EXHIBIT 10.2
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
FVNB CORP.
AND
CBOT FINANCIAL CORPORATION
Dated as of October 8, 1998
TABLE OF CONTENTS
Page
ARTICLE I........................................................ 1
THE MERGER..................................................... 1
SECTION 1.1 The Merger...................................... 2
SECTION 1.2 Effective Time.................................. 2
SECTION 1.3 Certain Effects of the Merger................... 2
SECTION 1.4 Articles of Incorporation and ByLaws............ 2
SECTION 1.5 Directors and Officers.......................... 2
SECTION 1.6 Conversion of Shares............................ 2
SECTION 1.7 Exchange of Shares.............................. 3
SECTION 1.8 Approval by Shareholders........................ 4
SECTION 1.9 Closing...........................................4
ARTICLE II....................................................... 4
DISSENTING SHARES.............................................. 4
SECTION 2.1 Dissenting Shares............................... 4
ARTICLE III...................................................... 5
REPRESENTATIONS AND WARRANTIES OF CBOT......................... 5
SECTION 3.1 Organization and Qualification.................. 5
SECTION 3.2 CBOT Capitalization............................. 5
SECTION 3.3 Subsidiary Capitalization; Other Securities..... 6
SECTION 3.4 Authority Relative to the Agreement............. 6
SECTION 3.5 No Violation.................................... 7
SECTION 3.6 Consents and Approvals.......................... 7
SECTION 3.7 Regulatory Reports.............................. 7
SECTION 3.8 SEC Status; Securities Issuances................ 7
SECTION 3.9 Financial Statements............................ 7
SECTION 3.10 Absence of Certain Changes...................... 8
SECTION 3.11 CBOT Indebtedness.............................. 10
SECTION 3.12 Litigation..................................... 10
SECTION 3.13 Tax Matters.................................... 10
SECTION 3.14 Employee Benefit Plans......................... 11
SECTION 3.15 Employment Matters.............................. 13
SECTION 3.16 Leases, Contracts and Agreements................ 14
SECTION 3.17 Related Company Transactions.................... 14
SECTION 3.18 Compliance with Laws............................ 14
SECTION 3.19 Insurance....................................... 15
SECTION 3.20 Loans........................................... 15
SECTION 3.21 Fiduciary Responsibilities...................... 15
SECTION 3.22 Patents, Trademarks and Copyrights.............. 15
SECTION 3.23 Environmental Compliance........................ 15
SECTION 3.24 Regulatory Actions.............................. 17
SECTION 3.25 Title to Properties; Encumbrances............... 17
SECTION 3.26 Broker's or Finder's Fees........................17
SECTION 3.27 Year 2000 Compliance.............................17
SECTION 3.28 Representations Not Misleading.................. 18
ARTICLE IV....................................................... 18
REPRESENTATIONS AND WARRANTIES OF FVNB......................... 18
SECTION 4.1 Organization and Authority...................... 19
SECTION 4.2 Authority Relative to Agreement................. 19
SECTION 4.3 Consents and Approvals.......................... 20
SECTION 4.4 Representations Not Misleading.................. 20
ARTICLE V........................................................ 20
COVENANTS OF CBOT.............................................. 20
SECTION 5.1 Affirmative Covenants of CBOT................... 20
SECTION 5.2 Negative Covenants of CBOT...................... 21
ARTICLE VI....................................................... 24
ADDITIONAL AGREEMENTS.......................................... 24
SECTION 6.1 Access To, and Information Concerning, Properties
and Records..................................... 24
SECTION 6.2 Filing of Regulatory Approvals.................. 24
SECTION 6.3 Miscellaneous Agreements and Consents........... 24
SECTION 6.4 CBOT Indebtedness............................... 25
SECTION 6.5 Good Faith Efforts.............................. 25
SECTION 6.6 Exclusivity..................................... 25
SECTION 6.7 Public Announcement............................. 25
SECTION 6.8 Treatment of Employee Benefit Plans............. 25
SECTION 6.9 Environmental Investigation; Right to Terminate
Agreement................................... 25
SECTION 6.10 Director and Officer Indemnification............ 27
SECTION 6.11 Proxy Statement..................................28
SECTION 6.12 Notification.....................................29
ARTICLE VII...................................................... 29
CONDITIONS TO CONSUMMATION OF THE MERGER....................... 29
SECTION 7.1 Conditions to Each Party's Obligation to Effect
the Merger........................................ 29
SECTION 7.2 Conditions to the Obligations of FVNB and
Acquisition Sub to Effect the Merger.............. 29
SECTION 7.3 Conditions to the Obligations of CBOT to
Effect the Merger................................. 30
ARTICLE VIII..................................................... 31
TERMINATION; AMENDMENT; WAIVER; NON-COMPETITION................ 31
SECTION 8.1 Termination..................................... 31
SECTION 8.2 Effect of Termination........................... 32
SECTION 8.3 Amendment....................................... 32
SECTION 8.4 Extension; Waiver............................... 32
ARTICLE IX....................................................... 32
SURVIVAL....................................................... 32
SECTION 9.1 Nonsurvival of Representations and Warranties... 32
ARTICLE X........................................................ 32
MISCELLANEOUS.................................................. 32
SECTION 10.1 Expenses........................................ 32
ii
SECTION 10.2 Brokers and Finders............................. 33
SECTION 10.3 Entire Agreement; Assignment.................... 33
SECTION 10.4 Further Assurances.............................. 33
SECTION 10.5 Enforcement of the Agreement.................... 33
SECTION 10.6 Severability.................................... 34
SECTION 10.7 Notices......................................... 34
SECTION 10.8 Governing Law................................... 34
SECTION 10.9 Descriptive Headings............................ 34
SECTION 10.10 Parties in Interest............................. 34
SECTION 10.11 Counterparts.................................... 35
SECTION 10.12 Incorporation by Reference...................... 35
SECTION 10.13 Disclosure...................................... 35
SECTION 10.14 Certain Definitions............................. 35
SECTION 10.15 Arbitration......................................36
ATTACHMENTS
EXHIBITS
A Form of Agreement and Plan of Merger
B Form of Opinion of Counsel for CBOT
C Form of Non-Competition Agreement
D Form of Opinion of Counsel for FVNB and Acquisition Sub
LIST OF SCHEDULES
Schedule 3.2 CBOT Capitalization
Schedule 3.3 Subsidiary Capitalization; Other Securities
Schedule 3.5 No Violations
Schedule 3.6 Consents and Approvals
Schedule 3.7 Regulatory Reports
Schedule 3.9 Financial Statements
Schedule 3.10 Absence of Certain Changes
Schedule 3.12 Litigation
Schedule 3.13 Tax Matters
Schedule 3.14(a) Employee Welfare Benefit Plans
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Schedule 3.14(b) Employee Pension Benefit Plans
Schedule 3.14(c) Deferred Compensation, Bonus and Other Plans, Programs, Etc.
Schedule 3.14(d) Governmental Approvals Relating to Pension Benefit Plans
Schedule 3.14(e) Compliance with Code
Schedule 3.14(f) ERISA Compliance
Schedule 3.14(g) Title IV of ERISA
Schedule 3.14(i) Further Commitments; Amendment; Etc.
Schedule 3.14(j) Claims, Disputes, Etc.
Schedule 3.14(k) Taxes, Penalties, Etc.
Schedule 3.14(l) Additional Payments Due Under Deferred Compensation, Bonus,
Employee Welfare Benefit Plans and Employee Pension Benefit
Plans
Schedule 3.15 Employment Matters
Schedule 3.16 Leases, Contracts and Agreements
Schedule 3.17 Related Company Transactions
Schedule 3.18 Compliance with Laws
Schedule 3.19 Insurance Policies
Schedule 3.20 Loans
Schedule 3.22 Patents, Trademarks and Copyrights
Schedule 3.23 Environmental Compliance
Schedule 3.24 Regulatory Actions
Schedule 3.25 Title to Properties; Encumbrances
Schedule 3.27 Year 2000 Compliance
Schedule 4.2 Authority Relative to Agreement
Schedule 5.1(j) List of Accounts and Safe Deposit Boxes
Schedule 5.1(k) List of Liabilities and Obligations of CBOT and its
subsidiaries
Schedule 6.4 CBOT Indebtedness
iv
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement") dated as of October 8, 1998, by
and between FVNB CORP., a Texas corporation ("FVNB") and CBOT FINANCIAL
CORPORATION a Texas corporation ("CBOT"). WHEREAS, FVNB and CBOT believe that
the Merger (as defined herein) of CBOT with a to-be-formed subsidiary
("Acquisition Sub") of FVNB incorporated under the laws of the State of Texas,
with CBOT to be the surviving entity in such merger and as a result of which
CBOT will become a wholly-owned subsidiary of FVNB, all in the manner provided
by, and subject to the terms and conditions set forth in, this Agreement and all
exhibits, schedules and supplements hereto, is desirable and in the best
interests of their respective institutions and shareholders; and
WHEREAS, FVNB is unwilling to enter into this Agreement unless,
contemporaneously with the execution and delivery of this Agreement, the
beneficial and record shareholders of CBOT holding at least a majority of the
issued and outstanding common stock of CBOT enter into agreements (collectively,
the "SHAREHOLDERS AGREEMENT") generally providing for the approval of the
Agreement by such shareholders and in order to induce FVNB to enter into this
Agreement, CBOT has approved the entering into by FVNB and such shareholders of
the Shareholders Agreement and such shareholders have agreed to enter into,
execute and deliver the Shareholders Agreement; and
WHEREAS, immediately after the Merger, FVNB will cause (i) CBOT, as the
surviving corporation in the Merger, to be merged with and into FVNB, and (ii)
Citizens Bank of Texas, N.A., New Waverly, a national banking association and a
subsidiary of CBOT Financial Corporation of Delaware ("CBOT Delaware"), which is
a wholly-owned subsidiary of CBOT (the "Bank"), to be maintained as a banking
subsidiary of FVNB separate and apart from First Victoria National Bank ("FVNB
Bank"), which is a wholly-owned subsidiary of FVNB; and
WHEREAS, the respective boards of directors of CBOT and FVNB have approved
this Agreement and the proposed transactions substantially on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, 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.
THE MERGER
SECTION 1.1 THE MERGER. (a) Upon the terms and subject to the conditions
set forth herein and in the Agreement and Plan of Merger in the form attached
hereto as Exhibit A, with such changes thereto as may be appropriate to satisfy
the requirements of the Secretary of State of the State (the "Merger
Agreement"), and in accordance with the Texas Business Corporation Act (the
"TBCA"), Acquisition Sub shall be merged with and into CBOT (the "Merger") as
soon as practicable following the satisfaction or waiver, if permissible, of the
conditions set forth
in Article VII hereof. Following the Merger, CBOT shall continue as the
surviving corporation (the "Surviving Corporation"), which will be wholly-owned
by FVNB, and the separate corporate existence of Acquisition Sub shall cease.
FVNB shall not be deemed a party to the Merger for the purposes of Article 5.06
of the TBCA or for any other purpose.
(b) Immediately after the Merger, CBOT, as the surviving corporation in
the Merger, and CBOT Delaware will be merged with and into FVNB (the "Subsequent
Mergers" and, together with the Merger, the "Mergers"). CBOT agrees, and shall
cause CBOT of Delaware and their respective directors, officers, employees,
agents and representatives, to execute and deliver, as appropriate, the Merger
Agreement, any appropriate Articles of Merger and other related documents and to
take any appropriate other actions and otherwise cooperate with FVNB in order to
facilitate each of the Merger and the Subsequent Mergers.
SECTION 1.2 EFFECTIVE TIME. The Merger shall be consummated by the filing
with the Texas Secretary of State of Articles of Merger, in the form required by
and executed in accordance with the relevant provisions of the TBCA, and by the
issuance of a Certificate of Merger by the Secretary of State of Texas. (The
date of such issuance and filing or such other time and date as may be specified
in the Articles of Merger shall be the "Effective Time").
SECTION 1.3 CERTAIN EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in Article 5.06 of the TBCA.
SECTION 1.4 ARTICLES OF INCORPORATION AND BYLAWS. The Articles of
Incorporation and the Bylaws of CBOT, in each case as in effect at the Effective
Time, shall be the Articles of Incorporation and Bylaws of the Surviving
Corporation.
SECTION 1.5 DIRECTORS AND OFFICERS. The directors and officers of
Acquisition Sub at the Effective Time shall be the directors and officers of the
Surviving Corporation and shall hold office from the Effective Time until their
respective successors are duly elected or appointed and qualified in the manner
provided in the Articles of Incorporation and Bylaws of the Surviving
Corporation, or as otherwise provided by law.
SECTION 1.6 CONVERSION OF SHARES. (a) Each share of CBOT's common stock,
par value $1.00 per share ("CBOT Common Stock" or "Shares"), issued and
outstanding immediately prior to the Effective Time ("Common Shares
Outstanding"), other than Dissenting Shares (as defined in Section 2.1), shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into and represent the right to receive the consideration
payable as set forth below (the "Merger Consideration") to the holder of record
thereof, without interest thereon, upon surrender of the certificate
representing such Share. At the Closing (as hereinafter defined), CBOT shall
calculate and certify to FVNB the number of Common Shares Outstanding.
(b) Each holder of CBOT Common Stock shall receive, for each share of CBOT
Common Stock so held, Merger Consideration equal to the quotient of (i) (A)
$17,250,000 less (B) the CBOT Indebtedness (as defined in Section 3.11), DIVIDED
BY (ii) the number of Common Shares Outstanding; provided, however, that if the
Effective Date of the Merger is after December 31, 1998, then the $17,250,000
amount in this calculation shall be increased by the amount of the net after-tax
income of CBOT as determined in accordance with GAAP consistent with past
practices from January 1, 1999 through the Effective Date; provided, however,
that
2
such $17,250,000 amount shall not be increased to the extent the failure of the
Effective Date to occur on or before December 31, 1998, is caused by any breach
by CBOT of any of its obligations hereunder. For purposes of determining the net
after-tax income of CBOT from December 31, 1998 through the Effective Time, such
net income shall be equal to (i) the year-to-date after-tax net income from
January 1, 1999 through the month-end immediately prior to the Effective Time,
if any, plus (ii) an amount equal to the product of (A) the number of days from
the first day of the calendar month in which the Effective Time occurs through
the Effective Time MULTIPLIED BY (B) the quotient of (1) the net after-tax
income of CBOT for the immediately preceding month divided by (2) the number of
days in such calendar month. In the event the Effective Time occurs after
December 31, 1998, then the amount of any increase in the $17,250,000 amount
described above shall be determined at or prior to the Closing by mutual
agreement of FVNB and CBOT in accordance with the above provisions, and, upon
such agreement, the amount of such increase as so determined shall be final and
binding on all parties.
(c) Each share of capital stock of Acquisition Sub issued and outstanding
immediately before the Effective Time shall be converted into and become, by
virtue of the Merger, one share of capital stock of the Surviving Corporation.
SECTION 1.7 EXCHANGE OF SHARES.
(a) FVNB shall deposit or cause to be deposited in trust with FVNB
Bank (the "Exchange Agent") prior to the Effective Time cash in an
aggregate amount sufficient to make the cash payments pursuant to Section
1.6 hereof and to make the appropriate cash payments, if any, to holders
of Dissenting Shares pursuant to Section 2.1 hereof (such amounts being
hereinafter referred to as the "Exchange Fund"). The Exchange Agent shall
promptly make the payments of the Merger Consideration out of the Exchange
Fund upon surrender of such shares. Payments to holders of Dissenting
Shares shall be made as required by the TBCA. The Exchange Fund shall not
be used for any other purpose, except as provided in this Agreement.
(b) At least 14 days prior to the Effective Time, the Exchange Agent
shall mail to each record holder of an outstanding certificate or
certificates which represent shares of CBOT Common Stock (the
"Certificates"), a form letter of transmittal which will specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Exchange
Agent and contain instructions for use in effecting the surrender of the
Certificates for payment therefor. The letter of transmittal shall provide
a holder of CBOT Common Stock with the option of receiving the
consideration due to him pursuant to the Agreement, subject to the
remaining provisions hereof, as follows: (i) by check sent by mail, (ii)
by check at Closing or (iii) by deposit in the shareholder's account at
the Bank. At and after the Closing (as defined herein) and upon surrender
to the Exchange Agent of a Certificate, together with such letter of
transmittal duly executed, the holder of such Certificate shall be
entitled to receive in exchange therefor the amount of cash provided in
Section 1.6 hereof in the manner described herein, and such Certificate
shall forthwith be canceled. Payment will be made at Closing for shares of
CBOT Common Stock if Certificates and a properly completed letter of
transmittal with respect to such shares are received by the Exchange Agent
at least five days prior to Closing. Payment will be made for all other
shares of CBOT Common Stock within five days after the Exchange Agent's
receipt of the related Certificates and a properly completed letter of
transmittal. No interest will be
3
paid or accrued on the cash payable upon surrender of the Certificates. If
payment of cash is to be made to a person other than the person in whose
name the Certificate surrendered is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the person requesting such
payment shall pay any transfer or other taxes required by reason of the
payment to a person other than the registered holder of the Certificate
surrendered or established to the satisfaction of FVNB that such tax has
been paid or is not applicable. Until surrendered in accordance with the
provisions of this Section 1.7, each Certificate (other than Certificates
representing Dissenting Shares) shall represent for all purposes only the
right to receive the Merger Consideration payable with respect thereto
without any interest thereon.
(c) Any portion of the Exchange Fund (including the proceeds of any
investments thereof) that remains unclaimed by the shareholders of CBOT
for six months after the Effective Time shall be paid to FVNB, and the
holders of shares of CBOT Common Stock not theretofore presented to the
Exchange Agent shall look to FVNB only, and not the Exchange Agent, for
the payment of any Merger Consideration in respect of such shares.
SECTION 1.8 APPROVAL BY SHAREHOLDERS. This Agreement shall be submitted to
the shareholders of CBOT in accordance with applicable provisions of law and the
respective Articles of Incorporation and Bylaws of CBOT. CBOT and FVNB shall
proceed expeditiously and cooperate fully in the procurement of any other
consents and approvals and the taking of any other actions in satisfaction of
all other requirements prescribed by law or otherwise necessary for consummation
of the Mergers on the terms herein provided, including, without limitation, the
preparation and submission of all necessary filings, requests for waivers and
certificates with the Board of Governors of the Federal Reserve System ("Federal
Reserve Board"), the Federal Deposit Insurance Corporation ("FDIC") and the
Texas Department of Banking ("TDB").
SECTION 1.9 CLOSING. Upon the terms and subject to the conditions hereof,
as soon as practicable after the receipt of all required regulatory approvals in
connection with the Mergers and the expiration of all applicable waiting periods
and the satisfaction or waiver, if permissible, of each of the other conditions
set forth in Article VII hereof, CBOT and Acquisition Sub shall execute and
deliver the Articles of Merger, as described in Section 1.2, and the parties
hereto shall take all such other and further actions as may be required by law
to make the Mergers effective. Prior to the filing referred to in this Section,
a closing (the "Closing") will be held at the office of First Victoria National
Bank, Victoria, Texas (or such other place as the parties may agree) for the
purpose of confirming all of the foregoing. In no event shall the Closing occur
later than one hundred eighty (180) days following the date of this Agreement,
unless otherwise agreed to by FVNB and CBOT.
ARTICLE II.
DISSENTING SHARES
SECTION 2.1 DISSENTING SHARES. Each share of CBOT Common Stock issued and
outstanding immediately prior to the Effective Time, the holder of which has not
voted in favor of the Merger and who has delivered a written demand for payment
of the fair value of such
4
shares within the time and in the manner provided in Article 5.12 of the TBCA,
is referred to herein as a "Dissenting Share." Dissenting Shares shall not be
converted into or represent the right to receive the Merger Consideration
pursuant to Section 1.6 of this Agreement unless and until such holder shall
have failed to perfect or shall have effectively withdrawn or lost his right to
appraisal and payment under the TBCA. If any such holder shall have so failed to
perfect or shall have effectively withdrawn or lost such right, such holder's
Dissenting Shares shall thereupon be deemed to have been converted into and to
have become exchangeable for, at the Effective Time, the right to receive the
Merger Consideration without any interest thereon. As set forth in Section 8.1
of this Agreement, if the holders of more than 10% of the CBOT Common Stock
shall have exercised their dissenters' rights, FVNB shall have no obligation to
consummate the Mergers.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
CBOT
CBOT hereby makes the representations and warranties set forth in this
Article III to FVNB. CBOT has delivered to FVNB the Schedules to this Agreement
referred to in this Article III prior to the date hereof.
SECTION 3.1 ORGANIZATION AND QUALIFICATION. CBOT is a Texas corporation
and a registered bank holding company under the Bank Holding Company Act of
1956, as amended, and is duly organized, validly existing and in good standing
under the laws of the State of Texas and all laws, rules, and regulations
applicable to bank holding companies. CBOT Delaware is a Delaware corporation
and a registered bank holding company under the Bank Holding Company Act of
1956, as amended, and is duly organized, validly existing and in good standing
under the laws of the State of Delaware and all laws, rules, and regulations
applicable to bank holding companies. The Bank is a national banking
association, duly organized, validly existing and duly authorized to transact
the business of banking under the laws of the United States. CBOT Mortgage
Company (the "Mortgage Company") is a Texas corporation duly organized, validly
existing and in good standing under the laws of the State of Texas. CBOT and
each of its subsidiaries has all requisite corporate power and authority to
carry on its business as now being conducted and to own, lease and operate its
properties and assets as now owned, leased or operated. CBOT does not own or
control any Affiliate (as defined in Section 3.17) or any subsidiary (as defined
in Section 10.13(a)) other than the Bank, CBOT Delaware and the Mortgage
Company. True and correct copies of the Articles of Incorporation or Association
and Bylaws of CBOT and each of its subsidiaries, with all amendments thereto
through the date of this Agreement, have been delivered by CBOT to FVNB. Except
for CBOT Delaware which is organized in Delaware and is not required to be
qualified to do business in any jurisdiction other than Delaware, the nature of
the business of CBOT and each of its subsidiaries and their respective
activities, as currently conducted, do not require them to be qualified to do
business in any jurisdiction other than the State of Texas.
SECTION 3.2 CBOT CAPITALIZATION. As of the date hereof, the authorized
capital stock of CBOT consists solely of (i) 5,000,000 shares of CBOT Common
Stock, of which 89,360 shares are issued and outstanding, and none of which are
held in treasury and (ii) 1,000,000 shares of preferred stock, $1.00 par value,
none of which are issued and outstanding. CBOT has
5
granted options to acquire an aggregate of 24,000 shares of CBOT Common Stock at
a price of $20.00 per share (the "Options") and Schedule 3.2 sets forth a true
and complete list of the holders of such Options and the respective number of
shares of CBOT Common Stock that each such holder has the right to acquire upon
the exercise of the Options held by such holder. The shareholders of CBOT set
forth on Schedule 3.2 are the record and beneficial owners of all of the issued
and outstanding shares of capital stock of CBOT, each owning the respective
numbers of shares of Common Stock set forth on Schedule 3.2,. Except for the
Options, there are no outstanding subscriptions, options, convertible
securities, rights, warrants, calls, or other agreements or commitments of any
kind issued or granted by, or binding upon, CBOT or any of its subsidiaries to
purchase or otherwise acquire any security of or equity interest in CBOT or any
of its subsidiaries. Except as set forth on Schedule 3.2, to the knowledge of
CBOT, there are no irrevocable proxies or any agreements restricting the
transfer of or otherwise relating to shares of its capital stock of any class.
All of the Shares that have been issued have been duly authorized, validly
issued and are fully paid and non-assessable, and are free of preemptive rights.
Except as disclosed in Schedule 3.2, there are no restrictions applicable to the
payment of dividends on the Shares except pursuant to the TBCA and applicable
banking laws and regulations, and, except as set forth on Schedule 3.2, all
dividends declared prior to the date hereof have been paid.
SECTION 3.3 SUBSIDIARY CAPITALIZATION; OTHER SECURITIES. The authorized
capital stock of the Bank consists solely of 100,000 shares of common stock, par
value $5.00 per share, of which 100,000 shares are issued and outstanding, and
none of which are held in treasury. The authorized capital stock of CBOT
Delaware consists solely of 3,000 authorized shares of common stock, par value
$.01 per share, of which 1,000 shares are issued and outstanding, and none of
which are held in treasury. The authorized capital stock of the Mortgage Company
consists solely of (i) 5,000,000 shares of common stock, par value $1.00 per
share, of which 28,000shares are issued and outstanding, and none of which are
held in treasury and (ii) 1,000,000 shares of preferred stock, $1.00 par value,
none of which are issued and outstanding. All of the issued and outstanding
shares of the capital stock of each of the Bank, CBOT Delaware and the Mortgage
Company (i) are duly authorized, validly issued, fully paid and nonassessable,
(ii) are directly or indirectly owned by CBOT free and clear of any liens,
claims, security interests and encumbrances of any kind, except as set forth on
Schedule 3.3, and (iii) there are no irrevocable proxies with respect to such
shares and there are no outstanding or authorized subscriptions, options,
warrants, calls, rights, or other agreements or commitments of any kind
restricting the transfer of, requiring the issuance or sale of, or otherwise
relating to any of such shares of capital stock to any person. CBOT has no
subsidiaries (as defined in Section 10.13(a)), except for the Bank, CBOT
Delaware and the Mortgage Company. Set forth on Schedule 3.3 hereto is a list of
all equity ownership by CBOT and each of its subsidiaries for the account of
CBOT or any such subsidiary in any other person other than the Bank, CBOT
Delaware or the Mortgage Company (the "Other Securities"). CBOT or one of its
subsidiaries owns each Other Security free and clear of any lien, encumbrance,
security interest or charge. The Other Securities represent less than five
percent of the outstanding equity securities of each such person.
SECTION 3.4 AUTHORITY RELATIVE TO THE AGREEMENT. CBOT has full corporate
power and authority, and except for the approvals of the appropriate regulatory
authorities, no further proceedings on the part of CBOT are necessary, to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby, all of which have been duly and validly authorized by its
Board of Directors. This Agreement has been duly executed and delivered by
6
CBOT and is a duly authorized, valid, legally binding and enforceable obligation
of CBOT, subject to the effect of bankruptcy, insolvency, reorganization,
moratorium, or other similar laws relating to creditors' rights generally and
general equitable principles and subject to such shareholder approvals and such
approval of regulatory agencies and other governmental authorities having
authority over CBOT as may be required by statute or regulation. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby will not conflict with, or result in any
violation or breach of or default under the respective Articles of Incorporation
or Association or Bylaws of CBOT or any of its subsidiaries.
SECTION 3.5 NO VIOLATION. Except as set forth on Schedule 3.5, neither the
execution, delivery nor performance of this Agreement in its entirety, nor the
consummation of all of the transactions contemplated hereby, following the
receipt of such approvals, including any applicable waiting periods, as may be
required from the Office of the Comptroller of the Currency ("OCC"), the Board
of Governors of the Federal Reserve System ("FRB"), and the Texas Department of
Banking ("TDB"), will (i) violate (with or without the giving of notice or the
passage of time), any law, order, writ, judgment, injunction, award, decree,
rule, statute, ordinance or regulation applicable to CBOT or any of its
subsidiaries or (ii) be in conflict with, result in a breach or termination of
any provision of, cause the acceleration of the maturity of any debt or
obligation pursuant to, constitute a default (or give rise to any right of
termination, cancellation or acceleration) under, or result in the creation of
any security interest, lien, charge or other encumbrance upon any property or
assets of CBOT or any of its subsidiaries pursuant to, any terms, conditions or
provisions of any note, license, instrument, indenture, mortgage, deed of trust
or other agreement or understanding or any other restriction of any kind or
character, to which CBOT or any of its subsidiaries is a party or by which any
of their assets or properties are subject or bound. Except as set forth in
Schedule 3.5, or as contemplated hereby, the corporate existence, business
organization, assets, licenses, permits, authorizations and contracts of CBOT
and its subsidiaries will not be terminated or impaired by reason of the
execution, delivery or performance by CBOT of this Agreement or consummation by
CBOT of the transactions contemplated hereby, assuming the receipt of required
bank regulatory approvals.
SECTION 3.6 CONSENTS AND APPROVALS. CBOT's Board of Directors has approved
the Agreement and recommended approval and adoption of this Agreement by CBOT's
shareholders. Except as described in Schedule 3.6 hereto, no prior consent,
approval or authorization of, or declaration, filing or registration with any
person, domestic or foreign, is required of CBOT in connection with the
execution, delivery and performance by CBOT of this Agreement and the
transactions contemplated hereby or the resulting change of control of CBOT or
any of its subsidiaries, except the approval of the shareholders of CBOT, the
filing of the Articles of Merger under the TBCA and such approvals as may be
required from the FRB, the TDB and the OCC.
SECTION 3.7 REGULATORY REPORTS. Except as set forth on Schedule 3.7,
during the last five years CBOT and its subsidiaries have timely filed
(including within any authorized extension period) all reports, registrations
and statements, together with any amendments required to be made thereto, that
are required to be filed with the FRB, the TDB, and the OCC, as well as all
material reports, registrations and statements, together with any amendments
required to be made thereto, that are required to be filed with any other
regulatory authority having jurisdiction over any such persons.
7
SECTION 3.8 SEC STATUS; SECURITIES ISSUANCES. CBOT is not subject to the
registration provisions of Section 12 of the Exchange Act nor the rules and
regulations of the SEC promulgated under Section 12 of the Exchange Act. All
issuances of securities by CBOT and its subsidiaries have been registered under
the Securities Act, the Securities Act of the State of Texas, and all other
applicable laws or were exempt from any such registration requirements.
SECTION 3.9 FINANCIAL STATEMENTS. CBOT has provided FVNB with a true and
complete copy of (i) the audited consolidated balance sheet of the Bank and its
subsidiaries as of December 31, 1997, and the related consolidated statements of
income, shareholders' equity and statements of cash flows for the years ended
December 31, 1997 and 1996; (ii) Reports of Condition and Statements of Income
("Call Reports") of the Bank as of March 31, 1998, and June 30, 1998 and (iii)
the unaudited balance sheet of CBOT as of December 31, 1997 and June 30, 1998
(the "CBOT Balance Sheets") (such consolidated statements of financial position
and the related consolidated statements of income, shareholders' equity and
changes in cash flows are collectively referred to herein as the "Consolidated
Financial Statements") (collectively, with the Consolidated Financial Statements
and the notes and schedules thereto, the Call Reports and the CBOT Balance
Sheets referred to as the "Financial Statements"). Except as described in the
notes to the Consolidated Financial Statements and the amendment being made to
the Call Reports which is described in Schedule 3.9 hereto, the Financial
Statements fairly present the financial position of the Bank and its
subsidiaries and CBOT, respectively, as of the dates thereof and the results of
operations and changes in consolidated financial position of the Bank and its
subsidiaries for the periods then ended, in conformity with Generally Accepted
Accounting Principles applied on a basis consistent with prior periods ("GAAP")
(subject, in the case of the unaudited interim financial statements, to normal
year-end adjustments and the fact that they do not contain all of the footnote
disclosures required by GAAP), except as otherwise noted therein, and the
accounting records underlying the Consolidated Financial Statements accurately
and fairly reflect in all material respects the transactions of the Bank and its
subsidiaries. As of their dates, the Consolidated Financial Statements conformed
in all material respects with all applicable rules and regulations promulgated
by the FRB, the TDB, and the OCC. Neither CBOT nor any of its subsidiaries has
any liabilities or obligations of a type which should be included in or
reflected on the Financial Statements if prepared in accordance with GAAP,
whether related to tax or non-tax matters, accrued or contingent, due or not yet
due, liquidated or unliquidated, or otherwise, except as and to the extent
disclosed or reflected in the Financial Statements or as set forth on Schedule
3.9. CBOT will provide FVNB with the unaudited unconsolidated statements of
financial position of CBOT and its subsidiaries as of the end of each month
hereafter, prepared on a basis consistent with prior periods and promptly
following their availability, CBOT will provide FVNB with the Call Reports of
the Bank for all periods ending after June 30, 1998. Neither CBOT nor any of its
subsidiaries has any off balance sheet liabilities associated with financial
derivative products or potential liabilities associated with financial
derivative products.
SECTION 3.10 ABSENCE OF CERTAIN CHANGES. Except as set forth on Schedule
3.10, since December 31, 1994, CBOT and its subsidiaries have operated and
conducted their respective businesses in the ordinary course of business,
consistent with past practices, and, without limiting the generality of the
foregoing, have not taken any actions intended to alter in any material respect
the size or composition of the deposit base, securities portfolio, loan
portfolio or asset mix of CBOT or any of its subsidiaries, including, without
limitation, engaging in the practice of offering above- or below-market rates to
attract or maintain deposits or loans.
8
Additionally, except as and to the extent set forth on Schedule 3.10, since
December 31, 1997 (the "Balance Sheet Date") neither CBOT nor any of its
subsidiaries has:
(a) made any amendment to its Articles of Incorporation or Association or
Bylaws or changed the character of its business in any material manner;
(b) suffered any Material Adverse Effect (as defined in Section 10.13(b));
(c) entered into any agreement, commitment or transaction except in the
ordinary course of business and consistent with prudent banking practices;
(d) except in the ordinary course of business and consistent with prudent
banking practices, incurred, assumed or become subject to, whether directly or
by way of any guarantee or otherwise, any obligations or liabilities (absolute,
accrued, contingent or otherwise);
(e) permitted or allowed any of its material property or assets to be
subject to any mortgage, pledge, lien, security interest, encumbrance,
restriction or charge of any kind (other than statutory liens not yet
delinquent) except in the ordinary course of business and consistent with
prudent banking practices;
(f) except in the ordinary course of business and consistent with prudent
banking practices, canceled any debts, waived any claims or rights, or sold,
transferred, or otherwise disposed of any of its properties or assets;
(g) disposed of or permitted to lapse any rights to the use of any
trademark, service xxxx, trade name or copyright, or disposed of or disclosed to
any person other than its employees or agents, any trade secret not theretofore
a matter of public knowledge;
(h) granted any increase in compensation or paid or agreed to pay or
accrue any bonus, percentage compensation, service award, severance payment or
like benefit to or for the credit of any director, officer, employee or agent
(other than customary annual compensation adjustments in accordance with past
practices to employees who are not executive officers), or entered into any
employment or consulting contract or other agreement with any director, officer
or employee or adopted, amended or terminated any pension, employee welfare,
retirement, stock purchase, stock option, stock appreciation rights,
termination, severance, income protection, golden parachute, savings or
profit-sharing plan (including trust agreements and insurance contracts
embodying such plans), any deferred compensation, or collective bargaining
agreement, any group insurance contract or any other incentive, welfare or
employee benefit plan, program or agreement maintained by CBOT or any of its
subsidiaries for the directors, employees or former employees of CBOT or any of
its subsidiaries ("Employee Benefit Plan");
(i) directly or indirectly declared, set aside or paid any dividend or
made any distribution in respect to its capital stock or redeemed, purchased or
otherwise acquired, or arranged for the redemption, purchase or acquisition of,
any shares of its capital stock or other of its securities, except for dividends
paid to CBOT by the Bank, CBOT Delaware or the Mortgage Company;
(j) organized or acquired any capital stock or other equity securities or
acquired any equity or ownership interest in any person (except through
settlement of indebtedness,
9
foreclosure, acquisition in lieu of foreclosure, the exercise of creditors'
remedies or in a fiduciary capacity, the ownership of which does not expose CBOT
or any of its subsidiaries to any liability from the business, operations or
liabilities of such person);
(k) issued, reserved for issuance, granted, sold or authorized the
issuance of any shares of its capital stock or subscriptions, options, warrants,
calls, rights or commitments of any kind relating to the issuance or sale of or
conversion into shares of its capital stock;
(l) made any or acquiesced with any change in any accounting methods,
principles or practices;
(m) experienced any material adverse change in relations with customers or
clients of CBOT or any of its subsidiaries;
(n) except for the transactions contemplated by this Agreement or as
otherwise permitted hereunder, entered into any transaction, or entered into,
modified or amended any contract or commitment, other than in the ordinary
course of business and consistent with prudent banking practices; or
(o) agreed, whether in writing or otherwise, to take any action the
performance of which would change the representations contained in this Section
3.10 in the future so that any such representation would not be true in all
material respects as of the Closing.
SECTION 3.11 CBOT INDEBTEDNESS. CBOT has delivered to FVNB true and
complete copies of all loan documents ("CBOT Loan Documents") related to
indebtedness of CBOT and its subsidiaries, other than deposits, trade payables
and federal funds borrowings ("CBOT Indebtedness"), and made available to FVNB
all material correspondence concerning the status of CBOT Indebtedness.
SECTION 3.12 LITIGATION. Except as set forth on Schedule 3.12, there are
no actions, suits, claims, investigations, reviews or other proceedings pending
or, to the knowledge of CBOT, threatened against CBOT or any of its subsidiaries
or involving any of their respective properties or assets, at law or in equity
or before or by any foreign, federal, state, municipal, or other governmental
court, department, commission, board, bureau, agency, or other instrumentality
or person or any board of arbitration or similar entity ("Proceeding"). CBOT
will notify FVNB immediately in writing of any Proceedings of the nature
described in the foregoing sentence against CBOT or any of its subsidiaries.
SECTION 3.13 TAX MATTERS. CBOT and each of its subsidiaries have duly and
timely filed (including within any authorized extension period) all tax returns
required to be filed by them involving a tax liability or other potential
detriment for failure to file (the "Filed Returns"). CBOT and each of its
subsidiaries have paid, or have established adequate reserves for the payment
of, all federal income taxes and all material state and local income taxes and
all franchise, property, sales, employment, withholding, foreign or other taxes
required to be paid by any of them with respect to the periods covered by the
Filed Returns. With respect to the periods for which returns have not yet been
filed, CBOT and its subsidiaries have established adequate reserves determined
in accordance with GAAP for the payment of all federal income taxes and all
state and local income taxes and all franchise, property, sales, employment,
foreign or other taxes. Except as described in Schedule 3.13, neither CBOT nor
any of its subsidiaries has any
10
direct or indirect liability for the payment of federal income taxes, state and
local income taxes, and franchise, property, sales, employment, withholding or
other taxes in excess of amounts paid or reserves established. Except as set
forth on Schedule 3.13, neither CBOT nor any of its subsidiaries has entered
into any tax sharing agreement or other agreement regarding the allocation of
the tax liability of CBOT or any of its subsidiaries. Neither CBOT nor any of
its subsidiaries has filed any Internal Revenue Service ("IRS") Forms 1139
(Application for Tentative Refund). Except as set forth on Schedule 3.13, there
are no pending or threatened audits, investigations, reviews or other similar
proceedings as to which CBOT or any of its subsidiaries has been notified in
writing by the IRS or other taxing authority for taxes or assessments of CBOT or
any of its subsidiaries, nor are there any outstanding agreements or waivers
extending the statutory period of limitation applicable to any tax return of
CBOT or any of its subsidiaries for any period. CBOT and each of its
subsidiaries have withheld from employee wages and paid over to the proper
governmental authorities all amounts required to be so withheld and paid over.
For the purposes of this Agreement, the term "tax" shall include all federal,
state and local taxes and related governmental charges and any interest or
penalties payable in connection with the payment of taxes.
SECTION 3.14 EMPLOYEE BENEFIT PLANS.
(a) Schedule 3.14(a) lists each "employee welfare benefit plan" (as
defined in Section 3(1) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) maintained by CBOT or any of its subsidiaries or to which
CBOT or any of its subsidiaries contributes or is required to contribute,
including any multiemployer welfare plan (such employee welfare benefit plans
being hereinafter collectively referred to as the "Welfare Benefit Plans") and
sets forth (i) the amount of any liability of CBOT or any of its subsidiaries
for contributions more than thirty days past due with respect to each Welfare
Benefit Plan as of the date hereof and as of the end of any subsequent month
ending prior to the Closing and (ii) the annual cost attributable to each of the
Welfare Benefit Plans; except as set forth on Schedule 3.14(a), no Welfare
Benefit Plan provides for continuing benefits or coverage for any participant,
beneficiary or former employee after such participant's or former employee's
termination of employment except as may be required by Section 4980B of the Code
and Sections 601-608 of ERISA;
(b) Schedule 3.14(b) lists each "employee pension benefit plan" (as
defined in Section 3(2) of ERISA and not exempted under Section 4(b) or 201 of
ERISA) maintained by CBOT or any of its subsidiaries or to which CBOT or any of
its subsidiaries contributes or is required to contribute, including any
multiemployer plan (as defined in Section 3(37) of ERISA) (such employee pension
benefit plans being hereinafter collectively referred to as the "Pension Benefit
Plans");
(c) Except as set forth on Schedule 3.14(c), neither CBOT nor any of its
subsidiaries maintains, has or is a party to any plan, program, agreement,
arrangement or commitment for the benefit of any of its employees, directors or
officers relating to any of the following: severance pay, deferred compensation,
bonuses, stock options, employee stock purchases, restricted stock, excess
benefits, incentive compensation, stock bonuses, cash bonuses, golden
parachutes, life insurance, rabbi trusts, cafeteria plans, dependent care,
unfunded plans or any other employee-related plans, programs, agreements,
arrangements or commitments (other than normal policies concerning holidays,
vacations and salary continuation during short absences for illness or other
reasons), or any program, plan, commitments, or practice of purchasing or
otherwise
11
compensating employees, including officers, for accrued vacation or sick leave
upon termination of employment (collectively referred to as "Other Programs");
(d) All of the Pension Benefit Plans and Welfare Benefit Plans and any
related trust agreements or insurance or annuity contracts (or any other funding
instruments) and all Other Programs to the extent required comply currently, and
have complied in the past, both as to form and operation, with the provisions of
ERISA, the Code and with all other applicable laws, rules and regulations
governing the establishment and operation of the Pension Benefit Plans, Welfare
Benefit Plans and all Other Programs; except as set forth on Schedule 3.14(d),
all necessary governmental approvals relating to the establishment of the
Pension Benefit Plans have been obtained; and with respect to each Pension
Benefit Plan that is intended to be tax-qualified under Section 401(a) or 403(a)
of the Code, a favorable determination letter as to the qualification under the
Code of each such Pension Benefit Plan and each material amendment thereto has
been issued by the Internal Revenue Service (and nothing has occurred since the
date of the last such determination letter which resulted in, or is likely to
result in the revocation of such determination);
(e) Except as set forth on Schedule 3.14(e), each Welfare Benefit Plan,
each Pension Benefit Plan and each Other Program has been administered in
compliance in all material respects to the extent required with the requirements
of the Code, ERISA and all other applicable laws, and all reports and
disclosures required by ERISA, the Code and any other applicable laws with
respect to each Welfare Benefit Plan, each Pension Benefit Plan and each Other
Program have been timely filed;
(f) Except as set forth on Schedule 3.14(f), on and after January 1, 1975,
neither CBOT nor any of its subsidiaries nor any plan fiduciary of any Welfare
Benefit Plan or Pension Benefit Plan has engaged in any transaction in violation
of Section 406 of ERISA (for which transaction no exemption exists under Section
408 of ERISA) or in any "prohibited transaction" as defined in Section
4975(c)(1) of the Code (for which no exemption exists under Section 4975(c)(2)
or 4975(d) of the Code);
(g) Except as set forth on Schedule 3.14(g), neither CBOT nor any of its
subsidiaries nor any corporation or other trade or business controlled by or
under common control with CBOT (as determined under Sections 414(b) and 414(c)
of the Code) ("Common Control Entity") is, or has been within the past three
years, a contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a
Pension Benefit Plan subject to the provisions of Title IV of ERISA, nor has
CBOT or any of its subsidiaries or a Common Control Entity maintained or
participated in any employee pension benefit plan (defined in Section 3(2) of
ERISA) subject to the provision of Title IV of ERISA. In addition, except as set
forth on Schedule 3.14(g), neither CBOT nor any of its subsidiaries nor a Common
Control Entity (i) is a party to a collective bargaining agreement, (ii) has
maintained or contributed to, or has participated in or agreed to participate
in, a multiemployer plan (as defined in Section 3(37) of ERISA), or (iii) has
made a complete or partial withdrawal from a multiemployer plan (as defined in
Section 3(37) of ERISA) so as to incur withdrawal liability as defined in
Section 4201 of ERISA (without regard to subsequent reduction or waiver of such
liability under Section 4207 or 4208 of ERISA);
(h) True and complete copies of each Welfare Benefit Plan, each Pension
Benefit Plan and each Other Program, related trust agreements or insurance or
annuity contracts (or any other funding instruments), summary plan descriptions,
the most recent determination letter issued by
12
the Internal Revenue Service with respect to each Pension Benefit Plan, the most
recent application for a determination letter from the Internal Revenue Service
with respect to each Pension Benefit Plan, the Annual Reports on Form 5500
Series filed with any governmental agency for each Welfare Benefit Plan, Pension
Benefit Plan and Other Program for the three most recent plan years, the Summary
Annual Report provided to participants with respect to each Welfare Benefit
Plan, Pension Benefit Plan, and Other Program for the three most recent plan
years, and any correspondence to or from the IRS, Department of Labor, or bank
examiner with respect to any Welfare Benefit Plan, Pension Benefit Plan, or
Other Program during the three most recent plan years, have been furnished to
FVNB;
(i) All Welfare Benefit Plans, Pension Benefit Plans, and Other Programs
related trust agreements or insurance or annuity contracts (or any other funding
instruments), are legally valid and binding and in full force and effect and,
except as set forth on Schedule 3.14(i), there are no promised increases in
benefits (whether expressed, implied, oral or written) under any of these plans
nor any obligations, commitments or understandings to continue any of these
plans, (whether expressed, implied, oral or written) except as required by
Section 4980B of the Code and Sections 601-608 of ERISA or under the terms of
such plans; except as set forth on Schedule 3.14(i), CBOT, the Bank, the
Mortgage Company, or a Common Control Entity has the right to modify, amend, or
terminate each Welfare Benefit Plan, Pension Benefit Plan, and Other Program at
any time; the termination of any Welfare Benefit Plan, Pension Benefit Plan, or
Other Program would not accelerate or increase any benefits payable under such
plan; and except as set forth on Schedule 3.14(i), in the event of termination
of any Welfare Benefit Plan, Pension Benefit Plan, or Other Program, neither
CBOT nor any of its subsidiaries would have any liability with respect to such
plan, other than the payment of benefits pursuant to such plan;
(j) Except as set forth on Schedule 3.14(j), there are no claims pending
with respect to, or under, any Pension Benefit Plan, Welfare Benefit Plan or any
Other Program, other than routine claims for plan benefits, and there are no
disputes or litigation pending or threatened with respect to any such plans;
neither CBOT nor any of its subsidiaries nor any Common Control Entity has any
liability with respect to any Pension Benefit Plan under Section 412 of the
Code; and all contributions, premiums, or other payments due from CBOT or any of
its subsidiaries have been fully paid or adequately provided for and disclosed
on the books and financial statements of CBOT;
(k) Except as set forth on Schedule 3.14(k), no action has been taken, nor
has there been a failure to take any action that would subject any person or
entity to any liability for any income, excise or other tax or penalty in
connection with any Pension Benefit Plan, Welfare Benefit Plan or any Other
Program, other than for income taxes due with respect to benefits paid; and
(l) Except as otherwise set forth in Schedule 3.14(l), neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment to be made by
CBOT or any of its subsidiaries (including, without limitation, severance,
unemployment compensation, golden parachute (defined in Section 280G of the
Code), or otherwise) becoming due to any employee, director or consultant, or
(ii) increase any benefits otherwise payable under any Welfare Benefit Plan,
Pension Benefit Plan, or any Other Program.
13
SECTION 3.15 EMPLOYMENT MATTERS. Except as disclosed on Schedules 3.14(a),
3.14(b), 3.14(c) and 3.15, neither CBOT nor any of its subsidiaries is a party
to (i) any oral or written contracts, agreements, understandings or commitments,
express or implied, granting any material benefits or rights to any employee(s),
(ii) any collective bargaining agreement, or (iii) any conciliation agreement
with the Department of Labor, the Equal Employment Opportunity Commission or any
federal, state or local agency which requires equal employment opportunities or
affirmative action in employment. There are no unfair labor practice complaints
pending against CBOT or any of its subsidiaries (as to which CBOT or any of its
subsidiaries has been notified in writing) before the National Labor Relations
Board and no similar claims pending before any similar state, local or foreign
agency as to which CBOT or any of its subsidiaries has been notified in writing.
To the knowledge of CBOT, there is no activity or proceeding of any labor
organization (or representative thereof) or employee group to organize any
employees of CBOT or any of its subsidiaries, nor of any strikes, slowdowns,
work stoppages, lockouts, or threats thereof, by or with respect to any such
employees. CBOT and each of its subsidiaries are in compliance in all material
respects with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and neither
CBOT nor any of its subsidiaries is engaged in any unfair labor practice.
SECTION 3.16 LEASES, CONTRACTS AND AGREEMENTS. Schedules 3.13, 3.14(a),
3.14(b), 3.14(c) and 3.16 set forth an accurate and complete list of all leases,
subleases, licenses, contracts and agreements to which CBOT or any of its
subsidiaries is a party or by which CBOT or any of its subsidiaries is bound
which obligate or may obligate CBOT and its subsidiaries for an amount in excess
of $25,000 over the entire term of any such agreement or related contracts of a
similar nature which in the aggregate obligate or may obligate CBOT and its
subsidiaries in the aggregate for an amount in excess of $25,000 over the entire
term of such related contracts (the "Contracts"). CBOT has delivered or made
available to FVNB true and correct copies of all Contracts. For the purposes of
this Agreement, the Contracts shall be deemed not to include loans made by,
repurchase agreements made by, spot foreign exchange transactions of, bankers
acceptances of, agreements with Bank customers for trust services, or deposits
by CBOT or any of its subsidiaries, but does include unfunded loan commitments
and letters of credit issued by CBOT or any of its subsidiaries where the
borrowers' total direct and indirect indebtedness to CBOT and its subsidiaries
is in excess of $50,000. Except as set forth in Schedule 3.16, no participations
or loans have been sold which have buy back, recourse or guaranty provisions
which create contingent or direct liabilities of CBOT or any of its
subsidiaries. All of the Contracts are legal, valid and binding obligations of
the parties to the Contracts enforceable in accordance with their terms, subject
to the effect of bankruptcy, insolvency, reorganization, moratorium, or other
similar laws relating to creditors' rights generally and to general equitable
principles, and are in full force and effect. Except as described in Schedule
3.16, all rent and other payments by CBOT and each of its subsidiaries under the
Contracts are current, there are no existing defaults by CBOT or any of its
subsidiaries under the Contracts and no termination, condition or other event
has occurred which (whether with or without notice, lapse of time or the
happening or occurrence of any other event) would constitute a default. CBOT and
each of its subsidiaries has a good and valid leasehold interest in each parcel
of real property leased by it free and clear of all mortgages, pledges, liens,
encumbrances and security interests. Except for deposit accounts entered into
with the Bank in the ordinary course of business or as set forth on Schedule
3.16, neither CBOT nor any of its subsidiaries is a party to or bound by any
contract, agreement, commitment or understanding with any shareholder of CBOT or
any Affiliate of any such shareholder.
14
SECTION 3.17 RELATED COMPANY TRANSACTIONS. Except as set forth on
Schedules 3.13, 3.14(a), 3.14(b), 3.14(c), 3.15, 3.16 and 3.17, there are no
agreements, instruments, commitments, extensions of credit, tax sharing or
allocation agreements or other contractual agreements of any kind between or
among CBOT, whether on its own behalf or in its capacity as trustee or custodian
for the funds of any employee benefit plan (as defined in ERISA), and any of its
Affiliates (including, without limitation, any of its subsidiaries). The term
"Affiliate" as used in this Agreement means, with respect to any person, any
person that, directly or indirectly, controls, is controlled by, or is under
common control with, such person in question. For the purposes of this
definition, "control" (including, with correlative meaning, the terms
"controlled by" and "under common control with") as used with respect to any
person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such person,
whether through the ownership of voting securities or by contract or otherwise.
SECTION 3.18 COMPLIANCE WITH LAWS. Except as set forth on Schedule 3.18,
neither CBOT nor any of its subsidiaries is in material default in respect to or
is in material violation of (i) any judgment, order, writ, injunction or decree
of any court or (ii) any statute, law, ordinance, rule, order or regulation of
any governmental department, commission, board, bureau, agency or
instrumentality, federal, state or local, including (for purposes of
illustration and not limitation) the Bank Secrecy Act, capital and FRB reserve
requirements, capital ratios and loan limitations of the FRB, the OCC or the
Commissioner. CBOT and each of its subsidiaries have all permits, licenses, and
franchises from governmental agencies required to conduct their businesses as
they are now being conducted.
SECTION 3.19 INSURANCE. CBOT and each of its subsidiaries have in effect
the insurance coverage (including fidelity bonds) described in Schedule 3.19 and
have had similar insurance in force for the last 5 years. Except as set forth on
Schedule 3.19, there have been no claims under such fidelity bonds within the
last 5 years and to the knowledge of CBOT no facts exist which would form the
basis of a claim under such bonds. CBOT has no reason to believe that the
existing fidelity coverage would not be renewed by its carrier on substantially
the same terms unless such failure to renew is based upon any pending claim.
SECTION 3.20 LOANS. Each loan, including, without limitation, each loan in
which CBOT or any of its subsidiaries holds a participation interest, reflected
as an asset in the Financial Statements or the books of CBOT or any of its
subsidiaries (collectively, "Loans") is the legal, valid and binding obligation
of the obligor of each Loan, enforceable in accordance with its terms, subject
to the effect of bankruptcy, insolvency, reorganization, moratorium, or other
similar laws relating to creditors' rights generally and to general equitable
principles; provided, however, that no representation or warranty is made as to
the collectability of such Loans. All such Loans were made in the ordinary
course of CBOT's business, have been made in accordance with reasonable and
prudent banking practices, and priced consistently with all other similar Loans
of CBOT. CBOT or one of its subsidiaries owns each such Loan free and clear of
all liens, claims and encumbrances. Neither CBOT nor any of its subsidiaries has
in its portfolio any Loan exceeding its legal lending limit. Schedule 3.20 sets
forth, as of June 30, 1998, a list of all of the outstanding Loans of CBOT and
each of its subsidiaries that were classified as delinquent, substandard,
doubtful, loss, nonperforming or problem Loans in connection with the most
recent examination of CBOT or any such subsidiary or were considered to be so
classified at June 30, 1998 under the policies and procedures of CBOT or such
subsidiary.
15
SECTION 3.21 FIDUCIARY RESPONSIBILITIES. CBOT and each of its subsidiaries
have performed in all material respects all of their respective duties as a
trustee, custodian, guardian or as an escrow agent in a manner which complies in
all material respects with all applicable laws, regulations, orders, agreements,
instruments and common law standards.
SECTION 3.22 PATENTS, TRADEMARKS AND COPYRIGHTS. Except as set forth in
Schedule 3.22, neither CBOT nor any of its subsidiaries requires the use of any
material patent, patent application, invention, process, trademark (whether
registered or unregistered), trademark application, trade name, service xxxx,
copyright, or any material trade secret for the business or operations of CBOT
or any of its subsidiaries. CBOT and its subsidiaries own or are licensed or
otherwise have the right to use the items listed in Schedule 3.22.
SECTION 3.23 ENVIRONMENTAL COMPLIANCE. Except as set forth in Schedule
3.23:
(a) CBOT and each of its subsidiaries and any property owned or operated
by any of them are in material compliance in all material respects with all
applicable Environmental Laws (as defined in Section 10.13(c)) and have obtained
and are in compliance with all permits, licenses and other authorizations
(individually a "Permit," and collectively, "Permits") required under any
Environmental Law. There is no past or present event, condition or circumstance
that could reasonably be expected to (1) interfere with the conduct of the
business of CBOT or any of its subsidiaries in the manner now conducted relating
to such entity's material compliance with Environmental Laws, (2) constitute a
material violation of any Environmental Law or (3) have a Material Adverse
Effect upon CBOT or any of its subsidiaries;
(b) Neither CBOT nor any of its subsidiaries currently leases, operates,
owns, or exercises managerial functions at nor has formerly leased, operated,
owned, or exercised managerial functions at any facility or real property that
is subject to any actual, or, to the knowledge of CBOT, potential, or threatened
Proceeding under any Environmental Law;
(c) There are no Proceedings pending or, to the knowledge of CBOT,
threatened against CBOT or any of its subsidiaries under any Environmental Law,
or relating to the release, threatened release, management, treatment, storage
or disposal of, or exposure to Polluting Substances (as defined in Section
10.13(d)), and neither CBOT nor any of its subsidiaries has received any notice
(whether from any regulatory body or private person) of any claim under, or
violation, or potential or threatened violation of, any Environmental Law;
(d) There are no actions or Proceedings pending or, to the knowledge of
CBOT, threatened under any Environmental Law involving the release or threat of
release of any Polluting Substances at, on or under any property where Polluting
Substances generated by CBOT or any of its subsidiaries have been disposed,
treated or stored;
(e) There is no Property for which CBOT or any of its subsidiaries is or
was required to obtain any Permit under an Environmental Law to construct,
demolish, renovate, occupy, operate, or use such Property or any portion of it;
(f) Neither CBOT nor any of its subsidiaries has generated any Polluting
Substances for which it was required under an Environmental Law to execute any
waste disposal manifest or receipt;
16
(g) There has been no release of Polluting Substances at or under any
Property in violation of any Environmental Laws or which would require any
remediation or report or notification to any governmental or regulatory
authority;
(h) There are no underground or above ground storage tanks on or under any
Property which are not in compliance with Environmental Laws and any Property
previously containing such tanks has been remediated for any releases in
compliance with all Environmental Laws;
(i) There is no asbestos containing material present in any Controlled
Property (as defined below) or any Collateral Property (as defined below), nor
has CBOT or any of its subsidiaries received any written notice with respect to
the existence of asbestos containing material in any property (real or personal)
previously owned, operated, leased or managed by any of them;
(j) For purposes of this Section 3.23 and Section 6.9, "Property" includes
(1) any property (whether real or personal) which CBOT or any of its
subsidiaries leases, operates, owns or manages in any manner including without
limitation any property acquired by foreclosure or deed in lieu thereof
("Controlled Property") and (2) property now held as security for a loan or
other indebtedness by CBOT or any of its subsidiaries or property currently
proposed as security for loans or other credit CBOT or any of its subsidiaries
is currently evaluating whether to extend or has committed to extend
("Collateral Property"). With respect to any Collateral Property, the
representations of this Section 3.23 shall be limited to the knowledge of CBOT.
SECTION 3.24 REGULATORY ACTIONS. Except as set forth on Schedule 3.24,
there are no actions or proceedings pending or, to the knowledge of CBOT,
threatened against CBOT or any of its subsidiaries by or before the FRB, the
TDB, the OCC, the Environmental Protection Agency, the Texas Natural Resource
Conservation Commission, or any other nation or government, any state or
political subdivision thereof, or any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
Except as set forth on Schedule 3.24, neither CBOT nor any of its subsidiaries
is subject to a formal or informal agreement, memorandum of understanding,
enforcement action with or any type of financial assistance by any regulatory
authority having jurisdiction over such entity. Neither CBOT nor any of its
subsidiaries has taken or agreed to take any action or has knowledge of any fact
or circumstance that would materially impede or delay receipt of any required
regulatory approval. Except as set forth in Schedule 3.24, neither CBOT nor any
of its subsidiaries has received or been made aware of any complaints or
inquiries under the Community Reinvestment Act, the Fair Housing Act, the Equal
Credit Opportunity Act or any other state or federal anti-discrimination fair
lending law and, to the knowledge of CBOT, there is no fact or circumstance that
would form the basis of any such complaint or inquiry.
SECTION 3.25 TITLE TO PROPERTIES; ENCUMBRANCES. Except as set forth on
Schedule 3.25, CBOT and its subsidiaries have unencumbered, good, legal, and
indefeasible title to all their respective properties and assets, real and
personal, including, without limitation, all the properties and assets reflected
in the Financial Statements except for those properties and assets disposed of
for fair market value in the ordinary course of business and consistent with
prudent banking practice since the date of the Financial Statements. Except as
set forth on Schedule 3.25, CBOT or one of its subsidiaries has a title policy
in full force and effect from a title insurance company which, to the knowledge
of CBOT, is solvent, insuring good and indefeasible title (subject to the
exceptions identified in such title policies) to all real property owned by
17
CBOT or any of its subsidiaries in favor of CBOT or such subsidiary, whichever
is applicable. CBOT has made available to FVNB all of the files and information
in the possession of CBOT or any of its subsidiaries concerning such properties,
including any title exceptions which might affect indefeasible title or value of
such property. CBOT and its subsidiaries each hold good and legal title or good
and valid leasehold rights to all assets that are necessary for them to conduct
their respective businesses as they are currently being conducted. Except as set
forth on Schedule 3.25, CBOT or one of its subsidiaries owns all furniture,
equipment, art and other property used to transact business presently located on
its premises except for items of personal property owned by employees.
SECTION 3.26 BROKER'S OR FINDER'S FEES. No agent, broker, person or firm
acting on behalf of the Company or any of its subsidiaries or shareholders is,
or will be, entitled to any commission or broker's or finder's fees from any of
the parties hereto, or from any Affiliate of any of the parties hereto, in
connection with any of the transactions contemplated by this Agreement.
SECTION 3.27 YEAR 2000 COMPLIANCE. Except as set forth on SCHEDULE 3.27,
each material item of software, hardware, firmware, third-party software, goods
with computer chips and services (a) provided by the Company during the last
four (4) years to any customer of the Company or any other party or (b) used by
the Company in its business, is and shall remain in compliance with the
regulations of the FRB, FDIC and OCC regarding Year 2000 Compliance, as
applicable, and will be Year 2000 Compliant, as that term is hereinafter
defined, prior to and through the year 2000. For purposes of this Agreement,
"Year 2000 Complaint" means that the item:
(a) functions without interruption or human intervention with
four-digit year processing on all data, input, or output which includes an
indication of date (collectively, "Date Data"), including errors or
interruptions from functions which may involve Date Data from more than one
century, leap years, or the date September 9, 1999, regardless of the date of
processing or date of Date Data;
(b) provides results from any operation accurately reflecting any
Date Data used in the operation performed, with output in any form, except
graphics, having four digit years;
(c) accepts two digit year Date Data in a manner that resolves any
ambiguities as to century in a defined manner; and
(d) provides data interchange in the ISO8601:1988 standard of
CCYYMMDD.
Except as set forth on SCHEDULE 3.27, each of the Company's vendors has ensured
that each material item of software, hardware, firmware, third-party software,
goods with computer chips, and services (a) provided by such vendor during the
last four (4) years to CBOT or any of its subsidiaries or by any such vendor on
behalf of CBOT or any of its subsidiaries to any of their respective customers
or any other party or (b) used by such vendor in its business, will be Year 2000
Compliant prior to and through the year 2000. CBOT and its subsidiaries have
followed the procedures set forth in, and have taken and will continue to take
all actions required by FFIEC Safety and Soundness Guidelines Concerning the
Year 2000 Business Risk (the "Year 2000
18
Guidelines") to ensure that all computer software owned by or licensed to CBOT
or any of its subsidiaries is fully compliant with the Year 2000 Guidelines.
Neither CBOT nor any of its subsidiaries has received a regulatory rating of
less than satisfactory from any regulatory authority with respect to any review
of its compliance with the Year 2000 Guidelines or the adequacy of its Year 2000
planning efforts.
SECTION 3.28 REPRESENTATIONS NOT MISLEADING. No representation or warranty
by CBOT in this Agreement, nor any certificate or schedule furnished to FVNB or
Acquisition Sub by CBOT or any of its subsidiaries under or pursuant to this
Agreement, contains or will contain, when taken as a whole, any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements contained herein or therein, in light of the circumstances in which
they were made, not misleading.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF FVNB
FVNB hereby makes the representations and warranties set forth in this
Article IV to CBOT.
SECTION 4.1 ORGANIZATION AND AUTHORITY.
(a) FVNB is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Texas, and has all requisite corporate
power and authority to conduct its business as now conducted, to own, lease and
operate its properties and assets as now owned, leased or operated and to enter
into and carry out its obligations under this Agreement. FVNB has provided to
CBOT true and correct copies of its Articles of Incorporation and Bylaws.
(b) FVNB is a registered bank holding company under the Bank Holding
Company Act of 1956, as amended, and in good standing under all laws, rules and
regulations applicable to bank holding companies. FVNB is duly qualified or
licensed and in good standing in each jurisdiction which requires such
qualification where it owns or leases properties or conducts business.
SECTION 4.2 AUTHORITY RELATIVE TO AGREEMENT. FVNB has full corporate power
and authority, and, except for the approvals of the appropriate regulatory
authorities, no further proceedings on the part of FVNB are necessary to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby, all of which have been duly and validly authorized by FVNB's Board of
Directors. This Agreement has been duly executed and delivered by FVNB and is a
duly authorized, valid, legally binding and enforceable obligation of FVNB,
subject to the effect of bankruptcy, insolvency, reorganization, moratorium, or
other similar laws relating to creditors' rights generally and general equitable
principles, and subject to such shareholder approvals and such approval of
regulatory agencies and other governmental authorities having authority over
FVNB as may be required by statute or regulation. FVNB is not in violation of or
default under its Articles of Incorporation or Bylaws or any agreement, document
or instrument under which FVNB is obligated or bound, or any law, order,
judgment, injunction, award, decree, statute, rule, ordinance or regulation
applicable to FVNB or any of its subsidiaries, the violation or breach of which
could have a Material Adverse Effect on FVNB
19
and its subsidiaries taken as a whole. Except as set forth on Schedule 4.2,
neither the execution, delivery nor performance of this Agreement in its
entirety, nor the consummation of all the transactions contemplated hereby,
following the receipt of such approvals as may be required from the TDB, the
FRB, and the OCC, will (i) violate (with or without the giving of notice or
passage of time), any law, order, writ, judgment, injunction, award, decree,
rule, statute, ordinance or regulation applicable to FVNB or (ii) be in conflict
with, result in a breach or termination of any provision of, cause the
acceleration of the maturity of any debt or obligation pursuant to, constitute a
default (or give rise to any right of termination, cancellation or acceleration)
under, or result in the creation of any security interest, lien, charge or other
encumbrance upon any property or assets of FVNB or any of its subsidiaries
pursuant to, any terms, conditions or provisions of any note, license,
instrument, indenture, mortgage, deed of trust or other agreement or
understanding or any other restriction of any kind or character, to which FVNB
or any of its subsidiaries is a party or by which any of their assets or
properties are subject or bound. Except as set forth on Schedule 4.2, there are
no proceedings pending or, to the knowledge of FVNB, threatened, against FVNB,
at law or in equity or before any foreign, federal, state, municipal or other
governmental court, department, commission, board, bureau, agency,
instrumentality or other person which would prevent or delay the consummation of
the transaction contemplated hereby. Except as set forth in Schedule 4.2, or as
contemplated hereby, the corporate existence, business, organization, assets,
licenses, permits, authorizations and contracts of FVNB will not be terminated
or impaired by reason of the execution, delivery or performance by FVNB of this
Agreement or consummation by FVNB of the transactions contemplated hereby,
assuming receipt of the required regulatory approvals.
SECTION 4.3 CONSENTS AND APPROVALS. FVNB's Board of Directors (at a
meeting called and duly held or by unanimous written consent) has approved this
Agreement. No prior consent, approval or authorization of, or declaration,
filing or registration with any person, domestic or foreign, is required of or
by FVNB in connection with the execution, delivery and performance by FVNB of
this Agreement and the transactions contemplated hereby or the resulting change
in control of CBOT and its subsidiaries, except the filing of Articles of Merger
under the TBCA and such approvals as may be required from the FRB, the TDB, and
the OCC.
SECTION 4.4 REPRESENTATIONS NOT MISLEADING. No representation or warranty
by FVNB in this Agreement, nor any certificate or schedule furnished to CBOT by
FVNB or any of its subsidiaries under or pursuant to this Agreement, contains or
will contain, when taken as a whole, any untrue statement of a material fact or
omit to state a material fact necessary to make the statements contained herein
or therein, in light of the circumstances in which they were made, not
misleading.
ARTICLE V.
COVENANTS OF CBOT
SECTION 5.1 AFFIRMATIVE COVENANTS OF CBOT. For so long as this Agreement
is in effect, CBOT shall, and shall use its commercially reasonable efforts to
cause each of its subsidiaries to, from the date of this Agreement to the
Closing, except as specifically contemplated by this Agreement:
(a) operate and conduct the businesses of CBOT and its subsidiaries in the
ordinary course of business and consistent with prudent banking practices;
20
(b) preserve intact the corporate existence, business organization,
assets, licenses, permits, authorizations, and business opportunities of CBOT
and each of its subsidiaries;
(c) comply with all material contractual obligations applicable to the
operations of CBOT or any of its subsidiaries;
(d) maintain in a manner consistent with past practices all of the
properties of CBOT and each of its subsidiaries in good repair, order and
condition, reasonable wear and tear excepted, and maintain the insurance
coverages described in Schedule 3.19 (which shall list all Property insured by
such coverages) or obtain comparable insurance coverages from reputable insurers
which, in respect to amounts, types and risks insured, are adequate for the
business conducted by CBOT and its subsidiaries and consistent with the existing
insurance coverages;
(e) in good faith and in a timely manner (i) cooperate with FVNB and
Acquisition Sub in satisfying the conditions in this Agreement, (ii) assist FVNB
and Acquisition Sub in obtaining as promptly as possible all consents,
approvals, authorizations and rulings, whether regulatory, corporate or
otherwise, as are necessary for FVNB and Acquisition Sub and CBOT (or any of
them) to carry out and consummate the transactions contemplated by this
Agreement, including all consents, approvals and authorizations required by any
agreement or understanding existing at the Closing between CBOT and any
governmental agency or other third party, (iii) furnish information concerning
CBOT and its subsidiaries not previously provided to FVNB required for inclusion
in any filings or applications that may be necessary in that regard and (iv)
perform all acts and execute and deliver all documents reasonably necessary to
cause the transactions contemplated by this Agreement to be consummated in the
manner contemplated hereby;
(f) timely file with the FRB, the TDB, the OCC and all other appropriate
regulatory authorities, all financial statements and other reports required to
be so filed by CBOT or any of its subsidiaries and to the extent permitted by
applicable law, promptly thereafter deliver to FVNB copies of all financial
statements and other reports required to be so filed;
(g) comply in all material respects with all applicable laws and
regulations, domestic and foreign;
(h) promptly notify FVNB of any default, event of default or condition
which with the passage of time or giving of notice would constitute a default or
an event of default under any CBOT Loan Document and promptly notify and provide
copies to FVNB of any material written communications concerning any CBOT Loan
Document;
(i) between the date of this Agreement and Closing, promptly give written
notice to FVNB of any event or fact that would cause any of the representations
or warranties of CBOT contained in or referred to in this Agreement to be untrue
or misleading in any material respect;
(j) deliver to FVNB a list (Schedule 5.1(j)), dated as of the Effective
Time, showing (i) the name of each bank or institution where CBOT or any of its
subsidiaries has accounts or safe deposit boxes, (ii) the name(s) in which such
accounts or boxes are held and (iii) the name of each person authorized to draw
thereon or have access thereto;
(k) deliver to FVNB a list (Schedule 5.1(k)), dated as of the Effective
Time, showing all liabilities and obligations of CBOT and its subsidiaries in
excess of $25,000, except those arising
21
in the ordinary course of their respective businesses, incurred since the
Balance Sheet Date, certified by an officer of CBOT;
(l) promptly notify FVNB of any material change or inaccuracies in any
data previously given or made available to FVNB or Acquisition Sub pursuant to
this Agreement; and
(m) provide access, to the extent that CBOT or any of its subsidiaries
have the right to provide access, to any or all Property (as defined in Section
3.23) so as to enable FVNB to physically inspect any structure or components of
any structure on such Property, including without limitation surface and
subsurface testing and analyses.
Notwithstanding the foregoing, nothing contained in this Section 5.1 shall
be deemed to require CBOT or any of its subsidiaries to pay any amounts to any
of their respective employees, other than such employees' usual and ordinary
compensation, to induce such employees to remain employees of CBOT or any such
subsidiary, as the case may be, pending the Closing; provided, further, however,
that CBOT shall, and shall cause it subsidiaries to, cooperate with FVNB in
determining and making any such special payments to such employees as FVNB may
consent in writing.
SECTION 5.2 NEGATIVE COVENANTS OF CBOT. Except with the prior written
consent of FVNB or as otherwise specifically permitted by this Agreement, CBOT
shall not and shall use its best efforts not to permit any of its subsidiaries
to, from the date of this Agreement to the Closing:
(a) make any amendment to its articles of incorporation or association or
bylaws;
(b) make any change in the methods used in allocating and charging costs,
except as may be required by applicable law, regulation or GAAP and after notice
to FVNB;
(c) make any change in the number of shares of the capital stock issued
and outstanding, or issue, reserve for issuance, grant, sell or authorize the
issuance of any shares of its capital stock or subscriptions, options, warrants,
calls, rights or commitments of any kind relating to the issuance or sale of or
conversion into shares of its capital stock;
(d) contract to create any obligation or liability (absolute, accrued,
contingent or otherwise) except in the ordinary course of business and
consistent with prudent banking practices;
(e) contract to create any mortgage, pledge, lien, security interest or
encumbrances, restrictions, or charge of any kind (other than statutory liens
for which the obligations secured thereby shall not become delinquent), except
in the ordinary course of business and consistent with prudent banking
practices;
(f) cancel any debts, waive any claims or rights of value or sell,
transfer, or otherwise dispose of any of its material properties or assets,
except in the ordinary course of business and consistent with prudent banking
practices;
(g) sell any real estate owned as of the date of this Agreement or
acquired thereafter, which real estate qualifies as "other real estate owned"
under accounting principles applicable to
22
it, except in the ordinary course of business and consistent with prudent
banking practices and applicable banking laws and regulations;
(h) dispose of or permit to lapse any rights to the use of any material
trademark, service xxxx, trade name or copyright, or dispose of or disclose to
any person other than its employees any material trade secret not theretofore a
matter of public knowledge;
(i) grant any increase in compensation or directors' fees, or pay or agree
to pay or accrue any bonus or like benefit to or for the credit of any director,
officer, employee or other person (other than customary annual compensation
adjustments in accordance with past practices, and immaterial customary
severance payments not to exceed $25,000 in the aggregate, to employees who are
not executive officers) or enter into any employment, consulting or severance
agreement or other agreement with any director, officer or employee, or adopt,
amend or terminate any Employee Benefit Plan, Welfare Benefit Plan, Pension
Benefit Plan or other Program or change or modify the period of vesting or
retirement age for any participant of such a plan;
(j) declare, pay or set aside for payment any dividend or other
distribution or payment in respect of shares of its capital stock, except for
dividends from the Bank to CBOT and the other shareholder of the Bank;
(k) except through settlement of indebtedness, foreclosure, acquisition in
lieu of foreclosure, the exercise of creditors' remedies or in a fiduciary
capacity, acquire the capital stock or other equity securities or interest of
any person;
(l) except for capital expenditures reasonably incurred in connection with
the establishment of the Call Center to be located at the main office of the
Bank, which expenditures shall not exceed $75,000 in the aggregate, make any
capital expenditure or a series of expenditures of a similar nature in excess of
$100,000 in the aggregate;
(m) except with the consent of FVNB, which consent shall not be
unreasonably withheld, make any income tax or franchise tax election or settle
or compromise any federal, state, local or foreign income tax or franchise tax
liability, or, except in the ordinary course of business consistent with prudent
banking practices, make any other tax election or settle or compromise any other
federal, state, local or foreign tax liability;
(n) except for negotiations and discussions between the parties hereto
relating to the transactions contemplated by this Agreement or as otherwise
permitted hereunder, enter into any transaction, or enter into, modify or amend
any contract or commitment by which any such transaction, contract, or
commitment would obligate CBOT or any of its subsidiaries in an amount which
would exceed $50,000 alone or in the aggregate other than in the ordinary course
of business and consistent with prudent banking practices;
(o) except as contemplated by this Agreement, adopt a plan of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization, or other reorganization or business combination of CBOT or any
of its subsidiaries;
(p) issue any certificates of deposit except in the ordinary course of
business and in accordance with prudent banking practices;
23
(q) make any investments except in the ordinary course of business and in
accordance with prudent banking practices;
(r) modify, amend, waive or extend any CBOT Loan Documents or any rights
under such agreements;
(s) modify any outstanding loan, make any new loan, or acquire any loan
participation, unless such modification, new loan, or participation is made in
the ordinary course of business and in accordance with prudent banking
practices;
(t) sell or contract to sell any part of the premises or other material
assets of CBOT or any of its subsidiaries;
(u) change any fiscal year or the length thereof;
(v) prepay in whole or in part CBOT Indebtedness, except as otherwise
specifically contemplated hereby;
(w) enter into any agreement, understanding or commitment, written or
oral, with any other person which is in any manner inconsistent with the
obligations of CBOT under this Agreement or any related written agreement; or
(x) alter the size or composition of the deposit base, securities
portfolio, loan portfolio or asset mix of CBOT or any of its subsidiaries,
except in the ordinary course of business, without the prior written consent of
FVNB.
Nothing contained in this Section 5.2 or in Section 5.1 is intended to influence
the general management or overall operations of CBOT and its subsidiaries in a
manner not permitted by applicable law and the provisions thereof shall
automatically be reduced in compliance therewith.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 ACCESS TO, AND INFORMATION CONCERNING, PROPERTIES AND RECORDS.
(a) During the pendency of the transactions contemplated hereby, CBOT shall, to
the extent permitted by law, give FVNB, its legal counsel, accountants and other
representatives full access, during normal business hours, throughout the period
prior to the Closing, to all of CBOT's and its subsidiaries' properties, books,
contracts, commitments and records, permit FVNB to make such inspections at
FVNB's expense (including without limitation physical inspection of the surface
and subsurface of any property thereof and any structure thereon) as they may
require and furnish to FVNB during such period all such information concerning
CBOT and its subsidiaries and their affairs as FVNB may reasonably request. FVNB
and its respective affiliates, subsidiaries, officers, employees, directors and
agents shall not disclose, or make available, to any third party or use for any
purpose other than the transactions contemplated hereby any confidential
information provided, or made available, pursuant to the terms of this Agreement
relating to the financial condition, results of operations, business,
24
properties, assets, liabilities, or future prospects of CBOT and its
subsidiaries; PROVIDED, HOWEVER, that the restrictions of this sentence shall
not apply (a) as may otherwise be required by law, or (b) to the extent such
information is generally available to the public other than as a result of a
disclosure by or through the receiving party. In the event this Agreement is
terminated pursuant to the provisions of Article VIII, upon the written request
of CBOT, FVNB agrees to destroy or return to CBOT all copies of such
confidential information.
(b) FVNB acknowledges to CBOT that CBOT has, prior to the date hereof,
cooperated in providing FVNB access to the books and records of CBOT and its
subsidiaries and has been afforded by CBOT the opportunity to conduct due
diligence; however, the foregoing acknowledgment does not negate, void or modify
the representations, warranties, or obligations of CBOT under this Agreement,
including without limitation the obligation to continue to provide access as
provided by subsection (a) above.
SECTION 6.2 FILING OF REGULATORY APPROVALS. Within 14 days after execution
of this Agreement, FVNB shall file all notices and applications to the FRB, the
TDB and the OCC which FVNB deems necessary or appropriate to complete the
transactions contemplated herein, including, without limitation, each of the
Mergers. FVNB will deliver to CBOT, and CBOT will deliver to FVNB, copies of all
non-confidential portions of any such applications. CBOT shall cooperate, and
shall cause each subsidiary of CBOT and their respective directors, officers,
employees and representatives to cooperate with FVNB in connection with such
notices and applications.
SECTION 6.3 MISCELLANEOUS AGREEMENTS AND CONSENTS. Subject to the terms
and conditions of this Agreement, FVNB and CBOT agree to use all reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper, or advisable under applicable laws and
regulations to consummate and make effective, as soon as practicable after the
date hereof, the transactions contemplated by this Agreement. Subject to the
terms and conditions of this Agreement, FVNB and CBOT shall use their respective
commercially reasonable efforts to obtain or cause to be obtained consents of
all third parties and governmental and regulatory authorities necessary or
desirable for the consummation of the transactions contemplated herein.
SECTION 6.4 CBOT INDEBTEDNESS. Prior to the Effective Time, CBOT shall pay
all regularly scheduled payments on all CBOT Indebtedness and shall cooperate
with FVNB in taking such actions as are reasonably appropriate or necessary in
connection with the redemption, prepayment, modification, satisfaction or
elimination of any outstanding indebtedness of CBOT or any of its subsidiaries
with respect to which a consent is required to be obtained to effectuate the
Merger and the transactions contemplated by this Agreement and has not been so
obtained. CBOT represents, warrants and agrees that Schedule 6.4 sets forth an
accurate and complete listing of all indebtedness of CBOT and each of its
subsidiaries.
SECTION 6.5 GOOD FAITH EFFORTS. All parties hereto agree that the parties
will use their good faith efforts to secure all regulatory approvals necessary
to consummate the Mergers and other transactions provided herein and to satisfy
the other conditions to Closing contained herein.
SECTION 6.6 EXCLUSIVITY. Prior to the termination of this Agreement in
accordance with the provisions hereof, none of CBOT or any of its subsidiaries,
or any of their respective
25
shareholders, directors, officers, employees, agents or representatives shall
solicit, entertain or negotiate with respect to any offer to acquire CBOT or and
of its subsidiaries, or any of the material assets thereof, from any other
person. During the term of this Agreement, none of CBOT or any of its
subsidiaries, or any of their respective shareholders, directors, officers,
employees, agents or representatives shall provide information to any other
person in connection with a possible acquisition of CBOT or any of its
subsidiaries, or any of the material assets thereof (an "Acquisition Proposal").
Immediately upon receipt of any such unsolicited offer, CBOT shall communicate
to FVNB the terms of any proposal or request for information and the identity of
parties involved.
SECTION 6.7 PUBLIC ANNOUNCEMENT. Subject to written advice of counsel with
respect to legal requirements relating to public disclosure of matters related
to the subject matter of this Agreement, the timing and content of any
announcements, press releases or other public statements concerning the proposal
contained herein will occur upon, and be determined by, the mutual consent of
CBOT and FVNB.
SECTION 6.8 TREATMENT OF EMPLOYEE BENEFIT PLANS. The consummation of the
Merger will not affect the employee benefit plans of the Bank. The employee
benefit plans of the Bank will remain in effect as of the consummation of the
Merger. Notwithstanding the foregoing, nothing herein shall be construed to
limit or prohibit the ability of FVNB or any of its subsidiaries to amend,
modify or terminate any of such employee benefit plans after the Effective Time.
SECTION 6.9 ENVIRONMENTAL INVESTIGATION; RIGHT TO TERMINATE AGREEMENT. (a)
FVNB and its consultants, agents and representatives, shall have the right, at
FVNB's expense, to the same extent that CBOT or any of its subsidiaries has such
right, but not the obligation or responsibility, to inspect any Property,
including, without limitation, for the purpose of conducting asbestos surveys
and sampling, and other environmental assessments and investigations
("Environmental Inspections"). FVNB's right to conduct Environmental Inspections
shall include the right to sample and analyze air, sediment, soil and
groundwater of any Property to the same extent that CBOT or any of its
subsidiaries has such right. FVNB may conduct such Environmental Inspections at
any time subject to Section 6.9(d) below.
(b) CBOT and its subsidiaries shall cause to be performed at FVNB's
expense by an environmental consulting firm acceptable to FVNB an environmental
investigation of any Property acquired, leased, foreclosed, managed or
controlled by CBOT or any of its subsidiaries between the date hereof and the
Closing Date, the scope and results of which shall be acceptable to FVNB in its
sole discretion.
(c) CBOT and its subsidiaries shall cause to be performed at FVNB's
expense by an environmental consulting firm acceptable to FVNB an environmental
investigation of any Property in which CBOT or any of its subsidiaries acquires
a security interest between the date hereof and the Closing Date, the scope and
results of which shall be acceptable to FVNB in its sole discretion and the
scope and results of which shall be equivalent to the policies of FVNB and its
subsidiaries with respect to acquiring security interests on real or personal
property.
(d) FVNB shall notify CBOT of any physical inspections of Property which
it intends to conduct, and CBOT may place reasonable restrictions on the time of
such inspections. Upon FVNB's notification to CBOT of the Property upon which it
intends to conduct such physical
26
inspections, CBOT and its subsidiaries shall notify the owner of such Property
and use their best efforts to secure access to such Property for FVNB. If, as a
result of any such Environmental Inspection, further investigation ("secondary
investigation") including, without limitation, test borings, soil, water and
other sampling is deemed desirable by FVNB, FVNB shall notify CBOT of the
Properties on which it intends to conduct a secondary investigation on or prior
to the 30th day after the date hereof. CBOT and its subsidiaries will provide
notification to owners of Property on which FVNB intends to conduct secondary
investigations and will use their commercially reasonable efforts to secure
access to such property for FVNB. FVNB shall notify CBOT of any Properties that,
in the sole discretion of FVNB, are not acceptable and require remediation on or
prior to the 45th day after the date hereof.
(e) Each party hereto agrees to indemnify and hold harmless the other
parties for any claims for damage to the Property or injury or death to persons
in connection with any Environmental Inspection or secondary investigation of
the Property to the extent such damage, injury or death is directly attributable
to the negligent actions or negligent omissions of such indemnifying party. FVNB
shall have no liability or responsibility of any nature whatsoever for the
results, conclusions or other findings related to any Environmental Inspection,
secondary investigation or other environmental survey. If this Agreement is
terminated, then except as otherwise required by law, FVNB shall have no
obligation to make any reports to any governmental authority of the results of
any Environmental Inspection, secondary investigation or other environmental
survey, but such reporting shall remain the responsibility of and within the
discretion of CBOT. FVNB shall have no liability to CBOT or any of its
subsidiaries for making any report of such results to any governmental
authority.
(f) FVNB shall have the right to terminate this Agreement in any of the
following circumstances:
(i) CBOT's material breach of any representation or warranty set
forth in Section 3.23, or the factual substance of any warranties set forth in
Section 3.23 is not true and accurate in all material respects irrespective of
the knowledge or lack of knowledge of CBOT;
(ii) the Environmental Inspection, secondary investigation or other
environmental survey identifies any past or present violations or potential
violations of Environmental Laws or any event, condition or circumstance that,
based on the estimates of the environmental professionals referred to in this
Section 6.9, may currently or in the future require or result in expenditures in
connection with (1) fines, penalties or other damages, (2) investigation,
remediation or monitoring of any Controlled Property (including without
limitation eventual removal of asbestos-containing material), (3) preparing and
obtaining approval by the appropriate Environmental Regulatory Authority of
remediation plans with respect to Controlled Properties, or (4) any violations
of applicable Environmental Laws, which expenditures individually or in the
aggregate may exceed $100,000; provided, however, that to the extent such
expenditures are expected to be in excess of $100,000, CBOT may elect to pay or
agree to pay such excess expenditures, in which event (a) FVNB shall not have
the right to terminate this Agreement pursuant to this paragraph (ii) as a
result of such expected expenditures being in excess of $100,000, and (b) the
Merger Consideration to be paid to the holders of the Shares pursuant to Article
I hereof shall be reduced by the amount by which such expected expenditures
exceed $100,000; or
27
(iii) FVNB is not permitted to conduct an Environmental Inspection
or secondary investigation of any Property to the extent it deems appropriate.
(g) CBOT agrees to make available to FVNB and its consultants, agents and
representatives all documents and other material relating to environmental
conditions of the Property including, without limitation, the results of all
other environmental inspections and surveys. CBOT also agrees that all engineers
and consultants who prepared or furnished such reports may discuss such reports
and information with FVNB and shall be entitled to certify the same in favor of
FVNB and its consultants, agents and representatives in such a manner which will
entitle FVNB to rely upon such reports and make all other data available to FVNB
and its consultants, agents and representatives. At the written request of CBOT,
FVNB agrees to provide CBOT with a copy of all environmental reports prepared by
its consultants as a result of the Environmental Inspections. FVNB shall keep
confidential the reports, surveys and results relating to and of the
Environmental Inspections, unless otherwise required by law.
SECTION 6.10 DIRECTOR AND OFFICER INDEMNIFICATION.
(a) For a period of four years from the Effective Time, FVNB shall
indemnify, defend and hold harmless the directors, officers and employees of
CBOT and its Subsidiaries (each, an "Indemnified Party") against all losses,
expenses (including reasonable attorneys' fees), claims, damages or liabilities
and amounts paid in settlement arising out of actions or omissions or alleged
acts or omissions occurring at or prior to the Effective Time (including the
transactions contemplated by this Agreement) to the fullest extent required by
CBOT's Articles of Incorporation and bylaws as in effect on the date hereof,
except that the right to indemnification shall not arise in those instances in
which the party seeking indemnification has participated in the breach of any
covenant or agreement contained herein or knowingly caused any representation or
warranty of CBOT contained herein to be false or inaccurate in any respect and
the claim arises principally from such breach or the falsity or inaccuracy of
such representation or warranty. Without limiting the foregoing, in any case in
which a determination by FVNB is required to effectuate any indemnification,
FVNB shall direct, at the election of the Indemnified Party, that the
determination shall be made by independent counsel mutually agreed upon between
FVNB and the Indemnified Party.
(b) FVNB shall use its commercially reasonable efforts (and CBOT shall
cooperate prior to the Effective Time in these efforts) to maintain in effect
for a period of four years after the Effective Time CBOT's existing directors'
and officers' liability insurance policy (provided that FVNB may substitute
therefor (i) policies of at least the same coverage and amounts containing terms
and conditions which are substantially no less advantageous in the aggregate or
(ii) with the consent of CBOT given prior to the Effective Time, any other
policy) with respect to claims arising from facts or events which occurred prior
to the Effective Time and covering persons who are currently covered by such
insurance; provided, however, that FVNB shall not be obligated to make premium
payments for such four-year period in respect of such policy (or coverage
replacing such policy) which exceed, for the portion related to CBOT's directors
and officers, 100% of the annual premium payments on CBOT's current policy in
effect as of the date of this Agreement (the "Maximum Amount"). If the amount of
the premiums necessary to maintain or procure such insurance coverage exceeds
the Maximum Amount, FVNB shall use its commercially reasonable efforts to
maintain the most advantageous policies of directors' and officers' liability
insurance obtainable for a premium equal to the Maximum Amount.
28
(c) FVNB shall pay all expenses, including reasonable attorneys'
fees, that may be incurred by any Indemnified Party in successfully enforcing
the indemnity and other obligations provided for in this Section 6.10 if FVNB
has been finally determined to have acted in bad faith in refusing such
indemnity. The Indemnified Party shall pay all expenses, including reasonable
attorneys' fees, incurred by FVNB if the indemnification or other obligations
provided in this Section 6.10 are denied by a court of competent jurisdiction by
final and nonappealable order.
SECTION 6.11 PROXY STATEMENT. Within one month after the execution of this
Agreement and after all applications filed in connection with the transactions
contemplated in this Agreement are accepted for filing by all applicable
regulatory agencies, CBOT shall prepare and mail to its shareholders a proxy or
information statement (the "Proxy Statement") relating to a meeting of the
shareholders of CBOT called for the purpose of approving the Merger, such
meeting to be held not later than November 30, 1998. FVNB shall furnish all
information concerning FVNB as CBOT may reasonably request in connection with
the preparation of the Proxy Statement. CBOT shall give FVNB and its counsel the
opportunity to review and comment on the Proxy Statement and each document to be
incorporated by reference therein prior to its dissemination.
(b) Unless otherwise required pursuant to the applicable fiduciary duties
of CBOT's Board (as determined in good faith by CBOT's Board based upon the
advice of its outside counsel), no material amendment or supplement to the Proxy
Statement will be made by CBOT without the approval of FVNB, which approval
shall not be unreasonably withheld.
(c) The information supplied by CBOT for inclusion in the Proxy Statement
shall not, at (i) the time the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to the shareholders of CBOT and (ii) the
time of the meeting of the shareholders of CBOT contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading.
(d) The information supplied or to be supplied by FVNB for inclusion in
the Proxy Statement will not, at the time it is supplied to CBOT, contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein not misleading.
SECTION 6.12 NOTIFICATION. CBOT shall give prompt notice to FVNB, and FVNB
shall give prompt notice to CBOT, of (i) any representation or warranty made by
it in this Agreement becoming untrue or inaccurate in any material respect or
(ii) the failure by it to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
29
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of CBOT, FVNB and Acquisition Sub to effect the
Merger are subject to the satisfaction or waiver of the following conditions
prior to the Effective Time:
(a) the receipt of all required regulatory approvals in connection with
each of the Mergers, which approvals shall not have imposed any condition or
requirement which in the reasonable judgment of the party or parties affected by
such condition or requirement would adversely impact in a material respect the
economic or business benefits to such party of the transactions contemplated by
this Agreement or otherwise would in the reasonable judgment of such party be so
burdensome as to render reasonably inadvisable the consummation of the Mergers,
or any of them, and the expiration of any applicable waiting periods with
respect thereto;
(b) the Closing will not violate any injunction, order or decree of any
court or governmental body having competent jurisdiction; and
(c) the holders of at least a majority of the shares of issued and
outstanding capital stock of CBOT shall have authorized and approved the Merger
and this Agreement and CBOT shall have delivered evidence of same to FVNB in
form and substance reasonably satisfactory to FVNB.
SECTION 7.2 CONDITIONS TO THE OBLIGATIONS OF FVNB AND ACQUISITION SUB TO
EFFECT THE MERGER.
The obligations of FVNB and Acquisition Sub to effect the Merger are
subject to the satisfaction or waiver in writing of the following conditions
prior to the Effective Time:
(a) all representations and warranties of CBOT shall be true and correct
in all material respects (except for representations and warranties qualified by
materiality or "Material Adverse Effect", which shall be true and correct in all
respects) as of the date hereof and at and as of the Closing, except for
representations and warranties made as of a specific date which shall be true
and correct (except for representations and warranties qualified by materiality
or "Material Adverse Effect", which shall be true and correct in all respects)
as of such date, with the same force and effect as though made on and as of the
Closing;
(b) CBOT shall have performed in all material respects all obligations and
agreements and in all material respects complied with all covenants and
conditions, contained in this Agreement to be performed or complied with by it
or them prior to the Effective Time;
(c) there shall not have occurred a Material Adverse Effect with respect
to CBOT or any of its subsidiaries;
(d) FVNB shall have received the opinions of counsel to CBOT reasonably
acceptable to FVNB as to the matters set forth on Exhibit B attached hereto;
30
(e) the number of shareholders of CBOT exercising their dissenters rights
shall not have exceeded ten percent (10%) of the total issued and outstanding
shares (as of the Effective Time) of CBOT Common Stock;
(f) FVNB shall have received a duly executed Noncompetition Agreement in
substantially the form of Exhibit C attached hereto from each of Xxxxx X.
Xxxxxxxx, Xxx Xxxx, Xxxxxx Xxxxxx and Xxxxxxx Xxxxxxx the terms of which will be
consistent with the Letter of Intent dated August 27, 1998 between the parties
hereto and Xxxxx X. Xxxxxxxx;
(g) the aggregate principal amount of all CBOT Indebtedness shall not
exceed $2,750,000;
(h) each of the Options shall have been exercised in full, or, to the
extent not so exercised, the holders thereof shall have waived and terminated in
writing, in form and substance satisfactory to FVNB, all of their respective
rights thereunder, without the payment of any consideration therefor; and
(i) FVNB shall have received certificates dated the Closing executed by
the President of CBOT, certifying in such reasonable detail as FVNB may
reasonably request, to the effect described in Sections 7.2(a), (b), (c) and (e)
and Section 7.1(c).
SECTION 7.3 CONDITIONS TO THE OBLIGATIONS OF CBOT TO EFFECT THE MERGER.
The obligations of CBOT to effect the Merger are subject to the satisfaction or
waiver of the following conditions prior to the Effective Time:
(a) all representations and warranties of FVNB shall be true and correct
in all material respects as of the date hereof and at and as of the Closing,
with the same force and effect as though made on and as of the Closing;
(b) FVNB and Acquisition Sub shall have performed in all material respects
all obligations and agreements and in all material respects complied with all
covenants and conditions contained in this Agreement to be performed or complied
with by either of them prior to the Effective Time;
(c) there shall not have occurred a Material Adverse Effect with respect
to FVNB or any of its subsidiaries which prevents the payment of the Merger
Consideration.
(d) CBOT shall have received the opinions of counsel to FVNB reasonably
acceptable to CBOT as to the matters set forth on Exhibit D attached hereto;
(e) CBOT shall have received certificates dated the Closing, executed by
appropriate officers of FVNB and Acquisition Sub, respectively, certifying, in
such detail as CBOT may reasonably request, to the effect described in Sections
7.3(a), (b) and (c) ; and
(f) CBOT shall have received an opinion from an investment banker or bank
consulting firm reasonably acceptable to CBOT to the effect that the Merger
Consideration is fair to shareholders of CBOT from a financial point of view.
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ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER; NON-COMPETITION
SECTION 8.1 TERMINATION. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time notwithstanding approval
thereof by the shareholders of CBOT, but prior to the Effective Time:
(a) by mutual written consent duly authorized by the Boards of Directors
of FVNB and CBOT;
(b) by FVNB (i) if FVNB learns or becomes aware of a state of facts or
breach or inaccuracy of any representation or warranty of CBOT contained in
Article III which constitutes a Material Adverse Effect, (ii) pursuant to
Section 6.9, (iii) if any of the conditions to Closing contained in Section 7.1
or 7.2 are not satisfied or waived in writing by FVNB, (iv) if the Board of
Directors of CBOT shall have withdrawn or modified in any manner its approval or
recommendation of this Agreement, or shall have resolved to do the same
(including without limitation, the execution of an agreement for the disposition
or merger, or sale of any of the material assets, of CBOT or any of its
subsidiaries); (v) if there shall have been a breach of Section 6.6; or (vi) if
the holders of more than 10% of the issued and outstanding Common Stock of CBOT
exercise their dissenters rights of appraisal;
(c) by CBOT (i) if CBOT learns or becomes aware of a state of facts or
breach or inaccuracy of any representation or warranty of FVNB contained in
Article IV which constitutes a Material Adverse Effect, (ii) if the conditions
to Closing contained in Section 7.1 or 7.3 are not satisfied or waived in
writing by CBOT; or (iii) if the Board of Directors of FVNB shall have withdrawn
or modified in any manner its approval or recommendation of this Agreement, or
shall have resolved to do the same;
(d) by FVNB or CBOT if the Effective Time shall not have occurred on or
before March 31, 1999, or such later date agreed to in writing by FVNB and CBOT;
(e) by FVNB or CBOT if any court of competent jurisdiction in the United
States or other United States (federal or state) governmental body shall have
issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger and such order, decree, ruling or
other action shall have been final and nonappealable;
(f) by FVNB or CBOT if any regulatory authority whose consent is required
to consummate the Merger denies an application filed in connection with the
Merger, which denial is final and binding without any rights of appeal with
respect thereto.
SECTION 8.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 8.1 hereof, this Agreement
shall forthwith become void and have no effect, without any liability on the
part of any party or its directors, officers or shareholders, other than the
provisions of Sections 6.9, 8.2, 10.1, 10.8 10.14, and 10.15, except that if
such termination shall result (i) from the willful failure of a party to fulfill
a condition to the performance of the obligations of any other party or to
perform a covenant of this Agreement or (ii) from a breach by any party of any
provision of this Agreement (including, without limitation, any breach of or
inaccuracy in any representation or warranty contained in this
32
Agreement), such party shall be fully liable for any and all damages, costs and
expenses (including, but not limited to, reasonable counsel fees) sustained or
incurred by the other party or parties as a result of such failure or breach.
SECTION 8.3 AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed by all the parties hereto.
SECTION 8.4 EXTENSION; WAIVER. At any time prior to the Effective Time,
the parties may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document, certificate or writing delivered pursuant hereto, or (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. In the event any party specifically waives in accordance with the
provisions hereof any inaccuracy in any representation or warranty, the
performance of any agreement or compliance with any condition, such inaccuracy,
failure to perform or non-compliance shall not be a basis for a claim for
indemnification under Article IX.
ARTICLE IX.
SURVIVAL
SECTION 9.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective
representations and warranties contained in this Agreement or in any Schedule
delivered pursuant hereto shall not survive after the Effective Time. This
Section 9.1 shall not limit any covenant or agreement of the parties contained
in Sections 1.6 or 2.1 of this Agreement which by its terms contemplates
performance after the Effective Time.
ARTICLE X.
MISCELLANEOUS
SECTION 10.1 EXPENSES. All costs and expenses incurred in connection with
the transactions contemplated by this Agreement, including without limitation,
attorneys' fees, accountants' fees, advisor's fees, investment banker, bank
consulting firm and other professional fees and costs related to expenses of
officers and directors of CBOT and its subsidiaries, shall be paid by the party
incurring such costs and expenses; provided, however, without the consent of
FVNB, which consent may be withheld in FVNB's sole discretion, all such costs
and expenses incurred by CBOT and its subsidiaries (including expenses incurred
for or on behalf CBOT's shareholders) shall not exceed $100,000. In the event
such costs and expenses of CBOT exceed $100,000 in the aggregate, the amount of
such excess shall reduce the amount payable to CBOT's shareholders pursuant to
Article I.
SECTION 10.2 BROKERS AND FINDERS. All negotiations on behalf of FVNB and
CBOT relating to this Agreement and the transactions contemplated by this
Agreement have been carried on by the parties hereto and their respective agents
directly without the intervention of any other person in such manner as to give
rise to any claim against FVNB, Acquisition Sub, CBOT or any of its subsidiaries
for financial advisory fees, brokerage or commission fees,
33
finder's fees or other like payment in connection with the consummation of the
transactions contemplated hereby.
SECTION 10.3 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement, including the
Exhibits and Schedules hereto, (a) constitutes the entire agreement among the
parties with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, among the parties or any
of them with respect to the subject matter hereof, and (b) shall not be assigned
by operation of law or otherwise, provided that FVNB may assign its rights and
obligations or those of Acquisition Sub to any direct or indirect, wholly-owned,
subsidiary of FVNB, but no such assignment shall relieve FVNB of its obligations
hereunder.
SECTION 10.4 FURTHER ASSURANCES. From time to time as and when requested
by FVNB or its successors or assigns, CBOT and its subsidiaries, and their
respective officers and directors shall execute and deliver such further
agreements, documents, deeds, certificates and other instruments and shall take
or cause to be taken such other actions, including those as shall be necessary
to vest or perfect in or to confirm of record or otherwise CBOT's or any such
subsidiaries' title to and possession of, all of their respective property,
interests, assets, rights, privileges, immunities, powers, franchises and
authority, as shall be reasonably necessary or advisable to carry out the
purposes of and effect the transactions contemplated by this Agreement.
SECTION 10.5 ENFORCEMENT OF THE AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof, this being in addition to
any other remedy to which they are entitled at law or in equity.
SECTION 10.6 SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
SECTION 10.7 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered if in person, by cable, telegram or telex or by
telecopy, or five business days after mailing if delivered by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties as follows:
if to FVNB or Acquisition Sub:
FVNB Corp.
000 X. Xxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxx, President
Telecopy No.: (000) 000-0000
34
with copies to:
Xxx & Xxxxx Incorporated
000 X. Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxxx Kavy
Telecopy No.: (000) 000-0000
if to CBOT:
CBOT FINANCIAL CORPORATION
Citizens Bank of Texas, N.A.
00000 Xxxxxxxxxx 00
Xxx Xxxxxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxxxx, President
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxxxx & Xxxxxxxxx, LLP
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION 10.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 10.9 DESCRIPTIVE HEADINGS. The descriptive headings are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
SECTION 10.10 PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
SECTION 10.11 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 10.12 INCORPORATION BY REFERENCE. Any and all schedules, exhibits,
annexes, statements, reports, certificates or other documents or instruments
referred to herein or attached hereto are incorporated herein by reference
hereto as though fully set forth at the point referred to in the Agreement.
35
SECTION 10.13 DISCLOSURE. For purposes of disclosure in the schedules
attached hereto, disclosure under one schedule shall be deemed to be disclosure
under all other appropriate schedules.
SECTION 10.14 CERTAIN DEFINITIONS.
(a) "subsidiary" or "subsidiaries" shall mean, when used with reference to
an entity, any corporation, a majority of the outstanding voting securities of
which are owned directly or indirectly by such entity or any partnership, joint
venture or other enterprise in which any entity has, directly or indirectly, any
equity interest.
(b) "Material Adverse Effect" shall mean any circumstance, event or series
of events which has a material adverse effect on the financial condition,
assets, liabilities (absolute, accrued, contingent or otherwise), reserves,
business or results of operations of CBOT and its subsidiaries, taken as a whole
(or when the reference is to FVNB, to FVNB and its subsidiaries, taken as a
whole).
(c) "Environmental Laws" shall mean all federal, state and local laws,
ordinances, rules, regulations, guidance documents, directives, and decisions,
interpretations and orders of courts or administrative agencies or authorities,
relating to the release, threatened release, recycling, processing, use,
handling, transportation treatment, storage, disposal, remediation, removal,
inspection or monitoring of Polluting Substances or protection of human health
or safety or the environment (including, without limitation, wildlife, air,
surface water, ground water, land surface, and subsurface strata), including,
without limitation, the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986, as amended ("XXXX"), the Resource Conservation and
Recovery Act of 1976, as amended ("RCRA"), Hazardous and Solid Waste Amendments
of 1984, as amended ("HSWA"), the Hazardous Materials Transportation Act, as
amended ("HMTA"), the Toxic Substances Control Act ("TSCA"), Occupational Safety
and Health Act ("OSHA"), Federal Water Pollution Control Act, Clean Air Act, and
any and all regulations promulgated pursuant to any of the foregoing.
(d) "Polluting Substances" shall mean those substances included within the
statutory or regulatory definitions, listings or descriptions of "pollutant,"
"contaminant," "toxic waste," "hazardous substance," "hazardous waste," "solid
waste," or "regulated substance" pursuant to CERCLA, XXXX, RCRA, HSWA, HMTA,
TSCA, OSHA, and/or any other Environmental Laws, as amended, and shall include,
without limitation, any material, waste or substance which is or contains
explosives, radioactive materials, oil or any fraction thereof, asbestos, or
formaldehyde. To the extent that the laws or regulations of the State of Texas
establish a meaning for "hazardous substance," "hazardous waste," "hazardous
materials," "solid waste," or "toxic waste," which is broader than that
specified in any of CERCLA, XXXX, RCRA, HSWA, HMTA, TSCA, OSHA or other
Environmental Laws such broader meaning shall apply.
(e) "Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing, discarding or abandoning.
36
(f) "knowledge" or "known" -- An individual shall be deemed to have
"knowledge" of or to have "known" a particular fact or other matter if (i) such
individual is actually aware of such fact or other matter, or (ii) such
individual could be expected to have discovered or otherwise become aware of
such fact or other matter had such individual exercised reasonable diligence
concerning the truth or existence of such fact or other matter. CBOT shall be
deemed to have "knowledge" of or to have "known" a particular fact or other
matter if Xxxxxxx X. Xxxxxxxx, Xxxx Xxxxxx or Xxxxx X. Xxxxxxxx has knowledge of
such fact or other matter. FVNB shall be deemed to have "knowledge" of or to
have "known" a particular fact or other matter if Xxxxx X. Xxxxxx or C. Xxx
Xxxxxx has knowledge of such fact or other matter.
SECTION 10.15 ARBITRATION. The parties shall submit to binding arbitration
by a panel of three arbitrators any disputed question or controversy arising
under this Agreement or arising out of or relating to the transactions
contemplated by the Agreement (whether based on contract, tort or any other
basis). Any such arbitration shall be conducted in San Antonio, Texas. Either
party may initiate the arbitration, by notice in writing to the other party,
setting forth the nature of the dispute, the amount involved, if any, and the
remedy sought. Any party desiring to initiate arbitration shall serve a written
notice of intention to arbitrate to the other party and to the American
Arbitration Association office in San Antonio, Texas (or the city located in
Texas that is closest to San Antonio) within 180 days after dispute has arisen.
A dispute is deemed to have arisen upon receipt of written demand or service of
judicial process. Failure to serve a notice of intention to arbitrate within the
time specified above shall be deemed a waiver of the notifying party's right to
compel arbitration of such claim. Such notice of intention to arbitrate may be
informal and need not comply with Rule 6 of the American Arbitration
Association. Legal action regarding this Agreement and any liabilities hereunder
shall either be brought by arbitration, as described herein, or by judicial
proceedings-but shall not be pursued in different or alternative forums. The
issue of waiver pursuant to this paragraph is an arbitrable issue.
The panel of three arbitrators shall be appointed promptly upon filing of
the complaint in arbitration by the initiating party, and shall be selected from
the Commercial Arbitration Panel in accordance with the Commercial Arbitration
Rules of the American Arbitration Association. All of the arbitrators shall be
members of the American Arbitration Association, and, if commercially
reasonable, at least two of the arbitrators shall be experienced in the banking
industry. Depositions may be taken and other discovery obtained in any
arbitration under this Agreement. The panel of arbitrators appointed hereunder
shall conduct the arbitration pursuant to the Commercial Arbitration Rules of
the American Arbitration Association then in effect, except as such rules may be
modified for the purpose of the arbitration proceeding by mutual written
agreement of the parties to this Agreement.
In the arbitration proceeding subject to these provisions, the
arbitrators, or a majority of them, are specifically empowered to decide (by
documents only, or with a hearing, at the arbitrators sole discretion)
pre-hearing motions which are substantially similar to prehearing motions to
dismiss and motions for summary adjudication.
The award of the arbitrators shall be final and binding upon the parties
and judgment thereon may be entered in any court having jurisdiction.
All statutes of limitations which would otherwise be applicable shall
apply to any arbitration proceeding hereunder, provided, however, that the
filing of a complaint in arbitration
37
shall serve to toll such statutes of limitation to the same extent as they would
be tolled if an action had been filed in a court of competent jurisdiction.
The provisions of this Section 10.15 shall survive any termination,
amendment, or expiration of the Agreement in which this section is contained,
unless all the parties hereto otherwise expressly agree in writing.
The parties acknowledge that this Agreement evidences a transaction
involving interstate commerce. The Federal Arbitration Act shall govern the
interpretation, enforcement, and proceedings pursuant to the arbitration clause
in this Agreement.
The arbitrators, or a majority of them, shall award attorney's fees and
costs to the prevailing party pursuant to the terms of this Agreement.
Venue of any arbitration proceeding hereunder will be in Bexar County,
Texas.
Except as set forth above concerning awards to the prevailing party, each
party shall bear its own expenses in connection with preparation for the
presentation of its case at the arbitration proceedings and the fees and
expenses of the arbitrators and all other expenses of the arbitration (except
those referred to in the preceding sentence) shall be borne equally by the
parties to such arbitration.
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IN WITNESS WHEREOF, each of the parties has executed or caused this
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the day and year first above written.
FVNB CORP.
By: /S/ XXXXX X. XXXXXX
Xxxxx X. Xxxxxx, President
CBOT FINANCIAL CORPORATION
By: /S/ XXXXX X. XXXXXXXX
XXXXX X. XXXXXXXX, President
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