AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 18, 1999.
REGISTRATION NO. 333-______
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
BANK UNITED CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 6035 13-3528556
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
3200 SOUTHWEST FREEWAY, SUITE 2600
HOUSTON, TEXAS 77027
(713) 543-6500
(Address, including zip code, and
telephone number, including area code, of
registrant's principal executive offices)
Copies to:
JONATHON K. HEFFRON JOHN R. BRANTLEY
EXECUTIVE VICE PRESIDENT, BRACEWELL & PATTERSON, L.L.P.
CHIEF OPERATING OFFICER AND GENERAL COUNSEL 711 LOUISIANA ST., STE. 2900
3200 SOUTHWEST FREEWAY, SUITE 2600 HOUSTON, TEXAS 77002-2781
HOUSTON, TEXAS 77027
(713) 543-6500
(Name, address, including
zip code, and telephone number, including
area code, of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this registration statement becomes
effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. |_|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS AMOUNT OFFERING AGGREGATE AMOUNT OF
OF SECURITIES TO BE PRICE PER OFFERING REGISTRATION
TO BE REGISTERED REGISTERED SHARE PRICE FEE
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Class A Common Stock,
$0.01 par value 710,000 (1) 7,846,000(2) $2,181
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(1) Not applicable.
(2) Computed in accordance with Rule 457(f) under the Securities Act of 1933,
as amended, based on the book value as of March 31, 1999 of the securities
to be received by the registrant in exchange for the securities registered
hereby.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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TEXAS CENTRAL BANCSHARES, INC. BANK UNITED CORP.
PROXY STATEMENT/PROSPECTUS
Notice of Special Meeting of Shareholders to be held July 30, 1999
-----------------------------------
BANK UNITED CORP.
(Class A Common Stock, $0.01 Par Value Per Share)
Texas Central Bancshares, Inc. is providing you this Proxy
Statement/Prospectus and notice of special meeting of shareholders in connection
with a solicitation of proxies by the Board of Directors of Texas Central for
approval of the proposed acquisition of Texas Central by Bank United Corp. Bank
United Corp. proposes to acquire Texas Central through the merger of a
wholly-owned subsidiary of Bank United Corp. with and into Texas Central. Texas
Central will hold a special shareholders' meeting to vote on the merger on
Friday, July 30, 1999, at 3:00 p.m., local time, at its principal executive
office, 8144 Walnut Hill Lane, Dallas, Texas.
In exchange for the common stock of Texas Central, Bank United Corp. will
issue whole shares of its Class A common stock and will make cash payments for
fractional shares. The number of shares of Bank United Corp. Class A common
stock you will receive for each share of Texas Central stock will be based on
the total number of shares of Texas Central stock outstanding on the closing
date of the merger. If the total number of shares of common stock of Texas
Central outstanding on the closing date is 350,340, then each share of Texas
Central stock will be converted into 2.0266 shares of Bank United Corp. Class A
common stock. The number of shares you receive may be reduced based on the
amount of certain fees and expenses incurred by Texas Central in connection with
the merger.
This Proxy Statement/Prospectus also constitutes the Prospectus of Bank
United Corp. for the shares of its Class A common stock to be issued in the
merger. The shares of Class A common stock of Bank United Corp. are traded on
The NASDAQ Stock Market National Market under the symbol "BNKU." On June 15, the
last reported sale price per share of Bank United Corp. Class A common stock on
the NASDAQ was $39.8125 per share.
This Proxy Statement/Prospectus and the related materials are first being
mailed to the Texas Central shareholders on or about July 1, 1999. A complete
list of these shareholders will be available for examination at the special
meeting and at Texas Central's offices at 8144 Walnut Hill Lane, Dallas, Texas
75231, during ordinary business hours, after July 19, 1999, for the examination
of any shareholder for any purpose related to the special meeting.
--------------------
AN INVESTMENT IN BANK UNITED CORP. CLASS A COMMON STOCK IN CONNECTION WITH
THE MERGER INVOLVES CERTAIN RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 20.
------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE MERGER OR THE SHARES OF BANK UNITED
CORP. CLASS A COMMON STOCK TO BE ISSUED IN CONNECTION WITH THE MERGER OR
DETERMINED IF THIS PROXY STATEMENT/PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Proxy Statement/Prospectus is ________________________.
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TABLE OF CONTENTS
WHERE YOU CAN FIND MORE
INFORMATION.................................................................1
QUESTIONS AND ANSWERS ABOUT THE
MERGER......................................................................3
SUMMARY........................................................................5
The Companies..................................................................5
The Merger.....................................................................5
The Special Meeting and Vote Required..........................................5
Reasons for the Merger; Recommendation of the
Texas Central Board of Directors.........................................6
Fairness Opinion...............................................................6
What You Will Receive in the Merger............................................6
Conditions to Completion of the Merger.........................................7
Regulatory Approvals...........................................................7
Termination of the Merger Agreement............................................8
Interests of Texas Central Officers and Directors
in the Merger............................................................8
Additional Agreement...........................................................9
Resale of Bank United Corp. Class A Common
Stock Received in the Merger.............................................9
Appraisal Rights...............................................................9
Material Federal Income Tax Consequences of
the Merger...............................................................9
Comparative Shareholder Rights................................................10
Accounting Treatment..........................................................10
Selected Financial Data of Bank United Corp.
.......................................................................11
Selected Financial Data of Texas Central......................................15
Summary of Historical and Pro Forma Per Share
Selected Financial Data.................................................18
Comparative Stock Prices......................................................19
RISK FACTORS..................................................................20
You could experience dilution.................................................20
FORWARD-LOOKING INFORMATION...................................................20
Interest Rates and Economy ...................................................20
Competition and Product Availability .........................................20
Change in Bank United Corp.'s Asset Mix ......................................21
Liquidity and Capital ........................................................21
Systems.......................................................................21
Personnel.....................................................................21
Regulatory, Compliance and Legal .............................................21
THE SPECIAL MEETING...........................................................22
General.......................................................................22
Date, Place and Time of Special Meeting.......................................22
Shares Entitled to Vote, Quorum and Vote
Required................................................................22
Voting and Revocation of Proxies..............................................22
THE MERGER....................................................................23
Terms of the Merger...........................................................23
Shareholder Approval..........................................................23
Background and Reasons for the Merger;
Recommendation of Texas Central Board...................................23
Fairness Opinion..............................................................24
Other Terms and Conditions....................................................26
No Solicitation...............................................................28
Additional Agreements.........................................................28
Business Pending Effective Time...............................................30
Employee Matters..............................................................30
Amendment.....................................................................30
Termination...................................................................31
Expenses......................................................................32
Exchange of Shares............................................................32
Material Federal Income Tax Consequences......................................33
Dissenters Rights of Appraisal and Related
Issues..................................................................34
Accounting Treatment..........................................................36
Restrictions on Sales of Bank United Corp.
Class A Common Stock by Affiliates of
Texas Central...........................................................36
Regulatory Approvals..........................................................36
COMPARISON OF RIGHTS OF SHAREHOLDERS
OF BANK UNITED CORP. AND TEXAS
CENTRAL....................................................................36
SELECTED FINANCIAL DATA OF TEXAS
CENTRAL....................................................................42
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS OF
TEXAS CENTRAL..............................................................45
TEXAS CENTRAL.................................................................60
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General.......................................................................60
Facilities....................................................................60
Competition...................................................................60
Employees.....................................................................60
Legal Proceedings.............................................................60
BENEFICIAL OWNERSHIP OF TEXAS
CENTRAL STOCK..............................................................61
MARKET PRICES OF AND DISTRIBUTIONS
ON TEXAS CENTRAL STOCK.....................................................62
SUPERVISION AND REGULATION OF TEXAS
CENTRAL....................................................................63
Texas Central.................................................................63
Texas Central Bank............................................................65
Instability of Regulatory Structure...........................................67
Expanding Enforcement Authority...............................................68
Effect on Economic Environment................................................68
BANK UNITED CORP..............................................................68
Incorporation of Certain Documents by
Reference...............................................................68
Interests of Certain Persons..................................................68
EXPERTS.......................................................................68
LEGAL OPINIONS................................................................69
OTHER MATTERS.................................................................69
INDEX TO FINANCIAL STATEMENTS OF
TEXAS CENTRAL BANCSHARES, INC.............................................F-1
EXHIBIT A Agreement and Plan or
Reorganization...................................................A-1
EXHIBIT B Opinion of SAMCO Capital
Markets..........................................................B-1
EXHIBIT C Provisions of the Texas Business
Corporation Act
Related to Dissenters
Rights of Appraisal..............................................C-1
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WHERE YOU CAN FIND MORE INFORMATION
Bank United Corp. has filed with the Securities and Exchange Commission a
registration statement on Form S-4 to register the Bank United Corp. Class A
common stock to be issued in the merger. As allowed by Commission rules, this
Proxy Statement/Prospectus does not contain all the information you can find in
the registration statement or the exhibits thereto. The registration statement,
including its exhibits and schedules, contains additional relevant information
about Bank United Corp. and the Bank United Corp. Class A common stock. This
Proxy Statement/Prospectus is a part of the registration statement and is a
prospectus of Bank United Corp. in addition to being a proxy statement of Texas
Central for the meeting.
In addition to filing this registration statement with the Commission,
Bank United Corp. files reports, proxy statements and other information with the
Commission under the Securities Exchange Act of 1934. You may read and copy this
information at the following locations of the Commission:
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Chicago Regional Office
Public Reference Room New York Regional Office Citicorp Center
450 Fifth Street, N.W. 7 World Trade Center 500 West Madison Street
Room 1024 Suite 1300 Suite 1400
Washington, D.C. 20549 New York, New York 10048 Chicago, Illinois 60661-2511
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You may obtain information on the operation of the Public Reference Room
by calling the Commission at 1-800- SEC-0330. The Commission also maintains an
Internet world wide web site that contains reports, proxy statements and other
information about issuers, like Bank United Corp., who file electronically with
the Commission. The address of that site is http://www.sec.gov.
The Commission allows Bank United Corp. to "incorporate by reference"
information into this Proxy Statement/Prospectus, which means that Bank United
Corp. can disclose important information to you by referring you to another
document filed separately with the Commission. The information that Bank United
Corp. incorporates by reference is considered to be part of this Proxy
Statement/Prospectus, and later information that Bank United Corp. files with
the Commission will automatically update and supersede the information Bank
United Corp. included in this Proxy Statement/Prospectus. Bank United Corp.
incorporates by reference the documents listed below:
o Annual Report on Form 10-K for the year ended September 30, 1998.
o Quarterly Report on Form 10-Q for the quarter ended December 31,
1998.
o Quarterly Report on Form 10-Q for the quarter ended March 31, 1999.
o Current Report on Form 8-K dated March 22, 1999.
o Current Report on Form 8-K dated March 30, 1999.
o Current Report on Form 8-K dated June 9, 1999.
o The description of Bank United Corp. Class A common stock contained
on Form 8-A dated July 12, 1996.
o Proxy Statement for the Annual Meeting of Stockholders dated
February 10, 1999.
Bank United Corp. also incorporates by reference any future filings it
makes with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date of this Proxy Statement/Prospectus and before the
meeting.
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Upon your written or oral request, Bank United Corp. will provide you
without charge a copy of this Proxy Statement/Prospectus and a copy of any or
all of the documents incorporated by reference herein, other than the exhibits
to those documents, unless the exhibits are specifically incorporated by
reference into the information that this Proxy Statement/Prospectus
incorporates. Your written or oral requests for copies of this Proxy
Statement/Prospectus and documents Bank United Corp. has incorporated by
reference should be directed to:
INVESTOR RELATIONS
BANK UNITED CORP.
3200 SOUTHWEST FREEWAY, SUITE 3100
HOUSTON, TEXAS 77027
(713) 543-6926
TO OBTAIN TIMELY DELIVERY, YOU MUST MAKE A WRITTEN OR ORAL REQUEST FOR A
COPY OF SUCH INFORMATION BY JULY 23, 1999.
NEITHER TEXAS CENTRAL NOR BANK UNITED CORP. HAS AUTHORIZED ANY PERSON TO
MAKE STATEMENTS REGARDING THE MATTERS CONTAINED IN THIS PROXY
STATEMENT/PROSPECTUS OTHER THAN THOSE CONTAINED THEREIN OR IN THE DOCUMENTS
INCORPORATED BY REFERENCE HEREIN. YOU SHOULD NOT RELY ON ANY UNAUTHORIZED
STATEMENTS. THIS PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY SECURITIES, NOR DOES IT CONSTITUTE THE
SOLICITATION OF A PROXY, IN ANY JURISDICTION, TO OR FROM ANY PERSON, TO OR FROM
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION.
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QUESTIONS AND ANSWERS ABOUT THE MERGER
The following questions and answers highlight selected information
regarding the merger described in this Proxy Statement/Prospectus and may not
contain all information that is important to you as you consider the merits of
the merger. For a more complete description of the terms of the merger and the
related transactions, please read this entire Proxy Statement/Prospectus
carefully, as well as any additional documents referred to in this document.
Q: WHY HAS TEXAS CENTRAL PROPOSED TO BE ACQUIRED BY BANK UNITED CORP.?
A: The Board of Directors of Texas Central perceived that over the last
several years the direction of the banking industry has been towards
deregulation and consolidation, particularly in the State of Texas. The
Board of Directors of Texas Central and certain of Texas Central's major
shareholders felt that the organization needed to expand the boundaries of
its franchise. Several options were discussed over a two or three year
period. The acquisition of another institution or branching into
additional communities in the Dallas area were considered.
In January of 1999, the Board of Directors of Texas Central received a
merger proposal from Bank United Corp. The Board reviewed the proposal and
concluded that such a merger would be in the best interests of the Texas
Central shareholders. The merger will permit Texas Central to expand
services, such as providing trust services, on-line banking, cash
management, in-house data processing and give Texas Central a larger
network of branches and automated teller machines.
For the reasons set forth above, the Texas Central Board of Directors
believes the merger to be in the best interests of Texas Central's
shareholders.
Q: HOW WILL I BE AFFECTED IN THE MERGER?
A: Shareholders of Texas Central will have their shares of Texas Central
stock converted into whole shares of Bank United Corp. Class A common
stock and cash for fractional shares. The actual number of shares of Bank
United Corp. Class A common stock you will receive for each share of Texas
Central stock will be based on the number of shares of Texas Central stock
outstanding as of the closing date of the merger. If there are 350,340
shares of Texas Central stock outstanding as of the closing, the maximum
number of shares permitted under the merger agreement, each share of Texas
Central stock will be converted into 2.0266 shares of Bank United Corp.
Class A common stock. Any remaining fractional shares will be converted
into cash based on the average daily closing prices of a share of Bank
United Corp. Class A common stock for the 20 successive trading days
ending on the trading that is one day prior to closing.
For example, if a Texas Central shareholder owns 100 shares of Texas
Central stock, after the merger, the shareholder will own 202 shares of
Bank United Corp. Class A common stock and will receive a check for the
market value of a 0.66 share of Bank United Corp. Class A common stock. On
June 15, 1999, fractional shares would have been converted into cash based
on $39.8125 as the value of a share of Bank United Corp. Class A common
stock.
Texas Central shareholders will receive shares representing ownership of
approximately 710,000 shares of Bank United Corp. Class A common stock
after the proposed merger. Each share owned by existing shareholders of
Texas Central will represent an ownership interest in a much larger
company.
Q: WHEN CAN I SELL THE SHARES OF BANK UNITED CORP. CLASS A COMMON STOCK THAT
I RECEIVE IN CONNECTION WITH THE MERGER?
A: You may sell the shares of Class A common stock you receive in connection
with the merger without restriction unless you are considered an
"affiliate" of Texas Central or you become an affiliate of Bank United
Corp. To review the restrictions on transfers by affiliates, see page 37.
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Q: WHAT ARE THE TAX CONSEQUENCES OF THE MERGER TO ME?
A: Texas Central and Bank United Corp. expect that the exchange of shares in
the merger will be a tax-free transaction for federal income tax purposes
for Texas Central shareholders. However, Texas Central shareholders will
have to pay taxes on cash received for fractional shares. To review the
tax consequences to shareholders in greater detail, see page 34. The tax
consequences of the merger to you will depend on your own situation. You
should consult your tax advisors for a full understanding of the tax
consequences of the merger to you.
Q: WHAT RISKS SHOULD I CONSIDER?
A: You should review the "RISK FACTORS" section on page 20.
Q: WHEN WILL THE MERGER TAKE EFFECT?
A: Texas Central and Bank United Corp. expect the merger to become effective
in September of 1999.
Q: CAN I CHANGE MY VOTE AFTER I HAVE MAILED IN MY SIGNED PROXY CARD?
A: Yes. After you have mailed your signed proxy card you can change your vote
at any time before Texas Central votes your proxy at the meeting. You can
do so in one of three ways prior to the meeting. First, you can send a
written notice stating that you would like to revoke your proxy to the
Corporate Secretary of Texas Central at the address given below. Second,
you can complete a new proxy card and send it to the Corporate Secretary
of Texas Central at the address given below. Third, you can attend the
meeting and vote in person. You should send any written notice or new
proxy card to the attention of the Corporate Secretary of Texas Central at
8144 Walnut Hill Lane, Dallas, Texas 75231. You may request a new proxy
card by calling the Corporate Secretary of Texas Central, at (214)
691-8600.
Q: WHAT IF I DO NOT APPROVE OF THE MERGER AND DO NOT WANT MY SHARES CONVERTED
IF THE MERGER IS APPROVED?
A: You may obtain dissenting shareholders rights by complying with the
applicable requirements of the Texas Business Corporation Act. If all of
the applicable requirements of the Texas Business Corporation Act are met
and the merger is consummated, you will receive cash for the fair market
value of your shares in lieu of Bank United Corp. Class A common stock.
See page 34 for details.
Q: WHAT SHOULD I DO NOW?
A: After reading this document carefully, you should complete and sign your
proxy card and mail it in the enclosed return envelope as soon as
possible, so that your shares may be represented at the meeting. The Board
of Directors of Texas Central recommends that the Texas Central
shareholders vote "FOR" the merger. The meeting will be held on July 30,
1999.
Q: SHOULD I SEND MY STOCK CERTIFICATES NOW?
A: No. After the merger becomes effective, you will receive instructions
regarding how to send your stock certificates.
Q: WHO SHOULD I CALL WITH QUESTIONS?
A: If you have any questions about the merger or the meeting, please call
Christiane Thompson at (214) 691-8600. If you would like copies of any of
the documents referred to or incorporated by reference in this Proxy
Statement/Prospectus, please call Investor Relations at Bank United Corp.
at (713) 543-6926.
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SUMMARY
This summary highlights selected information from this Proxy
Statement/Prospectus and may not contain all of the information that is
important to you. To understand the merger and related transactions more fully,
you should carefully read this entire document and the documents referred to in
the Proxy Statement/Prospectus. Bank United Corp. and Texas Central urge you to
read carefully the entire Proxy Statement/Prospectus.
THE COMPANIES
BANK UNITED CORP. Bank United Corp. is a Delaware corporation and a
savings and loan holding company registered under the Home Owners' Loan Act, as
amended. Bank United Corp. provides broad-based financial services primarily
through Bank United, a federal savings bank subsidiary, to consumers and
businesses in Texas and selected regional markets throughout the United States.
At March 31, 1999, Bank United operated a 94-branch community banking network
serving nearly 265,000 households, as well as 19 commercial banking offices in
16 states across the country. As of March 31, 1999, Bank United Corp. was the
largest publicly traded financial institution headquartered in Texas, with $14.9
billion in assets, $6.6 billion in deposits, and $723.0 million in stockholders'
equity. Bank United Corp.'s address is 3200 Southwest Freeway, Suite 2600,
Houston, Texas 77027 and its telephone number is (713) 543-6500.
BUC ACQUISITION CORPORATION II. BUC Acquisition is a Texas corporation
that will be formed as a wholly-owned subsidiary of Bank United Corp. solely to
facilitate the acquisition of Texas Central by Bank United Corp. BUC Acquisition
will no longer exist after it merges into Texas Central.
TEXAS CENTRAL. Texas Central is a Texas corporation and a bank holding
company registered under the Bank Holding Company Act of 1956, as amended. Texas
Central provides commercial banking services through Texas Central Bank, N.A. to
consumers and businesses from commercial banking offices in Dallas and Plano.
Since January 1, 1998, Texas Central has been a Subchapter S corporation for
federal income tax purposes. As an S corporation, Texas Central is generally
treated as a pass-through entity for federal income tax purposes, such that it
does not typically pay federal income tax on its earnings. Except as otherwise
noted, financial statements and information for Texas Central for periods after
January 1, 1998 contained in this Proxy Statement/Prospectus do not include
accruals or adjustments for the federal income tax Texas Central would have
incurred if it had not been an S corporation. As of March 31, 1999, Texas
Central had $120.6 million in assets, $100.2 million in deposits and $7.8
million in shareholders' equity. Texas Central's address is 8144 Walnut Hill
Lane, Dallas, Texas 75231 and its telephone number is (214) 691-8600.
THE MERGER
If two-thirds of the shareholders of Texas Central approve the merger and
certain other conditions are met, Bank United Corp. will acquire Texas Central
through the merger of BUC Acquisition with and into Texas Central. The merger
agreement is attached as Exhibit A to this Proxy Statement/Prospectus. To
understand the merger more fully, you should carefully read the merger agreement
as well as this Proxy Statement/Prospectus.
THE SPECIAL MEETING AND VOTE REQUIRED
Texas Central is holding a special shareholders' meeting at 3:00 p.m.,
local time, on Friday, July 30, 1999, at its principal executive office, 8144
Walnut Hill Lane, Dallas, Texas. The purpose of the meeting is for Texas Central
shareholders to consider and vote on the merger. The record date for the meeting
is the close of business on June 30, 1999. Only shareholders of record at the
close of business on the record date will be entitled to vote at the meeting and
any adjournment.
Two-thirds of the outstanding shares of Texas Central stock must vote in
favor of the merger for the Texas Central shareholders to approve the merger.
Texas Central stock representing approximately 80% of such shares outstanding
have signed a Voting Agreement and Irrevocable Proxy in favor of Bank United
Corp. in which such shareholders have agreed to vote their Texas Central stock
in favor of the merger. Therefore, it is expected that the merger will be
approved at the meeting. The directors and executive officers of Texas Central
and Texas Central Bank own or otherwise control the right to
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vote 68,870 shares of Texas Central stock, representing approximately 19% of the
shares of Texas Central stock issued and outstanding as of the record date. Of
the shares of Texas Central stock held by executive officers and directors,
43,880 shares, constituting approximately 13% of the total shares of Texas
Central stock, are subject to the Voting Agreement. The directors and executive
officers of Texas Central have indicated their intention to vote to approve the
merger.
REASONS FOR THE MERGER; RECOMMENDATION OF THE TEXAS CENTRAL BOARD OF DIRECTORS
REASONS FOR THE MERGER. The Agreement is the result of arm's-length
negotiations between representatives of Bank United Corp. and Texas Central.
Upon receipt of a proposal from Bank United Corp., the Texas Central Board of
Directors carefully evaluated the proposal and concluded that the proposed
merger with Bank United Corp. was in the best interests of Texas Central and
Texas Central's shareholders for a number of reasons. The Board of Directors of
Texas Central perceived that over the last several years the direction of the
banking industry has been towards deregulation and consolidation, particularly
in the State of Texas. The Board of Directors of Texas Central and certain of
Texas Central's major shareholders felt that the organization needed to expand
the boundaries of its franchise. Several options were discussed over a two or
three year period. The acquisition of another institution or branching into
additional communities in the Dallas area were considered.
In January of 1999, the Board of Directors of Texas Central received a
merger proposal from Bank United Corp. The Board reviewed the proposal and
concluded that such a merger would be in the best interests of the Texas Central
shareholders. The merger will permit Texas Central to expand services, such as
providing trust services, on-line banking, cash management, in-house data
processing and give Texas Central a larger network of branches and automated
teller machines.
For the reasons set forth above, the Texas Central Board of Directors
believes the merger to be in the best interests of Texas Central's shareholders.
RECOMMENDATION OF THE TEXAS CENTRAL BOARD OF DIRECTORS. Based on the
reasons set out above, the Board of Directors of Texas Central is of the opinion
that the merger is in the best interest of Texas Central and its shareholders
and recommends that you vote "FOR" the merger.
FAIRNESS OPINION
In deciding to approve the merger, the Texas Central Board of Directors
received and considered the oral opinion of SAMCO Capital Markets, its financial
advisor, as to the fairness of the merger, from a financial point of view, to
the Texas Central shareholders as of such date. The oral opinion was confirmed
in writing on June 15, 1999, and a copy of the written opinion is attached as
Exhibit B to this Proxy Statement/Prospectus. You should read the opinion in its
entirety to understand the assumptions made, matters considered and limits of
the review undertaken by SAMCO Capital Markets in providing its opinion.
WHAT YOU WILL RECEIVE IN THE MERGER
In exchange for shares of Texas Central stock, Bank United Corp. will
issue whole shares of Bank United Corp. Class A common stock and will make cash
payments for fractional shares. The number of shares of Bank United Corp. Class
A common stock you will receive for each share of Texas Central stock will be
based on the total number of shares of Texas Central stock outstanding on the
closing date of the merger. If there are 350,340 shares of Texas Central stock
outstanding as of the closing, the maximum number of shares permitted under the
merger agreement, each share of Texas Central stock will be converted into
2.0266 shares of Bank United Corp. Class A common stock.
Instead of issuing you fractional shares of Bank United Corp. Class A
common stock, Bank United Corp. will pay you cash for such fractional shares. To
determine the amount you will receive for your fractional share, Bank United
Corp. will multiply the average of the daily closing sales prices for a share of
Bank United Corp. Class A common stock on the NASDAQ for the 20 successive
trading days ending on the trading day that is one day prior to the closing by
the share fraction you would otherwise receive.
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If the fees and expenses incurred by Texas Central in connection with the
merger agreement exceed $100,000, the amount of the excess will reduce the
number of shares you receive. The fees of Texas Central's financial advisor and
certain other expenses, however, are excluded from this calculation.
The shares of Bank United Corp. Class A common stock issued in the merger
will be registered under applicable securities laws and will be authorized for
trading on the National Market System of The NASDAQ Stock Market.
CONDITIONS TO COMPLETION OF THE MERGER
The completion of the merger depends upon the satisfaction or waiver of
certain conditions, including the following:
o Texas Central shareholders approve the merger.
o Bank United Corp. receives all required governmental approvals and
other consents.
o No material adverse change affecting Texas Central or Bank United
Corp. occurs from March 23, 1999 until the closing of the merger.
o Receipt of opinions from legal counsel to Texas Central and Bank
United Corp. counsel that the merger will be a tax-free
reorganization.
o Bank United Corp.'s receipt of a letter from its accountants that
the merger will qualify for pooling of interests accounting
treatment and a letter from Texas Central's accountants that it does
not know of a reason why the merger would not qualify for pooling.
o The registration statement relating to Bank United Corp. Class A
common stock shall be effective under federal law and any applicable
state securities or blue sky laws and no stop order suspending the
effectiveness of the registration statement shall be in effect.
o Bank United Corp.'s receipt of the environmental reports regarding
Texas Central real estate required by the merger agreement in form
and substance satisfactory to Bank United Corp.
o Bank United Corp.'s receipt of evidence of the accrual and discharge
by Texas Central of all payment obligations under the bonus,
incentive compensation or similar plans of Texas Central and its
subsidiaries and all vacation obligations of Texas Central and its
subsidiaries.
o The holders of no more than five percent of the Texas Central stock
exercise their right to dissent from the merger.
o The material accuracy of all representations and warranties of Texas
Central and Bank United Corp.
o Texas Central and Bank United Corp. shall have performed or complied
with all covenants and conditions required by the merger agreement
to be performed or complied with by them prior the closing date.
REGULATORY APPROVALS
The merger must be approved by the Office of Thrift Supervision, and the
Federal Reserve Bank of Dallas must waive a filing of any application that may
otherwise be required to be filed with the Board of Governors of the Federal
Reserve System. On May 19, 1999, Bank United Corp. filed an application with the
Office of Thrift Supervision to obtain prior approval of the merger. On May 19,
1999, Bank United Corp. filed a waiver request with the Federal Reserve Bank of
Dallas to obtain a waiver of any application that might otherwise be required to
be filed with the Federal Reserve. The Federal Reserve Bank of Dallas approved
the waiver request on June 3, 1999.
-7-
<PAGE>
TERMINATION OF THE MERGER AGREEMENT
Texas Central and Bank United Corp. may mutually agree to terminate the
merger agreement and not complete the merger. The merger agreement also may be
terminated in the following other circumstances:
o By Texas Central or Bank United Corp. if a court or governmental
body issues a final order prohibiting the merger.
o By Texas Central or Bank United Corp. if the merger is disapproved
by any regulatory agency.
o By Texas Central or Bank United Corp. if the merger is not effected
on or before September 17, 1999 or such later date as extended by
the parties.
o By a non-breaching party in the event of a material breach of the
merger agreement by the other party.
o By Texas Central if the average of the daily closing sales prices
for Bank United Corp. Class A common stock for the 20 successive
trading days ending on the trading day that is one day prior to the
proposed effective date is less than $33.57.
o By Texas Central if the closing sales price of the Bank United Corp.
Class A common stock on the day prior to the proposed effective date
is less than $32.00.
o By Bank United Corp. if there has been a material adverse change
after December 31, 1998 in the business or financial condition of
Texas Central.
o By Bank United Corp. if it reasonably concludes that it will not be
able to obtain any required regulatory approval.
INTERESTS OF TEXAS CENTRAL OFFICERS AND DIRECTORS IN THE MERGER
When considering the recommendation of the Texas Central Board of
Directors, you should be aware that officers and directors of Texas Central have
interests and arrangements that may be different from your interest as a
shareholder, including the following:
o Mr. James C. Veirs, Mr. Gary D. Mulhollen and Mr. Keith Schmidt,
each an officer or director of either Texas Central or Texas Central
Bank, have executed an Employment Agreement and Agreement Not to
Compete with Bank United Corp.
o Mr. Michael A. Ruff, an executive officer and director of Texas
Central, has executed a Consulting Agreement with Bank United Corp.
o Bank United Corp. has agreed to provide the directors and officers
of Texas Central with liability insurance coverage for actions
occurring after the effective date of the merger and for a period of
three years will use its best efforts to continue Texas Central's
directors' and officers' liability insurance coverage for actions
occurring prior to the effective date.
o For a period of six years after the effective date, Bank United
Corp. will indemnify the officers, directors and employees of Texas
Central against all losses, expenses or claims arising out of
actions occurring prior to the effective date.
-8-
<PAGE>
ADDITIONAL AGREEMENTS
VOTING AGREEMENT. Pursuant to the merger agreement, five Texas Central
shareholders holding 280,950 shares of Texas Central stock, representing
approximately 80% of such shares outstanding, have entered into a Voting
Agreement and Irrevocable Proxy with Bank United Corp. Among other things, the
Voting Agreement requires that they vote their Texas Central stock in favor of
the merger at the meeting. Therefore, it is expected that the merger will be
approved at the meeting.
NONCOMPETITION AGREEMENTS. It is a condition to Bank United Corp.'s
obligations to consummate the merger that it receive Noncompetition Agreements
from each person owning five percent or more of the Texas Central stock and from
each of the directors of Texas Central. The Noncompetition Agreements provide,
among other things, that for a three year period from the effective date of the
merger such individuals/entities will not solicit the business of Texas Central
Bank, its affiliates or it successors and will not compete with Texas Central
Bank, its affiliates or its successors within any county all or a portion of
which is included in the Dallas Consolidated Metropolitan Statistical Area. Each
of such persons has signed the required agreement to become effective as of the
closing of the merger.
STOCK OPTION AGREEMENT. In connection with the merger agreement, Texas
Central and Bank United Corp. entered into a stock option agreement which
entitles Bank United Corp. to purchase 60,464 shares of Texas Central stock
representing approximately 15% of such stock at a price of $49.83 per share. The
option is exercisable upon the occurrence of certain events related to
significant corporate transactions at Texas Central that would prevent Bank
United Corp. from acquiring Texas Central or the acquisition of 30% or more of
the Texas Central stock by a person or group. The option contains a cash
settlement provision entitling Bank United Corp. to receive a cash payment
instead of exercising the option to acquire Texas Central stock.
RESALE OF BANK UNITED CORP. CLASS A COMMON STOCK RECEIVED IN THE MERGER
Bank United Corp. has registered under the federal securities laws the
shares of its Class A common stock to be issued in the merger. Therefore, you
may sell such shares without restriction unless you are considered an
"affiliate" (as that term is used in the securities laws) of Texas Central or
you become an affiliate of Bank United Corp.
If you are considered an affiliate of Texas Central or become an affiliate
of Bank United Corp., you may resell the shares of Bank United Corp. Class A
common stock only pursuant to an effective registration statement under the
securities laws, or pursuant to Rule 145 of the Commission's rules, or in
transactions otherwise exempt from registration under the securities laws. Bank
United Corp. is not obligated and does not intend to register for resale the
shares issued to affiliates of Texas Central. In addition, the Commission's
rules governing pooling of interests accounting prohibit resales by affiliates
of Texas Central of the Bank United Corp. Class A common stock until such time
as financial results covering at least 30 days of combined operations of Texas
Central and Bank United Corp. have been published.
Each affiliate of Texas Central has signed a written agreement restricting
the transfer of shares of Bank United Corp. Class A common stock received in the
merger to transfers permitted by the federal securities laws and the
Commission's rules relating to pooling of interests accounting.
APPRAISAL RIGHTS
Under Texas law, Texas Central shareholders may dissent from the merger
and demand the "fair value" of their shares in cash. To exercise this right, you
must not vote your shares in favor of the merger and you must take certain other
actions that Texas law requires. See page 34.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The merger has been structured as a "tax-free reorganization" for federal
income tax purposes. Accordingly, holders of Texas Central stock generally will
not recognize any gain or loss for federal income tax purposes on the exchange
of their Texas Central stock for Bank United Corp. Class A common stock in the
merger, except for any gain or loss recognized in connection with the receipt of
cash instead of a fractional share of Bank United Corp. Class A common stock.
-9-
<PAGE>
The companies themselves will not recognize gain or loss as a result of the
merger. It is a condition to the obligations of Texas Central and Bank United
Corp. to complete the merger that each receive a legal opinion from its counsel
that the merger will be a tax-free reorganization for federal income tax
purposes. Neither Texas Central nor Bank United Corp. will request a ruling from
the Internal Revenue Service concerning the federal income tax consequences of
the merger. See page 33.
The federal income tax consequences described above may not apply to some
holders of Texas Central stock. Your tax consequences will depend upon your
personal situation. You should consult your tax advisor for a full understanding
of the tax consequences of the merger to you.
COMPARATIVE SHAREHOLDER RIGHTS
Once the merger occurs, Texas Central shareholders will become
stockholders of Bank United Corp. Texas Central is a Texas corporation and Bank
United Corp. is a Delaware corporation. As a result, your rights as a
shareholder, which now are governed by Texas corporate law and the provisions of
the Articles of Incorporation and Bylaws of Texas Central, will, after the
merger, be governed by Delaware corporate law and the provisions of the
Certificate of Incorporation and Bylaws of Bank United Corp. Because of
differences between the provisions of Texas corporate law and Delaware corporate
law, and differences between the Articles of Incorporation and Bylaws of Texas
Central and the Certificate of Incorporation and Bylaws of Bank United Corp.,
your rights as a shareholder will change as a result of the merger. See page 36.
ACCOUNTING TREATMENT
It is expected that the merger will qualify as a pooling of interests for
accounting purposes, which means that Texas Central and Bank United Corp. will
be treated as if they had always been combined for accounting and financial
reporting purposes. It is a condition to Bank United Corp.'s obligation to
consummate the merger that Bank United Corp. receive a letter from its
accountants that the merger will qualify for pooling of interests accounting
treatment and a letter from Texas Central's accountants that it does not know of
a reason why the merger would not qualify for pooling. See page 36.
-10-
<PAGE>
SELECTED FINANCIAL DATA OF BANK UNITED CORP.
The following selected financial data for each of the years ended
September 30, 1994 through 1998 are derived from Bank United Corp.'s audited
consolidated financial statements. The following selected financial data for the
six months ended March 31, 1999 and March 31, 1998 are derived from the
unaudited consolidated financial statements of Bank United Corp. and include, in
the opinion of the management of Bank United Corp., all adjustments (consisting
only of normal recurring adjustments) necessary to present fairly the data of
such periods. The information set forth below is only a summary and should be
read in conjunction with the consolidated financial statements and the notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" incorporated by reference into this Proxy
Statement/Prospectus.
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
AT MARCH 31, -------------------------------------------------------------------
1999 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
SUMMARY OF FINANCIAL
CONDITION
ASSETS:
Cash and cash equivalents ...................... $ 237,251 $ 228,674 $ 121,000 $ 119,523 $ 112,931 $ 76,938
Securities purchased under agreements to
resell and federal funds sold ............ 411,529 474,483 349,209 674,249 471,052 358,710
Securities and other investments ............... 124,373 91,350 77,809 65,693 117,094 115,126
Mortgage-backed securities, net ................ 1,168,958 932,058 1,569,705 1,657,908 2,398,263 2,828,903
Loans, net
Single family-held for investment ........ 4,978,688 4,686,600 5,795,179 6,113,318 7,000,303 4,144,787
Single family-held for sale .............. 1,571,433 2,149,009 697,410 256,656 406,563 253,310
Commercial ............................... 4,480,710 3,472,579 2,201,880 981,001 735,876 546,794
Consumer ................................. 576,777 495,556 300,760 168,513 117,498 101,283
Mortgage servicing rights ...................... 431,746 410,868 272,214 123,392 75,097 56,677
Other assets ................................... 893,301 723,815 581,906 552,124 548,857 427,633
----------- ----------- ----------- ----------- ----------- -----------
Total assets ................................ $14,874,766 $13,664,992 $11,967,072 $10,712,377 $11,983,534 $ 8,910,161
=========== =========== =========== =========== =========== ===========
LIABILITIES, MINORITY
INTEREST, AND
STOCKHOLDERS' EQUITY
Deposits ....................................... $ 6,605,548 $ 6,320,476 $ 5,247,668 $ 5,147,945 $ 5,182,220 $ 4,764,204
Federal Home Loan Bank advances ................ 5,744,594 4,783,294 3,992,344 3,490,386 4,383,895 2,620,329
Securities sold under agreements
to repurchase and federal fund
purchased .................................. 576,007 811,742 1,308,600 832,286 1,172,533 553,000
Notes payable .................................. 368,715 219,720 220,199 115,000 115,000 115,000
Other liabilities .............................. 671,426 659,848 414,282 410,217 448,283 320,766
----------- ----------- ----------- ----------- ----------- -----------
Total liabilities ........................ 13,966,290 12,795,080 11,183,093 9,995,834 11,301,931 8,373,299
----------- ----------- ----------- ----------- ----------- -----------
Minority interest-Bank preferred
stock ....................................... 185,500 185,500 185,500 185,500 185,500 85,500
Stockholders' equity ........................... 722,976 684,412 598,479 531,043 496,103 451,362
----------- ----------- ----------- ----------- ----------- -----------
Total liabilities, minority interest, and
stockholders' equity ............... $14,874,766 $13,664,992 $11,967,072 $10,712,377 $11,983,534 $ 8,910,161
=========== =========== =========== =========== =========== ===========
</TABLE>
-11-
<PAGE>
<TABLE>
<CAPTION>
AT OR FOR
THE SIX MONTHS
ENDED MARCH 31, AT OR FOR THE YEAR ENDED SEPTEMBER 30,
--------------------- -----------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
SUMMARY OF OPERATIONS
Interest income ............................ $ 478,775 $ 442,581 $ 898,746 $ 810,708 $ 812,312 $ 746,759 $ 494,706
Interest expense ........................... 319,172 303,179 612,665 546,064 584,778 552,760 320,924
--------- --------- --------- --------- --------- --------- ---------
Net interest income ..................... 159,603 139,402 286,081 264,644 227,534 193,999 173,782
Provision for credit losses ................ 12,384 14,963 20,123 18,107 16,469 24,293 6,997
--------- --------- --------- --------- --------- --------- ---------
Net interest income after
provision for losses ........... 147,219 124,439 265,958 246,537 211,065 169,706 166,785
Non-interest income
Net gains (losses)
Sales of single family servicing
rights and single family
loans .......................... 13,175 2,541 11,124 21,182 43,074 60,495 63,286
Securities and mortgage-backed
securities ..................... 785 1,801 2,761 2,841 4,002 26 10,404
Other loans ........................ 1,027 376 651 1,128 3,189 (1,210) 163
Sale of mortgage offices (1) ....... -- -- -- 4,748 -- -- --
Loan servicing, net of related
amortization ....................... 27,598 13,459 35,975 32,381 30,383 32,677 26,813
Other ................................... 18,711 13,280 30,426 21,152 15,541 12,162 13,295
--------- --------- --------- --------- --------- --------- ---------
Total non-interest income ............... 61,296 31,457 80,937 83,432 96,189 104,150 113,961
--------- --------- --------- --------- --------- --------- ---------
Non-interest expense
Compensation and benefits ............... 47,125 39,625 86,725 75,016 87,640 83,520 86,504
SAIF deposit insurance premiums ......... 2,010 1,927 4,160 4,797 45,690 11,428 11,329
Court of Claims litigation .............. 4,077 900 1,800 -- -- -- --
Restructuring charges(1) ................ -- -- -- -- 10,681 -- --
Other ................................... 56,326 45,795 95,857 92,323 95,407 88,797 96,832
--------- --------- --------- --------- --------- --------- ---------
Total non-interest expense .............. 109,538 88,247 188,542 172,136 239,418 183,745 194,665
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes,
minority interest, and
extraordinary loss ................. 98,977 67,649 158,353 157,833 67,836 90,111 86,081
Income tax expense (benefit) ............... 37,365 (8,209) 25,722 60,686 (75,765) 37,415 (31,899)
--------- --------- --------- --------- --------- --------- ---------
Income before minority interest and
extraordinary loss ................. 61,612 75,858 132,631 97,147 143,601 52,696 117,980
Minority interest
Bank preferred stock dividends .......... 9,126 9,126 18,253 18,253 18,253 10,600 8,653
Payments in lieu of dividends (2) ....... -- -- -- -- 6,413 377 357
--------- --------- --------- --------- --------- --------- ---------
Income before extraordinary loss ........ 52,486 66,732 114,378 78,894 118,935 41,719 108,970
Extraordinary loss--early extinguishment
of debt (3) ............................. -- -- -- 2,323 -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net income .............................. $ 52,486 $ 66,732 $ 114,378 $ 76,571 $ 118,935 $ 41,719 $ 108,970
========= ========= ========= ========= ========= ========= =========
Net income applicable to diluted
earnings per common share .......... $ 52,486 $ 66,732 $ 114,378 $ 76,571 $ 113,327 $ 38,824 $ 102,519
========= ========= ========= ========= ========= ========= =========
Earnings per common share(4)
Basic ................................... $ 1.66 $ 2.11 $ 3.62 $ 2.42 $ 4.06 $ 1.45 $ 3.78
Diluted ................................. 1.63 2.06 3.54 2.40 3.87 1.35 3.55
CERTAIN RATIOS AND OTHER
DATA(9)
Book value per common share ................ $ 22.91 $ 20.67 $ 21.67 $ 18.94 $ 16.81 $ 17.19 $ 15.64
Dividends per common share ................. 0.32 0.32 0.64 0.56 3.16 -- --
Average common shares outstanding .......... 31,565 31,596 31,595 31,596 29,260 28,863 28,863
Average common shares and potential
dilutive common shares .................. 32,172 32,316 32,337 31,881 29,287 28,863 28,863
</TABLE>
-12-
<PAGE>
<TABLE>
<CAPTION>
AT OR FOR THE SIX MONTHS
ENDED MARCH 31, AT OR FOR THE YEAR ENDED SEPTEMBER 30,
-------------------------------- --------------------------------------------------
1999 1998 1998 1997 1996
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
CERTAIN RATIOS AND OTHER
DATA -CONTINUED
Regulatory capital ratios of Bank United
Tangible capital ..................... 6.73% 7.02% 6.75% 7.72% 6.57%
Core capital ......................... 6.75% 7.06% 6.77% 7.77% 6.64%
Total risk-based capital ............. 11.92% 11.59% 10.48% 13.18% 13.09%
Return on average assets(5) ............. 0.86% 1.23% 1.04% 0.85% 1.28%
Return on average common equity ......... 14.91% 21.68% 17.78% 13.50% 23.06%
Stockholders' equity to assets .......... 4.86% 4.98% 5.01% 5.00% 4.96%
Tangible stockholders' equity to tangible
assets .............................. 4.30% 4.52% 4.59% 4.89% 4.81%
Net yield on interest-earning assets .... 2.41% 2.42% 2.42% 2.52% 2.10%
Interest rate spread .................... 2.23% 2.20% 2.21% 2.26% 1.78%
Average interest-earning assets to
average interest-bearing liabilities . 1.03 1.04 1.04 1.05 1.06
Single family servicing portfolio ....... $ 27,303,981 $ 23,887,887 $ 27,935,300 $ 24,518,396 $ 13,246,848
Fundings:
Single family ........................ 2,399,057 1,959,019 3,789,389 2,188,273 3,602,009
Commercial ........................... 2,040,570 1,219,141 2,876,328 1,492,931 891,306
Consumer ............................. 142,620 180,030 367,097 152,665 125,596
-------------- -------------- -------------- -------------- --------------
Total fundings .......................... 4,582,247 3,358,190 7,032,814 3,833,869 4,618,911
-------------- -------------- -------------- -------------- --------------
Loans purchased for held to maturity
portfolio ............................ 1,021,884 183,509 1,158,270 1,086,249 148,510
Non-interest expense to average total
assets ............................... 1.53% 1.43% 1.48% 1.55% 2.13%
Net operating expense ratio(6) .......... 0.67 0.92 0.84 0.80 1.28
Efficiency ratio(7) ..................... 48.36 50.39 49.88 49.20 72.23
Nonperforming assets to total assets .... 0.62 0.63 0.59 0.63 1.12
Net nonaccrual loans to total loans ..... 0.54 0.62 0.57 0.60 1.19
Allowance for credit losses to net
nonaccrual loans ..................... 93.34 71.44 75.91 72.61 44.24
Allowance for credit losses to
nonperforming assets ................. 64.06 54.76 57.84 52.24 32.95
Allowance for credit losses to
total loans .......................... 0.50 0.44 0.44 0.43 0.52
Net loan charge-offs to average loans ... 0.06 0.20 0.13 0.23 0.17
Full-time equivalent employees .......... 2,234 1,689 1,927 1,541 2,310
Number of community banking
branches ............................. 94 80 84 71 70
Number of commercial banking
origination offices ................. 19 15 19 11 9
Number of mortgage origination
offices(1) ........................... 9 6 8 6 85
CERTAIN RATIOS AND OTHER
DATA-EXCLUDING
ADJUSTING ITEM(8)
Net income .............................. $ 55,036 $ 42,298 $ 89,944 $ 75,970 $ 56,392
Net income applicable to diluted
earnings per common shares .............. 55,036 42,298 89,944 75,970 53,295
Earnings per diluted share .............. 1.71 1.31 2.78 2.38 1.82
Return on average assets ................ 0.89% 0.83% 0.85% 0.85% 0.67%
Return on average common equity ......... 15.61 13.82 14.28 13.41 11.47
Efficiency ratio ........................ 46.52 48.48 48.98 49.20 55.80
<CAPTION>
AT OR FOR THE
YEAR ENDED SEPTEMBER 30,
------------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE DATA)
CERTAIN RATIOS AND OTHER
DATA -CONTINUED
Regulatory capital ratios of Bank United
Tangible capital ..................... 6.20% 6.01%
Core capital ......................... 6.29% 6.17%
Total risk-based capital ............. 13.45% 14.02%
Return on average assets(5) ............. 0.50% 1.42%
Return on average common equity ......... 8.80% 26.32%
Stockholders' equity to assets .......... 4.14% 5.07%
Tangible stockholders' equity to tangible
assets .............................. 3.93% 4.68%
Net yield on interest-earning assets .... 1.92% 2.20%
Interest rate spread .................... 1.61% 1.95%
Average interest-earning assets to
average interest-bearing liabilities . 1.06 1.06
Single family servicing portfolio ....... $ 12,532,472 $ 8,920,760
Fundings:
Single family ........................ 3,226,324 5,424,550
Commercial ........................... 547,117 364,604
Consumer ............................. 99,249 94,153
-------------- --------------
Total fundings .......................... 3,872,690 5,883,307
-------------- --------------
Loans purchased for held to maturity
portfolio ............................ 2,658,093 1,406,275
Non-interest expense to average total
assets ............................... 1.76% 2.35%
Net operating expense ratio(6) .......... 0.76 0.97
Efficiency ratio(7) ..................... 58.26 63.36
Nonperforming assets to total assets .... 0.84 1.09
Net nonaccrual loans to total loans ..... 0.91 1.51
Allowance for credit losses to net
nonaccrual loans ..................... 48.74 30.73
Allowance for credit losses to
nonperforming assets ................. 36.65 24.18
Allowance for credit losses to
total loans .......................... 0.44 0.46
Net loan charge-offs to average loans ... 0.16 0.30
Full-time equivalent employees .......... 2,663 2,894
Number of community banking
branches ............................. 65 62
Number of commercial banking
origination offices ................. 9 5
Number of mortgage origination
offices(1) ........................... 122 145
CERTAIN RATIOS AND OTHER
DATA-EXCLUDING
ADJUSTING ITEM(8)
Net income .............................. $ 41,719 $ 50,804
Net income applicable to diluted
earnings per common shares .............. 38,824 47,585
Earnings per diluted share .............. 1.35 1.65
Return on average assets ................ 0.50% 0.72%
Return on average common equity ......... 8.80 12.27
Efficiency ratio ........................ 58.26 63.36
</TABLE>
-13-
<PAGE>
- ------------------
(1) During fiscal 1997, Bank United Corp. sold certain of its mortgage
origination offices. In connection with this sale, the remaining offices
were restructured or closed. The mortgage origination branches shown at
March 31, 1999 and 1998 and September 30, 1998 and 1997 are wholesale
mortgage origination offices, which are currently part of the Financial
Markets Group.
(2) In connection with its acquisition, Bank United Corp. issued to the
Federal Deposit Insurance Corporation, as manager of the Federal Savings
and Loan Insurance Corporation Resolution Trust Fund, a warrant to acquire
158,823 shares of common stock of Bank United. Payments in lieu of
dividends related to the Warrant, which was redeemed in August 1996.
(3) The extraordinary loss represents costs and charges associated with the
repurchase and retirement of a majority of Bank United Corp.'s senior
notes.
(4) Effective October 1, 1997, Bank United Corp. adopted Statement of
Financial Accounting Standard ("SFAS") No. 128, "Earnings per share,"
which establishes standards for computing and presenting earnings per
share ("EPS"). It requires dual presentation of basic and diluted EPS for
entities with complex capital structures. All prior period EPS data were
restated to comply with SFAS No. 128, but are not materially different.
(5) Return on average assets is net income without deduction of minority
interest, divided by average total assets.
(6) Net operating expense ratio is total non-interest expense, less total
non-interest income, as a percentage of average assets for each period.
(7) Efficiency ratio is non-interest expense (excluding goodwill
amortization), divided by net interest income plus non-interest income,
excluding the gain on the sale of mortgage offices.
(8) Adjusting items are composed of the following for fiscal 1999, 1998, 1997,
1996, and 1994:
-- 1999 (decreased EPS $0.08)-- court of claims litigation expense
totaling $4.1 million ($2.6 million net of tax);
-- 1998 (increased EPS $0.76) -- (1) two positive income tax
adjustments totaling $33.5 million, (2) an increase in the
commercial loan allowance of $7.8 million ($4.9 million net of tax),
and (3) provisions for the impact of higher prepayments on the
single family loan and servicing portfolios totaling $6.7 million
($4.2 million net of tax);
-- 1997 (increased EPS $0.02) -- (1) the gain on the sale of mortgage
offices of $4.7 million ($2.9 million net of tax) and (2) an
extraordinary loss on extinguishment of debt of $3.6 million ($2.3
million net of tax);
-- 1996 (increased EPS $2.05) -- (1) a one-time SAIF assessment charge
of $33.7 million ($20.7 million net of tax), (2) compensation
expense of $7.8 million ($4.8 million net of tax), (3) charges
totaling $12.5 million ($7.7 million net of tax) related to the
restructuring of and items associated with the mortgage origination
business, (4) a contractual payment to previous minority interests
of $5.9 million, and (5) an income tax benefit of $101.7 million;
-- 1994 (increased EPS $1.90)-- an income tax benefit of $58.2 million.
(9) Where appropriate, ratios for the interim periods have been annualized.
-14-
<PAGE>
SELECTED FINANCIAL DATA OF TEXAS CENTRAL
The following consolidated selected financial data as of and for each of
the five years in the period ended December 31, 1998 are derived from the Texas
Central's audited consolidated financial statements. The following selected
financial data as of and for the three months ended March 31, 1999 and March 31,
1998 have not been audited but, in the opinion of Texas Central management,
contain all adjustments (consisting only of normal recurring adjustments)
necessary for a fair statement of the results of the interim periods. The
information set forth below is only a summary and should be read in conjunction
with the consolidated financial statements and the notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations of Texas Central." The consolidated statements of financial condition
as of December 31, 1998 and 1997 and the consolidated statements of operations
for each of the years in the three-year period ended December 31, 1998 are
included elsewhere in this document.
<TABLE>
<CAPTION>
AT MARCH 31, AT DECEMBER 31,
--------- -------------------------------------------------------------
1999 1998 1997 1996 1995 1994
--------- --------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
SUMMARY OF FINANCIAL CONDITION
ASSETS
Cash and interest bearing deposits ................... $ 8,616 $ 7,914 $ 7,379 $ 5,464 $ 4,191 $ 3,212
Federal funds sold ................................... 18,124 20,799 17,040 14,945 11,585 10,370
Securities and other investments ..................... 19,049 13,480 7,457 8,752 7,646 5,755
Mortgage-backed securities, net ...................... 6,202 6,470 694 1,059 756 845
Loans
Real estate ..................................... 34,109 31,433 27,063 22,487 13,468 13,724
Commercial, financial and industrial ............ 25,011 24,860 19,308 18,538 16,443 14,618
Installment and other ........................... 6,814 8,336 5,349 3,898 3,583 5,211
Allowance for credit losses ..................... (553) (476) (549) (544) (369) (302)
Other assets ......................................... 3,198 3,247 3,555 2,876 1,975 695
--------- --------- --------- --------- --------- ---------
Total assets .................................... $ 120,570 $ 116,063 $ 87,296 $ 77,475 $ 59,278 $ 54,128
========= ========= ========= ========= ========= =========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Deposits ........................................ $ 100,225 $ 95,990 $ 76,656 $ 69,388 $ 54,199 $ 49,342
Federal Home Loan Bank advances ................. 195 204 237 268 298 431
Securities sold under agreements to repurchase... 12,076 12,301 3,701 2,000 -- --
Other liabilities ............................... 228 586 719 475 148 191
--------- --------- --------- --------- --------- ---------
Total liabilities .................................... 112,724 109,081 81,313 72,131 54,645 49,964
Stockholders' equity ................................. 7,846 6,982 5,983 5,344 4,633 4,164
--------- --------- --------- --------- --------- ---------
Total liabilities and stockholders' equity ...... $ 120,570 $ 116,063 $ 87,296 $ 77,475 $ 59,278 $ 54,128
========= ========= ========= ========= ========= =========
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
AT OR FOR THE THREE
MONTHS ENDED MARCH 31, AT OR FOR THE YEAR ENDED DECEMBER 31,
--------------------- ------------------------------------------------------------
1999(1) 1998 1998 1997 1996 1995 1994
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Interest income ............................. $ 1,962 $ 1,561 $ 7,054 $ 5,775 $ 4,588 $ 4,102 $ 3,255
Interest expense ............................ 737 520 2,382 1,850 1,432 1,285 972
--------- --------- --------- --------- --------- --------- ---------
Net interest income ...................... 1,225 1,041 4,672 3,925 3,156 2,817 2,283
Provision for credit losses (2) ............. 84 -- -- -- 20 498 3
--------- --------- --------- --------- --------- --------- ---------
Net income after provision for
credit losses ............................ 1,141 1,041 4,672 3,925 3,136 2,319 2,280
Non-interest income
Net gain (loss) on sale of securities (3) -- -- -- (123) (1) -- --
Other ................................... 193 161 716 695 609 568 613
--------- --------- --------- --------- --------- --------- ---------
Total non-interest income ........... 193 161 716 572 608 568 613
--------- --------- --------- --------- --------- --------- ---------
Non-interest expense
Compensation and benefits ............... 527 476 2,165 1,820 1,565 1,264 1,154
Other ................................... 439 399 1,771 1,432 1,166 1,096 1,026
--------- --------- --------- --------- --------- --------- ---------
Total non-interest expense .......... 966 875 3,936 3,252 2,731 2,360 2,180
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes .................. 368 327 1,452 1,245 1,013 527 713
Income tax expense (4) ...................... 11 126 140 300 278 130 257
--------- --------- --------- --------- --------- --------- ---------
Net income .................................. $ 357 $ 201 $ 1,312 $ 945 $ 735 $ 397 $ 456
========= ========= ========= ========= ========= ========= =========
Net income applicable to diluted earnings
per common share (4) .................... $ 357 $ 201 $ 1,312 $ 945 $ 735 $ 397 $ 456
========= ========= ========= ========= ========= ========= =========
Earnings per common share
Basic ................................... $ 1.15 $ 0.70 $ 4.39 $ 3.12 $ 2.43 $ 1.32 $ 1.51
Diluted ................................. 1.15 0.66 4.14 2.94 2.32 1.30 1.51
CERTAIN RATIOS AND OTHER DATA(9)
Book value per common share ................. $ 22.40 $ 21.24 $ 23.05 $ 20.84 $ 17.67 $ 15.37 $ 13.82
Dividends per common share (5) .............. -- 0.35 1.56 -- -- -- --
Average common shares outstanding ........... 310 288 299 302 302 302 301
Average common shares and equivalents
outstanding .............................. 311 303 317 322 316 305 301
Regulatory capital ratios of Texas Central
Bank:
Tangible capital ........................ 6.54% 7.15% 6.60% 6.94% 8.66% 9.07% 9.34%
Core capital ............................ 6.54% 7.15% 6.60% 6.94% 8.66% 9.07% 9.34%
Total risk-based capital ................ 11.02% 10.61% 10.11% 11.23% 12.05% 12.51% 12.14%
Return on average assets (6) ................ 1.23% 0.94% 1.41% 1.27% 1.24% 0.76% 0.98%
Return on average common equity ............. 20.11% 13.51% 20.59% 15.70% 14.66% 9.11% 11.48%
Shareholders' equity to assets .............. 6.51% 6.56% 6.02% 6.85% 6.90% 7.82% 7.69%
Tangible shareholders' equity to tangible
assets .................................. 6.35% 6.42% 6.02% 6.85% 6.90% 7.82% 7.69%
Net yield on interest-earning assets ........ 4.72% 5.62% 5.61% 5.96% 5.99% 5.94% 5.59%
Interest rate spread ........................ 3.85% 4.26% 4.31% 4.69% 4.80% 4.86% 4.53%
Average interest-earning assets to average
interest-bearing liabilities ............ 1.39 1.49 1.45 1.45 1.44 1.41 1.39
Non-interest expense to average total
assets .................................. 3.37% 4.16% 4.22% 4.37% 4.60% 4.51% 4.68%
Net operating expense ratio (7) ............. 2.69 3.40 3.45 3.60 3.58 3.43 3.37
Efficiency ratio (8) ........................ 68.12 72.80 73.05 72.31 72.56 69.72 75.28
Nonperforming assets to total assets ........ 0.22 0.14 0.05 0.22 0.07 0.59 0.06
Net nonaccrual loans to total loans ......... 0.35 0.24 0.08 0.32 -- 0.82 0.07
Allowance for credit losses to net
nonaccrual loans ........................ 242.50 401.50 881.50 285.90 -- 135.20 1,308.70
Allowance for credit losses to
nonperforming assets .................... 202.60 395.50 850.00 283.00 989.10 105.40 912.10
Allowance for credit losses to total loans .. 0.84 0.97 0.74 1.06 1.21 1.10 0.90
Net loan charge-offs to average loans (2) ... 0.04 0.14 0.13 (0.01) (0.41) 1.34 0.17
Full-time equivalent employees .............. 38 38 41 36 30 28 25
Number of community banking branches ........ 3 2 3 2 2 1 1
</TABLE>
-16-
<PAGE>
- ---------------
(1) Variances between March 31, 1999 and March 31, 1998 can be attributed to
the opening of the Park Cities branch location in May 1998.
(2) The variance for 1995 is attributed to a single credit charged off during
that year. The subsequent year received a partial recovery of this
charge-off.
(3) The loss during 1997 is attributed to the sale of a mutual fund.
(4) Texas Central elected S corporation status effective January 1, 1998.
(5) Distributions made to shareholders during 1998 were for the payment of tax
liability associated with the income passed through to them due to the
Texas Central's S corporation election.
(6) Return on average assets is net income divided by average total assets.
(7) Net operating expense ratio is total non-interest expense, less total
non-interest income, as a percentage of average assets for each period.
(8) Efficiency ratio is non-interest expense, divided by net interest income
plus non-interest income.
(9) Where appropriate, certain ratios for the interim periods have been
annualized.
-17-
<PAGE>
SUMMARY OF HISTORICAL AND PRO FORMA PER SHARE SELECTED FINANCIAL DATA
Set forth below are the net earnings, diluted earnings, cash dividends and
book value per common share data for Bank United Corp. and Texas Central on a
historic basis, on a pro forma combined basis and on a pro forma combined basis
per Texas Central equivalent share. Also included are weighted average shares
outstanding and shares outstanding at end of period for Bank United Corp., Texas
Central and on a pro forma basis. The exchange ratio for the merger is assumed
to be 2.0266 shares of Bank United Corp. Class A common stock for each share of
Texas Central stock.
The pro forma data was derived by combining the historic consolidated
financial information of Bank United Corp. and Texas Central using the pooling
of interests method of accounting for business combinations.
The Texas Central pro forma equivalent share information shows the effect
of the merger from the perspective of an owner of Texas Central stock. The
information was computed by multiplying the pro forma information by an exchange
ratio of 2.0266.
You should read the information below together with historical financial
statements and related notes and other information included in this Proxy
Statement/Prospectus and incorporated by reference. The unaudited pro forma
combined data below is for illustrative purposes only. The companies may have
performed differently had they always been combined. You should not rely on this
information as being indicative of the historical results that would have been
achieved had the companies always been combined or the future results that the
combined company will experience after the merger.
<TABLE>
<CAPTION>
AT OR FOR THE SIX
MONTHS ENDED MARCH 31, AT OR FOR THE YEARS ENDED(1)
----------------------- ------------------------------------
1999 1998 1998 1997 1996
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Basic earnings per share
Bank United Corp. ......................................... $ 1.66 $ 2.11 $ 3.62 $ 2.42 $ 4.06
Texas Central ............................................. 2.39 1.22 4.39 3.12 2.43
Pro Forma (2) ............................................. 1.64 2.08 3.57 2.40 3.99
Equivalent pro forma per share of
Texas Central stock (2) ............................. 3.32 4.22 7.23 4.86 7.72
Diluted earnings per share
Bank United Corp. ......................................... 1.63 2.06 3.54 2.40 3.87
Texas Central ............................................. 2.38 1.16 4.14 2.94 2.32
Pro Forma (2) ............................................. 1.61 2.03 3.49 2.38 3.80
Equivalent pro forma per share of
Texas Central stock (2) ............................. 3.26 4.11 7.07 4.82 7.70
Cash dividends per share
Bank United Corp. ......................................... 0.32 0.32 0.64 0.56 3.16
Texas Central ............................................. -- 0.35 1.56 -- --
Pro Forma ................................................. 0.32 0.32 0.64 0.56 3.16
Equivalent pro forma per share of
Texas Central stock ................................. 0.65 0.65 1.30 1.13 6.40
Book value per share
Bank United Corp. ......................................... 22.91 20.67 21.67 18.94 16.81
Texas Central ............................................. 22.40 21.24 23.05 20.84 17.67
Pro Forma ................................................. 22.64 20.45 21.43 18.76 16.67
Equivalent pro forma per share of
Texas Central stock ................................. 45.88 41.44 43.43 38.02 33.78
Weighted average common and potential dilutive
common shares outstanding (in thousands)
Bank United Corp. ......................................... 32,172 32,316 32,337 31,881 29,287
Texas Central ............................................. 311 303 317 322 316
Pro Forma ................................................. 32,882 33,026 33,047 32,591 29,997
Number of shares of common outstanding at end of
period (in thousands)
Bank United Corp. ......................................... 31,563 31,596 31,583 31,596 31,596
Texas Central ............................................. 350 297 303 287 303
Pro Forma ................................................. 32,273 32,306 32,293 32,306 32,306
</TABLE>
- ------------
(1) Information for Bank United Corp. is at or for the years ended September
30, 1998, 1997 and 1996. Information for Texas Central is at or for the
years ended December 31, 1998, 1997 and 1996.
-18-
<PAGE>
(2) Texas Central elected S corporation status effective January 1, 1998. For
pro forma purposes, Bank United Corp.'s tax rate for 1998 and 1999 was
applied to Texas Central's pre-tax income for those periods.
COMPARATIVE STOCK PRICES
The following table summarizes the market values of Texas Central stock
and Bank United Corp. Class A common stock on March 22, 1999 as the business day
prior to the announcement of the merger. Because the market price of Bank United
Corp. Class A common stock is subject to fluctuation, the market value of the
shares of Bank United Corp. Class A common stock that holders of Texas Central
stock would receive upon consummation of the merger may increase or decrease
prior to the receipt of such shares following the effectiveness of the merger.
You should obtain current market quotations for Bank United Corp. Class A common
stock.
<TABLE>
<CAPTION>
HISTORICAL EQUIVALENT
---------------------------------------------- PRO FORMA PER SHARE OF
BANK UNITED CORP.(1) TEXAS CENTRAL (2) TEXAS CENTRAL STOCK (3)
-------------------- ----------------- -----------------------
<S> <C> <C> <C>
Market value per share $ 41.219 $ - $ 83.534
</TABLE>
(1) Represents the average of the high and low prices on the NASDAQ.
(2) Although there are occasional transactions in the Texas Central stock,
there is no established trading market for Texas Central stock.
(3) Equivalent pro forma market value per share of Texas Central stock
represents the historical market value per share of Bank United Corp.
Class A common stock multiplied by 2.0266, an estimate of the rate under
the merger agreement at which each share of Texas Central stock will be
converted into shares of Bank United Corp. Class A common stock.
-19-
<PAGE>
RISK FACTORS
An investment in the Bank United Corp. Class A common stock in connection
with the merger involves certain risks. Before you decide to invest in any of
the Bank United Corp. Class A common stock, you should carefully consider the
following risk factors, in addition to the other information contained or
incorporated by reference in this Proxy Statement/Prospectus.
YOU COULD EXPERIENCE DILUTION.
Some stockholders of Bank United Corp. hold shares of Class B common stock
which have no voting rights. Holders of Class B common stock may, however, elect
to convert their shares to Class A common stock. Class B common stock is also
converted to Class A common stock automatically when a holder of Class B common
stock transfers such shares to a person who is not an affiliate of the
transferring holder. As of March 31, 1999, there were 3,241,320 shares of Class
B common stock outstanding.
Bank United Corp. issued 31,595,596 shares in its initial public offering
in August, 1996. Since that time, it has repurchased 34,200 shares and issued
142,250 shares, so that it currently has 31,703,646 shares of common stock
outstanding. Of the 31,595,596 shares issued in the initial public offering,
12,075,000 were registered under the Securities Act of 1933 and sold to the
public in the initial public offering and 19,520,596 were subject to contractual
restrictions on sale which expired or expire at various times. Bank United Corp.
agreed to use its best efforts to register these 19,520,596 shares under the
Securities Act and to maintain the effectiveness of such registration for a
specified period. Registration statements covering all of these shares are
currently in effect. The contractual restrictions on the sale of 7,887,436 of
these 19,520,596 shares were terminated on June 4, 1999. The contractual
restrictions on the balance of the shares expire on July 28, 1999.
FORWARD-LOOKING INFORMATION
Statements and financial discussion and analysis by Bank United Corp.
contained or incorporated in this Proxy Statement/Prospectus that are not
historical facts are forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve a number of risks and uncertainties. The
important factors that could cause actual results to differ materially from the
forward-looking statements include, without limitation:
INTEREST RATES AND ECONOMY
o Changes in interest rates and economic conditions;
o changes in the levels of loan prepayments and the resulting effects
on the value of Bank United Corp.'s loan and servicing portfolios
and the related hedging instruments;
o changes in local economic and business conditions adversely
affecting Bank United Corp.'s borrowers and their ability to repay
their loans according to their terms or impacting the value of the
related collateral; and
o changes in local economic and business conditions adversely
affecting Bank United Corp.'s customers other than borrowers and
their ability to transact profitable business with Bank United Corp.
COMPETITION AND PRODUCT AVAILABILITY
o Increased competition for deposits and loans adversely affecting
rates and terms;
o changes in availability of loans originated by other financial
institutions or Bank United Corp.'s ability to purchase such loans
on favorable terms;
-20-
<PAGE>
o changes in availability of single family servicing rights in the
marketplace and Bank United Corp.'s ability to purchase such assets
on favorable terms; and
o various strategic alternatives that Bank United Corp. considers from
time to time, including acquisitions of other depository
institutions, their assets or their liabilities on favorable terms,
and Bank United Corp.'s successful integration of any such
acquisitions.
CHANGE IN BANK UNITED CORP.'S ASSET MIX
o Increased credit risk in Bank United Corp.'s assets and increased
operating risk caused by an increase in commercial and consumer
loans and a decrease in single family mortgage loans as a percentage
of the total loan portfolio.
LIQUIDITY AND CAPITAL
o Changes in the availability of funds resulting in increased costs or
reduced liquidity;
o changes in Bank United Corp.'s ability to pay dividends on its
common stock; and
o increased asset levels and changes in the composition of assets and
the resulting impact on Bank United Corp.'s capital levels and
regulatory capital ratios.
SYSTEMS
o Bank United Corp.'s ability to acquire, operate and maintain cost
effective and efficient systems; and
o Bank United Corp.'s ability to complete its project to assess and
resolve any Year 2000 problems on time.
PERSONNEL
o The loss of senior management or operating personnel and the
potential inability to hire qualified personnel at reasonable
compensation levels.
REGULATORY, COMPLIANCE AND LEGAL
o Changes in applicable statutes and government regulations or their
interpretations;
o claims of Bank United Corp.'s noncompliance with statutory and
regulatory requirements;
o claims with respect to representations and warranties made by Bank
United Corp. to purchasers and insurers of mortgage loans and to
purchasers of mortgage servicing rights; and
o changes in the status of litigation to which Bank United Corp. is a
party.
-21-
<PAGE>
THE SPECIAL MEETING
GENERAL
This Proxy Statement/Prospectus is furnished in connection with the
solicitation of proxies by the Board of Directors of Texas Central from the
shareholders of Texas Central for use at the special meeting. The special
meeting is a meeting of the shareholders of Texas Central at which the
shareholders will consider the merger. A complete copy of the merger agreement
is attached to this Proxy Statement/Prospectus as Exhibit A.
It is anticipated that this Proxy Statement/Prospectus will first be
mailed to shareholders on or about July 1, 1999.
DATE, PLACE AND TIME OF SPECIAL MEETING
The special meeting will be held at 3:00 p.m. local time on Friday, July
30, 1999 at the principal executive office of Texas Central, 8144 Walnut Hill
Lane, Dallas, Texas.
SHARES ENTITLED TO VOTE, QUORUM AND VOTE REQUIRED
The holders of record of the outstanding Texas Central stock at the close
of business on June 30, 1999 will be entitled to notice of and to vote at the
meeting and any adjournment. At the close of business on such date, Texas
Central had issued and outstanding and entitled to vote at the meeting 350,340
shares of Texas Central stock. Each holder of Texas Central stock will be
entitled to one vote for each share of Texas Central stock owned of record on
the record date. The presence of the holders of a majority of the Texas Central
stock, either in person or by proxy, is required to constitute a quorum at the
meeting. The affirmative vote of two-thirds of the issued and outstanding Texas
Central stock is required to approve the merger. A majority of the Texas Central
stock present at the meeting, either in person or by proxy, is required to
approve any other matters that may be properly presented at the meeting.
Pursuant to the merger agreement, five Texas Central shareholders holding
280,950 shares of Texas Central stock, representing approximately 80% of the
outstanding Texas Central stock, entered into a Voting Agreement with Bank
United Corp. The Voting Agreement requires such shareholders to vote their Texas
Central stock in favor of the merger. Therefore, it is expected that the merger
will be approved at the meeting. The directors and executive officers of Texas
Central own or otherwise control the right to vote 68,870 shares of Texas
Central stock, comprising approximately 19% of the total shares of Texas Central
stock issued and outstanding as of the record date. Of the shares of Texas
Central stock held by executive officers and directors, 43,880 shares,
comprising approximately 13% of the total shares of Texas Central stock, are
subject to the Voting Agreement. THE TEXAS CENTRAL BOARD OF DIRECTORS RECOMMENDS
THAT THE SHAREHOLDERS VOTE IN FAVOR OF THE MERGER.
VOTING AND REVOCATION OF PROXIES
Proxies, in the form enclosed, which are properly executed by the
shareholders and returned to Texas Central and not subsequently revoked, will be
voted at the meeting as directed in the proxy. Any properly executed proxy on
which voting instructions are not specified will be voted in favor of the
ratification and approval of the merger. The proxy also grants authority to the
persons designated in the proxy to vote in accordance with their own judgment if
an unscheduled matter is brought before the meeting. A proxy may be revoked at
any time before it is voted by giving written notice to the Corporate Secretary
of Texas Central, by execution of a proxy of a later date filed with the
Corporate Secretary of Texas Central at or before the meeting or by voting in
person at the meeting.
This proxy solicitation is made by the Texas Central Board of Directors.
Bank United Corp. and Texas Central are each responsible for their own expenses
incurred in preparing, assembling, printing, and mailing this Proxy Statement/
Prospectus. Proxies will be solicited through the mail. Additionally, directors,
officers, and regular employees of Texas Central and Texas Central Bank intend
to solicit proxies personally or by telephone without receiving special
compensation therefor. Texas Central will reimburse banks, brokers and other
custodians, nominees and fiduciaries for their reasonable expenses in forwarding
the proxy materials to beneficial owners.
-22-
<PAGE>
THE MERGER
The following information relating to the merger is not intended to be a
complete description of all information relating to the merger and is qualified
in its entirety by reference to more detailed information contained elsewhere in
this Proxy Statement/Prospectus, including the Exhibits hereto and the documents
referred to herein or incorporated herein by reference. A copy of the merger
agreement is included as Exhibit A. All shareholders of Texas Central are urged
to read the merger agreement in its entirety.
TERMS OF THE MERGER
The merger agreement provides for the merger of BUC Acquisition with and
into Texas Central. The merger will be effective as soon as practicable
following the receipt of all necessary regulatory approvals and the satisfaction
of all conditions to the consummation of the merger. As a result of the merger,
holders of Texas Central stock (other than those shareholders who perfect their
dissenters' rights of appraisal) will be entitled to receive whole shares of
Bank United Corp. Class A common stock and cash for fractional shares and will
no longer be owners of Texas Central stock. As a result of the merger,
certificates for Texas Central stock will only represent the right to receive
the merger consideration pursuant to the merger agreement, and otherwise will be
null and void after such date. Assuming the number of outstanding shares of
Texas Central is 350,340, the maximum number permitted by the merger agreement,
each share of Texas Central stock will be converted into the right to receive
2.0266 shares of Bank United Corp. Class A common stock, subject to adjustment
as described below.
Bank United Corp. will not issue any certificates for fractional shares of
Bank United Corp. Class A common stock in connection with the merger. Instead of
issuing fractional shares, Bank United Corp. will pay cash for such fractional
shares in an amount based on the average of the daily closing bid sales prices
for a share of Bank United Corp. Class A common stock on the NASDAQ for the 20
successive trading days ending on the trading day that is one day prior to the
closing.
The merger agreement provides that legal, accounting and other fees and
expenses incurred by Texas Central in connection with the merger agreement in
excess of $100,000 will be deducted from the merger consideration. However, the
fee to be paid to SAMCO Capital Markets, the financial adviser to Texas Central,
and fees, expenses and payments associated with the funding or payment of
bonuses, incentive compensation plans and vacation pay required by the merger
agreement will not be included in the calculation of the $100,000 limit and will
not be deducted from the merger consideration.
SHAREHOLDER APPROVAL
The merger agreement must be approved by the affirmative vote of the
holders of two-thirds of the outstanding shares of Texas Central stock entitled
to vote at the meeting. Of the 350,340 shares of Texas Central stock outstanding
on the record date, the holders of 233,560 shares must vote in favor of the
merger in order for it to be approved. The holders of 280,950 shares of Texas
Central stock, representing approximately 80% of such shares outstanding, are
parties to the Voting Agreement in which they have agreed, among other things,
to vote in favor of the merger at the meeting. Therefore, it is expected that
the merger will be approved at the meeting. Bank United Corp. is expected to
approve the merger as the sole shareholder of BUC Acquisition.
BACKGROUND AND REASONS FOR THE MERGER; RECOMMENDATION OF TEXAS CENTRAL BOARD
The Board of Directors of Texas Central has approved the Agreement as
being in the best interests of Texas Central and its shareholders, and the Board
of Directors of Bank United Corp. has also approved the Agreement as being in
the best interests of Bank United Corp. and Bank United Corp.'s shareholders. If
the transactions contemplated by the Agreement are consummated, Texas Central
will be merged with and into a subsidiary of Bank United Corp., its separate
existence will cease, and present Texas Central shareholders will become
shareholders Bank United Corp.
-23-
<PAGE>
The Board of Directors of Texas Central perceived that over the last
several years, the direction of the banking industry has been towards
deregulation and consolidation, particularly in the State of Texas. The Board of
Directors of Texas Central and certain of Texas Central's major shareholders
felt that the organization needed to expand the boundaries of its franchise.
Several options were discussed over a two or three year period. The acquisition
of another institution or branching into additional communities in the Dallas
area were considered. The Board of Directors' review of alternatives continued
through 1998. In January of 1999, the Board of Directors of Texas Central
received a merger proposal from Bank United Corp. The Board reviewed the
proposal and concluded that such a merger would be in the best interests of the
Texas Central shareholders. The merger will permit Texas Central to expand
services, such as providing trust services, on-line banking, cash management,
in-house data processing and offer its customers a larger network of branches
and automated teller machines.
For the reasons set forth above, the Texas Central Board of Directors
approved the merger and recommends approval of the transaction by the Texas
Central shareholders.
The Board of Directors of Bank United Corp. believes that acquiring Texas
Central will allow Bank United Corp. to expand and strengthen its presence in
the Dallas metropolitan area and will also result in some economies of scale.
Following arm's length negotiations between representatives of Bank United
Corp. and Texas Central, the merger agreement was executed on March 23, 1999.
The aggregate consideration to be paid to the holders of Texas Central stock
resulted from negotiations which considered the historical earnings and
dividends of Texas Central and Bank United Corp., the earnings potential and
deposit base of Texas Central, potential growth in the Dallas market, Texas
Central's asset quality and the effect of the merger on the shareholders,
customers and employees of Texas Central and Bank United Corp.
Subject to satisfaction of certain conditions contained in the merger
agreement, the Texas Central Board of Directors believes the merger to be fair
and in the best interest of Texas Central and its shareholders. In addition, a
fairness opinion has been obtained from SAMCO Capital Markets with respect to
the fairness, from a financial point of view, of the merger to the Texas Central
shareholders. THE TEXAS CENTRAL BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
THE TEXAS CENTRAL SHAREHOLDERS VOTE FOR APPROVAL OF THE MERGER and has
authorized consummation of the merger, subject to approval of Texas Central
shareholders, federal and state bank regulators and the satisfaction of certain
other conditions.
FAIRNESS OPINION
In deciding to approve the merger, the Texas Central Board of Directors
received and considered the oral opinion of SAMCO Capital Markets ("SAMCO"), its
financial advisor, as to the fairness of the merger to the Texas Central
shareholders from a financial point of view as of such date. The oral opinion
was confirmed in writing on June 15, 1999, and a copy of the written opinion is
attached as Exhibit B to this Proxy Statement/Prospectus. You should read the
opinion in its entirety to understand the assumptions made, matters considered
and limits of the review undertaken by SAMCO in providing its opinion.
SAMCO, a division of Service Asset Management Company, is regularly
engaged in the business of evaluating financial institutions and their
securities in connection with mergers and acquisitions, and in evaluations for
other purposes. On September 10, 1998, Texas Central engaged SAMCO to act as an
independent financial advisor to Texas Central's Board of Directors and
shareholders in connection with the merger. Specifically, based on SAMCO's
reputation and qualifications in evaluating financial institutions, the Board of
Directors of Texas Central requested that SAMCO render advice and analysis in
connection with the merger, and to provide an opinion with regard to the
fairness, from the perspective of the shareholders of Texas Central of the
financial terms of the merger.
SAMCO has rendered a written opinion to the Board of Directors of Texas
Central to the effect that the terms of the merger are fair, from a financial
point of view, to the shareholders of Texas Central as of the date of the
opinion letter. A copy of the opinion letter is attached as Exhibit B to this
Proxy Statement/Prospectus and should be read in its entirety by the Texas
Central shareholders.
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SAMCO based its opinion upon, among other things, a review of:
o certain publicly available financial statements and other
information of Texas Central and Bank United Corp.;
o certain internal financial statements and other financial and
operating data concerning Texas Central and Bank United Corp.
prepared by the management of Texas Central and Bank United Corp.;
o certain summary financial projections concerning Texas Central and
Bank United Corp. prepared by the management of Texas Central and
Bank United Corp., respectively;
o discussions with senior executives of Texas Central regarding the
past and current operations and prospects of Texas Central;
o discussions with senior executives of Bank United Corp. regarding
the past and current operations and financial condition and the
prospects of Bank United Corp. and the estimated pro forma impact of
the merger, including on the combined company's earnings per share,
consolidated capitalization and financial ratios;
o discussions with senior executives of Texas Central and Bank United
Corp. regarding the strategic objectives of the merger and the long
term benefits expected to result from the merger, including without
limitation, certain estimates and timing of synergies and other cost
savings for the continued company;
o reported prices and trading activity for transactions in Texas
Central stock and Bank United Corp. Class A common stock;
o a comparison of the financial performance of Texas Central and Bank
United Corp. and the prices and trading activity of Texas Central
and Bank United Corp. with that of certain other comparable publicly
traded companies and their securities;
o the financial terms, to the extent publicly available, of certain
comparable transactions;
o the merger agreement and certain related documents; and
o such factors as it have deemed appropriate.
SAMCO also reviewed such other information, including financial studies,
analyses, investigations and economic and market criteria, that SAMCO deemed
relevant to its engagement. SAMCO maintains a sizable database of information
pertaining to prices paid for banks in the United States. The database includes
transactions involving banking organizations in Texas and the Southwest Region
of the United States, and provides comparable pricing of financial performance
data for banking organizations. SAMCO has the capability of sorting such records
to yield transactions involving similar banks. Similarities might include banks
within a specified asset size range, banks that generate a return on average
assets within a specified range, banks that have an equity-to-assets ratio
within a certain range, or banks that sold for a specific form of consideration
(such as cash or stock). The ability to produce specific groups of comparable
banks facilitates making a valid comparative analysis.
SAMCO considered twenty-one transaction values for Texas banks with assets
greater that $75 million and less than $250 million announced between January 1,
1997 and March 1, 1999 for which publicly available pricing information is
available. For these twenty-one transactions, the average price/book was 2.74
times, price/earnings 19.59 times, price/assets 22.05%, price/deposits 24.70%,
and tangible book premium/core deposits 17.82%. Based on comparability pricing
to these transactions, a range of $54 to $75 a share for control of Texas
Central was calculated.
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SAMCO compared transaction values, and the corresponding characteristics
for the relevant banks, in relation to the transaction value in the context of
the acquisition of Texas Central by Bank United Corp. The comparative analysis
revealed that the merger yields a higher price than the comparative transactions
pricing range. Generally, higher performing banks command higher prices than
lower performing ones. The average performance ratios for these transactions
were a 1.37% return on assets and a 15.23% return on equity, for which Texas
Central comparatively had a slightly higher 1.38% return on assets and a higher
19.36% return on equity.
Since the form of consideration in the merger involves the exchange of
Bank United Corp. Class A common stock for the shares of Texas Central, SAMCO
evaluated the financial condition and performance of Bank United Corp. SAMCO
conducted its own independent financial analysis of Bank United Corp. based upon
the aforementioned information provided to or obtained by SAMCO. SAMCO also
reviewed and considered financial analyses and earnings forecasts produced by
financial analysts affiliated with various brokerage and investment banking
firms that cover the financial institutions industry in general, and Bank United
Corp. in particular. The intent of this financial analysis is to ascertain the
current financial condition and future earnings prospects of Bank United Corp.
given that the current shareholders of Texas Central will have an ownership in
Bank United Corp. following the transaction. SAMCO is satisfied with the
findings obtained from its financial analyses regarding the financial condition
and earnings prospects of Bank United Corp., and believes that sufficient
foundation exists in this regard to support SAMCO's conclusion regarding the
financial fairness of the proposed transaction.
SAMCO is of the belief that its review of, among other things, the
aforementioned items, provides a reasonable basis for the issuance of its
opinion, recognizing that SAMCO is issuing an informed professional opinion, not
a certification of value. No limitations were imposed on the scope of SAMCO's
investigation by either Bank United Corp. or Texas Central.
SAMCO, as part of its professional services, specializes in rendering
valuation opinions of banks and bank holding companies in connection with
mergers and acquisitions nationwide. For SAMCO's services as an independent
financial analyst and advisor to Texas Central in connection with the merger,
Texas Central paid SAMCO a professional fee of $500,000. The professional fees
billed by SAMCO for services provided to Texas Central (including both the fees
for services provided in the past and fees for SAMCO's evaluation of the merger)
are insignificant as compared to SAMCO's total annual billings.
SAMCO relied upon the information provided by the management of Texas
Central and Bank United Corp., or otherwise reviewed by SAMCO, as being complete
and accurate in all material respects. SAMCO has not verified through
independent inspection or examination the specific assets or liabilities of
Texas Central, Bank United Corp. or their subsidiary banks. SAMCO has assumed
that there has been no material change in assets, financial condition, results
of operation or business prospects of Texas Central and Bank United Corp. since
the date of the last financial statements made available to SAMCO. SAMCO met
with the management of Texas Central and Bank United Corp. for the purpose of
discussing the relevant information that has been provided to SAMCO.
Based on all factors that SAMCO deemed relevant and assuming the accuracy
and completeness of the information and data provided, SAMCO concluded that the
provisions of the proposed merger, specifically the terms of the exchange ratio,
as outlined herein, are fair, from a financial standpoint, to the common
shareholders of Texas Central.
OTHER TERMS AND CONDITIONS
The merger agreement contains a number of terms, conditions,
representations and covenants which must be satisfied as of the closing date,
including, but not limited to, the following:
o The receipt of necessary regulatory approvals in a manner that does
not impose any restrictions on the operations of Texas Central or
Bank United Corp. which are unacceptable to Texas Central or Bank
United Corp., and the expiration of any applicable waiting periods
with respect thereto.
o The consummation of the merger will not violate any order or ruling
of any court having competent jurisdiction.
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o The approval of the merger agreement by the Texas Central
shareholders.
o The registration statement relating to Bank United Corp. Class A
common stock shall be effective under the Securities Act of 1933, as
amended, and any applicable state securities or blue sky laws and no
stop order suspending the effectiveness of the registration
statement shall be in effect.
o Neither Bank United Corp. nor Texas Central shall have experienced a
material adverse change.
o All representations and warranties of Texas Central and Bank United
Corp. shall be true in all material respects as of the date of the
merger agreement and at and as of the date of the closing of the
merger.
o Texas Central and Bank United Corp. shall have performed or complied
with all covenants and conditions required by the merger agreement
to be performed or complied with by them prior the closing date.
o The directors and executive officers of Texas Central and its
subsidiaries shall have delivered to Bank United Corp. an instrument
dated as of the effective date releasing Bank United Corp. from any
and all claims of such directors and executive officers (except as
to their deposits and accounts and any rights of indemnification
pursuant to the Articles of Incorporation of Texas Central) and the
directors of Texas Central and its subsidiaries shall have delivered
to Bank United Corp. their resignations as directors of Texas
Central and Texas Central Bank.
o Texas Central and its subsidiaries shall have delivered to the
directors and executive officers that executed releases to Bank
United Corp. an instrument dated the effective date releasing such
directors and executive officers from any and all claims of Texas
Central and its subsidiaries.
o The holders of no more than five percent of Texas Central stock
shall have demanded or be entitled to demand payment of the fair
value of their shares as dissenting shareholders.
o Bank United Corp. shall have received a letter from its independent
accountants, dated as of the effective date, that the merger will
qualify for pooling of interests accounting treatment if consummated
in accordance with the merger agreement.
o Bank United Corp. shall have received a letter from the independent
accountants for Texas Central that such firm knows of no reason why
the merger will not qualify for pooling of interests accounting
treatment if consummated in accordance with the merger agreement.
o Bank United Corp. and Texas Central shall have received opinions of
their counsel that for federal income tax purposes (i) the merger
will constitute a reorganization within the meaning of Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the
"Code"), (ii) no gain or loss will be recognized by holders of Texas
Central stock upon receipt of Bank United Corp. Class A common
stock, (iii) the aggregate tax basis of Bank United Corp. stock
received by a Texas Central shareholder will be the aggregate basis
of the Texas Central stock exchanged therefor and (iv) the holding
period of Bank United Corp. stock to be received by each Texas
Central shareholder will include the period during which the
shareholder held the Texas Central stock surrendered in exchange
therefor, provided that the Texas Central stock is held as a capital
asset on the date of the exchange.
o Bank United Corp. and Texas Central shall have received the opinions
of counsel to the other as to certain other matters in acceptable
form.
o Prior to the issuance of this Proxy Statement/Prospectus, Texas
Central shall have received an opinion of Service Asset Management
Company as to the fairness of the merger to the shareholders of
Texas Central from a financial point of view.
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o Bank United Corp. shall have received an Affiliate Agreement from
each Texas Central shareholder who is an affiliate of Texas Central.
o Instruments evidencing third party bank debt of Texas Central shall
be amended or modified to reflect Bank United Corp. as sole obligor
on such debt in a form reasonably acceptable to Bank United Corp.
Bank United Corp. shall have received a letter from the holder of
such debt consenting to the assumption of such debt by Bank United
Corp. and confirming that there are no breaches under the relevant
note and security documents.
o Bank United Corp. shall have received fully executed Noncompetition
Agreements from each of the persons owning five percent or more of
the Texas Central stock and each of the directors of Texas Central.
o Bank United Corp. shall have received all of the environmental
reports regarding each of its bank facilities and each
non-residential other real estate owned property required by the
merger agreement and such reports shall have been in form and
substance satisfactory to Bank United Corp.
o Bank United Corp. shall have received evidence of the exercise or
cancellation of all outstanding options to purchase Texas Central
stock.
o Bank United Corp. shall have received evidence of the accrual and
discharge of all payment obligations in connection with (i) all
bonus, incentive compensation or similar plans of Texas Central and
its subsidiaries and (ii) vacation obligations of Texas Central and
its subsidiaries.
Any condition to the consummation of the merger, except the required
shareholder and regulatory approvals, registration of Bank United Corp. Class A
common stock and the absence of an order or ruling prohibiting the merger, may
be waived in writing by the party to the merger agreement entitled to the
benefit of such condition.
BUSINESS PENDING EFFECTIVE TIME
The merger agreement imposes certain limitations on the conduct of Texas
Central's business pending consummation of the merger. Among other things, Texas
Central must conduct its business only in the ordinary course, consistent with
prudent banking practices and may only declare and pay cash dividends in an
amount equal to 39.6% of the taxable income of Texas Central as approved by Bank
United.
NO SOLICITATION
Pursuant to the merger agreement, and for so long as the merger agreement
is in effect, Texas Central, its subsidiaries and none of their directors or
officers may entertain, solicit or encourage any inquiries, or provide any
information to or negotiate with any other party with respect to any proposal
which could reasonably be expected to lead to the merger, consolidation,
acquisition, or sale of all or substantially all of the assets or any shares of
capital stock of Texas Central or any of its subsidiaries. Texas Central has
also agreed to notify Bank United Corp. immediately of any such unsolicited
acquisition proposals and provide reasonable details as to the identity of the
proposed acquirer and the nature of the proposed transaction.
ADDITIONAL AGREEMENTS
Certain additional agreements were executed by Texas Central, Bank United
Corp. and others in connection with the merger agreement.
VOTING AGREEMENTS. Pursuant to the merger agreement, five Texas Central
shareholders holding 280,958 shares of Texas Central stock, representing
approximately 80% of such shares outstanding, have entered into the Voting
Agreement
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with Bank United Corp. Among other things, the voting agreement requires that
they vote their Texas Central stock in favor of the merger at the meeting.
Therefore, it is expected that the merger will be approved at the meeting.
EMPLOYMENT AND CONSULTING AGREEMENTS. Pursuant to the merger agreement,
Bank United has entered into an Employment Agreement and Agreement Not to
Compete with three officers of Texas Central Bank: James C. Veirs, Gary D.
Mulhollen and Keith Schmidt. These individuals will be employed by Bank United
for two years commencing on the effective date of the merger. Mr. Veirs will
receive an annualized base salary of $181,120, Mr. Mulhollen an annualized base
salary of $105,000 and Mr. Schmidt an annualized base salary of $80,000. In
addition, each shall be entitled to participation in all group benefit plans
provided by Bank United and will be credited with past service for Texas Central
Bank for purposes of the vesting of benefits under Bank United's plans with
respect to vacation, holidays and paid and unpaid leaves of absence. Each
employment agreement includes a provision which prohibits the employee from
soliciting the business of Bank United or competing with Bank United within any
county all or any portion of which is included in the Dallas Consolidated
Metropolitan Statistical Area during a three year period from the effective date
of the merger.
Pursuant to the merger agreement, Michael A. Ruff, an executive officer of
Texas Central, and Bank United have entered into a Consulting Agreement whereby
Mr. Ruff will consult with Bank United for a six-month period commencing on the
effective date of the merger. Mr. Ruff will receive a consulting fee of
$8,333.34 per month.
NONCOMPETITION AGREEMENTS. It is a condition to Bank United Corp.'s
obligations to consummate the merger that it receive Noncompetition Agreements
from each person owning five percent or more of the Texas Central stock and from
each of the directors of Texas Central. The Noncompetition Agreements provide,
among other things, that for a three year period from the effective date of the
merger such individuals/entities will not solicit the business of Texas Central
Bank, its affiliates or it successors and will not compete with Texas Central
Bank, its affiliates or its successors within any county all or a portion of
which is included in the Dallas Consolidated Metropolitan Statistical Area. Each
of these persons has signed the required agreements to become effective as of
the closing of the merger.
STOCK OPTION AGREEMENT. Texas Central has granted Bank United Corp. the
option to purchase up to 60,464 shares of Texas Central stock, representing
approximately 15% of the shares to be outstanding if it were exercised, at a
purchase price of $49.83 per share pursuant to the Stock Option Agreement. Bank
United Corp. may exercise its option following:
o the occurrence of certain events related to:
oo the merger or consolidation of Texas Central or any of its
subsidiaries,
oo the transfer of 10% or more of the consolidated assets of
Texas Central, or
oo the issuance of securities representing 20% or more of the
voting power of Texas Central.
o the acquisition of or right to acquire beneficial ownership of 30%
or more of the voting power of Texas Central by a person or group.
At Bank United Corp.'s option, or if banking regulators fail to approve
Bank United Corp.'s acquisition of the Texas Central stock pursuant to the Stock
Option Agreement, then Bank United Corp. may elect to receive cash in exchange
for the cancellation of the option rather than the receipt of Texas Central
stock. The amount of cash received if this "cash out" alternative is elected
depends on the event that triggers the exercise of the stock option. If the
option is triggered by the merger of Texas Central with another person, then the
cash payment received by Bank United Corp. will be based on the amount paid to
the Texas Central shareholders in the merger. For other triggering events that
do not involve the acquisition of Texas Central by another person, the cash
payment to be received by Bank United Corp. will be determined by reference to
the value of the Class A common stock of Bank United Corp.
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The option will terminate upon:
o the effectiveness of the merger,
o 15 days after an event triggering the option, or
o termination of the merger agreement in accordance with its
terms prior to the occurrence of an event triggering the
option.
AFFILIATE AGREEMENTS. Pursuant to the merger agreement, the directors,
executive officers of Texas Central and certain principal shareholders of Texas
Central have entered into Affiliate Agreements with Bank United Corp. pursuant
to which they have agreed, among other things, not to offer to sell, sell,
transfer or otherwise dispose of any shares of Bank United Corp. Class A common
stock acquired by them in the merger until the publication of financial results
covering at least 30 days of post-merger combined operations of Bank United
Corp. and Texas Central. Even after such publication, they have agreed to
dispose of Bank United Corp. Class A common stock only (i) in accordance with
the applicable provisions of Rule 145 promulgated under the Securities Act of
1933; (ii) in a transaction that is exempt from the registration requirements of
the Securities Act or (iii) in an offering registered under the Securities Act.
BUSINESS PENDING EFFECTIVE TIME
The merger agreement imposes certain limitations on the conduct of Texas
Central's business pending consummation of the merger. Among other things, Texas
Central must conduct its businesses only in the ordinary course, consistent with
prudent banking practices and may only declare and pay cash dividends in an
amount equal to 39.6% of the taxable income of Texas Central as approved by Bank
United Corp.
EMPLOYEE MATTERS
OFFERS TO TEXAS CENTRAL BANK EMPLOYEES. On or before 15 days prior to
closing, Bank United will make employment offers to become effective as of the
effective date of the merger to the Texas Central Bank employees it wants to
employ. Bank United Corp. will also notify Texas Central Bank of the names of
the employees whom Bank United does not wish to employ. To the extent consistent
with Bank United's existing compensation structure for comparable positions and
comparable officer titles and its current policies regarding officer titles, all
Texas Central Bank employees offered employment by Bank United will be offered
employment at base wages and salaries no less favorable than the wages and
salaries currently being received by such employees and in positions with
comparable responsibilities and officer titles, and, unless agreed upon by such
employee before the effective date, within a reasonable geographic proximity to
such employee's current work location.
CREDIT FOR SERVICE WITH TEXAS CENTRAL BANK. All employees who are offered
and accept employment with Bank United as of the effective date shall be
eligible to participate in the employee benefit plans and other fringe benefits
of Bank United on the same basis as such plans and benefits are offered to
employees of Bank United with comparable positions with Bank United. To the
extent possible under its employee benefit plans, Bank United shall credit such
employees for their length of service with Texas Central Bank for purposes of
eligibility and vesting under each employee benefit and fringe benefit plan to
be provided by Bank United to such employees, to the same extent such service
was recognized under a similar plan of Texas Central Bank; provided, however,
credit for prior service will not apply to the incentive compensation, pension,
profit sharing, retirement and post retirement welfare benefits, and vacation
plans of Texas Central Bank.
AMENDMENT
The merger agreement may be amended only by a writing signed by the party
to the merger agreement to be bound by such amendment.
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TERMINATION
MUTUAL CONSENT. The merger agreement may be terminated and the merger
abandoned at any time on the mutual consent of Bank United Corp. and Texas
Central.
BY EITHER PARTY. The merger agreement may be terminated and the merger
abandoned at any time prior to the effective date by either Bank United Corp. or
Texas Central if:
o any court of competent jurisdiction in the United States or other
federal or state governmental body shall have issued an order,
decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the merger and such order, decree, ruling or
other action shall have been final and non-appealable,
o any of the transactions contemplated by the merger agreement are
disapproved by any regulatory authority or other person whose
approval is required to consummate any of such transactions, or
o the merger shall not have become effective on or before September
17, 1999 or such later date as shall have been approved in writing
by the Boards of Directors of Bank United Corp. and Texas Central.
The right to terminate under the last item above is not available to any party
whose failure to fulfill any material obligation under the merger agreement has
been the cause of, or has resulted in, the failure of the merger to become
effective on or before such date.
BY TEXAS CENTRAL. The merger agreement may be terminated and the merger
abandoned at any time by Texas Central if:
o Bank United Corp. fails to comply in any material respect with any
of its covenants or agreements contained in the merger agreement, or
if any of the representations or warranties of Bank United Corp. are
untrue in any material respect,
o the average of the daily closing sales prices for a share of Bank
United Corp. Class A common stock for the 20 successive trading days
ending on the trading day that is one trading day prior to the
closing is less than $33.57, or
o the closing sales price of the Bank United Corp. Class A common
stock on the day immediately prior to the proposed effective date is
less than $32.00.
In the event Texas Central desires to terminate the merger agreement as provided
in the first item above, Texas Central must notify Bank United Corp. in writing
of its intent to terminate stating the reason therefor. Bank United Corp. has 15
days from the receipt of the notice to cure the alleged breach or inaccuracy or
change, subject to the approval of Texas Central (which approval may not be
unreasonably delayed or withheld).
BY BANK UNITED CORP. The merger agreement may be terminated and the merger
abandoned at any time by Bank United Corp. if:
o Texas Central fails to comply in any material respect with any of
its covenants or agreements contained in the merger agreement, or if
any of the representations or warranties of Texas Central are
defective in any material respect,
o there shall have been any change after December 31, 1998, in the
assets, liabilities (including deposit liabilities), properties,
business or financial condition of Texas Central which individually
or in the aggregate have materially and adversely affected the
financial condition, results of operation or business of Texas
Central, or
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o Bank United Corp. concludes, in its discretion, that Bank United
Corp. will be unable to obtain any regulatory approval required in
order to consummate the merger.
In the event the Board of Directors of Bank United Corp. desires to terminate
the merger agreement because of an alleged breach, inaccuracy or change as
provided in either of the first two items above, Bank United Corp. must notify
Texas Central in writing of its intent to terminate stating the cause therefor.
Texas Central has 15 days from the receipt of the notice to cure the alleged
breach, inaccuracy or change, subject to the approval of Bank United Corp.
(which approval may not be unreasonably delayed or withheld).
REMEDIES. In the event of the termination of the merger agreement without
breach by any party hereto, the merger agreement will be void and have no
effect, without liability on the part of any party or the directors, officers or
shareholders of any party. A termination of the merger agreement will not
relieve a party of any liability for breach of the merger agreement. Bank United
Corp.'s remedy for a breach by Texas Central of the representation contained in
the merger agreement regarding Texas Central's reserve for possible loan losses
is limited to the termination of the merger agreement and the receipt of a cash
payment from Texas Central equal to the actual out of pocket expenses incurred
by Bank United Corp. in connection with the transactions contemplated by the
merger agreement not to exceed $250,000.
EXPENSES
Whether or not the merger is consummated, each party to the merger
agreement will pay its respective expenses incurred in connection with the
preparation and performance of its obligations under the merger agreement.
Except as to the fee to be paid by Texas Central to SAMCO Capital Markets, not
to exceed $500,000, each party agrees to indemnify the other party against any
cost, expense or liability (including reasonable attorneys' fees) in respect of
any claim made by any party for a broker's or finder's fee in connection with
the merger other than one based on communications between the party and the
claimant seeking indemnification.
The merger agreement provides that legal, accounting and other fees and
expenses incurred by Texas Central in connection with the merger agreement in
excess of $100,000 will reduce the number of shares issuable in the merger.
However, the fee to be paid to SAMCO Capital Markets, and the fees,
expenses and payments associated with the funding or payment of bonuses,
incentive compensation plans and vacation pay required by the merger agreement,
will not be included in the calculation of the $100,000 limit and will not be
deducted from the merger consideration:
EXCHANGE OF SHARES
Prior to the effective date of the merger, Bank United Corp. will deposit
in trust with an exchange agent to be selected by Bank United Corp. (the
"Exchange Agent") certificates representing a number of shares of Bank United
Corp. Class A common stock sufficient to pay the merger consideration and the
cash to be paid in lieu of fractional shares. Soon after the effective date of
the merger, the Exchange Agent will mail to each holder of an outstanding
certificate or certificates which as of the effective date represented shares of
Texas Central stock (the "Certificates"), a letter of transmittal for use in the
exchange and instructions explaining how to surrender the Certificates to the
Exchange Agent. Upon surrender to the Exchange Agent of a Certificate, together
with such letter of transmittal duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor (i) a certificate representing
the number of whole shares of Bank United Corp. Class A common stock to which
such holder is entitled pursuant to the merger agreement and (ii) a check
representing the amount of cash in lieu of fractional shares of Bank United
Corp. Class A common stock which such holder would otherwise have the right to
receive pursuant to the merger agreement. The Certificate shall then be
canceled.
Upon the effective date, you will cease to have any rights as shareholder
of Texas Central. Until so surrendered, each Certificate will be deemed for all
corporate purposes to represent and evidence solely the right to receive the
merger consideration to be paid pursuant to the merger agreement. Neither the
Exchange Agent nor any other party will be liable to any holder of Certificates
for any amount paid to a public official pursuant to any applicable abandoned
property, escheat or similar law. Except as required by law, no interest will be
paid on the cash payable for fractional shares or the cash payable for
dissenting shares, and no dividends will be disbursed with respect to shares of
Bank United Corp. Class A common stock until certificates representing shares of
Texas Central stock are surrendered in exchange therefor. You will receive your
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share of the merger consideration only upon the Exchange Agent's receipt of a
lost certificate affidavit and an indemnity agreement in a form acceptable to
Bank United Corp.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a general summary of certain United States
federal income tax consequences of the merger. This discussion is based upon the
Code, regulations promulgated by the United States Treasury Department, judicial
authorities, and current rulings and administrative practice of the Internal
Revenue Service in each case as in effect as of the date hereof and all of which
are subject to change at any time, possibly with retroactive effect. For
purposes of this discussion, it is assumed that shares of Texas Central stock
are held as "capital assets" within the meaning of Section 1221 of the Code
(I.E., property held for investment). This discussion does not address all
aspects of federal income taxation that might be relevant to particular holders
of Texas Central stock in light of their status or personal investment
circumstances; nor does it discuss the consequences to such holders who are
subject to special treatment under the federal income tax laws such as foreign
persons, dealers in securities, regulated investment companies, life insurance
companies, other financial institutions, tax-exempt organizations, pass-through
entities, taxpayers who hold Texas Central stock as part of a "straddle,"
"hedge" or "conversion transaction" or who have a "functional currency" other
than the United States dollar or to persons who have received their Texas
Central stock as compensation. Further, this discussion does not address the
state, local or foreign tax consequences of the merger.
The merger is intended to qualify as a reorganization under Section
368(a)(1)(A) of the Code. It is a condition to the obligations of Bank United
Corp. and Texas Central to consummate the merger that Bank United Corp. and
Texas Central shall have received opinions from each of their counsel to the
effect that, for federal income tax purposes, (i) the merger will constitute a
reorganization within the meaning of Section 368(a)(1)(A) of the Code, (ii) no
gain or loss will be recognized by holders of Texas Central stock upon receipt
of Bank United Corp. Class A common stock except for cash received in lieu of
fractional shares, (iii) the aggregate tax basis of Bank United Corp. Class A
common stock received by a shareholder of Texas Central will be the same as the
aggregate basis of Texas Central stock surrendered in exchange therefore, and
(iv) the holding period of Bank United Corp. Class A common stock to be received
by each Texas Central shareholder will include the period during which the
shareholder held the Texas Central stock surrendered in exchange therefore,
provided that the Texas Central stock is held as a capital asset on the date of
the exchange. These opinions will be rendered in reliance upon certain
assumptions and representations made by officers and shareholders of Texas
Central and officers of Bank United Corp. and BUC Acquisition. An opinion of
counsel represents counsel's best legal judgment, but has no binding effect or
official status of any kind, and no assurance can be given that contrary
positions will not be taken by the IRS or a court considering the issues.
Neither Texas Central nor Bank United Corp. has requested or will receive a
ruling from the IRS as to the tax consequences of the merger.
Assuming the merger is treated as a reorganization within the meaning of
Section 368(a)(1)(A) of the Code, the merger will result in the following
federal income tax consequences to the Texas Central shareholders:
o No gain or loss upon the exchange of their Texas Central stock in
the merger solely for Bank United Corp. Class A common stock, but
gain or loss will be recognized by a shareholder on the receipt of
cash instead of fractional shares.
o A shareholder's aggregate tax basis in the shares of Bank United
Corp. Class A common stock received pursuant to the merger in
exchange for Texas Central stock will be equal to the aggregate tax
basis of the shares of Texas Central stock surrendered in exchange
therefor (decreased by the amount of any tax basis allocable to
fractional shares of Bank United Corp. Class A common stock for
which cash is received).
o Each shareholder will include in his holding period for Bank United
Corp. Class A common stock received in the merger the holding period
of the shares of Texas Central stock surrendered in exchange
therefor; provided that the Texas Central stock is held as a capital
asset on the date of the exchange.
o A shareholder who receives cash in lieu of a fractional share
interest in Bank United Corp. Class A common stock in the merger
will be treated for federal income tax purposes as if the fractional
share of
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Bank United Corp. Class A common stock had been received and then
redeemed for cash and will recognize a capital gain or loss in an
amount equal to the difference between the cash received and the
proportionate part of the aggregate federal income tax basis of such
shareholder's Texas Central stock allocable to such fractional share
interest, unless such payment, under each such shareholder's
particular facts and circumstances, is deemed to have the effect of
a dividend distribution and not a redemption treated as an exchange
under the principles of Section 302 of the Code.
o A shareholder who exercises the right to dissent in connection with
the merger and receives only cash in exchange for such shareholder's
Texas Central stock will be treated as having received such cash as
a distribution in redemption of such shareholder's Texas Central
stock and will recognize a capital gain or loss equal to the
difference between the amount of cash received and the adjusted
basis of such shareholder's Texas Central stock, unless such
payment, under each such shareholder's particular facts and
circumstances, is deemed to have the effect of a dividend
distribution and not a redemption treated as an exchange under the
principles of Section 302 of the Code.
THE FOREGOING IS A SUMMARY DISCUSSION OF MATERIAL FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER. THE DISCUSSION IS INCLUDED FOR GENERAL INFORMATION
PURPOSES ONLY AND MAY NOT APPLY TO A PARTICULAR TEXAS CENTRAL SHAREHOLDER IN
LIGHT OF SUCH SHAREHOLDER'S PARTICULAR CIRCUMSTANCES. TEXAS CENTRAL SHAREHOLDERS
SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO
THEM OF THE MERGER, INCLUDING THE APPLICATION OF STATE, LOCAL AND FOREIGN TAX
LAWS AND POSSIBLE FUTURE CHANGES IN FEDERAL INCOME TAX LAWS AND THE
INTERPRETATION THEREOF, WHICH CAN HAVE RETROACTIVE EFFECTS.
DISSENTERS RIGHTS OF APPRAISAL AND RELATED ISSUES
You have a statutory right to dissent from the merger by following the
specific procedures set forth below. If the merger is approved by the
shareholders and consummated, any shareholder who properly perfects his
dissenters' rights will be entitled to receive an amount of cash equal to the
fair value of his shares of Texas Central stock rather than being required to
receive the consideration established by the merger agreement. The following
summary is not a complete statement of the statutory dissenters' rights of
appraisal, and such summary is qualified by reference to the applicable
provisions of the Texas Business Corporation Act (the "TBCA"), which are
reproduced in full in Exhibit C to this Proxy Statement/Prospectus. YOU MUST
FOLLOW THE EXACT PROCEDURE REQUIRED BY THE TBCA IN ORDER TO PROPERLY EXERCISE
YOUR DISSENTER'S RIGHTS OF APPRAISAL AND AVOID WAIVER OF THOSE RIGHTS.
Any shareholder who desires to dissent from the merger must file a written
objection to the merger with the Corporate Secretary of Texas Central, Ms.
Christiane Thompson, 8144 Walnut Hill Lane, Dallas, Texas 75231, prior to the
meeting. The written notice must state that the shareholder will exercise his
right to dissent if the merger is consummated and give the shareholder's address
to which notice of effectiveness of the merger should be sent. A VOTE AGAINST
THE MERGER IS NOT SUFFICIENT TO PERFECT A SHAREHOLDER'S STATUTORY RIGHT TO
DISSENT FROM THE MERGER. If the merger is consummated, each shareholder who sent
notice to Texas Central as described above and who did not vote in favor of the
merger will be deemed to have dissented from the merger (each a "Dissenting
Shareholder"). Failure to vote against the merger will not constitute a waiver
of the dissenters' rights of appraisal; on the other hand, a vote in favor of
the merger will constitute such a waiver.
Bank United Corp. will be liable for any payments to Dissenting
Shareholders and, within ten days of the effective date, must notify the
Dissenting Shareholders in writing that the merger has occurred. Each Dissenting
Shareholder so notified must, within ten days of the delivery or mailing of such
notice, make a written demand on Bank United Corp., for payment of the fair
value of the Dissenting Shareholder's shares as estimated by the Dissenting
Shareholder. Failure to follow this procedure will constitute a waiver of his
dissenter's rights of appraisal by such Dissenting Shareholder. The demand shall
state the number and class of the shares owned by the Dissenting Shareholder and
the fair value of the shares as estimated by the Dissenting Shareholder. The
fair value of the shares shall be the value thereof as of the date immediately
preceding the meeting, excluding any appreciation or depreciation in
anticipation of the merger. Dissenting Shareholders who fail to make a written
demand within the ten day period will be bound by the merger and lose their
rights to dissent. Within twenty days after making a demand, the Dissenting
Shareholder must submit his or her Certificates to Bank United
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<PAGE>
Corp. for notation thereon that such demand has been made. Dissenting
Shareholders who have made a demand for payment of their shares shall not
thereafter be entitled to vote or exercise any other rights of a shareholder
except the right to receive payment for their shares pursuant to the provisions
of the TBCA and the right to maintain an appropriate action to obtain relief on
the basis of fraud.
Within twenty days after receipt of a Dissenting Shareholder's demand
letter as described above, Bank United Corp. shall deliver or mail to the
Dissenting Shareholder written notice stating that Bank United Corp. accepts the
amount claimed in the demand letter and agrees to pay that amount, within ninety
days after the effective date, upon surrender of the Certificates duly endorsed
by the Dissenting Shareholder, or containing Bank United Corp.'s written
estimate of the fair value of the shares of Texas Central stock together with an
offer to pay such amount within ninety days after the effective date if Bank
United Corp. receives notice, within sixty days after the effective date,
stating that the Dissenting Shareholder agrees to accept that amount and upon
surrender of the Certificates duly endorsed by the Dissenting Shareholder. In
either case, the Dissenting Shareholder shall cease to have any ownership
interest in Texas Central following consummation of the merger.
If the Dissenting Shareholder and Bank United Corp. cannot agree on the
fair value of the shares within sixty days after the effective date, the
Dissenting Shareholder may, within sixty days of the expiration of the initial
sixty day period, file a petition ("Petition") in any court of competent
jurisdiction in Harris County, Texas requesting a finding and determination of
the fair value of the Dissenting Shareholder's shares. Each Dissenting
Shareholder is not required to file a separate Petition. If one Dissenting
Shareholder files a Petition, Bank United Corp. must file, with the clerk of the
court in which the Petition was filed, a list containing the names and addresses
of the Dissenting Shareholders with whom agreements as to the value of their
shares have not been reached. The court will give notice of the time and place
of the hearing on the Petition to the Dissenting Shareholders named on the list.
Dissenting Shareholders so notified by the court will be bound by the final
judgment of the court regarding fair value of the shares. If no Petition is
filed within the appropriate time period, then all Dissenting Shareholders who
have not reached an agreement with Bank United Corp. on the value of their
shares shall be bound by the merger and lose their rights to dissent.
After a hearing concerning the Petition, the court shall determine which
Dissenting Shareholders have complied with the provisions of the TBCA and have
become entitled to the valuation of, and payment for, their shares, and shall
appoint one or more qualified appraisers to determine the value of the shares of
Texas Central stock in question. The appraiser shall determine such value and
file a report with the court. The court shall then in its judgment determine the
fair value of the shares of Texas Central. The judgment of the court shall be
binding on Bank United Corp. and on all Dissenting Shareholders receiving notice
of the hearing. This value may be more than, less than, or equal to what is
received by non-Dissenting Shareholders. The court shall direct Bank United
Corp. to pay such amount, together with interest thereon beginning 91 days after
the effective date to the date of judgment, to the Dissenting Shareholders
entitled thereto. The judgment shall be payable upon the surrender to Bank
United Corp. of the Certificates fully endorsed by the Dissenting Shareholder.
Upon payment of the judgment, the Dissenting Shareholder shall cease to have any
interest in the Certificates. All court costs shall be allotted between the
Dissenting Shareholders and Bank United Corp. in the manner the court determines
to be fair and equitable.
Any Dissenting Shareholder who has made a written demand on Bank United
Corp. for payment of the fair value of his Texas Central stock may withdraw such
demand at any time before payment for his shares has been made or before a
Petition has been filed with an appropriate court for determination of the fair
value of such shares. If a Dissenting Shareholder withdraws his demand, or if he
is otherwise unsuccessful in asserting his dissenters' rights of appraisal, such
Dissenting Shareholder shall be bound by the merger and his status as a former
shareholder shall be restored without prejudice to any corporate proceedings,
dividends, or distributions which may have occurred during the interim.
In the absence of fraud in the transaction, a Dissenting Shareholder's
statutory right to appraisal is the exclusive remedy for the recovery of the
value of his shares or money damages to the Shareholder with respect to the
merger. See Exhibit C.
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ACCOUNTING TREATMENT
Bank United Corp. expects to account for the merger using the pooling of
interests method of accounting. Pursuant to the merger agreement, Bank United
Corp. will receive a letter from its independent accountants stating that the
merger will qualify as a pooling of interests, and Bank United Corp. will also
receive a letter from the independent accountants for Texas Central stating that
it knows of no reason why the merger would not qualify for pooling of interest
accounting treatment. With pooling of interests accounting treatment, assets and
liabilities are recorded at their book value as they existed on the books of
Texas Central at the time of the merger (i.e., goodwill is not recorded). The
results of operations for Bank United Corp. will not be restated to include the
results of operations of Texas Central prior to the effective date of the
merger, as the pre-merger results of operations for Texas Central are not deemed
to be material.
RESTRICTIONS ON SALES OF BANK UNITED CORP. CLASS A COMMON STOCK BY AFFILIATES OF
TEXAS CENTRAL
Bank United Corp. has registered under the federal securities laws the
shares of its Class A common stock to be issued in the merger. Therefore, you
may sell such shares without restriction unless you are considered an
"affiliate" (as that term is used in the securities laws) of Texas Central or
you become an affiliate of Bank United Corp.
If you are considered an affiliate of Texas Central or become an affiliate
of Bank United Corp., you may resell the shares of Bank United Corp. Class A
common stock only pursuant to an effective registration statement under the
securities laws, or pursuant to Rule 145 of the Commission's rules, or in
transactions otherwise exempt from registration under the securities laws. Bank
United Corp. is not obligated and does not intend to register for resale the
shares issued to affiliates of Texas Central. In addition, the Commission's
rules governing pooling of interests accounting prohibit resales by affiliates
of Texas Central of the Bank United Corp. Class A common stock until such time
as financial results covering at least 30 days of combined operations of Texas
Central and Bank United Corp. have been published .
Each affiliate of Texas Central has signed a written agreement restricting
the transfer of shares of Bank United Corp. common stock received in the merger
to transfers permitted by the federal securities laws and the Commission's rules
relating to pooling of interests accounting.
REGULATORY APPROVALS
The merger must be approved by the Office of Thrift Supervision and the
Federal Reserve Bank of Dallas must waive a filing of any application that may
otherwise be required to be filed with the Board of Governors of the Federal
Reserve System ("Federal Reserve"). On May 19, 1999, Bank United Corp. filed an
application with the Office of Thrift Supervision to obtain prior approval of
the merger. On May 19, 1999, Bank United Corp. filed a waiver request with the
Federal Reserve Bank of Dallas to obtain a waiver of any application that might
otherwise be required to be filed with the Federal Reserve. The Federal Reserve
Bank of Dallas approved the waiver request on June 3, 1999.
COMPARISON OF RIGHTS OF SHAREHOLDERS
OF BANK UNITED CORP. AND TEXAS CENTRAL
The rights of Texas Central shareholders under Texas corporate law, and
the Articles of Incorporation and Bylaws of Texas Central will differ in some
respects from the rights Texas Central shareholders will have as shareholders of
Bank United Corp. under Delaware corporate law and the Certificate of
Incorporation and Bylaws of Bank United Corp. Bank United Corp.'s Certificate of
Incorporation and Bylaws contain several provisions which may make Bank United
Corp. a less attractive target for an acquisition of control by anyone who does
not have the support of the Bank United Corp. Board of Directors. Such
provisions include a classified board of directors, a restriction on a
shareholder's ability to call a special meeting of shareholders, the requirement
of a supermajority vote of shareholders to amend certain provisions of the
Certificate of Incorporation and Bylaws and the limitation that shareholder
action without a meeting may only be taken by unanimous written consent. Copies
of Bank United Corp.'s Certificate of Incorporation and Bylaws are available
upon written request from Bank United Corp. Copies of the Texas Central Articles
of Incorporation and Bylaws are available upon written request from Texas
Central.
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<PAGE>
Certain differences between the Delaware General Corporate Law and the
Texas Business Corporation Act as well as a description of the corresponding
provisions contained in Texas Central's Articles of Incorporation and Bylaws and
Bank United Corp.'s Certificate of Incorporation and Bylaws as such differences
may affect the rights of shareholders, are set forth below. The summary
contained in the following chart is not intended to be complete and is qualified
by reference to Delaware law, Texas law, the Texas Central Articles of
Incorporation, the Texas Central Bylaws, the Bank United Corp. Certificate of
Incorporation and the Bank United Corp. Bylaws.
SUMMARY OF MATERIAL DIFFERENCES BETWEEN CURRENT RIGHTS OF
TEXAS CENTRAL SHAREHOLDERS AND RIGHTS THOSE PERSONS
WILL HAVE AS STOCKHOLDERS OF BANK UNITED CORP. FOLLOWING THE MERGER
<TABLE>
<CAPTION>
<S> <C> <C>
TEXAS CENTRAL BANK UNITED CORP.
Corporate The rights of Texas Central shareholders are The rights of Bank United Corp. shareholders
Governance: currently governed by Texas law and the are governed by Delaware corporate law and
Articles of Incorporation and Bylaws of the Certificate of Incorporation and Bylaws of
Texas Central. Following the completion of Bank United Corp.
the merger, rights of Texas Central
shareholders who become Bank United Corp.
shareholders will be governed by Delaware
corporate law and the Certificate of
Incorporation and Bylaws of Bank United
Corp.
Classification of Texas Central does not have a classified Bank United Corp.'s board is divided into three
the Board of board. The Texas Central Bylaws require classes, as nearly equal in number as possible,
Directors: that all directors be elected at each annual with each class serving a staggered three-year
meeting of shareholders for a one-year term. term. This means that only one-third of the
board is elected at each annual meeting of
stockholders.
Election of Under Texas law, Texas Central shareholders Under Delaware law and the provisions of
Directors: are allowed to cumulate their votes in the Bank United Corp.'s Certificate of
election of directors unless prohibited in the Incorporation, Bank United Corp. stockholders
Articles of Incorporation. However, Texas are not entitled to cumulate votes in the election
Central's Articles of Incorporation prohibit of directors. Each share of Bank United Corp.
cumulative voting. As a result, each share of Class A common stock has one vote for each
Texas Central stock has one vote for each nominee for director. Bank United Corp.'s
nominee for director. Therefore, directors directors must be elected by ballot and by a
are elected by a plurality of the votes cast by plurality of the votes cast by the holders entitled
the holders entitled to vote at the meeting. to vote at the meeting.
Removal of Texas law and the Articles of Incorporation Delaware law provides that a company with a
Directors: and Bylaws of Texas Central provide that at classified board may remove a director only for
any meeting of shareholders called expressly cause unless its Certificate of Incorporation
for that purpose, any or all members of a provides otherwise. The Bank United Corp.
board of director's that is not classified may Certificate of Incorporation and Bylaws provide
be removed, with or without cause, by the that Bank United Corp. directors may be
vote of a majority of shares entitled to vote at removed only for cause by the affirmative vote
an election of directors. of the holders of at least a majority of the
voting power of the then outstanding voting
stock, voting as a single class. A Bank United
Corp. director may not be removed without
cause.
Merger: Under Texas law, a merger may become Under Delaware law, a merger may become
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TEXAS CENTRAL BANK UNITED CORP.
effective without the approval of the effective without the approval of the surviving
surviving corporation's shareholders in corporation's stockholders in certain
certain circumstances. Where shareholder circumstances. Where stockholder approval is
approval is required, the merger must be required, the merger must be approved by the
approved by the holders of at least holders of a majority of the outstanding shares
two-thirds of the outstanding shares of each class entitled to vote.
entitled to vote unless a different number,
not less than a majority, is specified in
the Articles of Incorporation. The Texas
Central Articles of Incorporation do not
provide for a different number. If there is
a class of stock entitled to vote as a
class, two-thirds of the outstanding shares
of that class is also required for approval.
Vote Required for Texas law provides that on matters other than Bank United Corp.'s Certificate of
Certain the election of directors, the affirmative vote Incorporation and Bylaws provide that unless
Shareholder of the holders of a majority of the shares otherwise required by law, the Bank United
Actions: entitled to vote and represented at a Corp. Certificate of Incorporation or Bylaws or
shareholders' meeting shall be the act of the a preferred stock designation, the affirmative
shareholders, unless the vote of a greater vote of a majority of the shares present or
number is required by law, the Articles of represented at a meeting and entitled to vote on
Incorporation or Bylaws. matters other than the election of directors shall
be the act of the stockholders.
Under Texas law, the sale, lease, exchange or Under Delaware law, the approval of a sale of
other disposition of all or substantially all of all or substantially of a corporation's assets
a corporation's assets, if not made in the requires the affirmative vote of a majority of
usual and ordinary course of business, must the total votes represented by the outstanding
be approved by the holders of at least two- stock of the corporation entitled to vote on such
thirds of the outstanding shares entitled to matter.
vote on the matter unless a different number,
not less than a majority, is specified in the
Articles of Incorporation. The Texas Central
Articles of Incorporation do not provide for
a different number.
Amendment of Under Texas law, the Texas Central Articles Under Delaware law, the Bank United Corp.
Charter and of Incorporation may be amended by the Certificate of Incorporation may be amended
Bylaws: affirmative vote of the holders of two- thirds by the affirmative vote of a majority of the
of the outstanding shares entitled to vote on outstanding stock entitled to vote on the
the amendment and the holders of two-thirds of amendment at a stockholders' meeting and a
the outstanding shares of each class or series majority of the outstanding stock of each
entitled to vote on the amendment as a class, class entitled to vote on the amendment as a
unless a different number, not less than a class. Bank United Corp.'s Certificate of
majority, is specified in the Articles of Incorporation provides that the affirmative
Incorporation. The Texas Central Articles of vote of at least 80% of the voting stock
Incorporation do not provide for a different then outstanding, voting as a class, is
number. required to amend the provisions in the
Certificate of Incorporation related to
Under Texas law, unless a corporation's Articles stockholder action, the board of directors,
of Incorporation or a Bylaw adopted by the amendment of the Bylaws or amendment of the
shareholders provides otherwise, a Certificate of Incorporation.
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<PAGE>
TEXAS CENTRAL BANK UNITED CORP.
corporation's shareholders may amend the Generally, the Bank United Corp. Bylaws may
Bylaws. The Texas Central Bylaws provide be amended at any annual or special meeting by
that the Bylaws may only be amended by the the affirmative vote of the holders of a majority
board of directors. of the outstanding stock entitled to vote at such
a meeting. However, the Bank United Corp.
Certificate of Incorporation provides that the
amendment of certain specified provisions of
the Bylaws requires the affirmative vote of at
least 80% of the voting stock then outstanding.
These Bylaw provisions are related to
stockholder special meetings, procedures for
annual and special meeting proposals,
stockholder action, the number and election of
directors, director vacancies and removal of
directors.
Shareholder Under Texas law, shareholders may act Under Delaware law, unless otherwise provided
Actions Without a without a meeting if a written consent is in a corporation's Certificate of Incorporation,
Meeting: signed by all the shareholders entitled to vote stockholders may act by written consent signed
on the matter, unless a corporation's Articles by the holders of outstanding shares having not
of Incorporation requires less than less than the minimum number of votes
unanimous consent (but not less than the necessary to take such action at a meeting.
number of votes necessary to take the action Bank United Corp.'s Certificate of
at a meeting). Texas Central's Articles of Incorporation provides that stockholder action
Incorporation do not provide for less than may only be effected by unanimous written
unanimous consent when shareholder action consent.
is taken without a meeting, so no action may be
taken by written consent instead of a meeting
unless all shareholders agree.
Special Meetings of A special meeting of shareholders of a Texas Shareholders of a Delaware corporation do not
Shareholders: corporation may be called by the president, have a right to call a special meeting of
the board of directors, other persons so stockholders unless such a right is provided for
authorized in the corporation's Articles of in the corporation's Certificate of Incorporation
Incorporation or Bylaws or the holders of not or Bylaws. Bank United Corp.'s Certificate of
less than 10% of all the shares entitled to vote Incorporation and Bylaws provide that a special
at the meeting, unless a different percentage, meeting of shareholders may be called only by
not to exceed 50%, is provided for in the the board of directors pursuant to a resolution
Articles of Incorporation. The Texas Central approved by a majority of the total number of
Articles of Incorporation do not require the directors Bank United Corp. would have if
holders of a greater percentage of shares to there were no vacancies or by the chairman of
call a special meeting of shareholders. the board. Bank United Corp. stockholders
may not call a special meeting of stockholders.
Restrictions on the Texas law provides that a restriction on the Delaware law also provides that a restriction on
Transfer of transfer of a security may be imposed by a the transfer of a security may be imposed by a
Common Stock: corporation's Articles of Incorporation, corporation's Certificate of Incorporation,
Bylaws, a written agreement among any number of Bylaws, a written agreement among any
shareholders or a written agreement among any number of shareholders or a written agreement
number of shareholders and the corporation. The among any number of stockholders and the
Texas Central Articles of Incorporation and corporation.
Bylaws prohibit shareholders from transferring
shares of common stock to a person or entity not
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TEXAS CENTRAL BANK UNITED CORP.
qualified to own stock in an S corporation or
effecting a transfer that would cause Texas
Central to be ineligible for status as an S
corporation. Any such transfers which are
restricted shall be void and shall not be
reflected in Texas Central's stock record
book.
In addition, a Stock Restriction Agreement was
executed in December 1997 by Texas Central and
each shareholder of Texas Central. The agreement
provides that it shall terminate upon the
consummation of a merger where Texas Central is
not the surviving entity or Texas Central
shareholders will receive the stock of another
company in exchange for their Texas Central
stock. The agreement will terminate upon
completion of the merger.
Dividends: A Texas corporation may pay dividends only A Delaware corporation may pay dividends out
out of surplus (the excess of net assets over of surplus. If there is no surplus, dividends
capital stock). may be declared out of net profits for the
current or preceding fiscal year unless the
capital of the corporation has been decreased
to an amount less than the aggregate amount
of the capital represented by the issued and
outstanding stock having a preference upon the
distribution of assets.
Appraisal Rights: Under Texas law, shareholders are entitled to Under Delaware law, the rights of
dissent and exercise their right to have their stockholders to dissent and obtain the fair
shares appraised in the event of a sale, lease, value of their shares in an appraisal
exchange or other disposition of all or proceeding may be available in connection
substantially all of the property and assets of with a statutory merger or consolidation in
a corporation not made in the usual and certain specific situations. Appraisal
regular course of business or a merger or rights are not available to a corporation's
consolidation. Appraisal rights are not stockholders when the corporation will be
available to a corporation's shareholders the surviving corporation and no stockholder
when the corporation will be the surviving vote is required to approve the merger.
corporation and no shareholder vote is
required to approve the merger. A Delaware corporation's charter may provide
that appraisal rights shall be available to
Shareholders of a Texas corporation also do not stockholders in the event of the sale of all
have appraisal rights in connection with a or substantially all of a corporation's
merger where, on the record date fixed to assets or the adoption of an amendment to
determine the shareholders entitled to vote on its Certificate of Incorporation, however,
the merger, the corporation's stock is listed on Bank United Corp.'s Certificate of
a national securities exchange, listed on the Incorporation does not provide for such
NASDAQ or held of record by more than 2,000 rights.
shareholders, unless the shareholder is required
to accept any consideration other than shares of Stockholders of a Delaware corporation also
a corporation which immediately after the do not have appraisal rights in connection
effective date of the with a merger where, on the record date
fixed to determine the stockholders entitled
to vote on
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TEXAS CENTRAL BANK UNITED CORP.
merger are listed on a national securities the merger, the corporation's stock is
exchange or the NASDAQ or held of record by listed on a national securities exchange,
more than 2,000 shareholders, cash in lieu listed on the NASDAQ or held of record by
of fractional shares or a combination of the more than 2,000 stockholders, unless the
two. stockholder is required to accept any
consideration other than shares of stock or
depository receipts of the surviving
corporation or any other corporation, which
at the effective date of the merger, will be
listed on a national securities exchange or
the NASDAQ or held of record by more than
2,000 stockholders, cash in lieu of
fractional shares or fractional depository
receipts of a corporation described above or
any combination of the two.
</TABLE>
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<PAGE>
SELECTED FINANCIAL DATA OF TEXAS CENTRAL
The following consolidated selected financial data as of and for each of
the five years in the period ended December 31, 1998 are derived from the Texas
Central's audited consolidated financial statements. The following selected
financial data as of and for the three months ended March 31, 1999 and March 31,
1998 have not been audited but, in the opinion of the management of Texas
Central, contain all adjustments (consisting only of normal recurring
adjustments) necessary for a fair statement of the results of the interim
periods. The information set forth below should be read in conjunction with the
consolidated financial statements and the notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations of
Texas Central." The consolidated statements of financial condition as of
December 31, 1998 and 1997 and the consolidated statements of operations for
each of the years in the three-year period ended December 31, 1998 are included
elsewhere in this document.
<TABLE>
<CAPTION>
AT MARCH 31, AT DECEMBER 31,
---------- -------------------------------------------------------------
1999 1998 1997 1996 1995 1994
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
SUMMARY OF FINANCIAL CONDITION
ASSETS
Cash and interest bearing deposits ................... $ 8,616 $ 7,914 $ 7,379 $ 5,464 $ 4,191 $ 3,212
Federal funds sold ................................... 18,124 20,799 17,040 14,945 11,585 10,370
Securities and other investments ..................... 19,049 13,480 7,457 8,752 7,646 5,755
Mortgage-backed securities, net ...................... 6,202 6,470 694 1,059 756 845
Loans
Real estate ..................................... 34,109 31,433 27,063 22,487 13,468 13,724
Commercial, financial and industrial ............ 25,011 24,860 19,308 18,538 16,443 14,618
Installment and other ........................... 6,814 8,336 5,349 3,898 3,583 5,211
Allowance for credit losses ..................... (553) (476) (549) (544) (369) (302)
Other assets ......................................... 3,198 3,247 3,555 2,876 1,975 695
--------- --------- --------- --------- --------- ---------
Total assets .................................... $ 120,570 $ 116,063 $ 87,296 $ 77,475 $ 59,278 $ 54,128
========= ========= ========= ========= ========= =========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Deposits ............................................. $ 100,225 $ 95,990 $ 76,656 $ 69,388 $ 54,199 $ 49,342
Federal Home Loan Bank advances ...................... 195 204 237 268 298 431
Securities sold under agreements to
repurchase ........................................ 12,076 12,301 3,701 2,000 -- --
Other liabilities .................................... 228 586 719 475 148 191
--------- --------- --------- --------- --------- ---------
Total liabilities ........................... 112,724 109,081 81,313 72,131 54,645 49,964
Stockholders' equity ................................. 7,846 6,982 5,983 5,344 4,633 4,164
--------- --------- --------- --------- --------- ---------
Total liabilities and shareholders'
equity ................................. $ 120,570 $ 116,063 $ 87,296 $ 77,475 $ 59,278 $ 54,128
========= ========= ========= ========= ========= =========
</TABLE>
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<TABLE>
<CAPTION>
AT OR FOR THE THREE
MONTHS ENDED MARCH 31, AT OR FOR THE YEAR ENDED DECEMBER 31,
--------------------- -----------------------------------------------------------
1999 (1) 1998 1998 1997 1996 1995 1994
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Interest income .............................. $ 1,962 $ 1,561 $ 7,054 $ 5,775 $ 4,588 $ 4,102 $ 3,255
Interest expense ............................. 737 520 2,382 1,850 1,432 1,285 972
--------- --------- --------- --------- --------- --------- ---------
Net interest income ..................... 1,225 1,041 4,672 3,925 3,156 2,817 2,283
Provision for credit losses (2) .............. 84 -- -- -- 20 498 3
--------- --------- --------- --------- --------- --------- ---------
Net income after provision for
credit losses ........................... 1,141 1,041 4,672 3,925 3,136 2,319 2,280
Non-interest income
Net gain (loss) on sale of securities (3) -- -- -- (123) (1) -- --
Other ................................... 193 161 716 695 609 568 613
--------- --------- --------- --------- --------- --------- ---------
Total non-interest income ........... 193 161 716 572 608 568 613
--------- --------- --------- --------- --------- --------- ---------
Non-interest expense
Compensation and benefits ............... 527 476 2,165 1,820 1,565 1,264 1,154
Other ................................... 439 399 1,771 1,432 1,166 1,096 1,026
--------- --------- --------- --------- --------- --------- ---------
Total non-interest expense .......... 966 875 3,936 3,252 2,731 2,360 2,180
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes ................... 368 327 1,452 1,245 1,013 527 713
Income tax expense (4) ....................... 11 126 140 300 278 130 257
--------- --------- --------- --------- --------- --------- ---------
Net income ................................... $ 357 $ 201 $ 1,312 $ 945 $ 735 $ 397 $ 456
========= ========= ========= ========= ========= ========= =========
Net income applicable to diluted earnings
per common share (4) .................... $ 357 $ 201 $ 1,312 $ 945 $ 735 $ 397 $ 456
========= ========= ========= ========= ========= ========= =========
Earnings per common share
Basic ............................... $ 1.15 $ 0.70 $ 4.39 $ 3.12 $ 2.43 $ 1.32 $ 1.51
Diluted ............................. 1.15 0.66 4.14 2.94 2.32 1.30 1.51
CERTAIN RATIOS AND OTHER DATA(9)
Book value per common share .................. $ 22.40 $ 21.24 $ 23.05 $ 20.84 $ 17.67 $ 15.37 $ 13.82
Dividends per common share (5) ............... -- 0.35 1.56 -- -- -- --
Average common shares outstanding ............ 310 288 299 302 302 302 301
Average common shares and equivalents
outstanding ............................. 311 303 317 322 316 305 301
Regulatory capital ratios of Texas Central
Bank:
Tangible capital .................... 6.54% 7.15% 6.60% 6.94% 8.66% 9.07% 9.34%
Core capital ........................ 6.54% 7.15% 6.60% 6.94% 8.66% 9.07% 9.34%
Total risk-based capital ............ 11.02% 10.61% 10.11% 11.23% 12.05% 12.51% 12.14%
Return on average assets (6) ................. 1.23% 0.94% 1.41% 1.27% 1.24% 0.76% 0.98%
Return on average common equity .............. 20.11% 13.51% 20.59% 15.70% 14.66% 9.11% 11.48%
Shareholders' equity to assets ............... 6.51% 6.56% 6.02% 6.85% 6.90% 7.82% 7.69%
Tangible shareholders' equity to tangible
assets .................................. 6.35% 6.42% 6.02% 6.85% 6.90% 7.82% 7.69%
Net yield on interest-earning assets ......... 4.72% 5.62% 5.61% 5.96% 5.99% 5.94% 5.59%
Interest rate spread ......................... 3.85% 4.26% 4.31% 4.69% 4.80% 4.86% 4.53%
Average interest-earning assets to average
interest-bearing liabilities ........... 1.39 1.49 1.45 1.45 1.44 1.41 1.39
Non-interest expense to average total
assets .................................. 3.37% 4.16% 4.22% 4.37% 4.60% 4.51% 4.68%
Net operating expense ratio (7) .............. 2.69 3.40 3.45 3.60 3.58 3.43 3.37
Efficiency ratio (8) ......................... 68.12 72.80 73.05 72.31 72.56 69.72 75.28
Nonperforming assets to total assets ......... 0.22 0.14 0.05 0.22 0.07 0.59 0.06
Net nonaccrual loans to total loans .......... 0.35 0.24 0.08 0.32 -- 0.82 0.07
Allowance for credit losses to net
nonaccrual loans ........................ 242.50 401.50 881.50 285.90 -- 135.20 1,308.70
Allowance for credit losses to
nonperforming assets .................... 202.60 395.50 850.00 283.00 989.10 105.40 912.10
Allowance for credit losses to total loans ... 0.84 0.97 0.74 1.06 1.21 1.10 0.90
Net loan charge-offs to average loans (2) .... 0.04 0.14 0.13 (0.01) (0.41) 1.34 0.17
Full-time equivalent employees ............... 38 38 41 36 30 28 25
Number of community banking branches ......... 3 2 3 2 2 1 1
</TABLE>
-43-
<PAGE>
- ---------------
(1) The variances between March 31, 1999 and March 31, 1998 can be attributed
to the opening of the Park Cities branch location in May 1998.
(2) The variance for 1995 is attributed to a single credit charged off during
that year. The subsequent year received a partial recovery of this
charge-off.
(3) The loss during 1997 is attributed to the sale of a mutual fund.
(4) Texas Central elected S corporation status effective January 1, 1998.
(5) Distributions made to shareholders during 1998 were for the payment of tax
liability associated with the income passed through to them due to the
Texas Central's S corporation election.
(6) Return on average assets is net income, divided by average total assets.
(7) Net operating expense ratio is total non-interest expense, less total
non-interest income, as a percentage of average assets for each period.
(8) Efficiency ratio is non-interest expense, divided by net interest income
plus non-interest income.
(9) When appropriate, certain ratios for the interim periods have been
annualized.
-44-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS OF TEXAS CENTRAL
Management's Discussion and Analysis of Financial Condition and Results of
Operations of Texas Central analyzes the major elements of Texas Central's
balance sheets and statements of operations. This section should be read in
conjunction with Texas Central's consolidated financial statements and notes to
consolidated financial statements presented elsewhere in this Proxy
Statement/Prospectus.
RESULTS OF OPERATIONS
GENERAL
The earnings of Texas Central depend primarily on net interest income
(i.e., the difference between the income earned on loans and investments and the
interest paid on its deposits and other borrowed funds.) Among the factors
affecting net interest income are the type and volume of its loans, deposits and
other borrowed funds, and the relative sensitivity of its interest-earning
assets and its interest-bearing liabilities to changes in market interest rates.
Texas Central's income is also affected by fees it receives from other
banking services, by its provision for loan losses and by the level of its
operating expenses. All aspects of Texas Central's operations are affected by
general market, economic and competitive conditions.
Texas Central reported net income of $357,000 for the three month period
ended March 31, 1999, an increase of $156,000 from net income of $201,000 for
the three month period ended March 31, 1998. Since January 1, 1998, Texas
Central has been an S corporation for federal income tax purposes. As an S
corporation, Texas Central is generally treated as a pass-through entity for
federal income tax purposes, such that it does not typically pay federal income
tax on its earnings. Except as otherwise noted, financial statements and
information for Texas Central for periods after January 1, 1998 contained in
this Proxy Statement/Prospectus do not include accruals or adjustments for the
federal income tax Texas Central would have incurred if it had not been an S
corporation.
Texas Central reported net income of $1.3 million for the year ended
December 31, 1998, an increase of $367,000 from net income of $945,000 for the
year ended December 31, 1997. Income before income taxes was $1.5 million for
the year ended December 31, 1998, a $207,000 increase from the $1.2 million
earned during the year ended December 31, 1997. Texas Central had net income of
$735,000 and pre-tax income of $1.0 million for the year ended December 31,
1996. Changes occurring in the major components of Texas Central's income
statement for such periods are discussed below.
The return on equity and return on assets and certain other ratios are set
forth below:
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS ENDED FOR THE YEAR ENDED
MARCH 31, 1999 (1) DECEMBER 31,
------------------ -----------------------
1998 1997 1996
----- ----- -----
<S> <C> <C> <C> <C>
Return on average assets............... 1.23% 1.41% 1.27% 1.24%
Return on average equity............... 20.11 20.59 15.70 14.66
Average equity to average assets....... 6.10 6.41 7.49 8.50
Dividend payout ratio.................. -- 35.54 -- --
</TABLE>
(1) Annualized
NET INTEREST INCOME
Net interest income is the primary source of income for Texas Central and
represents the amount by which interest generated by earning assets exceeds the
cost of funds, primarily interest paid to depositors on interest-bearing
accounts.
-45-
<PAGE>
Net interest income was $1.2 million for the three months ended March 31,
1999, a 20.00% increase from net interest income of $1.0 million for the three
months ended March 31, 1998. The increase in net interest income is primarily
due to the increases in the volume of loans and investment securities. Average
rates earned on loans decreased to 9.11% as of March 31, 1999 from 9.53% as of
March 31, 1998. This decrease is primarily due to the drop in the prime rate
during the later part of 1998. Average deposits for the three months ended March
31, 1999, were $96.4 million an increase of 28.04% over average deposits of
$75.3 million for 1998.
Net interest income was $4.7 million for the year ended December 31, 1998,
a 19.03% increase from net interest income of $3.9 million for the year ended
December 31, 1997. The increase in net interest income resulted primarily from
the increase in interest on securities and loans due to an increase in volume.
Average rates earned on interest-bearing assets decreased to 8.46% for the year
ended December 31, 1998 from 8.77% for the year ended December 31, 1997. Average
loans of $57.7 million for the year ended December 31, 1998, increased 22.55%
from average loans of $47.1 million for 1997. The increase in average loans
primarily resulted from increases in commercial and real estate loans, with a
slight increase in installment loans. Average deposits for the year ended
December 31, 1998 were $82.1 million an increase of 26.78% over average deposits
of $64.8 million for 1997.
Net interest income was $3.9 million for the year ended December 31, 1997,
a 24.37% increase from net interest income of $3.2 million for 1996. The
increase in net interest income was due primarily to the increase in average
loans outstanding. Average loans of $47.1 million for the year ended December
31, 1997 increased 25.45% over average loans of $37.5 million for 1996. The
increase in average loans outstanding was the result of increases in commercial
and real estate loans during 1997. Average deposits for the year ended December
31, 1997 were $64.8 million an increase of 22.28% from average deposits of $53.0
million for the same period in 1996.
The following tables set forth for the periods indicated an analysis of
net interest income by each major category of interest-earning assets and
interest-bearing liabilities. The table presents the total dollar amount of
average balances, interest income from average interest-earning assets and the
resultant yields, as well as interest expense on average interest-bearing
liabilities, expressed both in dollars and annualized rates.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31,
-----------------------------------------------------------
1999 1998
---------------------------- ----------------------------
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE
-------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans ........................................................ $ 62,428 $ 1,403 9.11% $ 52,920 $ 1,244 9.53%
Securities ................................................... 21,438 303 5.74 11,953 176 6.00
Federal funds sold ........................................... 21,590 256 4.81 10,137 139 5.57
Deposits in financial institutions ........................... -- -- -- 100 2 4.05
-------- -------- -------- -------- -------- --------
Total interest-earning assets ............................. 105,456 1,962 7.55 75,110 1,561 8.43
Non-interest-earning assets .......................................... 10,963 10,165
-------- -------- -------- -------- -------- --------
Total assets .............................................. $116,419 $ 85,275
======== ========
Interest-bearing liabilities:
NOW, money market and savings deposits ....................... $ 35,259 252 2.90 $ 24,917 175 2.85
Certificates of deposit and other\
time deposits ............................................. 27,831 346 5.05 21,992 299 5.51
-------- -------- -------- -------- -------- --------
Total interest-bearing deposits ........................... 63,090 598 3.85 46,909 474 4.10
Securities sold under repurchase agreements .................. 12,529 139 4.46 3,670 46 5.08
-------- -------- -------- -------- -------- --------
Total interest-bearing liabilities ........................ 75,619 737 3.70 50,579 520 4.17
Non-interest bearing liabilities and shareholders' equity:
Non-interest bearing demand deposits ......................... 33,300 28,371
Other ........................................................ 7,500 6,325
-------- --------
40,800 34,696
-------- --------
Total liabilities and shareholders'
equity .................................................... $116,419 85,275
======== ========
Net interest income/interest rate spread ............................. $ 1,225 3.85% $ 1,041 4.26%
======== ======== ======== ========
Net yield on interest-earning assets ................................. 4.72% 5.62%
======== ========
</TABLE>
-46-
<PAGE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1998 1997
------------------------- -------------------------
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE
------- -------- ------- ------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans ............................................................... $57,674 $ 5,604 9.72% $47,058 $ 4,653 9.89%
Securities .......................................................... 12,960 771 5.95 9,944 633 6.37
Federal funds sold .................................................. 12,662 676 5.34 8,737 484 5.54
Deposits in financial institutions .................................. 40 3 7.50 100 5 5.00
------- ------- ------- ------- ------- -------
Total interest-earning assets ..................................... 83,336 7,054 8.46 65,839 5,775 8.77
Non-interest-earning assets ................................................ 9,950 8,520
------- -------
Total assets ...................................................... $93,286 $74,359
======= =======
Interest-bearing liabilities:
NOW, money market and
savings deposits .................................................. $28,461 848 2.98 $23,747 687 2.89
Certificates of deposit and
other time deposits ............................................ 24,521 1,317 5.37 18,309 998 5.45
------- ------- ------- ------- ------- -------
Total interest-bearing deposits ..................................... 52,982 2,165 4.09 42,056 1,685 4.00
Securities sold under agreements to
repurchase ........................................................ 4,455 217 4.85 3,388 165 4.87
------- ------- ------- ------- ------- -------
Total interest-bearing liabilities ................................ 57,437 2,382 4.15 45,444 1,850 4.08
Non-interest-bearing liabilities and shareholders' equity:
Noninterest-bearing demand
deposits .......................................................... 29,084 22,729
Other ............................................................... 6,765 6,186
------- -------
35,849 28,915
------- -------
Total liabilities and shareholders'
equity ......................................................... $93,286 $74,359
======= =======
Net interest income/interest rate
spread ............................................................ $ 4,672 4.31% $ 3,925 4.69%
======= ======= ======= =======
Net yield on interest-earning assets ....................................... 5.61% 5.96%
======= =======
</TABLE>
-47-
<PAGE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------------
1996
-------------------------------------
AVERAGE YIELD/
BALANCE INTEREST RATE
--------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Interest-earning assets:
Loans ............................................................................ $ 37,512 $ 3,679 9.81%
Securities ....................................................................... 8,650 558 6.45
Federal funds sold ............................................................... 6,496 348 5.36
Deposits in financial institutions ............................................... 61 3 5.42
--------- --------- ---------
Total interest-earning assets .................................................. 52,719 4,588 8.70
Non-interest-earning assets ............................................................. 6,640
---------
Total assets ................................................................... $ 59,359
=========
Interest-bearing liabilities:
NOW, money market and
savings deposits ............................................................... $ 21,227 599 2.82
Certificates of deposit and
other time deposits ......................................................... 14,301 774 5.41
--------- --------- ---------
Total interest-bearing deposits .................................................. 35,528 1,373 3.87
Securities sold under agreements to
repurchase ..................................................................... 1,164 59 5.06
--------- --------- ---------
Total interest-bearing liabilities ............................................... 36,692 1,432 3.90
Non-interest-bearing liabilities and shareholders' equity:
Noninterest-bearing demand
deposits ....................................................................... 17,453
Other ............................................................................ 5,214
---------
22,667
---------
Total liabilities and shareholders'
equity ...................................................................... $ 59,359
========= ---------
Net interest income/interest rate
spread ......................................................................... $ 3,156 4.80%
========= =========
Net yield on interest-earning assets .................................................... 5.99%
=========
</TABLE>
Changes in interest income and interest expense can result from variances
in both volume and rate. Texas Central has an asset and liability management
strategy designed to provide a proper balance between rate sensitive assets and
rate sensitive liabilities to attempt to maximize interest margins, and to
provide adequate liquidity for anticipated needs.
-48-
<PAGE>
The following table sets forth for the periods indicated a summary of the
changes in interest earned and interest paid resulting from changes in volume
and rate.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE YEAR ENDED
ENDED MARCH 31, DECEMBER 31,
1999 VS. 1998 1998 VS. 1997
--------------------------------- ---------------------------------
VOLUME RATE NET VOLUME RATE NET
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
INTEREST INCOME:
Loans ........................................... $ 215 $ (56) $ 159 $ 1,031 $ (80) $ 951
Securities ...................................... 135 (8) 127 180 (42) 138
Federal funds sold .............................. 136 (19) 117 209 (17) 192
Deposits in financial institutions .............. (2) -- (2) (2) -- (2)
------- ------- ------- ------- ------- -------
Total ..................................... 484 (83) 401 1,418 (139) 1,279
------- ------- ------- ------- ------- -------
INTEREST EXPENSE:
NOW, money market and savings ................... 74 3 77 140 21 161
Certificates of deposit and
other time deposits ....................... 72 (25) 47 334 (15) 319
Securities sold under repurchase
agreements ................................ 99 (6) 93 46 6 52
------- ------- ------- ------- ------- -------
Total ..................................... 245 (28) 217 520 12 532
------- ------- ------- ------- ------- -------
Net change in interest income ........................ $ 239 $ (55) $ 184 $ 898 $ (151) $ 747
======= ======= ======= ======= ======= =======
<CAPTION>
FOR THE YEAR
ENDED DECEMBER 31,
1997 VS. 1996
-----------------------------------------------
VOLUME RATE NET
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
INTEREST INCOME:
Loans ............................................................ $ 944 $ 30 $ 974
Securities ....................................................... 82 (7) 75
Federal funds sold ............................................... 124 12 136
Deposits in financial institutions ............................... 2 -- 2
------ ------ ------
Total ...................................................... 1,152 35 1,187
------ ------ ------
INTEREST EXPENSE:
NOW, money market and savings .................................... 73 15 88
Certificates of deposit and
other time deposits ........................................ 218 6 224
Securities sold under repurchase
agreements ................................................. 108 (2) 106
------ ------ ------
Total ...................................................... 399 19 418
------ ------ ------
Net change in interest income ......................................... $ 753 $ 16 $ 769
====== ====== ======
</TABLE>
PROVISION FOR CREDIT LOSSES
Texas Central's allowance for credit losses is established through charges
to operating income in the form of the provision for credit losses. Actual
credit losses or recoveries of credit losses are charged or credited directly to
the allowance for credit losses.
Texas Central recorded a provision for credit losses for the three months
ended March 31, 1999 of $84,000 compared to none taken during this same time
period for 1998. The allowance for credit losses expressed as a percentage of
outstanding loans was 0.84% and 0.97% as of March 31, 1999 and March 31, 1998,
respectively.
-49-
<PAGE>
For the years ended December 31, 1998 and December 31, 1997, Texas Central
recorded no provision for credit losses as the allowance was deemed adequate.
For the year ended December 31, 1996, Texas Central recorded a provision for
credit losses of $20,000. The allowance for credit losses as of December 31,
1998, 1997, and 1996 was $476,000, $549,000, and $544,000, respectively. The
allowance for credit losses expressed as a percentage of outstanding loans was
0.74%, 1.06%, and 1.21% as of December 31, 1998, 1997, and 1996, respectively.
Nonaccrual loans were $198,000 as of March 31, 1999 and $54,000 as of
December 31, 1998.
NON-INTEREST INCOME
Non-interest income, which primarily includes service charges and other
fee income was $193,000 for the three months ended March 31, 1999 and $161,000
for the three months ended March 1, 1998.
Non-interest income increased 25.17% to $716,000 for the year ended
December 31, 1998 from $572,000 for the year ended December 31, 1997 primarily
due to growth in number of deposit accounts yielding service charge income and a
$123,000 loss on the sale of securities occurring in 1997.
Non-interest income decreased 5.92% from $608,000 for the year ended
December 31, 1996 to $572,000 for the year ended December 31, 1997. The net
decrease was due primarily to the loss on sale of securities during 1997.
NON-INTEREST EXPENSE
Non-interest expense includes expenses that Texas Central incurs in the
course of operations, such as employee compensation and benefits, occupancy
expense and general operating expenses. These expenses increased 10.40% from
$875,000 for the three months ended March 31, 1998 to $966,000 for the three
months ended March 31, 1999. The increase was due to primarily expenses related
to a branch which opened in May 1998, and salary and related benefits increases.
Non-interest expense increased from $3.3 million for the year ended
December 31, 1997 to $3.9 million for the year ended December 31, 1998. The
increase was mainly attributable to an increase in salaries and employee
benefits and occupancy expense.
Non-interest expense for the year ended December 31, 1997 increased by
$521,000, from the year ended December 31, 1996 due primarily to increased
salary and benefit costs.
FEDERAL AND STATE INCOME TAXES
Texas Central's provision for income taxes was $11,000 and $126,000 for
the three month periods ended March 31, 1999 and 1998, respectively. As of
January 1, 1998, Texas Central elected S corporation status, therefore Texas
Central is not generally subject to a company-level federal income tax, and the
shareholders of Texas Central are taxed on their proportionate share of Texas
Central's taxable income. Due to the S corporation election, Texas Central had
to charge-off deferred tax assets of $52,000 and accrue for unrealized "net
built in gains" of $74,000 in the first quarter of 1998.
Texas Central's provision for income taxes were $140,000, $300,000, and
$278,000 for the years ended December 31, 1998, 1997, and 1996, respectively.
DISCUSSION OF CHANGES IN FINANCIAL CONDITION
GENERAL
From December 31, 1998 to March 31, 1999, Texas Central increased its
total assets by approximately $4.5 million primarily through growth in loans and
securities. These increases were funded by approximately $4.2 million of deposit
growth. From December 31, 1997 to 1998, total assets increased by approximately
$28.7 million as Texas Central opened a new branch and continued its growth in
existing markets.
-50-
<PAGE>
LOAN PORTFOLIO
The following table classifies Texas Central's loans according to type as of the
dates shown:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
--------- ---------------------------------------
1999 1998 1997 1996
--------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Commercial, financial and industrial ................................... $ 25,011 $ 24,860 $ 19,308 $ 18,538
Real estate ............................................................ 34,109 31,433 27,063 22,487
Installment ............................................................ 6,765 8,225 5,307 3,861
Other .................................................................. 50 112 46 52
--------- --------- --------- ---------
Total ................................................ 65,935 64,630 51,724 44,938
Less allowance for credit losses ....................................... 553 476 549 544
Less unearned income ................................................... 1 1 4 15
--------- --------- --------- ---------
Total ................................................ $ 65,381 $ 64,153 $ 51,171 $ 44,379
========= ========= ========= =========
</TABLE>
The contractual maturity ranges of the commercial, financial and
industrial and real estate portfolios and the amount of such loans with
predetermined interest rates and floating interest rates in each maturity range
as of December 31, 1998 are summarized in the following table:
<TABLE>
<CAPTION>
DECEMBER 31, 1998
-------------------------------------------------------
AFTER ONE
ONE YEAR THROUGH AFTER FIVE
OR LESS FIVE YEARS YEARS TOTAL
---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Commercial, financial and industrial ................................... $ 15,364 $ 8,512 $ 984 $ 24,860
Real estate ............................................................ 19,397 10,746 1,290 31,433
---------- ---------- ---------- ----------
Total ............................................................ $ 34,761 $ 19,258 $ 2,274 $ 56,293
========== ========== ========== ==========
Loans with a predetermined interest rate ............................... $ 5,465 $ 2,825 $ 120 $ 8,410
Loans with a floating interest rate .................................... 29,296 16,433 2,154 47,883
---------- ---------- ---------- ----------
Total ............................................................ $ 34,761 $ 19,258 $ 2,274 $ 56,293
========== ========== ========== ==========
</TABLE>
NONACCRUAL, PAST DUE AND RESTRUCTURED LOANS
The following is an analysis of non-performing loans as of the dates
shown:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
--------- -------------------------------------
1999 1998 1997 1996
--------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Loans accounted for on a nonaccrual
basis ................................................................ $ 198 $ 54 $ 164 $ --
Accruing loans which are contractually
past due 90 days or more as to
principal or interest payments ....................................... 43 665 -- 9
--------- --------- --------- ---------
Total ................................................................ $ 241 $ 719 $ 164 $ 9
========= ========= ========= =========
</TABLE>
The accrual of interest on a loan is discontinued when the borrower's
financial condition is such that the collection of interest is doubtful. This
determination is the opinion of management based upon such criteria as default
in payment,
-51-
<PAGE>
asset deterioration, decline in cash flow, recurring operating loss, declining
sales, bankruptcy and other financial conditions which could result in default.
Placing a loan on nonaccrual status has a two-fold impact on net interest
income. First, it causes an immediate charge against earnings with respect to
that particular loan. Second, it eliminates future interest earnings with
respect to that particular loan. Interest on such loans is not recognized until
the entire principal is collected or until the loan is returned to a performing
status.
ALLOWANCE FOR CREDIT LOSSES AND RISK ELEMENTS
The provision for credit losses represents a determination by Texas
Central's management of the amount necessary to be charged to operating income
and transferred to the allowance for credit losses to maintain a level which it
considers adequate in relation to the risk of losses inherent in the loan
portfolio. It is Texas Central's policy to provide for exposure to losses of
specifically identified credits, and a general allowance for the remainder of
the loan portfolio. It is also Texas Central's policy to charge off in the
current period those loans in which a loss is deemed to exist.
In assessing the adequacy of its allowance for credit losses, management
relies predominantly on its ongoing review of the loan portfolio, which is
undertaken both to ascertain whether there are probable losses which must be
charged off and to assess the risk characteristic of individually significant
loans and of the portfolio in the aggregate.
The following table presents for the periods indicated an analysis of the
allowance for credit losses and other related data:
<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED DECEMBER 31,
ENDED --------------------------------
MARCH 31, 1999 1998 1997
-------------- -------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Average loans outstanding .................................................... $ 62,428 $ 57,674 $ 47,058
-------------- -------------- --------------
Gross loans outstanding at end of period ..................................... $ 65,935 $ 64,630 $ 51,724
-------------- -------------- --------------
Allowance for credit losses at beginning of period ........................... $ 476 $ 549 $ 544
Provision for credit losses .................................................. 84 -- --
Charge-offs:
Commercial, financial and industrial ................................... -- 87 12
Real estate ............................................................ -- -- --
Installment and other .................................................. 10 14 1
Recoveries:
Commercial, financial and industrial ................................... -- -- 1
Real estate ............................................................ -- 25 --
Installment and other .................................................. 3 3 17
-------------- -------------- --------------
Net (charge-offs) recoveries ................................................. (7) (73) 5
-------------- -------------- --------------
Allowance for credit losses at end of period ................................. $ 553 $ 476 $ 549
============== ============== ==============
Ratio of net charge-offs (recoveries) to average loans ....................... .04% .13% (.01)%
</TABLE>
-52-
<PAGE>
The following table describes the allocation of the allowance of the
credit losses among various categories of loans and certain other information
for the dates indicated. The allocation is made for analytical purposes and is
not necessarily indicative of the categories in which future losses may occur.
The total allowance is available to absorb losses from any segment of loans.
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
----------- ---------------------------------------------------
1999 1998 1997
----------- ------------------------ ------------------------
PERCENT OF PERCENT OF
LOANS TO LOANS TO
AMOUNT AMOUNT TOTAL LOANS AMOUNT TOTAL LOANS
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance of allowance for credit losses
applicable to:
Commercial, financial and
industrial ............................................. $ 319 $ 225 38.5% $ 304 37.3%
Real estate ................................................ 195 217 48.6 164 52.3
Installment and other ...................................... 31 29 12.9 16 10.4
Unallocated ................................................ 8 5 -- 65 --
----------- ----------- ----------- ----------- -----------
Total allowance for credit losses ...................... $ 553 $ 476 100.0% $ 549 100.0%
=========== =========== =========== =========== ===========
</TABLE>
-53-
<PAGE>
INVESTMENT SECURITIES
Set forth in the following table is a distribution of Texas Central's
investment securities by contractual maturity dates as of March 31, 1999
(mortgage-backed securities are classified in the period of final maturity):
<TABLE>
<CAPTION>
MATURING
--------------------------------------------------------------------------
AFTER ONE BUT AFTER FIVE YEARS
WITHIN ONE YEAR WITHIN FIVE YEARS BUT WITHIN TEN YEARS AFTER TEN YEARS TOTAL
--------------- ----------------- -------------------- --------------- ---------------
AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD
------- ------ --------- ------ ---------- -------- ------- ------ ------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Securities held to maturity:
U.S. Treasury securities ............ $ 2,000 6.49% $ 7,046 5.75% $ -- -- $ -- -- $ 9,046 5.91%
U.S. government agencies
and corporations ............... -- -- 8,980 5.45 -- -- -- -- 8,980 5.45
Mortgage-backed securities
and collateralized mortgage
obligations .................... -- -- 2,857 5.85 3,005 5.74% 340 5.93% 6,202 5.80
Other ............................... -- -- 509 5.91 -- -- -- -- 509 5.91
------- ------ --------- ------ ---------- ------- ------- ------ ------- ------
Total securities held to
maturity ................... $ 2,000 6.49% $ 19,392 5.63% $ 3,005 5.74% $ 340 5.93% $24,737 5.72%
======= ====== ========= ====== ========== ======= ======= ====== ======= ======
Securities available for sale ....... -- -- -- -- -- -- $ 514 5.00% $ 514 5.00%
======= ====== ========= ====== ========== ======= ======= ====== ======= ======
</TABLE>
Set forth in the following table is a distribution of Texas Central's
investment securities by contractual maturity dates as of December 31, 1998
(mortgage-backed securities are classified in the period of final maturity):
<TABLE>
<CAPTION>
MATURING
--------------------------------------------------------------------------
AFTER ONE BUT AFTER FIVE YEARS
WITHIN ONE YEAR WITHIN FIVE YEARS BUT WITHIN TEN YEARS AFTER TEN YEARS TOTAL
--------------- ----------------- -------------------- --------------- ---------------
AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD
------- ------ --------- ------ ---------- -------- ------- ------ ------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Securities held to maturity:
U.S. Treasury securities ........... $ 1,501 6.09% $ 5,997 6.10% $ -- -- $ -- -- $ 7,498 6.10%
U.S. government agencies
and corporations .............. -- -- 5,002 5.30 -- -- -- -- 5,002 5.30
Mortgage-backed securities
and collateralized mortgage
obligations ................... 125 6.56 -- -- -- -- 6,345 5.82% 6,470 5.84
Other ......................... -- -- 510 5.92 -- -- -- -- 510 5.92
------- ------ --------- ------ ---------- -------- ------- ------ ------- ------
Total securities held to
maturity .................. $ 1,626 6.13% $ 11,509 6.00% $ -- -- $ 6,345 5.82% $19,480 5.80%
======= ====== ========= ====== ========== ======== ======= ====== ======= ======
Securities available for sale ...... -- -- -- -- -- -- $ 470 5.00% $ 470 5.00%
======= ====== ========= ====== ========== ======== ======= ====== ======= ======
</TABLE>
-54-
<PAGE>
DEPOSITS
The average balances and average rates paid by category of deposit at the
dates shown below are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------
MARCH 31, 1999 1998 1997
------------------ ------------------ ------------------
AMOUNT RATE AMOUNT RATE AMOUNT RATE
------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Non-interest bearing deposits ................................. $33,300 -- $29,084 -- $22,729 --
Interest bearing deposits:
NOW, money market,
and savings deposits ....................................... 35,259 2.90% 28,461 2.98% 23,747 2.89%
Certificates of deposit ....................................... 27,831 5.05 24,521 5.37 18,309 5.45
------- ------- ------- ------- ------- -------
Total interest-bearing ..................................... 63,090 3.85 52,982 4.09 42,056 4.00
------- ------- ------- ------- ------- -------
Total ......................................................... $96,390 2.52% $82,066 2.64% $64,785 2.60%
======= ======= ======= ======= ======= =======
</TABLE>
The scheduled maturities of certificates of deposit in denominations of
$100,000 or more at March 31, 1999 and December 31, 1998, including public
funds, are shown below:
MARCH 31, 1999 DECEMBER 31, 1998
-------------- -----------------
(DOLLARS IN THOUSANDS)
Due in three months or less ................ $ 6,567 $ 5,425
Due in three to six months ................. 2,954 2,987
Due in six to twelve months ................ 2,416 3,650
Due in over twelve months .................. 415 546
-------------- -----------------
Total ...................................... $ 12,352 $ 12,608
============== =================
MARKET RISK ANALYSIS
Market risk is the risk of loss from adverse changes in market prices and
interest rates. Texas Central's principal market risk exposure is to changes in
interest rates. Interest rate risk arises primarily from differences in the
duration or repricing of Texas Central's assets, liabilities, and financial
instruments with off-balance-sheet risk. Management actively monitors and
manages its interest rate risk exposure. This effort is accomplished through
structuring the balance sheet portfolio by seeking to maximize net interest
income while maintaining an acceptable level of risk to changes in market
interest rates. The achievement of this goal requires a balance between
profitability, liquidity and interest rate risk.
ASSET, LIABILITY AND FUNDS MANAGEMENT
Texas Central's Asset Liability and Funds Management Policy provides
management with the necessary guidelines for effective funds management, and
Texas Central has established a measurement system for monitoring its net
interest rate sensitivity position. Texas Central manages its sensitivity
position within established guidelines.
Interest rate risk is managed by the Asset Liability Committee ("ALCO"),
which is composed of senior officers of Texas Central Bank, in accordance with
policies approved by Texas Central Bank's Board of Directors. The ALCO
formulates strategies based on appropriate levels of interest rate risk. In
determining the appropriate level of interest rate risk, the ALCO considers the
impact on earnings and capital of the current outlook on interest rates,
potential changes in interest rates, regional economics, liquidity, business
strategies and other factors. The ALCO meets regularly to review, among other
things, the sensitivity of assets and liabilities to interest rate changes, the
book and market values of assets and liabilities, unrealized gains and losses,
purchase and sale activities, commitments to originate loans and the maturities
of
-55-
<PAGE>
investments and borrowings. Additionally, the ALCO reviews liquidity, cash flow
flexibility, maturities, deposits and consumer and commercial deposit activity.
Management uses two methodologies to manage interest rate risks: an analysis of
relationships between interest-earning assets and interest-bearing liabilities
and an interest rate shock simulation model. Texas Central has traditionally
managed its business to reduce its overall exposure to changes in interest
rates.
Texas Central manages its exposure to interest rates by structuring its
balance sheet in the ordinary course of business. Texas Central does not enter
into instruments such as leveraged derivatives, interest rate swaps, financial
options, financial future contracts or forward delivery contracts for the
purpose of reducing interest rate risk.
An interest rate sensitive asset or liability is one that, within a
defined time period, either matures or experiences an interest rate change in
line with general market interest rates. The management of interest rate risk is
performed by analyzing the maturity and repricing relationships between
interest-earning assets and interest-bearing liabilities at specific points in
time ("GAP") and by analyzing the effects of interest rate changes on net
interest income over specific periods of time by projecting the performance of
the mix of assets and liabilities in varied interest rate environments. Interest
rate sensitivity reflects the potential effect on net interest income of a
movement in interest rates. A company is considered to be asset sensitive, or
having a positive GAP, when the amount of its interest-earning assets maturing
or repricing within a given period exceeds the amount of its interest bearing
liabilities also maturing or repricing within that time period. Conversely, a
company is considered to be liability sensitive, or having a negative GAP, when
the amount of its interest-bearing liabilities maturing or repricing within a
given period exceeds the amount of its interest-earning assets also maturing or
repricing within that time period. During a period of rising interest rates, a
negative GAP would tend to affect net interest income adversely, while a
positive GAP would tend to result in an increase in net interest income. During
a period of falling interest rates, a negative GAP would tend to result in an
increase in net interest income, while a positive GAP would tend to affect net
interest income adversely.
LIQUIDITY
Texas Central's asset and liability management policy is intended to
maintain adequate liquidity and thereby enhance its ability to raise funds to
support asset growth, meet deposit withdrawals and lending needs, maintain
reserve requirements, and otherwise sustain operations. Texas Central
accomplishes this through management of the maturities of its interest-earning
assets and interest-bearing liabilities. Liquidity is monitored and overall
interest rate risk is assessed through reports showing both sensitivity ratios
and existing dollar "GAP" data. Texas Central believes its present position to
be more than adequate to meet its current and future liquidity needs.
The liquidity of Texas Central is maintained in the form of readily
marketable investment securities, demand deposits with commercial banks, vault
cash and federal funds sold. While the minimum liquidity requirements for banks
is determined by federal bank regulatory agencies as a percentage of deposit
liabilities, Texas Central's management monitors liquidity requirements as
warranted by interest rate trends, changes in the economy and the scheduled
maturity and interest rate sensitivity of the investment and loan portfolio,
deposits and anticipated loan fundings. In addition to the liquidity provided by
the foregoing, Texas Central has correspondent relationships as of March 31,
1999 with other institutions with available unsecured lines of credit to
purchase overnight funds totaling greater than $3.0 million should additional
liquidity be needed.
INTEREST RATE SENSITIVITY
Interest rate sensitivity refers to the relationship between market
interest rates and net interest income resulting from the repricing of certain
assets and liabilities. Interest rate risk arises when an earning asset matures
or when its rate of interest changes in a time frame different from that of the
supporting interest-bearing liability. One way to reduce the risk of significant
adverse effects of market rate fluctuations on net interest income is to
minimize the difference between rate sensitive assets and liabilities, referred
to as "GAP," by maintaining a similar interest rate sensitivity position of the
assets and liabilities within a particular time frame.
Maintaining an equilibrium between rate sensitive assets and liabilities
will reduce some of the risk associated with changes in market rates, but it
will not guarantee a stable net interest spread because yields and rates may
change
-56-
<PAGE>
simultaneously and by different amounts. These changes in market spreads could
materially affect the overall net interest spread even if assets and liabilities
were perfectly matched.
The following table sets forth an interest rate sensitivity analysis for
Texas Central as of March 31, 1999.
<TABLE>
<CAPTION>
VOLUMES SUBJECT TO REPRICING WITHIN
------------------------------------------------------
0 TO 91 DAYS OVER
90 DAYS TO 1 YEAR 1 YEAR TOTAL
---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Interest-earning assets:
Loans.................................................................... $ 32,711 $ 5,080 28,143 $ 65,934
Securities............................................................... 1,353 1,500 22,398 25,251
Federal funds sold ...................................................... 18,124 -- -- 18,124
---------- ---------- ---------- ----------
Total interest-earning assets....................................... 52,188 6,580 50,541 109,309
---------- ---------- ---------- ----------
Interest-bearing liabilities:
NOW, money market and savings deposits................................... 39,091 -- -- 39,091
Certificates of deposit and other time deposits.......................... 11,831 13,278 2,571 27,680
Securities sold under repurchase agreements.............................. 12,086 29 156 12,271
---------- ---------- ---------- ----------
Total interest-bearing liabilities ................................. 63,008 13,307 2,727 79,042
---------- ---------- ---------- ----------
Period GAP ............................................................... (10,820) (6,727) 47,814 30,267
Cumulative GAP ........................................................... (10,820) (17,547) 30,267 30,267
Cumulative GAP as a percentage of total assets ........................... (8.98)% (14.55)% 25.10% 25.10%
</TABLE>
Varying interest rate environments can create unexpected changes in
prepayment levels of assets and liabilities, which are not reflected in the
interest sensitivity analysis. These prepayments may have significant effects on
Texas Central's net interest margin. Because of these factors, an interest
sensitivity GAP report may not provide a complete assessment of Texas Central's
exposure to changes in interest rates.
The following table presents an analysis of the percentage changes
inherent in Texas Central's net interest income over a 12 month period and
market value of portfolio equity arising from hypothetical changes in market
interest rates ("MVE"). MVE is the market value of assets, less the market value
of liabilities. The interest rate scenarios presented in the table include
interest rates at March 31, 1999, December 31, 1998 and December 31, 1997 and as
adjusted by instantaneous parallel rate changes upward and downward of up to 200
basis points. These scenarios are not comparable due to differences in the
interest rate environments, including the absolute level of rates and the shape
of the yield curve.
<TABLE>
<CAPTION>
MARCH 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
------------------------------- ------------------------------ ------------------------------
CHANGE IN NET INTEREST MARKET VALUE OF NET INTEREST MARKET VALUE OF NET INTEREST MARKET VALUE OF
INTEREST RATES INCOME PORTFOLIO EQUITY INCOME PORTFOLIO EQUITY INCOME PORTFOLIO EQUITY
- -------------- ------------ ---------------- ------------ ---------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
+200 5.99% (10.74)% 7.97% (36.30)% 22.04% 3.26%
+100 2.99 (5.86) 3.98 (19.01) 11.05 1.22
0 0.00 0.00 0.00 0.00 0.00 0.00
-100 (2.52) 6.89 (3.52) 20.75 (10.17) (0.27)
-200 (5.05) 14.80 (7.06) 43.30 (20.35) 0.27
</TABLE>
The MVE is negatively impacted by the estimated effect of prepayments on
the value of mortgage-backed securities as rates decline. Further, this analysis
is based on Texas Central's interest rate exposure at the dates indicated and
does not contemplate any actions Texas Central might undertake in response to
changes in market interest rates, which could impact MVE.
-57-
<PAGE>
Each rate scenario shows unique prepayment, repricing, and reinvestment
assumptions. Management derived these assumptions considering published market
prepayment expectations, the repricing characteristics of individual instruments
or groups of similar instruments, Texas Central's historical experience, and
Texas Central's assets and liability management strategy. Further this analysis
assumes that certain of Texas Central's instruments would not be affected by the
changes in interest rates or would be partially affected due to the
characteristics of the instruments.
There are limitations inherent in any methodology used to estimate the
exposure to changes in market interest rates. It is not possible to fully model
the market risk instruments with leverage, option or prepayment risks. Also,
Texas Central is affected by basis risk, which is the difference in repricing
characteristics of similar term rate indices. As such, this analysis is not
intended to be a forecast of the effect of a change in market interest rates on
Texas Central.
CAPITAL RESOURCES
Capital resources are subject to various regulatory capital requirements
administered by the federal banking agencies. Any institution that fails to meet
its minimum capital requirements is subject to actions by regulators that could
have a direct material effect on the financial statements. Under the capital
adequacy guidelines and the regulatory framework for prompt corrective action,
Texas Central Bank must meet specific capital requirements based on its assets,
liabilities and certain off-balance sheet items as calculated under regulatory
accounting practices.
To meet the capital adequacy requirements, Texas Central Bank must
maintain minimum ratios as defined in the regulations. Management believes that
as of March 31, 1999 and December 31, 1998, Texas Central Bank met all capital
adequacy requirements. As of March 31, 1999, Texas Central Bank satisfied the
requirements of a "well capitalized" institution for federal capital adequacy
purposes. Additionally, the Federal Reserve has capital adequacy requirements
for bank holding companies. For bank holding companies with consolidated assets
of less than $150 million, like Texas Central, these capital adequacy
requirements are applied on a bank-only basis.
The following is a summary of Texas Central Bank's capitalization at March
31, 1999 and December 31, 1998 and 1997.
<TABLE>
<CAPTION>
ACTUAL MINIMUM REQUIRED
----------------------- -----------------------
TEXAS CENTRAL BANK: AMOUNT RATIO AMOUNT RATIO
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
As of March 31, 1999:
Total capital (to risk-weighted assets) ................................... $ 8,163 11.02% $ 5,924 8.00%
Tier I capital (to risk-weighted assets) .................................. 7,610 10.27 2,962 4.00
Tier I capital (to total average assets) .................................. 7,610 6.54 3,441 3.00
As of December 31, 1998:
Total capital (to risk-weighted assets) ................................... $ 7,412 10.11% $ 5,868 8.00%
Tier I capital (to risk-weighted assets) .................................. 6,936 9.46 2,934 4.00
Tier I capital (to total average assets) .................................. 6,936 6.60 3,154 3.00
As of December 31, 1997:
Total capital (to risk-weighted assets) ................................... $ 6,461 11.23% $ 4,604 8.00%
Tier I capital (to risk-weighted assets) .................................. 5,912 10.27 2,302 4.00
Tier I capital (to total average assets) .................................. 5,912 6.94 2,555 3.00
</TABLE>
YEAR 2000 COMPLIANCE
GENERAL. The Year 2000 risk involves computer programs and computer
software that are not able to perform without interruption into the Year 2000.
If computer systems do not correctly recognize the date change from December 31,
1999 to January 1, 2000, computer applications that rely on the date field could
fail or create erroneous results. Such erroneous results could affect interest,
payment or due dates or cause the temporary inability to process
-58-
<PAGE>
transactions, send invoices or engage in similar normal business activities. If
these issues are not addressed by Texas Central, its suppliers and its
borrowers, there could be a material adverse impact on Texas Central's financial
condition or results of operations.
STATE OF READINESS. Texas Central formally initiated its Year 2000 project
and plan in June 1997 to insure that its operational and financial systems will
not be adversely affected by Year 2000 problems. Texas Central has formed a Year
2000 project team and the Board of Directors and management are supporting all
compliance efforts and allocating the necessary resources to ensure completion.
An inventory of all systems and products (including both information technology
("IT") and non-information technology ("non-IT" systems) that could be affected
by the year 2000 date change has been developed, verified and categorized as to
its importance to Texas Central and an assessment of all major IT and critical
non-IT systems has been completed. This assessment involved inputting into IT
systems test data which simulates the Year 2000 date change and reviewing the
system output for accuracy. Texas Central's assessment of critical non-IT
systems involved reviewing such systems to determine whether they were date
dependent. Based on such assessment, Texas Central believes that none of its
critical non-IT systems are date dependent. The software for Texas Central's
systems is provided through service bureaus and software vendors. Texas Central
has contacted all of its third party vendors and software providers and is
requiring them to demonstrate and represent that the products provided are or
will be Year 2000 compliant and has planned a program of testing compliance.
Texas Central's service bureau, which performs substantially all of Texas
Central's data processing functions, has warranted in writing that its software
is Year 2000 compliant, and pursuant to applicable regulatory guidelines, Texas
Central is currently reviewing the results of user group tests performed by the
service provider to verify this assertion.
Texas Central has completed the following phases of its Year 2000 plan:
(i) recognizing Year 2000 issues, (ii) assessing the impact of Year 2000 issues
on Texas Central's critical systems and (iii) upgrading systems as necessary to
resolve those Year 2000 issues which have been identified. Texas Central is in
the final stages of testing and implementing those systems that have been
upgraded.
COSTS OF COMPLIANCE. Management does not expect the costs of bringing
Texas Central's systems into Year 2000 compliance will have a material adverse
effect on Texas Central's financial condition, results of operations or
liquidity. Texas Central has budgeted $75,000 to address Year 2000 issues and
$7,000 has been expended as of March 31, 1999. As of March 31, 1999, Texas
Central has not incurred any significant costs in relation to Year 2000. The
largest potential risk to Texas Central concerning Year 2000 is the malfunction
of its data processing system. In the event its data processing system does not
function properly, Texas Central believes it has developed adequate back-up
procedures. Texas Central believes it is in compliance with regulatory
guidelines regarding Year 2000 compliance, including the timetable for achieving
compliance.
RISK RELATED TO THIRD PARTIES. The impact of Year 2000 noncompliance by
third parties with which Texas Central transacts business cannot be accurately
gauged. Texas Central identified its largest commercial loan ($100,000 or more)
customers and, based on information available to Texas Central, conducted a
preliminary evaluation to determine which of those customers are likely to be
affected by Year 2000 issues. Texas Central then surveyed those customers deemed
at risk to determine their readiness with respect to Year 2000 issues, plans to
address such issues and progress with respect to such plans. To the extent a
problem has been identified, Texas Central intends to monitor the customer's
progress in resolving such problem. In the event that Year 2000 noncompliance
adversely affects a borrower, Texas Central may be required to charge off the
loan to that borrower. Texas Central does not anticipate any significant losses
from its customers in regard to Year 2000 issues. Texas Central relies on the
Federal Reserve Bank of Dallas for electronic fund transfers and understands
that the systems of the Federal Reserve Bank of Dallas became Year 2000
compliant during the fourth quarter of 1998.
CONTINGENCY PLAN. Texas Central has finalized its contingency planning
with respect to the Year 2000 date change and believes that if its own systems
should fail, Texas Central has adequate off-site capacity that could sustain
them through an interim period without significant losses. In the event that the
Federal Reserve Bank of Dallas is unable to handle electronic funds transfers,
Texas Central does not expect the impact to be material to its financial
condition or results of operations as long as Texas Central is able to utilize
an alternative electronic funds transfer source. As part of its contingency
planning, Texas Central has reviewed its loan customer base and the potential
impact on capital of Year 2000 non-compliance. In addition, Texas Central plans
to maintain additional cash on hand to meet any unusual deposit withdrawal
activity.
-59-
<PAGE>
TEXAS CENTRAL
GENERAL
Texas Central was organized as a bank holding company for Texas Central
Bank in 1997. Texas Central Bank is an independent community bank that was
chartered in 1985. Texas Central offers a variety of services through Texas
Central Bank to satisfy the needs of the consumer and commercial customers in
its market area. The principal services offered by Texas Central include most
types of lending, including commercial, consumer and real estate loans. It also
offers safe deposit boxes, a night deposit facility, motor bank, wire transfer
and ATM cards. Since January 1, 1998, Texas Central has been an S corporation
for federal income tax purposes. As an S corporation, Texas Central is generally
treated as a pass-through entity for federal income tax purposes, such that it
does not typically pay federal income tax on its earnings. Financial statements
and information for periods after that date do not include accruals or
adjustments for the federal income tax Texas Central would have incurred had it
not been an S corporation. As of March 31, 1999, Texas Central had total assets
of $120.6 million, net loans of $65.4 million, total deposits of $100.2 million
and total shareholders' equity of $7.8 million.
FACILITIES
Texas Central conducts business at full-service banking locations in
Dallas and Plano. Texas Central's headquarters are located at 8144 Walnut Hill
Lane, Dallas, Texas in space leased by Texas Central.
COMPETITION
The banking business is highly competitive, and the profitability of Texas
Central depends principally on Texas Central's ability to compete in the market
areas in which its banking operations are located. Texas Central competes with
other commercial banks, savings banks, savings and loan associations, credit
unions, finance companies, mutual funds, insurance companies, brokerage and
investment banking firms, asset-based non-bank lenders and certain other
non-financial entities, including retail stores which may maintain their own
credit programs and certain governmental organizations which may offer more
favorable financing than Texas Central. Texas Central has been able to compete
effectively with other financial institutions by emphasizing customer service,
technology and local office decision-making; by establishing long-term customer
relationships and building customer loyalty; and by providing products and
services designed to address the specific needs of its customers.
EMPLOYEES
As of March 31, 1999, Texas Central and Texas Central Bank had 38
full-time employees, seven of whom were executive officers of Texas Central
Bank. Texas Central Bank provides medical and hospitalization insurance to its
full-time employees. Texas Central Bank considers its relations with employees
to be excellent.
LEGAL PROCEEDINGS
In the normal course of its businesses, Texas Central from time to time is
involved in legal proceedings. Other than such proceedings incidental to its
business, Texas Central's management is not aware of any pending or threatened
legal proceedings which, upon resolution, would have a material adverse effect
upon Texas Central's financial condition, results of operations or cash flows.
The continued absence of such proceedings is a condition to Bank United Corp.'s
obligation to consummate the merger.
-60-
<PAGE>
BENEFICIAL OWNERSHIP OF TEXAS CENTRAL STOCK
The following table sets forth, as of the record date, the names of (i)
each beneficial owner of more than 5% of Texas Central stock known to management
of Texas Central, (ii) each director of Texas Central and (iii) each executive
officer of Texas Central. The table indicates the amount and nature of
beneficial ownership of Texas Central stock and the number of shares of Texas
Central stock owned beneficially by all directors and executive officers as a
group. Also included is the number of shares and percentage of Bank United Corp.
Class A common stock to be owned by such persons and by directors and executive
officers as a group upon the exchange of Texas Central stock for Bank United
Corp. Class A common stock.
<TABLE>
<CAPTION>
PRO FORMA
AMOUNT
AMOUNT (PERCENT)
(PERCENT) AND NATURE
AND NATURE OF BENEFICIAL
OF BENEFICIAL OWNERSHIP
OWNERSHIP OF OF BANK UNITED
NAME AND ADDRESS OF TEXAS CENTRAL CORP. CLASS A
BENEFICIAL OWNER POSITION WITH TEXAS CENTRAL STOCK (1) COMMON STOCK (2)
---------------- --------------------------- --------- ----------------
<S> <C> <C> <C>
Suzanne Ruff (3)(4) Principal Shareholder 128,629 260,680
(36.72%) *
Estate of Arthur L. Ruff (4) Principal Shareholder 89,441 181,261
(25.53%) *
James C. Veirs (4) Principal Shareholder 40,120 81,307
(11.45%) *
James P. Leake (4) Principal Shareholder 19,000 38,505
(5.42%) *
Michael A. Ruff (4) Chairman of the Board and President 3,760 7,620
* *
All directors and officers as a group 7,510
(2 persons) (2.1%) 15,220
</TABLE>
- -----------------
* Represents less that 1.00% of outstanding stock.
(1) Unless otherwise indicated, each individual is the record owner of, and
has sole voting and investment power with respect to, all shares of Texas
Central stock of which he or she is the beneficial owner. Unless otherwise
indicated, all percentages are based upon 350,340 shares of Texas Central
stock issued and outstanding.
(2) Assumes the issuance of 2.0266 shares of Bank United Corp. Class A common
stock in exchange for each share of Texas Central stock in connection with
the merger.
(3) Ms. Suzanne Ruff is the widow of Mr. Arthur L. Ruff, the former Chairman
of the Board of Texas Central, and is the mother of Michael A. Ruff, the
current Chairman of the Board of Texas Central.
(4) Party to a Voting Agreement with Bank United Corp. in which the
stockholder has agreed to vote in favor of the merger.
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MARKET PRICES OF AND DISTRIBUTIONS ON TEXAS CENTRAL STOCK
There has been no active public trading market for shares of Texas Central
stock, although it is traded infrequently in private transactions about which
Texas Central's management has little reliable information regarding price.
The following table sets forth the dividends declared per share of Texas
Central stock for each period below.
TEXAS CENTRAL STOCK
1998 -------------------
Fourth Quarter.......................................... $ .5075
Third Quarter........................................... .4285
Second Quarter.......................................... .2760
First Quarter........................................... .3521
No dividends were declared on Texas Central stock during the first quarter of
1999 or during 1997.
Holders of Texas Central stock are entitled to receive distributions when,
as and if declared by Texas Central's Board of Directors out of funds legally
available therefor. While Texas Central has declared distributions on the Texas
Central stock since January of 1998, there is no assurance that Texas Central
will continue to pay distributions in the future. The merger agreement permits
Texas Central, between September 30, 1998 and the closing, to declare and pay
cash dividends in an amount equal to 39.6% of its taxable income as estimated by
Texas Central and approved by Bank United Corp. in good faith.
The principal source of cash revenues to Texas Central is dividends paid
by Texas Central Bank with respect to Texas Central Bank's capital stock. There
are certain restrictions on the payment of such dividends imposed by federal and
state banking laws, regulations and authorities. As of March 31, 1999, an
aggregate of approximately $2.0 million was available for payment of dividends
by Texas Central Bank to Texas Central under applicable restrictions, without
regulatory approval. Regulatory authorities could impose administratively
stricter limitations on the ability of Texas Central Bank to pay dividends to
Texas Central if such limits were deemed appropriate to preserve certain capital
adequacy requirements.
If the merger is not consummated, the future declaration and payment of
distributions on Texas Central stock will depend upon the earnings and financial
condition of Texas Central, liquidity and capital requirements, the general
economic and regulatory climate, Texas Central's ability to service any equity
or debt obligations senior to the Texas Central stock and other factors deemed
relevant by Texas Central's Board of Directors.
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SUPERVISION AND REGULATION OF TEXAS CENTRAL
The supervision and regulation of bank holding companies and their
subsidiaries is intended primarily for the protection of depositors, the deposit
insurance funds of the Federal Deposit Insurance Corporation ("FDIC") and the
banking system as a whole, and not for the protection of the bank holding
company shareholders or creditors. The banking agencies have broad enforcement
power over bank holding companies and banks including the power to impose
substantial fines and other penalties for violations of laws and regulations.
The following description summarizes some of the laws to which Texas
Central and Texas Central Bank are subject. References herein to applicable
statutes and regulations are brief summaries thereof, do not purport to be
complete, and are qualified in their entirety by reference to such statutes and
regulations.
TEXAS CENTRAL
Texas Central is a bank holding company registered under the Bank Holding
Company Act of 1956, as amended ("BHC Act"), and it is subject to supervision,
regulation and examination by the Federal Reserve. The BHC Act and other federal
laws subject bank holding companies to particular restrictions on the types of
activities in which they may engage, and to a range of supervisory requirements
and activities, including regulatory enforcement actions for violations of laws
and regulations.
REGULATORY RESTRICTIONS ON DIVIDENDS; SOURCE OF STRENGTH. It is the policy
of the Federal Reserve that bank holding companies should pay cash dividends on
common stock only out of income available over the past year and only if
prospective earnings retention is consistent with the organization's expected
future needs and financial condition. The policy provides that bank holding
companies should not maintain a level of cash dividends that undermines the bank
holding company's ability to serve as a source of strength to its banking
subsidiaries.
Under Federal Reserve policy, a bank holding company is expected to act as
a source of financial strength to each of its banking subsidiaries and commit
resources to their support. Such support may be required at times when, absent
this Federal Reserve policy, a holding company may not be inclined to provide
it. As discussed below, a bank holding company in certain circumstances could be
required to guarantee the capital plan of an undercapitalized banking
subsidiary.
In the event of a bank holding company's bankruptcy under Chapter 11 of
the U.S. Bankruptcy Code, the trustee will be deemed to have assumed and is
required to cure immediately any deficit under any commitment by the debtor
holding company to any of the federal banking agencies to maintain the capital
of an insured depository institution, and any claim for breach of such
obligation will generally have priority over most other unsecured claims.
ACTIVITIES "CLOSELY RELATED" TO BANKING. The BHC Act prohibits a bank
holding company, with certain limited exceptions, from acquiring direct or
indirect ownership or control of any voting shares of any company which is not a
bank or from engaging in any activities other than those of banking, managing or
controlling banks and certain other subsidiaries, or furnishing services to or
performing services for its subsidiaries. One principal exception to these
prohibitions allows the acquisition of interests in companies whose activities
are found by the Federal Reserve, by order or regulation, to be so closely
related to banking or managing or controlling banks, as to be a proper incident
thereto. Some of the activities that have been determined by regulation to be
closely related to banking are making or servicing loans, performing certain
data processing services, acting as an investment or financial advisor to
certain investment trusts and investment companies, and providing securities
brokerage services. Other activities approved by the Federal Reserve include
consumer financial counseling, tax planning and tax preparation, futures and
options advisory services, check guaranty services, collection agency and credit
bureau services, and personal property appraisals. In approving acquisitions by
bank holding companies of companies engaged in banking-related activities, the
Federal Reserve considers a number of factors, and weighs the expected benefits
to the public (such as greater convenience and increased competition or gains in
efficiency) against the risks of possible adverse effects (such as undue
concentration of resources, decreased or unfair competition, conflicts of
interest, or unsound banking practices). The Federal Reserve is also empowered
to differentiate between activities commenced de novo and activities commenced
through acquisition of a going concern.
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SECURITIES ACTIVITIES. The Federal Reserve has approved applications by
bank holding companies to engage, through nonbank subsidiaries, in certain
securities-related activities (underwriting of municipal revenue bonds,
commercial paper, consumer receivable-related securities and one-to-four family
mortgage-backed securities), provided that the affiliates would not be
"principally engaged" in such activities for purposes of Section 20 of the
Glass-Steagall Act. In limited situations, holding companies may be able to use
such subsidiaries to underwrite and deal in corporate debt and equity
securities.
SAFE AND SOUND BANKING PRACTICES. Bank holding companies are not permitted
to engage in unsafe and unsound banking practices. The Federal Reserve's
Regulation Y, for example, generally requires a holding company to give the
Federal Reserve prior notice of any redemption or repurchase of its own equity
securities, if the consideration to be paid, together with the consideration
paid for any repurchases or redemptions in the preceding year, is equal to 10%
or more of Texas Central's consolidated net worth. The Federal Reserve may
oppose the transaction if it believes that the transaction would constitute an
unsafe or unsound practice or would violate any law or regulation. Depending
upon the circumstances, the Federal Reserve could take the position that paying
a dividend would constitute an unsafe or unsound banking practice.
The Federal Reserve has broad authority to prohibit activities of bank
holding companies and their nonbanking subsidiaries which represent unsafe and
unsound banking practices or which constitute violations of laws or regulations,
and can assess civil money penalties for certain activities conducted on a
knowing and reckless basis, if those activities caused a substantial loss to a
depository institution. The penalties can be as high as $1,000,000 for each day
the activity continues.
ANTI-TYING RESTRICTIONS. Bank holding companies and their affiliates are
prohibited from tying the provision of certain services, such as extensions of
credit, to other services offered by a holding company or its affiliates.
CAPITAL ADEQUACY REQUIREMENTS. The Federal Reserve has adopted a system
using risk-based capital guidelines to evaluate the capital adequacy of bank
holding companies. For bank holding companies with consolidated assets of less
than $150 million, like Texas Central, these capital adequacy requirements are
applied on a bank-only basis.
IMPOSITION OF LIABILITY FOR UNDERCAPITALIZED SUBSIDIARIES. Bank regulators
are required to take "prompt corrective action" to resolve problems associated
with insured depository institutions whose capital declines below certain
levels. In the event an institution becomes "undercapitalized," it must submit a
capital restoration plan. The capital restoration plan will not be accepted by
the regulators unless each company having control of the undercapitalized
institution guarantees the subsidiary's compliance with the capital restoration
plan up to a certain specified amount. Any such guarantee from a depository
institution's holding company is entitled to a priority of payment in
bankruptcy.
The aggregate liability of the holding company of an undercapitalized bank
is limited to the lesser of 5% of the institution's assets at the time it became
undercapitalized or the amount necessary to cause the institution to be
"adequately capitalized." The bank regulators have greater power in situations
where an institution becomes "significantly" or "critically" undercapitalized or
fails to submit a capital restoration plan. For example, a bank holding company
controlling such an institution can be required to obtain prior Federal Reserve
approval of proposed dividends, or might be required to consent to a merger or
to divest the troubled institution or other affiliates.
ACQUISITIONS BY BANK HOLDING COMPANIES. The BHC Act requires every bank
holding company to obtain the prior approval of the Federal Reserve before it
may acquire all or substantially all of the assets of any bank, or ownership or
control of any voting shares of any bank, if after such acquisition it would own
or control, directly or indirectly, more than 5% of the voting shares of such
bank. In approving bank acquisitions by bank holding companies, the Federal
Reserve is required to consider the financial and managerial resources and
future prospects of the bank holding company and the banks concerned, the
convenience and needs of the communities to be served, and various competitive
factors.
CONTROL ACQUISITIONS. The Change in Bank Control Act prohibits a person or
group of persons from acquiring "control" of a bank holding company unless the
Federal Reserve has been notified and has not objected to the transaction. Under
a rebuttal presumption established by the Federal Reserve, the acquisition of
10% or more of a class of voting stock of a bank holding company where such
person is the largest shareholder, would, under the circumstances set forth in
the presumption, constitute an acquisition of control.
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In addition, any company is required to obtain the approval of the Federal
Reserve under the BHC Act before acquiring 25% (5% in the case of an acquirer
that is a bank holding company) or more of the voting power of a bank holding
company, or otherwise obtaining control or a "controlling influence" over a bank
holding company.
TEXAS CENTRAL BANK
As a national banking association, Texas Central Bank is principally
supervised, examined and regulated by the OCC. The OCC regularly examines such
areas as capital adequacy, reserves, loan portfolio, investments and management
practices. Texas Central Bank must also furnish quarterly and annual reports to
the OCC, and the OCC may exercise cease and desist and other enforcement powers
over Texas Central Bank if its actions represent unsafe or unsound practices or
violations of law. Since the deposits of Texas Central Bank are insured by the
Bank Insurance Fund ("BIF") of the FDIC, Texas Central Bank is also subject to
regulation and supervision by the FDIC.
RESTRICTIONS ON TRANSACTIONS WITH AFFILIATES AND INSIDERS. Transactions
between Texas Central Bank and its nonbanking subsidiaries, are subject to
Section 23A of the Federal Reserve Act. In general, Section 23A imposes limits
on the amount of such transactions, and also requires certain levels of
collateral for loans to affiliated parties. It also limits the amount of
advances to third parties which are collateralized by the securities or
obligations of Texas Central Bank or its subsidiaries.
Affiliate transactions are also subject to Section 23B of the Federal
Reserve Act which generally requires that certain transactions between Texas
Central Bank and its affiliates be on terms substantially the same, or at least
as favorable to Texas Central Bank, as those prevailing at the time for
comparable transactions with or involving other nonaffiliated persons.
The restrictions on loans to directors, executive officers, principal
shareholders and their related interests (collectively referred to herein as
"insiders") contained in the Federal Reserve Act and Regulation O apply to all
insured institutions and their subsidiaries and holding companies. These
restrictions include limits on loans to one borrower and conditions that must be
met before such a loan can be made. There is also an aggregate limitation on all
loans to insiders and their related interests. These loans cannot exceed the
institution's total unimpaired capital and surplus, and the OCC may determine
that a lesser amount is appropriate. Insiders are subject to enforcement actions
for knowingly accepting loans in violation of applicable restrictions.
RESTRICTIONS ON DISTRIBUTION OF SUBSIDIARY BANK DIVIDENDS AND ASSETS.
Dividends paid by Texas Central Bank to Texas Central are Texas Central's
principal source of operating funds. Capital adequacy requirements serve to
limit the amount of dividends that may be paid by Texas Central Bank. Until
capital surplus equals or exceeds capital stock, a national bank must transfer
to surplus 10% of its net income for the preceding four quarters in the case of
an annual dividend or 10% of its net income for the preceding two quarters in
the case of a quarterly or semiannual dividend. At March 31, 1999, the Texas
Central Bank's capital surplus exceeded its capital stock. Without prior
approval, a national bank may not declare a dividend if the total amount of all
dividends, declared by the bank in any calendar year exceeds the total of the
bank's retained net income for the current year and retained net income for the
preceding two years. Under federal law, Texas Central Bank cannot pay a dividend
if, after paying the dividend, Texas Central Bank will be "undercapitalized."
The OCC may declare a dividend payment to be unsafe and unsound even though
Texas Central Bank would continue to meet its capital requirements after the
dividend.
Because Texas Central is a legal entity separate and distinct from its
subsidiaries, its right to participate in the distribution of assets of any
subsidiary upon the subsidiary's liquidation or reorganization will be subject
to the prior claims of the subsidiary's creditors. In the event of a liquidation
or other resolution of an insured depository institution, the claims of
depositors and other general or subordinated creditors are entitled to a
priority of payment over the claims of holders of any obligations of the
institution to its shareholders, arising as a result of their status as
shareholders, including any depository institution holding company (such as
Texas Central) or any shareholder or creditor thereof.
EXAMINATIONS. The OCC periodically examines and evaluates national banks.
Based upon such an evaluation, the OCC may revalue the assets of the institution
and require that it establish specific reserves to compensate for the difference
between the OCC-determined value and the book value of such assets.
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CAPITAL ADEQUACY REQUIREMENTS. The OCC has adopted regulations
establishing minimum requirements for the capital adequacy of national banks.
The OCC may establish higher minimum requirements if, for example, a bank has
previously received special attention or has a high susceptibility to interest
rate risk.
The OCC's risk-based capital guidelines generally require national banks
to have a minimum ratio of Tier 1 capital to total risk-weighted assets of 4%
and a ratio of total capital to total risk-weighted assets of 8%. As of March
31, 1999, Texas Central Bank's ratio of Tier 1 capital to total risk-weighted
assets was 10.27% and its ratio of total capital to total risk-weighted assets
was 11.02%.
The OCC's leverage guidelines require national banks to maintain Tier 1
capital of no less than 5% of average total assets, except in the case of
certain highly rated banks for which the requirement is 3% of average total
assets. As of March 31, 1999, Texas Central Bank's ratio of Tier 1 capital to
average total assets (leverage ratio) was 6.54%.
CORRECTIVE MEASURES FOR CAPITAL DEFICIENCIES. The federal banking
regulators are required to take "prompt corrective action" with respect to
capital-deficient institutions. Agency regulations define, for each capital
category, the levels at which institutions are "well capitalized," "adequately
capitalized," "under capitalized," "significantly under capitalized" and
"critically under capitalized." A "well capitalized" bank has a total risk based
capital ratio of 10% or higher; a Tier 1 risk based capital ratio of 6% or
higher; a leverage ratio of 5% or higher; and is not subject to any written
agreement, order or directive requiring it to maintain a specific capital level
for any capital measure. An "adequately capitalized" bank has a total risk based
capital ratio of 8% or higher; a Tier 1 risk based capital ratio of 4% or
higher; a leverage ratio of 4% or higher (3% or higher if the bank was rated a
CAMEL 1 in its most recent examination report and is not experiencing
significant growth); and does not meet the criteria for a well capitalized bank.
A bank is "under capitalized" if it fails to meet any one of the ratios required
to be adequately capitalized.
In addition to requiring undercapitalized institutions to submit a capital
restoration plan, agency regulations contain broad restrictions on certain
activities of undercapitalized institutions including asset growth,
acquisitions, branch establishment, and expansion into new lines of business.
With certain exceptions, an insured depository institution is prohibited from
making capital distributions, including dividends, and is prohibited from paying
management fees to control persons if the institution would be undercapitalized
after any such distribution or payment.
As an institution's capital decreases, the OCC's enforcement powers become
more severe. A significantly undercapitalized institution is subject to mandated
capital raising activities, restrictions on interest rates paid and transactions
with affiliates, removal of management, and other restrictions. The OCC has only
very limited discretion in dealing with a critically undercapitalized
institution and is virtually required to appoint a receiver or conservator.
Banks with risk-based capital and leverage ratios below the required
minimums may also be subject to certain administrative actions, including the
termination of deposit insurance upon notice and hearing, or a temporary
suspension of insurance without a hearing in the event the institution has no
tangible capital.
DEPOSIT INSURANCE ASSESSMENTS. Texas Central must pay assessments to the
FDIC for federal deposit insurance protection. The FDIC has adopted a risk based
assessment system as required by FDICIA. Under this system, FDIC-insured
depository institutions pay insurance premiums at rates based on their risk
classification. Institutions assigned to higher-risk classifications (that is,
institutions that pose a greater risk of loss to their respective deposit
insurance funds) pay assessments at higher rates than institutions that pose a
lower risk. An institution's risk classification is assigned based on its
capital levels and the level of supervisory concern the institution poses to the
regulators. In addition, the FDIC can impose special assessments in certain
instances. The current range of BIF assessments is between 0% and .27% of
deposits.
The FDIC established a process for raising or lowering all rates for
insured institutions semi-annually if conditions warrant a change. Under this
new system, the FDIC has the flexibility to adjust the assessment rate schedule
twice a year without seeking prior public comment, but only within a range of
five cents per $100 above or below the premium schedule adopted. Changes in the
rate schedule outside the five cent range above or below the current schedule
can be made by the FDIC only after a full rulemaking with opportunity for public
comment.
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On September 30, 1996, President Clinton signed into law an act that
contained a comprehensive approach to recapitalizing the Savings Association
Insurance Fund ("SAIF") and to assure the payment of the Financing Corporation's
("FICO") bond obligations. Under this new act, banks insured under the BIF are
required to pay a portion of the interest due on bonds that were issued by FICO
to help shore up the ailing Federal Savings and Loan Insurance Corporation in
1987. The BIF rate must equal one-fifth of the SAIF rate through year-end 1999,
or until the insurance funds are merged, whichever occurs first. Thereafter BIF
and SAIF payers will be assessed pro rata for the FICO bond obligations. With
regard to the assessment for the FICO obligation, the current BIF rate is .0126%
of deposits.
ENFORCEMENT POWERS. The FDIC, OCC and the other federal banking agencies
have broad enforcement powers, including the power to terminate deposit
insurance, impose substantial fines and other civil and criminal penalties and
appoint a conservator or receiver. Failure to comply with applicable laws,
regulations and supervisory agreements could subject Texas Central Bank, as well
as officers, directors and other institution-affiliated parties of these
organizations, to administrative sanctions and potentially substantial civil
money penalties. The appropriate federal banking agency may appoint the FDIC as
conservator or receiver for a banking institution (or the FDIC may appoint
itself, under certain circumstances) if any one or more of a number of
circumstances exist, including, without limitation, the fact that the banking
institution is undercapitalized and has no reasonable prospect of becoming
adequately capitalized; fails to become adequately capitalized when required to
do so; fails to submit a timely and acceptable capital restoration plan; or
materially fails to implement an accepted capital restoration plan.
CROSS-GUARANTEE PROVISIONS. The Financial Institutions Reform, Recovery
and Enforcement Act of 1989 ("FIRREA") contains a "cross-guarantee" provision
which generally makes commonly controlled insured depository institutions liable
to the FDIC for any losses incurred in connection with the failure of a commonly
controlled depository institution.
COMMUNITY REINVESTMENT ACT. The Community Reinvestment Act of 1977 ("CRA")
and the regulations issued thereunder are intended to encourage banks to help
meet the credit needs of their service area, including low and moderate income
neighborhoods, consistent with the safe and sound operations of the banks. These
regulations also provide for regulatory assessment of a bank's record in meeting
the needs of its service area when considering applications to establish
branches, merger applications and applications to acquire the assets and assume
the liabilities of another bank. FIRREA requires federal banking agencies to
make public a rating of a bank's performance under the CRA. In the case of a
bank holding company, the CRA performance record of the banks involved in the
transaction are reviewed in connection with the filing of an application to
acquire ownership or control of shares or assets of a bank or to merge with any
other bank holding company. An unsatisfactory record can substantially delay or
block the transaction.
CONSUMER LAWS AND REGULATIONS. In addition to the laws and regulations
discussed herein, Texas Central is also subject to certain consumer laws and
regulations that are designed to protect consumers in transactions with banks.
While the list set forth herein is not exhaustive, these laws and regulations
include the Truth in Lending Act, the Truth in Savings Act, the Electronic Funds
Transfer Act, the Expedited Funds Availability Act, the Equal Credit Opportunity
Act, and the Fair Housing Act, among others. These laws and regulations mandate
certain disclosure requirements and regulate the manner in which financial
institutions must deal with customers when taking deposits or making loans to
such customers. Texas Central must comply with the applicable provisions of
these consumer protection laws and regulations as part of their ongoing customer
relations.
INSTABILITY OF REGULATORY STRUCTURE
Various legislation, including proposals to overhaul the bank regulatory
system, expand the powers of banking institutions and bank holding companies and
limit the investments that a depository institution may make with insured funds,
is from time to time introduced in Congress. Such legislation may change banking
statutes and the operating environment of Texas Central and Texas Central Bank
in substantial and unpredictable ways. Neither Texas Central nor Texas Central
Bank can determine the ultimate effect that potential legislation, if enacted,
or implementing regulations with respect thereto, would have upon the financial
condition or results of operations of Texas Central or Texas Central Bank.
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EXPANDING ENFORCEMENT AUTHORITY
One of the major additional burdens imposed on the banking industry by
FDICIA is the increased ability of banking regulators to monitor the activities
of banks and their holding companies. In addition, the Federal Reserve, OCC, and
FDIC are possessed of extensive authority to police unsafe or unsound practices
and violations of applicable laws and regulations by depository institutions and
their holding companies. For example, the FDIC may terminate the deposit
insurance of any institution which it determines has engaged in an unsafe or
unsound practice. The agencies can also assess civil money penalties, issue
cease and desist or removal orders, seek injunctions, and publicly disclose such
actions. FDICIA, FIRREA and other laws have expanded the agencies' authority in
recent years, and the agencies have not yet fully tested the limits of their
powers.
EFFECT ON ECONOMIC ENVIRONMENT
The policies of regulatory authorities, including the monetary policy of
the Federal Reserve, have a significant effect on the operating results of bank
holding companies and their subsidiaries. Among the means available to the
Federal Reserve to affect the money supply are open market operations in U.S.
Government securities, changes in the discount rate on member bank borrowings,
and changes in reserve requirements against member bank deposits. These means
are used in varying combinations to influence overall growth and distribution of
bank loans, investments and deposits, and their use may affect interest rates
charged on loans or paid for deposits.
Federal Reserve monetary policies have materially affected the operating
results of commercial banks in the past and are expected to continue to do so in
the future. The nature of future monetary policies and the effect of such
policies on the business and earnings of Texas Central and Texas Central Bank
cannot be predicted.
BANK UNITED CORP.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Certain documents filed by and relating to Bank United Corp. are
incorporated herein by reference. See "Where You Can Find More Information" on
page one for a list of these documents.
INTERESTS OF CERTAIN PERSONS
No director or executive officer of Bank United Corp. has any material
direct or indirect financial interest in Texas Central or the merger, except as
a director, executive officer or shareholder of Bank United Corp. or its
subsidiaries.
EXPERTS
The financial statements of Bank United Corp. incorporated in this Proxy
Statement/Prospectus by reference from Bank United Corp.'s Annual Report on Form
10-K for the year ended September 30, 1998 have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report, which is
incorporated by reference in this Proxy Statement/Prospectus, and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
With respect to the unaudited interim financial information of Bank United
Corp. for the periods ended March 31, 1999 and 1998 and December 31, 1998 and
1997 which is incorporated herein by reference, Deloitte & Touche LLP have
applied limited procedures in accordance with professional standards for a
review of such information. However, as stated in their reports included in Bank
United Corp.'s Quarterly Reports on Form 10-Q for the quarters ended March 31,
1999 and December 31, 1998 and incorporated by reference herein, they did not
audit and they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their reports on such information should
be restricted in light of the limited nature of the review procedures applied.
Deloitte & Touche LLP are not subject to the liability provisions
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of Section 11 of the Securities Act of 1933 for their reports on the unaudited
interim financial information because those reports are not "reports" or a
"part" of the registration statement prepared or certified by an accountant
within the meaning of Sections 7 and 11 of the Securities Act.
The financial statements for Texas Central for the two years ended
December 31, 1998, included in this Proxy Statement/Prospectus have been audited
by Payne, Faulkner, Smith & Jones, P.C., independent auditors, as stated in
their report, and have been so included in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.
The financial statements for Texas Central Bank for the year ended
December 31, 1996, included in this Proxy Statement/Prospectus have been audited
by Fisk & Robinson, P.C., independent auditors, as stated in their report, and
have been so included in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
LEGAL OPINIONS
The validity of the shares of Bank United Corp. Class A common stock to be
issued by Bank United Corp. has been passed upon by Jonathon K. Heffron, General
Counsel of Bank United Corp. Certain federal income tax consequences of the
merger will be passed upon by Bracewell & Patterson, L.L.P., counsel to Bank
United Corp., and Ford, Fritz, Byrne & Head, L.L.P., counsel to Texas Central.
OTHER MATTERS
The Texas Central Board of Directors does not know of any matters to be
presented at the meeting other than those set forth above. If any other matters
are properly brought before the meeting or any adjournment thereof, the enclosed
proxy will be voted in accordance with the recommendations of the Texas Central
Board of Directors unless "Authority Withheld" is indicated in the appropriate
box on the proxy.
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF
TEXAS CENTRAL BANCSHARES, INC.
Report of Independent Auditors' for the Years Ended
December 31, 1998 and 1997................................................F-2
Report of Independent Auditors' for the Year Ended
December 31, 1996.........................................................F-3
Consolidated Balance Sheets as of March 31, 1999 (Unaudited),
December 31, 1998, 1997 and 1996..........................................F-4
Consolidated Statements of Income for the Three Months Ended
March 31, 1999 and 1998 (Unaudited) and the Years Ended
December 31, 1998, 1997 and 1996..........................................F-5
Consolidated Statements of Changes in Stockholders' Equity for the Three
Months Ended March 31, 1999 (Unaudited) and for the Years
Ended December 31, 1998, 1997 and 1996....................................F-6
Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1999 and 1998 (Unaudited) and for the Years Ended
December 31, 1998, 1997 and 1996..........................................F-7
Notes to Consolidated Financial Statements...................................F-8
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Texas Central Bancshares, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheet of Texas
Central Bancshares, Inc. and Subsidiaries as of December 31, 1998 and 1997, and
the related consolidated statements of income, changes in stockholders' equity
and cash flows for the years then ended. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Texas
Central Bancshares, Inc. and Subsidiaries as of December 31, 1998 and 1997, the
results of their operations and their cash flows for the years then ended, in
conformity with generally accepted accounting principles.
Payne Falkner Smith & Jones, P.C.
Dallas, Texas
February 9, 1999
F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Texas Central Bank, N.A.
We have audited the accompanying consolidated balance sheet of Texas
Central Bank, N.A. and Subsidiary as of December 31, 1996 and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for the year then ended. These consolidated financial statements are the
responsibility of the Bank's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Texas Central Bank, N.A. and Subsidiary as of December 31, 1996, and the results
of their operations and their cash flows for the year then ended in conformity
with generally accepted accounting principles.
Fisk & Robinson P.C.
Dallas, Texas
April 18, 1997
F-3
<PAGE>
TEXAS CENTRAL BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, ----------------------------------
1999 1998 1997 1996
------------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
(UNAUDITED)
ASSETS
Cash and due from banks.............. $ 8,616 $ 7,914 $ 7,279 $ 5,364
Interest bearing deposits in other
banks.............................. -- -- 100 100
Federal funds sold................... 18,124 20,799 17,040 14,945
Securities available for sale........ 514 470 1,875 2,550
Securities held to maturity.......... 24,737 19,480 6,276 7,261
Loans................................ 65,381 64,153 51,171 44,379
Bank premises and equipment.......... 2,106 2,118 2,052 1,721
Other assets......................... 1,092 1,129 1,503 1,155
------------ ---------- ---------- ----------
$120,570 $ 116,063 $ 87,296 $ 77,475
============ ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest bearing................ $ 33,454 $ 34,210 $ 31,418 $ 23,123
Interest bearing................... 66,771 61,780 45,238 46,265
------------ ---------- ---------- ----------
Total deposits............. 100,225 95,990 76,656 69,388
Securities sold under agreements to
repurchase........................... 12,076 12,301 3,701 2,000
Other borrowings..................... 195 204 237 268
Other liabilities.................... 228 586 719 475
Commitments and contingencies........ -- -- -- --
Stockholders' equity:
Common stock....................... 350 303 287 1,513
Additional paid-in capital......... 2,886 2,426 2,283 1,506
Retained earnings.................. 4,610 4,253 3,413 2,468
Accumulated other comprehensive
income.......................... -- -- -- (143)
------------ ---------- ---------- ----------
Total stockholders'
equity.................. 7,846 6,982 5,983 5,344
------------ ---------- ---------- ----------
$120,570 $ 116,063 $ 87,296 $ 77,475
============ ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
TEXAS CENTRAL BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS ENDED FOR THE YEARS ENDED
MARCH 31, DECEMBER 31,
-------------------- -------------------------------
1999 1998 1998 1997 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Interest income:
Interest and fees on loans......... $ 1,403 $ 1,244 $ 5,604 $ 4,653 $ 3,679
Interest on deposits in other
banks............................ -- 2 3 5 3
Interest on securities............. 303 176 771 633 558
Interest on federal funds sold..... 256 139 676 484 348
--------- --------- --------- --------- ---------
Total interest income......... 1,962 1,561 7,054 5,775 4,588
--------- --------- --------- --------- ---------
Interest expense:
Interest on deposit accounts....... 598 474 2,165 1,685 1,373
Securities sold under agreements to
repurchase....................... 136 42 204 141 42
Other.............................. 3 4 13 24 17
--------- --------- --------- --------- ---------
Total interest expense........ 737 520 2,382 1,850 1,432
--------- --------- --------- --------- ---------
Net interest income..................... 1,225 1,041 4,672 3,925 3,156
Provision for possible loan losses...... 84 -- -- -- 20
--------- --------- --------- --------- ---------
Net interest income after provision..... 1,141 1,041 4,672 3,925 3,136
--------- --------- --------- --------- ---------
Noninterest income:
Service charges on deposit
accounts......................... 140 123 524 497 549
Other.............................. 53 38 192 75 59
--------- --------- --------- --------- ---------
Total noninterest income...... 193 161 716 572 608
--------- --------- --------- --------- ---------
Noninterest expense:
Salaries and employee benefits..... 527 476 2,165 1,820 1,565
Occupancy of bank premises......... 126 118 467 310 190
Furniture and equipment expense.... 31 49 216 155 125
Other.............................. 282 232 1,088 967 851
--------- --------- --------- --------- ---------
Total noninterest expense..... 966 875 3,936 3,252 2,731
--------- --------- --------- --------- ---------
Income before income tax expense........ 368 327 1,452 1,245 1,013
Income tax expense...................... 11 126 140 300 278
--------- --------- --------- --------- ---------
Net income.............................. $ 357 $ 201 $ 1,312 $ 945 $ 735
========= ========= ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
TEXAS CENTRAL BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT PER-SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMMON STOCK
$5 PAR VALUE,
375,000 SHARES
AUTHORIZED AT
DECEMBER 31, 1996;
$1 PAR VALUE,
5,000,000 SHARES ADDITIONAL ACCUMULATED
AUTHORIZED PAID-IN OTHER
SUBSEQUENT TO 1996 RETAINED RETAINED COMPREHENSIVE COMPREHENSIVE
SHARES AMOUNT CAPITAL EARNINGS INCOME INCOME TOTAL
------- ------- ---------- --------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances January 1, 1996............. 301,500 $ 1,508 $1,503 $ 1,733 $(111) $ 4,633
Comprehensive income:
Net income....................... -- -- -- 735 -- $ 735 735
Other comprehensive income, net
of tax:
Unrealized holding losses
arising during the period... -- -- -- -- (32) (32) (32)
-------------
Total comprehensive
income.................... -- -- -- -- -- $ 703 --
=============
Stock options exercised.............. 1,000 5 3 -- -- 8
------- ------- ---------- --------- ------------- ---------
Balances December 31, 1996........... 302,500 1,513 1,506 2,468 (143) 5,344
Comprehensive income:
Net income....................... -- -- -- 945 -- $ 945 945
Other comprehensive income, net
of tax:
Unrealized holding gains arising
during the period.............. -- -- -- -- 143 143 143
-------------
Total comprehensive
income.................... -- -- -- -- -- $ 1,088 --
=============
Stock options exercised.............. 2,940 14 14 -- -- 28
Purchase and retirement of common
stock in connection with the
formation of holding companies..... (19,700) (1,241) 749 -- -- (492)
Stock options exercised.............. 1,420 1 14 -- -- 15
------- ------- ---------- --------- ------------- ---------
Balances December 31, 1997........... 287,160 287 2,283 3,413 -- 5,983
Comprehensive income:
Net income....................... -- -- -- 1,312 -- $ 1,312 1,312
Other comprehensive income:
Unrealized holding gains
arising during the period... -- -- -- -- -- -- --
-------------
Total comprehensive
income.................... -- -- -- -- -- $ 1,312 --
=============
Stock options exercised.............. 15,720 16 143 -- -- 159
Distributions declared to
stockholders....................... -- -- -- (472) -- (472)
------- ------- ---------- --------- ------------- ---------
Balances December 31, 1998........... 302,880 303 2,426 4,253 -- 6,982
Comprehensive income:
Net income (unaudited)........... -- -- -- 357 -- $ 357 357
Other comprehensive income:
Unrealized holding gains
arising during the period
(unaudited)................. -- -- -- -- -- -- --
-------------
Total comprehensive income
(unaudited)............... -- -- -- -- -- $ 357 --
=============
Stock options exercised
(unaudited)........................ 47,380 47 460 -- -- 507
------- ------- ---------- --------- ------------- ---------
Balances March 31, 1999
(unaudited)........................ 350,260 $ 350 $2,886 $ 4,610 $ -- $ 7,846
======= ======= ========== ========= ============= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
TEXAS CENTRAL BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE YEARS ENDED
ENDED MARCH 31, DECEMBER 31,
-------------------- -------------------------------
1999 1998 1998 1997 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Cash flows from operating activities:
Net income.......................... $ 357 $ 201 $ 1,312 $ 945 $ 735
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation............... 21 42 194 104 76
Net amortization
(accretion) of investment
securities............... (4) -- 10 (7) 11
Provision for possible loan
losses................... 84 -- -- -- 20
Deferred tax expense....... -- 126 126 36 19
Loss (gain) on sale of
other real estate........ -- -- -- 8 (57)
Loss on sales of securities
available for sale....... -- -- -- 123 1
Other...................... (167) (284) (40) (176) 223
--------- --------- --------- --------- ---------
Net cash provided by
operating
activities.......... 291 85 1,602 1,033 1,028
--------- --------- --------- --------- ---------
Cash flows from investing activities:
Decrease (increase) in interest
bearing deposits in other banks... -- -- 100 -- (100)
Proceeds from sales of securities
available for sale................ -- -- 1,406 887 750
Proceeds from maturities and
paydowns of securities available
for sale.......................... -- -- -- -- 207
Purchases of securities available
for sale.......................... (44) -- (1) (192) (69)
Proceeds from maturities and
paydowns of securities held to
maturity.......................... 778 149 309 2,961 168
Purchases of securities held to
maturity.......................... (6,031) (5,506) (13,523) (1,969) (2,510)
Net originations of loans........... (1,312) (2,738) (12,982) (6,792) (11,656)
Additions to bank premises and
equipment......................... (9) (14) (259) (435) (932)
Proceeds from sale of other real
estate............................ -- -- -- 28 480
--------- --------- --------- --------- ---------
Net cash used by
investing
activities.......... (6,618) (8,109) (24,950) (5,512) (13,662)
--------- --------- --------- --------- ---------
Cash flows from financing activities:
Proceeds from exercise of stock
options........................... 507 89 159 43 8
Purchase and retirement of common
stock............................. -- -- -- (492) --
Net payments on other borrowings.... (9) (8) (33) (31) (30)
Net change in securities sold under
agreements to repurchase.......... (225) 200 8,600 1,701 2,000
Net increase in demand deposits, NOW
and savings accounts.............. 5,914 7,595 12,098 622 12,804
Net (decrease) increase in
certificates of deposit........... (1,679) 786 7,236 6,646 2,385
Distributions paid.................. (154) -- (318) -- --
--------- --------- --------- --------- ---------
Net cash provided by
financing
activities.......... 4,354 8,662 27,742 8,489 17,167
--------- --------- --------- --------- ---------
Net (decrease) increase in cash and cash
equivalents........................... (1,973) 638 4,394 4,010 4,533
Cash and cash equivalents at beginning
of period............................. 28,713 24,319 24,319 20,309 15,776
--------- --------- --------- --------- ---------
Cash and cash equivalents at end of
period................................ $ 26,740 $ 24,957 $ 28,713 $ 24,319 $ 20,309
========= ========= ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-7
<PAGE>
TEXAS CENTRAL BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997, AND 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies used by
Texas Central Bancshares, Inc. and Subsidiaries (together referred to as
Company) in the preparation of its consolidated financial statements. These
accounting policies conform to generally accepted accounting principles and
practices generally followed within the banking industry. A description of the
more significant of these policies follows.
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
Texas Central Bancshares, Inc. (TCBI) and its wholly-owned subsidiary, Texas
Central Bancshares of Delaware, Inc. (TCBD), and its wholly-owned subsidiary,
Texas Central Bank, N.A. (Bank) and its wholly-owned subsidiary CTL Leasing,
Inc. (CTL).
During 1997, TCBI (a Texas corporation) and TCBD (a Delaware corporation)
were formed. In December 1997, a transaction was consummated whereby the
stockholders of the Bank effectively exchanged all of their outstanding shares
(305,440) for 285,740 shares of TCBI stock and cash of $492,500. Following the
consummation of this transaction the Bank is a wholly-owned subsidiary of the
Delaware company which in turn, is a wholly-owned subsidiary of TCBI. Because
the stockholder group both before and after the exchange were substantially the
same, the transaction was accounted for in a manner similar to a pooling of
interests.
All material intercompany transactions and balances have been eliminated in
consolidation.
USE OF ESTIMATES
The accompanying consolidated financial statements and information as of
March 31, 1999 and for the three months ended March 31, 1999 and 1998 are
unaudited, and include all adjustments (consisting of only normal recurring
adjustments) that are necessary, in the opinion of management, for a fair
presentation. The results from operations for the periods ended March 31, 1999
and 1998 are not necessarily reflective of the annual results.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
For the purposes of reporting cash flows, cash and cash equivalents include
cash on hand, amounts due from banks, other short term investments and federal
funds sold. All highly liquid investments with an initial maturity of less than
ninety days are considered to be cash equivalents.
SECURITIES AVAILABLE FOR SALE
Available for sale securities consist of bonds, notes, debentures, and
certain equity securities not classified as trading securities nor as held to
maturity securities.
Unrealized holding gains and losses, net of tax, on available for sale
securities, are reported in other comprehensive income. Realized gains and
losses are included in other income or expense, and when applicable, are
reported as a reclassification adjustment, net of tax, in other comprehensive
income.
F-8
<PAGE>
TEXAS CENTRAL BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Declines in the fair value of individual held to maturity and available for
sale securities below their cost that are other than temporary, if any, would
result in write-downs of the individual securities to their fair value. The
related write-downs, if any, would be included in earnings as realized losses.
Premiums and discounts are recognized in interest income using the interest
method over the period to maturity.
SECURITIES HELD TO MATURITY
Bonds, notes, and debentures for which the Company has the positive intent
and ability to hold to maturity are reported at cost, adjusted for premiums and
discounts that are recognized in interest income using the interest method over
the period to maturity.
LOANS AND ALLOWANCE FOR POSSIBLE LOAN LOSSES
Loans are stated net of loan participations sold without recourse,
allowance for possible loan losses and unearned income. Unearned income on
installment loans is taken into income over the term of the loan by the
sum-of-the-periodic-balances method. The effect of not using the interest method
is not material to the financial statements.
Loans that management has the intent and ability to hold for the
foreseeable future or until maturity or pay-off are reported at their
outstanding principal balance adjusted for any charge-offs, the allowance for
loan losses, and unamortized premiums or discounts on purchased loans.
Impaired loans (as defined by SFAS No. 114 and as amended by SFAS No. 118)
are accounted for at the net present value of expected future cash flows,
discounted at the loan's effective interest rate, the observable market price of
the loan, or at fair value of the collateral if the loan is collateral
dependent.
The accrual of interest on impaired loans is discontinued when, in
management's opinion, the borrower may be unable to meet payments as they become
due. When accrual of interest is discontinued, all unpaid accrued interest is
reversed. Interest income is subsequently recognized only to the extent cash
payments are received in excess of principal due.
The allowance for loan losses is increased by charges to income and
decreased by charge-offs (net of recoveries). Management's periodic evaluation
of the adequacy of the allowance is based on the Company's past loan loss
experience, known and inherent risks in the portfolio, adverse situations that
may affect the borrower's ability to repay, the estimated value of any
underlying collateral, and current economic conditions.
FEES AND COSTS ASSOCIATED WITH ORIGINATING LOANS
Fees and costs associated with originating loans are recognized in income
generally in the period in which the fees and costs were incurred. Under
generally accepted accounting principles such net fees or costs generally are
deferred and recognized over the life of the loan as an adjustment of yield.
For the years ended December 31, 1998, 1997, and 1996, management believes
that not deferring such fees and costs and amortizing them over the life of the
related loans does not materially affect the financial position or results of
operations of the Company.
BANK PREMISES AND EQUIPMENT
Bank premises and furniture and equipment are carried at cost, less
accumulated depreciation and amortization. Depreciation is computed on the
straight-line method over the estimated useful life of each type of asset,
ranging from three to ten years.
F-9
<PAGE>
TEXAS CENTRAL BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Maintenance and repairs are charged to expense; betterments and renewals
are capitalized. Upon retirement or replacement, the cost of the asset and the
related accumulated depreciation are eliminated with the resulting gain or loss
included in the consolidated statement of income.
OTHER REAL ESTATE OWNED
Real estate properties acquired through, or in lieu of loan, foreclosure
are to be sold and are initially recorded at fair value at the date of
foreclosure, establishing a new cost basis. After foreclosure, valuations are
periodically performed by management and the real estate is carried at the lower
of carrying amount or fair value less cost to sell. Revenue and expenses from
operations and changes in the valuation allowance are included in other
noninterest expense.
INCOME TAXES
The Company files a consolidated income tax return with its subsidiaries.
Federal income tax expense or benefit has been allocated on a separate return
basis.
Effective January 1, 1998, the Company with the consent of its stockholders
elected to be an S corporation under the Internal Revenue Code (Code). In lieu
of corporate income taxes, the stockholders of an S corporation are taxed on
their proportionate share of the Company's taxable income. Following this
election the Company will generally report no federal income tax expense or
benefit in its financial statements, except for the expense incurred in
connection with "recognized net built in gains" (as defined in the Code).
Prior to January 1, 1998, deferred tax assets and liabilities were
reflected at currently enacted income tax rates applicable to that period in
which the deferred tax assets and liabilities were expected to be realized or
settled.
FINANCIAL INSTRUMENTS
The Company has not acquired or issued any derivative financial
instruments.
In the ordinary course of business the Company has entered into certain off
balance sheet financial instruments consisting of commitments to extend credit
and standby letters of credit. Such financial instruments are recorded in the
financial statements when they are funded or related fees are incurred or
received.
FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in
estimating fair values of financial instruments as disclosed herein:
CASH AND SHORT TERM INSTRUMENTS
The carrying amounts of cash and short term instruments approximate their
fair value.
AVAILABLE FOR SALE AND HELD TO MATURITY SECURITIES
Fair values for securities excluding restricted equity securities, are
based on quoted market prices. The carrying values of restricted equity
securities approximate fair values.
LOANS
For variable-rate loans that reprice frequently and have no significant
changes in credit risk, fair values are based on carrying values. Fair values
for certain mortgage loans (for example, one-to-four family residential) and
other consumer loans are based on quoted market prices of similar loans sold in
conjunction with securitization transactions, adjusted for differences in loan
characteristics. Fair values for commercial real estate and commercial loans are
estimated using discounted cash flow analyses, using interest rates
F-10
<PAGE>
TEXAS CENTRAL BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
currently being offered for loans with similar terms to borrowers of similar
credit quality. Fair values for impaired loans are estimated using discounted
cash flow analyses or underlying collateral values, where applicable.
DEPOSITS
The fair values disclosed for demand deposits are, by definition, equal to
the amount payable on demand at the reporting date (that is, their carrying
amounts). The carrying amounts of variable-rate, fixed term money market
accounts and certificates of deposit (CD's) approximate their fair values at the
reporting date. Fair values for fixed-rate CD's are estimated using a discounted
cash flow calculation that applies interest rates currently being offered on
certificates to a schedule of aggregated expected monthly maturities on time
deposits.
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
The carrying amount of securities sold under agreements to repurchase
approximates their fair value.
OTHER BORROWINGS
The carrying amount of other borrowings approximates their fair value.
ACCRUED INTEREST
The carrying amounts of accrued interest approximate their fair values.
OFF BALANCE SHEET INSTRUMENTS
Fair values for off balance sheet lending commitments are based on fees
currently charged to enter into similar agreements taking into account the
remaining terms of the agreements and the counterparties' credit standings.
RECLASSIFICATION
Certain amounts previously reported have been reclassified to conform to
the current format.
2. STATEMENT OF CASH FLOWS
The Company reports on a net basis its cash receipts and cash payments for
time deposits accepted and repayments of those deposits, loans made to customers
and principal collections on those loans.
The Company uses the indirect method to present cash flows from operating
activities. Other supplemental cash flow information for the years ended
December 31, 1998, 1997, and 1996 is presented as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Cash transactions
Interest expense paid.............. $ 2,360 $ 1,798 $ 1,429
========= ========= =========
Interest income received........... $ 6,864 $ 5,803 $ 4,478
========= ========= =========
Federal income taxes paid.......... $ 90 $ 273 $ 124
========= ========= =========
Noncash transactions:
Net unrealized appreciation
(depreciation) on securities
available for sale............... $ -- $ 143 $ (32)
========= ========= =========
Net addition of other real estate
owned............................ $ -- $ -- $ 382
========= ========= =========
Distributions declared not paid.... $ 154 $ -- $ --
========= ========= =========
</TABLE>
F-11
<PAGE>
TEXAS CENTRAL BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. DEBT AND EQUITY SECURITIES
Debt and equity securities have been classified in the consolidated balance
sheet according to management's intent. The carrying amount of securities and
their approximate fair values at December 31, 1998, 1997, and 1996 are as
follows (in thousands):
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- -------
<S> <C> <C> <C> <C>
SECURITIES CLASSIFIED AS AVAILABLE FOR
SALE
December 31, 1998
FHLB, FRB & TIB Stock.............. $ 470 $ -- $ -- $ 470
========= ========== ========== =======
December 31, 1997
FHLB, FRB & TIB Stock.............. $ 1,875 $ -- $ -- $ 1,875
========= ========== ========== =======
December 31, 1996
FHLB and FRB Stock................. $ 1,693 $ -- $ -- $ 1,693
Other.............................. 1,000 -- 143 857
--------- ---------- ---------- -------
$ 2,693 $ -- $ 143 $ 2,550
========= ========== ========== =======
SECURITIES CLASSIFIED AS HELD TO
MATURITY
December 31, 1998
U.S. Treasury securities........... $ 7,498 $ 192 $ -- $ 7,690
U.S. Government agencies........... 5,002 34 12 5,024
Pass through certificates
guaranteed by FNMA & FHLMC....... 6,470 -- 35 6,435
Other debt securities.............. 510 6 -- 516
--------- ---------- ---------- -------
$19,480 $ 232 $ 47 $19,665
========= ========== ========== =======
December 31, 1997
U.S. Treasury securities........... $ 5,582 $ 86 $ 4 $ 5,664
Pass through certificates
guaranteed by FNMA & FHLMC....... 694 1 6 689
--------- ---------- ---------- -------
$ 6,276 $ 87 $ 10 $ 6,353
========= ========== ========== =======
December 31, 1996
U.S. Treasury securities........... $ 6,202 $ 47 $ -- $ 6,249
Pass through certificates
guaranteed by FNMA & FHLMC....... 1,059 -- 8 1,051
--------- ---------- ---------- -------
$ 7,261 $ 47 $ 8 $ 7,300
========= ========== ========== =======
</TABLE>
Investment securities with recorded values of approximately $16,346,000,
$6,276,000, and $3,695,000 at December 31, 1998, 1997, and 1996, respectively,
were pledged as collateral for purposes required or permitted by law.
Proceeds from the sales of investment securities available for sale during
1998, 1997, and 1996 were approximately $1,406,000, $887,000, and $750,000,
respectively. There were no gains or losses associated with the sale of
securities in 1998. Sales in 1997 resulted in gross gains of approximately
$16,000 and gross losses of approximately $139,000. Sales in 1996 resulted in
gross losses of approximately $1,000.
F-12
<PAGE>
TEXAS CENTRAL BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The amortized cost and estimated fair value of debt securities (in
thousands) at December 31, 1998, by contractual maturity, are shown below.
Expected maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call or
prepayment penalties.
<TABLE>
<CAPTION>
SECURITIES AVAILABLE SECURITIES HELD TO
FOR SALE MATURITY
-------------------- ---------------------
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
---------- ------ ---------- -------
<S> <C> <C> <C> <C>
Due in one year or less.............. $ -- $ -- $ 1,626 $ 1,634
Due from one year to five years...... -- -- 11,509 11,721
Due from five years to ten years..... -- -- -- --
Due after ten years.................. -- -- 6,345 6,310
---------- ------ ---------- -------
-- -- 19,480 19,665
FHLB, FRB, and TIB stock............. 470 470 -- --
---------- ------ ---------- -------
$ 470 $ 470 $ 19,480 $19,665
========== ====== ========== =======
</TABLE>
4. LOANS AND ALLOWANCE FOR POSSIBLE LOAN LOSSES
Loans at December 31, 1998, 1997, and 1996 consisted of the following (in
thousands):
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Commercial........................... $ 24,860 $ 19,308 $ 18,538
Real estate.......................... 31,433 27,063 22,487
Consumer............................. 8,225 5,307 3,861
Other................................ 112 46 52
--------- --------- ---------
64,630 51,724 44,938
Unearned income...................... (1) (4) (15)
Allowance for possible loan losses... (476) (549) (544)
--------- --------- ---------
$ 64,153 $ 51,171 $ 44,379
========= ========= =========
</TABLE>
The Company extends commercial and consumer credit primarily to customers
in the state of Texas. At December 31, 1998, 1997, and 1996, substantially all
of the Company's loans were collateralized with real estate, inventory, accounts
receivable, equipment, marketable securities or other assets. An analysis of the
allowance for possible loan losses for the years ended December 31, 1998, 1997,
and 1996 is as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Balance at January 1................. $ 549 $ 544 $ 369
Provision charged to earnings........ -- -- 20
Loans charged to the allowance
account............................ (101) (13) (75)
Recoveries on loans previously
charged-off........................ 28 18 230
--------- --------- ---------
Balance at December 31............... $ 476 $ 549 $ 544
========= ========= =========
</TABLE>
Impaired loans having a recorded investment of approximately $54,000 and
$164,000 at December 31, 1998 and 1997, respectively, have been recognized in
conformity with SFAS No. 114 as amended by SFAS No. 118. There were no impaired
loans at December 31, 1996. The average recorded investment in impaired loans
during 1998 and 1997 was approximately $109,000 and $80,000, respectively. The
total allowance for loan losses related to these loans at December 31, 1998 and
1997 was approximately $4,000 and $54,000,
F-13
<PAGE>
TEXAS CENTRAL BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
respectively. No significant interest income on impaired loans was recognized
for cash payments received in 1998, 1997, and 1996.
Loan maturities and rate sensitivity of the loan portfolio, excluding
consumer loans and other loans before unearned discount, are as follows (in
thousands):
<TABLE>
<CAPTION>
WITHIN ONE-FIVE AFTER FIVE
ONE YEAR YEARS YEARS TOTAL
-------- -------- ---------- ---------
<S> <C> <C> <C> <C>
Commercial, financial and
industrial......................... $15,364 $ 8,512 $ 984 $ 24,860
Real estate.......................... 19,397 10,746 1,290 31,433
-------- -------- ---------- ---------
Total................................ $34,761 $ 19,258 $2,274 $ 56,293
======== ======== ========== =========
At fixed interest rates.............. $ 5,465 $ 2,825 $ 120 $ 8,410
At variable interest rates........... 29,296 16,433 2,154 47,883
-------- -------- ---------- ---------
Total................................ $34,761 $ 19,258 $2,274 $ 56,293
======== ======== ========== =========
</TABLE>
The Company is not committed to lend additional funds to debtors whose
loans have been modified.
5. BANK PREMISES AND EQUIPMENT
Bank premises and equipment at December 31, 1998, 1997, and 1996 consisted
of the following (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Building and improvements............... $ 1,500 $ 1,500 $ --
Leasehold improvements.................. 534 394 313
Furniture and equipment................. 1,296 1,176 812
Construction in progress................ -- -- 1,500
--------- --------- ---------
3,330 3,070 2,625
Less accumulated depreciation........... 1,212 1,018 904
--------- --------- ---------
$ 2,118 $ 2,052 $ 1,721
========= ========= =========
</TABLE>
6. DEPOSITS
Deposits at December 31, 1998, 1997, and 1996 are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
1998 1997 1996
------------------- ------------------- -------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Noninterest bearing demand accounts..... $34,210 35.6% $31,418 41.0% $23,123 33.3%
Interest bearing demand accounts........ 5,144 5.4 5,397 7.0 10,130 14.6
Savings accounts........................ 1,658 1.7 1,000 1.3 962 1.4
Limited access money market accounts.... 25,619 26.7 16,718 21.8 19,696 28.4
Certificates of deposit, less than
$100,000.............................. 16,751 17.5 11,910 15.5 10,399 15.0
Certificates of deposit, greater than
$100,000.............................. 12,608 13.1 10,213 13.4 5,078 7.3
------- ------- ------- ------- ------- -------
$95,990 100.0% $76,656 100.0% $69,388 100.0%
======= ======= ======= ======= ======= =======
</TABLE>
F-14
<PAGE>
TEXAS CENTRAL BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The scheduled maturities of certificates of deposit in denominations
greater than $100,000 at December 1998, 1997, and 1996 are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Three months or less................. $ 5,425 $ 3,819 $ 1,501
Four through six months.............. 2,987 2,362 1,561
Seven through twelve months.......... 3,650 3,466 1,816
Thereafter........................... 546 566 200
--------- --------- ---------
$ 12,608 $ 10,213 $ 5,078
========= ========= =========
</TABLE>
Interest expense for such interest bearing deposits was approximately
$548,000, $403,000, and $213,000 for the years ended December 31, 1998, 1997,
and 1996.
7. INCOME TAXES
The provision for income taxes for the years ended December 31, 1998, 1997,
and 1996, consisted of the following (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Income tax expense:
Current federal tax expense..... $ -- $ 240 $ 229
Deferred federal tax expense.... 126 36 19
Current state tax expense....... 14 24 30
--------- --------- ---------
Income tax expense................... $ 140 $ 300 $ 278
========= ========= =========
</TABLE>
As discussed in Note 1, the Company changed its tax status from taxable to
nontaxable on January 1, 1998. Accordingly, the tax provision in 1998 for
financial reporting purposes differs from an amount determined by applying the
statutory tax rate to the pretax accounting income. The deferred expense for
1998 consists of the following (in thousands):
Deferred expense due to the
elimination of the deferred tax
assets at the date of election to S
corporation........................ $ 52
Deferred expense due to the recording
of a deferred liability for the
estimated corporate level tax on
unrealized "net built-in
gains"............................ 74
---------
$ 126
=========
The 1997 and 1996 tax provision differs from the amount determined by
applying the statutory tax rate to pretax accounting income primarily because of
the effect of a leverage lease transaction.
F-15
<PAGE>
TEXAS CENTRAL BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Deferred income taxes reflect the net tax effects of temporary differences
between the recorded amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities as of December 31, 1998, 1997,
and 1996 are as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Deferred tax assets:
Basis of allowance for possible
loan losses for book in excess of
tax.............................. $ -- $ 92 $ 89
Basis of bank premises and
equipment for tax in excess of
book............................. -- 60 61
--------- --------- ---------
Total deferred tax assets..... -- 152 150
--------- --------- ---------
Deferred tax liabilities:
FHLB dividends and other........... -- 100 62
Estimated corporate level tax on
unrealized net built-in
gains............................ 74 -- --
--------- --------- ---------
Total deferred tax
liabilities................ 74 100 62
--------- --------- ---------
Net deferred tax (liability)
asset...................... $ (74) $ 52 $ 88
========= ========= =========
</TABLE>
The net deferred tax liability for 1998 is included in other liabilities in
the accompanying consolidated financial statements. The net deferred tax asset
for 1997 and 1996 is included in other assets in the accompanying consolidated
financial statements.
As of December 31, 1998, the Company has a net current income tax
receivable of approximately $40,000 included in other assets. As of December 31,
1997 and 1996, the Company had a current income tax payable of approximately
$135,000 and $150,000, respectively, included in other liabilities.
8. BORROWED FUNDS
ADVANCES FROM THE FHLB
The Bank is a member of the Federal Home Loan Bank of Dallas (FHLB). During
1998, 1997, and 1996, the Bank had a FHLB Warehouse Line of Credit. At December
31, 1998, 1997, and 1996, the Bank had no outstanding advances from the FHLB.
In addition, the Bank also has a long-term FHLB note in the original amount
of $350,000 which bears interest at 5.92%. Principal and interest are due
monthly, commencing February 1, 1994, through January 4, 2004. The outstanding
principal balance of the note was approximately $204,000, $237,000, and $268,000
at December 31, 1998, 1997, and 1996, respectively.
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Also included in borrowed funds are borrowings incurred in connection with
securities sold under agreements to repurchase. These borrowings do not have a
set maturity, but the agreements may be canceled by either party upon written
notice. Additional information concerning such borrowings at December 31, 1998,
1997, and 1996, is summarized as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Balance at year-end.................. $ 12,301 $ 3,701 $ 2,000
Average balance during the year...... 4,233 2,876 880
Average interest rate during the
year............................... 4.8% 4.9% 3.5%
Maximum balance during the year...... 12,301 3,701 2,000
</TABLE>
F-16
<PAGE>
TEXAS CENTRAL BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
LINE OF CREDIT
The Bank has a $3,000,000 revolving line of credit with a third-party bank
for the periodic purchase of federal funds. The lending bank requires a security
interest in marketable securities. Advances under this credit facility bear
interest at the prevailing daily rate on the federal funds, which will be quoted
at the time of the requested advance. No principal advances related to the
agreement were outstanding at December 31, 1998, 1997 and 1996.
9. COMMITMENTS AND CONTINGENCIES
The Company is involved in legal actions arising from normal business
activities. Management believes that these actions are without merit or that the
ultimate liability, if any, resulting from them will not materially affect the
financial position or results of operations of the Company.
The Company leases certain of its banking facilities under noncancellable
operating lease agreements. These agreements expire at various dates through
2006. Rent expense under the Company's operating lease agreements was
approximately $378,000, $264,000, and $176,000 for the years ended December 31,
1998, 1997, and 1996, respectively.
Future minimum lease payments under noncancellable operating leases for
each of the next five years and thereafter are as follows (in thousands):
YEAR ENDED
DECEMBER 31, AMOUNT
- ---------------------------------------- ------
1999............................... $ 449
2000............................... 449
2001............................... 473
2002............................... 197
2003............................... 197
Thereafter......................... 312
------
$2,077
======
The Company does not anticipate any material losses as a result of
commitments and contingent liabilities.
The Company has entered into a sublease with an affiliate of a director of
the Bank. The operating lease expires in July 1999 and provides annual rental
revenue of approximately $80,000. Rental payments received in regard to this
lease were approximately $48,000 during 1998.
F-17
<PAGE>
TEXAS CENTRAL BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
10. FINANCIAL INSTRUMENTS
The Company is a party to financial instruments with off-balance sheet risk
in the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to extend credit and standby
letters of credit. Those instruments involve, to varying degrees, elements of
credit risk in excess of the amount recognized in the balance sheet.
The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit and
standby letters of credit is represented by the contractual amount of those
instruments. The Company uses the same credit policies in making commitments and
conditional obligations as it does for on balance sheet instruments. At December
31, 1998, 1997, and 1996, the approximate amounts of these financial instruments
were as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Financial instruments whose contract
amounts represent credit risk:
Commitments to extend credit....... $ 17,585 $ 10,638 $ 8,760
Standby letters of credit.......... 631 310 1,119
--------- --------- ---------
$ 18,216 $ 10,948 $ 9,879
========= ========= =========
</TABLE>
Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitments may expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. Management evaluates each customer's
credit-worthiness on a case-by-case basis. The amount of collateral obtained, if
deemed necessary by the Company upon extension of credit, is based on
management's credit evaluation of the counterparty.
Standby letters of credit are conditional commitments issued by the Company
to guarantee the performance of a customer to a third party. Standby letters of
credit generally have fixed expiration dates or other termination clauses and
may require payment of a fee. The credit risk involved in issuing letters of
credit is essentially the same as that involved in extending loan facilities to
customers. The Company's policy for obtaining collateral and the nature of such
collateral is essentially the same as that involved in making commitments to
extend credit.
Although the maximum exposure to loss is the amount of such commitments,
management currently anticipates no material losses from such activities.
F-18
<PAGE>
TEXAS CENTRAL BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The estimated fair values of the Company's financial instruments at
December 31, 1998 were as follows (in thousands of dollars):
<TABLE>
<CAPTION>
CARRYING FAIR
AMOUNT VALUE
---------- -------
<S> <C> <C>
Financial assets:
Cash and due from banks, and
federal funds sold............ $ 28,713 $28,713
Securities available for sale... 470 470
Securities held to maturity..... 19,480 19,665
Loans........................... 64,153 64,067
Accrued interest receivable..... 602 602
Financial liabilities:
Deposit liabilities............. 95,990 96,099
Accrued interest payable........ 146 146
Repurchase agreements........... 12,301 12,301
Other borrowings................ 204 204
Off balance sheet assets:
Commitments to extend credit.... -- --
Standby letters of credit....... -- --
</TABLE>
11. SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK
Most of the Company's business activity is with customers located within
Texas. Such customers are normally also depositors of the Company.
The distribution of commitments to extend credit approximates the
distribution of loans outstanding. Standby letters of credit were granted
primarily to commercial borrowers.
The contractual amounts of credit related financial instruments such as
commitments to extend credit and letters of credit represent the amounts of
potential accounting loss should the contract be fully drawn upon, the customer
default, and the value of any existing collateral become worthless.
At December 31, 1998, 1997, and 1996, the Company had federal funds sold of
approximately $20,799,000, $17,040,000, and $14,945,000, respectively, to a
non-related financial institution.
12. RELATED PARTY TRANSACTIONS
In the ordinary course of business, the Company has and expects to continue
to have transactions, including borrowings, with its employees, officers,
directors and their affiliates. In the opinion of management, such transactions
are on the same terms, including interest rates and collateral requirements, as
those prevailing at the time for comparable transactions with unaffiliated
persons. At December 31, 1998, 1997, and 1996, the aggregate amounts of such
loans were approximately $2,039,000, $329,000, and $47,000, respectively. During
the year ended December 31, 1998, approximately $1,940,000 of new loans were
made and reductions totaled approximately $230,000. During the year ended
December 31, 1997, approximately $292,000 of new loans were made and reductions
totaled approximately $10,000.
13. STOCKHOLDERS' EQUITY AND REGULATORY MATTERS
The Bank is subject to certain restrictions on the amount of dividends that
it may declare without prior regulatory approval. At January 1, 1999,
approximately $1,974,000 of retained earnings were available for dividend
declaration without prior regulatory approval.
F-19
<PAGE>
TEXAS CENTRAL BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Bank is subject to various regulatory capital requirements administered
by federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory and possibly additional discretionary actions by
regulators that, if undertaken, could have a direct material effect on the
Bank's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet specific
capital guidelines that involve quantitative measures of the Bank's assets,
liabilities, and certain off balance sheet items as calculated under regulatory
accounting practices. The Bank's capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk
weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of total and Tier I capital (as defined in the regulations) to risk
weighted assets (as defined), and of Tier I capital (as defined) to average
assets (as defined). Management believes, as of December 31, 1998, that the Bank
meets all capital adequacy requirements to which it is subject.
As of December 31, 1998, 1997, and 1996, the Bank's capital ratios exceeded
those levels necessary to be categorized as "well capitalized" under the
regulatory framework for prompt corrective action. To be categorized as "well
capitalized" the Bank must maintain minimum total risk-based, Tier I risk-based
and Tier I leverage ratios as set forth in the table. There are no conditions or
events since December 31, 1998 that management believes have changed the Bank's
category.
A comparison of the Bank's actual capital amounts and ratios to required
capital amounts and ratios is presented in the following table (amounts in
thousands):
<TABLE>
<CAPTION>
TO BE WELL
CAPITALIZED UNDER
FOR CAPITAL PROMPT CORRECTIVE
ADEQUACY PURPOSES
ACTUAL ACTION PROVISIONS
--------------- ---------------------------------- ----------------------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------ ----- ---------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
As of December 31, 1998
Total capital (to risk weighted
assets)........................... $7,412 10.11% $5,868 8.0% $7,335 10.0 %
Tier I capital (to risk weighted
assets)........................... $6,936 9.46 % $2,934 4.0% $4,401 6.0 %
Tier I capital (to average
assets)........................... $6,936 6.60 % $3,154 3.0% $5,258 5.0 %
As of December 31, 1997
Total capital (to risk weighted
assets)........................... $6,461 11.23% $4,604 8.0% $5,755 10.0 %
Tier I capital (to risk weighted
assets)........................... $5,912 10.27% $2,302 4.0% $3,453 6.0 %
Tier I capital (to average
assets)........................... $5,912 6.94 % $2,555 3.0% $4,258 5.0 %
As of December 31, 1996
Total capital (to risk weighted
assets)........................... $6,031 12.05% $4,003 8.0% $5,004 10.0 %
Tier I capital (to risk weighted
assets)........................... $5,487 10.96% $2,002 4.0% $3,003 6.0 %
Tier I capital (to average
assets)........................... $5,487 8.66 % $1,901 3.0% $3,168 5.0 %
</TABLE>
14. STOCK OPTION PLANS
The Company has established stock option plans (Plans) applicable to 73,500
shares of the Company's common stock. Under the Plans, options can be granted to
full-time officers, key employees or directors of the Company. The Plans are
administered by the Board of Directors.
Stock options under each Plan are granted at no less than the fair value of
such shares at the time of grant. The options can be exercised at varying times
within the option periods as specified in the plan agreements.
The Company has elected to account for the Plan under Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related
interpretations. Accordingly, no compensation expense has been recognized for
the stock options.
F-20
<PAGE>
TEXAS CENTRAL BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Had compensation costs been determined on the basis of fair value pursuant
to FASB statement No. 123, "Accounting for Stock-Based Compensation,"
management has determined the effect on net earnings would have been
insignificant.
In connection with the formation of TCBI during 1997, the options for
shares of the Bank's stock were converted to options for shares of TCBI stock.
Changes in options outstanding for 1998, 1997, and 1996 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1998 DECEMBER 31, 1997 DECEMBER 31, 1996
--------------------- --------------------- ---------------------
OPTION OPTION OPTION
SHARES PRICE SHARES PRICE SHARES PRICE
UNDER PER UNDER PER UNDER PER
OPTION SHARE OPTION SHARE OPTION SHARE
------ ----------- ------ ----------- ------ -----------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year..... 58,220 $5.74-15.61 60,360 $5.74-13.32 59,040 $5.74-10.75
Granted during the year.............. 2,440 $18.30 2,220 $15.61 2,320 $ 13.32
Forfeited during the year............ -- -- -- -- -- --
Exercised during the year............ 15,720 $5.74-18.30 4,360 $6.67-10.60 1,000 $ 7.50
------ ------ ----------- ------
Outstanding at end of year........... 44,940 $5.74-18.30 58,220 $5.74-15.61 60,360 $5.74-13.32
====== ====== =========== ======
Options exercisable.................. 44,940 $5.74-18.30 58,220 $5.74-15.61 60,360 $5.74-13.32
====== ====== =========== ======
</TABLE>
15. EMPLOYEE BENEFITS
During 1994, the Bank formed a 401(k) employee savings plan (Plan). The
Plan covers all eligible employees, as defined by the terms of the Plan
agreement. Participating employees may contribute up to 15% of base salary on a
voluntary basis. The Bank makes discretionary contributions to the Plan up to a
maximum of 6% of an employee's base salary. The Bank's contributions to the Plan
totaled approximately $34,000, $29,000, and $30,000 in 1998, 1997 and 1996,
respectively.
F-21
<PAGE>
TEXAS CENTRAL BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
16. PARENT-COMPANY-ONLY CONDENSED FINANCIAL STATEMENTS
The following are parent-company-only condensed balance sheets as of
December 31, 1998 and 1997 and condensed statements of income and cash flows for
the years then ended:
TEXAS CENTRAL BANCSHARES, INC. (PARENT COMPANY ONLY)
BALANCE SHEET
DECEMBER 31, 1998 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
ASSETS
Cash................................. $ 11 $ 321
Investment in subsidiary............. 6,936 5,912
Receivable from subsidiary........... 154 --
Other assets......................... 55 35
--------- ---------
Total...................... $ 7,156 $ 6,268
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Dividends payable............... $ 154 $ --
Other liabilities............... 20 285
--------- ---------
Total liabilities.......... 174 285
Stockholders' equity:
Common stock.................... 303 287
Additional paid-in capital...... 2,426 2,283
Retained earnings............... 4,253 3,413
--------- ---------
Total stockholders'
equity....................... 6,982 5,983
--------- ---------
$ 7,156 $ 6,268
========= =========
</TABLE>
TEXAS CENTRAL BANCSHARES, INC. (PARENT COMPANY ONLY)
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Revenues -- Dividends declared by
subsidiary......................... $ 342 $ 552
Operating expenses:
Professional fees............... 55 4
--------- ---------
Total operating expenses... 55 4
--------- ---------
Income before equity in undistributed
earnings of subsidiary............. 287 548
Equity in undistributed earnings of
subsidiary......................... 1,025 397
--------- ---------
Net income........................... $ 1,312 $ 945
========= =========
</TABLE>
F-22
<PAGE>
TEXAS CENTRAL BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
TEXAS CENTRAL BANCSHARES, INC. (PARENT COMPANY ONLY)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Cash flows from operating activities
Net income......................... $ 1,312 $ 945
Adjustments to reconcile net income
to net cash (used) provided by
operating activities:
Equity in earnings of
subsidiary................ (1,367) (949)
Dividend received from
subsidiary................ 188 552
Increase in other assets...... (174) (35)
(Decrease) increase in other
liabilities............... (110) 285
--------- ---------
Net cash (used) provided
by operating
activities........... (151) 798
--------- ---------
Cash flows from financing activities
Payment of cash dividends.......... (318) --
Proceeds from note payable......... -- 240
Payment of note payable............ -- (240)
Proceeds from exercise of stock
options........................... 159 15
Purchase and retirement of common
stock............................. -- (492)
--------- ---------
Net cash used in
financing
activities........... (159) (477)
--------- ---------
Net (decrease) increase in cash and cash
equivalents........................... (310) 321
Cash and cash equivalents, beginning of
year.................................. 321 --
--------- ---------
Cash and cash equivalents, end of
year.................................. $ 11 $ 321
========= =========
</TABLE>
F-23
<PAGE>
EXHIBIT A
- ------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
BANK UNITED CORP., BUC ACQUISITION CORPORATION II
AND
TEXAS CENTRAL BANCSHARES, INC.
DATED AS OF MARCH 23, 1999
- ------------------------------------------------------------------------------
A-1
<PAGE>
TABLE OF CONTENTS
ARTICLE I.
THE ACQUISITION MERGER.................................................1
Section 1.1 Acquisition Merger...................................1
Section 1.2 Articles of Incorporation, Bylaws and Facilities
of Surviving Company ................................2
Section 1.3 Effect of Acquisition Merger.........................2
Section 1.4 Liabilities of the Surviving Company.................2
Section 1.5 Acquisition Merger Price.............................3
Section 1.6 Calculation of BUC Stock Ratio.......................3
Section 1.7 Dissenting Shares....................................3
Section 1.8 Exchange of Shares...................................4
Section 1.9 Approval by Shareholders.............................4
Section 1.10 Stock Option.........................................4
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF TEXAS CENTRAL........................5
Section 2.1 Organization.........................................5
Section 2.2 Capitalization.......................................5
Section 2.3 Approvals; Authority.................................6
Section 2.4 Investments..........................................6
Section 2.5 Financial Statements.................................6
Section 2.6 Title................................................7
Section 2.7 Environmental Laws...................................7
Section 2.8 Litigation and Other Proceedings.....................8
Section 2.9 Taxes................................................8
Section 2.10 Contracts...........................................10
Section 2.11 Fidelity Bonds and Insurance........................11
Section 2.12 No Conflict With Other Instruments..................11
Section 2.13 Laws................................................11
Section 2.14 Conduct.............................................12
Section 2.15 Reserve for Possible Loan Losses....................12
Section 2.16 Employment Relations................................12
Section 2.17 Employee Benefit Plans..............................13
Section 2.18 List of Loans.......................................15
Section 2.19 Accounting Matters..................................16
Section 2.20 SEC Status; Securities Issuances....................16
Section 2.21 Absence of Changes..................................16
Section 2.22 Brokers and Finders.................................16
Section 2.23 Absence of Property Taxes and Liens.................16
Section 2.24 Community Reinvestment Act..........................16
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Section 2.25 Fair Housing Act, Home Mortgage Disclosure Act and
Equal Credit Opportunity Act........................16
Section 2.26 Usury Laws and Other Consumer Compliance Laws.......17
Section 2.27 Bank Secrecy Act....................................17
Section 2.28 Zoning and Related Laws.............................17
Section 2.29 Securities Laws.....................................17
Section 2.30 Regulatory Approvals................................17
Section 2.31 Shareholders' List..................................17
Section 2.32 Books and Records...................................18
Section 2.33 Deposit Summary.....................................18
Section 2.34 Schedules...........................................18
Section 2.35 Year 2000 Representation............................18
Section 2.36 Disclosure..........................................18
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF BUC.................................18
Section 3.1 Organization........................................18
Section 3.2 Capitalization......................................19
Section 3.3 Issuance of BUC Stock...............................19
Section 3.4 Approvals; Authority................................19
Section 3.5 No Conflict With Other Instruments..................19
Section 3.6 Financial Reports and SEC Documents; Material
Adverse Effect......................................20
Section 3.7 Litigation; Regulatory Action.......................20
Section 3.8 Community Reinvestment Act..........................20
Section 3.9 Compliance with Law.................................21
Section 3.10 Year 2000 Representation............................21
ARTICLE IV.
COVENANTS OF BUC......................................................21
Section 4.1 Best Efforts........................................21
Section 4.2 Information for Applications and Proxy Solicitation.21
Section 4.3 Confidentiality.....................................22
Section 4.4 Registration Statement..............................22
Section 4.5 NASDAQ Listing......................................23
Section 4.6 Delivery of Reports.................................23
Section 4.7 Rule 144 Compliance.................................23
Section 4.8 Publication of Financial Condition..................23
Section 4.9 Press Releases......................................23
ARTICLE V.
COVENANTS OF TEXAS CENTRAL............................................24
Section 5.1 Shareholder Approval and Best Efforts...............24
Section 5.2 Operations..........................................24
Section 5.3 Information for Applications and SEC Filings........25
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Section 5.4 Access to Properties and Records....................26
Section 5.5 Accounting and Tax Treatment........................26
Section 5.6 Standstill Provision................................26
Section 5.7 Proxies.............................................26
Section 5.8 Dividends...........................................26
Section 5.9 Accruals............................................27
Section 5.10 Press Releases......................................27
Section 5.11 Nature of Deposits..................................27
Section 5.12 Termination of 401(k) Plan..........................27
Section 5.13 Incentive Compensation Obligations..................27
Section 5.14 Vacation Payment Obligations........................27
Section 5.15 Environmental Reports...............................27
Section 5.16 Stock Options.......................................28
Section 5.17 Affiliate Agreement.................................28
Section 5.18 Directors and Officers' Liability Insurance and
Indemnification.....................................28
Section 5.19 Supplements to Disclosure Schedules.................29
ARTICLE VI.
CLOSING...............................................................29
Section 6.1 Closing.............................................29
Section 6.2 Effective Date......................................30
ARTICLE VII.
TERMINATION...........................................................30
Section 7.1 Termination.........................................30
Section 7.2 Effect of Termination...............................31
ARTICLE VIII.
CONDITIONS TO OBLIGATIONS OF BUC......................................31
Section 8.1 Compliance with Representations.....................32
Section 8.2 Material Adverse Change.............................32
Section 8.3 Legal Opinion.......................................32
Section 8.4 Tax Opinion.........................................32
Section 8.5 Releases............................................32
Section 8.6 Accounting Letters..................................33
Section 8.7 Dissenters' Rights..................................33
Section 8.8 Affiliate Agreements................................33
Section 8.9 Debt Assumption.....................................33
Section 8.10 Noncompetition Agreement............................33
Section 8.11 Environmental Reports...............................33
Section 8.12 Stock Options.......................................33
Section 8.13 Closing Day Payment.................................33
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ARTICLE IX.
CONDITIONS TO OBLIGATIONS OF TEXAS CENTRAL............................34
Section 9.1 Compliance with Representations.....................34
Section 9.2 Material Adverse Change.............................34
Section 9.3 Legal Opinion.......................................34
Section 9.4 Tax Opinion.........................................34
Section 9.5 Fairness Opinion; Comfort Letter....................34
ARTICLE X.
CONDITIONS TO RESPECTIVE OBLIGATIONS OF
BUC AND TEXAS CENTRAL.................................................35
Section 10.1 Government Approvals................................35
Section 10.2 Shareholder Approval................................35
Section 10.3 Registration of BUC Stock...........................35
Section 10.4 No Injunction.......................................35
ARTICLE XI.
EMPLOYEE MATTERS......................................................36
Section 11.1 Offers to Texas Central Employees...................36
Section 11.2 Credit for Service with Texas Central...............36
Section 11.3 Vacation Policy.....................................36
Section 11.4 Employment Agreements...............................37
ARTICLE XII.
MISCELLANEOUS.........................................................37
Section 12.1 Survival of Representations and Warranties..........37
Section 12.2 Expenses............................................37
Section 12.3 Notices.............................................37
Section 12.4 Controlling Law.....................................38
Section 12.5 Headings............................................39
Section 12.6 Modifications or Waiver............................39
Section 12.7 Severability........................................39
Section 12.8 Consolidation of Agreements.........................39
Section 12.9 Counterparts........................................39
Section 12.10 Assignment; Binding on Successors...................39
Section 12.11 Gender; Plurals.....................................39
Section 12.12 Disclosures.........................................40
Section 12.13 Publicity...........................................40
Section 12.14 No Third Party Beneficiaries........................40
Section 12.15 Interpretation; Effect..............................40
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EXHIBITS
Exhibit A Form of Articles of Merger (including Plan of Merger)
Exhibit B Form of Stock Option
Exhibit C Form of Voting Agreement and Irrevocable Proxy
Exhibit D Form of Affiliate Agreement
Exhibit E Form of Opinion of Counsel to Texas Central
Exhibit F Form of Release of BUC by Directors and Officers of Texas Central
Exhibit G Form of Release of Texas Central Directors and Officers by Texas
Central
Exhibit H Form of Non-Competition Agreement
Exhibit I Form of Opinion of Counsel to BUC
Exhibit J Form of Employment Agreement
SCHEDULES
Schedule 2.1 Subsidiaries and Affiliates
Schedule 2.2 Options, Warrants and Similar Rights
Schedule 2.4 Securities Portfolio
Schedule 2.5 Contingent Liabilities
Schedule 2.7 Environmental Matters
Schedule 2.9(a) Tax Returns
Schedule 2.9(b) Tax Deficiencies
Schedule 2.9(c) Tax Penalties
Schedule 2.10 Contracts
Schedule 2.11 Fidelity Bonds and Insurance
Schedule 2.13 Compliance with Laws
Schedule 2.14 Dividends, Stock Issuances and Indebtedness
Schedule 2.15 Substandard and Similar Loans
Schedule 2.16 Wage Arrearages
Schedule 2.17(a) Compensation and Benefit Plans
Schedule 2.17(e) Administration of Benefit Plans
Schedule 2.17(h) Effects of Acquisition Merger on Benefit Plans
Schedule 2.18 Loans
Schedule 2.21 Changes Since Balance Sheet Date
Schedule 2.23 Property Tax Matters
Schedule 2.33 Deposit Summary
Schedule 5.7 Proxies
Schedule 11.4 Employment Agreements
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AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization ("Agreement") dated as of March
23, 1999, is by and among Bank United Corp., a Delaware corporation ("BUC"), BUC
Acquisition Corporation II, a Texas corporation ("Acquisition Company"), and
Texas Central Bancshares, Inc., a Texas corporation ("Texas Central").
WHEREAS, BUC and Texas Central believe that the acquisition of Texas
Central by BUC in the manner provided by, and subject to the terms and
conditions set forth in, this Agreement and all exhibits, schedules and
supplements hereto is desirable and in the best interests of their respective
institutions and shareholders.
NOW, THEREFORE, in consideration of such premises and the mutual
representations, warranties, covenants and agreements contained herein, the
parties agree as set forth below:
INTRODUCTION
Texas Central is a bank holding company registered under the Bank Holding
Company Act of 1956, as amended ("BHC Act"), which owns 100% of the issued and
outstanding capital stock of Texas Central Bank, N.A., a national banking
association (the "Texas Central Bank"), indirectly through Texas Central
Bancshares of Delaware, Inc. ("Texas Central Delaware"). BUC is a savings and
loan holding company within the meaning of the Home Owners' Loan Act, as amended
(the "HOLA"), which owns 100% of the issued and outstanding capital stock of
Bank United, a federal savings bank ("Bank United"), indirectly through BNKU
Holdings, Inc. ("BU Holdings"). This Agreement provides for the acquisition of
all of the issued and outstanding common stock, $1.00 par value, of Texas
Central (the "Texas Central Stock") by BUC in connection with which Texas
Central will become a wholly-owned subsidiary of BUC and will continue its
existing operations as a Texas corporation. The acquisition of the Texas Central
Stock will be accomplished through the merger of Acquisition Company, a
to-be-formed Texas corporation and a wholly-owned subsidiary of BUC, with and
into Texas Central, with Texas Central surviving (the "Acquisition Merger"), all
pursuant to this Agreement and the Articles of Merger (including the related
Plan of Merger) by and between Texas Central, BUC and Acquisition Company, a
form of which is attached hereto as EXHIBIT A (the "Articles of Merger").
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ARTICLE I.
THE ACQUISITION MERGER
Section 1.1 ACQUISITION MERGER. BUC Acquisition II shall merge with and
into Texas Central (the resulting company being referred to as the "Surviving
Company") as of the Effective Date, as defined in Section 6.2, under the charter
and Articles of Incorporation of Texas Central and each of the outstanding
shares of common stock of BUC Acquisition II shall and without any action on the
part of BUC be canceled and be converted into shares of common stock of the
Surviving Company. The shares of common stock of the Surviving Company into
which such BUC Acquisition II common stock is converted shall represent
ownership of 100% of the issued and outstanding capital stock of the Surviving
Company, all of which shall be owned by BUC.
Section 1.2 ARTICLES OF INCORPORATION, BYLAWS AND FACILITIES OF SURVIVING
COMPANY. At the Effective Date and until thereafter amended, the Articles of
Incorporation of the Surviving Company shall be the Articles of Incorporation of
Texas Central as in effect at the Effective Date. Until altered, amended or
repealed as provided therein and in the Articles of Incorporation of the
Surviving Company, the Bylaws of the Surviving Company shall be the Bylaws of
Texas Central as in effect at the Effective Date. The main office of the
Surviving Company shall be the main office of Texas Central as of the Effective
Date, and all corporate acts, plans, policies, contracts, approvals and
authorizations of Texas Central and BUC Acquisition II and their respective
shareholders, boards of directors, committees elected or appointed thereby,
officers and agents, which were valid and effective immediately prior to the
Effective Date, shall be taken for all purposes as the acts, plans, policies,
contracts, approvals and authorization of the Surviving Company and shall be as
effective and binding thereon as the same were with respect to Texas Central and
BUC Acquisition II respectively, as of the Effective Date.
Section 1.3 EFFECT OF ACQUISITION MERGER. At the Effective Date, the
corporate existence of Texas Central and BUC Acquisition II shall be merged into
and continued in the Surviving Company, and the Surviving Company shall be
deemed to be a continuation in entity and identity of Texas Central and BUC
Acquisition II. All rights, franchises and interests of Texas Central and BUC
Acquisition II, respectively, in and to any type of property and chooses in
action shall be transferred to and vested in the Surviving Company by virtue of
the Merger without any deed or other transfer. Surviving Company, without any
order or other action on the part of any court or otherwise, shall hold and
enjoy all rights of property, franchises and interest, including appointments,
designations and nominations, and all other rights and interests as trustee,
executor, administrator, transfer agent or registrar of stocks and bonds,
guardian of estates, assignee, receiver and committee of estates and lunatics,
and in every other fiduciary capacity, in the same manner and to the same extent
as such rights, franchises and interests were held or enjoyed by Texas Central
and BUC Acquisition II, respectively, as of the Effective Date.
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Section 1.4 LIABILITIES OF THE SURVIVING COMPANY. At the Effective Date,
the Surviving Company shall be liable for all liabilities of Texas Central and
BUC Acquisition II. All deposits, debts, liabilities and obligations of Texas
Central and of BUC Acquisition II, respectively, accrued, absolute, contingent
or otherwise, and whether or not reflected or reserved against on balance
sheets, books of account or records of Texas Central or BUC Acquisition II, as
the case may be, shall be those of the Surviving Company and shall not be
released or impaired by the Merger. All rights of creditors and other obligees
and all liens on property of either Texas Central or BUC Acquisition II shall be
preserved unimpaired.
Section 1.5 ACQUISITION MERGER PRICE. At the Effective Date and upon and
by reason of the Acquisition Merger becoming effective, each share of Texas
Central Stock issued and outstanding immediately prior to the Effective Date,
excluding Dissenting Shares (as defined in Section 1.7 of this Agreement), and
any and all rights arising out of ownership of such Texas Central Stock shall,
without any action on the part of the holder thereof, be canceled and be
converted into the right to receive a number of shares of the Class A Common
Stock, $ 0.01par value, which is quoted under the symbol "BNKU" on The NASDAQ
Stock Market National Market (the "BUC Stock"), in a ratio to be determined in
accordance with Section 1.6 below. BUC shall not issue any certificates for
fractional shares of BUC Stock in connection with the Merger. In lieu of issuing
fractional shares, BUC shall pay cash for such fractional shares in an amount
determined by multiplying the Average Value Per Share, as hereinafter defined,
by the fractional share interest in BUC Stock to which the Texas Central
shareholder is entitled pursuant to the calculation in accordance with Section
1.6. The Average Value Per Share shall be the average of the daily reported
closing sales prices for a share of the BUC Stock in The NASDAQ Stock Market
National Market for the twenty successive trading days ending on the trading day
that is one trading day prior to closing.
Section 1.6 CALCULATION OF BUC STOCK RATIO. The number of shares of BUC
Stock to be received for each share of Texas Central Stock will be the quotient
obtained by dividing (i) 710,000 by (ii) the total number of shares of Texas
Central Stock issued and outstanding on the Closing Date, which shall not exceed
350,340 shares (the "Merger Consideration"). In the event that the Average Value
Per Share, as calculated in accordance with Section 1.5, is less than $33.57, or
the closing sales price of the BUC Stock on the day immediately prior to the
proposed Effective Date is less than $32.00, the Board of Directors of Texas
Central may terminate this Agreement pursuant to Section 7.1(a)(iv) (B) or (C)
hereof.
Section 1.7 DISSENTING SHARES. Each share of Texas Central Stock issued
and outstanding immediately prior to the Effective Date, the holder of which has
not voted in favor of the Merger and who has properly perfected his dissenter's
rights of appraisal by following the procedures set forth in Texas Business
Corporation Act (the "TBCA"), is referred to herein as a "Dissenting Share. "
Dissenting Shares owned by each holder thereof who has not exchanged his
certificates representing shares of Texas Central Stock for the corresponding
share of the Merger Consideration or otherwise has not effectively withdrawn or
lost his dissenter's rights, shall not be converted into or represent the right
to receive the corresponding share of the Merger Consideration pursuant to
Section 1.5 hereof and shall be entitled only to such rights as are available to
such holder pursuant to the
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applicable provisions of the TBCA. Each holder of Dissenting Shares shall be
entitled to receive the value of such Dissenting Shares held by him in
accordance with the applicable provisions of the TBCA, provided such holder
complies with the procedures contemplated by and set forth in the applicable
provisions of the TBCA. If any holder of Dissenting Shares shall effectively
withdraw or lose his dissenter's rights under the applicable provisions of the
TBCA, such Dissenting Shares shall be converted into the right to receive the
corresponding share of the Merger Consideration in accordance with the
provisions of Section 1.5 hereof. The shares of Texas Central Stock (excluding
any Dissenting Shares) issued and outstanding immediately prior to Closing Date
are sometimes referred to herein as the "Exchange Shares."
Section 1.8 EXCHANGE OF SHARES. (a) On or immediately prior to the
Effective Date, BUC shall deposit in trust with an exchange agent to be selected
by BUC (the "Exchange Agent"), for exchange in accordance with this Agreement,
certificates representing a number of shares of BUC Stock sufficient to pay the
Merger Consideration (excluding any Dissenting Shares), and the cash to be paid
in lieu of fractional shares of BUC Stock.
(b) As soon as practicable after the Effective Date, the Exchange
Agent will mail to each holder of record of Exchange Shares a letter of
transmittal for use in exchanging such holder's certificates for the
corresponding share of the Merger Consideration. Each holder of Exchange Shares,
upon surrender of the certificates therefor to the Exchange Agent, accompanied
by a duly executed letter of transmittal, shall be entitled to receive (i) a
certificate representing that number of whole shares of BUC Stock to which such
holder of Exchange Shares shall have become entitled pursuant to the provisions
of this Article I, and (ii) a check representing the amount of cash in lieu of
fractional shares of BUC Stock, if any, which such holder has the right to
receive in respect of the certificate for the Exchange Shares surrendered
pursuant to the provisions of this Article I, and the certificate representing
the Exchange Shares so surrendered shall be canceled. Until so surrendered, each
stock certificate representing the Exchange Shares will be deemed for all
corporate purposes to represent and evidence solely the right to receive the
corresponding share of the Merger Consideration to be paid therefor pursuant to
this Agreement. Notwithstanding the foregoing, neither the Exchange Agent nor
any other party hereto shall be liable to any holder of certificates
representing Exchange Shares for any amount paid to a public official pursuant
to any applicable abandoned property, escheat or similar law. Except as required
by law, no interest shall be payable with respect to the cash payable for
fractional shares or the cash payable for Dissenting Shares and no dividends
shall be disbursed with respect to shares of BUC Stock until certificates
representing shares of Texas Central Stock are surrendered in exchange therefor.
If any shareholder of record of Texas Central is unable to locate any
certificate evidencing the Exchange Shares, the Exchange Agent shall deliver the
corresponding share of the Merger Consideration to the registered shareholder
upon receipt of a lost certificate affidavit and an indemnity agreement in a
form acceptable to BUC.
Section 1.9 APPROVAL BY SHAREHOLDERS. This Agreement shall be submitted to
the shareholders of Texas Central for their approval in accordance with
applicable provisions of law and the respective Articles of Incorporation and
Bylaws of Texas Central. BUC and Texas Central shall proceed expeditiously and
cooperate fully in obtaining any other consents and approvals and the
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taking of any other actions in satisfaction of all other requirements prescribed
by law or otherwise necessary for consummation of the Merger on the terms herein
provided, including, without limitation, the preparation and submission of all
necessary filings and certificates to the Office of Thrift Supervision (the
"OTS") and the Federal Deposit Insurance Corporation ("FDIC") and the Secretary
of State of Texas.
Section 1.10 STOCK OPTION. The parties acknowledge that, contemporaneously
with the execution and delivery of this Agreement, Texas Central has granted to
BUC an option to purchase 60,334 shares of the Texas Central Stock, representing
19.9% of such shares on a fully-diluted basis, in the form attached hereto as
EXHIBIT B (the "Texas Central Stock Option").
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF TEXAS CENTRAL
Texas Central and represents and warrants to BUC as follows:
Section 2.1 ORGANIZATION. Texas Central is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas and
is a registered bank holding company duly registered under the BHC Act. Texas
Central owns 100% of the issued and outstanding capital stock of Texas Central
Bank, indirectly through Texas Central Delaware. Texas Central Delaware is duly
registered under the BHC Act and a Delaware corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware. Texas
Central Bank is a Texas banking association, duly organized, validly existing
and in good standing under the laws of the State of Texas. Texas Central, Texas
Central Delaware and Texas Central Bank (together, the "Texas Central
Companies") (i) have full power and authority (including all licenses,
franchises, permits and other governmental authorizations which are legally
required) to own, lease and operate their properties, to engage in the business
and activities now conducted by them and Texas Central has full power and
authority to enter into this Agreement; (ii) Texas Central Bank is duly
authorized to conduct a general banking business, including without limitation
all usual deposit functions of commercial banks as well as commercial,
industrial and real estate loans, installment credits, collections and safe
deposit facilities subject to the supervision of the Department and the FDIC;
and (iii) Texas Central Bank is an insured bank as defined in the Federal
Deposit Insurance Act. Texas Central Bank does not conduct any trust activities.
True and complete copies of the Articles of Association and Bylaws of Texas
Central Bank, as amended to date, and the Articles of Incorporation and Bylaws
of Texas Central and Texas Central Delaware, as amended to date, have been
delivered or made available to BUC. Except as otherwise stated herein or as
otherwise disclosed in SCHEDULE 2.1 to this Agreement, none of the Texas Central
Companies (x) has any subsidiaries or affiliates, (y) is a general partner or
material owner in any joint venture, general partnership, limited partnership,
trust or other non-corporate entity, or (z) knows of any arrangement pursuant to
which the stock of any corporation is or has been held in trust (whether
express, constructive, resulting or otherwise) for the benefit of all
shareholders of Texas Central.
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Section 2.2 CAPITALIZATION. The authorized capital stock of Texas Central
consists of 5,000,000 shares of Texas Central Stock, 303,840 of which are issued
and outstanding. All of the issued and outstanding shares of Texas Central Stock
are validly issued, fully paid and nonassessable, and have not been issued in
violation of the preemptive rights of any person or in violation of any
applicable federal or state laws. Except as disclosed in SCHEDULE 2.2, there are
no existing options, warrants, calls, convertible securities or commitments of
any kind obligating Texas Central to issue any authorized and unissued Texas
Central Stock nor does Texas Central have any outstanding commitment or
obligation to repurchase, reacquire or redeem any of its outstanding capital
stock. There are no stock appreciation or similar rights to receive cash payment
in respect of options to purchase shares of Texas Central Stock other than the
stock appreciation rights held by Messrs. Veirs and Mulhollen. The maximum
number of shares of Texas Central Stock that would be outstanding as of the
Effective Date if all warrants, calls and other rights with respect thereto were
exercised is 350,340. There are no voting trusts, voting agreements, buy-sell
agreements or other similar arrangements affecting the Texas Central Stock. All
of the outstanding shares of capital stock of Texas Central Delaware and Texas
Central Bank are owned by Texas Central or Texas Central Delaware respectively,
free and clear of any mortgage, lien, pledge or encumbrance, or lien of any
character, except as disclosed in SCHEDULE 2.2.
Section 2.3 APPROVALS; AUTHORITY. The Board of Directors of Texas Central
has approved this Agreement and the transactions contemplated herein subject to
the approval thereof by the shareholders of Texas Central as required by law,
and, other than shareholder approval, no further corporate proceedings of Texas
Central are needed to execute and deliver this Agreement and consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Texas Central and is a duly authorized, valid, legally binding
agreement of Texas Central enforceable against Texas Central in accordance with
its terms, subject to the effect of bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally and
general equitable principles.
Section 2.4 INVESTMENTS. Texas Central has furnished to BUC, as SCHEDULE
2.4 of this Agreement, a complete list, as of January 31, 1999, of all
securities, including municipal bonds, owned by Texas Central (the "Securities
Portfolio"). All securities listed in SCHEDULE 2.4 are owned by Texas Central
(i) of record, and (ii) beneficially, free and clear of all mortgages, liens,
pledges and encumbrances, except as disclosed in SCHEDULE 2.4. SCHEDULE 2.4 also
discloses any entities in which Texas Central's ownership interest equals 5% or
more of the issued and outstanding voting securities of the issuer thereof.
There are no voting trusts or other agreements or understandings with respect to
the voting of the securities listed in SCHEDULE 2.4.
Section 2.5 FINANCIAL STATEMENTS. Texas Central has furnished BUC with
true and complete copies of Texas Central's balance sheets and related
consolidated statement of income, shareholders' equity and cash flow, together
with the notes thereto, as of and for the years ended December 31, 1998,
December 31, 1997 and December 31, 1996, accompanied by the report of Payne,
Faulkner, Smith & Jones, P.C., for the years ended December 31, 1997 and 1998,
and by the report of Fiske & Robinson, P.C. for the year ended December 31,
1996. Texas Central has also furnished to BUC true and complete copies of the
Call Reports filed by the Texas Central Bank as
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of and for each month during the three years ended December 31, 1998 and
December 31, 1996 (the "Call Reports"). The financial statements and Call
Reports referred to in this Section 2.5 are collectively referred to herein as
the "Texas Central Financial Statements." The Texas Central Financial Statements
fairly present the consolidated financial position of Texas Central and the
consolidated results of its operations at the dates and for the periods
indicated in conformity with generally accepted accounting principles
consistently applied during the periods covered thereby. As of their respective
dates, the Call Reports complied in all material respects with the rules and
regulations of applicable federal and state banking authorities and did not
contain any untrue statement of material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Except as
set forth in SCHEDULE 2.5 to this Agreement, as of the dates of the Texas
Central Financial Statements referred to above, Texas Central did not have any
liabilities, fixed or contingent, which are material and are not fully reflected
or provided for in the Texas Central Financial Statements or otherwise disclosed
in this Agreement. Since December 31, 1998, there have been no changes in the
financial condition, assets, liabilities or results of operations or cash flows
or business of Texas Central which, individually or in the aggregate, have
materially and adversely affected the financial condition or results of
operations of Texas Central.
Section 2.6 TITLE. True and complete copies of all of the deeds and leases
and title insurance policies for all real property owned or leased by the Texas
Central Companies and all mortgages, deeds of trust and security agreements to
which such property is subject have been delivered or made available to BUC. The
Texas Central Companies have good and marketable title to all of their assets
and properties including, without limitation, land and improvements thereon, and
all personal and intangible properties reflected in the Texas Central Financial
Statements or acquired subsequent thereto, subject to no liens, mortgages,
security interests, encumbrances or charges of any kind except (i) as noted in
the Texas Central Financial Statements or otherwise described in this Agreement,
(ii) statutory liens not yet delinquent, (iii) minor defects and irregularities
in title and encumbrances which do not materially impair the use thereof for the
purposes for which they are held, and (iv) those assets and properties disposed
of for fair value in the ordinary course of business since the dates of the
Texas Central Financial Statements. Texas Central owns no securities of, or
interest in, any commercial bank other than the Texas Central Bank.
Section 2.7 ENVIRONMENTAL LAWS. Texas Central is in compliance with all
terms and conditions of all applicable federal and state Environmental Laws (as
defined below) and permits thereunder. Except as set forth on SCHEDULE 2.7
hereto, (i) Texas Central has not received notice of any violation of any
Environmental Laws or generated, stored, or disposed of any materials designated
as Hazardous Materials (as defined below) under the Environmental Laws, and is
not subject to any claim or lien under any Environmental Laws; (ii) during the
term of ownership, lease or operation by Texas Central, no real estate currently
owned, operated, or leased (including any property acquired by foreclosure or
deeded in lieu thereof) by Texas Central, or owned, operated or leased by Texas
Central within the ten years preceding the date of this Agreement, has been
designated as requiring any environmental cleanup or response action to comply
with Environmental Laws, or has been the site of release of any Hazardous
Materials; (iii) no asbestos was used in the construction of any portion of
Texas Central's facilities; and (iv) no real property currently owned,
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leased or operated by Texas Central is, or has been, an industrial site or
landfill. Texas Central has furnished BUC true and complete copies of all
environmental assessments, reports, studies and other related information in its
possession relating to each real property owned, leased or operated by Texas
Central.
"Environmental Laws," for purposes of this Section 2.7, includes, but is
not limited to, 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 to date and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree, or judgment,
relating to the environment, human health or safety, or Hazardous Materials,
including without limitation the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. ss.ss. 9601, ET
SEQ.; The Hazardous Materials Transaction Act, as amended, 49 U.S.C. ss.ss.
1801, ET SEQ.; the Resource Conservation and Recovery Act of 1976, as amended,
42 U.S.C. ss.ss. 6901, ET SEQ.; the Federal Water Pollution Control Act, as
amended, 33 U.S.C. ss.ss. 1201, ET SEQ.; the Toxic Substances Control Act, 15
U.S.C. ss.ss. 2601, ET SEQ.; the Clean Air Act, 42 U.S.C. ss.ss. 7401, ET SEQ.;
and the Safe Drinking Water Act, 42 U.S.C. ss.ss. 3808, ET SEQ.
"Hazardous Materials," for purposes of this Section 2.7, includes, but is
not limited to, (i) any petroleum or petroleum products, natural gas, or natural
gas products, radioactive materials, asbestos, urea formaldehyde foam
insulation, transformers or other equipment that contains dielectric fluid
containing levels of polychlorinated biphenyls (PCBs), and radon gas; (ii) any
chemicals, materials, waste or substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes," toxic substances,"
"toxic pollutants," "contaminants," or "pollutants," or words of similar import,
under any Environmental Laws; and (iii) any other chemical, material, waste or
substance which is in any way regulated by any federal, state or local
government authority, agency or instrumentality, including mixtures thereof with
other materials, and including any regulated building materials such as asbestos
and lead.
Section 2.8 LITIGATION AND OTHER PROCEEDINGS. Except as otherwise noted on
SCHEDULE 2.8 hereto, there are no legal, quasi-judicial or administrative
proceedings of any kind or nature now pending or, to the knowledge of Texas
Central, threatened before any court or administrative body in any manner
against the Texas Central Companies or any of their respective properties or
capital stock, which might have a material adverse effect on the Texas Central
Companies or their respective financial conditions, assets, operations or
earnings or cash flows or the transactions proposed by this Agreement. Texas
Central knows of no basis on which any litigation or proceeding could be brought
which could have a materially adverse effect on the financial condition, results
of operation, business or prospects of the Texas Central Companies or which
could question the validity of any action taken or to be taken in connection
with this Agreement and the transactions contemplated hereby. No Texas Central
Company is in default with respect to any judgment, order, writ, injunction,
decree, award, rule or regulation of any court, arbitrator or governmental
agency or instrumentality.
Section 2.9 TAXES. (a) Except as otherwise noted in SCHEDULE 2.9(A)
hereto, all Returns required to be filed by or on behalf of each of the Texas
Central Companies have been duly filed on
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a timely basis and such Returns are true, complete and correct. All Taxes shown
to be payable on the Returns or on subsequent assessments with respect thereto
have been paid in full on a timely basis, and no other Taxes are payable by the
Texas Central Companies with respect to items or periods covered by such Returns
(whether or not shown on or reportable on such Returns) or with respect to any
period prior to the date of this Agreement. Each of the Texas Central Companies
has withheld and paid over all Taxes required to have been withheld and paid
over, and complied with all information reporting and backup withholding
requirements, including maintenance of required records with respect thereto, in
connection with amounts paid or owing to any employee, creditor, independent
contractor or other third party. There are no liens on any of the assets of the
Texas Central Companies with respect to Taxes, other than liens for Taxes not
yet due and payable.
(b) Except as otherwise noted in SCHEDULE 2.9(B) hereto, no
deficiencies for Taxes have been claimed, proposed or assessed by any taxing or
other governmental authority against the Texas Central Companies which have not
been settled, closed or reached a final determination. There are no pending
audits relating to any Tax liability of the Texas Central Companies. None of the
Texas Central Companies is a party to any action or proceeding for assessment or
collection of Taxes, nor have such events been asserted or threatened against
the Texas Central Companies or any of their assets. No waiver or extension of
any statute of limitations relating to Taxes is in effect with respect to the
Texas Central Companies. No power of attorney has been executed by the Texas
Central Companies with respect to any Tax matters which is currently in force.
(c) Except as otherwise noted in SCHEDULE 2.9(C) hereto, the Texas
Central Companies have disclosed on their federal income tax returns all
positions taken therein that could give rise to a substantial understatement
penalty within the meaning of Section 6662 of the Internal Revenue Code of 1986
(the "Code"). None of the Texas Central Companies has agreed to make, nor is any
of the Texas Central Companies required to make, any adjustment under Code
Section 481(a) by reason of a change in accounting method or otherwise. None of
the Texas Central Companies is a party to any safe harbor lease within the
meaning of Code Section 168(f)(8), as in effect prior to amendment by the Tax
Equity and Fiscal Responsibility Act of 1982. None of the Texas Central
Companies is a party to any Tax sharing agreement or has any continuing
obligations under any prior Tax sharing agreement, and none of the Texas Central
Companies has been a member of an affiliated group of corporations filing a U.S.
federal consolidated income tax return as to which Texas Central was not the
common parent.
(d) Texas Central has made a valid and timely election to be taxed
as an S corporation under the Code effective as of January 1, 1998, and such
election continues to be effective as of the date of this Agreement. Neither
Texas Central nor any of its existing shareholders or former shareholders has
taken any action which would terminate Texas Central's S corporation election
prior to the date of this Agreement. Texas Central (or any of the other Texas
Central Companies, as applicable) has made a valid and timely election for each
of the Texas Central Companies (other than Texas Central) to be treated as a
qualified subchapter S subsidiary pursuant to the Code effective as of January
1, 1998, and such elections continue to be effective as of the date of this
Agreement. None of the Texas Central Companies has taken any action which would
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terminate the qualified subchapter S subsidiary elections of the Texas Central
Companies prior to the date of this Agreement.
(e) None of the Texas Central Companies has any reason to believe
that any conditions exist that would prevent or impede the Acquisition Merger
from qualifying as a reorganization within the meaning of Code Section 368.
(f) As used in this Agreement, the term "Taxes" shall mean all
taxes, however denominated, including any interest, penalties or other additions
to tax that may become payable in respect thereof, imposed by any federal,
territorial, state, local or foreign government or any agency or political
subdivision of any such government, which taxes shall include, without limiting
the generality of the foregoing, all income or profits taxes (including, but not
limited to, federal income taxes and state income taxes), real property gains
taxes, payroll and employee withholding taxes, unemployment insurance taxes,
social security taxes, sales and use taxes, ad valorem taxes, excise taxes,
franchise taxes, gross receipts taxes, business license taxes, occupation taxes,
real and personal property taxes, stamp taxes, environmental taxes, transfer
taxes, workers' compensation, Pension Benefit Guaranty Corporation premiums and
other governmental charges, and other obligations of the same or of a similar
nature to any of the foregoing, which the Texas Central Companies are required
to pay, withhold or collect. As used in this Agreement, the term "Returns" shall
mean all reports, estimates, declarations of estimated tax, information
statements and returns relating to, or required to be filed in connection with,
any Taxes, including information returns or reports with respect to backup
withholding and other payments to third parties.
True and complete copies of the federal income tax returns of Texas
Central as filed with the Internal Revenue Service for the years ended December
31, 1997, December 31, 1996, and December 31, 1995, have been furnished to BUC.
Section 2.10 CONTRACTS. Except as otherwise noted in SCHEDULE 2.10 hereto,
no Texas Central Company is a party to or bound by any (i) employment contract
(including without limitation any collective bargaining contract or union
agreement or agreement with an independent contractor) which is not terminable
by the Texas Central Companies on less than 60 days notice without payment of
any amount on account of such termination; (ii) bonus, stock option, deferred
compensation or profit-sharing, pension or retirement plan or other employee
benefit arrangement; (iii) material lease or license with respect to any
property, real or personal, whether as landlord, tenant, licensor or licensee;
(iv) contract or commitment for capital expenditures in excess of $30,000 for
any one project; (v) material contract or commitment made in the ordinary course
of business for the purchase of materials or supplies or for the performance of
services over a period of more than 60 days from the date of this Agreement
involving an annual expenditure in excess of $30,000; (vi) contract or
commitment made in the ordinary course of business for the purchase of materials
or supplies or for the performance of services over a period of more than 120
days from the date of this Agreement; (vii) contract or option to purchase or
sell any real or personal property other than in the ordinary course of
business; (viii) contract, agreement or letter with respect to the management of
the Texas Central Companies imposed by any bank regulatory authority having
supervisory jurisdiction over the Texas Central Companies; (ix) agreement,
contract or indenture
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related to the borrowing by the Texas Central Companies of money other than
those entered into in the ordinary course of business; (x) guaranty of any
obligation for the borrowing of money, excluding endorsements made for
collection, repurchase or resell agreements, letters of credit and guaranties
made in the ordinary course of business; (xi) agreement with or extension of
credit to any executive officer or director of the Texas Central Companies or
holder of more than 10% of the Texas Central Stock, or any affiliate of such
person, which is not on substantially the same terms (including, without
limitation, in the case of lending transactions, interest rates and collateral)
as, and following credit underwriting practices that are not less stringent
than, those prevailing at the time for comparable transactions with unrelated
parties or which involve more than the normal risk of collectability or other
unfavorable features; (xii) any agreement or arrangement with any executive
officer, director, holder of 10% or more of the Texas Central Stock or affiliate
of such persons for the provision of services or lease of property or any
similar matter that is essential to their operations or on terms which are
preferential to them or such persons; or (xiii) material contracts, other than
the foregoing, involving more than $30,000 and not made in the ordinary course
of business and not otherwise disclosed in this Agreement, in any schedule
attached hereto. The Texas Central Companies have performed all obligations
required to be performed by them to date and are not in default under, and to
the best knowledge of Texas Central, no event has occurred which, with the lapse
of time or action by a third party could result in default under, any indenture,
mortgage, contract, lease or other agreement to which the Texas Central
Companies are a party or by which they are bound or under any provision of their
Articles of Incorporation, Articles of Association or Bylaws.
Section 2.11 FIDELITY BONDS AND INSURANCE. A true and complete list of all
fidelity bonds and insurance policies owned or held by, or issued in favor of,
the Texas Central Companies (other than credit-life policies), including policy
numbers, retention levels, insurance carriers, and effective and termination
dates, is set forth in SCHEDULE 2.11 to this Agreement. Such fidelity bonds and
insurance policies are adequate for the business conducted by the Texas Central
Companies in respect of amounts, types and risks insured.
Section 2.12 NO CONFLICT WITH OTHER INSTRUMENTS. Neither the execution and
delivery of this Agreement nor the consummation of the Acquisition Merger,
subject to obtaining all required shareholder consents, will conflict with or
result in a breach of any provision of the Articles of Incorporation or Bylaws
of the Texas Central Companies. The execution and delivery of this Agreement and
the consummation of the Acquisition Merger, subject to obtaining all required
shareholder and regulatory approvals, will not violate any provision of, or
constitute a default under, any law, or any order, writ, injunction or decree of
any court or other governmental agency, or any contract, agreement or instrument
to which any of the Texas Central Companies is a party or by which any of them
is bound or constitute an event which, with the lapse of time or action by a
third party, could result in any default under any of the foregoing or result in
the creation of any lien, charge or encumbrance upon the assets or properties of
the Texas Central Companies or upon the Texas Central Stock.
Section 2.13 LAWS. Except as otherwise noted on SCHEDULE 2.13 hereto, the
Texas Central Companies are in material compliance with all applicable federal,
state and local laws, rules,
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regulations and orders applicable to them. Except for approvals by regulatory
authorities having jurisdiction over the Texas Central Companies, no prior
consent, approval or authorization of, or declaration, filing or registrations
with, any person or regulatory authority is required of any of them in
connection with the execution, delivery and performance by any of them of this
Agreement and the Acquisition Merger. The Texas Central Companies have filed all
reports, notices, registrations and statements, together with any amendments
required to be made thereto, that are required to be filed with the FRB, the
Department and the FDIC or any other regulatory authority having jurisdic tion
over any of them, and such reports, notices, registrations and statements are,
to the best knowledge of Texas Central, true and correct and do not contain any
untrue statement of material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Section 2.14 CONDUCT. Except as otherwise noted in SCHEDULE 2.14 hereto,
since December 31, 1998, none of the Texas Central Companies has (i) issued or
sold any of their capital stock or corporate debt obligations; (ii) declared or
set aside or paid any dividend or made any other distribution in respect of or,
directly or indirectly, purchased, redeemed or otherwise acquired any shares of
their capital stock, except dividends on the Texas Central Stock of $153,700
paid prior to the date hereof; (iii) incurred any obligations or liabilities
(fixed or contingent), except obligations or liabilities incurred in the
ordinary course of business, or mortgaged, pledged or subjected any of their
assets to a lien or encumbrance (other than in the ordinary course of business
and other than statutory liens not yet delinquent); (iv) discharged or satisfied
any lien or encumbrance or paid any obligation or liability (fixed or
contingent), other than accruals, accounts and notes payable included in the
Texas Central Financial Statements, accruals, accounts and notes payable
incurred since December 31, 1998 in the ordinary course of business, and
accruals, accounts and notes payable incurred as contemplated by this Agreement;
(v) sold, exchanged or otherwise disposed of any of their capital assets other
than in the ordinary course of business; (vi) made any general or individual
wage or salary increase (including increases in directors' or consultants'
fees), paid any bonus, granted or paid any perquisites such as automobile
allowance, club membership or dues or other similar benefits, or instituted any
employee welfare, retirement or similar plan or arrangement; (vii) suffered any
physical damage, destruction or casualty loss, whether or not covered by
insurance, materially and adversely affecting their businesses, properties or
assets; (viii) made any or acquiesced in any change in accounting methods,
principles and practices; (ix) entered into any contract, agreement or
commitment which obligates Texas Central for an amount in excess of $30,000 over
the term of any such contract, agreement or commitment other than in the
ordinary course of business; or (x) except in the ordinary course of business,
entered or agreed to enter into any agreement or arrangement granting any
preferential rights to purchase any of their assets, properties or rights or
requiring the consent of any party to the transfer and assignment of any such
assets, properties or rights.
Section 2.15 RESERVE FOR POSSIBLE LOAN LOSSES. The reserve for possible
loan losses of Texas Central Bank has been calculated in accordance with
generally accepted accounting principles as applied to banking institutions and
in accordance with all applicable rules and regulations. Such reserve shown on
Texas Central Bank's Call Report of December 31, 1998, is adequate in all
respects to provide for all losses, net of recoveries relating to loans
previously charged off, on loans
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outstanding as of December 31, 1998. On the Effective Date, no material facts
relevant to the adequacy of such reserves as of that date shall have been
withheld from BUC. Except as disclosed in SCHEDULE 2.15 there are no loans of
Texas Central Bank that have been classified by national bank examiners on Texas
Central Bank's most recent examination report as "Other Assets Especially
Mentioned," "Substandard," "Doubtful" or "Loss."
Section 2.16 EMPLOYMENT RELATIONS. The relations of each Texas Central
Company with its employees are satisfactory, and they have not received any
notice of any controversies with, or organizational efforts or other pending
actions by, representatives of their employees. The Texas Central Companies have
complied in all material respects with all laws relating to the employment of
labor with respect to their employees, including any provisions thereof relating
to wages, hours, collective bargaining and the payment of worker's compensation
insurance and social security and similar taxes, and, except as disclosed in
SCHEDULE 2.16 hereto, no person has asserted that any Texas Central Company is
liable for any arrearages of wages, worker's compensation insurance premiums or
any taxes or penalties for failure to comply with any of the foregoing.
Section 2.17 EMPLOYEE BENEFIT PLANS. (a) SCHEDULE 2.17(A) contains a
complete and accurate list of all employee benefit plans and programs, and
bonus, incentive, deferred compensation, pension, retirement, profit-sharing,
thrift, savings, employee stock ownership, stock bonus, stock purchase,
restricted stock, stock option, stock appreciation, phantom stock, severance,
welfare and fringe benefit plans, contracts, employment, collective bargaining,
or severance agreements written and unwritten and all similar practices,
policies and arrangements in which any Texas Central Company has any liability,
obligation to, or which is maintained or contributed to by either of them or
which covers any employees, or former employees, consultants or former
consultants, officers or former officers, directors or former directors of them,
which are now in force or which have been in force during the last three years
(the "COMPENSATION AND BENEFIT PLANS"). There is no commitment to create any
additional Compensation and Benefit Plan or to modify or change any existing
Compensation and Benefit Plan.
(b) Each Compensation and Benefit Plan is in compliance in all
material respects, in form and in administration, with the plan documents and
all applicable laws, including, the extent applicable, ERISA, the Internal
Revenue Code, federal securities laws, the Age Discrimination in Employment Act,
or any regulations or rules promulgated thereunder, and all material filings,
disclosures and notices required by ERISA, the Internal Revenue Code, federal
securities laws, the Age Discrimination in Employment Act and any other
applicable law have been timely made. No Compensation and Benefit Plan is an
"employee pension benefit plan" within the meaning of Section 3(2) of ERISA (a
"PENSION PLAN") which is required to be qualified under Section 401(a) of the
Internal Revenue Code. There is no pending or, to the knowledge of Texas
Central, threatened legal action, suit or claim relating to the Compensation and
Benefit Plans. No transaction or omission with respect to any Compensation and
Benefit Plan exists that would be a violation of Section 4975 of the Code or
Section 502 of ERISA that is not exempt under Code Section 4975 or ERISA Section
502.
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(c) Neither Texas Central nor any entity which is a member of a
controlled group or affiliated service group with Texas Central under ERISA
Section 4001 or Section 414 of the Code ("ERISA AFFILIATE") maintains or has
ever maintained or contributed to a Pension Plan subject to title IV of ERISA or
Section 412 of the Code. No notice of a "reportable event", within the meaning
of Section 4043 of ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any Compensation and Benefit Plan or
any plan of an ERISA Affiliate within the 12-month period ending on the date
hereof, and no such notice will be required to be filed as a result of the
transactions contemplated by this Agreement. There is no pending investigation
or enforcement action by the Department Of Labor or Internal Revenue Service or
any other Governmental Authority with respect to any Compensation and Benefit
Plan.
(d) All contributions or insurance premiums required to be made
under the terms of any Compensation and Benefit Plan or any employee benefit
arrangements under any collective bargaining agreement to which Texas Central or
an ERISA Affiliate is a party have been timely made or will be timely made prior
to the Effective Time.
(e) No Texas Central Company has any obligation to provide retiree
health and life insurance or other retiree death benefits under any Compensation
and Benefit Plan, other than benefits mandated by Section 4980B of the Internal
Revenue Code and Sections 601-609 of ERISA. There has been no written or oral
communication to employees that promises or guarantees such employees retiree
health or life insurance or other retiree death benefits on a permanent basis.
Except as disclosed in SCHEDULE 2.17(E), Texas Central Bank may terminate or
amend any Compensation and Benefit Plan in which Texas Central Bank's or its
affiliates employees or former employees participate at any time without
incurring any liability thereunder. Except as disclosed in SCHEDULE 2.17(E), the
plan administrator of each Compensation and Benefit Plan in which such employees
or former employees participate has the sole discretion to construe and
interpret the terms of the plan.
(f) No Texas Central Company maintains any Compensation and Benefit
Plans covering foreign employees.
(g) With respect to each Compensation and Benefit Plan, if
applicable, Texas Central has furnished to BUC, true and complete copies of: (i)
Compensation and Benefit Plan documents and all amendments thereto; (ii) trust
instruments and insurance contracts; (iii) Forms 5500 filed with the IRS for the
last 3 plan years; (iv) most recent financial statement; (v) the most recent
summary plan description and any other communication to employees regarding such
benefits including employee booklets; and (f) most recent determination letter
issued by the IRS.
(h) Except as disclosed in SCHEDULE 2.17(H) the consummation of the
Acquisition Merger as contemplated by this Agreement will not, directly or
indirectly (including, without limitation, as a result of any termination of
employment prior to or following the Effective Time) (i) result in the vesting
or acceleration of the payment of any benefits under any Compensation and
Benefit Plan, (ii) result in any increase in benefits payable or compensation
payable to a participant or service provider under any Compensation and Benefit
Plan, (iii) result in the payment of any
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severance separation benefit, or (iv) result in a breach or violation of any
Compensation and Benefit Plan.
(i) No Texas Central Company maintains any compensation plans,
programs or arrangements in which their employees or former employees
participate the payments under which would not reasonably be expected to be
deductible as a result of the limitations under Section 162(m) of the Internal
Revenue Code and the regulations issued thereunder.
(j) As a result, directly or indirectly, of the Acquisition Merger
as contemplated by this Agreement (including, without limitation, as a result of
any termination of employment prior to or following the Effective Time), neither
BUC nor any Texas Central Company will be obligated to make a payment that would
be characterized as an "excess parachute payment" to an individual who is a
"disqualified individual" (as such terms are defined in Section 280G of the
Internal Revenue Code), without regard to whether such payment is reasonable
compensation for personal services performed or to be performed in the future.
(k) Neither any Texas Central Company nor any ERISA Affiliate is a
party to, or has made any contribution to or otherwise incurred or could incur
any obligation under any "multiemployer plan", as defined in Section 3(37) of
ERISA.
(l) There has been no written or oral communication or amendment to
a Compensation and Benefit Plan by any Texas Central Company or any ERISA
Affiliate since January 1, 1998 relating to or changing the participation or
coverage under any such plan in which any of their employees or former employees
participate which would increase the expense of maintaining such plan above the
level of expense incurred with respect to that plan for the most recent fiscal
year included in the Texas Central Financial Statements.
(m) There are no voluntary employee benefit associations related to
any Compensation and Benefit Plan under Section 501(c)(9) of the Internal
Revenue Code.
(n) Any guaranteed investment contracts or other funding contracts
with any insurance company that are held by a Compensation and Benefit Plan and
any annuity contracts purchased by such plan was issued by an insurance company
which carried the highest rating from each of D & B, S&P, Best and Moody's
Investor Service, Inc. as of such date the contract was issued, the date hereof
and the Effective Date.
Section 2.18 LIST OF LOANS. SCHEDULE 2.18 sets forth a true and complete
list, as of December 31, 1998, of all loans (individually, a "Loan" and
collectively, the "Loans") of Texas Central Bank, showing for each such Loan the
outstanding principal balance due, before reduction for any discount. All
currently outstanding Loans of Texas Central Bank, including any current
extensions of any Loan, were solicited, originated and currently exist in
material compliance with all applicable requirements of federal and state law
and regulations promulgated thereunder. The Loans are adequately documented and
each note evidencing a Loan or credit agreement or security instrument related
to a Loan constitutes a valid and binding obligation of the obligor thereunder,
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enforceable in accordance with the terms thereof, except where the failure
thereof, individually or in the aggregate, would not have a material adverse
effect on the condition (financial or otherwise), operations or prospects of
Texas Central Bank. For the purposes of this Section, the phrase "enforceable in
accordance with the terms thereof" does not mean that the borrower has the
financial ability to pay a Loan or that any collateral is sufficient to result
in payment of the Loan secured thereby. There are no oral modifications or
amendments or additional agreements related to the Loans that are not reflected
in Texas Central Bank's records, and no claim of defense as to the enforcement
of any Loan has been asserted, and Texas Central Bank is not aware of any acts
or omissions that would give rise to any claim or right of rescission, set off,
counterclaim or defense, except where such claim would not have, either
individually or in the aggregate, a material adverse effect on the condition
(financial or otherwise), operations or prospects of Texas Central Bank.
Section 2.19 ACCOUNTING MATTERS. None of the Texas Central Companies nor
any of the shareholders of Texas Central will take or agree to take any action
that would prevent BUC from accounting for the Acquisition Merger as a pooling
of interests.
Section 2.20 SEC STATUS; SECURITIES ISSUANCES. Texas Central is not
subject to the registration provisions of Section 12 of the Securities and
Exchange Act of 1934, as amended (the "Exchange Act") nor the rules and
regulations of the SEC promulgated under the Exchange Act, other than anti-fraud
provisions of such act. All issuances of securities by the Texas Central
Companies have been registered under the Securities Act, the Securities Act of
the State of Texas, the Texas Finance Code, and all other applicable laws or
were exempt from any such registration requirements.
Section 2.21 ABSENCE OF CHANGES. Since December 31, 1998, except as
disclosed in SCHEDULE 2.21 to this Agreement, there has not been any material
adverse change in the condition (financial or otherwise), assets, liabilities,
results of operations, earnings, cash flows, business or prospects of Texas
Central. Since December 31, 1998, the business of Texas Central has been
conducted only in the ordinary course, consistent with prior practices.
Section 2.22 BROKERS AND FINDERS. No Texas Central Company and none of
their 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 Acquisition Merger except for a fee to Service Asset
Management Company ("SAMCO") not to exceed $500,000.
Section 2.23 ABSENCE OF PROPERTY TAXES AND LIENS. All property taxes due
under the applicable provisions of the Texas Tax Code have been paid by either
Texas Central or the shareholders of Texas Central, and no liens imposed or
authorized by the Texas Tax Code exist on the shares of Texas Central Stock,
except as otherwise disclosed in SCHEDULE 2.23 to this Agreement.
Section 2.24 COMMUNITY REINVESTMENT ACT. Texas Central Bank is in material
compliance with the Community Reinvestment Act (12 U.S.C. ss. 2901 ET SEQ.) and
all regulations promulgated thereunder, and Texas Central has supplied BUC with
copies of Texas Central Bank's current CRA Statement, all letters and written
comments received by Texas Central Bank since January 1, 1996
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pertaining thereto and any responses by Texas Central Bank to such comments.
Texas Central Bank has a rating of "satisfactory" as of its most recent CRA
compliance examination and knows of no reason why it would not receive a rating
of "satisfactory" or better pursuant to its next CRA compliance examination or
why the Department or any other governmental entity may seek to restrain, delay
or prohibit the Acquisition Merger as a result of any act or omission of Texas
Central Bank under the CRA.
Section 2.25 FAIR HOUSING ACT, HOME MORTGAGE DISCLOSURE ACT AND EQUAL
CREDIT OPPORTUNITY ACT. Texas Central Bank is in material compliance with the
Fair Housing Act (42 U.S.C. ss. 3601 ET SEQ.), the Home Mortgage Disclosure Act
(12 U.S.C. ss. 2801 ET SEQ. and the Equal Credit Opportunity Act (15 U.S.C. ss.
1691 ET SEQ.) and all regulations promulgated thereunder. Texas Central Bank has
not received any notices of any violation of said acts or any of the regulations
promulgated thereunder, nor does Texas Central Bank have any notice of, or
knowledge of, any threatened administrative inquiry, proceeding or investigation
with respect to Texas Central Bank's compliance with said acts.
Section 2.26 USURY LAWS AND OTHER CONSUMER COMPLIANCE LAWS. All loans of
Texas Central Bank have been made substantially in accordance with all
applicable statutes and regulatory requirements at the time of such loan or any
renewal thereof, including without limitation, the Texas usury statutes as they
are currently interpreted, Regulation Z (12 C.F.R. ss. 226 ET SEQ.) issued by
the FRB, the Federal Consumer Credit Protection Act (15 U.S.C. ss. 1601 ET
SEQ.), the Texas Consumer Credit Code (Tex. Rev. Civ. Stat. Ann. art. 5069-2.01,
ET SEQ.) and all statutes governing the operation of Texas chartered banks. Each
Loan of Texas Central was made in the ordinary course of its business.
Section 2.27 BANK SECRECY ACT. Texas Central Bank is in material
compliance with the Bank Secrecy Act (12 U.S.C. ss.ss. 1730(d) and 1829(b)) and
all regulations promulgated thereunder, and Texas Central has properly certified
all foreign deposit accounts and has made all necessary tax withholdings on all
of its deposit accounts; furthermore, Texas Central Bank has timely and properly
filed and maintained all requisite Currency Transaction Reports and other
related forms, including, but not limited to, any requisite Custom Reports
required by any agency of the United States Treasury Department, including but
not limited to the Internal Revenue Service.
Section 2.28 ZONING AND RELATED LAWS. All real property owned, leased or
operated by the Texas Central Companies and the use thereof materially complies
with all applicable laws, ordinances, regulations, orders or requirements,
including without limitation, building, zoning and other laws.
Section 2.29 SECURITIES LAWS. Texas Central Bank and its officers,
employees and agents are now, and at all times in the past have been, in full
compliance with all applicable federal and state securities laws and any
regulations promulgated thereunder. Texas Central Bank and its officers,
employees and agents have complied with, and currently hold, all necessary
licenses and permits required under any federal or state securities law or
regulation to conduct any securities
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activities in which Texas Central Bank or its officers, employees, or agents are
now engaged or have been engaged in the past.
Section 2.30 REGULATORY APPROVALS. Texas Central has no reason to believe
that it will not be able to obtain all requisite regulatory and other approvals
or consents which it is required to obtain necessary to consummate the
Acquisition Merger.
Section 2.31 SHAREHOLDERS' LIST. Texas Central has provided BUC as of a
date within ten (10) days of the date of this Agreement, a list of the holders
of shares of Texas Central Stock containing for Texas Central's shareholders the
names, addresses and number of shares held of record, which shareholders' list
is in all respects accurate as of such date and will be updated and delivered to
BUC immediately prior to Closing.
Section 2.32 BOOKS AND RECORDS. The books and records of the Texas Central
Companies have been fully, properly and accurately maintained in all material
respects, and there are no material inaccuracies or discrepancies of any kind
contained or reflected therein and they fairly reflect the substance of events
and transactions included therein.
Section 2.33 DEPOSIT SUMMARY. Attached hereto as SCHEDULE 2.33 is a
summary of the amounts and types of the deposits held by Texas Central Bank on
December 31, 1998 and the weighted average interest rates being paid thereon as
of such date (the "Deposit Summary"). The Deposit Summary was prepared by the
Bank in the ordinary course of business and the information contained therein is
true, complete and correct as of the date thereof.
Section 2.34 SCHEDULES. The Schedules delivered pursuant to this Article
II and elsewhere in this Agreement, which have been delivered concurrent with
the execution and delivery of this Agreement, are true and correct and contain
no untrue statements of material fact or omit any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
Section 2.35 YEAR 2000 REPRESENTATION. No Texas Central Company has reason
to believe that it will receive a rating of less than "satisfactory" on any Year
2000 report of examination of any regulatory authority. Texas Central Bank has
delivered to BUC a complete and accurate copy of its plan, including a good
faith preliminary estimate of the anticipated associated costs ("YEAR 2000
BUDGET"), for addressing the issues set forth in the statements of the Federal
Financial Institutions Examination Council ("FFIEC") dated May 5, 1997, entitled
Year 2000 Project Management Awareness," and December 17, 1997, entitled "Safety
and Soundness Guidelines Concerning the Year 2000 Business Risk," as such issues
affect it and such plan is in material compliance with the schedule set forth in
the FFIEC statements. Texas Central Bank is in compliance with the Year 2000
Interagency Statements dated June, 1996, May 5, 1997, December 17, 1997, March
17, 1998, April 10, 1998 and May 13, 1998 issued by the FFIEC. Texas Central
Bank has delivered to BUC complete and accurate lists of its vendors and
automated systems material to its operations, including, software, firmware,
hardware, embedded chips and other processing devices. The Year 2000 Budget is
reasonable.
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Section 2.36 DISCLOSURE. The representations and warranties contained in
this Article II do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements and
information contained in this Article II not misleading.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF BUC
Section 3.1 ORGANIZATION. BUC is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and a
savings and loan holding company duly registered under HOLA. BUC, indirectly
through BU Holdings, owns 100% of the issued and outstanding capital stock of
Bank United. BU Holdings and Bank United shall hereafter sometimes be referred
to as the "BUC Subsidiaries". Bank United is a federal savings bank, duly
organized, validly existing and in good standing under the laws of the United
States of America. The deposits of Bank United are insured pursuant to the
Federal Deposit Insurance Act, as amended. BUC and the BUC Subsidiaries have
full power and authority (including all licenses, franchises, permits and other
governmental authorizations which are legally required) to own their respective
properties, to engage in the business and activities now conducted by them and
to enter into and perform this Agreement.
Section 3.2 CAPITALIZATION. The authorized capital stock of BUC consists
of 10 million shares of preferred stock, $.01 par value per share, 40,000,000
shares of BUC Class A Common Stock, par value $.01 per share, and 40,000,000
shares of BUC Class B Common Stock, par value $.01 per share. As of December 31,
1998, no shares of preferred stock, 28,321,576 shares of BUC Class A Common
Stock were issued and outstanding and 3,241,320 shares of BUC Class B Common
Stock were issued and outstanding. All of the issued and outstanding shares of
BUC Common Stock are validly issued, fully paid and non-assessable, and have not
been issued in violation of the preemptive rights of any person.
Section 3.3 ISSUANCE OF BUC STOCK. BUC has available a sufficient number
of authorized and unissued shares of BUC Stock to pay the Merger Consideration,
and BUC will not take any action during the term of this Agreement that will
cause it not to have a sufficient number of authorized and unissued shares of
BUC Stock to pay the Merger Consideration. None of the shares of BUC Stock to be
issued pursuant to this Agreement will be when issued subject to any lien,
charge, encumbrance, claim, rights of others, mortgage, pledge or security
interest created by BUC, and none will be subject to any agreements or
understandings among any persons with respect to the voting or transfer of such
shares of BUC Stock, except as contemplated hereby. The shares of BUC Stock to
be issued pursuant to this Agreement, when issued in accordance with the terms
and conditions of this Agreement, shall be validly issued, fully paid and
non-assessable, authorized for trading in The NASDAQ Stock Market National
Market and will not have been issued in violation of the preemptive rights of
any person.
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Section 3.4 APPROVALS; AUTHORITY. The Board of Directors of BUC has
approved this Agreement and the matters contemplated herein. No further
corporate proceedings of BUC are needed to deliver this Agreement and consummate
the Acquisition Merger. This Agreement has been duly executed and delivered by
BUC and is a binding agreement of BUC enforceable against BUC in accordance with
its terms, subject to the effect of bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally and
general equitable principles.
Section 3.5 NO CONFLICT WITH OTHER INSTRUMENTS. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby,
subject to obtaining all required regulatory approvals, will not violate any
provision of, or constitute a default under, any law, or any order, writ,
injunction or decree of any court or other governmental agency, or any contract,
agreement or instrument to which BUC is a party or by which it is bound or
constitute an event which, with the lapse of time or action by a third party,
could result in any default under any of the foregoing or result in the creation
of any lien, charge or encumbrance upon the assets or properties of BUC or upon
the BUC Stock.
Section 3.6 FINANCIAL REPORTS AND SEC DOCUMENTS; MATERIAL ADVERSE EFFECT.
(a) BUC's Annual Reports on Form 10-K for the fiscal years ended September 30,
1997 and 1998, and all periodic and current reports and definitive proxy
statements filed or to be filed by it subsequent to September 30, 1997 under
Section 13, 14 or 15(d) of the Exchange Act, in the form filed or to be filed
(collectively, "SEC DOCUMENTS") with the SEC, as of the date filed, (a) complied
or will comply in all material respects with the applicable requirements under
the Exchange Act, and (b) did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; and each of the balance sheets or
statements of condition contained in or incorporated by reference into any such
SEC Document (including the related notes and schedules thereto) fairly
presents, or will fairly present, the consolidated financial position of BUC as
of its date, and each of the statements of income and changes in stockholders'
equity and cash flows or equivalent statements in such SEC Documents (including
any related notes and schedules thereto) fairly presents, or will fairly
present, in all material respects, the consolidated results of operations,
changes in stockholders' equity and cash flows, as the case may be, of BUC for
the periods to which they relate, in each case in accordance with generally
accepted accounting principles consistently applied during the periods involved,
except in each case as may be noted therein, subject, in the case of unaudited
financial statements, to normal year-end audit adjustments and the absence of
footnotes.
(b) Since December 31, 1998, no event has occurred or circumstance
arisen that, individually or taken together with all other facts, circumstances
and events, is reasonably likely to have a material adverse effect with respect
to BUC.
Section 3.7 LITIGATION; REGULATORY ACTION. Except as set forth in BUC's
SEC Documents (i) no material litigation, claim or other proceeding before any
governmental authority is pending against BUC or any BUC Subsidiary and, to
BUC's knowledge, no such litigation, claim or other
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proceeding has been threatened; and (ii) other than routine compliance
statements contained in examinations conducted in the ordinary course, neither
BUC nor any BUC Subsidiary or properties is a party to or is subject to any
order, decree, agreement, memorandum of understanding or similar arrangement
with, or a commitment letter or similar submission to, or extraordinary
supervisory letter from a bank regulatory authority, nor has BUC or any BUC
Subsidiary been advised by a bank regulatory authority that such agency is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, decree, agreement, memorandum of
understanding, commitment letter, supervisory letter or similar submission.
Section 3.8 COMMUNITY REINVESTMENT ACT. At its most recent regulatory
evaluation of performance under the Community Reinvestment Act (the "CRA"),
BUC's record of performance was deemed to be "outstanding" or "satisfactory,"
and no proceedings are pending or, to the knowledge of BUC, threatened, that
would result in a change in such evaluation. BUC has not received any adverse
public comments with respect to its compliance under the CRA since the date of
its most recent regulatory evaluation of its performance under the CRA.
Section 3.9 COMPLIANCE WITH LAW. BUC and its subsidiaries have all
material licenses, franchises, permits and other governmental authorizations
that are legally required to enable them to conduct their respective businesses
in the manner presently conducted and are in compliance in all material respects
with all law and regulations applicable to the conduct of their respective
businesses.
Section 3.10 YEAR 2000 REPRESENTATION. BUC has no reason to believe that
it will receive a rating of less than "satisfactory" on any Year 2000 report of
examination of any regulatory authority. BUC has prepared a plan, including a
good faith preliminary estimate of the anticipated associated costs, for
addressing the issues set forth in the statements of the FFIEC, entitled "Safety
and Soundness Guidelines Concerning the Year 2000 Business Risk," as such issues
affect BUC and such plan is in material compliance with the schedule set forth
in the FFIEC statements. Bank United is in compliance in all material respects
with the Year 2000 Interagency Statements dated June, 1996, May 5, 1997,
December 17, 1997, March 17, 1998, April 10, 1998 and May 13, 1998 issued by the
FFIEC.
ARTICLE IV.
COVENANTS OF BUC
BUC covenants and agrees with Texas Central as follows:
Section 4.1 BEST EFFORTS. Acquisition Company will, as soon as
practicable, present for the approval of its shareholder, the Acquisition
Merger. BUC and the BUC Subsidiaries will take all reasonable action to aid and
assist in the consummation of the Acquisition Merger and the transactions
contemplated hereby, and will use their best efforts to take or cause to be
taken all other actions necessary, proper or advisable to consummate the matters
contemplated by this Agreement,
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including such actions which are necessary, proper or advisable in connection
with filing applications with, or obtaining approvals from, all regulatory
authorities having jurisdiction over the matters contemplated by this Agreement
and the Acquisition Merger.
Section 4.2 INFORMATION FOR APPLICATIONS AND PROXY SOLICITATION. To the
extent permitted by law, BUC will furnish Texas Central with all information
concerning BUC and the BUC Subsidiaries required for inclusion in (i) any
application, statement or document to be made or filed by Texas Central with any
federal or state regulatory or supervisory authority in connection with the
matters contemplated by this Agreement and (ii) any proxy materials to be
furnished to the shareholders of Texas Central in connection with their
consideration of the Acquisition Merger. All information so furnished for such
statements and applications shall, to the best of BUC's knowledge, be true and
correct in all material respects and will not omit any material fact necessary
to make its statements therein, in light of the circumstances in which they were
made, not misleading. BUC will indemnify and hold harmless Texas Central from
and against any and all losses, claims, damages, expenses or liabilities to
which Texas Central may become subject under applicable laws, rules and
regulations and will reimburse Texas Central for any legal or other expenses
reasonably incurred by Texas Central in connection with investigating or
defending any actions whether or not resulting in liability, insofar as such
losses, claims, damages, expenses, liabilities or actions arise out of or are
based on any untrue statement or alleged untrue statement of a material fact
contained in any such application or proxy materials or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, but only insofar as such statement or omission was made in reliance
upon and in conformity with information furnished by BUC in writing expressly
for use therein. BUC agrees, upon the request of Texas Central, to furnish to it
a written letter or statement confirming to the best of its knowledge the
accuracy of the information with respect to BUC and the BUC Subsidiaries
contained in any report or other application or statement referred to in
Sections 4.1 or 4.2 of this Agreement, and confirming that the information with
respect to BUC and the BUC Subsidiaries contained in such document or draft was
furnished expressly for use therein or, if such is not the case, indicating the
inaccuracies contained in such document or indicating the information not
furnished by BUC expressly for use therein. The indemnity contained in this
Section 4.2 shall terminate on the Effective Date.
Section 4.3 CONFIDENTIALITY. BUC shall not, before or after the
consummation or termination of this Agreement, directly or indirectly disclose
any confidential information acquired from Texas Central to any person, firm,
corporation, association or other entity for any reason or purpose whatsoever,
other than in connection with the regulatory notice and application process or,
after termination of this Agreement pursuant to Section 7.1 hereof, use such
information for its own purposes or for the benefit of any person, firm,
corporation, association, or other entity under any circumstances. In the event
that this Agreement is terminated and the Acquisition Merger is not consummated,
for a period of two years from the date the Agreement is terminated BUC agrees
that it will not, without the prior approval of Texas Central, directly or
indirectly solicit any individual who is an employee of any Texas Central
Company on the date the Agreement is terminated to terminate his or her
relationship with such entity in order to become employed by BUC or any of its
subsidiaries; provided, however, that the foregoing shall not apply to (i) the
use of an independent
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employment agency (so long as the agency was not directed to solicit a
particular individual or class of individuals that could only be satisfied by
employees of a Texas Central Company as of the date the Agreement is
terminated), or (ii) the use of a general solicitation (such as an
advertisement) not specifically directed to employees of a Texas Central
Company.
Section 4.4 REGISTRATION STATEMENT. As promptly as practicable after the
execution of this Agreement, BUC will file with the SEC a Registration Statement
on Form S-4 under the Securities Act and any other applicable documents (the
"Registration Statement"), relating to the shares of BUC Stock to be delivered
to the shareholders of Texas Central pursuant to this Agreement, and will use
its best efforts to cause such Registration Statement to become effective. At
the time the Registration Statement becomes effective, the Registration
Statement will comply in all material respects with the provisions of the
Securities Act and the published rules and regulations thereunder, and will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
false or misleading, and at the time of mailing thereof to Texas Central's
shareholders, at the time of the Texas Central shareholders' meeting held to
approve the Acquisition Merger and at the Effective Date, the prospectus
included as part of the Registration Statement, as amended or supplemented by
any amendment or supplement filed by BUC (the "Prospectus"), will not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not false or misleading; provided,
however, that none of the provisions of this subparagraph shall apply to
statements in or omissions from the Registration Statement or the Prospectus
made in reliance upon and in conformity with information furnished by Texas
Central for use in the Registration Statement or the Prospectus.
Section 4.5 NASDAQ LISTING. BUC will file all documents required to be
filed to list the BUC Stock to be issued pursuant to the Agreement on The NASDAQ
Stock Market National Market and use its best efforts to effect said listing.
Section 4.6 DELIVERY OF REPORTS. From the date hereof to the Effective
Date, BUC shall deliver to Texas Central, when reasonably available, BUC's
Quarterly Reports on Form 10-Q and BUC's Annual Reports on Form 10-K as filed
with the SEC under the Exchange Act.
Section 4.7 RULE 144 COMPLIANCE. From and after the Effective Date of the
Acquisition Merger, BUC shall file all reports with the SEC necessary to permit
the shareholders of Texas Central who may be deemed "underwriters" (within the
meaning of the Rule 145 under the Securities Act) of Texas Central Stock to sell
BUC Stock received by them in connection with the Acquisition Merger pursuant to
Rules 144 and 145(d) under the Securities Act if they would otherwise be so
entitled; provided, however, that BUC is otherwise obligated to file such
reports with the SEC.
Section 4.8 PUBLICATION OF FINANCIAL CONDITION. BUC will publish the
results of thirty (30) days of combined operations of BUC and Texas Central as
soon as practicable after the Effective Date, and no later than thirty (30) days
after the end of the fiscal quarter in which the Effective Date occurs.
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Section 4.9 PRESS RELEASES. BUC agrees that it will not, directly or
indirectly, without the prior approval of Texas Central, issue any press release
or written statement for public release relating to the Agreement or the
Acquisition Merger, except as otherwise required by applicable law or regulation
or NASDAQ rules, and then only after making reasonable efforts to notify Texas
Central in advance.
ARTICLE V.
COVENANTS OF TEXAS CENTRAL
Texas Central covenants and agrees with BUC as follows:
Section 5.1 SHAREHOLDER APPROVAL AND BEST EFFORTS. Texas Central will, as
soon as practicable, present for the approval of its shareholders this Agreement
and the transactions contemplated hereby. Texas Central will take all necessary
action to arrange for a meeting of its shareholders for the purpose of
considering the Agreement and, if the transaction is approved by such
shareholders, to aid and assist in the consummation of the Acquisition Merger,
and will use its best efforts to take or cause to be taken all other actions
necessary, proper or advisable to consummate the matters contemplated by this
Agreement, including such actions as BUC reasonably considers necessary, proper
or advisable in connection with filing applications and registration statements
with, or obtaining approvals from, all regulatory authorities having
jurisdiction over the transactions contemplated by this Agreement.
Section 5.2 OPERATIONS. (a) From and after the date of this Agreement to
the Effective Date, Texas Central agrees to, and to cause Texas Central Delaware
and Texas Central Bank to (i) conduct their business in substantially the same
manner as they have been conducted since December 31, 1997 and in accordance
with prudent business and banking practices, (ii) maintain and keep their
properties in as good repair and condition as at present, except for
deterioration due to ordinary wear and tear and damage due to casualty, (iii)
maintain in full force and effect insurance and fidelity bonds comparable in
amount and scope of coverage to that currently maintained for them, (iv) perform
all of their material obligations under contracts, leases and documents relating
to or affecting their assets, properties and business or the assets, properties
and business of Texas Central Bank except such obligations as they may in good
faith reasonably dispute, (v) use their best efforts to maintain and preserve
their business organizations and present employees and maintain all
relationships with depositors and customers, (vi) comply with and perform all
material obligations and duties imposed upon them by all federal, state and
local laws, rules, regulations and orders imposed by federal, state or local
governmental authorities, (vii) take any and all actions, on or simultaneously
with the Closing, necessary to amend the Articles of Incorporation or Bylaws of
Texas Central in any manner which BUC, in its reasonable discretion, shall deem
necessary, proper or advisable; (viii) make no alteration in the manner of
maintaining their books, accounts or records, or in the accounting practices
relating to their business, properties or assets; (ix) notify BUC immediately
upon commencement of any compliance, safety and soundness, Year 2000 or other
examination conducted by the FRB, the FDIC or the OCC; (x) promptly give written
notice to BUC upon obtaining knowledge of any fact or circumstance that would
cause any of their representations
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or warranties to be untrue or misleading in any material respect; and (xi)
continue to solicit deposits, maintain deposits and operate its deposit
gathering procedures consistent with existing procedures.
(b) From and after the date of this Agreement, no Texas Central Company
will, without the prior written consent of BUC, (i) permit any amendment or
change to be made in their Articles of Incorporation or Bylaws; (ii) take any
action described or do any of the things listed in Section 2.14 hereof, except
that Texas Central may declare or pay dividends on the Texas Central Common
Stock in the manner and to the extent permitted by Section 5.8 hereof; (iii)
enter into or amend, any contract, agreement or other instrument of any of the
types listed in Section 2.10 hereof, or amend or replace its existing
month-to-month contract with Electronic Data Systems; (iv) undertake any
additional borrowings with a term in excess of 90 days; (v) modify any
outstanding loan, make any new loan, or acquire any loan participation, unless
such modification, new loan or participation is made in the ordinary course of
business, consistent with existing practices; (vi) make any material change in
its accounting methods or practices; (vii) take any action that would result in
any of its representations and warranties contained in Article II of this
Agreement not being true and correct at the Effective Date; (viii) make any
change in policies respecting extensions of credit or loan charge-offs; (ix)
change reserve requirement policies; (x) change securities portfolio policies;
(xi) take any action with respect to the closing of any branches; (xii) make, or
permit Texas Central Bank to make, any changes in the titles, salaries, bonuses
or other compensation of any employee, officer or director; or (xiii) agree to
do any of the foregoing.
Section 5.3 INFORMATION FOR APPLICATIONS AND SEC FILINGS. Texas Central
will furnish BUC with all information concerning the Texas Central Companies
required for inclusion in (i) any application, statement, document or notice to
be made or filed by BUC with any federal or state regulatory or supervisory
authority in connection with the matters contemplated by this Agreement and (ii)
any filings with the SEC, including the Registration Statement and the
Prospectus, and any applicable state securities authorities. Texas Central
represents and warrants that all information so furnished for inclusion in the
Registration Statement shall, to the best of its knowledge, be true and correct
in all material respects and will not omit any material fact necessary to make
the statements therein not misleading. Texas Central represents and warrants
that all information furnished for inclusion in the Prospectus and in any filing
with any federal or state regulatory or supervisory authority shall, to the best
of its knowledge, be true and correct in all material respects and will not omit
any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Texas Central will
indemnify and hold harmless BUC from and against any and all losses, claims,
damages, expenses or liabilities to which it may become subject under applicable
laws, rules and regulations and will reimburse BUC for any legal or other
expenses reasonably incurred by it in connection with investigating or defending
any actions whether or not resulting in liability, insofar as such losses,
claims, damages, expenses, liabilities or actions arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
any such application or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary in order to make the state ments therein not misleading, but only
insofar as any such statement or omission was made in reliance upon and in
conformity with information furnished in writing by Texas Central expressly for
use therein. Texas Central agrees at any time, upon the request of BUC, to
furnish to BUC a
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written letter or statement confirming to the best of its knowledge the accuracy
of the information with respect to Texas Central contained in any report or
other application or statement referred to in Sections 5.1 or 5.3 of this
Agreement, and confirming that the information with respect to Texas Central
contained in such document or draft was furnished expressly for use therein or,
if such is not the case, indicating the inaccuracies contained in such document
or indicating the information not furnished by Texas Central expressly for use
therein. The indemnity agreement contained in this Section 5.3 shall terminate
at Closing.
Section 5.4 ACCESS TO PROPERTIES AND RECORDS. To the extent permitted by
law, Texas Central will afford the executive officers and authorized
representatives (including legal counsel, accountants and consultants) of BUC
full access to the properties, books and records of the Texas Central Companies
in order that BUC may have full opportunity to make such reasonable investiga
tion as it shall desire to make of the affairs of the Texas Central Companies,
provided, however, that such investigations shall be conducted in a manner so as
not to unreasonably interfere with the operations of the Texas Central
Companies, and the officers of Texas Central will furnish BUC with such
additional financial and operating data and other information as to the business
and properties of the Texas Central Companies as BUC shall, from time to time,
request. As soon as practicable after they become available, Texas Central will
deliver or make available to BUC all unaudited quarterly financial statements
prepared for the internal use of management of the Texas Central Companies and
all Call Reports filed by Texas Central Bank with the Department or the FDIC
after the date of this Agreement. All such financial statements shall be
prepared in accordance with generally accepted accounting principles applied on
a basis consistent with previous accounting periods. In the event of the
termination of this Agreement, BUC will return to Texas Central all documents
and other information obtained pursuant hereto and will keep confidential any
information obtained pursuant to this Agreement.
Section 5.5 ACCOUNTING AND TAX TREATMENT. Texas Central agrees to use its
best efforts to cause the Acquisition Merger to qualify as a "pooling of
interests" for accounting purposes and as a "reorganization" within the meaning
of Section 368(a) of the Internal Revenue Code. Texas Central agrees not to take
any action that would cause the Acquisition Merger not to qualify as a "pooling
of interests" for accounting purposes or as a "reorganization" within the
meaning of Section 368(a) of the Internal Revenue Code.
Section 5.6 STANDSTILL PROVISION. So long as this Agreement is in effect,
no Texas Central Company and none of their directors or officers shall
entertain, solicit or encourage any inquiries with respect to, or provide any
information to or negotiate with any other party with respect to any proposal
which could reasonably be expected to lead to the merger, consolidation,
acquisition, or sale of all or substantially all of the assets or any shares of
capital stock of any Texas Central Company. Texas Central agrees to notify BUC
immediately of any unsolicited acquisition proposals and provide reasonable
detail as to the identity of the proposed acquiror and the nature of the
proposed transaction.
Section 5.7 PROXIES. Texas Central acknowledges that the persons listed in
SCHEDULE 5.7 have agreed to vote their shares of Texas Central Stock in favor of
this Agreement and the
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transactions contemplated hereby and that such persons have granted to BUC or
its designee an irrevocable proxy to vote such shares at the meeting of Texas
Central shareholders called to approve the Acquisition Merger pursuant to a
Voting Agreement and Irrevocable Proxy substantially in the form of EXHIBIT C to
this Agreement (each a "Voting Agreement"), which has been executed as of the
date of this Agreement.
Section 5.8 DIVIDENDS. BUC and Texas Central agree that, between September
30, 1998 and the Effective Date, Texas Central may declare and pay cash
dividends in an amount equal to 39.6% of the taxable income of Texas Central as
estimated by Texas Central, and approved by BUC, in good faith, and no more.
Texas Central agrees to provide BUC written notice of any proposed cash dividend
at least 10 business days prior to the payment date of any proposed dividend.
Section 5.9 ACCRUALS. Prior to the Effective Date and after consultation
with BUC, Texas Central shall, consistent with generally accepted accounting
principles, make such changes and modifications to its loan, accrual and reserve
policies and practices (including loan classification and allowance for credit
losses levels) and other accounting policies and practices to bring such
policies and practices into line with those presently followed by BUC, including
appropriate increases in its allowance for credit losses. Without limiting the
foregoing, the ratio of the reserve for loan losses to total loans outstanding
at Texas Central Bank will be maintained, between the date hereof and the
Effective Date, at a ratio not less than the ratio for such matters on November
30, 1998.
Section 5.10 PRESS RELEASES. Texas Central agrees that it will not,
directly or indirectly, without the prior approval of BUC, issue any press
release or written statement for general circulation relating to the Agreement
or the Acquisition Merger except as otherwise required by applicable law or
regulation, and then only after making reasonable efforts to notify BUC in
advance.
Section 5.11 NATURE OF DEPOSITS. The deposits of Texas Central Bank will
be on the Closing Date of substantially the same character, mix, type, and
makeup as such deposits are as of the date hereof. Such deposits shall include
no "brokered deposits", as such term is used in 12 U.S.C. 1831f, unless
otherwise agreed by BUC.
Section 5.12 TERMINATION OF 401(K) PLAN. Texas Central shall terminate the
401(k) plan of the Texas Central Companies prior to the Effective Date in a
manner reasonably acceptable to Bank United.
Section 5.13 INCENTIVE COMPENSATION OBLIGATIONS. Prior to the Effective
Date, Texas Central shall accrue and discharge any payment or other obligations
under any bonus, incentive compensation or similar plans of the Texas Central
Companies and receive a release of claims from all participants in such plans in
a form reasonably acceptable to Bank United.
Section 5.14 VACATION PAYMENT OBLIGATIONS. Prior to the Effective Date,
Texas Central shall accrue any vacation obligations on the books of Texas
Central and discharge all such vacation obligations.
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Section 5.15 ENVIRONMENTAL REPORTS. Texas Central shall obtain, at its
sole expense, Phase I environmental assessments for each bank facility and each
non-residential OREO property. Oral reports of such environmental assessments
shall be delivered to BUC no later than four (4) weeks and written reports shall
be delivered to BUC no later than eight (8) weeks from the date of this
Agreement. Prior to the Effective Date, Texas Central shall obtain, at its sole
expense, Phase II environmental assessments for properties identified by BUC on
the basis of the results of such Phase I environmental assessments, which
reports shall be satisfactory to BUC. Texas Central shall obtain a survey and
assessment of all potential asbestos containing material in owned or leased
properties (other than OREO property) and a written report of the results shall
be delivered to BUC within four (4) weeks of execution of the definitive
agreement. Texas Central agrees to notify BUC a reasonable time in advance of
the examinations scheduled pursuant to this Section 5.15 and to permit BUC and
its contractors, consultants, agents and representatives to be present during
such examinations and to have such access to the properties and facilities of
Texas Central, and to conduct such consultations with the persons or firms
conducting such examinations, as BUC shall deem necessary.
Section 5.16 STOCK OPTIONS. As soon as practicable after the date of this
Agreement, the Board of Directors of Texas Central (or, if appropriate, any
committee administering the Texas Central stock option plans) shall adopt such
resolutions or take such other actions as may be required to cause all options
to purchase shares of Texas Central Stock outstanding on the date hereof and
exercised or canceled prior to its Effective Date. Evidence satisfactory to BUC
of such cancellation or exercise shall be delivered to BUC prior to the
Effective Date.
Section 5.17 AFFILIATE AGREEMENT. Within thirty (30) days after the date
of this Agreement, Texas Central shall enter into and cause each Texas Central
shareholder who is an "affiliate" (as defined in SEC Rule 405) of Texas Central
to enter into with BUC, an Affiliate Agreement in substantially the form of
EXHIBIT D attached hereto (each an "Affiliate Agreement").
Section 5.18 DIRECTORS AND OFFICERS' LIABILITY INSURANCE AND
INDEMNIFICATION. (a) Following the Effective Date, BUC will provide the
directors and officers of Texas Central and its subsidiaries with the same
directors' and officers' liability insurance coverage that BUC provides to
directors and officers of its other banking subsidiaries generally, and, in
addition, for a period of three years will use its best efforts to continue
Texas Central's directors' and officers' liability insurance coverage with
respect to actions occurring prior to the Effective Date and to the extent that
such coverage is obtainable for an aggregate premium not in excess of the
aggregate premium paid by Texas Central for such insurance; provided, that BUC
may at its option elect to replace Texas Central's insurance coverage with
respect to actions occurring prior to the effective date with coverage provided
by other insurers having the same aggregate limits. If the aggregate premium for
such continued coverage would exceed the aggregate premium for such coverage
paid by Texas Central, BUC shall use its best efforts to procure such level of
insurance having the coverage described above as can be obtained for an
aggregate premium equal to the maximum amount paid by Texas Central.
(b) For six years after the Effective Date, and subject to the
limitations contained in applicable OTS regulations, BUC shall cause the
Surviving Company to indemnify, defend and
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hold harmless the present and former officers, directors, employees and agents
of Texas Central and its subsidiaries (each, an "Indemnified Party") against all
losses, expenses, claims, damages or liabilities arising out of actions or
omissions occurring on or prior to the Effective Date (including, without
limitation, the transactions contemplated by this Agreement) to the full extent
then permitted under the Texas Business Corporation Act and by Texas Central's
Articles of Incorporation as in effect on the date hereof, including provisions
relating to advances of expenses incurred in the defense of any action or suit.
Section 5.19 SUPPLEMENTS TO DISCLOSURE SCHEDULES. From time to time prior
to the Effective Date, Texas Central shall promptly supplement or amend its
Disclosure Schedules to reflect any matter hereafter arising that would make any
representation or warranty set forth in Article II inaccurate. For purposes of
determining (i) the fulfillment of the condition set forth in Section 8.1 as of
the Closing Date and (ii) the accuracy of the representations and warranties
contained in Article II if the Acquisition Merger is not consummated, the
Disclosure Schedules shall be deemed to include only the information contained
therein on the date of this Agreement and shall be deemed to exclude any
information contained in any subsequent supplement or amendment thereto. If the
Acquisition Merger is not consummated, delivery of any supplemental disclosure
schedules will not affect the rights and remedies of the parties hereunder. For
purposes of determining the accuracy of the representations and warranties
contained in Article II or if the Acquisition Merger is consummated, the
Disclosure Schedules shall be deemed to include all information contained in any
supplement or amendment thereto made before the Closing Date. If any supplement
to any Disclosure Schedule shall be delivered within 10 days of the Closing
Date, at the option of BUC the Closing Date may be delayed to permit BUC to have
a period of at least 10 days to consider such supplement.
ARTICLE VI.
CLOSING
Section 6.1 CLOSING. Subject to the other provisions of this Article VI,
at a mutually acceptable time, on a mutually acceptable date ("Closing Date") as
soon as practicable within a thirty-day period commencing with the latest of the
following dates:
(i) the receipt of shareholder approval and the last approval from
any requisite regulatory or supervisory authority and the expiration of
any statutory or regulatory waiting period which is necessary to effect
the Acquisition Merger, or
(ii) if the matters contemplated by this Agreement are being
contested in any legal proceeding and BUC or Texas Central, pursuant to
Section 10.1 hereof, have elected to contest the same, then the date that
such proceeding has been brought to a conclusion favorable, in the
judgment of each of BUC and Texas Central, to the consummation of the
Acquisition Merger, or such prior date as each of BUC and Texas Central
shall elect whether or not such proceeding has been brought to a
conclusion;
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the closing of the Acquisition Merger ("Closing") will take place at which the
parties to this Agreement will exchange certificates, opinions, letters and
other documents provided for under this Agreement in order to effect the
Acquisition Merger and to determine whether any condition exists which would
permit the parties hereto to terminate this Agreement. If no such condition then
exists or if no party elects to exercise any right it may have to terminate this
Agreement, then and thereupon the appropriate parties shall execute such
documents and instruments as may be necessary or appropriate to effect the
Acquisition Merger contemplated by this Agreement.
The Closing shall take place at the offices of Bank United in Houston,
Texas, or at such other place to which the parties hereto may mutually agree.
Section 6.2 EFFECTIVE DATE. Subject to the terms and upon satisfaction of
all requirements of law and the conditions specified in this Agreement
including, among other conditions, the receipt of requisite approval of the
shareholders of Texas Central and the regulatory approvals (or waivers thereof)
of the OTS and the FRB and any other federal or state regulatory agency whose
approval must be received in order to consummate the Acquisition Merger, the
Acquisition Merger shall become effective, and the Effective Date of the
Acquisition Merger shall occur, at the date and time specified in the
certificate approving the Acquisition Merger to be issued by the Secretary of
State of Texas (the "Effective Date"). It is anticipated by BUC and Texas
Central that the Closing and the Effective Date will occur on the same day.
ARTICLE VII.
TERMINATION
Section 7.1 TERMINATION. (a) This Agreement may be terminated by action of
the Board of Directors of BUC or the Board of Directors of Texas Central at any
time prior to the Effective Date if:
(i) any court of competent jurisdiction in the United States or
other United States (federal or state) governmental body shall have issued
an order, decree or ruling or taken any other action restraining,
enjoining, or otherwise prohibiting the Acquisition Merger and such order,
decree, ruling or other action shall have been final and non-appealable;
(ii) any of the transactions contemplated by this Agreement are
disapproved by any regulatory authority or other person whose approval is
required to consummate the Acquisition Merger; or
(iii) the Effective Date shall not have occurred on or before
September 17, 1999 or such later date as shall have been approved in
writing by the Boards of Directors of BUC and Texas Central; provided,
however, that the right to terminate under this Section 7.1(a)(3) shall
not be available to any party whose failure to fulfill any obligation
under this
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Agreement has been the cause of, or has resulted in, the failure of the
Effective Date to occur on or before such date.
(iv) This Agreement may be terminated at any time prior to the
Effective Date by the Board of Directors of Texas Central if (A) BUC shall
fail to comply in any material respect with any of its covenants or
agreements contained in this Agreement, or if any of the representations
or warranties of BUC contained herein shall be untrue in any material
respect, (B) the Average Value Per Share as calculated in accordance with
Section 1.6 is below $33.57, or (C) the closing price of the BUC Stock on
the day immediately prior to the day fixed as the Closing Date shall be
less than $32.00. In the event the Board of Directors of Texas Central
desires to terminate this Agreement as provided in Section 7.1(a)(iv)(A)
above, such Board of Directors must notify BUC in writing of its intent to
terminate stating the reason therefor. BUC shall have fifteen days from
the receipt of such notice to cure the alleged breach, inaccuracy or
change, subject to the approval of Texas Central (which approval shall not
be unreasonably delayed or withheld).
(v) This Agreement may be terminated any time prior to the Effective
Date by BUC if (A) Texas Central shall fail to comply in any material
respect with any of its covenants or agreements contained in this
Agreement, or if any of the representations or warranties of Texas Central
contained herein shall be defective in any material respect, (B) there
shall have been any change after December 31, 1998 in the assets,
liabilities (including deposit liabilities) properties, business or
financial condition of Texas Central, Texas Central Delaware or Texas
Central Bank which individually or in the aggregate have materially and
adversely affected the financial condition, results of operation or
business of Texas Central, or (C) BUC concludes, in its reasonable
discretion, that BUC will be unable to obtain any regulatory approval
required in order to consummate the Acquisition Merger. In the event BUC
desires to terminate this Agreement because of an alleged breach or change
as provided in Section 7.1(a)(v)(A) or (B) above, BUC must notify Texas
Central in writing of its intent to terminate stating the cause therefor.
Texas Central shall have fifteen days from the receipt of such notice to
cure the alleged breach, inaccuracy or change, subject to the approval of
BUC (which approval shall not be unreasonably delayed or withheld).
(vi) This Agreement may be terminated at any time prior to the
Effective Date with the mutual written consent of BUC and Texas Central.
Section 7.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement and the abandonment of the Acquisition Merger without breach by any
party hereto, this Agreement shall become void and have no effect, without any
liability on the part of any party or the directors, officers or shareholders of
any corporate party. Nothing contained in this Section 7.2 shall relieve any
party hereto of any liability for a breach of this Agreement; PROVIDED, HOWEVER,
that BUC's remedy for a breach by Texas Central of the representation contained
in Section 2.15 shall be limited to termination of the Agreement and the receipt
of a cash payment from TCBI equal to the actual out of pocket expenses incurred
by BUC in connection with the transactions contemplated hereby, not to exceed
$250,000.
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ARTICLE VIII.
CONDITIONS TO OBLIGATIONS OF BUC
The obligations of BUC under this Agreement are subject to the
satisfaction, at or prior to the Closing Date of the following conditions, which
may be waived by BUC in its sole discretion:
Section 8.1 COMPLIANCE WITH REPRESENTATIONS. The representations and
warranties made by Texas Central in this Agreement must have been true when made
and shall be true in all material respects as of the Closing Date with the same
force and effect as if such representations and warranties were made at and as
of the Closing Date, and Texas Central shall have performed or complied with all
covenants and conditions required by this Agreement to be performed and complied
with by Texas Central prior to or at the Closing. BUC shall have been furnished
with a certificate, executed by an appropriate representative of Texas Central,
dated as of the Closing Date, to the foregoing effect.
Section 8.2 MATERIAL ADVERSE CHANGE. Prior to the Closing Date, there
shall not have occurred any material adverse change in the financial condition,
business or operations of the Texas Central Companies, including the amount,
pricing and mix of deposits, nor shall any event have occurred which, with the
lapse of time, may cause or create any material adverse change in the financial
condition, results of operations, business or prospects of the Texas Central
Companies in the reasonable judgment of BUC. BUC shall have received a
certificate to the foregoing effect executed by an appropriate representative of
Texas Central and dated as of the Closing Date. Without limiting any other
circumstance which might constitute a material adverse change under this Section
8.2, any of the following shall conclusively be deemed to constitute a material
adverse change: (i) a decrease in the aggregate amount of non-affiliate deposits
of Texas Central Bank to less than $86.4 million; or (ii) the ratio of
non-performing assets to gross loans shall exceed one and one-half (1 1/2)
percent.
Section 8.3 LEGAL OPINION. BUC shall have received an opinion of counsel
to Texas Central, dated as of the Closing Date, substantially in the form
attached hereto as EXHIBIT E.
Section 8.4 TAX OPINION. BUC shall have received an opinion from its
counsel, dated as of the Closing Date, that, for federal income tax purposes (i)
the Acquisition Merger will constitute a reorganization within the meaning of
Section 368(a)(1)(A) of the Code, (ii) no gain or loss will be recognized by
holders of Texas Central Stock upon receipt of BUC Stock, (iii) the aggregate
tax basis of BUC Stock received by a shareholder of Texas Central will be the
same as the aggregate basis of Texas Central Stock surrendered in exchange
therefor, and (iv) the holding period of BUC Stock to be received by each Texas
Central shareholder will include the period during which the shareholder held
the Texas Central Stock surrendered in exchange therefor, provided that the
Texas Central Stock is held as a capital asset on the date of the exchange.
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Section 8.5 RELEASES. The directors and executive officers of the Texas
Central Companies shall have delivered to BUC an instrument in the form of
EXHIBIT F attached hereto (each an "Employee Release") dated the Effective Date
releasing BUC, and the BUC Subsidiaries from any and all claims of such
directors and officers (except as to their deposits and accounts and any rights
of indemnification pursuant to the applicable Articles of Incorporation), and
the directors of Texas Central, Texas Central Delaware and Texas Central Bank
shall have delivered to BUC their resignations as directors of Texas Central.
The Texas Central Companies shall have delivered to the directors and executive
officers executing the release in the form attached as EXHIBIT F, an instrument
in the form of EXHIBIT G attached hereto releasing such directors and officers
from claims by the Texas Central Companies.
Section 8.6 ACCOUNTING LETTERS. BUC shall have received a letter from
Deloitte & Touche LLP, dated as of the Effective Date, to the effect that the
Acquisition Merger will qualify for pooling of interests accounting treatment if
consummated in accordance with the Agreement, and shall have received a letter
in form acceptable to BUC from Texas Central's accountants, Payne, Faulkner,
Smith & Jones, P.C., to the effect that such firm knows of no reason why the
Acquisition Merger will not qualify for pooling of interests accounting
treatment if consummated in accordance with the Agreement.
Section 8.7 DISSENTERS' RIGHTS. The holders of no more than five percent
of the issued and outstanding Texas Central Stock shall have demanded or shall
be entitled to demand payment of the fair value of their shares as dissenting
shareholders.
Section 8.8 AFFILIATE AGREEMENTS. BUC shall have received fully executed
Affiliate Agreements described in Section 5.17 hereof.
Section 8.9 DEBT ASSUMPTION. If so required, the instruments evidencing
the existing third party bank debt of Texas Central shall be amended or
otherwise modified to reflect BUC as the sole obligor on such debt in form
reasonably acceptable to BUC. BUC shall have received a letter from the holder
of such debt consenting to the assumption of such debt by BUC and confirming
that there are no breaches under the relevant note and security documents
related thereto.
Section 8.10 NONCOMPETITION AGREEMENT. BUC shall have received fully
executed Noncompetition Agreements in the form attached hereto as EXHIBIT H from
(i) each of the persons owning five percent or more of the Texas Central Stock
and (ii) each of the directors of Texas Central, which shall prohibit such
individuals from competing with Texas Central Bank and BUC in the Dallas
Consolidated Metropolitan Statistical Area for a period of three years after the
Closing Date, and otherwise in form and substance satisfactory to BUC (each a
"Non-competition Agreement"); PROVIDED, that the agreement with Mr. J. Stanley
Frederick will permit him to maintain his existing stock ownership in Irving
National Bancshares.
Section 8.11 ENVIRONMENTAL REPORTS. BUC shall have received the
environmental reports required by Section 5.15 of this Agreement and such
reports shall be in form and substance satisfactory to BUC.
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Section 8.12 STOCK OPTIONS. BUC shall have received evidence of the
exercise or cancellation of all outstanding options to purchase Texas Central
Stock required by Section 5.16 of this Agreement and such evidence shall be in
form and substance satisfactory to BUC.
Section 8.13 CLOSING DAY PAYMENT. BUC shall have received evidence of the
accrual and discharge by Texas Central of all payment obligations under the
bonus, incentive, and vacation plans required by Sections 5.13 and 5.14 of this
Agreement and such evidence shall be in form and substance satisfactory to BUC.
ARTICLE IX.
CONDITIONS TO OBLIGATIONS OF TEXAS CENTRAL
The obligations of Texas Central under this Agreement are subject to the
satisfaction, at or prior to the Closing Date, of the following conditions,
which may be waived by Texas Central in its sole discretion:
Section 9.1 COMPLIANCE WITH REPRESENTATIONS. The representations and
warranties made by BUC in this Agreement must have been true when made and shall
be true in all material respects as of the Closing Date with the same force and
effect as if such representations and warranties were made at and as of the
Closing Date, and BUC shall have performed and complied with all covenants and
conditions required by this Agreement to be performed or complied with by BUC
prior to or at the Closing. Texas Central shall be furnished with a certificate,
executed by appropriate representatives of BUC and dated as of the Closing Date,
to the foregoing effect.
Section 9.2 MATERIAL ADVERSE CHANGE. Prior to the Closing Date, there
shall not have occurred any material adverse change in the financial condition,
business or operations of BUC or the BUC Subsidiaries, nor shall any event have
occurred which, with the lapse of time, will cause or create any material
adverse change in the financial condition, business or operations of BUC or the
BUC Subsidiaries in the reasonable judgment of the Board of Directors of Texas
Central. Texas Central shall have received a certificate to the foregoing effect
executed by an appropriate representative of BUC and dated as of the Closing
Date.
Section 9.3 LEGAL OPINION. Texas Central shall have received an opinion of
counsel to BUC, dated as of the Closing Date and substantially in the form
attached hereto as EXHIBIT I.
Section 9.4 TAX OPINION. Texas Central shall have received an opinion from
its counsel, dated as of the Closing Date, that, for federal income tax purposes
(i) the Acquisition Merger will constitute a reorganization within the meaning
of Section 368(a)(1)(A) of the Code, (ii) no gain or loss will be recognized by
holders of Texas Central Stock upon receipt of BUC Stock, (iii) the aggregate
tax basis of BUC Stock received by a shareholder of Texas Central will be the
same as the aggregate basis of Texas Central Stock surrendered in exchange
therefor, and (iv) the holding period of BUC Stock to be received by each Texas
Central shareholder will include the period during which
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the shareholder held the Texas Central Stock surrendered in exchange therefor,
provided that the Texas Central Stock is held as a capital asset on the date of
the exchange.
Section 9.5 FAIRNESS OPINION; COMFORT LETTER. On or before the issuance of
the Prospectus, Texas Central shall have received an opinion of Texas Central's
investment advisors as to the fairness of the Acquisition Merger to the TCBI
Stockholders from a financial point of view (the "Fairness Opinion"). The
Fairness Opinion shall be satisfactory to Texas Central and BUC in form and
substance. On or before the date of issuance of the Prospectus, Texas Central
shall have received a letter of BUC's accounting firm stating their conclusions
as to the accuracy of certain information derived from the financial records of
BUC and its subsidiaries and contained in the Prospectus (the "BUC Comfort
Letter"). The BUC Comfort Letter shall be in form customary for such
transactions and reasonably satisfactory to Texas Central in form and substance.
ARTICLE X.
CONDITIONS TO RESPECTIVE OBLIGATIONS OF
BUC AND TEXAS CENTRAL
The respective obligations of BUC and Texas Central under this Agreement
are subject to the satisfaction of the following conditions which may be waived
by BUC and Texas Central, respectively, in their sole discretion:
Section 10.1 GOVERNMENT APPROVALS. BUC and Texas Central shall have
received the approval of the transactions contemplated by this Agreement from
all necessary governmental agencies and authorities, including the OTS, FRB and
any other regulatory agency whose approval must be received in order to
consummate the Acquisition Merger, which approvals shall not impose any
restrictions on the operations of Texas Central or BUC which are unacceptable to
BUC or Texas Central, and such approvals and the transactions contemplated
hereby shall not have been contested by any federal or state governmental
authority or any third party (except shareholders asserting dissenters' rights)
by formal proceeding. It is understood that, if any such contest is brought by
formal proceeding, BUC or Texas Central may, but shall not be obligated to,
answer and defend such contest or otherwise pursue the Acquisition Merger over
such objection.
Section 10.2 SHAREHOLDER APPROVAL. The shareholders of Texas Central shall
have approved this Agreement and the transactions contemplated by this
Agreement.
Section 10.3 REGISTRATION OF BUC STOCK. The Registration Statement
covering the BUC Stock to be issued in the Acquisition Merger shall have become
effective under the Securities Act and any applicable state securities or "blue
sky" acts and no stop orders suspending the effectiveness of such Registration
Statement shall be in effect.
Section 10.4 NO INJUNCTION. No court of competent jurisdiction shall have
issued any order or ruling which is in effect and which prohibits the
consummation of the Acquisition Merger.
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ARTICLE XI.
EMPLOYEE MATTERS
Section 11.1 OFFERS TO TEXAS CENTRAL EMPLOYEES. On or before 15 days prior
to Closing, BUC shall cause Bank United to offer employment, to become effective
as of the Effective Date, to the Employees of Texas Central or its subsidiaries
employed as of, or on, the Effective Date (the "Employees") whom Bank United
wishes to employ and give notice to Texas Central of the names of the Employees
whom BUC does not wish to employ. To the extent consistent with Bank United's
existing compensation structure for comparable positions and comparable officer
titles and its current policies regarding officer titles, all Employees offered
employment by Bank United shall be offered employment at base wages and salaries
no less favorable than the wages and salaries currently being received by such
Employees to such Employees and in positions with comparable responsibilities
and officer titles, and, unless agreed upon by such Employee before the
Effective Date, within a reasonable geographic proximity to such Employee's
current work location. BUC shall be responsible for advising Employees of the
details of any offers and terms of employment, and answering any questions
relating thereto, but Texas Central shall be allowed to review and promptly
approve any communication that refers to any of Texas Central's benefits or
policies prior to its distribution.
Section 11.2 CREDIT FOR SERVICE WITH TEXAS CENTRAL. All Employees who are
offered and accept employment with BUC as of the Effective Date shall be
eligible to participate in the employee benefit plans and other fringe benefits
of BUC on the same basis as such plans and benefits are offered to employees of
BUC with comparable positions with BUC. To the extent possible under its
employee benefit plans, BUC shall credit such Employees for their length of
service with Texas Central for purposes of eligibility and vesting under each
employee benefit and fringe benefit plan to be provided by BUC to such
Employees, to the same extent such service was recognized under a similar plan
of Texas Central, based on information provided by Texas Central. For purposes
of this Section 11.2, "employee benefit plans and other fringe benefits"
includes, without limitation, health insurance benefits (medical and dental),
disability, life and accident insurance, sickness benefits, employee loans and
banking privileges, but does not include, if any, the incentive compensation,
pension, profit sharing, retirement and post retirement welfare benefits, and
vacation plans of Texas Central. If BUC offers a salary continuation or similar
program for employees unable to work for medical reasons, the Employees who are
offered and accept employment with BUC shall be credited under any program of
BUC with at least the number of sickness benefit days (up to a maximum of 22
calendar days) accrued under Texas Central's program at the Effective Date.
Section 11.3 VACATION POLICY. Immediately prior to the Effective Date,
Texas Central shall pay all vacation accrued and not taken by Employees in
accordance with Section 5.14 and 12.2. In the calendar year in which the
Effective Date occurs, Employees who are offered and accept employment with BUC
shall be eligible to earn the annual vacation amount Employees would be eligible
to earn as employees of BUC or a BUC Subsidiary, without giving credit for the
Employees
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length of service with Texas Central. In subsequent calendar years, Employees
will be eligible to earn vacation days according to the schedule specified in
BUC's vacation policy.
Section 11.4 EMPLOYMENT AGREEMENTS. The parties acknowledge that, prior to
or contemporaneous with the execution and delivery of this Agreement, the
management personnel of the Texas Central Bank listed on SCHEDULE 11.4 each have
executed on the date hereof an Employment Agreement and Agreement Not to Compete
in the form attached hereto as EXHIBIT J (each, an "Employment Agreement"), with
BUC or one of the BUC Subsidiaries, which shall become effective on the Closing
Date.
ARTICLE XII.
MISCELLANEOUS
Section 12.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Notwithstanding
the indemnities set forth in Sections 4.2 and 5.3 of this Agreement, the
representations, warranties, covenants and indemnities of BUC and Texas Central
contained in this Agreement shall not survive the Effective Date.
Section 12.2 EXPENSES. Whether or not the transactions provided for herein
are consummated, each party to this Agreement will pay its respective expenses
incurred in connection with the preparation and performance of its obligations
under this Agreement. Except as to a fee to be paid by Texas Central and
expensed and fully accrued on its books prior to the Effective Date to SAMCO,
not to exceed $500,000 which will be paid by Texas Central but will not be
deducted from the Merger Consideration referenced Section 1.6, each party agrees
to indemnify the other parties against any cost, expense or liability (including
reasonable attorney's fees) in respect of any claim made by any party for a
broker's or finder's fee in connection with this transaction other than one
based on communications between the party and the claimant seeking
indemnification. BUC and Texas Central further agree that, except for the fee to
be paid by Texas Central to SAMCO, all legal, accounting and other fees and
expenses incurred by Texas Central in connection with this Agreement in excess
of $100,000 will be deducted from the total Merger Consideration to be paid by
BUC under Section 1.6, above. All such legal, accounting or other fees and
expenses will be expensed and fully accrued on the books of Texas Central prior
to the Effective Date. BUC and Texas Central also agree that any fees, expenses
and payments associated with the funding or payment of the bonuses, incentive
compensation plans and vacation pay required by Sections 5.13 and 5.14 will be
the responsibility of Texas Central, will not be deducted from the Merger
Consideration, will not be included in the calculation of fees and expenses in
the previous sentence and will be expensed and fully accrued on the books of
Texas Central and discharged prior to the Effective Date.
Section 12.3 NOTICES. Any notice given hereunder shall be in writing and
shall be delivered in person or mailed by first class mail, postage prepaid or
sent by facsimile, courier or personal
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delivery to the parties at the following addresses unless by such notice a
different address shall have been designated:
If to BUC:
Bank United Corp.
3200 Southwest Freeway, Suite 1600
Houston, Texas 77027
P.O. Box 1370
Houston, Texas 77251-1370
Attention: F. William Bonito
Fax: (713) 543-7949
With a copy to:
Bank United Corp.
3200 Southwest Freeway, Suite 1600
Houston, Texas 77027
P.O. Box 1370
Houston, Texas 77251-1370
Attention: Randolph C. Henson
Fax: (713) 543-6469
If to Texas Central:
Texas Central Bancshares, Inc.
8144 Walnut Hill Lane
Dallas, Texas 75231
Attention: Michael Ruff
Fax: (214) 691-8638
With a copy to:
Joseph M. Ford
Ford, Fritz, Byrne & Head, L.L.P.
98 San Jacinto Boulevard, Suite 2000
Austin, Texas 78701-4286
Fax: (512) 477-5267
All notices sent by mail as provided above shall be deemed delivered five (5)
days after deposit in the mail. All notices sent by facsimile or courier as
provided above shall be deemed delivered one day after being sent. All other
notices shall be deemed delivered when actually received. Any party to this
Agreement may change its address for the giving of notice specified above by
giving notice as herein provided.
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Section 12.4 CONTROLLING LAW. All questions concerning the validity,
operation and interpretation of this Agreement and the performance of the
obligations imposed upon the parties hereunder shall be governed by the laws of
the State of Texas and, to the extent applicable, by the laws of the United
States.
Section 12.5 HEADINGS. The table of contents, headings and titles to the
sections of this Agreement are inserted for convenience only and shall not be
deemed a part hereof or affect the construction or interpretation of any
provision hereof.
Section 12.6 MODIFICATIONS OR WAIVER. No termination, cancellation,
modification, amendment, deletion, addition or other change in this Agreement,
or any provision hereof, or waiver of any right or remedy herein provided, shall
be effective for any purpose unless specifically set forth in a writing signed
by the party or parties to be bound thereby. The waiver of any right or remedy
in respect to any occurrence or event on one occasion shall not be deemed a
waiver of such right or remedy in respect to such occurrence or event on any
other occasion.
Section 12.7 SEVERABILITY. Any provision hereof prohibited by or unlawful
or unenforceable under any applicable law or any jurisdiction shall as to such
jurisdiction be ineffective, without affecting any other provision of this
Agreement, or shall be deemed to be severed or modified to conform with such
law, and the remaining provisions of this Agreement shall remain in force,
provided that the purpose of the Agreement can be effected. To the full extent,
however, that the provisions of such applicable law may be waived, they are
hereby waived, to the end that this Agreement be deemed to be a valid and
binding agreement enforceable in accordance with its terms.
Section 12.8 CONSOLIDATION OF AGREEMENTS. All understandings and
agreements heretofore made between the parties hereto are merged in this
Agreement which (together with any agreements executed by the parties hereto
contemporaneously with or, if contemplated hereby, subsequent to the execution
of this Agreement) shall be the sole expression of the agreement of the parties
respecting the Acquisition Merger. Each party to this agreement acknowledges
that, in executing and delivering this Agreement, it has relied only on the
written representations, warranties and promises of the other parties hereto
that are contained herein or in the other agreements executed by the parties
contemporaneously with or, if contemplated hereby, subsequent to the execution
of this Agreement, and has not relied on the oral statements of any other party
or its representatives.
Section 12.9 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which shall
be deemed to constitute one and the same instrument.
Section 12.10 ASSIGNMENT; BINDING ON SUCCESSORS. Except as otherwise
provided herein, this Agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto and their respective heirs, executors, trustees,
administrators, guardians, successors and permitted assigns, but shall not be
assigned by any party without the prior written consent of the other parties.
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Section 12.11 GENDER; PLURALS. Any pronoun used herein shall refer to any
gender, either masculine, feminine or neuter, as the context requires. Defined
terms may be used in either the singular or plural form as indicated by the
applicable syntax, but the meaning of which shall not be affected thereby.
Section 12.12 DISCLOSURES. Any disclosure made in any document delivered
pursuant to this Agreement or referred to or described in writing in any section
of this Agreement or any schedule attached hereto shall be deemed to be
disclosure for purposes of any section herein or schedule hereto.
Section 12.13 PUBLICITY. Subject to written advice of counsel with respect
to legal requirements relating to public disclosure of matters related to the
matters contemplated by this Agreement, the timing and content of any
announcements, press releases or other public statements (whether written or
oral) concerning this Agreement or the Acquisition Merger will occur upon, and
be determined by, the mutual consent of BUC and Texas Central; provided,
however, that a mutually agreed release regarding the Acquisition Agreement
shall be made promptly upon the execution of this Agreement.
Section 12.14 NO THIRD PARTY BENEFICIARIES. Nothing contained in this
Agreement, express or implied, is intended to confer upon any persons, other
than the parties hereto or their respective successors, any rights, remedies,
obligations, or liabilities under or by reason of this Agreement.
Section 12.15 INTERPRETATION; EFFECT. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall be to a
Section of, or Exhibit or Schedule to, this Agreement unless otherwise
indicated. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". No provision of this Agreement shall be construed to require any
party hereto or their respective affiliates to take any action which would
violate applicable law, (whether statutory or common law), rule or regulation.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
BANK UNITED CORP.
/s/ BARRY C. BURKHOLDER
By: BARRY C. BURKHOLDER
Its: PRESIDENT AND CHIEF EXECUTIVE OFFICER
ATTEST:
By: /s/ RANDOLPH C. HENSON
Randolph C. Henson
BUC ACQUISITION CORPORATION II
/s/ BARRY C. BURKHOLDER
By: BARRY C. BURKHOLDER
Its: PRESIDENT AND CHIEF EXECUTIVE OFFICER
ATTEST:
By: /s/ RANDOLPH C. HENSON
Randolph C. Henson
TEXAS CENTRAL BANCSHARES, INC.
/s/ MICHAEL A.RUFF
By: MICHAEL A. RUFF
Its: CHAIRMAN
ATTEST:
By:/s/ RANDOLPH C. HENSON
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EXHIBIT B
June 15, 1999
The Board of Directors
Texas Central Bancshares, Inc.
401 West Texas, Suite 100
Texas Central, Texas 79701-4414
Attention: Michael Ruff
Members of the Board:
We understand that Texas Central Bancshares, Inc. ("TCBI"), Bank United
Corp., a Delaware corporation ("BUC"), and BUC Acquisition Corporation II, a
Texas corporation ("Acquisition Company") have entered into an Agreement and
Plan of Reorganization (the "Merger Agreement") dated March 23, 1999, which
provides for the merger (the "Merger") of TCBI and its subsidiary, Texas Central
Bank National Association ("Texas Central" or the "Bank"), with and into a new
wholly owned Texas subsidiary corporation of BUC (the Acquisition Company).
Pursuant to the terms of the Merger Agreement, each issued and outstanding share
of common stock, par value $1.00, of TCBI, as of the date the Merger becomes
effective, will be converted into the right to receive 2.02797 (the "Exchange
Ratio") shares of Bank United Corp. Class A Common Stock, par value $0.01, not
to exceed in the aggregate 710,000 shares, as described in the Merger Agreement,
with certain provisions for fractional shares. The terms and conditions of the
Merger are more fully set forth in the Merger Agreement. We understand that as a
result of the Merger, (i) TCBI and the Acquisition Company shall each be merged
with and into BUC and each will cease to exist and that (ii) Texas Central will
be merged with and into Bank United Corp. and will cease its separate existence.
You have asked for our opinion as to whether the Exchange Ratio pursuant
to the Merger Agreement is fair, from a financial point of view, to holders of
the TCBI common stock.
Our opinion is based on information furnished to us by TCBI and BUC, their
attorneys, accountants, or obtained by us from published and verbal sources we
consider relevant. We have relied upon and assumed the accuracy and completeness
of all information submitted to us or that was publicly available and have made
no independent verification of this information. We have not conducted any
valuation or appraisal of any assets or liabilities, nor have any such
valuations or appraisals been provided to us. In relying upon financial analyses
and forecasts provided to us, we have assumed that they have been reasonably
prepared based on assumptions reflecting the best currently available estimates
and judgments by management of TCBI and BUC as to the expected future results of
operations and financial condition of TCBI and BUC to which such analyses or
forecasts relate. We have relied as to all legal matters relevant to rendering
our opinion upon the
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advice of counsel. TCBI and BUC's management have informed us that they know of
no additional information which would have a material effect upon our valuation.
In arriving at our opinion, we have followed generally accepted industry
practices for the valuation of commercial banks and have used such valuation
methodologies as we have deemed necessary or appropriate for the purposes of
this opinion. In giving our opinion, we have given consideration to all
available financial data and other relevant factors effecting fair market value
including, but not limited to the following, (i) reviewed certain publicly
available financial statements and other information of TCBI and BUC, (ii)
reviewed certain internal financial statements and other financial and operating
data concerning TCBI and BUC prepared by the management of TCBI and BUC, (iii)
analyzed certain summary financial projections concerning TCBI and BUC prepared
by the management of TCBI and BUC, respectively; (iv) reviewed and discussed
with senior executives of TCBI the past and current operations and prospects of
TCBI, (v) reviewed and discussed with senior executives of BUC the past and
current operations and financial condition and the prospects of BUC and analyzed
the estimated pro forma impact of the Merger, including on the combined
company's earnings per share, consolidated capitalization and financial ratios,
(vi) reviewed and discussed with senior executives of TCBI and BUC the strategic
objectives of the Merger and the long term benefits expected to result from the
Merger, including without limitation, certain estimates and timing of synergies
and other cost savings for the continued company, (vii) reviewed reported prices
and trading activity for transactions in TCBI stock and BUC stock, (viii)
compared the financial performance of TCBI and BUC and the prices and trading
activity of TCBI and BUC with that of certain other comparable publicly traded
companies and their securities, (ix) reviewed the financial terms, to the extent
publicly available, of certain comparable transactions, (x) reviewed the Merger
Agreement and certain related documents, and (xi) considered other such factors
as we have deemed appropriate.
Neither SAMCO Capital Markets ("SAMCO") nor the individuals involved in
this valuation have any present or contemplated future financial interest in
TCBI or BUC which might prevent them from rendering a fair and unbiased opinion.
Our opinion is necessarily based upon the business, market, economic and other
conditions as they exist on, and can be evaluated as of, the date of this
letter, and does not address TCBI's underlying business decision to enter into
the Merger Agreement or constitute any recommendations to any holder of common
stock of TCBI as to how such holder should vote with respect to the Merger
Agreement. We were requested to, and did, solicit third party offers to acquire
all or any part of TCBI. In addition, we understand that the Merger may render
in effect a taxable transaction and our opinion may be used for purposes of the
shareholders in determining the tax liability they may have upon conversion.
In reaching our opinion, we have assumed that the Merger will be
consummated in accordance with the terms described in the Merger Agreement. We
consent to the reference to our firm and the inclusion of our opinion in its
entirety in any filing with the Securities and Exchange Commission related to
the Merger. Based on the foregoing and in consideration of all relevant factors,
it is our opinion, as of the date of this letter, that the Exchange Ratio is
fair and equitable to all holders of Texas Central Bancshares, Inc. common
stock, from a financial point of view.
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SAMCO Capital Markets appreciates the opportunity to be of service to you
in this matter.
Very truly yours,
SAMCO Capital Markets
By:/S/ DORY A. WILEY
Dory A. Wiley
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EXHIBIT C
PROVISIONS OF THE TEXAS BUSINESS CORPORATION ACT
RELATING TO
RIGHTS OF DISSENTING SHAREHOLDERS
(Articles 5.11 - 5.13)
ARTICLE 5.11.RIGHTS OF DISSENTING SHAREHOLDERS IN THE EVENT OF CERTAIN CORPORATE
ACTIONS
A. Any shareholder of a domestic corporation shall have the right to
dissent from any of the following corporate actions:
(1) Any plan of merger to which the corporation is a party if
shareholder approval is required by Article 5.03 or 5.16 of this Act and the
shareholder holds shares of a class or series that was entitled to vote thereon
as a class or otherwise;
(2) Any sale, lease, exchange or other disposition (not
including any pledge, mortgage, deed of trust or trust indenture unless
otherwise provided in the articles of incorporation) of all, or substantially
all, the property and assets, with or without good will, of a corporation if
special authorization of the shareholders is required by this Act and
shareholders hold shares of a class or series that was entitled to vote thereon
as a class or otherwise;
(3) Any plan of exchange pursuant to Article 5.02 of this Act
in which the shares of the corporation of the class or series held by the
shareholder are to be acquired.
B. Notwithstanding the provisions of Section A of this Article, a
shareholder shall not have the right to dissent from any plan of merger in which
there is a single surviving or new domestic or foreign corporation, or from any
plan of exchange, if:
(1) the shares held by the shareholder are part of a class or series,
shares of which are on the record date fixed to determine the shareholders
entitled to vote on the plan of merger or the plan of exchange:
(a) listed on a national securities exchange;
(b) listed on the Nasdaq Stock Market (or successor quotation system)
or designated as a national market security on an interdealer quotation system
by the National Association of Securities Dealers, Inc., or successor entity; or
(c) held of record by not less than 2,000 holders; and
(2) the shareholder is not required by the terms of the plan of merger
or the plan of exchange to accept for the shareholder's shares any consideration
that is different than the consideration (other than cash in lieu of fractional
shares that the shareholders would otherwise be entitled to receive) to be
provided to any other holder of shares of the same class or series of shares
held by such shareholder; and
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(3) the shareholders is not required by the terms of the plan of merger
or the plan of exchange to accept for the shareholder's shares any consideration
other than:
(a) shares of a domestic or foreign corporation, that immediately after
the effective time of the merger or exchange, will be a part of a class or
series, shares of which are:
(i) listed, or authorized for listing upon official notice of issuance,
on a national securities exchange;
(ii) approved for quotation as a national market security on an
interdealer quotation system by the National Association of Securities Dealers,
Inc., or successor entity; or
(iii) held of record by not less than 2,000 holders;
(b) cash in lieu of fractional shares otherwise entitled to be
received; or
(c) any combination of the securities and cash described in
Subdivisions (a) and (b) of this subsection.
ARTICLE 5.12.PROCEDURE FOR DISSENT BY SHAREHOLDERS AS TO SAID CORPORATE ACTIONS
A. Any shareholder of any domestic corporation who has the right to dissent from
any of the corporate actions referred to in Article 5.11 of this Act may
exercise that right to dissent only by complying with the following procedures:
(1)(a) With respect to proposed corporate action that is submitted
to a vote of shareholders at a meeting, the shareholder shall file with
the corporation, prior to the meeting, a written objection to the
action, setting out that the shareholder's right to dissent will be
exercised if the action is effective and giving the shareholder's
address, to which notice thereof shall be delivered or mailed in that
event. If the action is effected and the shareholder shall not have
voted in favor of the action, the corporation, in the case of action
other than a merger, or the surviving or new corporation (foreign or
domestic) or other entity that is liable to discharge the shareholder's
right of dissent, in the case of a merger, shall, within ten (10) days
after the action is effected, deliver or mail to the shareholder
written notice that the action has been effected, and the shareholder
may, within ten (10) days from the delivery or mailing of the notice,
make written demand on the existing, surviving, or new corporation
(foreign or domestic) or other entity, as the case may be, for payment
of the fair value of the shareholder's shares. The fair value of the
shares shall be the value thereof as of the day immediately preceding
the meeting, excluding any appreciation or depreciation in anticipation
of the proposed action. The demand shall state the number and class of
the shares owned by the shareholder and the fair market value of the
shares as estimated by the shareholder. Any shareholder failing to make
demand within the ten (10) day period shall be bound by the action.
(b) With respect to proposed corporate action that is approved
pursuant to Section A of Article 9.10 of this Act, the corporation, in
the case of action other than a merger, and the surviving or new
corporation (foreign or domestic) or other entity that is liable
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to discharge the shareholder's right of dissent, in the case of a
merger, shall, within ten (10) days after the date the action is
effected, mail to each shareholder of record as of the effective date
of the action notice of the fact and date of the action and that the
shareholder may exercise the shareholder's right to dissent from the
action. The notice shall be accompanied by a copy of this Article and
any articles or documents filed by the corporation with the Secretary
of State to effect the action. If the shareholder shall not have
consented to the taking of the action, the shareholder may, within
twenty (20) days after the mailing of the notice, make written demand
on the existing, surviving, or new corporation (foreign or domestic) or
other entity, as the case may be, for payment of the fair value of the
shareholder's shares. The fair value of the shares shall be the value
thereof as of the date the written consent authorizing the action was
delivered to the corporation pursuant to Section A of Article 9.10 of
this Act, excluding any appreciation or depreciation in anticipation of
the action. The demand shall state the number and class of shares owned
by the dissenting shareholder and the fair value of the shares as
estimated by the shareholder. Any shareholder failing to make demand
within the twenty (20) day period shall be bound by the action.
(2) Within twenty (20) days after receipt by the existing,
surviving, or new corporation (foreign or domestic) or other entity, as
the case may be, of a demand for payment made by a dissenting
shareholder in accordance with Subsection (1) of this Section, the
corporation (foreign or domestic) or other entity shall deliver or mail
to the shareholder a written notice that shall either set out that the
corporation (foreign or domestic) or other entity accepts the amount
claimed in the demand and agrees to pay that amount within ninety (90)
days after the date on which the action was effected, and, in the case
of shares represented by certificates, upon the surrender of the
certificates duly endorsed, or shall contain an estimate by the
corporation (foreign or domestic) or other entity of the fair value of
the shares, together with an offer to pay the amount of that estimate
within ninety (90) days after the date on which the action was
effected, upon receipt of notice within sixty (60) days after that date
from the shareholder that the shareholder agrees to accept that amount
and, in the case of shares represented by certificates, upon the
surrender of the certificates duly endorsed.
(3) If, within sixty (60) days after the date on which the
corporate action was effected, the value of the shares is agreed upon
between the shareholder and the existing, surviving, or new corporation
(foreign or domestic) or other entity, as the case may be, payment for
the shares shall be made within ninety (90) days after the date on
which the action was effected and, in the case of shares represented by
certificates, upon surrender of the certificates duly endorsed. Upon
payment of the agreed value, the shareholder shall cease to have any
interest in the shares or in the corporation.
B. If, within the period of sixty (60) days after the date on which the
corporate action was effected, the shareholder and the existing, surviving, or
new corporation (foreign or domestic) or other entity may be, do not so agree,
then the shareholder or the corporation (foreign or domestic) or other entity
may, within sixty (60) days after the expiration of the sixty (60) day period,
file a
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petition in any court of competent jurisdiction in the county in which the
principal office of the domestic corporation is located, asking for a finding
and determination of the fair value of the shareholder's shares. Upon the filing
of any such petition by the shareholder, service of a copy thereof shall be made
upon the corporation (foreign or domestic) or other entity, which shall, within
ten (10) days after service, file in the office of the clerk of the court in
which the petition was filed a list containing he names and addresses of all
shareholders of the domestic corporation who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the corporation (foreign or domestic) or other entity. If the
petition shall be filed by the corporation (foreign or domestic) or other
entity, the petition shall be accompanied by such a list. The clerk of the court
shall give notice of the time and place fixed for the hearing of the petition by
registered mail to the corporation (foreign or domestic) or other entity and to
the shareholders named on the list at the addresses therein stated. The forms of
the notices by mail shall be approved by the court. All shareholders thus
notified and the corporation (foreign or domestic) or other entity shall
thereafter be bound by the final judgment of the court.
C. After the hearing of the petition, the court shall determine the
shareholders who have complied with the provisions of this Article and have
become entitled to the valuation of and payment of their shares, and shall
appoint one or more qualified appraisers to determine that value. The appraisers
shall have power to examine any of the books and records of the corporation the
shares of which they are charged with the duty of valuating, and they shall make
a determination of the fair value of the shares upon such investigation as to
them may seem proper. The appraisers shall also afford a reasonable opportunity
to the parties interested to submit to them pertinent evidence as to the value
of the shares. The appraisers shall also have such power and authority as may be
conferred on Masters in Chancery by the Rules of Civil Procedure or by the order
of their appointment.
D. The appraisers shall determine the fair value of the shares of the
shareholders adjudged by the court to be entitled to payment for their shares
and shall file their report of that value in the office of the clerk of the
court. Notice of the filing of the report shall be given by the clerk to the
parties in interest. The report shall be subject to exceptions to be heard
before the court both upon the law and the facts. The court shall by its
judgment determine the fair value of the shares of the shareholders entitled to
payment for their shares and shall direct the payment of that value by the
existing, surviving, or new corporation (foreign or domestic) or other entity,
together with interest thereon, beginning 91 days after the date on which the
applicable corporate action from which the shareholder elected to dissent was
effected to the date of such judgment, to the shareholders entitled to payment.
The judgment shall be payable to the holders of uncertificated shares
immediately but to the holders of shares represented by certificates only upon,
and simultaneously with, the surrender to the existing, surviving, or new
corporation (foreign or domestic) or other entity, as the case may be, of duly
endorsed certificates for those shares. Upon payment of the judgment, the
dissenting shareholders shall cease to have any interest in those shares or in
the corporation. The court shall allow the appraisers a reasonable fee as court
costs, and all court costs shall be allotted between the parties in the manner
that the court determines to be fair and equitable.
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E. Shares acquired by the existing, surviving, or new corporation (foreign
or domestic) or other entity, as the case may be, pursuant to the payment of the
agreed value of the shares or pursuant to payment of the judgment entered for
the value of the shares, as in this Article provided, shall, in the case of a
merger, be treated as provided in the plan of merger and, in all other cases,
may be held and disposed of by the corporation as in the case of other treasury
shares.
F. The provisions of this Article shall not apply to a merger if, on the
date of the filing of the articles of merger, the surviving corporation is the
owner of all the outstanding shares of the other corporations, domestic or
foreign, that are parties to the merger.
G. In the absence of fraud in the transaction, the remedy provided by this
Article to a shareholder objecting to any corporate action referred to in
Article 5.11 of this Act is the exclusive remedy for the recovery of the value
of his shares or money damages to the shareholder with respect to the action. If
the existing, surviving, or new corporation (foreign or domestic) or other
entity, as the case may be, complies with the requirements of this Article any
shareholder who fails to comply with the requirements of this Article shall not
be entitled to bring suit for the recovery of the value of his shares or money
damages to the shareholder with respect to the action.
ARTICLE 5.13.PROVISIONS AFFECTING REMEDIES OF DISSENTING SHAREHOLDERS
A. Any shareholder who has demanded payment for his shares in accordance
with Article 5.12 or 5.16 of this Act shall not thereafter be entitled to vote
or exercise any other rights of a shareholder except the right to receive
payment for his shares pursuant to the provisions of those articles and the
right to maintain an appropriate action to obtain relief on the ground that the
corporate action would be or was fraudulent, and the respective shares for which
payment has been demanded shall not thereafter be considered outstanding for the
purposes of any subsequent vote of shareholders.
B. Upon receiving a demand for payment from any dissenting shareholder, the
corporation shall make an appropriate notation thereof in its shareholder
records. Within twenty (20) days after demanding payment for his shares in
accordance with Article 5.12 or 5.16 of this Act, each holder of certificates
representing shares so demanding payment shall submit such certificates to the
corporation for notation thereon that such demand has been made. The failure of
holders of certificated shares to do so shall, at the option of the corporation,
terminate such shareholder's right under Article 5.12 and 5.16 of this Act
unless a court of competent jurisdiction for good and sufficient cause shown
shall otherwise direct. If uncertificated shares for which payment has been
demanded or shares represented by a certificate on which notation has been so
made shall be transferred, any new certificate issued therefor shall bear
similar notation together with the name of the original dissenting holder of
such shares and a transferee of such shares shall acquire by such transfer no
rights in the corporation other than those which the original dissenting
shareholder had after making demand for payment of the fair value thereof.
C. Any shareholder who has demanded payment for his shares in accordance
with Article 5.12 or 5.16 of this Act may withdraw such demand at any time
before payment for his shares or
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before any petition has been filed pursuant to Article 5.12 or 5.16 of this Act
asking for a finding and determination of the fair value of such shares, but no
such demand may be withdrawn after such payment has been made or, unless the
corporation shall consent thereto, after any such petition has been filed. If,
however, such demand shall be withdrawn as hereinbefore provided, or if pursuant
to Section B of this Article the corporation shall terminate the shareholder's
rights under Article 5.12 or 5.16 of this Act, as the case may be, or if no
petition asking for a finding and determination of fair value of such shares by
a court shall have been filed within the time provided in Article 5.12 or 5.16
of this Act, as the case may be, or if after the hearing of a petition filed
pursuant to Article 5.12 or 5.16, the court shall determine that such
shareholder is not entitled to the relief provided by those articles, then, in
any such case, such shareholder and all persons claiming under him shall be
conclusively presumed to have approved and ratified the corporate action from
which he dissented and shall be bound thereby, the right of such shareholder to
be paid the fair value of his shares shall cease, and his status as a
shareholder shall be restored without prejudice to any corporate proceedings
which may have been taken during the interim, and such shareholder shall be
entitled to receive any dividends or other distributions made to shareholders in
the interim.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Bank United Corp. is a Delaware corporation. Section 145 of the General
Corporation Law of the State of Delaware (the "DGCL") contains detailed
provisions on indemnification of directors and officers of a Delaware
corporation against expenses, judgments, fines and amounts paid in settlement
actually and reasonably incurred in connection with certain litigation.
Bank United Corp.'s Restated Certificate of Incorporation (the
"Certificate of Incorporation") provides that a director of Bank United Corp.
will not be personally liable to Bank United Corp. or its stockholders for
monetary damages for breach of fiduciary duty as a director, except, if required
by the DGCL as amended from time to time, for liability (i) for any breach of
the director's duty of loyalty to Bank United Corp. or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the DGCL, which
concerns unlawful payments of dividends, stock purchases or redemptions, or (iv)
for any transaction from which the director derived an improper personal
benefit. Neither the amendment nor repeal of such provision will eliminate or
reduce the effect of such provision in respect of any matter occurring, or any
cause of action, suit or claim that, but for such provision, would accrue or
arise prior to such amendment or repeal.
While the Certificate of Incorporation provides directors with protection
from awards for monetary damages for breaches of their duty of care, it does not
eliminate such duty. Accordingly, the Certificate of Incorporation will have no
effect on the availability of equitable remedies such as an injunction or
rescission based on a director's breach of his or her duty of care.
The Certificate of Incorporation provides that each person who was or is
made a party or is threatened to be made a party to or is involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person, or a person of whom such
person is the legal representative, is or was a director or officer of Bank
United Corp. or is or was serving at the request of Bank United Corp. as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, will be
indemnified and held harmless by Bank United Corp. to the fullest extent
authorized by the DGCL, as the same exists or may hereafter be amended (but, in
the case of any such amendment, only to the extent that such amendment permits
Bank United Corp. to provide broader indemnification rights than said law
permitted Bank United Corp. to provide prior to such amendment), against all
expense, liability and loss reasonably incurred or suffered by such person in
connection therewith. Such right to indemnification includes the right to have
Bank United Corp. pay the expenses incurred in defending any such proceeding in
advance of its final disposition, subject to the provisions of the DGCL. Such
rights are not exclusive of any other right which any person may have or
thereafter acquire under any statute, provision of the Certificate of
Incorporation, By-Laws, agreement, vote of stockholders or disinterested
directors or otherwise. No repeal or modification of such provision will in any
way diminish or adversely affect the rights of any director, officer, employee
or agent of Bank United Corp. thereunder in respect of any occurrence or matter
arising prior to any such repeal or modification. The Certificate of
Incorporation also specifically authorizes the Registrant to maintain insurance
and to grant similar indemnification rights to employees or agents of the
Registrant.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENTS AND SCHEDULES
(a) Exhibits
The following Exhibits are filed herewith or incorporated herein by
reference:
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EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
2.1 - Agreement and Plan of Reorganization dated as March 23, 1999
by and among Bank United Corp., BUC Acquisition Corporation II
and Texas Central Bancshares, Inc.
3.1 - Form of Restated Certificate of Incorporation of Bank United
Corp., as amended (incorporated by reference to Exhibit 3.1 to
Form S-1, Registration No. 333-06229).
3.2 - Form of By-Laws of Bank United Corp. (incorporated by
reference to Exhibit 3.2 to Form S-1, Registration No.
333-06229).
4.1 - Form of Class A Common Stock (incorporated herein by reference
to Form 8-A filed, July 15, 1996).
5.1 - Opinion of Jonathon K. Heffron, General Counsel for Bank
United Corp. as to the legality of securities being
registered.
8.1* - Opinion of Bracewell & Patterson, L.L.P. as to certain federal
income tax matters.
8.2* - Opinion of Ford, Fritz, Byrne & Head, L.L.P. as to certain
federal income tax matters.
15.1 - Letter from Deloitte & Touche LLP regarding unaudited interim
financial information.
23.1 - Consent of Deloitte & Touche LLP.
23.2 - Consent of Payne, Faulkner, Smith & Jones, P.C.
23.3 - Consent of Fisk & Robinson, P.C.
23.4 - Consent of Jonathon K. Heffron, General Counsel for Bank
United Corp. (included in Exhibit 5.1 to this Registration
Statement)
23.5 - Consent of Bracewell & Patterson, L.L.P. (included in the
Opinion filed as Exhibit 8.1 to this Registration Statement).
23.6 - Consent of Ford, Fritz, Byrne & Head, L.L.P. (included in the
Opinion filed as Exhibit 8.2 to this Registration Statement).
24.1 - Powers of Attorney.
99.1 - Form of Proxy for Texas Central.
99.2 - Stock Option Agreement by and between Texas Central
Bancshares, Inc. and Bank United Corp.
99.3 - Form of Voting Agreement and Irrevocable Proxy by and among
Bank United Corp., BUC Acquisition Corp. II and certain
shareholders of Texas Central Bancshares, Inc.
99.4 - Opinion of SAMCO Capital Markets dated as of June 15, 1999.
- ----------------
* To be filed by amendment.
(b) FINANCIAL STATEMENTS AND SCHEDULES
Either not applicable or shown in the financial statements or notes thereto.
(c) OPINION OF FINANCIAL ADVISOR
Furnished as part of the Prospectus/Proxy Statement.
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will
II-2
<PAGE>
contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other items of the applicable form.
The Registrant undertakes that every prospectus (i) that is filed pursuant
to the immediately preceding paragraph or (ii) that purports to meet the
requirements of section 10(a)(3) of the Securities Act of 1933 and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Proxy
Statement/Prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within
one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has
caused this Registration Statement or amendment thereto to be signed on its
behalf by the undersigned, thereunto duly authorized, in Houston, Texas, on
June 18, 1999.
Bank United Corp.
(Registrant)
By:/s/ BARRY C. BURKHOLDER
Name: Barry C. Burkholder
Title: President and Chief Executive Officer
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<PAGE>
SIGNATURES -- (CONTINUED)
Pursuant to the requirements of the Securities Act, this Registration
Statement or amendment thereto has been signed by the following persons in the
capacities indicated on June 18, 1999.
SIGNATURE TITLE
--------- -----
* Chairman of the Board of Directors
Lewis S. Ranieri
/s/ BARRY C. BURKHOLDER Principal Executive Officer; Director
Barry C. Burkholder
* Director
Lawrence Chimerine
* Director
David M. Golush
* Director
Paul M. Horvitz
* Principal Financial and Accounting Officer; Director
Anthony J. Nocella
* Director
Salvatore A. Ranieri
* Director
Scott A. Shay
* Director
Michael S. Stevens
*By:/s/ BARRY C. BURKHOLDER
Barry C. Burkholder
Attorney-in-fact
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<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
2.1 - Agreement and Plan of Reorganization dated as March 23, 1999
by and among Bank United Corp., BUC Acquisition Corporation II
and Texas Central Bancshares, Inc.
3.1 - Form of Restated Certificate of Incorporation of Bank United
Corp., as amended (incorporated by reference to Exhibit 3.1 to
Form S-1, Registration No. 333-06229).
3.2 - Form of By-Laws of Bank United Corp. (incorporated by
reference to Exhibit 3.2 to Form S-1, Registration No.
333-06229).
4.1 - Form of Class A Common Stock (incorporated herein by reference
to Form 8-A filed, July 15, 1996).
5.1 - Opinion of Jonathon K. Heffron, General Counsel for Bank
United Corp. as to the legality of securities being
registered.
8.1* - Opinion of Bracewell & Patterson, L.L.P. as to certain federal
income tax matters.
8.2* - Opinion of Ford, Fritz, Byrne & Head, L.L.P. as to certain
federal income tax matters.
15.1 - Letter from Deloitte & Touche LLP regarding unaudited interim
financial information.
23.1 - Consent of Deloitte & Touche LLP.
23.2 - Consent of Payne, Faulkner, Smith & Jones, P.C.
23.3 - Consent of Fisk & Robinson, P.C.
23.4 - Consent of Jonathon K. Heffron, General Counsel for Bank
United Corp. (included in Exhibit 5.1 to this Registration
Statement)
23.5 - Consent of Bracewell & Patterson, L.L.P. (included in the
Opinion filed as Exhibit 8.1 to this Registration Statement).
23.6 - Consent of Ford, Fritz, Byrne & Head, L.L.P. (included in the
Opinion filed as Exhibit 8.2 to this Registration Statement).
24.1 - Powers of Attorney.
99.1 - Form of Proxy for Texas Central.
99.2 - Stock Option Agreement by and between Texas Central
Bancshares, Inc. and Bank United Corp.
99.3 - Form of Voting Agreement and Irrevocable Proxy by and among
Bank United Corp., BUC Acquisition Corp. II and certain
shareholders of Texas Central Bancshares, Inc.
99.4 - Opinion of SAMCO Capital Markets dated as of June 15, 1999.
- --------------
* To be filed by amendment
II-6
EXHIBIT 2.1
- ------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
BANK UNITED CORP., BUC ACQUISITION CORPORATION II
AND
TEXAS CENTRAL BANCSHARES, INC.
DATED AS OF MARCH 23, 1999
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE I.
THE ACQUISITION MERGER.................................................1
Section 1.1 Acquisition Merger...................................1
Section 1.2 Articles of Incorporation, Bylaws and Facilities
of Surviving Company ................................2
Section 1.3 Effect of Acquisition Merger.........................2
Section 1.4 Liabilities of the Surviving Company.................2
Section 1.5 Acquisition Merger Price.............................3
Section 1.6 Calculation of BUC Stock Ratio.......................3
Section 1.7 Dissenting Shares....................................3
Section 1.8 Exchange of Shares...................................4
Section 1.9 Approval by Shareholders.............................4
Section 1.10 Stock Option.........................................4
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF TEXAS CENTRAL........................5
Section 2.1 Organization.........................................5
Section 2.2 Capitalization.......................................5
Section 2.3 Approvals; Authority.................................6
Section 2.4 Investments..........................................6
Section 2.5 Financial Statements.................................6
Section 2.6 Title................................................7
Section 2.7 Environmental Laws...................................7
Section 2.8 Litigation and Other Proceedings.....................8
Section 2.9 Taxes................................................8
Section 2.10 Contracts...........................................10
Section 2.11 Fidelity Bonds and Insurance........................11
Section 2.12 No Conflict With Other Instruments..................11
Section 2.13 Laws................................................11
Section 2.14 Conduct.............................................12
Section 2.15 Reserve for Possible Loan Losses....................12
Section 2.16 Employment Relations................................12
Section 2.17 Employee Benefit Plans..............................13
Section 2.18 List of Loans.......................................15
Section 2.19 Accounting Matters..................................16
Section 2.20 SEC Status; Securities Issuances....................16
Section 2.21 Absence of Changes..................................16
Section 2.22 Brokers and Finders.................................16
Section 2.23 Absence of Property Taxes and Liens.................16
Section 2.24 Community Reinvestment Act..........................16
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Section 2.25 Fair Housing Act, Home Mortgage Disclosure Act and
Equal Credit Opportunity Act........................16
Section 2.26 Usury Laws and Other Consumer Compliance Laws.......17
Section 2.27 Bank Secrecy Act....................................17
Section 2.28 Zoning and Related Laws.............................17
Section 2.29 Securities Laws.....................................17
Section 2.30 Regulatory Approvals................................17
Section 2.31 Shareholders' List..................................17
Section 2.32 Books and Records...................................18
Section 2.33 Deposit Summary.....................................18
Section 2.34 Schedules...........................................18
Section 2.35 Year 2000 Representation............................18
Section 2.36 Disclosure..........................................18
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF BUC.................................18
Section 3.1 Organization........................................18
Section 3.2 Capitalization......................................19
Section 3.3 Issuance of BUC Stock...............................19
Section 3.4 Approvals; Authority................................19
Section 3.5 No Conflict With Other Instruments..................19
Section 3.6 Financial Reports and SEC Documents; Material
Adverse Effect......................................20
Section 3.7 Litigation; Regulatory Action.......................20
Section 3.8 Community Reinvestment Act..........................20
Section 3.9 Compliance with Law.................................21
Section 3.10 Year 2000 Representation............................21
ARTICLE IV.
COVENANTS OF BUC......................................................21
Section 4.1 Best Efforts........................................21
Section 4.2 Information for Applications and Proxy Solicitation.21
Section 4.3 Confidentiality.....................................22
Section 4.4 Registration Statement..............................22
Section 4.5 NASDAQ Listing......................................23
Section 4.6 Delivery of Reports.................................23
Section 4.7 Rule 144 Compliance.................................23
Section 4.8 Publication of Financial Condition..................23
Section 4.9 Press Releases......................................23
ARTICLE V.
COVENANTS OF TEXAS CENTRAL............................................24
Section 5.1 Shareholder Approval and Best Efforts...............24
Section 5.2 Operations..........................................24
Section 5.3 Information for Applications and SEC Filings........25
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Section 5.4 Access to Properties and Records....................26
Section 5.5 Accounting and Tax Treatment........................26
Section 5.6 Standstill Provision................................26
Section 5.7 Proxies.............................................26
Section 5.8 Dividends...........................................26
Section 5.9 Accruals............................................27
Section 5.10 Press Releases......................................27
Section 5.11 Nature of Deposits..................................27
Section 5.12 Termination of 401(k) Plan..........................27
Section 5.13 Incentive Compensation Obligations..................27
Section 5.14 Vacation Payment Obligations........................27
Section 5.15 Environmental Reports...............................27
Section 5.16 Stock Options.......................................28
Section 5.17 Affiliate Agreement.................................28
Section 5.18 Directors and Officers' Liability Insurance and
Indemnification.....................................28
Section 5.19 Supplements to Disclosure Schedules.................29
ARTICLE VI.
CLOSING...............................................................29
Section 6.1 Closing.............................................29
Section 6.2 Effective Date......................................30
ARTICLE VII.
TERMINATION...........................................................30
Section 7.1 Termination.........................................30
Section 7.2 Effect of Termination...............................31
ARTICLE VIII.
CONDITIONS TO OBLIGATIONS OF BUC......................................31
Section 8.1 Compliance with Representations.....................32
Section 8.2 Material Adverse Change.............................32
Section 8.3 Legal Opinion.......................................32
Section 8.4 Tax Opinion.........................................32
Section 8.5 Releases............................................32
Section 8.6 Accounting Letters..................................33
Section 8.7 Dissenters' Rights..................................33
Section 8.8 Affiliate Agreements................................33
Section 8.9 Debt Assumption.....................................33
Section 8.10 Noncompetition Agreement............................33
Section 8.11 Environmental Reports...............................33
Section 8.12 Stock Options.......................................33
Section 8.13 Closing Day Payment.................................33
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<PAGE>
ARTICLE IX.
CONDITIONS TO OBLIGATIONS OF TEXAS CENTRAL............................34
Section 9.1 Compliance with Representations.....................34
Section 9.2 Material Adverse Change.............................34
Section 9.3 Legal Opinion.......................................34
Section 9.4 Tax Opinion.........................................34
Section 9.5 Fairness Opinion; Comfort Letter....................34
ARTICLE X.
CONDITIONS TO RESPECTIVE OBLIGATIONS OF
BUC AND TEXAS CENTRAL.................................................35
Section 10.1 Government Approvals................................35
Section 10.2 Shareholder Approval................................35
Section 10.3 Registration of BUC Stock...........................35
Section 10.4 No Injunction.......................................35
ARTICLE XI.
EMPLOYEE MATTERS......................................................36
Section 11.1 Offers to Texas Central Employees...................36
Section 11.2 Credit for Service with Texas Central...............36
Section 11.3 Vacation Policy.....................................36
Section 11.4 Employment Agreements...............................37
ARTICLE XII.
MISCELLANEOUS.........................................................37
Section 12.1 Survival of Representations and Warranties..........37
Section 12.2 Expenses............................................37
Section 12.3 Notices.............................................37
Section 12.4 Controlling Law.....................................38
Section 12.5 Headings............................................39
Section 12.6 Modifications or Waiver............................39
Section 12.7 Severability........................................39
Section 12.8 Consolidation of Agreements.........................39
Section 12.9 Counterparts........................................39
Section 12.10 Assignment; Binding on Successors...................39
Section 12.11 Gender; Plurals.....................................39
Section 12.12 Disclosures.........................................40
Section 12.13 Publicity...........................................40
Section 12.14 No Third Party Beneficiaries........................40
Section 12.15 Interpretation; Effect..............................40
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<PAGE>
EXHIBITS
Exhibit A Form of Articles of Merger (including Plan of Merger)
Exhibit B Form of Stock Option
Exhibit C Form of Voting Agreement and Irrevocable Proxy
Exhibit D Form of Affiliate Agreement
Exhibit E Form of Opinion of Counsel to Texas Central
Exhibit F Form of Release of BUC by Directors and Officers of Texas Central
Exhibit G Form of Release of Texas Central Directors and Officers by Texas
Central
Exhibit H Form of Non-Competition Agreement
Exhibit I Form of Opinion of Counsel to BUC
Exhibit J Form of Employment Agreement
SCHEDULES
Schedule 2.1 Subsidiaries and Affiliates
Schedule 2.2 Options, Warrants and Similar Rights
Schedule 2.4 Securities Portfolio
Schedule 2.5 Contingent Liabilities
Schedule 2.7 Environmental Matters
Schedule 2.9(a) Tax Returns
Schedule 2.9(b) Tax Deficiencies
Schedule 2.9(c) Tax Penalties
Schedule 2.10 Contracts
Schedule 2.11 Fidelity Bonds and Insurance
Schedule 2.13 Compliance with Laws
Schedule 2.14 Dividends, Stock Issuances and Indebtedness
Schedule 2.15 Substandard and Similar Loans
Schedule 2.16 Wage Arrearages
Schedule 2.17(a) Compensation and Benefit Plans
Schedule 2.17(e) Administration of Benefit Plans
Schedule 2.17(h) Effects of Acquisition Merger on Benefit Plans
Schedule 2.18 Loans
Schedule 2.21 Changes Since Balance Sheet Date
Schedule 2.23 Property Tax Matters
Schedule 2.33 Deposit Summary
Schedule 5.7 Proxies
Schedule 11.4 Employment Agreements
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<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization ("Agreement") dated as of March
23, 1999, is by and among Bank United Corp., a Delaware corporation ("BUC"), BUC
Acquisition Corporation II, a Texas corporation ("Acquisition Company"), and
Texas Central Bancshares, Inc., a Texas corporation ("Texas Central").
WHEREAS, BUC and Texas Central believe that the acquisition of Texas
Central by BUC in the manner provided by, and subject to the terms and
conditions set forth in, this Agreement and all exhibits, schedules and
supplements hereto is desirable and in the best interests of their respective
institutions and shareholders.
NOW, THEREFORE, in consideration of such premises and the mutual
representations, warranties, covenants and agreements contained herein, the
parties agree as set forth below:
INTRODUCTION
Texas Central is a bank holding company registered under the Bank Holding
Company Act of 1956, as amended ("BHC Act"), which owns 100% of the issued and
outstanding capital stock of Texas Central Bank, N.A., a national banking
association (the "Texas Central Bank"), indirectly through Texas Central
Bancshares of Delaware, Inc. ("Texas Central Delaware"). BUC is a savings and
loan holding company within the meaning of the Home Owners' Loan Act, as amended
(the "HOLA"), which owns 100% of the issued and outstanding capital stock of
Bank United, a federal savings bank ("Bank United"), indirectly through BNKU
Holdings, Inc. ("BU Holdings"). This Agreement provides for the acquisition of
all of the issued and outstanding common stock, $1.00 par value, of Texas
Central (the "Texas Central Stock") by BUC in connection with which Texas
Central will become a wholly-owned subsidiary of BUC and will continue its
existing operations as a Texas corporation. The acquisition of the Texas Central
Stock will be accomplished through the merger of Acquisition Company, a
to-be-formed Texas corporation and a wholly-owned subsidiary of BUC, with and
into Texas Central, with Texas Central surviving (the "Acquisition Merger"), all
pursuant to this Agreement and the Articles of Merger (including the related
Plan of Merger) by and between Texas Central, BUC and Acquisition Company, a
form of which is attached hereto as EXHIBIT A (the "Articles of Merger").
ARTICLE I.
THE ACQUISITION MERGER
Section 1.1 ACQUISITION MERGER. BUC Acquisition II shall merge with and
into Texas Central (the resulting company being referred to as the "Surviving
Company") as of the Effective Date, as defined in Section 6.2, under the charter
and Articles of Incorporation of Texas Central and each of the outstanding
shares of common stock of BUC Acquisition II shall and without any action on the
part of BUC be canceled and be converted into shares of common stock of the
Surviving
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<PAGE>
Company. The shares of common stock of the Surviving Company into which such BUC
Acquisition II common stock is converted shall represent ownership of 100% of
the issued and outstanding capital stock of the Surviving Company, all of which
shall be owned by BUC.
Section 1.2 ARTICLES OF INCORPORATION, BYLAWS AND FACILITIES OF SURVIVING
COMPANY. At the Effective Date and until thereafter amended, the Articles of
Incorporation of the Surviving Company shall be the Articles of Incorporation of
Texas Central as in effect at the Effective Date. Until altered, amended or
repealed as provided therein and in the Articles of Incorporation of the
Surviving Company, the Bylaws of the Surviving Company shall be the Bylaws of
Texas Central as in effect at the Effective Date. The main office of the
Surviving Company shall be the main office of Texas Central as of the Effective
Date, and all corporate acts, plans, policies, contracts, approvals and
authorizations of Texas Central and BUC Acquisition II and their respective
shareholders, boards of directors, committees elected or appointed thereby,
officers and agents, which were valid and effective immediately prior to the
Effective Date, shall be taken for all purposes as the acts, plans, policies,
contracts, approvals and authorization of the Surviving Company and shall be as
effective and binding thereon as the same were with respect to Texas Central and
BUC Acquisition II respectively, as of the Effective Date.
Section 1.3 EFFECT OF ACQUISITION MERGER. At the Effective Date, the
corporate existence of Texas Central and BUC Acquisition II shall be merged into
and continued in the Surviving Company, and the Surviving Company shall be
deemed to be a continuation in entity and identity of Texas Central and BUC
Acquisition II. All rights, franchises and interests of Texas Central and BUC
Acquisition II, respectively, in and to any type of property and chooses in
action shall be transferred to and vested in the Surviving Company by virtue of
the Merger without any deed or other transfer. Surviving Company, without any
order or other action on the part of any court or otherwise, shall hold and
enjoy all rights of property, franchises and interest, including appointments,
designations and nominations, and all other rights and interests as trustee,
executor, administrator, transfer agent or registrar of stocks and bonds,
guardian of estates, assignee, receiver and committee of estates and lunatics,
and in every other fiduciary capacity, in the same manner and to the same extent
as such rights, franchises and interests were held or enjoyed by Texas Central
and BUC Acquisition II, respectively, as of the Effective Date.
Section 1.4 LIABILITIES OF THE SURVIVING COMPANY. At the Effective Date,
the Surviving Company shall be liable for all liabilities of Texas Central and
BUC Acquisition II. All deposits, debts, liabilities and obligations of Texas
Central and of BUC Acquisition II, respectively, accrued, absolute, contingent
or otherwise, and whether or not reflected or reserved against on balance
sheets, books of account or records of Texas Central or BUC Acquisition II, as
the case may be, shall be those of the Surviving Company and shall not be
released or impaired by the Merger. All rights of creditors and other obligees
and all liens on property of either Texas Central or BUC Acquisition II shall be
preserved unimpaired.
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<PAGE>
Section 1.5 ACQUISITION MERGER PRICE. At the Effective Date and upon and
by reason of the Acquisition Merger becoming effective, each share of Texas
Central Stock issued and outstanding immediately prior to the Effective Date,
excluding Dissenting Shares (as defined in Section 1.7 of this Agreement), and
any and all rights arising out of ownership of such Texas Central Stock shall,
without any action on the part of the holder thereof, be canceled and be
converted into the right to receive a number of shares of the Class A Common
Stock, $ 0.01par value, which is quoted under the symbol "BNKU" on The NASDAQ
Stock Market National Market (the "BUC Stock"), in a ratio to be determined in
accordance with Section 1.6 below. BUC shall not issue any certificates for
fractional shares of BUC Stock in connection with the Merger. In lieu of issuing
fractional shares, BUC shall pay cash for such fractional shares in an amount
determined by multiplying the Average Value Per Share, as hereinafter defined,
by the fractional share interest in BUC Stock to which the Texas Central
shareholder is entitled pursuant to the calculation in accordance with Section
1.6. The Average Value Per Share shall be the average of the daily reported
closing sales prices for a share of the BUC Stock in The NASDAQ Stock Market
National Market for the twenty successive trading days ending on the trading day
that is one trading day prior to closing.
Section 1.6 CALCULATION OF BUC STOCK RATIO. The number of shares of BUC
Stock to be received for each share of Texas Central Stock will be the quotient
obtained by dividing (i) 710,000 by (ii) the total number of shares of Texas
Central Stock issued and outstanding on the Closing Date, which shall not exceed
350,340 shares (the "Merger Consideration"). In the event that the Average Value
Per Share, as calculated in accordance with Section 1.5, is less than $33.57, or
the closing sales price of the BUC Stock on the day immediately prior to the
proposed Effective Date is less than $32.00, the Board of Directors of Texas
Central may terminate this Agreement pursuant to Section 7.1(a)(iv) (B) or (C)
hereof.
Section 1.7 DISSENTING SHARES. Each share of Texas Central Stock issued
and outstanding immediately prior to the Effective Date, the holder of which has
not voted in favor of the Merger and who has properly perfected his dissenter's
rights of appraisal by following the procedures set forth in Texas Business
Corporation Act (the "TBCA"), is referred to herein as a "Dissenting Share. "
Dissenting Shares owned by each holder thereof who has not exchanged his
certificates representing shares of Texas Central Stock for the corresponding
share of the Merger Consideration or otherwise has not effectively withdrawn or
lost his dissenter's rights, shall not be converted into or represent the right
to receive the corresponding share of the Merger Consideration pursuant to
Section 1.5 hereof and shall be entitled only to such rights as are available to
such holder pursuant to the applicable provisions of the TBCA. Each holder of
Dissenting Shares shall be entitled to receive the value of such Dissenting
Shares held by him in accordance with the applicable provisions of the TBCA,
provided such holder complies with the procedures contemplated by and set forth
in the applicable provisions of the TBCA. If any holder of Dissenting Shares
shall effectively withdraw or lose his dissenter's rights under the applicable
provisions of the TBCA, such Dissenting Shares shall be converted into the right
to receive the corresponding share of the Merger Consideration in accordance
with the provisions of Section 1.5 hereof. The shares of Texas Central Stock
(excluding any Dissenting Shares) issued and outstanding immediately prior to
Closing Date are sometimes referred to herein as the "Exchange Shares."
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<PAGE>
Section 1.8 EXCHANGE OF SHARES. (a) On or immediately prior to the
Effective Date, BUC shall deposit in trust with an exchange agent to be selected
by BUC (the "Exchange Agent"), for exchange in accordance with this Agreement,
certificates representing a number of shares of BUC Stock sufficient to pay the
Merger Consideration (excluding any Dissenting Shares), and the cash to be paid
in lieu of fractional shares of BUC Stock.
(b) As soon as practicable after the Effective Date, the Exchange
Agent will mail to each holder of record of Exchange Shares a letter of
transmittal for use in exchanging such holder's certificates for the
corresponding share of the Merger Consideration. Each holder of Exchange Shares,
upon surrender of the certificates therefor to the Exchange Agent, accompanied
by a duly executed letter of transmittal, shall be entitled to receive (i) a
certificate representing that number of whole shares of BUC Stock to which such
holder of Exchange Shares shall have become entitled pursuant to the provisions
of this Article I, and (ii) a check representing the amount of cash in lieu of
fractional shares of BUC Stock, if any, which such holder has the right to
receive in respect of the certificate for the Exchange Shares surrendered
pursuant to the provisions of this Article I, and the certificate representing
the Exchange Shares so surrendered shall be canceled. Until so surrendered, each
stock certificate representing the Exchange Shares will be deemed for all
corporate purposes to represent and evidence solely the right to receive the
corresponding share of the Merger Consideration to be paid therefor pursuant to
this Agreement. Notwithstanding the foregoing, neither the Exchange Agent nor
any other party hereto shall be liable to any holder of certificates
representing Exchange Shares for any amount paid to a public official pursuant
to any applicable abandoned property, escheat or similar law. Except as required
by law, no interest shall be payable with respect to the cash payable for
fractional shares or the cash payable for Dissenting Shares and no dividends
shall be disbursed with respect to shares of BUC Stock until certificates
representing shares of Texas Central Stock are surrendered in exchange therefor.
If any shareholder of record of Texas Central is unable to locate any
certificate evidencing the Exchange Shares, the Exchange Agent shall deliver the
corresponding share of the Merger Consideration to the registered shareholder
upon receipt of a lost certificate affidavit and an indemnity agreement in a
form acceptable to BUC.
Section 1.9 APPROVAL BY SHAREHOLDERS. This Agreement shall be submitted to
the shareholders of Texas Central for their approval in accordance with
applicable provisions of law and the respective Articles of Incorporation and
Bylaws of Texas Central. BUC and Texas Central shall proceed expeditiously and
cooperate fully in obtaining any other consents and approvals and the taking of
any other actions in satisfaction of all other requirements prescribed by law or
otherwise necessary for consummation of the Merger on the terms herein provided,
including, without limitation, the preparation and submission of all necessary
filings and certificates to the Office of Thrift Supervision (the "OTS") and the
Federal Deposit Insurance Corporation ("FDIC") and the Secretary of State of
Texas.
Section 1.10 STOCK OPTION. The parties acknowledge that, contemporaneously
with the execution and delivery of this Agreement, Texas Central has granted to
BUC an option to purchase 60,334 shares of the Texas Central Stock, representing
19.9% of such shares on a fully-diluted basis, in the form attached hereto as
EXHIBIT B (the "Texas Central Stock Option").
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ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF TEXAS CENTRAL
Texas Central and represents and warrants to BUC as follows:
Section 2.1 ORGANIZATION. Texas Central is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas and
is a registered bank holding company duly registered under the BHC Act. Texas
Central owns 100% of the issued and outstanding capital stock of Texas Central
Bank, indirectly through Texas Central Delaware. Texas Central Delaware is duly
registered under the BHC Act and a Delaware corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware. Texas
Central Bank is a Texas banking association, duly organized, validly existing
and in good standing under the laws of the State of Texas. Texas Central, Texas
Central Delaware and Texas Central Bank (together, the "Texas Central
Companies") (i) have full power and authority (including all licenses,
franchises, permits and other governmental authorizations which are legally
required) to own, lease and operate their properties, to engage in the business
and activities now conducted by them and Texas Central has full power and
authority to enter into this Agreement; (ii) Texas Central Bank is duly
authorized to conduct a general banking business, including without limitation
all usual deposit functions of commercial banks as well as commercial,
industrial and real estate loans, installment credits, collections and safe
deposit facilities subject to the supervision of the Department and the FDIC;
and (iii) Texas Central Bank is an insured bank as defined in the Federal
Deposit Insurance Act. Texas Central Bank does not conduct any trust activities.
True and complete copies of the Articles of Association and Bylaws of Texas
Central Bank, as amended to date, and the Articles of Incorporation and Bylaws
of Texas Central and Texas Central Delaware, as amended to date, have been
delivered or made available to BUC. Except as otherwise stated herein or as
otherwise disclosed in SCHEDULE 2.1 to this Agreement, none of the Texas Central
Companies (x) has any subsidiaries or affiliates, (y) is a general partner or
material owner in any joint venture, general partnership, limited partnership,
trust or other non-corporate entity, or (z) knows of any arrangement pursuant to
which the stock of any corporation is or has been held in trust (whether
express, constructive, resulting or otherwise) for the benefit of all
shareholders of Texas Central.
Section 2.2 CAPITALIZATION. The authorized capital stock of Texas Central
consists of 5,000,000 shares of Texas Central Stock, 303,840 of which are issued
and outstanding. All of the issued and outstanding shares of Texas Central Stock
are validly issued, fully paid and nonassessable, and have not been issued in
violation of the preemptive rights of any person or in violation of any
applicable federal or state laws. Except as disclosed in SCHEDULE 2.2, there are
no existing options, warrants, calls, convertible securities or commitments of
any kind obligating Texas Central to issue any authorized and unissued Texas
Central Stock nor does Texas Central have any outstanding commitment or
obligation to repurchase, reacquire or redeem any of its outstanding capital
stock. There are no stock appreciation or similar rights to receive cash payment
in respect of options to purchase shares of Texas Central Stock other than the
stock appreciation rights held by Messrs. Veirs and Mulhollen. The maximum
number of shares of Texas Central Stock that would
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be outstanding as of the Effective Date if all warrants, calls and other rights
with respect thereto were exercised is 350,340. There are no voting trusts,
voting agreements, buy-sell agreements or other similar arrangements affecting
the Texas Central Stock. All of the outstanding shares of capital stock of Texas
Central Delaware and Texas Central Bank are owned by Texas Central or Texas
Central Delaware respectively, free and clear of any mortgage, lien, pledge or
encumbrance, or lien of any character, except as disclosed in SCHEDULE 2.2.
Section 2.3 APPROVALS; AUTHORITY. The Board of Directors of Texas Central
has approved this Agreement and the transactions contemplated herein subject to
the approval thereof by the shareholders of Texas Central as required by law,
and, other than shareholder approval, no further corporate proceedings of Texas
Central are needed to execute and deliver this Agreement and consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Texas Central and is a duly authorized, valid, legally binding
agreement of Texas Central enforceable against Texas Central in accordance with
its terms, subject to the effect of bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally and
general equitable principles.
Section 2.4 INVESTMENTS. Texas Central has furnished to BUC, as SCHEDULE
2.4 of this Agreement, a complete list, as of January 31, 1999, of all
securities, including municipal bonds, owned by Texas Central (the "Securities
Portfolio"). All securities listed in SCHEDULE 2.4 are owned by Texas Central
(i) of record, and (ii) beneficially, free and clear of all mortgages, liens,
pledges and encumbrances, except as disclosed in SCHEDULE 2.4. SCHEDULE 2.4 also
discloses any entities in which Texas Central's ownership interest equals 5% or
more of the issued and outstanding voting securities of the issuer thereof.
There are no voting trusts or other agreements or understandings with respect to
the voting of the securities listed in SCHEDULE 2.4.
Section 2.5 FINANCIAL STATEMENTS. Texas Central has furnished BUC with
true and complete copies of Texas Central's balance sheets and related
consolidated statement of income, shareholders' equity and cash flow, together
with the notes thereto, as of and for the years ended December 31, 1998,
December 31, 1997 and December 31, 1996, accompanied by the report of Payne,
Faulkner, Smith & Jones, P.C., for the years ended December 31, 1997 and 1998,
and by the report of Fiske & Robinson, P.C. for the year ended December 31,
1996. Texas Central has also furnished to BUC true and complete copies of the
Call Reports filed by the Texas Central Bank as of and for each month during the
three years ended December 31, 1998 and December 31, 1996 (the "Call Reports").
The financial statements and Call Reports referred to in this Section 2.5 are
collectively referred to herein as the "Texas Central Financial Statements." The
Texas Central Financial Statements fairly present the consolidated financial
position of Texas Central and the consolidated results of its operations at the
dates and for the periods indicated in conformity with generally accepted
accounting principles consistently applied during the periods covered thereby.
As of their respective dates, the Call Reports complied in all material respects
with the rules and regulations of applicable federal and state banking
authorities and did not contain any untrue statement of material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Except as set forth in SCHEDULE 2.5 to this Agreement, as of the
dates of the Texas
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Central Financial Statements referred to above, Texas Central did not have any
liabilities, fixed or contingent, which are material and are not fully reflected
or provided for in the Texas Central Financial Statements or otherwise disclosed
in this Agreement. Since December 31, 1998, there have been no changes in the
financial condition, assets, liabilities or results of operations or cash flows
or business of Texas Central which, individually or in the aggregate, have
materially and adversely affected the financial condition or results of
operations of Texas Central.
Section 2.6 TITLE. True and complete copies of all of the deeds and leases
and title insurance policies for all real property owned or leased by the Texas
Central Companies and all mortgages, deeds of trust and security agreements to
which such property is subject have been delivered or made available to BUC. The
Texas Central Companies have good and marketable title to all of their assets
and properties including, without limitation, land and improvements thereon, and
all personal and intangible properties reflected in the Texas Central Financial
Statements or acquired subsequent thereto, subject to no liens, mortgages,
security interests, encumbrances or charges of any kind except (i) as noted in
the Texas Central Financial Statements or otherwise described in this Agreement,
(ii) statutory liens not yet delinquent, (iii) minor defects and irregularities
in title and encumbrances which do not materially impair the use thereof for the
purposes for which they are held, and (iv) those assets and properties disposed
of for fair value in the ordinary course of business since the dates of the
Texas Central Financial Statements. Texas Central owns no securities of, or
interest in, any commercial bank other than the Texas Central Bank.
Section 2.7 ENVIRONMENTAL LAWS. Texas Central is in compliance with all
terms and conditions of all applicable federal and state Environmental Laws (as
defined below) and permits thereunder. Except as set forth on SCHEDULE 2.7
hereto, (i) Texas Central has not received notice of any violation of any
Environmental Laws or generated, stored, or disposed of any materials designated
as Hazardous Materials (as defined below) under the Environmental Laws, and is
not subject to any claim or lien under any Environmental Laws; (ii) during the
term of ownership, lease or operation by Texas Central, no real estate currently
owned, operated, or leased (including any property acquired by foreclosure or
deeded in lieu thereof) by Texas Central, or owned, operated or leased by Texas
Central within the ten years preceding the date of this Agreement, has been
designated as requiring any environmental cleanup or response action to comply
with Environmental Laws, or has been the site of release of any Hazardous
Materials; (iii) no asbestos was used in the construction of any portion of
Texas Central's facilities; and (iv) no real property currently owned, leased or
operated by Texas Central is, or has been, an industrial site or landfill. Texas
Central has furnished BUC true and complete copies of all environmental
assessments, reports, studies and other related information in its possession
relating to each real property owned, leased or operated by Texas Central.
"Environmental Laws," for purposes of this Section 2.7, includes, but is
not limited to, 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 to date and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree, or judgment,
relating to the environment, human health or safety, or Hazardous Materials,
including without limitation the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended,
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42 U.S.C. ss.ss. 9601, ET SEQ.; The Hazardous Materials Transaction Act, as
amended, 49 U.S.C. ss.ss. 1801, ET SEQ.; the Resource Conservation and Recovery
Act of 1976, as amended, 42 U.S.C. ss.ss. 6901, ET SEQ.; the Federal Water
Pollution Control Act, as amended, 33 U.S.C. ss.ss. 1201, ET SEQ.; the Toxic
Substances Control Act, 15 U.S.C. ss.ss. 2601, ET SEQ.; the Clean Air Act, 42
U.S.C. ss.ss. 7401, ET SEQ.; and the Safe Drinking Water Act, 42 U.S.C. ss.ss.
3808, ET SEQ.
"Hazardous Materials," for purposes of this Section 2.7, includes, but is
not limited to, (i) any petroleum or petroleum products, natural gas, or natural
gas products, radioactive materials, asbestos, urea formaldehyde foam
insulation, transformers or other equipment that contains dielectric fluid
containing levels of polychlorinated biphenyls (PCBs), and radon gas; (ii) any
chemicals, materials, waste or substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes," toxic substances,"
"toxic pollutants," "contaminants," or "pollutants," or words of similar import,
under any Environmental Laws; and (iii) any other chemical, material, waste or
substance which is in any way regulated by any federal, state or local
government authority, agency or instrumentality, including mixtures thereof with
other materials, and including any regulated building materials such as asbestos
and lead.
Section 2.8 LITIGATION AND OTHER PROCEEDINGS. Except as otherwise noted on
SCHEDULE 2.8 hereto, there are no legal, quasi-judicial or administrative
proceedings of any kind or nature now pending or, to the knowledge of Texas
Central, threatened before any court or administrative body in any manner
against the Texas Central Companies or any of their respective properties or
capital stock, which might have a material adverse effect on the Texas Central
Companies or their respective financial conditions, assets, operations or
earnings or cash flows or the transactions proposed by this Agreement. Texas
Central knows of no basis on which any litigation or proceeding could be brought
which could have a materially adverse effect on the financial condition, results
of operation, business or prospects of the Texas Central Companies or which
could question the validity of any action taken or to be taken in connection
with this Agreement and the transactions contemplated hereby. No Texas Central
Company is in default with respect to any judgment, order, writ, injunction,
decree, award, rule or regulation of any court, arbitrator or governmental
agency or instrumentality.
Section 2.9 TAXES. (a) Except as otherwise noted in SCHEDULE 2.9(A)
hereto, all Returns required to be filed by or on behalf of each of the Texas
Central Companies have been duly filed on a timely basis and such Returns are
true, complete and correct. All Taxes shown to be payable on the Returns or on
subsequent assessments with respect thereto have been paid in full on a timely
basis, and no other Taxes are payable by the Texas Central Companies with
respect to items or periods covered by such Returns (whether or not shown on or
reportable on such Returns) or with respect to any period prior to the date of
this Agreement. Each of the Texas Central Companies has withheld and paid over
all Taxes required to have been withheld and paid over, and complied with all
information reporting and backup withholding requirements, including maintenance
of required records with respect thereto, in connection with amounts paid or
owing to any employee, creditor, independent contractor or other third party.
There are no liens on any of the assets of the Texas Central Companies with
respect to Taxes, other than liens for Taxes not yet due and payable.
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(b) Except as otherwise noted in SCHEDULE 2.9(B) hereto, no
deficiencies for Taxes have been claimed, proposed or assessed by any taxing or
other governmental authority against the Texas Central Companies which have not
been settled, closed or reached a final determination. There are no pending
audits relating to any Tax liability of the Texas Central Companies. None of the
Texas Central Companies is a party to any action or proceeding for assessment or
collection of Taxes, nor have such events been asserted or threatened against
the Texas Central Companies or any of their assets. No waiver or extension of
any statute of limitations relating to Taxes is in effect with respect to the
Texas Central Companies. No power of attorney has been executed by the Texas
Central Companies with respect to any Tax matters which is currently in force.
(c) Except as otherwise noted in SCHEDULE 2.9(C) hereto, the Texas
Central Companies have disclosed on their federal income tax returns all
positions taken therein that could give rise to a substantial understatement
penalty within the meaning of Section 6662 of the Internal Revenue Code of 1986
(the "Code"). None of the Texas Central Companies has agreed to make, nor is any
of the Texas Central Companies required to make, any adjustment under Code
Section 481(a) by reason of a change in accounting method or otherwise. None of
the Texas Central Companies is a party to any safe harbor lease within the
meaning of Code Section 168(f)(8), as in effect prior to amendment by the Tax
Equity and Fiscal Responsibility Act of 1982. None of the Texas Central
Companies is a party to any Tax sharing agreement or has any continuing
obligations under any prior Tax sharing agreement, and none of the Texas Central
Companies has been a member of an affiliated group of corporations filing a U.S.
federal consolidated income tax return as to which Texas Central was not the
common parent.
(d) Texas Central has made a valid and timely election to be taxed
as an S corporation under the Code effective as of January 1, 1998, and such
election continues to be effective as of the date of this Agreement. Neither
Texas Central nor any of its existing shareholders or former shareholders has
taken any action which would terminate Texas Central's S corporation election
prior to the date of this Agreement. Texas Central (or any of the other Texas
Central Companies, as applicable) has made a valid and timely election for each
of the Texas Central Companies (other than Texas Central) to be treated as a
qualified subchapter S subsidiary pursuant to the Code effective as of January
1, 1998, and such elections continue to be effective as of the date of this
Agreement. None of the Texas Central Companies has taken any action which would
terminate the qualified subchapter S subsidiary elections of the Texas Central
Companies prior to the date of this Agreement.
(e) None of the Texas Central Companies has any reason to believe
that any conditions exist that would prevent or impede the Acquisition Merger
from qualifying as a reorganization within the meaning of Code Section 368.
(f) As used in this Agreement, the term "Taxes" shall mean all
taxes, however denominated, including any interest, penalties or other additions
to tax that may become payable in respect thereof, imposed by any federal,
territorial, state, local or foreign government or any agency or political
subdivision of any such government, which taxes shall include, without limiting
the generality of the foregoing, all income or profits taxes (including, but not
limited to, federal income
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taxes and state income taxes), real property gains taxes, payroll and employee
withholding taxes, unemployment insurance taxes, social security taxes, sales
and use taxes, ad valorem taxes, excise taxes, franchise taxes, gross receipts
taxes, business license taxes, occupation taxes, real and personal property
taxes, stamp taxes, environmental taxes, transfer taxes, workers' compensation,
Pension Benefit Guaranty Corporation premiums and other governmental charges,
and other obligations of the same or of a similar nature to any of the
foregoing, which the Texas Central Companies are required to pay, withhold or
collect. As used in this Agreement, the term "Returns" shall mean all reports,
estimates, declarations of estimated tax, information statements and returns
relating to, or required to be filed in connection with, any Taxes, including
information returns or reports with respect to backup withholding and other
payments to third parties.
True and complete copies of the federal income tax returns of Texas
Central as filed with the Internal Revenue Service for the years ended December
31, 1997, December 31, 1996, and December 31, 1995, have been furnished to BUC.
Section 2.10 CONTRACTS. Except as otherwise noted in SCHEDULE 2.10 hereto,
no Texas Central Company is a party to or bound by any (i) employment contract
(including without limitation any collective bargaining contract or union
agreement or agreement with an independent contractor) which is not terminable
by the Texas Central Companies on less than 60 days notice without payment of
any amount on account of such termination; (ii) bonus, stock option, deferred
compensation or profit-sharing, pension or retirement plan or other employee
benefit arrangement; (iii) material lease or license with respect to any
property, real or personal, whether as landlord, tenant, licensor or licensee;
(iv) contract or commitment for capital expenditures in excess of $30,000 for
any one project; (v) material contract or commitment made in the ordinary course
of business for the purchase of materials or supplies or for the performance of
services over a period of more than 60 days from the date of this Agreement
involving an annual expenditure in excess of $30,000; (vi) contract or
commitment made in the ordinary course of business for the purchase of materials
or supplies or for the performance of services over a period of more than 120
days from the date of this Agreement; (vii) contract or option to purchase or
sell any real or personal property other than in the ordinary course of
business; (viii) contract, agreement or letter with respect to the management of
the Texas Central Companies imposed by any bank regulatory authority having
supervisory jurisdiction over the Texas Central Companies; (ix) agreement,
contract or indenture related to the borrowing by the Texas Central Companies of
money other than those entered into in the ordinary course of business; (x)
guaranty of any obligation for the borrowing of money, excluding endorsements
made for collection, repurchase or resell agreements, letters of credit and
guaranties made in the ordinary course of business; (xi) agreement with or
extension of credit to any executive officer or director of the Texas Central
Companies or holder of more than 10% of the Texas Central Stock, or any
affiliate of such person, which is not on substantially the same terms
(including, without limitation, in the case of lending transactions, interest
rates and collateral) as, and following credit underwriting practices that are
not less stringent than, those prevailing at the time for comparable
transactions with unrelated parties or which involve more than the normal risk
of collectability or other unfavorable features; (xii) any agreement or
arrangement with any executive officer, director, holder of 10% or more of the
Texas Central Stock or affiliate of such persons for the provision of services
or lease of property or any similar matter that is essential to
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their operations or on terms which are preferential to them or such persons; or
(xiii) material contracts, other than the foregoing, involving more than $30,000
and not made in the ordinary course of business and not otherwise disclosed in
this Agreement, in any schedule attached hereto. The Texas Central Companies
have performed all obligations required to be performed by them to date and are
not in default under, and to the best knowledge of Texas Central, no event has
occurred which, with the lapse of time or action by a third party could result
in default under, any indenture, mortgage, contract, lease or other agreement to
which the Texas Central Companies are a party or by which they are bound or
under any provision of their Articles of Incorporation, Articles of Association
or Bylaws.
Section 2.11 FIDELITY BONDS AND INSURANCE. A true and complete list of all
fidelity bonds and insurance policies owned or held by, or issued in favor of,
the Texas Central Companies (other than credit-life policies), including policy
numbers, retention levels, insurance carriers, and effective and termination
dates, is set forth in SCHEDULE 2.11 to this Agreement. Such fidelity bonds and
insurance policies are adequate for the business conducted by the Texas Central
Companies in respect of amounts, types and risks insured.
Section 2.12 NO CONFLICT WITH OTHER INSTRUMENTS. Neither the execution and
delivery of this Agreement nor the consummation of the Acquisition Merger,
subject to obtaining all required shareholder consents, will conflict with or
result in a breach of any provision of the Articles of Incorporation or Bylaws
of the Texas Central Companies. The execution and delivery of this Agreement and
the consummation of the Acquisition Merger, subject to obtaining all required
shareholder and regulatory approvals, will not violate any provision of, or
constitute a default under, any law, or any order, writ, injunction or decree of
any court or other governmental agency, or any contract, agreement or instrument
to which any of the Texas Central Companies is a party or by which any of them
is bound or constitute an event which, with the lapse of time or action by a
third party, could result in any default under any of the foregoing or result in
the creation of any lien, charge or encumbrance upon the assets or properties of
the Texas Central Companies or upon the Texas Central Stock.
Section 2.13 LAWS. Except as otherwise noted on SCHEDULE 2.13 hereto, the
Texas Central Companies are in material compliance with all applicable federal,
state and local laws, rules, regulations and orders applicable to them. Except
for approvals by regulatory authorities having jurisdiction over the Texas
Central Companies, no prior consent, approval or authorization of, or
declaration, filing or registrations with, any person or regulatory authority is
required of any of them in connection with the execution, delivery and
performance by any of them of this Agreement and the Acquisition Merger. The
Texas Central Companies have filed all reports, notices, registrations and
statements, together with any amendments required to be made thereto, that are
required to be filed with the FRB, the Department and the FDIC or any other
regulatory authority having jurisdic tion over any of them, and such reports,
notices, registrations and statements are, to the best knowledge of Texas
Central, true and correct and do not contain any untrue statement of material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
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Section 2.14 CONDUCT. Except as otherwise noted in SCHEDULE 2.14 hereto,
since December 31, 1998, none of the Texas Central Companies has (i) issued or
sold any of their capital stock or corporate debt obligations; (ii) declared or
set aside or paid any dividend or made any other distribution in respect of or,
directly or indirectly, purchased, redeemed or otherwise acquired any shares of
their capital stock, except dividends on the Texas Central Stock of $153,700
paid prior to the date hereof; (iii) incurred any obligations or liabilities
(fixed or contingent), except obligations or liabilities incurred in the
ordinary course of business, or mortgaged, pledged or subjected any of their
assets to a lien or encumbrance (other than in the ordinary course of business
and other than statutory liens not yet delinquent); (iv) discharged or satisfied
any lien or encumbrance or paid any obligation or liability (fixed or
contingent), other than accruals, accounts and notes payable included in the
Texas Central Financial Statements, accruals, accounts and notes payable
incurred since December 31, 1998 in the ordinary course of business, and
accruals, accounts and notes payable incurred as contemplated by this Agreement;
(v) sold, exchanged or otherwise disposed of any of their capital assets other
than in the ordinary course of business; (vi) made any general or individual
wage or salary increase (including increases in directors' or consultants'
fees), paid any bonus, granted or paid any perquisites such as automobile
allowance, club membership or dues or other similar benefits, or instituted any
employee welfare, retirement or similar plan or arrangement; (vii) suffered any
physical damage, destruction or casualty loss, whether or not covered by
insurance, materially and adversely affecting their businesses, properties or
assets; (viii) made any or acquiesced in any change in accounting methods,
principles and practices; (ix) entered into any contract, agreement or
commitment which obligates Texas Central for an amount in excess of $30,000 over
the term of any such contract, agreement or commitment other than in the
ordinary course of business; or (x) except in the ordinary course of business,
entered or agreed to enter into any agreement or arrangement granting any
preferential rights to purchase any of their assets, properties or rights or
requiring the consent of any party to the transfer and assignment of any such
assets, properties or rights.
Section 2.15 RESERVE FOR POSSIBLE LOAN LOSSES. The reserve for possible
loan losses of Texas Central Bank has been calculated in accordance with
generally accepted accounting principles as applied to banking institutions and
in accordance with all applicable rules and regulations. Such reserve shown on
Texas Central Bank's Call Report of December 31, 1998, is adequate in all
respects to provide for all losses, net of recoveries relating to loans
previously charged off, on loans outstanding as of December 31, 1998. On the
Effective Date, no material facts relevant to the adequacy of such reserves as
of that date shall have been withheld from BUC. Except as disclosed in SCHEDULE
2.15 there are no loans of Texas Central Bank that have been classified by
national bank examiners on Texas Central Bank's most recent examination report
as "Other Assets Especially Mentioned," "Substandard," "Doubtful" or "Loss."
Section 2.16 EMPLOYMENT RELATIONS. The relations of each Texas Central
Company with its employees are satisfactory, and they have not received any
notice of any controversies with, or organizational efforts or other pending
actions by, representatives of their employees. The Texas Central Companies have
complied in all material respects with all laws relating to the employment of
labor with respect to their employees, including any provisions thereof relating
to wages, hours, collective bargaining and the payment of worker's compensation
insurance and social security and
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similar taxes, and, except as disclosed in SCHEDULE 2.16 hereto, no person has
asserted that any Texas Central Company is liable for any arrearages of wages,
worker's compensation insurance premiums or any taxes or penalties for failure
to comply with any of the foregoing.
Section 2.17 EMPLOYEE BENEFIT PLANS. (a) SCHEDULE 2.17(A) contains a
complete and accurate list of all employee benefit plans and programs, and
bonus, incentive, deferred compensation, pension, retirement, profit-sharing,
thrift, savings, employee stock ownership, stock bonus, stock purchase,
restricted stock, stock option, stock appreciation, phantom stock, severance,
welfare and fringe benefit plans, contracts, employment, collective bargaining,
or severance agreements written and unwritten and all similar practices,
policies and arrangements in which any Texas Central Company has any liability,
obligation to, or which is maintained or contributed to by either of them or
which covers any employees, or former employees, consultants or former
consultants, officers or former officers, directors or former directors of them,
which are now in force or which have been in force during the last three years
(the "COMPENSATION AND BENEFIT PLANS"). There is no commitment to create any
additional Compensation and Benefit Plan or to modify or change any existing
Compensation and Benefit Plan.
(b) Each Compensation and Benefit Plan is in compliance in all
material respects, in form and in administration, with the plan documents and
all applicable laws, including, the extent applicable, ERISA, the Internal
Revenue Code, federal securities laws, the Age Discrimination in Employment Act,
or any regulations or rules promulgated thereunder, and all material filings,
disclosures and notices required by ERISA, the Internal Revenue Code, federal
securities laws, the Age Discrimination in Employment Act and any other
applicable law have been timely made. No Compensation and Benefit Plan is an
"employee pension benefit plan" within the meaning of Section 3(2) of ERISA (a
"PENSION PLAN") which is required to be qualified under Section 401(a) of the
Internal Revenue Code. There is no pending or, to the knowledge of Texas
Central, threatened legal action, suit or claim relating to the Compensation and
Benefit Plans. No transaction or omission with respect to any Compensation and
Benefit Plan exists that would be a violation of Section 4975 of the Code or
Section 502 of ERISA that is not exempt under Code Section 4975 or ERISA Section
502.
(c) Neither Texas Central nor any entity which is a member of a
controlled group or affiliated service group with Texas Central under ERISA
Section 4001 or Section 414 of the Code ("ERISA AFFILIATE") maintains or has
ever maintained or contributed to a Pension Plan subject to title IV of ERISA or
Section 412 of the Code. No notice of a "reportable event", within the meaning
of Section 4043 of ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any Compensation and Benefit Plan or
any plan of an ERISA Affiliate within the 12-month period ending on the date
hereof, and no such notice will be required to be filed as a result of the
transactions contemplated by this Agreement. There is no pending investigation
or enforcement action by the Department Of Labor or Internal Revenue Service or
any other Governmental Authority with respect to any Compensation and Benefit
Plan.
(d) All contributions or insurance premiums required to be made
under the terms of any Compensation and Benefit Plan or any employee benefit
arrangements under any collective
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bargaining agreement to which Texas Central or an ERISA Affiliate is a party
have been timely made or will be timely made prior to the Effective Time.
(e) No Texas Central Company has any obligation to provide retiree
health and life insurance or other retiree death benefits under any Compensation
and Benefit Plan, other than benefits mandated by Section 4980B of the Internal
Revenue Code and Sections 601-609 of ERISA. There has been no written or oral
communication to employees that promises or guarantees such employees retiree
health or life insurance or other retiree death benefits on a permanent basis.
Except as disclosed in SCHEDULE 2.17(E), Texas Central Bank may terminate or
amend any Compensation and Benefit Plan in which Texas Central Bank's or its
affiliates employees or former employees participate at any time without
incurring any liability thereunder. Except as disclosed in SCHEDULE 2.17(E), the
plan administrator of each Compensation and Benefit Plan in which such employees
or former employees participate has the sole discretion to construe and
interpret the terms of the plan.
(f) No Texas Central Company maintains any Compensation and Benefit
Plans covering foreign employees.
(g) With respect to each Compensation and Benefit Plan, if
applicable, Texas Central has furnished to BUC, true and complete copies of: (i)
Compensation and Benefit Plan documents and all amendments thereto; (ii) trust
instruments and insurance contracts; (iii) Forms 5500 filed with the IRS for the
last 3 plan years; (iv) most recent financial statement; (v) the most recent
summary plan description and any other communication to employees regarding such
benefits including employee booklets; and (f) most recent determination letter
issued by the IRS.
(h) Except as disclosed in SCHEDULE 2.17(H) the consummation of the
Acquisition Merger as contemplated by this Agreement will not, directly or
indirectly (including, without limitation, as a result of any termination of
employment prior to or following the Effective Time) (i) result in the vesting
or acceleration of the payment of any benefits under any Compensation and
Benefit Plan, (ii) result in any increase in benefits payable or compensation
payable to a participant or service provider under any Compensation and Benefit
Plan, (iii) result in the payment of any severance separation benefit, or (iv)
result in a breach or violation of any Compensation and Benefit Plan.
(i) No Texas Central Company maintains any compensation plans,
programs or arrangements in which their employees or former employees
participate the payments under which would not reasonably be expected to be
deductible as a result of the limitations under Section 162(m) of the Internal
Revenue Code and the regulations issued thereunder.
(j) As a result, directly or indirectly, of the Acquisition Merger
as contemplated by this Agreement (including, without limitation, as a result of
any termination of employment prior to or following the Effective Time), neither
BUC nor any Texas Central Company will be obligated to make a payment that would
be characterized as an "excess parachute payment" to an individual who is a
"disqualified individual" (as such terms are defined in Section 280G of the
Internal Revenue
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Code), without regard to whether such payment is reasonable compensation for
personal services performed or to be performed in the future.
(k) Neither any Texas Central Company nor any ERISA Affiliate is a
party to, or has made any contribution to or otherwise incurred or could incur
any obligation under any "multiemployer plan", as defined in Section 3(37) of
ERISA.
(l) There has been no written or oral communication or amendment to
a Compensation and Benefit Plan by any Texas Central Company or any ERISA
Affiliate since January 1, 1998 relating to or changing the participation or
coverage under any such plan in which any of their employees or former employees
participate which would increase the expense of maintaining such plan above the
level of expense incurred with respect to that plan for the most recent fiscal
year included in the Texas Central Financial Statements.
(m) There are no voluntary employee benefit associations related to
any Compensation and Benefit Plan under Section 501(c)(9) of the Internal
Revenue Code.
(n) Any guaranteed investment contracts or other funding contracts
with any insurance company that are held by a Compensation and Benefit Plan and
any annuity contracts purchased by such plan was issued by an insurance company
which carried the highest rating from each of D & B, S&P, Best and Moody's
Investor Service, Inc. as of such date the contract was issued, the date hereof
and the Effective Date.
Section 2.18 LIST OF LOANS. SCHEDULE 2.18 sets forth a true and complete
list, as of December 31, 1998, of all loans (individually, a "Loan" and
collectively, the "Loans") of Texas Central Bank, showing for each such Loan the
outstanding principal balance due, before reduction for any discount. All
currently outstanding Loans of Texas Central Bank, including any current
extensions of any Loan, were solicited, originated and currently exist in
material compliance with all applicable requirements of federal and state law
and regulations promulgated thereunder. The Loans are adequately documented and
each note evidencing a Loan or credit agreement or security instrument related
to a Loan constitutes a valid and binding obligation of the obligor thereunder,
enforceable in accordance with the terms thereof, except where the failure
thereof, individually or in the aggregate, would not have a material adverse
effect on the condition (financial or otherwise), operations or prospects of
Texas Central Bank. For the purposes of this Section, the phrase "enforceable in
accordance with the terms thereof" does not mean that the borrower has the
financial ability to pay a Loan or that any collateral is sufficient to result
in payment of the Loan secured thereby. There are no oral modifications or
amendments or additional agreements related to the Loans that are not reflected
in Texas Central Bank's records, and no claim of defense as to the enforcement
of any Loan has been asserted, and Texas Central Bank is not aware of any acts
or omissions that would give rise to any claim or right of rescission, set off,
counterclaim or defense, except where such claim would not have, either
individually or in the aggregate, a material adverse effect on the condition
(financial or otherwise), operations or prospects of Texas Central Bank.
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Section 2.19 ACCOUNTING MATTERS. None of the Texas Central Companies nor
any of the shareholders of Texas Central will take or agree to take any action
that would prevent BUC from accounting for the Acquisition Merger as a pooling
of interests.
Section 2.20 SEC STATUS; SECURITIES ISSUANCES. Texas Central is not
subject to the registration provisions of Section 12 of the Securities and
Exchange Act of 1934, as amended (the "Exchange Act") nor the rules and
regulations of the SEC promulgated under the Exchange Act, other than anti-fraud
provisions of such act. All issuances of securities by the Texas Central
Companies have been registered under the Securities Act, the Securities Act of
the State of Texas, the Texas Finance Code, and all other applicable laws or
were exempt from any such registration requirements.
Section 2.21 ABSENCE OF CHANGES. Since December 31, 1998, except as
disclosed in SCHEDULE 2.21 to this Agreement, there has not been any material
adverse change in the condition (financial or otherwise), assets, liabilities,
results of operations, earnings, cash flows, business or prospects of Texas
Central. Since December 31, 1998, the business of Texas Central has been
conducted only in the ordinary course, consistent with prior practices.
Section 2.22 BROKERS AND FINDERS. No Texas Central Company and none of
their 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 Acquisition Merger except for a fee to Service Asset
Management Company ("SAMCO") not to exceed $500,000.
Section 2.23 ABSENCE OF PROPERTY TAXES AND LIENS. All property taxes due
under the applicable provisions of the Texas Tax Code have been paid by either
Texas Central or the shareholders of Texas Central, and no liens imposed or
authorized by the Texas Tax Code exist on the shares of Texas Central Stock,
except as otherwise disclosed in SCHEDULE 2.23 to this Agreement.
Section 2.24 COMMUNITY REINVESTMENT ACT. Texas Central Bank is in material
compliance with the Community Reinvestment Act (12 U.S.C. ss. 2901 ET SEQ.) and
all regulations promulgated thereunder, and Texas Central has supplied BUC with
copies of Texas Central Bank's current CRA Statement, all letters and written
comments received by Texas Central Bank since January 1, 1996 pertaining thereto
and any responses by Texas Central Bank to such comments. Texas Central Bank has
a rating of "satisfactory" as of its most recent CRA compliance examination and
knows of no reason why it would not receive a rating of "satisfactory" or better
pursuant to its next CRA compliance examination or why the Department or any
other governmental entity may seek to restrain, delay or prohibit the
Acquisition Merger as a result of any act or omission of Texas Central Bank
under the CRA.
Section 2.25 FAIR HOUSING ACT, HOME MORTGAGE DISCLOSURE ACT AND EQUAL
CREDIT OPPORTUNITY ACT. Texas Central Bank is in material compliance with the
Fair Housing Act (42 U.S.C. ss. 3601 ET SEQ.), the Home Mortgage Disclosure Act
(12 U.S.C. ss. 2801 ET SEQ. and the Equal Credit Opportunity Act (15 U.S.C. ss.
1691 ET SEQ.) and all regulations promulgated thereunder. Texas Central Bank has
not received any notices of any violation of said acts or any of the
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regulations promulgated thereunder, nor does Texas Central Bank have any notice
of, or knowledge of, any threatened administrative inquiry, proceeding or
investigation with respect to Texas Central Bank's compliance with said acts.
Section 2.26 USURY LAWS AND OTHER CONSUMER COMPLIANCE LAWS. All loans of
Texas Central Bank have been made substantially in accordance with all
applicable statutes and regulatory requirements at the time of such loan or any
renewal thereof, including without limitation, the Texas usury statutes as they
are currently interpreted, Regulation Z (12 C.F.R. ss. 226 ET SEQ.) issued by
the FRB, the Federal Consumer Credit Protection Act (15 U.S.C. ss. 1601 ET
SEQ.), the Texas Consumer Credit Code (Tex. Rev. Civ. Stat. Ann. art. 5069-2.01,
ET SEQ.) and all statutes governing the operation of Texas chartered banks. Each
Loan of Texas Central was made in the ordinary course of its business.
Section 2.27 BANK SECRECY ACT. Texas Central Bank is in material
compliance with the Bank Secrecy Act (12 U.S.C. ss.ss. 1730(d) and 1829(b)) and
all regulations promulgated thereunder, and Texas Central has properly certified
all foreign deposit accounts and has made all necessary tax withholdings on all
of its deposit accounts; furthermore, Texas Central Bank has timely and properly
filed and maintained all requisite Currency Transaction Reports and other
related forms, including, but not limited to, any requisite Custom Reports
required by any agency of the United States Treasury Department, including but
not limited to the Internal Revenue Service.
Section 2.28 ZONING AND RELATED LAWS. All real property owned, leased or
operated by the Texas Central Companies and the use thereof materially complies
with all applicable laws, ordinances, regulations, orders or requirements,
including without limitation, building, zoning and other laws.
Section 2.29 SECURITIES LAWS. Texas Central Bank and its officers,
employees and agents are now, and at all times in the past have been, in full
compliance with all applicable federal and state securities laws and any
regulations promulgated thereunder. Texas Central Bank and its officers,
employees and agents have complied with, and currently hold, all necessary
licenses and permits required under any federal or state securities law or
regulation to conduct any securities activities in which Texas Central Bank or
its officers, employees, or agents are now engaged or have been engaged in the
past.
Section 2.30 REGULATORY APPROVALS. Texas Central has no reason to believe
that it will not be able to obtain all requisite regulatory and other approvals
or consents which it is required to obtain necessary to consummate the
Acquisition Merger.
Section 2.31 SHAREHOLDERS' LIST. Texas Central has provided BUC as of a
date within ten (10) days of the date of this Agreement, a list of the holders
of shares of Texas Central Stock containing for Texas Central's shareholders the
names, addresses and number of shares held of record, which shareholders' list
is in all respects accurate as of such date and will be updated and delivered to
BUC immediately prior to Closing.
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Section 2.32 BOOKS AND RECORDS. The books and records of the Texas Central
Companies have been fully, properly and accurately maintained in all material
respects, and there are no material inaccuracies or discrepancies of any kind
contained or reflected therein and they fairly reflect the substance of events
and transactions included therein.
Section 2.33 DEPOSIT SUMMARY. Attached hereto as SCHEDULE 2.33 is a
summary of the amounts and types of the deposits held by Texas Central Bank on
December 31, 1998 and the weighted average interest rates being paid thereon as
of such date (the "Deposit Summary"). The Deposit Summary was prepared by the
Bank in the ordinary course of business and the information contained therein is
true, complete and correct as of the date thereof.
Section 2.34 SCHEDULES. The Schedules delivered pursuant to this Article
II and elsewhere in this Agreement, which have been delivered concurrent with
the execution and delivery of this Agreement, are true and correct and contain
no untrue statements of material fact or omit any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
Section 2.35 YEAR 2000 REPRESENTATION. No Texas Central Company has reason
to believe that it will receive a rating of less than "satisfactory" on any Year
2000 report of examination of any regulatory authority. Texas Central Bank has
delivered to BUC a complete and accurate copy of its plan, including a good
faith preliminary estimate of the anticipated associated costs ("YEAR 2000
BUDGET"), for addressing the issues set forth in the statements of the Federal
Financial Institutions Examination Council ("FFIEC") dated May 5, 1997, entitled
Year 2000 Project Management Awareness," and December 17, 1997, entitled "Safety
and Soundness Guidelines Concerning the Year 2000 Business Risk," as such issues
affect it and such plan is in material compliance with the schedule set forth in
the FFIEC statements. Texas Central Bank is in compliance with the Year 2000
Interagency Statements dated June, 1996, May 5, 1997, December 17, 1997, March
17, 1998, April 10, 1998 and May 13, 1998 issued by the FFIEC. Texas Central
Bank has delivered to BUC complete and accurate lists of its vendors and
automated systems material to its operations, including, software, firmware,
hardware, embedded chips and other processing devices. The Year 2000 Budget is
reasonable.
Section 2.36 DISCLOSURE. The representations and warranties contained in
this Article II do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements and
information contained in this Article II not misleading.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF BUC
Section 3.1 ORGANIZATION. BUC is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and a
savings and loan holding company duly registered under HOLA. BUC, indirectly
through BU Holdings, owns 100% of the issued and
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outstanding capital stock of Bank United. BU Holdings and Bank United shall
hereafter sometimes be referred to as the "BUC Subsidiaries". Bank United is a
federal savings bank, duly organized, validly existing and in good standing
under the laws of the United States of America. The deposits of Bank United are
insured pursuant to the Federal Deposit Insurance Act, as amended. BUC and the
BUC Subsidiaries have full power and authority (including all licenses,
franchises, permits and other governmental authorizations which are legally
required) to own their respective properties, to engage in the business and
activities now conducted by them and to enter into and perform this Agreement.
Section 3.2 CAPITALIZATION. The authorized capital stock of BUC consists
of 10 million shares of preferred stock, $.01 par value per share, 40,000,000
shares of BUC Class A Common Stock, par value $.01 per share, and 40,000,000
shares of BUC Class B Common Stock, par value $.01 per share. As of December 31,
1998, no shares of preferred stock, 28,321,576 shares of BUC Class A Common
Stock were issued and outstanding and 3,241,320 shares of BUC Class B Common
Stock were issued and outstanding. All of the issued and outstanding shares of
BUC Common Stock are validly issued, fully paid and non-assessable, and have not
been issued in violation of the preemptive rights of any person.
Section 3.3 ISSUANCE OF BUC STOCK. BUC has available a sufficient number
of authorized and unissued shares of BUC Stock to pay the Merger Consideration,
and BUC will not take any action during the term of this Agreement that will
cause it not to have a sufficient number of authorized and unissued shares of
BUC Stock to pay the Merger Consideration. None of the shares of BUC Stock to be
issued pursuant to this Agreement will be when issued subject to any lien,
charge, encumbrance, claim, rights of others, mortgage, pledge or security
interest created by BUC, and none will be subject to any agreements or
understandings among any persons with respect to the voting or transfer of such
shares of BUC Stock, except as contemplated hereby. The shares of BUC Stock to
be issued pursuant to this Agreement, when issued in accordance with the terms
and conditions of this Agreement, shall be validly issued, fully paid and
non-assessable, authorized for trading in The NASDAQ Stock Market National
Market and will not have been issued in violation of the preemptive rights of
any person.
Section 3.4 APPROVALS; AUTHORITY. The Board of Directors of BUC has
approved this Agreement and the matters contemplated herein. No further
corporate proceedings of BUC are needed to deliver this Agreement and consummate
the Acquisition Merger. This Agreement has been duly executed and delivered by
BUC and is a binding agreement of BUC enforceable against BUC in accordance with
its terms, subject to the effect of bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally and
general equitable principles.
Section 3.5 NO CONFLICT WITH OTHER INSTRUMENTS. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby,
subject to obtaining all required regulatory approvals, will not violate any
provision of, or constitute a default under, any law, or any order, writ,
injunction or decree of any court or other governmental agency, or any contract,
agreement or instrument to which BUC is a party or by which it is bound or
constitute an
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event which, with the lapse of time or action by a third party, could result in
any default under any of the foregoing or result in the creation of any lien,
charge or encumbrance upon the assets or properties of BUC or upon the BUC
Stock.
Section 3.6 FINANCIAL REPORTS AND SEC DOCUMENTS; MATERIAL ADVERSE EFFECT.
(a) BUC's Annual Reports on Form 10-K for the fiscal years ended September 30,
1997 and 1998, and all periodic and current reports and definitive proxy
statements filed or to be filed by it subsequent to September 30, 1997 under
Section 13, 14 or 15(d) of the Exchange Act, in the form filed or to be filed
(collectively, "SEC DOCUMENTS") with the SEC, as of the date filed, (a) complied
or will comply in all material respects with the applicable requirements under
the Exchange Act, and (b) did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; and each of the balance sheets or
statements of condition contained in or incorporated by reference into any such
SEC Document (including the related notes and schedules thereto) fairly
presents, or will fairly present, the consolidated financial position of BUC as
of its date, and each of the statements of income and changes in stockholders'
equity and cash flows or equivalent statements in such SEC Documents (including
any related notes and schedules thereto) fairly presents, or will fairly
present, in all material respects, the consolidated results of operations,
changes in stockholders' equity and cash flows, as the case may be, of BUC for
the periods to which they relate, in each case in accordance with generally
accepted accounting principles consistently applied during the periods involved,
except in each case as may be noted therein, subject, in the case of unaudited
financial statements, to normal year-end audit adjustments and the absence of
footnotes.
(b) Since December 31, 1998, no event has occurred or circumstance
arisen that, individually or taken together with all other facts, circumstances
and events, is reasonably likely to have a material adverse effect with respect
to BUC.
Section 3.7 LITIGATION; REGULATORY ACTION. Except as set forth in BUC's
SEC Documents (i) no material litigation, claim or other proceeding before any
governmental authority is pending against BUC or any BUC Subsidiary and, to
BUC's knowledge, no such litigation, claim or other proceeding has been
threatened; and (ii) other than routine compliance statements contained in
examinations conducted in the ordinary course, neither BUC nor any BUC
Subsidiary or properties is a party to or is subject to any order, decree,
agreement, memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, or extraordinary supervisory letter
from a bank regulatory authority, nor has BUC or any BUC Subsidiary been advised
by a bank regulatory authority that such agency is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding, commitment letter,
supervisory letter or similar submission.
Section 3.8 COMMUNITY REINVESTMENT ACT. At its most recent regulatory
evaluation of performance under the Community Reinvestment Act (the "CRA"),
BUC's record of performance was deemed to be "outstanding" or "satisfactory,"
and no proceedings are pending or, to the knowledge of BUC, threatened, that
would result in a change in such evaluation. BUC has not
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received any adverse public comments with respect to its compliance under the
CRA since the date of its most recent regulatory evaluation of its performance
under the CRA.
Section 3.9 COMPLIANCE WITH LAW. BUC and its subsidiaries have all
material licenses, franchises, permits and other governmental authorizations
that are legally required to enable them to conduct their respective businesses
in the manner presently conducted and are in compliance in all material respects
with all law and regulations applicable to the conduct of their respective
businesses.
Section 3.10 YEAR 2000 REPRESENTATION. BUC has no reason to believe that
it will receive a rating of less than "satisfactory" on any Year 2000 report of
examination of any regulatory authority. BUC has prepared a plan, including a
good faith preliminary estimate of the anticipated associated costs, for
addressing the issues set forth in the statements of the FFIEC, entitled "Safety
and Soundness Guidelines Concerning the Year 2000 Business Risk," as such issues
affect BUC and such plan is in material compliance with the schedule set forth
in the FFIEC statements. Bank United is in compliance in all material respects
with the Year 2000 Interagency Statements dated June, 1996, May 5, 1997,
December 17, 1997, March 17, 1998, April 10, 1998 and May 13, 1998 issued by the
FFIEC.
ARTICLE IV.
COVENANTS OF BUC
BUC covenants and agrees with Texas Central as follows:
Section 4.1 BEST EFFORTS. Acquisition Company will, as soon as
practicable, present for the approval of its shareholder, the Acquisition
Merger. BUC and the BUC Subsidiaries will take all reasonable action to aid and
assist in the consummation of the Acquisition Merger and the transactions
contemplated hereby, and will use their best efforts to take or cause to be
taken all other actions necessary, proper or advisable to consummate the matters
contemplated by this Agreement, including such actions which are necessary,
proper or advisable in connection with filing applications with, or obtaining
approvals from, all regulatory authorities having jurisdiction over the matters
contemplated by this Agreement and the Acquisition Merger.
Section 4.2 INFORMATION FOR APPLICATIONS AND PROXY SOLICITATION. To the
extent permitted by law, BUC will furnish Texas Central with all information
concerning BUC and the BUC Subsidiaries required for inclusion in (i) any
application, statement or document to be made or filed by Texas Central with any
federal or state regulatory or supervisory authority in connection with the
matters contemplated by this Agreement and (ii) any proxy materials to be
furnished to the shareholders of Texas Central in connection with their
consideration of the Acquisition Merger. All information so furnished for such
statements and applications shall, to the best of BUC's knowledge, be true and
correct in all material respects and will not omit any material fact necessary
to make its statements therein, in light of the circumstances in which they were
made, not misleading. BUC will
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indemnify and hold harmless Texas Central from and against any and all losses,
claims, damages, expenses or liabilities to which Texas Central may become
subject under applicable laws, rules and regulations and will reimburse Texas
Central for any legal or other expenses reasonably incurred by Texas Central in
connection with investigating or defending any actions whether or not resulting
in liability, insofar as such losses, claims, damages, expenses, liabilities or
actions arise out of or are based on any untrue statement or alleged untrue
statement of a material fact contained in any such application or proxy
materials or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, but only insofar as such statement or omission
was made in reliance upon and in conformity with information furnished by BUC in
writing expressly for use therein. BUC agrees, upon the request of Texas
Central, to furnish to it a written letter or statement confirming to the best
of its knowledge the accuracy of the information with respect to BUC and the BUC
Subsidiaries contained in any report or other application or statement referred
to in Sections 4.1 or 4.2 of this Agreement, and confirming that the information
with respect to BUC and the BUC Subsidiaries contained in such document or draft
was furnished expressly for use therein or, if such is not the case, indicating
the inaccuracies contained in such document or indicating the information not
furnished by BUC expressly for use therein. The indemnity contained in this
Section 4.2 shall terminate on the Effective Date.
Section 4.3 CONFIDENTIALITY. BUC shall not, before or after the
consummation or termination of this Agreement, directly or indirectly disclose
any confidential information acquired from Texas Central to any person, firm,
corporation, association or other entity for any reason or purpose whatsoever,
other than in connection with the regulatory notice and application process or,
after termination of this Agreement pursuant to Section 7.1 hereof, use such
information for its own purposes or for the benefit of any person, firm,
corporation, association, or other entity under any circumstances. In the event
that this Agreement is terminated and the Acquisition Merger is not consummated,
for a period of two years from the date the Agreement is terminated BUC agrees
that it will not, without the prior approval of Texas Central, directly or
indirectly solicit any individual who is an employee of any Texas Central
Company on the date the Agreement is terminated to terminate his or her
relationship with such entity in order to become employed by BUC or any of its
subsidiaries; provided, however, that the foregoing shall not apply to (i) the
use of an independent employment agency (so long as the agency was not directed
to solicit a particular individual or class of individuals that could only be
satisfied by employees of a Texas Central Company as of the date the Agreement
is terminated), or (ii) the use of a general solicitation (such as an
advertisement) not specifically directed to employees of a Texas Central
Company.
Section 4.4 REGISTRATION STATEMENT. As promptly as practicable after the
execution of this Agreement, BUC will file with the SEC a Registration Statement
on Form S-4 under the Securities Act and any other applicable documents (the
"Registration Statement"), relating to the shares of BUC Stock to be delivered
to the shareholders of Texas Central pursuant to this Agreement, and will use
its best efforts to cause such Registration Statement to become effective. At
the time the Registration Statement becomes effective, the Registration
Statement will comply in all material respects with the provisions of the
Securities Act and the published rules and regulations thereunder, and will not
contain any untrue statement of a material fact or omit to state a material fact
required
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to be stated therein or necessary to make the statements therein not false or
misleading, and at the time of mailing thereof to Texas Central's shareholders,
at the time of the Texas Central shareholders' meeting held to approve the
Acquisition Merger and at the Effective Date, the prospectus included as part of
the Registration Statement, as amended or supplemented by any amendment or
supplement filed by BUC (the "Prospectus"), will not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not false or misleading; provided, however, that
none of the provisions of this subparagraph shall apply to statements in or
omissions from the Registration Statement or the Prospectus made in reliance
upon and in conformity with information furnished by Texas Central for use in
the Registration Statement or the Prospectus.
Section 4.5 NASDAQ LISTING. BUC will file all documents required to be
filed to list the BUC Stock to be issued pursuant to the Agreement on The NASDAQ
Stock Market National Market and use its best efforts to effect said listing.
Section 4.6 DELIVERY OF REPORTS. From the date hereof to the Effective
Date, BUC shall deliver to Texas Central, when reasonably available, BUC's
Quarterly Reports on Form 10-Q and BUC's Annual Reports on Form 10-K as filed
with the SEC under the Exchange Act.
Section 4.7 RULE 144 COMPLIANCE. From and after the Effective Date of the
Acquisition Merger, BUC shall file all reports with the SEC necessary to permit
the shareholders of Texas Central who may be deemed "underwriters" (within the
meaning of the Rule 145 under the Securities Act) of Texas Central Stock to sell
BUC Stock received by them in connection with the Acquisition Merger pursuant to
Rules 144 and 145(d) under the Securities Act if they would otherwise be so
entitled; provided, however, that BUC is otherwise obligated to file such
reports with the SEC.
Section 4.8 PUBLICATION OF FINANCIAL CONDITION. BUC will publish the
results of thirty (30) days of combined operations of BUC and Texas Central as
soon as practicable after the Effective Date, and no later than thirty (30) days
after the end of the fiscal quarter in which the Effective Date occurs.
Section 4.9 PRESS RELEASES. BUC agrees that it will not, directly or
indirectly, without the prior approval of Texas Central, issue any press release
or written statement for public release relating to the Agreement or the
Acquisition Merger, except as otherwise required by applicable law or regulation
or NASDAQ rules, and then only after making reasonable efforts to notify Texas
Central in advance.
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ARTICLE V.
COVENANTS OF TEXAS CENTRAL
Texas Central covenants and agrees with BUC as follows:
Section 5.1 SHAREHOLDER APPROVAL AND BEST EFFORTS. Texas Central will, as
soon as practicable, present for the approval of its shareholders this Agreement
and the transactions contemplated hereby. Texas Central will take all necessary
action to arrange for a meeting of its shareholders for the purpose of
considering the Agreement and, if the transaction is approved by such
shareholders, to aid and assist in the consummation of the Acquisition Merger,
and will use its best efforts to take or cause to be taken all other actions
necessary, proper or advisable to consummate the matters contemplated by this
Agreement, including such actions as BUC reasonably considers necessary, proper
or advisable in connection with filing applications and registration statements
with, or obtaining approvals from, all regulatory authorities having
jurisdiction over the transactions contemplated by this Agreement.
Section 5.2 OPERATIONS. (a) From and after the date of this Agreement to
the Effective Date, Texas Central agrees to, and to cause Texas Central Delaware
and Texas Central Bank to (i) conduct their business in substantially the same
manner as they have been conducted since December 31, 1997 and in accordance
with prudent business and banking practices, (ii) maintain and keep their
properties in as good repair and condition as at present, except for
deterioration due to ordinary wear and tear and damage due to casualty, (iii)
maintain in full force and effect insurance and fidelity bonds comparable in
amount and scope of coverage to that currently maintained for them, (iv) perform
all of their material obligations under contracts, leases and documents relating
to or affecting their assets, properties and business or the assets, properties
and business of Texas Central Bank except such obligations as they may in good
faith reasonably dispute, (v) use their best efforts to maintain and preserve
their business organizations and present employees and maintain all
relationships with depositors and customers, (vi) comply with and perform all
material obligations and duties imposed upon them by all federal, state and
local laws, rules, regulations and orders imposed by federal, state or local
governmental authorities, (vii) take any and all actions, on or simultaneously
with the Closing, necessary to amend the Articles of Incorporation or Bylaws of
Texas Central in any manner which BUC, in its reasonable discretion, shall deem
necessary, proper or advisable; (viii) make no alteration in the manner of
maintaining their books, accounts or records, or in the accounting practices
relating to their business, properties or assets; (ix) notify BUC immediately
upon commencement of any compliance, safety and soundness, Year 2000 or other
examination conducted by the FRB, the FDIC or the OCC; (x) promptly give written
notice to BUC upon obtaining knowledge of any fact or circumstance that would
cause any of their representations or warranties to be untrue or misleading in
any material respect; and (xi) continue to solicit deposits, maintain deposits
and operate its deposit gathering procedures consistent with existing
procedures.
(b) From and after the date of this Agreement, no Texas Central Company
will, without the prior written consent of BUC, (i) permit any amendment or
change to be made in their Articles of Incorporation or Bylaws; (ii) take any
action described or do any of the things listed in Section 2.14 hereof, except
that Texas Central may declare or pay dividends on the Texas Central Common
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Stock in the manner and to the extent permitted by Section 5.8 hereof; (iii)
enter into or amend, any contract, agreement or other instrument of any of the
types listed in Section 2.10 hereof, or amend or replace its existing
month-to-month contract with Electronic Data Systems; (iv) undertake any
additional borrowings with a term in excess of 90 days; (v) modify any
outstanding loan, make any new loan, or acquire any loan participation, unless
such modification, new loan or participation is made in the ordinary course of
business, consistent with existing practices; (vi) make any material change in
its accounting methods or practices; (vii) take any action that would result in
any of its representations and warranties contained in Article II of this
Agreement not being true and correct at the Effective Date; (viii) make any
change in policies respecting extensions of credit or loan charge-offs; (ix)
change reserve requirement policies; (x) change securities portfolio policies;
(xi) take any action with respect to the closing of any branches; (xii) make, or
permit Texas Central Bank to make, any changes in the titles, salaries, bonuses
or other compensation of any employee, officer or director; or (xiii) agree to
do any of the foregoing.
Section 5.3 INFORMATION FOR APPLICATIONS AND SEC FILINGS. Texas Central
will furnish BUC with all information concerning the Texas Central Companies
required for inclusion in (i) any application, statement, document or notice to
be made or filed by BUC with any federal or state regulatory or supervisory
authority in connection with the matters contemplated by this Agreement and (ii)
any filings with the SEC, including the Registration Statement and the
Prospectus, and any applicable state securities authorities. Texas Central
represents and warrants that all information so furnished for inclusion in the
Registration Statement shall, to the best of its knowledge, be true and correct
in all material respects and will not omit any material fact necessary to make
the statements therein not misleading. Texas Central represents and warrants
that all information furnished for inclusion in the Prospectus and in any filing
with any federal or state regulatory or supervisory authority shall, to the best
of its knowledge, be true and correct in all material respects and will not omit
any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Texas Central will
indemnify and hold harmless BUC from and against any and all losses, claims,
damages, expenses or liabilities to which it may become subject under applicable
laws, rules and regulations and will reimburse BUC for any legal or other
expenses reasonably incurred by it in connection with investigating or defending
any actions whether or not resulting in liability, insofar as such losses,
claims, damages, expenses, liabilities or actions arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
any such application or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary in order to make the state ments therein not misleading, but only
insofar as any such statement or omission was made in reliance upon and in
conformity with information furnished in writing by Texas Central expressly for
use therein. Texas Central agrees at any time, upon the request of BUC, to
furnish to BUC a written letter or statement confirming to the best of its
knowledge the accuracy of the information with respect to Texas Central
contained in any report or other application or statement referred to in
Sections 5.1 or 5.3 of this Agreement, and confirming that the information with
respect to Texas Central contained in such document or draft was furnished
expressly for use therein or, if such is not the case, indicating the
inaccuracies contained in such document or indicating the information not
furnished by Texas Central expressly for use therein. The indemnity agreement
contained in this Section 5.3 shall terminate at Closing.
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Section 5.4 ACCESS TO PROPERTIES AND RECORDS. To the extent permitted by
law, Texas Central will afford the executive officers and authorized
representatives (including legal counsel, accountants and consultants) of BUC
full access to the properties, books and records of the Texas Central Companies
in order that BUC may have full opportunity to make such reasonable investiga
tion as it shall desire to make of the affairs of the Texas Central Companies,
provided, however, that such investigations shall be conducted in a manner so as
not to unreasonably interfere with the operations of the Texas Central
Companies, and the officers of Texas Central will furnish BUC with such
additional financial and operating data and other information as to the business
and properties of the Texas Central Companies as BUC shall, from time to time,
request. As soon as practicable after they become available, Texas Central will
deliver or make available to BUC all unaudited quarterly financial statements
prepared for the internal use of management of the Texas Central Companies and
all Call Reports filed by Texas Central Bank with the Department or the FDIC
after the date of this Agreement. All such financial statements shall be
prepared in accordance with generally accepted accounting principles applied on
a basis consistent with previous accounting periods. In the event of the
termination of this Agreement, BUC will return to Texas Central all documents
and other information obtained pursuant hereto and will keep confidential any
information obtained pursuant to this Agreement.
Section 5.5 ACCOUNTING AND TAX TREATMENT. Texas Central agrees to use its
best efforts to cause the Acquisition Merger to qualify as a "pooling of
interests" for accounting purposes and as a "reorganization" within the meaning
of Section 368(a) of the Internal Revenue Code. Texas Central agrees not to take
any action that would cause the Acquisition Merger not to qualify as a "pooling
of interests" for accounting purposes or as a "reorganization" within the
meaning of Section 368(a) of the Internal Revenue Code.
Section 5.6 STANDSTILL PROVISION. So long as this Agreement is in effect,
no Texas Central Company and none of their directors or officers shall
entertain, solicit or encourage any inquiries with respect to, or provide any
information to or negotiate with any other party with respect to any proposal
which could reasonably be expected to lead to the merger, consolidation,
acquisition, or sale of all or substantially all of the assets or any shares of
capital stock of any Texas Central Company. Texas Central agrees to notify BUC
immediately of any unsolicited acquisition proposals and provide reasonable
detail as to the identity of the proposed acquiror and the nature of the
proposed transaction.
Section 5.7 PROXIES. Texas Central acknowledges that the persons listed in
SCHEDULE 5.7 have agreed to vote their shares of Texas Central Stock in favor of
this Agreement and the transactions contemplated hereby and that such persons
have granted to BUC or its designee an irrevocable proxy to vote such shares at
the meeting of Texas Central shareholders called to approve the Acquisition
Merger pursuant to a Voting Agreement and Irrevocable Proxy substantially in the
form of EXHIBIT C to this Agreement (each a "Voting Agreement"), which has been
executed as of the date of this Agreement.
Section 5.8 DIVIDENDS. BUC and Texas Central agree that, between September
30, 1998 and the Effective Date, Texas Central may declare and pay cash
dividends in an amount equal to
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39.6% of the taxable income of Texas Central as estimated by Texas Central, and
approved by BUC, in good faith, and no more. Texas Central agrees to provide BUC
written notice of any proposed cash dividend at least 10 business days prior to
the payment date of any proposed dividend.
Section 5.9 ACCRUALS. Prior to the Effective Date and after consultation
with BUC, Texas Central shall, consistent with generally accepted accounting
principles, make such changes and modifications to its loan, accrual and reserve
policies and practices (including loan classification and allowance for credit
losses levels) and other accounting policies and practices to bring such
policies and practices into line with those presently followed by BUC, including
appropriate increases in its allowance for credit losses. Without limiting the
foregoing, the ratio of the reserve for loan losses to total loans outstanding
at Texas Central Bank will be maintained, between the date hereof and the
Effective Date, at a ratio not less than the ratio for such matters on November
30, 1998.
Section 5.10 PRESS RELEASES. Texas Central agrees that it will not,
directly or indirectly, without the prior approval of BUC, issue any press
release or written statement for general circulation relating to the Agreement
or the Acquisition Merger except as otherwise required by applicable law or
regulation, and then only after making reasonable efforts to notify BUC in
advance.
Section 5.11 NATURE OF DEPOSITS. The deposits of Texas Central Bank will
be on the Closing Date of substantially the same character, mix, type, and
makeup as such deposits are as of the date hereof. Such deposits shall include
no "brokered deposits", as such term is used in 12 U.S.C. 1831f, unless
otherwise agreed by BUC.
Section 5.12 TERMINATION OF 401(K) PLAN. Texas Central shall terminate the
401(k) plan of the Texas Central Companies prior to the Effective Date in a
manner reasonably acceptable to Bank United.
Section 5.13 INCENTIVE COMPENSATION OBLIGATIONS. Prior to the Effective
Date, Texas Central shall accrue and discharge any payment or other obligations
under any bonus, incentive compensation or similar plans of the Texas Central
Companies and receive a release of claims from all participants in such plans in
a form reasonably acceptable to Bank United.
Section 5.14 VACATION PAYMENT OBLIGATIONS. Prior to the Effective Date,
Texas Central shall accrue any vacation obligations on the books of Texas
Central and discharge all such vacation obligations.
Section 5.15 ENVIRONMENTAL REPORTS. Texas Central shall obtain, at its
sole expense, Phase I environmental assessments for each bank facility and each
non-residential OREO property. Oral reports of such environmental assessments
shall be delivered to BUC no later than four (4) weeks and written reports shall
be delivered to BUC no later than eight (8) weeks from the date of this
Agreement. Prior to the Effective Date, Texas Central shall obtain, at its sole
expense, Phase II environmental assessments for properties identified by BUC on
the basis of the results of such Phase I environmental assessments, which
reports shall be satisfactory to BUC. Texas Central shall
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obtain a survey and assessment of all potential asbestos containing material in
owned or leased properties (other than OREO property) and a written report of
the results shall be delivered to BUC within four (4) weeks of execution of the
definitive agreement. Texas Central agrees to notify BUC a reasonable time in
advance of the examinations scheduled pursuant to this Section 5.15 and to
permit BUC and its contractors, consultants, agents and representatives to be
present during such examinations and to have such access to the properties and
facilities of Texas Central, and to conduct such consultations with the persons
or firms conducting such examinations, as BUC shall deem necessary.
Section 5.16 STOCK OPTIONS. As soon as practicable after the date of this
Agreement, the Board of Directors of Texas Central (or, if appropriate, any
committee administering the Texas Central stock option plans) shall adopt such
resolutions or take such other actions as may be required to cause all options
to purchase shares of Texas Central Stock outstanding on the date hereof and
exercised or canceled prior to its Effective Date. Evidence satisfactory to BUC
of such cancellation or exercise shall be delivered to BUC prior to the
Effective Date.
Section 5.17 AFFILIATE AGREEMENT. Within thirty (30) days after the date
of this Agreement, Texas Central shall enter into and cause each Texas Central
shareholder who is an "affiliate" (as defined in SEC Rule 405) of Texas Central
to enter into with BUC, an Affiliate Agreement in substantially the form of
EXHIBIT D attached hereto (each an "Affiliate Agreement").
Section 5.18 DIRECTORS AND OFFICERS' LIABILITY INSURANCE AND
INDEMNIFICATION. (a) Following the Effective Date, BUC will provide the
directors and officers of Texas Central and its subsidiaries with the same
directors' and officers' liability insurance coverage that BUC provides to
directors and officers of its other banking subsidiaries generally, and, in
addition, for a period of three years will use its best efforts to continue
Texas Central's directors' and officers' liability insurance coverage with
respect to actions occurring prior to the Effective Date and to the extent that
such coverage is obtainable for an aggregate premium not in excess of the
aggregate premium paid by Texas Central for such insurance; provided, that BUC
may at its option elect to replace Texas Central's insurance coverage with
respect to actions occurring prior to the effective date with coverage provided
by other insurers having the same aggregate limits. If the aggregate premium for
such continued coverage would exceed the aggregate premium for such coverage
paid by Texas Central, BUC shall use its best efforts to procure such level of
insurance having the coverage described above as can be obtained for an
aggregate premium equal to the maximum amount paid by Texas Central.
(b) For six years after the Effective Date, and subject to the
limitations contained in applicable OTS regulations, BUC shall cause the
Surviving Company to indemnify, defend and hold harmless the present and former
officers, directors, employees and agents of Texas Central and its subsidiaries
(each, an "Indemnified Party") against all losses, expenses, claims, damages or
liabilities arising out of actions or omissions occurring on or prior to the
Effective Date (including, without limitation, the transactions contemplated by
this Agreement) to the full extent then permitted under the Texas Business
Corporation Act and by Texas Central's Articles of Incorporation as in effect on
the date hereof, including provisions relating to advances of expenses incurred
in the defense of any action or suit.
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Section 5.19 SUPPLEMENTS TO DISCLOSURE SCHEDULES. From time to time prior
to the Effective Date, Texas Central shall promptly supplement or amend its
Disclosure Schedules to reflect any matter hereafter arising that would make any
representation or warranty set forth in Article II inaccurate. For purposes of
determining (i) the fulfillment of the condition set forth in Section 8.1 as of
the Closing Date and (ii) the accuracy of the representations and warranties
contained in Article II if the Acquisition Merger is not consummated, the
Disclosure Schedules shall be deemed to include only the information contained
therein on the date of this Agreement and shall be deemed to exclude any
information contained in any subsequent supplement or amendment thereto. If the
Acquisition Merger is not consummated, delivery of any supplemental disclosure
schedules will not affect the rights and remedies of the parties hereunder. For
purposes of determining the accuracy of the representations and warranties
contained in Article II or if the Acquisition Merger is consummated, the
Disclosure Schedules shall be deemed to include all information contained in any
supplement or amendment thereto made before the Closing Date. If any supplement
to any Disclosure Schedule shall be delivered within 10 days of the Closing
Date, at the option of BUC the Closing Date may be delayed to permit BUC to have
a period of at least 10 days to consider such supplement.
ARTICLE VI.
CLOSING
Section 6.1 CLOSING. Subject to the other provisions of this Article VI,
at a mutually acceptable time, on a mutually acceptable date ("Closing Date") as
soon as practicable within a thirty-day period commencing with the latest of the
following dates:
(i) the receipt of shareholder approval and the last approval from
any requisite regulatory or supervisory authority and the expiration of
any statutory or regulatory waiting period which is necessary to effect
the Acquisition Merger, or
(ii) if the matters contemplated by this Agreement are being
contested in any legal proceeding and BUC or Texas Central, pursuant to
Section 10.1 hereof, have elected to contest the same, then the date that
such proceeding has been brought to a conclusion favorable, in the
judgment of each of BUC and Texas Central, to the consummation of the
Acquisition Merger, or such prior date as each of BUC and Texas Central
shall elect whether or not such proceeding has been brought to a
conclusion;
the closing of the Acquisition Merger ("Closing") will take place at which the
parties to this Agreement will exchange certificates, opinions, letters and
other documents provided for under this Agreement in order to effect the
Acquisition Merger and to determine whether any condition exists which would
permit the parties hereto to terminate this Agreement. If no such condition then
exists or if no party elects to exercise any right it may have to terminate this
Agreement, then and thereupon the appropriate parties shall execute such
documents and instruments as may be necessary or appropriate to effect the
Acquisition Merger contemplated by this Agreement.
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The Closing shall take place at the offices of Bank United in Houston,
Texas, or at such other place to which the parties hereto may mutually agree.
Section 6.2 EFFECTIVE DATE. Subject to the terms and upon satisfaction of
all requirements of law and the conditions specified in this Agreement
including, among other conditions, the receipt of requisite approval of the
shareholders of Texas Central and the regulatory approvals (or waivers thereof)
of the OTS and the FRB and any other federal or state regulatory agency whose
approval must be received in order to consummate the Acquisition Merger, the
Acquisition Merger shall become effective, and the Effective Date of the
Acquisition Merger shall occur, at the date and time specified in the
certificate approving the Acquisition Merger to be issued by the Secretary of
State of Texas (the "Effective Date"). It is anticipated by BUC and Texas
Central that the Closing and the Effective Date will occur on the same day.
ARTICLE VII.
TERMINATION
Section 7.1 TERMINATION. (a) This Agreement may be terminated by action of
the Board of Directors of BUC or the Board of Directors of Texas Central at any
time prior to the Effective Date if:
(i) any court of competent jurisdiction in the United States or
other United States (federal or state) governmental body shall have issued
an order, decree or ruling or taken any other action restraining,
enjoining, or otherwise prohibiting the Acquisition Merger and such order,
decree, ruling or other action shall have been final and non-appealable;
(ii) any of the transactions contemplated by this Agreement are
disapproved by any regulatory authority or other person whose approval is
required to consummate the Acquisition Merger; or
(iii) the Effective Date shall not have occurred on or before
September 17, 1999 or such later date as shall have been approved in
writing by the Boards of Directors of BUC and Texas Central; provided,
however, that the right to terminate under this Section 7.1(a)(3) shall
not be available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of, or has resulted in, the
failure of the Effective Date to occur on or before such date.
(iv) This Agreement may be terminated at any time prior to the
Effective Date by the Board of Directors of Texas Central if (A) BUC shall
fail to comply in any material respect with any of its covenants or
agreements contained in this Agreement, or if any of the representations
or warranties of BUC contained herein shall be untrue in any material
respect, (B) the Average Value Per Share as calculated in accordance with
Section 1.6 is below $33.57, or (C) the closing price of the BUC Stock on
the day immediately prior to the
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day fixed as the Closing Date shall be less than $32.00. In the event the
Board of Directors of Texas Central desires to terminate this Agreement as
provided in Section 7.1(a)(iv)(A) above, such Board of Directors must
notify BUC in writing of its intent to terminate stating the reason
therefor. BUC shall have fifteen days from the receipt of such notice to
cure the alleged breach, inaccuracy or change, subject to the approval of
Texas Central (which approval shall not be unreasonably delayed or
withheld).
(v) This Agreement may be terminated any time prior to the Effective
Date by BUC if (A) Texas Central shall fail to comply in any material
respect with any of its covenants or agreements contained in this
Agreement, or if any of the representations or warranties of Texas Central
contained herein shall be defective in any material respect, (B) there
shall have been any change after December 31, 1998 in the assets,
liabilities (including deposit liabilities) properties, business or
financial condition of Texas Central, Texas Central Delaware or Texas
Central Bank which individually or in the aggregate have materially and
adversely affected the financial condition, results of operation or
business of Texas Central, or (C) BUC concludes, in its reasonable
discretion, that BUC will be unable to obtain any regulatory approval
required in order to consummate the Acquisition Merger. In the event BUC
desires to terminate this Agreement because of an alleged breach or change
as provided in Section 7.1(a)(v)(A) or (B) above, BUC must notify Texas
Central in writing of its intent to terminate stating the cause therefor.
Texas Central shall have fifteen days from the receipt of such notice to
cure the alleged breach, inaccuracy or change, subject to the approval of
BUC (which approval shall not be unreasonably delayed or withheld).
(vi) This Agreement may be terminated at any time prior to the
Effective Date with the mutual written consent of BUC and Texas Central.
Section 7.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement and the abandonment of the Acquisition Merger without breach by any
party hereto, this Agreement shall become void and have no effect, without any
liability on the part of any party or the directors, officers or shareholders of
any corporate party. Nothing contained in this Section 7.2 shall relieve any
party hereto of any liability for a breach of this Agreement; PROVIDED, HOWEVER,
that BUC's remedy for a breach by Texas Central of the representation contained
in Section 2.15 shall be limited to termination of the Agreement and the receipt
of a cash payment from TCBI equal to the actual out of pocket expenses incurred
by BUC in connection with the transactions contemplated hereby, not to exceed
$250,000.
ARTICLE VIII.
CONDITIONS TO OBLIGATIONS OF BUC
The obligations of BUC under this Agreement are subject to the
satisfaction, at or prior to the Closing Date of the following conditions, which
may be waived by BUC in its sole discretion:
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Section 8.1 COMPLIANCE WITH REPRESENTATIONS. The representations and
warranties made by Texas Central in this Agreement must have been true when made
and shall be true in all material respects as of the Closing Date with the same
force and effect as if such representations and warranties were made at and as
of the Closing Date, and Texas Central shall have performed or complied with all
covenants and conditions required by this Agreement to be performed and complied
with by Texas Central prior to or at the Closing. BUC shall have been furnished
with a certificate, executed by an appropriate representative of Texas Central,
dated as of the Closing Date, to the foregoing effect.
Section 8.2 MATERIAL ADVERSE CHANGE. Prior to the Closing Date, there
shall not have occurred any material adverse change in the financial condition,
business or operations of the Texas Central Companies, including the amount,
pricing and mix of deposits, nor shall any event have occurred which, with the
lapse of time, may cause or create any material adverse change in the financial
condition, results of operations, business or prospects of the Texas Central
Companies in the reasonable judgment of BUC. BUC shall have received a
certificate to the foregoing effect executed by an appropriate representative of
Texas Central and dated as of the Closing Date. Without limiting any other
circumstance which might constitute a material adverse change under this Section
8.2, any of the following shall conclusively be deemed to constitute a material
adverse change: (i) a decrease in the aggregate amount of non-affiliate deposits
of Texas Central Bank to less than $86.4 million; or (ii) the ratio of
non-performing assets to gross loans shall exceed one and one-half (1 1/2)
percent.
Section 8.3 LEGAL OPINION. BUC shall have received an opinion of counsel
to Texas Central, dated as of the Closing Date, substantially in the form
attached hereto as EXHIBIT E.
Section 8.4 TAX OPINION. BUC shall have received an opinion from its
counsel, dated as of the Closing Date, that, for federal income tax purposes (i)
the Acquisition Merger will constitute a reorganization within the meaning of
Section 368(a)(1)(A) of the Code, (ii) no gain or loss will be recognized by
holders of Texas Central Stock upon receipt of BUC Stock, (iii) the aggregate
tax basis of BUC Stock received by a shareholder of Texas Central will be the
same as the aggregate basis of Texas Central Stock surrendered in exchange
therefor, and (iv) the holding period of BUC Stock to be received by each Texas
Central shareholder will include the period during which the shareholder held
the Texas Central Stock surrendered in exchange therefor, provided that the
Texas Central Stock is held as a capital asset on the date of the exchange.
Section 8.5 RELEASES. The directors and executive officers of the Texas
Central Companies shall have delivered to BUC an instrument in the form of
EXHIBIT F attached hereto (each an "Employee Release") dated the Effective Date
releasing BUC, and the BUC Subsidiaries from any and all claims of such
directors and officers (except as to their deposits and accounts and any rights
of indemnification pursuant to the applicable Articles of Incorporation), and
the directors of Texas Central, Texas Central Delaware and Texas Central Bank
shall have delivered to BUC their resignations as directors of Texas Central.
The Texas Central Companies shall have delivered to the directors and executive
officers executing the release in the form attached as EXHIBIT F, an instrument
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in the form of EXHIBIT G attached hereto releasing such directors and officers
from claims by the Texas Central Companies.
Section 8.6 ACCOUNTING LETTERS. BUC shall have received a letter from
Deloitte & Touche LLP, dated as of the Effective Date, to the effect that the
Acquisition Merger will qualify for pooling of interests accounting treatment if
consummated in accordance with the Agreement, and shall have received a letter
in form acceptable to BUC from Texas Central's accountants, Payne, Faulkner,
Smith & Jones, P.C., to the effect that such firm knows of no reason why the
Acquisition Merger will not qualify for pooling of interests accounting
treatment if consummated in accordance with the Agreement.
Section 8.7 DISSENTERS' RIGHTS. The holders of no more than five percent
of the issued and outstanding Texas Central Stock shall have demanded or shall
be entitled to demand payment of the fair value of their shares as dissenting
shareholders.
Section 8.8 AFFILIATE AGREEMENTS. BUC shall have received fully executed
Affiliate Agreements described in Section 5.17 hereof.
Section 8.9 DEBT ASSUMPTION. If so required, the instruments evidencing
the existing third party bank debt of Texas Central shall be amended or
otherwise modified to reflect BUC as the sole obligor on such debt in form
reasonably acceptable to BUC. BUC shall have received a letter from the holder
of such debt consenting to the assumption of such debt by BUC and confirming
that there are no breaches under the relevant note and security documents
related thereto.
Section 8.10 NONCOMPETITION AGREEMENT. BUC shall have received fully
executed Noncompetition Agreements in the form attached hereto as EXHIBIT H from
(i) each of the persons owning five percent or more of the Texas Central Stock
and (ii) each of the directors of Texas Central, which shall prohibit such
individuals from competing with Texas Central Bank and BUC in the Dallas
Consolidated Metropolitan Statistical Area for a period of three years after the
Closing Date, and otherwise in form and substance satisfactory to BUC (each a
"Non-competition Agreement"); PROVIDED, that the agreement with Mr. J. Stanley
Frederick will permit him to maintain his existing stock ownership in Irving
National Bancshares.
Section 8.11 ENVIRONMENTAL REPORTS. BUC shall have received the
environmental reports required by Section 5.15 of this Agreement and such
reports shall be in form and substance satisfactory to BUC.
Section 8.12 STOCK OPTIONS. BUC shall have received evidence of the
exercise or cancellation of all outstanding options to purchase Texas Central
Stock required by Section 5.16 of this Agreement and such evidence shall be in
form and substance satisfactory to BUC.
Section 8.13 CLOSING DAY PAYMENT. BUC shall have received evidence of the
accrual and discharge by Texas Central of all payment obligations under the
bonus, incentive, and vacation plans
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required by Sections 5.13 and 5.14 of this Agreement and such evidence shall be
in form and substance satisfactory to BUC.
ARTICLE IX.
CONDITIONS TO OBLIGATIONS OF TEXAS CENTRAL
The obligations of Texas Central under this Agreement are subject to the
satisfaction, at or prior to the Closing Date, of the following conditions,
which may be waived by Texas Central in its sole discretion:
Section 9.1 COMPLIANCE WITH REPRESENTATIONS. The representations and
warranties made by BUC in this Agreement must have been true when made and shall
be true in all material respects as of the Closing Date with the same force and
effect as if such representations and warranties were made at and as of the
Closing Date, and BUC shall have performed and complied with all covenants and
conditions required by this Agreement to be performed or complied with by BUC
prior to or at the Closing. Texas Central shall be furnished with a certificate,
executed by appropriate representatives of BUC and dated as of the Closing Date,
to the foregoing effect.
Section 9.2 MATERIAL ADVERSE CHANGE. Prior to the Closing Date, there
shall not have occurred any material adverse change in the financial condition,
business or operations of BUC or the BUC Subsidiaries, nor shall any event have
occurred which, with the lapse of time, will cause or create any material
adverse change in the financial condition, business or operations of BUC or the
BUC Subsidiaries in the reasonable judgment of the Board of Directors of Texas
Central. Texas Central shall have received a certificate to the foregoing effect
executed by an appropriate representative of BUC and dated as of the Closing
Date.
Section 9.3 LEGAL OPINION. Texas Central shall have received an opinion of
counsel to BUC, dated as of the Closing Date and substantially in the form
attached hereto as EXHIBIT I.
Section 9.4 TAX OPINION. Texas Central shall have received an opinion from
its counsel, dated as of the Closing Date, that, for federal income tax purposes
(i) the Acquisition Merger will constitute a reorganization within the meaning
of Section 368(a)(1)(A) of the Code, (ii) no gain or loss will be recognized by
holders of Texas Central Stock upon receipt of BUC Stock, (iii) the aggregate
tax basis of BUC Stock received by a shareholder of Texas Central will be the
same as the aggregate basis of Texas Central Stock surrendered in exchange
therefor, and (iv) the holding period of BUC Stock to be received by each Texas
Central shareholder will include the period during which the shareholder held
the Texas Central Stock surrendered in exchange therefor, provided that the
Texas Central Stock is held as a capital asset on the date of the exchange.
Section 9.5 FAIRNESS OPINION; COMFORT LETTER. On or before the issuance of
the Prospectus, Texas Central shall have received an opinion of Texas Central's
investment advisors as to the fairness of the Acquisition Merger to the TCBI
Stockholders from a financial point of view
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(the "Fairness Opinion"). The Fairness Opinion shall be satisfactory to Texas
Central and BUC in form and substance. On or before the date of issuance of the
Prospectus, Texas Central shall have received a letter of BUC's accounting firm
stating their conclusions as to the accuracy of certain information derived from
the financial records of BUC and its subsidiaries and contained in the
Prospectus (the "BUC Comfort Letter"). The BUC Comfort Letter shall be in form
customary for such transactions and reasonably satisfactory to Texas Central in
form and substance.
ARTICLE X.
CONDITIONS TO RESPECTIVE OBLIGATIONS OF
BUC AND TEXAS CENTRAL
The respective obligations of BUC and Texas Central under this Agreement
are subject to the satisfaction of the following conditions which may be waived
by BUC and Texas Central, respectively, in their sole discretion:
Section 10.1 GOVERNMENT APPROVALS. BUC and Texas Central shall have
received the approval of the transactions contemplated by this Agreement from
all necessary governmental agencies and authorities, including the OTS, FRB and
any other regulatory agency whose approval must be received in order to
consummate the Acquisition Merger, which approvals shall not impose any
restrictions on the operations of Texas Central or BUC which are unacceptable to
BUC or Texas Central, and such approvals and the transactions contemplated
hereby shall not have been contested by any federal or state governmental
authority or any third party (except shareholders asserting dissenters' rights)
by formal proceeding. It is understood that, if any such contest is brought by
formal proceeding, BUC or Texas Central may, but shall not be obligated to,
answer and defend such contest or otherwise pursue the Acquisition Merger over
such objection.
Section 10.2 SHAREHOLDER APPROVAL. The shareholders of Texas Central shall
have approved this Agreement and the transactions contemplated by this
Agreement.
Section 10.3 REGISTRATION OF BUC STOCK. The Registration Statement
covering the BUC Stock to be issued in the Acquisition Merger shall have become
effective under the Securities Act and any applicable state securities or "blue
sky" acts and no stop orders suspending the effectiveness of such Registration
Statement shall be in effect.
Section 10.4 NO INJUNCTION. No court of competent jurisdiction shall have
issued any order or ruling which is in effect and which prohibits the
consummation of the Acquisition Merger.
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ARTICLE XI.
EMPLOYEE MATTERS
Section 11.1 OFFERS TO TEXAS CENTRAL EMPLOYEES. On or before 15 days prior
to Closing, BUC shall cause Bank United to offer employment, to become effective
as of the Effective Date, to the Employees of Texas Central or its subsidiaries
employed as of, or on, the Effective Date (the "Employees") whom Bank United
wishes to employ and give notice to Texas Central of the names of the Employees
whom BUC does not wish to employ. To the extent consistent with Bank United's
existing compensation structure for comparable positions and comparable officer
titles and its current policies regarding officer titles, all Employees offered
employment by Bank United shall be offered employment at base wages and salaries
no less favorable than the wages and salaries currently being received by such
Employees to such Employees and in positions with comparable responsibilities
and officer titles, and, unless agreed upon by such Employee before the
Effective Date, within a reasonable geographic proximity to such Employee's
current work location. BUC shall be responsible for advising Employees of the
details of any offers and terms of employment, and answering any questions
relating thereto, but Texas Central shall be allowed to review and promptly
approve any communication that refers to any of Texas Central's benefits or
policies prior to its distribution.
Section 11.2 CREDIT FOR SERVICE WITH TEXAS CENTRAL. All Employees who are
offered and accept employment with BUC as of the Effective Date shall be
eligible to participate in the employee benefit plans and other fringe benefits
of BUC on the same basis as such plans and benefits are offered to employees of
BUC with comparable positions with BUC. To the extent possible under its
employee benefit plans, BUC shall credit such Employees for their length of
service with Texas Central for purposes of eligibility and vesting under each
employee benefit and fringe benefit plan to be provided by BUC to such
Employees, to the same extent such service was recognized under a similar plan
of Texas Central, based on information provided by Texas Central. For purposes
of this Section 11.2, "employee benefit plans and other fringe benefits"
includes, without limitation, health insurance benefits (medical and dental),
disability, life and accident insurance, sickness benefits, employee loans and
banking privileges, but does not include, if any, the incentive compensation,
pension, profit sharing, retirement and post retirement welfare benefits, and
vacation plans of Texas Central. If BUC offers a salary continuation or similar
program for employees unable to work for medical reasons, the Employees who are
offered and accept employment with BUC shall be credited under any program of
BUC with at least the number of sickness benefit days (up to a maximum of 22
calendar days) accrued under Texas Central's program at the Effective Date.
Section 11.3 VACATION POLICY. Immediately prior to the Effective Date,
Texas Central shall pay all vacation accrued and not taken by Employees in
accordance with Section 5.14 and 12.2. In the calendar year in which the
Effective Date occurs, Employees who are offered and accept employment with BUC
shall be eligible to earn the annual vacation amount Employees would be eligible
to earn as employees of BUC or a BUC Subsidiary, without giving credit for the
Employees length of service with Texas Central. In subsequent calendar years,
Employees will be eligible to earn vacation days according to the schedule
specified in BUC's vacation policy.
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Section 11.4 EMPLOYMENT AGREEMENTS. The parties acknowledge that, prior to
or contemporaneous with the execution and delivery of this Agreement, the
management personnel of the Texas Central Bank listed on SCHEDULE 11.4 each have
executed on the date hereof an Employment Agreement and Agreement Not to Compete
in the form attached hereto as EXHIBIT J (each, an "Employment Agreement"), with
BUC or one of the BUC Subsidiaries, which shall become effective on the Closing
Date.
ARTICLE XII.
MISCELLANEOUS
Section 12.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Notwithstanding
the indemnities set forth in Sections 4.2 and 5.3 of this Agreement, the
representations, warranties, covenants and indemnities of BUC and Texas Central
contained in this Agreement shall not survive the Effective Date.
Section 12.2 EXPENSES. Whether or not the transactions provided for herein
are consummated, each party to this Agreement will pay its respective expenses
incurred in connection with the preparation and performance of its obligations
under this Agreement. Except as to a fee to be paid by Texas Central and
expensed and fully accrued on its books prior to the Effective Date to SAMCO,
not to exceed $500,000 which will be paid by Texas Central but will not be
deducted from the Merger Consideration referenced Section 1.6, each party agrees
to indemnify the other parties against any cost, expense or liability (including
reasonable attorney's fees) in respect of any claim made by any party for a
broker's or finder's fee in connection with this transaction other than one
based on communications between the party and the claimant seeking
indemnification. BUC and Texas Central further agree that, except for the fee to
be paid by Texas Central to SAMCO, all legal, accounting and other fees and
expenses incurred by Texas Central in connection with this Agreement in excess
of $100,000 will be deducted from the total Merger Consideration to be paid by
BUC under Section 1.6, above. All such legal, accounting or other fees and
expenses will be expensed and fully accrued on the books of Texas Central prior
to the Effective Date. BUC and Texas Central also agree that any fees, expenses
and payments associated with the funding or payment of the bonuses, incentive
compensation plans and vacation pay required by Sections 5.13 and 5.14 will be
the responsibility of Texas Central, will not be deducted from the Merger
Consideration, will not be included in the calculation of fees and expenses in
the previous sentence and will be expensed and fully accrued on the books of
Texas Central and discharged prior to the Effective Date.
Section 12.3 NOTICES. Any notice given hereunder shall be in writing and
shall be delivered in person or mailed by first class mail, postage prepaid or
sent by facsimile, courier or personal delivery to the parties at the following
addresses unless by such notice a different address shall have been designated:
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If to BUC:
Bank United Corp.
3200 Southwest Freeway, Suite 1600
Houston, Texas 77027
P.O. Box 1370
Houston, Texas 77251-1370
Attention: F. William Bonito
Fax: (713) 543-7949
With a copy to:
Bank United Corp.
3200 Southwest Freeway, Suite 1600
Houston, Texas 77027
P.O. Box 1370
Houston, Texas 77251-1370
Attention: Randolph C. Henson
Fax: (713) 543-6469
If to Texas Central:
Texas Central Bancshares, Inc.
8144 Walnut Hill Lane
Dallas, Texas 75231
Attention: Michael Ruff
Fax: (214) 691-8638
With a copy to:
Joseph M. Ford
Ford, Fritz, Byrne & Head, L.L.P.
98 San Jacinto Boulevard, Suite 2000
Austin, Texas 78701-4286
Fax: (512) 477-5267
All notices sent by mail as provided above shall be deemed delivered five (5)
days after deposit in the mail. All notices sent by facsimile or courier as
provided above shall be deemed delivered one day after being sent. All other
notices shall be deemed delivered when actually received. Any party to this
Agreement may change its address for the giving of notice specified above by
giving notice as herein provided.
Section 12.4 CONTROLLING LAW. All questions concerning the validity,
operation and interpretation of this Agreement and the performance of the
obligations imposed upon the parties
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hereunder shall be governed by the laws of the State of Texas and, to the extent
applicable, by the laws of the United States.
Section 12.5 HEADINGS. The table of contents, headings and titles to the
sections of this Agreement are inserted for convenience only and shall not be
deemed a part hereof or affect the construction or interpretation of any
provision hereof.
Section 12.6 MODIFICATIONS OR WAIVER. No termination, cancellation,
modification, amendment, deletion, addition or other change in this Agreement,
or any provision hereof, or waiver of any right or remedy herein provided, shall
be effective for any purpose unless specifically set forth in a writing signed
by the party or parties to be bound thereby. The waiver of any right or remedy
in respect to any occurrence or event on one occasion shall not be deemed a
waiver of such right or remedy in respect to such occurrence or event on any
other occasion.
Section 12.7 SEVERABILITY. Any provision hereof prohibited by or unlawful
or unenforceable under any applicable law or any jurisdiction shall as to such
jurisdiction be ineffective, without affecting any other provision of this
Agreement, or shall be deemed to be severed or modified to conform with such
law, and the remaining provisions of this Agreement shall remain in force,
provided that the purpose of the Agreement can be effected. To the full extent,
however, that the provisions of such applicable law may be waived, they are
hereby waived, to the end that this Agreement be deemed to be a valid and
binding agreement enforceable in accordance with its terms.
Section 12.8 CONSOLIDATION OF AGREEMENTS. All understandings and
agreements heretofore made between the parties hereto are merged in this
Agreement which (together with any agreements executed by the parties hereto
contemporaneously with or, if contemplated hereby, subsequent to the execution
of this Agreement) shall be the sole expression of the agreement of the parties
respecting the Acquisition Merger. Each party to this agreement acknowledges
that, in executing and delivering this Agreement, it has relied only on the
written representations, warranties and promises of the other parties hereto
that are contained herein or in the other agreements executed by the parties
contemporaneously with or, if contemplated hereby, subsequent to the execution
of this Agreement, and has not relied on the oral statements of any other party
or its representatives.
Section 12.9 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which shall
be deemed to constitute one and the same instrument.
Section 12.10 ASSIGNMENT; BINDING ON SUCCESSORS. Except as otherwise
provided herein, this Agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto and their respective heirs, executors, trustees,
administrators, guardians, successors and permitted assigns, but shall not be
assigned by any party without the prior written consent of the other parties.
Section 12.11 GENDER; PLURALS. Any pronoun used herein shall refer to any
gender, either masculine, feminine or neuter, as the context requires. Defined
terms may be used in either the
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<PAGE>
singular or plural form as indicated by the applicable syntax, but the meaning
of which shall not be affected thereby.
Section 12.12 DISCLOSURES. Any disclosure made in any document delivered
pursuant to this Agreement or referred to or described in writing in any section
of this Agreement or any schedule attached hereto shall be deemed to be
disclosure for purposes of any section herein or schedule hereto.
Section 12.13 PUBLICITY. Subject to written advice of counsel with respect
to legal requirements relating to public disclosure of matters related to the
matters contemplated by this Agreement, the timing and content of any
announcements, press releases or other public statements (whether written or
oral) concerning this Agreement or the Acquisition Merger will occur upon, and
be determined by, the mutual consent of BUC and Texas Central; provided,
however, that a mutually agreed release regarding the Acquisition Agreement
shall be made promptly upon the execution of this Agreement.
Section 12.14 NO THIRD PARTY BENEFICIARIES. Nothing contained in this
Agreement, express or implied, is intended to confer upon any persons, other
than the parties hereto or their respective successors, any rights, remedies,
obligations, or liabilities under or by reason of this Agreement.
Section 12.15 INTERPRETATION; EFFECT. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall be to a
Section of, or Exhibit or Schedule to, this Agreement unless otherwise
indicated. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". No provision of this Agreement shall be construed to require any
party hereto or their respective affiliates to take any action which would
violate applicable law, (whether statutory or common law), rule or regulation.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
BANK UNITED CORP.
/s/ BARRY C. BURKHOLDER
By: BARRY C. BURKHOLDER
Its: PRESIDENT AND CHIEF EXECUTIVE OFFICER
ATTEST:
By: /s/ RANDOLPH C. HENSON
Randolph C. Henson
BUC ACQUISITION CORPORATION II
/s/ BARRY C. BURKHOLDER
By: BARRY C. BURKHOLDER
Its: PRESIDENT AND CHIEF EXECUTIVE OFFICER
ATTEST:
By: /s/ RANDOLPH C. HENSON
Randolph C. Henson
TEXAS CENTRAL BANCSHARES, INC.
/s/ MICHAEL A.RUFF
By: MICHAEL A. RUFF
Its: CHAIRMAN
ATTEST:
By: /s/ RANDOLPH C. HENSON
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EXHIBIT 5.1
[BANK UNITED CORP. LETTERHEAD]
June 16, 1999
Bank United Corp.
3200 Southwest Freeway
Suite 2600
Houston, Texas 77027
Ladies and Gentlemen:
I am General Counsel of Bank United Corp., a Delaware corporation (the
"Company"). The Company proposes to offer up to 710,000 shares of its Class A
Common Stock, par value $.01 per share (the "Common Stock"), to the shareholders
of Texas Central Bancshares, Inc. ("TCBI") in connection with the merger of BUC
Acquisition Corporation II, a wholly owned subsidiary of the Company ("Newco"),
with and into TCBI pursuant to the terms of an Agreement and Plan of
Reorganization dated as of March 23, 1999 by and among the Company, Newco, and
TCBI (the "Merger Agreement"). The Company has filed a Registration Statement on
Form S-4 ("Registration Statement") with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, with respect to the Common Stock
to be issued pursuant to the Merger Agreement.
As General Counsel of the Company, I am familiar with the facts relating to this
opinion and have made such investigations of law as I have deemed necessary and
relevant as a basis hereof. I have assumed the genuineness of all signatures,
the authenticity of all documents, certificates and records submitted to me as
originals, the conformity to original documents, certificates and records of all
documents, certificates and records submitted to me as copies, and the
truthfulness of all statements of fact contained therein. Based on the
foregoing, and subject to the limitations set forth herein, and having due
regard for such legal considerations as I deem relevant, I am of the opinion
that, upon issuance pursuant to the terms of the Merger Agreement, the Common
Stock will be legally issued, fully paid and non-assessable. The foregoing
opinion is based on and is limited to the corporate laws of the State of
Delaware and the relevant laws of the United States of America, and I render no
opinion with respect to the laws of any other jurisdiction.
I hereby consent to the filing of this opinion with the Securities and Exchange
Commission as an exhibit to the Registration Statement and to the use of my name
therein.
Very truly yours,
BANK UNITED CORP.
/s/ Jonathon K. Hefron
Jonathon K. Heffron
General Counsel
EXHIBIT 15.1
Bank United Corp.
3200 Southwest Freeway, Suite 2600
Houston, Texas
We have made a review, in accordance with standards established by the
American Institute of Certified Public Accountants, of the unaudited interim
financial information of Bank United Corp. and subsidiaries for the periods
ended March 31, 1999 and 1998 and December 31, 1998 and 1997, as indicated in
our reports dated April 27, 1999 and January 22, 1999, respectively; because we
did not perform an audit, we expressed no opinion on that information.
We are aware that our reports referred to above, which were included in
your Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999 and
December 31, 1998, are being used in this Registration Statement.
We also are aware that the aforementioned reports, pursuant to Rule 436(c)
under the Securities Act of 1933, are not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
Houston, Texas
June 17, 1999
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of Bank United Corp. on Form S-4 of our report dated October 21, 1998,
appearing in the Annual Report on Form 10-K of Bank United Corp. for the year
ended September 30, 1998.
We also consent to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Houston, Texas
June 17, 1999
EXHIBIT 23.2
[Letterhead of Payne, Faulkner, Smith & Jones, P.C.]
The Board of Directors
Texas Central Bancshares, Inc.
We consent to the use of our report included herein and to the reference
to our firm under the heading "Experts" in the prospectus.
Payne, Faulkner, Smith & Jones, P.C.
Dallas, Texas
June 15, 1999
EXHIBIT 23.3
[Letterhead of Fisk & Robinson, P.C.]
We consent to the use of our report dated April 18, 1997, included in the Proxy
Statement of Texas Central Bancshares, Inc. which is made a part of the
Registration Statement (Form S-4) and Prospectus of Bank United Corp. dated June
18, 1999, and to the reference to our firm under the heading "Experts" in the
prospectus.
/s/ FISK & ROBINSON, P.C.
Fisk & Robinson, P.C.
June 18, 1999
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed
registration under the Securities Act of 1933, as amended (the "Securities
Act"), by Bank United Corp., a Delaware corporation (the "Company"), of shares
of its Class A Common Stock, par value $0.01 per share, the undersigned hereby
makes, constitutes and appoints each of Barry C. Burkholder and Jonathon K.
Heffron, with full power to act without the other, the undersigned's true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for the undersigned and on the undersigned's behalf and in the
undersigned's name, place and stead, in any and all capacities, to sign a
Registration Statement on Form S-4 relating to such securities and any
amendments or post-effective amendments thereto, and any subsequent registration
statement filed by the Company pursuant to Rule 462 of the Securities Act, and
to file same (with all exhibits thereto and other documents in connection
therewith) with the Securities and Exchange Commission and to sign and file all
documents required to be signed and filed with respect thereto with any
regulatory authority, granting unto said attorney full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same as fully to all intents
and purposes as the undersigned might or could do if personally present, hereby
ratifying and confirming all that said attorney-in-fact or his substitute may do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
16th day of June, 1999.
/s/ LEWIS S. RANIERI
Lewis S. Ranieri
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed
registration under the Securities Act of 1933, as amended (the "Securities
Act"), by Bank United Corp., a Delaware corporation (the "Company"), of shares
of its Class A Common Stock, par value $0.01 per share, the undersigned hereby
makes, constitutes and appoints each of Barry C. Burkholder and Jonathon K.
Heffron, with full power to act without the other, the undersigned's true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for the undersigned and on the undersigned's behalf and in the
undersigned's name, place and stead, in any and all capacities, to sign a
Registration Statement on Form S-4 relating to such securities and any
amendments or post-effective amendments thereto, and any subsequent registration
statement filed by the Company pursuant to Rule 462 of the Securities Act, and
to file same (with all exhibits thereto and other documents in connection
therewith) with the Securities and Exchange Commission and to sign and file all
documents required to be signed and filed with respect thereto with any
regulatory authority, granting unto said attorney full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same as fully to all intents
and purposes as the undersigned might or could do if personally present, hereby
ratifying and confirming all that said attorney-in-fact or his substitute may do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
18th day of June, 1999.
/s/ LAWRENCE CHIMERINE
Lawrence Chimerine
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed
registration under the Securities Act of 1933, as amended (the "Securities
Act"), by Bank United Corp., a Delaware corporation (the "Company"), of shares
of its Class A Common Stock, par value $0.01 per share, the undersigned hereby
makes, constitutes and appoints each of Barry C. Burkholder and Jonathon K.
Heffron, with full power to act without the other, the undersigned's true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for the undersigned and on the undersigned's behalf and in the
undersigned's name, place and stead, in any and all capacities, to sign a
Registration Statement on Form S-4 relating to such securities and any
amendments or post-effective amendments thereto, and any subsequent registration
statement filed by the Company pursuant to Rule 462 of the Securities Act, and
to file same (with all exhibits thereto and other documents in connection
therewith) with the Securities and Exchange Commission and to sign and file all
documents required to be signed and filed with respect thereto with any
regulatory authority, granting unto said attorney full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same as fully to all intents
and purposes as the undersigned might or could do if personally present, hereby
ratifying and confirming all that said attorney-in-fact or his substitute may do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
18th day of June, 1999.
/s/ DAVID M. GOLUSH
David M. Golush
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed
registration under the Securities Act of 1933, as amended (the "Securities
Act"), by Bank United Corp., a Delaware corporation (the "Company"), of shares
of its Class A Common Stock, par value $0.01 per share, the undersigned hereby
makes, constitutes and appoints each of Barry C. Burkholder and Jonathon K.
Heffron, with full power to act without the other, the undersigned's true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for the undersigned and on the undersigned's behalf and in the
undersigned's name, place and stead, in any and all capacities, to sign a
Registration Statement on Form S-4 relating to such securities and any
amendments or post-effective amendments thereto, and any subsequent registration
statement filed by the Company pursuant to Rule 462 of the Securities Act, and
to file same (with all exhibits thereto and other documents in connection
therewith) with the Securities and Exchange Commission and to sign and file all
documents required to be signed and filed with respect thereto with any
regulatory authority, granting unto said attorney full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same as fully to all intents
and purposes as the undersigned might or could do if personally present, hereby
ratifying and confirming all that said attorney-in-fact or his substitute may do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
15th day of June, 1999.
/s/ PAUL M. HORVITZ
Paul M. Horvitz
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed
registration under the Securities Act of 1933, as amended (the "Securities
Act"), by Bank United Corp., a Delaware corporation (the "Company"), of shares
of its Class A Common Stock, par value $0.01 per share, the undersigned hereby
makes, constitutes and appoints each of Barry C. Burkholder and Jonathon K.
Heffron, with full power to act without the other, the undersigned's true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for the undersigned and on the undersigned's behalf and in the
undersigned's name, place and stead, in any and all capacities, to sign a
Registration Statement on Form S-4 relating to such securities and any
amendments or post-effective amendments thereto, and any subsequent registration
statement filed by the Company pursuant to Rule 462 of the Securities Act, and
to file same (with all exhibits thereto and other documents in connection
therewith) with the Securities and Exchange Commission and to sign and file all
documents required to be signed and filed with respect thereto with any
regulatory authority, granting unto said attorney full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same as fully to all intents
and purposes as the undersigned might or could do if personally present, hereby
ratifying and confirming all that said attorney-in-fact or his substitute may do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
18th day of June, 1999.
/s/ ANTHONY J. NOCELLA
Anthony J. Nocella
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed
registration under the Securities Act of 1933, as amended (the "Securities
Act"), by Bank United Corp., a Delaware corporation (the "Company"), of shares
of its Class A Common Stock, par value $0.01 per share, the undersigned hereby
makes, constitutes and appoints each of Barry C. Burkholder and Jonathon K.
Heffron, with full power to act without the other, the undersigned's true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for the undersigned and on the undersigned's behalf and in the
undersigned's name, place and stead, in any and all capacities, to sign a
Registration Statement on Form S-4 relating to such securities and any
amendments or post-effective amendments thereto, and any subsequent registration
statement filed by the Company pursuant to Rule 462 of the Securities Act, and
to file same (with all exhibits thereto and other documents in connection
therewith) with the Securities and Exchange Commission and to sign and file all
documents required to be signed and filed with respect thereto with any
regulatory authority, granting unto said attorney full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same as fully to all intents
and purposes as the undersigned might or could do if personally present, hereby
ratifying and confirming all that said attorney-in-fact or his substitute may do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
16th day of June, 1999.
/s/ SALVATORE A. RANIERI
Salvatore A. Ranieri
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed
registration under the Securities Act of 1933, as amended (the "Securities
Act"), by Bank United Corp., a Delaware corporation (the "Company"), of shares
of its Class A Common Stock, par value $0.01 per share, the undersigned hereby
makes, constitutes and appoints each of Barry C. Burkholder and Jonathon K.
Heffron, with full power to act without the other, the undersigned's true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for the undersigned and on the undersigned's behalf and in the
undersigned's name, place and stead, in any and all capacities, to sign a
Registration Statement on Form S-4 relating to such securities and any
amendments or post-effective amendments thereto, and any subsequent registration
statement filed by the Company pursuant to Rule 462 of the Securities Act, and
to file same (with all exhibits thereto and other documents in connection
therewith) with the Securities and Exchange Commission and to sign and file all
documents required to be signed and filed with respect thereto with any
regulatory authority, granting unto said attorney full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same as fully to all intents
and purposes as the undersigned might or could do if personally present, hereby
ratifying and confirming all that said attorney-in-fact or his substitute may do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
14th day of June, 1999.
/s/ SCOTT A. SHAY
Scott A. Shay
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that in connection with the proposed
registration under the Securities Act of 1933, as amended (the "Securities
Act"), by Bank United Corp., a Delaware corporation (the "Company"), of shares
of its Class A Common Stock, par value $0.01 per share, the undersigned hereby
makes, constitutes and appoints each of Barry C. Burkholder and Jonathon K.
Heffron, with full power to act without the other, the undersigned's true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for the undersigned and on the undersigned's behalf and in the
undersigned's name, place and stead, in any and all capacities, to sign a
Registration Statement on Form S-4 relating to such securities and any
amendments or post-effective amendments thereto, and any subsequent registration
statement filed by the Company pursuant to Rule 462 of the Securities Act, and
to file same (with all exhibits thereto and other documents in connection
therewith) with the Securities and Exchange Commission and to sign and file all
documents required to be signed and filed with respect thereto with any
regulatory authority, granting unto said attorney full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same as fully to all intents
and purposes as the undersigned might or could do if personally present, hereby
ratifying and confirming all that said attorney-in-fact or his substitute may do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney this
15th day of June, 1999.
/s/ MICHAEL S. STEVENS
Michael S. Stevens
EXHIBIT 99.1
------------------------------
PROXY
TEXAS CENTRAL BANCSHARES, INC.
DALLAS, TEXAS
SPECIAL MEETING OF SHAREHOLDERS
JULY 30, 1999
------------------------------
The undersigned shareholder of Texas Central Bancshares, Inc. (the
"Company") hereby constitutes and appoints ___________________ and
___________________ each with full power of substitution, as proxy or proxies of
the undersigned, to vote the number of shares of common stock of the Company
which the undersigned would be entitled to vote if personally present at the
Special Meeting of Shareholders of the Company to be held at 3:00 p.m., local
time, on Friday, July 30, 1999, and at any adjournments thereof (the "Meeting"),
with respect to the proposals described in the Proxy Statement/Prospectus and
the Notice of Special Meeting of Shareholders both dated _______________, 1999,
timely receipt of which is acknowledged, in the manner specified below.
1. Approval of the acquisition of the Company by Bank United Corp.
pursuant to an Agreement and Plan of Reorganization dated as of March 23, 1999
among Bank United Corp., BUC Acquisition Corporation II and the Company as more
specifically described in the Proxy Statement/Prospectus.
[ ] For [ ] Against [ ] Abstain
2. In their sole discretion on such other matters as may properly come
before the Meeting or any adjournments thereof.
[ ] Authorized [ ] Withhold Authority
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this Proxy will
be voted "FOR" Proposal 1 and with discretionary authority on all other matters
that may properly come before the Meeting or any adjournments thereof.
Please date and sign exactly as your name appears on the certificates
representing your shares of common stock of the Company. If shares are held
jointly, each shareholder must sign. When signing as attorney, trustee or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
________________________________
(Signature of Shareholder)
________________________________
(Signature of Shareholder)
Dated ________________, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS AND MAY BE
REVOKED BY THE SHAREHOLDER PRIOR TO ITS EXERCISE.
EXHIBIT 99.2
STOCK OPTION AGREEMENT
This Stock Option Agreement dated as of March 23, 1999 (the "Agreement"),
by and between Texas Central Bancshares, Inc., a Texas corporation ("Issuer"),
and Bank United Corp., a Delaware corporation ("Grantee").
R E C I T A L S
A. Grantee, BUC Acquisition Corp. II, a wholly owned subsidiary of Grantee
("Sub"), and Issuer have entered into an Agreement and Plan of Reorganization
dated as of the date hereof (the "Reorganization Agreement"; capitalized terms
used but not defined herein have the meanings set forth in the Reorganization
Agreement) providing for, among other things, the merger of Sub with and into
Issuer, with Issuer as the surviving corporation in the merger and becoming a
wholly owned subsidiary of Grantee (the "Acquisition Merger"); and
B. As a condition and inducement to Grantee's willingness to enter into
the Reorganization Agreement, Grantee has requested that Issuer agree, and
Issuer has agreed, to grant Grantee the Option (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Issuer
and Grantee agree as follows:
1. GRANT OF OPTION. Subject to the terms and conditions set forth herein,
Issuer hereby grants to Grantee an irrevocable option (the "Option") to purchase
up to 60,464 (as adjusted as set forth herein) shares (the "Option Shares") of
common stock, par value $1.00 per share ("Issuer Common Stock"), of Issuer at a
purchase price of $49.83 (as adjusted as set forth herein) per Option Share (the
"Purchase Price"); PROVIDED, HOWEVER, that in no event shall the number of
Option Shares for which the Option is exercisable exceed 19.9% of the issued and
outstanding shares of Issuer Common Stock excluding, for purposes of this
calculation, any shares subject to or issued pursuant to the Option.
2. EXERCISE OF OPTION. (a) Subject to the provisions of Section 2(f),
Grantee may exercise the Option, with respect to any or all of the Option
Shares, at any time or from time to time, but only following the occurrence of a
Purchase Event, as defined below; PROVIDED, HOWEVER, that (i) except as provided
in the last sentence of this Section 2(a), the Option will terminate and be of
no further force and effect upon the earliest to occur of (A) the Effective
Time, (B) fifteen (15) business days after the first occurrence of a Purchase
Event, and (C) termination of the Reorganization Agreement in accordance with
its terms prior to the occurrence of a Purchase Event, and (ii) any purchase of
Option Shares upon exercise of the Option will be subject to compliance with the
applicable regulations of the Federal Reserve Board, the Office of Thrift
Supervision and other agencies having jurisdiction over the Issuer's sale, and
the Grantee's acquisition, of the Option Shares, and the obtaining or making of
any consents, approvals, orders, notifications, filings or authorizations, the
failure of which to have obtained or made would have the effect of making the
issuance of Option Shares to Grantee illegal (the "Regulatory Approvals").
Notwithstanding the
<PAGE>
termination of the Option, Grantee will be entitled to purchase the Option
Shares or exercise its Cash-Out Right (as defined below) if it has given notice
of same in accordance with the terms hereof prior to the termination of the
Option and the termination of the Option will not affect any rights hereunder or
under the Reorganization Agreement which by their terms do not terminate or
expire prior to or as of such termination.
(b) As used herein, a "Purchase Event" means any of the following
events:
(i) Without Grantee's prior written consent, Issuer shall have
authorized, recommended, publicly proposed or publicly announced an
intention to authorize, recommend or propose, or entered into an agreement
with any person (other than Grantee or any subsidiary of Grantee) to
effect an Acquisition Transaction (as defined below). As used herein, the
term "Acquisition Transaction" shall mean (A) a merger, consolidation,
statutory share exchange or similar transaction involving Issuer or any of
its subsidiaries (other than transactions solely between Issuer's
subsidiaries), (B) the disposition, by sale, lease, exchange or otherwise,
of assets of Issuer or any of its subsidiaries representing in either case
10% or more of the consolidated assets of Issuer and its subsidiaries, or
(C) the issuance, sale or other disposition of (including by way of
merger, consolidation, share exchange or any similar transaction)
securities representing 20% or more of the voting power of Issuer or any
of its subsidiaries; or
(ii) any person (other than Grantee or any subsidiary of
Grantee) shall have acquired beneficial ownership (as such term is defined
in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) of, or the right to acquire beneficial
ownership of, or any "group" (as such term is defined under the Exchange
Act) shall have been formed which beneficially owns or has the right to
acquire beneficial ownership of, 30% or more (or, if such person or group
is the beneficial owner of 30% or more on the date hereof, such person or
group acquires an additional 5% or more) of the voting power of Issuer or
any of its subsidiaries ;PROVIDED, that the acquisition of beneficial
ownership, or a right to acquire beneficial ownership, by any person or
group (other than Grantee or a subsidiary of Grantee) of 30% or more (or,
if such person or group is the beneficial owner of 30% or more on the date
hereof, such person or group shall acquire an additional 5% or more) of
the voting power of the Issuer or any of its subsidiaries that results
from the acquisition of such voting power by such person or group after
the date hereof pursuant to the last will or laws of intestate succession
of a shareholder of Issuer shall not be deemed a Purchase Event hereunder
so long as, after giving effect to such acquisition, at least two-thirds
of the voting power of the Issuer remains subject to the several Voting
Agreements and Irrevocable Proxies of even date herewith by and between
certain shareholders of the Issuer and the Grantee.
(c) As used herein, a "Preliminary Purchase Event" means any of the
following events:
-2-
<PAGE>
(i) any person (other than Grantee or any subsidiary of
Grantee) shall have commenced (as such term is defined in Rule 14d-2 under
the Exchange Act) or shall have filed a registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to
a tender offer or exchange offer to purchase any shares of Issuer Common
Stock such that, upon consummation of such offer, such person would
beneficially own 30% or more of the then outstanding shares of Issuer
Common Stock (such an offer being referred to herein as a "Tender Offer"
or an "Exchange Offer," respectively); or
(ii) the holders of Issuer Common Stock shall not have
approved the Reorganization Agreement at the meeting of such shareholders
held for the purpose of voting on the Reorganization Agreement, or such
meeting shall not have been held or shall have been canceled prior to
termination of the Reorganization Agreement, or the Issuer's Board of
Directors shall have withdrawn or modified in a manner adverse to Grantee
the recommendation of Issuer's Board of Directors with respect to the
Reorganization Agreement, in each case, after it shall have been publicly
announced that any person (other than Grantee or any subsidiary of
Grantee) shall have (A) made, or disclosed an intention to make, a
proposal to engage in an Acquisition Transaction, (B) commenced a Tender
Offer or filed a registration statement under the Securities Act with
respect to an Exchange Offer or (C) filed an application (or given a
notice), whether in draft or final form, under any applicable law or
regulation, including without limitation, the Bank Holding Company Act of
1956, the Bank Merger Act, the Change in Bank Control Act of 1978 or the
savings and loan holding company provisions of the Home Owner's Loan Act
for approval to engage in an Acquisition Transaction.
As used in this Agreement, the term "person" shall have the meaning specified in
Section 3(a)(9) and 13(d)(3) of the Exchange Act.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Preliminary Purchase Event or Purchase Event, it being
understood that the giving of such notice by Issuer shall not be a condition to
the right of Grantee to exercise the Option.
(e) In the event that Grantee is entitled to and wishes to exercise
the Option, it will send to Issuer a written notice (an "Exercise Notice"; the
date of which being herein referred to as the "Notice Date") to that effect and
which Exercise Notice also specifies the number of Option Shares, if any,
Grantee wishes to purchase pursuant to this Section 2(b), the number of Option
Shares, if any, with respect to which Grantee wishes to exercise its Cash-Out
Right (as defined herein) pursuant to Section 6(c), the denominations of the
certificate or certificates evidencing the Option Shares which Grantee wishes to
purchase pursuant to this Section 2(b) and a date (an "Option Closing Date"),
subject to the following sentence, not earlier than seven business days nor
later than 20 business days from the Notice Date for the closing of such
purchase (an "Option Closing"). Any Option Closing will be at an agreed location
and time in Houston, Texas on the applicable Option Closing Date or at such
later date as may be necessary so as to comply with the first sentence of
Section 2(a).
-3-
<PAGE>
(f) Notwithstanding anything to the contrary contained herein, any
exercise of the Option and purchase of Option Shares shall be subject to
compliance with applicable laws and regulations, which may prohibit the purchase
of all the Option Shares specified in the Exercise Notice without first
obtaining or making the required Regulatory Approvals. In such event, if the
Option is otherwise exercisable and Grantee wishes to exercise the Option, the
Option may be exercised in accordance with Section 2(b) and Grantee shall
acquire the maximum number of Option Shares specified in the Exercise Notice
that Grantee is then permitted to acquire under the applicable laws and
regulations, and if Grantee thereafter obtains the Regulatory Approvals to
acquire the remaining balance of the Option Shares specified in the Exercise
Notice, then Grantee shall be entitled to acquire such remaining balance. Issuer
agrees to use its reasonable efforts to assist Grantee in obtaining the
Regulatory Approvals.
In the event (i) Grantee receives official notice that a Regulatory
Approval required for the purchase of any Option Shares will not be issued or
granted or (ii) such Regulatory Approval has not been issued or granted within
six months of the date of the Exercise Notice, Grantee shall have the right to
exercise its Cash-Out Right pursuant to Section 6(c) with respect to the Option
Shares for which such Regulatory Approval will not be issued or granted or has
not been issued or granted.
3. PAYMENT AND DELIVERY OF CERTIFICATES. (a) At any Option Closing,
Grantee will pay to Issuer in immediately available funds by wire transfer to a
bank account designated in writing by Issuer an amount equal to the Purchase
Price multiplied by the number of Option Shares to be purchased at such Option
Closing plus the amount of any transfer, stamp or other similar taxes or charges
imposed in connection therewith.
(b) At any Option Closing, simultaneously with the delivery of
immediately available funds as provided in Section 3(a), Issuer will deliver to
Grantee a certificate or certificates representing the Option Shares to be
purchased at such Option Closing, which Option Shares will be free and clear of
all liens, claims, charges and encumbrances of any kind whatsoever. If at the
time of issuance of Option Shares pursuant to an exercise of the Option
hereunder, Issuer shall have issued any securities similar to rights under a
stockholder rights plan, then each Option Share issued pursuant to such exercise
will also represent such a corresponding right with terms substantially the same
as and at least as favorable to Grantee as are provided under any such
stockholder rights plan then in effect.
(c) Certificates for the Option Shares delivered at an Option
Closing will have typed or printed thereon a restrictive legend which will read
substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD
ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER AS SET FORTH IN THE STOCK OPTION AGREEMENT DATED AS OF MARCH 23,
1999, A COPY OF WHICH MAY BE OBTAINED FROM
-4-
<PAGE>
THE SECRETARY OF TEXAS CENTRAL BANCSHARES, INC. AT ITS PRINCIPAL EXECUTIVE
OFFICES."
It is understood and agreed that (i) the reference to restrictions arising under
the Securities Act in the above legend will be removed by delivery of substitute
certificate(s) without such reference if such Option Shares have been registered
pursuant to the Securities Act, such Option Shares have been sold in reliance on
and in accordance with Rule 144 under the Securities Act or Grantee has
delivered to Issuer a copy of a letter from the staff of the SEC, or an opinion
of counsel in form and substance reasonably satisfactory to Issuer and its
counsel, to the effect that such legend is not required for purposes of the
Securities Act and (ii) the reference to restrictions pursuant to this Agreement
in the above legend will be removed by delivery of substitute certificate(s)
without such reference if the Option Shares evidenced by certificate(s)
containing such reference have been sold or transferred in compliance with the
provisions of this Agreement under circumstances that do not require the
retention of such reference.
4. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby represents and
warrants to Grantee that (i) Issuer has taken all necessary corporate and other
action to authorize and reserve and, subject to the receipt of any required
Regulatory Approvals, to permit it to issue the Option Shares; (ii) at all times
from the date hereof until the obligation to deliver Option Shares upon the
exercise of the Option terminates, Issuer shall have reserved for issuance, upon
exercise of the Option, shares of Issuer Common Stock necessary for Grantee to
exercise the Option, and Issuer will take all necessary corporate action to
authorize and reserve for issuance all additional shares of Issuer Common Stock
or other securities which may be issued pursuant to Section 6 upon exercise of
the Option; and (iii) the shares of Issuer Common Stock to be issued upon due
exercise of the Option, including all additional shares of Issuer Common Stock
or other securities which may be issuable upon exercise of the Option or any
other securities which may be issued pursuant to Section 6, upon issuance
pursuant hereto, will be duly and validly issued, fully paid and nonassessable,
and will be delivered free and clear of all liens, claims, charges and
encumbrances of any kind or nature whatsoever, including without limitation any
preemptive rights of any stockholder of Issuer.
5. REPRESENTATION AND WARRANTY OF GRANTEE. Grantee hereby represents and
warrants to Issuer that any Option Shares or other securities acquired by
Grantee upon exercise of the Option will be acquired for investment and will not
be transferred or otherwise disposed of except in a transaction registered, or
exempt from registration, under the Securities Act.
6. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC. (a) In the event of any
change in Issuer Common Stock by reason of a stock dividend, split-up, merger,
recapitalization, combination, exchange of shares, or similar transaction, the
type and number of shares or securities subject to the Option, and the Purchase
Price thereof, will be adjusted appropriately, and proper provision will be made
in the agreements governing such transaction, so that Grantee will receive upon
exercise of the Option the number and class of shares or other securities or
property that Grantee would have received in respect of Issuer Common Stock if
the Option had been exercised immediately prior to such event or the record date
therefor, as applicable. Subject to Section 1, and without limiting the parties'
relative rights and obligations under the Reorganization Agreement, if any
additional shares
-5-
<PAGE>
of Issuer Common Stock are issued after the date of this Agreement (other than
pursuant to an event described in the first sentence of this Section 6(a)), the
number of shares of Issuer Common Stock subject to the Option will be adjusted
so that, after such issuance, it equals 19.9% of the number of shares of Issuer
Common Stock then issued and outstanding, without giving effect to any shares
subject to or issued pursuant to the Option.
(b) Without limiting the parties' relative rights and obligations
under the Reorganization Agreement, in the event that Issuer enters into an
agreement (i) to consolidate with or merge into any person, other than Grantee
or one of its subsidiaries, and Issuer will not be the continuing or surviving
corporation in such consolidation or merger, (ii) to permit any person, other
than Grantee or one of its subsidiaries, to merge into Issuer and Issuer will be
the continuing or surviving corporation, but in connection with such merger, the
shares of Issuer Common Stock outstanding immediately prior to the consummation
of such merger will be changed into or exchanged for stock or other securities
of Issuer or any other person or cash or any other property, or the shares of
Issuer Common Stock outstanding immediately prior to the consummation of such
merger will, after such merger, represent less than 50% of the outstanding
voting securities of the merged company, or (iii) to sell or otherwise transfer
all or substantially all of its assets to any person, other than Grantee or one
of its subsidiaries, then, and in each such case, the agreement governing such
transaction will make proper provision so that the Option will, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option with identical terms
appropriately adjusted to acquire the number and class of shares or other
securities or property that Grantee would have received in respect of Issuer
Common Stock if the Option had been exercised immediately prior to such
consolidation, merger, sale, or transfer, or the record date therefor, as
applicable and make any other necessary adjustments.
(c) If, at any time during the period commencing on a Purchase Event
and ending on the termination of the Option in accordance with Section 2,
Grantee sends to Issuer an Exercise Notice indicating Grantee's election to
exercise its right (the "Cash-Out Right") pursuant to this Section 6(c), then
Issuer shall pay to Grantee, on the Option Closing Date, in exchange for the
cancellation of the Option with respect to such number of Option Shares as
Grantee specifies in the Exercise Notice: (i) if the Purchase Event is one
specified in Section 2(b)(i)(A) or Section 2(b)(i)(B), an amount in cash equal
to the product obtained by multiplying the number of Option Shares specified in
the Exercise Notice by the difference between (A) the highest price per share
paid or to be paid for the Issuer Common Stock in the Purchase Event and (B) the
Purchase Price; or (ii) in the case of any other Purchase Event, an amount in
cash equal to the number of Option Shares specified in the Exercise Notice
multiplied by the difference between (Y) the product obtained by multiplying the
number of shares of BUC common stock into which a share of TCBI common stock
would have been converted in the merger by the average of the daily reported
closing sales prices for a share of the Class A Common Stock of Grantee in The
NASDAQ Stock Market National Market for the twenty successive trading days
ending on the trading day that is one trading day prior to the date of the
Exercise Notice and (Z) the Exercise Price. Notwithstanding the termination of
the Option, Grantee will be entitled to exercise its rights under this Section
6(c) if it has exercised such rights in accordance with the terms hereof prior
to the termination of the Option.
-6-
<PAGE>
7. LISTING. If Issuer Common Stock or any other securities to be acquired
upon exercise of the Option are then listed on any national securities exchange
or interdealer securities quotation system), Issuer, upon the request of
Grantee, will promptly file an application to list the shares of Issuer Common
Stock or other securities to be acquired upon exercise of the Option on any such
national securities exchange or interdealer securities quotation system) and
will use reasonable efforts to obtain approval of such listing as promptly as
practicable.
8. LOSS OR MUTILATION. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered will constitute an
additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed, or mutilated shall at any time be
enforceable by anyone.
9. MISCELLANEOUS.
(a) EXPENSES. Each of the parties hereto will bear and pay all costs
and expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants, and counsel.
(b) AMENDMENT. This Agreement may not be amended, except by an
instrument in writing signed on behalf of each of the parties.
(c) EXTENSION; WAIVER. Any agreement on the part of a party to waive
any provision of this Agreement, or to extend the time for performance, will be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise will not constitute a waiver of such rights.
(d) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement
and the Reorganization Agreement (including the documents and instruments
attached thereto as exhibits or schedules or delivered in connection therewith)
(i) constitute the entire agreement, and supersede all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter of this Agreement, and (ii) are not intended to confer upon any
person other than the parties any rights or remedies.
(e) GOVERNING LAW. This Agreement will be governed by, and construed
in accordance with, the laws of the State of Texas, regardless of the laws that
might otherwise govern under applicable principles of conflict of laws thereof.
(f) NOTICES. All notices, requests, claims, demands, and other
communications under this Agreement shall be sent in the manner and to the
addresses set forth in the Reorganization Agreement.
-7-
<PAGE>
(g) ASSIGNMENT. Neither this Agreement, the Option nor any of the
rights, interests, or obligations under this Agreement may be assigned or
delegated, in whole or in part, by operation of law or otherwise, by Issuer or
Grantee without the prior written consent of the other. Any assignment or
delegation in violation of the preceding sentence will be void. Subject to the
first and second sentences of this Section 11(g), this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the parties and their
respective successors and permitted assigns.
(h) FURTHER ASSURANCES. In the event of any exercise of the Option
by Grantee, Issuer and Grantee will execute and deliver all other documents and
instruments and take all other actions that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
(i) ENFORCEMENT. The parties agree that irreparable damage would
occur and that the parties would not have any adequate remedy at law in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties will be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Federal court located in the
State of Texas or in Texas state court, the foregoing being in addition to any
other remedy to which they are entitled at law or in equity. In addition, each
of the parties hereto (i) consents to submit itself to the personal jurisdiction
of any Federal court located in the State of Texas or any Texas state court in
the event any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement, (ii) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court, and (iii) agrees that it will not bring any action relating to this
Agreement or any of the transactions contemplated by this Agreement in any court
other than a Federal court sitting in the State of Texas or a Texas state court.
(j) SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
-8-
<PAGE>
IN WITNESS WHEREOF, Issuer and Grantee have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the day and
year first written above.
TEXAS CENTRAL BANCSHARES, INC.
/s/ MICHAEL A. RUFF
By: MICHAEL A. RUFF
Its: CHAIRMAN
BANK UNITED CORP.
/s/ BARRY C. BURKHOLDER
By: BARRY C. BURKHOLDER
Its: PRESIDENT AND CHIEF EXECUTIVE OFFICER
-9-
EXHIBIT 99.3
FORM OF VOTING AGREEMENT
AND
IRREVOCABLE PROXY
This Voting Agreement and Irrevocable Proxy dated as of March 23, 1999
(this "Agreement"), is made and entered into by and among Bank United Corp.,
Inc., a Delaware corporation ("BUC"), BUC Acquisition Corp. II, a Texas
corporation and a subsidiary of BUC ("Merger Sub"), and __________________
("Shareholder"), as a shareholder of Texas Central Bancshares, Inc., a Texas
corporation (the "Company").
RECITALS
WHEREAS, concurrently herewith, BUC, Merger Sub and the Company are
entering into an Agreement and Plan of Reorganization (as such agreement may
hereafter be amended from time to time, the "Reorganization Agreement"),
pursuant to which, among other things, Merger Sub will be merged with and into
the Company (the "Merger"); and
WHEREAS, as an inducement and a condition to entering into the
Reorganization Agreement, BUC has required that the Shareholder agree, and the
Shareholder has agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained herein and the benefits to be
received by the parties under the terms of the Reorganization Agreement, the
parties hereto, intending to be legally bound, hereby agree as follows:
AGREEMENTS
1. DEFINITIONS. Capitalized terms used but not defined herein and defined
in the Reorganization Agreement have the respective meanings ascribed to them in
the Reorganization Agreement. In addition, for purposes of this Agreement:
(a) "AFFILIATE" of a specified Person means another Person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with, such specified Person.
(b) "BENEFICIALLY OWN" or "BENEFICIAL OWNERSHIP" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of the
same securities by the same holder, securities Beneficially Owned by a Person
shall include securities Beneficially Owned by all other Persons (who are
Affiliates of such Person excluding officers and directors of the Company) who
together with such Person would constitute
<PAGE>
a "group" within the meaning of Section 13(d)(3) of the Exchange Act and in any
event with respect to the Shareholder shall include Shares held of record by the
Shareholder's spouse and children.
(c) "COMPANY ACQUISITION TRANSACTION" shall mean (i) any merger,
consolidation, statutory share exchange or similar transaction involving the
Company or any of its subsidiaries (other than transactions solely between the
Company's subsidiaries), (ii) the disposition, by sale, lease, exchange or
otherwise, of assets of the Company or any of its subsidiaries representing in
either case 10% or more of the consolidated assets of the Company and its
subsidiaries, or (iii) the issuance, sale or other disposition of (including by
way of merger, consolidation, share exchange or any similar transaction)
securities representing 20% or more of the voting power of the Company or any of
its subsidiaries.
(d) "CONTROL," as used within the definition of Affiliate, shall
mean the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise.
(e) "PERSON" shall mean an individual, corporation, limited
liability company, partnership, joint venture, association, trust,
unincorporated organization or other entity.
(f) "SHARES" shall mean shares of the common stock, $1.00 par value,
of the Company.
(g) "SHAREHOLDER'S SHARES" shall mean all Shares held of record or
Beneficially Owned by the Shareholder, whether currently issued or hereinafter
acquired, and for the purposes of Section 3 of this Agreement shall also
include, without duplication, any securities convertible into, or exercisable or
exchangeable for, Shares, including without limitation any options, warrants or
stock appreciation rights held of record or Beneficially Owned by the
Shareholder.
(h) "TERMINATION DATE" shall mean the date that the Reorganization
Agreement has been terminated.
2. PROVISIONS CONCERNING SHARES.
(a) From and after the date of this Agreement and ending as of the
first to occur of the Effective Time or the Termination Date, at any meeting of
the holders of Shares, however called, or in any other circumstance upon which
the vote, consent or other approval of holders of Shares is sought, the
Shareholder shall vote or cause to be voted (including by written consent, if
applicable) all of the issued and outstanding Shareholder's Shares entitled to
vote thereon, (i) in favor of the Reorganization, the execution and delivery by
the Company of the Reorganization Agreement and the approval of the terms
thereof and each of the other actions contemplated by the Reorganization
Agreement and this Agreement and any actions required in furtherance thereof and
hereof, (ii) against any action or agreement that would result in a breach in
any material respect of any covenant, representation or warranty or any other
material obligation or agreement of the Company under the Reorganization
Agreement or this Agreement and (iii) against the following
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<PAGE>
actions: (A) any Company Acquisition Transaction and (B) to the extent that such
are intended to, or could reasonably be expected to, (1) impede, interfere with,
delay, postpone or materially adversely affect the Merger or the transactions
contemplated by the Reorganization Agreement or this Agreement or (2) implement
or lead to any Company Acquisition Transaction: (w) any change in a majority of
the persons who constitute the board of directors of the Company; (x) any change
in the present capitalization of the Company or any amendment of the Company's
Articles of Incorporation or Bylaws; or (y) any other material change in the
Company's corporate structure or business. In addition to the other covenants
and agreements of the Shareholder provided for elsewhere in this Agreement,
during the above-described period the Shareholder shall not enter into any
agreement or understanding with any Person or entity the effect of which would
be inconsistent with or violate the provisions and agreements contained in this
Section 2.
(b) The Shareholder, with respect to all of the issued and
outstanding Shareholder's Shares entitled to vote, does hereby make, constitute
and appoint BUC, or any nominee of BUC, each with full power of substitution and
resubstitution, from the date hereof to the earlier to occur of the Effective
Time or the Termination Date, as Shareholder's true and lawful attorney and
proxy (the "Proxy"), for and in Shareholder's name, place and stead, to demand
that the Secretary of the Company call a special meeting of the Shareholders of
the Company for the purpose of considering any action related to the
Reorganization Agreement or the Reorganization and to vote such Shareholder's
Shares as its Proxy, at every annual, special or adjourned meeting of the
Shareholders of the Company, including the right to sign its name (as
Shareholder) to any consent, certificate or other document relating to the
Company that the laws of the State of Texas may permit or require, with respect
to any matters as to which the Shareholder is required to vote in accordance
with Section 2(a). The Proxy may not exercise this proxy on any other matter.
The Shareholder may vote the Shareholder's Shares on all such other matters.
THIS PROXY AND POWER OF ATTORNEY IS IRREVOCABLE AND COUPLED WITH AN INTEREST.
The Shareholder represents that any proxies heretofore given in respect of the
Shareholder's Shares are not irrevocable, and that any such proxies are hereby
revoked.
(c) The Shareholder hereby permits BUC and Merger Sub to publish and
disclose in the Registration Statement (including all documents and schedules
filed with the SEC) and in the Proxy Statement its identity and ownership of the
Shareholder's Shares and the nature of its commitments, arrangements and
understandings under this Agreement; PROVIDED, HOWEVER, that the BUC and Merger
Sub shall afford to the Shareholder a reasonable opportunity to review and
comment upon the disclosure regarding the foregoing matters prior to the filing
thereof with the SEC.
3. COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER. The
Shareholder hereby represents and warrants to, and covenants and agrees with,
BUC and Merger Sub as follows:
(a) OWNERSHIP. As of the date of this Agreement, the Shares set
forth on Schedule I hereto constitute all of the issued and outstanding Shares
owned of record or Beneficially Owned by the Shareholder. Except as otherwise
set forth in Schedule I, the Shareholder has sole power of disposition, sole
power to demand appraisal rights and sole power to vote upon and agree
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<PAGE>
to all of the matters set forth in this Agreement, in each case with respect to
all of the Shares set forth on Schedule I hereto, with no material limitations,
qualifications or restrictions on such rights, subject to applicable securities
laws and the terms of this Agreement and the Shareholders Agreement.
(b) POWER; BINDING AGREEMENT. The Shareholder has the legal
capacity, power and authority to enter into and perform all of the Shareholder's
obligations under this Agreement. This Agreement has been duly and validly
executed and delivered by the Shareholder and constitutes a valid and binding
agreement of the Shareholder, enforceable against the Shareholder in accordance
with its terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and general principles of
equity. There is no beneficiary or holder of a voting trust certificate or other
interest of any trust of which the Shareholder is trustee whose consent is
required for the execution and delivery of this Agreement or the consummation by
the Shareholder of the transactions contemplated hereby. If the Shareholder is
married and the Shareholder's Shares constitute community property, this
Agreement has been duly authorized, executed and delivered by, and constitutes a
valid and binding agreement of, the Shareholder's spouse, enforceable against
such person in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws relating to creditors' rights and
general principles of equity.
(c) NO CONFLICTS. No filing with, and no permit, authorization,
consent or approval of, any state or federal public body or authority is
necessary for the execution of this Agreement by the Shareholder and the
consummation by the Shareholder of the transactions contemplated hereby, except
where the failure to obtain such consent, permit, authorization, approval or
filing would not interfere in any material respect with the Shareholder's
ability to perform his obligations hereunder, and none of the execution and
delivery of this Agreement by the Shareholder, the consummation by the
Shareholder of the transactions contemplated hereby or compliance by the
Shareholder with any of the provisions hereof shall (i) result in a violation or
breach of, or constitute (with or without notice or lapse of time or both) a
default (or give rise to any third party right of termination, cancellation,
material modification or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind to which the Shareholder is a party or by which the
Shareholder or any of his properties or assets may be bound, or (ii) violate any
order, writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to the Shareholder or any of his properties or assets, in each such
case except to the extent that any conflict, breach, default or violation would
not interfere in any material respect with the ability of the Shareholder to
perform its obligations hereunder.
(d) NO ENCUMBRANCES. At all times hereafter during the term hereof,
all of the Shareholder's Shares (excluding Shares identified in Schedule I
hereto as Shares with respect to which Shareholder does not possess sole power
to dispose or direct the disposition) will be held by the Shareholder, or by a
nominee or custodian for the benefit of such Shareholder, free and clear of all
liens, claims, security interests, proxies, voting trusts or agreements,
understandings or arrangements or any other encumbrances whatsoever, except for
any liens, claims, understandings or arrangements that do not limit or impair in
any material respect Shareholder's ability to perform
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<PAGE>
his obligations under this Agreement, and subject to applicable securities laws
and the terms of this Agreement and the Shareholders Agreement.
(e) NO SOLICITATION. The Shareholder shall not take any action which
is described in Section 5.6 of the Reorganization Agreement as an action which
the Company is prohibited from authorizing or permitting its officers, directors
or employees to take or which the TCBI Shareholders are prohibited from taking.
(f) RESTRICTION ON TRANSFER AND PROXIES; NON-INTERFERENCE. From and
after the date of this Agreement and ending as of the first to occur of the
Effective Time or the Termination Date, the Shareholder shall not, and shall
cause each of his Affiliates who Beneficially Own any of the Shareholder's
Shares not to, directly or indirectly, without the consent of BUC: (i) offer for
sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose of,
or enter into any contract, option or other arrangement or understanding with
respect to or consent to the offer for sale, sale, transfer, tender, pledge,
encumbrance, assignment or other disposition of, any or all of the Shareholder's
Shares, or any interest therein, (ii) except as provided in this Agreement,
grant any proxies or powers of attorney, deposit any Shareholder's Shares into a
voting trust or enter into a voting agreement with respect to any Shareholder's
Shares, (iii) enter into any agreement or arrangement providing for any of the
actions described in clause (i) or (ii) above or (iv) take any action that could
reasonably be expected to have the effect of preventing or disabling the
Shareholder from performing the Shareholder's obligations under this Agreement.
(g) WAIVER OF AND AGREEMENT NOT TO ASSERT APPRAISAL RIGHTS. The
Shareholder hereby waives and agrees not to assert, and shall cause any of its
Affiliates who hold of record any of the Shareholder's Shares to waive and not
to assert, any appraisal rights with respect to the Acquisition Merger that the
Shareholder or such Affiliate may now or hereafter have with respect to any
Shares (or any other shares of capital stock of the Company that the Shareholder
shall hold of record at the time that Shareholder may be entitled to assert
appraisal rights with respect to the Merger) whether pursuant to Article 5.11 of
the TBCA or otherwise.
(h) FURTHER ASSURANCES. From time to time, at BUC's request and
without further consideration, the Shareholder shall execute and deliver such
additional documents reasonably requested by BUC as may be necessary or
desirable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement.
(i) RIGHTS OF FIRST REFUSAL. Neither the Shareholder nor any of its
Affiliates have any rights of first refusal, preemptive rights or similar rights
to purchase Shares issuable by the Company pursuant to the Texas Central Stock
Option.
4. COVENANTS, REPRESENTATIONS AND WARRANTIES OF BUC AND MERGER SUB. BUC
and Merger Sub hereby represent, warrant and covenant to the Shareholder that:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of BUC, Merger
Sub is a corporation duly organized, validly existing and in good standing under
the laws of the state of
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<PAGE>
their respective jurisdiction of incorporation, with adequate corporate power
and authority to own its properties and carry on its business as presently
conducted. Each of BUC and Merger Sub has the corporate power and authority to
enter into and perform all of its obligations under this Agreement and to
consummate the transactions contemplated hereby.
(b) EXECUTION, DELIVERY AND PERFORMANCE BY BUC AND MERGER SUB. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by the Boards of
Directors of BUC and Merger Sub, and each of BUC and Merger Sub has taken all
other actions required by law, its certificate or articles of incorporation and
its bylaws (except as described in the Reorganization Agreement) to consummate
the transactions contemplated by this Agreement. This Agreement constitutes the
valid and binding obligations of BUC and Merger Sub and is enforceable against
BUC and Merger Sub in accordance with its terms, except as enforceability may be
subject to bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally.
5. STOP TRANSFER. From and after the date of this Agreement and ending as
of the first to occur of the Effective Time or the Termination Date, Shareholder
will not request that the Company register the transfer (book-entry or
otherwise) of any certificate or uncertificated interest representing any of the
Shareholder's Shares (excluding shares identified in Schedule I as Shares with
respect to which Shareholder does not possess sole power to dispose or direct
the disposition), or as otherwise contemplated hereby.
6. RECAPITALIZATION. In the event of a stock dividend or distribution, or
any change in the Shares (or any class thereof) by reason of any split-up,
recapitalization, combination, exchange of shares or the like, the term "Shares"
shall include, without limitation, all such stock dividends and distributions
and any shares into which or for which any or all of the Shares (or any class
thereof) may be changed or exchanged as may be appropriate to reflect such
event.
7. SHAREHOLDER CAPACITY. The Shareholder does not make any agreement or
understanding herein, in his capacity as a director or officer of the Company,
and nothing herein shall limit or affect any action taken by the Shareholder in
such capacity.
8. COMPANY STOCK OPTIONS. To the extent required to effectuate the
provisions of Article II of the Reorganization Agreement, the Shareholder hereby
consents and agrees to the treatment of each option to purchase shares of Texas
Central Stock that is Beneficially Owned by the Shareholder or its Affiliates as
set forth in Article 5.16 of the Reorganization Agreement.
9. ASSIGNMENT. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by operation of law or otherwise, except
that Merger Sub may, without the approval of the Company or the Shareholder,
assign any or all of its rights, interests and obligations hereunder to BUC or
to any wholly-owned subsidiary of BUC. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns. Shareholder agrees that
this Agreement, and the obligations of the Shareholder hereunder, shall attach
to the Shareholder's Shares and shall be
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<PAGE>
binding upon any Person to which legal or beneficial ownership of such Shares
shall pass, whether by operation of Law or otherwise, including without
limitation the Shareholder's heirs, guardians, administrators or successors.
10. TERMINATION. This Agreement shall terminate without any further action
on the part of any party hereto upon (a) the termination of the Reorganization
Agreement pursuant to the terms thereof, or (b) the Effective Time. Upon such
termination, this Agreement shall forthwith become void and of no further force
or effect.
11. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.
(b) AMENDMENTS, WAIVERS, ETC. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except upon
the execution and delivery of a written agreement executed by the parties
hereto.
(c) NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses or the addresses set forth on the
signature pages hereto:
If to Shareholder:
___________________________________
___________________________________
___________________________________
If to BUC or Merger Sub:
Bank United Corp.
3200 Southwest Freeway, Suite 1600
Houston, Texas 77027
Attention: General Counsel
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(d) SEVERABILITY. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable
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<PAGE>
law, but if any provision or portion of any provision of this Agreement is held
to be invalid, illegal or unenforceable in any respect under any applicable law
or rule in any jurisdiction, then such invalidity, illegality or
unenforceability will not affect any other provision or portion of any provision
in such jurisdiction, and this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision or portion of any provision had never been contained herein.
(e) SPECIFIC PERFORMANCE. Each of the parties hereto recognizes and
acknowledges that a breach by the Shareholder of any covenants or agreements
contained in this Agreement will cause BUC and Merger Sub to sustain damages for
which they would not have an adequate remedy at law for money damages, and
therefore each of the parties hereto agrees that, in the event of any such
breach, BUC or Merger Sub shall be entitled to seek the remedy of specific
performance of such covenants and agreements and injunctive and other equitable
relief, without the necessity of posting bond or proving actual damages, in
addition to any other remedy to which they may be entitled, at law or in equity.
(f) REMEDIES CUMULATIVE. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any such
right, power or remedy by any party shall not preclude the simultaneous or later
exercise of any other such right, power or remedy by such party.
(g) NO WAIVER. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(h) NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to
be for the benefit of, and shall not be enforceable by, any person or entity who
or which is not a party hereto; provided that, in the event of the Shareholder's
death, the obligations of the Shareholder hereunder shall attach to the
Shareholder's Shares and shall be binding upon any Person to which legal or
beneficial ownership of such Shares shall pass, whether by operation of Law or
otherwise, including without limitation the Shareholder's heirs, guardians,
administrators or successors.
(i) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas, without giving effect to the
principles of conflicts of law thereof.
(j) JURISDICTION. Each party hereby irrevocably submits to the
exclusive jurisdiction of any court of the State of Texas located in the City of
Houston in any action, suit or proceeding arising in connection with this
Agreement, and agrees that any such action, suit or proceeding shall be brought
only in such court (and waives any objection based on forum non conveniens or
any other objection to venue therein); PROVIDED, HOWEVER, that such consent to
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<PAGE>
jurisdiction is solely for the purpose referred to in this paragraph and shall
not be deemed to be a general submission to the jurisdiction of said Court other
than for such purposes. EACH PARTY HERETO HEREBY WAIVES ANY RIGHT TO A TRIAL BY
JURY IN CONNECTION WITH ANY SUCH ACTION, SUIT OR PROCEEDING.
(k) DESCRIPTIVE HEADINGS. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
(l) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement. This Agreement shall not
be effective as to any party hereto until such time as this Agreement or a
counterpart thereof has been executed and delivered by each party hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
SPOUSE SHAREHOLDER
__________________________________
Name:
BANK UNITED CORP.
By:_______________________________
Name:
Title:
BUC ACQUISITION CORP. II
By:_______________________________
Name:
Title:
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EXHIBIT 99.4
June 15, 1999
The Board of Directors
Texas Central Bancshares, Inc.
401 West Texas, Suite 100
Texas Central, Texas 79701-4414
Attention: Michael Ruff
Members of the Board:
We understand that Texas Central Bancshares, Inc. ("TCBI"), Bank United
Corp., a Delaware corporation ("BUC"), and BUC Acquisition Corporation II, a
Texas corporation ("Acquisition Company") have entered into an Agreement and
Plan of Reorganization (the "Merger Agreement") dated March 23, 1999, which
provides for the merger (the "Merger") of TCBI and its subsidiary, Texas Central
Bank National Association ("Texas Central" or the "Bank"), with and into a new
wholly owned Texas subsidiary corporation of BUC (the Acquisition Company).
Pursuant to the terms of the Merger Agreement, each issued and outstanding share
of common stock, par value $1.00, of TCBI, as of the date the Merger becomes
effective, will be converted into the right to receive 2.02797 (the "Exchange
Ratio") shares of Bank United Corp. Class A Common Stock, par value $0.01, not
to exceed in the aggregate 710,000 shares, as described in the Merger Agreement,
with certain provisions for fractional shares. The terms and conditions of the
Merger are more fully set forth in the Merger Agreement. We understand that as a
result of the Merger, (i) TCBI and the Acquisition Company shall each be merged
with and into BUC and each will cease to exist and that (ii) Texas Central will
be merged with and into Bank United Corp. and will cease its separate existence.
You have asked for our opinion as to whether the Exchange Ratio pursuant
to the Merger Agreement is fair, from a financial point of view, to holders of
the TCBI common stock.
Our opinion is based on information furnished to us by TCBI and BUC, their
attorneys, accountants, or obtained by us from published and verbal sources we
consider relevant. We have relied upon and assumed the accuracy and completeness
of all information submitted to us or that as publicly available and have made
no independent verification of this information. We have not conducted any
valuation or appraisal of any assets or liabilities, nor have any such
valuations or appraisals been provided to us. In relying upon financial analyses
and forecasts provided to us, we have assumed that they have been reasonably
prepared based on assumptions reflecting the best currently available estimates
and judgments by management of TCBI and BUC as to the expected future results of
operations and financial condition of TCBI and BUC to which such analyses or
forecasts relate. We have relied as to all legal matters relevant to rendering
our opinion upon the
<PAGE>
advice of counsel. TCBI and BUC's management have informed us that they know of
no additional information which would have a material effect upon our valuation.
In arriving at our opinion, we have followed generally accepted industry
practices for the valuation of commercial banks and have used such valuation
methodologies as we have deemed necessary or appropriate for the purposes of
this opinion. In giving our opinion, we have given consideration to all
available financial data and other relevant factors effecting fair market value
including, but not limited to the following, (i) reviewed certain publicly
available financial statements and other information of TCBI and BUC, (ii)
reviewed certain internal financial statements and other financial and operating
data concerning TCBI and BUC prepared by the management of TCBI and BUC, (iii)
analyzed certain summary financial projections concerning TCBI and BUC prepared
by the management of TCBI and BUC, respectively; (iv) reviewed and discussed
with senior executives of TCBI the past and current operations and prospects of
TCBI, (v) reviewed and discussed with senior executives of BUC the past and
current operations and financial condition and the prospects of BUC and analyzed
the estimated pro forma impact of the Merger, including on the combined
company's earnings per share, consolidated capitalization and financial ratios,
(vi) reviewed and discussed with senior executives of TCBI and BUC the strategic
objectives of the Merger and the long term benefits expected to result from the
Merger, including without limitation, certain estimates and timing of synergies
and other cost savings for the continued company, (vii) reviewed reported prices
and trading activity for transactions in TCBI stock and BUC stock, (viii)
compared the financial performance of TCBI and BUC and the prices and trading
activity of TCBI and BUC with that of certain other comparable publicly traded
companies and their securities, (ix) reviewed the financial terms, to the extent
publicly available, of certain comparable transactions, (x) reviewed the Merger
Agreement and certain related documents, and (xi) considered other such factors
as we have deemed appropriate.
Neither SAMCO Capital Markets ("SAMCO") nor the individuals involved in
this valuation have any present or contemplated future financial interest in
TCBI or BUC which might prevent them from rendering a fair and unbiased opinion.
Our opinion is necessarily based upon the business, market, economic and other
conditions as they exist on, and can be evaluated as of, the date of this
letter, and does not address TCBI's underlying business decision to enter into
the Merger Agreement or constitute any recommendations to any holder of common
stock of TCBI as to how such holder should vote with respect to the Merger
Agreement. We were requested to, and did, solicit third party offers to acquire
all or any part of TCBI. In addition, we understand that the Merger may render
in effect a taxable transaction and our opinion may be used for purposes of the
shareholders in determining the tax liability they may have upon conversion.
In reaching our opinion, we have assumed that the Merger will be
consummated in accordance with the terms described in the Merger Agreement. We
consent to the reference to our firm and the inclusion of our opinion in its
entirety in any filing with the Securities and Exchange Commission related to
the Merger. Based on the foregoing and in consideration of all relevant factors,
it is our opinion, as of the date of this letter, that the Exchange Ratio is
fair and equitable to all holders of Texas Central Bancshares, Inc. common
stock, from a financial point of view.
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<PAGE>
SAMCO Capital Markets appreciates the opportunity to be of service to you
in this matter.
Very truly yours,
SAMCO Capital Markets
By:/s/ DORY A. WILEY
Dory A. Wiley
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