EXHIBIT 2.11
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") entered into as of
October 10, 1997, by and among SURETY BANK, NATIONAL ASSOCIATION, a national
banking association located in Hurst, Texas ("Surety Bank"), TEXSTAR NATIONAL
BANK, a national banking association located in Universal City, Texas
("TexStar"), SURETY CAPITAL CORPORATION, a Delaware corporation located in
Hurst, Texas ("Surety"), and the shareholders of TexStar listed on SCHEDULE A
attached hereto who are entering into this Agreement for certain limited
purposes (individually a "Shareholder" and collectively, the "Shareholders").
WITNESSETH:
WHEREAS, Surety is the record and beneficial owner of one hundred
percent (100%) of the issued and outstanding shares of common stock of Surety
Bank; and
WHEREAS, the parties hereto desire to effect a reorganization whereby
TexStar will merge with and into Surety Bank (the "Merger") pursuant to an
agreement to merge (the "Merger Agreement") in substantially the form attached
hereto as EXHIBIT A, which provides, among other things, for the conversion and
exchange of the outstanding common stock, $5.00 par value, of TexStar (the
"TexStar Common Stock") immediately prior to the time the Merger becomes
effective in accordance with the provisions of the Merger Agreement into the
right to receive (1) cash and (2) certain performance payments, all as more
fully set forth in the Merger Agreement.
NOW, THEREFORE, to effect such reorganization and in consideration of
the premises and the mutual warranties, representations, covenants and
agreements contained herein, the parties hereto do hereby represent, warrant,
covenant and agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF TEXSTAR. TexStar represents and
warrants to Surety Bank and Surety as follows:
(a) ORGANIZATION. TexStar is a national banking association duly
organized, validly existing and in good standing under the laws of the United
States of America. TexStar (i) is duly authorized to conduct a general banking
business, in accordance with its charter, subject to the supervision of the
United States Office of the Comptroller of the Currency (the "Comptroller");
(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.
(b) CAPITAL STOCK. The authorized capital stock of TexStar
consists of 575,000 shares of common stock, par value $5.00 per share, of which
as of the close of business on August 31, 1997, 485,000 shares were outstanding
and no shares were held in the treasury. All of the outstanding shares of
TexStar Common Stock have been duly and validly authorized and issued, are fully
paid and nonassessable and have not been issued or disposed of in violation of
the preemptive rights of any shareholder. Except as set forth in SCHEDULE 1(B),
there are no outstanding subscriptions, contracts, conversion privileges,
options, warrants, calls, preemptive rights or other rights obligating TexStar
to issue, sell or otherwise dispose of, or to purchase, redeem or otherwise
acquire, any shares of TexStar Common Stock. Since August 31, 1997, no shares of
TexStar Common Stock have been purchased, redeemed or otherwise acquired,
directly or indirectly, by TexStar, except as set forth on SCHEDULE 1(B), and no
dividends or other distributions have been declared, set aside, made or paid to
the shareholders of TexStar.
(c) SUBSIDIARIES. TexStar has no subsidiaries and there is no
association, corporation or other entity in which TexStar owns an equity or
voting interest or with respect of which TexStar has an obligation to acquire an
equity or voting interest.
(d) COMMUNITY REINVESTMENT ACT. TexStar has not received any
notice of non-compliance with the Community Reinvestment Act ("CRA") from any
regulatory agency, and TexStar has supplied Surety Bank with copies of the CRA
Statement for TexStar, all supporting papers relating thereto, all letters and
comments received by TexStar pertaining thereto, and any responses by TexStar to
such comments.
(e) TEXSTAR FINANCIAL STATEMENTS. TexStar has furnished Surety
Bank with the following financial statements (collectively, the "TexStar
Financial Statements"): (i) the Reports of Income and Condition filed by TexStar
with the Comptroller as of December 31, 1996, 1995 and 1994; and (ii) the
unaudited balance sheet and income statement of TexStar as of June 30, 1997 and
for the six (6) month period then ended. The TexStar Financial Statements fairly
present the financial position, results of operations and changes in financial
position of TexStar as of the dates and for the periods indicated in conformity
with generally accepted accounting principles, consistently applied during such
periods, except as otherwise stated in the TexStar Financial Statements and
subject, in the case of the interim TexStar Financial Statements, to normal and
recurring adjustments.
(f) LIABILITIES AND OBLIGATIONS. At June 30, 1997 TexStar had no
obligation or liability which was material or which, when combined with all
similar obligations or liabilities, would have been material, except as
disclosed in the TexStar Financial Statements or as set forth in any of the
schedules referred to herein, and there does not exist a set of circumstances
resulting from transactions effected or events occurring on or prior to June 30,
1997, or from any action omitted to be taken during such period, which could
reasonably be expected to result in any such material obligation or liability,
except as disclosed or provided for in the TexStar Financial Statements or
except as disclosed in one or more of the schedules referred to herein. Since
June 30, 1997 TexStar has not incurred or paid any obligation or liability,
except for obligations incurred or paid by TexStar in the ordinary course of its
banking business consistent with its past practice. Except for endorsements made
in connection with the deposit of items for collection made by TexStar in the
ordinary course of its banking business consistent with its past practice and
except as set forth in the TexStar Financial Statements, in SCHEDULE 1(F)
attached hereto, or in any of the schedules referred to herein, TexStar is not
obligated (by discount, loan participation agreement, repurchase agreement or
letter of credit) to provide funds in respect of or to guarantee or assume any
debt or obligation which is either material or which, when combined with all
similar debts or obligations, would be material.
(g) REPORTS. Since December 31, 1992, TexStar has filed all
reports, registrations and statements, together with any required amendments
thereto, that it was required to file, if any, with (i) the Federal Reserve
Board, (ii) the Federal Deposit Insurance Corporation (the "FDIC"), (iii) the
Comptroller and (iv) any applicable state securities or banking authorities. All
such reports and statements filed with any such regulatory body or authority are
collectively referred to herein as the "TexStar Reports." As of their respective
dates, the TexStar Reports complied in all material respects with all the rules
and regulations promulgated by the Federal Reserve Board, the FDIC, the
Comptroller and applicable state securities or banking authorities, as the case
may be. Copies of all the TexStar Reports have been made available to Surety
Bank by TexStar.
(h) LOANS. All loans of TexStar reflected in the TexStar
Financial Statements and all loans originated since June 30, 1997 were made in
the ordinary course of business. A true, complete and accurate list of all (i)
loans classified by examiners as "Other Loans Especially Mentioned,"
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"Substandard," "Doubtful," or "Loss," (ii) past due loans, (iii) loans to the
officers of TexStar and the Shareholders, or any of them, and (iv) loans to
other parties which have been guaranteed by the officers of TexStar and the
Shareholders, or any of them, or for which the officers of TexStar and the
Shareholders, or any of them, are otherwise responsible at June 30, 1997 is
attached hereto as SCHEDULE 1(H) and by reference made a part hereof.
(i) RESERVE FOR POSSIBLE LOAN LOSSES. The reserve for possible
loan losses as shown on the TexStar Financial Statements is adequate in all
material respects to provide for all losses, net of recoveries relating to loans
previously charged-off, on loans outstanding.
(j) INVESTMENT SECURITIES. Except for pledges to secure public and
trust deposits, or except as set forth on SCHEDULE 1(J) attached hereto, none of
the investments reflected in the TexStar Financial Statements as of June 30,
1997 under the heading "Investment Securities" and none of the investments made
since said date by TexStar is subject to any "investment" or other restriction,
whether contractual or statutory, which materially impairs the ability of the
holder thereof freely to dispose of such investment at any time, to the extent
permitted by applicable regulations, for a fair market price as determined at
the time of such disposition.
(k) EVIDENCES OF INDEBTEDNESS. Each evidence of indebtedness
reflected as an asset in the TexStar Financial Statements as of June 30, 1997,
or acquired since that date, is the legal, valid and binding obligation of the
obligor named therein, enforceable in accordance with its terms (subject, as to
enforcement of remedies, to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws from time to time in effect). No evidence of
indebtedness having an unpaid balance (principal and accrued interest) in excess
of $25,000 is subject to any defense, offset or counterclaim.
(l) PHYSICAL PROPERTIES. TexStar has furnished to Surety Bank a
schedule, designated SCHEDULE 1(L), describing all physical properties, real and
personal (showing the gross book values, accumulated depreciation and net book
values), owned or leased by TexStar as of June 30, 1997, having an original cost
in excess of $25,000 (exclusive of supplies consumable in the ordinary course of
business, which need not be scheduled). TexStar has good and indefeasible fee
simple title to all material real estate owned by it, has a valid leasehold
interest in each of the leased properties and owns outright all other assets and
properties, whether real, personal or mixed, tangible or intangible, described
in SCHEDULE 1(L) or reflected in the TexStar Financial Statements as of June 30,
1997, or acquired after said date (other than properties sold, and supplies
consumed, by TexStar in the ordinary course of its banking business consistent
with its past practice), free and clear of all liens, pledges, mortgages,
security interests, charges, burdens, encumbrances, options and adverse claims
("Burdens"), except in each case as set forth in SCHEDULE 1(L) and except for
liens for current taxes not yet due and payable and such imperfections of title,
covenants and easements as do not materially detract from or interfere with the
present use of the asset or property subject thereto or affected thereby. Since
June 30, 1997 TexStar has not satisfied or discharged, or become obligated to
satisfy or discharge, any Burden affecting TexStar or any asset of TexStar,
except in the ordinary course of TexStar's banking business consistent with its
past practice. The operation of the properties of TexStar and the business of
TexStar in the manner in which they are now operated does not violate any zoning
ordinances or municipal reg ulations in such a way as could, if such ordinances
or regulations were enforced, result in any material impairment of the uses of
the respective properties for the purposes for which they are now operated, and
no covenants, easements, rights-of-way or regulations of record materially
impair such uses.
(m) COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as set forth on
SCHEDULE 1(M) or described in the environmental assessments prepared pursuant to
SECTION 3(Q) hereof, there is no legal, administrative, or other proceeding,
claim, or action of any nature seeking to impose on TexStar,
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or that could result in the imposition on TexStar of, any liability relating to
the release of hazardous substances as defined under any local, state or federal
environmental statute, regulation or ordinance including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), pending or threatened against TexStar the result of
which has had or could reasonably be expected to have a material adverse effect
upon the financial condition of TexStar; there is no reasonable basis for any
such proceeding, claim or action; and TexStar is not subject to any agreement,
order, judgment, or decree by or with any court, governmental authority or third
party imposing any such environmental liability. TexStar has provided Surety
Bank with copies of all environmental assessments, reports, studies and other
related information in its possession with respect to each bank facility and
each non-residential OREO property.
(n) CONDITION OF PERSONAL PROPERTIES. All personal properties
owned or leased by TexStar are used by TexStar in the ordinary course of its
business and are in good condition and repair, normal wear and tear excepted.
(o) PATENTS, TRADEMARKS, ETC. Except as set forth on SCHEDULE
1(O), there are no
(i) patents, trademarks, trade names or copyrights or
applications therefor owned by or registered in the name of TexStar or
in which TexStar has rights,
(ii) license agreements to which TexStar is a party, either
as licensor or licensee, with respect to any patents, trademarks,
trade names or copyrights, or
(iii) claims, to the knowledge of TexStar or the
Shareholders, that in the conduct of TexStar's business as now
conducted TexStar is infringing any patents, trademarks, trade names
or copyrights of others.
(p) COMPLIANCE WITH LAWS. Except as would not have a material
adverse effect on the financial condition of TexStar, TexStar
(i) has complied with all laws and governmental
regulations pertaining to consumer credit in all material respects,
(ii) has complied with all other laws, regulations,
licensing requirements and orders applicable to its business, the
breach or violation of which could have a material adverse effect on
said business (including without limitation licensing requirements
with respect to personnel),
(iii) has filed with the proper authorities all statements
and reports required by the laws, regulations, licensing requirements
and orders to which it or any of its employees (because of his
activities on behalf of his employer) are subject, and
(iv) possesses all necessary licenses, franchises, permits
and governmental authorizations to conduct its business in all
material respects in the manner in which and in the jurisdictions and
places where such business is now conducted.
(q) INSURANCE. TexStar has furnished to Surety Bank a schedule,
designated SCHEDULE 1(q), containing a brief description of all policies of
fire, liability and other forms of insurance and all fidelity bonds held by
TexStar.
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(r) MATERIAL CONTRACTS. Except as set forth in SCHEDULE 1(R),
neither TexStar nor its assets, business or operations are a party to or are
bound or affected by or receive benefits under any written or oral agreement,
arrangement or commitment relating to
(i) the employment of any person other than personnel
employed at the pleasure of TexStar in the ordinary course of its
business at rates of compensation and on terms consistent with its
past practice,
(ii) the election or retention in office of any director or
officer,
(iii) collective bargaining with, or any representation of
any employees by, any labor union or association,
(iv) the acquisition of services, supplies, equipment or
other personal property involving, in any particular case, more than
$25,000 or for a quantity in excess of its requirements for normal
operating purposes,
(v) the purchase or sale of real property,
(vi) distribution, agency, public relations, advertising,
printing, construction, accounting or legal services, except for
agreements, arrangements and commitments subject to cancellation
without liability on notice of thirty (30) days or less and involving
a liability for each such agreement, arrangement or commitment of less
than $25,000,
(vii) lease of real or personal property as lessor or
lessee, or sublessor or sublessee, providing for annual payments in
the aggregate in excess of $2,500,
(viii) bonuses, pensions, profit-sharing, retirement, stock
options, stock purchases, employee discounts or other employee
benefits,
(ix) lending or advancing of funds, other than in the
ordinary course of TexStar's banking business consistent with its past
practice,
(x) borrowing of funds or receipt of credit other than in
the ordinary course of TexStar's banking business consistent with its
past practice,
(xi) incurring of any material obligation or liability
except for transactions engaged in by TexStar in the ordinary course
of its banking business consistent with its past practice,
(xii) the sale of personal property or services under which
payments due after the date of this Agreement exceed $25,000,
(xiii) any transaction or series of transactions, including
loans, in which any "affiliate" of TexStar, as that term is used in
the Rules and Regulations of the Securities and Exchange Commission
under the Securities Act of 1933 (the "1933 Act"), any officer or
director of TexStar, any officer or director of any "affiliate" of
TexStar, or any "associate" of any such officer or director, as that
term is defined in Regulation 14A of the General Rules and Regulations
under the Securities Exchange Act of 1934
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(the "1934 Act"), has an interest if such transaction or series of
transactions would be required to be disclosed in a proxy statement
filed by a non-banking corporation under the 1934 Act, or
(xiv) any material transaction not in the ordinary course of
TexStar's banking business consistent with its past practice.
Except as set forth in SCHEDULE 1(r), since June 30, 1997 TexStar has not made
or permitted, or agreed to make or permit, any material modification or
termination of any material agreement, commitment or arrangement, except in the
ordinary course of its banking business consistent with its past practice.
(s) ABSENCE OF ADVERSE AGREEMENTS. TexStar is not a party to any
agreement or instrument or any judgment, order or decree or any rule or
regulation of any court or other governmen tal agency or authority which
materially and adversely affects or in the future may materially and adversely
affect the assets, properties, business, financial condition, operations or
prospects of TexStar.
(t) EMPLOYEE BENEFITS.
(i) SCHEDULE 1(t) lists each Employee Benefit Plan that
TexStar maintains or to which it contributes. For these purposes,
"Employee Benefit Plan" means any (i) nonqualified deferred
compensation or retirement plan or arrangement which is an employee
pension benefit plan (as defined in (S)3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), (ii) qualified
defined contribution retirement plan or arrangement which is an
employee pension benefit plan, (iii) qualified defined benefit
retirement plan or arrangement which is an employee pension benefit
plan (including any multiemployer plan), or (iv) employee welfare
benefit plan (as defined in ERISA (S)3(1)) or material fringe benefit
plan or program. With regard to each such plan:
(1) the plan (and each related trust, insurance
contract, or fund) complies in form and in operation in all
respects with the applicable require ments of ERISA, the Internal
Revenue Code of 1986, as amended (the "Code"), and other
applicable laws;
(2) all required reports and descriptions have been
filed or distribut ed appropriately, and the requirements of Part
6 of Subtitle B of Title I of ERISA and of Code (S)4980B have
been met;
(3) all contributions (including all employer
contributions and employee salary reduction contributions) which
are due have been paid and all contributions for any period which
are not yet due have been accrued on the TexStar Financial
Statements in accordance with the past custom and practice of
TexStar; and
(4) TexStar is currently complying, and has in the
past complied, with all requirements related to the formation and
operation of the Employee Benefit Plan, and the TexStar Financial
Statements properly reflect all unpaid expenses and obligations
in any way related to the Employee Benefit Plan.
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(ii) TexStar has delivered or made available to Surety Bank
correct and complete copies of the plan documents and summary plan
descriptions, the most recent determination letter received from the
Internal Revenue Service, the most recent Form 5500 Annual Report, and
all related trust agreements, insurance contracts, and other funding
agreements which implement each such Employee Benefit Plan.
(iii) TexStar does not maintain or contribute to, and has
not in the past maintained or contributed to, any Employee Benefit
Plan providing medical, health, or life insurance or other welfare-
type benefits for current or future retired or terminated employees,
their spouses, or their dependents (other than in accordance with Code
(S)4980B).
(u) MATERIAL CONTRACT DEFAULTS. Except as set forth in SCHEDULE
1(U), TexStar is not in default in any material respect under any of the
agreements, commitments, arrangements, leases, insurance policies or other
instruments set forth or described herein or in the schedules referred to herein
or otherwise disclosed in writing to Surety Bank by TexStar; such agreements,
commitments, arrangements, leases, insurance policies and other instruments are
legal, valid and binding obligations of the respective parties thereto in
accordance with their terms; and there are no defenses, offsets or counterclaims
thereto which may be made by any party thereto other than TexStar, nor has
TexStar waived any substantial rights thereunder, except as set forth in the
schedules referred to herein or otherwise disclosed in writing to Surety Bank by
TexStar on or before the date of this Agreement.
(v) LITIGATION AND OTHER PROCEEDINGS. Except to the extent
indicated in SCHEDULE 1(v), there is not pending or threatened against TexStar,
or affecting or which would affect the assets of TexStar, any action, suit,
proceeding or investigation which
(i) involves a claim for an amount exceeding the amount
recoverable by TexStar from insurance companies under policies
described in SCHEDULE 1(q), subject to the deductible amounts under
said policies as set forth in said schedule,
(ii) has resulted or might result in any adverse change in
the business, operations or assets or the condition, financial or
otherwise (including without limitation changes in the value of
investments), or results of operations of TexStar,
(iii) has affected or might affect the right or ability of
TexStar to carry on its business as now conducted, or
(iv) has affected or might affect the consummation of the
transactions contemplated by this Agreement or the Merger Agreement,
or any circumstances which would give rise to any such action, suit, proceeding
or investigation. The materiality threshold under SECTION 16 does not apply for
purposes of the foregoing. Except as set forth in SCHEDULE 1(v), TexStar is not
(x) subject to any continuing court or other order, writ, injunction or decree
applicable specifically to it or to its business, property or employees, or (y)
in default with respect to any order, writ, injunction or decree of any nature.
(w) TAXES. TexStar has 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 has paid all taxes shown thereon to be due and payable. There are no
unpaid taxes of TexStar which are or may become a lien on the properties or
assets of TexStar,
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except liens for taxes not yet due and payable. The reserves and liabilities
for taxes reflected in the TexStar Financial Statements have been accrued in
accordance with generally accepted accounting principles consistent with the
past practice of TexStar and are sufficient for the payment of all interest,
taxes, and penalties relating to periods ending with or prior to the Closing.
There is no pending or proposed assessment by any taxing authority against
TexStar for additional taxes for which TexStar does not have adequate reserves
and which is not reflected on the TexStar Financial Statements. No income tax
liability of TexStar has been asserted by the Internal Revenue Service for taxes
in excess of those already paid. TexStar is not a party to any agreement
currently in effect which extends the period for assessment and collection of
any tax, nor is TexStar 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 TexStar. The
materiality threshold under SECTION 16 does not apply for purposes of the
foregoing.
(x) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
SCHEDULE 1(x), since June 30, 1997 TexStar has not:
(i) issued or sold any of its capital stock or any
corporate debt obligations (except certificates of deposit, letters of
credit, cashier's checks and other documents and instruments issued in
the ordinary course of the banking business of TexStar);
(ii) granted any option for the purchase of any shares of
its capital stock;
(iii) declared or set aside any dividend or other
distribution in respect of its capital stock, or directly or
indirectly, purchased, redeemed or otherwise acquired any such capital
stock;
(iv) made or authorized any change in its outstanding
capital stock or in its Articles of Association or bylaws;
(v) made any material change in its mode of management or
operation or method of accounting;
(vi) incurred any obligations or liabilities (absolute or
contingent) (other than any obligations or liabilities incurred in the
ordinary course of business and any obligations or liabilities less
than $2,500 but not exceeding $10,000 in the aggregate) or mortgaged,
pledged or subjected to lien or encumbrance (other than statutory
liens not yet delinquent) any of its assets or properties;
(vii) discharged or satisfied any lien or encumbrance or
paid any obligation or liability (absolute or contingent), other than
current liabilities included in the TexStar Financial Statements and
current liabilities incurred since the date thereof in the ordinary
course of business;
(viii) sold, exchanged or otherwise disposed of any of its
assets other than in the ordinary course of business;
(ix) made or become obligated to make any capital
expenditures other than such expenditures or commitments which do not
aggregate more than $10,000;
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(x) engaged in any transaction affecting its business or
properties not in the ordinary course of business or suffered any
extraordinary loss;
(xi) paid or become obligated to pay any general wage or salary
increase, bonus, severance or termination pay to any officer or
employee, entered into any employment contract with any officer or
employee, instituted any employee welfare, bonus, stock option,
profit-sharing, retirement or similar plan or arrangement, or granted
or agreed to grant any increase in compensation to any director;
(xii) made any investment except investments in the ordinary
course of business, in accordance with past practice;
(xiii) suffered any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting its
properties;
(xiv) waived any rights of value which in the aggregate are
material;
(xv) experienced any material adverse change in its assets,
properties, business, financial condition, operations, or prospects;
(xvi) suffered the occurrence of any event or condition of any
character which may materially and adversely affect its assets,
properties, business, financial condition, operations, or prospects;
or
(xvii) entered into any material transactions outside the
ordinary course of business except as expressly contemplated by this
Agreement.
(y) CORPORATE POWER AND AUTHORITY. The Board of Directors of TexStar
has duly approved this Agreement, the Merger Agreement and the transactions
contemplated hereby and thereby, and has authorized the execution and delivery
of this Agreement and, subject to the approval of the shareholders of TexStar,
the Merger Agreement by TexStar. TexStar has full power, authority and legal
right to enter into such agreements and, upon approval of such agreements by
regulatory authorities having jurisdiction in the premises and by the TexStar
shareholders, to consummate the transactions contemplated hereby and thereby.
The execution, delivery and performance of this Agreement and the Merger
Agreement and the consummation of the transactions contemplated hereby and
thereby in accordance with said agreements will not:
(i) conflict with the Articles of Association or the bylaws of
TexStar,
(ii) result in any breach or termination of, or constitute a
default under, or constitute an event which with notice or lapse of
time, or both, would become a default, or result in the creation of
any Burden upon any asset of TexStar, under any agreement, arrangement
or commitment, or violate any order, writ, injunction or decree to
which TexStar is a party or by or under which TexStar or its assets,
business or operations may be bound or affected or receive benefits,
or
(iii) result in the loss or adverse modification of any license,
franchise, permit or other authorization granted to or otherwise held
by TexStar.
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(z) COMPENSATION. TexStar has furnished to Surety Bank a schedule,
designated SCHEDULE 1(z), containing the name and position of each person
employed by TexStar whose aggregate annual compensation from TexStar (including
bonuses and similar remuneration) exceeds $25,000 and setting forth his total
annual compensation. Except as designated on SCHEDULE 1(z), TexStar has no
knowledge of any facts which would indicate that employees of TexStar will not
continue in TexStar's employment on an acceptable basis, subject to normal
turnover. Since June 30, 1997, except as set forth in SCHEDULE 1(z), TexStar
has not granted or become obligated to grant any increases in the wages or
salary of, or paid or become obligated to pay any bonus or made or become
obligated to make any similar payment to, any officer or employee (including,
without limitation, any increase in the rate of compensation payable to any of
the personnel listed in SCHEDULE 1(z) over the rate shown in SCHEDULE 1(z)) in
an aggregate amount that, computed on an annual basis, would exceed ten percent
(10%) of such officer's or employee's annual rate of compensation prior to all
such increases, bonuses or similar payments. In addition, since June 30, 1997,
except as set forth in SCHEDULE 1(z), TexStar has not, directly or indirectly,
paid or become obligated to pay any severance or termination pay to any officer
or employee.
(aa) AVAILABILITY OF DOCUMENTS. TexStar has heretofore made available
for inspection by Surety Bank at the offices of TexStar true, correct and
complete copies of its Articles of Association and bylaws and all agreements,
arrangements, commitments and documents referred to herein or in the schedules
referred to herein, in each case together with all amendments and supplements
thereto.
(ab) CLAIMS AND DEPOSITS. Neither TexStar nor any of the Shareholders
have any claims against TexStar except as otherwise disclosed in SCHEDULE 1(AB).
All sums on deposit with TexStar by the Shareholders and the officers of TexStar
in excess of $100,000 are disclosed on SCHEDULE 1(AB).
(ac) SCHEDULES. All schedules referred to herein furnished or to be
furnished by TexStar to Surety Bank are (or will be when furnished) true,
correct and complete in all material respects, as supplemented on the Closing
Date.
(ad) STOCK OWNERSHIP. The Shareholders are as of the date of this
Agreement the record owners, and on the Closing Date will be the beneficial and
record owners, of over seventy-four percent (74%) of the issued and outstanding
shares of TexStar Common Stock.
2. REPRESENTATIONS AND WARRANTIES OF SURETY BANK. Surety Bank hereby
represents and warrants to TexStar and the Shareholders as follows:
(a) ORGANIZATION. Surety Bank is a national banking association duly
organized, validly existing and in good standing under the laws of the United
States of America and has all requisite corporate power and authority and is
entitled to own or lease its properties and to carry on its business as and in
the places where such properties are owned or leased and such business is
conducted.
(b) CORPORATE POWER AND AUTHORITY. The Board of Directors of Surety
Bank has duly approved this Agreement, the Merger Agreement and the transactions
contemplated hereby and thereby and has authorized the execution and delivery of
this Agreement and the Merger Agreement by Surety Bank. Surety Bank has full
power, authority and legal right to enter into such agreements and, upon
approval of such agreements by regulatory authorities having jurisdiction in the
premises, to consummate the transactions contemplated hereby and thereby. The
making and performance of this Agreement and the Merger Agreement and the
consummation of the transactions contemplated hereby
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and thereby in accordance with such agreements will not conflict with the
Articles of Association or bylaws of Surety Bank.
3. COVENANTS OF TEXSTAR AND THE SHAREHOLDERS. TexStar and the
Shareholders each hereby covenant and agree with Surety Bank that, unless the
prior written consent of Surety Bank is obtained:
(a) CONDUCT OF BUSINESS. Prior to the Effective Time, TexStar will
operate its business only in the usual, regular and ordinary course, and TexStar
will use its best efforts to
(i) maintain its corporate existence in good standing,
(ii) maintain the general character of its business and conduct
its business in its ordinary and usual manner,
(iii) preserve intact its business organization and assets,
(iv) except as provided in SCHEDULE 1(Z), keep available the
services of its present officers and employees,
(v) 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,
(vi) maintain in full force and effect insurance comparable in
amount and scope of coverage to that now maintained by it,
(vii) preserve its goodwill and the goodwill of its suppliers,
depositors, customers and others having business dealings with it,
(viii) extend credit in accordance with its existing lending
policies,
(ix) maintain proper business and accounting records in
accordance with generally accepted principles,
(x) comply in all material respects with and perform all
duties imposed on it by all federal and other applicable laws, rules,
regulations, ordinances, codes, orders, licenses and permits imposed
by federal and other governmental authorities or otherwise applicable
to TexStar's properties and business operations,
(xi) perform all of its obligations under contracts, leases and
documents relating to or affecting its assets, properties and business
and use its best efforts to obtain any approvals or consents required
to maintain existing leases and other contracts in effect following
the Merger,
(xii) cause TexStar not to take any action described in SECTION
1(X), other than the payment of a bonus to Xxxxx X. Bexley ("Bexley")
in the amount of the Net Earnings of TexStar (as defined in Section
5(b) of the Merger Agreement), subject to a maximum of $100,000,
payable by TexStar to Bexley on the Closing Date, if, and only if, the
transactions contemplated by this Agreement are consummated, and
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(xiii) prevent the occurrence of any change or event which would
render any of the representations and warranties of TexStar contained
herein and in the Merger Agreement untrue in any material respect at
and as of the Effective Time with the same effect as though such
representations and warranties (in the exact language contained in
this Agreement or in the Merger Agreement with appropriate
modifications of tense in the case of representations and warranties
relating to statements of fact as of specific dates) had been made at
and as of the Effective Time, except as otherwise contemplated by this
Agreement.
(b) ACCESS TO PROPERTIES AND RECORDS. TexStar will keep Surety Bank
closely advised of all material developments relevant to the operations of
TexStar and the consummation of the Merger and will cooperate fully in
permitting Surety Bank to make a full investigation of the business, properties,
financial condition and investments of TexStar and in bringing about the
consummation of the Merger. Prior to the Closing Date, TexStar will update by
amendment or supplement any of the schedules referred to herein and any other
disclosure in writing from TexStar to Surety Bank, including, but not limited
to, the disclosures of TexStar pursuant to SECTION 1(H). In addition, TexStar
hereby represents and warrants that such schedules and such written disclosures,
as so amended or supplement ed, shall be true, correct and complete in all
material respects as of the Closing Date; PROVIDED, HOWEVER, that the inclusion
of any information in any such amendment or supplement, not included in the
original schedule or written disclosure at or prior to the date of this
Agreement, will not (except to the extent such information was not required to
be included in the original schedule or written disclosure) limit or impair any
right which Surety Bank might otherwise have respecting the representations or
warranties of TexStar contained in this Agreement.
(c) FURTHER ASSURANCES. Upon request of Surety Bank, TexStar, subject
to approval by TexStar's counsel, and the Shareholders, and each of them, will
at any time, whether before or after the Closing Date, and from time to time,
duly execute and deliver to Surety Bank all such further instruments and
documents as may be necessary or advisable, in the opinion of Surety Bank's
counsel, to obtain the full benefit of this Agreement and the Merger Agreement
and the transactions contemplated hereby and thereby.
(d) CHANGED CIRCUMSTANCES. TexStar shall promptly notify Surety Bank
if TexStar discovers that any of the representations or warranties contained in
this Agreement or the Merger Agreement were not true and correct as of the date
hereof, or by reason of changed circumstances, or otherwise, are no longer true
and correct.
(e) REPORTS. From the date hereof to the Closing Date, TexStar and
the Sharehold ers, and each of them, will deliver to Surety Bank promptly after
they become available, all TexStar Reports filed by TexStar with any regulatory
body or authority, any report of TexStar to its sharehold ers, all proxy
statements and other written materials furnished to the shareholders of TexStar,
and all press releases issued by TexStar.
(f) RESTATEMENT OF TEXSTAR FINANCIAL STATEMENTS. On or before the
Closing Date, TexStar will cause the following TexStar Financial Statements to
be restated in accordance with Regulation S-X promulgated by the Securities and
Exchange Commission (the "SEC") and will cause same, together with any and all
consents from its independent accountants to the inclusion of such TexStar
financial statements in all necessary registration statements and reports to be
filed by Surety in connection with the consummation of the transactions
contemplated by this Agreement, to be delivered to Surety Bank: statements of
condition at December 31, 1997, 1996 and 1995, and statements of income,
statements of cash flows and of shareholders' equity for the three (3) years
ended as of
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December 31, 1997, 1996 and 1995, together with the notes thereto, as certified
by the independent accountants of TexStar.
(g) PERSONNEL CHANGES. From the date of this Agreement and until the
Closing, TexStar shall not cause any changes to be made in the officers or
directors of TexStar, except with the prior written approval of Surety Bank,
which approval shall not be unreasonably withheld.
(h) OFFICERS' CERTIFICATE. At the Closing Date, TexStar will furnish
to Surety Bank a certificate executed in its corporate name by the chief
executive officer of TexStar dated the Closing Date, which shall state whether
(i) TexStar has complied in all material respects with its agreements contained
herein and in the Merger Agreement to be performed at or prior to the Closing
Date, and (ii) the representations and warranties of TexStar contained herein
and in the Merger Agreement are true in all material respects at and as of the
Closing Date with the same effect as though such representations and warranties
(in the exact language contained in this Agreement or in the Merger Agreement
with appropriate modification of tense in the case of representations and
warranties relating to statements of fact as of specified dates) had been made
at and as of the Closing Date.
(i) ESCROW AGREEMENT. At the Closing Date, the Shareholders shall
each execute and deliver the escrow agreement (the "Escrow Agreement") in the
form attached hereto as EXHIBIT B.
(j) APPROVALS OF THIRD PARTIES. As soon as practicable after the date
of this Agreement, TexStar will use its best efforts to provide Surety Bank with
such information concerning TexStar as Surety Bank may request in order to
secure the approval of the Merger by regulatory authorities having jurisdiction
over banks and bank holding companies, and will otherwise use its best efforts
to cause the consummation of the Merger in accordance with the terms and
conditions of this Agreement and the Merger Agreement.
(k) FINANCIAL INFORMATION. TexStar will deliver, or will cause to be
delivered, to Surety Bank, as soon as available, but in any event within thirty
(30) days after the end of each month commencing with the month of August 1997,
the monthly information furnished to the Board of Directors of TexStar,
including, but not limited to, the following financial statements of TexStar:
(i) a statement of condition of TexStar as of the end of such month and the
related statement of income for such month and for the portion of the fiscal
year of TexStar ended at the end of such month, and (ii) such additional
information regarding the financial position, business or prospects of TexStar
as Surety Bank may reasonably require in connection with any filings by Surety
Bank or Surety with the SEC and the Comptroller. Such additional financial
statements will also be included in the term "TexStar Financial Statements" for
purposes of this Agreement. Additionally, TexStar will deliver, or will cause
to be delivered, at its expense, to Surety Bank, as soon as available, but in
any event by January 31, 1998, a statement of condition of TexStar as of the end
of such fiscal year and the related statement of income and statements of cash
flow and changes in stockholders equity of TexStar for such fiscal year, all in
reasonable detail, in compliance with Regulation S-X promulgated by the SEC,
stating in comparative form the respective figures for the corresponding date
and period in the prior fiscal year and prepared in accordance with generally
accepted accounting principles and accompanied by an opinion thereon by
TexStar's independent accountants.
(l) PROXY MATERIAL AND MEETING OF SHAREHOLDERS. As soon as
practicable after the receipt of regulatory approval of the transactions
contemplated hereby, TexStar will: (i) prepare a proxy statement, notice of
meeting and form of proxy to be used in connection with a meeting of its
shareholders to consider and vote upon the transactions contemplated in this
Agreement and the Merger Agreement, and (ii) furnish proxy materials to its
shareholders, and duly call and hold a meeting of its
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shareholders to submit and recommend to its shareholders the approval of the
transactions contemplated in this Agreement and the Merger Agreement, including
the appointment of W. Xxxxxx Xxxx or another shareholder of TexStar as the
attorney-in-fact of the shareholders of TexStar who will act on behalf of such
shareholders as the "Representative" pursuant to the Escrow Agreement, and cause
to be furnished to each such shareholder a copy of such proxy material.
(m) VOTING. The Shareholders agree to vote all of their shares of
TexStar Common Stock in favor of the Merger at the meeting of the shareholders
of TexStar called to consider and vote upon the transactions contemplated by
this Agreement and the Merger Agreement.
(n) MATERIAL CONTRACTS. From the date of this Agreement until the
Closing the Shareholders shall not, without prior consultation with Surety,
permit TexStar to enter into any agreement, contract or commitment to sell or
otherwise dispose of any real property or any material amount of any tangible or
intangible personal property to, make any investment in, or loan or otherwise
extend credit to a third party other than in the ordinary course of TexStar's
business.
(o) ATTENDANCE AT MEETINGS OF THE BOARD OF DIRECTORS. From the date
of this Agreement until the Closing, TexStar shall give Surety and Surety Bank
at least three (3) days' prior written notice of any regular or special meeting
of the Board of Directors of TexStar (or of any committee thereof) and permit a
representative of Surety and Surety Bank to attend each of such meetings.
(p) ADDITIONAL ACCRUALS AND RESERVES. Immediately prior to the
Closing, TexStar shall establish such additional accruals and reserves as may be
necessary: (i) to conform TexStar's accounting and credit loss reserve
practices and methods to those of Surety Bank and Surety Bank's plans with
respect to the conduct of TexStar's business following the Merger and, (ii) to
the extent permitted by generally accepted accounting principles, to provide for
the costs and expenses relating to the consummation by TexStar of the Merger and
the other transactions contemplated by this Agreement.
(q) ENVIRONMENTAL REPORTS. TexStar shall obtain, at its sole expense,
Phase I environmental assessments, or updates to those previously obtained, for
each bank facility and each non-residential OREO property. Oral reports of such
environmental assessments shall be delivered to Surety Bank no later than four
(4) weeks, and written reports shall be delivered to Surety Bank no later than
eight (8) weeks, from the date of this Agreement. TexStar shall obtain a survey
and assessment of all potential asbestos containing material in owned or leased
properties (other than OREO property) and a written report of the results shall
be delivered to Surety Bank within four (4) weeks from the date of this
Agreement.
(r) TITLE INSURANCE AND SURVEYS. TexStar shall provide copies of all
existing policies of title insurance and boundary surveys for each bank
facility, which shall be delivered to Surety Bank no later than four (4) weeks
from the date of this Agreement.
(s) PRESS RELEASES. TexStar shall consult with Surety Bank as to the
form and substance of any proposed press releases or other proposed public
disclosure of matters related to this Agreement or any of the transactions
contemplated thereby.
(t) FINAL TAX RETURNS. The Shareholders agree to cause to be
prepared, signed and filed with the Internal Revenue Service and with any other
appropriate taxing authorities all tax returns
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for TexStar for all periods ending prior to or with the Effective Date. This
covenant shall survive the consummation of the transactions contemplated in this
Agreement.
(u) TexStar shall have terminated its discretionary incentive
compensation program for its employees (more fully described on SCHEDULE 1(R),
ITEM (VIII)), effective as of the commence ment of business January 1, 1998.
4. COVENANTS OF SURETY BANK. Surety Bank hereby covenants and agrees
with TexStar and the Shareholders as follows:
(a) APPROVALS OF THIRD PARTIES. As soon as practicable after the date
of this Agreement, Surety Bank will use its best efforts to secure all necessary
approvals of third parties, including without limitation regulatory authorities,
having jurisdiction over banks and bank holding companies that are required in
order to effect the Merger and will otherwise use its reasonable efforts to
cause the consummation of the Merger in accordance with the terms and conditions
of this Agreement and the Merger Agreement.
(b) PAYMENT. As and when required by the provisions of the Merger
Agreement, Surety Bank shall pay to the shareholders of TexStar such sums to
which such shareholders are entitled under Section 5(a) of the Merger Agreement.
5. MUTUAL REPRESENTATIONS AND COVENANTS. Surety Bank and TexStar
mutually represent and covenant as follows:
(a) FURNISHING INFORMATION AND INDEMNIFICATION. Surety Bank and
TexStar have furnished, or will furnish as soon as practicable after the date of
this Agreement, to each other such information as the other has requested or may
request concerning itself required for inclusion in
(i) applications to be filed on behalf of TexStar and Surety
Bank with the Comptroller for authority to consummate the Merger, and
(ii) any other request, application, statement, report or
material to be made or filed by Surety Bank or TexStar to or with any
governmental agency, department or instrumentality in connection with
the transactions contemplated in this Agreement, in the Merger
Agreement or otherwise.
(b) NO AGENT'S FEE. Surety Bank and Surety, on the one hand, and
TexStar, on the other hand, represent to and covenant with each other that there
is no agent's, broker's or finder's fee or commission payable or that will be
payable in connection with the transactions contemplated in this Agreement or
the Merger Agreement by virtue of or resulting from any action or agreement on
the part of such indemnifying party other than a fee payable to Xxxxxxx X. Xxxxx
of Austin, Texas ("Agent") upon the consummation of the Merger, pursuant to a
letter agreement dated August 26, 1997 by and between TexStar and Agent. If,
but only if, the Merger is consummated pursuant to this Agreement and the Merger
Agreement, Surety Bank shall pay Agent such fee and such payment shall reduce
the amount payable by Surety Bank pursuant to Section 5(a) of the Merger
Agreement. Except as provided in the foregoing, Surety Bank and Surety, on the
one hand, and TexStar, on the other hand, hereby agree to indemnify and hold
harmless each other from and against any claim, demand, liability, loss, cost or
expense (including court costs and attorneys' fees) on account of or in
connection with any agent's, broker's or finder's fees or commissions payable or
alleged to be payable in connection with this Agreement or the Merger Agreement
or the transactions contemplated hereby or thereby by virtue
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of or resulting from any action or agreement on the part of such indemnifying
party. This indemnifica tion provision shall survive the Closing of the
transactions contemplated by this Agreement.
6. CONDITIONS TO OBLIGATIONS OF PARTIES. The obligations of Surety Bank
and TexStar to cause the Merger to be consummated are subject to the
satisfaction on or prior to the Closing Date of each of the following
conditions, unless such condition shall, on or prior to the Closing Date, have
been waived in writing by TexStar and Surety Bank:
(a) APPROVALS OF THIRD PARTIES. All orders, consents and approvals
necessary in order for the transactions contemplated hereby to be lawfully
accomplished shall have been entered by each regulatory authority having
jurisdiction in the premises, including the Comptroller, upon terms and
conditions satisfactory to TexStar and Surety Bank; all applicable statutory
waiting periods shall have expired; and all necessary orders, consents and
approvals referred to in SECTION 3(J) and SECTION 4(A) hereof shall have been
given by third parties, upon terms and conditions satisfactory to TexStar and
Surety Bank.
(b) LITIGATION. At the Closing Date, there shall not be pending or
threatened any litigation in any court or any proceeding before or by any
governmental department, agency or instrumentality,
(i) in which it is sought to restrain or prohibit or obtain
damages in respect of the consummation of the Merger, or
(ii) as a result of which, in the reasonable judgment of Surety
Bank or TexStar, either Surety Bank or TexStar or their respective
shareholders could be deprived of any of the material benefits of the
Merger.
7. CONDITIONS TO SURETY BANK'S OBLIGATIONS. The obligations of Surety
Bank to cause the Merger to be consummated are subject to the satisfaction on or
prior to the Closing Date of each of the following conditions, unless Surety
Bank shall have waived such condition in writing:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS OF TEXSTAR AND THE
SHAREHOLD ERS. TexStar and the Shareholders shall have complied in all material
respects with each agreement or covenant made by it or them in this Agreement or
in the Merger Agreement and to be performed by it or them at or prior to the
Closing Date, and each representation or warranty of TexStar contained in this
Agreement or the Merger Agreement shall be accurate in all material respects at
and as of the Closing Date with the same effect as though such representation or
warranty (in the exact language contained in this Agreement or in the Merger
Agreement with appropriate modification of tense in the case of representations
and warranties relating to statements of fact as of specified dates) had been
made at and as of the Closing Date.
(b) FURTHER ACTION. Each and every action required of TexStar and the
Sharehold ers by this Agreement to effect the Merger will have been taken,
including the execution and delivery by TexStar and the attorney-in-fact of the
shareholders of TexStar (appointed at the meeting of the shareholders of TexStar
pursuant to SECTION 3(L) hereof) of the Escrow Agreement.
(c) OTHER CERTIFICATES. TexStar shall have furnished to Surety Bank
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(i) a certificate from the Comptroller dated not more than
thirty (30) days prior to the Closing Date attesting to TexStar's
existence as a national banking association and certifying as to all
charter documents on file with respect to TexStar,
(ii) a certificate from the Comptroller dated not more than
thirty (30) days prior to the Closing Date attesting to TexStar's good
standing as a national banking association,
(iii) copies, certified by the Comptroller as of a date not more
than thirty (30) days prior to the Closing Date, of the Articles of
Association and all amendments thereto of TexStar,
(iv) copies, certified by the Cashier of TexStar as of the
Closing Date, of the bylaws of TexStar as amended at the Closing Date,
and
(v) a certificate of the Cashier of TexStar dated as of the
Closing Date attesting to the adoption of all resolutions by its
directors and shareholders and the taking of all such other corporate
action by TexStar as required for consummation of the Merger.
(d) SHAREHOLDER APPROVAL. At a meeting of the shareholders of TexStar
duly called and held for such purpose, the transactions contemplated in this
Agreement and the Merger Agreement shall have been duly approved by the
requisite vote of such shareholders.
(e) FINANCIAL RESOURCES. Surety Bank will have sufficient financial
resources available, in the sole opinion of Surety Bank, to consummate the
transactions contemplated by this Agreement and the Merger Agreement.
(f) MATERIAL ADVERSE CHANGE. TexStar will not, in the reasonable
opinion of Surety and Surety Bank, have suffered any material adverse change in
its financial condition, business, operations, prospects, properties or assets.
(g) DUE DILIGENCE. Surety and Surety Bank shall, in the sole opinion
of Surety and Surety Bank, be completely satisfied with the results of the due
diligence review of TexStar conducted by Surety and Surety Bank.
(h) EXERCISE OF DISSENTERS' RIGHTS. At the Closing Date, there shall
not exist any reason for Surety Bank to believe that statutory rights, if any,
of appraisal and payment for stock will be exercised upon consummation of the
Merger by holders of more than twelve percent (12%) of the outstanding shares of
TexStar Common Stock pursuant to 12 U.S.C. 215(a).
(i) EMPLOYEE BENEFIT PLANS. Immediately prior to the Closing, TexStar
shall have terminated the Employee Benefit Plans in compliance with all
applicable statutes, rules, and regulations.
(j) LOAN LOSS RESERVE. TexStar shall have maintained and the TexStar
Financial Statements shall reflect as of the Closing Date a reserve for loan
losses, excluding cash-secured and the guaranteed portion of SBA loans, at least
equal to the greater of: (i) $463,000, as reflected in the TexStar Financial
Statements at June 30, 1997, or (ii) an amount equal to 1.5% of TexStar's total
outstanding loans as of the Closing Date.
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(k) CONDITIONS TO TEXSTAR'S OBLIGATIONS. The obligations of TexStar
to cause the Merger to be consummated are subject to the satisfaction on or
prior to the Closing Date of each of the following conditions, unless TexStar
shall have waived such condition in writing:
(l) REPRESENTATIONS, WARRANTIES AND COVENANTS OF SURETY BANK. Surety
Bank shall have complied in all material respects with each agreement or
covenant made by it in this Agreement or in the Merger Agreement and to be
performed by it at or prior to the Closing Date, and each representation or
warranty of Surety Bank contained in this Agreement or the Merger Agreement
shall be accurate in all material respects at and as of the Closing Date with
the same effect as though such representation or warranty (in the exact language
contained in this Agreement or in the Merger Agreement with appropriate
modification of tense in the case of representations and warranties relating to
statements of fact as of specified dates) had been made at and as of the Closing
Date.
(m) FURTHER ACTION. Each and every action required of Surety Bank to
effect the Merger will have been taken.
(n) OTHER CERTIFICATES. Surety Bank shall have furnished to TexStar a
certificate of the Cashier of Surety Bank, dated as of the Closing Date,
attesting to the adoption of all resolutions by the directors and sole
shareholder and the taking of all other corporate action by Surety Bank as
required for consummation of the Merger.
8. EXPENSES. TexStar, the Shareholders, Surety Bank and Surety shall
each bear and pay all costs and expenses incurred by it or on its behalf in
connection with the proceedings relating to this Agreement and the Merger,
including, without limiting the generality of the foregoing, fees and expenses
of its own financial consultants, accountants and counsel. Surety Bank shall
pay all reasonable expenses and costs incurred by Surety Bank in connection with
its efforts to obtain any necessary approvals of any governmental regulatory
authority having control or jurisdiction over any transactions contemplated by
this Agreement. TexStar shall pay all expenses and costs related to the
restatement of the TexStar Financial Statements provided for in SECTION 3(F)
hereof. The Agent's fee provided for in SECTION 5(B) hereof shall be paid on a
pro rata basis by all of the shareholders of TexStar who do not exercise their
dissenters' rights (collectively, the "Non-Dissenting Shareholders"). Each Non-
Dissenting Shareholder shall bear that portion of the Agent's fee that such Non-
Dissenting Shareholder's number of shares of TexStar Common Stock bears to the
total number of shares of TexStar Common Stock held by the Non-Dissenting
Shareholders.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the warranties,
representations, covenants and agreements made by TexStar in this Agreement or
in any schedule, exhibit, list or other instrument delivered pursuant to or in
connection with this Agreement shall survive the Closing hereof, except for the
representations of TexStar contained in SECTION 1(V) AND (W) and SECTION 5(B)
hereof, which shall survive for two (2) years following the Closing and remain
operative and in full force and effect during such period of time regardless of
any investigation at any time made by or on behalf of the party to whom or with
whom the warranty, representation, covenant or agreement is made and shall not
be deemed merged into any document or instrument executed or delivered at
Closing.
10. INDEMNIFICATION.
(a) ESCROW AGREEMENT. TexStar and the Shareholders hereby agree, and
by the approval of this Agreement and the Merger Agreement by the shareholders
of TexStar, the shareholders of TexStar hereby agree, that Surety and Surety
Bank, and their respective officers, directors, employees, agents, successors
and assigns, shall be indemnified and held harmless from any and all
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Claims (as defined in the Escrow Agreement); provided, however, that Surety and
Surety Bank agree that the escrow established pursuant to the Escrow Agreement
shall be the exclusive source of funds from which they are entitled to be paid
for a Claim.
(b) OTHER INDEMNIFICATION PROVISIONS. Each of the Shareholders hereby
agrees that he or it will not make any claim for indemnification against TexStar
(or any successor) by reason of the fact that he or it was a director, officer,
employee, or agent of such entity or was serving at the request of such entity
as a partner, trustee, director, officer, employee, or agent of another entity
(whether such claim is for judgments, damages, penalties, fines, costs, amounts
paid in settlement, losses, expenses, or otherwise and whether such claim is
pursuant to any statute, charter document, bylaw, agreement, or otherwise) with
respect to any action, suit, proceeding, complaint, claim, or demand against
such Shareholder (whether such action, suit, proceeding, complaint, claim, or
demand is pursuant to this Agreement, applicable law, or otherwise).
Notwithstanding anything herein to the contrary, this Agreement shall not limit,
restrict, bar or void any claim, benefit, coverage or other right the
Shareholders may have under any liability policy of insurance which currently
exists or will be obtained for the benefit of TexStar or its officers,
directors, employees or agents.
11. NOTICES. Any notice, request, instruction or other document to be
given hereunder or under the Merger Agreement by or to any party hereto shall be
in writing and delivered personally or sent by certified mail, postage prepaid,
if to Surety Bank or Surety to:
0000 Xxxxxxxx Xxxx Xxxx
Xxxxx 000
Xxxxx, Xxxxx 00000
Attention: Mr. C. Xxxx Xxxx
with a copy to:
Xx. Xxxxxxxx X. Xxxxxxx
Xxxxx & Xxxxxxx, L.L.P.
000 X. 0xx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000-0000
and if to TexStar:
000 Xxx Xxxxxx Xxxx
Xxxxxxxxx Xxxx, Xxxxx 00000
Attention: Xx. Xxxxx X. Bexley
with a copy to:
Xx. Xxxxxxx X. Xxxxx
Xxxxxxx Xxxxxx, L.L.P.
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000-0000
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and if to Shareholders:
Mr. W. Xxxxxx Xxxx
Rush Peterbilt Truck Center
0000 Xxxxxxxxxx 00 Xxxx
Xxx Xxxxxxx, Xxxxx 00000
with a copy to:
Xx. Xxxxxxx X. Xxxxx
Xxxxxxx Xxxxxx, L.L.P.
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000-0000
or at such other address for a party as shall be specified by like notice.
12. SPECIFIC PERFORMANCE. The parties hereby declare that it is
impossible to measure in money the damages which will accrue to a party hereto,
his heirs, executors, administrators, legal representatives, successors or
assigns, by reason of the failure of another party to perform any of the
obligations hereunder. Therefore, if a party hereto, his heirs, executors,
administrators, legal representatives, successors or assigns, shall institute
any action or proceeding to enforce the provisions hereof, any party against
whom such action or proceeding is brought hereby agrees that specific
performance may be sought and obtained for any breach of this Agreement or the
Merger Agreement without the necessity of proving actual damages; provided,
however, that any party hereto may, at its option, waive its right to specific
performance and collect damages resulting from any breach or failure to perform
hereunder.
13. CONFIDENTIALITY. Except as necessary or appropriate in connection
with any statement, application or other document filed with applicable
governmental authorities in connection with the transactions contemplated by
this Agreement and the Merger Agreement or as otherwise required by law, each
party hereto will, and will cause its respective officers and authorized
representatives to, hold in confidence all, and not to disclose to others for
any reason whatsoever any, information of the other parties, including, but not
limited to, non-public information as identified in the Right to Financial
Privacy Act 12 U.S.C. (S)(S) 3401-3422, which information is received by such
party from the other parties hereto, or any of them, in connection with the
transactions contemplated by this Agreement and the Merger Agreement. If the
transactions contemplated by this Agreement shall not be consummated, such
confidence shall be maintained and such information shall not be used (except to
the extent such information can be shown to be previously known to such party,
in the public domain, or later acquired by such party from other legitimate
sources) and, upon request, all such documents, any copies thereof and extracts
therefrom shall immediately be returned.
14. ATTORNEYS' FEES. If any action at law or in equity, including any
action for declaratory relief, is brought to enforce or interpret the provisions
of this Agreement or the Merger Agreement, the prevailing party shall be
entitled to recover reasonable attorneys' fees and related expenses from the
other party or parties, which fees and expenses may be set by the court in the
trial of such action or may be enforced in a separate action brought for that
purpose.
15. MATERIALITY. For purposes of the provisions of this Agreement that
refer to matters or facts with the modification that same are "material," the
parties agree that the threshold for materiality is $25,000.
-20-
16. MISCELLANEOUS. This Agreement and the Merger Agreement constitute the
entire contract and supersede all prior agreements and understandings, both
written and oral, between the parties hereto and thereto with respect to the
subject matter hereof and thereof, and no party shall be liable or bound to the
other in any manner by any warranties or representations except as specifically
set forth herein or in the Merger Agreement or expressly required to be made or
delivered pursuant hereto or thereto. Each of the attachments, schedules, lists
and exhibits called for by this Agreement and the Merger Agreement is made a
part of this Agreement and the Merger Agreement the same as if set out verbatim
at each point where reference is made to it. The terms and conditions of this
Agreement and of the Merger Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties hereto and
thereto, but nothing contained herein shall be construed as a consent to any
assignment of this Agreement or the Merger Agreement by the parties hereto or
thereto, or any of them. Nothing in this Agreement or in the Merger Agreement,
express or implied, is intended to confer upon any party, other than the parties
hereto and thereto, and their respective successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of such agreements,
except as expressly provided herein or therein. The provisions of Sections 9,
10, 11 and 12 of the Merger Agreement are hereby incorporated into this
Agreement for all purposes notwithstanding whether the Merger Agreement or
Merger Plan have been approved by the shareholders of TexStar. This Agreement
may be executed in one or more counterparts, each of which shall for all
purposes be deemed to be an original and all of which shall constitute the same
instrument, but only one of which need be produced. The headings of the
sections and subsections of this Agreement are inserted for convenience only and
shall not be deemed to constitute part of this Agreement or to affect the
construction hereof. As used in this Agreement, the words "herein", "hereof",
and "hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular section, subsection or other subdivision.
Unless context otherwise requires,
(i) words in the singular number include the plural and the
plural include the singular, and
(ii) words of the masculine gender include the feminine and
neuter genders and words of the neuter gender referred to any gender.
In case any one or more of the provisions contained in this Agreement or the
Merger Agreement is for any reason held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality, or unenforceability shall not
affect any other provisions hereof or thereof, and this Agreement and the Merger
Agreement shall be construed as if such invalid, illegal or unenforceable
provisions had never been contained herein and therein. This Agreement shall be
construed in accordance with the laws of the State of Texas. No term or
condition of this Agreement or the Merger Agreement shall be deemed to have been
waived, nor shall there be any estoppel to enforce any provision of this
Agreement or the Merger Agreement, except by written instrument signed by the
party charged with such waiver or estoppel.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be signed in counterparts all as of the date first above written.
SURETY BANK: SURETY BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------------
Xxxxx X. Xxxxxxx, Vice Chairman of the Board,
President and Chief Executive Officer
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ATTEST:
/s/ Xxxxxx X. Xxxxx
---------------------------
Xxxxxx X. Xxxxx, Cashier
TEXSTAR: TEXSTAR NATIONAL BANK
By: /s/ Xxxxx X. Bexley
------------------------------------
Xxxxx X. Bexley, President
ATTEST:
/s/ Xxxxx X. Xxxxxxxx
--------------------------
Xxxxx X. Xxxxxxxx, Cashier
SURETY: SURETY CAPITAL CORPORATION
By: /s/ C. Xxxx Xxxx
-------------------------------------
C. Xxxx Xxxx, Chairman of the
Board and Chief Executive Officer
ATTEST:
/s/ X. X. Xxxxxx
--------------------------
X. X. Xxxxxx, Secretary
SHAREHOLDERS:
/s/ W. Xxxxxx Xxxx
----------------------------------------
W. Xxxxxx Xxxx
/s/ W. Xxxxxxx Xxxx
----------------------------------------
W. Xxxxxxx Xxxx
/s/ Xxxxx Xxxxx
----------------------------------------
Xxxxx Xxxxx
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxxx
/s/ Xxxxx Xxxxxxxxx
----------------------------------------
Xxxxx Xxxxxxxxx
/s/ Xxxxx X. Bexley
----------------------------------------
Xxxxx X. Bexley
-22-
SCHEDULE A
SHAREHOLDERS OF TEXSTAR NATIONAL BANK
W. Xxxxxx Xxxx
W. Xxxxxxx Xxxx
Xxxxx Xxxxx
Xxxxxx X. Xxxxxxxx
Xxxxx Xxxxxxxxx
Xxxxx X. Bexley
EXHIBIT "A"
AGREEMENT TO MERGE TEXSTAR NATIONAL BANK
WITH AND INTO SURETY BANK, NATIONAL ASSOCIATION UNDER THE
CHARTER OF SURETY BANK, NATIONAL ASSOCIATION AND UNDER
THE TITLE OF SURETY BANK, NATIONAL ASSOCIATION
AGREEMENT TO MERGE ("Merger Agreement") dated as of October __, 1997,
between SURETY BANK, NATIONAL ASSOCIATION, a national banking association
located in Hurst, Texas ("Surety Bank"), and TEXSTAR NATIONAL BANK, a national
banking association located in Universal City, Texas ("TexStar"), and joined in
by SURETY CAPITAL CORPORATION, a Delaware corporation located in Hurst, Texas
("Surety") and _________________________________________ (individually, a
"Shareholder" and collectively, the "Shareholders").
WITNESSETH:
A. Surety Bank is a national banking association duly organized and
existing under the laws of the United States of America having its principal
offices in the City of Xxxxx, County of Tarrant, State of Texas.
B. TexStar is a national banking association duly organized and
existing under the laws of the United States having its principal offices in the
City of Xxxxxxxxx Xxxx, Xxxxxx xx Xxxxx, Xxxxx of Texas.
C. Surety Bank has, and will have as of the Effective Time,
authorized capital consisting of 6,000,000 shares of common stock, $0.91 par
value, of which 3,708,195 shares have been duly issued and are, and will be as
of the Effective Time, validly outstanding.
D. TexStar has, and will have as of the Effective Time, authorized
capital consisting of 575,000 shares of common stock, $5.00 par value ("TexStar
Common Stock"), of which 485,000 shares are, and will be as of the Effective
Time, issued and outstanding.
E. The Boards of Directors of TexStar and of Surety Bank have
approved this Merger Agreement under which TexStar will be merged into Surety
Bank and have authorized the execution hereof; the Board of Directors of Surety
has approved this Merger Agreement, authorized Surety to join in and be bound by
this Merger Agreement, and authorized the undertakings herein made by Surety.
F. Surety Bank, TexStar, Surety and the Shareholders have entered
into an Agreement and Plan of Reorganization dated October __, 1997
("Reorganization Agreement") which contemplates the merger provided for in this
Merger Agreement. All terms not defined in this Merger Agreement will have the
meaning set forth in the Reorganization Agreement.
G. As and when required by the provisions of this Merger Agreement or
the Reorganization Agreement (hereinafter referred to collectively as the
"Merger Plan"), all such action as may be necessary or appropriate will be taken
by Surety Bank, TexStar, Surety and the Shareholders in order to consummate said
merger. In this connection, Surety Bank shall pay cash and, if applicable,
certain performance payments to the shareholders of TexStar, pursuant to the
provisions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises, Surety Bank and
TexStar, joined by Surety and the Shareholders, hereby agree that TexStar shall
be merged into Surety Bank on the following terms and conditions:
1. At the Effective Time, TexStar will be merged into Surety Bank
under the Articles of Association and Charter of Surety Bank. Said merger will
be pursuant to the provisions of and with the effect provided in 12 U.S.C.
Section 215(a).
2. At the Effective Time, the name of Surety Bank (hereinafter
referred to as "Continuing Bank" whenever reference is made to it as of the time
of merger or thereafter) will continue to be "Surety Bank, National
Association." The Articles of Association of Continuing Bank will be as set
forth in ANNEX A attached hereto and made a part hereof. The bylaws of Surety
Bank in effect immediately prior to the merger will become the bylaws of
Continuing Bank. The established office and facilities of Surety Bank
immediately prior to the merger will become the established office and
facilities of Continuing Bank. The established office and facilities of TexStar
immediately prior to the merger will continue and be operated as a branch of
Continuing Bank.
3. At the Effective Time, the corporate existence of Surety Bank and
TexStar will, as provided in 12 U.S.C. Section 215(a), be merged into and
continued in Continuing Bank; and Continuing Bank will be deemed to be the same
association as Surety Bank and TexStar. All rights, franchises and interests of
Surety Bank and TexStar, respectively, in and to every type of property (real,
personal and mixed) and choses in action shall be transferred to and vested in
Continuing Bank by virtue of such merger without any deed or other transfer.
Continuing Bank at the Effective Time and without any order or other action on
the part of any court or otherwise, will hold and enjoy all rights of property,
franchises and interests, including appointments, designations and nominations,
and all other rights and interests as trustee, executor, administrator, transfer
agent and registrar of stocks and bonds, guardian of estates, assignee,
receiver, and in every other fiduciary capacity, and in every agency capacity,
in the same manner and to the same extent as such rights, franchises and
interests were held or enjoyed by Surety Bank and TexStar, respectively, at the
Effective Time.
4. At the Effective Time, Continuing Bank shall be liable for all
liabilities of Surety Bank and of TexStar, respectively; and all deposits,
debts, liabilities, obligations and contracts of Surety Bank and of TexStar,
respectively, matured or unmatured, whether accrued, absolute, contingent or
otherwise, and whether or not reflected or reserved against on balance sheets,
books of account or records of Surety Bank or TexStar, as the case may be,
including all liabilities of Surety Bank and TexStar for taxes, whether existing
at the Effective Time or arising as a result of or pursuant to the merger, will
be those of Continuing Bank and will not be released or impaired by the merger;
and all rights of creditors and other obligees and all liens on property of
either Surety Bank or TexStar shall be preserved unimpaired.
5. At the Effective Time:
(a) Each share of TexStar Common Stock outstanding at the Effective
Time held by the shareholders of TexStar, other than Dissenting Shares (as
hereinafter defined), will, without any action on the part of the shareholders
of TexStar, be converted into and exchanged for the right to receive cash equal
to the sum of (i) the quotient of $9,500,000 divided by the number of shares of
TexStar Common Stock issued and outstanding at the Effective Time and (ii) the
quotient of the Performance Payment (as herein defined) divided by the number of
shares of TexStar Common Stock issued and outstanding at the Effective Time. The
foregoing sum shall be subject to the adjustment set forth in Section 9 of the
Reorganization Agreement and the resulting amount shall be the "Exchange Price".
(b) The Performance Payment will be equal to fifty percent (50%) of
the Net Earnings of TexStar in excess of $100,000. "Net Earnings of TexStar"
will be the net income of TexStar for the
-2-
period September 1, 1997 to the Closing Date before taxes but after all other
charges of TexStar (including normal year-end adjustments) as reflected by
TexStar's financial statements and mutually agreed upon by Surety Bank and
TexStar. In the event of a dispute, Surety Bank's independent public
accountants, Coopers & Xxxxxxx L.L.P., will ascertain "Net Earnings of TexStar"
for the applicable period and such determination will be conclusive and binding
on all the parties to this Agreement. All determinations by the parties in this
regard will be made in accordance with generally accepted accounting principles.
(c) All shares of capital stock of Surety Bank issued and outstanding
at the Effective Time will continue to be issued and outstanding shares of
capital stock of Continuing Bank.
(d) For purposes of this Merger Agreement, "Dissenting Shares" of a
shareholder of TexStar will refer to those shares of TexStar Common Stock owned
by a shareholder of TexStar who, pursuant to 12 U.S.C. Section 215(a), (i) gives
notice in writing at or prior to the meeting of TexStar's shareholders referred
to in Section 3(l) of the Reorganization Agreement to the presiding officer that
he dissents from the Merger Plan or votes against such Merger Plan at such
meeting and (ii) is thereby entitled to receive the value of his shares of
TexStar Common Stock upon approval of the Merger Plan by the Comptroller of the
Currency and written request made by such shareholder to the Continuing Bank at
any time before thirty (30) days after the Effective Time, accompanied by the
surrender of his stock certificates.
The value of the shares of TexStar Common Stock of any dissenting
shareholder will be ascertained, as of the Effective Time, by an appraisal made
by a committee of three persons, composed of (i) one selected by the vote of the
holders of a majority of the TexStar Common Stock, the owners of which are
entitled to payment in cash; (ii) one selected by the directors of the
Continuing Bank; and (iii) one selected by the two so selected. The valuation
agreed upon by any two of the three appraisers shall govern. If the value so
fixed will not be satisfactory to any dissenting shareholder who has requested
payment, that shareholder may, within five (5) days after being notified of the
appraised value of his shares, appeal to the Comptroller of the Currency, which
shall cause a reappraisal to be made which will be final and binding as to the
value of the shares of the appellant.
If, within ninety (90) days from the Effective Time, for any reason one or
more of the appraisers is not selected as herein provided, or the appraisers
fail to determine the value of such shares, the Comptroller of the Currency
shall upon written request of any interested party cause an appraisal to be made
which will be final and binding on all parties. The expenses of the Comptroller
of the Currency in making the reappraisal or the appraisal, as the case may be,
shall be paid by the Continuing Bank. The value of the shares ascertained shall
be promptly paid to the dissenting shareholders by the Continuing Bank.
6. After the Effective Time:
(a) The shareholders of TexStar, as the sole holders of the
outstanding certificates which prior thereto represented shares of TexStar
Common Stock, may surrender same to Continuing Bank, and the shareholders of
TexStar shall be entitled upon such surrender to receive from Continuing Bank in
exchange therefor, without cost to such holder, the Exchange Price for each
share of TexStar Common Stock represented by such outstanding certificates
surrendered, as adjusted for the required $400,000 contribution into the escrow
established by the Escrow Agreement provided for in the Reorganization
Agreement.
-3-
(b) Until so surrendered, each such outstanding certificate which,
prior to the Effective Time, represented shares of TexStar Common Stock shall be
deemed for all purposes to evidence solely the right to receive the amount of
cash into and for which such shares of TexStar Common Stock shall have been
converted pursuant to SECTION 5(A) hereof. No interest will be payable with
respect to any such cash payments. If a shareholder of TexStar is unable to
locate any of his certificates which prior to the Effective Time represented
shares of TexStar Common Stock, Continuing Bank will issue a check to such
shareholder in the amount which such shareholder would otherwise be entitled to
receive hereunder without surrendering such certificate, upon receipt by
Continuing Bank of an indemnity bond in favor of Continuing Bank and
satisfactory in all respects to Continuing Bank.
(c) The stock transfer books of TexStar will be closed as of the close
of business on the Closing Date (hereinafter defined), and no transfer of record
of any of the shares of TexStar Common Stock will take place thereafter. From
and after the close of business on the Closing Date, shares of TexStar Common
Stock will cease to be shares of TexStar, irrespective of whether such shares
are ultimately surrendered.
7. The directors, advisory directors and officers, respectively, of
Continuing Bank at the Effective Time will be those persons who are directors,
advisory directors and officers, respectively, of Surety Bank immediately before
the Effective Time. The committees of the Board of Directors of Continuing Bank
at the Effective Time will be the same as, and will be composed of the same
persons who are serving on, committees of the Board of Directors of Surety Bank
as they exist immediately before the Effective Time.
8. This Merger Agreement will be submitted to the sole shareholder of
Surety Bank and to the shareholders of TexStar at meetings called to be held as
promptly as practicable in accordance with the Reorganization Agreement. Upon
approval of the sole shareholder of Surety Bank and the shareholders of TexStar,
and the satisfaction of all the other conditions set forth in Sections 6, 7 and
8 of the Reorganization Agreement, this Merger Agreement will be made effective
as soon as practicable thereafter in the manner provided in SECTION 12 hereof.
9. The Merger Plan may be terminated and abandoned at any time prior to
or on the Closing Date, whether before or after action thereon by the sole
shareholder of Surety Bank or the shareholders of TexStar:
(a) By the mutual consent in writing of Surety
Bank and the Shareholders;
(b) By the Shareholders in writing if any of the conditions to the
obligations of the Shareholders or TexStar contained herein or in the
Reorganization Agreement shall not have been satisfied or, if unsatisfied,
waived as of the Closing Date;
(c) By Surety Bank in writing if any of the conditions to the
obligations of Surety or Surety Bank contained herein or in the Reorganization
Agreement shall not have been satisfied or, if unsatisfied, waived as of the
Closing Date;
(d) By either the Shareholders or Surety Bank in writing if any of the
conditions to the obligations of such parties contained in Section 6 of the
Reorganization Agreement shall not have been satisfied or, if unsatisfied,
waived as of the Closing Date; or
-4-
(e) By either the Shareholders or Surety Bank in writing if the
Closing Date shall not have occurred by March 31, 1998, unless the date is
extended by mutual agreement of the Shareholders and Surety Bank.
10. Except as provided in the next succeeding sentence, in the event
of the termination and abandonment of the Merger Plan pursuant to the provisions
of SECTION 9 hereof, the same shall be of no further force or effect except that
the indemnification provisions set forth in Section 11 of the Reorganization
Agreement and the provisions relating to expenses set forth in Section 9 of the
Reorganization Agreement shall survive any such termination and abandonment.
Additionally, in the event Surety elects to abandon the Merger Plan by written
notice to such effect to TexStar (the "Election") as a result of the failure of
the conditions to Closing set forth in Section 7(e) or 7(g) of the
Reorganization Agreement, the failure of which shall be determined in the sole
and unfettered discretion of Surety, and such Election is made by Surety after
December 31, 1997, Surety shall pay to TexStar a break-up fee in the amount of
$25,000, and upon payment thereof, none of the parties to the Reorganization
Agreement nor the Merger Agreements shall have any further obligations to each
other, except as expressly set forth in this SECTION 10.
11. Any of the terms or conditions of the Merger Plan may be waived at any
time, whether before or after action thereon by the shareholders of Surety Bank
or TexStar, by the party which is entitled to the benefits thereof; and this
Merger Agreement or the Reorganization Agreement may be modified or amended at
any time, whether before or after action thereon by the shareholders of Surety
Bank or TexStar; provided, however, that such action shall be taken only if, in
the judgment of Surety Bank and TexStar, such waiver, modification or amendment
will not have a materially adverse effect on Surety Bank, TexStar or their
respective shareholders. Any waiver, modification or amendment must be in
writing .
12. The closing date (the "Closing Date") shall be a date to be selected
by mutual agreement of the parties immediately following the date thirty (30)
days after the date of the order of the Comptroller of the Currency approving
the merger pursuant to 12 U.S.C. Section 1828(c) (or if such date is not a
business day, then the next business day following) and the satisfaction of all
other conditions to the obligations of the parties to the Reorganization
Agreement. The closing (the "Closing") shall be held at the offices of TexStar,
Universal City, Texas on the Closing Date. At the Closing, Surety Bank shall
deliver to the shareholders of TexStar, other than the dissenting shareholders,
cash in the amount of the Exchange Price and the shareholders of TexStar shall
deliver to Surety Bank all of the stock certificates evidencing issued and
outstanding shares of TexStar Common Stock. Subject to the terms, and upon
satisfaction on or before the Closing Date of all requirements of law and the
conditions specified in the Merger Plan, including receipt of the approval of
the Comptroller of the Currency specified in 12 U.S.C. Section 215(a), the
merger will become effective at the time specified in the certificate to be
issued by the Comptroller of the Currency under the seal of his office approving
the merger, such time being herein called the "Effective Time."
13. For the convenience of the parties hereto and to facilitate the filing
and recording of this Merger Agreement, any number of counterparts thereof may
be executed, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument, but only one of which
need be produced.
IN WITNESS WHEREOF, Surety Bank has caused this Merger Agreement to be
executed in counterparts by its duly authorized officers and its corporate seal
to be hereunto affixed as of the date first above written, and the directors
constituting all of the Board of Directors of such national banking association
have hereunto subscribed their names.
-5-
SURETY BANK: SURETY BANK, NATIONAL ASSOCIATION
By:
----------------------------------------
Xxxxx X. Xxxxxxx, Vice Chairman of
the Board, President and Chief
Executive Officer
ATTEST:
----------------------------
Xxxxxx X. Xxxxx, Cashier
ALL OF THE DIRECTORS OF
SURETY BANK, NATIONAL ASSOCIATION
-------------------------------------------
C. Xxxx Xxxx
-------------------------------------------
Xxxxxxx X. Xxxx
-------------------------------------------
Xxxxx X. Xxxxxxx
-------------------------------------------
Xxxxxx X. Xxxxxx
-------------------------------------------
X. X. Xxxxxxxxxxx, III
-------------------------------------------
Xxxxxxx X. Xxxxx
-------------------------------------------
Xxxxxxx Xxxxxx
-------------------------------------------
Xxxxxx X. Xxxxxx
-6-
THE STATE OF TEXAS )
)
COUNTY OF TARRANT )
On this _______ day of ______________, 1997, before me, a Notary Public for
the State and County aforesaid, personally came Xxxxx X. Xxxxxxx as President
and Xxxxxx X. Xxxxx as Cashier, of SURETY BANK, NATIONAL ASSOCIATION, and each
in his said capacity acknowledged the foregoing instrument to be the act and
deed of said association and the seal affixed thereto to be its seal; and came
also C. Xxxx Xxxx, Xxxxxxx X. Xxxx, Xxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxx, X. X.
Xxxxxxx xxxx, III, Xxxxxxx X. Xxxxx, Xxxxxxx Xxxxxx and Xxxxxx X. Xxxxxx, being
all of the Board of Directors of said association and each of them acknowledged
said instrument to be the act and deed of said association and of himself as
director thereof.
WITNESS my official seal and signature this day and year aforesaid.
-------------------------------------------
NOTARY PUBLIC IN AND FOR THE STATE
OF TEXAS
-------------------------------------------
My Commission Expires
IN WITNESS WHEREOF, TexStar has caused this Merger Agreement to be executed
in counterparts by its duly authorized officers and its corporate seal to be
hereunto affixed as of the date first above written, and the directors
constituting all of the Board of Directors of such national banking association
have hereunto subscribed their names.
TEXSTAR: TEXSTAR NATIONAL BANK
By:
-----------------------------------------
Xxxxx X. Bexley, President
ATTEST:
----------------------------------
, Cashier
----------------
ALL OF THE DIRECTORS OF
TEXSTAR NATIONAL BANK
-----------------------------------------
W. Xxxxxx Xxxx
-----------------------------------------
W. Xxxxxxx Xxxx
-7-
-----------------------------------------
Xxxxx Xxxxx
-----------------------------------------
Xxxxxx X. Xxxxxxxx
-----------------------------------------
Xxxxx Xxxxxxxxx
-----------------------------------------
Xxxxx X. Bexley
THE STATE OF TEXAS )
)
COUNTY OF _________ )
On this _______ day of ______________, 1997, before me, a Notary Public for
the State and County aforesaid, personally came Xxxxx X. Bexley, as President
and ______________ as Cashier, of TEXSTAR NATIONAL BANK, and each in his or her
said capacity acknowledged the foregoing instrument to be the act and deed of
said association and the seal affixed thereto to be its seal; and came also W.
Xxxxxx Xxxx, W. Xxxxxxx Xxxx, Xxxxx Xxxxx, Xxxxxx X. Xxxxxxxx, Xxxxx Xxxxxxxxx
and Xxxxx X. Bexley, being all of the Board of Directors of said association and
each of them acknowledged said instrument to be the act and deed of said
association and of himself or herself as director thereof.
WITNESS my official seal and signature this day and year aforesaid.
-----------------------------------------
NOTARY PUBLIC IN AND FOR THE STATE
OF TEXAS
-----------------------------------------
My Commission Expires
Surety hereby joins in the foregoing Merger Agreement, and undertakes that
it will be bound thereby and will do and perform all acts and things therein
referred to or provided to be done by it.
IN WITNESS WHEREOF, Surety has caused this undertaking to be made in
counterparts by its duly authorized officers and its corporate seal to be
hereunto affixed as of the date first above written.
SURETY: SURETY CAPITAL CORPORATION
By:
-----------------------------------------
C. Xxxx Xxxx, Chairman of the
Board and Chief Executive Officer
-8-
ATTEST:
-----------------------------
X. X. Xxxxxx, Secretary
The Shareholders hereby join in the foregoing Merger Agreement, and
undertake that they will be bound thereby and will do and perform all acts and
things therein referred to or provided to be done by them.
IN WITNESS WHEREOF, the Shareholders have caused this undertaking to be
made as of the date first above written.
THE SHAREHOLDERS:
-----------------------------------------
W. Xxxxxxx Xxxx
-----------------------------------------
W. Mauricce Rush
-----------------------------------------
Xxxxx Xxxxx
-----------------------------------------
Xxxxxx X. Xxxxxxxx
-----------------------------------------
Xxxxx Xxxxxxxxx
-----------------------------------------
Xxxxx X. Bexley
-9-
ANNEX A
ARTICLES OF ASSOCIATION 1996
FIRST. The title of the association shall be Surety Bank, National
Association.
SECOND. The main office of the association shall be in Hurst, County of
Tarrant, State of Texas. The general business of the association shall be
conducted at its main office and its branches.
THIRD. The board of directors of the association shall consist of not less
than 5 nor more than 25 persons, the exact number to be fixed and determined
from time to time by resolution of a majority of the full board of directors or
by resolution of a majority of the shareholders at any annual or special meeting
thereof. Each director shall own common or preferred stock of the association
with an aggregate par value of not less than $1,000, or common or preferred
stock of a bank holding company owning the association with an aggregate par,
fair market or equity value of not less than $1,000, as of either (i) the date
of purchase, (ii) the date the person became a director, or (iii) the date of
that person's most recent election to the board of directors, whichever is
greater. Any combination of common or preferred stock of the association or
holding company may be used.
Any vacancy in the board of directors may be filled by action of a majority
of the remaining directors between meetings of shareholders. The board of
directors may not increase the number of directors between meetings of
shareholders to a number which: (1) exceeds by more than 2 the number of
directors last elected by shareholders where the number was 15 or less; and (2)
exceeds by more than 4 the number of directors last elected by shareholders
where the number was 16 or more, but in no event shall the number of directors
exceed 25.
Terms of directors, including directors selected to fill vacancies, shall
expire at the next regular meeting of shareholders at which directors are
elected, unless the directors resign or are removed from office.
Despite the expiration of a director's term, the director shall continue to
serve until his or her successor is elected and qualifies or until there is a
decrease in the number of directors and his or her position is eliminated.
Honorary or advisory members of the board of directors, without voting
power or power of final decision in matters concerning the business of the
association, may be appointed by resolution of a majority of the full board of
directors, or by resolution of shareholders at any annual or special meeting.
Honorary or advisory directors shall not be counted for purposes of determining
the number of directors of the association or the presence of a quorum in
connection with any board action, and shall not be required to own qualifying
shares.
FOURTH. There shall be an annual meeting of the shareholders to elect
directors and transact whatever other business may be brought before the
meeting. It shall be held at the main office or any other convenient place the
board of directors may designate, on the day of each year specified therefore in
the bylaws, or if that day falls on a legal holiday in the state in which the
association is located, on the next following banking day. If no election is
held on the day fixed or in event of a legal holiday, an election may be held on
any subsequent day within 60 days of the day fixed, to be designated by the
board of directors, or, if the directors fail to fix the day, by shareholders
representing two-thirds of the shares issued and outstanding. In all cases at
least 10 days' advance notice of the meeting shall be given to the shareholders
by first class mail.
In all elections of directors, the number of votes each common shareholder
may cast will be determined by multiplying the number of shares he or she owns
by the number of directors to be elected. Those votes may be cumulated and cast
for a single candidate or may be distributed among two or more candidates in the
manner selected by the shareholder. On all other questions, each common
shareholder shall be entitled to one vote for each share of stock held by him or
her.
Nominations for election to the board of directors may be made by the board
of directors or by any stockholder of any outstanding class of capital stock of
the association entitled to vote for election of directors. Nominations other
than those made by or on behalf of the existing management shall be made in
writing and be delivered or mailed to the president of the association and to
the Comptroller of the Currency, Washington, D.C., not less than 14 days nor
more than 50 days prior to any meeting of shareholders called for the election
of directors; provided, however, that if less than 21 days' notice of the
meeting is given to shareholders, such nominations shall be mailed or delivered
to the president of the association and to the Comptroller of the Currency not
later than the close of business on the seventh day following the date on which
the notice of meeting was mailed. Such notification shall contain the following
information to the extent known to the notifying shareholder:
(1) The name and address of each proposed nominee.
(2) The principal occupation of each proposed nominee.
(3) The total number of shares of capital stock of the association that
will be voted for each proposed nominee.
(4) The name and residence address of the notifying shareholder, and
(5) The number of shares of capital stock of the association owned by the
notifying shareholder.
Nominations not made in accordance herewith may, in his/her discretion, be
disregarded by the chairperson of the meeting, and the vote tellers may
disregard all votes cast for each such nominee. No bylaw may unreasonably
restrict the nomination of directors by shareholders.
A director may resign at any time by delivering written notice to the board
of directors, its chairperson, or to the association, which resignation shall be
effective when the notice is delivered unless the notice specifies a later
effective date.
A director may be removed by shareholders at a meeting called to remove him
or her, when notice of the meeting stating that the purpose or one of the
purposes is to remove him or her is provided, if there is a failure to fulfill
one of the affirmative requirements for qualification, or for cause; provided,
however, that a director may not be removed if the number of votes sufficient to
elect him or her under cumulative voting is voted against his or her removal.
FIFTH. The authorized amount of capital stock of this association shall be
6,000,000 shares of common stock with a par value of ninety-one cents ($0.91)
each; but said capital stock may be increased or decreased from time to time,
according to the provisions of the laws of the United States.
No holder of shares of the capital stock of any class of the association
shall have any preemptive or preferential right of subscription to any shares of
any class of stock of the association, whether now or hereafter authorized, or
to any obligations convertible into stock of the association,
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issued, or sold, nor any right of subscription to any thereof other than such,
if any, as the board of directors, in its discretion may from time to time
determine and at such price as the board of directors may from time to time fix.
Unless otherwise specified in the articles of association or required by
law, (1) all matters requiring shareholder action, including amendments to the
articles of association must be approved by shareholders owning a majority
voting interest in the outstanding voting stock, and (2) each shareholder shall
be entitled to one vote per share.
Unless otherwise specified in the articles of association or required by
law, all shares of voting stock shall be voted together as a class on any
matters requiring shareholder approval. If a proposed amendment would affect
two or more classes or series in the same or a substantially similar way, all
the classes or series so affected must vote together as a single voting group on
the proposed amendment.
Shares of the same class or series may be issued as a dividend on a pro
rata basis and without consideration. Shares of another class or series may be
issued as a share dividend in respect of a class or series of stock if approved
by a majority of the votes entitled to be cast by the class or series to be
issued unless there are no outstanding shares of the class or series to be
issued. Unless otherwise provided by the board of directors, the record date
for determining shareholders entitled to a share dividend shall be the date the
board of directors authorizes the share dividend.
Unless otherwise provided in the bylaws, the record date for determining
shareholders entitled to notice of and to vote at any meeting is the close of
business on the day before the first notice is mailed or otherwise sent to the
shareholders, provided that in no event may a record date be more than 70 days
before the meeting.
If a shareholder is entitled to fractional shares pursuant to a stock
dividend, consolidation or merger, reverse stock split or otherwise, the
association may (a) issue fractional shares; (b) in lieu of the issuance of
fractional shares, issue script or warrants entitling the holder to receive a
full share upon surrendering enough script or warrants to equal a full share;
(c) if there is an established and active market in the association's stock,
make reasonable arrangements to provide the shareholder with an opportunity to
realize a fair price through sale of the fraction, or purchase of the additional
fraction required for a full share; (d) remit the cash equivalent of the
fraction to the shareholder; or (e) sell full shares representing all the
fractions at public auction or to the highest bidder after having solicited and
received sealed bids from at least 3 licensed stock brokers; and distribute the
proceeds pro rata to shareholders who otherwise would be entitled to the
fractional shares. The holder of a fractional share is entitled to exercise the
rights of a shareholder, including the right to vote, to receive dividends, and
to participate in the assets of the association upon liquidation, in proportion
to the fractional interest. The holder of script or warrants is not entitled to
any of these rights unless the script or warrants explicitly provide for such
rights. The script or warrants may be subject to such additional conditions as:
(1) that the script or warrants will become void if not exchanged for full
shares before a specified date; and (2) that the shares for which the script or
warrants are exchangeable may be sold at the option of the association and the
proceeds paid to scriptholders.
The association, at any time and from time to time, may authorize and issue
debt obligations, whether or not subordinated, without the approval of the
shareholders. Obligations classified as debt, whether or not subordinated,
which may be issued by the association without the approval of shareholders, do
not carry voting rights on any issue, including an increase or decrease in the
aggregate number of the securities, or the exchange or reclassification of all
or part of securities into securities of another class or series.
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SIXTH. The board of directors shall appoint one of its members as
president of this association, and one of its members as chairperson of the
board and shall have the power to appoint one or more vice presidents, a
secretary who shall keep minutes of the directors' and shareholders' meetings
and be responsible for authenticating the records of the association, and such
other officers and employees as may be required to transact the business of this
association. A duly appointed officer may appoint one or more officers or
assistant officers if authorized by the board of directors in accordance with
the bylaws.
The board of directors shall have the power to:
(1) Define the duties of the officers, employees and agents of the
association.
(2) Delegate the performance of its duties, but not the responsibility for
its duties, to the officers, employees and agents of the association.
(3) Fix the compensation and enter into employment contracts with its
officers and employees upon reasonable terms and conditions consistent with
applicable law.
(4) Dismiss officers and employees.
(5) Require bonds from officers and employees and fix the penalty thereof.
(6) Ratify written policies authorized by the association's management or
committees of the board.
(7) Regulate the manner in which any increase or decrease of the capital of
the association shall be made, provided that nothing herein shall restrict the
power of shareholders to increase or decrease the capital of the association in
accordance with law, and nothing shall raise or lower from two-thirds the
percentage required for shareholder approval to increase or reduce the capital.
(8) Manage and administer the business and affairs of the association.
(9) Adopt initial bylaws, not inconsistent with law or the articles of
association, for managing the business and regulating the affairs of the
association.
(10) Amend or repeal bylaws, except to the extent that the articles of
association reserve this power in whole or in part to shareholders.
(11) Make contracts.
(12) Generally perform all acts that are legal for a board of directors to
perform.
SEVENTH. The board of directors shall have the power to change the
location of the main office to any other place within the limits of Hurst, Texas
without the approval of the shareholders, and shall have the power to establish
or change the location of any branch or branches of the association to any other
location permitted under applicable law, without the approval of the
shareholders subject to approval by the Office of the Comptroller of the
Currency.
EIGHTH. The corporate existence of this association shall continue until
terminated according to the laws of the United States.
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NINTH. The board of directors of this association, or any 3 or more
shareholders owning, in the aggregate, not less than 10% of the stock of this
association, may call a special meeting of shareholders at any time. Unless
otherwise provided by the bylaws or the laws of the United States, or waived by
shareholders, a notice of the time, place and purpose of every annual and
special meeting of the shareholders shall be given by first-class mail, postage
prepaid, mailed at least 10, and no more than 60, days prior to the date of the
meeting to each shareholder of record at his/her address as shown upon the books
of this association. Unless otherwise provided by the bylaws, any action
requiring approval of shareholders must be effected at a duly called annual or
special meeting.
TENTH. The association shall indemnify to the fullest extent permitted
under the Texas Business Corporation Act any person who is made a named
defendant or respondent in any action, suit or proceeding, other than in an
administrative proceeding or action instituted by an appropriate bank regulatory
agency which proceeding or action results in a final order assessing civil
monetary penalties or requiring affirmative action by such person in the form of
payments to the association, whether civil, criminal, administrative,
arbitrative or investigative, or in any appeal in such an action, suit or
proceeding, by reason of the fact that he or she is or was a director, advisory
director or officer of the association, against all expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such director, advisory director or officer in connection
with any such action, suit or proceeding. The association may indemnify other
persons, as permitted by the Texas Business Corporation Act and other applicable
laws. The association may purchase and maintain insurance on behalf of
directors, advisory directors, officers or other persons against any liability
asserted against such persons in their capacities as directors, advisory
directors, officers or otherwise, other than for liability asserted against such
persons pursuant to a formal order assessing civil monetary penalties.
ELEVENTH. No director of the association shall be liable to the
association or its shareholders for monetary damages for an act or omission in
such director's capacity as a director of the association, except that this
Article Eleventh shall not eliminate or limit the liability of a director of the
association for:
(i) a breach of such director's duty of loyalty to the association or its
shareholders;
(ii) an act or omission not in good faith or that involves intentional
misconduct or a knowing violation of the law;
(iii) a transaction from which a director received an improper benefit,
whether or not the benefit resulted from an action taken within the scope of the
director's office; or
(iv) an act or omission for which the liability of a director is expressly
provided for by statute.
Any repeal or amendment of this Article Eleventh by the shareholders of the
association shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the association existing
at the time of such repeal or amendment. Anything herein to the contrary
notwithstanding, if the Texas Miscellaneous Corporation Laws Act is amended
after approval by the shareholders of this Article Eleventh to authorize
corporate action further eliminating or limiting the personal liability of
directors, then the liability of a director of the association shall be
eliminated or limited to the full extent then permitted by the Texas
Miscellaneous Corporation Laws Act, as so amended from time to time.
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TWELFTH. These articles of association may be amended at any regular or
special meeting of the shareholders by the affirmative vote of the holders of a
majority of the stock of this association, unless the vote of the holders of a
greater amount of stock is required by law, and in that case by the vote of the
holders of such greater amount. The association's board of directors may
propose one or more amendments to the articles of association for submission to
the shareholders.
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EXHIBIT "B"
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is made as of ____________, 199__ by and among SURETY
BANK, NATIONAL ASSOCIATION, a national banking association located in Hurst,
Texas ("Surety Bank"), TEXSTAR NATIONAL BANK, a national banking association
located in Universal City, Texas ("TexStar"), SURETY CAPITAL CORPORATION, a
Delaware corporation located in Hurst, Texas ("Surety"), W. Xxxxxx Xxxx, as the
representative of the shareholders of TexStar (the "Representative"), and
______________________ ("Escrow Agent"). All terms not otherwise defined in
this Escrow Agreement shall have the meanings set forth in the Agreement and
Plan of Reorganization dated __________, 1997 by and among Surety Bank, TexStar,
Surety and the Indemnifying Parties (the "Reorganization Agreement") and in the
Agreement to Merge TexStar National Bank with and into Surety Bank, National
Association Under the Charter of Surety Bank, National Association and Under the
Title of Surety Bank, National Association dated ___________, 1997 between
Surety Bank and TexStar and joined in by Surety and the Indemnifying Parties
(the "Merger Agreement"). The Reorganization Agreement and the Merger Agreement
are hereinafter referred to collectively as the "Agreements."
RECITALS
A. Pursuant to the Agreements, TexStar is to be merged into Surety Bank
(the "Merger") under the Articles of Association and Charter of Surety Bank; and
B. In connection with the Merger, a certain portion of the Exchange Price
to be received by the Indemnifying Parties in exchange for their Shares of
TexStar Common Stock (as herein defined) is to be deposited directly by Surety
in the escrow created hereby and disbursed in accordance herewith; and
C. Representative is executing this Escrow Agreement individually and as
attorney-in-fact (as authorized in the Reorganization Agreement) for certain of
the shareholders of TexStar who are identified on SCHEDULE A attached hereto.
W. Xxxxxx Xxxx and the other shareholders of TexStar identified on SCHEDULE A
are individually referred to as an "Indemnifying Party" and collectively
referred to as the "Indemnifying Parties." SCHEDULE A further sets forth each
Indemnifying Party's Escrow Proportion (as herein defined) and total
contribution to the Escrowed Principal Funds (as herein defined).
Now, therefore, in consideration of the premises and the mutual warranties,
representations covenants and agreements contained herein, the parties hereto
represent, warrant, covenant and agree as follows:
1. DEFINITIONS.
The following terms shall have the meanings specified:
"CLAIM CERTIFICATE" shall have the meaning specified in SECTION 4.B.I
hereof.
"CLAIMS" shall have the meaning specified in SECTION 4.A hereof.
"EFFECTIVE TIME" shall mean the time specified in the certificate to be
issued by the Comptroller of the Currency under the seal of his office approving
the Merger under the Agreements.
"ESCROW AGREEMENT" shall mean this escrow agreement (including all
attachments hereto), as same may from time to time be amended.
"ESCROWED FUNDS" shall have the meaning specified in SECTION 2.B hereof.
"ESCROWED INTEREST FUNDS" shall have the meaning specified in SECTION 2.B
hereof.
"ESCROWED PRINCIPAL FUNDS" shall have the meaning specified in SECTION 2.A
hereof.
"ESCROW PROPORTION" as to any Indemnifying Party shall mean the percentage
obtained by dividing (i) the number of Shares of TexStar Common Stock held of
record by such Indemnifying Party as of the Effective Time by (ii) the total
number of Shares of TexStar Common Stock held of record by all of the
Indemnifying Parties at the Effective Time. The Escrow Proportion for each
Indemnifying Party is set forth on SCHEDULE A hereto.
"FINAL DETERMINATION" shall mean the final decision of any court of
competent jurisdiction from which no appeal has been allowed because of lapse of
time or otherwise.
"FIRST RELEASE DATE" shall mean the first anniversary date of the Effective
Time.
"INDEMNIFIED PARTY" shall mean Surety Bank and Surety, and their respective
officers, directors, employees, agents, successors and assigns.
"REPRESENTATIVE" shall mean W. Xxxxxx Xxxx who is authorized to act on
behalf of the Indemnifying Parties for all purposes of this Escrow Agreement and
who shall serve in such capacity until his resignation or death, in which event
a majority of the shareholders who were members of the Board of Directors of
TexStar immediately before the Effective Time shall appoint a successor
Representative.
"SECOND RELEASE DATE" shall mean the second anniversary date of the
Effective Time.
"SHARES OF TEXSTAR COMMON STOCK" shall mean the outstanding shares of
common stock, $5.00 par value, of TexStar.
Capitalized terms not defined in this Agreement shall have the meaning set
forth in the Agreements.
2. CREATION OF ESCROW; INVESTMENT OF ESCROWED FUNDS.
a. CREATION OF ESCROW ACCOUNT. At the Effective Time Surety shall
deposit the amount of $400,000 in cash in escrow with the Escrow Agent (the
"Escrowed Principal Funds"). The Representative, on behalf of the Indemnifying
Parties, hereby authorizes and directs Surety to withhold out of each
Indemnifying Party's Exchange Price that amount set forth next to such
Indemnifying Party's name on SCHEDULE A under the heading "Contribution to
Escrowed Principal Funds" and to deposit such amount in escrow with the Escrow
Agent. Escrow Agent hereby agrees to hold and disburse the Escrowed Funds (as
herein defined) in accordance with the terms of this Agreement.
b. INVESTMENT OF ESCROWED PRINCIPAL FUNDS AND ESCROWED INTEREST FUNDS.
Escrow Agent shall, to the extent practicable, invest and reinvest the Escrowed
Principal Funds and Escrowed Interest Funds in readily marketable direct
obligations of or obligations guaranteed by the United States
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of America maturing within six months from their respective dates of issuance or
such other investments as may be specified in writing by the Representative and
Surety acting jointly. The term "Escrowed Interest Funds" shall mean any
interest received on investments of Escrowed Principal Funds and any interest
received on investments of such interest or dividends. The term "Escrowed
Funds" shall mean the Escrowed Principal Funds and the Escrowed Interest Funds.
3. RELEASE FROM ESCROW.
Escrow Agent will distribute and deliver the Escrowed Funds upon the
occurrence of any of the following events and in the manner hereinafter
provided:
a. Upon the receipt from Surety of a written notice that a specified
amount of Escrowed Funds held by Escrow Agent are to be delivered to the
Indemnifying Parties, such amount of Escrowed Funds shall be delivered to the
Indemnifying Parties.
b. Upon the receipt from time to time of a Claim Certificate signed by
the President or a Vice President of Surety that Surety is entitled to offset in
a stated amount on account of a Claim made by an Indemnified Party, which is not
contested by the Representative in accordance with SECTION 4.B or, if contested,
which is subsequently resolved in accordance with SECTION 4.B, by either the
delivery of a written consent of the Representative to Escrow Agent or entry of
a Final Determination with respect to the dispute, Escrow Agent shall deliver to
Surety, in satisfaction of such Claim, that amount of the Escrowed Funds which
shall equal the amount stated in the Claim Certificate or otherwise determined
under SECTION 4.B.
c. On the First Release Date, if Escrow Agent shall hold Escrowed Funds
in excess of the sum of (i) one hundred fifty percent (150%) of the aggregate
amount of all pending Claims, if any, of the Indemnified Parties filed with
Escrow Agent in accordance with SECTION 4.B below, and (ii) $200,000, Escrow
Agent shall deliver to the Indemnifying Parties the excess of such Escrowed
Funds.
d. On the Second Release Date, if Escrow Agent shall hold Escrowed Funds
in excess of one hundred fifty percent (150%) of the aggregate amount of all
pending Claims, if any, of the Indemnified Parties filed with Escrow Agent in
accordance with SECTION 4.B below, Escrow Agent shall deliver to the
Indemnifying Parties the excess of such Escrowed Funds.
e. If on the Second Release Date there shall be no outstanding Claims,
Escrow Agent shall on the Second Release Date deliver all then remaining
Escrowed Funds to the Indemnifying Parties.
f. Escrow Agent shall retain any Escrowed Funds not distributed hereunder
to the Indemnifying Parties on the Second Release Date until the Claims relating
to such Escrowed Funds have been fully satisfied or resolved or a Final
Determination has been rendered with respect thereto.
g. Each delivery of Escrowed Funds to the Indemnifying Parties pursuant
to SECTIONS 3.a through 3.f above shall be allocated to each Indemnifying Party
in accordance with such Indemnifying Party's Escrow Proportion; provided,
however, that each Indemnifying Party shall be entitled to receive distributions
hereunder only to the extent that Escrowed Funds shall have been deposited
hereunder on behalf of such Indemnifying Party.
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4. INDEMNIFICATION RIGHTS.
a. REIMBURSEMENT AND INDEMNIFICATION. The Indemnified Parties shall be
entitled to recover from the Escrowed Funds the amount of any and all
liabilities, damages, losses, claims, demands, costs or expenses (including
interest, penalties, reasonable attorneys' and accountants' fees and expenses,
court costs and fees of expert witnesses) (all of the foregoing hereinafter
collectively referred to as the "Claims") which an Indemnified Party shall
suffer or incur, whether liquidated or unliquidated, accrued or contingent,
connected with or arising out of (i) a breach of warranty or misrepresentation
by TexStar under Section 1(v) or Section 1(w) of the Reorganization Agreement,
or (ii) a misrepresentation or breach of covenant by TexStar under Section 5(b)
of the Reorganization Agreement; provided, however, no Claim may be made against
the Indemnifying Parties until such time as all Claims aggregate $25,000
("Minimum Claim") after which time the Indemnified Parties are entitled to
indemnification for all Claims in excess of the Minimum Claim made to the extent
of the Escrowed Funds.
b. PROCEDURE FOR CLAIMS.
i. If, prior to the Second Release Date, Surety shall discover,
incur or receive notice of the existence of any Claim, whether liquidated or
unliquidated, accrued or contingent, asserted or unasserted, for which an
Indemnified Party claims reimbursement or indemnity hereunder, Surety shall
promptly give written notice thereof to the Representative and Escrow Agent by
delivering a certificate (a "Claim Certificate") which shall be signed by the
President or a Vice President of Surety to the effect that an Indemnified Party
has a Claim in the amount specified in such Claim Certificate and setting forth
the basis for such Claim. Upon receipt of any such Claim Certificate, Escrow
Agent shall, as soon as practicable (but not earlier than seven (7) business
days after the delivery to Escrow Agent of such Claim Certificate) deliver to
the Indemnified Party Escrowed Funds equal to the amount of the Claim as set
forth in the Claim Certificate. Unless, within five (5) business days after
delivery to the Representative of any Claim Certificate, the Representative
gives written notice to Surety and Escrow Agent that the Representative
questions the accuracy of, or matters included in, such Claim Certificate, such
Claim Certificate shall constitute full authority to Escrow Agent to take the
action provided for in this SECTION 4.B and shall be conclusive on all parties
hereto.
ii. If the Representative gives notice questioning the accuracy of,
or matters included in, a Claim Certificate, Escrow Agent shall not distribute
to an Indemnified Party any Escrowed Funds or make any indemnification payment
to an Indemnified Party pursuant to this SECTION 4.B until Escrow Agent receives
(i) the written consent of the Representative to such indemnifying payment or
(ii) a Final Determination with respect to the dispute. After notice by the
Representative of disagreement with the accuracy of, or matters included in, a
Claim Certificate, either Surety or any other Indemnified Party (on the one
hand) or the Representative (on the other hand), may submit and settle such
disagreement by arbitration in accordance with the Commercial Arbitration Rules,
existing at the date thereof, of the American Arbitration Association (the
"Rules"). The dispute shall be submitted to one arbitrator agreed to by Surety
and the Representative or, if Surety and the Representa tive cannot agree on one
arbitrator, by three arbitrators selected in accordance with said Rules, and
shall be heard in Fort Worth, Texas. Each arbitrator must be experienced in the
subject matter in dispute. The costs and expenses of the arbitration shall be
paid by the non-prevailing party in such arbitration. If an Indemnified Party
is the prevailing party, a Claim may be made against the Escrowed Funds for such
costs and expenses.
iii. In the event of any Claim asserted against an Indemnified Party
by a third party, the Indemnified Party shall immediately notify the
Representative thereof, and permit the Representa-
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tive, on behalf of the Indemnifying Parties, to assume the defense of any such
Claim or any litigation resulting therefrom; provided, however, that counsel for
the Representative, on behalf of the Indemnify ing Parties, who shall conduct
the defense of such Claim or any litigation resulting therefrom, shall be
approved by the Indemnified Party or Parties against whom the Claim for which
indemnification is sought is made (whose approval shall not be unreasonably
withheld), and the Indemnified Party or Parties may participate in such defense
at such party's expense. The failure of any Indemnified Party to give notice to
the Representative as provided herein shall not relieve the Indemnifying Parties
of their obligations under this Escrow Agreement unless such failure to give
notice results in the forfeiture of substantive rights or defenses of the
Indemnifying Parties. The Representative, in the defense of any such Claim or
litigation, shall not, except with the consent of the relevant Indemnified Party
or Parties, which consent shall not be unreasonably withheld, consent to entry
of any judgment or enter into any settlement with regard to such Claim or
litigation. The Indemnified Parties shall furnish such information regarding
themselves or the Claim in question as the Representative may reasonably request
in writing and as shall be reasonably required in connection with the defense of
such Claim and litigation resulting therefrom. The Representative shall advise
the Indemnified Parties from time to time of the status of such defense. The
attorney fees, costs, and other expenses related to Representative's defending
or litigating a Claim shall be paid from the Escrowed Funds from time to time as
approved in writing by the Representative and Surety. Notwithstanding the above
rights of Representative to defend and litigate a Claim, Surety may, by written
notice to the Representative and Escrow Agent, terminate such defense and
litigation and direct that the Claim be paid in full if Surety reasonably
determines, after consultation with its counsel, that the sum of (A) the
estimated costs of defending and litigating such Claim, (B) the estimated costs
of paying such Claim if the defense and litigation is unsuccessful, and (C) the
total of all other Claims for which the requisite notice has been given, exceeds
seventy-five percent (75%) of the total of the Escrowed Funds then held by
Escrow Agent.
iv. If the Representative does not assume the defense of any such
Claim or commence settlement negotiations within thirty (30) days of receiving
the notice provided in SECTION 4.b.iii above, or such shorter period of time if
applicable because of procedural requirements, and pursue such defense or
settlement proceedings with reasonable diligence, the Indemnified Party may
assume such defense or commence such settlement negotiations and may further
consent to entry of a judgement or enter into a settlement of such Claim or
litigation on behalf of the Indemnifying Parties. In such event, the
Indemnified Party may submit a Claim Certificate to Escrow Agent from time to
time for the costs and expenses (including attorney fees and expenses) incurred
by the Indemnified Party in defending and settling the Claim.
5. GENERAL.
a. NOTICES. Any notice required or permitted by any party must be in
writing and must be delivered either personally to the other parties or by
certified mail, return receipt requested, at the parties' addresses indicated
below. Any notice will be effective upon delivery in the case of personal
delivery and, in the case of delivery by certified mail, three (3) business days
after the date of deposit in the United States mail, postage prepaid. The
addresses of the parties are as follows:
if to Escrow Agent:
__________________________
__________________________
__________________________
__________________________
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if to Surety Bank or Surety:
0000 Xxxxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxx, Xxxxx 00000
Attention: Mr. C. Xxxx Xxxx
with a copy to:
Xx. Xxxxxxxx X. Xxxxxxx
Xxxxx & Xxxxxxx, L.L.P.
000 X. 0xx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000-0000
if to TexStar:
000 Xxx Xxxxxx Xxxx
Xxxxxxxxx Xxxx, Xxxxx 00000
Attention: Xx. Xxxxx X. Bexley
with a copy to:
Xx. Xxxxxxx X. Xxxxx
Xxxxxxx Xxxxxx, L.L.P.
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000-0000
if to the Indemnifying Parties:
Mr. W. Xxxxxx Xxxx
Rush Peterbilt Truck Center
0000 Xxxxxxxxxx 00 Xxxx
Xxx Xxxxxxx, Xxxxx 00000
with a copy to:
Xx. Xxxxxxx X. Xxxxx
Xxxxxxx Xxxxxx, L.L.P.
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000-0000
The names and address of the parties to receive notice as stated in this section
may be changed at any time by notice given in accordance with this section. As
used in this Escrow Agreement, the term "business day" means any day of the
week, Monday through Friday, that is not recognized by the United States Postal
Service as a national holiday and on which the national banks are open for
business.
b. SUCCESSORS AND ASSIGNS; NO ASSIGNMENT BY INDEMNIFYING PARTIES. This
Escrow Agreement is binding upon and shall inure to the benefit of the
respective parties hereto and their respective heirs, executors, administrators,
successors and assigns. Notwithstanding anything herein to the contrary, no
interest herein may be assigned by any Indemnifying Party other than (a)
executors,
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administrators, legatees or heirs of the Indemnifying Party or (b) in a
transaction involving no change in beneficial ownership. Notice of any
transfers permitted hereunder shall be given to Surety and Escrow Agent and no
such permitted transfer shall be valid until such notice is given.
c. GOVERNING LAW. This Escrow Agreement shall be governed by and
construed in accordance with the laws of the State of Texas without giving
effect to the conflict of law rules thereof.
d. CUMULATIVE RIGHTS. The rights of the parties hereunder are cumulative
and are not exclusive of any other rights they may have under the Agreements or
otherwise.
e. WAIVERS. Waiver by any party of any breach of or failure to comply
with any provision of this Escrow Agreement by any other party shall not be
construed as, or constitute, a continuing waiver of any such provision, or a
waiver of any other breach of, or failure to comply with, any other provision of
this Escrow Agreement.
f. INTEGRATION; AMENDMENT AND TERMINATION. This Escrow Agreement
(including the attachments hereto) together with the Agreements (including the
attachments thereto) constitutes, except as to Escrow Agent which shall only be
bound by the terms of this Escrow Agreement, the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior
agreements and understandings between the parties with respect to the subject
matter hereof. This Escrow Agreement may not be amended or terminated, nor may
any condition or term hereof be waived, orally, but only by an instrument in
writing duly executed by the parties hereto, or, in the case of a waiver, by the
party otherwise entitled to performance.
g. SECTION AND OTHER HEADINGS. The section and other headings contained
in this Escrow Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Escrow Agreement.
h. COUNTERPARTS. This Escrow Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
i. NO IMPAIRMENT. If any provision of this Escrow Agreement is held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions shall nevertheless continue in full force and effect
without being impaired or invalidated in any way.
6. ESCROW AGENT RIGHTS AND DUTIES; LIMITATION OF LIABILITY AND INDEMNITY.
a. APPOINTMENT. Surety Bank, Surety, TexStar and the Representative on
behalf of the Indemnifying Parties hereby select Escrow Agent as the escrow
agent for the purposes set forth in this Agreement. Escrow Agent hereby accepts
this appointment and designation.
b. RESIGNATION AND REPLACEMENT.
i. Escrow Agent may resign by giving at least thirty (30) days
written notice to Surety and the Representative. Upon the dissolution or
resignation of Escrow Agent, Surety and the Representative shall select a
successor escrow agent by mutual agreement. If Escrow Agent has not been
notified of the successor on or before the 30th day, Escrow Agent may pay the
Escrowed Funds and deliver any documents in its possession into the registry or
custody of a court as provided for in
-7-
SECTION 6.e below. Escrow Agent shall be entitled to any compensation accrued
prior to the date of its payment and delivery of the Escrowed Funds and any such
documents.
ii. Surety and the Representative may replace the Escrow Agent by the
mutual agreement of Surety and the Representative and written notice to Escrow
Agent, but in such event Escrow Agent shall be entitled to any compensation
accrued prior to the date of its replacement.
iii. On the resignation, dissolution, or removal of Escrow Agent,
Escrow Agent shall deliver any Escrowed Funds and documents held pursuant to
this Agreement to its successor, or if there is no successor, to such person as
jointly directed in writing by Surety and the Representative. Failing to
receive such writing, Escrow Agent is authorized to deposit all of same into the
registry of a court of competent jurisdiction. On the completion of such
delivery to its successor or into the registry of the court, Escrow Agent shall
be deemed to be removed as of such date.
c. FEES AND EXPENSES OF ESCROW AGENT. All fees and expenses of Escrow
Agent (including the reasonable fees of any counsel retained by it) in
connection herewith shall be paid from the Escrowed Funds. If the Escrowed
Funds are insufficient for payment in full, one-half of the remaining amount
owed to Escrow Agent will be paid by Surety and one-half will be paid by the
Indemnifying Parties.
d. LIABILITY OF THE ESCROW AGENT; INDEMNIFICATION.
i. Escrow Agent, as part of the consideration for the acceptance of
this escrow, shall not be liable for any acts or omissions, for any claims,
demands or losses, or for any damages made or suffered by any party to this
Agreement, excepting such as may arise through or be caused by its bad faith,
willful misconduct, gross negligence, or breach of fiduciary duty. Furthermore,
it shall not be liable by reason of any act taken in good faith upon advice of
its counsel.
ii. Escrow Agent undertakes to perform only such duties as are
specifically set forth herein and may conclusively rely and shall be protected
in acting or restraining from acting on any written notice, instrument or
signature reasonable believed by it to be genuine and to have been signed or
presented by the proper party or parties duly authorized to do so. Escrow Agent
shall have no responsibility for the contents of any writing contemplated herein
and may rely, without any liability, upon the contents thereof. Attached hereto
as SCHEDULE B are the names, titles and specimen signatures of each of the
persons who are authorized to execute and deliver written notices and directions
to Escrow Agent. Each party may change its authorized persons during the term
of this Escrow Agreement.
iii. Surety, Surety Bank, and the Indemnifying Parties severally agree
to indemnify and hold harmless Escrow Agent against any and all losses, claims,
damages, liabilities and expenses, including, without limitation, reasonable
costs of investigation and counsel fees and disbursements which may be imposed
upon the Escrow Agent or incurred in connection with the acceptance of the
appointment as Escrow Agent or by its performance as Escrow Agent. This
specifically includes any litigation arising from this Escrow Agreement or
involving the subject matter thereof. Notwithstanding this indemnification
provision, or any other term to the contrary, Escrow Agent is responsible for
all losses, damages, liabilities, and expenses caused by its bad faith, willful
misconduct, gross negligence, or breach of fiduciary duty.
e. TENDER TO THE REGISTRY OF THE COURT. In the event of a dispute
concerning the Escrowed Funds, Escrow Agent shall be entitled to tender the
remaining Escrowed Funds and any
-8-
related documents in its possession to the registry or custody of a court of
competent jurisdiction and may file such pleadings or motions as it deems
appropriate and thereupon be discharged from all further responsibilities as
Escrow Agent. This action shall not deprive Escrow Agent of any right to
reimbursement granted or fees accrued under other provisions of this Escrow
Agreement.
IN WITNESS WHEREOF, Surety, Surety Bank, TexStar, Representative on behalf
of the Indemnifying Parties and Escrow Agent have caused this Escrow Agreement
to be duly executed as of the day and year first above written.
SURETY: SURETY CAPITAL CORPORATION
By:
-----------------------------------------
C. Xxxx Xxxx, Chairman of the
Board and Chief Executive Officer
SURETY BANK: SURETY BANK, NATIONAL ASSOCIATION
By:
-----------------------------------------
Xxxxx X. Xxxxxxx, Vice Chairman of
the Board, President and Chief
Executive Officer
TEXSTAR: TEXSTAR NATIONAL BANK
By:
-----------------------------------------
Xxxxx X. Bexley, President
REPRESENTATIVE:
-----------------------------------------
W. Xxxxxx Xxxx
INDEMNIFYING PARTIES:
-----------------------------------------
W. Xxxxxx Xxxx, individually and as
attorney-in-fact for the shareholders of
TexStar listed on SCHEDULE A
------------------------------------------
ESCROW AGENT: By:
------------------------------------------
Its:
------------------------------------------
-9-
SCHEDULE A
INDEMNIFYING PARTIES, ESCROW PROPORTIONS
AND CONTRIBUTIONS TO ESCROWED PRINCIPAL FUNDS
Contributions to
Indemnifying Parties Escrow Proportions Escrowed Principal Funds
-------------------- ------------------ ------------------------
SCHEDULE B
List of schedules to Agreement and Plan of Reorganization by and among Surety
Bank, National Association, TexStar National Bank, Surety Capital Corporation,
and certain shareholders of TexStar National Bank, dated as of October 10, 1997,
which are not filed herewith:
SCHEDULE DESCRIPTION
----------------------------------------------
1(b) Capital Stock
1(f) Liabilities and Obligations
1(h) Loans
1(j) Investment Securities
1(l) Physical Properties
1(m) Compliance with Environmental Laws
1(o) Patents, Trademarks, Etc.
1(q) Insurance
1(r) Material Contracts
1(t) Employee Benefits
1(z) Compensation
1(ab) Claims and Deposits
The registrant will furnish supplementally a copy of any omitted exhibit or
schedule to the Securities and Exchange Commission upon request.
AGREEMENT TO MERGE TEXSTAR NATIONAL BANK
WITH AND INTO SURETY BANK, NATIONAL ASSOCIATION UNDER THE
CHARTER OF SURETY BANK, NATIONAL ASSOCIATION AND UNDER
THE TITLE OF SURETY BANK, NATIONAL ASSOCIATION
AGREEMENT TO MERGE ("Merger Agreement") dated as of October 10, 1997,
between SURETY BANK, NATIONAL ASSOCIATION, a national banking association
located in Hurst, Texas ("Surety Bank"), and TEXSTAR NATIONAL BANK, a national
banking association located in Universal City, Texas ("TexStar"), and joined in
by SURETY CAPITAL CORPORATION, a Delaware corporation located in Hurst, Texas
("Surety") and W. Xxxxxx Xxxx, W. Xxxxxxx Xxxx, Xxxxx Xxxxx, Xxxxxx X. Xxxxxxxx,
Xxxxx Xxxxxxxxx and Xxxxx X. Bexley (individually, a "Shareholder" and
collectively, the "Shareholders").
WITNESSETH:
A. Surety Bank is a national banking association duly organized and
existing under the laws of the United States of America having its principal
offices in the City of Xxxxx, County of Tarrant, State of Texas.
B. TexStar is a national banking association duly organized and
existing under the laws of the United States having its principal offices in the
City of Xxxxxxxxx Xxxx, Xxxxxx xx Xxxxx, Xxxxx of Texas.
C. Surety Bank has, and will have as of the Effective Time,
authorized capital consisting of 6,000,000 shares of common stock, $0.91 par
value, of which 3,708,195 shares have been duly issued and are, and will be as
of the Effective Time, validly outstanding.
D. TexStar has, and will have as of the Effective Time, authorized
capital consisting of 575,000 shares of common stock, $5.00 par value ("TexStar
Common Stock"), of which 485,000 shares are, and will be as of the Effective
Time, issued and outstanding.
E. The Boards of Directors of TexStar and of Surety Bank have
approved this Merger Agreement under which TexStar will be merged into Surety
Bank and have authorized the execution hereof; the Board of Directors of Surety
has approved this Merger Agreement, authorized Surety to join in and be bound by
this Merger Agreement, and authorized the undertakings herein made by Surety.
F. Surety Bank, TexStar, Surety and the Shareholders have entered
into an Agreement and Plan of Reorganization dated October 10, 1997
("Reorganization Agreement") which contemplates the merger provided for in this
Merger Agreement. All terms not defined in this Merger Agreement will have the
meaning set forth in the Reorganization Agreement.
G. As and when required by the provisions of this Merger Agreement or
the Reorganization Agreement (hereinafter referred to collectively as the
"Merger Plan"), all such action as may be necessary or appropriate will be taken
by Surety Bank, TexStar, Surety and the Shareholders in order to consummate said
merger. In this connection, Surety Bank shall pay cash and, if applicable,
certain performance payments to the shareholders of TexStar, pursuant to the
provisions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises, Surety Bank and
TexStar, joined by Surety and the Shareholders, hereby agree that TexStar shall
be merged into Surety Bank on the following terms and conditions:
1. At the Effective Time, TexStar will be merged into Surety Bank
under the Articles of Association and Charter of Surety Bank. Said merger will
be pursuant to the provisions of and with the effect provided in 12 U.S.C.
Section 215(a).
2. At the Effective Time, the name of Surety Bank (hereinafter
referred to as "Continuing Bank" whenever reference is made to it as of the time
of merger or thereafter) will continue to be "Surety Bank, National
Association." The Articles of Association of Continuing Bank will be as set
forth in ANNEX A attached hereto and made a part hereof. The bylaws of Surety
Bank in effect immediately prior to the merger will become the bylaws of
Continuing Bank. The established office and facilities of Surety Bank
immediately prior to the merger will become the established office and
facilities of Continuing Bank. The established office and facilities of TexStar
immediately prior to the merger will continue and be operated as a branch of
Continuing Bank.
3. At the Effective Time, the corporate existence of Surety Bank and
TexStar will, as provided in 12 U.S.C. Section 215(a), be merged into and
continued in Continuing Bank; and Continuing Bank will be deemed to be the same
association as Surety Bank and TexStar. All rights, franchises and interests of
Surety Bank and TexStar, respectively, in and to every type of property (real,
personal and mixed) and choses in action shall be transferred to and vested in
Continuing Bank by virtue of such merger without any deed or other transfer.
Continuing Bank at the Effective Time and without any order or other action on
the part of any court or otherwise, will hold and enjoy all rights of property,
franchises and interests, including appointments, designations and nominations,
and all other rights and interests as trustee, executor, administrator, transfer
agent and registrar of stocks and bonds, guardian of estates, assignee,
receiver, and in every other fiduciary capacity, and in every agency capacity,
in the same manner and to the same extent as such rights, franchises and
interests were held or enjoyed by Surety Bank and TexStar, respectively, at the
Effective Time.
4. At the Effective Time, Continuing Bank shall be liable for all
liabilities of Surety Bank and of TexStar, respectively; and all deposits,
debts, liabilities, obligations and contracts of Surety Bank and of TexStar,
respectively, matured or unmatured, whether accrued, absolute, contingent or
otherwise, and whether or not reflected or reserved against on balance sheets,
books of account or records of Surety Bank or TexStar, as the case may be,
including all liabilities of Surety Bank and TexStar for taxes, whether existing
at the Effective Time or arising as a result of or pursuant to the merger, will
be those of Continuing Bank and will not be released or impaired by the merger;
and all rights of creditors and other obligees and all liens on property of
either Surety Bank or TexStar shall be preserved unimpaired.
5. At the Effective Time:
(a) Each share of TexStar Common Stock outstanding at the
Effective Time held by the shareholders of TexStar, other than Dissenting Shares
(as hereinafter defined), will, without any action on the part of the
shareholders of TexStar, be converted into and exchanged for the right to
receive cash equal to the sum of (i) the quotient of $9,500,000 divided by the
number of shares of TexStar Common Stock issued and outstanding at the Effective
Time and (ii) the quotient of the Performance Payment (as herein defined)
divided by the number of shares of TexStar Common Stock issued and outstanding
at the Effective Time. The foregoing sum shall be subject to the adjustment set
forth in Section 9 of the Reorganization Agreement and the resulting amount
shall be the "Exchange Price".
(b) The Performance Payment will be equal to fifty percent (50%)
of the Net Earnings of TexStar in excess of $100,000. "Net Earnings of TexStar"
will be the net income of TexStar for the
-2-
period September 1, 1997 to the Closing Date before taxes but after all other
charges of TexStar (including normal year-end adjustments) as reflected by
TexStar's financial statements and mutually agreed upon by Surety Bank and
TexStar. In the event of a dispute, Surety Bank's independent public
accountants, Coopers & Xxxxxxx L.L.P., will ascertain "Net Earnings of TexStar"
for the applicable period and such determination will be conclusive and binding
on all the parties to this Agreement. All determinations by the parties in this
regard will be made in accordance with generally accepted accounting principles.
(c) All shares of capital stock of Surety Bank issued and
outstanding at the Effective Time will continue to be issued and outstanding
shares of capital stock of Continuing Bank.
(d) For purposes of this Merger Agreement, "Dissenting Shares" of
a shareholder of TexStar will refer to those shares of TexStar Common Stock
owned by a shareholder of TexStar who, pursuant to 12 U.S.C. Section 215(a), (i)
gives notice in writing at or prior to the meeting of TexStar's shareholders
referred to in Section 3(l) of the Reorganization Agreement to the presiding
officer that he dissents from the Merger Plan or votes against such Merger Plan
at such meeting and (ii) is thereby entitled to receive the value of his shares
of TexStar Common Stock upon approval of the Merger Plan by the Comptroller of
the Currency and written request made by such shareholder to the Continuing Bank
at any time before thirty (30) days after the Effective Time, accompanied by the
surrender of his stock certificates.
The value of the shares of TexStar Common Stock of any dissenting
shareholder will be ascertained, as of the Effective Time, by an appraisal made
by a committee of three persons, composed of (i) one selected by the vote of the
holders of a majority of the TexStar Common Stock, the owners of which are
entitled to payment in cash; (ii) one selected by the directors of the
Continuing Bank; and (iii) one selected by the two so selected. The valuation
agreed upon by any two of the three appraisers shall govern. If the value so
fixed will not be satisfactory to any dissenting shareholder who has requested
payment, that shareholder may, within five (5) days after being notified of the
appraised value of his shares, appeal to the Comptroller of the Currency, which
shall cause a reappraisal to be made which will be final and binding as to the
value of the shares of the appellant.
If, within ninety (90) days from the Effective Time, for any reason
one or more of the appraisers is not selected as herein provided, or the
appraisers fail to determine the value of such shares, the Comptroller of the
Currency shall upon written request of any interested party cause an appraisal
to be made which will be final and binding on all parties. The expenses of the
Comptroller of the Currency in making the reappraisal or the appraisal, as the
case may be, shall be paid by the Continuing Bank. The value of the shares
ascertained shall be promptly paid to the dissenting shareholders by the
Continuing Bank.
6. After the Effective Time:
(a) The shareholders of TexStar, as the sole holders of the
outstanding certificates which prior thereto represented shares of TexStar
Common Stock, may surrender same to Continuing Bank, and the shareholders of
TexStar shall be entitled upon such surrender to receive from Continuing Bank in
exchange therefor, without cost to such holder, the Exchange Price for each
share of TexStar Common Stock represented by such outstanding certificates
surrendered, as adjusted for the required $400,000 contribution into the escrow
established by the Escrow Agreement provided for in the Reorganization
Agreement.
-3-
(b) Until so surrendered, each such outstanding certificate which,
prior to the Effective Time, represented shares of TexStar Common Stock shall be
deemed for all purposes to evidence solely the right to receive the amount of
cash into and for which such shares of TexStar Common Stock shall have been
converted pursuant to SECTION 5(a) hereof. No interest will be payable with
respect to any such cash payments. If a shareholder of TexStar is unable to
locate any of his certificates which prior to the Effective Time represented
shares of TexStar Common Stock, Continuing Bank will issue a check to such
shareholder in the amount which such shareholder would otherwise be entitled to
receive hereunder without surrendering such certificate, upon receipt by
Continuing Bank of an indemnity bond in favor of Continuing Bank and
satisfactory in all respects to Continuing Bank.
(c) The stock transfer books of TexStar will be closed as of the
close of business on the Closing Date (hereinafter defined), and no transfer of
record of any of the shares of TexStar Common Stock will take place thereafter.
From and after the close of business on the Closing Date, shares of TexStar
Common Stock will cease to be shares of TexStar, irrespective of whether such
shares are ultimately surrendered.
7. The directors, advisory directors and officers, respectively, of
Continuing Bank at the Effective Time will be those persons who are directors,
advisory directors and officers, respectively, of Surety Bank immediately before
the Effective Time. The committees of the Board of Directors of Continuing Bank
at the Effective Time will be the same as, and will be composed of the same
persons who are serving on, committees of the Board of Directors of Surety Bank
as they exist immediately before the Effective Time.
8. This Merger Agreement will be submitted to the sole shareholder of
Surety Bank and to the shareholders of TexStar at meetings called to be held as
promptly as practicable in accordance with the Reorganization Agreement. Upon
approval of the sole shareholder of Surety Bank and the shareholders of TexStar,
and the satisfaction of all the other conditions set forth in Sections 6, 7 and
8 of the Reorganization Agreement, this Merger Agreement will be made effective
as soon as practicable thereafter in the manner provided in SECTION 12 hereof.
9. The Merger Plan may be terminated and abandoned at any time prior
to or on the Closing Date, whether before or after action thereon by the sole
shareholder of Surety Bank or the shareholders of TexStar:
(a) By the mutual consent in writing of Surety Bank and the
Shareholders;
(b) By the Shareholders in writing if any of the conditions to the
obligations of the Shareholders or TexStar contained herein or in the
Reorganization Agreement shall not have been satisfied or, if unsatisfied,
waived as of the Closing Date;
(c) By Surety Bank in writing if any of the conditions to the
obligations of Surety or Surety Bank contained herein or in the Reorganization
Agreement shall not have been satisfied or, if unsatisfied, waived as of the
Closing Date;
(d) By either the Shareholders or Surety Bank in writing if any of the
conditions to the obligations of such parties contained in Section 6 of the
Reorganization Agreement shall not have been satisfied or, if unsatisfied,
waived as of the Closing Date; or
-4-
(e) By either the Shareholders or Surety Bank in writing if the
Closing Date shall not have occurred by March 31, 1998, unless the date is
extended by mutual agreement of the Shareholders and Surety Bank.
10. Except as provided in the next succeeding sentence, in the event of
the termination and abandonment of the Merger Plan pursuant to the provisions of
SECTION 9 hereof, the same shall be of no further force or effect except that
the indemnification provisions set forth in Section 11 of the Reorganization
Agreement and the provisions relating to expenses set forth in Section 9 of the
Reorganization Agreement shall survive any such termination and abandonment.
Additionally, in the event Surety elects to abandon the Merger Plan by written
notice to such effect to TexStar (the "Election") as a result of the failure of
the conditions to Closing set forth in Section 7(e) or 7(g) of the
Reorganization Agreement, the failure of which shall be determined in the sole
and unfettered discretion of Surety, and such Election is made by Surety after
December 31, 1997, Surety shall pay to TexStar a break-up fee in the amount of
$25,000, and upon payment thereof, none of the parties to the Reorganization
Agreement nor the Merger Agreements shall have any further obligations to each
other, except as expressly set forth in this SECTION 10.
11. Any of the terms or conditions of the Merger Plan may be waived at any
time, whether before or after action thereon by the shareholders of Surety Bank
or TexStar, by the party which is entitled to the benefits thereof; and this
Merger Agreement or the Reorganization Agreement may be modified or amended at
any time, whether before or after action thereon by the shareholders of Surety
Bank or TexStar; provided, however, that such action shall be taken only if, in
the judgment of Surety Bank and TexStar, such waiver, modification or amendment
will not have a materially adverse effect on Surety Bank, TexStar or their
respective shareholders. Any waiver, modification or amendment must be in
writing.
12. The closing date (the "Closing Date") shall be a date to be selected
by mutual agreement of the parties immediately following the date thirty (30)
days after the date of the order of the Comptroller of the Currency approving
the merger pursuant to 12 U.S.C. Section 1828(c) (or if such date is not a
business day, then the next business day following) and the satisfaction of all
other conditions to the obligations of the parties to the Reorganization
Agreement. The closing (the "Closing") shall be held at the offices of TexStar,
Universal City, Texas on the Closing Date. At the Closing, Surety Bank shall
deliver to the shareholders of TexStar, other than the dissenting shareholders,
cash in the amount of the Exchange Price and the shareholders of TexStar shall
deliver to Surety Bank all of the stock certificates evidencing issued and
outstanding shares of TexStar Common Stock. Subject to the terms, and upon
satisfaction on or before the Closing Date of all requirements of law and the
conditions specified in the Merger Plan, including receipt of the approval of
the Comptroller of the Currency specified in 12 U.S.C. Section 215(a), the
merger will become effective at the time specified in the certificate to be
issued by the Comptroller of the Currency under the seal of his office approving
the merger, such time being herein called the "Effective Time."
13. For the convenience of the parties hereto and to facilitate the filing
and recording of this Merger Agreement, any number of counterparts thereof may
be executed, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument, but only one of which
need be produced.
-5-
IN WITNESS WHEREOF, Surety Bank has caused this Merger Agreement to be
executed in counterparts by its duly authorized officers and its corporate seal
to be hereunto affixed as of the date first above written, and the directors
constituting all of the Board of Directors of such national banking association
have hereunto subscribed their names.
SURETY BANK: SURETY BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxx, Vice Chairman of
the Board, President and Chief
Executive Officer
ATTEST:
/s/ Xxxxxx X. Xxxxx
--------------------
Xxxxxx X. Xxxxx, Cashier
ALL OF THE DIRECTORS OF
SURETY BANK, NATIONAL ASSOCIATION
/s/ C. Xxxx Xxxx
-------------------------------------
C. Xxxx Xxxx
/s/ Xxxxxxx X. Xxxx
-------------------------------------
Xxxxxxx X. Xxxx
/s/ Xxxxx X. Xxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxx
/s/ Xxxxxx X. Xxxxxx
-------------------------------------
Xxxxxx X. Xxxxxx
/s/ X. X. Xxxxxxxxxxx, III
-------------------------------------
X. X. Xxxxxxxxxxx, III
/s/ Xxxxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxx
-------------------------------------
Xxxxxxx X. Xxxxx
-6-
/s/ Xxxxxxx Xxxxxx
-------------------------------------
Xxxxxxx Xxxxxx
/s/ Xxxxxx X. Xxxxxx
-------------------------------------
Xxxxxx X. Xxxxxx
THE STATE OF TEXAS )
)
COUNTY OF TARRANT )
On this 21st day of October, 1997, before me, a Notary Public for the State
and County aforesaid, personally came Xxxxx X. Xxxxxxx as President and Xxxxxx
X. Xxxxx as Cashier, of SURETY BANK, NATIONAL ASSOCIATION, and each in his said
capacity acknowledged the fore going instrument to be the act and deed of said
association and the seal affixed thereto to be its seal; and came also C. Xxxx
Xxxx, Xxxxxxx X. Xxxx, Xxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxx, X. X. Xxxxxxx xxxx,
III, Xxxxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxx, Xxxxxxx Xxxxxx and Xxxxxx X. Xxxxxx,
being all of the Board of Directors of said association and each of them
acknowledged said instrument to be the act and deed of said association and of
himself as director thereof.
WITNESS my official seal and signature this day and year aforesaid.
/s/ Xxxxx X. Xxxx
-------------------------------------
NOTARY PUBLIC IN AND FOR THE STATE
OF TEXAS
08-22-98
-------------------------------------
My Commission Expires
IN WITNESS WHEREOF, TexStar has caused this Merger Agreement to be executed
in counterparts by its duly authorized officers and its corporate seal to be
hereunto affixed as of the date first above written, and the directors
constituting all of the Board of Directors of such national banking association
have hereunto subscribed their names.
TEXSTAR: TEXSTAR NATIONAL BANK
By: /s/ Xxxxx X. Bexley
-------------------------------------
Xxxxx X. Bexley, President
ATTEST:
/s/ Xxxxx XxXxxx Xxxxxxxx
-------------------------------
Xxxxx XxXxxx Xxxxxxxx, Cashier
-7-
ALL OF THE DIRECTORS OF
TEXSTAR NATIONAL BANK
/s/ W. Xxxxxx Xxxx
-------------------------------------
W. Xxxxxx Xxxx
/s/ W. Xxxxxxx Xxxx
-------------------------------------
W. Xxxxxxx Xxxx
/s/ Xxxxx Xxxxx
-------------------------------------
Xxxxx Xxxxx
/s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxxx
/s/ Xxxxx Xxxxxxxxx
-------------------------------------
Xxxxx Xxxxxxxxx
/s/ Xxxxx X. Bexley
-------------------------------------
Xxxxx X. Bexley
THE STATE OF TEXAS )
)
COUNTY OF BEXAS )
On this 27th day of January, 1998, before me, a Notary Public for the State
and County aforesaid, personally came Xxxxx X. Bexley, as President and Xxxxx
XxXxxx Xxxxxxxx, as Cashier, of TEXSTAR NATIONAL BANK, and each in his or her
said capacity acknowledged the foregoing instrument to be the act and deed of
said association and the seal affixed thereto to be its seal; and came also W.
Xxxxxx Xxxx, W. Xxxxxxx Xxxx, Xxxxx Xxxxx, Xxxxxx X. Xxxxxxxx, Xxxxx Xxxxxxxxx
and Xxxxx X. Bexley, being all of the Board of Directors of said association and
each of them acknowledged said instrument to be the act and deed of said
association and of himself or herself as director thereof.
WITNESS my official seal and signature this day and year aforesaid.
/s/ Xxxxxxxx Xxxxxxxxxxxx
-------------------------------------
NOTARY PUBLIC IN AND FOR THE STATE
OF TEXAS
01-10-01
-------------------------------------
My Commission Expires
-8-
Surety hereby joins in the foregoing Merger Agreement, and undertakes that
it will be bound thereby and will do and perform all acts and things therein
referred to or provided to be done by it.
IN WITNESS WHEREOF, Surety has caused this undertaking to be made in
counterparts by its duly authorized officers and its corporate seal to be
hereunto affixed as of the date first above written.
SURETY: SURETY CAPITAL CORPORATION
By: /s/ C. Xxxx Xxxx
-------------------------------------
C. Xxxx Xxxx, Chairman of the
Board and Chief Executive Officer
ATTEST:
/s/ X. X. Xxxxxx
--------------------------------
X. X. Xxxxxx, Secretary
The Shareholders hereby join in the foregoing Merger Agreement, and
undertake that they will be bound thereby and will do and perform all acts and
things therein referred to or provided to be done by them.
IN WITNESS WHEREOF, the Shareholders have caused this undertaking to be
made as of the date first above written.
THE SHAREHOLDERS:
/s/ W. Xxxxxx Xxxx
-------------------------------------
W. Xxxxxx Xxxx
/s/ W. Xxxxxxx Xxxx
-------------------------------------
W. Xxxxxxx Xxxx
/s/ Xxxxx Xxxxx
-------------------------------------
Xxxxx Xxxxx
/s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxxx
/s/ Xxxxx Xxxxxxxxx
-------------------------------------
Xxxxx Xxxxxxxxx
/s/ Xxxxx X. Bexley
-------------------------------------
Xxxxx X. Bexley
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ANNEX A
ARTICLES OF ASSOCIATION 1996
FIRST. The title of the association shall be Surety Bank, National
Association.
SECOND. The main office of the association shall be in Hurst, County of
Tarrant, State of Texas. The general business of the association shall be
conducted at its main office and its branches.
THIRD. The board of directors of the association shall consist of not less
than 5 nor more than 25 persons, the exact number to be fixed and determined
from time to time by resolution of a majority of the full board of directors or
by resolution of a majority of the shareholders at any annual or special meeting
thereof. Each director shall own common or preferred stock of the association
with an aggregate par value of not less than $1,000, or common or preferred
stock of a bank holding company owning the association with an aggregate par,
fair market or equity value of not less than $1,000, as of either (i) the date
of purchase, (ii) the date the person became a director, or (iii) the date of
that person's most recent election to the board of directors, whichever is
greater. Any combination of common or preferred stock of the association or
holding company may be used.
Any vacancy in the board of directors may be filled by action of a majority
of the remaining directors between meetings of shareholders. The board of
directors may not increase the number of directors between meetings of
shareholders to a number which: (1) exceeds by more than 2 the number of
directors last elected by shareholders where the number was 15 or less; and (2)
exceeds by more than 4 the number of directors last elected by shareholders
where the number was 16 or more, but in no event shall the number of directors
exceed 25.
Terms of directors, including directors selected to fill vacancies, shall
expire at the next regular meeting of shareholders at which directors are
elected, unless the directors resign or are removed from office.
Despite the expiration of a director's term, the director shall continue to
serve until his or her successor is elected and qualifies or until there is a
decrease in the number of directors and his or her position is eliminated.
Honorary or advisory members of the board of directors, without voting
power or power of final decision in matters concerning the business of the
association, may be appointed by resolution of a majority of the full board of
directors, or by resolution of shareholders at any annual or special meeting.
Honorary or advisory directors shall not be counted for purposes of determining
the number of directors of the association or the presence of a quorum in
connection with any board action, and shall not be required to own qualifying
shares.
FOURTH. There shall be an annual meeting of the shareholders to elect
directors and transact whatever other business may be brought before the
meeting. It shall be held at the main office or any other convenient place the
board of directors may designate, on the day of each year specified therefore in
the bylaws, or if that day falls on a legal holiday in the state in which the
association is located, on the next following banking day. If no election is
held on the day fixed or in event of a legal holiday, an election may be held on
any subsequent day within 60 days of the day fixed, to be designated by the
board of directors, or, if the directors fail to fix the day, by shareholders
representing two-thirds of the shares issued and outstanding. In all cases at
least 10 days' advance notice of the meeting shall be given to the shareholders
by first class mail.
In all elections of directors, the number of votes each common shareholder
may cast will be determined by multiplying the number of shares he or she owns
by the number of directors to be elected. Those votes may be cumulated and cast
for a single candidate or may be distributed among two or more candidates in the
manner selected by the shareholder. On all other questions, each common
shareholder shall be entitled to one vote for each share of stock held by him or
her.
Nominations for election to the board of directors may be made by the board
of directors or by any stockholder of any outstanding class of capital stock of
the association entitled to vote for election of directors. Nominations other
than those made by or on behalf of the existing management shall be made in
writing and be delivered or mailed to the president of the association and to
the Comptroller of the Currency, Washington, D.C., not less than 14 days nor
more than 50 days prior to any meeting of shareholders called for the election
of directors; provided, however, that if less than 21 days' notice of the
meeting is given to shareholders, such nominations shall be mailed or delivered
to the president of the association and to the Comptroller of the Currency not
later than the close of business on the seventh day following the date on which
the notice of meeting was mailed. Such notification shall contain the following
information to the extent known to the notifying shareholder:
(1) The name and address of each proposed nominee.
(2) The principal occupation of each proposed nominee.
(3) The total number of shares of capital stock of the association that
will be voted for each proposed nominee.
(4) The name and residence address of the notifying shareholder, and
(5) The number of shares of capital stock of the association owned by the
notifying shareholder.
Nominations not made in accordance herewith may, in his/her discretion, be
disregarded by the chairperson of the meeting, and the vote tellers may
disregard all votes cast for each such nominee. No bylaw may unreasonably
restrict the nomination of directors by shareholders.
A director may resign at any time by delivering written notice to the board
of directors, its chairperson, or to the association, which resignation shall be
effective when the notice is delivered unless the notice specifies a later
effective date.
A director may be removed by shareholders at a meeting called to remove him
or her, when notice of the meeting stating that the purpose or one of the
purposes is to remove him or her is provided, if there is a failure to fulfill
one of the affirmative requirements for qualification, or for cause; provided,
however, that a director may not be removed if the number of votes sufficient to
elect him or her under cumulative voting is voted against his or her removal.
FIFTH. The authorized amount of capital stock of this association shall be
6,000,000 shares of common stock with a par value of ninety-one cents ($0.91)
each; but said capital stock may be increased or decreased from time to time,
according to the provisions of the laws of the United States.
No holder of shares of the capital stock of any class of the association
shall have any preemptive or preferential right of subscription to any shares of
any class of stock of the association, whether now or hereafter authorized, or
to any obligations convertible into stock of the association,
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issued, or sold, nor any right of subscription to any thereof other than such,
if any, as the board of directors, in its discretion may from time to time
determine and at such price as the board of directors may from time to time fix.
Unless otherwise specified in the articles of association or required by
law, (1) all matters requiring shareholder action, including amendments to the
articles of association must be approved by shareholders owning a majority
voting interest in the outstanding voting stock, and (2) each shareholder shall
be entitled to one vote per share.
Unless otherwise specified in the articles of association or required by
law, all shares of voting stock shall be voted together as a class on any
matters requiring shareholder approval. If a proposed amendment would affect
two or more classes or series in the same or a substantially similar way, all
the classes or series so affected must vote together as a single voting group on
the proposed amendment.
Shares of the same class or series may be issued as a dividend on a pro
rata basis and without consideration. Shares of another class or series may be
issued as a share dividend in respect of a class or series of stock if approved
by a majority of the votes entitled to be cast by the class or series to be
issued unless there are no outstanding shares of the class or series to be
issued. Unless otherwise provided by the board of directors, the record date
for determining shareholders entitled to a share dividend shall be the date the
board of directors authorizes the share dividend.
Unless otherwise provided in the bylaws, the record date for determining
shareholders entitled to notice of and to vote at any meeting is the close of
business on the day before the first notice is mailed or otherwise sent to the
shareholders, provided that in no event may a record date be more than 70 days
before the meeting.
If a shareholder is entitled to fractional shares pursuant to a stock
dividend, consolidation or merger, reverse stock split or otherwise, the
association may (a) issue fractional shares; (b) in lieu of the issuance of
fractional shares, issue script or warrants entitling the holder to receive a
full share upon surrendering enough script or warrants to equal a full share;
(c) if there is an established and active market in the association's stock,
make reasonable arrangements to provide the shareholder with an opportunity to
realize a fair price through sale of the fraction, or purchase of the additional
fraction required for a full share; (d) remit the cash equivalent of the
fraction to the shareholder; or (e) sell full shares representing all the
fractions at public auction or to the highest bidder after having solicited and
received sealed bids from at least 3 licensed stock brokers; and distribute the
proceeds pro rata to shareholders who otherwise would be entitled to the
fractional shares. The holder of a fractional share is entitled to exercise the
rights of a shareholder, including the right to vote, to receive dividends, and
to participate in the assets of the association upon liquidation, in proportion
to the fractional interest. The holder of script or warrants is not entitled to
any of these rights unless the script or warrants explicitly provide for such
rights. The script or warrants may be subject to such additional conditions as:
(1) that the script or warrants will become void if not exchanged for full
shares before a specified date; and (2) that the shares for which the script or
warrants are exchangeable may be sold at the option of the association and the
proceeds paid to scriptholders.
The association, at any time and from time to time, may authorize and issue
debt obligations, whether or not subordinated, without the approval of the
shareholders. Obligations classified as debt, whether or not subordinated,
which may be issued by the association without the approval of shareholders, do
not carry voting rights on any issue, including an increase or decrease in the
aggregate number of the securities, or the exchange or reclassification of all
or part of securities into securities of another class or series.
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SIXTH. The board of directors shall appoint one of its members as
president of this association, and one of its members as chairperson of the
board and shall have the power to appoint one or more vice presidents, a
secretary who shall keep minutes of the directors' and shareholders' meetings
and be responsible for authenticating the records of the association, and such
other officers and employees as may be required to transact the business of this
association. A duly appointed officer may appoint one or more officers or
assistant officers if authorized by the board of directors in accordance with
the bylaws.
The board of directors shall have the power to:
(1) Define the duties of the officers, employees and agents of the
association.
(2) Delegate the performance of its duties, but not the responsibility for
its duties, to the officers, employees and agents of the association.
(3) Fix the compensation and enter into employment contracts with its
officers and employees upon reasonable terms and conditions consistent with
applicable law.
(4) Dismiss officers and employees.
(5) Require bonds from officers and employees and fix the penalty thereof.
(6) Ratify written policies authorized by the association's management or
committees of the board.
(7) Regulate the manner in which any increase or decrease of the capital of
the association shall be made, provided that nothing herein shall restrict the
power of shareholders to increase or decrease the capital of the association in
accordance with law, and nothing shall raise or lower from two-thirds the
percentage required for shareholder approval to increase or reduce the capital.
(8) Manage and administer the business and affairs of the association.
(9) Adopt initial bylaws, not inconsistent with law or the articles of
association, for managing the business and regulating the affairs of the
association.
(10) Amend or repeal bylaws, except to the extent that the articles of
association reserve this power in whole or in part to shareholders.
(11) Make contracts.
(12) Generally perform all acts that are legal for a board of directors to
perform.
SEVENTH. The board of directors shall have the power to change the
location of the main office to any other place within the limits of Hurst, Texas
without the approval of the shareholders, and shall have the power to establish
or change the location of any branch or branches of the association to any other
location permitted under applicable law, without the approval of the
shareholders subject to approval by the Office of the Comptroller of the
Currency.
EIGHTH. The corporate existence of this association shall continue until
terminated according to the laws of the United States.
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NINTH. The board of directors of this association, or any 3 or more
shareholders owning, in the aggregate, not less than 10% of the stock of this
association, may call a special meeting of shareholders at any time. Unless
otherwise provided by the bylaws or the laws of the United States, or waived by
shareholders, a notice of the time, place and purpose of every annual and
special meeting of the shareholders shall be given by first-class mail, postage
prepaid, mailed at least 10, and no more than 60, days prior to the date of the
meeting to each shareholder of record at his/her address as shown upon the books
of this association. Unless otherwise provided by the bylaws, any action
requiring approval of shareholders must be effected at a duly called annual or
special meeting.
TENTH. The association shall indemnify to the fullest extent permitted
under the Texas Business Corporation Act any person who is made a named
defendant or respondent in any action, suit or proceeding, other than in an
administrative proceeding or action instituted by an appropriate bank regulatory
agency which proceeding or action results in a final order assessing civil
monetary penalties or requiring affirmative action by such person in the form of
payments to the association, whether civil, criminal, administrative,
arbitrative or investigative, or in any appeal in such an action, suit or
proceeding, by reason of the fact that he or she is or was a director, advisory
director or officer of the association, against all expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such director, advisory director or officer in connection
with any such action, suit or proceeding. The association may indemnify other
persons, as permitted by the Texas Business Corporation Act and other applicable
laws. The association may purchase and maintain insurance on behalf of
directors, advisory directors, officers or other persons against any liability
asserted against such persons in their capacities as directors, advisory
directors, officers or otherwise, other than for liability asserted against such
persons pursuant to a formal order assessing civil monetary penalties.
ELEVENTH. No director of the association shall be liable to the
association or its shareholders for monetary damages for an act or omission in
such director's capacity as a director of the association, except that this
Article Eleventh shall not eliminate or limit the liability of a director of the
association for:
(i) a breach of such director's duty of loyalty to the association or its
shareholders;
(ii) an act or omission not in good faith or that involves intentional
misconduct or a knowing violation of the law;
(iii) a transaction from which a director received an improper benefit,
whether or not the benefit resulted from an action taken within the scope of the
director's office; or
(iv) an act or omission for which the liability of a director is expressly
provided for by statute.
Any repeal or amendment of this Article Eleventh by the shareholders of the
association shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the association existing
at the time of such repeal or amendment. Anything herein to the contrary
notwithstanding, if the Texas Miscellaneous Corporation Laws Act is amended
after approval by the shareholders of this Article Eleventh to authorize
corporate action further eliminating or limiting the personal liability of
directors, then the liability of a director of the association shall be
eliminated or limited to the full extent then permitted by the Texas
Miscellaneous Corporation Laws Act, as so amended from time to time.
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TWELFTH. These articles of association may be amended at any regular or
special meeting of the shareholders by the affirmative vote of the holders of a
majority of the stock of this association, unless the vote of the holders of a
greater amount of stock is required by law, and in that case by the vote of the
holders of such greater amount. The association's board of directors may
propose one or more amendments to the articles of association for submission to
the shareholders.
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