EXHIBIT 2.05
REORGANIZATION AGREEMENT
REORGANIZATION AGREEMENT dated as of October 17, 1995 (the "Plan"), by and
between FIRST MIDLOTHIAN CORPORATION, a Texas corporation located in Midlothian,
Texas ("First Midlothian"); FIRST NATIONAL BANK, a national banking association
located in Midlothian, Texas ("First Bank"); all those individuals who have
subscribed their names hereto individually and as a director (hereinafter
referred to singly as a "Director" and collectively as the "Directors"); SURETY
BANK, NATIONAL ASSOCIATION, a national banking association located in Lufkin,
Texas ("Surety Bank"); and SURETY CAPITAL CORPORATION, a Delaware corporation
located in Hurst, Texas ("Surety").
WITNESSETH:
WHEREAS, the Directors are the record and beneficial owners of 20,228 and
1/3rd of the issued and outstanding shares of common stock of First Midlothian
and are the entire Board of Directors of First Midlothian;
WHEREAS, First Midlothian is the record and beneficial owner of all of the
issued and outstanding shares of common stock of First Bank;
WHEREAS, Surety is the record and beneficial owner of over ninety-nine
percent (99%) of the issued and outstanding shares of common stock of Surety
Bank;
WHEREAS, First Midlothian, First Bank, Surety Bank and Surety each desire
to effect (a) the merger (the "Holding Company Merger") of a Texas corporation
("Newco"), which will be formed by Surety Bank as an operating subsidiary of
Surety Bank, with and into First Midlothian, pursuant to which the shareholders
of First Midlothian will receive cash, in the amount as herein described, in
exchange for all of their shares of common stock of First Midlothian, (b)
immediately upon consummation of the Holding Company Merger, the merger (the
"Bank Merger") of First Bank with and into Surety Bank (the Holding Company
Merger and the Bank Merger are hereinafter referred to collectively as the
"Mergers"), and (c) immediately or within three (3) months after the
consummation of the Mergers, the dissolution of First Midlothian;
WHEREAS, the Boards of Directors of First Midlothian, Surety, Surety Bank
and First Bank have approved the Holding Company Merger pursuant to the Texas
corporate laws whereby the outstanding common stock of First Midlothian shall,
in accordance with the terms and conditions set forth in this Plan and in the
Merger Agreement in the form attached hereto as EXHIBIT A (the "Holding Company
Merger Agreement"), be converted into the right to receive the Consideration (as
defined in the Holding Company Merger Agreement); and
WHEREAS, the Boards of Directors of First Midlothian, Surety, Surety Bank
and First Bank have approved the Bank Merger pursuant
to the national banking laws whereby the outstanding common stock of First Bank
shall, in accordance with the terms and conditions set forth in this Plan and in
the Merger Agreement in the form attached hereto as EXHIBIT B (the "Bank Merger
Agreement") (the Holding Company Merger Agreement and the Bank Merger Agreement
are hereinafter referred to collectively as the "Merger Agreements"), be
cancelled and be of no further force and effect.
NOW, THEREFORE, in consideration of the mutual promises, representations
and warranties herein contained, and on the terms and subject to the conditions
herein set forth, the Directors, First Midlothian, First Bank, Surety Bank and
Surety agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE DIRECTORS, FIRST MIDLOTHIAN AND
FIRST BANK. The Directors, each in their individual and representative
capacities, First Midlothian and First Bank, jointly and severally, represent
and warrant to Surety and Surety Bank as follows (the representations and
warranties of the Directors being to their best knowledge, information and
belief only):
(a) ORGANIZATION.
(i) First Midlothian is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas, which is the
only jurisdiction in which the property owned or leased or the business
conducted by it makes such qualification necessary, and is duly authorized to
carry on its business as it is now being conducted.
(ii) First Bank is a national banking association duly
organized, validly existing and in good standing under the laws of the United
States of America. First Bank (a) is duly authorized to conduct a general
banking business, in accordance with its charter, subject to the supervision of
the Office of the Comptroller of the Currency (the "Comptroller"); (b) is a
member of the Board of Governors of the Federal Reserve System (the "Federal
Reserve") and is a stockholder of the Federal Reserve Bank of Dallas; (c) is an
insured bank as defined in the Federal Deposit Insurance Act; and (d) has full
power and authority (including all licenses, franchises, permits and other
governmental authorizations which are legally required) to own, lease and
operate its properties and to engage in the business and activities now
conducted by it.
(b) CAPITAL STOCK.
(i) The authorized capital stock of First Midlothian consists of
48,000 shares of common stock, par value $10.00 per share ("First Midlothian
Common Stock"), of which 48,000 shares have been duly issued and are validly
outstanding, fully paid and nonassessable, and not issued or disposed of in
violation of the preemptive rights of any shareholder. As of the date of this
Plan:
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(1) there were outstanding no securities convertible into
or exchangeable for ("First Midlothian Convertible Securities")
(x) any shares of First Midlothian Common Stock, or (y) any capi-
tal notes, debentures or other corporate securities of First
Midlothian ("First Midlothian Debt Securities"),
(2) there were outstanding no subscriptions, warrants,
options or other arrangements or commitments ("First Midlothian
Rights") obligating First Midlothian to issue or dispose of any
shares of First Midlothian Common Stock or any First Midlothian
Debt Securities, and
(3) there were no existing agreements, arrangements or
commitments obligating First Midlothian to issue, dispose of or
grant any First Midlothian Convertible Securities, First
Midlothian Debt Securities or First Midlothian Rights.
Since the date of this Plan, First Midlothian has not:
(1) issued, disposed of or granted, or made any agreement,
arrangement or commitment obligating First Midlothian to issue,
dispose of or grant, any shares of First Midlothian Common Stock,
any First Midlothian Convertible Securities, any First Midlothian
Debt Securities, or any First Midlothian Rights,
(2) redeemed or acquired, or made any agreement,
arrangement or commitment obligating First Midlothian to redeem
or acquire, any shares of First Midlothian Common Stock, any
First Midlothian Convertible Securities, any First Midlothian
Debt Securities, or any First Midlothian Rights, or
(3) declared, paid, made or set aside, or agreed, arranged
or committed to declare, pay, make or set aside, any dividend,
payment or distribution to shareholders.
(ii) The authorized capital stock of First Bank consists of
48,000 shares of common stock, par value $10.00 per share ("First Bank Common
Stock"), of which 48,000 shares have been duly issued and are validly
outstanding, fully paid and nonassessable, and not issued or disposed of in
violation of the preemptive rights of any shareholder. As of the date of this
Plan:
(1) there were outstanding no securities convertible into
or exchangeable for ("First Bank Convertible Securities") (x) any
shares of First
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Bank Common Stock, or (y) any capital notes, debentures or other
corporate securities of First Bank ("First Bank Debt
Securities"),
(2) there were outstanding no subscriptions, warrants,
options or other arrangements or commitments ("First Bank
Rights") obligating First Bank to issue or dispose of any shares
of First Bank Common Stock or any First Bank Debt Securities, and
(3) there were no existing agreements, arrangements or
commitments obligating First Bank to issue, dispose of or grant
any First Bank Convertible Securities, First Bank Debt Securities
or First Bank Rights.
Since the date of this Plan, First Bank has not:
(1) issued, disposed of or granted, or made any agreement,
arrangement or commitment obligating First Bank to issue, dispose
of or grant, any shares of First Bank Common Stock, any First
Bank Convertible Securities, any First Bank Debt Securities, or
any First Bank Rights, or
(2) redeemed or acquired, or made any agreement,
arrangement or commitment obligating First Bank to redeem or
acquire, any shares of First Bank Common Stock, any First Bank
Convertible Securities, any First Bank Debt Securities, or any
First Bank Rights.
(c) STOCK OWNERSHIP.
(i) The Directors are as of the date of this Plan, and on the
Closing Date shall be, the beneficial and record owners of 20,228 and 1/3rd of
the issued and outstanding shares of First Midlothian Common Stock and have good
and marketable title to such First Midlothian Common Stock, which on the Closing
Date will be free and clear of any interests, security interests, claims, liens,
pledges, penalties, charges, encumbrances, voting trust agreements, buy-sell
agreements, preemptive rights or other rights of any party whatsoever of any
kind or character. To the extent any of such First Midlothian Common Stock was
pledged to secure any extensions of credit by First Bank to the Directors, such
extensions of credit shall on the Closing Date either be repaid in full or
recollateralized in a commercially reasonable manner satisfactory to Surety and
Surety Bank.
(ii) First Midlothian is as of the date of this Plan, and on the
Closing Date shall be, the beneficial and record owner of all of the issued and
outstanding shares of First Bank Common Stock, and has good and marketable title
to such common
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stock, which on the Closing Date will be free and clear of any interests,
security interests, claims, liens, pledges, penalties, charges, encumbrances,
voting trust agreements, buy-sell agreements, preemptive rights or other rights
of any party whatsoever of any kind or character.
(d) SUBSIDIARIES.
(i) First Midlothian has no subsidiaries other than First Bank
and will not on or before the Closing Date create or acquire any additional
subsidiary without the consent of Surety.
(ii) First Bank neither has nor is it obligated to make any
material investment, direct or indirect, in any person, corporation,
association, partnership, joint venture, trust or other entity, except for
investments in prime rated commercial paper and other debt instruments made by
First Bank in the ordinary course of its banking business consistent with its
past practice which do not empower First Bank to direct or cause the direction
of the management and policies of the maker of such commercial paper or other
debt instrument.
(e) CONDITION AND RESULTS OF OPERATIONS. Within fifteen (15) days
following the date of this Plan, First Midlothian will deliver to Surety true,
correct and complete copies of the following consolidated financial statements
of First Midlothian (these financial statements together with those referred to
in SECTIONS 3(f) AND 3(k) hereof are collectively referred to herein as the
"First Midlothian Financial Statements"): statement of condition at December
31, 1994, statement of income for the year ended as of December 31, 1994 and
statements of cash flow and of shareholders' equity for the years ended as of
December 31, 1994, together with the notes thereto, as certified by the
independent public accountants of First Midlothian. The First Midlothian
Financial Statements shall be in accordance with the books and records of First
Midlothian, shall present fairly the financial position and results of
operations of First Midlothian, as of the dates and for the periods indicated,
shall be prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved (except that the unaudited
First Midlothian Financial Statements shall be subject to normal year-end
adjustments), and shall be prepared in accordance with Regulation S-X
promulgated by the Securities and Exchange Commission.
(f) LIABILITIES AND OBLIGATIONS.
(i) As of the date of the First Midlothian Financial Statements,
First Midlothian had no obligation or liability which was material or which,
when combined with all other non-material obligations or liabilities, would have
been material, except for the Debentures (as hereinafter defined) and except as
otherwise set forth in the First Midlothian Financial Statements or as set forth
in any of the schedules referred to herein, nor does
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there exist a set of circumstances resulting from transactions effected or
events occurring on or prior to the date of the First Midlothian Financial
Statements or from any action omitted to be taken during such period which could
reasonably be expected to result in any such material obligation or liability.
The amounts set up as liabilities for taxes in the First Midlothian Financial
Statements are sufficient for the payment of all taxes (including without
limitation federal, state, county, local and other excise, franchise, real and
personal property, payroll, income, capital stock, and sales and use taxes)
accrued in accordance with generally accepted accounting principles and unpaid
as of the date of such First Midlothian Financial Statements. Since the date of
the First Midlothian Financial Statements, First Midlothian has not incurred or
paid any obligation or liability, except for obligations incurred or paid by
First Midlothian in the ordinary course of its business consistent with its past
practices or as otherwise contemplated by this Plan.
(ii) Attached hereto as SCHEDULE 1(f) is a copy of each
Debenture issued and outstanding as of the date of this Plan. SCHEDULE 1(f)
sets forth with respect to each Debenture, the name of each holder, the date
thereof, the original principal amount thereof, the outstanding principal
thereof, and accrued interest thereon, as of the date of this Plan, the
applicable interest rate, the repayment provisions and maturity date, and the
amount and date of the next payment of interest and, if applicable, principal.
Each Debenture is an unsecured obligation of First Midlothian and may be prepaid
at any time without penalty. None of the Debentures are now in default, and
neither First Midlothian nor the Directors are aware of any fact or condition
that with the giving of notice or the passage of time, or both, would create or
cause there to be a default under any Debenture.
(iii) As of the date of the First Midlothian Financial
Statements, First Bank had no obligation or liability which was material or
which, when combined with all non-material obligations or liabilities, would
have been material, except as disclosed in the First Midlothian Financial
Statements or as set forth in any of the schedules referred to herein, nor does
there exist a set of circumstances resulting from transactions effected or
events occurring on or prior to the date of the First Midlothian Financial
Statements or from any action omitted to be taken during such period which could
reasonably be expected to result in any such material obligation or liability,
except as disclosed or provided for in the First Midlothian Financial Statements
or except as disclosed in one or more of the schedules referred to herein. The
amounts set up as liabilities for taxes in the First Midlothian Financial
Statements are sufficient for the payment of all taxes (including without
limitation federal, state, county, local and other excise, franchise, real and
personal property, payroll, income, capital stock, and sales and use taxes)
accrued in accordance with generally accepted accounting principles and unpaid
as of the date of such First Midlothian Financial Statements. Since
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the date of the Midlothian Financial Statements First Bank has not incurred or
paid any obligation or liability, except for obligations incurred or paid by
First Bank in the ordinary course of its business consistent with its past
practices. Except for endorsements made in connection with the deposit of items
for collection made by First Bank in the ordinary course of its business
consistent with its past practices and except as set forth in the First
Midlothian Financial Statements or in any of the schedules referred to herein,
First Bank is not obligated (by discount, loan participation agreement,
repurchase agreement or letter of credit) to provide funds in respect of or to
guarantee or assume any debt or obligation which is either material or which,
when combined with all similar debts or obligations, would be material.
(g) LOANS. All loans of First Bank reflected in the First Midlothian
Financial Statements and all loans originated since the date of the First
Midlothian Financial Statements were made in the ordinary course of business. A
true, complete and accurate list of all (i) loans classified by examiners as
"Other Loans Especially Mentioned," "Substandard," "Doubtful," or "Loss," (ii)
past due loans, (iii) loans to the directors, officers and shareholders of First
Bank, First Midlothian, or any of them, and (iv) loans to other parties which
have been guaranteed by the directors, officers and shareholders of First Bank
or First Midlothian, or any of them, or for which the directors, officers and
shareholders of First Bank or First Midlothian, or any of them, are otherwise
responsible as of the date of this Plan are set forth on SCHEDULE 1(g).
(h) RESERVE FOR POSSIBLE LOAN LOSSES. The reserve for possible loan
losses, as shown on the First Midlothian Financial Statements, is adequate in
all respects to provide for all losses, net of recoveries relating to loans
previously charged-off, on loans outstanding as of the date of such First
Midlothian Financial Statements.
(i) INVESTMENT SECURITIES. Except for pledges to secure public and
trust deposits, none of the investments reflected in the First Midlothian
Financial Statements under the heading "Investment Securities" and none of the
investments made since said date by First Bank is subject to any "investment" or
other restriction, whether contractual or statutory, which materially impairs
the ability of the holder thereof freely to dispose of such investment at any
time.
(j) EVIDENCES OF INDEBTEDNESS. Each evidence of indebtedness
reflected as an asset in the First Midlothian Financial Statements, or acquired
since that date, is the legal, valid and binding obligation of the obligor named
therein, enforceable in accordance with its terms (subject, as to enforcement of
remedies, to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws from time to time in effect). No evidence of indebtedness having
an unpaid balance (principal and accrued
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interest) in excess of $25,000 is subject to any defense, offset or
counterclaim.
(k) TANGIBLE PROPERTIES.
(i) First Midlothian neither owns nor leases any tangible
properties, real and personal.
(ii) SCHEDULE 1(k) describes all tangible properties, real and
personal (showing the gross book values, accumulated depreciation and net book
values), owned or leased by First Bank as of the date of the First Midlothian
Financial Statements, having an original cost in excess of $25,000 (exclusive of
supplies consumable in the ordinary course of business, which need not be
scheduled). First Bank has good and indefeasible fee simple title to all
material real estate owned by it, has a valid leasehold interest in each of the
leased properties and owns outright all other assets and properties, whether
real, personal or mixed, tangible or intangible, described in SCHEDULE 1(k) or
reflected in the First Midlothian Financial Statements or acquired after said
date (other than properties sold, and supplies consumed, by First Bank in the
ordinary course of its banking business consistent with its past practice), free
and clear of all liens, pledges, mortgages, security interests, charges,
burdens, encumbrances, options and adverse claims ("Burdens"), except in each
case as set forth in SCHEDULE 1(k) and except for liens for current taxes not
yet due and payable and such imperfections of title, covenants and easements as
do not materially detract from or interfere with the present use of the asset or
property subject thereto or affected thereby. Since the date of the First
Midlothian Financial Statements, First Bank has not satisfied or discharged, or
become obligated to satisfy or discharge, any Burden affecting First Bank or any
asset of First Bank, except in the ordinary course of First Bank's banking
business consistent with its past practice. The operation of the properties of
First Bank and the business of First Bank in the manner in which they are now
operated does not violate any zoning ordinances or municipal regulations in such
a way as could, if such ordinances or regulations were enforced, result in any
material impairment of the uses of the respective properties for the purposes
for which they are now operated, and no covenants, easements, rights-of-way or
regulations of record materially impair such uses.
(l) COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as set forth on
SCHEDULE 1(l),
(i) First Midlothian, First Bank and their respective
predecessors and affiliates have complied with all Environmental, Health and
Safety Laws (as defined below), and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against any of them alleging any failure so to comply. Without
limiting the generality of the preceding sentence, First Midlothian and First
Bank and
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their respective predecessors and affiliates have obtained and been in
compliance with all of the terms and conditions of all permits, licenses, and
other authorizations which are required under, and has complied with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables which are contained in, all
Environmental, Health and Safety Laws.
"Environmental, Health and Safety Laws" means the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Resource Conservation and Recovery Act of 1976, and the Occupational Safety
and Health Act of 1970, each as amended, together with all other laws (including
rules, regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof) concerning pollution or protection of the
environment, public health and safety, or employee health and safety, including
laws relating to emissions, discharges, releases, or threatened releases of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials
or wastes into ambient air, surface water, ground water, or lands or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials or wastes.
(ii) Neither First Midlothian nor First Bank has any liability
(and neither First Midlothian nor First Bank has handled or disposed of any
substance, arranged for the disposal of any substance, exposed any employee or
other individual to any substance or condition, or owned or operated any
property or facility in any manner that could form the basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against First Midlothian or First Bank giving rise to any
liability) for damage to any site, location, or body of water (surface or
subsurface), for any illness of or, personal injury to any employee or other
individual, or for any reason under any Environmental, Health and Safety Law.
(iii) All properties and equipment used in the business of First
Midlothian and First Bank and their respective predecessors and affiliates have
been free of asbestos, PCB's, methylene chloride, trichloroethylene,1,2-trans-
dichloroethylene, dioxins, dibenzofurans, and Extremely Hazardous Substances (as
defined below).
"Extremely Hazardous Substance" has the meaning set forth in
Sec. 302 of the Emergency Planning and Community Right-to-Know Act of 1986, as
amended.
(iv) Neither First Midlothian nor First Bank has placed any
underground storage tanks, as that term is defined at 40 C.F.R. Section 280.1,
on any part of the real property owned,
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leased or otherwise utilized by First Midlothian and First Bank (the "Real
Property"), and neither First Midlothian nor First Bank has any knowledge or has
received any notice that any such underground storage tanks were placed on the
Real Property by any prior owner or user.
(v) Neither First Midlothian nor First Bank has ever been
refused insurance coverage and no insurance coverage has ever been cancelled as
a result of the presence of hazardous waste, solid waste or hazardous substances
on the Real Property.
(vi) First Bank has not installed or maintained any active or
inactive hazardous waste management units on the Real Property, and neither
First Midlothian nor First Bank has any knowledge or has received any notice
that any active or inactive hazardous waste management units have been installed
or maintained on the Real Property by any prior owner or user, that require deed
recordation by First Bank.
(vii) There have been no spills, discharges or other releases of
hydrocarbons or hazardous or toxic substances onto or from the Real Property or
onto or from any other real property heretofore owned or leased by First Bank
and utilized in the conduct of any of its businesses, and neither First
Midlothian nor First Bank has any knowledge or has received any notice of any
such spills, discharges or releases by any prior owner or user of the Real
Property.
(viii) There are no environmental liens or security interests
against the Real Property nor are there any environmental liens or actions
pending or threatened which would result in the creation of any lien relating to
environmental conditions of the Real Property.
(m) CONDITION OF PERSONAL PROPERTIES. All personal properties owned
or leased by First Bank are used by First Bank in the ordinary course of its
banking business and are in good condition and repair and are suitable for the
purposes intended.
(n) PATENTS, TRADEMARKS, ETC. Except as set forth on SCHEDULE 1(n),
there are no:
(i) patents, trademarks, trade names or copyrights or
applications therefor owned by or registered in the name of First Midlothian or
First Bank or in which First Midlothian or First Bank have rights,
(ii) license agreements to which First Midlothian or First Bank
is a party, either as licensor or licensee, with respect to any patents,
trademarks, trade names or copyrights, or
(iii) claims, to the knowledge of First Midlothian or First
Bank, that, in the conduct of First Midlothian's or First
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Bank's business as now conducted, either First Midlothian or First Bank is
infringing any patents, trademarks, trade names or copyrights of others.
(o) COMPLIANCE WITH LAWS. First Midlothian and First Bank:
(i) have each complied with all laws and governmental
regulations pertaining to consumer credit in all material respects,
(ii) have each complied with all other laws, regulations,
licensing requirements and orders applicable to their respective businesses, the
breach or violation of which could have a material adverse effect on their
respective businesses (including without limitation licensing requirements with
respect to personnel),
(iii) have each filed with the proper authorities all statements
and reports required by the laws, regulations, licensing requirements and orders
to which it or any of its employees (because of his activities on behalf of his
employer) are subject, and
(iv) each possesses all necessary licenses, franchises, permits
and governmental authorizations to conduct their respective businesses in all
material respects in the manner in which and in the jurisdictions and places
where such businesses are now conducted.
(p) INSURANCE. SCHEDULE 1(p) contains a brief description of all
policies of fire, liability and other forms of insurance and all fidelity bonds
held by First Midlothian and First Bank.
(q) MATERIAL CONTRACTS. Except as set forth in SCHEDULE 1(q),
neither First Midlothian nor its assets, business or operations, nor First Bank
nor its assets, business or operations, is a party to or are bound or affected
by or receive benefits under any written or oral agreement, arrangement or
commitment relating to:
(i) the employment of any person other than personnel employed
at the pleasure of First Midlothian or First Bank, as the case may be, in the
ordinary course of their respective businesses at rates of compensation and on
terms consistent with their respective past practices,
(ii) the election or retention in office of any director or
officer,
(iii) collective bargaining with, or any representation of any
employees by, any labor union or association,
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(iv) the acquisition of services, supplies, equipment or other
personal property involving, in any particular case, more than $5,000 or for a
quantity in excess of its requirements for normal operating purposes,
(v) the purchase or sale of real property,
(vi) distribution, agency, public relations, advertising,
printing, construction, accounting or legal services, except for agreements,
arrangements and commitments subject to cancellation without liability on notice
of thirty (30) days or less and involving a liability for each such agreement,
arrangement or commitment of less than $5,000,
(vii) the lease of real or personal property as lessor or
lessee, or sublessor or sublessee, providing for annual payments in the
aggregate in excess of $2,500,
(viii) bonuses, pensions, profit-sharing, retirement, stock
options, stock purchases, employee discounts or other employee benefits,
(ix) lending or advancing of funds, other than in the ordinary
course of First Bank's banking business consistent with its past practice,
(x) borrowing of funds or receipt of credit other than in the
ordinary course of First Bank's banking business consistent with its past
practice,
(xi) incurring of any material obligation or liability except
for transactions engaged in by First Midlothian or First Bank in the ordinary
course of their respective businesses consistent with their respective past
practices,
(xii) the sale of personal property or services under which
payments due after the date of this Plan exceed $5,000,
(xiii) any transaction or series of transactions, including
loans, in which any "affiliate" of First Midlothian or First Bank, as that term
is used in the Rules and Regulations of the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933 (the "1933 Act"), any
officer or director of First Midlothian or First Bank, any officer or director
of any "affiliate" of First Midlothian or First Bank, or any "associate" of any
such officer or director, as that term is defined in Regulation 14A of the
General Rules and Regulations under the Securities Exchange Act of 1934 (the
"1934 Act"), has an interest if such transaction or series of transactions would
be required to be disclosed in a proxy statement filed by a non-banking
corporation under the 1934 Act, or
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(xiv) any material transaction not in the ordinary course of
First Midlothian's or First Bank's respective businesses consistent with their
respective past practices.
Except as set forth in SCHEDULE 1(q), since the date of the First Midlothian
Financial Statements, neither First Midlothian nor First Bank has made or
permitted, or agreed to make or permit, any material modification or termination
of any material agreement, commitment or arrangement, except in the ordinary
course of their respective businesses consistent with their respective past
practices.
(r) ABSENCE OF ADVERSE AGREEMENTS. Neither First Midlothian nor
First Bank is a party to any agreement or instrument or any judgment, order or
decree or any rule or regulation of any court or other governmental agency or
authority which materially and adversely affects or in the future may materially
and adversely affect the assets, properties, business, financial condition,
operations or prospects of First Midlothian or First Bank.
(s) STATUS OF EMPLOYEE BENEFIT PLANS. Except as set forth on
SCHEDULE 1(q), neither First Midlothian nor First Bank has an employee benefit
plan presently in effect.
(t) MATERIAL CONTRACT DEFAULTS. Except as set forth in SCHEDULE
1(t), neither First Midlothian nor First Bank is in default in any material
respect under any of the agreements, commitments, arrangements, leases,
insurance policies or other instruments set forth or described herein or in the
schedules referred to herein or otherwise disclosed in writing to Surety by
First Midlothian or First Bank; such agreements, commitments, arrangements,
leases, insurance policies and other instruments are legal, valid and binding
obligations of the respective parties thereto in accordance with their terms;
and there are no defenses, offsets or counterclaims thereto which may be made by
any party thereto other than First Midlothian or First Bank, nor have either
First Midlothian or First Bank waived any substantial rights thereunder, except
as set forth in the schedules referred to herein or otherwise disclosed in
writing to Surety by First Midlothian or First Bank on or before the date of
this Plan.
(u) LITIGATION AND OTHER PROCEEDINGS. Except to the extent indicated
in SCHEDULE 1(u), there is not pending or threatened, against either First
Midlothian or First Bank, or affecting or which would affect the assets of First
Midlothian or First Bank, any action, suit, proceeding or investigation which:
(i) involves a claim for an amount exceeding the amount
recoverable by First Midlothian or First Bank from insurance companies under
policies described in SCHEDULE 1(p), subject to the deductible amounts under
said policies as set forth in said schedule,
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(ii) has resulted or might result in any material adverse change
in the business, operations or assets or the condition, financial or otherwise
(including without limitation changes in the value of investments), or results
of operations of First Midlothian or First Bank,
(iii) has affected or might affect the right or ability of First
Midlothian or First Bank to carry on their businesses substantially as now
conducted, or
(iv) has affected or might affect the consummation of the
transactions contemplated by this Plan or the Merger Agreements,
or any circumstances which would give rise to any such action, suit, proceeding
or investigation. Except as set forth in SCHEDULE 1(u), neither First
Midlothian nor First Bank is (x) subject to any continuing court or other order,
writ, injunction or decree, applicable specifically to it or to its business,
property or employees, or (y) in default with respect to any order, writ,
injunction or decree of any nature.
(v) TAXES. First Midlothian and First Bank have each filed with the
appropriate governmental agencies all federal, state and local income,
franchise, excise, real and personal property and other tax returns and reports
which are required to be filed, and have paid all taxes shown thereon to be due
and payable. There are no unpaid taxes of First Midlothian or First Bank which
are or may become a lien on the properties or assets of First Midlothian or
First Bank, except liens for taxes not yet due and payable. All taxes not yet
due and payable which require accrual under generally accepted accounting
principles have been properly accrued on the books of First Midlothian and First
Bank, and where applicable, reflected in the First Midlothian Financial
Statements. All accruals shown in the First Midlothian Financial Statements in
respect of taxes are adequate, and there is not pending a proposed assessment by
any taxing authority against either First Midlothian or First Bank for
additional taxes which have not been disclosed in this Plan and for which First
Midlothian or First Bank does not have adequate reserves. No income tax
liability of First Midlothian nor First Bank has been asserted by the Internal
Revenue Service for taxes in excess of those already paid, and no audit or
notice of audit is pending. Neither First Midlothian nor First Bank has
executed or filed with the Internal Revenue Service any agreement extending the
period for assessment and collection of any tax, nor are either First Midlothian
or First Bank a party to any action or proceeding by any governmental authority
for assessment or collection of taxes, nor has any claim for assessment or
collection of taxes been asserted against either First Midlothian or First Bank.
(w) COMMUNITY REINVESTMENT ACT. First Bank has not received any
notice of non-compliance with the Community Reinvest-
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ment Act ("CRA") from any regulatory agency, and First Bank has supplied Surety
with copies of the CRA Statement for First Bank, all supporting papers therefor,
all letters and comments received by First Bank pertaining thereto, and any
responses by First Bank to such comments.
(x) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
SCHEDULE 1(x), since the date of the First Midlothian Financial Statements,
neither First Midlothian nor First Bank has
(i) issued or sold any of its capital stock or any corporate
debt obligations (except certificates of deposit, letters of credit, cashier's
checks and other documents and instruments issued in the ordinary course of the
banking business of First Bank);
(ii) granted any option for the purchase of any shares of its
capital stock;
(iii) except as otherwise contemplated by this Plan, declared or
set aside any dividend or other distribution in respect of its capital stock, or
directly or indirectly, purchased, redeemed or otherwise acquired any such
capital stock;
(iv) made or authorized any change in its outstanding capital
stock or in its Articles of Association or bylaws;
(v) made any material change in its mode of management or
operation or method of accounting;
(vi) incurred any obligations or liabilities (absolute or
contingent), except any obligations or liabilities incurred in the ordinary
course of business and any obligations or liabilities less than $2,500 but not
exceeding $10,000 in the aggregate, or mortgaged, pledged or subjected to lien
or encumbrance (other than statutory liens not yet delinquent) any of its assets
or properties;
(vii) discharged or satisfied any lien or encumbrance or paid
any obligation or liability (absolute or contingent), other than current
liabilities included in the First Midlothian Financial Statements and current
liabilities incurred since the date thereof in the ordinary course of business;
(viii) sold, exchanged or otherwise disposed of any of its assets
other than in the ordinary course of business;
(ix) made or become obligated to make any capital expenditure
other than an expenditure or commitment which does not exceed $5,000 per
occurrence;
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(x) engaged in any transaction affecting its business or
properties not in the ordinary course of business or suffered any extraordinary
loss;
(xi) paid or become obligated to pay any general wage or salary
increase, bonus, severance or termination pay to any officer or employee,
entered into any employment contract with any officer or employee, instituted
any employee welfare, bonus, stock option, profit-sharing, retirement or similar
plan or arrangement, or granted or agreed to grant any increase in compensation
to any director, except to the extent permitted under SECTION 1(z);
(xii) suffered any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting its properties;
(xiii) waived any rights of value which in the aggregate are
material;
(xiv) experienced any material adverse change in its assets,
properties, business, financial condition, operations, or prospects;
(xv) suffered the occurrence of any event or condition of any
character which may materially and adversely affect its assets, properties,
business, financial condition, operations, or prospects; or
(xiv) entered into any material transactions outside the
ordinary course of business except as expressly contemplated by this Plan.
(y) POWER AND AUTHORITY.
(i) Each Director has the right, power and authority to enter
into this Plan and to consummate the transactions contemplated by this Plan.
This Plan has been duly executed and delivered by each Director and constitutes
a valid and binding obligation enforceable against each Director in accordance
with its terms.
(ii) The respective Boards of Directors of First Midlothian and
First Bank have duly approved this Plan, the Merger Agreements and the
transactions contemplated hereby and thereby, and have authorized the execution
and delivery of this Plan and the Merger Agreements by First Midlothian and
First Bank, as applicable, and such agreements constitute the valid and binding
obligations of First Midlothian and First Bank, enforceable against them
according to their terms and provisions. First Midlothian and First Bank have
full power, authority and legal right to enter into such agreements and, upon
approval of such agreements by regulatory authorities having jurisdiction in the
premises, to consummate the transactions contemplated hereby and thereby. The
execution,
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delivery and performance of this Plan, the Merger Agreements and the
consummation of the transactions contemplated hereby and thereby in accordance
with said agreements will not:
(1) conflict with the Articles of Association or the
bylaws of First Midlothian or First Bank,
(2) result in any breach or termination of, or
constitute a default under, or constitute an event which with notice
or lapse of time, or both, would become a default under, or result in
the creation of any Burden upon any asset of First Midlothian or First
Bank, any agreement, arrangement or commitment, or violate any order,
writ, injunction or decree, to which First Midlothian or First Bank is
a party or by or under which First Midlothian or First Bank or their
respective assets, businesses or operations may be bound or affected
or receive benefits, or
(3) result in the loss or adverse modification of any
license, franchise, permit or other authorization granted to or
otherwise held by First Midlothian or First Bank.
(z) COMPENSATION. SCHEDULE 1(z) contains the name and position of
each person employed by First Midlothian and First Bank whose aggregate annual
compensation from First Midlothian and First Bank (including bonuses and similar
remuneration) exceeds $15,000 and sets forth his total annual compensation.
Neither First Midlothian nor First Bank have any knowledge of facts which would
indicate that employees of either First Midlothian or First Bank will not
continue in First Midlothian's or First Bank's employment on an acceptable
basis, subject to normal turnover. Since the date of the First Midlothian
Financial Statements, except as set forth in SCHEDULE 1(z) neither First
Midlothian nor First Bank has granted or become obligated to grant any increases
in the wages or salary of, or paid or become obligated to pay any bonus or made
or become obligated to make any similar payment to, any officer or employee
(including, without limitation, any increase in the rate of compensation payable
to any of the personnel listed in SCHEDULE 1(z) over the rate shown in SCHEDULE
1(z) in an aggregate amount that, computed on an annual basis, would exceed ten
percent (10%) of such officer's or employee's annual rate of compensation prior
to all such increases, bonuses or similar payments). In addition, since the
date of the First Midlothian Financial Statements, except as set forth in
SCHEDULE 1(z), neither First Midlothian nor First Bank has, directly or
indirectly, paid or become obligated to pay any severance or termination pay to
any officer or employee.
(aa) LABOR RELATIONS. No employee of either First Midlothian or First
Bank is represented, for purposes of collective bargaining, by a labor
organization of any type. There have been no efforts during the past three
years to unionize or organize any
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employees of First Midlothian or First Bank, and no material claim related to
employees of First Midlothian or First Bank under the Fair Labor Standards Act,
National Labor Relations Act, Civil Rights of 1964, Xxxxx-Xxxxx Act, Xxxxx Xxxxx
Act, Civil Rights Act of 1866, Age Discrimination in Employment Act, Equal Pay
Act of 1963, Executive Order No. 11246, Federal Unemployment Tax Act, Vietnam
Era Veterans Readjustment Act, Occupational Safety and Health Act, Americans
with Disabilities Act or any state or local employment related law, order,
ordinance or regulation, and no unfair labor practice, discrimination or wage-
and-hour claim is pending or threatened against or with respect to First
Midlothian or First Bank.
(bb) AVAILABILITY OF DOCUMENTS. First Midlothian and First Bank have
each heretofore made available for inspection by Surety at the offices of First
Midlothian and First Bank true, correct and complete copies of their respective
Articles of Association and bylaws and all agreements, arrangements, commitments
and documents referred to herein or in the schedules referred to herein, in each
case together with all amendments and supplements thereto.
(cc) NON-DEPOSIT CLAIMS. Neither the Directors nor First Midlothian
have any non-deposit claims against First Bank except as otherwise disclosed in
SCHEDULE 1(cc).
(dd) SCHEDULES. All schedules referred to herein furnished or to be
furnished by First Midlothian or First Bank to Surety are (or will be when
furnished) true, correct and complete in all material respects, as supplemented
on the Closing Date.
(ee) FULL DISCLOSURE. No representation or warranty contained in this
SECTION 1 contains any untrue statement of a material fact or omits to state any
material fact necessary to make any such representation, warranty or statement
not misleading.
2. REPRESENTATIONS AND WARRANTIES OF SURETY BANK. Surety and Surety
Bank, jointly and severally, represent and warrant to the Directors, First
Midlothian, and First Bank, as follows:
(a) ORGANIZATION.
(i) Surety is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and is duly
qualified to do business and is in good standing as a foreign corporation in the
State of Texas, which are the only jurisdictions in which the property owned or
leased or the business conducted by it makes such qualification necessary, and
is duly authorized to carry on its business as it is now being conducted.
(ii) Surety Bank is a national banking association duly
organized, validly existing and in good standing under the
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laws of the United States of America. Surety Bank (a) is duly authorized to
conduct a general banking business, in accordance with its charter, subject to
the supervision of the Comptroller; (b) is a member of the Federal Reserve and
is a stockholder of the Federal Reserve Bank of Dallas; (c) is an insured bank
as defined in the Federal Deposit Insurance Act; and (d) has full power and
authority (including all licenses, franchises, permits and other governmental
authorizations which are legally required) to own, lease and operate its
properties and to engage in the business and activities now conducted by it.
(iii) On or before the Closing Date, Newco will be a corporation
duly organized, validly existing and in good standing under the laws of the
State of Texas, which is the only jurisdiction in which the property to be owned
or leased or the business to be conducted by it will make such qualification
necessary, and will be duly authorized to carry on its business as it will be
conducted.
(b) CORPORATE POWER AND AUTHORITY.
(i) The Boards of Directors of Surety and Surety Bank have
duly approved this Plan, the Merger Agreements and the transactions contemplated
hereby and thereby and have authorized the execution and delivery of this Plan
and the Merger Agreements by Surety and Surety Bank. Surety and Surety Bank
have full power, authority and legal right to enter into such agreements and,
upon approval of such agreements by regulatory authorities having jurisdiction
in the premises, to consummate the transactions contemplated hereby and thereby.
The making and performance of this Plan, the Merger Agreements and the
consummation of the transactions contemplated hereby and thereby in accordance
with such agreements will not conflict with the Articles of Association or
bylaws of Surety or Surety Bank.
(ii) On or before the Closing Date, the Board of Directors of
Newco will have duly approved this Plan, the Merger Agreements and the
transactions contemplated hereby and thereby and will have authorized the
execution and delivery of this Plan and the Merger Agreements by Newco. Newco
will have full power, authority and legal right to enter into such agreements
and, upon approval of such agreements by regulatory authorities having
jurisdiction in the premises, to consummate the transactions contemplated hereby
and thereby. The making and performance of this Plan, the Merger Agreements and
the consummation of the transactions contemplated hereby and thereby in
accordance with such agreements will not conflict with the Articles of
Incorporation or bylaws of Newco.
3. COVENANTS OF THE DIRECTORS, FIRST MIDLOTHIAN AND FIRST BANK. The
Directors, each in their individual and representative capacity, First
Midlothian and First Bank each hereby covenant and
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agree with Surety and Surety Bank that, unless the prior written consent of
Surety shall have been obtained:
(a) CONDUCT OF BUSINESS. Prior to the Effective Time (as defined in
the Merger Agreements), First Midlothian and First Bank will each operate their
respective businesses only in the usual, regular and ordinary course, and First
Midlothian and First Bank will each use their best efforts to
(i) preserve intact their business organization and assets,
(ii) except as provided in SCHEDULE 1(x), keep available the
services of its present officers and employees,
(iii) maintain and keep its properties in as good repair and
condition as at present, except for depreciation due to ordinary wear and tear
and damage due to casualty,
(iv) maintain in full force and effect insurance comparable in
amount and scope of coverage to that now maintained by it,
(v) preserve its present relationships with depositors,
customers and others having business dealings with it,
(vi) fully comply with and perform all obligations and duties
imposed upon it by all federal, state and other applicable laws, rules,
regulations and orders imposed by federal, state and other governmental
authorities,
(vii) perform all of its obligations under contracts, leases and
documents relating to or affecting its assets, properties and business,
(viii) cause either First Midlothian or First Bank to take any
action described in SECTION 1(x), and
(ix) prevent the occurrence of any change or event which would
render any of the representations and warranties of the Directors, First
Midlothian and First Bank contained herein and the Merger Agreements untrue in
any material respect at and as of the Closing Date with the same effect as
though such representations and warranties (in the exact language contained in
this Plan or the Merger Agreements with appropriate modifications of tense in
the case of representations and warranties relating to statements of fact as of
specific dates) had been made at and as of the Closing Date, except as otherwise
contemplated by this Plan.
(b) ACCESS TO PROPERTIES AND RECORDS. First Midlothian will keep
Surety and Surety Bank closely advised of all material developments relevant to
the consummation of the Mergers and will cooperate fully in permitting Surety
and Surety Bank to make a full
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investigation of the business, properties, financial condition and investments
of First Midlothian and First Bank and in bringing about the consummation of the
Mergers. Prior to the Closing Date and at the request of Surety, First
Midlothian and First Bank will update by amendment or supplement any of the
schedules referred to herein and any other disclosure in writing from First
Midlothian or First Bank to Surety; and the Directors, First Midlothian and
First Bank hereby represent and warrant (the representations and warranties of
the Directors being to their best knowledge, information and belief only) that
such schedules and such written disclosures, as so amended or supplemented,
shall be true, correct and complete in all material respects as of the Closing
Date; PROVIDED, HOWEVER, that the inclusion of any information in any such
amendment or supplement, not included in the original schedule or written
disclosure at or prior to the date of this Plan, shall not (except to the extent
such information was not required to be included in the original schedule or
written disclosure) limit or impair any right which Surety or Surety Bank might
otherwise have respecting the representations or warranties of the Directors,
First Midlothian and First Bank contained in this Plan.
(c) FURTHER ASSURANCES. Upon request of Surety, First Midlothian and
First Bank, and each of them, will at any time, whether before or after the
Closing Date, and from time to time, duly execute and deliver to Surety all such
further instruments and documents as may be necessary or advisable, in the
opinion of Surety, to obtain the full benefit of this Plan, the Merger
Agreements and the transactions contemplated hereby and thereby.
(d) CHANGED CIRCUMSTANCES. The Directors, First Midlothian and First
Bank shall promptly notify Surety if, prior to the Closing Date, the Directors,
First Midlothian or First Bank discover that any of the representations or
warranties of the Directors, First Midlothian or First Bank contained in this
Plan or the Merger Agreements were not true and correct as of the date hereof,
or by reason of changed circumstances, or otherwise, are no longer true and
correct.
(e) PERIODIC REPORTS AND FINANCIAL STATEMENTS. From the date hereof
to the Closing Date, First Midlothian and First Bank will deliver to Surety
promptly after they become available all periodic reports filed by First
Midlothian and First Bank pursuant to any applicable federal or state securities
laws, any report of First Midlothian to its shareholders, all proxy statements
and other written materials furnished to the shareholders of First Midlothian,
and all press releases issued by First Midlothian and First Bank.
(f) AUDITS.
(i) Within sixty (60) days following the date of this Plan,
First Midlothian will deliver to Surety true, correct and complete copies of the
following consolidated financial state-
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ments of First Midlothian: statement of condition at December 31, 1993,
statement of income for the year ended as of December 31, 1993, and statements
of cash flow and of shareholders' equity for the year ended as of December 31,
1993, together with the notes thereto, as certified by the independent public
accountants of First Midlothian satisfactory to Surety. The First Midlothian
Financial Statements shall be in accordance with the books and records of First
Midlothian, shall present fairly the financial position and results of
operations of First Midlothian, as of the dates and for the periods indicated,
shall be prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, and shall be prepared in
accordance with Regulation S-X promulgated by the Securities and Exchange
Commission.
(ii) Prior to the Closing Date, First Midlothian will deliver
to Surety true, correct and complete copies of the following consolidated
financial statements of First Midlothian: statement of condition at December
31, 1995, statement of income for the year ended as of December 31, 1995, and
statements of cash flow and of shareholders' equity for the year ended as of
December 31, 1995, together with the notes thereto, as certified by the
independent public accountants of First Midlothian satisfactory to Surety. The
First Midlothian Financial Statements shall be in accordance with the books and
records of First Midlothian, shall present fairly the financial position and
results of operations of First Midlothian, as of the dates and for the periods
indicated, shall be prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, and shall be
prepared in accordance with Regulation S-X promulgated by the Securities and
Exchange Commission.
(g) PERSONNEL CHANGES. From the date of this Plan and until the
Closing, neither First Midlothian nor First Bank shall cause any changes to be
made in the officers or directors of First Midlothian or First Bank, except with
the prior written approval of Surety, which approval shall not be unreasonably
withheld.
(h) OFFICERS' CERTIFICATE. At the Closing Date, First Midlothian
will furnish to Surety a certificate executed in its corporate name by an
officer of First Midlothian, dated the Closing Date, which shall state whether
(i) First Midlothian and First Bank have complied in all material respects with
their respective agreements contained herein and in the Merger Agreements to be
performed at or prior to the Closing Date, and (ii) the representations and
warranties of First Midlothian and First Bank contained herein and in the Merger
Agreements are true in all material respects at and as of the Closing Date with
the same effect as though such representations and warranties (in the exact
language contained in this Plan or in the Merger Agreements with appropriate
modification of tense in the case of representations and warranties relating to
statements of fact as of specified dates) had been made at and as
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of the Closing Date, except as otherwise contemplated by this Plan or the Merger
Agreements.
(i) DIRECTORS' CERTIFICATE.
(i) At the Closing Date, the Directors will each furnish to
Surety a certificate dated the Closing Date which shall state whether (i) the
Directors have complied in all material respects with their respective
agreements contained herein and in the Merger Agreements to be performed at or
prior to the Closing Date, and (ii) the representations and warranties of the
Directors, First Midlothian, and First Bank contained herein and in the Merger
Agreements are true in all material respects at and as of the Closing Date with
the same effect as though such representations and warranties (in the exact
language contained in this Plan or in the Merger Agreements with appropriate
modification of tense in the case of representations and warranties relating to
statements of fact as of specified dates) had been made at and as of the Closing
Date, except as otherwise contemplated by this Plan or the Merger Agreements.
(ii) At the Closing Date, the shareholders of First Midlothian
who are not Directors will each furnish to Surety a certificate executed in each
such shareholder's individual or representative capacity dated the Closing Date,
pursuant to which such shareholder shall warrant and represent that such
shareholder has good and marketable title to and the absolute right to sell,
assign, and transfer the shares of First Midlothian Common Stock registered in
such shareholder's name free and clear of any interests, security interests,
claims, liens, pledges, penalties, charges, encumbrances, buy-sell agreements,
preemptive rights or rights of any shareholder of First Midlothian or any party
whatsoever of every kind and character and that such shareholder has the right,
power, and authority to ability to transfer such shares of First Midlothian
Common Stock in accordance with the terms and provisions of this Plan and the
Merger Agreements.
(j) APPROVALS OF THIRD PARTIES. As soon as practicable after the
date of this Plan, First Midlothian and First Bank will use their best efforts
to provide Surety and Surety Bank such information concerning First Midlothian
and First Bank as Surety and Surety Bank may request in order to secure the
approval of the Mergers by regulatory authorities having jurisdiction over bank
holding companies and banks, and will otherwise use their best efforts to cause
the consummation of the Mergers in accordance with the terms and conditions of
this Plan and the Merger Agreements.
(k) FINANCIAL INFORMATION. First Midlothian will deliver, or will
cause to be delivered, to Surety, as soon as available, but in any event
concurrently with the delivery thereof to the Board of Directors of First Bank,
commencing with the month of October 1995, the monthly financial statements and
other information, financial or otherwise, of First Bank and First Midlothian
-23-
which First Bank furnishes to its Board of Directors in connection with the
meetings of its Board of Directors and such other information as Surety may
reasonably require. Additionally, First Midlothian will deliver to Surety on at
least a monthly basis a schedule of past due loans, a schedule reflecting First
Bank's investment portfolio at book and market values, a schedule of First
Bank's ORE property, and such other information as may be requested by Surety.
(l) PROXY MATERIAL AND MEETING OF SHAREHOLDERS. As soon as
practicable after the date of this Plan, First Midlothian and First Bank will
submit this Plan and the Merger Agreements to their respective shareholders for
approval at a meeting of shareholders called for the purpose of voting thereon.
(m) VOTING. The Directors each hereby covenant and agree to vote all
of their First Midlothian Common Stock in favor of the Holding Company Merger at
the meeting of the shareholders of First Midlothian called to consider and vote
upon the Holding Company Merger Agreement. First Midlothian hereby covenants
and agrees to vote all of its First Bank Common Stock in favor of the Bank
Merger at the meeting of the shareholders of First Bank called to consider and
vote upon the Bank Merger Agreement.
(n) ATTENDANCE AT MEETINGS OF THE BOARDS OF DIRECTORS. From the date
hereof until the Closing, First Midlothian and First Bank shall give Surety and
Surety Bank at least three (3) days' prior written notice of any regular or
special meeting of the Boards of Directors of First Midlothian and First Bank
(or of any committee thereof) and permit a representative of Surety or Surety
Bank approved by First Bank to attend each of such meetings. First Midlothian
and First Bank acknowledge that C. Xxxx Xxxx, Xxxxx X. Xxxxxxx, X. X.
Xxxxxxxxxxx, III, X. X. Xxxxxx and Xxxxxx X. Xxxxx are each approved as
individuals that may attend any of such meetings.
(o) DEBENTURES. First Midlothian shall pay all principal of, and
interest on, the Debentures as and when such payments shall become due and
payable under the Debentures. First Midlothian shall not enter into any
amendment or modification of any of the Debentures without the prior written
consent of Surety.
4. COVENANTS OF SURETY AND SURETY BANK. Surety and Surety Bank each
hereby covenant and agree with First Midlothian as follows:
(a) OFFICERS' CERTIFICATE. At the Closing Date, Surety will furnish
to First Midlothian a certificate of Surety executed in its corporate name by
the president of Surety, dated the Closing Date, which shall state whether (i)
Surety, Surety Bank and Newco have complied in all material respects with their
agreements contained herein and in the Merger Agreements to be performed at or
prior to the Closing Date, and (ii) the representations and
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warranties of Surety and Surety Bank contained herein and in the Merger
Agreements are true in all material respects at and as of the Closing Date with
the same effect as though such representations and warranties (in the exact
language contained in this Plan or the Merger Agreements with appropriate
modification of tense in the case of representations and warranties relating to
statements of fact as of specified dates) had been made at and as of the Closing
Date, except as otherwise contemplated by this Plan or the Merger Agreements.
(b) PROXY MATERIAL AND MEETING OF SHAREHOLDERS. As soon as
practicable after the date of this Plan, Surety and Surety Bank will cause Newco
to submit this Plan and the Holding Company Merger Agreement to its shareholders
for approval at a meeting of shareholders called for the purpose of voting
thereon. Additionally, as soon as practicable after the date of this Plan,
Surety Bank will prepare a proxy statement, notice of meeting and form of proxy
to be used in connection with a meeting of its shareholders to consider and vote
upon the transactions contemplated in this Plan and the Bank Merger Agreement,
to use its best efforts to obtain the authorization of the Comptroller for
Surety Bank to furnish such proxy material to its shareholders, to thereafter
duly call and hold said meeting of its shareholders, to submit and recommend to
its shareholders the approval of the transactions contemplated in this Plan and
the Bank Merger Agreement and to cause to be furnished to each such shareholder
a copy of such proxy material.
(c) VOTING. Surety Bank hereby covenants and agrees to vote all of
its shares of common stock of Newco in favor of the Holding Company Merger at
the meeting of the shareholders of Newco called to consider and vote upon the
Holding Company Merger Agreement. Surety hereby covenants and agrees to vote
all of its shares of common stock of Surety Bank in favor of the Bank Merger at
the meeting of the shareholders of Surety Bank to consider and vote upon the
Bank Merger Agreement.
(d) APPROVALS OF THIRD PARTIES. As soon as practicable after the
date of this Plan, Surety and Surety Bank will use their best efforts to secure
all necessary approvals of third parties, including without limitation
regulatory authorities having jurisdiction over banks and bank holding
companies, that shall be required in order to form Newco as an operating subsid-
iary of Surety Bank and to effect the Mergers and will otherwise use their best
efforts to cause the consummation of the Mergers in accordance with the terms
and conditions of this Plan and the Merger Agreements.
(e) PAYMENT. As and when required by the provisions of the Holding
Company Merger Agreement, Surety Bank shall pay to the shareholders of First
Midlothian such sums to which such shareholders are entitled under SECTION 5(a)
of the Holding Company Merger Agreement.
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(f) NOTIFICATION AS TO MATERIAL DEVELOPMENTS. Surety will keep First
Midlothian and First Bank closely advised of all material developments relevant
to the consummation of the Mergers.
(g) FURTHER ASSURANCES. Upon request of First Midlothian, Surety and
Surety Bank, and each of them, will at any time, whether before or after the
Closing Date, and from time to time, duly execute and deliver to First
Midlothian all such further instruments and documents as may be necessary or
advisable, in the opinion of First Midlothian, to obtain the full benefit of
this Plan, the Merger Agreements, and the transactions contemplated hereby and
thereby.
(h) CHANGED CIRCUMSTANCES. Surety and Surety Bank shall promptly
notify First Midlothian if Surety or Surety Bank discover that any of the
representations or warranties of Surety or Surety Bank contained in this Plan or
the Merger Agreements were not true and correct as of the date hereof, or by
reason of changed circumstances, or otherwise, are no longer true and correct.
5. MUTUAL REPRESENTATIONS AND COVENANTS. Surety, Surety Bank, the
Directors, each in their individual and representative capacity, First
Midlothian and First Bank mutually represent and covenant as follows:
(a) FURNISHING INFORMATION AND INDEMNIFICATION. The parties to this
Plan have furnished, or will furnish as soon as practicable after the date of
this Plan, to each other such information as the other has requested or may
request concerning itself required for inclusion in
(i) applications (or waivers therefrom) to be filed on behalf
of Newco with the Federal Reserve for authority to consummate the Holding
Company Merger and applications to be filed on behalf of Surety Bank with the
Comptroller for authority to consummate the Bank Merger, and
(ii) any other request, application, statement, report or
material to be made or filed by Surety, Surety Bank, Newco, First Midlothian or
First Bank to or with any governmental agency, department or instrumentality in
connection with the transactions contemplated in this Plan, in the Merger
Agreements, or otherwise.
Surety, Surety Bank, the Directors, First Midlothian and First Bank each
represent and warrant to the other that, to their best knowledge, information
and belief, all information so furnished for such requests, statements,
applications, reports and material shall be true and correct in all material
respects without omissions of any material fact required to be stated to make
the information not misleading. Surety and Surety Bank, on the one hand, and
the Directors, First Midlothian and First Bank, on the other hand, will
indemnify and hold harmless each other, each of the other's
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directors and officers, and each person, if any, who controls the other within
the meaning of the 1933 Act, from and against any and all losses, damages,
expenses or liabilities to which the other, or any such director, officer or
controlling person may become subject under applicable laws (including the Bank
Holding Company Act of 1956, as amended) and rules and regulations thereunder
and will reimburse the other, and any such director, officer or controlling
person for any legal or other expenses reasonably incurred in connection with
investigating or defending any actions whether or not resulting in liability,
insofar as such losses, 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 request, statement, application, report or material
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 not misleading, but only insofar as any such
statement or omission was made in reliance upon and in conformity with
information furnished in writing in connection therewith by such indemnifying
party expressly for use therein.
(b) NO AGENT'S FEE. Each party hereto represents to and covenants
that there is no agent's, broker's or finder's fee or commission payable or that
will be payable in connection with the transactions contemplated in this Plan or
the Merger Agreements by virtue of or resulting from any action or agreement by
it other than a fee in the amount of approximately $170,000 payable to Service
Asset Management Company ("Agent") upon the consummation of the transactions
contemplated by this Plan. If, but only if, the transactions are consummated
pursuant to this Plan and the Merger Agreements, First Midlothian shall pay
Agent such fee. Surety Bank and Surety, on the one hand, and the Directors,
First Midlothian and First Bank, on the other hand, hereby agree to indemnify
and hold harmless each other from and against any claim, demand, liability,
loss, cost or expense (including court costs and attorneys' fees) on account of
or in connection with any agent's, broker's or finder's fees or commissions
payable or alleged to be payable in connection with this Plan, the Merger
Agreements or the transactions contemplated hereby or thereby by virtue of or
resulting from any action or agreement on the part of such indemnifying party.
6. CONDITIONS TO OBLIGATIONS OF PARTIES. The obligations of Surety,
Surety Bank, the Directors, First Midlothian and First Bank to cause the Mergers
to be consummated shall be subject to the satisfaction on or prior to the
Closing Date of each of the following conditions, unless such condition shall,
on or prior to the Closing Date, have been waived in writing by Surety and First
Midlothian:
(a) APPROVALS OF THIRD PARTIES. All orders, consents, waivers, and
approvals necessary in order for the transactions contemplated hereby to be
lawfully accomplished shall have been
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entered by each regulatory authority having jurisdiction in the premises,
including the Comptroller and the Federal Reserve, upon terms and conditions
satisfactory to First Midlothian and Surety; all applicable statutory waiting
periods shall have expired; and all necessary orders, consents and approvals
referred to in SECTION 3(j) and SECTION 4(d) hereof shall have been given by
third parties, upon terms and conditions satisfactory to First Midlothian and
Surety.
(b) LITIGATION. At the Closing Date, there shall not be pending or
threatened any litigation in any court or any proceeding before or by any
governmental department, agency or instrumentality,
(i) in which it is sought to restrain or prohibit or obtain
damages in respect of the consummation of the Mergers, or
(ii) as a result of which, in the reasonable judgment of Surety
or First Midlothian, either Surety, Surety Bank, First Midlothian, First Bank,
or their respective shareholders could be deprived of any of the material
benefits of the Mergers.
7. CONDITIONS TO SURETY AND SURETY BANK'S OBLIGATIONS. The obligations
of Surety and Surety Bank to cause the Mergers to be consummated shall be
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions, unless Surety and Surety Bank shall have waived such
condition in writing:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DIRECTORS, FIRST
MIDLOTHIAN AND FIRST BANK. The Directors, First Midlothian and First Bank shall
each have complied in all material respects with each agreement or covenant made
by it in this Plan or in the Merger Agreements and to be performed by it at or
prior to the Closing Date, and each representation or warranty of the Directors,
First Midlothian and First Bank contained in this Plan or the Merger Agreements
shall be accurate in all material respects at and as of the Closing Date with
the same effect as though such representation or warranty (in the exact language
contained in this Plan or the Merger Agreements with appropriate modification of
tense in the case of representations and warranties relating to statements of
fact as of specified dates) had been made at and as of the Closing Date, except
as otherwise contemplated by this Plan or the Merger Agreements.
(b) FURTHER ACTION. Each and every action required of the Directors,
First Midlothian and First Bank by this Plan to effect the Merger shall have
been taken.
(c) OTHER CERTIFICATES.
(i) First Midlothian shall have furnished to Surety
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(1) a certificate from the Secretary of State of the
State of Texas dated not more than thirty (30) days prior to the
Closing Date attesting to First Midlothian's existence as a Texas
corporation and certifying as to all charter documents on file
with respect to First Midlothian,
(2) a certificate from the Secretary of State of the
State of Texas dated not more than thirty (30) days prior to the
Closing Date attesting to First Midlothian's good standing as a
Texas corporation,
(3) copies, certified by the Secretary of State of the
State of Texas as of a date not more than thirty (30) days prior
to the Closing Date, of the Articles of Incorporation and all
amendments thereto of First Midlothian,
(4) copies, certified by the Secretary of First
Midlothian as of the Closing Date, of the bylaws of First
Midlothian as amended as of the Closing Date,
(5) a certificate of the Secretary of First Midlothian
dated the Closing Date attesting to the adoption of all
resolutions by its directors and shareholders and the taking of
all such other corporate action by First Midlothian as shall have
been required for consummation of the Mergers, and
(6) the shareholders certificates
provided for in SUBSECTION (ii) OF SECTION 3(i).
(ii) First Bank shall have furnished to Surety
(1) a certificate from the Comptroller dated not more
than thirty (30) days prior to the Closing Date attesting to
First Bank's existence as a national banking association and
certifying as to all charter documents on file with respect to
First Bank,
(2) a certificate from the Comptroller dated not more
than thirty (30) days prior to the Closing Date attesting to
First Bank's good standing as a national banking association,
(3) copies, certified by the Comptroller as of a date
not more than thirty (30) days prior to the Closing Date, of the
Charter and all amendments thereto of First Bank,
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(4) copies, certified by the Cashier of First Bank as of
the Closing Date, of the Articles of Association and bylaws of
First Bank as amended as of the Closing Date, and
(5) a certificate of the Cashier of First Bank dated the
Closing Date attesting to the adoption of all resolutions by its
directors and shareholders and the taking of all such other
corporate action by First Bank as shall have been required for
consummation of the Bank Merger.
(iii) Each of the Directors and the other shareholders of First
Midlothian shall have furnished to Surety the certificate provided for in
SUBSECTION (i) OF SECTION 3(i).
(d) SHAREHOLDER APPROVAL.
(i) At a meeting of the shareholders of First Midlothian duly
called and held for such purpose, the transactions contemplated in this Plan and
the Holding Company Merger Agreement shall have been duly approved by the
requisite vote of such shareholders.
(ii) At a meeting of the shareholders of First Bank duly called
and held for such purpose, the transactions contemplated in this Plan and the
Bank Merger Agreement shall have been duly approved by First Midlothian as the
sole shareholder of First Bank.
(e) FINANCIAL RESOURCES. Surety shall have sufficient financial
resources available, in the sole opinion of Surety, to consummate the
transactions contemplated by this Plan and the Merger Agreements.
(f) MATERIAL ADVERSE CHANGE. Neither First Midlothian nor First Bank
shall have, in the opinion of Surety and Surety Bank, suffered any material
adverse change in their financial condition, business, operations, prospects,
properties or assets.
(g) EDS CONTRACT. First Midlothian shall have calculated the cost of
terminating that certain data processing agreement between First Bank and
Electronic Data Systems ("EDS") dated April 1, 1992 (the "EDS Contract") as of
the conversion date selected by Surety, which date shall not be before the
Closing Date (the "Termination Fee"), and shall have advised Surety of the
amount thereof. Additionally, if requested by Surety, Surety shall have
received written confirmation from EDS, satisfactory to Surety, that the
Termination Fee, as calculated by First Midlothian, is correct and that upon
payment thereof to EDS, the EDS Contract shall be terminated and be of no
further force and effect.
(h) EXPENSES. First Midlothian shall have paid, or retained as of
the Closing Date sufficient cash to pay, all
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expenses accrued or incurred on or before the Closing Date, including those
expenses related to the transactions contemplated by this Plan to be paid by
First Midlothian, as provided for in SECTION 9 of this Plan.
(i) DISSENTERS' RIGHTS. Holders of no more than five percent (5%) of
the issued and outstanding shares of First Midlothian Common Stock shall have
exercised their right to dissent from the Holding Company Merger.
(j) SCHEDULES. The schedules provided for in this Plan shall have
been prepared and delivered to Surety by First Midlothian pursuant to SECTION 17
of this Plan and shall be satisfactory in all respects to Surety.
8. CONDITIONS TO OBLIGATIONS OF THE DIRECTORS, FIRST MIDLOTHIAN AND FIRST
BANK. The obligations of the Directors, each in their individual and
representative capacity, First Midlothian and First Bank to cause the Mergers to
be consummated shall be subject to the satisfaction on or prior to the Closing
Date of each of the following conditions, unless First Midlothian shall have
waived such condition in writing:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS OF SURETY AND SURETY
BANK. Surety, Surety Bank and Newco shall each have complied in all material
respects with each agreement or covenant made by it in this Plan or in the
Merger Agreements and to be performed by it at or prior to the Closing Date, and
each representation or warranty of Surety and Surety Bank contained in this Plan
or in the Merger Agreements shall be accurate in all material respects at and as
of the Closing Date with the same effect as though such representation or
warranty (in the exact language contained in this Plan or the Merger Agreements
with appropriate modification of tense in the case of representations and
warranties relating to statements of fact as of specified dates) had been made
at and as of the Closing Date, except as otherwise contemplated by this Plan or
the Merger Agreements.
(b) FURTHER ACTION. Each and every action required of Surety and
Surety Bank to effect the Mergers shall have been taken.
(c) OTHER CERTIFICATES. Surety Bank shall have furnished to First
Midlothian
(i) a certificate of the Comptroller dated not more than
thirty (30) days prior to the Closing Date attesting to Surety Bank's
organization and good standing as a national banking association,
(ii) copies, certified by the Comptroller as of a date not more
than thirty (30) days prior to the Closing Date, of the Charter and all
amendments thereto of Surety Bank, and
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(iii) a certificate of the Cashier of Surety Bank, dated the
Closing Date, attesting to the adoption of all resolutions by the directors and
shareholders and the taking of all other corporate action by Surety Bank as
shall have been required for consummation of the Bank Merger.
(d) APPROVAL BY SHAREHOLDERS.
(i) At a meeting of the shareholders of Surety Bank duly
called and held for such purpose, the transactions contemplated in this Plan and
the Bank Merger Agreement shall have been duly approved by the requisite vote of
such shareholders.
(ii) At a meeting of the shareholders of Newco duly called and
held for such purpose, the transactions contemplated in this Plan and the
Holding Company Merger Agreement shall have been duly approved by the requisite
vote of Surety Bank as the sole shareholder of Newco.
9. EXPENSES. The Directors, First Midlothian and First Bank, on the one
hand, and Surety and Surety Bank, on the other hand, shall each bear and pay all
costs and expenses incurred by such parties on their own behalf in connection
with the proceedings relating to this Plan, the Mergers, including, without
limiting the generality of the foregoing, fees and expenses of its own financial
consultants, accountants and legal counsel. Surety shall pay all reasonable
expenses and costs incurred by Surety in connection with its efforts to obtain
any necessary approvals or waivers of any governmental regulatory authority
having control or jurisdiction over any transactions contemplated by this Plan,
including applicable filings with the Comptroller and the Federal Reserve, and
one-half (1/2) of the appraisal fees, if any, pursuant to SECTION 5 of the
Holding Company Merger Agreement and one-half of the Termination Fee pursuant to
SECTION 7(g) of this Plan. First Midlothian shall pay all expenses and costs
related to the audits provided for in SECTION 3(f) of this Plan, the agent's fee
provided for in SECTION 5(b) of this Plan, one-half (1/2) of the Termination Fee
pursuant to SECTION 7(g) of this Plan, and one-half (1/2) of the appraisal fees,
if any, pursuant to SECTION 5 of the Holding Company Merger Agreement.
10. WARRANTIES AT CLOSING: SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All of the warranties and representations of each party to this Plan and the
Merger Agreements are not only true and correct as of the date of this Plan, but
also shall be true and correct as of the Closing Date with the same force and
effect as if made on and as of the Closing Date. All of the warranties,
representations, covenants and agreements made by the parties in this Plan or in
any schedule, exhibit, list or other instrument delivered pursuant to or in
connection with this Plan, shall survive for one (1) year (except for all
warranties, representations, covenants and agreements relating to taxes, which
shall survive for four (4) years after the filing of the return to which same
relates)
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following the Closing and remain operative and in full force and effect during
such period of time regardless of any investigation at any time made by or on
behalf of the party to whom or with whom the warranty, representation, covenant
or agreement is made and shall not be deemed merged into any document or
instrument executed or delivered at Closing; PROVIDED, HOWEVER, that no party to
this Plan and/or the Merger Agreements shall have a continuing duty after the
Closing Date to update any representation or warranty contained herein or there-
in.
11. INDEMNIFICATION BY THE DIRECTORS, FIRST MIDLOTHIAN AND FIRST BANK.
(a) The Directors, each in their individual and representative
capacity, First Midlothian and First Bank shall each, jointly and severally,
indemnify and hold Newco, Surety Bank, Surety and their respective officers,
directors, employees, agents, successors and assigns (collectively, the
"Indemnified Parties") harmless from and against any and all claims, demands,
losses, damages, suits, judgments and expenses of any description whatever
(including without limitation all costs and expenses, including attorneys' fees,
incurred in investigating into or defending against any such claim, demand or
suit) which an Indemnified Party may at any time suffer, sustain or have
asserted against it, and which in any manner arises out of or in connection with
any breach by the Directors, First Midlothian or First Bank of any warranty or
representation contained in this Plan or in any instrument given pursuant to
this Plan, including those deemed to have been made on the Closing Date under
SECTION 7(a), or any breach or failure by the Directors, First Midlothian or
First Bank to keep or perform any of their respective covenants, agreement or
undertakings contained in this Plan or in any instrument given by the Directors,
First Midlothian or First Bank pursuant to this Plan.
(b) Surety and Surety Bank shall each, jointly and severally,
indemnify and hold the Directors, First Midlothian and First Bank, and their
respective officers, directors, employees, agents, successors and assigns
(collectively, the "Indemnified Parties") harmless from and against any and all
claims, demands, losses, damages, suits, judgments and expenses of any
description whatever (including without limitation all costs and expenses,
including attorneys' fees, incurred in investigating into or defending against
any such claim, demand or suit) which an Indemnified Party may at any time
suffer, sustain or have asserted against it, and which in any manner arises out
of or in connection with any breach by Surety Bank or Surety of any warranty or
representation contained in this Plan or in any instrument given pursuant to
this Plan, including those deemed to have been made on the Closing Date under
SECTION 8(a), or any breach or failure by Surety Bank or Surety to keep or
perform any of Surety Bank's or Surety's covenants, agreement or undertakings
contained in this Plan or in any instrument given by Surety Bank and Surety
pursuant to this Plan.
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(c) If any warranty or representation made by any of the parties
hereto in this Plan or in any instrument given pursuant to this Plan shall be
determined to be untrue, then such party or parties (the "Indemnifying Party")
shall pay the Indemnified Party an amount equal to the amount which it would
cost, at the time the untruth is discovered, to put each Indemnified Party in
the position that each would have been in had the warranty or representation
been true.
(d) Any payments becoming due to the Indemnified Party under this
SECTION 11 shall be payable by the Indemnifying Party to the Indemnified Party
upon demand at the Indemnified Party's offices together with interest thereon at
the highest lawful rate per annum from date of loss until date of payment. The
Indemnifying Party shall pay to the Indemnified Party reasonable attorneys' fees
incurred by the Indemnified Party in enforcing the Indemnifying Party's
obligations under this SECTION 11.
12. INCOME TAXES, AUDITS, LITIGATION, AND INDEMNITIES. For purposes of
this SECTION 12, Newco, Surety Bank, Surety and their respective officers,
directors, employees, agents, successors and assigns shall be collectively
referred to as the "Surety Group."
(a) The Directors, each in their individual and representative
capacity, jointly and severally, shall be responsible for all federal, state,
and local income, franchise, and other tax liabilities of either First
Midlothian or First Bank for all periods prior to the consummation of the
Mergers and for solely federal income and Texas franchise tax liabilities that
are incurred by Surety, Surety Bank, Newco, First Midlothian, or First Bank as a
result of any of the transactions contemplated by the Mergers and/or the
subsequent liquidation of First Midlothian being held to be a taxable
acquisition or disposition of assets or other taxable transaction (collectively
the "Tax Liabilities").
(b) The Directors, each in their individual and representative
capacity, agree that the certified public accounting firm retained by First
Midlothian shall provide to Surety in final form all tax reporting information
for First Midlothian and First Bank for the period ending with and at the
completion of the Mergers, and Surety agrees to prepare and timely file all
income, franchise, and other tax returns for the tax reporting periods of First
Midlothian and First Bank that include the periods for which such information
was furnished. Each party shall pay its own expense in this regard. In
addition, Surety agrees to provide the Directors with a copy of any tax return
or report at least thirty (30) days prior to the final filing date for same.
(c) Except to the extent the Tax Liabilities were reflected in the
First Midlothian Financial Statements, the Directors shall pay to the
appropriate party in the Surety Group (within five (5) days prior to the
applicable due date, taking into account any applicable extensions) the Tax
Liabilities and any
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deficiencies, assessments, penalties, interest, and other costs attributable to
the Tax Liabilities, together with the costs of contesting same, and the
Directors, each in their individual and their representative capacity, hereby
agree, jointly and severally, to indemnify and hold the Surety Group harmless
for same. Any such payments owed under the foregoing shall be paid within
fifteen (15) days after a written notice is given to the Directors of such
amount being due and, if not so paid, such amount shall accrue interest at the
rate of fourteen percent (14%) per annum from the end of such fifteen (15) day
period to the date paid.
(d) Upon receipt of any notices, letters, or adjustments relating to
periods for which Tax Liabilities may be calculated, the party receiving such
notice agrees to immediately send a copy of any such notices, letters, or
adjustments to the other party. Furthermore, the parties agree to cooperate in
the handling of any audit with the appropriate taxing authority or in tax
litigation for such periods.
(e) Each party will preserve all records relating to tax reporting
requirements for periods through the consummation of the Mergers for a period of
seven (7) years after the date on which the tax return or information report was
or is filed, and shall permit the other party to have access to and the right to
photocopy these records.
(f) Each party agrees to cooperate with the other in carrying out the
provisions of this SECTION 12 by furnishing to the other all information and
documentation necessary to comply with the purpose and intent of the parties'
agreements contained in this SECTION 12.
(g) If any deficiencies are proposed or assessed against the Surety
Group with respect to the Tax Liabilities, the Directors desire to defend
against such proposed or assessed deficiencies, and the Directors pay for the
expenses of any audits, court proceedings, tax deficiencies, interest,
penalties, etc., the Surety Group hereby agrees that the Directors and counsel
of its choosing may defend and compromise such proposed or assessed
deficiencies. In such event, the Surety Group shall receive, in a timely
manner, copies of (1) all correspondence and other written communications with
the taxing authority and from counsel, (2) all items filed with the court,
administrative review or appeal officer, or other deciding body, and (3) any
supporting information that the Directors may have in their possession or that
the Directors can reasonably obtain from other sources.
(h) If any deficiencies are proposed or assessed against the Surety
Group concerning the Tax Liabilities and the Directors elect to defend same, the
Directors agree to pursue such defense with due diligence, and they further
agree to pay all costs of a tax audit or tax litigation, including all past due
taxes, interest, deficiencies, penalties, and other costs associated therewith,
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including direct costs incurred by the Surety Group in connection with providing
information and support for such defense.
(i) Surety, as the parent of that group of affiliate companies filing
a federal consolidated income tax return, and as the party responsible for the
filing or causing to be filed any Texas franchise tax returns for itself or for
its affiliates, shall be obligated to pay to the shareholders of First
Midlothian any decrease in federal income taxes or Texas franchise tax realized
by Surety and its affiliates because of either an audit adjustment, amended tax
return or claim for refund that is directly attributable to the activities of
First Midlothian and/or First Bank for the pre-merger period for which such
shareholders have not been previously compensated. If statutory interest is
received by Surety in connection with such audit adjustment, amended tax return,
or claim for refund, this amount shall also be paid to such shareholders. Any
amounts owed to the shareholders of First Midlothian shall be paid within
fifteen (15) days of Surety's receipt of same.
13. NOTICES. Any notice, request, instruction or other document to be
given hereunder or under the Merger Agreements by any party hereto shall be in
writing and delivered personally or sent by certified mail, return receipt
requested, postage prepaid, if to Surety Bank or Surety to:
Mr. C. Xxxx Xxxx
Surety Capital Corporation
0000 Xxxxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxx, Xxxxx 00000
with a copy to:
Xx. Xxxxxxxx X. Xxxxxxx
Xxxxx & Xxxxxxx
000 X. Xxxxxxx Xx., Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000
and if to the Directors, First Midlothian or First Bank to:
Mr. Xxx Xxxxxxx
First Midlothian Corporation
000 X. Xxxxx
Xxxxxxxxxx, Xxxxx 00000
with a copy to:
Xx. Xxxxxxx X. Xxxxx
Xxxxxxxxx & Xxxxxxxxx, L.L.P.
0000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
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or at such other address for a party as shall be specified by like notice.
14. SPECIFIC PERFORMANCE. The parties hereby declare that it is
impossible to measure in money the damages which will accrue to a party hereto,
his heirs, executors, administrators, legal representatives, successors or
assigns, by reason of the failure of any other party to perform any of the
obligations hereunder. Therefore, if a party hereto, his heirs, executors,
administrators, legal representatives, successors or assigns, shall institute
any action or proceeding to enforce the provisions hereof, any party against
whom such action or proceeding is brought hereby agrees that specific
performance may be sought and obtained for any breach of this Plan or the Merger
Agreements without the necessity of proving actual damages; PROVIDED, HOWEVER,
that any party hereto may, at its option, waive his right to specific
performance and collect damages resulting from any breach or failure to perform
hereunder.
15. CONFIDENTIALITY. Except as necessary or appropriate in connection
with any statement, application or other document filed with applicable
governmental authorities in connection with the transactions contemplated by
this Plan and the Merger Agreements, the parties hereto will, and will cause
their respective officers and authorized representatives to, hold in confidence
all, and not disclose to others for any reason whatsoever any, nonpublic
information received by it from the other parties hereto, or any of them, in
connection with the transactions contemplated by this Plan and the Merger
Agreements.
16. ATTORNEYS' FEES. If any action at law or in equity, including any
action for declaratory relief, is brought to enforce or interpret the provisions
of this Plan or the Merger Agreements, the prevailing party shall be entitled to
recover reasonable attorneys' fees from the other party or parties, which fees
may be set by the court in the trial of such action or may be enforced in a
separate action brought for that purpose.
17. MISCELLANEOUS. This Plan and the Merger Agreements constitute the
entire contract and shall supersede all prior agreements and understandings,
both written and oral, between the parties hereto and thereto with respect to
the subject matter hereof and thereof and no party shall be liable or bound to
the other in any manner by any warranties or representations except as
specifically set forth herein or in the Merger Agreements or expressly required
to be made or delivered pursuant hereto or thereto. Each of the attachments,
schedules, lists and exhibits called for by this Plan and the Merger Agreements
is made a part of this Plan and the Merger Agreements the same as if set out
verbatim at each point where reference is made to it. The schedules to be
prepared by First Midlothian in connection with this Plan shall be delivered to
Surety within ten (10) days of the date of this Plan. The terms and conditions
of this Plan and the Merger Agreements
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shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties hereto and thereto, but nothing contained herein shall be
construed as a consent to any assignment of this Plan or the Merger Agreements
by the parties hereto or thereto, or any of them. Nothing in this Plan or in
the Merger Agreements, express or implied, is intended to confer upon any party,
other than the parties hereto and thereto, and their respective successors and
assigns, any rights, remedies, obligations or liabilities under or by reason of
such agreements, except as expressly provided herein or therein. The provisions
of SECTIONS 9, 10, 11 AND 12 of the Holding Company Merger Agreement and
SECTIONS 8, 9, 10 AND 11 of the Bank Merger Agreement are hereby incorporated
into this Plan for all purposes. This Plan may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument, but only one of which
need be produced. The headings of the Sections and Subsections of this Plan are
inserted for convenience only and shall not be deemed to constitute part of this
Plan or to affect the construction hereof. As used in this Plan, the words
"herein", "hereof", and "hereunder" and other words of similar import refer to
this Plan as a whole and not to any particular section, subsection or other
subdivision. Unless context otherwise requires, words in the singular number
include the plural and the plural include the singular, and words of the
masculine gender include the feminine and neuter genders and words of the neuter
gender referred to any gender. In case any one or more of the provisions
contained in this Plan or the Merger Agreements shall for any reason be held to
be invalid, illegal or unenforceable in any respect, such invalidity,
illegality, or unenforceability shall not affect any other provisions hereof or
thereof, and this Plan and the Merger Agreements shall be construed as if such
invalid, illegal or unenforceable provisions had never been contained herein and
therein. This Plan shall be construed in accordance with the laws of the State
of Texas. All disputes arising out of this Plan and/or the Merger Agreements
shall be litigated in Tarrant County, Texas and, to the extent such a dispute
relates to the alleged breach of a warranty or representation by a party to this
Plan, any suit initiated with respect to such a dispute shall be commenced on or
before the expiration of such warranty or representation pursuant to SECTION 10
of this Plan. No term or condition of this Plan or the Merger Agreements shall
be deemed to have been waived, nor shall there be any estoppel to enforce any
provision of this Plan or the Merger Agreements, except by written instrument
signed by the party charged with such waiver or estoppel.
18. BREAKUP FEE. In the event Surety elects to abandon the Merger Plan by
written notice to such effect to First Midlothian
-38-
(the "Election") pursuant to SECTION 7(e) of this Plan, as a result of Surety's
inability to have sufficient financial resources available, in the sole opinion
of Surety, to consummate the transactions contemplated by the this Plan and the
Merger Agreements, Surety shall pay to First Midlothian a break-up fee, as
follows, and upon payment thereof, none of the parties to this Plan nor the
Merger Agreements shall have any further obligations to each other, except as
expressly set forth in this SECTION 18:
(a) If Surety makes the Election on or before December 31,
1995, Surety shall pay to First Midlothian the sum of
TWENTY-FIVE THOUSAND AND NO/100 DOLLARS ($25,000)
concurrently with the mailing of the notice of such
Election.
(b) If Surety makes the Election on or before March 31,
1996, Surety shall pay to First Midlothian the sum of
THIRTY-FIVE THOUSAND AND NO/100 DOLLARS ($35,000)
concurrently with the mailing of the notice of such
Election.
(c) If Surety makes the Election on or before June 30,
1996, Surety shall pay to First Midlothian the sum of FIFTY
THOUSAND AND NO/100 DOLLARS ($50,000) concurrently with the
mailing of the notice of such Election.
IN WITNESS WHEREOF, each of the parties hereto has caused this Plan to be
signed in counterparts all as of the date first above written.
FIRST MIDLOTHIAN CORPORATION,
a Texas corporation
By:/s/ Xxxxx X. Xxxxxxx
------------------------------------------
Xxxxx X. Xxxxxxx, Vice President
FIRST NATIONAL BANK,
a national banking association
By:/s/ Xxxxx X. Xxxxxxx
------------------------------------------
Xxxxx X. Xxxxxxx, President
/s/ Xxxxxx Xx Xxxxx
---------------------------------------------
Xxxxxx Xx Xxxxx, Individually and as a
Director of First Midlothian Corporation and
First National Bank
-39-
/s/ Xxxxxxx X. Xxxxx
---------------------------------------------
Xxxxxxx X. Xxxxx, Individually and as a
Director of First Midlothian Corporation and
First National Bank
/s/ X. X. Xxxxxxxxxx, Xx.
---------------------------------------------
X. X. Xxxxxxxxxx, Xx., Individually and as a
Director of First Midlothian Corporation and
First National Bank
/s/ Xxx X. Xxxxxxx
---------------------------------------------
Xxx X. Xxxxxxx, Individually and as a
Director of First Midlothian Corporation and
First National Bank
/s/ Xxxxx X. Xxxxxxx
---------------------------------------------
Xxxxx X. Xxxxxxx, Individually and as a
Director of First Midlothian Corporation and
First National Bank
/s/ X. X. Xxxxxxx
---------------------------------------------
X. X. Xxxxxxx, Individually and as a Director
of First Midlothian Corporation and First
National Bank
/s/ X. X. Xxxxxxx
---------------------------------------------
X. X. Xxxxxxx, Individually and as a Director
of First Midlothian Corporation and First
National Bank
/s/ E. L. Xxxx
---------------------------------------------
E. L. Xxxx, Individually and as a Director of
First Midlothian Corporation and First
National Bank
-40-
SURETY BANK, NATIONAL ASSOCIATION,
a national banking association
By:/s/ Xxxxx X. Xxxxxxx
------------------------------------------
Its: President & C.E.O.
-----------------------------------------
SURETY CAPITAL CORPORATION,
a Delaware corporation
By:/s/ Xxxxx X. Xxxxxxx
------------------------------------------
Its: Vice President & C.F.O.
-----------------------------------------
-41-
AGREEMENT TO MERGE SURETY ACQUISITION, INC.
WITH AND INTO FIRST MIDLOTHIAN CORPORATION UNDER THE
CHARTER OF FIRST MIDLOTHIAN CORPORATION
AND UNDER THE TITLE OF FIRST MIDLOTHIAN CORPORATION
MERGER AGREEMENT made this _____ day of _____________, 1995, between FIRST
MIDLOTHIAN CORPORATION, a Texas corporation registered as a bank holding
company, located in Midlothian, Texas ("First Midlothian"); SURETY ACQUISITION,
INC. a Texas corporation ("Newco") which has been approved as a wholly-owned
operating subsidiary of SURETY BANK, NATIONAL ASSOCIATION, a national banking
association located in Lufkin, Texas ("Surety Bank"); and joined in by Surety
Bank and all those individuals and entities who have subscribed their names
hereto individually and as a Director (hereinafter referred to individually as a
"Director" and collectively as the "Directors").
WITNESSETH:
A. First Midlothian is a corporation duly organized and existing under
the laws of the State of Texas with authorized common stock of 48,000 shares,
par value $10.00 per share ("First Midlothian Common Stock"), of which 48,000
shares are issued and outstanding;
B. Newco is a corporation duly organized and existing under the laws of
the State of Texas with authorized common stock of ______ shares, par value
$____ per share ("Newco Common Stock") of which ______ shares are issued and
outstanding;
C. The Boards of Directors and shareholders of First Midlothian and of
Newco have approved this Merger Agreement under which Newco shall be merged with
and into First Midlothian (the "Holding Company Merger") and have authorized the
execution hereof; and the Board of Directors of Surety Bank has approved this
Merger Agreement, authorized Surety Bank to join in and be bound by this Merger
Agreement, and authorized the undertakings herein made by Surety Bank;
D. Surety Capital Corporation, a Delaware corporation which owns of record
and beneficially over ninety-nine percent (99%) of the issued and outstanding
shares of common stock of Surety Bank ("Surety"); Surety Bank; First Midlothian;
First National Bank, a national banking association located in Midlothian, Texas
("First Bank)", all of the issued and outstanding shares of common stock of
which are owned of record and beneficially by First Midlothian; and the
Directors have entered into a Reorganization Agreement dated ________, 1995 (the
"Reorganization Agreement") which contemplates the Holding Company Merger
provided for in this Merger Agreement. All terms not defined in this Merger
Agreement shall have the meaning set forth in the Reorganization Agreement;
E. As and when required by the provisions of this Merger Agreement or the
Reorganization Agreement (hereinafter referred to
EXHIBIT A
collectively as the "Merger Plan"), all such action as may be necessary or
appropriate shall be taken by Newco, Surety Bank, First Midlothian and the
Directors in order to consummate the Holding Company Merger.
NOW, THEREFORE, in consideration of the premises, Newco and First
Midlothian, joined in by Surety Bank and the Directors, in their individual and
representative capacity, hereby agree that Newco shall be merged with and into
First Midlothian on the following terms and conditions:
1. At the Effective Time (as defined herein), Newco shall be merged with
and into First Midlothian to do business and be governed by the laws of the
State of Texas. Said Holding Company Merger shall be pursuant to the provisions
of and with the effect provided in the Texas Business Corporation Act.
2. At the Effective Time, the name of First Midlothian (hereinafter
referred to as "Resulting Entity" whenever reference is made to it as of the
time of the Holding Company Merger or thereafter) shall be changed to "Surety
Acquisition, Inc."; the Articles of Incorporation of Resulting Entity shall be
as set forth in ANNEX A attached hereto and made a part hereof; the bylaws of
Resulting Entity shall be as set forth in ANNEX B hereto and made a part hereof;
and the established office and facilities of Newco immediately prior to the
Holding Company Merger shall become the established office and facilities of
Resulting Entity.
3. At the Effective Time, the corporate existence of First Midlothian and
Newco shall be merged into and continued in Resulting Entity and Resulting
Entity shall be deemed to be the same corporation as First Midlothian and Newco.
All rights, franchises and interests of First Midlothian and Newco, respec-
tively, in and to every type of property (real, personal and mixed) and choses
in action shall be transferred to and vested in Resulting Entity by virtue of
such Holding Company Merger without any deed or other transfer. Resulting
Entity at the Effective Time and without any order or other action on the part
of any court or otherwise, shall hold and enjoy all rights of property,
franchises and interests, including appointments, designations and nominations,
and all other rights and interests as trustee, executor, administrator, transfer
agent and registrar of stocks and bonds, guardian of estates, assignee,
receiver, and in every other fiduciary capacity, and in every agency capacity,
in the same manner and to the same extent as such rights, franchises and
interests were held or enjoyed by First Midlothian and Newco, respectively, at
the Effective Time.
4. At the Effective Time, Resulting Entity shall be liable for all
liabilities of First Midlothian and Newco, respectively; and all deposits,
debts, liabilities, obligations and contracts of First Midlothian and Newco,
respectively, matured or unmatured, whether accrued, absolute, contingent or
otherwise, and whether or not reflected or reserved against on balance sheets,
books of account or records of First Midlothian or Newco, as the case may
-2-
be, including all liabilities of First Midlothian and Newco for taxes, whether
existing at the Effective Time or arising as a result of or pursuant to the
Holding Company Merger, shall be those of Resulting Entity and shall not be
released or impaired by the Holding Company Merger; and all rights of creditors
and other obligees and all liens on property of either First Midlothian or Newco
shall be preserved unimpaired.
5. At the Effective Time:
(a) All shares of First Midlothian Common Stock outstanding at the
Effective Time held by the shareholders shall, without any action on the part of
the shareholders, be converted into and exchanged for the right to receive cash
(the "Consideration") equal to (i) one hundred fifty percent (150%) of the Book
Value of First Bank as of the Closing Date (as defined herein), to the extent
such Book Value does not exceed $4,500,000 plus (ii) one hundred percent (100%)
of the Book Value of First Bank as of the Closing Date in excess of $4,500,000
minus (iii) the outstanding principal of, and accrued interest on, the
Debentures as of the Closing Date.
(b) Book Value shall mean the sum of First Bank's total stockholders'
equity (defined as capital stock, surplus, undivided profits and retained
earnings) determined in accordance with generally accepted accounting principles
applied on a consistent basis, with reserves acceptable to First Midlothian and
Surety. The Book Value shall be determined pursuant to an audit or other
specified review procedure prepared by Coopers & Xxxxxxx, and the Book Value of
First Bank shall be based on the results of that audit or specified review
procedure.
(c) In the event the Book Value, as determined pursuant to SUBSECTION
(b), is unsatisfactory to either First Midlothian or Surety, the parties agree
that they will first attempt in good faith to resolve their dispute with respect
to Book Value through direct negotiation within fifteen (15) days of the date
either party notifies the other of the existence of such a dispute. If a
shorter time period is indicated by the circumstances, the parties agree that
the time period shall be reduced accordingly.
(d) In the event the parties are unable to resolve their dispute
through direct negotiation within the applicable time period, either party may
notify the other party of its decision to submit the dispute to resolution by
appraisal. In this event, the parties shall unanimously select an appraiser
within fifteen (15) days after the end of the fifteen (15) day period. The
appraiser unanimously selected shall determine Book Value within thirty (30)
days after the appraiser is appointed and such determination shall be
conclusive. If the parties do not unanimously agree upon a single appraiser
within the fifteen (15) day period, Surety shall select one appraiser and First
Midlothian shall select another appraiser within five (5) days after the end of
the fifteen (15) day period. Upon appointment of the two appraisers, the two
-3-
appraisers shall within five (5) days jointly select a third appraiser. Book
Value shall then be determined within thirty (30) days after the date of the
appointment of the third appraiser and such determination shall be conclusive.
Book Value shall be the average of the two closest values determined by the
three (3) appraisers. The total cost of the appraisers shall be paid one-half
by Surety and one-half by First Midlothian.
(e) Each share of Newco Common Stock issued and outstanding at the
Effective Time shall be converted into and become one share of common stock of
Resulting Entity.
6. After the Effective Time:
(a) The holders of the outstanding certificate or certificates which
prior thereto represented shares of First Midlothian Common Stock may surrender
same to Resulting Entity, and each shall be entitled upon such surrender to
receive from Surety Bank in exchange therefor, without cost to such holders, the
amount determined by dividing the Consideration by the number of shares of First
Midlothian Common Stock outstanding at the Effective Time and multiplying such
result by the number of shares of First Midlothian Common Stock represented by
such outstanding certificate or certificates surrendered.
(b) Until so surrendered, each such outstanding certificate which,
prior to the Effective Time, represented shares of First Midlothian Common Stock
shall be deemed for all purposes to evidence solely the right to receive the
amount of cash into and for which such shares of First Midlothian Common Stock
shall have been converted pursuant to SECTION 6(a) hereof. No interest shall be
payable with respect to any such cash payments. If a shareholder is unable to
locate any of his certificates which prior to the Effective Time represented
shares of First Midlothian Common Stock, Resulting Entity shall issue a check to
such shareholder in the amount to which such shareholder would otherwise be
entitled to receive hereunder without surrendering such certificate, upon
receipt by Resulting Entity of an indemnity agreement to Resulting Entity in
form and substance satisfactory in all respects to Resulting Entity.
(c) The stock transfer books of First Midlothian shall be closed as
of the close of business on the Closing Date, and no transfer of record of any
of the shares of First Midlothian Common Stock shall take place thereafter.
From and after the close of business on the Closing Date, shares of First
Midlothian Common Stock shall cease to be shares of First Midlothian, irre-
spective of whether such shares are ultimately surrendered.
7. The directors, advisory directors, and officers, respectively, of
Resulting Entity at the Effective Time shall be those persons who are directors,
advisory directors, and officers, respectively, of Newco immediately before the
Effective Time. The committees of the Board of Directors of Resulting Entity at
the
-4-
Effective Time shall be the same as, and shall be composed of the same persons
who are serving on, committees of the Board of Directors of Newco as they exist
immediately before the Effective Time.
8. This Merger Agreement shall be submitted to the shareholders of First
Midlothian, at a meeting called to be held as promptly as practicable in
accordance with the Reorganization Agreement. This Merger Agreement shall be
approved by Surety Bank, the sole shareholder of Newco, pursuant to a unanimous
consent executed and delivered by such sole shareholder in accordance with the
Reorganization Agreement. Upon approval of the shareholders of First Midlothian
and the sole shareholder of Newco, this Merger Agreement shall be made effective
as soon as practicable thereafter in the manner provided in SECTION 11 hereof.
9. The Merger Plan may be terminated and abandoned at any time prior to
or on the Closing Date, whether before or after action thereon by the
shareholders of First Midlothian and the sole shareholder of Newco:
(a) By the mutual consent in writing of First Midlothian and Newco;
(b) By First Midlothian in writing if any of the conditions to the
obligations of the Directors, First Midlothian or First Bank contained herein or
in the Reorganization Agreement shall not have been satisfied or, if
unsatisfied, waived as of the Closing Date;
(c) By Surety in writing if any of the conditions to the obligations
of Surety or Surety Bank contained herein or in the Reorganization Agreement
shall not have been satisfied or, if unsatisfied, waived as of the Closing Date;
or
(d) By either First Midlothian or Newco in writing if the Closing
Date shall not have occurred by June 30, 1996, unless the date is extended by
mutual agreement of First Midlothian and Newco.
10. Except as provided in the next succeeding sentence, in the event of
the termination and abandonment of the Merger Plan pursuant to the provisions of
SECTION 9 hereof, the same shall be of no further force or effect except that
the indemnification provisions set forth in SECTION 11 and the provisions
relating to expenses set forth in SECTION 9 of the Reorganization Agreement
shall survive any such termination and abandonment. Additionally, in the event
Surety elects to abandon the Merger Plan by written notice to such effect to
First Midlothian (the "Election") pursuant to SECTION 7(e) of the Reorganization
Agreement, as a result of Surety's inability to have sufficient financial
resources available, in the sole opinion of Surety, to consummate the
transactions contemplated by the Reorganization Plan and the Merger Agreements,
Surety shall pay to First Midlothian a break-up fee, as follows,
-5-
and upon payment thereof, none of the parties to the Reorganization Agreement
nor the Merger Agreements shall have any further obligations to each other,
except as expressly set forth in this SECTION 10:
(a) If Surety makes the Election on or before December 31,
1995, Surety shall pay to First Midlothian the sum of
TWENTY-FIVE THOUSAND AND NO/100 DOLLARS ($25,000)
concurrently with the mailing of the notice of such
Election.
(b) If Surety makes the Election on or before March 31,
1996, Surety shall pay to First Midlothian the sum of
THIRTY-FIVE THOUSAND AND NO/100 DOLLARS ($35,000)
concurrently with the mailing of the notice of such
Election.
(c) If Surety makes the Election on or before June 30,
1996, Surety shall pay to First Midlothian the sum of FIFTY
THOUSAND AND NO/100 DOLLARS ($50,000) concurrently with the
mailing of the notice of such Election.
11. The closing date (the "Closing Date") shall be a date to be selected
by mutual agreement of the parties immediately following the satisfaction of all
requirements of law and the conditions specified in the Merger Plan, including
receipt of all applicable regulatory approvals or waivers therefrom and expira-
tion of applicable waiting periods relating thereto. The closing (the
"Closing") shall be held at the offices of Surety located in Hurst, Texas on the
Closing Date. At the Closing, Surety Bank shall deliver to the shareholders of
First Midlothian cash in the amount of the Consideration and the shareholders of
First Midlothian shall deliver to Surety Bank all of the stock certificates
evidencing issued and outstanding shares of common stock of First Midlothian.
The Holding Company Merger shall become effective at the time specified in the
certificate to be issued by the Secretary of State of the State of Texas, such
time being herein called the "Effective Time."
12. For the convenience of the parties hereto and to facilitate the filing
and recording of this Merger Agreement, any number of counterparts hereof may be
executed, each of which shall for all purposes be deemed to be an original and
all of which shall constitute the same instrument, but only one of which need be
produced.
IN WITNESS WHEREOF, First Midlothian and Newco have each caused this Merger
Agreement to be executed in counterparts on its behalf as of the date first
above written.
-6-
FIRST MIDLOTHIAN CORPORATION
By:
------------------------------------------
Its:
--------------------------------------
SURETY ACQUISITION, INC.
By:
------------------------------------------
Its:
--------------------------------------
Surety Bank hereby joins in the foregoing Merger Agreement, and undertakes
that it will be bound thereby and will do and perform all acts and things
therein referred to or provided to be done by it.
IN WITNESS WHEREOF, Surety Bank has caused this undertaking to be made in
counterparts by its duly authorized officer and its corporate seal to be
hereunto affixed as of the date first above written.
SURETY BANK, NATIONAL ASSOCIATION
By:
------------------------------------------
Its:
--------------------------------------
The Directors hereby join in the foregoing Merger Agreement, and undertake
that they will be bound thereby and will do and perform all acts and things
therein referred to or provided to be done by them.
---------------------------------------------
Xxxxxx Xx Xxxxx, Individually and as a
Director of First Midlothian Corporation and
First National Bank
---------------------------------------------
Xxxxxxx X. Xxxxx, Individually and as a
Director of First Midlothian Corporation and
First National Bank
-7-
---------------------------------------------
X. X. Xxxxxxxxxx, Xx., Individually and as a
Director of First Midlothian Corporation and
First National Bank
---------------------------------------------
Xxx X. Xxxxxxx, Individually and as a
Director of First Midlothian Corporation and
First National Bank
---------------------------------------------
Xxxxx X. Xxxxxxx, Individually and as a
Director of First Midlothian Corporation and
First National Bank
---------------------------------------------
X. X. Xxxxxxx, Individually and as a Director
of First Midlothian Corporation and First
National Bank
---------------------------------------------
X. X. Xxxxxxx, Individually and as a Director
of First Midlothian Corporation and First
National Bank
---------------------------------------------
E. L. Xxxx, Individually and as a Director of
First Midlothian Corporation and First
National Bank
-8-
AGREEMENT TO MERGE FIRST NATIONAL BANK WITH
AND INTO SURETY BANK, NATIONAL ASSOCIATION UNDER THE
CHARTER OF SURETY BANK, NATIONAL ASSOCIATION AND UNDER
THE TITLE OF SURETY BANK, NATIONAL ASSOCIATION
MERGER AGREEMENT made this _____ day of _________, 199___, between Surety
Bank, National Association ("Surety Bank") and FIRST NATIONAL BANK ("First
Bank") and joined in by SURETY ACQUISITION, INC., a Texas corporation ("Newco")
(prior to the Holding Company Merger known as "First Midlothian Corporation")
and SURETY CAPITAL CORPORATION, a Delaware corporation ("Surety").
WITNESSETH:
A. Surety Bank is a national banking association duly organized and
existing under the laws of the United States of America having its principal
offices in the City of Lufkin, County of Angelina, State of Texas.
B. First Bank is a national banking association duly organized and
existing under the laws of the United States having its principal offices in the
City of Midlothian, County of Xxxxx, State of Texas.
C. First Bank has, and will have as of the Effective Time, (i) authorized
capital stock of $480,000 consisting of 48,000 shares of common stock, $10.00
par value ("First Bank Common Stock"), of which 48,000 shares are, or will be as
of the Effective Time, issued and outstanding and (ii) surplus of not less than
$1,000,000.
D. All issued and outstanding shares of First Bank Common Stock are and
will be as of the Effective Time held of record and beneficially by Newco.
E. A majority of the Boards of Directors of First Bank and of Surety Bank
has approved this Merger Agreement under which First Bank shall be merged into
Surety Bank (the "Bank Merger") and has authorized the execution hereof; the
Board of Directors of Newco has approved this Merger Agreement, authorized Newco
to join in and be bound by this Merger Agreement, and authorized the
undertakings herein made by Newco; and the Board of Directors of Surety has
approved this Merger Agreement, authorized Surety to join in and be bound by
this Merger Agreement, and authorized the undertakings herein made by Surety.
F. Surety; Surety Bank; First Midlothian Corporation, a Texas corporation
registered as a bank holding company located in Midlothian, Texas ("First
Midlothian"); certain of the shareholders of First Midlothian (the
"Shareholders"); and First Bank have entered into a Reorganization Agreement
dated ___________, 1995 (the "Reorganization Agreement") which contemplates the
Bank Merger provided for in this Merger Agreement. All terms not defined in
EXHIBIT B
this Merger Agreement shall have the meaning set forth in the Reorganization
Agreement.
G. As and when required by the provisions of this Merger Agreement or the
Reorganization Agreement (hereinafter referred to collectively as the "Merger
Plan"), all such action as may be necessary or appropriate shall be taken by
Surety Bank, First Bank, Newco and Surety in order to consummate the Bank
Merger.
NOW, THEREFORE, in consideration of the premises, Surety Bank and First
Bank, joined by Newco and Surety, hereby agree that First Bank shall be merged
with and into Surety Bank on the following terms and conditions:
1. At the Effective Time, First Bank shall be merged with and into Surety
Bank under the Articles of Association and Charter of Surety Bank. Said Bank
Merger shall be pursuant to the provisions of and with the effect provided in 12
U.S.C. Section 215(a).
2. At the Effective Time, the name of Surety Bank (hereinafter referred
to as "Continuing Bank" whenever reference is made to it as of the time of Bank
Merger or thereafter) shall continue to be "Surety Bank, National Association";
the Articles of Association of Continuing Bank shall be as set forth in ANNEX A
attached hereto and made a part hereof; the bylaws of Surety Bank in effect
immediately prior to the Bank Merger shall become the bylaws of Continuing Bank;
the established office and facilities of First Bank immediately prior to the
Bank Merger shall become the established office and facilities of Continuing
Bank; and the established office and facilities of Surety Bank immediately prior
to the Bank Merger shall continue and be operated as a branch of Continuing
Bank.
3. At the Effective Time, the corporate existence of Surety Bank and
First Bank shall, as provided in 12 U.S.C. Section 215(a), be merged into and
continued in Continuing Bank; and Continuing Bank shall be deemed to be the same
corporation as Surety Bank and First Bank. All rights, franchises and interests
of Surety Bank and First Bank, respectively, in and to every type of property
(real, personal and mixed) and choses in action shall be transferred to and
vested in Continuing Bank by virtue of such Bank Merger without any deed or
other transfer. Continuing Bank at the Effective Time and without any order or
other action on the part of any court or otherwise, shall hold and enjoy all
rights of property, franchises and interests, including appointments,
designations and nominations, and all other rights and interests as trustee,
executor, administrator, transfer agent and registrar of stocks and bonds,
guardian of estates, assignee, receiver, and in every other fiduciary capacity,
and in every agency capacity, in the same manner and to the same extent as such
rights, franchises and interests were held or enjoyed by Surety Bank and First
Bank, respectively, at the Effective Time.
-2-
4. At the Effective Time, Continuing Bank shall be liable for all
liabilities of Surety Bank and of First Bank, respectively; and all deposits,
debts, liabilities, obligations and contracts of Surety Bank and of First Bank,
respectively, matured or unmatured, whether accrued, absolute, contingent or
otherwise, and whether or not reflected or reserved against on balance sheets,
books of account or records of Surety Bank or First Bank, as the case may be,
including all liabilities of Surety Bank and First Bank for taxes, whether
existing at the Effective Time or arising as a result of or pursuant to the Bank
Merger, shall be those of Continuing Bank and shall not be released or impaired
by the Bank Merger; and all rights of creditors and other obligees and all liens
on property of either Surety Bank or First Bank shall be preserved unimpaired.
5. At the Effective Time:
(a) All shares of First Bank Common Stock outstanding at the
Effective Time held by Newco shall, without any action on the part of Newco, be
cancelled and be of no further force and effect.
(b) All shares of capital stock of Surety Bank issued and outstanding
at the Effective Time shall continue to be issued and outstanding shares of
capital stock of Continuing Bank.
6. The directors, advisory directors and officers, respectively, of
Continuing Bank at the Effective Time shall be those persons who are directors,
advisory directors and officers, respectively, of Surety Bank immediately before
the Effective Time. The committees of the Board of Directors of Continuing Bank
at the Effective Time shall be the same as, and shall be composed of the same
persons who are serving on, committees of the Board of Directors of Surety Bank
as they exist immediately before the Effective Time.
7. This Merger Agreement shall be approved by Newco, the sole shareholder
of First Bank pursuant to a Unanimous Consent executed and delivered by such
sole shareholder in accordance with the Reorganization Agreement. This Merger
Agreement shall be submitted to the shareholders of Surety Bank, at a meeting
called to be held as promptly as practicable in accordance with the
Reorganization Agreement. Upon approval of the shareholders of Surety Bank and
First Bank, this Merger Agreement shall be made effective as soon as practicable
thereafter in the manner provided in SECTION 10 hereof.
8. The Merger Plan shall be automatically terminated and abandoned at any
time prior to or on the Closing Date, whether before or after action thereon by
the shareholders of Surety Bank or First Bank, in the event the Holding Company
Merger is not consummated, for any reason whatsoever, and may be terminated and
abandoned at any time prior to or on the Closing Date, whether before or after
action thereon by the shareholders of Surety Bank
-3-
or First Bank by the mutual consent in writing of Surety Bank and First Bank.
9. In the event of the termination and abandonment of the Merger Plan
pursuant to the provisions of SECTION 8 hereof, the same shall be of no further
force or effect except that the indemnification provisions set forth in
SECTION 11 and the provisions relating to expenses set forth in SECTION 9 of the
Reorganization Agreement shall survive any such termination and abandonment.
10. The "Closing Date" shall have the meaning set forth in the Holding
Company Merger Agreement. The closing (the "Closing") shall be held at the
offices of Surety located in Hurst, Texas on the Closing Date. At the Closing,
Newco shall deliver to Surety Bank all of the stock certificates evidencing
issued and outstanding shares of common stock of First Bank. Subject to the
terms, and upon satisfaction on or before the Closing Date of all requirements
of law and the conditions specified in the Merger Plan, including receipt of the
approval of the Comptroller of the Currency specified in 12 U.S.C. Section
215(a), the Bank Merger shall become effective at the time specified in the cer-
tificate to be issued by the Comptroller of the Currency under the seal of his
office approving the Bank Merger, such time being herein called the "Effective
Time."
11. For the convenience of the parties hereto and to facilitate the filing
and recording of this Merger Agreement, any number of counterparts thereof may
be executed, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument, but only one of which
need be produced.
IN WITNESS WHEREOF, Surety Bank has caused this Merger Agreement to be
executed in counterparts by its duly authorized officers and its corporate seal
to be hereunto affixed as of the date first above written, and the directors
constituting all of the Board of Directors of such banking association have
hereunto subscribed their names.
SURETY BANK: SURETY BANK, NATIONAL ASSOCIATION
By:
------------------------------------------
Xxxxx X. Xxxxxxx, President
ATTEST:
-----------------------------------
, Cashier
----------------------
-4-
ALL OF THE DIRECTORS OF
SURETY BANK, NATIONAL ASSOCIATION
---------------------------------------------
C. Xxxx Xxxx
---------------------------------------------
Xxxxxxx X. Xxxx
---------------------------------------------
Xxxxx X. Xxxxxxx
---------------------------------------------
Xxxxxx X. Xxxxxx
---------------------------------------------
X. X. Xxxxxxxxxxx, III
---------------------------------------------
Xxxxxxx X. Xxxxx
---------------------------------------------
Xxxxxxx Xxxxxx
---------------------------------------------
Xxxxxx X. Xxxxxx
THE STATE OF TEXAS )
)
COUNTY OF _____________ )
On this _______ day of ______________, 199___, before me, a Notary Public
for the State and County aforesaid, personally came Xxxxx X. Xxxxxxx, as
President and ___________________ as Cashier, of Surety Bank, National
Association, a national banking association, and each in his said capacity
acknowledged the foregoing instrument to be the act and deed of said association
and the seal
-5-
affixed thereto to be its seal; and came also C. Xxxx Xxxx, Xxxxxxx X. Xxxx,
Xxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxx, X. X. Xxxxxxxxxxx, III, Xxxxxxx X. Xxxxx,
Xxxxxxx Xxxxxx and Xxxxxx X. Xxxxxx, being all of the Board of Directors of said
association and each of them acknowledged said instrument to be the act and deed
of said association and of himself as director thereof.
WITNESS my official seal and signature this day and year aforesaid.
---------------------------------------------
Notary Public, State of Texas
---------------------------------------------
(Print or Type Notary's Name)
My Commission Expires:
----------------------------
IN WITNESS WHEREOF, First Bank has caused this Merger Agreement to be
executed in counterparts by its duly authorized officers and its corporate seal
to be hereunto affixed as of the date first above written, and the directors
constituting all of the Board of Directors of such banking association have
hereunto subscribed their names.
FIRST BANK: FIRST NATIONAL BANK
By:
------------------------------------------
, President
------------------------------
ATTEST:
-----------------------------------
, Cashier
----------------------
ALL OF THE DIRECTORS OF
FIRST NATIONAL BANK
---------------------------------------------
---------------------------------------------
-6-
---------------------------------------------
---------------------------------------------
---------------------------------------------
THE STATE OF TEXAS )
)
COUNTY OF ____________ )
On this _______ day of _________________, 199___, before me, a Notary
Public for the State and County aforesaid, personally came _________________ as
President and ________________ as Cashier, of FIRST NATIONAL BANK, a national
banking association, and each in his/her said capacity acknowledged the
foregoing instrument to be the act and deed of said association and the seal
affixed thereto to be its seal; and came also ________________________________
__________________________________ ________________, being all of the Board of
Directors of said association and each of them acknowledged said instrument to
be the act and deed of said association and of himself or herself as director
thereof.
WITNESS my official seal and signature this day and year aforesaid.
---------------------------------------------
Notary Public, State of Texas
---------------------------------------------
(Print or Type Notary's Name)
My Commission Expires:
----------------------------
Newco hereby joins in the foregoing Merger Agreement, and undertakes that
it will be bound thereby and will do and perform all acts and things therein
referred to or provided to be done by it.
IN WITNESS WHEREOF, Newco has caused this undertaking to be made in
counterparts by its duly authorized officers and its
-7-
corporate seal to be hereunto affixed as of the date first above written.
NEWCO: SURETY ACQUISITION, INC.
By:
------------------------------------------
, President
-------------------------------
ATTEST:
-----------------------------------
, Secretary
----------------------
Surety hereby joins in the foregoing Merger Agreement, and undertakes that
it will be bound thereby and will do and perform all acts and things therein
referred to or provided to be done by it.
IN WITNESS WHEREOF, Surety has caused this undertaking to be made in
counterparts by its duly authorized officers and its corporate seal to be
hereunto affixed as of the date first above written.
SURETY: SURETY CAPITAL CORPORATION
By:
------------------------------------------
X. X. Xxxxxxxxxxx, III, President
ATTEST:
-----------------------------------
Xxxxx X. Xxxxxxx, Secretary
-8-
AMENDMENT NUMBER ONE TO
REORGANIZATION AGREEMENT
THIS AMENDMENT NUMBER ONE TO REORGANIZATION AGREEMENT is made and entered
into this ____ day of ___________, 1995 by and between FIRST MIDLOTHIAN
CORPORATION, a Texas corporation located in Midlothian, Texas ("First
Midlothian"); FIRST NATIONAL BANK, a national banking association located in
Midlothian, Texas ("First Bank"); all those individuals who have subscribed
their names hereto individually and as a director (hereinafter referred to
singly as a "Director" and collectively as the "Directors"); SURETY BANK,
NATIONAL ASSOCIATION, a national banking association located in Lufkin, Texas
("Surety Bank"); and SURETY CAPITAL CORPORATION, a Delaware corporation located
in Hurst, Texas ("Surety") (sometimes collectively referred to herein as the
"parties").
WHEREAS, the parties have agreed to amend the October 17, 1995
Reorganization Agreement by and between First Midlothian, First Bank, the
Directors, Surety Bank and Surety (the "Reorganization Agreement"), to provide
for the consolidation of First Bank and Surety Bank.
For and in consideration of the covenants, terms and conditions of the
Reorganization Agreement and the mutual benefits to the parties established by
this Amendment Number One to Reorganization Agreement, the parties agree that
the following sections of the Reorganization Agreement are hereby amended as
follows:
1. The Agreement to Consolidate First National Bank and Surety Bank,
National Association Under the Charter of Surety Bank, National Association and
Under the Title of Surety Bank, National Association, in the form attached
hereto as EXHIBIT A, shall be attached to the Reorganization Agreement as though
it was an original part thereof.
2. The fourth WHEREAS paragraph is revised to read in full as follows:
WHEREAS, First Midlothian, First Bank, Surety Bank and Surety each desire
to effect (a) the merger (the "Holding Company Merger") of a Texas corporation
("Newco"), which will be formed by Surety Bank as an operating subsidiary of
Surety Bank, with and into First Midlothian, pursuant to which the shareholders
of First Midlothian will receive cash, in the amount as herein described, in
exchange for all of their shares of common stock of First Midlothian, (b)
immediately upon consummation of the Holding Company Merger, the consolidation
(the "Bank Consolidation") of First Bank and Surety Bank under the charter of
Surety Bank (the Holding Company Merger and the Bank Consolidation are here-
inafter referred to collectively as the "Mergers"), and (c) immediately or
within three (3) months after the consummation of the Mergers, the dissolution
of First Midlothian;
3. The sixth WHEREAS paragraph is revised to read in full as follows:
WHEREAS, the Boards of Directors of First Midlothian, Surety, Surety Bank
and First Bank have approved the Bank Consolidation pursuant to the national
banking laws whereby the outstanding common stock of First Bank and Surety Bank
shall, in accordance with the terms and conditions set forth in this Plan and in
the Agreement to Consolidate in the form attached hereto as EXHIBIT B (the "Bank
Consolidation Agreement") (the Holding Company Merger Agreement and the Bank
Consolidation Agreement are hereinafter referred to collectively as the "Merger
Agreements"), be cancelled, converted or exchanged, as more fully set forth in
the Bank Consolidation Agreement.
4. Paragraph 3(m) is revised to read in full as follows:
(m) VOTING. The Directors each hereby covenant and agree to vote all
of their First Midlothian Common Stock in favor of the Holding Company Merger at
the meeting of the shareholders of First Midlothian called to consider and vote
upon the Holding Company Merger Agreement. First Midlothian hereby covenants
and agrees to vote all of its First Bank Common Stock in favor of the Bank
Consolidation at the meeting of the shareholders of First Bank called to
consider and vote upon the Bank Consolidation Agreement.
5. Paragraph 4(b) is revised to read in full as follows:
(b) PROXY MATERIAL AND MEETING OF SHAREHOLDERS. As soon as
practicable after the date of this Plan, Surety and Surety Bank will cause Newco
to submit this Plan and the Holding Company Merger Agreement to its shareholders
for approval at a meeting of shareholders called for the purpose of voting
thereon. Additionally, as soon as practicable after the date of this Plan,
Surety Bank will prepare a proxy statement, notice of meeting and form of proxy
to be used in connection with a meeting of its shareholders to consider and vote
upon the transactions contemplated in this Plan and the Bank Consolidation
Agreement, to use its best efforts to obtain the authorization of the
Comptroller for Surety Bank to furnish such proxy material to its shareholders,
to thereafter duly call and hold said meeting of its shareholders, to submit and
recommend to its shareholders the approval of the transactions contemplated in
this Plan and the Bank Consolidation Agreement and to cause to be furnished to
each such shareholder a copy of such proxy material.
6. Paragraph 4(c) is revised to read in full as follows:
(c) VOTING. Surety Bank hereby covenants and agrees to vote all of
its shares of common stock of Newco in favor of the Holding Company Merger at
the meeting of the shareholders of Newco called to consider and vote upon the
Holding Company Merger Agreement. Surety hereby covenants and agrees to vote
all of its shares of common stock of Surety Bank in favor of the Bank Xxxxxxx-
-2-
dation at the meeting of the shareholders of Surety Bank to consider and vote
upon the Bank Consolidation Agreement.
7. Paragraph 5(a)(i) is revised to read in full as follows:
(i) applications (or waivers therefrom) to be filed on behalf of
Newco with the Federal Reserve for authority to consummate the Holding Company
Merger and applications to be filed on behalf of Surety Bank with the
Comptroller for authority to consummate the Bank Consolidation, and
8. Paragraph 7(c)(ii)(5) is revised to read in full as follows:
(5) a certificate of the Cashier of First Bank dated the
Closing Date attesting to the adoption of all resolutions by its
directors and shareholders and the taking of all such other
corporate action by First Bank as shall have been required for
consummation of the Bank Consolidation.
9. Paragraph 7(d)(ii) is revised to read in full as follows:
(ii) At a meeting of the shareholders of First Bank duly called
and held for such purpose, the transactions contemplated in this Plan and the
Bank Consolidation Agreement shall have been duly approved by First Midlothian
as the sole shareholder of First Bank.
10. Paragraph 8(c)(iii) is revised to read in full as follows:
(iii) a certificate of the Cashier of Surety Bank, dated the
Closing Date, attesting to the adoption of all resolutions by the directors and
shareholders and the taking of all other corporate action by Surety Bank as
shall have been required for consummation of the Bank Consolidation.
11. Paragraph 8(d)(i) is revised to read in full as follows:
(i) At a meeting of the shareholders of Surety Bank duly called
and held for such purpose, the transactions contemplated in this Plan and the
Bank Consolidation Agreement shall have been duly approved by the requisite vote
of such shareholders.
12. Paragraph 12(i) is revised to read in full as follows:
(i) Surety, as the parent of that group of affiliate companies filing
a federal consolidated income tax return, and as the party responsible for the
filing or causing to be filed any Texas franchise tax returns for itself or for
its affiliates, shall be obligated to pay to the shareholders of First
Midlothian any decrease in federal income taxes or Texas franchise tax realized
by Surety and its affiliates because of either an audit adjustment,
-3-
amended tax return or claim for refund that is directly attributable to the
activities of First Midlothian and/or First Bank for the pre-merger/
consolidation period for which such shareholders have not been previously
compensated. If statutory interest is received by Surety in connection with
such audit adjustment, amended tax return, or claim for refund, this amount
shall also be paid to such shareholders. Any amounts owed to the shareholders
of First Midlothian shall be paid within fifteen (15) days of Surety's receipt
of same.
13. Paragraph 17 is revised to read in full as follows:
17. MISCELLANEOUS. This Plan and the Merger Agreements constitute the
entire contract and shall supersede all prior agreements and understandings,
both written and oral, between the parties hereto and thereto with respect to
the subject matter hereof and thereof and no party shall be liable or bound to
the other in any manner by any warranties or representations except as
specifically set forth herein or in the Merger Agreements or expressly required
to be made or delivered pursuant hereto or thereto. Each of the attachments,
schedules, lists and exhibits called for by this Plan and the Merger Agreements
is made a part of this Plan and the Merger Agreements the same as if set out
verbatim at each point where reference is made to it. The schedules to be
prepared by First Midlothian in connection with this Plan shall be delivered to
Surety within ten (10) days of the date of this Plan. The terms and conditions
of this Plan and the Merger Agreements shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties hereto and
thereto, but nothing contained herein shall be construed as a consent to any
assignment of this Plan or the Merger Agreements by the parties hereto or
thereto, or any of them. Nothing in this Plan or in the Merger Agreements,
express or implied, is intended to confer upon any party, other than the parties
hereto and thereto, and their respective successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of such agreements,
except as expressly provided herein or therein. The provisions of SECTIONS 9,
10, 11 AND 12 of the Holding Company Merger Agreement and SECTIONS 8, 9, 10 AND
11 of the Bank Consolidation Agreement are hereby incorporated into this Plan
for all purposes. This Plan may be executed in one or more counterparts, each
of which shall for all purposes be deemed to be an original and all of which
shall constitute the same instrument, but only one of which need be produced.
The headings of the Sections and Subsections of this Plan are inserted for
convenience only and shall not be deemed to constitute part of this Plan or to
affect the construction hereof. As used in this Plan, the words "herein",
"hereof", and "hereunder" and other words of similar import refer to this Plan
as a whole and not to any particular section, subsection or other subdivision.
Unless context otherwise requires, words in the singular number include the
plural and the plural include the singular, and words of the masculine gender
include the feminine and neuter genders and words of the neuter gender referred
to any gender. In case any one or more of the provisions contained in this Plan
or the Merger
-4-
Agreements shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality, or unenforceability shall not
affect any other provisions hereof or thereof, and this Plan and the Merger
Agreements shall be construed as if such invalid, illegal or unenforceable
provisions had never been contained herein and therein. This Plan shall be
construed in accordance with the laws of the State of Texas. All disputes
arising out of this Plan and/or the Merger Agreements shall be litigated in
Tarrant County, Texas and, to the extent such a dispute relates to the alleged
breach of a warranty or representation by a party to this Plan, any suit
initiated with respect to such a dispute shall be commenced on or before the
expiration of such warranty or representation pursuant to SECTION 10 of this
Plan. No term or condition of this Plan or the Merger Agreements shall be
deemed to have been waived, nor shall there be any estoppel to enforce any
provision of this Plan or the Merger Agreements, except by written instrument
signed by the party charged with such waiver or estoppel.
14. Paragraph 18 is revised to read in full as follows:
18. BREAKUP FEE. In the event Surety elects to terminate this Plan and
the Merger Agreements by written notice to such effect to First Midlothian (the
"Election") pursuant to SECTION 7(e) of this Plan, as a result of Surety's
inability to have sufficient financial resources available, in the sole opinion
of Surety, to consummate the transactions contemplated by the this Plan and the
Merger Agreements, Surety shall pay to First Midlothian a break-up fee, as
follows, and upon payment thereof, none of the parties to this Plan nor the
Merger Agreements shall have any further obligations to each other, except as
expressly set forth in this SECTION 18:
(a) If Surety makes the Election on or before December 31,
1995, Surety shall pay to First Midlothian the sum of
TWENTY-FIVE THOUSAND AND NO/100 DOLLARS ($25,000)
concurrently with the mailing of the notice of such
Election.
(b) If Surety makes the Election on or before March 31,
1996, Surety shall pay to First Midlothian the sum of
THIRTY-FIVE THOUSAND AND NO/100 DOLLARS ($35,000)
concurrently with the mailing of the notice of such
Election.
(c) If Surety makes the Election on or before June 30,
1996, Surety shall pay to First Midlothian the sum of FIFTY
THOUSAND AND NO/100 DOLLARS ($50,000) concurrently with the
mailing of the notice of such Election.
15. Except as specifically amended by this Amendment Number One to
Reorganization Agreement, the Reorganization Agreement by and between the
parties shall remain in full force and effect.
-5-
IN WITNESS WHEREOF, each of the parties hereto has caused this Plan to be
signed in counterparts all as of the date first above written.
FIRST MIDLOTHIAN CORPORATION,
a Texas corporation
By:
------------------------------------------
Xxxxx X. Xxxxxxx, Vice President
FIRST NATIONAL BANK,
a national banking association
By:
------------------------------------------
Xxxxx X. Xxxxxxx, President
---------------------------------------------
Xxxxxx Xx Xxxxx, Individually and as a
Director of First Midlothian Corporation and
First National Bank
---------------------------------------------
Xxxxxxx X. Xxxxx, Individually and as a
Director of First Midlothian Corporation and
First National Bank
---------------------------------------------
X. X. Xxxxxxxxxx, Xx., Individually and as a
Director of First Midlothian Corporation and
First National Bank
---------------------------------------------
Xxx X. Xxxxxxx, Individually and as a
Director of First Midlothian Corporation and
First National Bank
-6-
---------------------------------------------
Xxxxx X. Xxxxxxx, Individually and as a
Director of First Midlothian Corporation and
First National Bank
---------------------------------------------
X. X. Xxxxxxx, Individually and as a Director
of First Midlothian Corporation and First
National Bank
---------------------------------------------
X. X. Xxxxxxx, Individually and as a Director
of First Midlothian Corporation and First
National Bank
---------------------------------------------
E. L. Xxxx, Individually and as a Director of
First Midlothian Corporation and First
National Bank
SURETY BANK, NATIONAL ASSOCIATION,
a national banking association
By:
------------------------------------------
Its:
-----------------------------------------
SURETY CAPITAL CORPORATION,
a Delaware corporation
By:
------------------------------------------
Its:
-----------------------------------------
-7-
List of schedules to Reorganization Agreement by and between First Midlothian
Corporation; First National Bank; the directors of First Midlothian Corporation
and First National Bank; Surety Bank, National Association; and Surety Capital
Corporation, dated October 17, 1995 which are not filed herewith:
SCHEDULE DESCRIPTION
--------------------------------------------------------------------------------
1(f) Debentures
1(g) Loans
1(k) All tangible properties, real and personal owned or
leased by First National Bank having an original
cost in excess of $25,000
1(l) Compliance with environmental laws
1(n) Patents, trademarks, etc.
1(p) All policies of fire, liability and other forms of
insurance and all fidelity bonds held by First
Midlothian Corporation and First National Bank
1(q) Material contracts
1(t) Material contract defaults
1(u) Litigation and other proceedings
1(x) Absence of certain changes or events
1(z) Name, position and annual compensation of each
person employed by First Midlothian and First Bank
whose aggregate annual compensation from First
Midlothian and First Bank (including bonuses and
similar remuneration) exceeds $15,000
1(cc) Non-deposit claims
The registrant will furnish supplementally a copy of any omitted schedule to the
Securities and Exchange Commission upon request.
