EXHIBIT 2.03
AMENDMENT NUMBER TWO TO
REORGANIZATION AGREEMENT
THIS AMENDMENT NUMBER TWO TO REORGANIZATION AGREEMENT is made and entered
into this 29th day of February, 1996 by and between FIRST MIDLOTHIAN
CORPORATION, a Texas corporation located in Midlothian, Texas ("First
Midlothian"); FIRST NATIONAL BANK, a national banking association located in
Midlothian, Texas ("First Bank"); all those individuals who have subscribed
their names hereto individually and as a director (hereinafter referred to
singly as a "Director" and collectively as the "Directors"); SURETY BANK,
NATIONAL ASSOCIATION, a national banking association located in Lufkin, Texas
("Surety Bank"); and SURETY CAPITAL CORPORATION, a Delaware corporation located
in Hurst, Texas ("Surety") (sometimes collectively referred to herein as the
"parties").
WHEREAS, the parties have agreed to amend the October 17, 1995
Reorganization Agreement by and between First Midlothian, First Bank, the
Directors, Surety Bank and Surety, as same was amended by AMENDMENT NUMBER ONE
TO REORGANIZATION AGREEMENT made and entered into on the 16th day of January,
1996, (collectively the "Reorganization Agreement"), as set forth herein;
NOW THEREFORE, for and in consideration of the covenants, terms and
conditions of the Reorganization Agreement and the mutual benefits to the
parties established by this Amendment Number Two to Reorganization Agreement,
the parties agree that the following sections of the Reorganization Agreement
are hereby amended as follows:
1. SECTION 7 - CONDITIONS TO SURETY AND SURETY BANK'S OBLIGATIONS
SHALL BE AMENDED TO ADD A SUBSECTION (k) TO READ IN FULL AS FOLLOWS:
(k) LOAN LOSS RESERVE AND REO PRE-CLOSING ADJUSTMENTS. Immediately
prior to closing its books for the consummation of the transactions
contemplated by this Plan and the Merger Agreements, First Bank shall make
certain adjustments to its loan loss reserves and its ORE property as more
particularly set forth in the letter dated February 29, 1996 from Surety to
First Bank, a copy of which is attached hereto as SCHEDULE 7(K) and
incorporated herein for all purposes (such adjustments to be hereafter
referred to as the "Pre-Closing Loan Loss/REO Adjustments").
2. SECTION 12(a) IS REVISED TO READ IN FULL AS FOLLOWS:
(a) The Directors, each in their individual and representative
capacity, jointly and severally, shall be responsible for all federal,
state, and local income, franchise, and other tax liabilities of
either First Midlothian or First Bank for all periods prior to the
consummation of the Mergers and for solely federal income and Texas
franchise tax liabilities that are incurred by
Surety, Surety Bank, Newco, First Midlothian, or First Bank as a
result of any of the transactions contemplated by the Mergers and/or
the subsequent liquidation of First Midlothian being held to be a
taxable acquisition or disposition of assets or other taxable
transaction (collectively the "Tax Liabilities"); PROVIDED HOWEVER,
that the foregoing definition of Tax Liabilities shall not include Tax
Liabilities that are directly attributable to the utilization by
Surety or Surety Bank for tax purposes of the Pre-Closing Loan
Loss/REO Adjustments as carry-back items to a tax period ending prior
to the consummation of the Mergers or from the utilization of the Pre-
Closing Loan Loss/REO Adjustments in the current tax period.
3. SECTION 12(i) IS REVISED TO READ IN FULL AS FOLLOWS:
(i) Surety, as the parent of that group of affiliate companies
filing a federal consolidated income tax return, and as the party
responsible for the filing or causing to be filed any Texas franchise
tax returns for itself or for its affiliates, shall be obligated to
pay to the shareholders of First Midlothian any decrease in federal
income taxes or Texas franchise tax realized by Surety and its
affiliates because of either an audit adjustment, amended tax return
or claim for refund that is directly attributable to the activities of
First Midlothian and/or First Bank for the pre-merger period for which
such shareholders have not been previously compensated; PROVIDED
HOWEVER, that such pre-merger period decreases in federal income taxes
or Texas franchise tax for which such shareholders shall be
compensated under the foregoing shall not include any pre-merger
decreases directly attributable to the utilization by Surety of the
Pre-Closing Loan Loss/REO Adjustments. If statutory interest is
received by Surety in connection with such audit adjustment, amended
tax return, or claim for refund, this amount shall also be paid to
such shareholders, except to the extent directly attributable to
Surety's utilization of the Pre-Closing Loan Loss/REO Adjustments.
Any amounts owed to the shareholders of First Midlothian shall be paid
within fifteen (15) days of Surety's receipt of same.
4. Except as specifically amended by this Amendment Number Two to
Reorganization Agreement, the Reorganization Agreement by and between the
parties shall remain in full force and effect.
IN WITNESS WHEREOF, each of the parties hereto has caused this Plan to be
signed in counterparts all as of the date first above written.
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FIRST MIDLOTHIAN CORPORATION,
a Texas corporation
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx, Vice President
FIRST NATIONAL BANK,
a national banking association
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx, Chairman
/s/ Xxxxxx Xx Xxxxx
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Xxxxxx Xx Xxxxx, Individually and as a Director of
First Midlothian Corporation and First National
Bank
/s/ Xxxxxxx X. Xxxxx
------------------------------------------------
Xxxxxxx X. Xxxxx, Individually and as a Director
of First Midlothian Corporation and First National
Bank
/s/ X. X. Xxxxxxxxxx, Xx.
------------------------------------------------
X. X. Xxxxxxxxxx, Xx., Individually and as a
Director of First Midlothian Corporation and First
National Bank
/s/ Xxx X. Xxxxxxx
------------------------------------------------
Xxx X. Xxxxxxx, Individually and as a Director of
First Midlothian Corporation and First National
Bank
/s/ Xxxxx X. Xxxxxxx
------------------------------------------------
Xxxxx X. Xxxxxxx, Individually and as a Director
of First Midlothian Corporation and First National
Bank
-3-
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X. X. Xxxxxxx, Individually and as a Director of
First Midlothian Corporation and First National
Bank
/s/ X. X. Xxxxxxx
------------------------------------------------
X. X. Xxxxxxx, Individually and as a Director of
First Midlothian Corporation and First National
Bank
/s/ E. L. Xxxx
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E. L. Xxxx, Individually and as a Director of
First Midlothian Corporation and First National
Bank
SURETY BANK, NATIONAL ASSOCIATION,
a national banking association
By: /s/ Xxxxx X. Xxxxxxx
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Its: President
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SURETY CAPITAL CORPORATION,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxx
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Its: Senior Vice President
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