<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): February 29, 1996
Central Bancorporation, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Texas 0-15732 75-1653291
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(State or other (Commission File Number I.R.S. Employer
jurisdiction of Identification
incorporation) Number)
777 West Rosedale, Fort Worth, Texas 76104
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(Address of principal executive offices)
Registrant's telephone number, including area code: (817) 347-8800
Not applicable
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
At the close of business on February 29, 1996, Central Bancorporation,
Inc. ("CBI") acquired First American Savings Bank, S.S.B., a Texas savings bank
with its principal offices in Bedford, Texas ("First American"), pursuant to an
Agreement and Plan of Reorganization between CBI and First American and joined
in by Patsy R. Smith, dates November 9, 1995 (the "Agreement").
Under the Agreement, Central Bancorporation of Delaware, Inc. ("CBI of
Delaware"), a wholly-owned subsidiary of CBI, formed a new bank subsidiary ("New
Bank") which was merged with and into First American (the "Merger"). Pursuant
to the Merger, the resulting bank acquired all of the assets and assumed all of
the liabilities of the constituent banks. In connection with the Merger, the
shareholders of First American received cash in the amount of $20,093,094 in
exchange for their shares of common stock of First American. The purchase price
paid by CBI for First American pursuant to the Merger was approximately one
hundred seventy-eight percent (178%) of the book value of First American as of
October 31, 1995.
First American, as a wholly-owned subsidiary of CBI of Delaware, is
currently conducting its banking activities from its principal office located in
Bedford, Texas and three (3) branch locations. Upon receipt of all necessary
regulatory approvals, First American will be merged with and into Central Bank &
Trust, another wholly-owned subsidiary of CBI of Delaware. This merger is
anticipated to occur in April 1996.
CBI financed the acquisition by borrowing $9,500,000 on its revolving
line of credit with Frost National Bank, San Antonio, Texas. The balance of the
purchase price was financed from internally-generated funds.
There exists no material relationship between First American and CBI,
or any of its affiliates, any director or officer of CBI, or any associate of
any such director or officer.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
Audited financial statements of First American, if determined to be
required by Rule 3-05 of Regulation S-X, will be filed within sixty
(60) days.
(b) Proforma financial statements and applicable industry guide 3
disclosures will be filed within sixty (60) days.
2
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(c) Exhibits
The following exhibits are included with this Form 8-K in accordance
with the provisions of Item 601 of Regulation S-K:
Exhibits:
2.01 Agreement and Plan of Reorganization by and between Central
Bancorporation, Inc. and First American Savings Bank, S.S.B.
and joined in by Patsy R. Smith, dated November 9, 1995 *
2.02 Agreement and Plan of Merger between New Bedford Bank, S.S.B.
and First American Savings Bank, S.S.B. and joined in by CBI,
dated January 23, 1996 *
___________________________________
* Filed herewith.
3
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CENTRAL BANCORPORATION, INC.
Dated: March 15, 1996 /s/ Michael J. Tyler
---------------------------------------
Michael J Tyler, Senior Vice President
and Chief Financial Officer
4
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EXHIBIT 2.01
================================================================================
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
CENTRAL BANCORPORATION, INC.
FORT WORTH, TEXAS
AND
FIRST AMERICAN SAVINGS BANK, S.S.B.
BEDFORD, TEXAS
AND JOINED IN BY
PATSY R. SMITH
Dated as of November 9, 1995
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TABLE OF CONTENTS
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ARTICLE I. ACQUISITION OF THE BANK BY CBI................................................ 2
SECTION 1.01 Merger of the New Bank with and into the Bank......................... 2
---------------------------------------------
SECTION 1.02 Effects of the Merger................................................. 2
---------------------
SECTION 1.03 Articles of Incorporation and Bylaws.................................. 2
------------------------------------
SECTION 1.04 Directors and Officers................................................ 2
----------------------
SECTION 1.05 Conversion of the Bank Stock.......................................... 2
----------------------------
SECTION 1.06 Shareholders' Meeting................................................. 3
---------------------
SECTION 1.07 Delivery of Consideration............................................. 4
-------------------------
ARTICLE II. THE CLOSING, THE CLOSING DATE AND THE EFFECTIVE DATE......................... 4
SECTION 2.01 Time and Place of the Closing and Closing Date........................ 4
----------------------------------------------
SECTION 2.02 Actions to be Taken at the Closing by the Bank........................ 5
----------------------------------------------
SECTION 2.03 Actions to be Taken at the Closing by CBI............................. 6
-----------------------------------------
SECTION 2.04 Further Assurances.................................................... 7
------------------
SECTION 2.05 Effective Date........................................................ 8
--------------
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE BANK AND SMITH........................ 8
SECTION 3.01 Organization and Qualification........................................ 8
------------------------------
SECTION 3.02 Execution and Delivery................................................ 8
----------------------
SECTION 3.03 Capitalization........................................................ 9
--------------
SECTION 3.04 Compliance with Laws, Permits and Instruments......................... 9
---------------------------------------------
SECTION 3.05 Financial Statements.................................................. 10
--------------------
SECTION 3.06 Undisclosed Liabilities............................................... 10
-----------------------
SECTION 3.07 Litigation............................................................ 11
----------
SECTION 3.08 Consents and Approvals................................................ 11
----------------------
SECTION 3.09 Title to Assets....................................................... 11
---------------
SECTION 3.10 Absence of Certain Changes or Events.................................. 11
------------------------------------
SECTION 3.11 Leases, Contracts and Agreements...................................... 14
--------------------------------
SECTION 3.12 Taxes................................................................. 14
-----
SECTION 3.13 Insurance............................................................. 15
---------
SECTION 3.14 No Adverse Change..................................................... 15
-----------------
SECTION 3.15 Patents, Trademarks and Copyrights.................................... 16
----------------------------------
SECTION 3.16 Transactions with Certain Persons and Entities........................ 16
----------------------------------------------
SECTION 3.17 Evidences of Indebtedness............................................. 16
-------------------------
SECTION 3.18 Condition of Assets................................................... 16
-------------------
SECTION 3.19 Environmental Compliance.............................................. 17
------------------------
SECTION 3.20 Regulatory Compliance................................................. 17
---------------------
SECTION 3.21 Absence of Certain Business Practices................................. 18
-------------------------------------
SECTION 3.22 Proxy Statement....................................................... 18
---------------
SECTION 3.23 Dissenting Shareholders............................................... 18
-----------------------
SECTION 3.24 Books and Records..................................................... 18
-----------------
SECTION 3.25 Forms of Instruments, Etc............................................. 19
-------------------------
SECTION 3.26 Fiduciary Responsibilities............................................ 19
--------------------------
SECTION 3.27 Guaranties............................................................ 19
----------
SECTION 3.28 Voting Trust or Buy-Sell Agreements................................... 19
-----------------------------------
SECTION 3.29 Employee Relationships................................................ 19
----------------------
SECTION 3.30 Employee Benefit Plans................................................ 19
----------------------
</TABLE>
(i)
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<TABLE>
<S> <C>
SECTION 3.31 Ownership of Business Assets.......................................... 21
----------------------------
SECTION 3.32 Representations Not Misleading........................................ 21
------------------------------
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF CBI........................................ 21
SECTION 4.01 Organization and Qualification........................................ 21
------------------------------
SECTION 4.02 Execution and Delivery................................................ 21
----------------------
SECTION 4.03 Compliance with Laws, Permits and Instruments......................... 22
---------------------------------------------
SECTION 4.04 Litigation............................................................ 22
----------
SECTION 4.05 Consents and Approvals................................................ 22
----------------------
SECTION 4.06 Proxy Statement....................................................... 22
---------------
SECTION 4.07 Representations Not Misleading........................................ 23
------------------------------
ARTICLE V. COVENANTS OF THE BANK......................................................... 23
SECTION 5.01 Best Efforts.......................................................... 23
------------
SECTION 5.02 Merger Agreement...................................................... 23
----------------
SECTION 5.03 Affiliate Merger...................................................... 23
----------------
SECTION 5.04 Information for Applications.......................................... 23
----------------------------
SECTION 5.05 Required Acts of the Bank............................................. 24
-------------------------
SECTION 5.06 Prohibited Acts of the Bank........................................... 25
---------------------------
SECTION 5.07 Access; Pre-Closing Investigation..................................... 29
---------------------------------
SECTION 5.08 Invitations to and Attendance at Directors' and Committee Meetings.... 29
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SECTION 5.09 Additional Financial Statements....................................... 30
-------------------------------
SECTION 5.10 Untrue Representations................................................ 30
----------------------
SECTION 5.11 Litigation and Claims................................................. 30
---------------------
SECTION 5.12 Adverse Changes....................................................... 30
---------------
SECTION 5.13 No Negotiation with Others............................................ 30
--------------------------
SECTION 5.14 Consents and Approvals................................................ 31
----------------------
SECTION 5.15 Environmental Investigation; Right to Terminate Agreement............. 31
---------------------------------------------------------
SECTION 5.16 Proxies............................................................... 33
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ARTICLE VI. COVENANTS OF CBI............................................................. 33
SECTION 6.01 Best Efforts.......................................................... 33
------------
SECTION 6.02 Incorporation and Organization of New Bank............................ 33
------------------------------------------
SECTION 6.03 Merger Agreement...................................................... 33
----------------
SECTION 6.04 Information for Applications.......................................... 34
----------------------------
SECTION 6.05 Acts of New Bank...................................................... 34
----------------
SECTION 6.06 Untrue Representations................................................ 34
----------------------
SECTION 6.07 Litigation and Claims................................................. 34
---------------------
SECTION 6.08 Regulatory and Other Approvals........................................ 34
------------------------------
SECTION 6.09 Adverse Change........................................................ 35
--------------
ARTICLE VII. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BANK......................... 35
SECTION 7.01 Compliance with Representations, Warranties and Agreements............ 35
----------------------------------------------------------
SECTION 7.02 Shareholder Approvals................................................. 35
---------------------
SECTION 7.03 Government and Other Approvals........................................ 35
------------------------------
SECTION 7.04 No Litigation......................................................... 36
-------------
SECTION 7.05 Opinion of Legal Counsel to CBI....................................... 36
-------------------------------
ARTICLE VIII. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF CBI............................. 36
</TABLE>
(ii)
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<TABLE>
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SECTION 8.01 Compliance with Representations, Warranties and Agreements............ 36
----------------------------------------------------------
SECTION 8.02 Shareholder Approvals................................................. 37
---------------------
SECTION 8.03 Government and Other Approvals........................................ 37
------------------------------
SECTION 8.04 No Litigation......................................................... 37
-------------
SECTION 8.05 Opinion of Legal Counsel to the Bank.................................. 37
------------------------------------
SECTION 8.06 Accounting Treatment.................................................. 38
--------------------
SECTION 8.07 Releases and Resignations............................................. 38
-------------------------
SECTION 8.08 No Material Adverse Change............................................ 38
--------------------------
SECTION 8.09 Special Assessment on the Bank's Deposits............................. 38
-----------------------------------------
ARTICLE IX. TERMINATION AND ABANDONMENT.................................................. 38
SECTION 9.01 Right of Termination.................................................. 38
--------------------
SECTION 9.02 Notice of Termination................................................. 39
---------------------
SECTION 9.03 Effect of Termination................................................. 39
---------------------
ARTICLE X. SURVIVAL; INDEMNIFICATION..................................................... 39
SECTION 10.01 Survival of Representations and Warranties........................... 40
------------------------------------------
SECTION 10.02 Indemnification...................................................... 40
---------------
SECTION 10.03 Procedure for Indemnification........................................ 40
-----------------------------
SECTION 10.04 Limitation on Indemnity with Respect to Time......................... 41
--------------------------------------------
SECTION 10.04 Arbitration.......................................................... 41
-----------
ARTICLE XI. CONFIDENTIAL INFORMATION..................................................... 41
SECTION 11.01 Definition of "Recipient," "Disclosing Party," "Representative"
-------------------------------------------------------------------
and "Person" 41
-----------
SECTION 11.02 Definition of "Subject Information".................................. 41
-----------------------------------
SECTION 11.03 Confidentiality...................................................... 42
---------------
SECTION 11.04 Securities Law Concerns.............................................. 42
-----------------------
SECTION 11.05 Return of Subject Information........................................ 42
-----------------------------
SECTION 11.06 Specific Performance/Injunctive Relief............................... 42
--------------------------------------
ARTICLE XII. MISCELLANEOUS............................................................... 43
SECTION 12.01 Expenses............................................................. 43
--------
SECTION 12.02 Brokerage Fees and Commissions....................................... 43
------------------------------
SECTION 12.03 Entire Agreement..................................................... 43
----------------
SECTION 12.04 Further Cooperation.................................................. 43
-------------------
SECTION 12.05 Severability......................................................... 44
------------
SECTION 12.06 Notices.............................................................. 44
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SECTION 12.07 GOVERNING LAW........................................................ 45
-------------
SECTION 12.08 Multiple Counterparts................................................ 45
---------------------
SECTION 12.09 Certain Definitions.................................................. 46
-------------------
SECTION 12.10 Specific Performance................................................. 47
--------------------
SECTION 12.11 Attorneys' Fees and Costs............................................ 47
-------------------------
SECTION 12.12 Rules of Construction................................................ 47
---------------------
SECTION 12.13 Binding Effect....................................................... 47
--------------
SECTION 12.14 Public Disclosure.................................................... 48
-----------------
SECTION 12.15 Extension; Waiver.................................................... 48
-----------------
SECTION 12.16 Amendments........................................................... 48
----------
</TABLE>
(iii)
<PAGE>
EXHIBITS
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<TABLE>
<S> <C>
Exhibit "A" - Merger Agreement
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Exhibit "B" - Voting Agreement and Irrevocable Proxy
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Exhibit "C" - Opinion of Counsel to CBI
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Exhibit "D" - Opinion of Counsel to the Bank
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Exhibit "E" - Form of Release to Be Executed By Directors
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Exhibit "F" - Form of Release to Be Executed By Officers
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</TABLE>
SCHEDULES
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<TABLE>
<CAPTION>
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Schedule 3.01 - Subsidiaries and Affiliates
Schedule 3.04 - Compliance with Laws, Permits and Instruments
Schedule 3.05 - Special or Nonrecurring Income
Schedule 3.06 - Undisclosed Liabilities
Schedule 3.07 - Litigation
Schedule 3.08 - Consents and Approvals
Schedule 3.09 - Liens, Mortgages, Security Interests and Encumbrances
Schedule 3.10 - Certain Changes or Events
Schedule 3.11 - Contracts
Schedule 3.12 - Tax Matters
Schedule 3.13 - Insurance Matters
Schedule 3.16 - Transactions With Insiders
Schedule 3.17 - Credit Information
Schedule 3.18 - Condition of Assets
Schedule 3.19 - Environmental Compliance
Schedule 3.20 - Regulatory Compliance
Schedule 3.29 - Employee Relationships
Schedule 3.30 - Employee Benefit Plans
Schedule 4.05 - Consents and Approvals
Schedule 5.08 - Designees of CBI
Schedule 5.16 - Proxies
</TABLE>
(iv)
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
------------------------------------
This AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made
and entered into as of the 9th day of November, 1995, by and between Central
Bancorporation, Inc., a Texas corporation and registered bank holding company
with its principal offices in Fort Worth, Texas ("CBI"), and First American
Savings Bank, S.S.B., a Texas savings bank with its principal offices in
Bedford, Texas (the "Bank"), and joined by Patsy R. Smith, individually and as a
shareholder of the Bank ("Smith").
W I T N E S S E T H:
-------------------
WHEREAS, the Bank is a Texas savings bank duly organized and existing
under the laws of the State of Texas and has, and will have as of the Effective
Date (as defined herein), 1,000,000 shares of common stock, par value $8.00 per
share, authorized (the "Bank Stock"), of which 343,680 shares are issued and
outstanding;
WHEREAS, this Agreement provides for the incorporation and
organization of an interim Texas savings bank (the "New Bank") as a wholly-owned
subsidiary of CBI in order for CBI to acquire the Bank Stock through the merger
of the New Bank with and into the Bank (the "Merger");
WHEREAS, CBI and the Bank believe that the Merger, as provided for,
and subject to the terms and conditions set forth in, this Agreement and all
exhibits, schedules and supplements hereto, is in the best interests of CBI and
the Bank and their respective shareholders;
WHEREAS, CBI and the Bank desire to set forth certain representations,
warranties and covenants made by each to the other as an inducement to the
execution and delivery of this Agreement and certain additional agreements
related to the transactions contemplated hereby;
WHEREAS, the respective boards of directors of CBI and the Bank have
approved this Agreement and the proposed transactions substantially on the terms
and conditions set forth in this Agreement and have authorized the execution
hereof; and
WHEREAS, Smith has joined in this Agreement for certain limited
purposes set forth herein;
NOW, THEREFORE, for and in consideration of the foregoing and of the
mutual representations, warranties, covenants and agreements contained in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and subject to the conditions set
forth below, the parties hereto undertake, promise, covenant and agree with each
other as follows:
<PAGE>
ARTICLE I.
ACQUISITION OF THE BANK BY CBI
SECTION 1.01 Merger of the New Bank with and into the Bank. Subject
---------------------------------------------
to the terms and conditions of this Agreement and the Agreement and Plan of
Merger to be entered into between the Bank and the New Bank (the "Merger
Agreement"), attached hereto as Exhibit "A", CBI and the Bank shall exercise all
-----------
reasonable efforts to cause the New Bank to be merged with and into the Bank
pursuant to the provisions of Tex. Rev. Civ. Stat. Ann. art. 489e (S) 3.03 (West
Supp. 1995) ("Article 489e").
SECTION 1.02 Effects of the Merger. The Merger shall have the
---------------------
effects set forth in Article 489e. At the Effective Date (as defined in Section
2.05), the corporate existence of the New Bank and the Bank shall be merged into
and continued in the bank resulting from the Merger (the "Resulting Bank"), the
separate corporate existence of the Bank and the New Bank shall cease and the
Resulting Bank shall be deemed to be the same corporation as the New Bank and
the Bank. The name of the Resulting Bank shall be "First American Savings Bank,
S.S.B." The existing offices and facilities of the Bank immediately preceding
the Merger shall be the principal offices and facilities of the Resulting Bank
following the Merger. At the Effective Date, except as expressly provided to
the contrary herein, all property of the New Bank and the Bank, including its
rights, titles and interests in and to all property of whatever kind, whether
real, personal or mixed and things in action, and every right, privilege,
interest and asset of any conceivable value or benefit then existing or
pertaining to the New Bank or the Bank, or which would inure to either the New
Bank or the Bank, immediately by operation of law and without any conveyance or
transfer and without any further act or deed will vest in the Resulting Bank.
At the Effective Date, the Resulting Bank will succeed to all the rights,
obligations and relations of the New Bank and the Bank.
SECTION 1.03 Articles of Incorporation and Bylaws. The Articles of
------------------------------------
Incorporation and Bylaws, respectively, of the Resulting Bank shall be as set
forth in the Merger Agreement.
SECTION 1.04 Directors and Officers. The directors and officers of
----------------------
the Bank at the Effective Date shall be as set forth in the Merger Agreement.
SECTION 1.05 Conversion of the Bank Stock. At the Effective Date:
----------------------------
A. All holders of shares of the Bank Stock shall be entitled to
receive from CBI, as of the Effective Date, an amount equal to
$20,100,000 divided by the number of shares of Bank Stock issued and
outstanding as of the Effective Date, for each share of Bank Stock
owned by such holder at the Effective Date (the "Merger
Consideration"), provided, however, that (i) if the Closing Date
occurs after March 31, 1996, the Merger Consideration shall increase
an amount equal to $5,000 divided by the number of shares of Bank
Stock issued and outstanding as of the Effective Date, for each day
from April 1, 1996, until the Closing Date, and (ii) if the amount of
all payments, if any (the "Consulting
2
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Payments"), due and payable to Alex Sheshunoff and Company
("Sheshunoff") pursuant to the terms of that certain Consulting
Agreement, dated to be effective June 28, 1995, between the Bank and
Sheshunoff (the "Consulting Agreement") should exceed $350,000, the
amount of the Merger Consideration shall be decreased by 66% of the
amount by which such Consulting Payments exceed $350,000 divided by
the number of shares of Bank Stock issued and outstanding as of the
Effective Date.
B. The number of shares of the common stock of the Bank
outstanding at the Effective Date shall, at the Effective Date and by
virtue of the Merger and without any action on the part of CBI or any
other party as holder thereof, be converted into a like number of
shares of common stock of the Resulting Bank with a par value of $8.00
per share, with the effect that the number of shares of the common
stock of the Resulting Bank outstanding immediately after the
Effective Date shall be equal to the aggregate number of shares of the
Bank Stock outstanding immediately before the Effective Date. The
authorized number of shares of common stock of the Resulting Bank
shall be the same as the authorized number of shares of Bank Stock
immediately prior to the Effective Date.
C. The shares of the Bank Stock issued and outstanding at the
Effective Date shall, by operation of law and without any action on
the part of the holder thereof, unless dissenters' rights under
applicable law are being perfected with respect thereto, be converted
into the right to receive the consideration set forth in Section
1.05(A).
D. On or following the Effective Date, each holder of the Bank
Stock shall be required to surrender its shares of Bank Stock to the
Bank, which shall act as exchange agent (the "Exchange Agent"), and
upon such surrender, each such holder shall be entitled to receive
from CBI an amount of cash as determined pursuant to Section 1.05(A).
Until so surrendered, each such outstanding certificate representing
shares of the Bank Stock shall be deemed for all purposes, subject
only to dissenters' rights under applicable law, to evidence solely
the right to receive such consideration from CBI described in Section
1.05(A).
SECTION 1.06 Shareholders' Meeting. The Bank, acting through its Board
---------------------
of Directors (the "Bank Board"), shall, in accordance with applicable law:
A. Duly call, give notice of, convene and hold a meeting of its
shareholders (the "Shareholders' Meeting") as soon as practicable for
the purpose of approving and adopting the Merger and the Merger
Agreement and the transactions contemplated hereby and thereby;
B. Require that the vote of the shareholders of the Bank to
approve the Merger and the Merger Agreement be no more than a majority
of the shares of Bank Stock entitled to vote;
3
<PAGE>
C. Subject to its fiduciary duties to the shareholders of the
Bank, include in the Proxy Statement (defined in Section 1.06(D)) the
recommendation of the Bank Board that the shareholders of the Bank
vote in favor of the approval and adoption of the Merger and the
Merger Agreement and the transactions contemplated hereby and thereby;
and
D. Cause the Proxy Statement to be mailed to the shareholders of
the Bank as soon as practicable, and use all reasonable efforts to
obtain the approval and adoption of the Merger and the Merger Agreement
by the holders of at least a majority of the Bank Stock entitled to
vote on the Merger and the Merger Agreement. The letter to
shareholders, notice of meeting, proxy statement and form of proxy to
be distributed to shareholders in connection with the Merger and the
Merger Agreement shall be in form and substance reasonably satisfactory
to CBI and are collectively referred to herein as the "Proxy
Statement."
SECTION 1.07 Delivery of Consideration. The Exchange Agent shall send
-------------------------
to each holder of the Bank Stock a letter of transmittal for use in exchanging
such holder's certificates for the consideration set forth in Section 1.05(A).
The Bank shall forward letters of transmittal to each of the shareholders of the
Bank, addressed to the most current address of such shareholders according to
the records of the Bank, at least twenty (20) days prior to the Closing Date
unless the Bank and CBI shall mutually agree to send such letters at a later
date. If a holder of the Bank Stock surrenders the certificates representing
shares of such stock and a properly executed letter of transmittal to the
Exchange Agent at least ten (10) days prior to the Closing Date, then on the
Closing Date, CBI shall pay to such shareholder the consideration set forth in
Section 1.05(A), with respect to such shares of Bank Stock. If a holder of the
Bank Stock surrenders the certificates representing shares of such stock and a
properly executed letter of transmittal to the Exchange Agent at any time after
ten (10) days prior to the Closing Date, then promptly, and in no event later
than ten (10) days after receipt of such certificates and letter of transmittal,
CBI shall pay to such shareholder the consideration set forth in Section
1.05(A), with respect to such shares of Bank Stock. If any record shareholder of
the Bank is unable to locate any certificate evidencing the Bank Stock, such
shareholder shall submit an Indemnity Agreement to the Exchange Agent in a form
acceptable to CBI in lieu of such certificate. Notwithstanding the foregoing,
neither the Exchange Agent nor any other party to this Agreement shall be liable
to any holder of certificates representing the Bank Stock for any amount paid to
a public official pursuant to any applicable abandoned property, escheat or
similar law. No interest shall be payable with respect to the payment of the
Merger Consideration.
ARTICLE II.
THE CLOSING, THE CLOSING DATE AND THE EFFECTIVE DATE
SECTION 2.01 Time and Place of the Closing and Closing Date. On a date
----------------------------------------------
determined by CBI within ten (10) business days after the receipt of all
necessary regulatory, corporate and other approvals and the expiration of any
mandatory statutory or regulatory waiting periods (herein
4
<PAGE>
called the "Closing Date"), a meeting (the "Closing") will take place at which
the parties to this Agreement will exchange certificates, opinions, letters and
other documents in order to determine whether all of the conditions set forth in
Articles VII and VIII of this Agreement have been satisfied or waived or whether
any condition exists that would permit a party to this Agreement to terminate
this Agreement. If no such condition then exists or if no party elects to
exercise any right it may have to terminate this Agreement, then and thereupon
the appropriate parties shall execute such documents and instruments as may be
necessary or appropriate in order to effect the transactions contemplated by
this Agreement.
The Closing shall take place at the fourth floor conference room of the
Bank located at 1903 Central Drive, Bedford, Texas 76021 on the Closing Date, or
at such other place to which the parties may agree.
SECTION 2.02 Actions to be Taken at the Closing by the Bank. At the
----------------------------------------------
Closing, the Bank shall execute and acknowledge (where appropriate) and deliver
to CBI such documents and certificates reasonably necessary to carry out the
terms and provisions of this Agreement, including without limitation, the
following (all of such actions constituting conditions precedent to CBI's
obligations to close hereunder):
A. True, correct and complete copies of the Articles of
Incorporation of the Bank and all amendments thereto, duly certified as of
a recent date by the Texas Savings and Loan Department of Texas (the
"TSLD");
B. A certificate to do business, dated as of a recent date, issued
by the TSLD, duly certifying as to the authority of the Bank to transact
the business of banking under the laws of the State of Texas;
C. A certificate of good standing, dated as of a recent date, issued
by the Texas Comptroller of Public Accounts, duly certifying as to the good
standing of the Bank in the State of Texas;
D. A certificate, dated as of a recent date, issued by the Federal
Deposit Insurance Corporation (the "FDIC"), duly certifying that the
deposits of the Bank are insured by the FDIC pursuant to the Federal
Deposit Insurance Act (the "FDIA");
E. A certificate, dated as of the Closing Date, executed by the
Secretary or an Assistant Secretary of the Bank, pursuant to which such
officer shall certify (a) the due adoption by the Bank Board of corporate
resolutions attached to such certificate authorizing the execution and
delivery of this Agreement and the other agreements and documents
contemplated hereby, including, but not limited to, the Merger Agreement,
and the taking of all actions contemplated hereby and thereby; (b) the due
adoption by the shareholders of the Bank of resolutions authorizing the
Merger and the execution and delivery of the Merger Agreement and the other
agreements and documents contemplated hereby and the
5
<PAGE>
taking of all actions contemplated hereby and thereby; (c) the incumbency
and true signatures of those officers of the Bank duly authorized to act on
its behalf in connection with the transactions contemplated by this
Agreement and to execute and deliver this Agreement and other agreements
and documents contemplated hereby and the taking of all actions
contemplated hereby and thereby on behalf of the Bank, and (d) that the
copy of the Bylaws of the Bank attached to such certificate is true and
correct and such Bylaws have not been amended except as reflected in such
copy;
F. A certificate, dated as of the Closing Date, executed by the
President of the Bank or the Chairman of the Bank Board, pursuant to which
the Bank shall certify that all of the representations and warranties made
in Article III of this Agreement are true and correct on and as of the date
of such certificate as if made on such date and that except as expressly
permitted by this Agreement there shall have been no Material Adverse
Change (as defined in Section 12.09) since September 30, 1995;
G. All consents reasonably required to be obtained by the Bank from
third parties to consummate the transactions contemplated by this
Agreement, including, but not limited to, those listed on Schedule 3.08;
H. An opinion of counsel to the Bank in accordance with this
Agreement; and
I. All other documents reasonably required to be delivered to CBI by
the Bank under the provisions of this Agreement, and all other documents,
certificates and instruments as are reasonably requested by CBI or its
counsel.
SECTION 2.03 Actions to be Taken at the Closing by CBI. At the Closing,
-----------------------------------------
CBI shall execute and acknowledge (as appropriate) and deliver to the Bank such
documents and certificates reasonably necessary to carry out the terms and
provisions of this Agreement, including without limitation, the following (all
of such actions constituting conditions precedent to the Bank's obligations to
close hereunder):
A. True, correct and complete copies of CBI's Articles of
Incorporation and all amendments thereto, duly certified as of a recent
date by the Secretary of State of the State of Texas;
B. True, correct and complete copies of the Articles of
Incorporation and all amendments thereto, of the New Bank, duly certified
as of a recent date by the TSLD;
C. Good standing and existence certificates for CBI and the New
Bank, dated as of a recent date, issued by the appropriate state officials,
duly certifying as to the existence and good standing of CBI and the New
Bank in the State of Texas;
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D. A certificate, dated as of the Closing Date, executed by the
Secretary or an Assistant Secretary of CBI pursuant to which such officer
shall certify (a) the due adoption by the Board of Directors of CBI of
corporate resolutions attached to such certificate authorizing the
execution and delivery of this Agreement and the other agreements and
documents contemplated hereby and the taking of all actions contemplated
hereby and thereby; (b) the incumbency and true signatures of those
officers of CBI duly authorized to act on its behalf in connection with the
transactions contemplated by this Agreement and to execute and deliver this
Agreement and other agreements and documents contemplated hereby and the
taking of all actions contemplated hereby and thereby on behalf of CBI, and
(c) that the copy of the Bylaws of CBI attached to such certificate is true
and correct and such Bylaws have not been amended except as reflected in
such copy;
E. A certificate, dated as of the Closing Date, executed by the
Secretary or an Assistant Secretary of the New Bank, pursuant to which such
officer shall certify (a) the due adoption by the Board of Directors of the
New Bank of corporate resolutions attached to such certificate authorizing
the execution and delivery of the Merger Agreement and the taking of all
actions contemplated thereby; (b) the due adoption by the sole shareholder
of the New Bank of resolutions authorizing the Merger and the execution and
delivery of the Merger Agreement and the other agreements and documents
contemplated hereby and the taking of all actions contemplated hereby and
thereby; (c) the incumbency and true signatures of those officers of the
New Bank duly authorized to act on its behalf in connection with the
transactions contemplated by the Merger Agreement and to execute and
deliver the Merger Agreement and the taking of all actions contemplated
thereby on behalf of the New Bank; and (d) that the copy of the Bylaws of
the New Bank attached to such certificate is true and correct and such
Bylaws have not been amended except as reflected in such copy;
F. A certificate, dated as of the Closing Date, executed by a duly
authorized officer of CBI, pursuant to which CBI shall certify that all of
the representations and warranties made in Article IV of this Agreement are
true and correct on and as of the date of such certificate as if made on
such date;
G. All consents reasonably required to be obtained by CBI from third
parties to consummate the transactions contemplated by this Agreement,
including, but not limited to, those listed on Schedule 4.05;
H. An opinion of counsel to CBI in accordance with this Agreement;
I. Written verification, in form and substance reasonably acceptable
to Smith and the Bank, of the availability of the funds to timely deliver,
at the Closing, the Merger Consideration; and
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J. All other documents reasonably required to be delivered to the
Bank by CBI under the provisions of this Agreement, and all other
documents, certificates and instruments as are reasonably requested by the
Bank or its counsel.
SECTION 2.04 Further Assurances. At any time and from time to time after
------------------
the Closing, at the request of any party to this Agreement and without further
consideration, any party so requested will execute and deliver such other
instruments and take such other action as the requesting party may reasonably
deem necessary or desirable in order to effectuate the transactions contemplated
hereby. In the event that, at any time after the Closing, any further action is
reasonably necessary or desirable to carry out the purposes of this Agreement,
each party hereto shall take or cause to be taken all such action.
SECTION 2.05 Effective Date. The "Effective Date" as that term is used in
--------------
this Agreement means the effective date of the Merger under the Merger
Agreement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
OF THE BANK AND SMITH
The Bank and Smith hereby make the representations and warranties set forth
in this Article III to CBI, provided, however, that, with respect to the
representations and warranties other than those contained in Sections 3.01,
3.02, 3.03, 3.08, 3.23, 3.28 and 3.31, such representations and warranties are
made to the knowledge of Smith. As used in the preceding sentence, the phrase
"to the knowledge of Smith" means the actual knowledge of Smith, excluding any
constructive knowledge and does not include any actual knowledge acquired by
Smith after the date of this Agreement provided Smith promptly discloses such
new knowledge to CBI in writing, and does not impose a duty on Smith to inquire
as to any matters represented or warranted. The Bank agrees at the Closing to
provide CBI with supplemental schedules reflecting any material changes thereto
between the date of this Agreement and the Closing Date.
SECTION 3.01 Organization and Qualification. The Bank is a Texas savings
------------------------------
bank duly organized, validly existing and in good standing under all laws,
rules, and regulations of the State of Texas. The Bank has all requisite
corporate power and authority (including all licenses, franchises, permits and
other governmental authorizations as are legally required) to carry on its
business as now being conducted, to own, lease and operate its properties and
assets, including, but not limited to, as now owned, leased or operated and to
enter into and carry out its obligations under this Agreement and the Merger
Agreement. True and complete copies of the Articles of Incorporation and Bylaws
of the Bank, as amended to date, certified by the Secretary of the Bank, have
been delivered to CBI. The Bank is an insured bank as defined in the FDIA. The
Bank does not own or control any Affiliate (as defined in Section 12.09) or
Subsidiary (as defined in Section 12.09), other than as set forth in Schedule
3.01. The nature of the business of the Bank and its activities do not require
it to be qualified to do business in any jurisdiction other than the
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State of Texas. Except as set forth on Schedule 3.01, the Bank has no equity
interest, direct or indirect, in any other bank or corporation or in any
partnership, joint venture or other business enterprise or entity, except as
acquired through settlement of indebtedness, foreclosure, the exercise of
creditors' remedies or in a fiduciary capacity, and the business carried on by
the Bank has not been conducted through any other direct or indirect Subsidiary
or Affiliate of the Bank.
SECTION 3.02 Execution and Delivery. The Bank has taken all corporate
----------------------
action necessary to authorize the execution, delivery and (provided the required
regulatory and shareholder approvals are obtained) performance of this Agreement
and the other agreements and documents contemplated hereby to which it is a
party, including, but not limited to, the Merger Agreement. This Agreement has
been, and the other agreements and documents contemplated hereby, including, but
not limited to, the Merger Agreement, have been or at Closing will be, duly
executed by the Bank and each constitutes the legal, valid and binding
obligation of the Bank, enforceable in accordance with its respective terms and
conditions, except as enforceability may be limited by bankruptcy,
conservatorship, insolvency, moratorium, reorganization, receivership or similar
laws and judicial decisions affecting the rights of creditors generally and by
general principles of equity (whether applied in a proceeding at law or in
equity).
SECTION 3.03 Capitalization. The entire authorized capital stock of the
--------------
Bank consists solely of 1,000,000 shares of Bank Stock, par value $8.00 per
share, of which 343,680 shares are issued and outstanding. There are no (i)
other outstanding equity securities of any kind or character, (ii) outstanding
subscriptions, options, convertible securities, rights, warrants, calls or other
agreements or commitments of any kind issued or granted by, or binding upon, the
Bank to purchase or otherwise acquire any security of or equity interest in the
Bank or (iii) outstanding subscriptions, options, rights, warrants, calls,
convertible securities, irrevocable proxies or other agreements or commitments
obligating the Bank to issue any shares of, restricting the transfer of or
otherwise relating to shares of its capital stock of any class. All of the
issued and outstanding shares of the Bank Stock have been duly authorized,
validly issued and are fully paid and nonassessable, and have not been issued in
violation of the preemptive rights of any person. Such shares of the Bank Stock
have been issued in compliance with the securities laws of the United States and
other jurisdictions having applicable securities laws. There are no
restrictions applicable to the payment of dividends on the shares of the Bank
Stock except pursuant to applicable laws and regulations, and all dividends
declared prior to the date of this Agreement have been paid.
SECTION 3.04 Compliance with Laws, Permits and Instruments. Except as
---------------------------------------------
disclosed on Schedule 3.04, the Bank has in all material respects performed and
abided by all obligations required to be performed by it to the date hereof, and
has complied with, and is in compliance with, and is not in default (or with the
giving of notice or the passage of time will not be in default) under, or in
violation of, (i) any provision of the Articles of Incorporation or Bylaws of
the Bank, (ii) any material provision of any mortgage, indenture, lease,
contract, agreement or other instrument applicable to the Bank or its assets,
operations, properties or businesses now conducted or heretofore conducted or
(iii) any permit, concession, grant, franchise, license, authorization,
judgment, writ, injunction, order, decree, award, statute, federal, state or
local law, ordinance, rule
9
<PAGE>
or regulation of any court, arbitrator or any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
applicable to the Bank or its assets, operations, properties or businesses now
conducted or heretofore conducted.
Except as set forth on Schedule 3.04, the execution, delivery and (provided
the required regulatory and shareholder approvals are obtained) performance of
this Agreement and the other agreements contemplated hereby, including, but not
limited to the Merger Agreement, and the consummation of the transactions
contemplated hereby and thereby will not conflict with, or result, by itself or
with the giving of notice or the passage of time, in any violation of or default
or loss of a benefit under, (i) any provision of the Articles of Incorporation
or Bylaws of the Bank, (ii) any mortgage, indenture, lease, contract, agreement
or other instrument applicable to the Bank or its assets, operations, properties
or businesses or (iii) any permit, concession, grant, franchise, license,
authorization, judgment, writ, injunction, order, decree, statute, law,
ordinance, rule or regulation applicable to the Bank or its assets, operations,
properties or businesses.
SECTION 3.05 Financial Statements. The Bank has furnished to CBI true and
--------------------
complete copies of the audited consolidated balance sheets of the Bank as of
December 31, 1992, 1993 and 1994, and the related audited consolidated
statements of income, stockholders' equity and cash flows for the years ended
December 31, 1992, 1993 and 1994 and unaudited consolidated balance sheet of the
Bank as of September 30, 1995, and the related unaudited consolidated statements
of income and cash flows for the nine-month period ended September 30, 1995
(such consolidated balance sheets and the related statements of income,
stockholders' equity and cash flows are collectively referred to herein as the
"Financial Statements"). Except as described in the notes to the Financial
Statements, the Financial Statements fairly present, in all material respects,
the financial position of the Bank as of the respective dates thereof and the
results of operations and changes in financial position of the Bank for the
periods then ended, in conformity with generally accepted accounting principles
("GAAP"), unless otherwise instructed by regulatory accounting principles
("RAP"), in which instance such information is presented in conformity with RAP,
applied on a basis consistent with prior periods (subject, in the case of the
unaudited interim financial statements, to normal year-end adjustments and the
fact that they do not contain all of the footnote disclosures required by GAAP),
except as otherwise noted therein, and the accounting records underlying the
Financial Statements accurately and fairly reflect in all material respects the
transactions of the Bank. Except as set forth on Schedule 3.05, The Financial
Statements do not contain any items of special or nonrecurring income or any
other income not earned in the ordinary course of business except as expressly
specified therein.
The Bank has calculated its allowance for loan losses in accordance with
RAP as applied to banking institutions and in accordance with all applicable
rules and regulations. The allowance for loan losses account for the Bank is,
and as of the Closing Date will be, adequate in all material respects to provide
for all losses, net of recoveries relating to loans previously charged off, on
all outstanding loans of the Bank.
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SECTION 3.06 Undisclosed Liabilities. The Bank does not have any material
-----------------------
liability or obligation, accrued, absolute, contingent or otherwise and whether
due or to become due (including, without limitation, unfunded obligations under
any Employee Benefit Plan (as defined in Section 3.30) or material liabilities
for federal, state or local taxes or assessments or material liabilities under
any agreement that are not reflected in or disclosed in the Financial
Statements, except (i) those liabilities and expenses incurred in the ordinary
course of business and consistent with prudent business practices since the date
of the Financial Statements or (ii) as disclosed on Schedule 3.06.
SECTION 3.07 Litigation. Except as set forth on Schedule 3.07, there are
----------
no actions, claims, suits, investigations, reviews or other legal, quasi-
judicial or administrative proceedings of any kind or nature now pending or
threatened against or affecting the Bank at law or in equity, or by or before
any federal, state or municipal court or other governmental or administrative
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, that in any manner involves the Bank or any of its properties or
capital stock that might reasonably be anticipated to result in a Material
Adverse Change or materially and adversely affect the transactions contemplated
by this Agreement or the Merger Agreement, and the Bank does not know or have
any reason to be aware of any basis for the same. No legal action, suit or
proceeding or judicial, administrative or governmental investigation is pending
or, to the knowledge of the Bank, threatened against the Bank that questions or
might question the validity of this Agreement or the agreements contemplated
hereby, including, but not limited to, the Merger Agreement, or any actions
taken or to be taken by the Bank pursuant hereto or thereto or seeks to enjoin
or otherwise restrain the transactions contemplated hereby or thereby.
SECTION 3.08 Consents and Approvals. The Bank Board (at a meeting duly
----------------------
called and held) has resolved, subject to its fiduciary duties to the
shareholders of the Bank, to recommend approval and adoption by the Bank's
shareholders of the Merger and the Merger Agreement. Except as expressly
contemplated or otherwise set forth in this Agreement or as disclosed in
Schedule 3.08, no approval, consent, order or authorization of, or registration,
declaration or filing with, any governmental authority or other third party is
required on the part of the Bank in connection with the execution, delivery or
performance of this Agreement or the agreements contemplated hereby, including,
but not limited to, the Merger Agreement or the consummation by the Bank of the
transactions contemplated hereby or thereby.
SECTION 3.09 Title to Assets. True and complete copies of all existing
---------------
deeds, leases and title insurance policies for all real property owned or leased
by the Bank and all mortgages, deeds of trust, security agreements and other
documents describing encumbrances to which such property is subject have been,
or at the request of CBI will be, made available to CBI. The Bank has good and
indefeasible fee simple title to all of its real properties and good title to
all personal properties including, without limitation, all properties reflected
in the Financial Statements or acquired subsequent thereto, subject to no liens,
mortgages, security interests, encumbrances or charges of any kind except (i) as
described in Schedule 3.09, (ii) as noted in the Financial Statements, or as set
forth in the documents delivered to CBI pursuant to this Section 3.09, (iii)
statutory liens not yet
11
<PAGE>
delinquent, (iv) consensual landlord liens (v) minor defects and irregularities
in title and encumbrances that do not materially impair the use thereof for the
purpose for which they are held, (vi) pledges of assets in the ordinary course
of business to secure public funds deposits, and (vii) those assets and
properties disposed of for fair value in the ordinary course of business since
the dates of the Financial Statements.
SECTION 3.10 Absence of Certain Changes or Events. Except as disclosed on
------------------------------------
Schedule 3.10 or as consented to by CBI pursuant to Section 5.06, since
September 30, 1995, the Bank has conducted its business only in the ordinary
course and has not, other than in the ordinary course of business and consistent
with past practices and safe and sound banking practices:
A. Incurred any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, except deposits
taken and federal funds purchased and current liabilities for trade or
business obligations, which individually or in the aggregate, result in a
Material Adverse Change;
B. Discharged or satisfied any lien, charge or encumbrance or paid
any obligation or liability, whether absolute or contingent, due or to
become due;
C. Declared or made any payment of dividends or other distribution
to its shareholders, or purchased, retired or redeemed, or obligated itself
to purchase, retire or redeem, any of its shares of capital stock or other
securities, except as contemplated by Section 5.06(J).
D. Issued, reserved for issuance, granted, sold or authorized the
issuance of any shares of its capital stock or other securities or
subscriptions, options, warrants, calls, rights or commitments of any kind
relating to the issuance thereto;
E. Acquired any capital stock or other equity securities or acquired
any equity or ownership interest in any bank, corporation, partnership or
other entity (except (i) through settlement of indebtedness, foreclosure,
or the exercise of creditors' remedies or (ii) in a fiduciary capacity, the
ownership of which does not expose it to any liability from the business,
operations or liabilities of such person);
F. Mortgaged, pledged or subjected to lien, charge, security
interest or any other encumbrance or restriction any of its property,
business or assets, tangible or intangible except (i) as described in
Schedule 3.09, (ii) statutory liens not yet delinquent, (iii) consensual
landlord liens, (iv) minor defects and irregularities in title and
encumbrances that do not materially impair the use thereof for the purpose
for which they are held, (v) pledges of assets to secure public funds
deposits, and (vi) for those assets and properties disposed of for fair
value since the dates of the Financial Statements.
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<PAGE>
G. Sold, transferred, leased to others or otherwise disposed of any
of its assets or canceled or compromised any debt or claim, or waived or
released any right or claim (except pursuant to the settlement of
litigation described in Section 3.10(L)) of material value;
H. Terminated, canceled or surrendered, or received any notice of or
threat of termination or cancellation of any contract, lease or other
agreement or suffered any damage, destruction or loss (whether or not
constituting, or reasonably anticipated to constitute, a Material Adverse
Change covered by insurance), which, in any case or in the aggregate, may
result in a Material Adverse Change;
I. Disposed of, permitted to lapse, transferred or granted any
rights under, or entered into any settlement regarding the breach or
infringement of, any United States or foreign license or Proprietary Right
(as defined in Section 3.15) or modified any existing rights with respect
thereto;
J. Made any change in the rate of compensation, commission, bonus or
other direct or indirect remuneration payable, or paid or agreed or orally
promised to pay, conditionally or otherwise, any bonus, extra compensation,
pension or severance or vacation pay, to or for the benefit of any of its
shareholders, directors, officers, employees or agents, or entered into any
employment or consulting contract or other agreement with any director,
officer or employee or adopted, amended in any material respect or
terminated any pension, employee welfare, retirement, stock purchase, stock
option, stock appreciation rights, termination, severance, income
protection, golden parachute, savings or profit-sharing plan (including
trust agreements and insurance contracts embodying such plans), any
deferred compensation, or collective bargaining agreement, any group
insurance contract or any other incentive, welfare or employee benefit plan
or agreement maintained by it for the benefit of its directors, employees
or former employees, except as contemplated by Section 5.06(Q);
K. Except for improvements or betterments relating to Properties (as
defined in Section 3.19), made any capital expenditures or capital
additions or betterments in excess of an aggregate of $25,000;
L. Instituted, had instituted against it, settled or agreed to
settle any litigation, action or proceeding before any court or
governmental body relating to its property other than routine collection
suits instituted by it to collect amounts owed or suits in which the amount
in controversy is less than $25,000;
M. Suffered any change, event or condition that, in any case or in
the aggregate, has caused or may result in a Material Adverse Change, or
any Material Adverse Change in earnings or costs or relations with its
employees, agents, depositors, loan customers, correspondent banks or
suppliers;
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N. Except for the transactions contemplated by this Agreement or as
otherwise permitted hereunder, entered into any transaction, or entered
into, modified or amended any contract or commitment;
O. Entered into or given any promise, assurance or guarantee of the
payment, discharge or fulfillment of any undertaking or promise made by
any person, firm or corporation;
P. Sold, or knowingly disposed of, or otherwise divested itself of
the ownership, possession, custody or control, of any corporate books or
records of any nature that, in accordance with sound business practice,
normally are retained for a period of time after their use, creation or
receipt, except at the end of the normal retention period;
Q. Made any, or acquiesced with any, change in any accounting
methods, principles or material practices except as required by GAAP or
RAP;
R. Sold (provided, however, that payment at maturity is not deemed a
sale) or purchased any investment securities in an aggregate amount in
excess of $500,000;
S. Made, renewed, extended the maturity of, or altered any of the
material terms of any loan to any single borrower and his related interests
in excess of the principal amount of $100,000; or
T. Entered into any agreement or made any commitment whether in
writing or otherwise to take any of the types of action described in
subsections A. through S. above.
SECTION 3.11 Leases, Contracts and Agreements. Schedule 3.11 sets forth
--------------------------------
an accurate and complete description of all leases, subleases, licenses,
contracts and agreements to which the Bank is a party or by which the Bank is
bound which obligate or may obligate the Bank in the aggregate for an amount in
excess of $25,000 over the entire term of any such agreement or related
contracts of a similar nature which in the aggregate obligate or may obligate
the Bank for an amount in excess of $25,000 over the entire term of such related
contracts (the "Contracts"). The Bank has delivered or otherwise made available
to CBI true and correct copies of all Contracts. For the purposes of this
Agreement, the Contracts shall be deemed not to include loans made by,
repurchase agreements made by, spot foreign exchange transactions of, bankers
acceptances of or deposits by the Bank, but does include unfunded loan
commitments and letters of credit issued by the Bank where the borrowers' total
direct and indirect indebtedness to the Bank is in excess of $25,000. Except as
set forth in Schedule 3.11, no participations or loans have been sold which have
buy back, recourse or guaranty provisions which create contingent or direct
liabilities of the Bank. All of the Contracts are legal, valid and binding
obligations of the parties to the Contracts enforceable in accordance with their
terms, subject to the effects of bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally and to
14
<PAGE>
general equitable principles, and are in full force and effect. Except as
described in Schedule 3.11, all rent and other payments by the Bank under the
Contracts are current, there are no existing defaults by the Bank under the
Contracts and no termination, condition or other event has occurred which
(whether with or without notice, lapse of time or the happening or occurrence of
any other event) would constitute a default. The Bank has a good and
indefeasible leasehold interest in each parcel of real property leased by it
free and clear of all mortgages, pledges, liens, encumbrances and security
interests.
SECTION 3.12 Taxes. The Bank has duly and timely filed with the
-----
appropriate Federal, state and local governmental agencies all tax returns and
reports required to be filed, including, without limitation, income, excise,
property, sales, use, franchise, value added, unemployment, employees' income
withholding and social security taxes, imposed by the United States or by any
foreign country or by any state, municipality, subdivision or instrumentality of
the United States or of any foreign country, or by any other taxing authority,
and has paid, or has established adequate reserves for the payment of, all taxes
and assessments that are or are claimed to be due, payable or owed by the Bank,
or for which the Bank may have liability, whether as a result of its own
activities or by virtue of its affiliation with other entities and all interest
and penalties thereon, whether disputed or not. All such tax returns and
reports are accurately prepared and all deposits required by law to be made by
the Bank with respect to employees' withholding taxes have been duly made. The
Bank is not and has not been delinquent in the payment of any foreign or
domestic tax, assessment or governmental charge or deposit and has no tax
deficiency or claim outstanding, proposed or assessed against it, and there is
no basis for any such deficiency or claim. Within the last four (4) years, the
Bank's Federal income tax return has not been audited or examined and no such
audit is currently pending or threatened. The Bank has not been granted any
extension of time with respect to the date on which any tax return was or is due
to be filed by or with respect to the Bank or any waiver or agreement by the
Bank for the extension of time for the assessment or collection of any tax. The
Bank has not committed any violation of any applicable Federal, state, local or
foreign tax laws.
Except as disclosed in Schedule 3.12, based on existing tax laws and
regulations, the amounts set up as provisions for current or deferred taxes on
the Financial Statements are sufficient for the payment of all unpaid Federal,
state, county, local, foreign or other taxes (including any interest or
penalties) of or on behalf of the Bank applicable to the periods covered by the
Financial Statements, and all years and periods prior thereto. True and
complete copies of the Federal income tax returns of the Bank as filed with the
Internal Revenue Service (the "IRS") for the years ended December 31, 1992,
1993, and 1994, have been delivered to CBI.
SECTION 3.13 Insurance. Schedule 3.13 contains an accurate and complete
---------
list and brief description of all policies of insurance, including fidelity and
bond insurance, of the Bank. All such policies (a) are sufficient for
compliance by the Bank with all requirements of law and all agreements to which
the Bank is a party, (b) are valid, outstanding and enforceable except as
enforceability may be limited by bankruptcy, conservatorship, insolvency,
moratorium, reorganization, receivership, or similar laws and judicial decisions
affecting the rights of creditors
15
<PAGE>
generally and by general principles of equity (whether applied in a proceeding
at law or equity), (c) will not in any significant respect be affected by, and
will not terminate or lapse by reason of, the transactions contemplated by this
Agreement, and (d) are presently in full force and effect, no notice has been
received of the cancellation, or threatened or proposed cancellation, of any
such policy and there are no unpaid premiums due thereon. The Bank is not in
default with respect to the provisions of any such policy and has not failed to
give any notice or present any claim thereunder in a due and timely fashion.
Each property of the Bank is insured for the benefit of the Bank in amounts
deemed adequate by the Bank's management against risks customarily insured
against. Except as set forth on Schedule 3.13, there has been no single claim in
excess of $10,000 under any fidelity bond and there have been no claims in the
aggregate in excess of $50,000 under any fidelity bonds of the Bank within the
last three (3) years, and the Bank is not aware of any facts that would form the
basis of a claim under such bonds.
16
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SECTION 3.14 No Adverse Change. Except as disclosed in the
-----------------
representations and warranties made in this Article III, there has not been any
Material Adverse Change since September 30, 1995, nor has any event or condition
occurred that has resulted in, or has a reasonable probability of resulting in
the future, in a Material Adverse Change.
SECTION 3.15 Patents, Trademarks and Copyrights. The Bank does not own or
----------------------------------
require the use of any patent, patent application, patent right, invention,
process, trademark (whether registered or unregistered), trademark application,
trademark right, trade name, service name, service mark, copyright or any trade
secret ("Proprietary Rights") for the business or operations of the Bank. The
Bank is not infringing upon or otherwise acting adversely to, and have not in
the past three (3) years infringed upon or otherwise acted adversely to, any
Proprietary Right owned by any other person or persons. There is no claim or
action by any such person pending, or, to the knowledge of the Bank, threatened,
with respect thereto.
SECTION 3.16 Transactions with Certain Persons and Entities. Except as
----------------------------------------------
disclosed in Schedule 3.16, the Bank does not owe any amount to (excluding
deposit liabilities), or have any loan, contract, lease, commitment or other
obligation from or to any of the present or former directors or officers (other
than compensation for current services not yet due and payable and reimbursement
of expenses arising in the ordinary course of business) of the Bank, and none of
such persons owes any amount to the Bank. Except as set forth on Schedule 3.16,
there are no agreements, instruments, commitments, extensions of credit, tax
sharing or allocation agreements or other contractual agreements of any kind
between or among the Bank, whether on its own behalf or in its capacity as
trustee or custodian for the funds of any employee benefit plan (as defined in
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")), and
any of its Affiliates.
SECTION 3.17 Evidences of Indebtedness. All evidences of indebtedness and
-------------------------
leases that are reflected as assets of the Bank are legal, valid and binding
obligations of the respective obligors thereof, enforceable in accordance with
their respective terms (except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors generally and
the availability of injunctive relief, specific performance and other equitable
remedies) and are not subject to any known or threatened defenses, offsets or
counterclaims that may be asserted against the Bank or the present holder
thereof, except as disclosed in Schedule 3.17. The credit files of the Bank
contain all material information (excluding general, local or national industry,
economic or similar conditions) known to the Bank that is reasonably required to
evaluate in accordance with generally prevailing practices in the banking
industry the collectibility of the loan portfolio of the Bank (including loans
that will be outstanding if any of them advances funds they are obligated to
advance). The Bank has disclosed all of the substandard, doubtful, loss,
nonperforming and problem loans on the internal watch list of the Bank in
accordance with RAP. A copy of the internal watch list as of September 30,
1995, has been provided to CBI.
SECTION 3.18 Condition of Assets. All tangible assets used by the Bank
-------------------
are in good operating condition, ordinary wear and tear excepted, and conform
with all applicable ordinances,
17
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regulations, zoning and other laws, whether Federal, state or local. Except as
disclosed in Schedule 3.18, none of the Bank's premises or equipment are in need
of maintenance or repairs other than ordinary routine maintenance and repairs
that are not material in nature or cost, taking into account the age, nature,
location and use of such assets.
SECTION 3.19 Environmental Compliance.
------------------------
A. The Bank and all of the Properties and the Bank's operations are
in compliance with all Environmental Laws (as defined in Section 12.09).
The Bank is not aware of, nor has the Bank received notice of, any past,
present or future conditions, events, activities, practices or incidents
that may interfere with or prevent the Bank's compliance with all
Environmental Laws.
B. The Bank has obtained all permits, licenses and authorizations
that are required under any Environmental Laws.
C. Except as disclosed in Schedule 3.19, no Hazardous Materials (as
defined in Section 12.09) exist on, about, or within any of the Properties,
nor have any Hazardous Materials previously existed on, about or within or
been used, generated, stored, transported, disposed of, on or released from
any of the Properties. The use that the Bank makes and intends to make of
the Properties will not result in the use, generation, storage,
transportation, accumulation, disposal or release of any Hazardous Material
on, in or from any of the Properties.
D. There is no action, suit, proceeding, investigation or inquiry
before any court, administrative agency or other governmental authority
pending or threatened against the Bank relating in any way to any
Environmental Law. The Bank has no liability for remedial action under any
Environmental Law. The Bank has not received any request for information
by any governmental authority with respect to the condition, use or
operation of any of the Properties nor has the Bank received any notice of
any kind from any governmental authority or other person with respect to
any violation of or claimed or potential liability of any kind under any
Environmental Law (including, without limitation, any letter, notice or
inquiry from any person or governmental entity informing the Bank that it
is or may be liable in any way under CERCLA (as defined in Section 12.09)
or requesting information to enable such a determination to be made).
E. As used in this Agreement, the term "Property" or "Properties"
shall include all real property owned or leased by the Bank, including, but
not limited to, properties that the Bank has foreclosed on as well as the
Bank's premises and all improvements and fixtures thereon.
SECTION 3.20 Regulatory Compliance. Except as expressly set forth in this
---------------------
Agreement with respect to the Merger and the other transactions contemplated
hereby, all reports, records,
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registrations, statements, notices and other documents or information required
to be filed by the Bank with any federal or state regulatory authority
including, without limitation, the TSLD, the Office of Thrift Supervision (the
"OTS"), the FDIC and the IRS have been duly and timely filed and all information
and data contained in such reports, records or other documents are true,
accurate, correct and complete. Except as disclosed on Schedule 3.20, the Bank
is not now nor has been within the last five (5) years subject to any commitment
letter, memorandum of understanding, cease and desist order, written agreement
or other formal or informal administrative action with any such regulatory
bodies. The Bank does not believe any such regulatory bodies have any present
intent to place the Bank under any such administrative action. Except as set
forth on Schedule 3.20, there are no actions or proceedings pending or
threatened against the Bank by or before any such regulatory bodies or any other
nation, state or subdivision thereof, or any other entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
SECTION 3.21 Absence of Certain Business Practices. Neither the Bank nor
-------------------------------------
any officer, employee or agent of the Bank nor any other person acting on their
behalf, has, directly or indirectly, within the past five (5) years, given or
agreed to give any gift or similar benefit to any customer, supplier,
governmental employee or other person who is or may be in a position to help or
hinder the business of the Bank (or assist the Bank in connection with any
actual or proposed transaction) that (i) will more likely than not subject the
Bank to any damage or penalty in any civil, criminal or governmental litigation
or proceeding, (ii) if not given in the past, will more likely than not result
in a Material Adverse Change or (iii) if not continued in the future will more
likely than not result in a Material Adverse Change or might subject the Bank to
suit or penalty in any private or governmental litigation or proceeding.
SECTION 3.22 Proxy Statement. None of the information supplied or to be
---------------
supplied by the Bank or any of its directors, officers, employees or agents for
inclusion in the Proxy Statement, or any amendment thereof or supplement
thereto, will be false or misleading with respect to any material fact, or omit
to state any material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, or at the
time of the Shareholders' Meeting, be false or misleading with respect to any
material fact, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of any
proxy for the Shareholders' Meeting. All documents that the Bank is responsible
for filing with any regulatory or governmental agency in connection with the
Merger will comply in all material respects with the provisions of applicable
law.
SECTION 3.23 Dissenting Shareholders. The Bank has no knowledge of any
-----------------------
plan or intention on the part of any of the shareholders of the Bank to make
written demand for payment of the fair value of their shares of the Bank Stock
in the manner provided by applicable law.
SECTION 3.24 Books and Records. The minute books, stock certificate books
-----------------
and stock transfer ledgers of the Bank (i) have been kept accurately in the
ordinary course of business, (ii) are complete and correct in all material
respects, (iii) the transactions entered therein represent bona
19
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fide transactions, and (iv) there have been no transactions involving the
business of the Bank that properly should have been set forth therein and that
have not been accurately so set forth.
SECTION 3.25 Forms of Instruments, Etc. The Bank has made, and will make,
-------------------------
available to CBI copies of all standard forms of notes, mortgages, deeds of
trust and other routine documents of a like nature used on a regular and
recurring basis by the Bank in the ordinary course of its business.
SECTION 3.26 Fiduciary Responsibilities. The Bank has performed in all
--------------------------
material respects all of its duties as a trustee, custodian, guardian or as an
escrow agent in a manner that complies in all material respects with all
applicable laws, regulations, orders, agreements, instruments and common law
standards, where the failure to so perform would result in a Material Adverse
Change or materially and adversely affect the transactions contemplated by this
Agreement, and the Bank does not have any reason to be aware of any basis for
the same.
SECTION 3.27 Guaranties. Except for items in the process of collection in
----------
the ordinary course of the Bank's business, none of the obligations or
liabilities of the Bank are guaranteed by any other person, firm or corporation,
nor, except in the ordinary course of business, according to prudent business
practices and in compliance with applicable law, has the Bank guaranteed the
obligations or liabilities of any other person, firm or corporation.
SECTION 3.28 Voting Trust or Buy-Sell Agreements. The Bank is not aware
-----------------------------------
of any agreement between any of its shareholders relating to a right of first
refusal with respect to the purchase or sale by any such shareholder of capital
stock of the Bank or any voting agreement or voting trust with respect to shares
of capital stock of the Bank, other than the Proxy (as defined in Section 5.16).
SECTION 3.29 Employee Relationships. Except as set forth on Schedule
----------------------
3.29, the Bank has complied in all material respects with all applicable laws
relating to its relationships with its employees, and the Bank believes that the
relationships between the Bank and its employees are good. To the best
knowledge of the Bank, no key executive officer or manager of any of the
operations operated by the Bank or any group of employees of the Bank have any
present plans to terminate their employment with the Bank. Except as expressly
set forth in this Agreement, the Bank is not a party to any oral or written
contracts or agreements granting benefits or rights to employees or any
collective bargaining agreement or to any conciliation agreement with the
Department of Labor, the Equal Employment Opportunity Commission or any federal,
state or local agency that requires equal employment opportunities or
affirmative action in employment. There are no unfair labor practice complaints
pending against the Bank before the National Labor Relations Board and no
similar claims pending before any similar state, local or foreign agency. There
is no activity or proceeding of any labor organization (or representative
thereof) or employee group to organize any employees of the Bank, nor of any
strikes, slowdowns, work stoppages, lockouts or threats thereof, by or with
respect to any such employees. The Bank is in compliance in all material
respects with all applicable laws respecting employment and employment
practices,
20
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terms and conditions of employment and wages and hours, and the Bank is not
engaged in any unfair labor practice.
SECTION 3.30 Employee Benefit Plans. Set forth on Schedule 3.30 is a
----------------------
complete and correct list of all "employee benefit plans" (as defined in ERISA),
all specified fringe benefit plans as defined in section 6039D of the Internal
Revenue Code of 1986, as amended (the "Code"), and all other bonus, incentive,
compensation, deferred compensation, profit sharing, stock option, stock
appreciation right, stock bonus, stock purchase, employee stock ownership,
savings, severance, supplemental unemployment, layoff, salary continuation,
retirement, pension, health, life insurance, disability, group insurance,
vacation, holiday, sick leave, fringe benefit or welfare plan or any other
similar plan, agreement, policy or understanding (whether written or oral,
qualified or nonqualified, currently effective or terminated), and any trust,
escrow or other agreement related thereto, which (a) is maintained or
contributed to by the Bank, or with respect to which the Bank has any liability,
and (b) provides benefits, or describes policies or procedures applicable to any
officer, employee, service provider, former officer or former employee of the
Bank, or the dependents of any thereof, regardless of whether funded (the
"Employee Plans").
No Employee Plan is a defined benefit plan within the meaning of section
3(35) of ERISA. The Bank has delivered or made available to CBI true, accurate
and complete copies of the documents comprising each Employee Plan, and such
other documents, records or other materials related thereto reasonably requested
by CBI. To the best knowledge of the Bank, there have been no prohibited
transactions, breaches of fiduciary duty or any other breaches or violations of
any law applicable to the Employee Plans that would subject CBI or the Bank to
any liabilities. Each Employee Plan intended to be qualified under section
401(a) of the Code has a current favorable determination letter and, to the best
knowledge of the Bank, has been operated in compliance with applicable law and
in accordance with its terms. There are no pending claims, lawsuits or actions
relating to any Employee Plan (other than ordinary course claims for benefits)
and, to the best knowledge of the Bank, none are threatened. No written or oral
representations have been made to any employee or former employee of the Bank
promising or guaranteeing any employer payment or funding for the continuation
of medical, dental, life or disability coverage for any period of time beyond
the end of the current plan year (except to the extent of coverage required
under section 4980B of the Code). Compliance with FAS 106 will not create any
material change to the Bank's financial statements. Except as required in
connection with qualified plan amendments required by tax law changes, the
consummation of the transactions contemplated by this Agreement will not
accelerate the time of payment or vesting, or increase the amount, of
compensation due to any employee, officer, former employee or former officer of
the Bank.
With respect to each "employee benefit plan" (as defined in ERISA)
maintained or contributed to or required to be contributed to, currently or in
the past, by any trade or business with which the Bank is required by any of the
rules contained in the Code or ERISA to be treated as a single employer (the
"Controlled Group Plans"):
21
<PAGE>
A. To the best knowledge of the Bank, all Controlled Group Plans
that are "group health plans" (as defined in the Code and ERISA) have been
operated to the Closing such that failures to operate such group health
plans in full compliance with Part 6 of Subtitle B of Title 1 of ERISA and
section 4980B of the Code would not subject the Bank to liability; and
B. There is no Controlled Group Plan that is a defined benefit plan
(as defined in section 3(35) of ERISA), nor has there been in the last five
calendar years.
C. There is no Controlled Group Plan that is a "multiple employer
plan" or "multiemployer plan" (as either such term is defined in ERISA),
nor has there been since 1974.
SECTION 3.31 Ownership of Business Assets. All assets used in the
----------------------------
business of the Bank are owned by the Bank and are not owned by any officer,
director or shareholder.
SECTION 3.32 Representations Not Misleading. All material facts relating
------------------------------
to the business operations, properties, assets, liabilities (contingent or
otherwise) and financial condition of the Bank have been disclosed to CBI in or
in connection with this Agreement. No representation or warranty by the Bank
contained in this Agreement, nor any statement, exhibit or schedule furnished to
CBI by the Bank under and pursuant to, or in anticipation of or in connection
with, this Agreement, contains or will contain on the Closing Date any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein, in light of the
circumstances under which it was or will be made, not misleading in any material
respect and such representations and warranties would continue to be true and
correct following disclosure to any governmental authority having jurisdiction
over the Bank or its properties of the facts and circumstances upon which they
were based. Except as disclosed herein, there is no matter that materially
adversely affects the Bank or the Bank's ability to perform the transactions
contemplated by this Agreement or the other agreements contemplated hereby, or
to the knowledge of the Bank, will in the future result in a Material Adverse
Change, other than general economic conditions. No information material to the
Merger and that is necessary to make the representations and warranties herein
contained not misleading, has been withheld by the Bank.
22
<PAGE>
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF CBI
CBI hereby makes the representations and warranties set forth in this
Article IV to the Bank.
SECTION 4.01 Organization and Qualification. CBI is a corporation, duly
------------------------------
organized, validly existing under the laws of the State of Texas, and in good
standing under all laws, rules, and regulations applicable to corporations
located in the State of Texas. CBI has all requisite corporate power and
authority (including all licenses, franchises, permits and other governmental
authorizations as are legally required) to carry on its business as now being
conducted, to own, lease and operate its properties and assets as now owned,
leased or operated and to enter into and carry out its obligations under this
Agreement.
SECTION 4.02 Execution and Delivery. CBI has taken all corporate action
----------------------
necessary to authorize the execution, delivery and (provided the required
regulatory approvals are obtained) performance of this Agreement and the other
agreements and documents contemplated hereby to which it is a party, including,
but not limited to, the Merger Agreement. This Agreement has been, and the
other agreements and documents contemplated hereby, including, but not limited
to, the Merger Agreement, have been or at Closing will be, duly executed by CBI
and each constitutes the valid and binding obligation of CBI, enforceable in
accordance with its respective terms and conditions, except as enforceability
may be limited by bankruptcy, conservatorship, insolvency, moratorium,
reorganization, receivership or similar laws and judicial decisions affecting
the rights of creditors generally and by general principles of equity (whether
applied in a proceeding at law or in equity).
SECTION 4.03 Compliance with Laws, Permits and Instruments. The
---------------------------------------------
execution, delivery and (provided the required regulatory approvals are
obtained) performance of this Agreement and the other agreements contemplated
hereby, including, but not limited to the Merger Agreement, and the consummation
of the transactions contemplated hereby and thereby, will not conflict with, or
result, by itself or with the giving of notice or the passage of time, in any
violation of or default or loss of a benefit under, (i) any provision of the
Articles of Incorporation or Bylaws of CBI, (ii) any material provision of any
mortgage, indenture, lease, contract, agreement or other instrument applicable
to CBI or its assets, operations, properties or businesses now conducted or
heretofore conducted or (iii) any statute, law, ordinance, rule or regulation
applicable to CBI.
SECTION 4.04 Litigation. No legal action, suit or proceeding or judicial,
----------
administrative or governmental investigation is pending or, to the knowledge of
CBI, threatened against CBI that questions or might question the validity of
this Agreement or the agreements contemplated hereby, including, but not limited
to, the Merger Agreement, or any actions taken or to be taken by CBI pursuant
hereto or thereto or seeks to enjoin or otherwise restrain the transactions
contemplated hereby or thereby.
23
<PAGE>
SECTION 4.05 Consents and Approvals. Except for regulatory approvals as
----------------------
disclosed in Schedule 4.05, no approval, consent, order or authorization of, or
registration, declaration or filing with, any governmental authority or other
third party is required on the part of CBI in connection with the execution,
delivery or performance of this Agreement or the agreements contemplated hereby,
including, but not limited to, the Merger Agreement or the consummation by CBI
of the transactions contemplated hereby or thereby.
SECTION 4.06 Proxy Statement. None of the information supplied or to be
---------------
supplied by CBI or any of its directors, officers, employees or agents for
inclusion in the Proxy Statement, or any amendment thereof or supplement
thereto, will be false or misleading with respect to any material fact, or omit
to state any material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, or at the
time of the Shareholders' Meeting, be false or misleading with respect to any
material fact, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of any
proxy for the Shareholders' Meeting. All documents that CBI is responsible for
filing with any regulatory or governmental agency in connection with the Merger
will comply in all material respects with the provisions of applicable law.
SECTION 4.07 Representations Not Misleading. No representation or
------------------------------
warranty by CBI contained in this Agreement, nor any statement, exhibit or
schedule furnished to the Bank by CBI under and pursuant to, or in anticipation
of this Agreement, contains or will contain on the Closing Date any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein, in light of the
circumstances under which it was or will be made, not misleading in any material
respect and such representations and warranties would continue to be true and
correct following disclosure to any governmental authority having jurisdiction
over CBI of the facts and circumstances upon which they were based.
ARTICLE V.
COVENANTS OF THE BANK AND SMITH
The Bank hereby makes the covenants set forth in this Article V to CBI.
Smith covenants with CBI to exercise all reasonable efforts as a director and
shareholder to cause the Bank to comply with its covenants set forth in this
Article V.
SECTION 5.01 Best Efforts. The Bank will use all reasonable efforts to
------------
cause the consummation of the transactions contemplated hereby in accordance
with the terms and conditions of this Agreement.
SECTION 5.02 Merger Agreement. The Bank will, as soon as practicable
----------------
after the execution of this Agreement, duly authorize and enter into the Merger
Agreement, the form of which is attached hereto as Exhibit "A", and perform all
-----------
of its obligations thereunder.
24
<PAGE>
SECTION 5.03 Affiliate Merger. At the option of CBI, the Bank will
----------------
reasonably cooperate with CBI and its Subsidiaries to cause the Bank to merge
with, or cause the Bank to merge into, a Subsidiary of CBI immediately after the
Effective Date, and the Bank agrees to reasonably cooperate and join in with CBI
and its Subsidiaries in the preparation, execution and processing of all
applications and all director, shareholder and regulatory approvals of CBI, its
Subsidiaries or the Bank necessary or appropriate to obtain regulatory,
corporate and other approvals of such merger in a timely manner.
SECTION 5.04 Information for Applications and Statements. The Bank will
-------------------------------------------
promptly, but in no event later than ten (10) business days after receipt of a
request by CBI, prepare and furnish to CBI all information concerning the Bank,
including, but not limited to, financial statements, reasonably required for
inclusion in any application or statement to be made by CBI to or filed by CBI
with any governmental body in connection with the transactions contemplated by
this Agreement (including pursuant to Section 5.03 and any filings to be made
with the Securities and Exchange Commission), or in connection with any
unrelated transactions during the pendency of this Agreement, and the Bank
represents and warrants that all information so furnished for such statements
and applications shall be true and correct in all material respects and shall
not omit any material fact required to be stated therein or necessary to make
the statements made, in light of the circumstances under which they were made,
not misleading. The Bank shall otherwise fully cooperate with CBI in the filing
of any applications or other documents necessary to consummate the transactions
contemplated by this Agreement, including the Merger.
SECTION 5.05 Required Acts of the Bank. Prior to the Closing, the Bank
-------------------------
shall, unless otherwise permitted in writing by CBI:
A. Operate only in the ordinary course of business and consistent
with prudent banking practices;
B. Except as required by prudent business practices, use all
reasonable efforts to preserve its business organization intact and to
retain its present customers, depositors, suppliers, correspondent banks,
officers, directors, employees and agents;
C. Act in a manner intended to preserve or attempt to preserve its
goodwill;
D. Perform all of its obligations under contracts, leases and
documents relating to or affecting its assets, properties and business
except such obligations as the Bank may in good faith reasonably dispute;
E. Except as required by prudent business practices, maintain all
offices, machinery, equipment, materials, supplies, inventories, vehicles
and other properties owned, leased or used by it (whether under its control
or the control of others), in good operating condition and repair, ordinary
wear and tear excepted;
25
<PAGE>
F. Maintain in full force and effect all insurance policies now in
effect or renewals thereof and, except as required by prudent business
practices that do not jeopardize insurance coverage, give all notices and
present all claims under all insurance policies in due and timely fashion;
G. Timely file all reports required to be filed with governmental
authorities and observe and conform to all applicable laws, rules,
regulations, ordinances, codes, orders, licenses and permits, except those
being contested in good faith by appropriate proceedings;
H. Timely file all tax returns required to be filed by it and
promptly pay all taxes, assessments, governmental charges, duties,
penalties, interest and fines that become due and payable, except those
being contested in good faith by appropriate proceedings;
I. Withhold from each payment made to each of its employees the
amount of all taxes (including, but not limited to, federal income taxes,
FICA taxes and state and local income and wage taxes) required to be
withheld therefrom and pay the same to the proper tax receiving officers;
J. Continue to follow and implement policies, procedures and
practices regarding the identification, monitoring, classification and
treatment of all assets in substantially the same manner as it has in the
past; and
K. Account for all transactions of the Bank in accordance with GAAP
(unless otherwise instructed by RAP in which instance account for such
transaction in accordance with RAP), and maintain the allowance for loan
losses account for the Bank in an adequate amount to provide for all
losses, net of recoveries relating to loans previously charged off, on all
outstanding loans of the Bank.
SECTION 5.06 Prohibited Acts of the Bank. Prior to the Closing, the Bank
---------------------------
shall not, without the prior written consent of CBI, which consent shall not be
unreasonably delayed, conditioned or withheld:
A. Introduce any new material method of management or operation;
B. Take any action that could reasonably be anticipated to result in
a Material Adverse Change;
C. Take or, except as required by prudent business practice, fail to
take any action that would cause or permit the representations and
warranties made in Article III hereof to be inaccurate at the time of the
Closing (except as contemplated or permitted by this Agreement) or preclude
the Bank from making such representations and warranties at the time of the
Closing;
26
<PAGE>
D. Cause or fail to use all reasonable efforts to prevent the loss of
insurance coverage, unless replaced with coverage that is substantially
similar (in amount and insurer) to that now in effect;
E. Change its Articles of Incorporation or Bylaws or its authorized
capital stock;
F. Enter into any transaction other than in the ordinary course of
business, provided, that the Bank may pay the one-time special assessment
with respect to SAIF insured deposits, and provided further, that the Bank
may purchase a "tail" or other director and officer liability insurance
policy covering the actions officers and directors of the Bank for the
period prior to Closing and continuing such coverage for a period of
approximately twenty-four (24) months after Closing, provided the premium
for such insurance coverage does not exceed $15,000 or a higher amount
approved in advance by CBI;
G. Except as explicitly permitted hereunder or in accordance with
applicable law, engage in any transaction with any affiliated person or
allow such persons to acquire any assets from the Bank except in the form
of wages, salaries and reimbursement of expenses and by loans secured by
collateral having a fair market value at least equal to the principal
balance due on such loan to its officers, directors and employees;
H. Incur any obligation or liability, absolute, accrued, contingent
or otherwise, except in the ordinary course of business consistent with
prudent banking practices;
I. Discharge or satisfy any lien, charge or encumbrance or pay any
obligation or liability, whether absolute or contingent, due or to become
due, except in the ordinary course of business consistent with prudent
banking practices;
J. Declare or make any payment of dividends or other distribution to
its shareholders, or purchase, retire or redeem, or obligate itself to
purchase, retire or redeem, any of its shares of capital stock or other
securities, provided, however, that the Bank may make a dividend of the
following parcels of vacant land currently held by the Bank (or, if one or
both parcels are sold by the Bank prior to the Closing Date, a cash
dividend equal to the net after tax proceeds received by the Bank from the
sale thereof):
(i) Lot 18, Snow Heights Addition, North Richland Hills, Texas,
consisting of approximately 0.3705 acres, most recently appraised at
$194,000; and
(ii) Lot 2, Block 1, First American Savings Banc Addition,
Southlake, Texas, consisting of approximately 3.83 acres, most
recently appraised at $500,000;
27
<PAGE>
provided that the Bank conveys such properties subject to a restriction
that the properties shall not be used for the purpose of operating a bank,
savings and loan or other financial institution without the prior written
consent of the Bank or its successor;
K. Issue, reserve for issuance, grant, sell or authorize the issuance
of any shares of its capital stock or other securities or subscriptions,
options, warrants, calls, rights or commitments of any kind relating to the
issuance thereto;
L. Acquire any capital stock or other equity securities or acquire
any equity or ownership interest in any bank, corporation, partnership or
other entity (except (i) through settlement of indebtedness, foreclosure,
or the exercise of creditors' remedies or (ii) in a fiduciary capacity, the
ownership of which does not expose it to any liability from the business,
operations or liabilities of such person);
M. Mortgage, pledge or subject to lien, charge, security interest or
any other encumbrance or restriction any of its property, business or
assets, tangible or intangible except in the ordinary course of business
and consistent with prudent banking practices;
N. Sell, transfer, lease to others or otherwise dispose of any of its
assets or cancel or compromise any debt or claim, or waive or release any
right or claim of material value, except in the ordinary course of business
and consistent with past practices and safe and sound banking principles;
O. Terminate, cancel or surrender any contract, lease or other
agreement or suffer any damage, destruction or loss (whether or not
constituting, or reasonably anticipated to constitute, a Material Adverse
Change covered by insurance), which, in any case or in the aggregate, may
result in a Material Adverse Change;
P. Dispose of, permit to lapse, transfer or grant any rights under,
or breach or infringe upon, any United States or foreign license or
Proprietary Right or modify any existing rights with respect thereto,
except in the ordinary course of business and consistent with past
practices and safe and sound banking principles;
Q. Make any change in the rate of compensation, commission, bonus or
other direct or indirect remuneration payable, or pay or agree or orally
promise to pay, conditionally or otherwise, any bonus, extra compensation,
pension or severance or vacation pay, to or for the benefit of any of its
shareholders, directors, officers, employees or agents, or enter into any
employment or consulting contract (other than as contemplated by this
Agreement) or other agreement with any director, officer or employee or
adopt, amend in any material respect or terminate any pension, employee
welfare, retirement, stock purchase, stock option, stock appreciation
rights, termination, severance, income protection, golden parachute,
savings or profit-sharing plan (including trust agreements and insurance
contracts embodying such plans), any deferred compensation, or collective
28
<PAGE>
bargaining agreement, any group insurance contract or any other incentive,
welfare or employee benefit plan or agreement maintained by it for the
benefit of its directors, employees or former employees, except:
(i) normal periodic increases in the compensation payable to
officers or salaried employees, consistent with past practices and
made in the ordinary course of business;
(ii) payments made to Mr. Jeff Peiper, President of the Bank,
pursuant to the terms of that certain employment agreement between Mr.
Peiper and the Bank dated as of February 10, 1995 (the "Employment
Agreement"), including, but not limited to, the Bank's obligation to
pay severance pay to Mr. Peiper in an amount not to exceed six (6)
months salary. In addition, the Bank and Mr. Peiper may agree for his
continued employment beyond the expiration date of the Employment
Agreement, provided that such continued employment will (i) be on a
month to month basis, (ii) be on the same terms, including salary and
other benefits, as provided currently under the terms of the
Employment Agreement, (iii) not increase the amount of severance pay
to be paid to Mr. Peiper pursuant to the terms of the Employment
Agreement;
(iii) payments made pursuant to that certain Bank earnings
incentive compensation arrangement that has been previously adopted
for the benefit of senior officers of the Bank (the "ICA"), provided
that such payments shall not exceed an aggregate amount of $100,000
without the prior consent of CBI, which consent shall not be
unreasonably delayed, conditioned or denied. In proposing and
responding to any request for any higher amount, the parties agree to
exercise their reasonable, good faith judgment regarding a fair and
reasonable employee performance rating for each employee entitled to
participate in the ICA. In addition, the Bank may modify the ICA,
either (i) with the consent of all of the employees who have rights to
receive payments pursuant to the ICA or (ii) without such consent if
such modifications do not result in any breach of any contractual
obligation, to provide that the amount of the costs and expenses
reasonably incurred and paid by the Bank prior to December 31, 1995,
in connection with the negotiation, execution and performance of this
Agreement, not to exceed $25,000 and any portion of the Consultant
Payment and one-time special assessment with respect to SAIF insured
deposits actually paid in 1995, shall be added back to the earnings of
the Bank in determining the amounts to be paid to such officers
pursuant to the ICA; provided however, that of the amounts payable
----------------------
with respect to calendar year 1995 pursuant to the terms of the ICA,
one-third (1/3) of the amounts payable to each officer will be paid on
or before December 31, 1995, and the remainder will be paid on the
earlier of the Closing Date or March 31, 1996;
29
<PAGE>
(iv) payments and contributions, in an amount not to exceed
$10,000 in the aggregate, to the employee 401(k) Plan and the Senior
Officer Split-Dollar Insurance Retirement Plan, which have been
previously enacted for the Bank;
(v) the Consulting Payments; and
(vi) payments to Richard Laxton, Tammy Mooney, Louis Ainsworth
and Jeff Peiper pursuant to the bonus compensation arrangement
approved by the Bank Board on or about the time the Consulting
Agreement was approved by the Bank Board; provided, however, that (i)
such payments shall not exceed $94,008 in the aggregate, and (ii) the
Bank shall consult with CBI regarding the timing and characterization
of any payments to be made to such officers, but the Bank shall not be
required to take any actions that would breach any existing obligation
of the Bank under such bonus compensation arrangements.
R. Except for improvements or betterments relating to Properties,
make any capital expenditures or capital additions or betterments in excess
of an aggregate of $25,000;
S. Hire or employ any person with an annual salary equal to or
greater than $25,000;
T. Enter into or give any promise, assurance or guarantee of the
payment, discharge or fulfillment of any undertaking or promise made by
any other person, firm or corporation;
U. Sell or knowingly dispose of, or otherwise divest itself of the
ownership, possession, custody or control, of any corporate books or
records of any nature that, in accordance with sound business practice,
normally are retained for a period of time after their use, creation or
receipt, except at the end of the normal retention period;
V. Make any, or acquiesce with any, change in any accounting methods,
principles or material practices;
W. Sell (provided, however, that the maturity of a security shall not
be deemed a sale of such security) or purchase any investment securities in
an aggregate amount of $500,000, other than the purchase of securities
issued by the U.S. Government or its agencies having a maturity of less
than one year; or
X. Make, renew, extend the maturity of, or alter any of the material
terms of any loan to any single borrower and his related interests in
excess of the principal amount of $100,000;
30
<PAGE>
provided, however, that CBI shall be deemed to have given its consent under this
Section 5.06, two business days after actual receipt by CBI of notice given
pursuant to Section 11.07 (or as otherwise instructed by CBI in writing) with
respect to such act and all material information relating to such act reasonably
requested by CBI, unless CBI sooner objects to such act.
SECTION 5.07 Access; Pre-Closing Investigation. Subject to the provisions
---------------------------------
of Article XI, the Bank shall afford the officers, directors, employees,
attorneys, accountants, investment bankers and authorized representatives of CBI
full access to the properties, books, contracts and records of the Bank, permit
CBI to make such inspections (including without limitation with regard to such
properties physical inspection of the surface and subsurface thereof and any
structure thereon) as they may require and furnish to CBI during such period all
such information concerning the Bank and its affairs as CBI may reasonably
request, in order that CBI may have full opportunity to make such reasonable
investigation as it shall desire to make of the affairs of the Bank, including,
without limitation, access sufficient to verify the value of the assets and the
liabilities of the Bank and the satisfaction of the conditions precedent to
CBI's obligations described in Article VIII of this Agreement. The Bank agrees
at any time, and from time to time, to furnish to CBI as soon as practicable,
any additional information that CBI may reasonably request.
SECTION 5.08 Invitations to and Attendance at Directors' and Committee
---------------------------------------------------------
Meetings. The Bank shall give notice at the addresses specified on Schedule
- --------
5.08 to the two (2) designees of CBI specified on Schedule 5.08 and shall invite
such persons to attend all regular and special meetings of the board of
directors of the Bank. Such notice shall be sent by the Bank at least two (2)
business days prior to any such meeting. Such designees may in turn select
other employees of CBI to attend meetings of senior management and management
and other committees of the Bank. CBI may change the persons to serve as its
designees by giving written notice to the Bank pursuant to Section 12.06,
provided, however, that any such change shall be ineffective with respect to any
meeting to be held if notice of such change is received less than two (2)
business days prior to such meeting.
SECTION 5.09 Additional Financial Statements. The Bank shall promptly
-------------------------------
furnish CBI with true and complete copies of each Report of Condition and Income
of the Bank and any audited financial statements of the Bank prepared after the
date of this Agreement as soon as such reports are made available to the FDIC.
SECTION 5.10 Untrue Representations. The Bank shall promptly notify CBI
----------------------
in writing if the Bank becomes aware of any fact or condition that makes untrue,
or shows to have been untrue, in any material respect, any schedule or any other
information furnished to CBI or any representation or warranty made in or
pursuant to this Agreement or that results in the Bank's failure to comply with
any covenant, condition or agreement contained in this Agreement.
SECTION 5.11 Litigation and Claims. The Bank shall promptly notify CBI in
---------------------
writing of any litigation, or of any claim, controversy or contingent liability
that might be expected to become the subject of litigation, against the Bank or
affecting any of its properties if such litigation or
31
<PAGE>
potential litigation might, in the event of an unfavorable outcome, result in a
Material Adverse Change, and the Bank shall promptly notify CBI of any legal
action, suit or proceeding or judicial, administrative or governmental
investigation, pending or, to the knowledge of the Bank, threatened against the
Bank that questions or might question the validity of this Agreement or the
agreements contemplated hereby, including, but not limited to, the Merger
Agreement or any actions taken or to be taken by the Bank pursuant hereto or
thereto or seeks to enjoin or otherwise restrain the transactions contemplated
hereby or thereby.
SECTION 5.12 Adverse Changes. The Bank shall promptly notify CBI in
---------------
writing if any change shall have occurred or been threatened (or any development
shall have occurred or been threatened involving a prospective change) in the
business, financial condition, operations or prospects of the Bank that has or
may reasonably be expected to have or lead to a Material Adverse Change.
SECTION 5.13 No Negotiation with Others. The Bank shall not, nor shall it
--------------------------
permit any of its officers, directors, employees, representatives or agents to,
directly or indirectly (i) encourage, solicit or initiate discussions or
negotiations with, or (ii) except upon advice of counsel to the extent required
to fulfill the fiduciary duties owed to the shareholders of the Bank, entertain,
discuss or negotiate with, or provide any information to, or cooperate with, any
corporation, partnership, person or other entity or group (other than CBI or its
Affiliates or associates or officers, partners, employees or other authorized
representatives of CBI or such Affiliates or associates) concerning any merger,
tender offer or other takeover offer, sale of substantial assets, sale of shares
of capital stock or similar transaction involving the Bank. Immediately upon
receipt of any unsolicited offer, the Bank will communicate to CBI the terms of
any proposal or request for information and the identity of the parties
involved.
SECTION 5.14 Consents and Approvals. The Bank shall use all reasonable
----------------------
efforts to obtain all consents and approvals from third parties, including those
listed on Schedule 3.08, at the earliest practicable time.
32
<PAGE>
SECTION 5.15 Environmental Investigation; Right to Terminate Agreement.
---------------------------------------------------------
A. CBI and its consultants, agents and representatives shall, at the
sole cost and expense of CBI, have the right to the same extent that the
Bank has such right, but not the obligation or responsibility, to inspect
any Property, including, without limitation, conducting asbestos surveys
and sampling, environmental assessments and investigation, and other
environmental surveys and analyses including soil and ground sampling
("Environmental Inspections") at any time on or prior to November 30, 1995.
CBI shall notify the Bank prior to any physical inspections of the
Property, and the Bank may place reasonable restrictions on the time of
such inspections. If, as a result of any such Environmental Inspection,
further investigation ("secondary investigation") including, without
limitation, test borings, soil, water and other sampling is deemed
desirable by CBI, CBI shall (i) notify the Bank of any Property for which
it intends to conduct such a secondary investigation and the reasons for
such secondary investigation, and (ii) commence such secondary
investigation, on or prior to December 31, 1995. CBI shall give reasonable
notice to the Bank of such secondary investigations, and the Bank may place
reasonable time and place restrictions on such secondary investigations.
B. The Bank agrees to indemnify and hold harmless CBI for any claims
for damage to property, or injury or death to persons, made as a result of
any Environmental Inspection or secondary investigation conducted by CBI or
its agents, which damage or injury is proximately caused by the negligent
actions or negligent omissions of the Bank or its agents while CBI or its
agents are in the process of conducting such investigation or inspection.
CBI agrees to indemnify and hold harmless the Bank for any claims for
damage to property, or injury or death to persons, attributable to the
negligent actions or omissions of CBI or its agents in performing any
Environmental Inspection or secondary investigation except to the extent
caused in whole or in part by the negligence of the Bank. CBI shall not
have any liability or responsibility of any nature whatsoever for the
results, conclusions or other findings related to any Environmental
Inspection, secondary investigation or other environmental survey. If this
Agreement is terminated, then except as otherwise required by law, reports
to any governmental authority of the results of any Environmental
Inspection, secondary investigation or other environmental survey shall be
made by the Bank and not by CBI. CBI shall make no such report prior to
Closing unless required to do so by law, and in such case will give the
Bank reasonable notice of CBI's intentions.
C. CBI shall have the right to terminate this Agreement if (i) the
factual substance of any warranty or representation set forth in Section
3.19 is not true and accurate; (ii) the results of such Environmental
Inspection, secondary investigation or other environmental survey are
reasonably and in good faith disapproved by CBI because the environmental
inspection, secondary investigation or other environmental survey
identifies violations or potential violations of Environmental Laws; (iii)
the Bank has refused to allow CBI to conduct an Environmental Inspection or
secondary investigation in a manner that CBI reasonably considers
necessary; (iv) the Environmental Inspection, secondary
33
<PAGE>
investigation or other environmental survey identifies any past or present
event, condition or circumstance that would or potentially would require
remedial or cleanup action or result in a Material Adverse Change; (v) the
Environmental Inspection, secondary investigation or other environmental
survey identifies the presence of any underground or above ground storage
tank in, on or under any Property that is not shown to be in compliance
with all Environmental Laws applicable to the tank either now or at a
future time certain, or that has had a release of petroleum or some other
Hazardous Material that has not been cleaned up to the satisfaction of the
relevant governmental authority or any other party with a legal right to
compel cleanup; or (vi) the Environmental Inspection, secondary
investigation or other environmental survey identifies the presence of any
asbestos-containing material in, on or under any Property, the removal of
which would result in a Material Adverse Change. On or prior to January 15,
1996, CBI shall advise the Bank in writing as to whether CBI intends to
terminate this Agreement because CBI disapproves of the results of the
Environmental Inspection, secondary investigation or other environmental
survey. The Bank shall have the opportunity, but not the obligation to CBI
or the New Bank, to correct any objected to violations or conditions to
CBI's reasonable satisfaction prior to February 15, 1996. In the event that
the Bank fails to demonstrate its diligent progress on the correction (or
in the event the correction has not been remedied or corrected within 90
days after notice to the Bank thereof) of the violations or conditions to
CBI, CBI may terminate the Agreement.
D. The Bank agrees to make available to CBI and its consultants,
agents and representatives all documents and other material relating to
environmental conditions of any Property including, without limitation, the
results of other environmental inspections and surveys. The Bank also
agrees that all engineers and consultants who prepared or furnished such
reports may discuss such reports and information with CBI and shall be
entitled to certify the same in favor of CBI and its consultants, agents
and representatives and make all other data available to CBI and its
consultants, agents and representatives.
E. For purposes of this Section 5.15, the term "Property" or
"Properties" shall have the same meaning given in Section 3.19(E).
F. Neither the Bank nor Smith makes any representation or warranty
as to the truth, accuracy or completeness of any engineering or
environmental report or screening that is prepared for or presented to CBI
pursuant to any provision of this Agreement. By providing such
environmental reports or screenings to CBI, neither Smith nor the Bank is
making any representations or warranties, implied or otherwise as to the
accuracy or factual information provided or the conclusions formed by the
consultants who prepared such environmental reports or screenings. Further
neither Smith, the Bank nor any of its related entities are making any
representations or warranties as to the skill and care taken by such
consultants in preparing such engineering or environmental reports or
screenings. Smith, the Bank and its related entities will not be
responsible for conditions or consequences arising from relevant facts that
were concealed, withheld or not fully disclosed by the
34
<PAGE>
consultant, any regulatory or governmental agency or from persons
interviewed as part of the preparation of any such engineering or
environmental reports or screenings. CBI also acknowledges that the facts
and circumstances referenced in such engineering or environmental reports
and screenings may change over time and the conclusions and recommendations
set forth therein are applicable only to the facts and conditions as
described therein. CBI shall use good faith efforts in determining whether
the engineering or environmental reports and screenings are accurate. CBI
shall obtain, at its sole cost and expense, any other engineering or
environmental reports and screenings that it, in the exercise of reasonable
diligence, time and care, determines is necessary for compliance with
prudent engineering practice or applicable stays, laws, rules, regulations
or requirements or in the use and occupancy of any Property.
SECTION 5.16 Proxies. The Bank and each of the persons set forth on
-------
Schedule 5.16 shall execute the Voting Agreement and Irrevocable Proxy in the
form of Exhibit "B" attached hereto (the "Proxy"), and the Bank acknowledges
-----------
that such persons have agreed that they will vote the shares of the Bank Stock
owned by them in favor of the Merger Agreement and the Merger and the
transactions contemplated hereby and thereby, subject to required regulatory
approvals.
ARTICLE VI.
COVENANTS OF CBI
CBI hereby makes the covenants set forth in this Article VI to the Bank.
SECTION 6.01 Best Efforts. CBI agrees to use all reasonable efforts to
------------
cause the consummation of the transactions contemplated hereby in accordance
with the terms and conditions of this Agreement.
SECTION 6.02 Incorporation and Organization of New Bank. CBI will
------------------------------------------
incorporate, charter and organize the New Bank as an interim Texas savings bank
under the laws of the State of Texas.
SECTION 6.03 Merger Agreement. CBI will, and will cause the New Bank to,
----------------
as soon as practicable after the execution of this Agreement, enter into the
Merger Agreement, the form
of which is attached hereto as Exhibit "A", and CBI shall perform, and shall
-----------
cause the New Bank to perform, all of their respective obligations thereunder.
CBI will, as soon as practicable after the execution of this Agreement, cause
the New Bank to duly authorize and enter into the enter into the Bank Merger
Agreement, and shall cause the New Bank to perform all of its obligations
thereunder. CBI shall vote all of the stock of the New Bank in favor of the
Merger and the Merger Agreement.
SECTION 6.04 Information for Applications and Statements. CBI will
-------------------------------------------
promptly furnish to the Bank all information concerning CBI and the New Bank,
including, but not limited to,
35
<PAGE>
financial statements, reasonably required for inclusion in (i) any proxy or
information statement to be used by the Bank in connection with the approval of
the shareholders of the Bank of the transactions contemplated hereby and (ii)
any application or statement to be made by the Bank to or filed by the Bank with
any governmental body in connection with the transactions contemplated by this
Agreement, or in connection with any unrelated transactions during the pendency
of this Agreement, and CBI represents and warrants that all information so
furnished for such statements and applications shall be true and correct in all
material respects and shall not omit any material fact required to be stated
therein or necessary to make the statements made, in light of the circumstances
under which they were made, not misleading. CBI shall otherwise fully cooperate
with the Bank in the filing of any applications or other documents necessary to
consummate the transactions contemplated by this Agreement, including the
Merger.
SECTION 6.05 Acts of New Bank. Prior to the Closing, CBI shall cause New
----------------
Bank to refrain from taking any action or executing any agreement, document or
certificate except as contemplated by this Agreement and the other agreements
contemplated hereby, including, but not limited to, the Merger Agreement,
provided, however, that notwithstanding anything to the contrary contained in
this Agreement, neither CBI nor the New Bank shall acquire any rights to any
property of the Bank, including, but not limited to the Bank's trade name,
unless and until the Merger contemplated by this Agreement has been consummated.
SECTION 6.06 Untrue Representations. CBI shall promptly notify the Bank
----------------------
in writing if CBI becomes aware of any fact or condition that makes untrue, or
shows to have been untrue, in any material respect, any schedule or any other
information furnished to the Bank or any representation or warranty made in or
pursuant to this Agreement or that results in CBI's failure to comply with any
covenant, condition or agreement contained in this Agreement.
SECTION 6.07 Litigation and Claims. CBI shall promptly notify the Bank of
---------------------
any legal action, suit or proceeding or judicial, administrative or governmental
investigation, pending or, to the knowledge of CBI, threatened against CBI or
the New Bank that questions or might question the validity of this Agreement or
the agreements contemplated hereby, including, but not limited to, the Merger
Agreement, or any actions taken or to be taken by CBI or the New Bank pursuant
hereto or thereto or seeks to enjoin or otherwise restrain the transactions
contemplated hereby or thereby.
SECTION 6.08 Regulatory and Other Approvals. CBI, at its sole cost and
------------------------------
expense, shall promptly, but in no event later than thirty (30) days of the date
of this Agreement, file or cause to be filed applications for all regulatory
approvals required to be obtained by CBI or the New Bank in connection with this
Agreement and the other agreements contemplated hereby. CBI shall use all
reasonable efforts to obtain all such regulatory approvals and any other
approvals from third parties, including those listed on Schedule 4.05, at the
earliest practicable time.
SECTION 6.09 Adverse Change. CBI shall promptly notify the Bank in
--------------
writing if any change or development shall have occurred or been threatened that
would adversely affect, prevent
36
<PAGE>
or delay consummation of the transactions contemplated by this Agreement or the
other agreements contemplated hereby.
ARTICLE VII.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BANK
All obligations of the Bank under this Agreement are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions,
any or all of which may be waived in whole or in part by the Bank:
SECTION 7.01 Compliance with Representations, Warranties and Agreements.
----------------------------------------------------------
All representations and warranties made by CBI in this Agreement or in any
document or schedule delivered to the Bank pursuant hereto shall have been true
and correct in all material respects when made and shall be true and correct in
all material respects as of the Closing with the same force and effect as if
such representations and warranties were made at and as of the Closing, except
with respect to those representations and warranties specifically made as of an
earlier date (in which case such representations and warranties shall be true as
of such earlier date). CBI shall have performed or complied in all material
respects with all agreements, terms, covenants and conditions required by this
Agreement to be performed or complied with by CBI prior to or at the Closing.
SECTION 7.02 Shareholder Approvals. The Board of Directors of the New
---------------------
Bank, CBI (as sole shareholder of the New Bank) and the holders of at least a
majority of the Bank Stock entitled to vote on the Merger and the Merger
Agreement shall have approved the Merger and the Merger Agreement.
SECTION 7.03 Government and Other Approvals. CBI and the Bank shall have
------------------------------
received approvals, acquiescence or consents of the transactions contemplated by
this Agreement, and the Merger Agreement, from all necessary governmental
agencies and authorities and other third parties, including but not limited to
the Board of Governors of the Federal Reserve System (the "Federal Reserve"),
the FDIC, the TSLD, the OTS and the Texas Department of Banking (the "TDB"), and
all applicable statutory and regulatory waiting periods shall have expired, and
the approvals and consents of all third parties required to consummate this
Agreement and the other agreements contemplated hereby, including, but not
limited to, the Merger Agreement and the transactions contemplated hereby and
thereby, including all consents described on Schedules 3.08 and 4.05. Such
approvals and the transactions contemplated hereby shall not have been contested
or threatened to be contested by any Federal or state governmental authority or
by any other third party (except shareholders asserting statutory dissenters'
appraisal rights) by formal proceedings.
SECTION 7.04 No Litigation. No action shall have been taken, and no
-------------
statute, rule, regulation or order shall have been promulgated, enacted,
entered, enforced or deemed applicable to the acquisition by any Federal, state
or foreign government or governmental authority or by any court, domestic or
foreign, including the entry of a preliminary or permanent injunction, that
would
37
<PAGE>
(a) make the Agreement or any other agreement contemplated hereby, including,
but not limited to, the Merger Agreement, or the transactions contemplated
hereby or thereby illegal, invalid or unenforceable, (b) impose material limits
in the ability of any party to this Agreement to consummate the Agreement or any
other agreement contemplated hereby, including, but not limited to, the Merger
Agreement, or the transactions contemplated hereby or thereby, or (c) if the
Agreement or any other agreement contemplated hereby, including, but not limited
to, the Merger Agreement, or the transactions contemplated hereby or thereby are
consummated, subject the Bank or subject any officer, director, shareholder or
employee of the Bank to criminal or civil liability. No action or proceeding
before any court or governmental authority, domestic or foreign, by any
government or governmental authority or by any other person, domestic or
foreign, shall be threatened, instituted or pending that would reasonably be
expected to result in any of the consequences referred to in clauses (a) through
(c) above.
SECTION 7.05 Opinion of Legal Counsel to CBI. The Bank shall have
-------------------------------
received an opinion of counsel to CBI in connection with the transactions
contemplated by this Agreement, dated as of the Closing Date and addressed to
the Bank, as described in Exhibit "C".
-----------
ARTICLE VIII.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF CBI
All obligations of CBI under this Agreement are subject to the fulfillment,
prior to or at the Closing, of each of the following conditions, any or all of
which may be waived in whole or in part by CBI.
SECTION 8.01 Compliance with Representations, Warranties and Agreements.
----------------------------------------------------------
All representations and warranties made by the Bank or Smith in this Agreement
or in any document or schedule delivered to CBI pursuant hereto shall have been
true and correct when made and shall be true and correct as of the Closing with
the same force and effect as if such representations and warranties were made at
and as of the Closing, except with respect to those representations and
warranties specifically made as of an earlier date (in which case such
representations and warranties shall be true as of such earlier date). The Bank
shall have performed or complied in all material respects with all agreements,
terms, covenants and conditions required by this Agreement to be performed or
complied with by the Bank prior to or at the Closing.
SECTION 8.02 Shareholder Approvals. The holders of at least a majority of
---------------------
the Bank Stock entitled to vote on the Merger and the Merger Agreement shall
have approved the Merger and the Merger Agreement.
SECTION 8.03 Government and Other Approvals. CBI and the Bank shall have
------------------------------
received approvals, acquiescence or consents (including any approvals,
acquiescence or consents that may be required in order to fulfill the
transactions contemplated by Section 5.03), all on terms and conditions
acceptable to CBI, of the transactions contemplated by this Agreement and the
Merger
38
<PAGE>
Agreement from all necessary governmental agencies and authorities, including
but not limited to the Federal Reserve, the FDIC, the TSLD, the OTS and the TDB,
and all applicable waiting periods shall have expired, and CBI or the Bank shall
have received the approvals and consents of all third parties required to
consummate this Agreement and the other agreements contemplated hereby,
including, but not limited to, the Merger Agreement and the transactions
contemplated hereby and thereby, including all consents described on Schedules
3.08 and 4.05. Such approvals and the transactions contemplated hereby shall not
have been contested or threatened to be contested by any Federal or state
governmental authority or by any other third party (except shareholders
asserting statutory dissenters' appraisal rights) by formal proceedings. It is
understood that, if such contest is brought by formal proceedings, CBI may, but
shall not be obligated to, answer and defend such contest or otherwise pursue
this transaction over such objection.
SECTION 8.04 No Litigation. Except as expressly permitted by the terms of
-------------
this Agreement, no action shall have been taken, and no statute, rule,
regulation or order shall have been promulgated, enacted, entered, enforced or
deemed applicable to this Agreement, the Merger, or the transactions
contemplated hereby or thereby by any Federal, state or foreign government or
governmental authority or by any court, domestic or foreign, including the entry
of a preliminary or permanent injunction, that would (a) make this Agreement or
any other agreement contemplated hereby, including, but not limited to, the
Merger Agreement, or the transactions contemplated hereby or thereby illegal,
invalid or unenforceable, (b) require the divestiture of a material portion of
the assets of the Bank, (c) impose material limits in the ability of any party
to this Agreement to consummate the Agreement or any other agreement
contemplated hereby, including, but not limited to, the Merger Agreement, or the
transactions contemplated hereby or thereby, (d) otherwise result in a Material
Adverse Change or (e) if this Agreement or any other agreement contemplated
hereby, including, but not limited to, the Merger Agreement, or the transactions
contemplated hereby or thereby are consummated, subject CBI or the New Bank or
subject any officer, director, shareholder or employee of CBI or the New Bank to
criminal or civil liability. No action or proceeding before any court or
governmental authority, domestic or foreign, by any government or governmental
authority or by any other person, domestic or foreign, shall be threatened,
instituted or pending that would reasonably be expected to result in any of the
consequences referred to in clauses (a) through (e) above.
SECTION 8.05 Opinion of Legal Counsel to the Bank. CBI shall have
------------------------------------
received an opinion of counsel to the Bank in connection with the transactions
contemplated by this Agreement, dated the Closing Date and addressed to CBI, as
described in Exhibit "D".
-----------
SECTION 8.06 Accounting Treatment. All accounting and tax treatment,
--------------------
entries and adjustments in connection with the transactions contemplated by this
Agreement and the other agreements contemplated hereby shall be satisfactory to
CBI, CBI shall not have received notification from any proper regulatory
authority that CBI's accounting and tax treatment, entries and adjustments used
in connection with the Merger are improper, and CBI shall not have been required
by any such regulatory authority to make any accounting or tax adjustments that
would constitute a Material Adverse Change.
39
<PAGE>
SECTION 8.07 Releases and Resignations. CBI shall have received from each
-------------------------
of the directors of the Bank an instrument dated the Closing Date releasing the
Bank from any and all claims of such directors (except to their deposits and
accounts), the form of which is attached as Exhibit "E." CBI shall have
------------
received from each of the officers of the Bank an instrument dated the Closing
Date releasing the Bank from any and all claims of such officers (except as to
accrued compensation permitted by this Agreement and their deposits and
accounts), the form of which is attached as Exhibit "F." Each of the directors
------------
of the Bank shall have delivered to CBI, if requested, their resignations as
directors of the Bank, effective as of the Closing Date.
SECTION 8.08 No Material Adverse Change. There shall have been no
--------------------------
Material Adverse Change since September 30, 1995.
SECTION 8.09 Special Assessment on the Bank's Deposits. The Bank shall
-----------------------------------------
have either (i) paid the one-time special assessment, if any, relating to
premiums for deposit insurance on Savings Association Insurance Fund-insured
deposits, or (ii) if legislation has passed with respect to such assessment and
the amount of such assessment can be determined, reserved the amount of such
assessment on its financial statements; which amount shall not exceed
$1,000,000, and CBI shall have received an opinion letter from its independent
public accountants to the effect that such assessment will qualify as a tax-
deductible expense to the Bank.
ARTICLE IX.
TERMINATION AND ABANDONMENT
SECTION 9.01 Right of Termination. This Agreement and the transactions
--------------------
contemplated hereby may be terminated and abandoned at any time prior to or at
the Closing (notwithstanding approval thereof by the shareholders of the Bank),
as follows, and in no other manner:
A. By the mutual consent of CBI and the Bank, duly authorized by the
board of directors of each of CBI and the Bank.
B. By either the Bank or CBI if the conditions precedent to such
parties' obligations to close specified in Articles VII and VIII,
respectively, hereof have not been met or waived and the Closing shall not
have occurred by June 30, 1996, or such later date as has been approved by
CBI and the Bank.
C. By either CBI or the Bank if any of the transactions contemplated
by this Agreement or the Merger Agreement are disapproved by any regulatory
authority whose approval is required to consummate such transactions or if
any court of competent jurisdiction in the United States or other United
States (federal or state) governmental body shall have issued an order,
decree or ruling or taken any other action restraining, enjoining,
40
<PAGE>
invalidating or otherwise prohibiting the Agreement or the transactions
contemplated hereby and such order, decree, ruling or other action shall
have been final and nonappealable.
D. By CBI if it reasonably determines, in good faith and after
consulting with counsel, that in all likelihood any necessary regulatory
approval will not be obtained or will be obtained only upon a condition or
conditions that make it inadvisable to proceed with the transactions
contemplated by this Agreement.
E. By CBI if there shall have been any Material Adverse Change.
F. By CBI if the Bank shall fail to comply in any material respect
with any of its covenants or agreements contained in this Agreement or in
any other agreement contemplated hereby, including, but not limited to, the
Merger Agreement, and such failure shall not have been cured within a
period of thirty (30) calendar days after notice from CBI, or if any of the
representations or warranties of the Bank contained herein or therein shall
be inaccurate in any material respect.
G. By the Bank if CBI or the New Bank shall fail to comply in any
material respect with any of their respective covenants or agreements
contained in this Agreement or in any other agreement contemplated hereby,
including, but not limited to, the Merger Agreement, and such failure shall
not have been cured within a period of thirty (30) calendar days after
notice from the Bank, or if any of the representations or warranties of CBI
contained herein or therein shall be inaccurate in any material respect.
SECTION 9.02 Notice of Termination. The power of termination provided for
---------------------
by Section 9.01 hereof may be exercised only by a notice given in writing, as
provided in Section 12.06 of this Agreement.
SECTION 9.03 Effect of Termination. Without limiting any other relief to
---------------------
which either party hereto may be entitled for breach of this Agreement, in the
event of the termination and abandonment of this Agreement pursuant to the
provisions of Section 9.01 hereof, no party to this Agreement shall have any
further liability or obligation in respect of this Agreement, except for (a)
liability of a party for expenses pursuant to Section 12.01 hereof, and (b) the
provisions of Article XI hereof shall remain applicable.
41
<PAGE>
ARTICLE X.
SURVIVAL; INDEMNIFICATION
SECTION 10.01 Survival of Representations and Warranties. The parties
------------------------------------------
hereto agree that all of their respective representations and warranties
contained in this Agreement shall survive for a period of eighteen (18) months
after the Closing Date.
SECTION 10.02 Indemnification. Smith agrees to indemnify and hold
---------------
harmless CBI and each of its Subsidiaries, parents, Affiliates, directors,
officers, shareholders, employees and agents (each an "Indemnified Person" and
collectively the "Indemnified Persons") from, against and with respect to any
and all liabilities, losses, damages, deficiencies, judgments, costs, expenses
(including, without limitation, the fees and expenses of counsel), and interest
or penalties (collectively, "Losses") resulting from (i) any inaccuracy or any
breach of any representation or warranty made by Smith in this Agreement or any
schedule, certificate or other document delivered pursuant hereto or thereto or
as part of the transactions contemplated hereby or thereby, and (ii) the failure
of Smith to perform any agreement or covenant required to be performed by Smith
pursuant to this Agreement, the Merger Agreement or any other instrument or
agreement contemplated hereby or thereby, provided, however, that Smith's
liability for all Losses shall not exceed the pro rata portion of the Merger
Consideration received by Smith pursuant to the terms of this Agreement.
SECTION 10.03 Procedure for Indemnification. CBI shall, within ten (10)
-----------------------------
business days after the service of process in a lawsuit or within thirty (30)
calendar days after CBI acquires knowledge of a claim covered by the indemnities
under Section 10.02 of this Agreement, give written notice to Smith, describing
the lawsuit or claim and the estimated amount thereof; provided, however, that
any failure by CBI to give the foregoing written notice within such period shall
not affect the indemnities under Section 10.02 to the extent Smith is not
actually prejudiced by such failure. Upon receipt of such notice, Smith shall
be entitled, at her cost and expense: (i) to assume responsibility and control
of the defense, compromise or settlement of any judicial proceeding that
involves solely a claim for one or more liabilities for which indemnity may be
sought hereunder, provided, however, that if Smith elects to assume such
responsibility and control and such claim is finally resolved by settlement or
final and nonappealable proceedings that result in no liability to the Bank or
the Indemnified Persons, then CBI shall reimburse Smith for the attorneys fees
and costs of Smith for defending against such claim, and (ii) in any other case,
to be consulted by CBI (who shall consider in good faith all requests of Smith
with respect to all such proceedings) with respect to proceedings subject to
control of CBI. For so long as Smith is contesting any such claim in good faith
and by appropriate proceedings, Smith shall not be required to make payment
under this provision to CBI. If Smith is controlling the conduct of any such
proceeding, Smith shall, on request of CBI, provide to CBI, at reasonable
intervals, a summary of any developments respecting such proceeding that have
occurred since the date of the last such summary so provided to CBI. CBI may
participate at its own expense in any judicial proceeding controlled by Smith
pursuant to the preceding provision. CBI shall supply Smith with such
information requested by Smith as in the reasonable opinion of counsel to Smith
is necessary and advisable for Smith to control and
42
<PAGE>
conduct the defense of any proceeding, to prosecute any counterclaim or to
participate in any proceeding to the extent permitted by this provision and
shall cooperate with Smith in the conduct of the defense and the assertion of
any counterclaim in any such proceeding. CBI shall not enter into any settlement
or other compromise with respect to any liability as to which indemnity may be
sought without the prior written consent of Smith, which consent shall not be
unreasonably withheld.
SECTION 10.04 Limitation on Indemnity with Respect to Time. The
--------------------------------------------
indemnification obligations under Section 10.02 of this Agreement shall expire
eighteen (18) months after the Closing Date, unless prior to the expiration of
such eighteen-month period, CBI provides Smith with a notice of claim ("Notice
of Claim") for indemnification arising under the terms of Section 10.02 of this
Agreement. For a period of ninety (90) days after any Notice of Claim is sent
to Smith, Smith and CBI shall negotiate in good faith to determine whether the
Indemnified Persons are entitled to indemnification regarding the matters set
forth in the Notice of Claim.
SECTION 10.04 ARBITRATION. IF CBI AND SMITH, WITHIN NINETY (90) DAYS OF
-----------
THE DATE WHEN A NOTICE OF CLAIM WAS SENT TO SMITH, FAIL TO AGREE UPON WHETHER
THE INDEMNIFIED PERSONS ARE ENTITLED TO INDEMNIFICATION WITH RESPECT TO THE
MATTERS CONTAINED IN SUCH NOTICE OF CLAIM, THE PARTIES SHALL SUBMIT THE MATTER
TO BINDING ARBITRATION ADMINISTERED BY THE AMERICAN ARBITRATION ASSOCIATION (THE
"AAA"), IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT AND THE COMMERCIAL
ARBITRATION RULES OF THE AAA. In the event of any inconsistency between this
Agreement and such rules, this Agreement shall control. There is no agreement
among the parties to arbitrate any dispute or matter other than the issue
Indemnified Persons are entitled to indemnification pursuant to Article X of
this Agreement.
ARTICLE XI.
CONFIDENTIAL INFORMATION
SECTION 11.01 Definition of "Recipient," "Disclosing Party,"
----------------------------------------------
"Representative" and "Person". For purposes of this Article XI, the term
- -----------------------------
"Recipient" shall mean the party receiving the Subject Information (as defined
in Section 11.02) and the term "Disclosing Party" shall mean the party
furnishing the Subject Information. The terms "Recipient" or "Disclosing
Party", as used herein, include: (1) all persons and entities related to or
affiliated in any way with the Recipient or the Disclosing Party, as the case
may be, and (2) any person or entity controlling, controlled by or under common
control with the Recipient or the Disclosing Party, as the case may be. The
term "Representative" as used herein, shall include all directors, officers,
shareholders, employees, representatives, advisors, attorneys, accountants and
agents of any of the foregoing. The term "person" as used in this Article XI
shall be broadly interpreted to include, without limitation, any corporation,
company, group, partnership, governmental agency or individual.
SECTION 11.02 Definition of "Subject Information". For purposes of this
-----------------------------------
Article XI, the term "Subject Information" shall mean all information furnished
to the Recipient or its
43
<PAGE>
Representatives (whether prepared by the Disclosing Party, its Representatives
or otherwise and whether or not identified as being nonpublic, confidential or
proprietary) by or on behalf of the Disclosing Party or its Representatives
relating to or involving the business, operations or affairs of the Disclosing
Party or otherwise in possession of the Disclosing Party. The term "Subject
Information" shall not include information that (i) was already in the
Recipient's possession at the time it was first furnished to Recipient by or on
behalf of Disclosing Party, provided that such information is not known by the
Recipient to be subject to another confidentiality agreement with or other
obligation of secrecy to the Disclosing Party, its Subsidiaries or another
party, or (ii) becomes generally available to the public other than as a result
of a disclosure by the Recipient or its Representatives, or (iii) becomes
available to the Recipient on a non-confidential basis from a source other than
the Disclosing Party, its Representative or otherwise, provided that such source
is not known by the Recipient to be bound by a confidentiality agreement with or
other obligation of secrecy to the Disclosing Party, its Representative or
another party.
SECTION 11.03 Confidentiality. Each Recipient hereby agrees that the
---------------
Subject Information will be used solely for the purpose of reviewing and
evaluating the transactions contemplated by this Agreement and the other
agreements contemplated hereby, including the Merger Agreement, and that the
Subject Information will be kept confidential by the Recipient and the
Recipient's Representatives; provided, however, that (i) any of such Subject
Information may be disclosed to the Recipient's Representatives (including, but
not limited to, the Recipient's accountants, attorneys and investment bankers)
who need to know such information for the purpose of evaluating any such
possible transaction between the Disclosing Party and the Recipient (it being
understood that such Representatives shall be informed by the Recipient of the
confidential nature of such information and that the Recipient shall direct and
cause such persons to treat such information confidentially); and (ii) any
disclosure of such Subject Information may be made to which the Disclosing Party
consents in writing prior to any such disclosure by Recipient.
SECTION 11.04 Securities Law Concerns. Each Recipient hereby acknowledges
-----------------------
that the Recipient is aware, and the Recipient will advise the Recipient's
Representatives who are informed as to the matters that are the subject of this
Agreement, that the United States securities laws prohibit any person who has
received material, non-public information from an issuer of securities from
purchasing or selling securities of such issuer or from communicating such
information to any other person under circumstances in which it is reasonably
foreseeable that such person is likely to purchase or sell such securities.
SECTION 11.05 Return of Subject Information. In the event of termination
-----------------------------
of this Agreement or the Merger Agreement, for any reason, the Recipient shall
promptly return to the Disclosing Party all written material containing or
reflecting any of the Subject Information other than information contained in
any application, notice or other document filed with any governmental agency and
not returned to the Recipient by such governmental agency. In making any such
filing, the Recipient will request confidential treatment of such Subject
Information included in any application, notice or other document filed with any
governmental agency.
44
<PAGE>
SECTION 11.06 Specific Performance/Injunctive Relief. Each Recipient
--------------------------------------
acknowledges that the Subject Information constitutes valuable, special and
unique property of the Disclosing Party critical to its business and that any
breach of Article XI of this Agreement by it will give rise to irreparable
injury to the Disclosing Party that is not compensable in damages. Accordingly,
each Recipient agrees that the Disclosing Party shall be entitled to obtain
specific performance and/or injunctive relief against the breach or threatened
breach of Article XI of this Agreement by the Recipient or its Representatives.
Each Recipient further agrees to waive, and use its reasonable efforts to cause
its Representatives to waive, any requirement for the securing or posting of any
bond in connection with such remedies. Such remedies shall not be deemed the
exclusive remedies for a breach of Article XI of this Agreement, but shall be in
addition to all other remedies available at law or in equity to the Disclosing
Party.
ARTICLE XII.
MISCELLANEOUS
SECTION 12.01 Expenses. The Bank shall pay all of its expenses and costs
--------
(including, without limitation, all counsel fees and expenses), and CBI shall
pay all of its expenses and costs (including, without limitation, all counsel
fees and expenses), incurred in connection with this Agreement and the
consummation of the transactions contemplated hereby.
SECTION 12.02 Brokerage Fees and Commissions. CBI hereby represents to
------------------------------
the Bank and Smith that no agent, representative or broker has represented CBI
in connection with the transactions described in this Agreement, and CBI hereby
agrees to indemnify and hold the Bank and Smith harmless for any amounts owed to
any agent, representative or broker as a result of any actions taken by CBI in
connection with the negotiation or execution of this Agreement. The Bank and
Smith hereby represent to CBI that Sheshunoff is the only agent, representative
or broker that has represented the Bank, Smith or any or all of the shareholders
of the Bank in connection with the transactions described in this Agreement.
Smith hereby agrees to indemnify and hold CBI harmless for any amounts owed to
any agent, representative or broker as a result of any actions taken by the Bank
or Smith in connection with the negotiation or execution of this Agreement.
SECTION 12.03 Entire Agreement. This Agreement and the other agreements,
----------------
documents, schedules and instruments executed and delivered by the parties to
each other at the Closing constitute the full understanding of the parties, a
complete allocation of risks between them and a complete and exclusive statement
of the terms and conditions of their agreement relating to the subject matter
hereof and supersede any and all prior agreements, whether written or oral, that
may exist between the parties with respect thereto. Except as otherwise
specifically provided in this Agreement, no conditions, usage of trade, course
of dealing or performance, understanding or agreement purporting to modify,
vary, explain or supplement the terms or conditions of this Agreement shall be
binding unless hereafter or contemporaneously herewith made in writing and
signed by the party to be bound, and no modification shall be effected by the
acknowledgment or
45
<PAGE>
acceptance of documents containing terms or conditions at variance with or in
addition to those set forth in this Agreement.
SECTION 12.04 Further Cooperation. The parties agree that they will, at
-------------------
any time and from time to time after the Closing, upon reasonable, good faith
request by the other and without further consideration, do, perform, execute,
acknowledge and deliver all such further acts, deeds, assignments, assumptions,
transfers, conveyances, powers of attorney, certificates and assurances as may
be reasonably required in order to fully consummate the transactions
contemplated hereby in accordance with this Agreement or to carry out and
perform any undertaking made by the parties hereunder.
SECTION 12.05 Severability. In the event that any provision of this
------------
Agreement is held to be illegal, invalid or unenforceable under present or
future laws, then (a) such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision were not a part hereof; (b) the remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected by such illegal,
invalid or unenforceable provision or by its severance from this Agreement; and
(c) there shall be added automatically as a part of this Agreement a provision
as similar in terms to such illegal, invalid or unenforceable provision as may
be possible and still be legal, valid and enforceable.
SECTION 12.06 Notices. Any and all payments (other than payments at the
-------
Closing), notices, requests, instructions and other communications required or
permitted to be given under this Agreement after the date hereof by any party
hereto to any other party may be delivered personally or by nationally
recognized overnight courier service or sent by mail or (except in the case of
payments) by telex or facsimile transmission, at the respective addresses or
transmission numbers set forth below and shall be effective (a) in the case of
personal delivery, telex or facsimile transmission, when received; (b) in the
case of mail, upon the earlier of actual receipt or five (5) business days after
deposit in the United States Postal Service, first class certified or registered
mail, postage prepaid, return receipt requested; and (c) in the case of
nationally-recognized overnight courier service, one (1) business day after
delivery to such courier service together with all appropriate fees or charges
and instructions for such overnight delivery. The parties may change their
respective addresses and transmission numbers by written notice to all other
parties, sent as provided in this Section 12.06. All communications must be in
writing and addressed as follows:
46
<PAGE>
IF TO THE BANK:
Ms. Vicki Weinberg
Chairperson of the Board
First American Savings Bank, S.S.B.
1903 Central Drive
Bedford, Texas 76021
Telecopy: (817) 267-9861
WITH A COPY TO:
Mr. John T. Lynch, IV
Adams, Lynch & Loftin, P.C.
1903 Central Drive, Suite 400
Bedford, Texas 76021-5872
Telecopy: (817) 571-2947
IF TO SMITH:
Ms. Patsy R. Smith
1903 Central Drive
Bedford, Texas 76021
Telecopy: (817) 354-4208
WITH A COPY TO:
Mr. John T. Lynch, IV
Adams, Lynch & Loftin, P.C.
1903 Central Drive, Suite 400
Bedford, Texas 76021-5872
Telecopy: (817) 571-2947
IF TO CBI:
Mr. Stuart W. Murff
President
Central Bancorporation, Inc.
777 West Rosedale
P.O. Box 3210
Fort Worth, Texas 76113-3210
Telecopy: (817) 347-8100
47
<PAGE>
WITH A COPY TO:
Mr. Charles E. Greef
Jenkens & Gilchrist,
a Professional Corporation
1445 Ross Avenue, Suite 3200
Dallas, Texas 75202-2799
Telecopy: (214) 855-4300
SECTION 12.07 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
-------------
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS (INCLUDING THOSE
LAWS RELATING TO CHOICE OF LAW) APPLYING TO CONTRACTS ENTERED INTO AND TO BE
PERFORMED WITHIN THE STATE OF TEXAS, WITHOUT REGARD FOR THE PROVISIONS THEREOF
REGARDING CHOICE OF LAW. VENUE FOR ANY CAUSE OF ACTION ARISING FROM THIS
AGREEMENT SHALL LIE IN FORT WORTH, TEXAS.
SECTION 12.08 Multiple Counterparts. For the convenience of the parties
---------------------
hereto, this Agreement may be executed in multiple counterparts, each of which
shall be deemed an original, and all counterparts hereof so executed by the
parties hereto, whether or not such counterpart shall bear the execution of each
of the parties hereto, shall be deemed to be, and shall be construed as, one and
the same Agreement. A telecopy or facsimile transmission of a signed
counterpart of this Agreement shall be sufficient to bind the party or parties
whose signature(s) appear thereon.
SECTION 12.09 Certain Definitions.
-------------------
A. A. "Affiliate" means, with respect to any person or entity, any
person or entity that, directly or indirectly, controls, is controlled by,
or is under common control with, such person or entity in question. For
the purposes of this definition, "control" (including, with correlative
meaning, the terms "controlled by" and "under common control with") as used
with respect to any person or entity, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the
management and policies of such person or entity, whether through the
ownership of voting securities or by contract or otherwise.
B. "Subsidiary" means, when used with reference to an entity, any
corporation, a majority of the outstanding voting securities of which are
owned directly or indirectly by such entity or any partnership, joint
venture or other enterprise in which any entity has, directly or
indirectly, any equity interest.
C. "Material Adverse Change" means any material adverse change in
the financial condition, assets, properties, liabilities (absolute,
accrued, contingent or otherwise), reserves, business or results of
operations or prospects of the Bank and
48
<PAGE>
specifically includes any change that reduces the shareholders' equity of
the Bank by an amount equalling or exceeding $100,000.
D. "Environmental Laws" mean all federal, state and local laws,
regulations, statutes, ordinances, codes, rules, decisions, orders or
decrees relating or pertaining to the public health and safety or the
environment, or otherwise governing the generation, use, handling,
collection, treatment, storage, transportation, recovery, recycling,
removal, discharge or disposal of Hazardous Materials, including, without
limitation, the Solid Waste Disposal Act, 42 U.S.C. 6901 et seq., as
-------
amended ("SWDA," also known as "RCRA" for a subsequent amending act), (b)
the Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. (S)9601 et seq., as amended ("CERCLA"), (c) the Clean Water Act,
-------
33 U.S.C. (S)1251 et seq., as amended ("CWA"), (d) the Clean Air Act, 42
-------
U.S.C. (S)7401 et seq., as amended ("CAA"), (e) the Toxic Substances
-------
Control Act, 15 U.S.C. (S)2601 et seq., as amended ("TSCA"), (f) the
-------
Emergency Planning and Community Right to Know Act, 15 U.S.C. (S)2601 et
--
seq., as amended ("EPCRKA"), and (g) the Occupational Safety and Health
----
Act, 29 U.S.C. (S) 651 et seq., as amended.
------
E. "Hazardous Material" means, without limitation, (a) any
"hazardous wastes" as defined under RCRA, (b) any "hazardous substances" as
defined under CERCLA, (c) any toxic pollutants as defined under CWA, (d)
any hazardous air pollutants as defined under CAA, (e) any hazardous
chemicals as defined under TSCA, (f) any hazardous substances or extremely
hazardous substances as defined under EPCRKA, (g) asbestos, (h)
polychlorinated biphenyls, (i) underground storage tanks, whether empty,
filled or partially filled with any substance, (j) any substance the
presence of which on the property in question is prohibited under any
Environmental Law, and (k) any other substance which under any
Environmental Law requires special handling or notification of or reporting
to any federal, state or local governmental entity in its generation, use,
handling, collection, treatment, storage, re-cycling, treatment,
transportation, recovery, removal, discharge or disposal.
SECTION 12.10 Specific Performance. Each of the parties hereto
--------------------
acknowledges that the other parties would be irreparably damaged and would not
have an adequate remedy at law for money damages in the event that any of the
covenants contained in this Agreement were not performed in accordance with its
terms or otherwise were materially breached. Each of the parties hereto
therefore agrees that, without the necessity of proving actual damages or
posting bond or other security, the other party shall be entitled to temporary
and/or permanent injunction or injunctions to prevent breaches of such
performance and to specific enforcement of such covenants in addition to any
other remedy to which they may be entitled, at law or in equity.
SECTION 12.11 Attorneys' Fees and Costs. In the event attorneys' fees or
-------------------------
other costs are incurred to secure performance of any of the obligations herein
provided for, or to establish damages for the breach thereof, or to obtain any
other appropriate relief, whether by way of prose-
49
<PAGE>
cution or defense, the prevailing party shall be entitled to recover reasonable
attorneys' fees and costs incurred therein.
SECTION 12.12 Rules of Construction. Each use herein of the masculine,
---------------------
neuter or feminine gender shall be deemed to include the other genders. Each
use herein of the plural shall include the singular and vice versa, in each case
as the context requires or as it is otherwise appropriate. The word "or" is
used in the inclusive sense. All articles and sections referred to herein are
articles and sections, respectively, of this Agreement and all exhibits and
schedules referred to herein are exhibits and schedules, respectively, attached
to this Agreement. Descriptive headings as to the contents of particular
sections are for convenience only and shall not control or affect the meaning,
construction or interpretation of any provision of this Agreement. Any and all
schedules, exhibits, annexes, statements, reports, certificates or other
documents or instruments referred to herein or attached hereto are and shall be
incorporated herein by reference hereto as though fully set forth herein
verbatim.
SECTION 12.13 Binding Effect; Assignment. All of the terms, covenants,
--------------------------
representations, warranties and conditions of this Agreement shall be binding
upon, and inure to the benefit of and be enforceable by, the parties hereto and
their respective successors, representatives and permitted assigns. Nothing
expressed or referred to herein is intended or shall be construed to give any
person other than the parties hereto any legal or equitable right, remedy or
claim under or in respect of this Agreement, or any provision herein contained,
it being the intention of the parties hereto that this Agreement, the assumption
of obligations and statements of responsibilities hereunder, and all other
conditions and provisions hereof are for the sole benefit of the parties to this
Agreement and for the benefit of no other person. Nothing in this Agreement
shall act to relieve or discharge the obligation or liability of any third party
to any party to this Agreement, nor shall any provision give any third party any
right of subrogation or action over or against any party to this Agreement. No
party to this Agreement shall assign this Agreement, by operation of law or
otherwise, in whole or in part, without the prior written consent of the other
parties. Any assignment made or attempted in violation of this Section 12.13
shall be void and of no effect.
SECTION 12.14 Public Disclosure. Neither CBI nor the Bank will make,
-----------------
issue or release any announcement, statement, press release, acknowledgment or
other public disclosure of the existence of, or reveal the terms, conditions or
the status of, this Agreement or the transactions contemplated hereby without
the prior written consent of the other parties to this Agreement; provided,
however, that notwithstanding the foregoing, CBI and the Bank will be permitted
to make any public disclosures or governmental filings as legal counsel may deem
necessary to maintain compliance with or to prevent violations of applicable
federal or state laws or regulations or that may be necessary to obtain
regulatory approval for the transactions contemplated hereby.
SECTION 12.15 Extension; Waiver. At any time prior to the Closing Date,
-----------------
the parties may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document, certificate or writing delivered pursuant hereto, or (iii) waive
compliance with
50
<PAGE>
any of the agreements or conditions contained herein. Such action shall be
evidenced by a signed written notice given in the manner provided in Section
12.06 hereof. No party to this Agreement shall by any act (except by a written
instrument given pursuant to Section 12.06 hereof) be deemed to have waived any
right or remedy hereunder or to have acquiesced in any breach of any of the
terms and conditions hereof. No failure to exercise, nor any delay in exercising
any right, power or privilege hereunder by any party hereto shall operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver of any party of any right or
remedy on any one occasion shall not be construed as a bar to any right or
remedy that such party would otherwise have on any future occasion or to any
right or remedy that any other party may have hereunder.
SECTION 12.16 Amendments. To the extent permitted by applicable law, this
----------
Agreement may be amended by action taken by or on behalf of the Board of
Directors of CBI and the Bank at any time before or after adoption of this
Agreement by the shareholders of the Bank but, after any submission of this
Agreement to such shareholders for approval, no amendment shall be made that (i)
decreases the consideration to be paid for the Bank Stock as set forth in
Section 1.05 or that materially and adversely affects the rights of the
shareholders of the Bank hereunder without the requisite approval of such
shareholders, or (ii) materially and adversely affects the rights or obligations
of Smith hereunder without the approval of Smith. This Agreement may be
amended, modified or supplemented only by an instrument in writing executed by
the party against which enforcement of the amendment, modification or supplement
is sought.
51
<PAGE>
IN WITNESS WHEREOF, CBI and the Bank have caused this Agreement to be
executed by their duly authorized officers and Smith has executed this Agreement
as of the date first above written.
CENTRAL BANCORPORATION, INC.
By: /s/ Stuart W. Murff
----------------------------------------
Stuart W. Murff,President
FIRST AMERICAN SAVINGS BANK, S.S.B.
By: /s/ Vicki S. Weinberg
----------------------------------------
Name: Vicki S. Weinberg
Title: Chairperson of the Board
SMITH
/s/ Patsy R. Smith
--------------------------------------------
Patsy R. Smith
52
<PAGE>
List of exhibits and schedules to Agreement and Plan of Reorganization by and
between Central Bancorporation, Inc. and First American Savings Bank, S.S.B. and
joined in by Patsy R. Smith, dated as of November 9, 1995, which are not filed
herewith:
EXHIBIT DESCRIPTION
- --------------------------------------------------------------------------------
A Merger Agreement
B Voting Agreement and Irrevocable Proxy
C Opinion of Counsel of CBI
D Opinion of Counsel to the Bank
E Form of Release to Be Executed by Directors
F Form of Release to Be Executed by Officers
SCHEDULE DESCRIPTION
- --------------------------------------------------------------------------------
3.01 Subsidiaries and Affiliates
3.04 Compliance with Laws, Permits and Instruments
3.05 Special or Nonrecurring Income
3.06 Undisclosed Liabilities
3.07 Litigation
3.08 Consents and Approvals
3.09 Liens, Mortgages, Security Interests and Encumbrances
3.10 Certain Changes or Events
3.11 Contracts
3.12 Tax Matters
3.13 Insurance Matters
3.16 Transactions With Insiders
3.17 Credit Information
3.18 Condition of Assets
3.19 Environmental Compliance
3.20 Regulatory Compliance
3.29 Employee Relationships
3.30 Employee Benefit Plans
4.05 Consents and Approvals
5.08 Designees of CBI
5.16 Proxies
The registrant will furnish supplementally a copy of any omitted exhibit or
schedule to the Securities and Exchange Commission upon request.
53
<PAGE>
EXHIBIT 2.02
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Merger Agreement"), is made as of
the 23rd day of January, 1996, by and between NEW BEDFORD BANK, S.S.B., BEDFORD,
TEXAS, an interim Texas savings bank (the "New Bank"), and FIRST AMERICAN
SAVINGS BANK, S.S.B., a Texas savings bank (the "Bank"), and joined in by
CENTRAL BANCORPORATION, INC., a Texas corporation ("CBI").
W I T N E S S E T H:
-------------------
A. The Bank is a Texas savings bank duly organized and existing under the
laws of the State of Texas, having its principal office in the City of Bedford,
County of Tarrant, State of Texas, with authorized capital stock consisting of
1,000,000 shares of common stock, par value $8.00 per share, authorized (the
"Bank Stock"), of which 343,680 shares are issued and outstanding;
B. The New Bank is an interim Texas savings bank duly organized and
existing under the laws of the State of Texas, having its principal office in
the City of Fort Worth, County of Tarrant, State of Texas, with authorized
capital stock consisting of 1,000 shares of common stock, par value $1.00 per
share (the "New Bank Stock"), all of which are issued and outstanding;
C. A majority of the Boards of Directors of each of the Bank and the New
Bank, pursuant to the authority given by and in accordance with the provisions
of Tex. Rev. Civ. Stat. Ann. art. 489e (S) 3.03 (West Supp. 1995) ("Article
489e"), has approved this Merger Agreement under which the New Bank shall be
merged with and into the Bank (the "Merger") and have authorized the execution
hereof; and the Board of Directors of CBI has approved this Merger Agreement,
authorized CBI to join in and be bound by this Merger Agreement, and authorized
the undertakings herein made by CBI;
D. As and when required by the provisions of this Merger Agreement, all
such action as may be necessary or appropriate shall be taken by the New Bank,
the Bank and CBI in order to consummate the Merger;
NOW, THEREFORE, in consideration of the premises, the Bank and the New
Bank, joined by CBI, hereby agree that the New Bank shall be merged with and
into the Bank on the following terms and conditions:
1. Merger of the New Bank and the Bank. At the Effective Date (as defined
-----------------------------------
in Section 14), the New Bank shall be merged with and into the Bank pursuant to
the provisions of Article 489e.
<PAGE>
2. Effects of the Merger. The Merger shall have the effects set forth in
---------------------
Article 489e. At the Effective Date (as defined in Section 14), the corporate
existence of the New Bank and the Bank shall be merged into and continued in the
bank resulting from the Merger (the "Resulting Bank"), the separate corporate
existence of the Bank and the New Bank shall cease and the Resulting Bank shall
be deemed to be the same corporation as the New Bank and the Bank. The name of
the Resulting Bank shall be "First American Savings Bank, S.S.B." The existing
offices and facilities of the Bank immediately preceding the Merger shall be the
principal offices and facilities of the Resulting Bank following the Merger. At
the Effective Date, all property of the New Bank and the Bank, including its
duties, obligations, rights, titles and interests in and to all property of
whatever kind, whether real, personal or mixed and things in action, and every
right, privilege, interest and asset of any conceivable value or benefit then
existing or pertaining to the New Bank or the Bank, or which would inure to
either the New Bank or the Bank, immediately by operation of law and without any
conveyance or transfer and without any further act or deed will vest in the
Resulting Bank. At the Effective Date, the Resulting Bank will succeed to all
the rights, obligations and relations of the New Bank and the Bank.
3. Articles of Incorporation and Bylaws. The Articles of Incorporation
------------------------------------
and Bylaws of the Bank shall be the Articles of Incorporation and Bylaws of the
Resulting Bank until the same shall be amended and changed as provided by law.
4. Directors and Officers. The directors and officers of the Resulting
----------------------
Bank at the Effective Date shall be as set forth on Exhibit "A" to this
-----------
Agreement, and each of such persons shall hold office from the Effective Date
until their respective successors are duly elected or appointed and qualified in
the manner provided in the Articles of Incorporation and Bylaws of the Resulting
Bank or as otherwise provided by law.
5. Conversion of the Bank Stock. At the Effective Date:
----------------------------
A. All holders of shares of the Bank Stock shall be entitled to
receive from CBI, as of the Effective Date, an amount equal to $20,100,000
divided by the number of shares of Bank Stock issued and outstanding as of
the Effective Date, for each share of Bank Stock owned by such holder at
the Effective Date (the "Merger Consideration"), provided, however, that
(i) if the Closing Date occurs after March 31, 1996, the Merger
Consideration shall increase an amount equal to $5,000 divided by the
number of shares of Bank Stock issued and outstanding as of the Effective
Date, for each day from April 1, 1996, until the Closing Date, and (ii) if
the amount of all payments, if any (the "Consulting Payments"), due and
payable to Alex Sheshunoff and Company ("Sheshunoff") pursuant to the terms
of that certain Consulting Agreement, dated to be effective June 28, 1995,
between the Bank and Sheshunoff should exceed $350,000, the amount of the
Merger Consideration shall be decreased by 66% of the amount by which such
Consulting Payments exceed $350,000 divided by the number of shares of Bank
Stock issued and outstanding as of the Effective Date.
2
<PAGE>
B. The number of shares of the common stock of the Bank outstanding
at the Effective Date shall, at the Effective Date and by virtue of the
Merger and without any action on the part of CBI or any other party as
holder thereof, be converted into a like number of shares of common stock
of the Resulting Bank with a par value of $8.00 per share, with the effect
that the number of shares of the common stock of the Resulting Bank
outstanding immediately after the Effective Date shall be equal to the
aggregate number of shares of the Bank Stock outstanding immediately before
the Effective Date. The authorized number of shares of common stock of the
Resulting Bank shall be the same as the authorized number of shares of Bank
Stock immediately prior to the Effective Date.
C. The shares of the Bank Stock issued and outstanding at the
Effective Date shall, by operation of law and without any action on the
part of the holder thereof, unless dissenters' rights under applicable law
are being exercised with respect thereto, be converted into the right to
receive the consideration set forth in Section 5(A).
D. On or following the Effective Date, each holder of the Bank Stock
shall be required to surrender its shares of Bank Stock to the Bank, which
shall act as exchange agent (the "Exchange Agent"), and upon such
surrender, each such holder shall be entitled to receive from CBI an amount
of cash as determined pursuant to Section 5(A). Until so surrendered, each
such outstanding certificate representing shares of the Bank Stock shall be
deemed for all purposes, subject only to dissenters' rights under
applicable law, to evidence solely the right to receive such consideration
from CBI described in Section 5(A).
6. Stock Transfer Books. The stock transfer books of the New Bank shall
--------------------
be closed as of the close of business at the Effective Date, and no transfer of
record of any of the shares of the New Bank Stock shall take place thereafter.
7. Bank Shareholders' Meeting. This Merger Agreement shall be submitted
--------------------------
to the shareholders of the Bank at a meeting called to be held as promptly as
practicable and to the sole shareholder of the New Bank by written consent of
the sole shareholder. Upon approval by the requisite vote of the shareholders
of the Bank and the approval of the sole shareholder of the New Bank, this
Merger Agreement shall be made effective as soon as practicable thereafter in
the manner provided in Section 14 hereof.
8. Delivery of Consideration. The Exchange Agent shall send to each
-------------------------
holder of the Bank Stock a letter of transmittal for use in exchanging such
holder's certificates for the consideration set forth in Section 5(A). The Bank
shall forward letters of transmittal to each of the shareholders of the Bank,
addressed to the most current address of such shareholders accordingly to the
records of the Bank, at least twenty (20) days prior to the Closing Date unless
the Bank and CBI shall mutually agree to send such letters at a later date. If
a holder of the Bank Stock surrenders the certificates representing shares of
such stock and a properly executed letter of transmittal to the Exchange Agent
at least ten (10) days prior to the Closing Date, then on the Closing Date, CBI
shall pay to such shareholder the consideration set forth in Section 5(A), with
respect to such shares
3
<PAGE>
of Bank Stock. If a holder of the Bank Stock surrenders the certificates
representing shares of such stock and a properly executed letter of transmittal
to the Exchange Agent at any time after ten (10) days prior to the Closing Date,
then promptly, and in no event later than ten (10) days after receipt of such
certificates and letter of transmittal, CBI shall pay to such shareholder the
consideration set forth in Section 5(A), with respect to such shares of Bank
Stock. If any record shareholder of the Bank is unable to locate any certificate
evidencing the Bank Stock, such shareholder shall submit an Indemnity Agreement
to the Exchange Agent in a form acceptable to CBI in lieu of such certificate.
Notwithstanding the foregoing, neither the Exchange Agent nor any other party to
this Agreement shall be liable to any holder of certificates representing the
Bank Stock for any amount paid to a public official pursuant to any applicable
abandoned property, escheat or similar law. No interest shall be payable with
respect to the payment of the Merger Consideration.
9. Dissenters' Rights. Any shareholder of the Bank who perfects his
------------------
dissenter's rights in accordance with Articles 5.11, 5.12 and 5.13 of the Texas
Business Corporation Act shall be governed by such provisions of law.
10. Conditions to Consummation of the Merger. All obligations of the
----------------------------------------
parties under this Merger Agreement are subject to the fulfillment, prior to or
at the Closing, of each of the conditions precedent set forth in the Agreement
and Plan of Reorganization, dated as of November 9, 1995 (the "Reorganization
Agreement"), by and between CBI and the Bank and joined in by Patsy R. Smith
(the "Reorganization Agreement"), any or all of which may be waived in whole or
in part in the manner set forth in the Reorganization Agreement. Terms with
their initial letter capitalized and not otherwise defined herein shall have the
meanings given them in the Reorganization Agreement.
11. Termination. This Merger Agreement may be terminated and abandoned at
-----------
any time prior to or on the Closing Date, whether before or after action thereon
by the shareholders of the Bank, pursuant to the terms and provisions of the
Reorganization Agreement.
12. Effect of Termination. In the event of the termination and
---------------------
abandonment of this Merger Agreement pursuant to the provisions of Section 11,
the liability by reason of this Merger Agreement or the termination thereof
shall be determined pursuant to the terms and provisions of the Reorganization
Agreement, which terms and provisions are hereby incorporated herein by
reference for all purposes.
13. Waiver, Amendment and Modification. Any of the terms or conditions
----------------------------------
of this Merger Agreement may be waived at any time, whether before or after
action thereon by the shareholders of the Bank by the party that is entitled to
the benefits thereof. This Merger Agreement may be modified or amended at any
time, whether before or after action thereon by the shareholders of the Bank, by
CBI and the Bank; provided, however, that in no event may any amendment hereto
be made after action by the shareholders of the Bank that decreases the value of
the consideration to be received by the shareholders of the Bank specified in
Section 5 of this Merger Agreement or that materially and adversely affects the
rights of the Bank's shareholders
4
<PAGE>
hereunder without the requisite approval of such shareholders. Any waiver,
modification or amendment of this Merger Agreement shall be in writing.
14. Closing Date and Effective Date. Subject to the terms, and upon
-------------------------------
satisfaction on or before a mutually acceptable date (the "Closing Date") of all
requirements of law, and the conditions specified in this Merger Agreement, the
Merger shall become effective at the opening of business on the date specified
in the certification to be issued by the Texas Savings and Loan Department of
the Merger, such time being herein called the "Effective Date."
15. Multiple Counterparts. For the convenience of the parties hereto,
---------------------
this Merger Agreement may be executed in multiple counterparts, each of which
shall be deemed an original, and all counterparts hereof so executed by the
parties hereto, whether or not such counterpart shall bear the execution of each
of the parties hereto, shall be deemed to be, and shall be construed as, one and
the same Merger Agreement. A telecopy or facsimile transmission of a signed
counterpart of this Merger Agreement shall be sufficient to bind the party or
parties whose signature(s) appear thereon.
16. Governing Law. THIS MERGER AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
-------------
WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS.
17. Further Assurances. Each party hereto agrees from time to time, as
------------------
and when requested by the other party hereto, or by its successors or assigns,
to execute and deliver, or cause to be executed and delivered, all such deeds
and instruments and to take or cause to be taken such further or other acts,
either before or after the Effective Date, as may be reasonably and in good
faith deemed necessary or desirable in order to vest in and confirm to the
Resulting Bank title to and possession of any assets of the New Bank or the Bank
acquired or to be acquired by reason of or as a result of the Merger and
otherwise to carry out the intent and purposes hereof, and the officers and
directors of the parties hereto are fully authorized in the name of their
respective corporate names to take any and all such actions.
18. Severability. In the event that any provision of this Merger
------------
Agreement is held to be illegal, invalid or unenforceable under present or
future laws, then (a) such provision shall be fully severable and this Merger
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision were not a part hereof; (b) the remaining provisions of
this Merger Agreement shall remain in full force and effect and shall not be
affected by such illegal, invalid or unenforceable provision or by its severance
from this Merger Agreement; and (c) there shall be added automatically as a part
of this Merger Agreement a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible and still be legal, valid
and enforceable.
5
<PAGE>
19. Specific Performance. Each of the parties hereto acknowledges that
--------------------
the other parties would be irreparably damaged and would not have an adequate
remedy at law for money damages in the event that any of the covenants contained
in this Merger Agreement were not performed in accordance with its terms or
otherwise were materially breached. Each of the parties hereto therefore agrees
that, without the necessity of proving actual damages or posting bond or other
security, the other party shall be entitled to temporary and/or permanent
injunction or injunctions to prevent breaches of such performance and to
specific enforcement of such covenants in addition to any other remedy to which
they may be entitled, at law or in equity.
20. Rules of Construction. Descriptive headings as to the contents of
---------------------
particular sections are for convenience only and shall not control or affect the
meaning, construction or interpretation of any provision of this Merger
Agreement. Unless otherwise indicated, all articles and sections referred to
herein are articles and sections, respectively, of this Merger Agreement and all
exhibits referred to herein are exhibits attached to this Merger Agreement.
Each use herein of the masculine, neuter or feminine gender shall be deemed to
include the other genders. Each use herein of the plural shall include the
singular and vice versa, in each case as the context requires or as it is
otherwise appropriate. The word "or" is used in the inclusive sense.
21. Binding Effect; Assignment. All of the terms, covenants,
--------------------------
representations, warranties and conditions of this Merger Agreement shall be
binding upon, and inure to the benefit of and be enforceable by, the parties
hereto and their respective successors, representatives and permitted assigns.
Nothing expressed or referred to herein is intended or shall be construed to
give any person other than the parties hereto any legal or equitable right,
remedy or claim under or in respect of this Merger Agreement, or any provision
herein contained, it being the intention of the parties hereto that this Merger
Agreement, the assumption of obligations and statements of responsibilities
hereunder, and all other conditions and provisions hereof are for the sole
benefit of the parties to this Merger Agreement and for the benefit of no other
person. Nothing in this Merger Agreement shall act to relieve or discharge the
obligation or liability of any third party to any party to this Merger
Agreement, nor shall any provision give any third party any right of subrogation
or action over or against any party to this Merger Agreement. No party to this
Merger Agreement shall assign this Merger Agreement, by operation of law or
otherwise, in whole or in part, without the prior written consent of the other
parties. Any assignment made or attempted in violation of this Section 21 shall
be void and of no effect.
6
<PAGE>
IN WITNESS WHEREOF, the Bank and the New Bank have caused this Merger
Agreement to be executed by their duly authorized officers as of the date first
above written, and the directors constituting a majority of the Board of
Directors of each such bank have hereunto subscribed their names.
FIRST AMERICAN SAVINGS BANK, S.S.B.
BEDFORD, TEXAS
By: /s/ Jeffrey A. Peiper
---------------------------------
Name: Jeffrey A. Peiper
Title: President/CEO
ATTEST:
/s/ Tammy S. Mooney
- ------------------------------
Name: Tammy S. Mooney
Title: Corporate Secretary
/s/ Patsy R. Smith /s/ Vicki S. Weinberg
- ------------------------------ ----------------------------
Patsy R. Smith - Director Vicki S. Weinberg - Director
/s/ Milton H. Thomas /s/ D. Wayne Tidwell
- ------------------------------ ----------------------------
Milton H. Thomas - Director D. Wayne Tidwell - Director
/s/ Joe W. Moore /s/ Jeffrey A. Peiper
- ------------------------------ ----------------------------
Joe W. Moore - Director Jeffrey A. Peiper - Director
A Majority of the Directors of
FIRST AMERICAN SAVINGS BANK, S.S.B., BEDFORD, TEXAS
7
<PAGE>
NEW BEDFORD BANK, S.S.B.
FORT WORTH, TEXAS
By: /s/ Michael J. Tyler
----------------------------------
ATTEST: Michael J. Tyler, President
/s/ J. Andy Thompson
- ---------------------------------
J. Andy Thompson, Secretary
/s/ Danny Coleman /s/ Brian W. Garrison
- --------------------------------- ----------------------------
Danny Coleman Brian W. Garrison
/s/ Stuart W. Murff /s/ J. Andy Thompson
- --------------------------------- ----------------------------
Stuart W. Murff J. Andy Thompson
/s/ Michael J. Tyler
- ---------------------------------
Michael J. Tyler
A Majority of the Directors of
NEW BEDFORD BANK, S.S.B., FORT WORTH, TEXAS
CBI hereby joins in the foregoing Merger Agreement, and undertakes that it
will be bound thereby and will do and perform all acts and things therein
referred to or provided to be done by it. IN WITNESS WHEREOF, CBI has caused
this Merger Agreement to be executed by its duly authorized officers as of the
date first above written.
CENTRAL BANCORPORATION, INC.
By: /s/ Stuart Murff
-------------------------------
ATTEST: Stuart Murff, President
/s/ Wendy Jo Alvey
- ----------------------------
Name:
Title:
8
<PAGE>
EXHIBIT A
FIRST AMERICAN SAVINGS BANK
Proposed Directors and Officers
-------------------------------
DIRECTORS: (these are the same as the interim savings bank)
J. Andy Thompson...........................................Chairman and Director
Tom F. Turner.............................................President and Director
Michael J. Tyler....................Cashier and Corporate Secretary and Director
Danny Coleman...........................................................Director
Brian W. Garrison.......................................................Director
OFFICERS:
Danny Coleman...........................................Executive Vice President
James Prunty.....................................Executive Vice President Retail
Michael J. Tyler....................................Executive Vice President CFO
Becky Whitt.....................................Senior Vice President Operations
Bob Havran.................................................Senior Vice President
Richard Laxton.............................................Senior Vice President
Philip Summers.............................................Senior Vice President
Dana Williams.....................................................Vice President
Roy Williamson....................................................Vice President
Darla Sledge......................................................Vice President
Ed Prestridge...........................................Assistant Vice President
BRANCH MANAGERS:
Lonnie Ethridge...................................................Vice President
Angela Faires...........................................Assistant Vice President
Sara Bruns..............................................Assistant Vice President
Mary Chance.......................................................Branch Officer
Mark Hogard............................................Vice President Controller
