This Amendment to Agreement and Plan of Merger (this "Amendment") is entered
into by and between East Texas Financial Services, Inc. ("Buyer") and Xxxxxx
Financial Services, Inc. ("Seller").
WHEREAS, Buyer and Seller have entered into that certain Agreement and
Plan of Merger, dated as of November 15, 1999 (the "Agreement"), and
WHEREAS, Buyer and Seller wish to amend and waive certain provisions of
the Agreement as set forth below,
NOW, THEREFORE, in consideration of the premises and the agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, hereby agree as follows:
ARTICLE I
AMENDMENTS TO THE AGREEMENT
1.0 Treatment of Capital Stock
Paragraph 2.3(d) , on page 8 of the Agreement is hereby amended and
revised to read in its entirety as follows:
(d) each share of Seller Common Stock (other than Dissenting Shares),
issued and outstanding immediately prior to the Effective Time shall be
cancelled and converted into and become the right to receive $26.10 in cash
without interest (the "Merger Consideration").
1.1 Options
Paragraph 2.5, on pages 8 and 9 of the Agreement is hereby amended and
revised to read in its entirety as follows:
Each holder of an option to purchase Seller Common Stock outstanding on the date
hereof and remaining outstanding at the Effective Time shall receive from Buyer,
as of the Effective Time, whether or not the option is then exercisable, a cash
payment in an amount equal to the product of (i) the number of shares of Seller
Common Stock subject to such option at the Effective Time and (ii) the excess,
if any, of $26.10 over the exercise price per share of such option, net of any
cash which must be withheld under federal and state income and employment tax
requirements. Such cash payments shall be in consideration for, and shall result
in, the settlement and cancellation of all such options. As a condition to the
receipt of a cash payment in cancellation of options, each option holder shall
execute a cancellation agreement in substantially the form attached hereto as
Exhibit D.
1.2 Indemnification; Insurance
Paragraph 5.9(a) and (b), on pages 33 and 34 of the Agreement are
hereby amended and revised to read in their entirety as follows:
5.9(a) INTENTIONALLY LEFT BLANK.
(b) INTENTIONALLY LEFT BLANK.
1.3 Employment Agreement
Paragraph 5.11(b), on page 35 of the Agreement is hereby amended and
revised to read in its entirety as follows:
Seller Bank shall have entered into a Departure Agreement in the form of Exhibit
F attached hereto and hereby made a part hereof with Xxxx X. Xxxxxx, who shall
have cancelled and terminated his current employment agreement with Seller Bank
for a payment of $75,000, which amount has been heretofore taken into account in
the determination and calculation of the Merger Consideration. At the Effective
Time and subject to Seller's shareholder approval as a part of the Merger, Xxxx
X. Xxxxxx shall be paid such cancellation amount and, if Xx. Xxxxxx so desires,
it shall also assign to Xx. Xxxxxx the life insurance/annuity policy it holds on
his life for a price equal to the greater of the policy's then-current book
value to Seller Bank or the cash value of such policy.
1.4 Exhibits
Exhibit E shall be deleted from the Agreement and shall not be replaced. Exhibit
D shall be amended so that each reference in the Cancellation Agreement to
"$29.50" shall be replaced with "$26.10." Exhibit F entitled "Departure
Agreement" shall be included as an Exhibit to the Agreement in the form attached
to this Amendment and made a part hereof for all purposes.
1.5 Disclosure Schedule
The Disclosure Schedule referred to in the Agreement is supplemented as of the
date hereof. The supplemented Disclosure Schedule is attached to this Amendment
and made a part hereof for all purposes.
1.6 Waiver of Certain Events under the Operating Covenants
Seller and Buyer acknowledge that from the date of the Agreement to the
date hereof, there have been certain events that have occurred which are
contrary to the operating covenants set forth in Section 5.6 of the Agreement.
These events have been disclosed in the attached supplement to the Disclosure
Schedules. Buyer agrees to waive any right it may have under the Agreement to
terminate such Agreement based on the above described effects so long as the
Seller is operated in the ordinary course, in accordance with Section 5.6 of the
Agreement during the period from the date of the Agreement, as amended and
continuing until the Effective Date, except as provided in Section 5.6(a) of the
Agreement; and provided that such waiver shall not affect any right of Buyer to
terminate such Agreement, as amended, based on the failure of Seller to comply
with any covenants set forth in the Agreement, as amended during the period from
the date of the Agreement, as amended, and continuing until the Effective Date.
1.7 Waiver of Condition
Buyer and Seller acknowledge that Seller has suffered effects to its financial
condition, results of operations, business, management, loan portfolio,
regulatory relationships with the Office of Thrift Supervision, ability to
consummate the corporate merger and related transactions and other matters as
described in the supplement to the Disclosure Schedules that may constitute a
Material Adverse Effect of the Seller, but that the Seller believes that the
effects identified by the Buyer may not constitute a Material Adverse Effect of
the Seller. Buyer agrees to waive any right it may have under the Agreement to
terminate such Agreement based on the above-described effects so long as the
Seller is operated in the ordinary course and in accordance with the terms and
conditions set forth in the Agreement, and provided that such waiver shall not
affect any right of Buyer to terminate such Agreement as amended based on the
failure of Seller to comply with any condition to its performance set forth
therein, or any of its representations, warranties or other obligations under
the Agreement.
1.8 Reference to and Effect on the Merger Agreement
Upon execution of this Amendment, each reference in the Agreement to
"this Agreement," "hereunder," "hereof," "herein" or words of like import, and
each reference in any document related thereto, or executed in connection
herewith, shall mean and be reference to the Agreement as amended hereby, and
the Agreement and this Amendment shall be read together and construed as one
single instrument. Except as specifically amended above, the Agreement shall
remain in full force and effect and is hereby ratified and confirmed by the
parties. Unless otherwise defined in this Amendment, all capitalized terms used
herein shall have the meanings ascribed to them in the Agreement.
1.9 Authority Relative to the Amendment
The execution, delivery and performance of the Agreement as amended by this
Amendment and the consummation of the transactions contemplated thereby and
hereby have been duly and effectively authorized by all necessary corporate
action of the parties, except that the Seller must receive the approval of its
stockholders.
ARTICLE II
EFFECTIVE DATE
2.0 Effective Date of This Amendment
This Amendment shall be effective as of April 25, 2000.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be executed in counterparts by its duly authorized officers this
25th day of April, 2000.
XXXXXX FINANCIAL SERVICES, INC.
Attest:
By: /s/ Xxxx X. Xxxxxx
------------------------------- ----------------------------------
________________, Secretary Xxxx X. Xxxxxx, President
EAST TEXAS FINANCIAL SERVICES, INC.
Attest:
By: /s/ Xxxxxx X. Free
------------------------------- ----------------------------------
__________________, Secretary Xxxxxx X. Free, President
EXHIBIT F
DEPARTURE AGREEMENT
This Departure Agreement ("Agreement") is made and entered into as of the ____
day of ___________, 2000 (the "Effective Date") by and among Gilmer Savings
Bank, FSB (the "Bank") and Xxxx X. Xxxxxx ("Xxxxxx").
R E C I T A L S
WHEREAS, pursuant to that certain Employment Agreement among the Bank and Xxxxxx
dated as of September 14, 1994 (the "Employment Agreement"), Xxxxxx is employed
by the Bank; and
WHEREAS, Xxxxxx is willing to voluntarily resign his employment with the Bank,
as well as his positions as an officer, director and employee of the Bank, its
subsidiaries and affiliates including, without limitation, Xxxxxx Financial
Services, Inc. (collectively, the "Other Entities"), and the Bank and the Other
Entities desire to accept Xxxxxx'x resignation as a director, officer and
employee in return for the consideration provided for in this Agreement;
WHEREAS, Xxxxxx Financial Services, Inc. is a party to an Agreement and Plan of
Merger dated November 15, 1999 with East Texas Financial Services, Inc. (the
"Merger"); and
WHEREAS, Xxxxxx and the Bank desire to set forth their agreements with respect
to Xxxxxx'x departure from the Bank.
A G R E E M E N T S
NOW, THEREFORE, in consideration of the Recitals and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged and
confessed, the parties hereto agree as follows:
1. The Bank waives its right to receive ninety (90) days' prior written notice
of Xxxxxx'x resignation pursuant to Section 6(b) of the Employment Agreement.
2. Effective on the closing of the Merger: (i) the Employment Agreement shall be
terminated, (ii) Xxxxxx shall resign his positions as an officer, director and
employee of the Bank and each of the Other Entities, and execute and deliver to
the Bank a resignation letter in substantially the same form as the letter
attached hereto as Exhibit A and (iii) Xxxxxx shall receive, subject to
shareholder approval, from the Merger Consideration due the shareholders of
Xxxxxx Financial Services, Inc. the sum of Seventy-Five Thousand and No/100
Dollars ($75,000.00) as payment in full. Effective on July 1, 2000, unless the
Merger Agreement has been extended in writing by Xxxxxx Financial Services,
Inc.: (i) the Employment Agreement shall be terminated, (ii) Xxxxxx shall resign
his positions as an officer, director and employee of the Bank and each of the
Other Entities, and execute and delivery to the Bank a resignation letter in
substantially the same form as the letter attached hereto as Exhibit A and (iii)
the Bank shall not be responsible to pay any amount to Xxxxxx. The alternative
effective times of the Employment Agreement termination and Xxxxxx'x resignation
will be referred to herein as the "Effective Date." Nothing contained herein
limits the rights of the Bank to terminate Xxxxxx pursuant to the terms of the
Employment Agreement, including but not limited to the right of the Bank to
terminate Xxxxxx pursuant to Section 6 of the Agreement or as otherwise allowed
by law. Until the termination of the Employment Agreement as provided herein,
Xxxxxx will continue to provide the services set forth therein, except that he
will not engage in any lending activities on behalf of the Bank.
3. Except for the right to receive his pro rata consideration payable to
stockholders pursuant to Section 2.3(a), his respective right to payment for his
unvested rights under the Restricted Stock Plan pursuant to Section 2.3(e), and
his rights to the proceeds of the liquidation of the Xxxxxx Financial Services,
Inc. Employee Stock Ownership Plan pursuant to Section 5.11(d) of that certain
Agreement and Plan of Merger between East Texas Financial Services, Inc. ("East
Texas") and Xxxxxx Financial Services, Inc., dated as of November 15, 1999, as
the same may be amended from time to time (the "Merger Agreement"), Xxxxxx
waives his individual rights, if any, pursuant to the Merger Agreement, and
acknowledges and agrees that he shall have no right to, and shall not, receive
an employment agreement or stock options from, or have any right to be employed
by, First Federal Savings and Loan Association of Tyler or any other entity
affiliated with the parties to the Merger Agreement.
4. Xxxxxx hereby RELEASES, ACQUITS and DISCHARGES the Bank, the Other Entities,
and East Texas and its affiliates (together with their officers, directors,
agents, servants, employees, attorneys and all persons, natural or corporate, in
privity with any of them, from all obligations and liabilities relating to
Xxxxxx'x employment by, and service as an officer and director on behalf of, the
Bank, the Other Entities, East Texas and its affiliates, and all matters, causes
of action, accountings, suits, controversies, agreements, termination payments,
insurance benefits, change in control payments, damages, claims and demands,
whether heretofore or hereafter accruing, whether now known or not known to the
parties prior to and including the date hereof, in any way directly or
indirectly arising out of or in connection with such Xxxxxx'x employment by, and
service by and on behalf of, the Bank, the Other Entities, East Texas and its
affiliates, and any documents, transactions or dealings between the parties
relating whereto, it being the intent of Xxxxxx to fully and completely
discharge the Bank, the Other Entities, East Texas and its affiliates (together
with their officers, directors, agents, servants, employees, attorneys and all
persons, natural or corporate, in privity with any of them) from any and all
liabilities and obligations related to or arising from all prior relationships,
instruments and courses of dealing (except as expressly set forth above in
Section 3 with regard to the Merger Agreement) between Xxxxxx and the Bank, or
the Other Entities, or East Texas or its affiliates, respectively, except that
such parties shall continue to be bound by the obligations described in this
Agreement.
5. The undersigned represent and warrant that they are fully authorized and
empowered to execute this Agreement and that neither they, nor the entities they
represent, if any, are subject to any limitation or disability created by law or
otherwise which would in any manner or to any extent prevent or restrict the
undersigned (as a representative or as a principal) from entering into and fully
performing their obligations under this Agreement.
6. Xxxxxx and the Bank each represent and warrant to each other that they have
not transferred to any person or entity any claim or cause of action or any part
thereof relating to Xxxxxx'x employment and service by or on behalf of the Bank
and the Other Entities or any other matters covered by this Agreement, and that
each is the 100% owner of all claims and causes of action it may have or has
ever had against the other (including, in the Bank's case, the Other Entities).
7. All materials related directly or indirectly to Xxxxxx'x employment with the
Bank shall be returned by Xxxxxx to the Bank on the Effective Date.
8. Xxxxxx hereby agrees not to disclose or otherwise communicate to any third
party (including any employee of the Bank) the existence or provisions of this
Agreement, and Xxxxxx agrees not to publish or otherwise communicate any
deleterious remarks concerning the Bank, the Other Entities, East Texas or their
respective officers, employees, directors or agents or to do anything which
would directly or indirectly damage the business, business prospects, Merger or
reputation of the Bank or the Other Entities, except as otherwise required by
statute or regulation. The Bank agrees to use its best efforts to see that the
directors of the Bank do not publish or otherwise communicate any deleterious
remarks concerning Xxxxxx'x service at the Bank or do anything directly or
indirectly
which would damage his professional reputation, except as otherwise required by
statute or regulation.
9. This Agreement shall be binding upon and inure to the benefit of the parties
hereto, their respective heirs, legal representatives, successors and assigns.
10. The construction and validity of this Agreement shall be governed by the
laws of the State of Texas. All obligations hereunder are performable in Upshur
County, Texas.
11. Any controversy or claim arising out of this Agreement, or the breach
thereof, shall be settled by arbitration in accordance with the rules of the
American Arbitration Association, and judgment upon the award rendered by the
arbitration may be entered in any court having jurisdiction thereof. The
arbitration agreement set forth herein shall not limit a court from granting a
temporary restraining order or preliminary injunction in order to preserve the
status quo of the parties pending arbitration. Further, the arbitrator(s) shall
have power to enter such orders by way of interim award, and they shall be
enforceable in court. The place of such arbitration shall be in Upshur County,
Texas.
12. In any case in which one or more of the provisions contained in this
Agreement 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 provision hereof and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
13. This Agreement and the documents referenced herein contains the entire
agreement of the parties hereto. There are no other agreements, oral or written,
among the parties concerning Xxxxxx'x employment by, or service as an officer or
director on behalf of, the Bank or the Other Entities, and this Agreement can be
amended only by written agreement signed by the parties hereto and by reference
made a part hereof.
14. The Other Entities, East Texas and its affiliates are each intended to be
third party beneficiaries of this Agreement and shall have the right to enforce
the provisions hereof in any court of competent jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement in
multiple counterparts, each of which shall be deemed an original.
-----------------------------------------
Xxxx Xxxxxx, Individually
GILMER SAVINGS BANK, FSB
By:______________________________________
Name: ___________________________________
Title:_____________________________________
EXHIBIT A
Copy of Resignation Letter
XXXX X. XXXXXX
0000 Xxxxxxxx
Xxxxxx, Xxxxx 00000
VIA HAND DELIVERY
_________________, 2000
Board of Directors
Gilmer Savings Bank, FSB
000 Xxxx Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Board of Directors
Gilmer Financial Services, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Gentlemen:
Please be advised that I resign all of my positions with Gilmer Savings Bank,
FSB, and Gilmer Financial Services, Inc., including my positions, if any, as a
director, officer and employee of such entities. I additionally resign all of my
positions, if any, with all subsidiaries, Employee Stock Ownership Plans and
affiliates of Gilmer Savings Bank, FSB, and Xxxxxx Financial Services, Inc. The
foregoing resignations are effective as of the above date.
Very truly yours,
