As filed with the Securities and Exchange Commission on May 17, 1999
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 1999
Commission File No. 0-19341
BOK FINANCIAL CORPORATION
Incorporated in the State of Oklahoma
I.R.S. Employer Identification No. 73-1373454
Bank of Oklahoma Tower
P.O. Box 2300
Tulsa, Oklahoma 74192
Registrant's Telephone Number,
Including Area Code (918) 588-6000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b)
OF THE ACT: (NONE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(g)
OF THE ACT:
COMMON STOCK ($.00006 Par Value)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date: 45,148,328 shares of common
stock ($.00006 par value) as of April 30, 1999.
<PAGE>
BOK Financial Corporation
Form 10-Q
Quarter Ended March 31, 1999
Index
Part I. Financial Information
Management's Discussion and Analysis 2
Report of Management on Consolidated
Financial Statements 15
Consolidated Statements of Earnings 16
Consolidated Balance Sheets 17
Consolidated Statements of Changes
in Shareholders' Equity 18
Consolidated Statements of Cash Flows 19
Notes to Consolidated Financial Statements 20
Financial Summaries - Unaudited 24
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 26
Signature 26
MANAGEMENT'S ASSESSMENT OF OPERATIONS AND FINANCIAL CONDITION
Assessment of Operations
Summary of Performance
BOK Financial Corporation ("BOK Financial") recorded net income of $19.8 million
or $0.38 per diluted common share for the first quarter of 1999 compared to
$16.3 million or $0.31 per diluted common share for the first quarter of 1998.
Returns on average assets were 1.19% for both the first quarters of 1999 and
1998. Returns on average equity were 15.75% and 14.89%, for the first quarter of
1999 and 1998, respectively
The increase in net income for the first quarter of 1999 was primarily due to
increases of $8.0 million or 22% in fees and commissions revenue and $7.9
million or 19% in net interest revenue. These increases were partially offset by
increases of $6.4 million or 11% in operating expenses.
Tangible Operating Results
Since inception, BOK Financial has completed several acquisitions that were
accounted for under the purchase method of accounting. The purchase method
results in the recording of goodwill and other identifiable intangible assets
that are amortized as non-cash charges in future years into operating expense.
Operating results excluding the impact of the amortization of these intangible
assets are summarized below:
<TABLE>
- ------------------------------------------------------------- -------------------------------
TABLE 1 - TANGIBLE OPERATING RESULTS
-------------------------------
(Dollars in Thousands Except Share Data) Three months ended
-------------------------------
March 31, March 31,
1999 1998
--------------- ---------------
<S> <C> <C>
Net income $ 19,817 $ 16,313
After-tax impact of amortization of intangible assets 2,889 2,072
- ------------------------------------------------------------- --------------- ---------------
Tangible net income $ 22,706 $ 18,385
- ------------------------------------------------------------- --------------- ---------------
Tangible net income per diluted share $ 0.44 $ 0.35
- ------------------------------------------------------------- --------------- ---------------
Tangible return on average shareholders' equity 18.05% 16.78%
- ------------------------------------------------------------- --------------- ---------------
Tangible return on average assets 1.36% 1.34%
- ------------------------------------------------------------- --------------- ---------------
</TABLE>
Net Interest Revenue
Net interest revenue on a tax-equivalent basis was $52.2 million for the first
quarter of 1999 compared to $44.4 million for the first quarter of 1998, an
increase of 18%. Average earning assets increased by $1.0 billion, including
increases in average loans of $701 million and average securities of $306
million. Interest bearing liabilities increased $950 million, primarily due to
increases in borrowed funds of $663 million. Interest bearing deposits increased
$286 million. The growth in average earning assets in excess of the growth in
interest bearing liabilities contributed $8.4 million to the increase in net
interest revenue.
<PAGE>
- ------------------------------------------------------------------------------
TABLE 2 - VOLUME/RATE ANALYSIS
(In thousands)
Three months ended
March 31, 1999/1998
-----------------------------------
Change Due To (1)
-----------------------
Yield
Change Volume /Rate
-----------------------------------
Tax-equivalent interest revenue:
Securities $ 3,833 $ 4,596 $ (763)
Trading securities 533 572 (39)
Loans 9,914 14,578 (4,664)
Funds sold (513) (443) (70)
- ------------------------------------------------------------------------------
Total 13,767 19,303 (5,536)
- ------------------------------------------------------------------------------
Interest expense:
Interest bearing transaction deposits 1,214 1,925 (711)
Savings deposits 86 197 (111)
Time deposits (2,183) (116) (2,067)
Other borrowings 6,804 8,922 (2,118)
Subordinated debenture (19) 2 (21)
- ------------------------------------------------------------------------------
Total 5,902 10,930 (5,028)
- ------------------------------------------------------------------------------
Tax-equivalent net interest revenue
before nonrecurring foregone interest 7,865 8,373 (508)
Non-recurring foregone interest -
Change in tax-equivalent adjustment (3)
- ------------------------------------------------------------------------------
Net interest revenue $ 7,862
- ------------------------------------------------------------------------------
(1) Changes attributable to both volume and yield are allocated to both volume
and yield/rate on an equal basis.
Net interest margin, the ratio of net interest revenue to average earning
assets, was 3.57% for the first quarter of 1999 compared to 3.65% for the first
quarter of 1998 and 3.72% for the fourth quarter of 1998. The primary reason for
the decrease in the net interest margin was the securitization sale of
approximately $100 million of automobile loans in the first quarter of 1999.
These loans had an average yield to BOK Financial of 9.23%, which is greater
than the overall yield on average earning assets. Additionally, the sale was
structured so that BOK Financial was required to carry a non-earning asset on
its balance sheet for 36 days during the quarter. This caused approximately 14
basis points of the decrease in the net interest margin. The effect of the sale
of these loans was partially offset by a decrease in the cost of interest
bearing liabilities, primarily certificates of deposit and borrowed funds.
Since inception, BOK Financial has followed a strategy of fully utilizing its
capital resources by borrowing funds in the capital markets to supplement
deposit growth in order to fund increased investments in securities. Although
this strategy frequently results in a net interest margin that falls below those
normally seen in the commercial banking industry, it provides positive net
interest revenue. Management estimates that for the first quarter of 1999, this
strategy resulted in a 46 basis point decrease in net interest margin. However,
this strategy contributed $2.9 million to net interest revenue. As more fully
discussed in the Market Risk section, management employs various techniques to
control, within established parameters, the interest rate and liquidity risk
inherent in this strategy.
Other Operating Revenue
Other operating revenue increased $6.1 million or 15% compared to the same
quarter of 1998. Total fees and commissions, which are included in other
operating revenue, increased $8.0 million or 22%. All categories of fee income,
except mortgage banking revenue, showed increases over the first quarter of
1998. Most notably, other revenue increased $2.3 million due primarily to a $1.6
million increase in underwriting and advisory fees for BOSC, Inc. Other
increases reflected continued growth in BOK Financial's overall business
activity. The decrease in mortgage banking revenue was due to lower servicing
revenue. Servicing revenue was $7.9 million and $8.5 million, respectively, for
the first quarters of 1999 and 1998. Lower interest rates during most of 1998
and the first quarter of 1999 increased the number of borrowers that refinanced
their mortgage loans. This refinancing activity reduced the amount of loans
serviced by BOK Financial and the servicing revenue. Gain on the sale of other
assets included $752 thousand from the sale of an interest in a local bank.
<TABLE>
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TABLE 3 - OTHER OPERATING REVENUE
(In thousands)
Three Months Ended
-------------------------------------------------------------------
March 31, Dec. 31, Sept. 30, June 30, March 31,
1999 1998 1998 1998 1998
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Brokerage and trading revenue $ 4,347 $ 4,010 $ 4,109 $ 4,051 $ 3,131
Transaction card revenue 7,555 6,360 6,516 6,010 5,540
Trust fees and commissions 7,762 7,650 7,751 7,654 6,884
Service charges and fees
on deposit accounts 9,159 9,094 8,015 7,440 7,638
Mortgage banking revenue 9,195 10,543 10,929 10,940 9,321
Leasing revenue 1,868 1,897 1,749 1,804 1,661
Other revenue 5,014 2,296 3,239 3,017 2,685
- ------------------------------------------------------------------------------------------------------
Total fees and commissions 44,900 41,850 42,308 40,916 36,860
- ------------------------------------------------------------------------------------------------------
Gain on student loan sales 529 - 14 119 1,415
Gain on loan securitization 270 - - - -
Gain on sale of other assets 892 - - - -
Gain on securities 274 2,967 538 3,320 2,512
- ------------------------------------------------------------------------------------------------------
Total other operating revenue $ 46,865 $ 44,817 $ 42,860 $ 44,355 $ 40,787
- ------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Other Operating Expenses
Operating expenses for the first quarter of 1999 increased $6.4 million or 11%
compared to the first quarter of 1998. The first quarter of 1999 includes
operating expenses of $6.1 million for the Bank of Albuquerque, which did not
exist in the first quarter of 1998. The first quarter of 1998 included charges
of $2.3 million for the cost of stock contributed to the BOk Charitable
Foundation and $3.0 million for a provision for the possible impairment of
mortgage servicing rights. The discussion following Table 4 of other operating
expenses excludes these charges for both 1999 and 1998 to improve comparability.
<TABLE>
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TABLE 4 - OTHER OPERATING EXPENSE
(In thousands)
Three Months Ended
-----------------------------------------------------------------------------------
March 31, Dec. 31, Sept. 30, June 30, March 31,
1999 1998 1998 1998 1998
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Personnel $ 31,106 $ 29,384 $ 26,067 $ 25,715 $ 24,829
Business promotion 2,459 2,619 1,862 1,662 1,897
Contribution of stock to BOK
Charitable Foundation - - - - 2,257
Professional fees/services 1,839 3,131 2,622 2,308 1,596
Net occupancy, equipment
and data processing 12,996 12,437 10,574 10,594 9,214
FDIC and other insurance 315 335 270 345 310
Printing, postage and supplies 2,751 2,659 2,267 2,223 2,047
Net gains and operating
expenses on repossessed assets (1,296) (91) (19) (315) (55)
Amortization of intangible
assets 3,245 2,529 2,268 2,272 2,302
Mortgage banking costs 5,304 7,262 6,374 6,290 6,023
Provision for impairment of
mortgage servicing rights - (4,290) - (1,000) 3,000
Other expense 4,874 4,846 4,552 3,710 3,773
- ---------------------------------------------------------------------------------------------------------------------
Total $ 63,593 $ 60,821 $ 56,837 $ 53,804 $ 57,193
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Personnel costs increased $4.3 million due to increased staffing, normal
compensation increases and increased incentive compensation. Staffing on a
full-time equivalent ("FTE") basis increased by 211 employees while average
compensation per FTE increased by 3.9%. Incentive compensation, which varies
directly with revenue increased $909 thousand to $3.6 million for the quarter.
The increase in incentive compensation was due to growth in revenue over
pre-determined targets and growth in the number of business units covered by
incentive plans. Occupancy, equipment and data processing costs increased $2.7
million or 29%, which included increases of $922 thousand in net occupancy costs
and $1.4 million in data processing costs. The increase in net occupancy costs
was due primarily to a decrease in rental income on bank premises of $574
thousand. A significant portion of BOK Financial's data processing is outsourced
to third parties. Therefore, data processing costs are directly related to the
volume of transactions processed.
<PAGE>
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
TABLE 5 - OTHER OPERATING EXPENSE, EXCLUDING SIGNIFICANT OR NONRECURRING ITEMS
(In thousands)
Three Months Ended
-------------------------------------------------------------------------------
March 31, Dec. 31, Sept. 30, June 30, March 31,
1999 1998 1998 1998 1998
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total other operating expense $ 63,593 $ 60,821 $ 56,837 $ 53,804 $ 57,193
Contribution of stock to BOk
Charitable Foundation - - - - (2,257)
Provision for impairment of mortgage
servicing rights - 4,290 - 1,000 (3,000)
Net gains and operating costs from
repossessed assets 1,296 91 19 315 55
- ---------------------------------------------------------------------------------------------------------------------
Total $ 64,889 $ 65,202 $ 56,856 $ 55,119 $ 51,991
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
LINES OF BUSINESS
BOK Financial operates four principal lines of business, corporate banking,
consumer banking, mortgage banking and trust services. Other lines of business
include the TransFund ATM system, BOSC, Inc., Bank of Arkansas, Bank of Texas
and Bank of Albuquerque.
CORPORATE BANKING
Corporate banking contributed $10.6 million or 53% of consolidated net income
for the first quarter of 1999 compared to $7.7 million or 47% of consolidated
net income for the first quarter of 1998. Revenue increased 15% due to increased
loan volumes while operating expenses decreased by $640 thousand.
Table 6 Corporate Banking
(In Thousands)
Three months ended March 31,
-----------------------------------
1999 1998
---------------- ----------------
Total revenue $ 26,475 $ 23,044
Operating expense 9,772 10,412
Net income 10,572 7,703
Average assets $2,598,249 $2,044,630
Average equity 293,600 247,068
Return on assets 1.65% 1.53%
Return on equity 14.60 12.64
Efficiency ratio 36.91 45.18
<PAGE>
CONSUMER BANKING
Consumer banking contributed $3.1 million or 16% of consolidated net income for
the first quarter of 1999 compared to $2.1 million or 13% of consolidated net
income for the first quarter of 1998. Total revenue, which consists primarily of
intercompany credit for funds provided to other divisions of BOK Financial and
fees generated by various services, increased $1.1 million or 6% compared to the
first quarter of 1999. Operating expenses decreased $283 thousand for the same
period.
Table 7 Consumer Banking
(In Thousands)
Three months ended March 31,
-----------------------------------
1999 1998
---------------- ----------------
Total revenue $ 17,693 $ 16,625
Operating expense 11,975 12,258
Net income 3,112 2,143
Average assets $1,886,641 $1,932,739
Average equity 43,432 44,813
Return on assets 0.67% 0.45%
Return on equity 29.06 19.39
Efficiency ratio 67.68 73.73
MORTGAGE BANKING
Mortgage banking contributed $1.0 million or 5% of consolidated net income for
the first quarter of 1999 compared to a 901 thousand loss for the first quarter
of 1998. The loss in 1998 was primarily due to a $3.0 million provision for the
impairment of mortgage servicing rights. Total revenue decreased $160 thousand
due to a $644 thousand decrease in servicing revenue. The decrease in servicing
revenue was partially offset by an increase in gains of the sale of mortgage
loans.
Capitalized mortgage servicing rights totaled $92.3 million at March 31, 1999
compared to $69.2 million at December 31, 1998. The increase in capitalized
servicing rights was due to $15.3 million in hedging losses and $10.9 million in
costs of newly acquired servicing rights, less amortization. At March 31, 1999,
realized hedging gains totaled $9.6 million, net of accumulated amortization,
while unrealized losses on open hedging positions totaled $3.1 million.
Table 8 Mortgage Banking
(In Thousands)
Three months ended March 31,
-----------------------------------
1999 1998
---------------- ----------------
Total revenue $ 10,920 $ 11,080
Operating expense 9,261 9,501
Provision for impairment of
mortgage servicing assets - 3,000
Net income 1,013 (901)
Average assets $ 305,660 $ 378,799
Average equity 25,705 29,505
Return on assets 1.34% (0.96)%
Return on equity 15.98 (12.38)
Efficiency ratio 84.81 85.75
TRUST SERVICES
Trust services contributed $1.6 million or 8% of consolidated net income for the
first quarter of 1999 compared to $1.4 million or 8% of consolidated net income
for the first quarter of 1998. Revenue from trust services increased $1.6
million or 15% for the quarter while operating expenses increased $1.3 million
or 15%. Personnel expenses accounted for $1.0 million of the increase in
operating expenses.
Table 9 Trust Services
(In Thousands)
Three months ended March 31,
-----------------------------------
1999 1998
---------------- ----------------
Total revenue $ 12,472 $ 10,883
Operating expense 9,880 8,573
Net income 1,584 1,380
Average assets $ 306,223 $ 274,766
Average equity 33,542 27,657
Return on assets 2.10% 2.04%
Return on equity 19.15 20.24
Efficiency ratio 79.22 78.77
YEAR 2000 CONSIDERATIONS
The Year 2000 issue, in general, is the result of computer programs being
written using two digits rather than four to define the applicable year. Any
computer programs that have date sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including among
other things, a temporary inability to process transactions or to engage in
similar normal business activities.
BOK Financial's Year 2000 efforts are under the direction of the Year 2000
Oversight Committee, comprised of various members of executive management, as
well as a Year 2000 Project Team, which includes representatives from BOK
Financial's major business units. Both groups meet on a regular basis to monitor
and discuss continuing Year 2000 developments. The Board of Directors recognizes
the importance of and supports these Year 2000 initiatives.
The Federal Financial Institution Examination Council ("FFIEC") provides
regulatory guidance on BOK Financial's and other financial institutions' Year
2000 compliance. In addition to other requirements, the FFIEC requires that
testing of mission-critical systems be substantially complete by June 30, 1999.
BOK Financial is well ahead of the FFIEC guidelines. Testing has been
successfully completed on all mission-critical, information technology systems.
For all mission-critical, non-information technology systems, we have either
completed testing, satisfactorily, or have received written representations as
to Year 2000.
FFIEC guidelines also require financial institutions to substantially complete
the four phases of the Year 2000 business resumption contingency planning
process no later than June 30, 1999. BOK Financial's Year 2000 Project Team is
focused on preparation for the Year 2000 event. Plans are being finalized to
address certain situations that may arise as a result of internal or external
disruptions. These plans will be completed by June 30, 1999, and will include a
definition of and a plan to address the most reasonably likely worst case
scenario. These plans will be simulated or otherwise validated during the third
quarter of 1999. System change control policies require that new enhancements or
initiatives within the company or at our outsourced providers be tested for Year
2000 compliance prior to introduction to our processing environment. This policy
includes severe limitations on all changes from October 1, 1999 through February
29, 2000. Finally, plans are being developed to have key resources available
throughout all high risk processing periods during December, 1999 and January
and February, 2000. Additional costs to prepare for Year 2000 are not expected
to be significant.
BOK Financial has also communicated with large customers to determine what
steps they have undertaken to ensure they are prepared for Year 2000. This
effort has enabled BOK Financial to adopt contingency plans related to the
possible effects of the Year 2000 issue on the credit risk of its borrowers,
cash flow disruptions of its funds providers, and its overall liquidity needs.
BOK Financial has included the potential effect of Year 2000 on the credit risk
of its borrowers in determining the adequacy of its loan loss reserve.
The foregoing forward-looking statements, including the costs of addressing the
Year 2000 issue and the dates upon which compliance will be attained, reflect
management's current assessment and estimates with respect to BOK Financial's
Year 2000 compliance effort. Various factors could cause actual plans and
results to differ materially from those contemplated by such assessments,
estimates and forward-looking statements, many of which are beyond the control
of BOK Financial. Some of these factors include, but are not limited to, third
party modification plans, availability of technological and monetary resources,
representations by vendors and counter parties, technological advances, economic
considerations and consumer perceptions. BOK Financial's Year 2000 compliance
program is an ongoing process involving continual evaluation and may be subject
to change in response to new developments.
Assessment of Financial Condition
The aggregate loan portfolio at March 31, 1999 increased $39 million to $3.6
billion during the first quarter of 1999. Approximately $100 million of
automobile loans and $52 million of student loans, both of which were reported
as consumer loans, were sold during the quarter. Commercial loans increased $148
million and commercial real estate loans increased $48 million, respectively.
While BOK Financial continues to increase geographic diversification through
expansion in the Dallas, Texas and Albuquerque, New Mexico areas, geographic
concentration subjects the loan portfolio to the general economic conditions in
Oklahoma. Notable loan concentrations by the primary industry of the borrowers
are presented in Table 10. Agriculture includes loans totaling $190 million to
the cattle industry and services includes loans totaling $113 million to the
hotel industry. Commercial real estate loans are secured primarily by properties
in the Tulsa or Oklahoma City metropolitan areas. The major components of other
real estate loans are office buildings, $167 million and retail facilities, $126
million.
<TABLE>
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TABLE 10 - LOANS
(In thousands)
March 31, Dec 31, Sept. 30, June 30, March 31,
1999 1998 1998 1998 1998
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commercial:
Energy $ 483,460 $ 467,259 $ 359,986 $ 315,051 $ 324,052
Manufacturing 275,815 240,633 229,495 223,540 222,385
Wholesale/retail 305,897 264,691 280,917 275,544 250,702
Agricultural 207,502 155,103 143,061 133,148 159,324
Services 628,952 615,285 533,550 496,347 473,684
Other commercial and industrial 188,039 198,385 127,017 138,278 139,516
Commercial real estate:
Construction and land development 202,282 172,258 149,679 139,323 123,412
Multifamily 188,075 178,217 150,150 115,821 95,335
Other real estate loans 402,116 393,578 339,314 310,417 283,329
Residential mortgage:
Secured by 1-4 family
residential properties 464,722 482,097 442,443 390,765 404,481
Residential mortgages held for 80,176 98,616 82,200 98,912 118,777
sale
Consumer 164,362 285,819 230,702 245,722 241,299
- ------------------------------------------------------------------------------------------------------
Total $ 3,591,398 $3,551,941 $ 3,068,514 $ 2,882,868 $ 2,836,296
- ------------------------------------------------------------------------------------------------------
</TABLE>
SUMMARY OF LOAN LOSS EXPERIENCE
The reserve for loans losses, which is available to absorb losses inherent in
the loan portfolio, totaled $68 million at March 31, 1999 and $65 million at
December 31, 1998. This represents 1.94% and 1.88% of total loans, excluding
loans held for sale, at March 31, 1999 and December 31, 1998, respectively.
Losses on loans held for sale, principally mortgage loans accumulated for
placement in securitized pools, are charged to earnings through adjustments in
carrying value to the lower of cost or market value in accordance with
accounting standards applicable to mortgage banking. Table 11 presents
statistical information regarding the reserve for loan losses for the past five
quarters.
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
TABLE 11 - SUMMARY OF LOAN LOSS EXPERIENCE
(In thousands)
Three Months Ended
---------------------------------------------------------------------------------
March 31, Dec. 31, Sept. 30, June 30, March 31,
1999 1998 1998 1998 1998
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Beginning balance $ 64,931 $ 62,131 $ 57,782 $ 54,839 $ 53,101
Loans charged-off:
Commercial 2 - 532 1,339 172
Commercial real estate 35 1,132 50 92 -
Residential mortgage 1 33 28 19 50
Consumer 1,162 54 888 845 1,305
- -------------------------------------------------------------------------------------------------------------------
Total 1,200 2,158 1,498 2,295 1,527
- -------------------------------------------------------------------------------------------------------------------
Recoveries of loans previously charged-off:
Commercial 133 33 796 534 120
Commercial real estate 236 516 551 170 161
Residential mortgage - - - 80 82
Consumer 489 382 499 501 432
- -------------------------------------------------------------------------------------------------------------------
Total 858 931 1,846 1,285 795
- -------------------------------------------------------------------------------------------------------------------
Net loans charged-off 342 1,227 (348) 1,010 732
Provision for loan losses 3,370 4,027 4,001 3,953 2,470
- -------------------------------------------------------------------------------------------------------------------
Ending balance $ 67,959 $ 64,931 $ 62,131 $ 57,782 $ 54,839
- -------------------------------------------------------------------------------------------------------------------
Reserve to loans outstanding
at period-end(1) 1.94 1.88 2.08 2.08 2.02
Net loan losses (annualized)
to average loans (1) 0.04 0.09 (0.05) 0.14 0.10
- -------------------------------------------------------------------------------------------------------------------
(1) Excludes residential mortgage loans held for sale which are carried at the
lower of aggregate cost or market value.
</TABLE>
<PAGE>
The adequacy of the reserve for loan losses is assessed by management based upon
an ongoing quarterly evaluation of the probable estimated losses inherent in the
portfolio, and includes probable losses on both outstanding loans and unused
commitments to provide financing. A consistent methodology has been developed
that includes reserves assigned to specific criticized loans, general reserves
that are based upon a statistical migration analysis for each category of loans,
and unallocated reserves that are based upon an analysis of current economic
conditions, loan concentrations, portfolio growth, and other relevant factors.
An independent Credit Administration department is responsible for performing
this evaluation for all of BOK Financial's subsidiaries to ensure that the
methodology is applied consistently.
All significant criticized loans are reviewed quarterly with written
documentation. Specific reserves for impairment are determined in accordance
with generally accepted accounting principles and appropriate regulatory
standards. At March 31, 1999, specific impairment reserves totaled $1.5 million.
The adequacy of general loan loss reserves is determined primarily through an
internally developed migration analysis model. Management uses an eight-quarter
aggregate accumulation of net loan losses as the basis for this model. Greater
emphasis is placed on net loan losses in the more recent periods. This model is
used to assign general loan loss reserves to commercial loans and leases,
residential mortgage loans and consumer loans. All loans, leases and letters of
credit are allocated a migration factor by this model. Management can override
the general allocation only by utilizing a specific allocation that is greater
than the general allocation.
A nonspecific allowance for loan losses is maintained for risks beyond those
factors specific to a particular loan or those identified by the migration
analysis. These factors include trends in general economic conditions in BOK
Financial's primary lending areas, duration of the business cycle, specific
conditions in industries where BOK Financial has a concentration of loans,
overall growth in the loan portfolio, bank regulatory examination results, error
potential in either the migration analysis model or in the underlying data, and
other relevant factors. A range of potential losses is then determined for each
factor identified. At March 31, 1999, the loss potential ranges for the more
significant factors are:
Concentration of large loans - $2.1 million to $4.1 million General economic
conditions - $1.4 million to $2.8 million
Loan portfolio growth and expansion into new markets - $1.8 million to $3.5
million
A provision for loan losses is charged against earnings in amounts necessary to
maintain an adequate allowance for loan losses. These provisions were $3.4
million for the first quarter of 1999 compared to $2.5 million for the first
quarter of 1998.
<PAGE>
NON-PERFORMING ASSETS
Information regarding non-performing assets, which were $20 million at March 31,
1999 and $18 million at December 31, 1998 is presented in Table 12.
Non-performing loans include non-accrual loans and renegotiated loans.
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
TABLE 12 - NONPERFORMING ASSETS
(In thousands)
March 31, Dec. 31, Sept. 30, June 30, March 31,
1999 1998 1998 1998 1998
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonperforming assets:
Nonperforming loans:
Nonaccrual loans:
Commercial $ 9,677 $ 8,386 $ 8,430 $ 9,045 $ 12,556
Commercial real estate 2,522 1,684 2,105 2,473 2,824
Residential mortgage 1,490 1,928 2,410 2,072 2,243
Consumer 1,318 1,118 1,068 1,145 1,192
- ---------------------------------------------------------------------------------------------------------------------
Total nonaccrual loans 15,007 13,116 14,013 14,735 18,815
Renegotiated loans - - - - -
- ---------------------------------------------------------------------------------------------------------------------
Total nonperforming loans 15,007 13,116 14,013 14,735 18,815
Other nonperforming assets 4,820 4,600 4,353 5,590 5,366
- ---------------------------------------------------------------------------------------------------------------------
Total nonperforming assets $ 19,827 $ 17,716 $ 18,366 $ 20,325 $ 24,181
- ---------------------------------------------------------------------------------------------------------------------
Ratios:
Reserve for loan losses to
Nonperforming loans 452.85% 495.05% 443.38% 392.14% 291.46%
Nonperforming loans to
Period-end loans (2) 0.43 0.38 0.47 0.53 0.69
- ---------------------------------------------------------------------------------------------------------------------
Loans past due (90 days) (1) $ 12,917 $ 9,414 $ 15,594 $ 21,568 $ 18,330
- ---------------------------------------------------------------------------------------------------------------------
(1) Includes residential mortgages guaranteed
by agencies of the U.S. Government $ 7,674 $ 8,122 $ 8,449 $ 7,569 $ 7,240
Excludes residential mortgages
guaranteed
by agencies of the U.S. Government in
foreclosure. 7,099 6,953 9,742 9,818 8,766
(2) Excludes residential mortgage loans held for sale
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
The loan review process also identifies loans that possess more than the normal
amount of risk due to deterioration in the financial condition of the borrower
or the value of the collateral. Because the borrowers are performing in
accordance with the original terms of the loan agreements and no loss of
principal or interest is anticipated, such loans are not included in the
Non-performing Assets totals. These loans are assigned to various risk
categories in order to focus management's attention on the loans with higher
risk of loss. At March 31, 1999, loans totaling $71 million were assigned by
management to the substandard risk category and loans totaling $25 million were
assigned to the special mention risk category, compared to $60 million and $31
million, respectively, at December 31, 1998.
MARKET RISK
Market risk is a broad term for the risk of economic loss due to adverse changes
in the fair value of a financial instrument. These changes may be the result of
various factors, including interest rates, foreign exchange rates, commodity
prices, or equity prices. Additionally, the financial instruments subject to
market risk can be classified either as held for trading or held for purposes
other than trading.
BOK Financial is subject to market risk primarily through the effect of changes
in interest rates on both its portfolio of assets held for purposes other than
trading and trading assets. The effect of other changes, such as foreign
exchange rates, commodity prices or equity prices, do not pose a material market
risk to BOK Financial. The responsibility for managing market risk rests with
the Asset/Liability Committee which operates under policy guidelines established
by the Board of Directors. The negative acceptable variation in net interest
revenue and economic value of equity due to a 200 basis point increase or
decrease in interest rates is generally limited by these guidelines to +/- 10%.
These guidelines also establish maximum levels for short-term borrowings,
short-term assets, and public and brokered deposits, and establish minimum
levels for unpledged assets, among other things. Compliance with these
guidelines is reviewed monthly.
Interest Rate Risk Management (Other than Trading)
BOK Financial performs a sensitivity analysis to identify more dynamic interest
rate risk exposures, including embedded option positions, on net interest
revenue, net income and economic value of equity. A simulation model is used to
estimate the effect of changes in interest rates over the next twelve months
based three interest rate scenarios. These are a "most likely" rate scenario and
two "shock test" scenarios, the first assuming a sustained parallel 200 basis
point increase and the second a sustained parallel 200 basis point decrease in
interest rates. An independent source is used to determine the most likely
interest rates for the next year. BOK Financial's primary interest rate
exposures include the Federal Reserve Bank's discount rate which affects
short-term borrowings, the prime lending rate and the London InterBank Offering
Rate ("LIBOR") which are the basis for much of the variable-rate loan pricing,
the 30-year mortgage rate which directly affects the prepayment speeds for
mortgage-backed securities and mortgage servicing rights, and the 10-year U.S.
Treasury rate which affects the value of the mortgage servicing hedges.
Derivative financial instruments and other financial instruments used for
purposes other than trading are included in this simulation. In addition,
sensitivity of fee income to market interest rate levels, such as those related
to cash management services and mortgage servicing, is included. The model
incorporates management's assumptions regarding the level of interest rate or
balance changes on indeterminable maturity deposits (demand deposits,
interest-bearing transaction accounts and savings accounts) for a given level of
market rate changes. The assumptions have been developed through a combination
of historical analysis and future expected pricing behavior. Interest rate swaps
on all products are included to the extent that they are effective in the
12-month simulation period. Additionally, changes in prepayment behavior of
mortgage-backed securities, residential mortgage loans and mortgage servicing in
each rate environment are captured using industry estimates of prepayment speeds
for various coupon segments of the portfolio. Finally, the impact of planned
growth and new business activities is factored into the simulation model. At
March 31, 1999 and 1998, this modeling indicated interest rate sensitivity as
follows:
<TABLE>
- --------------------------------------------------------------------------------------------------------------------
Table 13 - Interest Rate Sensitivity
(Dollars in Thousands)
200 bp Increase 200 bp Decrease Most Likely
------------------------- -------------------------- ------------------------
1999 1998 1999 1998 1999 1998
------------ ------------ ------------ ------------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Anticipated impact over the next twelve months:
Net interest revenue $ (1,394) $ 2,491 $ (477) $ (3,130) $ (69) $ (736)
(0.6)% 1.3% (0.2)% (1.6)% 0.0% (0.4)%
- ------------------------------- -------------- ------------- --- ----------- ------------- --- ----------- -----------
Net income $ (1,171) $ 5,075 $ (1,772) $ (26,987) $ (80) $ (410)
(1.3)% 6.7% (2.0)% (35.6)% 0.0% (0.5)%
- ------------------------------- -------------- ------------- --- ----------- ------------- --- ----------- -----------
Economic value of equity $ (86,488) $ (9,092) $ 4,251 $ (7,780) $ (11,192) $ 4,717
(10.0)% (1.3)% 0.5% (1.0)% (1.3)% 0.7%
- ------------------------------- -------------- ------------- --- ----------- ------------- --- ------------ ----------
</TABLE>
The estimated changes in interest rates on net interest revenue or net income is
not projected to be significant within the +/- 200 basis point range of
assumptions. However, this modeling indicated that under the 200 basis point
increase scenario, BOK Financial's economic value of equity would decrease by
$86.5 million due primarily to the effect of rising interest rates on the value
of the securities portfolio.
<PAGE>
BOK Financial hedges its loss exposure from the prepayment of mortgage loans
that it services through the use of futures contracts, call options and put
options. These derivatives are based upon 10-year U.S. Treasury securities. The
changes in value of these derivatives have a highly correlated, inverse relation
to changes in value of the mortgage servicing rights. The interest rate
sensitivity of the mortgage servicing portfolio and the related hedge is modeled
over a range of + or - 50 basis points. At March 31, 1999, the pre-tax results
of this modeling are as follows:
50 bp increase 50 bp decrease
----------------- ------------------
Anticipated change in:
Mortgage servicing rights $ 8,014 $ (12,437)
Hedging instruments (11,123) 9,770
================= ==================
Net $ ( 3,109) $ (2,667)
================= ==================
The simulations used to manage market risk are based on numerous assumptions
regarding the effect of changes in interest rates on the timing and extent of
repricing characteristics, future cash flows and customer behavior. These
assumptions are inherently uncertain and, as a result, the model cannot
precisely estimate net interest revenue, net income or economic value of equity
or precisely predict the impact of higher or lower interest rates on net
interest revenue, net income or economic value of equity. Actual results will
differ from simulated results due to timing, magnitude and frequency of interest
rate changes and changes in market conditions and management strategies, among
other factors.
BOK Financial uses interest rate swaps, a form of off-balance sheet derivative
product, in managing its interest rate sensitivity. These products are generally
used to more closely match interest paid on certain long-term certificates of
deposit and subordinated debt with earning assets. BOK Financial accrues and
periodically receives a fixed amount from the counterparties to these swaps and
accrues and periodically makes a variable payment to the counterparties. For the
first quarter of 1999, income from these swaps exceeded the cost of the swaps by
$227 thousand. Credit risk from these swaps is closely monitored and
counterparties to these contracts are selected on the basis of their credit
worthiness, among other factors. Derivative products are not used for
speculative purposes.
- --------------------------------------------------------------------------------
TABLE 14 - INTEREST
RATE SWAPS
(In thousands)
Notional Pay Receive Fair
Amount Rate Rate Value
-------------------------------------------------------------
Expiration:
1999 7,000 5.06 %(1) 6.80% 59
2001 4,292 5.03 (1) 4.94 (1) 25
2002 7,660 6.21 4.94 (1) (156)
2003 41,053 4.82 - 5.99 4.94 (1) 360
2004 23,553 5.65 - 5.95 4.94 (1) (158)
2005 8,289 5.08 - 5.21 4.94 (1) 183
2006 16,500 7.26 (1) 5.00 (1) (826)
2007 100,000 4.94(1) 6.75 - 6.80 6,032
2007 14,372 5.23 - 7.47 4.94 - 5.00(1) (452)
2008 28,490 5.15 - 5.66 4.94 (1) 784
2009 32,011 5.22 - 5.88 4.94 (1) 798
- --------------------------------------------------------------------------------
(1) Rates are variable based on LIBOR and reset monthly, quarterly or
semiannually.
Trading Activities
BOK Financial enters into trading account activities both as an intermediary for
customers and for its own account. As an intermediary, BOK Financial will take
positions in securities, generally mortgage-backed securities, government agency
securities, and municipal bonds. These securities are purchased for resale to
customers, which include individuals, corporations, foundations, and other
financial institutions. BOK Financial will also take trading positions in U.S.
Treasury securities, mortgage-backed securities, municipal bonds and financial
futures for its own account through BOk and BOSC. These positions are taken with
the objective of generating trading profits. Both of these activities involve
interest rate risk.
A variety of methods are used to manage the interest rate risk of trading
activities. These methods include daily marking of all positions to market
value, independent verification of inventory pricing, and position limits for
each trading activity. Hedges in either the futures or cash markets may be used
to reduce the risk associated with some trading positions. The Risk Management
Department monitors trading activity daily and reports to senior management and
the Risk Overssight and Audit Committee of the Board of Directors on any
exceptions to trading position limits and risk management policy.
BOK Financial uses a Value at Risk ("VAR") methodology to measure the market
risk inherent in its trading activities. VAR is calculated based upon historical
simulations over the past five years. It represents an amount of market loss
that is likely to be exceeded only one out of every 100 two-week periods.
Trading positions are managed within guidelines approved by the Board of
Directors. These guidelines limit the nominal aggregate trading positions to
$360 million and the VAR to $6.5 million. At March 31, 1999, the nominal
aggregate trading positions was $30 million, the VAR was $1.2 million.
- --------------------------------------------------------------------------------
TABLE 15 - CAPITAL RATIOS
March 31, Dec.31, Sept. 30, June 30, March 31,
1999 1998 1998 1998 1998
---------------------------------------------------
Average shareholders' equity
to average assets 7.56% 8.09 8.29% 8.18% 8.00%
Risk-based capital:
Tier 1 capital 8.06 7.80 9.44 9.35 9.47
Total capital 12.15 11.96 14.11 14.15 14.47
Leverage 6.31 6.57 7.28 7.24 6.81
REPORT OF MANAGEMENT ON CONSOLIDATED FINANCIAL STATEMENTS
Management is responsible for the consolidated financial statements which have
been prepared in accordance with generally accepted accounting principles. In
management's opinion, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting of normal recurring accruals)
necessary to present fairly the financial condition, results of operations and
cash flows of BOK Financial and its subsidiaries at the dates and for the
periods presented.
The financial information included in this interim report has been prepared by
management without audit by independent public accountants and should be read in
conjunction with BOK Financial's 1998 Form 10-K to the Securities and Exchange
Commission which contains audited financial statements.
<PAGE>
- -------------------------------------------- --- -------------- --- ------------
Consolidated Statement of Earnings
(In Thousands Except Share Data)
Three Months Ended
March 31
-------------------------------
1999 1998
-------------- --- ------------
Interest Revenue
Loans $ 70,500 $ 60,737
Taxable securities 31,212 27,235
Tax-exempt securities 3,922 3,918
- -------------------------------------------- --- -------------- --- ------------
Total securities 35,134 31,153
- -------------------------------------------- --- -------------- --- ------------
Trading securities 696 163
Funds sold 178 691
- -------------------------------------------- --- -------------- --- ------------
Total interest revenue 106,508 92,744
- -------------------------------------------- --- -------------- --- ------------
Interest Expense
Deposits 32,500 33,383
Other borrowings 21,762 14,958
Subordinated debenture 2,348 2,367
- -------------------------------------------- --- -------------- --- ------------
Total interest expense 56,610 50,708
- -------------------------------------------- --- -------------- --- ------------
Net Interest Revenue 49,898 42,036
Provision for Loan Losses 3,370 2,470
- -------------------------------------------- --- -------------- --- ------------
Net Interest Revenue After
Provision for Loan Losses 46,528 39,566
- -------------------------------------------- --- -------------- --- ------------
Other Operating Revenue
Brokerage and trading revenue 4,347 3,131
Transaction card revenue 7,555 5,540
Trust fees and commissions 7,762 6,884
Service charges and fees on deposit 9,159 7,638
accounts
Mortgage banking revenue, net 9,195 9,321
Leasing revenue 1,868 1,661
Other revenue 5,014 2,685
- -------------------------------------------- --- -------------- --- ------------
Total fees and commissions revenue 44,900 36,860
- -------------------------------------------- --- -------------- --- ------------
Gain on sale of student loans 529 1,415
Gain on loan securitization 270 -
Gain on sale of other assets 892 -
Securities gains, net 274 2,512
- -------------------------------------------- --- -------------- --- ------------
Total other operating revenue 46,865 40,787
- -------------------------------------------- --- -------------- --- ------------
Other Operating Expense
Personnel 31,106 24,829
Business promotion 2,459 1,897
Contribution of stock to BOk
Charitable Foundation - 2,257
Professional fees and services 1,839 1,596
Net occupancy, equipment & data processing 12,996 9,214
FDIC and other insurance 315 310
Printing, postage and supplies 2,751 2,047
Net(gains) losses, and operating
expenses of repossessed assets (1,296) (55)
Amortization of intangible assets 3,245 2,302
Mortgage banking costs 5,304 6,023
Provision for impairment of mortgage
servicing rights - 3,000
Other expense 4,874 3,773
- -------------------------------------------- --- -------------- --- ------------
Total other operating expense 63,593 57,193
- -------------------------------------------- --- -------------- --- ------------
Income Before Taxes 29,800 23,160
Federal and state income tax 9,983 6,847
- -------------------------------------------- --- -------------- --- ------------
Net Income $ 19,817 $ 16,313
================================================================================
Earnings Per Share:
Net Income
Basic $ 0.43 $ 0.35
- -------------------------------------------- --- -------------- --- ------------
Diluted $ 0.38 $ 0.31
- -------------------------------------------- --- -------------- --- ------------
Average Shares Used in Computation:
Basic 45,096,353 45,228,538
- -------------------------------------------- ------------------ ----------------
Diluted 51,747,293 51,933,968
- -------------------------------------------- ------------------ ----------------
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Data)
March 31, December 31, March 31,
1999 1998 1998
---------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 405,396 $ 426,265 $ 410,369
Funds sold 8,031 9,151 5,450
Trading securities 51,924 41,138 19,027
Securities:
Available for sale 2,375,630 2,219,636 1,873,390
Investment (fair value: March 31, 1999 - $229,719;
December 31, 1998 -$227,754;
March 31, 1998 - $222,545) 230,190 227,777 221,825
- --------------------------------------------------------------------------------------------------------------------
Total securities 2,605,820 2,447,413 2,095,215
- --------------------------------------------------------------------------------------------------------------------
Loans 3,591,398 3,551,941 2,836,296
Less reserve for loan losses 67,959 64,931 54,839
- --------------------------------------------------------------------------------------------------------------------
Net loans 3,523,439 3,487,010 2,781,457
- --------------------------------------------------------------------------------------------------------------------
Premises and equipment, net 86,662 81,965 58,109
Accrued revenue receivable 70,293 62,630 53,019
Excess cost over fair value of net assets acquired
and core deposit premiums (net of accumulated
amortization: March 31, 1999 - $52,198;
December 31, 1998 - $48,953;
March 31, 1998 - $41,884) 93,933 95,935 65,494
Mortgage servicing rights 92,305 69,224 80,274
Real estate and other repossessed assets 4,820 4,600 5,366
Other assets 101,377 84,017 58,887
- --------------------------------------------------------------------------------------------------------------------
Total assets $ 7,044,000 $ 6,809,348 $ 5,632,667
====================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing demand deposits $ 1,082,443 $ 1,126,860 $ 978,490
Interest-bearing deposits:
Transaction 1,415,389 1,420,573 1,159,160
Savings 151,744 146,751 113,172
Time 1,693,359 1,685,046 1,768,552
- --------------------------------------------------------------------------------------------------------------------
Total deposits 4,342,935 4,379,230 4,019,374
- --------------------------------------------------------------------------------------------------------------------
Funds purchased and repurchase
agreements 1,050,955 1,039,533 614,534
Other borrowings 893,819 660,347 345,602
Subordinated debenture 148,504 146,921 148,388
Accrued interest, taxes and expense 55,784 57,357 41,217
Other liabilities 32,796 20,846 14,917
- --------------------------------------------------------------------------------------------------------------------
Total liabilities 6,524,793 6,304,234 5,184,032
- --------------------------------------------------------------------------------------------------------------------
Stockholders' equity:
Preferred stock 25 25 23
Common stock ($.00006 par value; 2,500,000,000
Shares authorized; shares issued and outstanding
March 31, 1999 - 45,165,849; December 31, 1998
- 45,061,350; March 31, 1998 - 44,020,220) 3 3 3
Capital surplus 234,387 233,022 209,748
Retained earnings 281,264 261,822 234,567
Treasury stock (shares at cost: March 31, 1999 - 41,038;
December 31, 1998 - 23,792; March 31, 1998 - 222,818) (918) (565) (4,410)
Accumulated other comprehensive income 4,446 10,807 8,708
Less notes receivable from exercise of stock options - - (4)
- --------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 519,207 505,114 448,635
- --------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 7,044,000 $ 6,809,348 $ 5,632,667
====================================================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS EQUITY
(In Thousands)
Accumulated
Preferred Stock Common Stock Other Treasury Stock
------------------------------------Comprehensive Capital Retained -------------------- Notes
Shares Amount Shares Amount Income Surplus Earnings Shares Amount Receivable Total
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
December 31, 1997 250,000 $ 23 43,951 $ 3 $ 10,691 $ 208,325 $ 218,629 133 $ (2,190) $ (4) $ 435,477
Comprehensive income:
Net income - - - - - - 16,313 - - - 16,313
Other comprehensive
income, net of tax:
Unrealized gains
(loss)on securities
available for sale(1) - - - - (1,983) - - - - - (1,983)
-----------
Comprehensive income 14,330
-----------
Exercise of stock options - - 47 - - 973 - 16 (346) - 627
Preferred dividends paid
in shares of common stock - - 18 - - 375 (375) - - - -
Director retainer shares - - 4 - - 75 - - - - 75
Treasury stock purchase - - - - - - - 74 (1,874) - (1,874)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at
March 31, 1998 250,000 $ 23 44,020 $ 3 $ 8,708 $ 209,748 $ 234,567 223 $ (4,410) $ (4) $ 448,635
====================================================================================================================================
Balances at
December 31, 1998 250,000 $ 25 45,061 $ 3 $ 10,807 $ 233,022 $ 261,822 24 $ (565) $ - $ 505,114
Comprehensive income:
Net income - - - - - - 19,817 - - - 19,817
Other Comprehensive
Income, net of tax:
Unrealized gains
(loss)on securities
available for sale(1) - - - - (6,361) - - - - - (6,361)
-----------
Comprehensive income 13,456
-----------
Exercise of stock options - - 71 - - 595 - 14 (285) - 310
Issuance of common
stock to Thrift Plan - - 14 - - 322 - (1) 33 - 355
Preferred dividends paid
in shares of common stock - - 17 - - 375 (375) - - - -
Director retainer shares - - 3 - - 73 - - - - 73
Treasury stock purchase - - - - - - - 1 (101) - (101)
- ------------------------------------------------------------------------------------------------------------------------------------
Balances at
March 31, 1999 250,000 $ 25 45,166 $ 3 $ 4,446 $ 234,387 281,264 41 $ (918) $ - $ 519,207
====================================================================================================================================
<FN>
(1) March 31, 1999 March 31, 1998
-------------- --------------
Reclassification adjustments:
Unrealized losses on available $ (6,449) $ (214)
for sale securities
Less: reclassification
adjustment for gains realized
Included in net income, net of tax 182 1,769
--------------------------------------
Net unrealized losses on securities $ (6,631) $ (1,983)
======================================
</FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands Except Share Data)
Three Months Ended
March 31,
--------------------------------------
1999 1998
--------------------------------------
<S> <C> <C>
Cash Flow From Operating Activities:
Net income $ 19,817 $ 16,313
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Provision for loan losses 3,370 2,470
Depreciation and amortization 11,850 9,193
Provision for impairment of mortgage servicing rights - 3,000
Net amortization of security discounts and premiums 310 364
Contribution of stock to BOk Charitable Foundation - 2,257
Net gain on sale of assets (5,599) (5,590)
Mortgage loans originated for resale (198,720) (221,621)
Proceeds from sale of mortgage loans held for resale 219,513 183,078
Increase in trading securities (2,738) (14,028)
Increase in accrued revenue receivable (7,663) (2,264)
Increase in other assets (17,442) (1,142)
Increase in accrued interest, taxes and expense 5,273 1,401
Increase (decrease) in other liabilities 11,339 (2,302)
- ----------------------------------------------------------------------------------------------------
Net cash provided (used) by operating activities 39,310 (28,871)
- ----------------------------------------------------------------------------------------------------
Cash Flow From Investing Activities:
Proceeds from maturities of investment securities 19,375 7,364
Proceeds from maturities of available for sale securities 91,087 97,875
Purchases of investment securities (21,855) (16,894)
Purchases of available for sale securities (713,823) (690,995)
Proceeds from sales of available for sale securities 453,566 466,935
Loans originated or acquired net or principal collected (210,839) (85,115)
Proceeds from disposition of assets 151,278 63,737
Purchases of assets (37,985) (11,900)
Cash and cash equivalents of branches & subsidiaries
acquired and sold, net (1,339) -
- ----------------------------------------------------------------------------------------------------
Net cash used by investing activities (270,535) (168,993)
- ----------------------------------------------------------------------------------------------------
Cash Flows From Financing Activities:
Net increase (decrease) in demand deposits, transaction
deposits, money market deposits, and savings accounts (44,608) 138,605
Net increase in certificates of deposit 8,313 152,690
Net increase (decrease) in other borrowings 244,894 (65,766)
Purchase of treasury stock (101) (1,874)
Issuance of preferred, common and treasury stock, net 738 702
- ----------------------------------------------------------------------------------------------------
Net cash provided by financing activities 209,236 224,357
- ----------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (21,989) 26,493
Cash and cash equivalents at beginning of period 435,416 389,326
- ----------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 413,427 $ 415,819
- ----------------------------------------------------------------------------------------------------
Cash paid for interest $ 57,447 $ 49,503
- ----------------------------------------------------------------------------------------------------
Cash paid for taxes $ 8,550 $ 353
- ----------------------------------------------------------------------------------------------------
Net loans transferred to repossessed real estate
and other assets $ 840 $ 701
- ----------------------------------------------------------------------------------------------------
Payment of preferred stock dividends in common stock $ 375 $ 375
- ----------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) ACCOUNTING POLICIES
Basis of Presentation
The accounting and reporting policies of BOK Financial Corporation conform to
generally accepted accounting principles and to generally accepted practices
within the banking industry. The Consolidated Financial Statements of BOK
Financial include the accounts of BOK Financial and its subsidiaries, primarily
Bank of Oklahoma, N.A. ("BOk"), Bank of Arkansas N.A., Bank of Albuquerque,
N.A., and Bank of Texas, N.A.. Certain prior period balances have been
reclassified to conform with the current period presentation.
Effect of Pending Statements of Financial Accounting Standards
During 1998, the Financial Accounting Standards Board issued Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("FAS 133").
Among other things, FAS 133 requires that all derivative instruments be carried
on the statement of financial position at fair value. Changes in fair value of
the derivative instruments will either be reported in income or as a separate
component of other comprehensive income (shareholders' equity) depending on
whether the derivative instrument meets certain requirements for hedge
accounting. FAS 133 eliminates the current practice of deferral hedge accounting
where gains or losses on derivative instruments designated as hedges are
considered adjustments to the carrying value of the hedged asset or liability.
FAS 133 is effective for fiscal years beginning after June 15, 1999 and BOK
Financial expects to adopt the standard as of January 1, 2000. BOK Financial has
not yet determined what the effect of FAS 133 will be on its earnings or
financial position.
(2) ACQUISITIONS
BOK Financial's acquisition of First Muskogee Bancshares, Inc. is still pending
regulatory action. That action by the Federal Reserve Board on this application
is anticipated during the second quarter.
(3) MORTGAGE BANKING ACTIVITIES
At March 31, 1999, BOK Financial owned the rights to service 88,013 mortgage
loans with outstanding principal balances of $6.7 billion, including $73 million
serviced for BOk. The weighted average interest rate and remaining term was
7.49% and 278 months, respectively.
Activity in capitalized mortgage servicing rights and related valuation
allowance during the three months ending March 31, 1999 is as follows:
<TABLE>
Capitalized Mortgage Servicing Rights
-----------------------------------------------------------------------------------------
Valuation Hedging
Purchased Originated Total Allowance (Gain)/Loss Net
--------------- ------------- --------------- ------------- ----------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1998 $ 70,509 $ 21,199 $ 91,708 $ - $ (22,484) $ 69,224
Additions 7,871 2,981 10,852 - - 10,852
Amortization expense (2,783) (965) (3,748) - 692 (3,056)
Realized hedge losses - - - - 11,629 11,629
Unrealized hedge losses - - - - 3,656 3,656
- ----------------------------- -- ---------- --- ---------- - ----------- -- ------------- -- ----------- -- -----------
Balance at March 31, 1999 $ 75,597 $ 23,215 $ 98,812 $ - $ (6,507) $ 92,305
- ----------------------------- -- ---------- --- ---------- - ----------- -- ------------- -- ----------- -- -----------
Estimated fair value of
mortgage servicing
rights (1) $ 75,282 $ 27,529 102,811 $ 102,811
- ----------------------------- -- ---------- --- ---------- - ----------- -- ------------- -- ----------- -- -----------
(1) Excludes approximately $8.4 million of loan servicing rights on mortgage
loans originated prior to the adoption of FAS 122.
</TABLE>
<PAGE>
Stratification of the mortgage loan servicing portfolio, outstanding principal
of loans serviced, and related hedging information by interest rate at March 31,
1999 follows (in thousands):
<TABLE>
< 6.50% 6.50% - 7.49% 7.50% - 8.49% => 8.50% Total
---------------------------- ---------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Cost less accumulated amortization $ 3,139 $ 51,018 $ 39,789 $ 4,866 $ 98,812
Deferred hedge gains - (1,501) (5,005) - (6,507)
- --------------------------------------------------------------- ---------------- ------------- --------------
Adjusted cost 3,139 49,517 34,784 4,866 92,305
Fair value 3,565 53,900 38,592 6,753 102,811
- --------------------------------------------------------------- ---------------- ------------- --------------
Impairment $ - $ - $ - $ - $ -
- --------------------------------------------------------------- ---------------- ------------- --------------
Outstanding principal of loans
serviced $ 241,935 $ 2,818,880 $ 2,532,327 $ 494,703 $ 6,087,845(1)
- --------------------------------------------------------------- ---------------- ------------- --------------
(1) Excludes outstanding principal of $570,453 for loans serviced for which
there is no capitalized mortgage servicing rights.
</TABLE>
(4) DISPOSAL OF AVAILABLE FOR SALE SECURITIES
Sales of available for sale securities for the three months ending March 31,
1999 and 1998 resulted in gains and losses as follows (in thousands):
Proceeds $ 453,566 $ 466,935
Gross realized gains 1,681 3,157
Gross realized losses 1,407 645
Related federal and state
income tax expense 92 743
(5) LOAN SECURITIZATION
BOK Financial securitized and sold approximately $100 million of automobile
loans during the first quarter of 1999. In conjunction with the sale, BOK
Financial retained the servicing rights associated with the loans and a residual
interest in cash flows in excess of set targets. These retained interests were
recorded at $1.0 million and $8.0 million, respectively, based upon their
relative fair values. The fair value of the servicing rights was based upon the
discounted cash flow of net servicing revenue and will be amortized over the
expected life of the loans serviced, adjusted for changes in prepayment
assumptions. The fair value of the residual interest in cash flows was based
upon the discounted cash flow from the securitization trust to BOK Financial and
will be carried at fair value with unrealized gains or losses recognized in
income. The significant assumptions used to determine the fair value of these
assets are:
Servicing Rights Residual Interest
Discount rate 10% 12%
Servicing revenue 1% -
Servicing cost $50/loan -
Term 45 months 45 months
Default rate - 0.9%
BOSC, Inc. received an underwriting fee of $1.0 million in conjunction with this
transaction.
<PAGE>
(6) EARNINGS PER SHARE
The following table presents the computation of basic and diluted earnings per
share (dollars in thousands except share data):
Three Months Ended
---------------------------
March 31, March 31,
1999 1998
---------------------------
Numerator:
Net income 19,817 $ 16,313
Preferred stock dividends (375) (375)
- --------------------------------------------------------------------------------
Numerator for basic earnings per share - income
Available to common stockholders 19,442 15,938
- --------------------------------------------------------------------------------
Effect of dilutive securities:
Preferred stock dividends 375 375
- --------------------------------------------------------------------------------
Numerator for diluted earnings per share - income
available to common stockholders after assumed
conversion $ 19,817 $ 16,313
- --------------------------------------------------------------------------------
Denominator:
Denominator for basic earnings per share -weighted
average shares 45,096,353 45,228,538
Effect of dilutive securities:
Employee stock options 680,676 735,166
Convertible preferred stock 5,970,264 5,970,264
- --------------------------------------------------------------------------------
Dilutive potential common shares 6,650,940 6,705,430
- --------------------------------------------------------------------------------
Denominator for diluted earnings per share - adjusted
Weighted average shares and assumed conversions 51,747,293 51,933,968
- --------------------------------------------------------------------------------
Basic earnings per share $ 0.43 $ 0.35
- --------------------------------------------------------------------------------
Diluted earnings per share $ 0.38 $ 0.31
- --------------------------------------------------------------------------------
(7) REPORTABLE SEGMENTS
Reportable segments reconciliation to the Consolidated Financial Statements at
March 31, 1999 is as follows:
<TABLE>
Net Interest Other Operating Other Operating Average
Revenue Revenue Expense Assets
-------------------------------- ------------------ ------------
<S> <C> <C> <C> <C>
Total reportable lines of business $ 33,195 $ 34,365 $ 40,888 $ 5,096,773
Total non-reportable lines of business 11,041 11,834 18,803 1,283,014
Unallocated items:
Tax-equivalent adjustment (2,333) - - -
Funds management 8,007 305 2,570 136,512
Contribution to BOk Foundation - - - -
All others, net (12) 87 1,332 233,880
----------------------------------------------------------------
BOK Financial consolidated $ 49,898 $ 46,591 $ 63,593 $ 6,750,179
================================================================
</TABLE>
<PAGE>
Reportable segments reconciliation to the Consolidated Financial Statements at
March 31, 1998 is as follows:
<TABLE>
Net Interest Other Operating Other Operating Average
Revenue Revenue Expense Assets
------------------------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Total reportable lines of business $ 30,604 $ 31,028 $ 40,744 $ 4,630,934
Total non-reportable lines of business 6,327 6,828 9,612 577,376
Unallocated items:
Tax-equivalent adjustment (2,330) - - -
Funds management 7,383 1,994 8,227 (5,385)
Contribution to BOk Foundation - - 2,257 -
All others, net (52) (1,575) (6,647) 351,451
=============================== ================== ==================
BOK Financial consolidated $ 42,036 $ 46,591 $ 63,593 $ 6,750,179
=============================== ================== ==================
</TABLE>
(8) CONTINGENT LIABILITIES
In the ordinary course of business, BOK Financial and its subsidiaries are
subject to legal actions and complaints. Management believes, based upon the
opinion of counsel, that the actions and liability or loss, if any, resulting
from the final outcomes of the proceedings, will not be material in the
aggregate.
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------
QUARTERLY FINANCIAL SUMMARY - UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(In Thousands Except Share Data)
For Three months ended
--------------------------------------------------------------------------------------
March 31, 1999 December 31,1998
-------------------------------------------- --------------------------------------
Average Revenue/ Yield Average Revenue/ Yield
Balance Expense /Rate Balance Expense /Rate
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Taxable securities $ 2,088,998 $ 31,212 6.06% $ 1,902,736 $ 29,073 6.06%
Tax-exempt securities(1) 318,685 6,104 7.77 323,147 6,167 7.57
- ------------------------------------------------------------------------------------------------------------------------------
Total securities 2,407,683 37,316 6.29 2,225,883 35,240 6.28
- ------------------------------------------------------------------------------------------------------------------------------
Trading securities 54,907 696 5.14 19,415 232 4.74
Funds sold 14,365 178 5.03 16,539 242 5.81
Loans(2)(3) 3,523,454 70,651 8.13 3,270,560 69,158 8.39
Less reserve for loan losses 66,426 63,727 -
-
- ------------------------------------------------------------------------------------------------------------------------------
Loans, net of reserve(3) 3,457,028 70,651 8.29 3,206,833 69,158 8.56
- ------------------------------------------------------------------------------------------------------------------------------
Total earning assets(3) 5,933,983 108,841 7.44 5,468,670 104,872 7.61
- ------------------------------------------------------------------------------------------------------------------------------
Cash and other assets 816,196 672,352
- ------------------------------------------------------------------------------------------------------------------------------
Total assets $ 6,750,179 $ 6,141,022
- ------------------------------------------------------------------------------------------------------------------------------
Liabilities And Shareholders' Equity
Transaction deposits $ 1,401,655 10,131 2.93% $ 1,236,386 8,967 2.88%
Savings deposits 148,393 688 1.88 119,970 607 2.01
Other time deposits 1,730,964 21,681 5.08 1,601,350 21,264 5.27
- ------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 3,281,012 32,500 4.02 2,957,706 30,838 4.14
- ------------------------------------------------------------------------------------------------------------------------------
Other borrowings 1,714,762 21,762 5.15 1,502,825 20,427 5.39
Subordinated debenture 148,482 2,348 6.41 147,418 2,333 6.28
- ------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 5,144,256 56,610 4.46 4,607,949 53,598 4.61
- ------------------------------------------------------------------------------------------------------------------------------
Demand deposits 1,010,574 950,560
Other liabilities 85,070 85,721
Shareholders' equity 510,279 496,792
- ------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' $ 6,750,179 $ 6,141,022
Equity
- ------------------------------------------------------------------------------------------------------------------------------
Tax-Equivalent Net Interest Revenue (1)(3) 52,231 2.98% 51,274 2.99%
Tax-Equivalent Net Interest Revenue (1)
To Earning Assets 3.57 3.72
Less tax-equivalent adjustment 2,333 2,299
(1)(3)
- ------------------------------------------------------------------------------------------------------------------------------
Net Interest Revenue 49,898 48,975
Provision for loan losses 3,370 4,027
Other operating revenue 46,865 44,817
Other operating expense 63,593 60,821
- ------------------------------------------------------------------------------------------------------------------------------
Income Before Taxes 29,800 28,944
Federal and state income tax 9,983 9,729
- ------------------------------------------------------------------------------------------------------------------------------
Net Income $ 19,817 $ 19,215
- ------------------------------------------------------------------------------------------------------------------------------
Earnings Per Share:
Net Income
Basic $ 0.43 $ 0.42
- ------------------------------------------------------------------------------------------------------------------------------
Diluted $ 0.38 $ 0.37
- ------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Tax equivalent at the statutory federal and state rates for the periods
presented. The taxable equivalent adjustments shown
shown are for comparitive purposes.
(2) The loan averages include loans on which the accrual of interest has been discontinued and are stated net of unearned
income.
(3) Yield/Rate excludes $1.8 million and $1.5 million of non-recurring collection of foregone interest in September 30,
1998 and June 30, 1998, respectively.
</FN>
</TABLE>
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------
For Three months ended
- -------------------------------------------------------------------------------------------------------------------------
September 30, 1998 June 30, 1998 March 31, 1998
- -------------------------------------------------------------------------------------------------------------------------
Average Revenue/ Yield Average Revenue/ Yield Average Revenue/ Yield
Balance Expense /Rate Balance Expense /Rate Balance Expense /Rate
- -------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 1,751,428$ 27,300 6.18% $ 1,642,799 $ 25,119 6.13% $ 1,772,971$ 27,235 6.23%
325,413 6,212 7.57 321,703 6,173 7.70 328,735 6,248 7.71
- -------------------------------------------------------------------------------------------------------------------------
2,076,841 33,512 6.40 1,964,502 31,292 6.39 2,101,706 33,483 6.46
- -------------------------------------------------------------------------------------------------------------------------
27,389 389 5.63 21,408 262 4.91 11,774 163 5.61
25,287 333 5.22 37,728 571 6.07 47,050 691 5.96
2,978,087 66,503 8.62 2,838,037 63,072 8.71 2,822,147 60,737 8.73
59,821 - 56,423 - 54,164 -
- - -
- -------------------------------------------------------------------------------------------------------------------------
2,918,266 66,503 8.80 2,781,614 63,072 8.88 2,767,983 60,737 8.90
- -------------------------------------------------------------------------------------------------------------------------
5,047,783 100,737 7.78 4,805,252 95,197 7.82 4,928,513 95,074 7.82
- -------------------------------------------------------------------------------------------------------------------------
6477413 643,626 625,863
- -------------------------------------------------------------------------------------------------------------------------
$ 5,695,524 $ 5,448,878 $ 5,554,376
- -------------------------------------------------------------------------------------------------------------------------
$ 1,187,685 92737 3.10% $ 1,184,835 9,268 3.14% $ 1,145,221$ 8,917 3.16%
108,911 547 1.99 111,207 617 2.23 109,560 602 2.23
1,643,596 22,455 5.42 1,717,993 23,640 5.52 1,739,816 23,864 5.56
- -------------------------------------------------------------------------------------------------------------------------
2,940,192 32,275 4.36 3,014,035 33,525 4.46 2,994,597 33,383 4.52
- -------------------------------------------------------------------------------------------------------------------------
1,152,503 16,830 5.79 873,616 12,406 5.70 1,051,724 14,958 5.77
148,392 2,529 6.76 148,410 2,464 6.66 148,374 2,367 6.47
- -------------------------------------------------------------------------------------------------------------------------
4,241,087 51,634 4.83 4,036,061 48,395 4.81 4,194,695 50,708 4.90
- -------------------------------------------------------------------------------------------------------------------------
904,128 895,415 858,340
78,383 61,814 57,095
471,926 455,588 444,246
- -------------------------------------------------------------------------------------------------------------------------
$ 5,695,524 $ 5,448,878 $ 5,554,376
- -------------------------------------------------------------------------------------------------------------------------
49,103 2.95% 46,802 3.01% 44,366 2.92%
3.05
3.72 3.78 3.65
2,326 2,338 2,330
- -------------------------------------------------------------------------------------------------------------------------
46,777 44,464 42,036
4,001 3,953 2,470
42,860 44,355 40,787
56,837 53,804 57,193
- -------------------------------------------------------------------------------------------------------------------------
28,799 10,624 23,160
10,049 10,624 6,847
- -------------------------------------------------------------------------------------------------------------------------
$ 18,750 $ 20,438 $ 16,313
- -------------------------------------------------------------------------------------------------------------------------
$ 0.41 $ 0.44 $ 0.35
- -------------------------------------------------------------------------------------------------------------------------
$ 0.36 $ 0.39 $ 0.31
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits:
No. 10.26 Merger agreement among BOK Financial Corporation,
BOKF Merger Corporation Number Nine, and
Chaparral Bancshares, Inc.dated February 19, 1999.
No. 10.27 Merger agreement among BOK Financial Corporation,
Park Cities Bancshares, Inc., Mid-Cities
Bancshares, Inc. and Mid-Cities National Bank
dated February 24, 1999.
No. 10.28 Merger agreement among BOK Financial Corporation,
Park Cities Bancshares, Inc., PC Interim State
Bank, Swiss Avenue State Bank and Certain
Shareholders of Swiss Avenue State Bank dated
March 4, 1999.
No. 27 Financial Data Schedule filed herewith
electronically.
(B) Reports on Form 8-K:
No reports on Form 8-K were filed during the three months ended
March 31, 1999.
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 thereunto duly authorized.
BOK FINANCIAL CORPORATION
(Registrant)
Date: May 17, 1999 /s/ James A. White
------------ -------------------------
James A. White
Executive Vice President and
Chief Financial Officer
INDEX
Areement and Plan of Merger
Promissory Note Exhibit A
Escrow Agreement Exhibit B
Employment Agreement Exhibit C
Employment Agreement Exhibit D
Noncompetition Agreement Exhibit E
Escrow Agreement Exhibit F
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER ("Agreement"), dated as of February
19, 1999, is entered into by and among BOK Financial Corporation, an Oklahoma
Corporation, ("BOKF"), BOKF Merger Corporation Number Nine, a Texas corporation
and a wholly-owned subsidiary of BOKF ("BOKSub"), and Chaparral Bancshares,
Inc., a Texas corporation ("Chaparral").
WHEREAS, BOKF is a registered bank holding company under the Bank
Holding Company Act of 1956, as amended (the "BHCA"), and BOKSub is a
wholly-owned subsidiary of BOKF; and
WHEREAS, Chaparral is a registered bank holding company under the BHCA,
which controls Canyon Creek National Bank, a national banking association
("CCNB"); and
WHEREAS, Chaparral owns all of the issued and outstanding capital stock
of Chaparral Bancshares of Delaware, a Delaware corporation ("Delaware"); and
WHEREAS, Delaware is a registered bank holding company under the BHCA,
which owns all of the issued and outstanding capital stock of CCNB; and
WHEREAS, the respective Boards of Directors of each of BOKF and
Chaparral deem it advisable for BOKSub to merge with and into Chaparral upon the
terms and subject to the conditions described herein;
NOW, THEREFORE, for and in consideration of the mutual benefits to be
derived from this Agreement and of the representations, warranties, conditions,
and promises hereinafter contained, the parties hereto covenant and agree as
follows:
ARTICLE I
THE MERGER
Section 1.1. The Merger. Pursuant to the terms and provisions of this
Agreement and the Texas Business Corporation Act (the "TBCA"), BOKSub shall
merge with and into Chaparral (the "Merger").
Section 1.2. Merging Corporation. BOKSub shall be the merging corporation
under the Merger and its corporate identity and existence, separate and apart
from Chaparral, shall cease on consummation of the Merger.
Section 1.3. Surviving Corporation. Chaparral shall be the surviving
corporation in the Merger. No changes in the articles of incorporation or bylaws
of Chaparral shall be effected by the Merger. The officers and directors of
Chaparral after the Merger shall be the same as the officers and directors of
Chaparral as of the Effective Time (as defined in Section 9.2); provided,
however, Stanley A. Lybarger, Tom E. Turner and C. Fred Ball, Jr. shall, upon
consummation of the Merger, be additional members of the board of directors of
Chaparral. It is understood that some of the current directors of Chaparral may
elect to resign on or before the Effective Time.
Section 1.4. Effect of the Merger. The Merger shall have all of the
effects provided by the TBCA. Chaparral, as the surviving corporation, may, at
any time after the Effective Time, take any action (including executing and
delivering any documents) in the name and on behalf of either BOKSub or
Chaparral as are appropriate in order to carry out and effectuate the
transactions contemplated by this Agreement.
Section 1.5. Merger Consideration; Conversion of Shares.
(a) At the Effective Time, each share common stock of Chaparral, par
value $1.00 per share (the "Chaparral Common") then issued and outstanding,
other than shares the holders of which have duly exercised and perfected their
dissenters' rights under the TBCA, shall be automatically converted into the
right to receive an amount (the "Merger Consideration") equal to (i)
$29,900,000, plus (a) the difference (which may be a loss) between the amount
realized by CCNB (including principal and interest) upon collection or sale of
any of the CCFC Assets (as defined in Section 1.7) and the Book Value (as
defined in Section 1.7) thereof, between the date of this Agreement and the
Effective Time, minus (b) 134% of the amount of bonuses paid pursuant to Section
5.2(e) of this Agreement, and minus (c) the amount of any dividends paid by
Chaparral to its shareholders during the period from January 1, 1999 to the date
of consummation of the Merger, divided by (ii) the number of shares of Chaparral
Common issued and outstanding as of the Effective Time (and after exercise of
all of the Stock Options (as defined in Section 2.2)). The Merger Consideration
shall be paid to each holder of the Chaparral Common as of the Effective Time as
herein provided.
(b) Chaparral, BOKF and BOKSub acknowledge and understand that (i) all
Stock Options shall be exercised immediately prior to consummation of the
Merger, (ii) all shares of Chaparral Common issuable upon exercise of the Stock
Options shall be deemed issued and outstanding immediately prior to the
consummation of the Merger, and (iii) the Chaparral Common to be converted into
the right to receive the Merger Consideration shall include, without limitation,
the Chaparral Common to be issued upon the exercise of the Stock Options.
<PAGE>
(c) At the Effective Time, BOKF shall deposit or cause to be deposited,
each into an interest-bearing account, (i) $400,000 of the Merger Consideration
to be governed by Section 11.2 (the "Representation Escrow Funds"), and (ii) an
amount, if any, equal to the aggregate Tax Basis (as defined in Section 1.7) of
the CCFC Assets owned by CCNB as of the Effective Time (the "CCFC Escrow
Funds"). The Merger Consideration less the Representation Escrow Funds and the
CCFC Escrow Funds is referred to herein as the "Closing Consideration"). Each
holder of the Chaparral Common may elect to receive the Closing Consideration in
any combination of (i) cash or (ii) a single Promissory Note payable to the
shareholder by BOKF ("BOKF Note"). Each BOKF Note shall (i) be substantially in
the form attached hereto as Exhibit A (the "BOKF Note" and collectively the
"BOKF Notes"); (ii) bear interest at the rate per annum equal to the "Applicable
Federal Rate" as defined under the Internal Revenue Code of 1986, as amended
(the "Code"), based upon the term of such BOKF Note, (iii) be due and payable in
full on January 2, 2000.
(d) Unless a Chaparral shareholder (including holders of the Stock
Options) shall deliver to Chaparral not later than the meeting of shareholders
of Chaparral at which the shareholders vote on the question of approval of this
Agreement a written election ("BOKF Note Election") in a form approved by
counsel to BOKF (which approval shall not be unreasonably withheld or delayed)
to receive the Closing Consideration or part thereof in the form of a BOKF Note,
the shareholder shall be irrevocably deemed to have elected to receive the
Closing Consideration in all cash. Any Chaparral shareholder who has timely
delivered the BOKF Note Election may withdraw such election, and receive the
Closing Consideration in all cash, by delivering written notice to Chaparral to
that effect not less than twenty (20) days prior to the Closing Date (as defined
in Section 9.2).
(e) At the Effective Time, all of the shares of Chaparral Common, by
virtue of the Merger and without any action on the part of the holders thereof,
shall no longer be outstanding and shall be canceled and retired and shall cease
to exist, and each holder of any certificate or certificates which immediately
prior to the Effective Time represented outstanding shares of Chaparral Common
(the "Certificates") or of any holder of Stock Options shall thereafter cease to
have any rights with respect to such shares, except the right of such holders to
receive the Closing Consideration upon the surrender of such Certificate or
Certificates or exercise of such Stock Options in accordance with Section 1.6.
(f) At the Effective Time, each share of Chaparral Common, if any, held
in the treasury of Chaparral immediately prior to the Effective Time shall be
canceled.
(g) At the Effective Time, each share of common stock, par value $ 1.00
per share, of BOKSub outstanding immediately prior to the Effective Time shall
be converted into one share of Chaparral Common.
(h) If any holder of Chaparral Common is entitled to dissent from the
Agreement and the Merger under the TBCA and such holder thereof perfects such
holder's rights under the TBCA in accordance with the provisions thereof, any
issued and outstanding shares of Chaparral Common held by such dissenting holder
("Dissenting Shares") shall not be converted as described in this Section 1.5
but from and after the Effective Time shall represent only the right to receive
such cash consideration as may be determined to be due to such dissenting holder
pursuant to the TBCA; provided, however, that each share of Chaparral Common
outstanding immediately prior to the Effective Time and held by a dissenting
holder who shall, after the Effective Time, withdraw his demand for appraisal or
lose his right of appraisal shall have only such rights as are provided under
the TBCA.
Section 1.6. Exchange Procedures; Surrender of Certificates.
<PAGE>
(a) The Bank of New York, or other entity mutually satisfactory to
Chaparral and BOKF, shall act as paying agent in the Merger (the "Paying
Agent"). Immediately after the Effective Time, BOKF will cause Chaparral, as the
surviving corporation, to furnish the Paying Agent a corpus consisting of cash
and BOKF Notes sufficient in the aggregate for the Paying Agent to make full
payment of the Closing Consideration to the holders of all outstanding shares of
Chaparral Common (other than Dissenting Shares).
(b) At least twenty (20) days prior to the Effective Time, the Paying
Agent shall mail, without any further action on the part of BOKF or Chaparral,
to each record holder of the Certificates, addressed to the most current address
of such shareholders according to the records of Chaparral, a letter of
transmittal (and instructions) for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. Each such letter (the
"Merger Transmittal Letter") shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon proper delivery
of the Certificates to the Paying Agent and shall be in such form and have such
other provisions as BOKF may reasonably specify. If a holder of the Chaparral
Common surrenders the Certificates representing shares of such stock and a
properly executed Merger Transmittal Letter to the Paying Agent at least three
(3) business days prior to the Closing Date, then on the Closing Date, the
Paying Agent shall pay to such shareholder the Closing Consideration with
respect to such shares of Chaparral Common. If a holder of the Chaparral Common
surrenders the Certificates representing shares of such stock and a properly
executed Merger Transmittal Letter to the Paying Agent at any time after three
(3) business days prior to the Closing Date, then promptly, and in no event
later than three (3) business days after receipt of such Certificates and Merger
Transmittal Letter, the Paying Agent shall pay to such shareholder the Closing
Consideration with respect to such shares of Chaparral Common. No interest on
the Closing Consideration issuable upon the surrender of the Certificates shall
be paid or accrued for the benefit of holders of Certificates (other than any
interest on the BOKF Notes in accordance with their terms). If the Merger
Consideration is to be issued to a person other than a person in whose name a
surrendered Certificate is registered, it shall be a condition of issuance that
the surrendered Certificate shall be properly endorsed or otherwise executed in
proper form for transfer and that the person requesting such issuance shall pay
to the Paying Agent any required transfer or other taxes or establish to the
satisfaction of the Paying Agent that such tax has been paid or is not
applicable.
(c) With respect to any shares of Chaparral Common that are acquired as
a result of the exercise of the Stock Options, the purchase price for such
shares under the Stock Options shall be subtracted from or "netted-out" of the
Merger Consideration to be paid such shareholders in order to provide for a
cashless exercise of the Stock Options. That is, upon the exercise of the Stock
Options such option holder shall not be required to pay Chaparral the purchase
price specified in the Stock Options, but such amount shall be deducted from the
amount of Merger Consideration that would otherwise have been paid to such
option holder.
(d) After the Effective Time, there shall be no further registration or
transfers on the records of Chaparral of outstanding certificates formerly
representing shares of Chaparral Common and, if a certificate formerly
representing such shares is presented to Chaparral or BOKF, it shall be
forwarded to the Paying Agent for cancellation and exchange for the Merger
Consideration.
<PAGE>
(e) All Merger Consideration paid upon the surrender of Chaparral
Common in accordance with the above terms and conditions shall be deemed to have
been paid in full satisfaction of all rights pertaining to such shares of
Chaparral Common.
(f) In the event any certificate for Chaparral Common shall have been
lost, stolen or destroyed, the Paying Agent shall issue in exchange for such
lost, stolen or destroyed certificate, such Merger Consideration as may be
required pursuant to this Agreement; provided, however, that BOKF may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate to deliver an affidavit of
lost certificate and indemnification agreement in form reasonably acceptable to
BOKF.
(g) At any time following six months after the Effective Time, BOKF
shall be entitled to terminate the Paying Agent relationship, and thereafter
holders of Certificates shall be entitled to look only to BOKF (subject to
abandoned property, escheat or other similar laws) with respect to the Closing
Consideration payable upon surrender of their Certificates.
Section 1.7. The CCFC Escrow and Sale of the CCFC Assets.
(a) Schedule 1.7 sets forth, as of February 16, 1999, a list of certain
assets of CCNB (the "CCFC Assets"), the value of such assets on the books and
records of CCNB as of such date (the "Book Value") and the tax basis of such
assets on the books and records of CCNB as of such date (the "Tax Basis"). From
and after the date of this Agreement, Chaparral shall cause CCNB to use
reasonable, good faith efforts to collect or sell all of the CCFC Assets prior
to the Closing Date for such amounts and at such times as Chaparral may
determine. With the consent of BOKF, which consent shall not be unreasonably
withheld, CCNB may sell certain fixed assets currently used by the Bank in
collecting or servicing the CCFC Assets, or enter into contracts to lease space
or provide data processing services to the purchaser of all or substantially all
of the CCFC Assets.
(b) If all of the CCFC Assets are not collected or sold by CCNB prior
to the Effective Time, prior to the Effective Time, Chaparral shall incorporate
Canyon Creek Financial Corporation ("CCFC") as a Texas corporation, with the
shares of stock of CCFC to be issued in trust for the benefit of the
shareholders of Chaparral as of the Effective Time in proportion to such
holder's ownership of the stock of Chaparral. The persons who are members of the
Board of Directors of Chaparral immediately prior to the Closing shall serve as
directors of CCFC.
(c) If all of the CCFC Assets are not collected or sold by CCNB prior
to the Effective Time, at the Effective Time, BOKF shall establish an escrow
account (the "CCFC Escrow") with Bank of Texas Trust Company, National
Association (the "Escrow Agent"). The CCFC Escrow shall be governed by an escrow
agreement, the form of which is attached hereto as Exhibit "B" (the "CCFC Escrow
Agreement", which shall provide as follows:
(i) At the Effective Time, BOKF shall deposit an amount
equal to the aggregate Tax Basis of the CCFC Assets owned by CCNB as of
the Effective Time into the CCFC Escrow (the "CCFC Escrow Funds").
<PAGE>
(ii) At the Effective Time, CCFC will purchase the CCFC Assets
from CCNB and CCNB shall sell the CCFC Assets to CCFC at such place as
BOKF may determine for a price equal to the aggregate Tax Basis of the
CCFC Assets owned by CCNB as of the Effective Time (the "CCFC Assets
Purchase Price") out of the CCFC Escrow Funds. The CCFC Assets shall be
sold by CCNB to CCFC without recourse and in an "as is" condition
without any representations or warranties of any kind, other than title
to the CCFC Assets. The sale and purchase of the CCFC Assets will be
effected by appropriate documentation, which will be in form and
substance reasonably acceptable to counsel for CCFC and BOKF. After
consummation of the sale and purchase of the CCFC Assets and after
payment of the CCFC Assets Purchase Price to CCNB, the Escrow Agent,
the CCFC Escrow Agreement shall terminate.
(iii) BOKF shall pay the fees and costs of the Escrow Agent
with respect to the CCFC Escrow.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF CHAPARRAL
In order to induce BOKF and BOKSub to enter into, execute, deliver and
perform this Agreement, Chaparral represents and warrants to BOKF and BOKSub as
follows:
Section 2.1. Organization, Standing and Power.
(a) Chaparral is a corporation duly organized, validly existing and in
good standing under laws of the State of Texas. Chaparral (i) has all requisite
power and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted; (ii) is subject to the supervision of the
Board of Governors of the Federal Reserve System (the "Fed"); and (iii) is a
bank holding company registered with the Fed under the BHCA.
(b) Delaware is a corporation duly organized, validly existing and in
good standing under laws of the State of Delaware. Delaware (i) has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted; (ii) is subject to the
supervision of the Fed; and (iii) is a bank holding company registered with the
Fed under the BHCA.
(c) CCNB is a national banking association duly organized, validly
existing and in good standing under laws of the United States. CCNB (i) has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted; (ii) is subject to the
supervision of the Federal Deposit Insurance Corporation ("FDIC") and the Office
of the Comptroller of the Currency ("OCC"); and (iii) is an insured bank as
defined in the Federal Deposit Insurance Act.
<PAGE>
(d) Chaparral has delivered to BOKF and BOKSub complete and correct
copies, as of a date not more than 30 days prior to the date hereof, of (i) the
Articles of Association or Incorporation and all amendments thereto, and (ii)
the Bylaws and all amendments thereto, of each of Chaparral, Delaware and CCNB.
Section 2.2. Capital Structure.
(a) The authorized capital stock of Chaparral consists of 5,000,000
shares of Common Stock, par value $1.00 per share and 5,000,000 shares of
preferred stock, no par value per share. As of the date of this Agreement,
1,883,612 shares of Chaparral Common were outstanding (net of shares held by
Chaparral in treasury) and such issued and outstanding shares of Chaparral
Common are held of record by the shareholders in the amounts specified for each
such shareholder in Schedule 2.2(a). Chaparral does not have any outstanding
shares of preferred stock nor any commitment or obligation to repurchase,
reacquire or redeem any of the outstanding Chaparral Common. As of the date of
this Agreement, Chaparral had outstanding stock options granted, pursuant to the
Chaparral Employee Stock Option Plan and the Stock Option Plan for Directors,
representing the right to acquire an aggregate of 136,128 shares of Chaparral
Common (the "Stock Options"). Schedule 2.2 (b) sets forth the name of each
person that has been granted Stock Options, the number of shares that may be
acquired as of the date of this Agreement by each such person and the exercise
price of such Stock Options. The Chaparral Common is validly issued and
outstanding, fully paid and non-assessable. Except for the Stock Options, there
are no outstanding subscriptions, conversion privileges, calls, warrants,
options, commitments or agreements of any character obligating Chaparral to
issue, sell, or dispose of any shares of any of its capital stock.
(b) The authorized capital stock of Delaware consists solely of 300
shares of common stock, par value $1.00 per share (the "Delaware Common Stock").
As of the date of this Agreement, 300 shares of Delaware Common Stock were
issued and outstanding, and all of such outstanding shares are held of record by
Chaparral. There are no outstanding subscriptions, conversion privileges, calls,
warrants, option, commitments or agreements obligating Delaware to issue, sell,
or dispose of any shares of any of its capital stock.
(c) The authorized capital stock of CCNB consists of 15,000,000 shares
of common stock, par value $1.00 per share (the "CCNB Common Stock"), and
10,000,000 shares of preferred stock, par value $1.00 per share. As of the date
of this Agreement, 1,443,600 shares of CCNB Common Stock were issued and
outstanding, all of which are held of record by Delaware. There are no
outstanding shares of preferred stock, nor any subscriptions, conversion
privileges, calls, warrants, options, commitments or agreements obligating CCNB
to issue, sell, or dispose of any shares of any of its capital stock.
<PAGE>
Section 2.3. Authority. Subject to the approval of this Agreement by
the shareholders of Chaparral as contemplated by Section 5.6 hereof, the
execution and delivery of this Agreement and the consummation of the Merger
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of Chaparral. Neither the execution and delivery of
this Agreement nor the consummation of the Merger contemplated hereby nor
compliance by Chaparral with any of the provisions hereof will (i) conflict with
or result in a breach of any material provision of its Articles of Incorporation
or Bylaws or constitute a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any material note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which Chaparral is a party, or by which it or any of
its properties or assets may be bound, except for such conflict, breach or
default as to which requisite waivers or consents either shall have been
obtained by Chaparral by the Effective Time or the obtaining of which shall have
been waived by BOKF, or (ii) violate any material order, writ, injunction,
decree, statute, rule or regulation applicable to Chaparral or any of its
properties or assets. No other consent or approval by any governmental
authority, other than compliance with applicable federal and state securities
and banking laws and regulations of the Fed, is required in connection with the
execution and delivery by Chaparral of this Agreement or the consummation by
Chaparral of the Merger contemplated hereby.
Section 2.4. Financial Statements.
(a) Chaparral has previously delivered or made available to BOKF
complete copies of the (i) audited consolidated balance sheets of Chaparral,
Delaware and CCNB as of December 31, 1997 and related consolidated income
statements and statement of changes in shareholders' equity, together with the
notes thereto; (ii) unaudited consolidated balance sheet of Chaparral, Delaware
and CCNB as of December 31, 1998 and the related unaudited consolidated income
statement for the twelve months then ended; and (iii) the Reports of Condition
and Income of CCNB as filed with the OCC for each of the quarterly periods
during 1998 (collectively the "Financial Statements").
(b) The information set forth in the Financial Statements presents
fairly the financial position of Chaparral, Delaware and CCNB as of the dates
thereof and the results of their operations and the changes in their financial
position for the periods indicated in conformity with generally accepted
accounting principles applied on a consistent basis, except the interim
statements are subject to normal year-end adjustments. Such Financial Statements
do not, as of the dates thereof, include any material assets or omit to state
any material liabilities, absolute or contingent, or include or omit other
facts, the inclusion or omission of which renders such Financial Statements, in
light of the circumstances under which they were made, misleading in any
material respect; provided, however, the interim statements are subject to
normal year-end adjustments.
<PAGE>
Section 2.5. Absence of Changes. Since December 31, 1998, there has not
been any material adverse change in the condition (financial or otherwise) of
the assets, liabilities, earnings or business of Chaparral, Delaware or CCNB.
Since such date, the business of Chaparral, Delaware and CCNB has been conducted
only in the ordinary course consistent with prior practices and such entities
have not incurred any additional material liabilities (not already reflected in
the Financial Statements) except: (i) those incurred in the ordinary course of
business consistent with past practices without negligence or willful
malfeasance, or (ii) expenses or liabilities incurred in connection with this
Agreement and the transactions contemplated hereby. Without limiting the
generality of the foregoing, since December 31, 1998, except as permitted by
this Agreement, none of Chaparral, Delaware, or CCNB have paid any dividends,
made any distributions of assets, made any material changes in compensation or
benefits of any employee (other than by reason of promotion to increased
responsibility), or entered into any contracts for services or materials except
such contracts and materials which either: (i) may be terminated without penalty
within 90 days or, (ii) provide for the payment or other consideration to be
furnished by Chaparral, Delaware or CCNB in an amount of not more than $25,000,
individually or $100,000 for all such contracts and materials. Notwithstanding
the foregoing, any changes in banking laws, generally accepted accounting
principles, prevailing interest rates or other developments which affect the
entire banking industry generally shall not be deemed to have a material adverse
effect in the financial condition, the results of operations or the business of
Chaparral, Delaware or CCNB.
Section 2.6. Tax Matters.
(a) Chaparral, Delaware and CCNB have timely filed all federal, state
and local (and, if applicable, foreign) income, franchise, bank, excise, real
property, personal property and other tax returns required by applicable laws to
be filed by them (including, without limitation, estimated tax returns, income
tax returns, information returns and withholding and employment tax returns) and
have paid, or where payment is not required to have been made, have set up an
adequate reserve or accrual for the payment of, all taxes required to be paid
with respect of the periods covered by such returns and, as of the Effective
Time, will have paid, or where payment is not required to have been made, will
have set up an adequate reserve or accrual for the payment of, all taxes for any
subsequent periods ending on or prior to the Effective Time. None of Chaparral,
Delaware nor CCNB will have any material liability for any such taxes in excess
of the amounts so paid or reserves or accruals so established. No payment of any
amount to any employee of any of Chaparral, Delaware, or CCNB is an excess
parachute payment within the meaning of Section 280G of the Code.
(b) All federal, state and local income, franchise, bank, excise, real
property, personal property and other tax returns filed by Chaparral, Delaware
and CCNB are complete and accurate in all material respects. None of Chaparral,
Delaware nor CCNB is delinquent in the payment of any tax, assessment or
governmental charge, and none of them has requested any extension of time within
which to file any tax returns in respect of any fiscal year or portion thereof
which have not since been filed. There are currently no agreements in effect
with respect to Chaparral, Delaware or CCNB to extend the period of limitations
for the assessment or collection of any tax. As of the date hereof, no audit,
examination or deficiency or refund litigation with respect to any such return
is pending or, to Chaparral's knowledge, threatened.
Section 2.7. Property. Chaparral, Delaware and CCNB own all property
reflected on the balance sheet dated December 31, 1998 included in the Financial
Statements (except personal property sold or otherwise disposed of since
December 31, 1998, in the ordinary course of business), free and clear of all
mortgages, liens, pledges, charges or encumbrances of any nature whatsoever,
except those reflected in the Financial Statements, liens for current taxes not
yet due and payable and such encumbrances and imperfections of title, if any, as
are not substantial in character or amount or do not otherwise materially impair
business operations.
<PAGE>
Section 2.8. Legal Proceedings. There is no material legal,
administrative, arbitration or other proceeding or governmental investigation
pending or, to Chaparral's knowledge, threatened which might reasonably be
expected to result in material money damages payable by Chaparral, Delaware or
CCNB in excess of insurance coverage or in a permanent injunction against
Chaparral, Delaware or CCNB. To Chaparral's knowledge, each of Chaparral,
Delaware and CCNB have complied with, and are not in default in any material
respect under, any laws, ordinances, requirements, regulations or orders
applicable to their business. None of Chaparral, Delaware or CCNB is a party to
any agreement or instrument or subject to any charter or other corporate
restriction or any judgment, order, writ, injunction, or decree, which
materially and adversely affects, or might reasonably be expected materially and
adversely to affect, the business operations, properties, assets or condition,
financial or otherwise, of Chaparral, Delaware or CCNB.
Section 2.9. Brokers and Finders. None of Chaparral, its subsidiaries
or any of its officers, directors or employees has employed any broker or finder
or incurred any liability for any brokerage fees, commissions or finders' fees
in connection with the Merger contemplated herein.
Section 2.10. Loan Portfolio. Except as to any breach that would not
have a material adverse effect on the consolidated financial position of
Chaparral, Delaware and CCNB, (i) all loans and discounts shown on the Financial
Statements at December 31, 1998 or which were entered into after December 31,
1998, but before the Closing Date were and will be made in all material respects
for good, valuable and adequate consideration in the ordinary course of CCNB, in
accordance in all material respects with sound banking practices, and are not
subject to any material known defenses, setoffs or counterclaims, including
without limitation any such as are afforded by usury or truth in lending laws,
except as may be provided by bankruptcy, insolvency or similar laws or by
general principles of equity; (ii) the notes or other evidences of indebtedness
evidencing such loans and all forms of pledges, mortgages and other collateral
documents and security agreements are and will be, in all material respects,
enforceable, valid, true and genuine and what they purport to be; and (iii)
Chaparral, Delaware and CCNB have complied and will prior to the Closing Date
comply with all laws and regulations relating to such loans, or to the extent
there has not been such compliance, such failure to comply will not materially
interfere with the collection of any such loan. Notwithstanding the foregoing,
BOKF acknowledges and agrees that it has made its own determination as to the
collectibility of the loan portfolio of Chaparral and CCNB.
<PAGE>
Section 2.11. Environmental. To Chaparral's knowledge, the ownership,
location, construction, use and operation of all real property owned or leased
by Chaparral or CCNB (fixed asset or OREO) is, and has at all times been, in
material compliance with applicable Environmental Law, as hereinafter defined.
Delaware does not own or lease any real property and has not since its
incorporation. To Chaparral's knowledge, there are no pending or threatened, and
there have been no administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or violation,
investigations or proceedings relating in any way to any Environmental Law
relating to the real property owned by Chaparral or CCNB. To Chaparral's
knowledge, (i) no real property owned by Chaparral or CCNB has at any time been
used by Chaparral or CCNB, or by any person, as a landfill or for the storage or
disposal, or as a site of spilling, dumping, depositing or otherwise disposing
of, any hazardous or toxic substances or waste; and (ii) no real property owned
by Chaparral or CCNB is, or has been, an industrial site or landfill. For the
purposes hereof, "Environmental Law" means any federal, state or local statute,
law, rule, regulation, ordinance, code, policy or rule of common law now in
effect and in each case as amended and any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent,
decree or judgment, relating to the environment, health, safety or "hazardous
materials," "hazardous wastes," "toxic substances," "toxic pollutants,"
"contaminants," or words or terms of similar import (including under any
Environmental Law), including without limitation the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. 9601 et
seq., the Hazardous Materials Transportation Act, as amended, 49 U.S.C. 1801 et
seq., the Resource Conservation and Recovery Act, as amended, 42 U.S.C. 6901 et
seq., the Federal Water Pollution Control Act, as amended, 33 U.S.C. 1251 et
seq., the Toxic Substances Control Act, 15 U.S.C. 2601 et seq., the Clean Air
Act, 42 U.S.C. 7401 et seq., the Safe Drinking Water Act, 42 U.S.C. 3808 et
seq., the Texas Solid Waste Disposal Act, Tex. Health & Safety Code Ann. Ch.
361, the Texas Clean Air Act, Tex. Health & Safety Code Ann. Ch. 382, the Texas
Water Code, Tex. Water Code Ann., and the Texas Hazardous Substances Spill
Prevention and Control Act, Tex. Water Code Ann.
Section 2.12. Zoning and Related Laws. To Chaparral's knowledge, all
real property owned or leased by Chaparral or CCNB and the use thereof complies
with all applicable laws, ordinances, regulations, orders or requirements,
including without limitation, building, zoning and other laws, except as to any
violations which would not have a material adverse affect on the financial
condition of Chaparral or CCNB.
Section 2.13. Compliance with Law. Chaparral, Delaware and CCNB have
all licenses, franchises, permits and other governmental authorizations that are
legally required to enable them to conduct their respective businesses in all
material respects and are in compliance with all applicable laws and regulations
except to the extent that the failure to so comply could not have a material
adverse effect on Chaparral, Delaware or CCNB.
Section 2.14. Agreements with Regulatory Agencies. None of Chaparral,
Delaware nor CCNB is subject to any cease-and-desist or other order issued by,
or a party to any written agreement or memorandum of understanding with or is a
party to any commitment letter or similar undertaking to, or is subject to any
order or directive, or is a recipient of any extraordinary supervisory letter
from, or has adopted any board resolutions at the request of (each a "Regulatory
Agreement") any regulatory agency that materially restricts the conduct of its
business or that in any manner relates to its capital adequacy, its credit
policies, its management or its business, nor have Chaparral, Delaware or CCNB
been advised by any regulatory agency that it is considering issuing or
requesting any Regulatory Agreement.
<PAGE>
Section 2.15. Employees. Except as set forth in Schedule 2.15 attached
hereto, (i) none of the employees of Chaparral, Delaware, or CCNB is employed
under any employment contract (oral or written) which will survive the Merger
and (ii) none of Chaparral, Delaware, or CCNB have any employee benefit plans.
Section 2.16. Contracts and Commitments. A list of all contracts and
commitments, other than deposit, safe deposit, credit and lending transactions
entered into in the ordinary course of CCNB's banking business, which are
material to the business, operations, or financial condition of Chaparral,
Delaware, or CCNB as of this date is set forth in Schedule 2.16. For the purpose
of Schedule 2.16, materiality shall mean those contracts and commitments for
which payment or other consideration to be furnished by Chaparral, Delaware, or
CCNB is more than $25,000. Chaparral, Delaware, and CCNB have performed in all
material respects and are performing all material contractual and other
obligations required to be performed by them.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BOKF
In order to induce Chaparral to enter into, execute, deliver and
perform this Agreement, BOKF represents and warrants to Chaparral as follows:
Section 3.1. Organization, Standing and Power. BOKF is a corporation
duly organized, validly existing and in good standing under the State of
Oklahoma. BOKF (i) has all requisite power and authority to execute and deliver
this Agreement and to perform its obligations hereunder, and to own, lease and
operate its properties and to carry on its business as now being conducted; and
(ii) is a bank holding company registered with the Fed under the BHCA.
<PAGE>
Section 3.2. Authority. The execution and delivery of this Agreement,
the consummation of the Merger and payment of the Merger Consideration
(including issuance and delivery of the BOKF Notes) and the other transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of BOKF. This Agreement has been duly executed by
BOKF and constitutes the valid and binding obligation of BOKF, enforceable in
accordance with its 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). Neither the execution and delivery of this
Agreement nor the consummation of the Merger and payment of the Merger
Consideration (including issuance and delivery of the BOKF Notes) and the other
transactions contemplated hereby nor compliance by BOKF with any of the
provisions hereof will (i) conflict with or result in a breach of any provision
of its Articles of Incorporation or Bylaws or constitute a default (or give rise
to any right of termination, cancellation or acceleration) under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation to which BOKF is a party, or by
which it or any of its properties or assets may be bound except for such
conflict, breach or default as to which requisite waivers or consents either
shall have been obtained by BOKF by the Effective Time, or the obtaining of
which shall have been waived by Chaparral, or (ii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to BOKF or any of its
properties or assets. No consent or approval by any governmental authority,
other than compliance with applicable federal and state securities and banking
laws and regulations of the Fed, is required in connection with the execution
and delivery by BOKF of this Agreement or the consummation by BOKF of the Merger
and payment of the Merger Consideration (including issuance and delivery of the
BOKF Notes) and the other transactions contemplated hereby.
Section 3.3. Subsidiaries. Each of BOKF's subsidiaries is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the corporate power to own its
respective properties and assets, to incur its respective liabilities and to
carry on its respective business as now being conducted.
Section 3.4. Financial Information. The consolidated balance sheets of
BOKF and its subsidiaries as of December 31, 1997 and related consolidated
statements of income, changes in stockholders' equity and cash flows for the
three years ended December 31, 1997, together with the notes thereto, included
in BOKF's 10-K for the year ended 1997, as currently on file with the Securities
and Exchange Commission ("SEC") and the unaudited consolidated balance sheet of
BOKF and its subsidiaries as of September 30, 1998, and the related unaudited
consolidated income statement and statements of changes in stockholders' equity
and cash flows for the nine months then ended included in BOKF's Quarterly
Report on Form 10-Q for the quarter then ended, as currently on file with the
SEC (together the "BOKF Financial Statements"), have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
(except as disclosed therein) and fairly present the consolidated financial
position and the consolidated results of operations, changes in stockholders'
equity and cash flows of BOKF and its consolidated subsidiaries as of the dates
and for the periods indicated (subject, in the case of interim financial
statements, to normal recurring year-end adjustments, none of which will be
material).
Section 3.5. Absence of Changes. Since September 30, 1998, there has
not been any material adverse change in the financial condition, the results of
operations or the business of BOKF and its subsidiaries taken as a whole, nor
have there been any events or transactions having such a material adverse effect
which should be disclosed in order to make the BOKF Financial Statements not
misleading. Notwithstanding the foregoing, any changes in banking laws,
generally accepted accounting principles, prevailing interest rates or other
developments which affect the entire banking industry generally shall not be
deemed to be a material adverse change in the financial condition, the results
of operations or the business of BOKF and its subsidiaries taken as a whole.
Section 3.6. Litigation. There is no litigation, claim or other
proceeding pending or, to the knowledge of BOKF, threatened, against BOKF or any
of its subsidiaries, of which the property of BOKF or any of its subsidiaries is
or would be subject which if adversely determined would have a material adverse
effect on the business of BOKF and its subsidiaries taken as a whole.
<PAGE>
Section 3.7. Reports. Since January 1, 1993 (in the case of
subsidiaries of BOKF, the date of acquisition thereof by BOKF, if later) BOKF
and each of its significant subsidiaries has filed all reports and statements,
together with any amendments required to be made with respect thereto, that it
was required to file with (i) the SEC, (ii) the Fed, (iii) the OCC, (iv) the
FDIC, (v) any applicably state securities or banking authorities, (vi) NASDAQ
and (vii) any other governmental authority with jurisdiction over BOKF or any of
its significant subsidiaries. As of their respective dates, each of such reports
and documents, as amended, including the financial statements, exhibits and
schedules thereto, complied in all material respects with the relevant statutes,
rules and regulations enforced or promulgated by the regulatory authority with
which they were filed, and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
Section 3.8. Compliance With Law. BOKF and its significant subsidiaries
have all licenses, franchises, permits and other governmental authorizations
that are legally required to enable them to conduct their respective businesses
in all material respects and are in compliance with all applicable laws and
regulations, except to the extent that the failure to so comply would not have a
material adverse effect on BOKF and its subsidiaries taken as a whole.
Section 3.9. Regulatory Approvals. BOKF is not aware of any matter
(including, but not limited to, compliance with capital adequacy guidelines
adopted by the Fed, the Community Reinvestment Act, and FFIEC Interagency
guidelines establishing year 2000 standards) that would delay or prevent BOKF
from obtaining all requisite regulatory approvals necessary to consummate the
Merger as set forth in this Agreement.
Section 3.10. BOKF Notes. The BOKF Notes when issued and delivered
pursuant to the terms of this Agreement, will constitute the valid and binding
obligations of BOKF enforceable in accordance with their terms, except as
enforcement may be limited by applicable bankruptcy, reorganization, insolvency,
moratorium, or similar laws affecting the enforcement of creditors' rights.
Section 3.11 Ability to Pay Merger Consideration. BOKF will have
available to it as of the Closing Date, as a result of dividends or
distributions from its subsidiaries or borrowings on its existing line of
credit, sufficient cash to pay the Merger Consideration as set forth in Section
1.5 to the shareholders of Chaparral.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BOKSUB
In order to induce Chaparral to enter into, execute, deliver and
perform this Agreement, BOKSub represents and warrants to Chaparral as follows:
Section 4.1. Organization, Standing and Power. BOKSub is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Texas, with all requisite power and authority to own, lease and operate
its properties and to carry on its business as now being conducted.
<PAGE>
Section 4.2. Authority. The execution and delivery of this Agreement
and the consummation of the Merger contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of BOKSub.
Neither the execution and delivery of this Agreement, the consummation of the
Merger contemplated hereby nor the compliance by BOKSub with any of the
provisions hereof will (i) conflict with or result in a breach of any provision
of its Articles of Incorporation or Bylaws or constitute a default (or give rise
to any right of termination, cancellation or acceleration) under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation to which BOKSub is a party, or by
which it or any of its properties or assets may be bound except for such
conflict, breach or default as to which requisite waivers or consents either
shall have been obtained by BOKSub by the Effective Time, or the obtaining of
which shall have been waived by BOKSub, or (ii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to BOKSub or any of
its properties or assets. No consent or approval by any governmental authority,
other than those required by applicable federal and state securities and banking
laws and regulations is required in connection with the execution and delivery
by BOKSub of this Agreement.
ARTICLE V
PRE-CLOSING COVENANTS
Section 5.1. Access to Records and Properties of Chaparral.
(a) Between the date of this Agreement and the Effective Time,
Chaparral agrees to give BOKF reasonable access to all of its and CCNB's
premises, books, records (including tax returns filed and those in preparation),
financial information and other information pertinent to its operations,
including, without limitation, access to independent auditors with respect to
the preparation of the financial statements and tax planning of Chaparral and
CCNB; provided, however, that any such investigation shall be conducted in such
manner as not to interfere unreasonably with the operation of the business of
Chaparral or CCNB. Chaparral will cooperate fully in permitting BOKF to make a
full investigation of the business, properties, financial condition and
investments of Chaparral and CCNB, in the preparation of all applications,
reports and other documents necessary or advisable for the successful
consummation of the Merger.
<PAGE>
(b) BOKF will treat and hold confidential any information concerning
the business and affairs of Chaparral, Delaware or CCNB that is not generally
available to the public ("Confidential Information") it receives from any of
Chaparral, Delaware, CCNB, or their respective shareholders, officers, directors
or agents, in the course of its review of Chaparral, Delaware or CCNB. BOKF will
not use any of the Confidential Information except in connection with this
Agreement. If this Agreement is terminated for any reason whatsoever, BOKF and
BOKSub will promptly return to Chaparral, Delaware or CCNB, as the case may be,
all tangible embodiments (and all copies) of the Confidential Information which
are in its possession, and will not at any time use any Confidential Information
for any business purpose or disclose it to any third party. Any information
provided to BOKF by Chaparral, Delaware or CCNB shall not be deemed to be
Confidential Information if: (i) it was in BOKF's lawful possession or within
BOKF's knowledge at the time of disclosure; (ii) at the time of disclosure, it
was in the public domain; (iii) after Chaparral's disclosure, it becomes,
through no act or omission on BOKF's part, in the public domain; or (iv) it was
lawfully and independently obtained by BOKF from a third party who was not under
an obligation of confidentiality.
Section 5.2. Operation of the Business of Chaparral. Chaparral agrees
that from the date hereof to the Effective Time, except as contemplated by this
Agreement or to the extent that BOKF shall otherwise consent (which consent
shall not be unreasonably withheld),
(a) Chaparral will operate its business substantially as presently
operated and only in the ordinary course, and, consistent with such operation,
it will use its reasonable best efforts to preserve intact its present business
organization and its relationships with persons having business dealings with
it.
(b) Chaparral will maintain and keep its properties in as good repair
and condition as at present, except for depreciation due to ordinary wear and
tear and damage due to casualty, maintain in full force and effect insurance
comparable in amount and scope of coverage to that now maintained, perform all
its obligations under contracts, leases and documents relating to or affecting
its assets, properties and business, and fully comply with and perform all
material obligations and duties imposed upon it by applicable laws and
governmental rules, regulations and orders imposed by governmental authorities.
(c) Except as expressly permitted by subsections (e), (f) and (g)
below, Chaparral will not, other than in the ordinary course of business and
consistent with Chaparral's or CCNB's prior practices, (i) grant any material
salary increase to any officer or employee or enter into any new bonus,
incentive compensation, deferred compensation, profit sharing, retirement,
pension, group insurance or other benefit plan or any new employment or
consulting agreement; (ii) create or otherwise become liable with respect to any
indebtedness for money borrowed or purchase money indebtedness; (iii) make or
allow any amendment of its Articles of Association, Articles of Incorporation or
Bylaws; (iv) issue or contract to issue any shares of Chaparral Common or
securities exchangeable for or convertible into Chaparral Common, except in
connection with the exercise of the Stock Options; (v) purchase any shares of
Chaparral Common; (vi) enter into or assume any material contract or obligation;
(vii) incur a lien on any of its properties either real or personal; (viii) make
any substantial renovation of any of its properties or enter into any lease or
agreement involving any substantial obligation; or (ix) waive any right of
substantial value.
(d) From January 1, 1998, until the Closing Date, Chaparral will not
pay total dividends exceeding the amount of earnings at Chaparral, on a
consolidated basis, during such period, and Chaparral will not permit CCNB to
pay any dividend that would cause CCNB to no longer be "well capitalized" under
applicable federal capital adequacy guidelines.
<PAGE>
(e) Notwithstanding anything in this Agreement to the contrary, (i) the
Stock Options may be exercised and Chaparral may issue Chaparral Common in
connection therewith and otherwise perform its obligations thereunder; (ii) the
Stock Option exercise dates may be extended in the discretion of Chaparral
subject to the provisions of this Agreement respecting the exercise of such
Stock Options in connection with the consummation of the Merger; and (iii) upon
the exercise of the Stock Options, Chaparral may make bonus payments in an
aggregate amount not to exceed $650,000 to option holders who have exercised
Stock Options within a period of one year prior to the Closing Date.
(f) Notwithstanding anything in this Agreement to the contrary,
Chaparral may pay bonuses (in addition to any bonuses paid pursuant to Sections
5.2(e) and 5.2(g)) in amounts not to exceed $175,000 for 1998 and not to exceed
$218,750 for 1999.
(g) Notwithstanding anything in this Agreement to the contrary,
Chaparral may commit to pay to certain key employees of Chaparral or CCNB (who
do not enter into employment or noncompetition agreements) an aggregate amount
of $32,500 in consideration of such employees entering into retention agreements
whereby such employees would continue their employment with Chaparral or CCNB at
least through the earlier of (i) June 30, 2000 or (ii) the date of the data
processing conversion of CCNB to the data processing system used by Bank of
Texas, National Association ("BOT").
Section 5.3. Regulatory Approvals and Cooperation.
(a) BOKF and BOKSub shall promptly, but in no event later than twenty
(20) days after the date of this Agreement, file or cause to be filed
applications to fulfill all governmental, regulatory and other requirements
(including, without limitation, obtaining the approval of the OCC, the FDIC, the
Fed, SEC and/or any other governmental entity having jurisdiction over
Chaparral, Delaware, CCNB or BOKF and pay all fees and expenses associated
therewith) required by BOKF or BOKSub for the completion of the transaction
contemplated by this Agreement; and promptly furnish Chaparral with copies of
all such regulatory filings.
(b) Chaparral shall take all action necessary and fully cooperate in
good faith with BOKF and BOKSub to bring about the Merger contemplated by this
Agreement as soon as practicable. Chaparral will give any notices to third
parties, and Chaparral will use its best efforts to obtain any third party
consents, that BOKF may reasonably request in connection with the consummation
of the Merger.
Section 5.4. Public Disclosure. None of BOKF, BOKSub, Chaparral, nor
any representative of said parties, will make any public disclosure concerning
this Agreement or the Merger contemplated herein without the mutual consent of
each of the other parties hereto to the timing and content of the disclosure;
provided, however, the parties hereto may make any disclosure (i) necessary to
maintain compliance with applicable federal or state laws or regulations, (ii)
required in connection with the making of any application necessary to effect
the Merger, or (iii) as contemplated by Section 5.6.
Section 5.6. Shareholder Approval. Chaparral, acting through its Board of
Directors, shall, in accordance with applicable law:
<PAGE>
(a) Duly call, give notice of, convene and hold a meeting of its
shareholders on a date mutually selected by BOKF and Chaparral (the
"Shareholders's Meeting") for submission of this Agreement and the Merger for
approval of such shareholders as required by the TBCA, and
(b) Subject to its fiduciary duties to the shareholders of Chaparral,
include in the Proxy Statement (as defined below) the recommendation of its
Board of Directors that the shareholders of Chaparral vote in favor of the
approval and adoption of the Agreement and the Merger and
(c) Cause the Proxy Statement to be mailed to the shareholders of
Chaparral as soon as practicable, and take such other action as is reasonably
necessary to obtain approval of the Agreement and the Merger from its
shareholders. 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 BOKF and are collectively referred to herein as the "Proxy Statement."
Section 5.7. No Solicitation. Prior to the Effective Time, unless this
Agreement is sooner terminated, Chaparral shall not directly or indirectly (i)
solicit or encourage inquiries or proposals with respect to the merger of
Chaparral or the sale of any of the shares of Chaparral Common or other material
asset(s) of Chaparral from any party other than BOKF, or (ii) merge with any
party or sell any of the shares of Chaparral Common or material asset(s) of
Chaparral to any party except as set forth in this Agreement.
Section 5.8. Restrictions on Indebtedness. Chaparral agrees that from
the date hereof to the Effective Time, except as contemplated by this Agreement,
Chaparral shall not incur any indebtedness for borrowed money or incur any
noncurrent indebtedness for the purchase price of any fixed or capital asset, or
make any extension of credit or any loans to, guarantee the obligations of, or
make any additional investments in, any other person, corporation or joint
venture (whether an existing customer or a new customer) except:
(a) Extensions of credit, loans and guarantees (i) less than $300,000
per transaction or (ii) less than $100,000 with existing customers having
existing credit of $300,000 or more made by CCNB in the usual and ordinary
course of its banking business, consistent with prior practices and policies,
provided, however, that the consent of BOKF shall be deemed to have been given
unless earlier given or denied in writing (i) with respect to any loan presented
at a regularly scheduled meeting of CCNB's Executive Loan Committee, at the
later of 3:00 p.m. on the business day of such meeting or the adjournment of
such meeting, provided that all information provided to the members of CCNB's
Executive Loan Committee with respect to such loan is delivered to BOKF at the
same time it is delivered to such committee members, and (ii) with respect to
all other loans, at the close of business on the next business day after BOKF's
consent is requested and all information relating to the making, renewal or
alteration of such loan is furnished to BOKF.
(b) Legal investments by CCNB in the usual and ordinary course of its
banking business consistent with prior practices and policies.
<PAGE>
(c) Borrowings from the Federal Home Loan Bank, the Federal Reserve
Bank, deposit liabilities, and federal funds transactions by CCNB in the
ordinary course of business consistent with past practices.
Section 5.9 Audited Financial Statements. Within five (5) business days
after receipt thereof from Chaparral's auditors, but in no event later than
March 31, 1999, Chaparral shall furnish BOKF with audited financial statements
of Chaparral as of December 31, 1998.
ARTICLE VI
CONDITIONS OF MERGER - BOKF AND BOKSUB
The obligations of BOKF and BOKSub to close the transactions
contemplated by this Agreement are subject to the satisfaction of the following
conditions, unless waived by BOKF and BOKSub.
Section 6.1. Representations and Warranties. The representations and
warranties of Chaparral set forth in Article II hereof shall be true and correct
in all material respects as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date, except as otherwise provided
or permitted by this Agreement, and BOKF shall have received a certificate,
executed by the President of Chaparral to that effect.
Section 6.2. Performance of Obligations of Chaparral. Chaparral shall
have performed all obligations and agreements required to be performed by it
under this Agreement in all material respects prior to or at the Closing.
Section 6.3. Authorization of Merger. All action necessary to authorize
the execution, delivery and performance of this Agreement by Chaparral and the
consummation of the transactions contemplated hereby shall have been duly and
validly taken by the Board of Directors of Chaparral, and Chaparral shall have
full power and right to merge on the terms provided herein. All action necessary
to authorize and consummate the Merger contemplated hereby shall have been duly
and validly taken by the shareholders of Chaparral and holders of not more than
10% of the Chaparral Common either (i) file with Chaparral prior to the
Shareholders' Meeting a notice of their intent to exercise their right to
dissent to the Merger or (ii) vote against the Merger at the Shareholders'
Meeting.
ARTICLE VII
CONDITIONS OF MERGER - CHAPARRAL
The obligation of Chaparral to close the transactions contemplated by
this Agreement is subject to the satisfaction of the following conditions,
unless waived by Chaparral:
<PAGE>
Section 7.1. Representations and Warranties. The representations and
warranties of BOKF and BOKSub set forth in Article III and Article IV hereof,
respectively, shall be true and correct in all material respects as of the date
of this Agreement and as of the Closing Date as though made on and as of the
Closing Date, except as otherwise provided or permitted by this Agreement, and
Chaparral shall have received a certificate, executed by the Presidents of BOKF
and BOKSub to that effect.
Section 7.2. Performance of Obligations of BOKF. BOKF and BOKSub shall
have performed all obligations and agreements required to be performed by it
under this Agreement in all material respects prior to or at the Closing.
Section 7.3. Authorization of Merger by BOKF and BOKSub. All action
necessary to authorize the execution, delivery and performance of this Agreement
by BOKF and BOKSub and the consummation of the Merger contemplated hereby shall
have been duly and validly taken by the Boards of Directors and shareholders of
BOKF and BOKSub, respectively, and BOKSub and Chaparral shall have full power
and right to merge on the terms provided herein.
Section 7.4. Authorization of Merger by Chaparral. All action necessary
to authorize and consummate the Merger contemplated hereby shall have been duly
and validly taken by the shareholders of Chaparral and holders of not more than
one third of the Chaparral Common either (i) file with Chaparral prior to the
Shareholders' Meeting a notice of their intent to exercise their right to
dissent to the Merger or (ii) vote against the Merger at the Shareholders'
Meeting.
ARTICLE VIII
CONDITIONS TO RESPECTIVE OBLIGATIONS OF BOKF AND CHAPARRAL
The respective obligations of BOKF and Chaparral under this Agreement
are, at their respective options, subject to the further condition that:
Section 8.1. Governmental Approvals. The parties hereto shall have
received approval of the Merger and issuance of the BOKF Notes as contemplated
by this Agreement from all necessary governmental agencies and authorities,
including, to the extent required, the Fed, the OCC, the FDIC and the SEC, and
such approvals shall not have been contested by any Federal or state
governmental authority nor by any other third party by formal proceeding, and
none of such approvals or consents shall be subject to any terms or conditions
that are unreasonable or unduly burdensome in the opinion of the party hereto
which is obliged to discharge or comply with such term or condition, and all
applicable regulatory waiting periods have expired. It is understood that if any
contest as aforesaid is brought by formal proceedings, BOKF may, but shall not
be obligated to, answer and defend such contest.
Section 8.2. Documents. Each party hereto shall have received all
documents required to be received from the other party on or prior to the
Closing Date, including those set forth in Section 9.3 hereof, all in form and
substance reasonably satisfactory to the receiving party.
<PAGE>
ARTICLE IX
CLOSING
Section 9.1. Closing. The closing (the "Closing") for the consummation
of the transactions contemplated by this Agreement shall take place at the
offices of Jenkens & Gilchrist, a Professional Corporation, 1445 Ross Avenue,
Suite 3200, Dallas, Texas 75202 at 10:00 a.m. Central Time on the Closing Date
described in Section 9.2, unless another date or place is agreed to in writing
by the parties hereto.
Section 9.2. Closing Date; Effective Time. The Closing shall take place
on a date (the "Closing Date") mutually agreeable to BOKF and Chaparral, which
date shall be within ten (10) days after the receipt of all necessary
regulatory, corporate and other approvals and the expiration of any mandatory
waiting periods, provided, however, that the Closing Date shall not occur prior
to April 2, 1999 or later than July 2, 1999. Subject to the terms and conditions
set forth herein, including receipt of all regulatory approvals, the Merger
shall be effective upon the later of the filing of, or the date and time
specified in, the Certificate of Merger relating to the Merger and filed with
the Secretary of State of the State of Texas (the "Effective Time"), and the
parties shall use their best efforts to cause the Effective Time to occur on the
Closing Date.
Section 9.3. Closing Deliveries.
(a) At the Closing, Chaparral shall deliver to BOKF and BOKSub:
(i) a certified copy of the Articles of Incorporation or
Association of Chaparral, Delaware and CCNB;
(ii) a certificate, signed by an appropriate officer of
Chaparral, acting solely in his capacity as an officer of Chaparral, stating
that (A) each of the representations and warranties contained in Article II is
true and correct in all material respects at the time of the Closing with the
same force and effect as if such representations and warranties had been made at
Closing, and (B) all of the conditions set forth in Article VII have been
satisfied or waived as provided therein;
(iii) a certified copy of the resolutions of Chaparral's Board
of Directors and shareholders, as required for valid approval of the execution
of this Agreement and the consummation of the Merger and the other transactions
contemplated hereby;
(iv) good standing and existence certificates, dated a recent
date, duly certifying the existence and good standing of Chaparral in Texas;
(v) executed employment agreements for Charles O. Rolfe, Jr.,
and John B. Whisenant, in substantially the form as attached hereto as Exhibit
"C" and Exhibit "D", respectively;
(vi) an executed noncompetition agreement for Charles W.
Eisemann in substantially the form as attached hereto as Exhibit "E"; and
<PAGE>
(vii) an opinion of the accounting firm of Payne, Faulkner,
Smith & Jones, P.C., or another accounting firm mutually agreed to by Chaparral
and BOKF, in a form reasonably acceptable to BOKF, opining that no payment, of
which such accounting firm has knowledge, to any employee of Chaparral, Delaware
or CCNB is an excess parachute payment within the meaning of Section 280G of the
Code.
(b) At the Closing, BOKF shall deliver to Chaparral:
(i) certified copies of the Articles of Incorporation of
BOKF and BOKSub;
(ii) a certificate signed by an appropriate officer of BOKF
and BOKSub stating that (A) each of the representations and warranties contained
in Article III and IV is true and correct in all material respects at the time
of the Closing with the same force and effect as if such representations and
warranties have been made at Closing and (B) all of the conditions set forth in
Article VI have been satisfied;
(ii) a certified copy of the resolutions of BOKF's Board of
Directors authorizing the execution of this Agreement and the consummation of
the transactions contemplated hereby;
(iii) a certified copy of the resolutions of BOKSub's Board of
Directors and shareholder, as required for valid approval of the execution of
this Agreement and the consummation of the transactions contemplated hereby; and
(iv) good standing and existence certificates, dated a recent
date, duly certifying the existence and good standing of Chaparral in Texas;
(v) executed employment agreements for Charles O. Rolfe, Jr.,
and John B. Whisenant, in substantially the form as attached hereto as Exhibit
"C" and Exhibit "D", respectively;
(vi) an executed noncompetition agreement for Charles W.
Eisemann in substantially the form as attached hereto as Exhibit "E"; and
(vii) evidence of the approval of all regulatory authorities
required for the consummation of the Merger and the transactions contemplated by
this Agreement.
ARTICLE X
TERMINATION
Section 10.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time by:
(a) The mutual consent of the respective Boards of Directors of BOKF
and Chaparral;
<PAGE>
(b) BOKF if the conditions set forth in Article VI hereof shall not
have been met;
(c) Chaparral if the conditions set forth in Article VII hereof shall
not have been met;
(d) BOKF if the conditions set forth in Article VIII hereof shall not
have been met through no fault of, or reason attributable to, BOKF;
(e) Chaparral if the conditions set forth in Article VIII hereof shall
not have been met through no fault of, or reason attributable to, Chaparral,
Delaware, or CCNB; or
(f) Chaparral in the event the Closing has not occurred by July 2,
1999, or such other date as the parties hereto agree in writing.
Any party desiring to terminate this Agreement pursuant to any of the
foregoing provisions shall give notice of such termination to the other party in
accordance with Section 12.2 hereof.
Section 10.2. 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 10.1 hereof, no party to this Agreement shall have any
further liability or obligation in respect of this Agreement; provided, however,
that the confidentiality provisions of Section 5.1, above, shall survive
termination. Any such termination that occurs as a result of a breach of a
representation or warranty made in this Agreement that, at the time made, was
not known to the party making such representation to be untrue, or any such
termination that through no fault of any of the parties to this Agreement shall
be without liability to any of the parties hereto, but if such termination
results from the willful misrepresentation of a party or the wilful failure of a
party to fulfill a condition to the performance of the obligation of the other
party to this Agreement, such party shall be fully liable for any and all
damages, costs and expenses (including reasonable attorney's fees) sustained or
incurred by the other party or parties as a result of such failure or breach.
Section 10.3. Waiver and Amendment. Any term or provision of this
Agreement, except statutory requirements and requisite approvals of regulatory
authorities, may be waived at any time by the party which is entitled to the
benefits thereof and this Agreement may be amended or supplemented at any time
by the mutual agreement of BOKF, BOKSub and Chaparral through action taken by
their respective Boards of Directors.
ARTICLE XI
ADDITIONAL COVENANTS
<PAGE>
Section 11.1. No Survival. None of the representations, covenants,
warranties and agreements contained in this Agreement shall survive the Closing
and the Effective Time except (i) in accordance with Section 11.2, and (ii) this
Agreement shall continue and remain in full force and effect regarding the
covenants of BOKF that by their terms are to be performed after the Effective
Time (including without limitation the provisions in Section 1.5 concerning
payment of the Merger Consideration and Sections 11.2, 11.3, 11.4 and 11.5) for
the period of the applicable statute of limitations.
Section 11.2. Escrow. At the Effective Time, BOKF shall establish an
escrow account (the "Representation Escrow") with the Escrow Agent. The
Representation Escrow shall be governed by an escrow agreement, the form of
which is attached hereto as AExhibit "F" (the ARepresentation Escrow
"Agreement"), which shall provide as follows:
(a) At the Effective Time, BOKF shall deposit the principal amount of
$400,000 into the Representation Escrow, which, together with (i) all interest
earned thereon, but reduced by (ii) any Representation Escrow Allowed Claim (as
hereafter defined) is referred to herein as the "Representation Escrow Funds."
(b) The Representation Escrow Funds shall be invested in a certificate
of deposit at CCNB maturing on March 31, 2000, at the rate and on the terms and
conditions generally offered by CCNB for certificates of deposit of comparable
size and duration, and upon maturity as necessary, in three-month certificates
of deposit at CCNB at the rates and on terms and conditions generally offered by
CCNB for certificates of comparable size and duration at each renewal date,
provided that any penalty for early withdrawal of such funds will either be
waived by CCNB or borne by BOKF.
(c) The representations, warranties, covenants and agreements of
Chaparral contained in this Agreement shall survive the Closing, and BOKF shall
be indemnified and held harmless from any and all losses, to be decreased at a
rate of thirty-five percent (35%) to account for all federal and state taxes,
arising from any material breach by Chaparral of any such representations,
warranties, covenants and agreements (collectively, "Losses"), provided that (i)
written notice of such Losses must be given to Chaparral on or before March 31,
2000, (ii) the sole remedy available to BOKF for any Losses shall be limited
solely to a claim against the Representation Escrow Funds, (iii) all payments,
if any, to be made in respect of any Losses shall be made solely from the
Representation Escrow Funds, (iv) the Chaparral shareholders shall have no
obligations or liability for any such Losses except to the extent of the
Representation Escrow Funds, and (v) no claim shall be made for any Losses
unless and until the aggregate amount of all Losses exceeds $25,000.
(d) In the event BOKF makes no claim for any Losses on or before March
31, 2000, the Representation Escrow Agreement shall terminate and the Escrow
Agent shall, on or before April 15, 2000, distribute the Representation Escrow
Funds on a pro rata basis to the holders of the Chaparral Common as of the
Effective Time.
<PAGE>
(e) In the event BOKF makes a claim for any Losses on or before March
31, 2000, the Escrow Agent shall (i) on or before April 15, 2000, distribute on
a pro rata basis to the holders of the Chaparral Common as of the Effective Time
an amount equal to the Representation Escrow Funds less the amount of all Losses
claimed by BOKF, and (ii) continue to hold and invest the remaining
Representation Escrow Funds until such claim is resolved by (i) the mutual
agreement of a majority of the Agents (as defined below) and BOKF, or (ii) a
final adjudication determining the merits of the BOKF claim, at which time the
Representation Escrow Agreement shall terminate, the Escrow Agent shall pay the
claim of BOKF as mutually agreed or finally adjudicated (an "Representation
Escrow Allowed Claim") and the Escrow Agent shall distribute any remaining
Representation Escrow Funds on a pro rata basis to the holders of the Chaparral
Common as of the Effective Time.
(f) The rights of the holders of the Chaparral Common in the
Representation Escrow and the Representation Escrow Funds shall not be
assignable or transferable except by operation of law or by intestacy and will
not be evidenced by any certificate or other interest.
(g) The persons who are members of the Board of Directors of Chaparral
immediately prior to the Closing shall collectively serve as agents, acting by a
majority vote in the same manner as a board of directors acting under the TBCA,
for the holders of the Chaparral Common as of the Effective Time and shall have
full authority to act for and on behalf thereof in the administration of the
provisions of this Section (the AAgents@). The actions of the Agents shall be
deemed actions taken by them as members of the Board of Directors of Chaparral
prior to the Closing.
(h) BOKF shall pay the fees and costs of the Escrow Agent with respect
to the Representation Escrow.
Section 11.3. Indemnification; Insurance.
(a) From and after the Effective Time, BOKF (the "Indemnifying Party")
shall indemnify and hold harmless each present and former director, officer and
employee of Chaparral and CCNB determined as of the Effective Time (the
"Indemnified Parties") against any costs or expenses (including reasonably
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil or criminal, administrative or
investigative, arising out of matters existing or occurring at or prior to the
Effective Time, whether asserted or claimed prior to, at or after the Effective
Time to the fullest extent to which such Indemnified Parties were entitled under
the Articles of Incorporation, Certificate of Incorporation, Articles of
Association and Bylaws of Chaparral, Delaware and CCNB.
<PAGE>
(b) Any Indemnified Party wishing to claim indemnification under this
section, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Indemnifying Party, but the failure to
so notify shall not relieve the indemnifying Party of any liability it may have
to such Indemnified Party if such failure does not materially prejudice the
Indemnifying Party. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) the
Indemnifying Party shall have the right to assume the defense thereof and the
Indemnifying Party shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except that if the
Indemnifying Party elects not to assume such defense or counsel for the
Indemnified Party and the Indemnified Parties, the Indemnified Parties may
retain counsel which is reasonably satisfactory to the Indemnifying Party, and
the Indemnifying Party shall pay, promptly as statements therefor are received,
the reasonable fees and expenses of such counsel for the Indemnified Parties
(which may not exceed one firm in any jurisdiction unless the use of one counsel
for such Indemnified Parties would present such counsel with a conflict of
interest), (ii) the Indemnified Parties will cooperate in the defense of any
such matter and (iii) the Indemnifying Party shall not be liable for any
settlement effected without its prior written consent.
(c) BOKF shall maintain its existing policy of directors and officers
liability insurance (or comparable coverage) for a period of not less than three
years after the Effective Time; which policy shall be amended, however, to
include the directors and officers of Chaparral, Delaware and CCNB, and which
shall be a "claims made" policy providing coverage for (among other things) acts
or omissions occurring prior to the Effective Time.
(d) In the event that BOKF or any of its respective successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person, then, and in each such case, the successors and assigns of such
entity shall assume the obligations set forth in this Agreement, which
obligations are expressly intended to be for the irrevocable benefit of, and
shall be enforceable by, each director and officer covered hereby.
Section 11.4. BOT Director Position. As soon as practicable after the
Effective Time, BOKF shall cause (pursuant to a voting agreement with its
controlling shareholder or otherwise) the Chairman of the Board of Chaparral to
be elected as a member of the Board of Directors of BOT. BOKF shall continue to
cause such person to be nominated and elected as a director of BOT for a period
of two years after the Effective Time. If for any reason such person cannot or
will not serve as a director of BOKF, BOKF and the board of directors of
Chaparral shall mutually agree to designate another person who was on the Board
of Directors of Chaparral as of the Effective Time to fill such position for
such period of time.
Section 11.5. Severance Plan. Prior to the Closing Date, CCNB will
enter into a severance policy providing for the payment to any employee who is
involuntarily dismissed within the first 180 days after the Closing Date, an
amount equal to one week=s pay for each year of service or portion thereof by
such employee, and BOKF will honor such policy after the Closing with respect to
the employees of CCNB as of the Closing Date.
Section 11.6. Employee Benefits. BOKF presently intends that, after the
Merger, BOKF and Chaparral will not make additional contributions to the
employee benefit plans of Chaparral. Each employee of Chaparral or any direct or
indirect subsidiary of Chaparral who remains an employee of Chaparral or BOKF or
any direct or indirect subsidiary of Chaparral or BOKF immediately after the
Effective Time (the "Continuing Employees") will be entitled to participate in
the employee benefit plans and programs maintained for employees of BOKF and its
affiliates, in accordance with the respective terms of such plans and programs,
and BOKF shall take all actions necessary or appropriate to facilitate coverage
of the Continuing Employees in such plans and programs from and after the
Closing Date, subject to the following:
<PAGE>
(a) Each Continuing Employee will be entitled to credit for prior
service with Chaparral for all purposes under the employee welfare benefit plans
and other employee benefit plans and programs (other than those described in
subsection B. below and any stock option plans) sponsored by BOKF or its
affiliates. Any preexisting condition exclusion applicable to such plans and
programs shall be waived with respect to any Continuing Employee. For purposes
of determining each Continuing Employee's benefit for the year in which the
Merger occurs under the BOKF vacation program, any vacation taken by a
Continuing Employee preceding the Closing Date for the year in which the Merger
occurs will be deducted from the total BOKF vacation benefit available to such
employee for such year. For purposes of determining the number of vacation days
available with respect to each Continuing Employee for the year in which the
Merger occurs, that the number of vacation days for such year shall be
determined under Chaparral's vacation policies in effect as of January 1, 1999.
(b) Each Continuing Employee shall be entitled to credit for past
service with Chaparral or any of its direct or indirect subsidiaries for the
purpose of satisfying any eligibility or vesting periods applicable to the BOKF
employee pension benefit plans that are subject to Section 401(a) and 501(a) of
the Code. Notwithstanding the foregoing, BOKF shall not grant any prior years of
service credit to employees of Chaparral, with respect to any defined benefit
plans sponsored (or contributed to) by BOKF; instead, Continuing Employees shall
be treated as newly hired employees of BOKF as of the date following the Closing
Date for purposes of determining eligibility, vesting and benefit accruals
thereunder.
ARTICLE XII
MISCELLANEOUS
Section 12.1. Entire Agreement. This Agreement contains the entire
agreement among BOKF, BOKSub and Chaparral with respect to the Merger, and
supersedes all prior agreements and understandings relating to the subject
matter of this Agreement.
Section 12.2. Notices. All notices or other communications that are
required or permitted hereunder shall be in writing and shall be deemed to have
been given or made on the date of delivery, in the case of hand delivery, or
three (3) business days after deposit in the United States Registered Mail,
postage prepaid, or upon receipt if transmitted by facsimile telecopy or any
other means, addressed (in any case) as follows:
If to BOKF or BOKSub:
BOK Financial Corporation
P.O. Box 2300
Tulsa, OK 79192
Attention: Mr. James A. White
Telecopy No.: (918) 588-6853
and
<PAGE>
Bank of Texas, N.A.
5956 Sherry Lane, Suite 1800
Dallas, Texas 75225
Attention: Mr. C. Fred Ball, Jr., President
Telecopy No.: (214) 521-9072
With a Copy To:
Frederic Dorwart, Lawyers
Old City Hall
124 East Fourth Street
Tulsa, OK 74103-5010
Attention: Frederic Dorwart, Esq.
Telecopy No.: (918) 583-8251
If to Chaparral:
Chaparral Bancshares, Inc.
333 West Campbell Road
Richardson, Texas 75080
Attention: Mr. Charles W. Eisemann
Telecopy No.: (972) 234-8641
With a Copy To:
Jenkens & Gilchrist,
a Professional Corporation
1445 Ross Avenue, Suite 3200
Dallas, Texas 75202-2799
Attention: Charles E. Greef, Esq.
and Brian R. Marek, Esq.
Telecopy: (214) 855-4300
Section 12.3. Counterparts. This Agreement may be executed in any
number of counterparts, and each such counterpart hereof, including any
facsimile copy thereof, shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one agreement.
Section 12.4. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING
EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF TEXAS.
<PAGE>
Section 12.5. Venue. ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO,
ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO OR FROM
THIS AGREEMENT OR ANY OF THE OTHER DOCUMENTS SHALL BE LITIGATED IN COURTS HAVING
SITUS IN DALLAS, DALLAS COUNTY, TEXAS, AND EACH PARTY HERETO HEREBY SUBMITS TO
THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH ACTION AND HEREBY WAIVES ANY
RIGHTS IT MAY HAVE TO TRANSFER OR CHANGE THE JURISDICTION OR VENUE OF ANY
LITIGATION BROUGHT AGAINST IT IN ACCORDANCE WITH THIS SECTION.
Section 12.6. Additional Documentation. As soon as practicable after
the Effective Time, the parties hereto shall execute and file such documents and
take such other actions as may be necessary or appropriate to effect the
transactions contemplated by this Agreement.
Section 12.7. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, and the application
of such provision to persons or circumstances other than those to which it is
held invalid and unenforceable, shall not be affected thereby and each provision
of this Agreement shall be valid and enforced to the fullest extent permitted by
law.
Section 12.8. Expenses. Each party shall bear and pay for all of its
own costs and expenses incurred in connection with this Agreement or the Merger,
including respective fees and expenses of financial consultants, accountants and
counsel.
Section 12.9. Exhibits. The exhibits and schedules attached to this
agreement, together with all documents incorporated by reference therein, form
an integral part of this Agreement and are hereby incorporated into this
Agreement wherever reference is made to them to the same extent as if they were
set out in full at the point in which the reference is made. Items disclosed on
any Exhibit or Schedule to this Agreement shall be deemed to be disclosed on all
Exhibits or Schedules hereto and the failure of Chaparral to list any item on
one or more Exhibits or Schedules shall not give rise to a claim by BOKF or
BOKSub.
Section 12.10. Costs of Litigation. In any action brought by a party
hereto to enforce the obligations of any other party hereto, the prevailing
party shall be entitled to collect from the opposing party to such action such
party's reasonable litigation costs and attorneys fees and expenses (including
court costs, reasonable fees of accountants and experts, and other expenses
incidental to the litigation).
<PAGE>
FINIDAL:72777. 33131-00001
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date and year first above written.
BOK FINANCIAL CORPORATION
By: /S/ James Ulrich
James Ulrich, Senior Vice President
BOKF MERGER CORPORATION NUMBER NINE
By: /s/ C.F. Ball
C. Fred Ball, Jr., President
CHAPARRAL BANCSHARES, INC.
By: /s/ Charles W. Eisemann
Charles W. Eisemann, Chairman of the Board
<PAGE>
Schedule 1.7
CCFC Assets
as of February 16, 1999
All loans on the books of CCNB beginning with the numbers 20001 through
20018, 81329 through 82352 and 118193, 818740 and 4001695, totaling
approximately 660 loans.
Principal Balance: $4,793,834.07
Less unearned discount (618,949.49)
Book Value $3,965,688.58
As of this date, the Book Value of the CCFC Assets is equivalent to the
Tax Basis of such assets.
<PAGE>
Schedule 2.2(a)
Shareholder List - Available Upon Request
<PAGE>
Schedule 2.2(b)
List of Stock Options - Available Upon Request
<PAGE>
Schedule 2.15
Employment Contracts and Employee Benefits
Employment Contracts. There are no existing employment contracts with
the employees of Chaparral, Delaware, or CCNB. CCNB will enter into employment
agreements with Charles O. Rolfe, Jr., and John B. Whisenant, in substantially
the form as attached hereto as Exhibit "C" and Exhibit "D", respectively;
pursuant to Section 9.3 of this Agreement.
Employee Benefits. CCNB provides the following benefits to its employees:
Major Medical, Dental and Vision Insurance
Long-Term Disability Insurance
Accidental Death & Dismemberment Insurance
Life Insurance (up to two times salary, maximum of $200,000)
Vacation Benefits
Simplified Employee Pension Plan with Salary Reduction Option
Share Option Plan
<PAGE>
Schedule 2.16
Contracts and Commitments
CCNB has entered into a construction contract with Pogue, Inc. for the
construction of CCNB's branch in McKinney, Texas. The balance owing under the
terms of such contract is $336,856. Draws are to be paid as work is completed.
At the request of BOKF, CCNB is currently negotiating an Agreement for
Information Technology Services with Electronic Data Systems Corporation
("EDS"), which agreement is expected to be executed and delivered prior to the
Closing Date.
<PAGE>
EXHIBIT "A"
PROMISSORY NOTE
Amount Dallas, Texas Date
$___________ __________, 1999
FOR VALUE RECEIVED, the undersigned, BOK Financial Corporation, an
Oklahoma corporation ("Maker"), hereby promises to pay to the order
of___________________________ ("Holder"), at the address of Holder set forth on
the signature page hereof, or at such other address given to Maker by Holder,
the principal sum of _____________________________ ($______________), together
with interest, as hereinafter described.
This Note has been executed and delivered in connection with that
certain Agreement and Plan of Merger (the "Merger Agreement"), dated February
19, 1999, by and among Maker, BOKF Merger Corporation Number Nine, a Texas
corporation, and Chaparral Bancshares, Inc., a Texas corporation, and represents
all or a portion of the Merger Consideration (as defined in the Merger
Agreement) due to Holder. This Note is an unsecured general obligation of Maker.
Section 1. Interest and Payment.
(a) Prior to the occurrence of a default (hereinafter defined),
interest shall be payable on the outstanding principal balance of this Note at a
rate per annum equal to ____% [the Applicable Federal Rate as defined in the
Internal Revenue Code as in effect on the Closing Date]. Interest on this Note
shall be calculated at a daily rate equal to 1/360 of the annual percentage rate
which this Note bears, subject to the provisions hereof limiting interest to the
Maximum Lawful Rate (as herein defined).
(b) The entire outstanding principal balance of this Note and all
accrued but unpaid interest thereon shall be due and payable in full on January
2, 2000.
(c) After the occurrence of a default, for so long as such default
remains uncured or upon acceleration by Holder following a default, past due
principal, and past due interest, to the extent permitted by law, shall bear
interest at the lesser of (i) Maximum Lawful Rate or (ii) 18%.
(d) Maker shall not be entitled to prepay this Note in full or in part
prior to the maturity date hereof without the prior written consent of Holder.
Section 2. General Provisions.
Whenever any payment shall be due under this Note on a day which is not
a business day, the date on which such payment is due shall be extended to the
next succeeding business day, and such extension of time shall be included in
the computation of the amount of interest then payable.
<PAGE>
4
FINIDAL:72935.1 33131-00001
All principal, interest and other sums payable under this Note shall be
paid, not later than two o'clock p.m. (Dallas, Texas time), on the day when due,
in immediately available funds in lawful money of the United States of America.
Any payment under this Note other than in the required amount and in good,
unrestricted U.S. funds immediately available to the holder hereof shall not,
regardless of any receipt or credit issued therefor, constitute payment until
the required amount is actually received by the holder hereof in such funds and
shall be made and accepted subject to the condition that any check or draft may
be handled for collection in accordance with the practice of the collection bank
or banks.
All payments made as scheduled on this Note shall be applied, to the
extent thereof, first to accrued but unpaid interest and the balance to unpaid
principal.
The occurrence of any one of the following shall be a default under
this Note (a "default"):
(a) Maker shall fail to pay when due any principal of or interest
on this Note; or
(b) Maker (1) (i) executes an assignment for the benefit of creditors,
or takes any action in furtherance thereof; or (ii) admits in writing its
inability to pay, or fails to pay, its debts generally as they become due; or
(iii) as a debtor, files a petition, case, proceeding or other action pursuant
to, or voluntarily seeks the benefit or benefits of any debtor relief law, or
takes any action in furtherance thereof; or (iv) seeks the appointment of a
receiver, trustee, custodian or liquidator of any significant portion of its
property; or (v) becomes subject to any cease-and-desist or other order issued
by, or a party to any written agreement or memorandum of understanding with, or
is a recipient of any extraordinary supervisory letter from, any regulatory
agency; or (2) suffers the filing of a petition, case, proceeding or other
action against it as a debtor under any debtor relief law or seeking appointment
of a receiver, trustee, custodian or liquidator of any significant portion of
its other property; or (3) conceals, removes, or permits to be concealed or
removed, any part of its property, with intent to hinder, delay or defraud its
creditors or any of them, or makes or suffers a transfer of any of its property
that may be fraudulent under any bankruptcy, fraudulent conveyance or similar
law; or makes any transfer of its property to or for the benefit of a creditor
at a time when other creditors similarly situated have not been paid; or
(c) There shall occur (i) a change in control of Maker, Chaparral
Bancshares, Inc., or Canyon Creek National Bank; (ii) a sale of all or
substantially all of the assets of any such entity; or (iii) the liquidation or
dissolution of any such entity. For the purpose of this Note, a change of
control shall be deemed to have occurred when and only when those persons and
entities who are presently in control of Maker (within the meaning of Rule 405
of the Securities and Exchange Commission) become no longer in control of Maker
(within the meaning of said Rule 405).
Upon the occurrence of a default, the holder hereof shall have the
right to declare the unpaid principal balance and accrued but unpaid interest on
this Note at once due and payable (and upon such declaration, the same shall be
at once due and payable), and to exercise any rights, powers and remedies
available to Holder under this Note, or at law or in equity.
Neither the failure by the holder hereof to exercise, nor delay by the
holder hereof in exercising, the right to accelerate the maturity of this Note
or any other right, power or remedy upon any default shall be construed as a
waiver of such default or as a waiver of the right to exercise any such right,
power or remedy at any time. No single or partial exercise by the holder hereof
of any right, power or remedy shall exhaust the same or shall preclude any other
or further exercise thereof, and every such right, power or remedy may be
exercised at any time and from time to time. All rights and remedies provided
for in this Note are cumulative of each other and of any and all other rights
and remedies existing at law or in equity, and the holder hereof shall, in
addition to the rights and remedies provided herein, be entitled to avail itself
of all such other rights and remedies as may now or hereafter exist at law or in
equity for the collection of the indebtedness owing hereunder, and the resort to
any right or remedy provided for hereunder or provided for by law or in equity
shall not prevent the concurrent or subsequent employment of any other
appropriate rights or remedies. Without limiting the generality of the foregoing
provisions, the acceptance by the holder hereof from time to time of any payment
under this Note which is past due or which is less than the payment in full of
all amounts due and payable at the time of such payment, shall not (i)
constitute a waiver of or impair or extinguish the rights of the holder hereof
to accelerate the maturity of this Note or to exercise any other right, power or
remedy at the time or at any subsequent time, or nullify any prior exercise of
any such right, power or remedy, or (ii) constitute a waiver of the requirement
of punctual payment and performance, or a novation in any respect.
If any holder of this Note retains an attorney in connection with any
default or at maturity or to collect, enforce or defend this Note in any lawsuit
or in any probate, reorganization, bankruptcy or other proceeding, or if any
holder of this Note sues Maker in connection with this Note, then Maker agrees
to pay to holder, all costs and expenses incurred by such prevailing party in
any such suit or proceeding, including attorneys' fees.
<PAGE>
It is the intent of Holder and Maker to conform to and contract in
strict compliance with applicable usury law from time to time in effect. All
agreements between Holder or any other holder hereof and Maker are hereby
limited by the provisions of this paragraph which shall override and control all
such agreements, whether now existing or hereafter arising and whether written
or oral. In no way, nor in any event or contingency (including but not limited
to prepayment, default, demand for payment, or acceleration of the maturity of
any obligation), shall the rate of interest taken, reserved, contracted for,
charged or received under this Note or otherwise, exceed the maximum rate of
interest permitted by applicable law (the "Maximum Lawful Rate"). If, from any
possible construction of any document, interest would otherwise be payable in
excess of the Maximum Lawful Rate, any such construction shall be subject to the
provisions of this paragraph and such document shall be automatically reformed
and the interest payable shall be automatically reduced to the Maximum Lawful
Rate, without the necessity of execution of any amendment or new document. If
the holder hereof shall ever receive anything of value which is characterized as
interest under applicable law and which would apart from this provision be in
excess of the Maximum Lawful Rate, an amount equal to the amount which would
have been excessive interest shall, without penalty, be applied to the reduction
of the principal amount owing on the indebtedness evidenced hereby in the
inverse order of its maturity and not to the payment of interest, or refunded to
Maker or the other payor thereof if and to the extent such amount which would
have been excessive exceeds such unpaid principal. The right to accelerate the
maturity of this Note does not include the right to accelerate any interest that
has not otherwise accrued on the date of such acceleration, and the holder
hereof does not intend to charge or receive any unearned interest in the event
of acceleration. All interest paid or agreed to be paid to the holder hereof
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full stated term (including any renewal or
extension) of such indebtedness so that the amount of interest on account of
such indebtedness does not exceed the maximum nonusurious amount permitted by
applicable law. As used in this paragraph, the term "applicable law" shall mean
the laws of the State of Texas or the federal laws of the United States,
whichever laws allow the greater interest, as such laws now exist or may be
changed or amended or come into effect in the future.
Maker and all sureties, endorsers, guarantors and any other party now
or hereafter liable for the payment of this Note in whole or in part, hereby
severally waive demand, presentment for payment, notice of dishonor and of
nonpayment, protest, notice of protest, notice of intent to accelerate, notice
of acceleration and all other notices of any kind.
This Note may not be changed, amended or modified except in a writing
expressly intended for such purpose and executed by the party against whom
enforcement of the change, amendment or modification is sought.
All of the covenants, stipulations, promises, and agreements contained
in this Note by or on behalf of Maker shall bind its successors and assigns,
whether so expressed or not.
THIS NOTE, AND ITS VALIDITY, ENFORCEMENT AND INTERPRETATION, SHALL BE
GOVERNED BY TEXAS LAW (WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES) AND
APPLICABLE UNITED STATES FEDERAL LAW.
Time shall be of the essence in this Note with respect to all of
Maker's obligations hereunder.
THIS NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, Maker has duly executed this Note to be effective
as of the day and year first above written.
MAKER:
ADDRESS OF HOLDER: BOK FINANCIAL CORPORATION,
an Oklahoma corporation
- -------------------------
_________________________ By: _______________________________
Name:
_________________________ Title:
<PAGE>
EXHIBIT "B"
ESCROW AGREEMENT
This ESCROW AGREEMENT has been executed this ____ day of
_______________, 1999, by and between BOK Financial Corporation ("BOKF"), Canyon
Creek Financial Corporation ("CCFC"), and Bank of Texas Trust Company, National
Association (the "Escrow Agent").
BOKF has deposited in escrow with the Escrow Agent an amount equal to
the Aggregate Tax Basis of the CCFC Assets pursuant to that certain Agreement
and Plan of Merger dated as of February 19, 1999, among BOKF, BOKF Merger
Corporation Number Nine, and Chaparral Bancshares, Inc. (the "Merger
Agreement"). The parties agree that this escrow shall be administered in
accordance with Section 1.7 of the Merger Agreement, a true and correct copy of
which is attached hereto and incorporated herein by this reference. BOKF and
CCFC (as defined in Section 1.7 of the Merger Agreement) shall jointly provide
all notices to the Escrow Agent required by Section 1.7 of the Merger Agreement
to fulfil the terms and conditions of the Escrow Account, and the Escrow Agent
shall act only pursuant to the joint written instructions of BOKF and CCFC.
The parties to this Escrow Agreement agree that the following
provisions shall control with respect to the rights duties, liabilities,
privileges and immunities of the Escrow Agent.
(a) The Escrow Agent is not a party to, and is not bound by, or charged
with notice of, any agreement out of which this escrow may arise.
(b) The Escrow Agent acts hereunder as a depository only, and is not
responsible or liable in any manner whatever for the sufficiency, correctness,
genuineness or validity of the subject matter of the escrow, or any part
thereof, or for the form or execution thereof, or for the identity or authority
of any person executing or depositing it. The Escrow Agent will not render
investment advice with respect to the subject matter of this escrow.
(c) In the event the Escrow Agent becomes involved in litigation in
connection with this escrow, the undersigned jointly and severally agree to
indemnify and save the Escrow Agent harmless from all loss, cost, damages,
expenses and attorney's fees suffered or incurred by the Escrow Agent as a
result thereof.
(d) The Escrow Agent shall be protected in acting upon any written
notice, request, waiver, consent, certificate, receipt, authorization, power of
attorney or other paper or document which the Escrow Agent in good faith
believes to be genuine and what it purports to be.
(e) The Escrow Agent shall not be liable for anything that it may do or
refrain from doing in connection herewith, except its own gross negligence or
willful misconduct.
<PAGE>
(f) The Escrow Agent may consult with legal counsel in the event of any
dispute or question as to the construction of any of the provisions hereof or
its duties hereunder, and it shall incur no liability and shall be fully
protected in acting in accordance with the opinion and instructions of such
counsel.
(g) In the event of any disagreement between any of the parties to this
agreement, or between them or either of any of them and any other person,
resulting in adverse claims or demands being made in connection with the subject
matter of the escrow, or in the event that the Escrow Agent, in good faith, be
in doubt as to what action it should take hereunder, the Escrow Agent may, at
its option, refuse to comply with any claims or demands on it, or refuse to take
any other action hereunder, so long as such disagreement continues or such doubt
exists, and in any such event, the Escrow Agent shall not be or become liable in
any way or to any person for its failure or refusal to act, and the Escrow Agent
shall be entitled to continue so to refrain from acting until (i) the rights of
all parties shall have been fully and finally adjudicated by a court of
competent jurisdiction, or (ii) all differences shall have been adjusted and all
doubt resolved by agreement among all of the interested persons, and the Escrow
Agent shall have been notified thereof in writing signed by all such persons.
The rights of the Escrow Agent under this paragraph are cumulative of all other
rights which it may have by law or otherwise.
Executed in Dallas, Texas this ___ day of __________, 1999.
BOK FINANCIAL CORPORATION
By: ________________________________
Stanley A. Lybarger, Chief Executive Officer
CANYON CREEK FINANCIAL CORPORATION
By: ________________________________
Charles W. Eisemann, Chairman of the Board
BANK OF TEXAS TRUST COMPANY,
NATIONAL ASSOCIATION
By: _______________________________
Name:
Title:
<PAGE>
EXHIBIT "C"
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made, effective this ___ day
of ______________, 1999, between Canyon Creek National Bank, a national banking
association (the "Bank") and Charles O. Rolfe, Jr., an individual residing in
Richardson, Texas (the "Executive").
The Bank and Executive, in consideration of the promises and covenants
set forth herein (the receipt and adequacy of which is hereby acknowledged) and
intending to be legally bound hereby, agree as follows:
(1) Purpose of This Agreement. The purpose of this agreement is as follows:
(a) The Bank is a national banking association, engaged in the
banking business in Dallas County, Texas.
(b) The Executive is currently serving as President and Chief
Executive Officer of the Bank. The Executive currently has no
written agreement of employment with the Bank, but Executive
is currently receiving salary compensation and other benefits
from the Bank (collectively, the "Current Benefits"). BOK
Financial Corporation ("BOKF") is a bank holding company. BOKF
owns indirectly all of the issued and outstanding capital
stock of Bank of Texas, National Association ("BOT") and BOKF
Merger Corporation Number Nine, a Texas corporation.
(c) Pursuant to an Agreement and Plan of Merger, dated as of
February 19, 1999 (the "Merger Agreement"), among BOKF,
Chaparral Bancshares, Inc. ("Chaparral"), and BOK Merger
Corporation Number Nine, BOKF is acquiring indirect ownership
of the Bank (the "Merger"). Upon and subject to consummation
of the Merger, the Bank desires to retain the services of
Executive, and Executive desires to continue to render
services to the Bank. It is contemplated that in the near
future, the Bank will be merged into BOT (the "Bank Merger").
(d) The purpose of this Agreement is to set forth the terms and
conditions (i) on which the Bank shall, subject to
consummation of the Merger, employ Executive from and after
consummation of the Merger and (ii) on which Executive agrees
not to compete with the Bank.
(2) Employment. The Bank hereby employs Executive, and Executive hereby
agrees to work for the Bank, on the following terms and conditions:
(a) Until the Bank Merger, Executive shall serve as President and
Chief Executive Officer of the Bank, subject to the direction of
the Board of Directors of the Bank and of the Chief Executive
Officer of BOT; provided, that, in the event of a conflict
between the directions being given by the Board of Directors of
the Bank and the Chief Executive Officer of BOT, Executive shall
act in accordance with the directions of the Board of Directors
of the Bank. After consummation of the Bank Merger, the Executive
shall serve as President of Bank of Texas - Richardson (an
unincorporated banking division of the Bank).
(b) Executive shall devote all time and attention reasonably
necessary to the affairs of the Bank and shall serve the Bank
diligently, loyally, and to the best of his ability.
(c) Executive shall serve in such other or additional positions as
an officer and/or director of the Bank as Executive and the
Board of Directors of the Bank may mutually agree or any
affiliate of the Bank as Executive and the Chief Executive
Officer of BOT may mutually agree; provided, however,
Executive's residence and place of work shall remain in Dallas
County or Collin County, Texas.
(d) Notwithstanding anything herein to the contrary, Executive
shall not be precluded from engaging in any charitable, civic,
political or community activity or membership in any
professional organization.
(3) Compensation. As the sole, full and complete compensation to Executive
for the performance of all duties of Executive under this Agreement and
for all services rendered by Executive to the Bank or to any affiliate
of the Bank:
(a) The Bank shall pay to Executive the sum of $150,000 per year
payable in installments in arrears, less usual and customary
payroll deductions for FICA, federal and state withholding,
and the like, at the times and in the manner in effect in
accordance with the usual and customary payroll policies
generally in effect from time to time at the Bank ("Annual
Salary").
(b) The Bank shall pay and provide to Executive pension, thrift,
medical insurance, disability insurance plan benefits, and
other fringe benefits, generally in effect for senior
executive employees of BOKF and its affiliates (the
"Additional Benefits"). The pension benefits provided to BOKF
employees are fully described in the official plan document.
Executive shall be credited with his prior service at
Chaparral and its affiliates in BOKF's 401k plan and in
connection with the Additional Benefits, other than in
connection with BOKF's pension plan.
<PAGE>
(c) The Bank may, from time to time in Bank's sole discretion
consistent with the practices generally in effect for senior
executive employees of BOKF and its affiliates, pay or
provide, or agree to pay or provide, Executive a bonus, stock
option, or other incentive or performance based compensation.
All such bonus, stock option or other incentive or performance
based compensation, regardless of its nature (hereinafter
called "Performance Compensation") shall not constitute Annual
Salary.
(d) The Bank shall reimburse Executive for reasonable and
necessary entertainment, travel and other expenses in
accordance with BOKF's standard policies in general effect for
senior executive employees of BOKF's affiliates (which
includes dues for lunch clubs, but does not include
reimbursement for country club memberships or dues).
(e) The Executive shall be allowed vacation, holidays, and other
employee benefits not described above in accordance with the
Bank's standard policy in general effect for Bank's senior
executive employees.
(f) The Executive shall be considered for the award of options
pursuant to BOKF's stock option plan on the same basis as
other senior executives of BOKF and its affiliates.
(g) Upon consummation of the Merger, the Bank shall transfer to
Executive ownership of that certain 1997 Cadillac Sedan De
Ville automobile currently being driven by Executive. In
addition, it is understood and agreed that Executive owns a
membership in the Canyon Creek Country Club, although the Bank
currently pays the dues owing on such membership.
(h) Executive hereby agrees to accept the foregoing compensation
from and after the date of consummation of the Merger in lieu
of all Current Benefits and as the sole, full and complete
compensation to Executive for the performance of all duties of
Executive under this Agreement and for all services rendered
by Executive to the Bank or any affiliate of the Bank.
(4) Term of this Agreement. The term of this Agreement (the "Term") shall
commence (the "Commencement") as of the commencement of the first
pay-roll period immediately preceding the effective date of the Merger
and shall terminate on the third anniversary date of the Commencement.
(5) Termination of This Agreement. Notwithstanding the provisions of paragraph
4 of this Agreement, this Agreement may be terminated on the following
terms and conditions:
(a) Termination by Bank for Cause. The Bank may terminate this
Agreement for cause on the following terms and conditions:
<PAGE>
(i) The Bank shall be deemed to have cause to terminate
Executive's employment only in one of the following
events:
(A) The Executive shall, after one prior written
notice, willfully fail to substantially
perform his obligations under this Agreement
(it being understood that any such failure
resulting from Executive's incapacity due to
physical or mental illness shall not be
deemed willful);
(B) Any intentional act which is intended by
Executive to materially injure the Bank;
(C) Any criminal act involving moral turpitude;
(D) Any dishonest or fraudulent act; or,
(E) Any refusal to obey written orders or instructions of
the Board of Directors of the Bank, after one prior
written notice, unless such instructions would require
Executive to commit an illegal act, could subject
Executive to personal liability, would require
Executive to violate the terms of this Agreement, or
would otherwise be inconsistent with the duties of an
officer of a national banking association.
(ii) The Bank shall be deemed to have cause to terminate
Executive's employment only when a majority of the members
of the Board of Directors of the Bank finds that, in the
good faith opinion of such majority, Executive committed any
of the acts set forth in clauses (A) through (E) of the
preceding subparagraph, such finding to have been made after
at least ten (10) business days' notice to Executive and an
opportunity for Executive, together with his counsel, to be
heard before such majority. The determination of such
majority, made as set forth above, shall be binding upon the
Bank and Executive, absent bad faith or willful misconduct.
<PAGE>
(iii)The effective date of a termination for cause shall be
the date of the action of such majority finding the
termination was with cause. In the event the Bank
terminates this Agreement for cause, (A) the Bank shall
pay Executive Executive's then Annual Salary through,
but not beyond, the effective date of the termination,
(B) Executive shall receive those benefits that are
accrued through but not beyond the effective date of
such termination which are thereafter payable under the
terms and provisions of benefit plans then in effect in
accordance with paragraph 3 above.
(b) Termination By Executive. The Executive may, at any time after
the first anniversary date of the consummation of the Merger,
terminate this Agreement on the following terms and
conditions:
(i) The Executive may give written notice of termination
to the Bank. The termination shall be effective on
the fifteenth (15th) business day following the
notice of termination.
(ii) Upon termination by Executive, the Bank shall have no
obligation to Executive under this Agreement beyond
the effective date of the termination; provided,
however, that Executive shall be entitled to receive
any benefits, insured or otherwise, that Executive
would otherwise be able to receive under any benefit
plan of the Bank of which Executive is a beneficiary
in accordance with paragraph 3.
(c) Termination after Bank Merger. Either party to this Agreement
may, at any time after the ninetieth (90th) day after the Bank
Merger, terminate this Agreement on the following terms and
conditions:
(i) The party terminating this Agreement shall give
written notice of termination to the other party
hereto. The termination shall be effective on the
fifteenth (15th) business day following the notice of
termination.
(ii) Upon termination pursuant to this paragraph 5(c), the
obligations of the Executive pursuant to paragraph
8(a) and the Bank pursuant to paragraph 8(b) shall
continue for the remaining period of non-competition
set forth in paragraph 8(a).
<PAGE>
(6) Death of Executive. In the event of Executive's death during the term
of this Agreement, his estate, legal representatives, or named
beneficiaries (as set forth in a writing by Executive delivered to the
Bank prior to death) (i) shall be paid Executive's Annual Salary and
Additional Benefits for a period equal to the lesser of the remaining
term of this agreement or six (6) months following the date of
Executive's death and (ii) shall receive those benefits which are
accrued through the date six (6) months after the date of Executive's
death and which are thereafter payable under the terms and provisions
of the benefit plans then in effect in accordance with paragraph 3
above.
(7) Provisions Respecting Illness. In the event Executive is unable to
perform his duties under this Agreement on a full-time basis for a
period of six (6) consecutive months by reason of illness or other
physical or mental disability, and at or before the end of such period,
Executive does not return to work on a full-time basis, the Bank may
terminate this Agreement without further or additional compensation
being due Executive from the Bank except annual salary and benefits
accrued through the date of such termination under benefit plans then
in effect in accordance with paragraph 3 above.
(8) Agreement Not to Compete. The provisions of this paragraph 8 are hereafter
called the "Non-Competition Agreement".
(a) Executive agrees that for a period of 3 years after the commencement
of this Agreement, Executive shall not directly or indirectly (whether
as an officer, director, employee, partner, 5% stockholder or agent)
(i) engage in the banking business generally or in any business in
which the Bank has, as of the date of such termination engaged, in
Dallas County or Collin County, Texas, or (ii) solicit the banking
business of any clients of Bank or Bank's affiliates or solicit
employees of Bank or Bank's affiliates to seek employment with any
person or entity engaged in the financial services business except the
Bank and its affiliates, whether, in either case, such solicitation is
made within or without the area described in this paragraph 8, except
that this Non-Competition Agreement shall not be binding on Executive
if the Bank shall have breached its obligations under this Agreement.
(b) Except in the event of the termination of Executive's employment with
the Bank pursuant to the provisions of paragraph 5(a) or paragraph
5(b) of this Agreement, the Bank shall pay Executive during such
period of non-competition (i) 100% of his Annual Salary at the time of
termination, for each full calendar month payable on the first day of
each calendar month commencing with the first calendar month of the
period of non-competition and (ii) the Bank shall continue in effect,
and provide to Executive, the same or similar medical insurance and
disability insurance as provided to Executive immediately prior to
such termination.
(c) Executive agrees that (i) this Non-Competition Agreement is entered
into in connection with the sale to BOKF of the goodwill of the
business of the Bank, (ii) Executive is receiving valuable
consideration in the Merger for this Non-Competition Agreement, (iii)
the restrictions imposed upon Executive by this Non-Competition
Agreement are essential and necessary to ensure BOKF acquires the
goodwill of the Bank, and (iv) all the restrictions (including
particularly the time and geographical limitations) set forth in this
Non-Competition Agreement are fair and reasonable.
<PAGE>
(d) Executive agrees that any remedy at law for any breach of this
Non-Competition Agreement would be inadequate and, in the event of any
such breach, the Bank shall be entitled to both immediate and
permanent injunctive relief without the necessity of posting any bond
therefor to preclude any such breach (in addition to any remedies of
law which the Bank may be entitled).
(9) Miscellaneous Provisions. The following miscellaneous provisions shall apply
to this Agreement:
(a) All notices or advices required or permitted to be given by or
pursuant to this Agreement, shall be given in writing. All such
notices and advices shall be (i) delivered personally, (ii) delivered
by facsimile or delivered by U.S. Registered or Certified Mail, Return
Receipt Requested mail, or (iii) delivered for overnight delivery by a
nationally recognized overnight courier service. Such notices and
advices shall be deemed to have been given (i) the first business day
following the date of delivery if delivered personally or by
facsimile, (ii) on the third business day following the date of
mailing if mailed by U.S. Registered or Certified Mail, Return Receipt
Requested, or (iii) on the date of receipt if delivered for overnight
delivery by a nationally recognized overnight courier service. All
such notices and advices and all other communications related to this
Agreement shall be given as follows:
If to the Bank:
BOK Financial Corporation
P.O. Box 2300
Tulsa, OK 74192
Attention: Stanley A. Lybarger
Telecopy No.: (918) 588-6888
and
Canyon Creek National Bank
333 West Campbell Road
Richardson, Texas 75080
Attention: Chairman of the Board
Telecopy No.: (972) 234-8641
<PAGE>
With a Copy to:
Bank of Texas, N. A.
5956 Sherry Lane, Suite 1800
Dallas, Texas 75225
Attention: Mr. C. Fred Ball, Jr., President
Telecopy No.: (214) 521-9072
and
Frederic Dorwart
Old City Hall
124 East Fourth Street
Tulsa, OK 74103-5010
Telecopy No.: (918) 583-8251
If to Executive:
Mr. Charles O. Rolfe, Jr.
================================
--------------------------------
Telecopy No.: ___________________
or to such other address as the party may have furnished to
the other parties in accordance herewith, except that notice
of change of addresses shall be effective only upon receipt.
(b) This Agreement is made and executed in Dallas County, Texas,
and all actions or proceedings with respect to, arising
directly or indirectly in connection with, out of, related to
or from this Agreement, shall be litigated in courts having
situs in Dallas County, Texas.
(c) This Agreement shall be subject to, and interpreted by and in
accordance with, the laws (excluding conflict of law
provisions) of the State of Texas.
(d) This Agreement is the entire Agreement of the parties
respecting the subject matter hereof. There are no other
agreements, representations or warranties, whether oral or
written, respecting the subject matter hereof, except as
stated in this Agreement.
(e) This Agreement, and all the provisions of this Agreement,
shall be deemed drafted by all of the parties hereto.
<PAGE>
(f) This Agreement shall not be interpreted strictly for or
against any party, but solely in accordance with the fair
meaning of the provisions hereof to effectuate the purposes
and interest of this Agreement.
(g) Each party hereto has entered into this Agreement based solely
upon the agreements, representations and warranties expressly
set forth herein and upon his own knowledge and investigation.
Neither party has relied upon any representation or warranty
of any other party hereto except any such representations or
warranties as are expressly set forth herein.
(h) Each of the persons signing below on behalf of a party hereto
represents and warrants that he or she has full requisite
power and authority to execute and deliver this Agreement on
behalf of the parties for whom he or she is signing and to
bind such party to the terms and conditions of this Agreement.
(i) This Agreement may be executed in counterparts, each of which
shall be deemed an original. This Agreement shall become
effective only when all of the parties hereto shall have
executed the original or counterpart hereof. This Agreement
may be executed and delivered by a facsimile transmission of a
counterpart signature page hereof.
(j) In any action brought by a party hereto to enforce the
obligations of any other party hereto, the prevailing party
shall be entitled to collect from the opposing party to such
action such party's reasonable litigation costs and attorneys
fees and expenses (including court costs, reasonable fees of
accountants and experts, and other expenses incidental to the
litigation).
(k) This Agreement shall be binding upon and shall inure to the
benefit of the parties and their respective successors and
assigns. The Bank agrees that if it merges, consolidates or
combines with any other business entity, it shall cause the
succeeding or continuing corporation or business entity to
expressly assume and confirm in writing the obligations of the
Bank under this Agreement.
(l) This is not a third party beneficiary contract, except BOKF
(including each affiliate thereof) shall be a third party
beneficiary of this Agreement. No person or entity other than
a party signing this Agreement and those designated as a third
party beneficiary herein shall have any rights under this
Agreement.
(m) This Agreement may be amended or modified only in a writing
which specifically references this Agreement.
<PAGE>
(n) A party to this Agreement may decide or fail to require full
or timely performance of any obligation arising under this
Agreement. The decision or failure of a party hereto to
require full or timely performance of any obligation arising
under this Agreement (whether on a single occasion or on
multiple occasions) shall not be deemed a waiver of any such
obligation. No such decisions or failures shall give rise to
any claim of estoppel, laches, course of dealing, amendment of
this Agreement by course of dealing, or other defense of any
nature to any obligation arising hereunder.
(o) In the event any provision of this Agreement, or the
application of such provision to any person or set of
circumstances, shall be determined to be invalid, unlawful, or
unenforceable to any extent for any reason, the remainder of
this Agreement, and the application of such provision to
persons or circumstances other than those as to which it is
determined to be invalid, unlawful, or unenforceable, shall
not be affected and shall continue to be enforceable to the
fullest extent permitted by law.
Dated and effective the date first set forth above.
CANYON CREEK NATIONAL BANK
By: _____________________
Charles W. Eisemann,
Chairman of the Board
______________________
Charles O. Rolfe, Jr.
<PAGE>
EXHIBIT "D"
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made, effective this ___ day
of ______________, 1999, between Canyon Creek National Bank, a national banking
association (the "Bank") and John B. Whisenant, an individual residing in
McKinney, Texas (the "Executive").
The Bank and Executive, in consideration of the promises and covenants
set forth herein (the receipt and adequacy of which is hereby acknowledged) and
intending to be legally bound hereby, agree as follows:
(1) Purpose of This Agreement. The purpose of this agreement is as follows:
(a) The Bank is a national banking association, engaged in the
banking business in Dallas County, Texas.
(b) The Executive is currently serving as President of the
McKinney Branch of the Bank. The Executive currently has no
written agreement of employment with the Bank, but Executive
is currently receiving salary compensation and other benefits
from the Bank (collectively, the "Current Benefits"). BOK
Financial Corporation ("BOKF") is a bank holding company. BOKF
owns indirectly all of the issued and outstanding capital
stock of Bank of Texas, National Association ("BOT") and BOKF
Merger Corporation Number Nine, a Texas corporation.
(c) Pursuant to an Agreement and Plan of Merger, dated as of
February 19, 1999 (the "Merger Agreement"), among BOKF,
Chaparral Bancshares, Inc. ("Chaparral"), and BOK Merger
Corporation Number Nine, BOKF is acquiring indirect ownership
of the Bank (the "Merger"). Upon and subject to consummation
of the Merger, the Bank desires to retain the services of
Executive, and Executive desires to continue to render
services to the Bank. It is contemplated that in the near
future, the Bank will be merged into BOT (the "Bank Merger").
(d) The purpose of this Agreement is to set forth the terms and
conditions (i) on which the Bank shall, subject to
consummation of the Merger, employ Executive from and after
consummation of the Merger and (ii) on which Executive agrees
not to compete with the Bank.
(2) Employment. The Bank hereby employs Executive, and Executive hereby
agrees to work for the Bank, on the following terms and conditions:
<PAGE>
(a) Until the Bank Merger, Executive shall serve as President of the
McKinney Branch of the Bank, subject to the direction of the
Board of Directors of the Bank and of the Chief Executive Officer
of BOT; provided, that, in the event of a conflict between the
directions being given by the Board of Directors of the Bank and
the Chief Executive Officer of BOT, Executive shall act in
accordance with the directions of the Board of Directors of the
Bank. After consummation of the Bank Merger, the Executive shall
serve as President of Bank of Texas - McKinney (an unincorporated
banking division of the Bank).
(b) Executive shall devote all time and attention reasonably
necessary to the affairs of the Bank and shall serve the Bank
diligently, loyally, and to the best of his ability.
(c) Executive shall serve in such other or additional positions as
an officer and/or director of the Bank as Executive and the
Board of Directors of the Bank may mutually agree or any
affiliate of the Bank as Executive and the Chief Executive
Officer of BOT may mutually agree; provided, however,
Executive's residence and place of work shall remain in Collin
County, Texas.
(d) Notwithstanding anything herein to the contrary, Executive
shall not be precluded from engaging in any charitable, civic,
political or community activity or membership in any
professional organization.
(3) Compensation. As the sole, full and complete compensation to Executive
for the performance of all duties of Executive under this Agreement and
for all services rendered by Executive to the Bank or to any affiliate
of the Bank:
(a) The Bank shall pay to Executive the sum of $120,000 per year
payable in installments in arrears, less usual and customary
payroll deductions for FICA, federal and state withholding,
and the like, at the times and in the manner in effect in
accordance with the usual and customary payroll policies
generally in effect from time to time at the Bank ("Annual
Salary").
(b) The Bank shall pay and provide to Executive pension, thrift,
medical insurance, disability insurance plan benefits, and other
fringe benefits, generally in effect for senior executive
employees of BOKF and its affiliates (the "Additional Benefits").
The pension benefits provided to BOKF employees are fully
described in the official plan document. Executive shall be
credited with his prior service at Chaparral and its affiliates
in BOKF's 401k plan and in connection with the Additional
Benefits, other than in connection with BOKF's pension plan.
<PAGE>
(c) The Bank may, from time to time in Bank's sole discretion
consistent with the practices generally in effect for senior
executive employees of BOKF and its affiliates, pay or
provide, or agree to pay or provide, Executive a bonus, stock
option, or other incentive or performance based compensation.
All such bonus, stock option or other incentive or performance
based compensation, regardless of its nature (hereinafter
called "Performance Compensation") shall not constitute Annual
Salary.
(d) The Bank shall reimburse Executive for reasonable and
necessary entertainment, travel and other expenses in
accordance with BOKF's standard policies in general effect for
senior executive employees of BOKF's affiliates (which
includes dues for lunch clubs, but does not include
reimbursement for country club memberships or dues).
(e) The Executive shall be allowed vacation, holidays, and other
employee benefits not described above in accordance with the
Bank's standard policy in general effect for Bank's senior
executive employees.
(f) The Executive shall be considered for the award of options
pursuant to BOKF's stock option plan on the same basis as
other senior executives of BOKF and its affiliates.
(g) Executive hereby agrees to accept the foregoing compensation
from and after the date of consummation of the Merger in lieu
of all Current Benefits and as the sole, full and complete
compensation to Executive for the performance of all duties of
Executive under this Agreement and for all services rendered
by Executive to the Bank or any affiliate of the Bank.
(4) Term of this Agreement. The term of this Agreement (the "Term") shall
commence (the "Commencement") as of the commencement of the first
pay-roll period immediately preceding the effective date of the Merger
and shall terminate on the second anniversary date of the Commencement.
(5) Termination of This Agreement. Notwithstanding the provisions of paragraph
4 of this Agreement, this Agreement may be terminated on the following
terms and conditions:
(a) Termination by Bank for Cause. The Bank may terminate this Agreement
for cause on the following terms and conditions:
(i) The Bank shall be deemed to have cause to terminate Executive's
employment only in one of the following events:
<PAGE>
(A) The Executive shall, after one prior written notice,
willfully fail to substantially perform his obligations
under this Agreement (it being understood that any such
failure resulting from Executive's incapacity due to
physical or mental illness shall not be deemed willful);
(B) Any intentional act which is intended by Executive to
materially injure the Bank;
(C) Any criminal act involving moral turpitude;
(D) Any dishonest or fraudulent act; or,
(E) Any refusal to obey written orders or instructions of the
Board of Directors of the Bank, after one prior written
notice, unless such instructions would require Executive to
commit an illegal act, could subject Executive to personal
liability, would require Executive to violate the terms of
this Agreement, or would otherwise be inconsistent with the
duties of an officer of a national banking association.
(ii) The Bank shall be deemed to have cause to terminate
Executive's employment only when a majority of the
members of the Board of Directors of the Bank finds
that, in the good faith opinion of such majority,
Executive committed any of the acts set forth in
clauses (A) through (E) of the preceding subparagraph,
such finding to have been made after at least ten (10)
business days' notice to Executive and an opportunity
for Executive, together with his counsel, to be heard
before such majority. The determination of such
majority, made as set forth above, shall be binding
upon the Bank and Executive, absent bad faith or
willful misconduct.
(iii)The effective date of a termination for cause shall be
the date of the action of such majority finding the
termination was with cause. In the event the Bank
terminates this Agreement for cause, (A) the Bank shall
pay Executive Executive's then Annual Salary through,
but not beyond, the effective date of the termination,
(B) Executive shall receive those benefits that are
accrued through but not beyond the effective date of
such termination which are thereafter payable under the
terms and provisions of benefit plans then in effect in
accordance with paragraph 3 above.
<PAGE>
(b) Termination By Executive. The Executive may, at anytime after the
first anniversary date of the consummation of the Merger, terminate
this Agreement on the following terms and conditions:
(i) The Executive may give written notice of termination to the Bank.
The termination shall be effective on the fifteenth (15th)
business day following the notice of termination.
(ii) Upon termination by Executive, the Executive shall be entitled to
receive any benefits, insured or otherwise, that Executive would
otherwise be able to receive under any benefit plan of the Bank
of which Executive is a beneficiary in accordance with paragraph
3.
(6) Death of Executive. In the event of Executive's death during the term
of this Agreement, his estate, legal representatives, or named
beneficiaries (as set forth in a writing by Executive delivered to the
Bank prior to death) (i) shall be paid Executive's Annual Salary and
Additional Benefits for a period equal to the lesser of the remaining
term of this agreement or six (6) months following the date of
Executive's death and (ii) shall receive those benefits which are
accrued through the date six (6) months after the date of Executive's
death and which are thereafter payable under the terms and provisions
of the benefit plans then in effect in accordance with paragraph 3
above.
(7) Provisions Respecting Illness. In the event Executive is unable to
perform his duties under this Agreement on a full-time basis for a
period of six (6) consecutive months by reason of illness or other
physical or mental disability, and at or before the end of such period,
Executive does not return to work on a full-time basis, the Bank may
terminate this Agreement without further or additional compensation
being due Executive from the Bank except annual salary and benefits
accrued through the date of such termination under benefit plans then
in effect in accordance with paragraph 3 above.
(8) Agreement Not to Compete. The provisions of this paragraph 8 are hereafter
called the "Non-Competition Agreement".
<PAGE>
(a) Executive agrees that for a period of 12 months after the termination
of Executive's employment with Bank, for whatever reason such
employment may cease and whether for cause or without cause, Executive
shall not directly or indirectly (whether as an officer, director,
employee, partner, 5% stockholder or agent) (i) engage in the banking
business generally or in any business in which the Bank has, as of the
date of such termination engaged, in Collin County, Texas, or (ii)
solicit the banking business of any clients of Bank or Bank's
affiliates or solicit employees of Bank or Bank's affiliates to seek
employment with any person or entity engaged in the financial services
business except the Bank and its affiliates, whether, in either case,
such solicitation is made within or without the area described in this
paragraph 8, except that this Non-Competition Agreement shall not be
binding on Executive if the Bank shall have breached its obligations
under this Agreement.
(b) The Bank shall pay Executive during such period of non-competition (i)
50% of his Annual Salary at the time of termination, for each full
calendar month payable on the first day of each calendar month
commencing with the first calendar month of the period of
non-competition and (ii) the Bank shall continue in effect, and
provide to Executive, the same or similar medical insurance and
disability insurance as provided to Executive immediately prior to
such termination.
(c) Executive agrees that (i) this Non-Competition Agreement is entered
into in connection with the sale to BOKF of the goodwill of the
business of the Bank, (ii) Executive is receiving valuable
consideration in the Merger for this Non-Competition Agreement, (iii)
the restrictions imposed upon Executive by this Non-Competition
Agreement are essential and necessary to ensure BOKF acquires the
goodwill of the Bank, and (iv) all the restrictions (including
particularly the time and geographical limitations) set forth in this
Non-Competition Agreement are fair and reasonable.
(d) Executive agrees that any remedy at law for any breach of this
Non-Competition Agreement would be inadequate and, in the event of any
such breach, the Bank shall be entitled to both immediate and
permanent injunctive relief without the necessity of posting any bond
therefor to preclude any such breach (in addition to any remedies of
law which the Bank may be entitled).
(9) Miscellaneous Provisions. The following miscellaneous provisions shall
apply to this Agreement:
(a) All notices or advices required or permitted to be given by or
pursuant to this Agreement, shall be given in writing. All such
notices and advices shall be (i) delivered personally, (ii) delivered
by facsimile or delivered by U.S. Registered or Certified Mail, Return
Receipt Requested mail, or (iii) delivered for overnight delivery by a
nationally recognized overnight courier service. Such notices and
advices shall be deemed to have been given (i) the first business day
following the date of delivery if delivered personally or by
facsimile, (ii) on the third business day following the date of
mailing if mailed by U.S. Registered or Certified Mail, Return Receipt
Requested, or (iii) on the date of receipt if delivered for overnight
delivery by a nationally recognized overnight courier service. All
such notices and advices and all other communications related to this
Agreement shall be given as follows:
If to the Bank:
<PAGE>
BOK Financial Corporation
P.O. Box 2300
Tulsa, OK 74192
Attention: Stanley A. Lybarger
Telecopy No.: (918) 588-6888
and
Canyon Creek National Bank
333 West Campbell Road
Richardson, Texas 75080
Attention: Chairman of the Board
Telecopy No.: (972) 234-8641
With a Copy to:
Bank of Texas, N.A.
5956 Sherry Lane, Suite 1800
Dallas, Texas 75225
Attention: Mr. C. Fred Ball, Jr., President
Telecopy No.: (214) 521-9072
and
Frederic Dorwart
Old City Hall
124 East Fourth Street
Tulsa, OK 74103-5010
Telecopy No.: (918) 583-8251
If to Executive:
John B. Whisenant
--------------------------------
--------------------------------
Telecopy No.: ___________________
or to such other address as the party may have furnished to
the other parties in accordance herewith, except that notice
of change of addresses shall be effective only upon receipt.
(b) This Agreement is made and executed in Dallas County, Texas,
and all actions or proceedings with respect to, arising
directly or indirectly in connection with, out of, related to
or from this Agreement, shall be litigated in courts having
situs in Dallas County, Texas.
<PAGE>
(c) This Agreement shall be subject to, and interpreted by and in
accordance with, the laws (excluding conflict of law
provisions) of the State of Texas.
(d) This Agreement is the entire Agreement of the parties
respecting the subject matter hereof. There are no other
agreements, representations or warranties, whether oral or
written, respecting the subject matter hereof, except as
stated in this Agreement.
(e) This Agreement, and all the provisions of this Agreement,
shall be deemed drafted by all of the parties hereto.
(f) This Agreement shall not be interpreted strictly for or
against any party, but solely in accordance with the fair
meaning of the provisions hereof to effectuate the purposes
and interest of this Agreement.
(g) Each party hereto has entered into this Agreement based solely
upon the agreements, representations and warranties expressly
set forth herein and upon his own knowledge and investigation.
Neither party has relied upon any representation or warranty
of any other party hereto except any such representations or
warranties as are expressly set forth herein.
(h) Each of the persons signing below on behalf of a party hereto
represents and warrants that he or she has full requisite
power and authority to execute and deliver this Agreement on
behalf of the parties for whom he or she is signing and to
bind such party to the terms and conditions of this Agreement.
(i) This Agreement may be executed in counterparts, each of which
shall be deemed an original. This Agreement shall become
effective only when all of the parties hereto shall have
executed the original or counterpart hereof. This Agreement
may be executed and delivered by a facsimile transmission of a
counterpart signature page hereof.
(j) In any action brought by a party hereto to enforce the
obligations of any other party hereto, the prevailing party
shall be entitled to collect from the opposing party to such
action such party's reasonable litigation costs and attorneys
fees and expenses (including court costs, reasonable fees of
accountants and experts, and other expenses incidental to the
litigation).
(k) This Agreement shall be binding upon and shall inure to the
benefit of the parties and their respective successors and
assigns. The Bank agrees that if it merges, consolidates or
combines with any other business entity, it shall cause the
succeeding or continuing corporation or business entity to
expressly assume and confirm in writing the obligations of the
Bank under this Agreement.
<PAGE>
(l) This is not a third party beneficiary contract, except BOKF
(including each affiliate thereof) shall be a third party
beneficiary of this Agreement. No person or entity other than
a party signing this Agreement and those designated as a third
party beneficiary herein shall have any rights under this
Agreement.
(m) This Agreement may be amended or modified only in a writing
which specifically references this Agreement.
(n) A party to this Agreement may decide or fail to require full
or timely performance of any obligation arising under this
Agreement. The decision or failure of a party hereto to
require full or timely performance of any obligation arising
under this Agreement (whether on a single occasion or on
multiple occasions) shall not be deemed a waiver of any such
obligation. No such decisions or failures shall give rise to
any claim of estoppel, laches, course of dealing, amendment of
this Agreement by course of dealing, or other defense of any
nature to any obligation arising hereunder.
(o) In the event any provision of this Agreement, or the
application of such provision to any person or set of
circumstances, shall be determined to be invalid, unlawful, or
unenforceable to any extent for any reason, the remainder of
this Agreement, and the application of such provision to
persons or circumstances other than those as to which it is
determined to be invalid, unlawful, or unenforceable, shall
not be affected and shall continue to be enforceable to the
fullest extent permitted by law.
Dated and effective the date first set forth above.
CANYON CREEK NATIONAL BANK
By: __________________________
Charles W. Eisemann,
Chairman of the Board
__________________________
John B. Whisenant
<PAGE>
EXHIBIT "E"
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (the "Agreement") is made and entered
into as of the ______ day of ___________, 1999, by and between Canyon Creek
National Bank, a national banking association (the "Bank") and Charles W.
Eisemann, an individual resident of the State of Texas ("Eisemann").
RECITALS
WHEREAS, pursuant to an Agreement and Plan of Merger, dated as of
February 19, 1999 (the "Merger Agreement"), among BOK Financial Corporation
("BOKF"), Chaparral Bancshares, Inc., and BOK Merger Corporation Number Nine,
BOKF is acquiring indirect ownership of the Bank (the "Merger"); and
WHEREAS, in connection with consummation of the transactions
contemplated by the Merger Agreement, the Bank and Eisemann have agreed to enter
into this Noncompetition Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and intending to be legally bound hereby, the Bank and Eisemann
agree as follows:
1. Noncompete Covenants.
(a) Eisemann agrees that for a period of 24 months after the
date of consummation of the Merger, Eisemann shall not directly or indirectly
(whether as an officer, director, employee, partner, 5% stockholder or agent)
(i) engage in the banking business generally or in any business in which the
Bank has, as of the date of the Merger engaged, in Dallas County, Texas, or (ii)
solicit the banking business of any clients of Bank or Bank's affiliates or
solicit employees of Bank or Bank's affiliates to seek employment with any
person or entity engaged in the financial services business except the Bank and
its affiliates, whether, in either case, such solicitation is made within or
without the area described in this paragraph, except that this Agreement shall
not be binding on Eisemann if the Bank shall have breached its obligations under
this Agreement.
(b) For and in consideration of his obligations hereunder, the
Bank shall pay Eisemann $1,000 in a lump sum payment to be made as of the time
the Merger is effective.
(c) Eisemann agrees that (i) this Noncompetition Agreement is
entered into in connection with the sale to BOKF of the goodwill of the business
of the Bank, (ii) Eisemann is receiving valuable consideration in the Merger for
this Noncompetition Agreement, (iii) the restrictions imposed upon Eisemann by
this Noncompetition Agreement are essential and necessary to ensure BOKF
acquires the goodwill of the Bank, and (iv) all the restrictions (including
particularly the time and geographical limitations) set forth in this
Noncompetition Agreement are fair and reasonable.
2. Injunctive Relief. Eisemann agrees that any remedy at law for any
breach of this Noncompetition Agreement would be inadequate and, in the event of
any such breach, the Bank shall be entitled to both immediate and permanent
injunctive relief without the necessity of posting any bond therefor to preclude
any such breach (in addition to any remedies of law which the Bank may be
entitled).
3. Assignability. This Agreement shall not be assigned by either party
without the prior written consent of the other party.
4. Parties Bound. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective legal representatives,
successors and assigns, except as otherwise expressly provided herein.
5. Texas Law to Apply. This Agreement shall be subject to, and
interpreted by and in accordance with, the laws (excluding conflict of law
provisions) of the State of Texas. This Agreement is made and executed in Dallas
County, Texas, and all actions or proceedings with respect to, arising directly
or indirectly in connection with, out of, related to or from this Agreement,
shall be litigated in courts having situs in Dallas County, Texas.
6. Legal Construction. In the event any provision of this Agreement, or
the application of such provision to any person or set of circumstances, shall
be determined to be invalid, unlawful, or unenforceable to any extent for any
reason, the remainder of this Agreement, and the application of such provision
to persons or circumstances other than those as to which it is determined to be
invalid, unlawful, or unenforceable, shall not be affected and shall continue to
be enforceable to the fullest extent permitted by law.
7. Notice. All notices or advices required or permitted to be given by
or pursuant to this Agreement, shall be given in writing. All such notices and
advices shall be (i) delivered personally, (ii) delivered by facsimile or
delivered by U.S. Registered or Certified Mail, Return Receipt Requested mail,
or (iii) delivered for overnight delivery by a nationally recognized overnight
courier service. Such notices and advices shall be deemed to have been given (i)
the first business day following the date of delivery if delivered personally or
by facsimile, (ii) on the third business day following the date of mailing if
mailed by U.S. Registered or Certified Mail, Return Receipt Requested, or (iii)
on the date of receipt if delivered for overnight delivery by a nationally
recognized overnight courier service. All such notices and advices and all other
communications related to this Agreement shall be given as follows:
If to the Bank:
BOK Financial Corporation
P.O. Box 2300
Tulsa, OK 74192
Attention: Stanley A. Lybarger
Telecopy No.: (918) 588-6888
<PAGE>
and
Bank of Texas, N.A.
5956 Sherry Lane, Suite 1800
Dallas, Texas 75225
Attention: Mr. C. Fred Ball, Jr., President
Telecopy No.: (214) 521-9072
and
Canyon Creek National Bank
333 West Campbell Road
Richardson, Texas 75080
Attention: Chairman of the Board
Telecopy No.: (972) 234-8641
With a Copy to:
Frederic Dorwart
Old City Hall
124 East Fourth Street
Tulsa, OK 74103-5010
Telecopy No.: (918) 583-8251
If to Eisemann:
------------------------------
================================
--------------------------------
Telecopy No.: __________________
or to such other address as the party may have furnished to the other parties in
accordance herewith, except that notice of change of addresses shall be
effective only upon receipt.
8. Entire Agreement. This Agreement is the entire Agreement of the
parties respecting the subject matter hereof. There are no other agreements,
representations or warranties, whether oral or written, respecting the subject
matter hereof, except as stated in this Agreement.
9. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original. This Agreement shall become effective only
when all of the parties hereto shall have executed the original or counterpart
hereof. This Agreement may be executed and delivered by a facsimile transmission
of a counterpart signature page hereof.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
_________________________________
Charles W. Eisemann
CANYON CREEK NATIONAL BANK
By:________________________________
Charles O. Rolfe, Jr., President
EXHIBIT "F"
ESCROW AGREEMENT
This ESCROW AGREEMENT has been executed this ____ day of
_______________, 1999, by and between BOK Financial Corporation ("BOKF"), the
shareholders of Chaparral Bancshares, Inc. (the "Shareholders"), and Bank of
Texas Trust Company, National Association (the "Escrow Agent").
BOKF has deposited in escrow with the Escrow Agent $400,000 pursuant to
that certain Agreement and Plan of Merger dated as of February 19, 1999, among
BOKF, BOKF Merger Corporation Number Nine, and Chaparral Bancshares, Inc. (the
"Merger Agreement"). The parties agree that this escrow shall be administered in
accordance with Section 11.2 of the Merger Agreement, a true and correct copy of
which is attached hereto and incorporated herein by this reference. BOKF and the
Agents (as defined in Section 11.2 of the Merger Agreement) shall jointly
provide all notices to the Escrow Agent required by Section 11.2 of the Merger
Agreement to fulfil the terms and conditions of the Escrow Account, and the
Escrow Agent shall act only pursuant to the joint written instructions of BOKF
and the Agents.
The parties to this Escrow Agreement agree that the following
provisions shall control with respect to the rights duties, liabilities,
privileges and immunities of the Escrow Agent.
(a) The Escrow Agent is not a party to, and is not bound by, or charged
with notice of, any agreement out of which this escrow may arise.
(b) The Escrow Agent acts hereunder as a depository only, and is not
responsible or liable in any manner whatever for the sufficiency, correctness,
genuineness or validity of the subject matter of the escrow, or any part
thereof, or for the form or execution thereof, or for the identity or authority
of any person executing or depositing it. The Escrow Agent will not render
investment advice with respect to the subject matter of this escrow.
(c) In the event the Escrow Agent becomes involved in litigation in
connection with this escrow, the undersigned jointly and severally agree to
indemnify and save the Escrow Agent harmless from all loss, cost, damages,
expenses and attorney's fees suffered or incurred by the Escrow Agent as a
result thereof.
(d) The Escrow Agent shall be protected in acting upon any written
notice, request, waiver, consent, certificate, receipt, authorization, power of
attorney or other paper or document which the Escrow Agent in good faith
believes to be genuine and what it purports to be.
(e) The Escrow Agent shall not be liable for anything that it may do or
refrain from doing in connection herewith, except its own gross negligence or
willful misconduct.
<PAGE>
(f) The Escrow Agent may consult with legal counsel in the event of any
dispute or question as to the construction of any of the provisions hereof or
its duties hereunder, and it shall incur no liability and shall be fully
protected in acting in accordance with the opinion and instructions of such
counsel.
(g) In the event of any disagreement between any of the parties to this
agreement, or between them or either of any of them and any other person,
resulting in adverse claims or demands being made in connection with the subject
matter of the escrow, or in the event that the Escrow Agent, in good faith, be
in doubt as to what action it should take hereunder, the Escrow Agent may, at
its option, refuse to comply with any claims or demands on it, or refuse to take
any other action hereunder, so long as such disagreement continues or such doubt
exists, and in any such event, the Escrow Agent shall not be or become liable in
any way or to any person for its failure or refusal to act, and the Escrow Agent
shall be entitled to continue so to refrain from acting until (i) the rights of
all parties shall have been fully and finally adjudicated by a court of
competent jurisdiction, or (ii) all differences shall have been adjusted and all
doubt resolved by agreement among all of the interested persons, and the Escrow
Agent shall have been notified thereof in writing signed by all such persons.
The rights of the Escrow Agent under this paragraph are cumulative of all other
rights which it may have by law or otherwise.
Executed in Dallas, Texas this ___ day of __________, 1999.
BOK FINANCIAL CORPORATION
By: ____________________________________________
Stanley A. Lybarger, Chief Executive Officer
SHAREHOLDERS
By: ____________________________________________
Charles W. Eisemann, as Chairman of the Board
of Directors of Chaparral Bancshares, Inc.
BANK OF TEXAS TRUST COMPANY,
NATIONAL ASSOCIATION
By: ___________________________
Name:
Title:
E
C O N F I D E N T I A L
ACQUISITION DOCUMENT
(CASH PURCHASE AND REVERSE TRIANGULAR MERGER TRANSACTION)
****
MERGER AGREEMENT
AMONG
BOK FINANCIAL CORPORATION,
PARK CITIES BANCSHARES, INC.,
MID-CITIES BANCSHARES, INC.,
AND
MID-CITIES NATIONAL BANK
* * * *
AGREEMENT DATE OF FEBRUARY 24, 1999
INDEX
TO
MERGER AGREEMENT
SECTION PAGE
1. Purpose of this Merger Agreement. . . 1
2. The Merger. . . . . . . . . 3
3. Effect of the Merger. . . . 4
4. Representations and Warranties of Mid-Cities . 5
5. Representations and Warranties of BOKF.........................15
6. Covenants......................................................17
7. Conditions Precedent to Closing by BOKF and Park Cities........31
8. Conditions Precedent to Closing by Mid-Cities..................33
9. Closing........................................................34
10. Escrow.........................................................36
11. Miscellaneous Provisions.......................................38
EXHIBIT CAPTION
EXHIBIT NUMBER
Subsidiaries
4.3
Material Liabilities
4.6.3
Conduct of Business Prior to Closing Exceptions
4.7
Contracts and Commitments
4.9
Litigation
4.10
Brokers and Commissions
4.11
Employee Contracts and Benefit Plans
4.15
ADA Exceptions
4.16
Compensation Exceptions
6.3.7
Principal Shareholders
6.4
Employment Agreements
6.8
Mid-Cities Counsel's Opinion
7.4
Non-Competition Agreement
7.6
BOKF Counsel's Opinion
8.3
Employment Agreement Exceptions
9.1.3
MERGER AGREEMENT
This merger agreement ("Merger Agreement") is made as of February 24, 1999 (the
"Agreement Date") among:
(i) Mid-Cities Bancshares, Inc., a Texas Corporation ("Mid-Cities");
(ii) Mid-Cities National Bank ("Mid-Cities Bank");
(iii) BOK Financial Corporation ("BOKF"); and,
(iv) Park Cities Bancshares, Inc, a Texas Corporation ("Park Cities").
In consideration of the mutual covenants contained herein, the adequacy of which
is hereby expressly acknowledged, and intending to be legally bound hereby,
Mid-Cities, Mid-Cities Bank, BOKF and Park Cities agree as follows:
1. PURPOSE OF THIS MERGER AGREEMENT. The purpose of this Merger Agreement is
as follows:
1.1 Mid-Cities is a bank holding company organized under the laws of Texas with
offices in Hurst, Texas. Mid-Cities is subject to regulation by the Federal
Reserve Board ("FRB"). Mid-Cities owns all of the issued and outstanding capital
stock of Mid-Cities Bank (located in Hurst, Texas). Mid-Cities Bank is a bank
organized in accordance with the laws of the United States and subject to
regulation by the Office of the Comptroller of the Currency. The issued and
outstanding capital stock of Mid-Cities consists solely of a single class of one
million (1,000,000) shares of common stock of a par value of $1.00 per share
("Mid-Cities Common Stock") of which 764,421 shares are issued and outstanding.
The issued and outstanding capital stock of Mid-Cities Bank consists solely of a
single class of one million (1,000,000) shares of common stock of a par value of
$5.00 per
share ("Mid-Cities Bank Common Stock") of which 302,621 shares are issued and
outstanding. The Common Stock of Mid-Cities issued and outstanding as of the
Closing, including all Common Stock of Mid-Cities acquired pursuant to the
exercise of the Stock Options (as hereafter defined), is hereafter called the
"Mid-Cities Common Stock".
1.2 BOKF is a bank holding company organized under the laws of the State of
Oklahoma. BOKF is subject to regulation by the FRB. BOKF owns all of the capital
stock of Park Cities. Park Cities is a bank holding company organized under the
laws of the State of Texas. Park Cities is subject to regulation by the FRB. The
issued and outstanding capital stock of Park Cities consists solely of 2,000,000
shares of common stock, par value of $5.00 per share (the "Park Cities Shares")
of which 1,193,034 shares are issued and outstanding.
1.3 The purpose of this Merger Agreement is to set forth the terms and
conditions on which Mid-Cities and Park Cities shall merge. This Merger
Agreement shall constitute a plan of merger for corporate law purposes and for
federal income tax purposes under Section 368(a)(2)(D) of the Internal Revenue
Code.
1.4 Park Cities owns all of the issued and outstanding capital stock of Park
Cities Corporation, a Nevada Corporation. Park Cities Corporation owns all of
the issued and outstanding capital stock of Bank of Texas, National Association
("BOT").
- 2 -
2. THE MERGER. On the terms and conditions hereafter stated, Park Cities [or an
acquisition subsidiary thereof] shall be merged into Mid-Cities (the "Merger").
2.1 Mid-Cities shall be the surviving corporation ("Surviving Corporation").
2.2 The Articles of Incorporation of Mid-Cities shall be the Articles of
Incorporation of the Surviving Corporation until changed as provided by law.
2.3 The Bylaws of Park Cities [or an acquisition subsidiary thereof] shall be
the Bylaws of the Surviving Corporation until changed as provided by law.
2.4 The officers of Park Cities shall be the officers of the Surviving
Corporation, until changed as provided by law.
2.5 The directors of Park Cities shall be the directors of the Surviving
Corporation until changed as provided by law.
2.6 The Merger shall be effective at the Closing (as hereafter provided in
Section 9).
2.7 Each share of Mid-Cities Common Stock shall, subject to the provisions of
Section 5.11 and following of the Texas Business Corporation Act, automatically
and without any action on the part of the holder thereof, be cancelled and
converted solely into the right to receive:
2.7.1 At Closing an amount of United States Dollars equal to (x) the Cash
Consideration (as hereafter defined) less the Escrow Amount (as hereafter
defined) divided by (y) the number of shares of Mid-Cities Common Stock; and,
- 3 -
2.7.2 Upon termination of the Escrow, her, his, or its proportionate share of
the remaining Escrow Amount, as provided in Section 10.
2.8 The Cash Consideration shall equal (i) Seventeen Million Dollars
($17,000,000) less (ii) the Transaction Costs (as hereafter defined) and less
(iii) One Hundred Sixty-Five Thousand Dollars ($165,000), representing the
Mid-Cities long term debt. The Transaction Costs are all accounting, brokerage,
commission, and legal costs attributable to, or resulting from, the negotiation,
execution, delivery, and consummation of this Agreement incurred by Mid-Cities
and Mid-Cities Bank in excess of Three Hundred Thousand Dollars ($300,000). If
the Merger is not consummated by July 1, 1999, for whatever reason, the Cash
Consideration shall be increased by an aggregate amount of the total Cash
Consideration to be paid to all shareholders (prior to such adjustment)
multiplied by the result of (A) the number of days from and after July 1, 1999
to the date the Merger is consummated, multiplied by (B) .0002778 (i.e., 1/360th
of 10%).
2.9 The Escrow Amount shall be Three Hundred Thousand Dollars ($300,000).
2.10 Notwithstanding the provisions of Section 2.7, all holders of Mid-Cities
Common Stock electing to dissent to the Merger pursuant to Section 5.11 and
following of the Texas Business Corporation Act shall have only those rights set
forth in said sections.
3. EFFECT OF THE MERGER. The Merger shall have the following effects:
3.1 The corporate franchise, existence, rights and liabilities of Mid-Cities
shall continue unaffected and unimpaired.
- 4 -
3.2 The corporate franchise, existence, rights and liabilities of Park Cities
[or an acquisition subsidiary] shall be merged into Mid-Cities and the
separate existence of Park Cities [or an acquisition subsidiary] shall
cease.
3.3 Mid-Cities shall have and be vested with all of the rights, powers, assets,
property, liabilities and obligations of Park Cities [or the acquisition
subsidiary thereof].
4. REPRESENTATIONS AND WARRANTIES OF MID-CITIES AND MID-CITIES BANK. Mid Cities
and Mid-Cities Bank hereby, jointly and severally, represent and warrant to BOKF
that:
4.1 INCORPORATION AND CORPORATE POWER. Mid-Cities is a corporation duly
organized, validly existing and in good standing under the laws of Texas.
Mid-Cities Bank is a bank duly organized, validly existing and in good standing
under the laws of the United States. Each of Mid-Cities and Mid-Cities Bank has
all the corporate power and authority necessary and required to own its
properties and to conduct its business as such business is now being conducted.
Each of Mid-Cities and Mid-Cities Bank is (A) in material compliance with all
applicable provisions of all applicable federal, state and local statutes, laws,
regulations, ordinances and other requirements of any governmental authorities
(including, but not limited to, whether similar or dissimilar, the Bank Holding
Company Act of 1956, the Texas Business Corporation Act, the National Bank Act
and the filing of all administrative reports and the payment of all fees) in
effect as of the date of this Merger Agreement and (B) shall be in material
compliance therewith at the time of Closing.
- 5 -
4.2 CAPITAL.
4.2.1 The Mid-Cities Common Stock is and at the Closing will be all of the
issued and outstanding capital stock of Mid-Cities. Other than the Stock
Options, no person or entity has any right or option to acquire any capital
stock of Mid-Cities. The Mid-Cities Common Stock shall consist at the Closing of
no more than Nine Hundred Ninety-One Thousand Four Hundred Twenty-One (991,421)
shares.
4.2.2 Mid-Cities owns all of the issued and outstanding capital stock of
Mid-Cities Bank Common Stock. The Mid-Cities Bank Common Stock is and at the
Closing will be all of the issued and outstanding capital stock of Mid-Cities
Bank. No person or entity has any right or option to acquire any capital stock
of Mid-Cities Bank.
4.3 CAPITALIZATION OF MID-CITIES AND MID-CITIES BANK. The Mid-Cities Common
Stock and Mid-Cities Bank Common Stock are validly issued and outstanding, fully
paid and non-assessable. There are no outstanding subscriptions, conversion
privileges, calls, warrants, options or agreements obligating Mid-Cities and
Mid-Cities Bank to issue, sell or dispose of, or to purchase, redeem or
otherwise acquire any shares of their capital stock (collectively, "options and
rights") except options to purchase two hundred twenty-seven thousand (227,000)
shares of Common Stock of Mid-Cities (the "Stock Options"). None of the
Mid-Cities Common Stock and Mid-Cities Bank Common Stock has been issued or
disposed of in violation of any preemptive rights of any shareholder nor in
violation of any agreement
-6-
to which Mid-Cities or Mid-Cities Bank was or is a party. Mid-Cities and
Mid-Cities Bank have no subsidiaries and do not own, nor have the right or
obligation to acquire, any shares of equity securities of any corporation except
(i) Mid-Cities Bank is a subsidiary of Mid-Cities and (ii) as set forth in
Exhibit 4.3.
4.4 NON-VIOLATION OF OTHER AGREEMENTS. The execution and delivery of this Merger
Agreement, and the compliance with its terms and provisions by Mid-Cities and
Mid-Cities Bank (including the execution and delivery of any document required
to be executed by Mid-Cities or Mid-Cities Bank) will not breach any material
agreement, lease, or obligation, whether similar or dissimilar, by which
Mid-Cities or Mid-Cities Bank is bound.
4.5 FINANCIAL STATEMENTS. Mid-Cities has delivered to BOKF, or will have
delivered to BOKF prior to the Closing as soon as future financial statements
are available, copies of the following ("Financial Statements"):
4.5.1 Consolidated Financial Statements (Audited) for Mid-Cities and
Subsidiaries, December 31, 1996, 1997, and 1998 (if available at the Closing);
4.5.2 Financial Statements (Unaudited) for Mid-Cities Bank, December 31, 1996,
1997, and 1998;
4.5.3 Financial Statements (Unaudited) for Mid-Cities and Subsidiaries, March
31, 1999 (if the Closing occurs after April 15, 1999) and after April 15,1999,
the most recent monthly financial statements as are available as of the Closing;
and,
- 7 -
4.5.4 Financial Statements (Unaudited) for Mid-Cities Bank, March 31, 1999 (if
the Closing occurs after April 15, 1999) and after April 15,1999, the most
recent monthly financial statements as are available as of the Closing.
The Financial Statements described in Section 4.5.1 and 4.5.2, (A) have been
prepared or will have been prepared in accordance with generally accepted
regulatory accounting principles, consistently applied and (B) fairly reflect
the financial condition and results of operations for the indicated periods. The
Financial Statements described in Sections 4.5.3 and 4.5.4 fairly reflect the
financial condition and results of operations for the periods indicated, subject
to immaterial year-end adjustments and the omission of footnotes.
4.6 MATERIAL LIABILITIES. Neither Mid-Cities nor Mid-Cities Bank has any
material liabilities (including, but not limited to, whether similar or
dissimilar, liabilities or obligations for taxes, whether due or to become due)
except: 4.6.1 Those fully reflected or reserved against, or otherwise disclosed,
in the Financial Statements;
4.6.2Those incurred with due care since December 31, 1998 in the normal course
of business consistent with past practices; and,
4.6.3 Those specifically disclosed in Exhibit 4.6.3 to this Merger Agreement.
- 8 -
4.7 CONDUCT OF BUSINESS PRIOR TO CLOSING. Except as set forth in Exhibit 4.7,
since December 31, 1998, and until the Closing of this transaction, (A) each of
Mid-Cities and Mid-Cities Bank has carried on and will carry on its business
only in the ordinary and normal course consistent with past practices and (B)
has not and will not, without the prior consent of BOKF:
4.7.1 Incur any material liabilities, commitments or obligations, contingent or
otherwise, or dispose of any of its assets, except in the ordinary course of its
business consistent with past practices and for the purpose of carrying on the
business as a going concern;
4.7.2 Incur any bank or other institutional debt, or enter into any agreement
for the borrowing of money; except borrowing of federal funds or borrowing from
the Federal Home Loan Bank by Mid-Cities Bank consistent with past practices;
4.7.3 Suffer any material adverse change in the financial conditions, assets,
liabilities, business or property of Mid-Cities taken as a whole or of
Mid-Cities Bank taken as a whole; and,
4.7.4 Make any material change in the manner in which business is conducted
(including, without limitation, branch relations, branch closings, and any
material change in products offered to customers).
4.8 TAX RETURNS/REPORTS. Each of Mid-Cities and Mid-Cities Bank has duly filed
all tax reports and returns required to be filed by it and has duly paid
- 9 -
all taxes and other charges claimed to be due from it by federal, state and
local taxing authorities. No waivers of the statute of limitation have been
issued with respect to unaudited years. Mid-Cities and Mid-Cities Bank have no
knowledge of any facts which could reasonably be expected to result in a
material deficiency with respect to unaudited tax returns which would result in
a material adverse effect on Mid-Cities taken as a whole or Mid-Cities Bank
taken as a whole.
4.9 CONTRACTS AND COMMITMENTS.
4.9.1 A list of all contracts and commitments, other than credit and lending,
deposit or borrowing transactions entered into in the ordinary course of
business by Mid-Cities or Mid- Cities Bank which are material to the business,
operations or financial condition of Mid-Cities or Mid-Cities Bank as of this
date, is set forth on Exhibit 4.9. For the purpose of Exhibit 4.9, materiality
shall mean those contracts and commitments (including a series of related
contracts or commitments) for which payment or other consideration to be
furnished by any party is more than $25,000 a year or $100,000 over the
remaining life of the contract.
4.9.2 Except as set forth on Exhibit 4.9, each of Mid-Cities and Mid-Cities Bank
has in all material respects performed and is performing all contractual and
other obligations required to be performed by them.
- 10 -
4.10 LITIGATION. Except as set forth in Exhibit 4.10, there is not pending, or,
to the knowledge and belief of Mid-Cities and Mid-Cities Bank threatened, any
claim, litigation, proceeding, order of any court or governmental agency, or
governmental investigation or inquiry to which Mid-Cities or Mid-Cities Bank is
a party or which involves their business operations, any of their property or
any property leased by them which, individually or in the aggregate:
4.10.1 May reasonably result in any material adverse change in the financial
condition, business, prospects, assets, properties or operations of Mid-Cities
taken as a whole or Mid-Cities Bank taken as a whole; or,
4.10.2 May reasonably involve the expenditure of more than a total of $25,000 in
legal fees or costs;
4.11 BROKERAGE FEES. Neither Mid-Cities nor Mid-Cities Bank has incurred or will
incur, directly or indirectly, any liability for brokerage, finder's, financial
advisor's or agent's fees or commissions by virtue of any commitment made by any
of them in connection with this Merger Agreement or any transaction contemplated
hereby except as described in Exhibit 4.11.
4.12 REQUIRED CORPORATE ACTION. The execution, delivery and consummation of this
Merger Agreement has been duly and validly authorized by the board of directors
of Mid-Cities and will at the time of Closing have been duly and validly
authorized by the board of directors of Mid-Cities Bank and the shareholders of
Mid-Cities and Mid-Cities Bank in accordance with the requirements of the
National Bank Act, the Texas Business Corporation Act and all other applicable
law.
- 11 -
4.13 AUTHORIZED EXECUTION. This Merger Agreement has been duly executed and
delivered by duly authorized officers of Mid-Cities and Mid-Cities Bank. This
Merger Agreement constitutes the legal, valid and binding agreement and
obligation of Mid-Cities, and Mid-Cities Bank enforceable against them in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, moratorium, receivership, and other similar laws affecting the
rights of creditors generally.
4.14 TITLE TO ASSETS; ENCUMBRANCES. Mid-Cities and Mid-Cities Bank have good and
valid title (with respect to fee real estate, good and valid title shall mean
such title as may be insured on standard title insurance forms with no
exceptions materially and adversely affecting the value or use of the fee real
estate) to their assets, and in each case subject to no mortgage, pledge, lien,
security interest, conditional sale agreement, or other encumbrance of any
nature whether similar or dissimilar, except:
4.14.1 Such encumbrances which are purchase money security interests entered
into in the ordinary course of business consistent with past practice reflected
on their books and records;
4.14.2 Lessors' interests in leased tangible real and personal property
reflected on their books and records;
4.14.3 Such encumbrances for taxes and assessments not yet due and payable;
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4.14.4 Encumbrances as do not materially detract from the value or interfere
with the use or operation of the asset subject thereto; and,
4.14.5 Repossessed and foreclosed assets acquired in satisfaction of debt
previously contracted.
4.15 EMPLOYEES. Except as set forth on Exhibit 4.15, none of the employees of
Mid-Cities and Mid-Cities Bank is employed under any employment contract (oral
or written) or is the beneficiary of any compensation plan (oral or written) or
is entitled to any payment from Mid-Cities and Mid-Cities Bank by reason of this
Merger Agreement or the Merger and there are no employment contracts, management
contracts, consulting agreements, union contracts, labor agreements, pension
plans, profit sharing plans or employee benefit plans to which Mid-Cities or
Mid-Cities Bank are a party or by which either of them is bound. The Mid-Cities
401(k) Plan is in full compliance with all requirements of the Plan and with the
Employee Retirement Income Security Act and the regulations promulgated pursuant
thereto.
4.16 ENVIRONMENTAL LAWS. To the best knowledge of Mid-Cities and Mid-Cities
Bank, the existence, use and operation of the assets of Mid-Cities and
Mid-Cities Bank are in material compliance with all applicable statutes, rules
and regulations including, without limiting the generality of the foregoing, all
environmental and zoning laws and, except as set forth on Exhibit 4.16, the
Americans With Disabilities Act.
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4.17 SURVIVAL AND INDEPENDENCE OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Mid-Cities and Mid-Cities Bank made in this
Merger Agreement shall survive the Closing hereof notwithstanding any
investigation or knowledge of BOKF or Park Cities; provided BOKF shall give
notice to Agent (as hereafter defined) of any claim of a breach of any such
representations and warranties on or before March 31, 2000 (the "Claim Notice
Deadline"); and, provided further, the sole remedy for a breach of such
representations and warranties shall be a claim against the Escrow Amount. Each
of the representations and warranties of Mid-Cities and Mid-Cities Bank set
forth in this Merger Agreement is a separate and independent representation and
warranty, shall be cumulative of and in addition to all other warranties and
representations, and shall not limit or be interpreted to be in derogation of
any other representation or warranty made herein. Any disclosure made on any
Exhibit hereto shall be applicable to the entire Agreement and not just one
representation or warranty.
5. REPRESENTATIONS AND WARRANTIES OF BOKF. BOKF and Park Cities represent and
warrant, jointly and severally, to Mid-Cities that:
5.1 INCORPORATION AND CORPORATE POWER. BOKF and Park Cities are corporations
duly organized, validly existing and in good standing under the laws of Oklahoma
and Texas, respectively. BOKF and Park Cities have all the corporate power and
authority necessary and required to consummate the transactions contemplated by
this Merger Agreement.
5.2 NON-VIOLATION OF OTHER AGREEMENTS. The execution and delivery of this Merger
Agreement, and compliance with its terms and provisions by BOKF
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and Park Cities and the execution of any document required to be executed by
BOKF or Park Cities, will not:
5.2.1 Violate, conflict with or result in the breach of their respective
certificates of incorporation or bylaws or any of the terms, conditions or
provisions of any agreement or instrument to which BOKF or Park Cities is a
party, or by which BOKF or Park Cities is bound;
5.2.2 Result in the creation or imposition of any lien, charge, encumbrance or
restriction of any nature whatever upon any of the property, contracts or
business of BOKF and Park Cities; or, 5.2.3 Require the consent of any party to
a contract with
BOKF and Park Cities in order to keep the contract enforceable.
5.3 REQUIRED CORPORATE ACTION. The execution, delivery, and consummation of this
Merger Agreement by BOKF and Park Cities has been duly and validly authorized by
the boards of directors of BOKF and Park Cities and, as of the Closing, will
have been approved by the shareholder of Park Cities. The approval of the
shareholders of BOKF is not required. This Merger Agreement has been duly
executed and delivered by duly authorized officers of BOKF and Park Cities. This
Merger Agreement constitutes a legal, valid and binding agreement and obligation
of BOKF and Park Cities enforceable against BOKF and Park Cities in accordance
with its terms, except as may be limited by applicable bankruptcy, insolvency,
moratorium, receivership, and other similar laws affecting the rights of
creditors generally.
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5.4 BROKERAGE FEES. Neither BOKF nor Park Cities has incurred or will incur,
directly or indirectly, any liability for brokerage, finder's, financial
advisor's or agent's fees or commissions by virtue of any commitment made by
BOKF or Park Cities in connection with this Merger Agreement or any transaction
contemplated hereby. Neither BOKF nor Park Cities has any knowledge that any
party has asserted any claim of such nature against BOKF or Park Cities.
5.5 SURVIVAL AND INDEPENDENCE OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of BOKF and Park Cities made in this Merger
Agreement shall not survive the Closing hereof; provided, however, the
indemnification obligations of Section 5.6 hereof shall survive the Closing
indefinitely. Each of the representations and warranties of BOKF and Park Cities
set forth in this Merger Agreement is a separate and independent representation
and warranty, shall be cumulative of and in addition to all other warranties and
representations; and shall not limit any other representation or warranty made
herein.
5.6 BOKF AND PARK CITIES INDEMNIFICATION. BOKF and Park Cities shall indemnify
the present and future directors, officers and employees of Mid-Cities and
Mid-Cities Bank (the "Indemnified Parties") to the fullest extent to which such
Indemnified Parties were entitled under the Articles of Incorporation and Bylaws
of Mid-Cities and/or the Articles of Association and Bylaws of Mid-Cities Bank.
BOKF shall cause Mid-Cities to purchase
- 16 -
at the Closing "tail coverage" under the Mid-Cities existing Mid-Cities
directors and officers liability policy for such period of time as may be
purchased by a premium equal to the pre-paid premium for such policy remaining
on the consolidated books and records of Mid-Cities as of the Closing. In
addition, BOKF and Park Cities shall indemnify Mr. Paul A. Rowntree for all tax
liability that he may incur under Section 280G of the Internal Revenue Code of
1986, as amended (the "Code") as a result of payments received by him in
connection with the Merger and as a result of Stock Options issued to him by
Mid-Cities.
6. COVENANTS.
6.1 FULL ACCESS. In order that BOKF shall have the full opportunity to make such
investigations as it shall reasonably desire concerning Mid-Cities and
Mid-Cities Bank and their business affairs, Mid-Cities and Mid-Cities Bank
shall:
6.1.1 Give BOKF, its employees, counsel, accountants and other authorized
representatives, as necessary to conduct the investigation and whose names shall
have been provided to (and approved by) Mid-Cities, full access, upon reasonable
notice to Mid-Cities and at reasonable times without unduly interfering with the
conduct of business by Mid-Cities and Mid-Cities Bank throughout the period up
to the Closing, to all of the facilities, properties, books, contracts and
records of Mid-Cities and Mid-Cities Bank.
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6.1.2 Authorize its accountants to give BOKF full access to the accountant's
records, including work papers; and,
6.1.3 Furnish to BOKF during that period all additional financial, operating and
other information concerning Mid-Cities and Mid-Cities Bank and their business
affairs, as BOKF may reasonably request and which Mid-Cities and Mid-Cities Bank
shall have available.
6.1.4 All information provided pursuant to this Section 6.1 shall be subject to
the provisions of Section 6.7.
6.2 CONDUCT OF BUSINESS PRIOR TO THE CLOSING DATE. From this date until the
Closing Date, each of Mid-Cities and Mid-Cities Bank shall, except as may be
first approved in writing by BOKF or as is otherwise permitted or contemplated
in this Merger Agreement:
6.2.1 Maintain their corporate existence in good standing;
6.2.2 Maintain the general character of their business and conduct their
business in their ordinary and usual manner consistent with past practices;
6.2.3 Maintain proper business and accounting records generally in accordance
with past practices;
6.2.4 Maintain their properties (except repossessed and foreclosed assets
acquired in satisfaction of debts previously contracted) in normal repair and
condition, normal wear and tear and damage due to fire or other unavoidable
casualty excepted;
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6.2.5 Preserve their business organizations intact, use their reasonable efforts
to maintain satisfactory relationships with suppliers, customers and others
having business relations with them whose relationships they believe are
desirable to maintain, and use their reasonable efforts to procure the
willingness of all of the personnel employed by them immediately prior to the
execution of this Merger Agreement who are material to the success of their
business to continue in their employ on substantially the same terms and
conditions as those on which such personnel were employed immediately prior to
the execution of this Merger Agreement;
6.2.6 Maintain in full force and effect insurance comparable in amount and in
scope of coverage to that now maintained by them on the date hereof;
6.2.7 Except as otherwise disclosed in this Merger Agreement, perform all of
their obligations under all material contracts, leases and agreements relating
to or affecting their assets, properties and businesses; and,
6.2.8 Comply in all material respects with and perform all obligations and
duties imposed upon them by federal, state and local laws, and all rules,
regulations and orders imposed by federal, state or local governmental
authorities, except as may be contested by them in good faith by appropriate
proceedings.
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6.3 MID-CITIES AND MID-CITIES BANK PROHIBITED ACTIONS PRIOR TO THE CLOSING DATE.
From this date until the Closing Date, Mid-Cities and Mid-Cities Bank shall not
(except as otherwise permitted by this Merger Agreement or as requested or
approved by BOKF which approval shall be deemed given unless BOKF shall
specifically deny such approval in writing within five (5) business days after
receiving a request for approval from Mid-Cities or Mid-Cities Bank):
6.3.1 Incur any indebtedness for borrowed money or incur any noncurrent
indebtedness for the purchase price of any fixed or capital asset, or make any
extension of credit or any loans to, guarantee the obligations of, or make any
additional investments in, any other person, corporation or joint venture
(whether an existing customer or a new customer) except:
6.3.1.1 Extensions of credit, loans and guarantees (i) less than Five Hundred
Thousand Dollars ($500,000) per transaction or (ii) less than Two Hundred
Thousand Dollars ($200,000) with existing Mid-Cities customers having existing
credit of Five Hundred Thousand Dollars ($500,000) or more made by Mid-Cities
Bank in the usual and ordinary course of its banking business, consistent with
prior practices and policies;
- 20 -
6.3.1.2 Legal investments by Mid-Cities Bank in the usual and ordinary course of
its banking business consistent with prior practices and policies.
6.3.1.3 Borrowings from the Federal Home Loan Bank, the Federal Reserve Bank,
deposit liabilities, and federal funds transactions by Mid-Cities Bank in the
ordinary course of business consistent with past practices.
6.3.2 Make any (a) material change, except in the ordinary and usual course of
business, in their assets (including, but not limited to, any change in the
composition of such assets so as to materially alter the proportion of cash) or
liabilities, (b) material commitment for any capital expenditures, excluding
expenditures for repairs and remodeling in the ordinary and usual course of
business, or (c) sale or other disposition of any material capital asset other
than for fair value in the ordinary course of business;
6.3.3 Make any change in their Articles of Incorporation or Association or
Bylaws;
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6.3.4 Except for the Stock Options, authorize any shares of their capital stock
for issuance, issue any shares of any previously authorized but unissued capital
stock or grant, issue or make any option or commitment relating to their capital
stock;
6.3.5 Enter into any letter of intent or agreement to sell any of their material
assets, except in the normal and ordinary course of their business, or acquire,
be acquired by, or merge, consolidate or reorganize with any person, firm or
corporation;
6.3.6 Declare or pay any dividend, make any other distribution or payment or set
aside any amount for payment with respect to any shares of their capital stock
or directly or indirectly, redeem, purchase or otherwise acquire any shares of
their capital stock or make any commitment relating thereto, provided, however,
Mid-Cities Bank may pay a dividend in March 1999 in an amount sufficient to
enable Mid-Cities to reduce its long-term debt to a principal balance of
$165,000.
6.3.7 Except as set forth in Exhibit 6.3.7, make any (a) increase in the
compensation payable or to become payable to any of their directors, officers or
employees (including, without limitation, any bonus or incentive payment or
agreement), (b) make or enter into any written employment contract or
- 22 -
any bonus, stock option, profit sharing, pension, retirement or other similar
payment or arrangement, or (c) make any payment to any person, except in the
usual and ordinary course of business or except as required by an existing
agreement set forth in the Exhibits hereto;
6.3.8 Make any material change in their banking, safe deposit or power of
attorney arrangements;
6.3.9 Enter into any trust, escrow, agency and similar trust company agreements,
purchase orders and contracts for goods and services, except in the ordinary
course of business consistent with past practices;
6.3.10 Enter into any agreement resulting in the imposition of any mortgage or
pledge of their assets or the creation of any lien, charge or encumbrance on any
of their assets;
6.3.11 Incur any material obligation or liability, absolute or contingent,
except in the ordinary course of business or pursuant to existing contracts
described in this Merger Agreement;
6.3.12 Take any action which would prevent compliance with any of the conditions
of this Merger Agreement; or,
6.3.13 Pre-pay long term indebtedness; provided, however, Mid-Cities may pay
interest, and make a principal reduction, on its existing indebtedness in March
1999 in an aggregate amount that does not exceed Thirty Thousand Dollars
($30,000).
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6.3.14 If the Closing of the transaction as contemplated by this Agreement shall
not have occurred by June 27, 1999, then Mid-Cities Bank may dividend such
amounts as are necessary to enable Mid-Cities to make such payments on its
long-term indebtedness as are required by the note and loan agreement with
respect thereto.
6.4 VOTE FOR MERGER AND WAIVER OF RIGHT TO DISSENT. Mid-Cities shall use its
best efforts to cause each of the shareholders of Mid-Cities set forth on
Exhibit 6.4 to enter into an Irrevocable Proxy and Voting Agreement whereby each
shareholder agrees to vote his shares of Mid-Cities Common Stock in favor of the
Merger, and use its best efforts to cause the Merger to be approved by the
directors and shareholders of Mid-Cities and Mid-Cities Bank in accordance with
applicable law and consummated in accordance with the terms of this Merger
Agreement.
6.5 REGULATORY APPROVAL. BOKF shall diligently file and pursue (A) all
regulatory applications required in order to consummate the Merger and the
merger of Mid-Cities Bank into Bank of Texas, National Association, including
but not limited to the necessary applications for prior approval of the Board of
Governors of the Federal Reserve System and the Office of the Comptroller of the
Currency on or before the thirtieth (30th) calendar day following the Agreement
Date and (B) thereafter promptly file any required supplements or amendments
thereto. All applications, supplements, and
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amendments shall be substantially complete when filed. BOKF shall deliver to
Mid-Cities and its counsel a copy of all such filings, as filed, within three
(3) business days after the filing thereof. Although all such filings shall be
the responsibility of BOKF, BOKF shall nevertheless advise and consult with
Mid-Cities on an ongoing basis with respect to the filings and all matters and
events related thereto. BOKF shall inform and make available to Mid-Cities from
time to time all matters relating to the filings and the regulatory approvals.
BOKF shall diligently proceed with reasonable deliberate speed to obtain all
such approvals. If any regulatory application required to be filed by BOKF
should be finally denied or disapproved by the respective regulatory authority,
then BOKF shall immediately give notice to Mid-Cities and this Merger Agreement
shall thereupon terminate, subject to the provisions of Section 11. However, it
is understood that a request for additional information or undertaking by the
applicant, as a condition for approval, shall not be deemed to be a denial or
disapproval so long as the applicant can reasonably be expected to provide the
requested information or undertaking. In the event an application is denied
pending an appeal, petition for review, or similar such act on the part of the
applicant, then the application will be deemed denied unless the applicant
promptly and diligently prepares and files such appeal and continues the
appellate process for the purposes of getting the necessary approval.
6.6 CONFIDENTIALITY. Prior to the Closing, BOKF shall keep all information
disclosed to BOKF (its employees, counsel, accountants, and other authorized
representatives) by Mid-Cities or Mid-Cities Bank (or their
- 25 -
representatives) respecting the business and financial condition of Mid-Cities
and Mid-Cities Bank confidential and shall make no use of such information
except to conduct the investigation contemplated by Section 6.4, the application
contemplated by Section 6.5 and to consummate the transactions contemplated
hereby, and BOKF shall not use such information to obtain a competitive
advantage in connection with any customer of Mid-Cities Bank. In the event this
Merger Agreement is terminated for any reason BOKF (its agents,
officers, directors, employees and counsel) shall (i) return all copies of all
information and documents obtained from Mid-Cities, Mid-Cities Bank, and their
representatives, (ii) thereafter keep all such information confidential and not
make use of any such information to obtain a competitive advantage in connection
with any customer of Mid Cities Bank, and (iii) shall not solicit for
employment, whether directly or indirectly, any of the employees, officers or
directors of Mid-Cities or Mid-Cities Bank.
6.7 BOKF PROHIBITED ACTION PRIOR TO CLOSING. From this date until the Closing
Date, BOKF shall not take any action which would prevent compliance with any of
the conditions of this Merger Agreement. BOKF shall not, and shall cause its
subsidiaries not to, make or agree to make any acquisition, or take any other
action, that adversely affects its ability to consummate the transactions
contemplated by this Merger Agreement and will otherwise continue to conduct its
business operations and shall cause the operations of its subsidiaries to be
conducted in a manner consistent with past operating practices.
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6.8 EMPLOYMENT AGREEMENTS. Mid-Cities and Mid-Cities Bank shall use their best
efforts to cause:
6.8.1 Paul A. Rowntree to enter into an employment agreement with Mid-Cities
Bank in the form and content of Exhibit 6.8.1 (the "Rowntree Agreement"); and
6.8.2 Vikki L. Pier to enter into an employment agreement with Mid-Cities Bank
in the form and content of Exhibit 6.8.2 (the "Pier Agreement").
6.9 MID-CITIES COVENANT TO OBTAIN APPROVALS. Mid-Cities shall promptly seek and
use commercially reasonable efforts to obtain the approval of this Merger
Agreement and the transactions contemplated hereby by the shareholders of
Mid-Cities. Mid-Cities Bank shall enter into an agreement to merge with Bank of
Texas, National Association, subject to the Closing of this Merger Agreement, in
form and content acceptable to BOKF.
6.10 COVENANTS RESPECTING EMPLOYMENT AND NON-COMPETITION AGREEMENTS. BOKF and
Mid-Cities shall use commercially reasonable efforts to cause all employment and
non-competition agreements which are a condition precedent to the obligations of
BOKF under this Merger Agreement to be executed and delivered by the parties
thereto.
6.11 EMPLOYMENT BENEFITS. Following the Closing, BOKF shall cause all employees
of Mid-Cities Bank to have the same benefits provided by BOKF generally to
employees of BOKF and its affiliates. Employees of Mid-Cities Bank shall be
credited for their actual and credited service with Mid-Cities Bank for purposes
of eligibility, vesting and beneficial accrual for all BOKF
- 27 -
employee benefit plans (including, without limitation, the BOKF 401(k) plan);
provided, however, such employees shall not be credited
with prior service in BOKF's defined benefit pension plan. Mid-Cities Bank
employees shall not be subject to any exclusions for pre-existing conditions
under BOKF's medical benefit plan and shall receive credit for any deductibles
or out-of-pocket expenses previously paid.
6.12 DELIVERY OF BOKF NOTES IN LIEU OF CASH. BOKF shall, at the Closing, deliver
to any person or entity so requesting which holds as of the record date (as
hereafter defined) ten thousand (10,000) shares of Mid-Cities Common Stock its
promissory note in usual and customary form acceptable to counsel for Mid-Cities
and counsel for BOKF (provided, in each instance, such acceptance is not
unreasonably withheld, delayed or denied) evidencing all, or such portion of the
Cash Consideration payable to such holder at the Closing as such person shall
determine, bearing interest at the Applicable Federal Rate (appropriate for the
term of the note as provided in the Internal Revenue Code) in such installments
and with such maturities, not exceeding five years from the date of Closing, as
such person or entity shall determine (collectively, the "Notes"); provided,
however, BOKF shall not issue a Note to any holder who does not (i) advise BOKF
in writing on or prior to the record date of the principal amount, installments,
and maturities such holder desires, (ii) all Notes shall be non-transferrable by
the holders thereof except by gift, devise, or operation of law; and (iii) BOKF
shall not issue any Note unless it shall have received an opinion of its counsel
that the issuance of such Note does not require registration under the
Securities Act of 1933, the securities law of all applicable jurisdictions, and
the Trust Indenture Act of 1940.
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6.13 STOCK OPTIONS. Mid-Cities shall use its best efforts to cause all Stock
Options to be fully exercised in accordance with their existing terms and
conditions immediately prior to the Closing subject to consummation of the
Closing. With respect to any shares of Mid-Cities Common Stock that are acquired
at the Closing as a result of the exercise of the Stock Options, the purchase
price for such shares pursuant to the Stock Options shall be subtracted from or
"netted-out" of the Cash Consideration to be paid to the holders of such shares
of Mid-Cities Common Stock in order to provide for a cashless exercise of the
Stock Options. That is, upon the exercise of the Stock Options, the option
holder shall not be required to pay Mid-Cities the purchase price set forth in
the Stock Options, rather the purchase price shall be deducted from the amount
of cash which would otherwise be distributed to such option holder ("Cashless
Stock Option Exercise"). BOFK and Mid-Cities shall cooperate, and Mid-Cities
shall use its best efforts to cause the holders of the Stock Options to
cooperate, in determining the most efficient means of satisfying the withholding
obligations of Mid-Cities as a result of the Cashless Stock Option Exercise.
6.14 1998 AUDITED FINANCIAL STATEMENTS. Mid-Cities shall cause audited financial
statements for calendar year 1998 to be prepared at the time and in the same
manner as is consistent with the prior practices of Mid-Cities.
6.15 APPROVAL OF MERGER AGREEMENT BY THE BOARDS OF DIRECTORS OF BOKF AND PARK
CITIES. BOKF shall use its best efforts to obtain the approval
- 29 -
of this Merger Agreement by its Board of Directors at the meeting thereof on
February 23, 1999. Park Cities shall use its best efforts to obtain the approval
of this Merger Agreement by its Board of Directors at the meeting thereof on
February 24, 1999.
7. CONDITIONS PRECEDENT TO CLOSING BY BOKF AND PARK CITIES. The obligation of
BOKF and Park Cities to consummate and close this transaction is conditioned
upon each and all of the following:
7.1 The representations, warranties and covenants of Mid-Cities and Mid-Cities
Bank shall be materially true at the Closing as though such representations,
warranties and covenants were also made at the Closing.
7.2 The Federal Reserve Board shall have approved the Merger, or issued a waiver
of approval, in accordance with 12 U.S.C. Section 1842 and 12 C.F.R. Section
225. The Office of the Comptroller of the Currency shall have approved the
merger of Mid-Cities Bank into Bank of Texas, National Association in accordance
with 12 U.S.C. Section 215a and 12 C.F.R. Section 5.33, and such other
regulatory approval as may be required is obtained.
7.3 Mid-Cities and Mid-Cities Bank shall have performed and complied with, in
all material respects, all of their obligations under this Merger Agreement
which are to be performed or complied with by them prior to or on the Closing
Date.
7.4 Mid-Cities shall have delivered to BOKF an opinion of its counsel, dated the
Closing Date, in the form and content of the opinion attached hereto as Exhibit
7.4.
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7.5 The shareholders of Mid-Cities shall have approved this Merger Agreement in
accordance with the Texas Business Corporation Act. Mid-Cities Bank shall have
entered into an agreement to merge with Bank of Texas, National Association,
subject to the Closing of this Merger Agreement, in form and content acceptable
to BOKF.
7.6 The Rowntree Agreement and the Pier Agreement shall have been executed and
delivered. Each of the directors of Mid-Cities and Mid-Cities Bank set forth on
Exhibit 7.6, which BOKF deems critical in BOKF's good faith judgment, shall,
prior to or at the Closing, have entered into a non-competition agreement in the
form of Exhibit 7.6.
7.7 Neither Mid-Cities taken as a whole nor Mid-Cities Bank taken as a whole
shall have suffered any Material Adverse Change (as hereinafter defined) in
their financial conditions, assets, liabilities, businesses or properties. For
purposes of this Section 7.7 "material adverse change" shall mean any event
resulting in a one-time charge to Mid-Cities Bank's loan loss reserve, or a
reduction of Mid-Cities Bank's Tier 1 capital, of Three Hundred Thousand Dollars
($300,000) or more before recording any entries associated with the Stock
Options or any Cashless Stock Option Exercises. Further, for the purposes of
this Section 7.7, an event or changes affecting the banking industry as a whole
in the Dallas-Ft. Worth Metropolitan Area shall not be considered a "material
adverse change" unless it affects Mid-Cities or Mid-Cities Bank to a greater
degree than other similar size bank holding companies or banks in the Tarrant
County, Texas area.
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7.8 Holders of no more than five percent (5%) of the Mid-Cities Common Stock
shall have dissented under Section 5.11 and following of the Texas Business
Corporation Act.
In the event any one or more of these conditions shall not have been fulfilled
prior to or at the Closing, BOKF and Park Cities may terminate this Merger
Agreement by written notice to Mid-Cities, in which event neither party shall
have any further obligation or liability to the other except the obligations of
BOKF set forth in Section 6.7 and the obligations of Mid-Cities and Mid-Cities
Bank set forth in Section 4.11. BOKF shall be entitled to waive compliance with
any one or more of the conditions, representations, warranties or covenants in
whole or in part.
8. CONDITIONS PRECEDENT TO CLOSING BY MID-CITIES. The obligation of Mid-Cities
and Mid- Cities Bank to consummate and close this transaction are conditioned
upon each and all of the following:
8.1 The representations, warranties and covenants of BOKF and Park Cities made
in this Merger Agreement shall be true at the Closing as though such
representations, warranties and covenants were also made at the Closing.
8.2 BOKF and Park Cities shall have performed and complied, in all material
respects, with all of their obligations under this Merger Agreement which are to
be performed or complied with by them prior to or at the Closing.
8.3 BOKF shall have delivered to the Mid-Cities an opinion of its counsel,
Frederic Dorwart, Tulsa, Oklahoma, dated the Closing Date, in the form and
content of the opinion attached hereto as Exhibit 8.3.
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8.4 The Federal Reserve Board shall have approved the Merger, or issued a waiver
of approval, in accordance with 12 U.S.C. Section 1842 and 12 C.F.R. Section
225.
8.5 The shareholders of Mid-Cities shall have approved this Merger Agreement and
the transactions contemplated hereby as required by the Texas Business
Corporations Act.
Mid-Cities shall be entitled to waive compliance with any one or more of the
conditions, representations, warranties or covenants in whole or in part. In the
event any one or more of these conditions shall not have been fulfilled prior to
or at the Closing, Mid-Cities may terminate this Merger Agreement by notice to
BOKF, in which event no party shall have any further obligation or liability to
the other, except the obligations of BOKF set forth in Section 6.7 and Section
11 and the obligations of Mid-Cities set forth in Section 12.
9. CLOSING. The Closing ("Closing" or "Closing Date") of the transactions
contemplated by this Merger Agreement shall take place not later than five (5)
business days following the first day on which (i) BOKF and Park Cities can
lawfully consummate the Merger under 12 U.S.C. Section 1842, 12 C.F.R. Section
225 and other applicable laws, rules and regulations and (ii) Bank of Texas,
National Association and Mid-Cities Bank can merge under 12 U.S.C. Section 215a,
and 12 C.F.R. Section 5.23 and other applicable laws, rules and regulations. In
any event, if the Closing Date does not occur on or before August 1, 1999, then
either BOKF or Mid-Cities may by notice to the other, terminate this Merger
Agreement, provided such notice is given on or before July 15, 1999. The Closing
shall be held at 10:00 a.m. on the Closing Date at the offices of Mid-Cities
Bank or at such other time and place as BOKF and Mid-Cities may agree. At the
Closing, BOKF, Park Cities, Mid-Cities, and Mid-Cities Bank shall execute and
deliver all of the documents and take all other actions which are contemplated
by the terms hereof.
- 33 -
9.1 Without limiting the generality of Section 9 of this Merger Agreement, the
following actions shall be taken at the Closing concurrently. Mid-Cities shall:
9.1.1 Use commercially reasonable efforts to cause to be delivered to Park
Cities certificates representing the Mid- Cities Common Stock;
9.1.2 Deliver the opinion of Mid-Cities's counsel pursuant to Section 7.4; and,
9.1.3 Except as otherwise set forth on Exhibit 9.1.3, cause the employment
agreements, plans and payments described in Exhibit 4.15 to be terminated and
discharged at no cost to Mid-Cities and Mid-Cities Bank.
9.2 Without limiting the generality of Section 9 of this Merger Agreement, the
following actions shall be taken at the Closing concurrently. BOKF shall:
9.2.1 Pay, by corporate check, to each of the holders of Mid- Cities Common
Stock of record on the third business day preceding the Closing (the "Record
Date") the amounts to which such holders are entitled pursuant to Section 2.7.1
or deliver Notes in lieu thereof as provided in Section 6.12; shareholders
owning more than 25,000 shares of Mid-Cities Common Stock shall be entitled to
receive payment by wire transfer; provided, however, BOKF shall not be required
to make more than seven (7) wire transfers.
- 34 -
9.2.2 Deliver the opinion of BOKF's counsel pursuant to Section 8.3.
9.2.3 Cause appropriate evidences of the Merger to be filed in accordance with
applicable law.
10. THE ESCROW. The Escrow shall be established on the following terms and
conditions:
10.1 The escrow agent shall be Bank of Texas Trust Company, National Association
("Escrow Agent").
10.2 The Escrow shall be governed by the standard form of escrow agreement
generally in use by the Escrow Agent (the "Escrow Agreement") a copy of which is
set forth as Exhibit 10.2.
10.3 BOKF shall deliver the Escrow Amount to the Escrow Agent at the Closing.
The Escrow Agent shall invest the Escrow Amount in three month certificates of
deposit issued by Bank of Texas, National Association ("BOT") on the terms and
conditions being offered by BOT to the public at the time of such investment and
shall thereafter renew such certificates of deposit upon maturity as to the
total amount remaining in the Escrow after payment of any Allowed Claim (for
like periods and on the terms and conditions being offered by BOT to the public
at the time of such renewal). Interest on the certificates shall be added to the
Escrow and deemed part of the Escrow Amount.
10.4 In the event BOKF claims a breach of the representations and warranties of
Mid-Cities and Mid-Cities Bank arising under this Merger Agreement,
- 35 -
BOKF shall give notice of the claim (a "Claim") to William G. Hall (the
"Agent"). The notice shall identify the representations and warranties which
BOKF claims have been breached and describe in reasonable detail the basis of
the Claim.
10.5 In the event BOKF makes a Claim(s) prior to the Claim Notice Deadline, the
Escrow Agent shall continue to hold the Escrow Amount until such Claim(s) is
resolved by (i) the mutual agreement of Agent and BOKF or (ii) a final
adjudication determining the merits of the Claim(s), at which time the Escrow
shall terminate and the Escrow Agent shall pay (a "Claim Payment") the Claim as
mutually agreed or finally adjudicated (an "Allowed Claim").
10.6 The Escrow shall terminate at the later of the Claim Notice Deadline or the
date on which all timely noticed Claims have been resolved by mutual agreement
or final adjudication and all Allowed Claims, if any, shall have been paid to
BOKF.
10.7 Upon termination of the Escrow, the Escrow Amount remaining in the Escrow
shall be delivered to the holders of Mid-Cities Common Stock on the Record Date
in accordance with their respective interests, including any Cashless Stock
Option Exercises.
10.8 The rights of the holders of Mid-Cities Common Stock to receive payments
from the Escrow shall not be assignable or transferable except by operation of
law or by intestacy or with the approval of BOKF (which approval shall not be
unreasonably withheld, delayed, or denied) and will not be evidenced by any
certificate or other evidence of ownership.
- 36 -
10.9 BOKF shall pay the fees and costs of the Escrow Agent with respect to the
Escrow.
10.10 The Agent shall be William G. Hall. The holders of Mid-Cities Common Stock
on the Record Date may by the vote of a majority in interest and upon notice to
BOKF change the agent. The Agent shall not be deemed a fiduciary of the holders
of Mid-Cities Common Stock and shall be liable to such holders only for gross
negligence or intentional wrongdoing. 11. MISCELLANEOUS PROVISIONS. The
following miscellaneous provisions shall apply to this Agreement:
11.1 All notices or advices required or permitted to be given by or pursuant to
this Agreement, shall be given in writing. All such notices and advices shall be
(i) delivered personally, (ii) delivered by facsimile or delivered by U.S.
Registered or Certified Mail, Return Receipt Requested mail, or (iii) delivered
for overnight delivery by a nationally recognized overnight courier service.
Such notices and advices shall be deemed to have been given (i) the first
business day following the date of delivery if delivered personally or by
facsimile, (ii) on the third business day following the date of mailing if
mailed by U.S. Registered or Certified Mail, Return Receipt Requested, or (iii)
on the date of receipt if delivered for overnight delivery by a nationally
recognized overnight courier service. All such notices and advices and all other
communications related to this Agreement shall be given as follows:
- 37 -
BOKF and Park Cities:
James A. White, Executive Vice President
BOK FINANCIAL CORPORATION P.O. Box 2300 Tulsa, OK 74192 (918) 588-6853 -
Facsimile
and
Frederic Dorwart, Secretary and General Counsel to BOK Financial Corporation Old
City Hall 124 East Fourth Street Tulsa, OK 74103 (918) 583-8251 - Facsimile
Mid-Cities, and Mid-Cities Bank:
Paul A. Rowntree Chairman of the Board and President Mid-Cities National Bank
500 Grapevine Highway P.O. Box 1588 Hurst, Texas 76053 817-485-6660 - Telephone
817-485-6756 - Facsimile
and
Sanford M. Brown Bracewell & Patterson, L.L.P. 500 North Akard Street, Suite
4000 Dallas, Texas 75201-3387 214-758-1093 - Telephone 214-758-1010 - Facsimile
or to such other address as the party may have furnished to the other parties in
accordance herewith, except that notice of change of addresses shall be
effective only upon receipt.
11.2 This Agreement shall be subject to, and interpreted by and in accordance
with, the laws (excluding conflict of law provisions) of the State of Texas.
- 38 -
11.3 This Agreement is the entire Agreement of the parties respecting the
subject matter hereof. There are no other agreements, representations or
warranties, whether oral or written, respecting the subject matter hereof.
11.4 No course of prior dealings involving any of the parties hereto and no
usage of trade shall be relevant or advisable to interpret, supplement, explain
or vary any of the terms of this Agreement, except as expressly provided herein.
11.5 This Agreement, and all the provisions of this Agreement, shall be deemed
drafted by all of the parties hereto.
11.6 This Agreement shall not be interpreted strictly for or against any party,
but solely in accordance with the fair meaning of the provisions hereof to
effectuate the purposes and interest of this Agreement.
11.7 Each party hereto has entered into this Agreement based solely upon the
agreements, representations and warranties expressly set forth herein and upon
his own knowledge and investigation. Neither party has relied upon any
representation or warranty of any other party hereto except any such
representations or warranties as are expressly set forth herein.
11.8 Each of the persons signing below on behalf of a party hereto represents
and warrants that he or she has full requisite power and authority to execute
and deliver this Agreement on behalf of the parties for whom he or she is
signing and to bind such party to the terms and conditions of this Agreement.
11.9 This Agreement may be executed in counterparts, each of which shall be
deemed an original. This Agreement shall become effective only when all
- 39 -
of the parties hereto shall have executed the original or counterpart hereof.
This agreement may be executed and delivered by a facsimile transmission of a
counterpart signature page hereof.
11.10 In any action brought by a party hereto to enforce the obligations of any
other party hereto, the prevailing party shall be entitled to collect from the
opposing party to such action such party's reasonable litigation costs and
attorneys fees and expenses (including court costs, reasonable fees of
accountants and experts, and other expenses incidental to the litigation).
11.11 This Agreement shall be binding upon and shall inure to the benefit of the
parties and their respective successors and assigns.
11.12 This is not a third party beneficiary contract except as otherwise
expressly stated herein. No person or entity other than a party signing this
Agreement shall have any rights under this Agreement except as otherwise
expressly stated herein.
11.13 This Agreement may be amended or modified only in a writing which
specifically references this Agreement.
11.14 This Agreement may not be assigned by any party hereto.
11.15 A party to this Agreement may decide or fail to require full or timely
performance of any obligation arising under this Agreement. The decision or
failure of a party hereto to require full or timely performance of any
obligation arising under this Agreement (whether on a single occasion or on
multiple occasions) shall not be deemed a waiver of any such obligation. No such
decisions or failures shall give rise to any claim of estoppel, laches,
- 40 -
course of dealing, amendment of this Agreement by course of dealing, or other
defense of any nature to any obligation arising hereunder.
11.16 The repudiation, breach, or failure to perform any obligation arising
under this Agreement by a party after reasonable notice thereof shall be deemed
a repudiation, breach, and failure to perform all of such party's obligations
arising under this Agreement.
11.17 Time is of the essence with respect to each obligation arising under this
Agreement. The failure to timely perform an obligation arising hereunder shall
be deemed a failure to perform the obligation.
11.18 All actions taken and documents delivered at the Closing shall be deemed
to have been taken and executed simultaneously and no action shall be deemed
taken nor any document delivered until all have been taken and delivered.
11.19 Any information delivered by way of exhibit or schedule in connection with
this agreement shall be deemed delivered for the purpose of any other exhibit or
schedule which calls for such information.
Dated and effective the date first set forth above.
MID-CITIES BANCSHARES, INC., a Texas Corporation
By /s/ William G. Hall
-------------------------------------
William G. Hall, President
MID-CITIES NATIONAL BANK, a national banking association
By /s/ William G. Hall
-------------------------------------
William G. Hall, Vice Chairman
- 41 -
BOK FINANCIAL CORPORATION
By /s/ Stanley A. Lybarger
-------------------------------------
PARK CITIES BANCSHARES, INC., a Texas Corporation
By /s/ C. Fred Ball, Jr.
-------------------------------------
- 42 -
EXHIBIT 4.3
TO
MERGER AGREEMENT
Subsidiaries
None
- 43 -
EXHIBIT 4.6.3
TO
MERGER AGREEMENT
Material Liabilities
None
- 44 -
EXHIBIT 4.7
TO
MERGER AGREEMENT
Conduct of Business Prior to Closing Exceptions
None
- 45 -
EXHIBIT 4.9
to
MERGER AGREEMENT
Section 4.9.1
None, except, the following:
Space Lease
Mid Cities Bank leases 13,162 square feet of office space in the Mid-Cities Bank
Building located at 500 Grapevine Hwy., Hurst, Texas. The terms of the operating
lease are:
Lease Expiration Date
March 31, 2001
Annual Base Rent
$ 299,435
Escalation Billed for 1998
74,659
Total Lease Billed for 1998
$ 374,094
The Base Rent remains the same until the lease expiration date of Mach 31, 2001.
Escalation increases are based on Mid Cities Bank's share of the annual expenses
incurred by the building.
Data Processing Services
Mid Cities Bank has a contract with Fiserv - Houston for data processing and
item processing services. The product that the Bank uses is Fiserv's
CustomerFile system. The contract expires on September 15, 2001. A copy of the
data processing contract, as amended, has been provided to BOKF.
FiSi Madison Club Account Services
Mid Cities Bank has contracted with FiSi Madison to provide Club deposit account
services for all Premier and Premier Plus account customers. Mid-Cities Bank has
provided a copy of the agreement with FiSi Madison to BOKF. The Agreement may be
canceled at any time by giving a 120 day notice of termination.
Check Printing - Deluxe
Mid Cities Bank has contracted with Deluxe, Inc. to provide check printing
services to the Bank. Mid Cities Bank has provided BOKF with a copy of the
agreement.
Section 4.9.2 None; except the following:
Mid-Cities Bank has requested additional information concerning the Escalation
billed for 1998 by the landlord. Mid-Cities has notified the landlord that the
Bank will continue to pay at the original escalation rate established for 1998
until the landlord provides adequate evidence of costs related to the operation
of the building and the computation of Mid-Cities Bank's share of such costs.
Mid-Cities Bank has accrued a payable in the amount billed by the landlord for
the increased escalation of 1998.
- 46 -
EXHIBIT 4.10
TO
MERGER AGREEMENT
Pending Litigation
None, except Mid-Cities Bank is party to the following matter:
Cause no. 348-176164-98, Williams Chrysler Plymouth, Inc. dba Roger Williams
Chrysler Plymouth Dodge v. Andy Joe Winters, C&D Automotive Service, James
Michael Davis, Pete Calady, and Mid-Cities National Bank.
This is an action brought by the Plaintiff asserting an interest in inventory
which was owned by C&D Automotive Services and which is currently in the
possession of Mid-Cities National Bank. Plaintiff's Original Petition does not
allege any specific dollar amount, but merely alleges damages in excess of the
minimum jurisdictional limits of the Court.
C&D Automotive furnished to the Plaintiff through Andy Winters various model
cars to be sold by the Plaintiff at its dealership and at Auto Races. Mr.
Winters was an employee of the Plaintiff and Mr. Winters, it is alleged, forged
the signature on some checks paid to C&D Automotive. Mid-Cities Bank is
asserting a lien on the inventory of C&D Automotive. This litigation arose when
the Plaintiff stopped payment on a $72,000.00 check which had been deposited by
C&D Automotive into its account with Mid-Cities National Bank thereby causing
C&D's account to be overdrawn in the approximate sum of $52,000. As of the date
hereof, all parties are represented by attorneys and the attorneys are working
toward an agreement to sell the inventory with the proceeds to be placed in
escrow.
Mid-Cities Bank has recorded a reserve of $30,000 related to this matter.
Further, Mid-Cities Bank has a legal reserve of $5,000 for attorney's fees
related to this matter.
- 47 -
EXHIBIT 4.11
TO
MERGER AGREEMENT
Brokerage Fees
None; except, a fee due SAMCO Capital Markets equal to the sum of (i) five
percent (5%) of the first One Million Dollars ($1,000,000) of the Cash
Consideration, (ii) four percent (4%) of the second One Million Dollars
($1,000,000) of the Cash Consideration, (iii) three percent (3%) of the third
One Million Dollars ($1,000,000) of the Cash Consideration, (iv) two percent
(2%) of the fourth One Million Dollars ($1,000,000) of the Cash Consideration,
and (v) one percent (1%) of all of the Cash Consideration in excess of Four
Million Dollars ($4,000,000).
- 48 -
EXHIBIT 4.15
TO
MERGER AGREEMENT
Employee Contracts and Benefit Plans
Auto Allowances
Mid-Cities Pays Chris Strittmatter $500 per month as an auto allowance
Mid-Cities reimburses Steve Ewing his direct auto expenses for gas and repairs
Mid-Cities Bank has committed to pay the following incentives:
M. Chris Strittmatter - 10% of real estate loan interim commitment fees charged
on loans made by him. Such amount is accrued through the year and paid in
January of the following year.
All loan officers (other than Paul Rowntree and Vikki Pier) are eligible to
receive 5% of credit life premiums collected on loans that he or she makes.
Mid-Cities Bank has an incentive program titled the "Bone Loan." Loan officers
(other than Paul Rowntree and Vikki Pier) that make a qualified "Bone Loan" are
paid .25% of the principal amount of such loan. Payments are made at the end of
the year.
Mid-Cities Bank has the following employee benefits plans:
Health/Dental/Life Insurance
Mid-Cities Bank has arranged for health insurance for eligible employees through
Aetna and for dental and life insurance through Guarantee Life. The insurance
rate commitment is through April 1, 1999. The Bank has not renewed or extended
these policies as of the date hereof. Information related to health, dental and
life insurance has been provided to BOKF.
Other Benefits
Other employee benefits, such as sick and vacation time, are described in the
Employee Handbook that has been provided to BOKF.
401(k) Plan
Mid-Cities Bank has a 401(k) plan that does allow for additional employer
discretionary contribution; Mid-Cities has made contribution match of up to 7%
of an eligible employee's salary in 1996, 1997 and 1998. Mid-Cities anticipates
- 49 -
making a similar contribution before Closing of the Merger. Mid-Cities Bank has
not made and does not anticipate making any additional discretionary
(non-matching) contributions to the Plan.
- 50 -
EXHIBIT 4.16
TO
MERGER AGREEMENT
ADA Exceptions
Mid-Cities Bank leases space from the Mid-Cities Bank Building. This Building
was built in 1981, prior to the enactment of the Americans with Disabilities
Act. Since that date, the Bank and/or Building have not completed remodeling of
the sort that would require the Bank or the Building to come into compliance
with the ADA's requirements. Mid-Cities Bank has not discussed with the landlord
as to whether the entrances, elevators and guest baths comply with ADA.
Mid-Cities Bank has not reviewed compliance with ADA that might be required
should the Bank remodel the Drive-thru facility. The lease between the Bank and
the Building was prepared before the ADA was enacted and, therefore, is silent
with respect to which party is responsible for the cost of ADA compliance. The
Bank anticipates that the landlord will expect the Bank to share in the cost of
any ADA compliance.
- 51 -
EXHIBIT 6.3.7
TO
MERGER AGREEMENT
Compensation Exceptions
Mid-Cities Bank has paid 1998 bonuses and had implemented 1999 salary increases.
Mid-Cities Bank has provided BOKF with a listing of 1998 bonus payments and
concurrent 1999 salaries in place.
- 52 -
EXHIBIT 6.4
TO
MERGER AGREEMENT
Principal Shareholders
The following persons comprise the Board of Directors of Mid-Cities and
Mid-Cities Bank:
Name Shares
Paul A. Rowntree 267,922
William G. Hall 96,925
Vikki L. Pier 62,096
Lois Taylor 54,492
Dr. L.L. Golden 31,384
William P. Martin 25,384
Greg Regian 10,000
Dr. J.P. Jones 6,000
Russell Johnson 3,129
Yale Lary 1,000
Louis Miller 1,000
Total owned by Directors 559,332
Total Shares Currently Outstanding 764,421
Percentage of Total 73.2%
- 53 -
EXHIBIT 6.8
TO
MERGER AGREEMENT
Employment Agreements
Rowntree Agreement Attached Hereto
Pier Agreement Attached Hereto
- 54 -
EXHIBIT 7.4
TO
MERGER AGREEMENT
Mid-Cities Counsel's Opinion
[To be prepared by the mutual agreement of counsel to BOKF and counsel to
Mid-Cities]
- 55 -
EXHIBIT 7.6
TO
MERGER AGREEMENT
Non-Competition Agreement
Rowntree Agreement attached as prior Exhibit.
Pier Agreement attached as prior Exhibit.
Directors to provide a non-compete agreement:
Paul A. Rowntree in the form included in the Rowntree Employment Agreement
William G. Hall in the form attached
Vikki L. Pier in the form attached
Lois Taylor in the form attached
Directors that Rowntree, Hall and Pier will use best efforts to cause such
directors to sign a non-compete agreement in the form attached:
Dr. L.L. Golden
William P. Martin
Greg Regian
Dr. J.P. Jones
Russell Johnson
Yale Lary
Louis Miller
- 56 -
EXHIBIT 7.6
TO
MERGER AGREEMENT
AGREEMENT NOT TO COMPETE
This Agreement Not to Compete ("Agreement") is made effective as of
_____________, 199___ (the "Effective Date") between:
(i) _____________________ ("Principal"); and,
(ii) BOK Financial Corporation ("BOKF").
In consideration of the mutual covenants contained herein, the adequacy of which
is hereby expressly acknowledged, and intending to be legally bound hereby,
Principal and BOKF agree as follows:
(1) PURPOSE OF THIS AGREEMENT NOT TO COMPETE. Principal is a key officer or
director and shareholder of Mid-Cities and/or Mid-Cities Bank. The shareholders
of Mid-Cities and Mid-Cities Bank and BOKF are contemporaneously herewith
entering into that certain Merger Agreement dated effective as of February, 1999
to which reference is hereby made (the "Merger Agreement"). The Merger Agreement
constitutes the sale of the goodwill of the business of Mid-Cities and
Mid-Cities Bank to BOKF. Principal acknowledges that competition by Principal
with BOKF would damage the goodwill being sold by Principal. The purpose of this
agreement is to set forth the terms and conditions on which Principal agrees not
to compete with BOKF. The defined terms set forth herein shall have the meanings
set forth in the Merger Agreement.
(2) Principal hereby agrees that, from and after the Closing for one year
following the Closing, Principal shall not directly or indirectly (whether as an
officer, director, employee, partner, stockholder, creditor or agent or
representative of other persons or entities or in any other manner) engage in
the banking business in Dallas or Tarrant Counties.
(3) Paragraph 2 hereof shall not apply to any investment by the Principal in any
widely-held class of securities of any banking business, which investment
comprises less than 5% of the total number of shares of that class of securities
outstanding.
(4) Principal agrees that:
(1) This Agreement is entered into in connection with the sale of the goodwill
of Mid-Cities and Mid-Cities Bank.
(2) The restrictions imposed by this Agreement (particularly the geographical
and time restrictions) are fair, reasonable and necessary
- 57 -
to protect the goodwill of Mid-Cities and Mid-Cities Bank which is being sold to
BOKF.
(3) Any remedy at law for any breach of this Agreement would be inadequate and,
in the event of any such breach, BOKF shall be entitled to immediate and
permanent injunctive relief to preclude any such breach (in addition to any
remedies at law to which BOKF may be entitled) without any necessity of
establishing irreparable injury or posting bond or security therefore.
(4) Without limiting the generality of the obligations imposed by Paragraph 2
hereof, Principal agrees that the Principal shall not solicit
persons or entities who are customers or clients of Mid-Cities and Mid-Cities
Bank at the date hereof or solicit employees of Mid-Cities or Mid-Cities Bank to
seek employment with any person or entity except BOKF and its subsidiaries,
whether, in either case, such solicitation is made within or without the area
described in Paragraph 2 hereof.
(5) Principal represents that Principal is entering into this Agreement in order
to induce BOKF to enter into and consummate the Merger Agreement and
acknowledges that the consideration received in the Merger is full and adequate
consideration for the promises of Principal made herein.
(5) MISCELLANEOUS. The following miscellaneous provisions shall apply to this
Agreement:
(1) This Agreement shall be subject to, and interpreted by and in accordance
with, the laws of the State of Texas (excluding the conflicts of law provisions
thereof).
(2) This Agreement is the entire agreement of the parties respecting the subject
matter hereof. There are no other agreements, whether oral or written,
respecting the subject matter hereof.
(3) This Agreement may be executed in counterparts, each of which shall be
deemed an original. This Agreement shall become effective only when all of the
parties hereto shall have executed the original or a counterpart hereof. This
Agreement may be delivered by facsimile transmission of an executed original or
counterpart hereof.
(4) In any action brought by a party hereto to enforce the obligations of any
other party hereto, the prevailing party shall be entitled to collect from the
opposing parties to such action such party's reasonable attorneys fees and costs
(including court costs, reasonable fees of accountants and experts, and other
expenses incidental to the action).
- 58 -
(5) This is not a third party beneficiary contract. No person or entity other
than an express party hereto shall have any rights hereunder.
(6) This Agreement shall be binding upon the parties and their respective
successors and assigns. The rights of the parties under this Agreement may not
be assigned without the prior written consent of the parties hereto.
By ---------------------------------
BOK FINANCIAL CORPORATION
By --------------------------------
- 59 -
EXHIBIT 8.3
TO
MERGER AGREEMENT
BOKF Counsel's Opinion
[To be prepared by the mutual agreement of counsel to BOKF and counsel to
Mid-Cities]
- 60 -
EXHIBIT 9.1.3
TO
MERGER AGREEMENT
EMPLOYMENT AGREEMENT EXCEPTIONS
None
- 61 -
C O N F I D E N T I A L
ACQUISITION DOCUMENT
====================
(CASH PURCHASE AND TRIPARTITE REVERSE MERGER TRANSACTION)
****
MERGER AGREEMENT
AMONG
BOK FINANCIAL CORPORATION,
PARK CITIES BANCSHARES, INC.,
PC INTERIM STATE BANK,
SWISS AVENUE STATE BANK,
AND
CERTAIN SHAREHOLDERS
OF
SWISS AVENUE BANK
* * * *
AGREEMENT DATE OF MARCH 4, 1999
INDEX
TO
MERGER AGREEMENT
SECTION PAGE
1. Purpose of this Merger Agreement . 1
2. Organization of Park Cities. . 2
3. The Merger. . . . . . . . 3
4. Effect of the Merger. . .
5
5. Representations and Warranties of Swiss Avenue . . 5
6. Representations and Warranties of BOKF . 14
7. Covenants . . . . . . . . 16
8. Conditions Precedent to Closing by BOKF and Park Cities . . 27
9. Conditions Precedent to Closing by Swiss Avenue. . 29
10. Closing . . . . . . . . . 30
11. Escrow. . . . . . . . . . 32
12. Miscellaneous Provisions. 34
EXHIBIT CAPTION
EXHIBIT NUMBER
Principal Shareholders
1.3
Subsidiaries
5.3
Material Liabilities
5.6.3
Conduct of Business Prior to Closing Exceptions
5.7
Contracts and Commitments
5.9
Litigation
5.10
Brokers and Commissions
5.11
Employee Contracts and Benefit Plans
5.15
Compensation Exceptions
7.3.7
Schieffer Agreement
7.8
Letter Agreements With Senior Officers
7.13
Swiss Avenue Counsel's Opinion
8.4
Non-Competition Agreement
8.6
BOKF Counsel's Opinion
9.3
Employment Agreement Exception
10.1.3
MERGER AGREEMENT
This merger agreement ("Merger Agreement") is made as of March 4, 1999 (the
"Agreement Date") among:
(i) Swiss Avenue State Bank ("Swiss Avenue Bank");
(ii) The shareholders of Swiss Avenue set forth in Exhibit 1.3 ("Principal
Shareholders");
(iii) PC Interim State Bank ("PC");
(iv) BOK Financial Corporation ("BOKF"); and,
(v) Park Cities Bancshares, Inc, a Texas Corporation ("Park Cities").
In consideration of the mutual covenants contained herein, the adequacy of which
is hereby expressly acknowledged, and intending to be legally bound hereby,
Swiss Avenue Bank, Principal Shareholders, PC, BOKF and Park Cities agree as
follows:
1. PURPOSE OF THIS MERGER AGREEMENT. The purpose of this Merger Agreement is
as follows:
1.1 Swiss Avenue Bank is a bank organized in accordance with the laws of the
State of Texas and subject to regulation by the Texas Banking Department and the
Federal Deposit Insurance Corporation. The issued and outstanding capital stock
of Swiss Avenue Bank consists solely of a single class of 214,631 shares of
common stock of a par value of $8.00 per share ("Swiss Avenue Common Stock") of
which 214,631 shares are issued and outstanding at the Agreement Date. The
Common Stock of Swiss Avenue Bank issued and outstanding as of the Closing is
hereafter called the "Swiss Avenue Common Stock".
1.2 BOKF is a bank holding company organized under the laws of the State of
Oklahoma. BOKF is subject to regulation by the FRB. BOKF owns all of
the capital stock of Park Cities. Park Cities is a bank holding company
organized under the laws of the State of Texas. Park Cities is subject to
regulation by the FRB. The issued and outstanding capital stock of Park Cities
consists solely of 1,193.034 shares of common stock, par value of $5.00 per
share (the "Park Cities Shares").
1.3 The Principal Shareholders set forth on Exhibit 1.3 own not less than and
sixty percent (60%) of the Swiss Avenue Common
Stock.
1.4 The purpose of this Merger Agreement is to set forth the terms and
conditions on which (i) PC shall be formed and (ii) Swiss Avenue Bank and PC
shall merge. This Merger Agreement shall constitute a plan of merger for
corporate law purposes and for federal income tax purposes under Section
368(a)(2)(D) of the Internal Revenue Code.
1.5 Park Cities owns all of the issued and outstanding capital stock of Park
Cities Corporation, a Nevada Corporation. Park Cities Corporation owns all of
the issued and outstanding capital stock of Bank of Texas, National Association
("BOT").
1.6 PC shall be an interim state bank organized by Park Cities for the purpose
of facilitating the transaction contemplated by this Merger Agreement pursuant
to 7 T.A.C. Section 15.23, as hereafter provided.
2. ORGANIZATION OF PC. Prior to the Closing (as hereafter defined) Park Cities
shall organize PC as an interim state bank on the following terms and
conditions:
2.1 Park Cities shall cause PC to be organized in accordance with 7 T.A.C.
Section 15.23.
2.2 Park Cities shall own all of the issued and outstanding capital stock of PC.
2.3 PC shall be organized solely to facilitate the transaction contemplated by
this Merger Agreement.
2.4 Park Cities shall cause PC to execute and deliver this Merger Agreement at
such time as PC may enter into legally valid agreements in accordance with 7
T.A.C. Section 15.23.
3. THE MERGER. On the terms and conditions hereafter stated, PC shall be merged
into Swiss Avenue Bank on the following terms and conditions: 3.1 Swiss Avenue
Bank shall be the receiving corporation ("Surviving Corporation").
3.2 The Articles of Association of Swiss Avenue Bank shall be the Articles of
Association of the Surviving Corporation until changed as provided by law.
3.3 The Bylaws of Swiss Avenue Bank shall be the Bylaws of the Surviving
Corporation until changed as provided by law.
3.4 The officers of Swiss Avenue Bank shall be the officers of the Surviving
Corporation, until changed as provided by law.
3.5 The directors of Swiss Avenue Bank shall be the directors of the Surviving
Corporation until changed as provided by law; provided, however, Stanley A.
Lybarger, C. Fred Ball, Jr., and Tom E. Turner shall also be directors of the
Surviving Corporation.
3.6 The Merger shall be effective at the Closing (as hereafter provided in
Section 9).
3.7 Each share of Swiss Avenue Common Stock shall, subject to the provisions of
7 T.A.C. Section 15.23 and Section 5.11 and following of the Texas Business
Corporation Act, automatically and without any action on the part
of the holder thereof, be cancelled and converted solely into the right to
receive:
3.7.1 At Closing an amount of United States Dollars equal to (x) the Cash
Consideration (as hereafter defined) less the Escrow Amount (as hereafter
defined) divided by (y) the number of shares of Swiss Avenue Common Stock; and,
3.7.2 Upon termination of the Escrow, her, his, or its proportionate share of
the remaining Escrow Amount, as provided in Section 10.
3.8 The Cash Consideration shall equal (i) Thirty-Two Million Dollars
($32,000,000) less (ii) the Transaction Costs (as hereafter defined) The
Transaction Costs are all accounting, brokerage, commission, and legal costs,
arising or resulting from, the negotiation, execution, delivery, and
consummation of this Agreement incurred by Swiss Avenue Bank in excess of Thirty
Thousand Dollars ($30,000).
3.9 The Escrow Amount shall be Five Hundred Thousand Dollars ($500,000).
3.10 Notwithstanding the provisions of Section 3.7, all holders of shares of
Swiss Avenue Bank Common Stock electing to dissent to the Merger pursuant to the
provisions of 7 T.A.C. Section 110 and the Section 5.11 and following of the
Texas Business Corporation Act shall have only those rights set forth in said
sections.
4. EFFECT OF THE MERGER. The Merger shall have the following effects:
4.1 The corporate franchise, existence, rights and liabilities of Swiss Avenue
Bank shall continue unaffected and unimpaired.
4.2 The corporate franchise, existence, rights and liabilities of PC shall be
merged into Swiss Avenue Bank and the separate existence of PC shall cease.
4.3 Swiss Avenue Bank shall have and be vested with all of the rights, powers,
assets, property, liabilities and obligations of PC.
5. REPRESENTATIONS AND WARRANTIES OF SWISS AVENUE BANK. Swiss Avenue Bank hereby
represents and warrants to BOKF and Park Cities that:
5.1 INCORPORATION AND CORPORATE POWER. Swiss Avenue Bank is a bank duly
organized, validly existing and in good standing under the laws of the State of
Texas. Swiss Avenue Bank has all the corporate power and authority necessary and
required to own its properties and to conduct its business as such business is
now being conducted. Swiss Avenue Bank is (A) in material compliance with all
applicable provisions of all applicable federal, state and local statutes, laws,
regulations, ordinances and other requirements of any governmental authorities
(including, but not limited to, whether similar or dissimilar, the Texas Finance
Code, the Texas Business Corporation Act, and the filing of all administrative
reports and the payment of all fees) in effect as of the date of this Merger
Agreement and (B) shall be in material compliance therewith at the time of
Closing.
5.2 CAPITAL.
5.2.1 The Principal Shareholders are the record and beneficial owners of (i) not
less than sixty percent (60%) of the Swiss Avenue Common Stock. The Swiss Avenue
Common
Stock is and at the Closing will be all of the issued and outstanding capital
stock of Swiss Avenue Bank. No person or entity has any right or option to
acquire any capital stock of Swiss Avenue. The Swiss Avenue Common Stock shall
consist at the Closing of no more than 214,631 shares.
5.3 CAPITALIZATION OF SWISS AVENUE BANK. The Swiss Avenue Bank Common Stock is
validly issued and outstanding, fully paid and non-assessable. There are no
outstanding subscriptions, conversion privileges, calls, warrants, options or
agreements obligating Swiss Avenue Bank to issue, sell or dispose of, or to
purchase, redeem or otherwise acquire any shares of capital stock of Swiss
Avenue Bank (collectively, "options and rights"). None of the Swiss Avenue
Common Stock has been issued or disposed of in violation of any preemptive
rights of any shareholder nor in violation of any agreement to which Swiss
Avenue Bank was or is a party. Swiss Avenue Bank has no subsidiaries and does
not own, nor have the right or obligation to acquire, any shares of equity
securities of any corporation. except as set forth in Exhibit 5.3.
5.4 NON-VIOLATION OF OTHER AGREEMENTS. The execution and delivery of this Merger
Agreement, and the compliance with its terms and provisions by Swiss Avenue Bank
(including the execution and delivery of any document required to be executed by
Swiss Avenue Bank) will not breach any agreement, lease, or obligation of any
nature, whether similar or dissimilar, by which Swiss Avenue Bank is bound.
5.5 FINANCIAL STATEMENTS. Swiss Avenue Bank has delivered to BOKF, or will
have delivered to BOKF prior to the Closing as soon as future financial
statements are available, copies of the following ("Financial Statements"):
5.5.1 Financial Statements (Audited), December 31, 1996, 1997, and 1998;
5.5.2 Year to Date Monthly Financial Statement (Unaudited) for the most recent
month as is available as of the Closing.
The Financial Statements described in Section 5.5.1 (A) have been prepared or
will have been prepared in accordance with generally accepted regulatory
accounting principles, consistently applied and (B) fairly reflect the financial
condition and results of operations for the indicated periods. The Financial
Statement described in Sections 5.5.2 fairly reflects the financial condition
and results of operations for the period indicated, subject to immaterial
year-end adjustments and the omission of footnotes.
5.6 MATERIAL LIABILITIES. Swiss Avenue Bank has no material liabilities
(including, but not limited to, whether similar or dissimilar, liabilities or
obligations for taxes, whether due or to become due) except:
5.6.1 Those fully reflected or reserved against, or otherwise disclosed, in the
Financial Statements;
5.6.2 Those incurred with due care since December 31, 1998 in the normal course
of business consistent with past practices; and,
5.6.3 Those specifically disclosed in Exhibit 5.6.3 to this Merger Agreement.
5.7 CONDUCT OF BUSINESS PRIOR TO CLOSING. Except as set forth in Exhibit 5.7,
since December 31, 1998, and until the Closing of this transaction, (A) Swiss
Avenue Bank has carried on and will carry on its business only in the ordinary
and normal course consistent with past practices and (B) has not and will not,
without the prior consent of BOKF: 5.7.1 Incur any material liabilities,
commitments or obligations, contingent or otherwise, or dispose of any of its
assets, except in the ordinary course of its business consistent with past
practices and for the purpose of carrying on the business as a going concern;
5.7.2 Incur any bank or other institutional debt, or enter into any agreement
for the borrowing of money; except borrowing of federal funds or borrowing from
the Federal Home Loan Bank by Swiss Avenue Bank consistent with past practices;
5.7.3 Suffer any material adverse change in the financial conditions, assets,
liabilities, business or property of Swiss Avenue Bank taken as a whole; and,
5.7.4 Make any material change in the manner in which business is conducted
(including, without limitation, branch relations, branch closings, and any
material change in products offered to customers).
5.8 TAX RETURNS/REPORTS. Swiss Avenue Bank has duly filed all tax reports and
returns required to be filed by it and has duly paid all taxes and other charges
claimed to be due from it by federal, state and local taxing authorities. No
waivers of the statute of limitation have been issued with respect to unaudited
years. Swiss Avenue Bank has no knowledge of any facts which could reasonably be
expected to result in a material deficiency with respect to unaudited tax
returns which would result in a material adverse effect on Swiss Avenue Bank
taken as a whole. No payment of any kind made to any employee of Swiss Avenue
Bank is or will be an excess parachute payment in respect of the Merger within
the meaning of Section 280G of the Internal Revenue Code.
5.9 CONTRACTS AND COMMITMENTS.
5.9.1 A list of all contracts and commitments, other than credit and lending,
deposit or borrowing transactions entered into in the ordinary course of
business by Swiss Avenue Bank which are material to the business, operations or
financial condition of Swiss Avenue Bank as of this date, is set forth on
Exhibit 5.9. For the purpose of Exhibit 5.9, materiality shall mean those
contracts and commitments (including a series of related contracts or
commitments) for which payment or other consideration to be furnished by any
party is more than $25,000.
5.9.2 Except as set forth on Exhibit 5.9, Swiss Avenue Bank has in all material
respects performed and is performing all contractual and other obligations
required to be performed by them.
5.10 LITIGATION. Except as set forth in Exhibit 5.10, there is not pending, or,
to the knowledge and belief of Swiss Avenue Bank threatened, any claim,
litigation, proceeding, order of any court or governmental agency, or
governmental investigation or inquiry to which Swiss Avenue Bank is a party or
which involves their business operations, any of their property or any property
leased by them which, individually or in the aggregate:
5.10.1 May reasonably result in any material adverse change in the financial
condition, business, prospects, assets, properties or operations of Swiss Avenue
Bank taken as a whole;
5.10.2 May reasonably involve the expenditure of more than a total of $10,000 in
legal fees and/or allocated employees' salaries or their direct or indirect
costs; or,
5.10.3 Alleges violation of any law, rule or regulation.
5.11 BROKERAGE FEES. Swiss Avenue Bank has not incurred nor will it incur,
directly or indirectly, any liability for brokerage, finder's, financial
advisor's or agent's fees or commissions by virtue of any commitment made by any
of them in connection with this Merger Agreement or any transaction contemplated
hereby except as described in Exhibit 5.11.
5.12 REQUIRED CORPORATE ACTION. The execution, delivery and consummation of this
Merger Agreement will at the time of Closing have been duly and validly
authorized by the board of directors of Swiss Avenue Bank and will at the time
of Closing have been duly and validly authorized by the shareholders of Swiss
Avenue Bank in accordance with the requirements of the Texas Finance Code and
all other applicable law.
5.13 AUTHORIZED EXECUTION. This Merger Agreement has been duly executed and
delivered by Principal Shareholders and
by duly authorized officers of Swiss
Avenue Bank. This Merger Agreement constitutes the legal, valid and binding
agreement and obligation of Principal Shareholders and Swiss Avenue Bank
enforceable against them in accordance with its terms, except as may be limited
by applicable bankruptcy, insolvency, moratorium, receivership, and other
similar laws affecting the rights of creditors generally.
5.14 TITLE TO ASSETS; ENCUMBRANCES. Swiss Avenue Bank has good and valid title
(with respect to fee real estate, good and valid title shall mean such title as
may be insured on standard title insurance forms with no exceptions materially
and adversely affecting the value or use of the fee real estate) to their
assets, and in each case subject to no mortgage, pledge, lien, security
interest, conditional sale agreement, or other encumbrance of any nature whether
similar or dissimilar, except:
5.14.1 Such encumbrances which are purchase money security interests entered
into in the ordinary course of business consistent with past practice reflected
on their books and records;
5.14.2 Lessors' interests in leased tangible real and personal property
reflected on their books and records;
5.14.3 Such encumbrances for taxes and assessments not yet due and payable;
5.14.4 Encumbrances as do not materially detract from the value or interfere
with the use or operation of the asset subject thereto; and,
5.14.5 Repossessed and foreclosed assets acquired in satisfaction of debt
previously contracted.
5.15 EMPLOYEES. Except as set forth on Exhibit 5.15, none of the employees of
Swiss Avenue Bank is employed under any employment contract (oral or written) or
is the beneficiary of any compensation plan (oral or written) or is entitled to
any payment from Swiss Avenue Bank by reason of this Merger Agreement or the
Merger and there are no employment contracts, management contracts, consulting
agreements, union contracts, labor agreements, pension plans, profit sharing
plans or employee benefit plans to which Swiss Avenue Bank is a party or by
which it is bound except as described on Exhibit 5.15. All plans which are
required to comply with the requirements of the Employee Retirement Income
Security Act are in full compliance therewith and with the regulations
promulgated pursuant thereto.
5.16 ENVIRONMENTAL LAWS. The existence, use and operation of the assets of Swiss
Avenue Bank are in material compliance with all applicable statutes, rules and
regulations including, without limiting the generality of the foregoing, all
environmental and zoning laws and the Americans With Disabilities Act.
5.17 SURVIVAL AND INDEPENDENCE OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Swiss Avenue Bank made in this Merger
Agreement shall survive the Closing hereof notwithstanding any investigation or
knowledge of BOKF; provided BOKF or Park Cities shall give notice to Agent (as
hereafter defined) of any claim of a breach of any such representations and
warranties on or before March 31, 2000 (the "Claim
Notice Deadline"). Each of the representations and warranties of Swiss Avenue
Bank set forth in this Merger Agreement is a separate and independent
representation and warranty, shall be cumulative of and in addition to all other
warranties and representations, and shall not limit or be interpreted to be in
derogation of any other representation or warranty made herein.
6. REPRESENTATIONS AND WARRANTIES OF BOKF. BOKF and Park Cities represent and
warrant, jointly and severally, to Swiss Avenue Bank that:
6.1 INCORPORATION AND CORPORATE POWER. BOKF and Park Cities are corporations
duly organized, validly existing and in good standing under the laws of Oklahoma
and Texas, respectively. BOKF and Park Cities have all the corporate power and
authority necessary and required to consummate the transactions contemplated by
this Merger Agreement.
6.2 NON-VIOLATION OF OTHER AGREEMENTS. The execution and delivery of this Merger
Agreement, and compliance with its terms and provisions by BOKF and Park Cities
and the execution of any document required to be executed by BOKF or Park
Cities, will not:
6.2.1 Violate, conflict with or result in the breach of their respective
certificates of incorporation or bylaws or any of the terms, conditions or
provisions of any agreement or instrument to which BOKF or Park Cities is a
party, or by which BOKF or Park Cities is bound;
6.2.2 Result in the creation or imposition of any lien, charge,
encumbrance or restriction of any nature whatever upon any of the property,
contracts or business of BOKF and Park Cities; or,
6.2.3 Require the consent of any party to a contract with BOKF and Park Cities
in order to keep the contract enforceable.
6.3 REQUIRED CORPORATE ACTION. The execution, delivery, and consummation of this
Merger Agreement by BOKF and Park Cities have been duly and validly authorized
by the boards of directors of BOKF and Park Cities and approved by the
shareholders of Park Cities. The approval of the shareholders of BOKF is not
required. This Merger Agreement has been duly executed and delivered by duly
authorized officers of BOKF and Park Cities. This Merger Agreement constitutes a
legal, valid and binding agreement and obligation of BOKF and Park Cities
enforceable against BOKF and Park Cities in accordance with its terms, except as
may be limited by applicable bankruptcy, insolvency, moratorium, receivership,
and other similar laws affecting the rights of creditors generally.
6.4 BROKERAGE FEES. Neither BOKF nor Park Cities has incurred or will incur,
directly or indirectly, any liability for brokerage, finder's, financial
advisor's or agent's fees or commissions by virtue of any commitment made by
BOKF or Park Cities in connection with this Merger Agreement or any transaction
contemplated hereby. Neither BOKF nor Park Cities has any knowledge that any
party has asserted any claim of such nature against BOKF or Park Cities.
6.5 SURVIVAL AND INDEPENDENCE OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of BOKF and Park Cities made in this Merger
Agreement shall survive the Closing hereof notwithstanding any investigation or
knowledge of the Principal Shareholders; provided the Principal Shareholders
shall give notice to BOKF on or before the Claim Notice Deadline of any claim of
a breach of any such representations and warranties. Each of the representations
and warranties of BOKF and Park Cities set forth in this Merger Agreement is a
separate and independent representation and warranty, shall be cumulative of and
in addition to all other warranties and representations; and shall not limit any
other representation or warranty made herein.
6.6 BOKF AND PARK CITIES INDEMNIFICATION. BOKF and Park Cities shall indemnify
the holders of Swiss Avenue Common Stock against, and hold them harmless from,
all loss, cost and expense (including interest at the judgment rate and
attorney's fees) arising out of any breach by BOKF and Park Cities of any
representation or warranty made in this Merger Agreement; provided, Agent shall,
on or before the Claim Notice Deadline, give notice of any breach of such
representations and warranties to BOKF and Park Cities on the request of a
majority in interest of such shareholders.
7. COVENANTS.
7.1 FULL ACCESS. In order that BOKF shall have the full opportunity to make such
investigations as it shall reasonably desire concerning Swiss Avenue Bank and
their business affairs, Swiss Avenue Bank shall:
7.1.1 Give BOKF, its employees, counsel, accountants and other authorized
representatives, as necessary to conduct the investigation, full access, upon
reasonable notice to Swiss
Avenue Bank and at reasonable times without unduly interfering with the conduct
of business by Swiss Avenue Bank throughout the period up to the Closing, to all
of the facilities, properties, books, contracts and records of Swiss Avenue
Bank.
7.1.2 Authorize its accountants to give BOKF full access to the accountants'
records, including work papers; and,
7.1.3 Furnish to BOKF during that period all additional financial, operating and
other information concerning Swiss Avenue Bank and its business affairs, as BOKF
may reasonably request and which Swiss Avenue Bank shall have available.
7.1.4 All information provided pursuant to this Section 7.1 shall be subject to
the provisions of Section 7.7.
7.2 CONDUCT OF BUSINESS PRIOR TO THE CLOSING DATE. From this date until the
Closing Date, Swiss Avenue Bank shall, except as may be first approved in
writing by BOKF or as is otherwise permitted or contemplated in this Merger
Agreement:
7.2.1 Maintain its corporate existence in good standing;
7.2.2 Maintain the general character of its business and conduct its business in
their ordinary and usual manner consistent with past practices;
7.2.3 Maintain proper business and accounting records generally in accordance
with past practices;
7.2.4 Maintain its properties (except repossessed and foreclosed
assets acquired in satisfaction of debt previously contracted) in normal repair
and condition, normal wear and tear and damage due to fire or other unavoidable
casualty excepted;
7.2.5 Preserve its business organizations intact, use their reasonable efforts
to maintain satisfactory relationships with suppliers, customers and others
having business relations with them whose relationships it believes is desirable
to maintain, and use its reasonable efforts to procure the willingness of all of
the personnel employed by them immediately prior to the execution of this Merger
Agreement who are material to the success of its business to continue in its
employ on substantially the same terms and conditions as those on which such
personnel were employed immediately prior to the execution of this Merger
Agreement;
7.2.6 Maintain in full force and effect insurance comparable in amount and in
scope of coverage to that now maintained by it;
7.2.7 Except as otherwise disclosed in this Merger Agreement, perform all of
their obligations under all material contracts, leases and agreements relating
to or affecting its assets, properties and businesses; and,
7.2.8 Comply in all material respects with and perform all obligations and
duties imposed upon them by federal, state
and local laws, and all rules, regulations and orders imposed by federal, state
or local governmental authorities, except as may be contested by it in good
faith by appropriate proceedings.
7.3 SWISS AVENUE BANK PROHIBITED ACTIONS PRIOR TO THE CLOSING DATE. From this
date until the Closing Date, Swiss Avenue Bank shall not (except as otherwise
permitted by this Merger Agreement or as requested or approved by BOKF which
approval shall not be unreasonably withheld, delayed, or denied):
7.3.1 Incur any indebtedness for borrowed money or incur any noncurrent
indebtedness for the purchase price of any fixed or capital asset, or make any
extension of credit or any loans to, guarantee the obligations of, or make any
additional investments in, any other person, corporation or joint venture
(whether an existing customer or a new customer) except:
7.3.1.1 Extensions of credit, loans and guarantees (i) less than Five Hundred
Thousand Dollars ($500,000) per transaction or (ii) less than One Hundred
Thousand Dollars ($100,000) with existing Swiss Avenue Bank customers having
existing credit of Five Hundred Thousand Dollars ($500,000) or more made by
Swiss Avenue Bank in the
usual and ordinary course of its banking business, consistent with prior
practices and policies;
7.3.1.2 Legal investments by Swiss Avenue Bank in the usual and ordinary course
of its banking business consistent with prior practices and policies; and,
7.3.1.3 Borrowings from the Federal Home Loan Bank, the Federal Reserve Bank,
deposit liabilities, and federal funds transactions by Swiss Avenue Bank in the
ordinary course of business consistent with past practices.
7.3.2 Make any (a) material change, except in the ordinary and usual course of
business, in its assets (including, but not limited to, any change in the
composition of such assets so as to materially alter the proportion of cash) or
liabilities, (b) material commitment for any capital expenditures, excluding
expenditures for repairs and remodeling in the ordinary and usual course of
business, or (c) sale or other disposition of any material capital asset other
than for fair value in the ordinary course of business;
7.3.3 Make any change in its Articles of Association or Bylaws;
7.3.4 Authorize any shares of its capital stock for issuance, issue any shares
of any previously authorized but unissued capital
stock or grant, issue or make any option or commitment relating to its capital
stock;
7.3.5 Enter into any letter of intent or agreement to sell any of its assets,
except in the normal and ordinary course of their business, or acquire, be
acquired by, or merge, consolidate or reorganize with any person, firm or
corporation;
7.3.6 Declare or pay any dividend, make any other distribution or payment or set
aside any amount for payment with respect to any shares of their capital stock
or directly or indirectly, redeem, purchase or otherwise acquire any shares of
their capital stock or make any commitment relating thereto.
7.3.7 Except as set forth in Exhibit 7.3.7, make any (a) increase in the
compensation payable or to become payable to any of their directors, officers or
employees (including, without limitation, any bonus or incentive payment or
agreement), (b) make or enter into any written employment contract or any bonus,
stock option, profit sharing, pension, retirement or other similar payment or
arrangement, or (c) make any payment to any person, except in the usual and
ordinary course of business or except as required by an existing agreement set
forth in the Exhibits hereto;
7.3.8 Make any material change in its banking, safe deposit or power of attorney
arrangements;
7.3.9 Enter into any trust, escrow, agency and similar trust
company agreements, purchase orders and contracts for goods and services, except
in the ordinary course of business consistent with past practices;
7.3.10 Enter into any agreement resulting in the imposition of any mortgage or
pledge of their assets or the creation of any lien, charge or encumbrance on any
of its assets;
7.3.11 Incur any material obligation or liability, absolute or contingent,
except in the ordinary course of business or pursuant to existing contracts
described in this Merger Agreement;
7.3.12 Take any action which would prevent compliance with any of the conditions
of this Merger Agreement;
7.3.13 Increase compensation to any employee except annual increases at the
times and in amounts consistent with past practices or pay any bonuses to any
employee except at the times and in amounts consistent with past practices; or,
7.3.14 Pre-pay long term indebtedness.
7.4 VOTE FOR MERGER AND WAIVER OF RIGHT TO DISSENT. Each Principal Shareholder
shall vote, as a stockholder (and, if applicable, as a director) of Swiss Avenue
Bank, for the Merger and use her or his best efforts to cause the Merger to be
approved by the directors and shareholders of Swiss Avenue Bank in accordance
with applicable law and consummated in accordance with the terms of this Merger
Agreement. Each Principal Shareholder hereby irrevocably waives any and all
rights to dissent to the Merger.
7.5 REGULATORY APPROVAL. BOKF shall diligently file and pursue (A) all
regulatory applications required in order to consummate the Merger, including
but not limited to the necessary applications for prior approval of the Board of
Governors of the Federal Reserve System, the Office of the Comptroller of the
Currency, and the Texas Banking Department on or before the thirtieth (30th)
calendar day following the Agreement Date and (B) thereafter promptly file any
required supplements or amendments thereto. All applications, supplements, and
amendments shall be substantially complete when filed. BOKF shall deliver to
Swiss Avenue Bank a copy of all such filings, as filed, within three (3)
business days after the filing thereof. Although all such filings shall be the
responsibility of BOKF, BOKF shall nevertheless advise and consult with Swiss
Avenue Bank on an ongoing basis with respect to the filings and all matters and
events related thereto. BOKF shall inform and make available to Swiss Avenue
Bank from time to time all matters relating to the filings and the regulatory
approvals. BOKF shall diligently proceed with reasonable deliberate speed to
obtain all such approvals. If any regulatory application required to be filed by
BOKF should be finally denied or disapproved by the respective regulatory
authority, then BOKF shall immediately give notice to Swiss Avenue Bank and this
Merger Agreement shall thereupon terminate. However, it is understood that a
request for additional information or undertaking by the applicant, as a
condition for approval, shall not be deemed to be a denial or disapproval so
long as the applicant can reasonably be expected to provide
the requested information or undertaking. In the event an application is denied
pending an appeal, petition for review, or similar such act on the part of the
applicant, then the application will be deemed denied unless the applicant
promptly and diligently prepares and files such appeal and continues the
appellate process for the purposes of getting the necessary approval.
7.6 CONFIDENTIALITY. Prior to the Closing, BOKF shall keep all information
disclosed to BOKF (its employees, counsel, accountants, and other authorized
representatives) by Swiss Avenue Bank respecting the business and financial
condition of Swiss Avenue Bank confidential and shall make no use of such
information except to conduct the investigation contemplated by Section 7.1 and
to consummate the transactions contemplated hereby and shall not use such
information to obtain a competitive advantage in connection with any customer of
Swiss Avenue Bank. In the event this Merger Agreement is terminated for any
reason BOKF shall (i) return all copies of all information and documents
obtained from Swiss Avenue Bank and Principal Shareholders and (ii) thereafter
keep all such information confidential and not make use of any such information
to obtain a competitive advantage in connection with any customer of Swiss
Avenue Bank.
7.7 BOKF PROHIBITED ACTION PRIOR TO CLOSING. From this date until the Closing
Date, BOKF shall not take any action which would prevent compliance with any of
the conditions of this Merger Agreement. BOKF shall not, and shall cause its
subsidiaries not to, make or agree to make any
acquisition, or take any other action, that adversely affects its ability to
consummate the transactions contemplated by this Merger Agreement and will
otherwise continue to conduct its business operations and shall cause the
operations of its subsidiaries to be conducted in a manner consistent with past
operating practices.
7.8 EMPLOYMENT AGREEMENT. Principal Shareholders shall use their best efforts to
cause Carl B. Schieffer to enter into an employment agreement with Swiss Avenue
Bank in the form and content of Exhibit 7.8 (the "Schieffer Agreement").
7.9 SWISS AVENUE BANK COVENANT TO OBTAIN APPROVALS. Swiss Avenue Bank shall
promptly seek and use commercially reasonable efforts to obtain the approval of
this Merger Agreement and the transactions contemplated hereby by the
shareholders of Swiss Avenue Bank. Swiss Avenue Bank shall enter into an
agreement to merge with Bank of Texas, National Association, subject to the
Closing of this Merger Agreement, in form and content acceptable to BOKF.
7.10 COVENANTS RESPECTING EMPLOYMENT AND NON-COMPETITION AGREEMENTS. BOKF and
Swiss Avenue Bank shall use commercially reasonable efforts to cause all
employment and non-competition agreements which are a condition precedent to the
obligations of BOKF and Park Cities under this Merger Agreement to be executed
and delivered by the parties thereto.
7.11 EMPLOYMENT BENEFITS. Following the Closing, BOKF shall cause all employees
of Swiss Avenue Bank to have the same benefits provided by BOKF generally to
employees of BOKF and its affiliates. Employees of Swiss Avenue Bank shall be
credited for their actual and credited service with Swiss Avenue Bank for
purposes of eligibility, vesting and beneficial accrual for all BOKF employee
benefit plans including the BOKF 401(k) plan; provided, however, such employees
shall not be credited with prior service in BOKF's defined benefit pension plan.
Swiss Avenue Bank employees shall not be subject to any exclusions for
pre-existing conditions under BOKF's medical benefit plan and shall receive
credit for any deductibles or out-of-pocket expenses previously paid. The annual
salary of employees of Swiss Avenue Bank as of the date of the this Merger
Agreement shall not be reduced following the Closing during the period of time
commencing at the Closing and ending at the opening of business on January 1,
2000.
7.12 DELIVERY OF BOKF NOTES IN LIEU OF CASH. BOKF shall, at the Closing, deliver
to any person or entity so requesting which holds as of the record date (as
hereafter defined) one thousand (1,000) shares of Swiss Avenue Common Stock its
negotiable promissory note in usual and customary form acceptable to counsel for
Swiss Avenue Bank and BOKF (provided such acceptance is not unreasonably
withheld, delayed or denied) bearing interest compounded annually at the
Applicable Federal Rate (at the date of Closing as set forth in the Internal
Revenue Code) evidencing all, or such portion of the Cash Consideration payable
to such holder at the Closing as such person shall determine, in such
installments and with such maturities, not exceeding one year from the date of
Closing, as such person or entity shall determine (collectively, the "Notes");
provided, however, BOKF shall not issue a Note
to any holder who does not (i) advise BOKF in writing on or prior to the record
date of the principal amount, installments, and maturities such holder desires,
(ii) all Notes shall be non-transferrable by the holders thereof except by gift,
devise, or operation of law; and (iii) BOKF shall not issue any Note unless it
shall have received an opinion of its counsel that the issuance of such Note
does not require registration under the Securities Act of 1933, the securities
law of all applicable jurisdictions, and the Trust Indenture Act of 1940.
7.13 EMPLOYMENT OF SENIOR OFFICERS. BOKF shall, upon consummation of the Merger,
cause Bank of Texas, National Association to enter into letter agreements
respecting employment, in the form of Exhibit 7.13, with the following senior
officers of Swiss Avenue Bank: Harlan Bilton, Danell Lichtenwalter, Reggie
George, Sue Dorsey, Danny Oberst, and Shelby Martin.
8. CONDITIONS PRECEDENT TO CLOSING BY BOKF AND PARK CITIES. The obligation of
BOKF, Park Cities and PC to consummate and close this transaction is conditioned
upon each and all of the following:
8.1 The representations, warranties and covenants of Swiss Avenue Bank shall be
materially true at the Closing as though such representations, warranties and
covenants were also made at the Closing.
8.2 The Federal Reserve Board shall have approved the Merger, or issued a waiver
of approval, in accordance with 12 U.S.C. Section 1842 and 12 C.F.R. Section
225. The Texas Banking Department shall have approved the Merger in accordance
with Section 31.301 of the Texas Finance Code. The Office of the Comptroller of
the Currency shall have approved the
Merger and the merger of Swiss Avenue Bank into Bank of Texas, National
Association in accordance with 12 U.S.C. Section 215a and 12 C.F.R. 5.33. Such
other regulatory approvals as may be required shall have been obtained.
8.3 Swiss Avenue Bank and Principal Shareholders shall have performed and
complied with, in all material respects, all of their obligations under this
Merger Agreement which are to be performed or complied with by them prior to or
on the Closing Date.
8.4 Swiss Avenue Bank shall have delivered to BOKF an opinion of its counsel,
dated the Closing Date, in the form and content of the opinion attached hereto
as Exhibit 8.4.
8.5 The shareholders of Swiss Avenue Bank shall have approved this Merger
Agreement in accordance with the Texas Finance Code and the Texas Business
Corporation Act. Swiss Avenue Bank shall have entered into an agreement to merge
with Bank of Texas, National Association, subject to the Closing of this Merger
Agreement, in form and content acceptable to BOKF. 8.6 The Schieffer Agreement
shall have been executed and delivered. Each officer and director of Swiss
Avenue Bank, which BOKF deems critical in BOKF's good faith judgment, shall,
prior to or at the Closing, have entered into a non-competition agreement in the
form of Exhibit 8.6.
8.7 Swiss Avenue Bank taken as a whole shall not have suffered any material
adverse change in their financial conditions, assets, liabilities, businesses or
properties.
8.8 Holders of no more than five percent (5%) of the Swiss Avenue Common Stock
shall have dissented to the Merger.
In the event any one or more of these conditions shall not have been fulfilled
prior to or at the Closing, BOKF, Park Cities, and PC may terminate this Merger
Agreement by written notice to Swiss Avenue Bank, in which event neither party
shall have any further obligation or liability to the other except the
obligations of BOKF set forth in Section 7.6 and the obligations of Swiss Avenue
Bank set forth in Section 5.11. BOKF, Park Cities, and PC shall be entitled to
waive compliance with any one or more of the conditions, representations,
warranties or covenants in whole or in part.
9. CONDITIONS PRECEDENT TO CLOSING BY SWISS AVENUE BANK. The obligation of Swiss
Avenue Bank to consummate and close this transaction are conditioned upon each
and all of the following:
9.1 The representations, warranties and covenants of BOKF and Park Cities made
in this Merger Agreement shall be true at the Closing as though such
representations, warranties and covenants were also made at the Closing.
9.2 BOKF and Park Cities shall have performed and complied, in all material
respects, with all of their obligations under this Merger Agreement which are to
be performed or complied with by them prior to or at the Closing.
9.3 BOKF shall have delivered to Swiss Avenue Bank an opinion of its counsel,
Frederic Dorwart, Tulsa, Oklahoma, dated the Closing Date, in the form and
content of the opinion attached hereto as Exhibit 9.3.
9.4 The Federal Reserve Board shall have approved the Merger, or issued a waiver
of approval, in accordance with 12 U.S.C. Section 1842 and 12 C.F.R. Section
225. The Texas Banking Department shall have approved the
Merger in accordance with Section 31.301 of the Texas Finance Code. The Office
of the Comptroller of the Currency shall have approved the Merger and the merger
of Swiss Avenue Bank into Bank of Texas, National Association in accordance with
12 U.S.C. Section 215a and 12 C.F.R. 5.33. Such other regulatory approvals as
may be required shall have been obtained.
9.5 The shareholders of Swiss Avenue Bank shall have approved this Merger
Agreement and the transactions contemplated hereby as required by the Texas
Finance Code and the Texas Business Corporation Act.
Swiss Avenue Bank shall be entitled to waive compliance with any one or more of
the conditions, representations, warranties or covenants in whole or in part. In
the event any one or more of these conditions shall not have been fulfilled
prior to or at the Closing, Swiss Avenue Bank may terminate this Merger
Agreement by notice to BOKF, in which event no party shall have any further
obligation or liability to the other, except the obligations of BOKF set forth
in Section 7.6.
10. CLOSING. The Closing ("Closing" or "Closing Date") of the transactions
contemplated by this Merger Agreement shall take place five (5) business days
following the first day on which (i) BOKF and Park Cities can lawfully
consummate the Merger under 12 U.S.C. Section 1842, 12 C.F.R. Section 225 and
other applicable laws, rules and regulations and (ii) Bank of Texas, National
Association and Swiss Avenue Bank can merge under 12 U.S.C. Section 215a, and 12
C.F.R. Section 5.23 and other applicable laws, rules and regulations. In any
event, if the Closing Date does not occur on or before July 1, 1999, then either
BOKF or Swiss Avenue Bank may by notice to the other, terminate this Merger
Agreement, provided such notice is given on or before August 1, 1999. The
Closing shall be held at 10:00 a.m. on the Closing Date at the offices of Swiss
Avenue Bank or at such other time and place as BOKF and Swiss Avenue may agree.
At the Closing, BOKF, Park Cities, PC, Swiss Avenue Bank, and Principal
Shareholders shall execute and deliver all of the documents and take all other
actions which are contemplated by the terms hereof.
10.1 Without limiting the generality of Section 10 of this Merger Agreement, the
following actions shall be taken at the Closing concurrently. Swiss Avenue Bank
shall:
10.1.1 Use commercially reasonable efforts to cause to be delivered to Park
Cities certificates representing the Swiss Avenue Common Stock;
10.1.2 Deliver the opinion of Swiss Avenue Bank's counsel pursuant to Section
8.4; and,
10.1.3 Except as otherwise set forth on Exhibit 10.1.3, cause the employment
agreements, plans and payments described in Exhibit 5.15 to be terminated and
discharged at no cost to Swiss Avenue Bank.
10.2 Without limiting the generality of Section 10 of this Merger Agreement, the
following actions shall be taken at the Closing concurrently. BOKF, Park Cities,
or PC shall:
10.2.1 Pay, by corporate check, to each of the holders of Swiss Avenue Common
Stock of record on the third business day preceding the Closing (the "Record
Date") the amounts to which such holders are entitled pursuant to Section 3.7 or
deliver Notes in lieu thereof as provided in Section 7.12.
10.2.2 Establish the Escrow.
10.2.3 Deliver the opinion of BOKF's counsel pursuant to Section 9.3.
10.2.4 Cause appropriate evidences of the Merger to be filed in accordance with
applicable law.
11. THE ESCROW. The Escrow shall be established on the following terms and
conditions:
11.1 The escrow agent shall be Bank of Texas Trust Company, National Association
("Escrow Agent").
11.2 The Escrow shall be governed by the standard form of escrow agreement
generally in use by the Escrow Agent (the "Escrow Agreement").
11.3 BOKF shall deliver the Escrow Amount to the Escrow Agent at the Closing.
The Escrow Agent shall invest the Escrow Amount in three month certificates of
deposit issued by Bank of Texas, National Association ("BOT") on the terms and
conditions being offered by BOT to the public at the time of such investment and
shall thereafter renew such certificates of deposit upon maturity as to the
total amount remaining in the Escrow after payment of any Allowed Claim (for
like periods and on the terms and conditions being offered by BOT to the public
at the time of such renewal). Interest on the certificates shall be added to the
Escrow and deemed part of the Escrow Amount.
11.4 In the event BOKF claims a breach of the representations and warranties of
Swiss Avenue Bank arising under this Merger Agreement, BOKF shall give notice of
the claim (a "Claim") to the Agent (as hereafter defined). The notice shall
identify the representations and warranties which BOKF claims have been breached
and describe in reasonable detail the basis of the Claim.
11.5 In the event BOKF makes a Claim(s) prior to the Claim Notice Deadline, the
Escrow Agent shall continue to hold the Escrow Amount until such Claim(s)
is resolved by (i) the mutual agreement of Agent and BOKF or (ii) a final
adjudication determining the merits of the Claim(s), at which time the Escrow
shall terminate and the Escrow Agent shall pay (a "Claim Payment") the Claim as
mutually agreed or finally adjudicated (an "Allowed Claim").
11.6 The Escrow shall terminate at the later of the Claim Notice Deadline or the
date on which all timely noticed Claims have been resolved by mutual agreement
or final adjudication and all Allowed Claims, if any, shall have been paid.
11.7 Upon termination of the Escrow the Escrow Amount remaining in the Escrow
shall be delivered to the holders of Swiss Avenue Common Stock on the Record
Date in accordance with their respective interests.
11.8 The rights of the holders of Swiss Avenue Common Stock to receive payments
from the Escrow shall not be assignable or transferable except by operation of
law or by intestacy or with the approval of BOKF (which approval shall not be
unreasonably withheld, delayed, or denied) and will not be evidenced by any
certificate or other evidence of ownership.
11.9 BOKF shall pay the fees and costs of the Escrow Agent with respect to the
Escrow.
11.10 The Agent shall be Sam Davis. The Executive Committee of Swiss Avenue Bank
on the Record Date may by majority vote and upon notice to BOKF change the
Agent. The Agent shall have authority to act for and on behalf of the
stockholders of Swiss Avenue Bank in resolving, whether through settlement or
litigation, any Claim. The Agent shall be reimbursed for his reasonable costs
and expenses, including attorneys' fees, by the Escrow Agent out of the Escrow
Fund. The Agent
shall not be deemed a fiduciary of the holders of Swiss Avenue Common Stock and
shall be liable to such holders only for gross negligence or intentional
wrongdoing.
12. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions shall apply
to this Agreement:
12.1 All notices or advices required or permitted to be given by or pursuant to
this Agreement, shall be given in writing. All such notices and advices shall be
(i) delivered personally, (ii) delivered by facsimile or delivered by U.S.
Registered or Certified Mail, Return Receipt Requested mail, or (iii) delivered
for overnight delivery by a nationally recognized overnight courier service.
Such notices and advices shall be deemed to have been given (i) the first
business day following the date of delivery if delivered personally or by
facsimile, (ii) on the third business day following the date of mailing if
mailed by U.S. Registered or Certified Mail, Return Receipt Requested, or (iii)
on the date of receipt if delivered for overnight delivery by a nationally
recognized overnight courier service. All such notices and advices and all other
communications related to this Agreement shall be given as follows:
BOKF and Park Cities:
James A. White, Executive Vice President BOK FINANCIAL CORPORATION P.O. Box 2300
Tulsa, OK 74192 (918) 588-6853 - Facsimile
C. Fred Ball, Jr. 7600 West Northwest Highway Dallas, Texas 75225 Attention: C.
Fred Ball, Jr. Telephone No: (214) 706-0336 Telecopy No.: (214) 706-0350
and Frederic Dorwart, Secretary and General Counsel to BOK Financial Corporation
Old City Hall 124 East Fourth Street Tulsa, OK 74103 (918) 583-8251 - Facsimile
Swiss Avenue Bank and Principal Shareholders:
Carl B. Schieffer President Swiss Avenue State Bank 4217 Swiss Avenue
214-824-4760 - Telephone 214-823-3918 - Facsimile
and Robert S. Addison Payne & Blanchard, L.L.P. 700 North Pearl Street Suite
500, LB 393 Dallas, TX 75201-7424 214-871-4336 - Telephone 214-220-0439 -
Facsimile
or to such other address as the party may have furnished to the other parties in
accordance herewith, except that notice of change of addresses shall be
effective only upon receipt.
12.2 This Agreement shall be subject to, and interpreted by and in accordance
with, the laws (excluding conflict of law provisions) of the State of Texas.
12.3 This Agreement is the entire Agreement of the parties respecting the
subject matter hereof. There are no other agreements, representations or
warranties, whether oral or written, respecting the subject matter hereof.
12.4 No course of prior dealings involving any of the parties hereto and no
usage of trade shall be relevant or advisable to interpret, supplement, explain
or vary any of the terms of this Agreement, except as expressly provided herein.
12.5 This Agreement, and all the provisions of this Agreement, shall be deemed
drafted by all of the parties hereto. 12.6 This Agreement shall not be
interpreted strictly for or against any party, but solely in accordance with the
fair meaning of the provisions hereof to effectuate the purposes and interest of
this Agreement. 12.7 Each party hereto has entered into this Agreement based
solely upon the agreements, representations and warranties expressly set forth
herein and upon his own knowledge and investigation. Neither party has relied
upon any representation or warranty of any other party hereto except any such
representations or warranties as are expressly set forth herein.
12.8 Each of the persons signing below on behalf of a party hereto represents
and warrants that he or she has full requisite power and authority to execute
and deliver this Agreement on behalf of the parties for whom he or she is
signing and to bind such party to the terms and conditions of this Agreement.
12.9 This Agreement may be executed in counterparts, each of which shall be
deemed an original. This Agreement shall become effective only when all of the
parties hereto shall have executed the original or counterpart hereof. This
agreement may be executed and delivered by a facsimile transmission of a
counterpart signature page hereof.
12.10 In any action brought by a party hereto to enforce the obligations of any
other party hereto, the prevailing party shall be entitled to collect from the
opposing party to such action such party's reasonable litigation costs and
attorneys fees and expenses (including court costs, reasonable fees of
accountants and experts, and other expenses incidental to the litigation).
12.11 This Agreement shall be binding upon and shall inure to the benefit of the
parties and their respective successors and assigns.
12.12 This is not a third party beneficiary contract except as otherwise
expressly stated herein. No person or entity other than a party signing this
Agreement shall have any rights under this Agreement except as otherwise
expressly stated herein.
12.13 This Agreement may be amended or modified only in a writing which
specifically references this Agreement.
12.14 This Agreement may not be assigned by any party hereto.
12.15 A party to this Agreement may decide or fail to require full or timely
performance of any obligation arising under this Agreement. The decision or
failure of a party hereto to require full or timely performance of any
obligation arising under this Agreement (whether on a single occasion or on
multiple occasions) shall not be deemed a waiver of any such obligation. No such
decisions or failures shall give rise to any claim of estoppel, laches, course
of dealing, amendment of this Agreement by course of dealing, or other defense
of any nature to any obligation arising hereunder.
12.16 The repudiation, breach, or failure to perform any obligation arising
under this Agreement by a party after reasonable notice thereof shall be deemed
a repudiation, breach, and failure to perform all of such party's obligations
arising under this Agreement.
12.17 Time is of the essence with respect to each obligation arising under this
Agreement. The failure to timely perform an obligation arising hereunder shall
be deemed a failure to perform the obligation.
12.18 All actions taken and documents delivered at the Closing shall be deemed
to have been taken and executed simultaneously and no action shall be deemed
taken nor any document delivered until all have been taken and delivered.
Dated and effective the date first set forth above.
SWISS AVENUE STATE BANK
By /s/ NOBLE HURLEY
---------------------------------------
SHAREHOLDERS OF SWISS AVENUE BANK (As Set Forth On Exhibit 1.3)
By
---------------------------------------
BOK FINANCIAL CORPORATION
By /s/ JAMES F. ULRICH
---------------------------------------
PARK CITIES BANCSHARES, INC., a Texas Corporation
By /s/ C.F. BALL, JR.
---------------------------------------
PC INTERIM STATE BANK (Dated ______________, _____, 1999)
By ---------------------------------------
EXHIBIT 1.3
TO
MERGER AGREEMENT
Principal Shareholders
NAME # OF SHARES
Willis I. Cottel, M.D.
David H. Hitt /s/ DAVID H. HITT 5,933
Hitt Family Trust /s/ DAVID H. HITT 5,934
Noble Hurley /s/ NOBLE HURLEY 853
Sanford Family Trust /s/ H. SANFORD
Smith Marital Trust /s/ GLORIA SMITH 30,004
Baptist Foundation of Texas /s/ LYNN CRAFT 84,021
Carl B. Schieffer /s/ CARL B. SCHIEFFER 1,920
EXHIBIT 5.3
TO
MERGER AGREEMENT
Subsidiaries
None
EXHIBIT 5.6.3
TO
MERGER AGREEMENT
Material Liabilities
None
EXHIBIT 5.7
TO
MERGER AGREEMENT
Conduct of Business Prior to Closing Exceptions
None
EXHIBIT 5.9
TO
MERGER AGREEMENT
Contracts and Commitments
None; except as listed below:
EXHIBIT 5.10
TO
MERGER AGREEMENT
Litigation
None
EXHIBIT 5.11
TO
MERGER AGREEMENT
Brokers and Commissions
None
EXHIBIT 5.15
TO
MERGER AGREEMENT
Employee Contracts and Benefit Plans
None
Swiss Avenue State Bank Profit Sharing Plan which includes Employee Thrift
Contribution. It is a 401 A with a balance of $1,290,343.22.
EXHIBIT 7.3.7
TO
MERGER AGREEMENT
Compensation Exceptions
None
EXHIBIT 7.8
TO
MERGER AGREEMENT
Schieffer Agreement
EXHIBIT 7.13
TO
MERGER AGREEMENT
Letter Agreements With Senior Officers
________________, ____ 1999
Bank of Texas, National Association Letterhead
Dear _________________:
As you know Swiss Avenue State Bank will soon become a member of the Bank of
Texas group of banks. For an interim period of time Swiss Avenue will be
operated as a separate bank. In due course, Swiss Avenue will be merged into
Bank of Texas.
I want to welcome you, as a key member of Swiss Avenue Bank, to our
organization. We are confident you will enjoy and prosper as part of the Bank of
Texas team.
Officers within the Bank of Texas group of banks generally serve at will;
however, because of the transition, we think it advisable that we each agree to
a one year employment agreement. Bank of Texas will cause your employment with
Swiss Avenue Bank to be continued for this one year period; after the one year
period, your employment will continue with Swiss Avenue (or Bank of Texas
following the merger) on the usual basis.
Your annual salary will remain the same. Salary reviews, incentive compensation,
and other benefits will be transitioned from Swiss Avenue Bank to those of Bank
of Texas. In exchange for our one year commitment, we ask you to commit to us
for the same one year period. If you are willing to make this one year
commitment with us, please indicate your acceptance of this commitment by
signing and returning a copy of this letter to us.
Again, welcome to Bank of Texas. I look forward to a good and long relationship.
Please let me know if you have any questions.
EXHIBIT 8.4
TO
MERGER AGREEMENT
Swiss Avenue Bank Counsel's Opinion
[To be prepared by mutual agreement of counsel to BOKF and
counsel to Swiss Avenue Bank.]
EXHIBIT 8.6
TO
MERGER AGREEMENT
AGREEMENT NOT TO COMPETE
This Agreement Not to Compete ("Agreement") is made effective as of
_____________, 199___ (the "Effective Date") between:
(i) _____________________ ("Principal"); and,
(ii) BOK Financial Corporation ("BOKF").
In consideration of the mutual covenants contained herein, the adequacy of which
is hereby expressly acknowledged, and intending to be legally bound hereby,
Principal and BOKF agree as follows:
(1) PURPOSE OF THIS AGREEMENT NOT TO COMPETE. Principal is a key officer or
director and shareholder of Swiss Avenue Bank. BOKF and the shareholders of
Swiss Avenue Bank are contemporaneously herewith entering into that certain
Merger Agreement dated effective as of ______________, 1998 to which reference
is hereby made (the "Merger Agreement"). The Merger Agreement constitutes the
sale of the goodwill of the business of Swiss Avenue Bank to BOKF. Principal
acknowledges that competition by Principal with BOKF would damage the goodwill
being sold by Principal. The purpose of this agreement is to set forth the terms
and conditions on which Principal agrees not to compete with BOKF. The defined
terms set forth herein shall have the meanings set forth in the Merger
Agreement.
(2) Principal hereby agrees that, from and after the Closing for one year
following the closing, Principal shall not directly or indirectly (whether as an
officer, director, employee, partner, stockholder, creditor or agent or
representative of other persons or entities or in any other manner) engage in
the banking business in the Dallas-Ft. Worth Metropolitan Area or in any county
contiguous thereto or in such other area where Swiss Avenue Bank has heretofore
regularly conducted business or maintained an office.
(3) Paragraph 2 hereof shall not apply to any investment by the Principal in any
widely-held class of securities of any banking business, which investment
comprises less than 5% of the total number of shares of that class of securities
outstanding.
(4) Principal agrees that:
(a) This Agreement is entered into in connection with the sale of the goodwill
of Swiss Avenue Bank.
(b) The restrictions imposed by this Agreement (particularly the geographical
and time restrictions) are fair, reasonable and necessary to protect the
goodwill of Swiss Avenue Bank which is being sold to BOKF.
(c) Any remedy at law for any breach of this Agreement would be inadequate and,
in the event of any such breach, BOKF shall be entitled to immediate and
permanent injunctive relief to preclude any such breach (in addition to any
remedies at law to which BOKF may be entitled) without any necessity of
establishing irreparable injury or posting bond or security therefore.
(d) Without limiting the generality of the obligations imposed by Paragraph 2
hereof, Principal agrees that the Principal shall not solicit persons or
entities who are customers or clients of Swiss Avenue Bank at the date hereof or
solicit employees of Swiss Avenue Bank to seek employment with any person or
entity except BOKF and its subsidiaries, whether, in either case, such
solicitation is made within or without the area described in Paragraph 2 hereof.
(e) Principal represents that Principal is entering into this Agreement in order
to induce BOKF to enter into and consummate the Merger Agreement and
acknowledges that the consideration received in the Merger is full and adequate
consideration for the promises of Principal made herein.
(5) MISCELLANEOUS. The following miscellaneous provisions shall apply to this
Agreement:
(a) This Agreement shall be subject to, and interpreted by and in accordance
with, the laws of the State of Texas (excluding the conflicts of law provisions
thereof).
(b) This Agreement is the entire agreement of the parties respecting the subject
matter hereof. There are no other agreements, whether oral or written,
respecting the subject matter hereof.
(c) This Agreement may be executed in counterparts, each of which shall be
deemed an original. This Agreement shall become effective only when all of the
parties hereto shall have executed the original or a counterpart hereof. This
Agreement may be delivered by facsimile transmission of an executed original or
counterpart hereof.
(d) In any action brought by a party hereto to enforce the obligations of any
other party hereto, the prevailing party shall be entitled to collect from the
opposing parties to such action such party's reasonable attorneys fees and costs
(including court costs, reasonable fees of accountants and experts, and other
expenses incidental to the action).
(e) This is not a third party beneficiary contract. No person or entity other
than an express party hereto shall have any rights hereunder.
(f) This Agreement shall be binding upon the parties and their respective
successors and assigns. The rights of the parties under this Agreement may not
be assigned without the prior written consent of the parties hereto.
By -----------------------------------
BOK FINANCIAL CORPORATION
By -----------------------------------
EXHIBIT 9.3
TO
MERGER AGREEMENT
BOKF Counsel's Opinion
[To be prepared by mutual agreement of counsel to BOKF and counsel to Swiss
Avenue Bank.]
EXHIBIT 10.1.3
TO
MERGER AGREEMENT
EMPLOYMENT AGREEMENT EXCEPTIONS
None
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from BOK
Financial Corporation's 10-Q for the period ended March 31, 1999 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 405,396
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 8,031
<TRADING-ASSETS> 51,924
<INVESTMENTS-HELD-FOR-SALE> 2,375,630
<INVESTMENTS-CARRYING> 230,190
<INVESTMENTS-MARKET> 229,719
<LOANS> 3,591,398
<ALLOWANCE> 67,959
<TOTAL-ASSETS> 7,044,000
<DEPOSITS> 4,342,835
<SHORT-TERM> 1,944,010
<LIABILITIES-OTHER> 88,580
<LONG-TERM> 149,268
0
25
<COMMON> 3
<OTHER-SE> 519,179
<TOTAL-LIABILITIES-AND-EQUITY> 7,044,000
<INTEREST-LOAN> 70,500
<INTEREST-INVEST> 35,134
<INTEREST-OTHER> 874
<INTEREST-TOTAL> 106,508
<INTEREST-DEPOSIT> 32,500
<INTEREST-EXPENSE> 56,610
<INTEREST-INCOME-NET> 49,898
<LOAN-LOSSES> 3,370
<SECURITIES-GAINS> 274
<EXPENSE-OTHER> 63,593
<INCOME-PRETAX> 29,800
<INCOME-PRE-EXTRAORDINARY> 19,817
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,817
<EPS-PRIMARY> .43
<EPS-DILUTED> .38
<YIELD-ACTUAL> 3.57
<LOANS-NON> 15,007
<LOANS-PAST> 12,917
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 71,224
<ALLOWANCE-OPEN> 64,931
<CHARGE-OFFS> 1,200
<RECOVERIES> 858
<ALLOWANCE-CLOSE> 67,959
<ALLOWANCE-DOMESTIC> 67,959
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
