EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
FIRST AMERICAN FINANCIAL CORP.
AND
GUARANTY BANCSHARES, INC.
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made
and entered into effective as of April 23, 1999, by and between FIRST AMERICAN
FINANCIAL CORP. ("First American") and GUARANTY BANCSHARES, INC., ("Buyer"), and
provides as follows:
W I T N E S S E T H:
WHEREAS, Buyer desires to acquire all of the issued and outstanding
stock of First American through the merger of First American with and into a
subsidiary of Buyer (the "Merger');
WHEREAS, Buyer and First American believe that the Merger is in the
best interests of Buyer, First American and their respective shareholders;
WHEREAS, Buyer and First American desire to set forth the terms and
conditions of the Merger;
WHEREAS, the respective boards of directors of Buyer and First
American have approved this Agreement.
NOW THEREFORE, in consideration of the premises, First American and
Buyer hereby agree that a wholly owned subsidiary of Buyer shall be merged with
and into First American on the following terms and conditions:
SECTION 1: MERGER
(a) MERGER OF FIRST AMERICAN INTO SUBSIDIARY OF BUYER. Subject to the
terms and conditions of this Agreement, on the Closing Date (as defined herein),
a wholly-owned subsidiary of Buyer shall be merged with and into First American
pursuant to the provisions of and with the effect provided in Part Five of the
Texas Business Corporation Act (the "TBCA").
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(b) EFFECT OF MERGER. The specific Plan of Merger is set forth in
Exhibit A attached hereto and made a part hereof. The Merger shall have the
effects set forth in Part Five of the TBCA. On the Closing Date, First American
shall continue as the corporation surviving the Merger (the "Surviving
Corporation") which shall not be deemed to be a new corporation, and the
separate corporate existence of the subsidiary of Buyer shall cease. On the
Closing Date, all rights, title, and interests to all real and personal property
owned by First American and said subsidiary shall be allocated to the vested in
the Surviving Corporation without reversion or impairment, without further act
or deed, and without any transfer or assignment having occurred, but subject to
any existing liens or encumbrances thereon. On the Closing Date, all liabilities
and obligations of First American and said subsidiary shall be allocated to the
Surviving Corporation and the Surviving Corporation shall be the sole obligor
therefore. Thereafter, the Surviving Corporation shall be merged into Buyer.
(c) THE SURVIVING CORPORATION. The specific Plan of Merger is set
forth in Exhibit A attached hereto and made a part hereof. The established
office and facilities of First American shall continue as the office and
facilities of the Surviving Corporation. The Articles of Incorporation and
Bylaws of First American shall continue in effect as the Articles of
Incorporation and Bylaws of the Surviving Corporation until the same shall be
amended and changed as provided by law. The directors and officers of said
subsidiary shall continue as the directors and officers of the Surviving
Corporation until their respective successors are duly elected or appointed and
qualified in the manner provided in the Articles of Incorporation of the
Surviving Corporation or as otherwise provided by law.
(d) FINAL MERGER. Immediately after Closing, the Surviving
Corporation shall be merged with and into Buyer ("Continuing Company")
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under the charter and Articles of Incorporation of Buyer pursuant to the
provisions of, and with the effect provided in Article Five of the TBCA.
The Articles of Incorporation of Continuing Company shall be the
Articles of Incorporation of Buyer. Until altered, amended or repealed as
therein provided and in the Articles of Incorporation of Continuing Company, the
Bylaws of Continuing Company shall be the Bylaws of Buyer. Unless and until
changed by the Board of Directors of Continuing Company, the main office of
Continuing Company shall be the main office of Buyer. The established offices
and facilities of the Surviving Corporation immediately prior to the Merger
shall become established offices and facilities of the Continuing Company. Until
thereafter changed in accordance with law or the Articles of Incorporation or
Bylaws of Continuing Company, all corporate acts, plans, policies, contracts,
approvals and authorizations of the Surviving Corporation and Buyer and their
respective shareholders, boards of directors, committees elected or appointed
thereby, officers and agents, which were valid and effective shall be taken for
all purposes as the acts, plans, policies, contracts, approvals and
authorizations of Continuing Company and shall be as effective and binding
thereon.
(e) MERGER CONSIDERATION. At the consummation of the Plan of Merger,
in exchange for all of the issued and outstanding common stock of First American
(the "First American Stock"), Buyer shall issue a total of 351,750 shares of its
voting common stock, par value $1.00 per share (the "Buyer Stock"), the fair
market value of which is agreed to be $10.00 per share, and pay a total of
$3,379,480.00 in cash to the shareholders of First American (the "Merger
Consideration").
(f) CONVERSION OF THE FIRST AMERICAN STOCK. On the Closing Date, by
virtue of this Agreement and without any further action on the part of any
holder, each share of First American Stock shall cease to be issued and
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outstanding, and other than shares with respect to which dissenters' rights have
been perfected, shall be converted into and become the right to receive 3.417039
shares of Buyer Stock and $32.829609 cash (the "Per Share Consideration").
(g) CONVERSION OF SUBSIDIARY STOCK. The shares of stock of Buyer's
subsidiary outstanding on the Closing Date shall, by virtue of the Merger an
without any action on the part of the Buyer or any other party as holder
thereof, be converted into and become shares of capital stock of Surviving
Corporation. By virtue of this Agreement and without any action by any party,
the number of shares of capital stock of the Surviving Corporation to be
outstanding after the Closing Date shall be 102,940 shares of common stock,
$1.00 xxx value per share.
SECTION 2: CLOSING
On a date mutually agreeable to First American and Buyer within five
(5) business days after the receipt of all necessary regulatory, corporate and
other approvals and the expiration of any mandatory waiting periods (herein
called the "Closing Date"), but not later than September 30, 1999, a closing
(the "Closing") will take place at the offices of First American at which the
parties to this Agreement will exchange certificates, opinions, letters and
other documents in order to determine whether all of the conditions set forth in
this Agreement have been satisfied or waived. If no such condition then exists
or if no party has previously exercised any right it may have to terminate this
Agreement, then and thereupon the appropriate parties shall execute such
documents and instruments as may be necessary in order to effect the
transactions contemplated by this Agreement.
(a) DELIVERY OF CONSIDERATION. First American shall send to each
holder of First American Stock a letter of transmittal (which shall include a
representation regarding title) for use in exchanging such holder's certificates
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for the Merger Consideration. Provided that all necessary shareholder and
regulatory approvals have been obtained, First American shall forward letters of
transmittal to all of the shareholders at least twenty (20) days prior to the
Closing Date unless First American and Buyer shall mutually agree to send such
letters at a later date. Promptly after receipt of such certificates and letter
of transmittal, Buyer shall review the executed letters of transmittal in order
to verify proper execution. Provided that the letter of transmittal is properly
completed, accompanied by all of the appropriate stock certificates and made
available for review by First American by twelve noon on the business day before
the Closing Date, on the Closing Date, Buyer shall deliver to such shareholder
the Per Share Consideration multiplied by the number of shares of First American
Stock surrendered. If a shareholder does not provide properly completed letters
of transmittal and all appropriate stock certificates to Buyer on the business
day before the Closing Date, then, provided that the letter of transmittal is
properly completed and accompanied by all of the appropriate stock certificates
and delivered to Buyer, Buyer promptly, but in no event later than two (2)
business days following receipt of those documents by Buyer, shall pay to such
shareholder the Per Share Consideration multiplied by the number of shares of
First American Stock surrendered. In the event that a letter of transmittal
contains an error, is incomplete or is not accompanied by all appropriate stock
certificates, then neither Buyer nor any other party to this Agreement shall be
liable to any holder of certificates representing the First American Stock for
any amount paid to a public official pursuant to any applicable abandoned
property, escheat or similar law. No interest shall be payable with respect to
the payment of the Merger Consideration.
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SECTION 3. REPRESENTATIONS AND WARRANTIES OF FIRST AMERICAN.
First American does hereby represent and warrant to
Buyer and agree as follows:
(a)ORGANIZATION, GOOD STANDING, POWER. First American is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Texas, and has all requisite corporate power and authority
to own, lease, operate, and sell its respective properties and to carry on its
respective businesses as they are presently conducted. First American is a bank
holding company which wholly owns a bank in Sulphur Springs, Texas, a bank in
Commerce, Texas (collectively, the "Bank") and a mortgage company, named First
American Mortgage Corporation (the "Mortgage Company"). No other party owns any
interest in the Bank or the Mortgage Company, except for the outstanding
preferred stock of the Mortgage Company which shall be redeemed prior to the
Closing. First American has no other businesses or ownership interest in any
other businesses.
(b) CAPITALIZATION. The authorized capital of First American
consists of 1,000,000 shares of common stock, $2.50 par value, of which 91,940
shares are validly issued and outstanding, fully paid and nonassessable, and
11,000 shares in options have been granted, which shall be fully exercised prior
to the Closing.
(c)AUTHORIZATION. This Agreement has been duly executed by First
American and, subject to regulatory and shareholder approval, constitutes the
valid, legally binding and enforceable obligations of First American.
(d) EFFECT OF AGREEMENT. The execution, delivery, and
performance of this Agreement by First American and the consummation of
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transactions contemplated hereby, will not conflict with or result in a breach
or termination of any provision of, or constitute a default under, or result in
the creation of any lien, charge, or encumbrance upon any of the assets of First
American pursuant to the corporate charter or by-laws of First American, or
pursuant to any indenture, mortgage, deed of trust, lease, contract, agreement,
or other instrument, or any governmental approval, authorization, certificate,
consent, license, order, or permit, or any judgment, award, decree, statute,
ordinance, regulation, or any other restriction of any kind or character, to
which First American is a party which breach, termination or default would or
may prevent consummation of the transactions contemplated hereby by First
American.
(e)FINANCIAL STATEMENTS OF THE CORPORATION. Delivered to Buyer
herewith are the certified balance sheets of First American as of December 31,
1998, December 31, 1997 and December 31, 1996, and the statements of earnings,
statements of stockholders' equity and statements of cash flow with respect to
First American for the fiscal years ended 1998, 1997 and 1996 (referred to
collectively herein as the "Certified Financial Statements"). Also delivered
herewith are the unaudited balance sheet of First American as of March 31, 1999,
and the unaudited statement of earnings, consolidated statement of stockholders'
equity and consolidated statement of cash flow with respect to First American
for the three-month period ended March 31, 1999 (referred to herein as the
"Interim Financial Statements"). The Certified Financial Statements and the
Interim Financial Statements are in accordance with the books and records of
First American, fairly present the financial position of the First American as
of the dates and for the periods indicated, and have been prepared in conformity
with generally accepted accounting principles applied on a basis consistent with
prior years, except as stated therein.
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(f) UNDISCLOSED LIABILITIES. Except for liabilities disclosed in
the Certified Financial Statements and Internal Financial Statements referred
to above, First American has no liabilities nor obligations of any kind,
whether accrued, absolute, contingent, or otherwise, and regardless of whether
such liabilities or obligations would have been required to be disclosed on a
balance sheet prepared in accordance with generally accepted accounting
principles.
(g) ACCOUNTS RECEIVABLE AND PAYABLE. The accounts and notes
receivable of First American reflected on the Interim Financial Statements,
and all accounts and notes receivable arising after March 31, 1999 and prior
to the Closing Date, are not subject to any defenses, counterclaims, or rights
of setoff, and are current and fully collectible, less applicable reserves.
First American has no accounts or notes payable, or other liabilities or
obligations, except in the ordinary course of business.
(h) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as otherwise
disclosed in Exhibit B attached hereto, since January 1, 1999, First American
has not:
(i) incurred any obligation or liability (contingent or
otherwise) or entered into any contract, transaction, or commitment, except in
the ordinary course of business;
(ii) discharged or satisfied any lien or encumbrance or
paid any obligation or liability (contingent or otherwise), except in the
ordinary course of business;
(iii) mortgaged, pledged, or subjected to lien, charge,
security interest, or to any other encumbrance any of its assets;
(iv) sold, assigned, transferred, conveyed, leased, or
otherwise disposed of, or agreed to sell, assign, transfer, convey, lease,
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or otherwise dispose of, any of its assets, other than in the ordinary course of
business;
(v) canceled any debt or claim;
(vi) waived or released anyrights;
(vii) made any capital expenditures in excess of
$5,000.00;
(viii) suffered any casualty loss or damage, whether or
not such loss or damage shall have been covered by insurance;
(ix) suffered any material adverse change in
operations, assets, properties, or businesses;
(x) declared any dividend or made any payment or
distribution in respect of its capital stock;
(xi) engaged in any business other than the Bank and the
Mortgage Company.
(i)TAX MATTERS. First American has filed all United States,
foreign, state, county, local, and other tax and duty returns and reports
required to be filed and have paid, or set up a reasonable and adequate reserve
that is reflected in the Financial Statements of the payment of all income,
franchise, property, sales, employment, ad valorem, and other taxes and duties
required to be paid in respect of the periods covered by such returns, and have
set up a reasonable and adequate reserve that is reflected in the Interim
Financial Statements for the payment of all income, franchise, property, sales,
employment, or other taxes or duties required to be paid or anticipated to be
required to be paid in respect of the periods subsequent to the last of such
periods covered by such returns and prior to the Closing Date. First American
has made all withholding of tax required to be made under all applicable United
States, state, and local tax regulations. First American is not a party to any
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pending action, examination, investigation or proceeding, nor is any action,
examination, investigation or proceeding threatened, by any governmental
authority for assessment or collection of taxes, and no claim for assessment or
collection of taxes has been asserted against First American. To the best
knowledge of First American, the liability for Federal Income Taxes for First
American is closed for all taxable years ending on or prior to 1998.
(j) LIST OF PRIORITIES, CONTRACTS, AND OTHER DATA.
Attached hereto as Exhibit C are correct and complete lists, descriptions, or
summaries, as the case may be, setting forth, as of the date of this Agreement
except as specified thereon, the following:
(i) all policies of insurance in force (with a notation as
to the date through which premiums have been paid) with respect to First
American;
(ii)all existing contracts and commitments, including,
without limiting the generality of the foregoing, all mortgages, deeds of trust,
indentures, loan agreements, credit agreements, partnership agreements, and
joint venture agreements, by which any of First American's assets are or maybe
bound;
(iii) all collective bargaining agreements, employment and
consulting agreements, executive compensation plans, bonus plans, incentive
compensation plans, deferred compensation agreements, employee compensation
plans or retirement plans, employee profit sharing plans, employee stock
purchase or stock option plans, and hospitalization insurance or other plans or
arrangements providing for benefits for employees of First American;
(iv)the names and current annual total compensation of all
present directors and officers of First American;
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(v) the names of all retired employees of First American who
are receiving or are entitled to receive any unfunded pensions not fully covered
by any pension plan to which First American is or was a party, their ages, and
their current annual unfunded pension rates;
(vi)by category, all personal property used by First
American in its businesses, including automobiles, machinery, equipment,
furniture, and fixtures;
(vii) all approvals, authorizations, certificates, consents,
licenses, orders, permits, and restrictions of any governmental agency, whether
federal, state, or local, required by First American to permit the continued
operation of its businesses in the manner in which they are currently conducted.
True and complete copies of all documents, including all amendments
thereto, referred to in such lists or summaries have been delivered to Buyer or
are available for inspection at the office of First American. All documents,
rights, obligations, and commitments referred to in such lists are valid and
enforceable in accordance with their respective terms for the periods stated
herein, and there is not under any of them existing default, event of default,
or event that with the giving of notice or the passage of time, or both, would
constitute a default.
(k)TITLE TO ASSETS; LEASES. First American has good and
marketable title to its all of its assets, free and clear of all claims, liens,
and encumbrances, and will have good and marketable title, free and clear of all
claims, liens, and encumbrances, to all other assets acquired after the date
hereof but before the Closing Date. There are no contracts pursuant to which
First American leases any real or personal property, save and except the lease
of the Commerce, Texas, location.
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(l)FIXED ASSETS. The real property improvements, equipment, and
other tangible assets used or owned by First American in the conduct of its
businesses are fit for their intended use and are in good operating condition
and repair, subject to ordinary wear and tear. None of said improvements,
equipment, and other assets is subject to any commitment or other arrangement
for their use by any other parties.
(m)LITIGATION. Except as disclosed in Exhibit D attached hereto,
there are no actions, suits, or proceedings at law or in equity before or by any
federal, state, municipal, or other governmental or nongovernmental department,
commission, board, bureau, agency, or instrumentality, pending or threatened
against or affecting First American or wherein an unfavorable decision, ruling,
or finding would adverse affect the consummation of the transactions
contemplated by this Agreement, and to the best knowledge of First American, no
facts are now in existence upon which such an action, suit, or proceeding could
be brought. First American reasonably believes that the damages, liabilities,
and related expenses (including the cost and expenses of investigating,
prosecuting, or defending any such legal proceeding and fees and disbursements
of counsel incurred herein) , whether occasioned through a final adjudication of
the issues or good faith settlement, which may be incurred by First American as
the result of any pending litigation set forth on Exhibit D will not exceed
$50,000.00.
(n)EPA AND OSHA. There are no actions pending or to First
American's knowledge, threatened between First American and any former employees
or anyone representing them. To the best knowledge of First American, First
American has complied with all requirements made upon it or threatened on it
under both the Environmental Protection Act, as amended, and the Occupational
Safety and Health Act and has complied in all material respects
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with all other laws relating to the environment or employment of labor,
including any provisions thereof relating to wages, hours, collective
bargaining, and the collection or payment of social security withholding and
similar taxes, and is not liable for any arrears of wages or any taxes or
penalties for failure to comply with any of the foregoing.
(o)PATENTS, TRADEMARKS, COPYRIGHTS. First American does not own
or use or infringe upon the rights of others with respect to any patents, patent
applications, trade secrets, trademarks, trade names, or copyrights, and no
patents, patent applications, trade secrets, trademarks, trade names, or
copyrights are necessary for the conduct of the businesses of First American as
now conducted. No director or officer of First American owns, directly or
indirectly, in whole or in part, any patents, trademarks, trade names,
copyrights.
(p)BOOKS AND RECORDS. The books, records, and work papers of
First American are substantially complete and correct, have been maintained in
accordance with good business practices, and accurately reflect the basis for
the financial condition of First American set forth in the Financial Statements.
(q) LICENSES, PERMITS, AUTHORIZATIONS. First American has all
approvals, authorizations, certificates, consents, licenses, orders, and other
permits of all governmental agencies, whether federal state or local, required
to permit the operation of its businesses presently conducted, and no action is
underway that may cause the termination, modification, or revocation thereof.
(r) COMPLIANCE WITH APPLICABLE LAW. The conduct of the
businesses of First American does not materially violate or infringe any
domestic laws, statutes, ordinances, regulations, orders, or requirements. First
American has not received notice of, nor do its officers have any specific
knowledge of, the violation by First American of any applicable law, statute,
ordinance, regulation, order, or requirement relating to its operations or
assets.
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(s) TRANSACTION WITH MANAGEMENT. Except as disclosed in Exhibit
E attached hereto, First American is not a party to any contract, lease, or
commitment with stockholders of First American or any employee, officer, or
director of First American, or any member of the family of any such person, nor
are there any loans outstanding to or from any of such persons from or to First
American. No officer or director has any direct or indirect financial interest
in any competitor of First American.
(t)UNDUE INFLUENCE. First American has not made any payments to
or entered into any transactions with any person as an inducement to such person
(or to induce such person to influence another person) to take action deemed to
be to the advantage of First American in such person's official position with a
governmental authority, or in such person's position with any other business
entity, nor has First American directly or indirectly made any payment to any
person or entity that was contrary to any law or regulation of any such
governmental authority.
(u)NO UNTRUE STATEMENT. Neither this Agreement nor any of the
document, certificate, or written statement furnished to Buyer by or on behalf
of First American in connection with the transactions contemplated hereby
contains any untrue statement or omits to state a fact necessary in order to
make the statements contained herein and therein not misleading. There is no
fact, which has not been described in this Agreement or in the Exhibits attached
hereto, that is known to First American or Stockholders relating to the
businesses of First American which now or in the future will, with reasonable
probability, materially and adversely affect First American.
(v)PAYMENT OF BROKERS OR FINDERS. First American has not incurred
any obligations or liability, contingent or otherwise, for brokerage or finders'
fees or agents' commissions, or other like payment in connection with this
Agreement.
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(w)PENSION PLANS AND WELFARE PLANS. First American is not the
sponsor of any pension benefit or welfare benefit plan as defined in the
Employee Retirement Income Security Act of 1974, as amended, nor are any of the
employees of First American covered by any such pension benefit or welfare
benefit plan.
(x)OFFICIAL STATEMENTS. All filings and statements to all state
or federal regulatory agencies (the "Official Statements") and other documents
utilized in connection therewith including, without limiting the generality of
the foregoing, call reports and examination reports, do not contain any untrue
statement of a material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
(y) OFFER AND SALE OF SECURITIES. First American has not sold or
offered to sell any securities, as such term is defined in the Securities Act of
1933, as amended ("1933 Act"), or the Securities Exchange Act of 1934, as
amended ("1934 Act"), except such securities as shall have been "exempted
securities" as such are set forth in Section 3 of the 1933 Act, or except
pursuant to "exempted transactions" as such are set forth in Section 4 of the
1933 Act. Each Prospectus, notice, circular, advertisement, letter or other
communication, written or by radio or television, pursuant to which First
American has offered for sale any security, as such term is defined in the 1933
Act or the 1934 Act, did not at the time such security was issued and sold and
does not as of the date hereof contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
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SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to First American as follows:
(a) ORGANIZATION, GOOD STANDING, POWER. Buyer is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Texas, and has all requisite corporate power and authority
to own, lease, and operate its properties, to carry on its business as it is
presently conducted, and to enter into this Agreement and to perform its
obligations hereunder.
(b)AUTHORIZATION. The execution, delivery, and performance of
this Agreement by Buyer have been duly and effectively authorized by all
necessary corporate action of Buyer. This Agreement has been duly executed by
Buyer and is a valid, legally binding, and enforceable obligation of Buyer.
(c)EFFECT OF AGREEMENT. The execution, delivery, and performance
of this Agreement by Buyer and the consummation of the transactions contemplated
hereby, will not conflict with or result in a breach or termination of any
provision of, or constitute a default under, or result in the creation of any
lien, charge, or encumbrance upon any of the assets of Buyer pursuant to the
Certificate of Incorporation or by-laws of Buyer, or pursuant to any indenture,
mortgage, deed of trust, lease, contract, agreement, or other instrument, or any
governmental approval, authorization, certificate, consent, license, order, or
permit, or any judgment, award, decree, statute, ordinance, regulation, or any
other restriction of any kind or character, to which Buyer is a party, or by
which or pursuant to which Buyer or any of its assets may be bound, which
breach, termination, or default would prevent or may be executed to prevent
consummation of the transactions contemplated hereby by Buyer.
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(d) BROKERS OR FINDERS. Buyer has not incurred any obligations
or liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other like payment in connection with this Agreement.
(e) PURCHASE FOR INVESTMENT. Buyer is purchasing the Stock
for its own account for investment without a view to or for the distribution
thereof.
(f) BUYER STOCK. The authorized capital consists of
50,000,000 shares of voting common stock, $1.00 par value per share, of which
2,898,280 shares are validly issued and outstanding, fully paid and
nonassessable. Buyer has delivered a certified copy of its Articles of
Incorporation and Bylaws, as amended, to First American. Except as set forth in
its 1998 Option Plan, the Buyer has not granted or committed to grant any
options, rights, warrants or other contractual rights to acquire shares of
Buyer's capital stock or securities. The shares of common stock to be issued by
Buyer to shareholders of First American pursuant to this Agreement will be
validly issued, fully paid and nonassessable and will not be issued in violation
of the preemptive rights or any person. The shares of Buyer's capital stock are
registered under and have been issued in compliance with the 1933 Act and the
1934 Act. Such shares shall be listed for trading on the NASDAQ securities
exchange or securities quotation system and will be freely transferable on such
exchange without restriction or limitation. Each registration statement,
prospectus, annual or quarterly report or filing, and notice, circular,
advertisement and other item, relating to Buyer's securities did not at the date
of
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such item and does not as of the date hereof contain any untrue statement or
material fact or omit to state a material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
(g) NO MATERIAL ADVERSE CHANGE. Since December 31, 1998,
Buyer has not suffered any material adverse change in operations, assets,
properties or business.
SECTION 5. COVENANTS OF FIRST AMERICAN.
First American covenants and agrees as follows with respect to actions
to be taken between the date of this Agreement and the Closing Date:
(a) MAINTAIN REPRESENTATIONS AND WARRANTIES. Without the prior written
consent of Buyer, no action will be taken that would violate the terms and
conditions hereof.
(b) ACCESS TO INFORMATION. First American will give, and to the
extent necessary cause other parties to give, to Buyer and its agents and
representatives, full access, during normal business hours throughout the period
prior to the Closing Date, to the properties, books, work papers, contracts,
commitments and records, as well as other assets of First American, whether in
the possession of First American, its accountants or other representatives, and
will furnish to Buyer during such period all such information concerning First
American as Buyer may reasonably request. Buyer agrees that it will, and will
cause its agents and representatives, to hold in strict confidence all
information so
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obtained from First American, not disclose such information to any person or
entity, and to use such information solely and exclusively for determining
whether to proceed with the transaction contemplated by this Agreement, and if
the transactions herein provided for is not consummated as contemplated herein,
Buyer will return all such data and all copies and memoranda and other written
evidence or summation thereof.
(c) EVIDENCE OF TITLE. First American will give, and to the
extent necessary cause other parties to give, to Buyer and its agents and
representatives true and correct copies of all title policies, title documents,
and instruments creating or evidencing the encumbrances, easements, and
restrictions affecting the properties of First American.
(d) CONDUCT OF BUSINESS PENDING THE CLOSING DATE. Except such
actions as shall be specifically agreed to by Buyer pursuant to advance written
consent (which consent shall not be unreasonably withheld), First American,
during the period between the date of this Agreement and the Closing Date,
shall:
(i) operate its businesses only in the usual, regular, and
ordinary manner and, to the extent consistent with such operation, use its best
efforts to preserve its present business organizations intact, keep available
the services of its present officers and preserve its present relationship with
persons having business dealings with it;
(ii) maintain all of its assets in customary repair, order, and
condition, reasonable wear and use excepted, and maintain insurance upon all of
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such assets in such amounts and of such kinds comparable to that in effect on
the date of this Agreement;
(iii) maintain its books, accounts, and records in the usual,
regular, and ordinary manner, on a basis consistent with prior years, and
endeavor to comply with all laws applicable to it and to the conduct of its
businesses and to perform all of its obligations without default;
(iv) not enter or agree to enter into any merger or consolidation
with any corporation or change the character of its businesses in any manner;
(v) not declare, pay, or make any dividend or other distribution
or payments in respect of shares of its capital stock, or purchase or redeem any
of such shares other than the redemption of preferred stock by the Mortgage
Company;
(vi)not (1) hire any employees; (2) make any increase in the
compensation payable or to become payable by it to any director, officer or
agent except in the ordinary course of business; (3) except for the June profit
sharing distribution, pay or provide for any bonus, stock option, stock
purchase, profit sharing, deferred compensation, pension, retirement, or other
similar payment or arrangement; (4) pay or provide for any unfunded pensions not
covered by any pension plan to which it is a party; and ( 5) enter into any
employment or consulting agreement, sales agency, or other contract or
arrangement with respect to the performance of personal services;
(vii) not (1) incur or become subject to, or agree to incur or
become subject to, any obligation or liability (contingent or otherwise) ,
except in the ordinary course of business; (2) discharge or satisfy any lien or
encumbrance or pay any obligation or liability (contingent or otherwise), except
21
in the ordinary course of business; ( 3) mortgage, pledge, or subject to lien or
encumbrance any of its assets; (4) sell, assign, transfer, convey, lease, or
otherwise dispose of any of its assets except in the ordinary course of
business; (5) acquire or agree to acquire any assets except in the ordinary
course of business;(6) cancel, compromise, or postpone any debt or claim except
in the ordinary course of business; (7) waive any right, except in the ordinary
course of business and not of material value; (8) transfer or grant any rights
under any concessions, licenses, patents, inventions, trade names, trademarks,
copyrights, or with respect to know-how; (9) enter into, modify, change, or
terminate any existing license, lease, contract, or other documents; (10) make
any capital expenditures in excess of $5,000.00, or enter into any commitment
therefor; (11) enter into any collective bargaining agreement or, through
negotiation or otherwise, make any commitment or incur any liability to any
labor organization; (12) enter into any transactions or make or enter into any
contract or commitment that by reason of its size or otherwise is not in the
ordinary course of business; ( 13) enter into any contract, lease, or commitment
with any member of the family of any officer, director, employee, or stockholder
of or corporation affiliated with First American, or loan or otherwise make any
advances to any of such entities or persons.
(viii) make no change in its banking policies.
(e)NOTIFICATION OF CHANGES. First American will promptly notify
Buyer in writing of the existence or happening of any fact, event, or
22
occurrence that may alter the accuracy or completeness of any representation or
warranty contained in this Agreement.
(f)CONSENTS. First American will obtain any consents or
agreements of third parties necessary for the performance by First American of
its obligations under this Agreement.
(g)REGULATORY AUTHORIZATIONS. First American will execute and
file, or join in the execution and filing, any applications or other documents
that may be necessary in order to obtain the authorization, approval, or consent
of any governmental body that may be required, or that Buyer may reasonably
request, in connection with the consummation of that transactions contemplated
by this Agreement, including but not limited to change of control filings.
(h) EFFORTS AND COOPERATION. First American will use its good
faith reasonable effort to cause the satisfaction of the conditions precedent
set forth in this Agreement and shall cooperate with Buyer to consummate the
transaction contemplated by this Agreement.
SECTION 6. COVENANTS OF BUYER.
Buyer covenants and agrees as follows with respect to actions to be taken
between the date of this Agreement and the Closing Date:
(a) MAINTAIN REPRESENTATIONS AND WARRANTIES. Without the prior
consent of First American, no action will be taken that would violate the terms
and conditions hereof.
(b) NO CHANGE IN CAPITAL. Buyer shall not make any change in its
authorized capital structure or in its issued and outstanding securities. Buyer
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shall not issue any securities other than the securities to be issued pursuant
to the Merger.
(c) REGISTRATION STATEMENT AND REGULATORY FILINGS. Within 30
days of the effective date of this Agreement, Buyer shall prepare and file with
the SEC any required Registration Statement (on such form as may be appropriate)
and all amendments and supplements thereto, with respect to the common stock to
be issued pursuant to this Agreement. Within 30 days of the effective date of
this Agreement, Buyer shall prepare and file all necessary filings with any
banking regulatory agency which may be necessary for approval to consummate the
transactions contemplated by this Agreement. Buyer shall provide to First
American (1) copies of drafts of all filings made pursuant to this section in
advance of filing, (ii) copies of documents as filed, and (iii) copies of any
correspondence between Buyer and any applicable agency including the SEC and the
Board of Governors of the Federal Reserve System respecting the filings made
pursuant to this section.
(d) LISTING. Prior to the Closing Date, Buyer shall list the
shares of Buyer common stock to be issued in the Merger on the securities
exchange or other quotation system on which such shares are primarily traded.
(e) EFFORTS AND COOPERATION. Buyer will use its good faith
reasonable effort to cause the satisfaction of the conditions precedent set
forth in this Agreement and shall cooperate with First American to consummate
the transaction contemplated by this Agreement.
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(f) INCORPORATED AND ORGANIZATION OF SUBSIDIARY. Buyer will
incorporate, charter and organize a subsidiary as a Texas corporation. Buyer
will, as soon as practicable after the execution of this Agreement, enter into
the Plan of Merger, the form of which is attached hereto as EXHIBIT "A", and
shall perform all of its obligations thereunder. Buyer will, as soon as
practicable after the execution of this Agreement, cause the subsidiary to duly
authorize and enter into the Plan of Merger and shall cause the subsidiary to
perform all of its obligations thereunder. Buyer shall vote all of the stock of
the subsidiary in favor of the Merger and the Plan of Merger.
SECTION 7. CONDITIONS TO FIRST AMERICAN'S OBLIGATIONS.
The obligations of First American hereunder are
subject to each of the conditions set forth below,
(a)COMPLIANCE WITH TERMS. On the Closing Date, all of the terms,
conditions, and covenants of this Agreement to be complied with and performed by
Buyer at or before the Closing Date shall have been complied with or performed.
(b) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made by Buyer in this Agreement shall be correct
and complete in all material respects at and as of the Closing Date.
(c) SHAREHOLDER APPROVAL. The holders of at least eighty-one
percent of the outstanding shares of common stock of First American shall have
approved the Merger.
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(d) REGULATORY APPROVAL. Buyer shall have obtained the approval
of the transaction contemplated by this Agreement by all required banking and
securities regulatory agencies.
(e) NO LITIGATION. No action shall have been taken or overtly
threatened to enjoin the Merger or to impose liability upon First American or
its shareholders, directors, officers, employees or agents for any action taken
in connection with the Merger.
(f) LISTING ON SECURITIES EXCHANGE. The shares of Buyer common
stock to be issued pursuant to the Merger shall have been listed on the
securities exchange or quotation system upon which shares of Buyer common stock
are traded.
(g) MATERIAL ADVERSE CHANGE. Between the date of this Agreement
and the Closing Date, there shall have been no material adverse change in the
condition, financial or otherwise, of the Buyer.
(h) TAX OPINION. An opinion of a nationally recognized legal
firm shall have been received in form and substance reasonably satisfactory to
First American to the effect that (i) the Merger will constitute a
"reorganization" within the meaning of Section 368 of the Code; (ii) no gain or
loss will be recognized by the shareholders of First American with respect to
the shares of Buyer common stock received pursuant to the Merger; and (iii) the
receipt of cash by shareholders of First American pursuant to the Merger shall
be capital gain (or loss) to the extent shares of First American Stock were held
as capital assets.
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SECTION 8. CONDITIONS TO BUYER'S OBLIGATIONS.
The obligations of Buyer at the closing hereunder are subject to each of the
conditions set forth below. Any of such conditions may be waived by Buyer, but
only in writing. Notwithstanding the failure or any one or more of such
conditions, Buyer may nevertheless proceed with the Closing without satisfaction
of such conditions and without written waiver, and Buyer shall not be deemed to
have waived any rights or remedies it may have by reason of failure of any of
such conditions.
(a) OPINION OF COUNSEL FOR FIRST AMERICAN. Buyer shall have
received an opinion of counsel for First American, dated the Closing Date in
form and substance satisfactory to Buyer, to the effect that:
(i) First American is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Texas and has the power and authority to own, lease, operate and sell its
properties and to carry on its businesses as it is presently conducted.
(ii) The authorized capitalization of First American consists
of ________ shares of common stock, $2.50 par value, of which 102,940 are
validly issued and outstanding, fully paid and nonassessable.
(iii) This Agreement has been duly executed and delivered by First
American, and is a valid, legally binding and enforceable obligation as the same
may be limited or otherwise affected by applicable bankruptcy, reorganization,
moratorium, and other similar laws affecting the rights of creditors generally;
provided, however, that no opinion need be rendered as to
27
whether a court would grant specific performance or any other equitable remedy
with respect to the enforcement of any provision of this Agreement;
(iv) The execution, delivery, and performance of this Agreement by
First American and the consummation of the transactions contemplated hereby do
not conflict with or result in a breach or termination of any provision of, or
constitute a default under, or result in the creation of any lien, charge, or
encumbrance upon any of assets of First American pursuant to the corporate
charter or by-laws of First American, or, to such counsel's knowledge, pursuant
to any indenture, mortgage, deed of trust, lease, contract, agreement, or other
instrument, or any governmental approval, authorization, certificate, consent,
license, order, or permit, or any judgment, award, decree, statute, ordinance,
regulation, or any other restriction of any kind or character, to which First
American is a party or by which or pursuant to which First American or any of
their assets may be bound;
(v) Except as disclosed in therein, to the knowledge of such
counsel, there are no actions, suits, or proceedings at law or in equity by or
before any federal, state, municipal, or other governmental or non governmental
department, commission, board, bureau, agency, or instrumentality, pending or
threatened against or affecting First American or wherein an unfavorable
decision, ruling, or finding would adversely affect the consummation of the
transactions contemplated by this Agreement,
(vi)To the knowledge of such counsel, First American has all
approvals, authorizations, certificates, consents, licenses, orders, and other
permits of all governmental agencies, whether federal, state, or local, required
to permit the operation of its businesses as presently conducted, and
consummation of the transactions contemplated hereby will not cause the
termination, modification, or revocation thereof, or require the consent,
28
approval, or authorization of any governmental entity or agency or any other
third party.
(b) COMPLIANCE WITH TERMS. On the Closing Date, all of the
terms, conditions, and covenants of this Agreement to be complied with and
performed by First American on or before the Closing Date shall have been
complied with or performed.
(c)ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made by First American in this Agreement shall be
correct and complete at and as of the Closing Date in all material respects.
(d)CONSENTS AND AUTHORIZATIONS. Buyer shall have received any
necessary consents from third parties and any necessary governmental approvals,
consents, or permits for the performance by Buyer of its obligations under this
Agreement.
(e)ACTUAL OR THREATENED ACTIONS. There shall not be any actual or
threatened action or proceeding by or before any court or other governmental
body or agency that shall seek to restrain, prohibit or invalidate the
transactions contemplated by this Agreement, or that might affect the right of
Buyer to own the First American Stock after the Closing Date, or subject Buyer
to any liability therefor.
(f)NO ADVERSE CHANGE. Between the date of this Agreement and the
Closing Date there shall have been no material adverse change in the condition
or prospects (financial or otherwise) of First American.
(g) RESIGNATIONS. Buyer shall have received the written
resignations of all the directors of First American, which resignations shall
become effective of the Closing Date, and a signed release by said directors of
all claims against First American in form satisfactory to Buyer.
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SECTION 9. TERMINATION.
Anything herein or elsewhere to the contrary notwithstanding, this Agreement
may be terminated at any time prior to the Closing:
(a) By mutual written consent of First American and Buyer;
(b) If any one or more of the conditions precedent to its obligations
herein shall not have been fulfilled or, in any event, if the Closing has not
occurred on or before September 30, 1999;
Written notice of any termination under this section stating
the grounds therefor shall be given by the party entitled to terminate this
Agreement concurrently with such termination.
SECTION 10. CONTINUING MANAGEMENT.
The parties agree that during the interim period between the date of the
execution of this Agreement and the Closing Date, Buyer shall have the right to
have one or more executive officers of Buyer (collectively, the "Executive")
present at the offices of First American during such term, to review contracts,
documents, instruments and other obligations of First American, to familiarize
himself with the conduct and operations of First American, to acquaint himself
with the officers and employees of First American, and to monitor the business
operations of First American. The Executive shall have the opportunity to review
and express his suggestions, comments and concerns regarding the business
activities of First American during said period. In no event shall the Executive
be considered to be an employee of First American, First American
30
shall have no obligation to pay the Executive, or withhold taxes or provide
benefits for the Executive.
Notwithstanding the termination, closing, or other disposition or resolution
of the terms and conditions of this Agreement and the matters contained herein,
First American and the Stockholders agree with Buyer that in no event shall
Buyer or the Executive incur any liability as a result of the actions,
omissions, or other deeds of the Executive done pursuant to the above paragraph,
and First American and Stockholders do hereby release, relinquish, waive, and
hold Buyer and the Executive harmless from any and all losses, costs, expenses,
claims, fees or other liabilities in connections with or related to, directly or
indirectly, the actions, omissions, or deeds of the Executive in conducting the
activities referred to herein. This release and waiver shall incorporate any and
all acts, deeds and omissions of the Executive, including, but not limited to,
the Executive's own negligence. This release is between the parties to this
Agreement only, and does not limit any action of a third party or any Agency.
SECTION 11. MISCELLANEOUS.
(a) NOTICES. All notices or deliveries required or desired to
be given hereunder shall be in writing and shall be delivered in person or by
registered or certified United States mail, postage prepaid, return receipt
requested, or by wire, telegram, or telex, and addressed to the parties at their
respective address set forth below, unless by such notice a different address
shall have been designated. All notices sent by mail as aforesaid shall be
deemed
31
delivered two days after deposit in the mail. All notices sent by wire,
telegram, or telex as aforesaid shall be deemed delivered one day after being
sent. All other notices shall be deemed delivered when actually received.
If to the Buyer: Guaranty Bank
Attn: Art Xxxxxxxxx
X.X. Xxx 0000
Xx. Xxxxxxxx, Xxxxx 00000-0000
If to the Seller: First American Financial Corp.
Attn: Xxxx Xxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxx Xxxxxxx, Xxxxx 00000
(b) CONTROLLING LAW. All questions
concerning the validity, operation and interpretation of this Agreement and the
performance of the obligations imposed upon the parties hereunder shall be
governed by the laws of the State of Texas.
(c) HEADINGS. The headings and titles to the Sections of this
Agreement are inserted for convenience only and shall not be deemed to be a
part hereof or to affect the construction or interpretation of any provision
hereof.
(d) MODIFICATIONS AND WAIVER. No termination, cancellation,
modification, amendment, deletion, addition, or other change in this
agreement, or any provision hereof, or waiver of any right or remedy herein
provided, shall be effective for any purpose unless specifically set forth in
a writing signed by the party or parties to be bound thereby. The waiver of
any right or remedy in respect to any occurrence or event on one occasion
shall not be deemed a waiver of such right or remedy in respect to such
occurrence or event on any other occasion.
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(e)ENTIRE AGREEMENT. This Agreement supersedes all other
agreements, oral or written, heretofore made with respect to the subject matter
hereof and the transactions contemplated hereby, and contains the entire
agreement of the parties hereto.
(f)ASSIGNMENTS. This Agreement and any rights or duties hereunder
shall not be assigned without the advance written consent of all parties hereto.
(g)COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
(h) TIME OF ESSENCE. The parties acknowledge that time is of the
essence in connection with the obligations of each party hereunder.
(i)BINDING ON SUCCESSORS. Except as otherwise provided herein,
this Agreement shall be binding upon, and shall inure to the benefit of, the
parties hereto and their respective legal representatives, estates, heirs,
successors, and assigns.
(j)EXPENSES. Each party shall pay all expenses, including,
without limiting the generality of the foregoing, the fees and expenses of the
agents, representatives, counsel, and accountants of all parties hereto
incidental to the preparation of this Agreement and the consummation of the
transactions provided herein.
(k)REPRESENTATIONS AND WARRANTIES. The representations and
warranties hereunder are cumulative, not exclusive, and no representation or
warranty shall be deemed to limit the scope and reasonable meaning of any other
representation or warranty.
(1)EXHIBITS. The exhibits attached hereto are incorporated
herein by reference and specifically form a part of this Agreement.
(m)SPECIFIC PERFORMANCE. The duties and obligations of Buyer and
First American under this Agreement shall be subject to specific performance.
(n)CONFIDENTIALITY. All parties agree that the matters contained
herein are confidential and are not to be disclosed to any third party, save and
except the Agencies, and
33
agree to keep all matters herein strictly confidential, and will inform the
officers and employees of the obligation to maintain such confidentiality.
EXECUTED as of the date set forth above.
GUARANTY BANCSHARES, INC.
By:/s/XXXXXX X. SCHLARACH
Name: Xxxxxx X. Schlarach
Title:President
FIRST AMERICAN FINANCIAL CORP.
By:/s/XXXX XXXXXX
Name:Xxxx Xxxxxx
Title:Chairman of the Board
34
