EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (hereinafter called the
"Agreement"), dated as of December 15, 1997, is executed by and between Texas
Regional Bancshares, Inc., McAllen, Texas, a Texas corporation ("Texas
Regional") and Raymondville Bancorp, Inc., a Texas corporation ("Raymondville").
Texas Regional operates a commercial banking business in Texas through its
wholly owned subsidiary, Texas State Bank, a Texas state banking association
("Texas State Bank"). Texas Regional's wholly owned subsidiary, Texas Regional
Delaware, Inc. ("TRD"), has formed a new wholly owned subsidiary corporation,
Texas Regional Acquisition Corp. ("TRA"), for purposes of facilitating the
transaction herein described. Raymondville operates a commercial banking
business in Texas through its wholly owned subsidiary, Bank of Texas ("Bank of
Texas"). As used in this Agreement, any reference to the subsidiaries of
Raymondville includes any and all direct or indirect subsidiaries of
Raymondville, including specifically but without limitation Bank of Texas.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ is the sole shareholder of Raymondville (the
"Shareholder") and he joins into the execution hereof for the limited purpose of
evidencing his consent to and approval of the transaction herein described and
to confirm that he has heretofore approved the merger transaction as herein
described.
W I T N E S S E T H:
This Agreement provides for the merger of Raymondville with TRA, a
wholly owned subsidiary of TRD, as a result of which Raymondvllle will be the
surviving corporation, pursuant to the terms of this Agreement and Plan of
Reorganization. As a result of the merger, the sole shareholder of Raymondville
will receive cash, as herein provided, in exchange for his shares of
Raymondville common stock. Upon the closing of the transaction, it is
anticipated that (i) Raymondville shall be merged with TRA, with Raymondville
being the surviving corporation, and the sole shareholder of Raymondville will
receive cash in exchange for his shares of Raymondville, and (ii) Bank of Texas
will be merged with and into Texas State Bank and Bank of Texas will cease its
separate existence.
As a result of the merger of TRA with and into Raymondville, all rights,
privileges, immunities, powers and franchises of each of TRA and Raymondville
shall be merged into Raymondville as the surviving corporation. Without any
other action, at the Effective Time,
the surviving corporation shall be vested with all property, real, personal and
mixed, of the merging corporations and shall thereafter possess all of the
interests, both public and private, of each of the merging corporations and all
claims of creditors of each of TRA and Raymondville shall survive and any liens
shall be preserved unimpaired in Raymondville as the surviving corporation. All
of the foregoing shall be effected pursuant to and as set forth in this
Agreement and in a Certificate of Merger (the "Certificate of Merger") to be
executed by and among TRA and Raymondville, in the form required by applicable
provisions of the Texas Business Corporation Act.
In addition, at or immediately following the Effective Time of the merger
of TRA with and into Raymondville, Bank of Texas will be merged with and into
Texas State Bank, and all rights, privileges, immunities, powers and franchises
of each of Texas State Bank and Bank of Texas shall be merged into Texas State
Bank as the surviving banking association. Without any other action, at the
Effective Time, Texas State Bank shall be vested with all property, real,
personal and mixed, of Bank of Texas and Texas State Bank and shall thereafter
possess all of the interests, both public and private, of each of Bank of Texas
and Texas State Bank, and all claims of creditors of each of Texas State Bank
and Bank of Texas shall survive and any liens shall be preserved unimpaired in
Texas State Bank as the surviving banking association. All of the foregoing
shall be effected pursuant to and as set forth in an Agreement of Merger to be
executed by and among Texas State Bank and Bank of Texas.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the parties hereto agree as follows:
ARTICLE
PLAN OF MERGER
1.1 THE MERGER. Upon and subject to the terms and provisions hereof, at
the Effective Time, as hereafter defined, TRA shall be merged with and into
Raymondville (the "Merger"). The effect of the Merger is that the separate
existence of TRA shall cease. Following approval of such merger transaction by
applicable regulatory authorities and the fulfillment of other conditions
precedent to such merger transaction as herein described, TRA and Raymondville
shall each execute and deliver the Articles of Merger, in the form required by
the Texas Business Corporation Act, for filing with the Secretary of State of
Texas. At the Effective Time of the Merger, the rights of the sole shareholder
of
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Raymondville shall, without the requirement of further action on the part of the
shareholder, immediately be converted into the right to receive cash, as herein
provided, and such shareholder shall cease to be a shareholder of Raymondville
and his share certificate shall for all purposes be deemed only to represent a
right to receive the cash consideration to be paid pursuant to this Agreement.
1.2 CONSIDERATION TO RAYMONDVILLE SOLE SHAREHOLDER.
1.2.1 At the Effective Time (as hereinafter defined), all of the
outstanding shares of Raymondville capital stock shall be converted into the
right to receive an aggregate of $9,100,000.00 in cash, payable at the time of
closing of the transaction herein described, and evidence, in the form of a
safekeeping receipt, that Texas State Bank, Trust Department, is holding an
additional aggregate amount of $500,000.00 (the "▇▇▇▇▇▇ Escrow Account"). The
▇▇▇▇▇▇ Escrow Account will be held and disbursed pursuant to section 9.11 of
this Agreement.
1.2.2 The consideration to which the sole shareholder of
Raymondville becomes entitled shall be delivered by Texas Regional to the
shareholder upon surrender of such shareholder's share certificate or
certificates evidencing shares of Raymondville stock. A number of Raymondville
shares equal to the number of outstanding TRA shares shall then be issued to TRD
as the sole shareholder of TRA, in exchange for and in cancellation of TRD's TRA
shares. The stock transfer records of TRA shall for all purposes be closed as of
the Effective Time, and no transfer of record of any of the shares of TRA
capital stock shall take place thereafter.
1.3 CLOSING. Each of Raymondville and Texas Regional will use reasonable
efforts to close the transactions herein described on or before February 10,
1998, provided that the conditions to closing as herein described have been met
in a timely manner to permit closing by such date. The closing ("Closing") of
the transactions contemplated by this Agreement shall be effected on the latest
of the following dates, or as promptly thereafter as reasonably practicable (the
"Closing Date"):
1.3.1 February 10, 1998;
1.3.2 The thirtieth calendar day after the date of approval by the
Federal Reserve Board as required by Section 7.2 herein; or
1.3.3 Such date as may be prescribed by the Federal Reserve Board,
the Texas Banking Department or by any other federal or state agency or
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authority pursuant to an applicable federal or state law, order, rule or
regulation, prior to which consummation of the transactions provided
herein may not be effected; or
1.3.4 If the transactions contemplated by this Agreement are being
contested in any legal proceeding and Texas Regional, pursuant to Section
7.2 hereof, has elected to contest (he same, then the date that such legal
proceeding has been brought to a conclusion favorable, in (the judgment of
Texas Regional, to the consummation of the transactions contemplated
hereby; or
1.3.5 Such other date as Raymondville and Texas Regional may
select by mutual agreement.
The Closing shall take place at the offices of Texas Regional, Kerria Plaza,
Suite 301, 3700 N. Tenth Street, McAllen, Texas, on the Closing Date, or at such
other place as shall he mutually agreeable. If such Closing shall not have been
accomplished on or before April 1, 1998, this Agreement shall, at the election
of either Raymondville or Texas Regional by written notice, terminate and be of
no further force or effect. Any termination which occurs through 110 fault of
Raymondville or Texas Regional shall be without liability to any of (the parties
hereto. This Agreement may be terminated at any time prior to the Effective Time
by the mutual action of the respective Boards of Directors of Raymondville and
Texas Regional.
1.4 EFFECTIVE TIME. The parties hereto agree to take, on or prior to (the
Closing Date, all such action, and to execute and deliver all such instruments
and documents, as may be necessary or advisable, on the advice of counsel, to
cause the Articles of Merger to become effective on the Closing Date. The merger
shall become effective (herein referred to as the "Effective Time") upon
issuance of a Certificate of Merger by the Office of Secretary of State of
Texas, pursuant to which TRA is merged with and into Raymondville.
1.5 EFFECT OF MERGER. As a result of the merger, all or the capital stock
of Bank of Texas, shall be acquired by TRD, free and clear of any and all liens,
claims or encumbrances.
1.6 BANK MERGER. Raymondville shall take, in advance of (the Effective
Time, any action requested by Texas Regional to facilitate the merger
immediately following the Effective Time (or as soon thereafter as practicable)
of Bank of Texas with and into Texas State Bank, including execution and
delivery of an Agreement of Merger, any requested
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certificates of officers, and such other documents as may be required to cause
such merger to become effective in a timely manner.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF RAYMONDVILLE
Raymondville represents and warrants to, and covenants and agrees with,
Texas Regional as follows:
2.1 ORGANIZATION AND OPERATION OF RAYMONDVILLE. Raymondville is a
Texas corporation, duly organized, validly existing and in good standing under
the laws of the state of Texas, and has full power and authority (including all
licenses, franchises, permits and other governmental authorizations which are
legally required) to own its properties and to engage in the business and
activities now conducted by it, including its direct ownership of Bank of Texas.
Raymondville is duly registered as a bank holding company with the Federal
Reserve Board and is operated in compliance with applicable Federal Reserve
Board regulations. True and complete copies of the Articles of Incorporation and
Bylaws of Raymondville as amended to date, have been delivered to Texas
Regional. Raymondville is not a reporting company under the Securities Exchange
Act of 1934, as amended (the "1934 Act"). The only business of Raymondville is
its ownership and operation of its subsidiary, Bank of Texas. Raymondville has
no liabilities, liquidated or unliquidated, fixed or contingent, other than
those shown on the Balance Sheet dated December 31, 1996 (as hereinafter
described), and has no assets other than its ownership of all of the capital
stock of Bank of Texas. Without limiting the generality of the foregoing,
Raymondville is not a member of any joint venture or partnership and
Raymondville does not own the securities of any other entity other than as
herein described.
2.2 ORGANIZATION AND OPERATION OF BANK OF TEXAS. Bank of Texas is a Texas
state banking association, duly organized and existing under the laws of the
State of Texas, and has full power and authority (including all licenses,
franchises, permits and other governmental authorizations which are legally
required) to own its properties and to engage in the business and activities now
conducted by it, including its commercial banking business. Bank of Texas is in
good standing under the laws of the state of Texas. Bank of Texas operates out
of its main bank facility in Raymondville, Texas, and one branch facility
located in Brownsville, Texas. Bank of Texas has no other branch facilities, nor
does Bank of Texas have any application pending for operation of any additional
branch facility. True and
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complete copies of the Articles of Association and Bylaws of Bank of Texas, as
amended to date, have been delivered to Texas Regional. Bank of Texas (i) is
duly authorized to conduct a general banking business, in accordance with its
charter, subject to the supervision of the Texas Department of Banking and other
applicable regulatory authorities; (ii) is an insured bank as defined in the
Federal Deposit Insurance Act; and (iii) has full power and authority (including
all licenses, franchises, permits and other governmental authorizations which
are legally required) to engage in the business and activities now conducted by
it. To the best knowledge and belief of Raymondville, all books and records
related to the business of Bank of Texas are true, correct and complete. Bank of
Texas' banking and other business activities are in full compliance with sound
banking practices and applicable provisions of law, including the Texas Banking
Code, the Federal Deposit Insurance Act, the Federal Reserve Act and applicable
regulations. Except as disclosed in SCHEDULE 2.2 Bank of Texas has no
subsidiaries or affiliates, owns no voting securities of any other corporation,
and is not a member of any joint venture or partnership.
2.3 CAPITALIZATION AND OWNERSHIP. The authorized capital stock of
Raymondville consists of 1,000,000 shares of common stock, par value $1.00 per
share, of which a total of 49,991 shares (the "Shares") are outstanding, all of
which have been validly issued and outstanding, are fully paid, nonassessable,
and are owned beneficially and of record by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇. The Shares have
not been issued in violation of the preemptive rights of any stockholder. The
authorized capital stock of Bank of Texas consists of 63,331 shares of capital
stock, par value $5.00 per share, all of which are duly authorized, validly
issued and outstanding, fully paid, nonassessable, and are owned beneficially
and of record by Raymondville. There are no outstanding options, warrants,
conversion rights, calls or commitments of any kind obligating Raymondville or
Bank of Texas to issue, directly or indirectly, additional shares of capital
stock, and no authorization therefor has been given. Neither Raymondville nor
Bank of Texas has any outstanding commitment or obligation to repurchase,
reacquire or redeem any of its outstanding capital stock.
2.4 FINANCIAL STATEMENTS AND RECORDS.
2.4.1 Raymondville has delivered to Texas Regional (i) the
consolidated balance sheet of Raymondville and its subsidiaries as of December
31, 1996, 1995 and 1994 (the "Balance Sheet"), and the related consolidated
statements of income, changes in stockholders' equity and changes in financial
position for the years then ended, as compiled by the Comptroller of Bank of
Texas, from the books and records of Raymondville and the Bank of Texas. These
financial statements fairly present the financial position of Raymondville and
its subsidiaries as of the dates thereof and the results of its operations for
the periods indicated in conformity with generally accepted accounting
principles applied
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on a consistent basis. To the best knowledge of Raymondville, the compiled
consolidated financial statements of Raymondville and its subsidiaries have been
prepared in accordance with generally accepted accounting principles. In
addition, Raymondville has delivered to Texas Regional its unaudited parent
company only balance sheets and regulatory reports of condition of Raymondville
as of October 31, 1997, and its unaudited bank only balance sheets and
regulatory reports of condition of Bank of Texas as of October 31, 1997
(collectively, such balance sheets are hereafter sometimes called the
"Raymondville Balance Sheet" and the "Bank of Texas Balance Sheet, respectively)
and the related unaudited statements of income, changes in stockholders' equity
and changes in financial position for the ten-month period then ended. In the
opinion of the management of Raymondville, these financial statements also
fairly present the financial position of Raymondville and Bank of Texas as of
the date thereof and the results of their respective operations for the period
indicated in conformity with generally accepted accounting principles applied on
a consistent basis. All of the financial statements described in this paragraph
are collectively referred to hereinafter as the "Raymondville Financial
Statements." Except as described in SCHEDULE 2.4.1, the Raymondville Financial
Statements do not, as of the dates thereof, include any material assets or omit
to state any material liability, absolute or contingent, or other fact, the
inclusion or omission of which renders such financial statements, in light of
the circumstances under which they were made, materially misleading. Without
limiting the generality of the foregoing, except as described in SCHEDULE 2.4.1,
Raymondville specifically represents to Texas Regional that Raymondville and its
subsidiaries have no liabilities, either accrued, contingent or otherwise,
which, individually or in the aggregate, are material, which have not been
reflected in the Raymondville Financial Statements (including the Raymondville
Balance Sheet and the Bank of Texas Balance Sheet) or which have been incurred
in the ordinary course of business since the date of the Raymondville Balance
Sheet and the Bank of Texas Balance Sheet. As of the time of Closing, any
material liabilities, accrued, contingent or otherwise, which have been incurred
since September 30, 1997, will have been fully disclosed to Texas Regional.
2.4.2 To the best knowledge and belief of Raymondville, except as
described in SCHEDULE 2.4.1, within the past five (5) years there have not been
any material changes in the financial condition, results of operations, business
or prospects of Raymondville and its subsidiaries, other than changes in the
ordinary course of business, none of which individually or in the aggregate has
been materially adverse, nor have there been any other events or conditions of
any character which have individually or in the aggregate materially and
adversely affected the financial condition, results of operations, business or
prospects of Raymondville or its subsidiaries.
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2.4.3 The books and records of Raymondville and its subsidiaries
reflect the transactions to which they are or were a party or by which their
properties are or were bound, and, to the extent applicable, such books and
records are and have been properly kept and maintained in accordance with the
law and with generally accepted accounting principles consistently applied. As
of the date hereof and as of the Closing, all of the minute books of
Raymondville and its subsidiaries are and will be complete, accurate and
current.
2.4.4 Bank of Texas and Raymondville have no trust business.
2.5 LOANS.
2.5.1 All loans included in the assets of Raymondville and its
subsidiaries, including specifically Bank of Texas, and all commitments to make
loans (which includes leasing transactions and off balance sheet lending
transactions such as letters of credit and which constitutes all of the lending
business of Raymondville), have been made in the ordinary course of business of
Raymondville and, other than those loans that have been identified on the
problem loan list delivered to Texas Regional prior to or contemporaneously with
the execution hereof (which problem loan list has been marked for identification
by Texas Regional and Raymondville), such loans do not present more than the
normal risk of uncollectibility or other unfavorable features. Raymondville will
provide an updated problem loan list at the time of Closing.
2.5.2 All loans to directors, officers and beneficial owners of 5%
or more of the outstanding capital stock of Raymondville and loans to any person
or company related to or affiliated with any such person, are listed on the
related party transaction list provided to Texas Regional by Raymondvllle (and
marked for identification by Texas Regional and Raymondville), which listing is
herein called the "Related Party Transaction List". The loans listed on the
Related Party Transaction List do not present more than the normal risk of
uncollectibility or other unfavorable features.
2.5.3 The reserves for loan losses of Bank of Texas (which
constitute the total reserves of Raymondville) have been calculated in
accordance with all applicable rules and regulations. In the reasonable opinion
of the management, officers and directors of Raymondville, the reserve for loan
losses shown on the Raymondville Balance Sheet is adequate in all respects to
provide for all losses on loans outstanding as of the date of the Raymondville
Balance Sheet.
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2.6 PROPERTIES. Subject to reservations and exceptions shown on title
opinions or title policies delivered to Texas Regional (and marked for
identification by Texas Regional and Raymondville), Raymondvilie and its
subsidiaries, including Bank of Texas, have good and marketable title to all
assets and properties, whether real or personal, tangible or intangible, which
they purport to own, including without limitation, all assets and properties
reflected on the Raymondville Balance Sheet or acquired subsequent thereto
(except to the extent such assets and properties have been disposed of in the
ordinary course of business since the date of the Raymondville Balance Sheet),
subject to no liens, mortgages, security interests, encumbrances, easements,
title imperfections, or charges of any kind except (i) as noted in the
Raymondville Balance Sheet or the notes to the Raymondville Financial
Statements, (ii) statutory liens not yet delinquent, (iii) security interests
granted incident to borrowings by Bank of Texas from Federal Reserve Banks or to
secure deposits of funds by federal, state or other governmental agencies, and
(iv) minor defects and irregularities in title and encumbrances which do not
materially impair the use thereof for the purposes for which they are held and
such liens, mortgages, security interests, encumbrances and charges as are not,
in the aggregate, material to the assets and properties of Raymondville. All
improvements, buildings and structures located on real estate owned by
Raymondville and its subsidiaries, and the use by Raymondville and its
subsidiaries of such real estate, together with such improvements, buildings and
structures, in the manner heretofore and currently used by Raymondville and its
subsidiaries, conform in all material respects to applicable federal, state and
local laws and regulations (including applicable environmental laws and
regulations), zoning and building ordinances and health and safety ordinances,
and such real estate is zoned for the various purposes for which such real
estate is currently being used. All such improvements, buildings and structures
located on real estate owned by Raymondville and its subsidiaries, and all of
the material, tangible personal property owned by Raymondville and its
subsidiaries, are in good operating condition and repair, reasonable wear and
tear excepted Listed on SCHEDULE 2.6 are all policies of title insurance
covering such properties.
2.7 ENVIRONMENTAL MATTERS. To the best knowledge and belief of
Raymondville, neither any Environmental Hazards nor any Hazardous Materials
Contamination exist on any real property owned or used by Raymondville and its
subsidiaries, including Bank of Texas (including any owned by and used in
connection with the business of Bank of Texas and any foreclosed properties
owned by Bank of Texas), or on any real property used by Bank of Texas in
connection with the business of Bank of Texas or on any adjacent property, as a
result of any Environmental Hazards on or emanating from the Real Property. The
real properties described in the preceding sentence are sometimes collectively
referred to as the "Real Property." As used in this Agreement, the term
"Environmental Hazards" shall mean (i) any "hazardous waste" as defined by the
Resource
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Conservation and Recovery Act of 1976(42 U. S.C. Section 6901 et seq.), as
amended from time to time, and regulations promulgated thereunder; (ii) any
"hazardous substance" as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (42 U.5.C. Section 9601 et seq.)
("CERCLA"), as amended from time to time, and regulations promulgated
thereunder; (iii) any toxic substance regulated by the Toxic Substances Control
Act (15 U.S.C. Section 2601 et seq.), as amended from time to time, and
regulations promulgated thereunder; (iv) gasoline, diesel fuel or other
petroleum hydrocarbons; (v) asbestos and asbestos containing materials, in any
form, whether friable or non-friable; (vi) polychlorinated biphenyls; (vii)
radon gas; (viii) any solid waste or petroleum waste; and (ix) any other
substance which any governmental authority requires special handling or
notification of any federal, state or local governmental entity in its
collection, storage, treatment, or disposal or which is identified or classified
to be hazardous or toxic under applicable state or federal law or regulation or
the common law, or any other applicable laws. As used in this Agreement, the
term "Hazardous Materials Contamination" shall mean the contamination of the
improvements, facilities, soil, groundwater, air or other elements on or of the
Real Property by Hazardous Materials, or the contamination of the buildings,
facilities, soil, groundwater, air or other elements on or of any other property
as a result of Hazardous Materials at any time before the date of this Agreement
emanating from the Real Property.
2.8 LITIGATION. No claims have been asserted and no relief has been
sought against Raymondville or any of its subsidiaries, including Bank of Texas,
in any pending litigation or governmental proceedings or otherwise which might
result in a judgment, decree or order having a material adverse effect on the
financial condition, results of operations, business or prospects of
Raymondville or any of its subsidiaries. To the best knowledge and belief of
Raymondville, Raymondvilie and its subsidiaries have compiled with, and are
presently in compliance with, all laws and regulations pertaining to consumer
credit and truth in lending. The management of Raymondville and its subsidiaries
is not aware of any material violation by Raymondville or any subsidiary of
Raymondville of any of the foregoing. To the best knowledge and belief of
Raymondville, Raymondville and its subsidiaries are in substantial compliance
with all other laws, all rules and regulations of governmental agencies and
authorities and any judgments, orders or decrees which by their terms apply to
any of them. All permits, concessions, grants, franchises, licenses and other
governmental authorizations and approvals necessary for the conduct of the
business of Raymondville and its subsidiaries have been duly obtained and are
in full force and effect, and there are no proceedings pending or, to
Raymondville's and its subsidiaries' knowledge, threatened which may result in
the revocation, cancellation, suspension or adverse modification of any thereof.
The consummation of the transactions contemplated hereby will not result in any
such revocation, cancellation, suspension or modification.
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2.9 TAXES. Raymondvilie and its subsidiaries have filed with the
appropriate governmental agencies all federal, state and local income,
franchise, excise, real and personal property and other tax returns and reports
which are required to be filed, and neither Raymondville nor any subsidiary of
Raymondville is delinquent in the payment of any taxes shown on such returns or
reports. Raymondville has no examination pending by the Internal Revenue
Service, the Texas Comptroller of Public Accounts, or any other tax authority,
nor has Raymondville been notified of any proposed examination. There are
included in the Raymondville Balance Sheet, or reflected in the Notes to the
Raymondville Financial Statements, reserves adequate in the reasonable opinion
of management for the payment of all accrued but unpaid federal, state and local
taxes of Raymondville and its subsidiaries, including all income, franchise, ad
valorem and other taxes, and all interest and penalties, whether or not
disputed, for the ten-month period ended October 31, 1997, for the year ended
December 31, 1996, and for all fiscal years prior thereto. Neither Raymondvilie
nor any subsidiary of Raymondville has executed or filed with the Internal
Revenue Service, the Comptroller of Public Accounts of the State of Texas or any
other taxing authority any agreement extending the period for assessment and
collection of any tax, nor is Raymondville nor any subsidiary a party to any
action or proceeding by any governmental authority for assessment or collection
of taxes, nor has any claim for assessment or collection of taxes been asserted
against any of them. Neither Raymondville nor any of its subsidiaries has filed
a consent pursuant to Section 341(f) of the Internal Revenue Code or otherwise.
2.10 CONTACTS. Except as set forth in SCHEDULE 2.10 neither Raymondvilie
nor any subsidiary thereof is a party to or bound by any written or oral (i)
employment contracts (including without limitation any collective bargaining
contracts or union agreements); (ii) commission, bonus, deferred compensation,
profit-sharing, life insurance, health insurance, salary continuation, severance
pay, pension or retirement plans or arrangements whether or not legally binding
and whether or not funded; (iii) material leases or licenses with respect to any
property, real or personal, whether as landlord, tenant, licensor or licensee;
(iv) contracts or commitments for capital expenditures in excess of $10,000 for
any one project; (v) contracts or options to purchase or sell any real or
personal property otherwise than in the ordinary course of business or pursuant
to this Agreement; (vi) agreements or instruments relating to any commitments to
loan money or to extend credit, except for commitments to extend credit in the
ordinary course of business in amounts of less than $400,000 in any one
transaction and $400,000 in the aggregate; (vii) agreements to which any
director, officer or holder of 5% or more of the outstanding capital stock of
Raymondville, or any person or company related to or affiliated with any such
person, is a party; (viii) contracts relating to the purchase or sale of
financial or other futures, or put or call options relating to cash, securities
or any commodities whatsoever; or (ix) material
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contracts, other than the foregoing, not made in the ordinary course of
business. Raymondvilie and its subsidiaries have in all material respects
performed all obligations required to be performed by them to date. Neither
Raymondville nor any of its subsidiaries is in default, and no event has
occurred which, with notice or the lapse of time or action by a third party,
could result in a default by Raymondville or any of its subsidiaries, (a) under
any outstanding indenture, mortgage, contract, lease or other agreement to which
it is a party or by which it is bound; (b) under any provision of its Articles
of Incorporation or Bylaws or other organizational documents which might result
in a material adverse effect on the financial condition, results of operations,
business or prospects of Raymondville and its subsidiaries; or (c) under any
agreement with federal or state regulatory authorities. Raymondville and its
subsidiaries have not granted any power of attorney, except routine powers of
attorney relating to representation before governmental agencies or given in
connection with qualification to conduct business in another jurisdiction.
2.11 APPROVALS; VALIDITY OF AGREEMENT. The Board of Directors of
Raymondville has approved the form, terms and provisions of this Agreement and
the transactions contemplated hereby. The sole shareholder of Raymondville,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, is the only shareholder with the power to consider and vote
upon the transactions herein described, including the right to vote on the
proposed merger of Raymondville and TRA. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ has joined into the
execution hereof to evidence his consent to and written approval of the
transaction herein described, and to represent that he has taken all action
required as the sole shareholder of Raymondville to approve the transaction, and
that no additional action by the shareholder is required. Provided required
approval is obtained as and to the extent required from applicable regulatory
authorities, including the Federal Reserve Board and the Texas Banking
Department, to the best knowledge, information and belief, after due inquiry, of
Raymondville, the execution, delivery and performance of this Agreement and the
consummation of the merger contemplated herein, and the merger of Bank of Texas
with and into Texas State Bank, will not conflict with, result in the breach of,
constitute a default under or accelerate the performance provided by, (i) the
terms of any law, order, rule or regulation of any governmental agency or
authority or any judgment, order or decree of any court or other governmental
agency to which Raymondville or any subsidiary thereof may be subject; (ii) any
contract, agreement or instrument to which Raymondville or any subsidiary
thereof is a party or pursuant to which Raymondville or any subsidiary is bound;
or (iii) the Articles of Incorporation or Bylaws of Raymondville or the Articles
of Association or Bylaws of Bank of Texas. Provided required approval is
obtained (as and to the extent required) from applicable regulatory authorities,
including the Federal Reserve Board and the Texas Banking Department, no consent
or approval or other action by any party (including specifically but without
limitation any party to a contract to which Raymondville or Bank of Texas is
subject) is required for the execution, delivery and
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performance of this Agreement and consummation of the transaction herein
described or for the merger of Bank of Texas with and into Texas State Bank, as
herein contemplated. The execution9 delivery and performance of this Agreement
and the consummation of the transactions herein described, and the merger of
Bank of Texas with and into Texas State Bank, will not constitute an event which
with the lapse of time or action by a third party could result in a default
under any of the foregoing or result in the creation of any lien, charge or
encumbrance upon any of the assets or properties of Raymondville or its
subsidiaries or upon any of the stock of Raymondville or its subsidiaries. This
Agreement constitutes the legal, valid and binding obligation of Raymondville,
enforceable against Raymondville in accordance with its terms, except as the
same may be limited by applicable bankruptcy, insolvency9 reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and general equitable principles regardless of whether such
enforceability is considered in a proceeding at law or in equity.
2.12 INSURANCE. Raymondville and its subsidiaries have insurance
coverage with reputable insurers in amounts, types and risks insured as set
forth in SCHEDULE 2.12. Bank of Texas accounts are insured by the Federal
Deposit Insurance Corporation (~FDIC") to the extent permitted by law, and Bank
of Texas has paid all premiums required to be paid and is in compliance with the
applicable regulations of the FDIC.
2.13 ABSENCE OF ADVERSE AGREEMENTS. Neither Raymondville nor any
subsidiary thereof is a party to any agreement or instrument, nor is
Raymondville or any subsidiary subject to any judgment, order, decree, rule or
regulation of any court or other governmental agency or authority which
materially and adversely affects or in the future may materially and adversely
affect the financial condition, results of operations, business or prospects of
Raymondvilie or any subsidiary of Raymondville.
2.14 ABSENCE OF CERTAIN CHANGES. Except as set forth in SCHEDULE 2.149
since December 31,1994, Raymondville and its subsidiaries have not (i) issued or
sold any capital stock of Raymondville or any of its subsidiaries, or any
corporate debt obligations (except certificates of deposit, letters of credit,
cashier's checks, acknowledgments of indebtedness incident to borrowings from
the Federal Reserve Bank and other documents and instruments issued in the
ordinary course of banking business of Bank of Texas); (ii) granted any options
for the purchase of its capital stock; (iii) declared or set aside or paid any
dividend or other distribution in respect of its capital stock, or directly or
indirectly, purchased, redeemed or otherwise acquired any shares of such stock;
(iv) incurred or assumed any obligations or liabilities (absolute or
contingent), except obligations or liabilities incurred in the ordinary course
of business, or mortgaged, pledged or subjected to lien or encumbrances (other
than statutory liens not yet delinquent) any of its assets or
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properties; (v) discharged or satisfied any lien or encumbrance or paid any
obligation or liability (absolute or contingent), other than current liabilities
included in the Raymondville Balance Sheet, current liabilities incurred since
the date thereof in the ordinary course of business and liabilities incurred in
carrying out the transactions contemplated by this Agreement; (vi) sold,
exchanged or otherwise disposed of any of its capital assets other than in the
ordinary course of business; (vii) forgiven or canceled any debts or claims, or
waived any rights; (viii) made any general wage or salary increase, entered into
any employment contract with any officer or salaried employee or instituted any
employee welfare, bonus, stock option, profit-sharing, retirement or similar
plan or arrangement; (ix) suffered any damage, destruction or loss, whether or
not covered by insurance, materially and adversely affecting its business,
property of assets or waived any rights of value which in the aggregate are
material; (x) except in the ordinary course of business, entered into or agreed
to enter into any agreement or arrangement granting any preferential rights to
purchase any of its assets, properties or rights or requiring the consent of any
party to the transfer and assignment of any such assets, properties or rights;
(xi) made any material change in the conduct of its business, whether entered
into or made in the ordinary course of business or otherwise; (xii) granted to
any director or officer, or any employee, any increase in compensation in any
form in excess of the amount thereof in effect as or December 31, 1996 or any
severance or termination pay, or entered into any written employment agreement,
trust, fund or other arrangement for the benefit of any such director, officer
or employee, whether or not legally binding; (xiii) suffered any loss of
officers, employees, suppliers or customers that materially and adversely
affects the business, operations or prospects of Raymondville or any of its
subsidiaries; or (xiv) entered into any transaction outside the ordinary course
of business except as expressly contemplated by this Agreement. Since September
30, 1997, there has been no material adverse change in Raymondville or Bank of
Texas.
2.15 AGREEMENTS WITH DIRECTORS, OFFICERS AND STOCKHOLDERS. The name of
each director and executive officer of Raymondville and each of its
subsidiaries, and the name and address of the holder of one hundred percent
(100%) of the outstanding capital stock of Raymondville, together with the name
of each "affiliate" of each of such persons, as such term is defined in the
rules and regulations under the Securities Act of 1933, as amended (the "1933
Act"), is listed in SCHEDULE 2.15. Except as set forth on the Related Party
Transaction List, no such director, executive officer, stockholder or associate
has during the period from January 1, 1994 to the date of this Agreement been a
party to any transaction with Raymondville or any subsidiary (including Bank of
Texas). All transactions with directors, executive officers, stockholders and
affiliates are fully and appropriately summarized on the Related Party
Transaction List. None of the transactions have been outside of the ordinary
course of business, and, except as set forth on the Related Party
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Transaction List, neither Raymondvilie nor any subsidiary thereof has any
commitments, written or oral, to lend any funds to any such person.
2.16 AFFILIATED CORPORATIONS. Raymondville knows of no arrangement
whereby the stock of any corporation is or has been held in trust (whether
express, constructive, resulting or otherwise) for the benefit of Raymondville
or for the shareholders of Raymondville.
2.17 REGULATORY MATTERS AND EXAMINATION REPORTS. Neither
Raymondville nor any of its subsidiaries has any formal or informal agreements,
arrangements or understandings with the Federal Reserve Board, the Federal
Deposit Insurance Corporation, the Texas Banking Department, or any other
regulatory authority (collectively, the "Regulatory Authorities"), nor does
Raymondville or any subsidiary have any examination pending by any applicable
Regulatory Authorities nor has Raymondville or any subsidiary been notified of
any proposed examination by any Regulatory Authorities, except for an
examination by the Federal Reserve Board scheduled to begin on January 5, 1998,
to facilitate the transactions herein described. To the extent permitted by law,
Raymondville has provided to Texas Regional complete and correct copies of (i)
all examination reports by Regulatory Authorities forwarded to Raymondville or
any subsidiary thereof during the calendar years 1994, 1995, 1996 and to date
1997; (ii) any correspondence between Raymondville (or any subsidiary of
Raymondville) and such agencies during such periods, and (iii) any agreements,
arrangements or understandings between Raymondvllle (or any subsidiary of
Raymondville) and such agencies, including any agreements, arrangements or
understandings arising out of or related to any such examinations.
2.18 COMPLIANCE WITH THE APPLICABLE LAW. To the best knowledge and
belief of Raymondville, Raymondville and its subsidiaries and the conduct of
their respective business are not in violation of any applicable law, statute,
order, rule or regulation promulgated by, or judgment entered by, any federal,
state, or local court or governmental authority relating to the operation,
conduct or ownership of the business and property of Raymondville or any
subsidiary, which violation might result in any material adverse change in the
condition, business, prospects, properties or assets of Raymondville or its
subsidiaries.
2.19 DISCLOSURE. Neither the financial statements nor any
representation or warranty contained herein, nor any information delivered or to
be delivered by Raymondville pursuant to this Agreement, contains or shall
contain an untrue statement of a material fact, nor do the financial statements,
representations, warranties and other information omit to state, nor will they
omit to state, any material fact necessary in order to make the statements made
not misleading.
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2.20 FINDERS. Neither Raymondville nor any subsidiary has engaged or
directly or indirectly obligated itself to anyone acting as a broker, finder, or
in any other similar capacity in connection with the transactions contemplated
by this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF TEXAS REGIONAL
Texas Regional represents and warrants to, and covenants and agrees
with, Raymondville as follows:
3.1 ORGANIZATION. Texas Regional is a business corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas with all necessary power to carry on its business as it is now being
conducted. Texas Regional is duly registered with the Federal Reserve Board as a
bank holding company under the Bank Holding Company Act of 1956, as amended. TRA
is a business corporation duly organized, validly existing and in good standing
under the laws of the State of Texas with all necessary power to carry on its
business as it is now being conducted.
3.2 APPROVALS. The Board of Directors of Texas Regional has approved
this Agreement and the transactions contemplated hereby. Texas Regional is a
reporting company under the Securities and Exchange Act of 1934, as amended (the
"1934 Act"), and the rules and regulations promulgated thereunder.
3.3 ORDERS AND DECREES. Provided required approval is obtained from
applicable regulatory authorities, including the Federal Reserve Board and the
Texas Banking Department, the execution, delivery and performance by Texas
Regional of this Agreement and of the obligations imposed upon it hereunder will
not violate any provision of, or result in any breach of, (i) any law, order,
rule or regulation of any governmental agency or authority or any judgment,
order or decree of any court or governmental agency to which Texas Regional may
be subject, (ii) the Articles of Incorporation or Bylaws of Texas Regional, or
(iii) any contract or agreement to which Texas Regional is a party or by which
it is bound.
3.4 FINDERS. Texas Regional has not engaged and is not directly or
indirectly obligated to anyone acting as a broker, finder, or in any other
similar capacity in connection with the transactions contemplated by this
Agreement.
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ARTICLE 4
INDEMNIFICATION
4.1 RAYMONDVILLE AGREEMENT TO INDEMNIFY. Raymondville hereby agrees to
indemnity, defend and hold harmless Texas Regional and Texas State Bank, and
their respective officers, directors, employees, agents and attorneys from and
against any and all losses, claims, damages, expenses or liabilities to which
Texas Regional or Texas State Bank may become subject (including any arising as
a result of the consummation of the transaction described in this Agreement and
any arising under the Securities Act of 1933 or the Securities Exchange Act of
1934, or any rule, order or regulation pursuant thereto), arising out of or
based upon:
(i) breach of a representation, warranty, covenant or agreement of
Raymondville in this Agreement or any breach in the performance
hereof;
(ii) any misleading or untrue statement of a material fact by or on
behalf of Raymondville or any subsidiary thereof, or any omission of
a material fact necessary in order to make any statements made by or
on behalf of Raymondville, in light of the circumstances under which
they were made, not misleading, including any such statement or
omission in the context of solicitation by Raymondville of proxies
for approval of the transactions described in this Agreement by the
shareholders of Raymondville; and
(iii) any disclosure by any officer, director, shareholder or present or
former employee of Raymondville or any subsidiary thereof of any
confidential information related to Raymondvilie or any subsidiary
or their respective business (including confidential customer
information).
4.2 INDEMNIFICATION BY TEXAS REGIONAL. Texas Regional hereby agrees to
indemnify, defend and hold harmless Raymondville and its officers, directors,
employees, agents and attorneys from and against any and all losses, claims,
damages, expenses or liabilities to which Raymondville may become subject
(including any arising as a result of the consummation of the transaction
described in this Agreement and any arising under the Securities Act of 1933 or
the Securities Exchange Act of 1934, or any rule, order or regulation pursuant
thereto), arising out of or based upon:
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(i) breach of a representation, warranty, covenant or agreement of Texas
Regional in this Agreement or in the performance hereof; and
(ii) any misleading or untrue statement of a material fact by or on
behalf of Texas Regional, or any omission of a material fact
necessary in order to make any statements made by or on behalf of
Texas Regional, in light of the circumstances under which they were
made, not misleading.
4.3 EXTENSION TO OTHER PARTIES. Each of Texas Regional and Raymondville
(to the extent of an indemnification obligation hereunder, herein referred to as
the "Indemnifying Party") will indemnify the other and each of such other
party's directors, officers and each person who "controls" such other party
within the meaning of such term as used in Section 15 of the 1933 Act (such
persons being herein called the "Indemnified Parties") and will defend and hold
the Indemnified Parties harmless from and against any and all losses, claims,
damages, expenses, or liabilities to which the Indemnified Parties may become
subject under the common law or otherwise insofar as:
4.3.1 such losses, claims, damages, expenses, liabilities or
actions arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any communications to
shareholders, or any application or statement filed pursuant to this
Agreement or arising out of or based upon the omission or alleged omission
to state therein a material fact necessary in order to make the statement
therein, in the light of the circumstances in which they were made, not
misleading, but only insofar as any such statement or omission was made in
reliance upon and in conformity with information furnished by the party
against whom indemnification is sought hereunder for use therein; and
4.3.2 such losses, claims, damages, expenses, or liabilities are
incurred by the Indemnified Parties (or are losses, claims, damages,
expenses or liabilities with respect to which the Indemnified Parties
become subject), under the common law or otherwise, arising out of or in
any way attributable to the breach of any warranty or representation
made by such party herein or pursuant to the terms hereof, or the
failure of such party to perform any covenant or obligation contained in
this Agreement.
4.4 LEGAL AND OTHER COSTS. The indemnification obligations contained
herein shall expressly include the obligation of the Indemnifying Party to
reimburse the Indemnified Party for any legal or other expenses (including
counsel fees) reasonably incurred by them
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in connection with investigating or defending against any and all such losses,
claims, damages, expenses, liabilities or actions whether or not resulting in
any liability.
4.5 NOTICES AND PARTICIPATION RIGHTS. The Indemnified Parties shall,
within twenty (20) days after the receipt by them of any notice of any claim or
of the commencement of any litigation in respect of which indemnity may be
sought hereunder, notify the Indemnifying Party thereof. The omission to notify
the Indemnifying Party of any such claim or litigation shall relieve the
Indemnifying Party from any liability which it may have under the indemnity
agreement contained herein, but shall not relieve the Indemnifying Party from
any other liability which it may have to the Indemnified Parties, other than
that raised in any such claim or litigation explicitly or by reasonable
implication or that which may estop the Indemnifying Party from raising and
effecting some defense it might otherwise have raised had such notice been
properly given. If any such litigation shall be brought against the Indemnified
Parties and if the Indemnified Parties shall notify the Indemnifying Party of
the commencement thereof, the Indemnifying Party shall be entitled, unless in
the opinion of counsel to the Indemnified Party there exist issues as to which
the interests of the Indemnified and Indemnifying Parties are adverse, to
participate in (and, to the extent that it shall wish, to direct) the defense
thereof at its own expense, but such defense shall be conducted by counsel
satisfactory to the Indemnified Parties.
4.6 SURVIVAL AND ARBITRATION. The indemnity agreement contained in this
Article 4 shall survive any investigation made by or on behalf of any
Indemnified Party but shall not survive the closing of the transactions
described in this Agreement. In the event of any disputed claim for
indemnification under this Article 4, the claim shall be submitted to binding
arbitration within thirty (30) days of the request by either the party or
parties claiming indemnification or the party or parties against whom the
indemnification obligation is claimed, in the following manner, to wit: the
party or parties claiming indemnification and shall select a qualified,
commercial arbitrator and the party or parties from whom indemnification is
sought shall select one qualified, commercial arbitrator. The two arbitrators so
selected shall in turn select a third arbitrator who shall participate with the
two arbitrators selected by the parties as an arbitration panel. The arbitrators
shall in each case be qualified in arbitrating matters such as the disputed
claim for indemnification, and they shall arbitrate the dispute in a location in
Cameron County, Texas, in accordance with applicable Commercial Arbitration
Rules of the American Arbitration Association. Any ruling rendered by the
arbitrators shall be final, binding and conclusive. No provision of, nor the
exercise of any rights under, this article shall limit the right of any party,
and the parties shall have the right during any dispute, to seek, use and employ
ancillary or preliminary remedies, either legal or equitable, judicial or
otherwise, for the purposes of realizing upon, preserving, or protecting rights
hereunder. To the extent permitted by
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applicable law, the arbitrator(s) shall have the power to award and allocate
recovery of all 'I costs and fees (including attorneys' fees, administrative
fees and arbitrators' fees) between the parties. THE PARTIES WILL BE LEGALLY
OBLIGATED TO ABIDE BY THE AWARD RENDERED BY THE ARBITRATOR(S). A COURT JUDGMENT
MAY BE ENTERED UPON THE AWARD OR SUCH AWARD MAY BE ENFORCED BY INJUNCTIVE
RELIEF, RECEIVERSHIP RELIEF, OR OTHER EQUITABLE RELIEF.
ARTICLE 5
SPECIAL COVENANTS
5.1 STOCKHOLDER APPROVAL BY RAYMONDVILLE. The sole shareholder of
Raymondville has heretofore approved this Agreement and the Merger transaction
herein described, and Raymondville and such sole shareholder covenant and agree
not to take any action to rescind or revoke such approval, nor shall either
Raymondville or such sole shareholder take any action that is not expressly
consistent with such approval. This Agreement and the proposed merger of Bank of
Texas with and into Texas State Bank have already been approved by the Board of
Directors of Raymondville as the sole shareholder of Bank of Texas.
5.2 PERIODIC REPORTS AND STATEMENT INFORMATION. Raymondville agrees to
provide any and all information as may be required by Texas Regional for
purposes of (i) preparation of any periodic report, including reports on Forms
8-K, 10-Q and 10-K required by applicable Securities and Exchange Commission
("SEC") regulations to be filed with the SEC, (ii) preparation of any
registration statement for the registration of the Texas Regional Class A Voting
Common stock to be issued in the connection with any pending transaction or any
transaction hereafter entered into by Texas Regional, and (iii) communications
with shareholders of Texas Regional pending the Closing (collectively, the
"Raymondville Information"). Raymondville hereby represents and warrants that
the Raymondville Informati6n shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading.
5.3 ACCESS. From and after the date of this Agreement, Raymondville shall
afford to the officers, attorneys, accountants and other authorized
representatives of Texas Regional full and free access to the properties, books,
contracts, commitments and records
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of Raymondville and its subsidiaries, including Bank of Texas, at all reasonable
times during business hours, and such representatives of Texas Regional shall be
furnished with true and complete copies of the same and with all other
information concerning the affairs of Raymondville and its subsidiaries as such
representatives may reasonably request.
5.4 ENVIRONMENTAL INSPECTION. Raymondville expressly agrees to supply
Texas Regional with historical and operational information regarding the real
properties owned or operated by, or used in connection with the operation of the
business of, Raymondville and its subsidiaries, including Bank of Texas, and any
premises heretofore used in connection with the operation of such business, and
any other properties included in the Real Property, including (but not limited
to) any environmental tests or surveys made of such properties. Raymondville
agrees to cooperate (and to cause its subsidiaries to cooperate) with any
reasonable request of Texas Regional related to site assessment or site review
related to any environmental matter or investigation, including making available
such personnel of Raymondville and Bank of Texas as Texas Regional may
reasonably request. At Texas Regional's discretion, Texas Regional may arrange
for one or more independent contractors to conduct tests of the Real Property
and any other premises now or heretofore used in connection with the business of
Raymondville and its subsidiaries in order to identify any presence of, or
present or past release or threatened release of, any waste materials or any
chemical substances, including, without limitation, any Environmental Hazards.
Any such test may be done at any time, or from time to time, upon reasonable
notice and under reasonable conditions, which do not impede the performance of
the tests. Such tests may include both above and below ground testing for
environmental damages or the presence of Environmental Hazards or Hazardous
Material Contamination or such other tests as Texas Regional may deem reasonably
necessary. Any and all costs of third parties associated with obtaining such
information shall be borne by Texas Regional. In the event Texas Regional
arranges for and causes such tests to be conducted, and if such tests indicate
the presence of Hazardous Material Contamination, Texas Regional shall be
entitled to terminate this Agreement by written notice to Raymondville without
further liability or obligation.
5.5 ACTION BY RAYMONDVILLE PRIOR TO CLOSING.
5.5.1 From and after the date of this Agreement until the Closing
Date, Raymondville will (and Raymondvllle will cause its subsidiaries,
including Bank of Texas, to):
(i) carry on its business in accordance with prudent banking
practices and in substantially the same manner as it is presently
conducted;
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(ii) maintain and keep its properties in as good repair and
condition as at present, except for depreciation due to ordinary wear and
tear and damage due to casualty, and not make or commit to make any
capital expenditure outside of the ordinary course of business and not
make or commit to make any capital expenditure (whether or not in the
ordinary course of business) in excess of $10,000 in any single
transaction and $25,000 in the aggregate;
(iii) maintain in full force and effect insurance comparable in
amount and in scope of coverage to that now maintained by it;
(iv) use its best efforts to perform all of its obligations under
contracts, leases and documents relating to or affecting its assets,
properties and business;
(v) use its best efforts to maintain and preserve its business
organization intact, to retain its present officers and employees and to
maintain its relationships with customers;
(vi) use its best efforts to fully comply with and perform all
obligations and duties imposed upon it by all federal and state laws and
all rules, regulations and orders imposed by federal or state governmental
authorities;
(vii) use its best efforts to maintain its books of account and
records in the usual, regular and orderly manner consistent with generally
accepted accounting principles and practices, consistently applied, and
prudent banking practices;
(viii) not issue or sell any additional shares of its stock or
securities convertible into shares of such stock or options or other
commitments for the issuance of shares of such stock or securities;
(ix) not increase in any manner the compensation of any of its
directors, officers or employees, or pay or agree to pay any pension or
retirement allowance not required by an existing plan or agreement, to any
such persons, or commit itself to any pension, retirement or
profit-sharing plan or arrangement or employment agreement for the benefit
of any officer, employee or other person;
(x) not declare or pay any dividend or make any stock split or
purchase or otherwise acquire for value any of its shares;
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(xi) not issue (without the prior consent of Texas Regional)
commitments for the future funding of loans at a fixed rate other than the
then prevailing market at the date of funding; and
(xii) not engage in any business practice which deviates in any
material respect from its customary practices during the last eighteen
months immediately preceding the date hereof.
5.5.2 Without limiting the foregoing, between the date hereof and
the date of Closing, Raymondville specifically covenants and agrees that
Raymondville will not incur (and will not permit its subsidiaries to incur) any
indebtedness other than deposit liabilities owed to deposit customers in the
ordinary course of business and trade accounts payable incurred in the ordinary
course of business. Raymondville will not incur (and will not permit its
subsidiaries to incur) significant expenses outside of the ordinary course of
business. In addition, neither Raymondville nor any subsidiary of Raymondville
will increase expenses in any material way (either individually or in the
aggregate), nor will Raymondville nor any subsidiary of Raymondville make any
changes in its capital structure.
5.5.3 Provided that seeking such approvals is in accordance with
applicable banking law and regulations, Raymondville covenants that neither it
nor any of its subsidiaries will make a fully collateralized loan, nor commit to
make a fully collateralized loan, in excess of $400,000 to any one borrower or
in any one transaction without the prior approval of Texas Regional, and neither
it nor any of its subsidiaries will make any other loan, nor commit to make any
other loan, in excess of $50,000 to any one borrower or in any one transaction
without the prior consent of Texas Regional.
5.5.4 Without limiting the generality of the foregoing, from and
after the date of this Agreement until the Closing Date, Raymondville covenants
that neither it nor any of its subsidiaries will sell or otherwise dispose of
any of their real or personal property without the prior written consent of
Texas Regional.
5.5.5 Without limiting the generality of the foregoing, from and
after the date of this Agreement until the Closing Date, Raymondvilie
specifically covenants and agrees neither it nor any of its subsidiaries will
acquire any United States Treasury or government agency bonds, or municipal
securities, or make other investments in securities, with fixed rates or with
maturities of greater than three years from the date of investment. In addition,
Raymondville covenants and agrees that neither it nor any of its subsidiaries
will enter into any forward commitment to acquire any such securities.
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5.5.6 From and after the date of this Agreement until the Closing
Date, Raymondville will not, and will not permit any of its subsidiaries to, (i)
permit any change to be made in the Articles of Incorporation or Bylaws of
Raymondville or any subsidiary thereof, or (ii) take any action described in
Section 2.10 herein, without the prior written consent of Texas Regional.
5.6 TERMINATION OF EMPLOYMENT ARRANGEMENTS. At or prior to Closing,
Raymondvllle will terminate (without liability or penalty to Raymondville, any
subsidiary of Raymondvllle, Texas Regional, any subsidiary of Texas Regional, or
any other person or entity) any existing employee severance, deferred
compensation and incentive compensation agreements or arrangements, and any
other contracts with employees, and shall terminate, in a manner acceptable to
Texas Regional, any other employee benefit plans, including any employee stock
ownership plan.
5.7 CONTEMPORANEOUS TRANSACTION. The parties hereto acknowledge that,
contemporaneously with the transaction herein described, Texas Regional is
acquiring additional banking organizations, including specifically but without
limitation Brownsville Bancshares, Inc. and its subsidiary, Brownsville National
Bank, and TB&T Bancshares, Inc., and its subsidiary, Texas Bank & Trust Co., and
the parties acknowledge and agree that any filings with regulatory authorities,
filings with the Securities and Exchange Commission, proxy statements, financial
information and other business activities in connection with the transaction
herein described may include information related to such other pending
acquisition(s). Notwithstanding that such other pending acquisition(s) may be
proceeding on the same timetable as the transaction herein described, Texas
Regional's obligations hereunder are not contingent upon the closing of such
other pending acquisition(s).
ARTICLE 6
CONDITIONS TO OBLIGATIONS OF TEXAS REGIONAL
In addition to any other condition herein described as a condition to the
obligations of Texas Regional under this Agreement, the obligations of Texas
Regional under this Agreement are subject, in the discretion of Texas Regional,
to the satisfaction at or prior to the Closing Date of each of the following
conditions:
6.1 COMPLIANCE WITH REPRESENTATIONS. The representations and warranties
made by Raymondville in this Agreement shall have been true when made and,
except for changes
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as contemplated herein, shall be true at the Closing Date with the same force
and effect as if such representations and warranties were made at and as of the
Closing Date, and Raymondville shall have performed or complied with all
covenants and conditions required by this Agreement to be performed or complied
with by it prior to or a~ the Closing. Texas Regional shall have been furnished
with a certificate, signed by the President of Raymondville in his capacity as
such and dated the Closing Date, and a certificate, signed by the President of
Raymondville in his capacity as such and dated the Closing Date, in each case to
the foregoing effect.
6.2 STOCKHOLDER APPROVAL. The shareholders of Raymondville shall have
approved the transaction pursuant to a unanimous consent in lieu of special
meeting of the shareholders, and Raymondville shall have delivered to Texas
Regional a certificate signed by the President and Secretary of Raymondville in
his or her capacity as such, confirming the approval of this transaction by the
unanimous action of the shareholders of Raymondville.
6.3 REGULATORY APPROVALS. Texas Regional shall have received approval of
the transactions contemplated by this Agreement including the merger of TRA
with and into Raymondville, and the merger of Bank of Texas with and into Texas
State Bank, from all necessary governmental agencies and authorities, including
the Texas Banking Department and the Federal Reserve Board, and such approvals
and transactions contemplated hereby shall not have been contested by any
federal or state governmental authority nor by any other third party by formal
proceeding. It is understood that, if any contest as aforesaid is brought by
formal proceedings, Texas Regional may, but shall not be obligated to, answer
and defend such contest.
6.4 LITIGATION. On the Closing Date, there shall not be any litigation,
investigation, inquiry or proceeding pending or threatened in or by any court or
governmental agency or authority which might result in action to restrain9
enjoin or prohibit consummation of the transaction contemplated by this
Agreement or which might result in divestiture, rescission or damages in
connection with such transactions or involving any of the assets, properties,
business or operations of Raymondville or any of its subsidiaries which might
result in any material adverse change in the financial condition, results of
operations, business or prospects of Raymondville or any of its subsidiaries.
Texas Regional shall have been furnished with a certificate, dated the Closing
Date and signed by the President of Raymondville and each of its subsidiaries,
to the effect that no such litigation, investigation, inquiry or proceeding is
pending, or, to the best of his or her knowledge, threatened.
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6.5 OPINION OF COUNSEL. Prior to closing, Raymondville shall deliver to
Texas Regional the opinion of Raymondville's counsel, in form and content
satisfactory to Texas Regional, to the effect that
(i) Raymondvilie is a duly organized, validly existing and in good
standing as a corporation under the laws of the state of Texas, is
registered as a bank holding company under applicable regulations and
requirements of the Federal Reserve Board, and has full power and
authority to carry on its business as presently conducted;
(ii) the authorized capital stock of Raymondville consists of
1,000,000 shares of capital stock, par value of $1.00 per share, of which
a total of 49,991 shares are issued and outstanding, and that those shares
which are issued and outstanding have been validly issued, are fully paid
and nonassessable, and there are no options, warrants, conversion or other
rights, agreements or commitments of any kind obligating Raymondville to
issue or sell any shares of its capital stock of any class, or securities
convertible into or exchangeable for any such shares are outstanding, and
no authorization therefor has been given;
(iii) Bank of Texas is a duly organized, validly existing and in
good standing as a banking association under the laws of the State of
Texas, and has full power and authority to carry on its business as
presently conducted;
(iv) the authorized capital stock of Bank of Texas consists of
63,331 shares of capital stock, par value of $5.00 per share, of which all
63,331 shares are validly issued, fully paid, nonassessable, and owned
beneficially and of record by Raymondville and no options, warrants,
conversion or other rights, agreements or commitments of any kind
obligating Bank of Texas to issue or sell any shares of its capital stock
of any class, or securities convertible into or exchangeable for any such
shares, are outstanding, and no authorization therefor has been given;
(v) this Agreement has been duly authorized by all necessary
corporate action on the part of Raymondville, its directors and
shareholders, and this Agreement constitutes the valid and binding
obligation of Raymondville enforceable in accordance with its terms except
as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws affecting the rights of
creditors generally;
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(vi) this Agreement and the consummation of the transaction herein
described do not and will not violate, conflict with or constitute a
breach of any term, condition, or provision of the Articles of
Incorporation or Bylaws of Raymondville, the Articles of Association or
Bylaws of Bank of Texas, or, to the best knowledge and belief of such
counsel, any agreement or instrument to which Raymondville or Bank of
Texas is a party or is bound, or any law, regulation, judgment or order
binding on any of them; and
(vii) the merger of Bank of Texas with and into Texas State bank
has been duly authorized by all necessary corporate action on the part of
Bank of Texas, its directors and shareholders, and the consummation of the
merger of Bank of Texas with and into Texas State Bank will not violate,
conflict with or constitute a breach of any term, condition, or provision
of the Articles of Association or Bylaws Bank of Texas, or, to the best
knowledge and belief of such counsel, any agreement or instrument to which
Raymondville or Bank of Texas is a party or is bound, or any law,
regulation, judgment or order binding on any of them.
6.6 DUE DILIGENCE REVIEW; NO MATERIAL ADVERSE CHANGE. Texas Regional and
its employees, agents, attorneys, accountants and other representatives shall be
entitled to review and monitor the assets, liabilities, business and prospects
of Raymondville and its subsidiaries during the period from the date hereof to
the time of Closing. Texas Regional shall be entitled to terminate this
transaction at its sole option and at any time prior to Closing if the results
of such review reflect a material adverse change in the condition, financial
position or business prospects of Raymondville or any of its subsidiaries.
6.7 CONSENTS, APPROVALS AND ESTOPPEL CERTIFICATES. Texas Regional shall
have received all such consents, approvals, estoppel certificates and other
assurances, in each case in form and content reasonably satisfactory to Texas
Regional, from any party to an agreement with Raymondville or any of its
subsidiaries, or by which Raymondville or any of its subsidiaries is bound as a
result of an order of any authority, or pursuant to any other legal requirement.
Without limiting the generality of the foregoing, Texas Regional shall have
received consents and estoppel certificates from each landlord of Raymondville
or any subsidiary of Raymondville and from each tenant of any of them,
consenting (if Texas Regional deems such consent necessary) to the transfer by
operation of law of any outstanding lease or rental agreement, attesting to the
validity of each lease to which Raymondville or any subsidiary is a party, the
fact that no default exists (or which could with
-27-
the passage of time or notice could exist) under the lease, and providing for
such other matters as may be deemed advisable to Texas Regional.
6.8 NET WORTH OF RAYMONDVILLE AND BANK OF TEXAS. The net worth of
Raymondville, calculated in accordance with applicable regulatory requirements,
shall be not less than the sum of $4,798,000, increased by $25,000 per month for
each month elapsed during the period from October 31, 1997, until the date of
Closing. The net worth of Bank of Texas, calculated in accordance with
applicable regulatory requirements, shall be not less than the sum of
$5,052,911, increased by $25,000 per month for each month elapsed during the
period from October 31, 1997, until the date of Closing.
6.9 FAIRNESS OPINION. Texas Regional shall have received a fairness
opinion, in form and content acceptable to Texas Regional in its sole
discretion, and rendered by a firm acceptable to Texas Regional in its sole
discretion, as to the fairness of the transaction to Texas Regional and the
shareholders of Texas Regional.
6.10 COVENANT NOT TO COMPETE. Texas Regional shall have entered into a
covenant not to compete with ▇▇▇▇▇ ▇▇▇▇▇▇▇, in the form attached hereto as
Schedule 6.11, in consideration of the payment by Texas Regional to ▇▇▇▇▇
▇▇▇▇▇▇▇ of consideration consisting of $100,000 cash payable at the time of
Closing.
ARTICLE 7
CONDITIONS TO OBLIGATIONS OF RAYMONDVILLE
The obligations of Raymondville under this Agreement are subject, in the
discretion of Raymondville, to the satisfaction at or prior to the Closing Date,
of each of the following conditions:
7.1 COMPLIANCE WITH REPRESENTATIONS. The representations and warranties
made by Texas Regional in this Agreement shall have been true when made and,
except as may otherwise be contemplated or permitted herein, shall be true as of
the Closing Date with the same force and effect as if such representations and
warranties were made at and as of the Closing Date, and Texas Regional shall
have performed or complied with all covenants and conditions required by this
Agreement to be performed or complied with by it prior to or at the Closing.
Raymondville shall have been furnished with a certificate dated the
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Closing Date, signed by the President of Texas Regional, in his capacity as
such, to the foregoing effect.
7.2 REGULATORY APPROVALS. Texas Regional shall have received approval of
the transactions contemplated by this Agreement, including the merger of TRA
with and into Raymondville, and the merger of Bank of Texas with and into Texas
State Bank, from all necessary governmental agencies and authorities, including
the Texas Banking Department and the Federal Reserve Board, and such approvals
and transactions contemplated hereby shall not have been contested by any
federal or state governmental authority nor by any other third party by formal
proceeding. It is understood that, if any contest as aforesaid is brought by
formal proceedings, Texas Regional may, but shall not be obligated to, answer
and defend such contest.
7.3 LITIGATION. On the Closing Date, there shall not be any litigation,
investigation, inquiry or proceeding pending or threatened in or by any court or
governmental agency or authority which might result in action to restrain,
enjoin or prohibit consummation of the transactions contemplated by this
Agreement or which might result in divestiture, rescission or damages in
connection with such transactions and Raymondville shall have been furnished
with a certificate, dated the Closing Date and signed by the President of Texas
Regional, in his capacity as such, to the effect that no litigation,
investigation, inquiry or proceeding is pending, or, to the best of his
knowledge, threatened.
7.4 OPINION OF COUNSEL. Prior to closing, Texas Regional shall deliver to
Raymondvilie the opinion of Texas Regional's counsel, in form and content
satisfactory to Texas Regional, to the effect that
(i) Texas Regional is a duly organized, validly existing and in good
standing as a corporation under tile laws of the state of Texas, is
registered as a bank holding company under applicable regulations and
requirements of the Federal Reserve Board, and has full power and
authority to carry on its business as presently conducted;
(ii) Texas State Bank is a duly organized, validly existing and in
good standing as a banking association under the laws of the State of
Texas, and has full power and authority to carry on its business as
presently conducted;
(iii) this Agreement has been duly authorized by all necessary
corporate action on the part of Texas Regional, and its directors, and
this Agreement constitutes the valid and binding obligation of Texas
Regional, enforceable in
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accordance with its terms except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other similar laws
affecting the rights of creditors generally; and
(iv) this Agreement and the consummation of the transaction herein
described do not and will not violate, conflict with or constitute a
breach of any term, condition, or provision of the Articles of
Incorporation or Bylaws of Texas Regional, the Articles of Association or
Bylaws of Texas State Bank, or, to the best knowledge and belief of such
counsel, any agreement or instrument to which Texas Regional or Texas
State Bank is a party or is bound, or any law, regulation, judgment or
order binding on any of them.
7.5 COVENANT NOT TO COMPETE. Texas Regional shall have entered into a
covenant not to compete with ▇▇▇▇▇ ▇▇▇▇▇▇▇, in the form attached hereto as
Schedule 6.11, in consideration of the payment by Texas Regional to ▇▇▇▇▇
▇▇▇▇▇▇▇ of consideration consisting of $100,000 cash payable at the time of
Closing.
ARTICLE 8
CLOSING OBLIGATIONS
8.1 TEXAS REGIONAL OBLIGATIONS. AT THE CLOSING, TEXAS REGIONAL SHALL
DELIVER THE following:
8.1.1 Articles of Merger, in the form required to be delivered for
filing with the Secretary of State of Texas, pursuant to applicable
provisions of the Texas Business Corporation Act, providing for the merger
of TRA with and into Raymondvllle.
8.1.2 Officer's Certificate, including an incumbency certification
and further certifying as to the existence and good standing of Texas
Regional, the accuracy of all representations and warranties of Texas
Regional, the approval by the Board of Directors of Texas Regional, and
Texas Regional as the sole shareholder of TRA, of resolutions authorizing
and approving the merger transaction.
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8.1.3 Delivery to the sole shareholder of Raymondville cash
consideration in the amount of $9,100,000 as required by section 1.2 of
this Agreement and evidence, in the form of a safekeeping receipt, that
Texas State Bank, Trust Department is holding an additional aggregate
amount of $500,000.00. The ▇▇▇▇▇▇ Escrow account to be held and disbursed
pursuant to Section 9.11 of this Agreement.
8.1.4 An opinion of Texas Regional's counsel in form and substance
required by this Agreement and otherwise acceptable to Raymondville.
8.1.5 A Covenant Not To Compete executed by Texas Regional in the
form of Schedule 6.11 attached hereto and incorporated herein by this
reference for all relevant purposes.
8.2 RAYMONDVILLE OBLIGATIONS. At the Closing, Raymondville shall deliver
the following to Texas Regional:
8.2.1 Articles of Merger, in the form required to be delivered for
filing with the Secretary of State of Texas, pursuant to applicable
provisions of the Texas Business Corporation Act, providing for the merger
of TRA with and into Raymondville.
8.2.2 Officer's Certificates of Raymondville and Bank of Texas,
including an incumbency certification in each case, and further certifying
as to the existence and good standing of each entity, the accuracy of all
representations and warranties of Raymondville, the approval by the Board
of Directors of each of Raymondville and Bank of Texas, and by the sole
shareholder of Raymondville, and by Raymondville as the sole shareholder
of Bank of Texas, in each case authorizing and approving the transaction.
8.2.3 Certificates of Existence and Good Standing of each of
Raymondville (issued by the Secretary of State of Texas) and Bank of Texas
(issued by the Texas Department of Banking) in each case dated as of a
date not more than three days prior to the Closing.
8.2.4 Certificate of Good Standing of each of Raymondville (issued
by the Texas Comptroller of Public Accounts) and Bank of Texas (issued by
the Texas Comptroller of Public Accounts), in each case dated as of a date
not more than three days prior to the Closing.
8.2.5 Certificates of adoption of appropriate resolutions,
Certificates of Merger, Articles of Merger and other documents as may be
required by
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Texas Regional to effect the merger of Bank of Texas with and into Texas
State Bank.
8.2.6 An opinion of Raymondville's counsel in form and substance
required by this Agreement and otherwise acceptable to Texas Regional.
8.2.7 A Covenant Not To Compete executed by ▇▇▇▇▇ ▇▇▇▇▇▇▇ in the
form of Schedule 6.11 attached hereto and incorporated herein by this
reference for all relevant purposes.
ARTICLE 9
MISCELLANEOUS
9.1 SURVIVAL OF REPRESENTATION AND WARRANTIES. The representations and
warranties contained in this Agreement shall survive any investigation of the
parties hereto, but shall not survive the Closing of the transaction
contemplated hereby except as specifically provided in this section 9.1. The
only representations and warranties which will survive the closing are the
representations and warranties contained in sections 9.11 of this Agreement.
9.2 BROKERS. Texas Regional and Raymondville agree that no third party has
in any way brought the parties together or been instrumental in the making of
this Agreement. Each of Texas Regional and Raymondvilie agrees to indemnify the
other against any claim by any third person for any commission, brokerage or
finder's fee, or other payment with respect to this Agreement, the merger of
Bank of Texas with and into Texas State Bank, or the transactions contemplated
hereby and thereby based on any alleged agreement or understanding between such
party and any third person, whether express or implied from the actions of such
party.
9.3 EXPENSES. Whether or not the transactions provided for herein are
consummated, each party to THIS Agreement WILL pay its respective expenses
incurred in connection with the preparation and performance of this Agreement,
except that, IN the event that the transactions herein described are not
consummated, other than AS a result of a default by Raymondville or ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, and other than a termination by Texas Regional as a result of a breach
of a representation, warranty or covenant made by Raymondville pursuant to this
Agreement, Texas Regional shall pay additional required
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audit expense of Raymondville, in an amount not to exceed $30,000.00, related to
the audit of the financial statements of Bank of Texas and its subsidiaries.
9.4 NOTICES. Any notice given hereunder shall be in writing and shall be
deemed delivered on the earlier of actual receipt or the time of deposit in the
United States mail, by registered or certified mail, return receipt requested,
postage prepaid, addressed to the party to whom such notice is to be sent at the
following addresses:
If to Texas Regional or to Texas State Bank, then to:
Texas Regional Bancshares, Inc.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇ Chairman of the Board
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇ Center
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
If to Raymondville, Bank of Texas or to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, then to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
9.5 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their respective successors and assigns, and, to
the extent required by Section 43, the directors, officers and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, but shall not be assigned by any party without the prior written consent
of the other party.
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9.6 ARTICLE AND OTHER HEADINGS. Article and other headings contained in
THIS Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
9.7 ENTIRE AGREEMENT. This Agreement embodies the entire agreement between
the parties with respect to the subject matter hereof, and supersedes all prior
arrangements, understandings, agreements or covenants between the parties. This
Agreement may only be modified by an instrument in writing executed by both
Texas Regional and Raymondville.
9.8 WAIVERS. Texas Regional or Raymondville may, by an instrument in
writing, extend the time for or waive the performance of any of the obligations
of the other or waive compliance with any of the covenants or conditions
contained in this Agreement.
9.9 GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Texas applicable to contracts made and to be performed therein.
9.10 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts shall together constitute but one and the same instrument.
9.11 JOINDER BY SOLE SHAREHOLDER OF RAYMONDVILLE. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, who
executes this Agreement as the sole shareholder of Raymondville (herein referred
to as "▇▇▇▇▇▇"), hereby joins into the execution of this Agreement to evidence
his consent to and approval of the transaction herein described and to evidence
his qualified agreement to reimburse Texas State Bank for certain losses as
herein described. ▇▇▇▇▇▇ represents to Texas Regional (i) that he owns all of
the outstanding common stock of Raymondville; (ii) that he, as the sole
shareholder of Raymondville common stock, is the only person entitled to
consider and vote on the transaction described in this Agreement and Plan of
Reorganization and that he has heretofore approved the transaction as herein
described; (iii) that he has the full power and authority to enter into and
perform this Agreement; and (iv) that Texas Regional is relying upon the
covenants and agreements contained in this paragraph in executing and entering
into the Agreement and Plan of Reorganization. ▇▇▇▇▇▇ specifically agrees to
take any and all additional corporate action as may be necessary to approve the
transaction herein described. In addition, ▇▇▇▇▇▇ represents, warrants and
agrees that:
a. To the best of ▇▇▇▇▇▇'▇ knowledge, Bank of Texas has disclosed to
Texas Regional any and all information available to it in the context of
the Casa de Cambio Tamibe, S.A. de C.V. ("Tamibe") deposit relationship at
Bank
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of Texas, and, according to such information, all charge backs on Tamibe
accounts at Bank of Texas of stolen and/or forged United States Postal
Service money orders have been fully paid by Tamibe and Bank of Texas has
not heretofore suffered any loss related thereto.
b. Bank of Texas is presently holding two certificates of deposit
deposited on behalf of Tamibe in the amount of $200,000 and $50,000,
respectively, pursuant to an Agreement in Regard to Check Processing by
and between Bank of Texas, Tamibe and ▇▇▇▇▇ del ▇▇▇▇▇ ▇▇▇▇▇▇ Gaya,
individually and as chairman of Tamibe. Such agreement permits Bank of
Texas to offset losses in the Tamibe accounts, as therein provided. Bank
of Texas has delivered a true, correct and complete copy of the Agreement
in Regard to Check Processing to Texas Regional, which copy has been
marked for identification by Texas Regional and ▇▇▇▇▇▇. The Agreement in
Regard to Check Processing described in this paragraph shall survive the
merger of Bank of Texas with and into Texas State Bank and will inure to
the benefit of Texas State Bank (and ▇▇▇▇▇▇ in the event of a loss
sustained by Texas State Bank that is reimbursed by ▇▇▇▇▇▇ as provided
herein) following the closing of the transaction described in this
Agreement and Plan of Reorganization.
▇. ▇▇▇▇▇▇ hereby agrees that he will have contingent liability to
reimburse Texas State Bank for a portion of future losses, if any,
suffered by Texas State Bank as successor in interest to Bank of Texas, as
a result of charge backs or other claims made arising out of stolen and/or
forged United States Postal Service money orders or other items charged
back against deposits made by Tamibe or on its behalf into accounts at
Bank of Texas prior to December 10, 1997, provided that Texas State Bank
has complied with the terms and provisions of its obligations pursuant to
this section 9.11.
In this connection, it is understood and agreed that at the time of
closing of the transaction described in this Agreement, Texas State Bank,
Trust Department, acting as escrow agent as specified in section 1.2.1
hereof, will be delivered funds by TRD in the amount of $500,000, which
are to be held and which are, subject to the rights of Texas Regional and
▇▇▇▇▇▇ upon the occurrence of certain contingencies described in this
section 9.11. This is the account defined in section 12.1 as the "▇▇▇▇▇▇
Escrow Account." Texas State Bank, Trust Department shall cause the funds
in the ▇▇▇▇▇▇ Escrow Account to be held in an account or accounts bearing
interest at the rate of six percent (6%) per annum, with such interest
being payable to ▇▇▇▇▇▇ on a monthly basis.
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Funds shall be disbursed pursuant to, and the contingent liability of
▇▇▇▇▇▇ pursuant to this provision is subject to, the following:
(1) If any losses are sustained by Texas State Bank following
closing as a result of deposits made by Tamibe prior to December 10, 1997,
such losses shall first be paid out of funds on deposit by Tamibe which
have been left in the general clearing account of Tamibe in the manner
provided by the Agreement With Regard to Check Processing between Tamibe
and Bank of Texas as herein described;
(2) To the extent that Texas State Bank sustains losses in excess of
amounts remaining in the Tamibe general clearing account as herein
described, such losses shall be paid first out of the certificates of
deposit described herein obtained by Bank of Texas in the total amount of
$250,000;
(3) If losses are sustained by Texas State Bank as a result of
deposits made on or before December 10, 1997, by Tamibe in excess of the
funds in the general clearing account of Tamibe and in excess of the
$250,000 contained in the certificates of deposit referred to herein, such
losses shall be paid out of the ▇▇▇▇▇▇ Escrow Account referred to herein,
up to the aggregate additional amount of $250,000,
(4) If losses are sustained by Texas State Bank in excess of
$500,000 in addition to the funds contained in the Tamibe general clearing
account based upon prior deposits made by Tamibe in Bank of Texas on or
before December 10, 1997, such losses shall be shared equally by ▇▇▇▇▇▇
and Texas State Bank, up to a maximum additional sum of $500,000, with
$250,000 being paid out of funds remaining in the aforesaid ▇▇▇▇▇▇ Escrow
Account referred to herein and Texas State Bank incurring unreimbursed
losses for all additional sums which relate to deposits previously made by
Tamibe.
(5) The maximum exposure to ▇▇▇▇▇▇ for deposits made by Tamibe
pursuant to this section 9.11 as a result of the Tamibe account as
referred to herein following the closing of this transaction shall be the
sum of $500,000, and all of such
-36-
losses shall be paid by Texas State Bank by offsetting such losses against
the ▇▇▇▇▇▇ Escrow Account established at the time of closing of this
transaction as described herein, provided that it is acknowledged and
agreed that Texas Regional and Texas State Bank shall be deemed for all
purposes to have rights and interests in such ▇▇▇▇▇▇ Escrow Account that
are superior to those of ▇▇▇▇▇▇ in the amount of any losses on Tainibe
accounts incurred by Texas State Bank which arc to be reimbursed from the
▇▇▇▇▇▇ Escrow Account to the extent of the contingent liability assumed by
▇▇▇▇▇▇ pursuant to this Section 9.11.
(6) Following the closing of this transaction, subject to Texas
State Bank and Texas Regional being provided with a written consent from
Tamibe permitting such disclosure, ▇▇▇▇▇▇ shall be advised in writing
promptly upon receipt of the item (but not less often than weekly) of any
lost, stolen or forged items previously deposited by Tamibe into the Bank
of Texas prior to December 10,1997, which Texas State Bank proposes to
fund by offsetting the account balances of Tainibe in its clearing
accounts, the certificates of deposit deposited by Tamibe or the ▇▇▇▇▇▇
Escrow Account described in this paragraph. Provided that written consent
has been obtained from Tamibe as herein provided to permit ▇▇▇▇▇▇ to have
access to such information, ▇▇▇▇▇▇ shall be entitled to information
related to Tamibe's account balances and account activity for purposes of
monitoring compliance by Tamibe with the Agreement With Regard to Check
Processing referred to herein. After receipt of such notice, ▇▇▇▇▇▇ shall,
to the extent permitted by law and Texas State Bank collection practices,
be afforded five (5) working days to object to the return of any item and
at all times ▇▇▇▇▇▇ shall be afforded the right to inspect documentation
of any proposed return item;
(7) Pursuant to this Agreement, ▇▇▇▇▇▇ and Texas State Bank shall
each have the right, at such party's own expense, to pursue collection
efforts against ▇▇▇▇▇ del ▇▇▇▇▇ ▇▇▇▇▇▇ Gaya by reason of her unconditional
guarantee of the relationship between Bank of Texas and Tamibe as referred
to herein. If either party elects not to pursue such collection
-37-
efforts, the other shall be entitled nonetheless to pursue such collection
efforts on his or its own behalf. Each party shall bear its own expenses
in pursuing any such collection efforts.
(8) The term of the ▇▇▇▇▇▇ Escrow Account to be purchased at closing
pursuant to section 1.2.1 above shall be for a period beginning on the
date of closing and continuing until January 10, 2000. Any money remaining
in the ▇▇▇▇▇▇ Escrow Account as of January 10, 2000, shall be paid to
▇▇▇▇▇▇ and Texas State Bank, TRD, and Texas Regional shall be deemed for
all purposes to have discharged their obligation to pay such funds to
▇▇▇▇▇▇ pursuant to this Agreement, Including section 12 hereof by such
payment to ▇▇▇▇▇▇; and
(9) During the period of this Agreement, neither ▇▇▇▇▇▇ nor his
heirs, executors, assigns, designees or nominees will have any right to
exercise any dominion, control or possession over the funds in the ▇▇▇▇▇▇
Escrow Account held by Texas State Bank Trust Department pursuant to this
provision. Texas State Bank and Texas Regional shall have the sole right
to exercise dominion, control and possession over the aforesaid ▇▇▇▇▇▇
Escrow Account, subject to the terms of this Agreement.
d. The agreement contained in this section 9.11 shall survive any
investigation made by or on behalf of any party. In the event of any
disputed claim for reimbursement under this section 9.11, the claim shall
be submitted to binding arbitration within thirty (30) days of the request
by either the party or parties claiming reimbursement or the party or
parties against whom the reimbursement obligation is claimed, each of whom
shall select a qualified, commercial arbitrator. The two arbitrators so
selected shall in turn select a third arbitrator who shall participate
with the two arbitrators selected by the parties as an arbitration panel.
The arbitrators shall in each case be qualified in arbitrating matters
such as the disputed claim for reimbursement, and they shall arbitrate the
dispute in accordance with applicable Commercial Arbitration Rules of the
American Arbitration Association. Any ruling rendered by the arbitrators
shall be final, binding and conclusive. No provision of, nor the exercise
of any rights under, this article shall limit the right of any party, and
the parties shall have the right during any dispute, to seek, use and
-38-
employ ancillary or preliminary remedies, either legal or equitable,
judicial or otherwise, for the purposes of realizing upon, preserving or
protecting rights hereunder. To the extent permitted by applicable law,
the arbitrator(s) shall have the power to award and allocate recovery of
all costs and fees (including attorneys' fees, administrative fees and
arbitrators' fees) between the parties. THE PARTIES WILL BE LEGALLY
OBLIGATED TO ABIDE BY THE AWARD RENDERED BY THE ARBITRATOR(S). A COURT
JUDGMENT MAY BE ENTERED UPON THE AWARD OR SUCH AWARD MAY BE ENFORCED BY
INJUNCTIVE RELIEF, RECEIVERSHIP RELIEF, OR OTHER EQUITABLE RELIEF.
e. The obligations of ▇▇▇▇▇▇ described in this section 9.11 shall be
binding upon ▇▇▇▇▇▇'▇ heirs, legal representatives, successors and
assigns.
The representations, warranties and covenants of ▇▇▇▇▇▇ contained in this
section 9.11 shall be deemed remade as of the time of closing of the transaction
herein described and shall survive the closing of the transaction described in
this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.
TEXAS REGIONAL BANCSHARES, INC.
BY: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇,
Chairman of the Board
ATTEST:
/s/ ▇▇▇ ▇▇▇▇▇▇
Secretary
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RAYMONDVILLE BANCORP, INC.
ATTEST: By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Chairman of the Board
SECRETARY
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
as the sole shareholder of
Raymondville Bancorp, Inc.
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