan; provided,
however, that no approval, consent or waiver referred to in this Section
5.1(b) shall be deemed to have been received if it shall include any
condition or requirement (other than conditions or requirements that
have been imposed on the Acquiror in connection with previous
acquisitions announced since 1990) that, individually or in the
aggregate, (i) would result in a Material Adverse Effect on the Acquiror
or the Acquiror Bank or (ii) would reduce the economic and business
benefits of the transactions contemplated by the Plan to the Acquiror or
the Acquiror Bank in so significant and adverse a manner that the
Acquiror, in its judgment, would not have entered into this Plan had
such condition or requirement been known at the date hereof.
(c) All other requirements prescribed by law which are
necessary to the consummation of the Merger and any transactions
necessary to consummate the Merger shall have been satisfied.
(d) No party hereto shall be subject to any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins
or prohibits the consummation of the Merger or any transaction necessary
to consummate the Merger, and no litigation or proceeding shall be
pending against the Acquiror or the Company or any of their subsidiaries
brought by any
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governmental agency seeking to prevent consummation of the Merger or any
transaction necessary to consummate the Merger.
(e) No statute, rule, regulation, order, injunction or decree
shall have been enacted, entered, promulgated, interpreted, applied or
enforced by any governmental authority which prohibits, restricts or
makes illegal consummation of the Merger or any other transaction
contemplated by this Plan.
SECTION 5.2. Conditions to the Obligations of the Acquiror and
Merger Sub. The obligations of the Acquiror and Merger Sub to effect the
Merger shall be subject to the satisfaction or waiver prior to the Effective
Time of the following additional conditions:
(a) The Acquiror shall have received from the Company's
independent certified public accountants a "cold comfort" letter or
"specified procedures" letter, dated (i) the date of the mailing of the
Proxy Statement to the Company's shareholders and (ii) shortly prior to
the Effective Date, with respect to certain financial information
regarding the Company in the form customarily issued by "Big Six"
independent auditors in transactions of this type.
(b) Each of the representations and warranties of the Company
contained in this Plan shall have been true and correct on the date
hereof and shall be true and correct at the Effective Time (or on the
date when made in the case of any representation or warranty which
specifically relates to an earlier date or period), provided, however,
that for purposes of this Section 5.2(b) a representation or warranty
shall only fail to be true and correct at the Effective Time if the
failure of any such representation or warranty to be true and correct
has or constitutes, or is likely to have or constitute or relates to,
either individually or in the aggregate with other representations or
warranties, a Material Adverse Effect on the Company or the Company
Bank; the Company shall have performed, or shall have caused to be
performed, in all material respects, each of its covenants and
agreements contained in this Plan required to be performed at or prior
to the Effective Time; and the Acquiror shall have received a
certificate signed by the Chief Executive Officer and the Chief
Financial Officer of the Company, dated the Effective Date, to the
foregoing effect.
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(c) The Acquiror shall have received an opinion, dated the
Effective Date, from Jones, Day, Reavis & Pogue, counsel to the Company,
covering the matters set forth in Annex 3, in form and substance
satisfactory to the Acquiror.
(d) The Acquiror shall have received the written resignation of
each director (in his/her capacity as director) of the Company,
effective as of the Effective Time.
(e) Simultaneously with the Effective Time, all Rights,
including any rights under the Rights Agreement, shall be terminated and
shall thereafter be of no force and effect.
(f) No person shall have become an "Acquiring Person" and no
"Distribution Date" (as such terms are defined in the Rights Agreement)
shall have occurred, and the rights issued under the Rights Agreement
shall not have become separable, distributable, redeemable or
exercisable.
SECTION 5.3. Conditions to the Obligation of the Company. The
obligation of the Company to effect the Merger shall be subject to the
satisfaction or waiver prior to the Effective Time of the following additional
conditions:
Each of the representations, warranties and covenants of the
Acquiror and Merger Sub contained in this Plan shall have been true on
the date hereof and shall be true in all material respects on the
Effective Date as if made on such date (or on the date when made in the
case of any representation or warranty which specifically relates to an
earlier date or period), provided, however, that for purposes of this
Section 5.3 a representation or warranty shall only fail to be true and
correct at the Effective Time if the failure of any such representation
or warranty to be true and correct has or constitutes or relates to, or
is likely to have or constitute or relate to, either individually or in
the aggregate with other representations or warranties, a Material
Adverse Effect on the Acquiror; the Acquiror and Merger Sub shall have
performed, or shall have caused to be performed, in all material
respects, each of its covenants and agreements contained in this Plan
required to be performed at or prior to the Effective Time; and the
Company shall have received certificates signed by the Chief
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Executive Officer and the Chief Financial Officer of the Acquiror, dated
the Effective Date, to the foregoing effect.
ARTICLE VI. TERMINATION
SECTION 6.1. Termination. This Plan may be terminated, and the
Merger abandoned, prior to the Effective Date, either before or after its
approval by the shareholders of the Company and the Acquiror:
(a) by the mutual consent of the Acquiror and the Company, if
the board of directors of each so determines by vote of a majority of
the members of its entire board;
(b) by the Acquiror or the Company, by written notice to the
other parties, if its board of directors so determines by vote of a
majority of the members of its entire board, in the event of (i) the
failure of the shareholders of the Company to approve the Plan at its
meeting called to consider such approval, or (ii) a material breach by
the other party hereto of any representation, warranty, covenant or
agreement contained herein which is not cured or not curable within 30
days after written notice of such breach is given to the party
committing such breach by the other party;
(c) by the Acquiror or the Company, by written notice to the
other parties, if either (i) any approval, consent or waiver of a
governmental authority required to permit consummation of the Merger or
any transaction necessary to consummate the Merger shall have been
denied or (ii) any governmental authority of competent jurisdiction
shall have issued a final, unappealable order enjoining or otherwise
prohibiting consummation of the Merger or any transaction necessary to
consummate the Merger;
(d) by the Acquiror or the Company, by written notice to the
other parties, if its board of directors so determines by vote of a
majority of the members of its entire board, in the event that the
Merger is not consummated by April 15, 1997, unless the failure to so
consummate by such time is due to the breach of any representation,
warranty or covenant contained in this Plan by the party seeking to
terminate;
(e) by the Acquiror, by written notice to the Company on or
prior to October 15, 1996, if the
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Acquiror shall not be satisfied in its sole and absolute discretion with
the results and findings of a due diligence investigation of the Company
and its subsidiaries conducted by Acquiror by October 15, 1996. In
connection therewith, (i) the Company shall provide Acquiror with such
access to the Company and its subsidiaries as Acquiror shall in its sole
discretion deem appropriate to complete such due diligence prior to
October 15, 1996, and (ii) the Company acknowledges and agrees that no
prior representation or warranty, covenant or agreement or any condition
or investigation by the Acquiror of the Company and its subsidiaries or
other consideration shall affect the Acquiror's right to exercise its
discretion pursuant to the foregoing, which shall be absolute and
unconditional;
(f) by the Acquiror, by written notice to the Company, if the
Company takes, causes to be taken or allows to be taken any action that,
without giving effect to the exception contained in Section 4.1
regarding the exercise by the Company's board of directors of its
fiduciary duties, would otherwise be prohibited under Section 4.1; or
(g) by the Company, by written notice to the Acquiror prior to
the approval by the shareholders of the Company of this Plan, if the
Company receives a proposal to engage in an Acquisition Transaction on
terms and conditions which the board of directors determines, after
receiving the written advice of its outside counsel, (i) that to proceed
with the Merger will violate the fiduciary duties of the board of
directors to the Company's shareholders and (ii) to accept such
proposal; provided, however, that the Company shall not be entitled to
terminate this Plan pursuant to this clause (g) unless it shall have (A)
provided the Acquiror with written notice of such a possible
determination (which written notice will inform the Acquiror of the
material terms and conditions of the proposal, including the identity of
the proponent) two business days prior to such determination and (B)
made the payment of the Alternative Fee to the Acquiror as required by
Section 6.2(a)(ii).
SECTION 6.2. Fee. (a)(i) The Company hereby agrees to pay the
Acquiror, and the Acquiror shall be entitled to payment of, a fee (the "Fee")
of one million dollars ($1,000,000) upon the occurrence of a Purchase Event (as
defined herein) so long as the Purchase Event occurs prior to a Fee Termination
Event (as defined herein). Such
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<PAGE> 49
payment shall be made to the Acquiror in immediately available funds within
five business days after the occurrence of a Purchase Event. A Fee Termination
Event shall be the first to occur of the following: (i) the Effective Time,
(ii) 18 months following the first occurrence of a Preliminary Purchase Event
(as defined herein), (iii) termination of this Plan in accordance with the
terms hereof prior to the occurrence of a Purchase Event or a Preliminary
Purchase Event (other than a termination of this Plan by the Acquiror pursuant
to Section 6.1(b)(ii) as a result of a willful breach of any representation,
warranty, covenant or agreement of the Company or the termination of this Plan
by the Acquiror pursuant to Section 6.1(f)) or (iv) 18 months after the
termination of this Plan by the Acquiror pursuant to Section 6.1(b)(ii) hereof
as a result of a willful breach of any representation, warranty, covenant or
agreement of the Company or the termination of this Plan by the Acquiror
pursuant to Section 6.1(f). Upon payment of the Fee in accordance with the
terms of this Plan, the Company shall have no further or other obligation to
the Acquiror under this Section 6.2 to pay the Alternative Fee referred to in
clause (a)(ii), unless this Plan shall have theretofore been terminated by the
Company pursuant to Section 6.1(g), in which event the Alternative Fee shall be
payable instead of the Fee.
(ii) The Company hereby agrees to pay the Acquiror, and the
Acquiror shall be entitled to receive payment of, an alternative fee (the
"Alternative Fee") of one million one hundred fifty thousand dollars
($1,150,000) upon the termination of this Plan by the Company pursuant to
Section 6.1(g). Such payment shall be made to the Acquiror in immediately
available funds simultaneously with such termination, and the payment of the
Alternative Fee shall be a condition to the effectiveness of any termination
pursuant to Section 6.1(g). Upon payment of the Alternative Fee, the Company
shall have no further or other obligation to the Acquiror under this Section
6.2 to pay the Fee referred to in clause (a)(i).
(b) The term "Preliminary Purchase Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) The Company or any subsidiary of the Company, without having
received the Acquiror's prior written consent, shall have entered into
an agreement to engage in an Acquisition Transaction (as defined below)
with any person (the term "person" for purposes of this Agreement having
the meaning assigned thereto in
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Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act, and the
rules and regulations thereunder) other than the Acquiror or any
affiliate of the Acquiror (the term "affiliate" for purposes of this
Agreement having the meaning assigned thereto in Rule 405 under the
Securities Act) or the Board of Directors of the Company shall have
recommended that the shareholders of the Company approve or accept any
Acquisition Transaction with any person other than the Acquiror or any
affiliate of the Acquiror. For purposes of this Agreement, "Acquisition
Transaction" shall mean (x) a merger or consolidation, or any similar
transaction, involving the Company or any subsidiary of the Company, (y)
a purchase, lease or other acquisition of all or substantially all of
the assets of the Company or any subsidiary of the Company or (z) a
purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of securities representing
15% or more of the voting power of the Company or any subsidiary of the
Company;
(ii) Any person (other than the Acquiror or any affiliate of the
Acquiror and National Bancshares Corp. of Texas ("National Bancshares"),
but only so long as National Bancshares holds not more than the number
of Company Common Shares owned by National Bancshares on the date of
this Plan) shall have acquired beneficial ownership or the right to
acquire beneficial ownership of 15% or more of the outstanding shares of
Company Common Stock (the term "beneficial ownership" for purposes of
this Agreement having the meaning assigned thereto in Section 13(d) of
the Securities Exchange Act, and the rules and regulations thereunder);
(iii) Any person other than the Acquiror or any affiliate of the
Acquiror shall have made a bona fide proposal to the Company or its
shareholders, by public announcement or written communication that is or
becomes the subject of public disclosure, to engage in an Acquisition
Transaction (including, without limitation, any situation in which any
person other than the Acquiror or any affiliate of the Acquiror shall
have commenced (as such term is defined in Rule 14d-2 under the
Securities Exchange Act) a tender offer or shall have filed a
registration statement under the Securities Act with respect to an
exchange offer, to purchase any shares of the Company Common Stock such
that, upon consummation of such offer, such person would own or control
15% or more of the then outstanding shares of the Company Common Stock);
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<PAGE> 51
(iv) After a bona fide proposal is made by any person other than
the Acquiror or any affiliate of the Acquiror to the Company or its
shareholders to engage in an Acquisition Transaction, the Company shall
have breached any covenant or obligation contained in this Plan and such
breach would entitle the Acquiror to terminate this Plan or the holders
of the Company Common Stock shall not have approved this Plan at the
meeting of such shareholders held for the purpose of voting on this
Plan, such meeting shall not have been held or shall have been canceled
prior to termination of the Plan or the Company's Board of Directors
shall have withdrawn or modified in a manner adverse to the Acquiror the
recommendation of the Company's Board of Directors with respect to this
Plan; or
(v) Any person other than the Acquiror or any affiliate of the
Acquiror, other than in connection with a transaction to which the
Acquiror has given its prior written consent, shall have filed an
application or notice with the Federal Reserve Board or other
governmental authority or regulatory or administrative agency or
commission for approval to engage in an Acquisition Transaction.
(c) The term "Purchase Event" shall mean either of the following
events or transactions occurring after the date hereof:
(i) The acquisition by any person other than the Acquiror or any
affiliate of the Acquiror of beneficial ownership of 25% or more of the
then outstanding Common Stock; or
(ii) The occurrence of a Preliminary Purchase Event described in
Section 6.2(b)(i) except that the percentage referred to in clause (z)
shall be 25%.
(d) The Company shall notify the Acquiror promptly in writing of
the occurrence of any Preliminary Purchase Event or Purchase Event.
SECTION 6.3. Effect of Termination. In the event of the
termination of this Plan by either the Acquiror or the Company, as provided
above, this Plan shall thereafter become void and, subject to the provisions of
Section 8.2, there shall be no liability on the part of any party hereto or
their respective officers or directors, except that any such termination shall
be without prejudice to the rights of any party hereto arising out of the
willful breach by any
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<PAGE> 52
other party of any covenant or willful misrepresentation contained in this
Plan.
ARTICLE VII. EFFECTIVE DATE AND EFFECTIVE TIME
SECTION 7.1. Effective Date and Effective Time. On such date as
the Acquiror selects, which shall be within 30 days after the last to occur of
the expiration of all applicable waiting periods in connection with approvals
of governmental authorities occurs and the receipt of all approvals of
governmental authorities and all conditions to the consummation of the Merger
are satisfied or waived, or on such earlier or later date as may be agreed in
writing by the parties, articles of merger shall be executed in accordance with
all appropriate legal requirements and shall be filed as required by law, and
the Merger provided for herein shall become effective upon such filing or on
such date as may be specified in such articles of merger. The date of such
filing or such later effective date is herein called the "Effective Date". The
"Effective Time" of the Merger shall be the time of such filing or as set forth
in such articles of merger.
ARTICLE VIII. OTHER MATTERS
SECTION 8.1. Certain Definitions; Interpretation. As used in
this Plan, the following terms shall have the meanings indicated:
"material" means material to the Acquiror or the Company (as the
case may be) and its respective subsidiaries, taken as a whole.
"Material Adverse Effect", with respect to a person, means any
condition, event, change or occurrence that is reasonably likely to have
a material adverse effect upon (A) the condition (financial or other),
properties, assets, business, results of operations or prospects of such
person and its subsidiaries, taken as a whole, or (B) the ability of
such person to perform its obligations under, and to consummate the
transactions contemplated by, this Plan.
"person" includes an individual, corporation, partnership,
association, trust or unincorporated organization.
"subsidiary", with respect to a person, means any other person
controlled by such person.
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<PAGE> 53
When a reference is made in this Plan to Sections or Annexes, such reference
shall be to a Section of, or Annex to, this Plan unless otherwise indicated.
The table of contents, tie sheet and headings contained in this Plan are for
ease of reference only and shall not affect the meaning or interpretation of
this Plan. Whenever the words "include", "includes", or "including" are used
in this Plan, they shall be deemed followed by the words "without limitation".
Any singular term in this Plan shall be deemed to include the plural, and any
plural term the singular.
SECTION 8.2. Survival. Only those agreements and covenants of
the parties that are by their terms applicable in whole or in part after the
Effective Time shall survive the Effective Time. All other representations,
warranties, agreements and covenants shall be deemed to be conditions of the
Plan and shall not survive the Effective Time. If the Plan shall be
terminated, the agreements of the parties in Section 6.2, Section 8.6, Section
8.7 and the last three sentences of Section 4.4 shall survive such termination.
SECTION 8.3. Waiver. Prior to the Effective Time, any provision
of this Plan may be: (i) waived by the party benefitted by the provision; or
(ii) amended or modified at any time (including the structure of the
transaction) by an agreement in writing between the parties hereto approved by
their respective boards of directors.
SECTION 8.4. Counterparts. This Plan may be executed in
counterparts, each of which shall be deemed to constitute an original, but all
of which together shall constitute one and the same instrument.
SECTION 8.5. Governing Law. This Plan shall be governed by, and
interpreted in accordance with, the laws of the State of Texas.
SECTION 8.6. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS PLAN OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 8.7. Expenses. Each party hereto will bear all expenses
incurred by it in connection with this Plan and the transactions contemplated
hereby.
SECTION 8.8. Notices. All notices, requests, acknowledgements
and other communications hereunder to a party shall be in writing and shall be
deemed to have been duly given when delivered by hand, telecopy, telegram or
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<PAGE> 54
telex (confirmed in writing) to such party at its address set forth below or
such other address as such party may specify by notice to the other party
hereto.
If to the Company, to:
Corpus Christi Bancshares, Inc.
2402 Leopard Street
Corpus Christi, Texas 78408
Telecopier: (512) 887-3017
Attention: R. Jay Phillips
With copies to:
Jones, Day, Reavis & Pogue
2300 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Telecopier: (214) 969-5100
Attention: Stephen L. Fluckiger, Esq.
If to the Acquiror or Merger Sub, to:
Cullen/Frost Bankers, Inc.
P.O. Box 1600
100 West Houston Street
San Antonio, Texas 78296
Telecopier: (210) 220-4605
Attention: Jerry Salinas, Esq.
With copies to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Telecopier: (212) 558-3588
Attention: Mark J. Menting, Esq.
SECTION 8.9. Entire Agreement; Etc. This Plan represents the
entire understanding of the parties hereto with reference to the transactions
contemplated hereby and
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<PAGE> 55
supersedes any and all other oral or written agreements heretofore made. All
terms and provisions of the Plan shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
Except as to Section 4.7, nothing in this Plan is intended to confer upon any
other person any rights or remedies of any nature whatsoever under or by reason
of this Plan.
SECTION 8.10. Assignment. This Plan may not be assigned by any
party hereto without the written consent of the other parties.
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<PAGE> 56
IN WITNESS WHEREOF, the parties hereto have caused this Plan to
be executed by their duly authorized officers as of the day and year first
above written.
CULLEN/FROST BANKERS, INC.
By:
------------------------------
Name: Phillip D. Green
Title: Executive Vice President
R.E. HOLDING CORPORATION
By:
------------------------------
Name: Phillip D. Green
Title: Executive Vice President
CORPUS CHRISTI BANCSHARES, INC.
By:
------------------------------
Name: R. Jay Phillips
Title: President and
Chief Executive officer
Attest:
- ------------------------------
Name: Jace C. Hoffman
Title: Secretary
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<PAGE> 57
Annex 2
FIRST AMENDMENT TO RIGHTS AGREEMENT
FIRST AMENDMENT, dated as of September 30, 1996 (this "First
Amendment"), to the Rights Agreement (the "Rights Agreement"), dated as of
October 18, 1995, between Corpus Christi Bancshares, Inc., a Texas corporation
(the "Company"), and ChaseMellon Shareholder Services, L.L.C., as Rights Agent
(the "Rights Agent").
The Company desires to amend the Rights Agreement in accordance
with Section 27 thereof as set forth herein and hereby directs the Rights Agent
to join in such amendment.
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
1. Amendment of Section 1
The Rights Agreement is hereby amended to delete in its entirety
the definition of "Acquiring Person" contained in subsection (a) of Section 1
thereof and to substitute the following definition of "Acquiring Person"
therefor:
"'Acquiring Person' shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 20% or more of the Common Shares then outstanding,
but shall not include (i) the Company, any Subsidiary of the Company,
any employee benefit or stock ownership plan of the Company or of any
Subsidiary of the Company or any entity holding Common Shares for or
pursuant to the terms of any such plan, or (ii) any person who would
otherwise become an Acquiring Person solely as a result of a reduction
in the number of Common Shares outstanding unless and until (A) such
time as such Person or any Affiliate or Associate of such Person shall
thereafter become the Beneficial Owner of any additional Common Shares,
other than
<PAGE> 58
as a result of a stock dividend, stock split or similar transaction
effected by the Company in which all holders of Common Shares are
treated equally, or (B) any other Person who is the Beneficial Owner of
any Common Shares shall thereafter become an Affiliate or Associate of
such Person, or (iii) Cullen/Frost Bankers, Inc., R.E. Holding
Corporation, or any of their respective Affiliates or Associates, for so
long as the Merger Agreement shall be in effect and not terminated.
Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an
"Acquiring Person," as defined pursuant to the foregoing provisions of
this paragraph (a), has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of Common Shares
so that such Person would no longer be an "Acquiring Person," as defined
pursuant to the foregoing provisions of this paragraph (a), then such
Person shall not be deemed an "Acquiring Person" for any purposes of
this Agreement."
2. Additions to Section 1
Section 1 of the Rights Agreement is hereby further amended to
add the following definition:
"(l) 'Merger Agreement' shall mean the Agreement and Plan of
Merger, dated as of September 30, 1996, among Cullen/Frost Bankers,
Inc., R.E. Holding Corporation, and the Company."
Section 1 of the Rights Agreement is hereby further amended by
adding the following parenthetical phrase after the words "exchange offer" in
clause (ii) of Section 1(g): "(except that the transactions contemplated by the
Merger Agreement shall not be considered a tender or exchange offer for
purposes of this Rights Agreement)."
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<PAGE> 59
3. Revision of subsections of Section 1
Subparagraphs (l), (m), (n), (o), (p), (q), (r) and (s) of
Section 1 of the Rights Agreement are hereby relettered to become subparagraphs
(m), (n), (o), (p), (q), (r), (s) and (t) thereof, respectively.
4. Amendment to Section 3(c)
The legend in Section 3(c) of the Rights Agreement is hereby
amended by adding the following clause immediately following the words "dated
as of October 18, 1995":
", as amended."
5. Governing Law. This First Amendment shall be deemed to be
a contract made under the laws of the State of Texas and for all purposes shall
be governed by and construed in accordance with the laws of such state
applicable to contracts to be made and performed entirely within such state.
6. Miscellaneous. Except as expressly set forth herein, this
First Amendment shall not by implication or otherwise alter, modify, amend or
in any way affect any of the terms, conditions, obligations, covenants or
agreements contained in the Rights Agreement, all of which are ratified and
affirmed in all respects and shall continue in full force and effect.
7. Counterparts. This First Amendment may be executed in any
number of counterparts, each of which shall
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<PAGE> 60
for all purposes be deemed an original, and all of which together shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be duly executed as of the day and year first above written.
Attest: CORPUS CHRISTI BANCSHARES, INC.
By: By:
--------------------- ---------------------------
Attest: CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.,
as Rights Agent
By: By:
--------------------- ---------------------------
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Annex 3
[FORM OF OPINION OF JONES, DAY, REAVIS & POGUE]
(1) The Company is a corporation duly organized, validly
existing and in good standing under laws of the State of Texas.
(2) The Company Subsidiary Holding Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
(3) The Company Bank is a state chartered bank duly organized,
validly existing and in good standing under the laws of the State of Texas.
(4) The issued and outstanding shares of capital stock of the
Company Subsidiary Holding Company consist of ___ shares of common stock, par
value $___ per share (the "Company Subsidiary Holding Company Shares"). The
issued and outstanding shares of capital stock of the Company Bank consist of
___ shares of common stock, par value $___ per share (the "Company Bank
Shares"). All of the outstanding Company Subsidiary Holding Company Shares and
Company Bank Shares have been duly authorized and validly issued and are fully
paid and nonassessable. All of the authorized Company Subsidiary Holding
Company Shares are owned by the Company free and clear of all liens, pledges,
security interests, claims or other encumbrances, and have not been issued in
violation of any preemptive rights. All of the authorized Company Bank Shares
are owned by the Company Subsidiary Holding Company free and clear of all
liens, pledges, security interests, claims or other encumbrances, and have not
been issued in violation of any preemptive rights.
(5) The Plan has been duly authorized, executed and delivered by
the Company and duly approved by its shareholders, and constitutes a valid and
binding obligation of the Company, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, receivership, conservatorship,
insolvency, fraudulent transfer, reorganization, moratorium and other similar
laws of general applicability relating to or affecting creditors' rights
generally and to general equity principles, regardless of whether considered in
a proceeding in equity or at law.
(6) All regulatory consents, authorizations, approvals and
filings required to be obtained or made by the Company, the Company Subsidiary
Holding Company or the Company Bank under the Federal laws of the United States
or the laws of the State of Texas for the execution and delivery by the Company
of the Plan, and the consummation by the Company of the transactions
contemplated therein, have been obtained or made.
<PAGE> 62
(7) The Merger and the execution and delivery by the Company of
the Plan did not, and the consummation by the Company of the transactions
contemplated therein do not, violate the articles of incorporation or by-laws
of any of the Company, the Company Subsidiary Holding Company or the Company
Bank, or breach or violate any governmental permit or license known to us, or
violate any order, writ, injunction or decree of any court or regulatory body
of the United States or the State of Texas known to us, by which the Company,
the Company Subsidiary Holding Company or the Company Bank are bound or to
which the Company, the Company Subsidiary Holding Company or the Company Bank
are subject, or violate any Federal law or regulation of the United States or
law or regulation of the State of Texas applicable to the Company, the Company
Subsidiary Holding Company or the Company Bank.
(8) The board of directors of the Company has taken all
necessary action to irrevocably redeem all of the rights issued and outstanding
under the Rights Agreement for $0.01 per right, such redemption to be effective
immediately prior to the Effective Time.
(9) As of the date of the Proxy Statement and the date of the
Company Meeting, the Proxy Statement (except for operating statistics,
financial statements, financial schedules and other financial data included
therein, as to which we express no opinion) complied as to form in all material
respects with the Exchange Act and the rules and regulations thereunder.
(10) We have participated in the preparation of the Proxy
Statement and from time to time have had discussions with officers, directors,
and employees of the Company, and the independent accountants who examined
certain of the financial statements of the Company and its subsidiaries
included in the Proxy Statement, concerning the information contained in the
Proxy Statement. Based upon the participation and discussions described above,
as of the date of the Proxy Statement and the date of the Company Meeting, no
facts have come to our attention that cause us to believe that the Proxy
Statement (except for the operating statistics, financial statements, financial
schedules and other financial data included therein) contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. However, we
have not independently verified and are not passing upon, and do not assume any
responsibility for, the accuracy, completeness, or fairness of
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<PAGE> 63
the information contained in the Proxy Statement except as it relates to
documents or statutes or laws described therein.
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