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EXHIBIT 2
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AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
PRIME BANCSHARES, INC.,
IBID, INC.
PRIME BANK
AND
SUNBELT NATIONAL BANK
DATED AS OF DECEMBER 30, 1997
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TABLE OF CONTENTS
Page
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
I. THE CONSOLIDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1. Initial Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2. Articles of Association, Bylaws and Facilities of
First Surviving Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.3. Effect of Initial Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.4. Liabilities of the First Surviving Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.5. Final Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.6. Articles of Association, Bylaws and Facilities of
Continuing Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.7. Effect of Final Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.8. Liabilities of Continuing Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.9. Consolidation Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.10. Adjustments to Consolidation Consideration . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 1.11. Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 1.12. Exchange of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 1.13. Ratification by Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 1.14. Registration of the Bancshares Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . 8
II. REPRESENTATIONS AND WARRANTIES OF SUNBELT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.1. Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.2. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.3. Approvals; Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.4. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.5. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.6. Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.7. Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.8. Litigation and Other Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.9. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.10. Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.11. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.12. No Conflict With Other Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.13. Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.14. Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.15. Allowance for Credit Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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Section 2.16. Employment Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.17. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.18. Deferred Compensation Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.19. List of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.20. Absence of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.21. Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.22. Absence of Property Taxes and Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.23. Community Reinvestment Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.24. Fair Housing Act, Home Mortgage Disclosure Act and Equal Credit Opportunity Act . . . . . . 17
Section 2.25. Usury Laws and Other Consumer Compliance Laws . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.26. Bank Secrecy Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.27. Zoning and Related Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.28. Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.29. Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.30. Shareholders' List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
III. REPRESENTATIONS AND WARRANTIES OF BANCSHARES,DELAWARE-COMPANY AND PRIME . . . . . . . . . . . . . . . . . . . . 18
Section 3.1. Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.2. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.3. Approvals; Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.4. No Conflict With Other Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.5. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.6. SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.7. Litigation and Other Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.8. Ability to Pay Consolidation Consideration . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.9. Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.10. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
IV. COVENANTS OF SUNBELT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.1. Shareholder Approval and Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.2. Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.3. Access to Properties and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.4. Information for Regulatory Applications and SEC filings . . . . . . . . . . . . . . . . . . 23
Section 4.5. Attendance at Certain Sunbelt Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.6. Standstill Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.7. Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.8. Accounting and Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.9. Pre-Closing Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
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V. COVENANTS OF BANCSHARES, DELAWARE-COMPANY AND PRIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.1. Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.2. Information for Applications and Proxy Solicitation . . . . . . . . . . . . . . . . . . . . 25
Section 5.3. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.4. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.5. Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.6. NASDAQ Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.7. Issuance of Bancshares Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.8. Delivery of Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.9. Rule 144 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.10. Publication of Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.11. Employee Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
VI. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.1. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.2. Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
VII. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.2. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
VIII. CONDITIONS TO OBLIGATIONS OF BANCSHARES,DELAWARE-COMPANY AND PRIME . . . . . . . . . . . . . . . . . . . . . . 31
Section 8.1. Compliance with Representations and Covenants . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.2. Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.3. Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.4. Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.5. Accounting Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.6. Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.7. Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
IX. CONDITIONS TO OBLIGATIONS OF SUNBELT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 9.1. Compliance with Representations and Covenants . . . . . . . . . . . . . . . . . . . . . . . 33
Section 9.2. Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 9.3. Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 9.4. Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 9.5. Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
X. CONDITIONS TO RESPECTIVE OBLIGATIONS OF BANCSHARES,DELAWARE-COMPANY, PRIME AND SUNBELT . . . . . . . . . . . . . 34
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Section 10.1. Government Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 10.2. Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 10.3. Registration of Bancshares Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 34
XI. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 11.1. Non-Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . 35
Section 11.2. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 11.3. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 11.4. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 11.5. Controlling Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 11.6. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 11.7. Modifications or Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 11.8. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 11.9. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 11.10. Consolidation of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 11.11. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 11.12. Binding on Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 11.13. Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 11.14. Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 11.15. Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 11.16. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SCHEDULE 1.10 TO THE AGREEMENT: 1998 Budget - Sunbelt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SCHEDULE 2.1 TO THE AGREEMENT: Organization - Sunbelt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SCHEDULE 2.2 TO THE AGREEMENT: Capitalization - Sunbelt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SCHEDULE 2.4 TO THE AGREEMENT: Investments - Sunbelt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SCHEDULE 2.5 TO THE AGREEMENT: Undisclosed Liabilities - Sunbelt . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SCHEDULE 2.7 TO THE AGREEMENT: Environmental Laws - Sunbelt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
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SCHEDULE 2.8 TO THE AGREEMENT: Litigation and Other Proceedings - Sunbelt . . . . . . . . . . . . . . . . . . . . . . 49
SCHEDULE 2.9 TO THE AGREEMENT: Taxes - Sunbelt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SCHEDULE 2.10 TO THE AGREEMENT: Contracts - Sunbelt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SCHEDULE 2.11 TO THE AGREEMENT: Insurance Policies - Sunbelt . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SCHEDULE 2.13 TO THE AGREEMENT: Compliance with Laws - Sunbelt . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SCHEDULE 2.14 TO THE AGREEMENT: Conduct - Sunbelt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SCHEDULE 2.16 TO THE AGREEMENT: Employment Relations - Sunbelt . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SCHEDULE 2.18 TO THE AGREEMENT: Deferred Compensation Arrangements - Sunbelt . . . . . . . . . . . . . . . . . . . . 56
SCHEDULE 2.20 TO THE AGREEMENT: Absence of Changes - Sunbelt . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SCHEDULE 2.22 TO THE AGREEMENT: Absence of Property Taxes and Liens - Sunbelt . . . . . . . . . . . . . . . . . . . . 58
SCHEDULE 4.7 TO THE AGREEMENT: Voting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SCHEDULE 5.11 TO THE AGREEMENT: Employee Protection--Sunbelt . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SCHEDULE 8.3 TO THE AGREEMENT: Legal Opinion to be Delivered by Sunbelt . . . . . . . . . . . . . . . . . . . . . . . 61
SCHEDULE 9.3 TO THE AGREEMENT: Legal Opinion to be Delivered by Bancshares . . . . . . . . . . . . . . . . . . . . . 63
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AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization ("Agreement") dated as of
December 30, 1997, is by and among Prime Bancshares, Inc., a Texas corporation
("Bancshares"), IBID, Inc., a Delaware corporation ("Delaware-Company"), Prime
Bank, a Texas banking corporation ("Prime"), and Sunbelt National Bank, a
national banking association ("Sunbelt").
WHEREAS, Sunbelt desires to affiliate with Bancshares and Prime and
Bancshares and Prime desire to affiliate with Sunbelt in the manner provided in
this Agreement; and
WHEREAS, Bancshares, Delaware-Company, Prime and Sunbelt believe that
the acquisition of Sunbelt by Bancshares in the manner provided by, and subject
to the terms and conditions set forth in, this Agreement and all exhibits,
schedules and supplements hereto is desirable and in the best interests of
their respective shareholders; and
WHEREAS, the respective Boards of Directors of Bancshares,
Delaware-Company, Prime and Sunbelt have approved this Agreement and the
transactions proposed herein substantially on the terms and conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of such premises and the mutual
representations, warranties, covenants and agreements contained herein, the
parties agree as set forth below.
INTRODUCTION
Following the execution of this Agreement by Bancshares,
Delaware-Company, Prime and Sunbelt, Bancshares or Delaware-Company will
charter and organize as a wholly-owned subsidiary an interim Texas banking
corporation ("New Bank") solely for the purpose of consummating the
consolidation transaction described herein. This Agreement provides for (i)
the consolidation of New Bank with and into Sunbelt with Sunbelt as the
survivor (the "Initial Consolidation"), all pursuant to this Agreement and a
Plan of Consolidation by and between New Bank and Sunbelt, a copy of which is
attached hereto as Exhibit "A" and all of the terms of which are incorporated
by reference for all purposes and, immediately thereafter, (ii) the
consolidation of Sunbelt with and into Prime with Prime as the survivor (the
"Final Consolidation"), all pursuant to this Agreement and a Plan of
Consolidation by and between Sunbelt and Prime, a copy of which is attached
hereto as Exhibit "B" and all of the terms of which are incorporated by
reference for all purposes. The Initial Consolidation and the Final
Consolidation shall sometimes be referred to collectively as the
"Consolidations." In connection with the Consolidations, Bancshares will
purchase all of
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the issued and outstanding shares of common stock, $10.00 par value, of Sunbelt
("Sunbelt Common Stock") for an aggregate consideration as set forth in this
Agreement.
I. THE CONSOLIDATIONS
Section 1.1. Initial Consolidation. New Bank shall be merged with
and into Sunbelt (the resulting bank being herein referred to as the "First
Surviving Bank") as of the effective time of the Initial Consolidation under
the charter and Articles of Association of Sunbelt, as determined by the Office
of the Comptroller of the Currency ("OCC"), and each of the outstanding shares
of common stock of New Bank shall and without any action on the part of
Bancshares or Delaware-Company be canceled and be converted into shares of
common stock of the First Surviving Bank. The shares of common stock of the
First Surviving Bank into which such New Bank common stock is converted shall
represent ownership of 100% of the issued and outstanding capital stock of the
First Surviving Bank, all of which shall be owned by Bancshares or
Delaware-Company.
Section 1.2. Articles of Association, Bylaws and Facilities of
First Surviving Bank. On the effective date of the Initial Consolidation and
until thereafter amended in accordance with applicable law, the Articles of
Association of the First Surviving Bank shall be the Articles of Association of
Sunbelt as in effect on the effective date of the Initial Consolidation. Until
altered, amended or repealed as provided therein and in the Articles of
Association of the First Surviving Bank, the Bylaws of the First Surviving Bank
shall be the Bylaws of Sunbelt as in effect on the effective date of the
Initial Consolidation. The main office of the First Surviving Bank shall be
the main office of Sunbelt as of the effective date of the Initial
Consolidation, and all corporate acts, plans, policies, contracts, approvals
and authorizations of Sunbelt and New Bank and their respective shareholders,
boards of directors, committees elected or appointed thereby, officers and
agents, which were valid and effective immediately prior to the effective date
of the Initial Consolidation, shall be taken for all purposes as the acts,
plans, policies, contracts, approvals and authorization of the First Surviving
Bank and shall be as effective and binding thereon as the same were with
respect to Sunbelt and New Bank respectively, as of the effective date of the
Initial Consolidation.
Section 1.3. Effect of Initial Consolidation. On the effective
date of the Initial Consolidation, the corporate existence of Sunbelt and New
Bank shall be merged into and continued in the First Surviving Bank, and the
First Surviving Bank shall be deemed to be a continuation in entity and
identity of Sunbelt and New Bank. All rights, franchises and interests of
Sunbelt and New Bank, respectively, in and to any type of property and choses
in action shall be transferred to and vested in the First Surviving Bank by
virtue of the Initial Consolidation without any deed or other transfer. First
Surviving Bank, without any order or other action on the part of any court or
otherwise, shall hold and enjoy all rights of property, franchises and
interest, including appointments, designations and nominations, and
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all other rights and interests as trustee, executor, administrator, transfer
agent or registrar of stocks and bonds, guardian of estates, assignee, receiver
and committee of estates and lunatics, and in every other fiduciary capacity,
in the same manner and to the same extent as such rights, franchises and
interests were held or enjoyed by Sunbelt and New Bank, respectively, as of the
effective date of the Initial Consolidation. As of the effective time of the
Initial Consolidation, the directors and officers of New Bank shall become the
directors and officers of First Surviving Bank.
Section 1.4. Liabilities of the First Surviving Bank. On the
effective date of the Initial Consolidation, the First Surviving Bank shall be
liable for all liabilities of Sunbelt and New Bank. All deposits, debts,
liabilities and obligations of Sunbelt and of New Bank, respectively, accrued,
absolute, contingent or otherwise, and whether or not reflected or reserved
against on balance sheets, books of account or records of Sunbelt or New Bank,
as the case may be, shall be those of the First Surviving Bank and shall not be
released or impaired by the Initial Consolidation. All rights of creditors and
other obligees and all liens on property of either Sunbelt or New Bank shall be
preserved unimpaired.
Section 1.5. Final Consolidation. Immediately after the effective
time of the Initial Consolidation, the First Surviving Bank shall be merged
with and into Prime (which, as the receiving association, is hereinafter
referred to as "Continuing Bank" whenever reference is made to it at or after
the Effective Date (as defined in Section 6.2 of this Agreement)) under the
charter and Articles of Association of Prime pursuant to the provisions of, and
with the effect provided in Texas Banking Act Section 3.301 and the Bank Merger
Act (12 U.S.C. 1828(c)).
Section 1.6. Articles of Association, Bylaws and Facilities of
Continuing Bank. On the Effective Date and until thereafter amended in
accordance with applicable law, the Articles of Association of Continuing Bank
shall be the Articles of Association of Prime as in effect on the Effective
Date. Until altered, amended or repealed as therein provided and in the
Articles of Association of Continuing Bank, the Bylaws of Continuing Bank shall
be the Bylaws of Prime as in effect on the Effective Date. Unless and until
changed by the Board of Directors of Continuing Bank, the main office of
Continuing Bank shall be the main office of Prime as of the Effective Date.
The established offices and facilities of the First Surviving Bank immediately
prior to the Final Consolidation shall become established offices and
facilities of the Continuing Bank. Until thereafter changed in accordance with
law or the Articles of Association or Bylaws of Continuing Bank, all corporate
acts, plans, policies, contracts, approvals and authorizations of the First
Surviving Bank and Prime and their respective shareholders, boards of
directors, committees elected or appointed thereby, officers and agents, which
were valid and effective immediately prior to the Effective Date, shall be
taken for all purposes as the acts, plans, policies, contracts, approvals and
authorizations of Continuing Bank and shall be as effective and binding thereon
as the same
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were with respect to the First Surviving Bank and Prime, respectively, as of
the Effective Date.
Section 1.7. Effect of Final Consolidation. On the Effective
Date, the corporate existence of the First Surviving Bank and Prime shall, as
provided in the provisions of law heretofore mentioned, be merged into and
continued in Continuing Bank, and Continuing Bank shall be deemed to be a
continuation in entity and identity of the First Surviving Bank and Prime. All
rights, franchises and interests of the First Surviving Bank and Prime,
respectively, in and to any type of property and choses in action shall be
transferred to and vested in Continuing Bank by virtue of such Final
Consolidation without any deed or other transfer. Continuing Bank, without any
order or other action on the part of any court or otherwise, shall hold and
enjoy all rights of property, franchises and interest, including appointments,
designations and nominations, and all other rights and interests as trustee,
executor, administrator, transfer agent or registrar of stocks and bonds,
guardian of estates, assignee, receiver and committee of estates and lunatics,
and in every other fiduciary capacity, in the same manner and to the same
extent as such rights, franchises, and interests were held or enjoyed by
Sunbelt and Prime, respectively, as of the Effective Date. On the Effective
Date, the directors and officers of Prime shall become the directors and
officers of the Continuing Bank.
Section 1.8. Liabilities of Continuing Bank. On the Effective
Date of the Final Consolidation, Continuing Bank shall be liable for all
liabilities of the First Surviving Bank and Prime. All deposits, debts,
liabilities, obligations and contracts of the First Surviving Bank and of
Prime, 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 the First Surviving Bank or
Prime, as the case may be, shall be those of Continuing Bank and shall not be
released or impaired by the Consolidations. All rights of creditors and other
obligees and all liens on property of either the First Surviving Bank or Prime
shall be preserved unimpaired subsequent to the Consolidations.
Section 1.9. Consolidation Consideration.
(a) Each share of Sunbelt's Common Stock issued and
outstanding immediately prior to the effective date of the Initial
Consolidation, other than Dissenting Shares (as defined in Section 1.11 of the
Agreement), shall, by virtue of the Consolidations and without any action on
the part of the holder thereof, be converted into and represent the right to
receive the consideration payable as set forth below (the "Consolidation
Consideration") to the holder of record thereof, without interest thereon, upon
surrender of the certificate representing such share.
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(b) Based on a total of 460,000 shares of Sunbelt Common
Stock issued and outstanding, each holder of Sunbelt Common Stock shall receive
Consolidation Consideration in the form of shares of common stock, $.25 par
value, of Bancshares ("Bancshares Common Stock") equal to 2.0023 shares of
Bancshares Common Stock for each share of Sunbelt Common Stock owned on the
Effective Date.
(c) The aggregate number of shares of Bancshares Common
Stock to be exchanged for each share of Sunbelt Common Stock shall be adjusted
appropriately to reflect any change in the number of shares of Bancshares
Common Stock by reason of any stock dividends or splits, reclassification,
recapitalization or conversion with respect to Bancshares Common Stock,
received or to be received by holders of Bancshares Common Stock, when the
record date or payment occurs prior to the Effective Date.
(d) Bancshares will not issue any certificates for
fractional shares of Bancshares Common Stock otherwise issuable pursuant to the
Consolidation. In lieu of issuing such fractional shares, Bancshares shall pay
cash to any holder of shares of Sunbelt Common Stock otherwise entitled to
receive such fractional share. Such cash payment shall be based on the closing
bid price of a share of Bancshares Common Stock as listed on the NASDAQ
National Market on the day prior to the Effective Date.
Section 1.10. Adjustments to Consolidation Consideration. The
Consolidation Consideration shall be adjusted as follows:
(a) In the event that one-half of any net earnings of
Sunbelt, calculated in accordance with generally accepted accounting principles
applicable to financial institutions, from January 1, 1998 through the end of
the month prior to the month in which the Effective Date occurs, exceed an
amount calculated by multiplying (i) the difference between the average closing
bid and asked prices of Bancshares' Common Stock as quoted on NASDAQ for the
twenty (20) trading days immediately preceding the fifth calendar day prior to
the Effective Date ("Average Price") (provided that such Average Price is
greater than $19.00) and $19.00 by (ii) 920,000 ("Net Earnings Difference"),
the aggregate number of shares of Bancshares Common Stock to be paid to
shareholders of Sunbelt on the Effective Date shall be increased by dividing
such Net Earnings Difference by the Average Price. It is specifically provided
that proceeds from the sales of assets other than in the ordinary course of
business and any income from the sale of SBA loans which is in excess of the
amount of such income contained in Sunbelt's 1998 budget (which is attached as
Schedule 1.10) shall not be included in the calculation of net earnings.
(b) If the Average Price is $22.00 or greater, the
aggregate number of shares of Bancshares Common Stock into which shares of
Sunbelt Common Stock will be converted on the Effective Date shall be decreased
by (i) subtracting $20,240,000 from
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920,000 multiplied by the Average Price and (ii) dividing that difference by
the Average Price.
(c) If the Board of Directors of Sunbelt exercises its
right to termination set forth in Section 7.1(e) of the Agreement, Bancshares
shall have the option of increasing the Consolidation Consideration as set
forth in Section 7.1(e).
Section 1.11. Dissenting Shares. Each share of Sunbelt Common
Stock issued and outstanding immediately prior to the Effective Date, the
holder of which has not voted in favor of the Initial Consolidation and who has
properly perfected his dissenters' rights of appraisal by following the
procedures set forth in the National Bank Act, is referred to herein as a
"Dissenting Share." Dissenting Shares owned by each holder thereof who has not
failed to perfect his dissenters' rights shall not be converted into or
represent the right to receive the Consolidation Consideration pursuant to
Section 1.9 of this Agreement and shall be entitled only to such rights as are
available to such holder pursuant to the applicable provisions of the National
Bank Act. Each holder of Dissenting Shares shall be entitled to receive the
value of such Dissenting Shares held by him in accordance with the applicable
provisions of the National Bank Act, provided that such holder complies with
the procedures contemplated by and set forth in the applicable provisions of
the National Bank Act. As set forth in Section 8.6 of this Agreement, if the
holders of more than 5% of the Sunbelt Common Stock shall have exercised their
dissenters' rights, Bancshares shall have no obligation to consummate the
Consolidation.
Section 1.12. Exchange of Shares.
(a) Bancshares shall deposit or cause to be deposited in
trust with American Securities Transfer and Trust, Inc., Denver, Colorado (the
"Exchange Agent") prior to the Effective Date cash in an aggregate amount
estimated to be sufficient to make the cash payments in lieu of fractional
shares of Bancshares Common Stock pursuant to Section 1.9 hereof and to make
the appropriate cash payments, if any, to holders of Dissenting Shares pursuant
to Section 1.11 hereof (such amounts being hereinafter referred to as the
"Exchange Fund"). The Exchange Agent shall promptly make the payments in lieu
of fractional shares out of the Exchange Fund upon surrender of such shares.
Payments to holders of Dissenting Shares shall be made as required by the
National Bank Act. The Exchange Fund shall not be used for any other purpose,
except as provided in this Agreement.
(b) Promptly after the Effective Date, the Exchange
Agent shall mail to each record holder of an outstanding certificate or
certificates which as of the Effective Date represented shares of Sunbelt
Common Stock (the "Certificates"), a form letter of transmittal which will
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Exchange Agent and contain
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instructions for use in effecting the surrender of the Certificates for payment
therefor. Upon surrender to the Exchange Agent of a Certificate, together with
such letter of transmittal duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor the amount of cash and number of
shares of Bancshares Common Stock provided in Section 1.9 hereof, and such
Certificate shall forthwith be canceled. Bancshares shall provide the Exchange
Agent with certificates for Bancshares Common Stock, as requested by the
Exchange Agent, in the amounts provided in Section 1.9 hereof. No interest
will be paid or accrued on the cash payable upon surrender of the Certificate.
If payment or delivery of Bancshares Common Stock is to be made to a person
other than the person in whose name the Certificate surrendered is registered,
it shall be a condition of payment that the Certificate so surrendered shall be
properly endorsed or otherwise in proper form for transfer and that the person
requesting such payment shall pay any transfer or other taxes required by
reason of the payment and delivery of Bancshares Common Stock to a person other
than the registered holder of the Certificate surrendered or established to the
satisfaction of Bancshares that such tax has been paid or is not applicable.
Until surrendered in accordance with the provisions of this Section 1.12, each
Certificate (other than Certificates representing Dissenting Shares) shall
represent for all purposes the right to receive the Consolidation Consideration
without any interest thereon. Former shareholders of Sunbelt shall be entitled
to vote after the Effective Date at any meeting of Bancshares' shareholders the
number of shares of Bancshares Common Stock into which their shares are
converted, regardless of whether such shareholders have exchanged their
Certificates. Immediately after the Effective Date, shareholders of Sunbelt
shall be entitled to any dividends with respect to shares of Bancshares Common
Stock received by them in the Consolidation, provided that no dividend will be
disbursed with respect to the shares of Bancshares Common Stock until the
holder's shares are surrendered in exchange therefor.
(c) After the Effective Date, the stock transfer ledger
of Sunbelt shall be closed and there shall be no transfers on the stock
transfer books of Sunbelt of the shares of Sunbelt Common Stock which were
outstanding immediately prior to such time of filing. If, after the Effective
Date, Certificates are presented to Bancshares, they shall be promptly
presented to the Exchange Agent and exchanged as provided in this Section 1.12.
(d) Any portion of the Exchange Fund (including the
proceeds of any investments thereof) that remains unclaimed by the shareholders
of Sunbelt for six months after the Effective Date shall be paid to Bancshares,
and the holders of shares of Sunbelt Common Stock not theretofore presented to
the Exchange Agent shall look to Bancshares only, and not the Exchange Agent,
for the payment of any Consolidation Consideration in respect of such shares.
Section 1.13. Ratification by Shareholders. This Agreement shall
be submitted to the shareholders of Sunbelt and, if required, to either
Bancshares or Delaware-Company as
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the sole shareholder of New Bank and to Delaware-Company as the sole
shareholder of Prime, in accordance with applicable provisions of law and the
respective Articles of Association and Bylaws of Sunbelt, New Bank and Prime.
Sunbelt and Bancshares and Prime shall proceed expeditiously and cooperate
fully in the procurement of any other consents and approvals and the taking of
any other actions in satisfaction of all other requirements prescribed by law
or otherwise necessary for consummation of the Consolidation on the terms
herein provided, including, without limitation, the preparation and submission
of all necessary filings, requests for waivers and certificates with the Board
of Governors of the Federal Reserve System ("Federal Reserve Board"), the OCC,
the Federal Deposit Insurance Corporation ("FDIC") and the Texas Department of
Banking ("Banking Department").
Section 1.14. Registration of the Bancshares Common Stock.
(a) Bancshares shall file a registration statement (the
"Registration Statement") with the Securities and Exchange Commission ("SEC")
under the Securities Act of 1933, as amended ("Securities Act"), covering the
shares of Bancshares Common Stock to be issued to shareholders of Sunbelt in
the Consolidation.
(b) Within 30 days after the date hereof, Sunbelt shall
enter into and cause each Sunbelt shareholder who is an "affiliate" (as defined
in SEC Rule 405) of Sunbelt to enter into with Bancshares an Affiliate
Agreement in substantially the form of Exhibit "C" attached hereto.
II. REPRESENTATIONS AND WARRANTIES OF SUNBELT
Sunbelt represents and warrants to Bancshares, Delaware-Company and
Prime that each of the statements made in this Article II are true and correct
in all material respects. The Schedules required pursuant to this Article II
and elsewhere in this Agreement will be delivered and made part of this
Agreement no later than January 12, 1998. Sunbelt agrees that, at the Closing,
it shall provide Bancshares with supplemental Schedules reflecting any changes
in the information contained in the Schedules which have occurred in the period
from the date of delivery of such Schedules to the date of Closing.
Section 2.1. Organization. Sunbelt is a national banking
association duly organized, validly existing and in good standing under the
laws of the United States of America. Sunbelt (i) has full power and authority
(including all licenses, franchises, permits and other governmental
authorizations which are legally required) to own, lease and operate its
properties, to engage in the business and activities now conducted by it and to
enter into this Agreement; (ii) is duly authorized to conduct a general banking
business, embracing all usual deposit functions of commercial banks as well as
commercial, industrial and real estate
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loans, installment credits, collections and safe deposit facilities subject to
the supervision of the OCC; and (iii) is an insured bank as defined in the
Federal Deposit Insurance Act. Sunbelt does not conduct any trust activities.
True and complete copies of the Articles of Association and Bylaws of Sunbelt,
as amended to date, have been delivered or made available to Bancshares.
Except as otherwise disclosed in Schedule 2.1 to this Agreement, Sunbelt (a)
does not have any subsidiaries or affiliates, (b) is not a general partner or
material owner in any joint venture, general partnership, limited partnership,
trust or other non-corporate entity, and (c) does not know of any arrangement
pursuant to which the stock of any corporation is or has been held in trust
(whether express, constructive, resulting or otherwise) for the benefit of all
shareholders of Sunbelt.
Section 2.2. Capitalization. The authorized capital stock of
Sunbelt consists of 875,000 shares of Sunbelt Common Stock, 460,000 of which
are issued and outstanding. All of the issued and outstanding shares of
Sunbelt Common Stock are validly issued, fully paid and nonassessable, and have
not been issued in violation of the preemptive rights of any person or in
violation of any applicable federal or state laws. Except as disclosed in
Schedule 2.2, there are no existing options, warrants, calls, convertible
securities or commitments of any kind obligating Sunbelt to issue any
authorized and unissued Sunbelt Common Stock nor does Sunbelt have any
outstanding commitment or obligation to repurchase, reacquire or redeem any of
its outstanding capital stock. Other than the Sunbelt National Bank Voting and
Stock Restriction Agreement dated May 26, 1984 ("Sunbelt Voting Agreement") and
except as disclosed in Schedule 2.2 to this Agreement, there are no voting
trusts, voting agreements, buy-sell agreements or other similar arrangements
affecting the Sunbelt Common Stock.
Section 2.3. Approvals; Authority. The Board of Directors has
approved this Agreement and the transactions contemplated herein subject to the
approval thereof by the shareholders of Sunbelt as required by law, and, other
than shareholder approval, no further corporate proceedings of Sunbelt are
needed to execute and deliver this Agreement and consummate the Consolidations.
This Agreement has been duly executed and delivered by Sunbelt and, is a duly
authorized, valid, legally binding agreement of Sunbelt enforceable against
Sunbelt in accordance with its terms, subject to the effect of bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
creditors' rights generally and general equitable principles.
Section 2.4. Investments. Sunbelt has furnished to Bancshares, as
Schedule 2.4 of this Agreement, a complete list, as of September 30, 1997, of
all securities, including municipal bonds, owned by Sunbelt (the "Securities
Portfolio"). All securities listed in Schedule 2.4 are owned by Sunbelt (i) of
record, except those held in bearer form, and (ii) beneficially, free and clear
of all mortgages, liens, pledges and encumbrances, except as noted in Schedule
2.4. Schedule 2.4 also discloses any entities in which Sunbelt's ownership
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interest equals 5% or more of the issued and outstanding voting securities of
the issuer thereof. There are no voting trusts or other agreements or
understandings with respect to the voting of the securities listed in Schedule
2.4.
Section 2.5. Financial Statements. Sunbelt has furnished or made
available to Bancshares true and complete copies of Sunbelt's audited balance
sheet as of December 31, 1996, 1995 and 1994, and the related statements of
income and statements of cash flow for the periods then ended, together with
the notes thereto. Sunbelt has also delivered to Bancshares a true and correct
copy of the Consolidated Reports of Condition and Income ("Call Reports") filed
by Sunbelt as of and for the nine months ended September 30, 1997. The audited
financial information and Call Reports referred to in this Section 2.5 are
collectively referred to in this Article II as the "Sunbelt Financial
Statements." The Sunbelt Financial Statements fairly present the financial
position of Sunbelt and the results of its operations at the dates and for the
periods indicated in conformity with generally accepted accounting principles
applied on a consistent basis. Except as set forth on Schedule 2.5 to this
Agreement, as of the dates of the Sunbelt Financial Statements referred to
above, Sunbelt did not have any liabilities, fixed or contingent, which are
material and are not fully shown or provided for in such Sunbelt Financial
Statements or otherwise disclosed in this Agreement, or in any of the documents
delivered to Bancshares. Except as set forth in Schedule 2.20 to this
Agreement, since September 30, 1997, there have been no material changes in the
financial condition, assets, liabilities or business of Sunbelt, other than
changes in the ordinary course of business, which individually or in the
aggregate have materially and adversely affected the financial condition,
results of operations or business of Sunbelt.
Section 2.6. Title. True and complete copies of all of Sunbelt's
deeds and leases and title insurance policies, if any, for all real property
owned or leased by Sunbelt and all mortgages, deeds of trust and security
agreements to which such property is subject are attached on Schedule 2.6 of
this Agreement. Sunbelt has good and indefeasible title to all of its assets
and properties including, without limitation, land and improvements thereon,
and all personal and intangible properties reflected in the Sunbelt Financial
Statements or acquired subsequent thereto, subject to no liens, mortgages,
security interests, encumbrances or charges of any kind except (a) defects,
irregularities in title and encumbrances set forth in the public record of the
applicable county, (b) as noted in the Sunbelt Financial Statements or as set
forth in Schedule 2.6, (c) statutory liens not yet delinquent, (d) minor
defects and irregularities in title and encumbrances which do not materially
impair the use thereof for the purposes for which they are held, and (e) those
assets and properties disposed of for fair value in the ordinary course of
business since the dates of the Sunbelt Financial Statements. Except as set
forth in Schedule 2.6 to this Agreement, Sunbelt owns no securities of or other
interest in any other commercial bank.
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Section 2.7. Environmental Laws. Sunbelt is in compliance with
all terms and conditions of all applicable federal and state Environmental Laws
(as defined below) and permits thereunder. Except as set forth on Schedule 2.7
of this Agreement, (a) Sunbelt has not received notice of any violation of any
Environmental Laws or generated, stored, or disposed of any materials
designated as Hazardous Materials (as defined below) under the Environmental
Laws, and is not subject to any claim or lien under any Environmental Laws; (b)
during the term of ownership by Sunbelt, no real estate currently owned,
operated, or leased (including any property acquired by foreclosure or deeded
in lieu thereof) by Sunbelt, or owned, operated or leased by Sunbelt within the
ten years preceding the date of this Agreement, has been designated as
requiring any environmental cleanup or response action to comply with
Environmental Laws, or has been the site of release of any Hazardous Materials;
(c) to the knowledge of Sunbelt, no asbestos was used in the construction of
any portion of Sunbelt's facilities; and (d) to the knowledge of Sunbelt, no
real property currently owned by Sunbelt is, or has been, an industrial site or
landfill. Bancshares and its consultants, agents and representatives shall
have the right to inspect Sunbelt's assets for the purpose of conducting
asbestos and other environmental surveys.
"Environmental Laws," for purposes of this Section 2.7, includes, but
is not limited to, any federal, state or local statute, law, rule, regulation,
ordinance, code, policy or rule of common law now in effect and in each case as
amended to date and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree, or judgment,
relating to the environment, human health or safety, or Hazardous Materials,
including without limitation the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601, et
seq.; The Hazardous Materials Transaction Act, as amended, 49 U.S.C. Sections
1801, et seq.; the Resource Conservation and Recovery Act of 1976, as amended,
42 U.S.C. Sections 6901, et seq.; the Federal Water Pollution Control Act, as
amended, 33 U.S.C. Sections 1201, et seq.; the Toxic Substances Control Act, 15
U.S.C. Sections 2601, et seq.; the Clean Air Act, 42 U.S.C. Sections 7401, et
seq.; and the Safe Drinking Water Act, 42 U.S.C. Sections 3808, et seq.
"Hazardous Materials," for purposes of this Section 2.7, includes, but
is not limited to, (a) any petroleum or petroleum products, natural gas, or
natural gas products, radioactive materials, asbestos, urea formaldehyde foam
insulation, transformers or other equipment that contains dielectric fluid
containing levels of polychlorinated biphenyls (PCBs), and radon gas; (b) any
chemicals, materials, waste or substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous wastes," "toxic
substances," "toxic pollutants," "contaminants," or "pollutants," or words of
similar import, under any Environmental Laws; and (c) any other chemical,
material, waste or substance which is in any way regulated by any federal,
state or local government authority, agency or instrumentality, including
mixtures thereof with other materials, and including any regulated building
materials such as asbestos and lead.
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Section 2.8. Litigation and Other Proceedings. Except as
otherwise noted on Schedule 2.8 hereto, there are no legal, quasi-judicial,
regulatory or administrative proceedings of any kind or nature now pending or,
to the knowledge of Sunbelt, threatened before any court or administrative body
in any manner against Sunbelt, or any of its properties or capital stock, which
might have a material adverse effect on Sunbelt, its financial condition,
assets, operations or earnings or the transactions proposed by this Agreement.
Sunbelt does not know of any basis on which any litigation or proceeding could
be brought which could have a materially adverse effect on the financial
condition or prospects of Sunbelt or which could question the validity of any
action taken or to be taken in connection with this Agreement and the
transactions contemplated hereby. Sunbelt is not in default with respect to
any judgment, order, writ, injunction, decree, award, rule or regulation of any
court, arbitrator or governmental agency or instrumentality.
Section 2.9. Taxes. Except as otherwise noted in Schedule 2.9
hereto, Sunbelt has filed with the appropriate federal, state and local
governmental agencies all tax returns and reports required to be filed, and has
paid all taxes and assessments shown or claimed to be due. Sunbelt has not
executed or filed with the Internal Revenue Service any agreement extending the
period for assessment and collection of any federal tax, nor is Sunbelt 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 Sunbelt. Sunbelt has not waived any statute of
limitations with respect to any tax or other assessment or levy, and all such
taxes and other assessments and levies which Sunbelt is required by law to
withhold or to collect have been duly withheld and collected and have been paid
over to the proper governmental agency, domestic and foreign, or segregated and
set aside for such payment and, if so segregated and set aside will be so paid
by Sunbelt, as required by law.
True and complete copies of the federal income tax returns of Sunbelt
as filed with the Internal Revenue Service for the years ended December 31,
1996, December 31, 1995, and December 31, 1994, have been delivered or made
available to Bancshares.
Section 2.10. Contracts. Except as otherwise noted in Schedule
2.10 hereto, Sunbelt is not a party to nor bound by any (a) employment contract
or severance arrangement (including without limitation any collective
bargaining contract or union agreement or agreement with an independent
consultant) which is not terminable by Sunbelt on less than sixty (60) days'
notice without payment of any amount on account of such termination; (b) bonus,
stock option, deferred compensation or profit-sharing, pension or retirement
plan or other employee benefit arrangement; (c) material lease or license with
respect to any property, real or personal, whether as landlord, tenant,
licensor or licensee; (d) contract or commitment for capital expenditures; (e)
material contract or commitment made in the ordinary course of business for the
purchase of materials or supplies or for the performance of services over a
period of more than one hundred twenty (120) days from the date of this
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Agreement; (f) contract or option to purchase or sell any real or personal
property other than in the ordinary course of business; (g) contract, agreement
or letter with respect to the management or operations of Sunbelt imposed by
any bank regulatory authority having supervisory jurisdiction over Sunbelt; (h)
agreement, contract or indenture related to the borrowing by Sunbelt of money
other than those entered into in the ordinary course of business; (i) guaranty
of any obligation for the borrowing of money, excluding endorsements made for
collection, repurchase or resell agreements, letters of credit and guaranties
made in the ordinary course of business; (j) agreement with or extension of
credit to any executive officer or director of Sunbelt or holder of more than
ten percent (10%) of the issued and outstanding Sunbelt Common Stock, or any
affiliate of such person, which is not on substantially the same terms
(including, without limitation, in the case of lending transactions, interest
rates and collateral) as, and following credit underwriting practices that are
not less stringent than, those prevailing at the time for comparable
transactions with unrelated parties or which involve more than the normal risk
of collectibility or other unfavorable features; or (k) material contracts,
other than the foregoing, not made in the ordinary course of business and not
otherwise disclosed in this Agreement, in any schedule attached hereto or in
any document delivered or referred to or described in writing by Sunbelt to
Bancshares. Sunbelt has in all material respects performed all material
obligations required to be performed by it to date and is not in default under,
and no event has occurred which, with the lapse of time or action by a third
party could result in default under, any indenture, mortgage, contract, lease
or other agreement to which Sunbelt is a party or by which Sunbelt is bound or
under any provision of its Articles of Association or Bylaws.
Section 2.11. Insurance. A true and complete list of all insurance
policies owned or held by or on behalf of Sunbelt (other than credit-life
policies), including policy numbers, retention levels, insurance carriers, and
effective and termination dates, is set forth in Schedule 2.11 to this
Agreement. In the judgment of the Board of Directors of Sunbelt, such
insurance policies are adequate for the business conducted by Sunbelt in
respect of amounts, types and risks insured.
Section 2.12. No Conflict With Other Instruments. Neither the
execution and delivery of this Agreement nor the consummation of the
Consolidations contemplated hereby, subject to obtaining all required
shareholder consents, will conflict with or result in a breach of any provision
of Sunbelt's Articles of Association or Bylaws. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby,
subject to obtaining all required shareholder and regulatory approvals, will
not violate any provision of, or constitute a default under, any law, or any
order, writ, injunction or decree of any court or other governmental agency, or
any contract, agreement or instrument to which Sunbelt is a party or by which
either is bound or constitute an event which, with the lapse of time or action
by a third party, could result in any default under any of the foregoing
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or result in the creation of any lien, charge or encumbrance upon the assets or
properties of Sunbelt or upon the Sunbelt Common Stock.
Section 2.13. Laws. Except as otherwise noted in Schedule 2.13
hereto, Sunbelt is in material compliance with all applicable federal, state
and local laws, rules, regulations and orders applicable to it. Except for
approvals by regulatory authorities having jurisdiction over Sunbelt, no prior
consent, approval or authorization of, or declaration, filing or registrations
with, any person or regulatory authority is required of Sunbelt in connection
with the execution, delivery and performance by Sunbelt of this Agreement and
the transactions contemplated hereby or the resulting change of control of
Sunbelt except for certain instruments necessary to consummate the
Consolidations contemplated hereby. Sunbelt has filed all reports,
registrations and statements, together with any amendments required to be made
thereto, that are required to be filed with the OCC or any other regulatory
authority having jurisdiction over Sunbelt, and such reports, registrations and
statements are, to the best knowledge of Sunbelt, true and correct in all
material respects.
Section 2.14. Conduct. Except as otherwise noted in Schedule 2.14
hereto, since September 30, 1997, Sunbelt has not (a) issued or sold any of its
capital stock or corporate debt obligations; (b) declared or set aside or paid
any dividend or made any other distribution in respect of or, directly or
indirectly, purchased, redeemed or otherwise acquired any shares of Sunbelt
Common Stock; (c) incurred any obligations or liabilities (fixed or
contingent), except obligations or liabilities incurred in the ordinary course
of business, or mortgaged, pledged or subjected any of its assets to a lien or
encumbrance (other than in the ordinary course of business and other than
statutory liens not yet delinquent); (d) discharged or satisfied any lien or
encumbrance or paid any obligation or liability (fixed or contingent), other
than accruals, accounts and notes payable included in the Sunbelt Financial
Statements, accruals, accounts and notes payable incurred since September 30,
1997 in the ordinary course of business and accruals, accounts and notes
payable incurred in connection with the transactions contemplated by this
Agreement; (e) sold, exchanged or otherwise disposed of any of its capital
assets other than in the ordinary course of business; (f) made any general or
individual wage or salary increase (including increases in directors' or
consultants' fees), paid any bonus, granted or paid any perquisites such as
automobile allowance, club membership or dues or other similar benefits, or
instituted any employee welfare, retirement or similar plan or arrangement; (g)
suffered any physical damage, destruction or casualty loss, whether or not
covered by insurance, materially and adversely affecting its business, property
or assets; (h) made any or acquiesced with any change in accounting methods,
principles and practices; (i) entered into any contract, agreement or
commitment which obligates Sunbelt for an amount in excess of $10,000 over the
term of any such contract, agreement or commitment; or (j) except in the
ordinary course of business, entered or agreed to enter into any agreement or
arrangement granting any preferential rights to purchase any
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of its assets, properties or rights or requiring the consent of any party to
the transfer and assignment of any such assets, properties or rights.
Section 2.15. Allowance for Credit Losses. The allowance for
credit losses of Sunbelt has been calculated in accordance with generally
accepted accounting principles as applied to banking institutions and in
accordance with all applicable rules and regulations. The allowance for credit
losses shown on Sunbelt's Call Report of September 30, 1997 is substantially
adequate in all material respects to provide for all losses, net of recoveries
relating to loans previously charged off, on loans outstanding as of September
30, 1997. On the Effective Date, no material facts relevant to the adequacy of
the allowance for credit losses as of that date shall have been withheld from
Bancshares. Except as disclosed in writing to Bancshares by Sunbelt on or
before the date of the Agreement, there are no loans of Sunbelt that have been
classified by bank examiners on Sunbelt's most recent examination report as
"Other Assets Especially Mentioned," "Substandard," "Doubtful" or "Loss."
Section 2.16. Employment Relations. The relations of Sunbelt with
its employees are satisfactory, and Sunbelt has not received any notice of any
controversies with, or organizational efforts or other pending actions by,
representatives of its employees. Sunbelt has materially complied with all
laws relating to the employment of labor with respect to its employees,
including any provisions thereof relating to wages, hours, collective
bargaining and the payment of xxxxxxx'x compensation insurance and social
security and similar taxes, and, except as disclosed in Schedule 2.16 hereto,
no person has asserted that Sunbelt is liable for any arrearages of wages,
xxxxxxx'x compensation insurance premiums or any taxes or penalties for failure
to comply with any of the foregoing.
Section 2.17. ERISA. The employee pension benefits plans and
welfare benefit plans (referred to collectively herein as the "Plans") in
effect at Sunbelt (all of which are included in Schedule 2.10 hereto) have all
been operated in all material respects in compliance with ERISA since ERISA
became applicable with respect thereto. None of the Plans nor any of their
respective related trusts have been terminated (except the termination of any
Plan which is in compliance with the requirements of ERISA and which will not
result in any additional liability to Sunbelt), and there has been no
"reportable event," as that term is defined in Section 4043 of ERISA, required
to be reported since the effective date of ERISA which has not been reported,
and none of such Plans nor their respective related trusts have incurred any
"accumulated funding deficiency," as such term is defined in Section 302 of
ERISA (whether or not waived), since the effective date of ERISA. The Plans
are the only employee pension benefit plans covering employees of Sunbelt.
Sunbelt will not have any material liabilities with respect to employee pension
benefits, whether vested or unvested as of the Closing, for any of its
employees other than under the Plans, and as of the date hereof the actuarial
present value of Plan assets of each Plan is not less (and as of the Closing
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of the Consolidation such present value will not be less) than the present
value of all benefits payable or to be payable thereunder.
Section 2.18. Deferred Compensation Arrangements. The schedule
attached as Schedule 2.18 contains a full description of all of Sunbelt's
deferred compensation arrangements, including the terms under which the cash
value of any life insurance purchased in connection with any such arrangement
can be realized.
Section 2.19. List of Loans. Schedule 2.19 to this Agreement sets
forth a true and complete list, as of September 30, 1997, of all loans
(individually, a "Loan" and collectively, the "Loans") of Sunbelt, showing for
each such Loan the outstanding principal balance due, before reduction for any
discount. All currently outstanding Loans of Sunbelt, including any current
extensions of any Loan, were solicited, originated and currently exist in
material compliance with all applicable requirements of federal and state law
and regulations promulgated thereunder. The Loans are adequately documented
and each note evidencing a Loan or credit agreement or security instrument
related to a Loan constitutes a valid and binding obligation of the obligor
thereunder, enforceable in accordance with the terms thereof, except where the
failure thereof, individually or in the aggregate, would not have a material
adverse effect on the condition (financial or otherwise), operations or
prospects of Sunbelt. There are no oral modifications or amendments or
additional agreements related to the Loans that are not reflected in Sunbelt's
records, and no claim of defense as to the enforcement of any Loan has been
asserted, and Sunbelt is not aware of any acts or omissions that would give
rise to any claim or right of rescission, set off, counterclaim or defense,
except where such claim would not have, either individually or in the
aggregate, a material adverse effect on the condition (financial or otherwise),
operations or prospects of Sunbelt.
Section 2.20. Absence of Changes. Since September 30, 1997, except
as disclosed in Schedule 2.20 to this Agreement, there has not been any
material adverse change in the condition (financial or otherwise), assets,
liabilities, earnings or business of Sunbelt. Since such date, the business of
Sunbelt has been conducted only in the ordinary course consistent with prior
practices.
Section 2.21. Brokers and Finders. Neither Sunbelt nor any of its
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders' fees in
connection with the Consolidations contemplated herein.
Section 2.22. Absence of Property Taxes and Liens. All property
taxes due under the applicable provisions of the Texas Tax Code have been paid
by either Sunbelt or the shareholders of Sunbelt, and no liens imposed or
authorized by the Texas Tax Code exist on
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the shares of Sunbelt Common Stock, except as otherwise disclosed in Schedule
2.22 to this Agreement.
Section 2.23. Community Reinvestment Act. Sunbelt is in material
compliance with the Community Reinvestment Act (12 U.S.C. Section 2901 et
seq.) and all regulations promulgated thereunder, and Sunbelt has supplied
Bancshares with copies of Sunbelt's current CRA Statement, all support papers
therefor, all letters and written comments received by Sunbelt since January 1,
1995 pertaining thereto and any responses by Sunbelt to such comments. Sunbelt
has a rating of "satisfactory" as of its most recent CRA compliance examination
and knows of no reason why it would not receive a rating of "satisfactory" or
better pursuant to its next CRA compliance examination or why the OCC or any
other governmental entity may seek to restrain, delay or prohibit the
transactions contemplated hereby as a result of any act or omission of Sunbelt
under the CRA.
Section 2.24. Fair Housing Act, Home Mortgage Disclosure Act and
Equal Credit Opportunity Act. Sunbelt is in material compliance with the Fair
Housing Act (42 U.S.C. Section 3601 et seq.), the Home Mortgage Disclosure Act
(12 U.S.C. Section 2801 et seq.) and the Equal Credit Opportunity Act (15
U.S.C. Section 1691 et seq.) and all regulations promulgated thereunder.
Sunbelt has not received any notices of any violation of said Acts or any of
the regulations promulgated thereunder, nor does Sunbelt have any notice of, or
knowledge of, any threatened administrative inquiry, proceeding or
investigation with respect to Sunbelt's compliance with said Acts.
Section 2.25. Usury Laws and Other Consumer Compliance Laws. All
loans of Sunbelt have been made substantially in accordance with all applicable
statutes and regulatory requirements at the time of such loan or any renewal
thereof, including without limitation, the Texas usury statutes as they are
currently interpreted, Regulation Z (12 C.F.R. Section 226 et seq.) issued by
the Board of Governors of the Federal Reserve System, the Federal Consumer
Credit Protection Act (15 U.S.C. Section 1601 et seq.), the Texas Consumer
Credit Code (Tex. Rev. Civ. Stat. Xxx. art. 5069-2.01, et seq.) and all
statutes governing the operation of national banks located in Texas. Each loan
on the books of Sunbelt was made in the ordinary course of Sunbelt's business.
Section 2.26. Bank Secrecy Act. Sunbelt is in material compliance
with the Bank Secrecy Act (12 U.S.C. Sections 1730(d) and 1829(b)) and all
regulations promulgated thereunder, and Sunbelt has properly certified all
foreign deposit accounts and has made all necessary tax withholdings on all of
its deposit accounts; furthermore, Sunbelt has timely and properly filed and
maintained all requisite Currency Transaction Reports and other related forms,
including, but not limited to, any requisite Custom Reports required by any
agency of the United States Treasury Department, including but not limited to
the Internal Revenue Service.
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Section 2.27. Zoning and Related Laws. All real property owned by
Sunbelt and the use thereof materially complies with all applicable laws,
ordinances, regulations, orders or requirements, including without limitation,
building, zoning and other laws.
Section 2.28. Securities Laws. Sunbelt and its officers, employees
and agents are now, and at all times in the past have been, in full compliance
with all applicable federal and state securities laws and any regulations
promulgated thereunder. Sunbelt and its officers, employees and agents have
complied with, and currently hold, all necessary licenses and permits required
under any federal or state securities law or regulation to conduct any
securities activities in which Sunbelt or its officers, employees, or agents
are now engaged or have been engaged in the past.
Section 2.29. Regulatory Approvals. Sunbelt has no reason to
believe that it will not be able to obtain all requisite regulatory approvals
necessary to consummate the Consolidations as set forth in this Agreement.
Section 2.30. Shareholders' List. Sunbelt has provided or made
available to Bancshares as of a date within ten (10) days of the date of this
Agreement a list of the holders of shares of Sunbelt Common Stock containing
for Sunbelt's shareholders the names, addresses and number of shares held of
record, which shareholders' list is in all respects accurate as of such date
and will be updated prior to Closing.
III. REPRESENTATIONS AND WARRANTIES OF BANCSHARES,
DELAWARE-COMPANY AND PRIME
Bancshares, Delaware-Company and Prime, respectively as indicated
below, represent and warrant to Sunbelt that the statements contained in this
Article III are true and correct in all material respects as follows:
Section 3.1. Organization. Bancshares is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas and a bank holding company duly registered under the Bank Holding Company
Act of 1956, as amended (the "BHC Act"), subject to all laws, rules and
regulations applicable to bank holding companies. Delaware-Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and a bank holding company duly registered under
the BHC Act subject to all laws, rules and regulations applicable to bank
holding companies. Bancshares owns 100% of the issued and outstanding common
stock of Delaware-Company and, indirectly through Delaware-Company, 100% of the
issued and outstanding capital stock of Prime. Prime is a Texas banking
corporation duly organized, validly existing and in good standing under the
laws of the State of Texas. Prime is an insured bank as defined in the Federal
Deposit Insurance Act. Upon the organization of New Bank, Bancshares or
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Delaware-Company will own 100% of the issued and outstanding capital stock of
New Bank. When organized, New Bank will be duly organized, validly existing
and in good standing under the laws of the State of Texas. Bancshares,
Delaware-Company and Prime have full power and authority (including all
licenses, franchises, permits and other governmental authorizations which are
legally required) to own their properties, to engage in the business and
activities now conducted by them and to enter into this Agreement.
Section 3.2. Capitalization. The authorized capital stock of
Bancshares consists of 50,000,000 shares of common stock, $0.25 par value
("Bancshares Common Stock"), 12,010,980 of which are issued and 9,317,020 are
outstanding and 15,000,000 shares of preferred stock, $1.00 par value,
1,250,000 of which are designated as Series B 10% Non-Cumulative Preferred
Stock, 1,000,000 of which are issued and outstanding ("Bancshares Preferred
Stock"). All of the issued and outstanding shares of Bancshares Common Stock
and Bancshares Preferred Stock are validly issued, fully paid and
non-assessable. Except as disclosed on Schedule 3.2, Bancshares has no
existing options, warrants, calls, convertible securities or commitments of any
kind obligating Bancshares to issue any authorized but unissued shares of
Bancshares Common Stock or Bancshares Preferred Stock nor does Bancshares have
any outstanding commitment or obligation to repurchase, reacquire or redeem any
of its outstanding capital stock.
Section 3.3. Approvals; Authority. The Boards of Directors of
Bancshares, Delaware-Company and Prime have each approved this Agreement and
the transactions contemplated herein subject to the approval thereof by the
shareholders of Bancshares, Delaware-Company and Prime as required by law, and,
other than shareholder approval, no further corporate proceedings of
Bancshares, Delaware-Company or Prime are needed to execute and deliver this
Agreement and consummate the Consolidations. This Agreement has been duly
executed and delivered by Bancshares, Delaware-Company and Prime and is a duly
authorized, valid, legally binding agreement of Bancshares, Delaware-Company
and Prime enforceable against each entity in accordance with its terms, subject
to the effect of bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to creditors' rights generally and general equitable
principles.
Section 3.4. No Conflict With Other Instruments. Neither the
execution and delivery of this Agreement nor the consummation of the
Consolidations contemplated thereby, subject to obtaining all required
shareholder consents, will conflict with or result in a breach of any provision
of any Articles of Incorporation or Association of Bancshares,
Bancshares-Delaware, Prime or New Bank, as applicable, or their respective
Bylaws. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby, subject to obtaining all required
shareholder and regulatory approvals, will not violate any provision of, or
constitute a default under, any law, or any order, writ, injunction or decree
of any court or other governmental agency, or any contract, agreement
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or instrument to which Bancshares, Delaware-Company, Prime or New Bank is a
party or by which it is bound or constitute an event which, with the lapse of
time or action by a third party, could result in any default under any of the
foregoing or result in the creation of any lien, charge or encumbrance upon the
assets or properties of Bancshares, Delaware-Company or Prime or upon the stock
of Bancshares, Delaware-Company or Prime.
Section 3.5. Financial Statements. Bancshares' audited
consolidated balance sheets and the related statements of income, changes in
shareholders' equity and cash flows, together with the notes thereto, as of and
for the three years ended December 31, 1996, December 31, 1995 and December 31,
1994 and Bancshares unaudited balance sheet as of September 30, 1997 and
statements of income, changes in shareholders' equity and cash flows for the
nine months then ended have been furnished to Sunbelt. The financial
information referred to in this Section 3.5 is collectively referred to in this
Article III as the "Bancshares Financial Statements." The Bancshares Financial
Statements fairly present the financial position of Bancshares and Prime and
the results of their respective operations at the dates and for the periods
indicated in conformity with agreed upon selected procedures applied on a
consistent basis with previous accounting periods. As of the dates of the
Bancshares Financial Statements referred to above neither Bancshares nor Prime
had any liabilities, fixed or contingent, which are material and are not fully
shown or provided for in such Financial Statements or otherwise disclosed in
this Agreement, or in any of the documents delivered to Sunbelt. Since
September 30, 1997 there have been no material changes in the financial
condition, assets, liabilities or business of Bancshares or Prime, other than
changes in the ordinary course of business, which individually or in the
aggregate have materially and adversely affected the financial condition of
Bancshares or Prime.
Section 3.6. SEC Reports. Bancshares has filed all material
reports and statements, together with any amendments required to be made with
respect thereto, that it was required to file with the Securities and Exchange
Commission ("SEC"). As of their respective dates, each of such reports and
statements, as amended, were true and correct and complied in all material
respects with the relevant statutes, rules and regulations enforced or
promulgated by the SEC.
Section 3.7. Litigation and Other Proceedings. Except as
otherwise noted on Schedule 3.7 hereto, there are no legal, quasi-judicial or
administrative proceedings of any kind or nature now pending or, to the
knowledge of Bancshares, threatened before any court or administrative body in
any manner against Bancshares or Prime, or any of their respective properties
or capital stock, which might have a material adverse effect on Bancshares or
Prime, their respective financial conditions, assets, operations or earnings or
the transactions proposed by this Agreement. Neither Bancshares nor Prime
knows of any basis on which any litigation or proceeding could be brought which
could have a materially adverse effect on the financial condition or prospects
of Bancshares or Prime or which could question the
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validity of any action taken or to be taken in connection with this Agreement
and the transactions contemplated hereby. Neither Bancshares nor Prime is in
default with respect to any judgment, order, writ, injunction, decree, award,
rule or regulation of any court, arbitrator or governmental agency or
instrumentality.
Section 3.8. Ability to Pay Consolidation Consideration.
Bancshares has available a sufficient number of authorized and unissued shares
of Bancshares Common Stock to pay the portion of the Consolidation
Consideration payable in shares of Bancshares Common Stock, and Bancshares will
not take any action during the term of this Agreement that will cause it not to
have a sufficient number of authorized and unissued shares of Bancshares Common
Stock to pay the portion of the Consolidation Consideration payable in shares
of Bancshares Common Stock. Bancshares has available through internal funds
cash in the amount of the Consolidation Consideration to be paid in cash to
shareholders of Sunbelt as set forth in Section 1.9 hereof.
Section 3.9. Regulatory Approvals. Bancshares has no reason to
believe that it will not be able to obtain all requisite regulatory approvals
necessary to consummate the transactions set forth in this Agreement.
Section 3.10. Capitalization. The shares of Bancshares Common
Stock to be issued pursuant to this Agreement, when so issued, will be duly and
validly authorized and issued, fully paid and nonassessable, and not issued in
violation of any preemptive rights. As of September 30, 1997, Bancshares had
issued 12,010,980 shares of common stock, $.25 per share par value, 9,317,020
of which were outstanding. None of the shares of Bancshares Common Stock to be
issued pursuant to this Agreement will be subject to any lien, charge,
encumbrance, claim, rights of others, mortgage, pledge or security interest,
and none will be subject to any agreements or understandings among any persons
with respect to the voting or transfer of such shares of Bancshares Common
Stock except as contemplated hereby.
IV. COVENANTS OF SUNBELT
Sunbelt covenants and agrees with Bancshares, Delaware-Company and
Prime as follows:
Section 4.1. Shareholder Approval and Best Efforts. Sunbelt will,
as soon as practicable, present for the approval of its shareholders this
Agreement and the transactions contemplated hereby. Sunbelt will take all
reasonable action to arrange for a meeting of its shareholders for the purpose
of considering the Agreement and, if the transaction is approved by such
shareholders, to aid and assist in the consummation of the Consolidations, and
will use its best efforts to take or cause to be taken all other actions
necessary, proper or advisable to consummate the transactions contemplated by
this Agreement, including such actions as
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Bancshares reasonably considers necessary, proper or advisable in connection
with filing applications and registration statements with, or obtaining
approvals from, all regulatory authorities having jurisdiction over the
transactions contemplated by this Agreement.
Section 4.2. Operations. From and after the date of this
Agreement to the Effective Date, Sunbelt agrees to (a) conduct its business in
substantially the same manner as it has been conducted since September 30, 1997
and in accordance with prudent business and banking practices, (b) maintain and
keep its properties in as good repair and condition as at present, except for
deterioration due to ordinary wear and tear and damage due to casualty, (c)
maintain in full force and effect insurance comparable in amount and scope of
coverage to that currently maintained for Sunbelt, (d) make no alteration in
the manner of maintaining its books, accounts or records, or in the accounting
practices relating to its business, properties or assets, (e) perform all of
its material obligations under contracts, leases and documents relating to or
affecting its assets, properties and business, except such obligations as
Sunbelt may in good faith reasonably dispute, (f) maintain and preserve its
corporate existence, business organization, assets, licenses, permits,
authorizations and business opportunities intact, use its best efforts to
retain its present employees and maintain all relationships with depositors and
customers of Sunbelt, (g) comply with and perform all obligations and duties
imposed upon Sunbelt by all federal, state and local laws, and all rules,
regulations and orders imposed by federal, state or local governmental
authorities, (h) notify Bancshares immediately upon commencement of any
compliance, safety and soundness or other type of examination conducted by the
OCC or any other agency having supervisory authority over Sunbelt or in the
event of any actual or threatened litigation, (i) use its best efforts to amend
the Articles of Association or Bylaws of Sunbelt in any manner which
Bancshares, in its reasonable discretion, shall deem necessary, proper or
advisable, (j) promptly give written notice to Bancshares upon obtaining
knowledge of any event or fact that would cause any of the representations or
warranties of Sunbelt contained in this Agreement to be untrue or misleading in
any material respect, and (k) use its best efforts to continue to solicit
deposits, maintain deposits and operate its deposit gathering procedures
consistent with existing practices.
Sunbelt will not, without the prior written consent of Bancshares, (i)
permit any amendment or change to be made in Articles of Association or Bylaws
of Sunbelt except as directed by Bancshares as set forth in (i) above, (ii)
take any action described or do any of the things listed in Section 2.14 hereof
except with respect to Section 2.14(g), (iii) enter into or amend any contract,
agreement or other instrument of any of the types listed in Section 2.10
hereof, (iv) undertake any additional borrowings in excess of ninety (90) days,
(v) sell any investment securities, (vi) purchase any investment securities
other than United States Treasury obligations or obligations of any United
States governmental agency with maturities of more than two (2) years, (vii)
modify any outstanding loan, make any new loan, or acquire any loan
participation, unless such modification, new loan or participation is made
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in the ordinary course of business, consistent with existing practice, (viii)
commit to or make any extension of credit in an amount exceeding an aggregate
of $250,000 to any one borrower or his related interests, or (ix) agree to
settle all or part of any litigation matters, provided that with respect to
sections (iv), (v), (vi), (vii), (viii) and (ix) written consent of Bancshares
shall not be unreasonably withheld.
Section 4.3. Access to Properties and Records. To the extent
permitted by applicable law, Sunbelt will afford the executive officers and
authorized representatives (including legal counsel, accountants and
consultants) of Bancshares full access to the properties, books and records of
Sunbelt in order that Bancshares may have full opportunity to make such
reasonable investigation as it shall desire to make of the affairs of Sunbelt,
and the officers of Sunbelt will furnish Bancshares with such additional
financial and operating data and other information as to the business and
properties of Sunbelt as Bancshares shall, from time to time, request. As soon
as practicable after they become available, Sunbelt will deliver or make
available to Bancshares all unaudited quarterly financial statements prepared
for the internal use of management of Sunbelt and all Call Reports filed by
Sunbelt with the appropriate federal regulatory authority after the date of
this Agreement. All such financial statements shall be prepared in accordance
with generally accepted accounting principles applied on a consistent basis
with previous accounting periods. In the event of the termination of this
Agreement, Bancshares will return to Sunbelt all documents and other
information obtained pursuant hereto and will keep confidential any information
obtained pursuant to this Agreement.
Section 4.4. Information for Regulatory Applications and SEC
filings. To the extent permitted by law, Sunbelt will furnish Bancshares with
all information concerning Sunbelt required for inclusion in (i) any
application, statement or document to be made or filed by Bancshares,
Delaware-Company or Prime with any federal or state regulatory or supervisory
authority in connection with the transactions contemplated by this Agreement
during the pendency of this Agreement and (ii) any filings with the SEC,
including a Registration Statement on Form S-4, and any applicable state
securities authorities. Sunbelt represents and warrants that all information
so furnished for such applications and filings shall, to the best of its
knowledge, be true and correct in all material respects without omission of any
material fact required to be stated to make the information not misleading.
Sunbelt will indemnify and hold harmless Bancshares, Delaware-Company and Prime
from and against any and all losses, claims, damages, expenses or liabilities
to which any of them may become subject under applicable laws, rules and
regulations and will reimburse Bancshares, Delaware-Company and Prime for any
legal or other expenses reasonably incurred by any of them in connection with
investigating or defending any actions whether or not resulting in liability,
insofar as such losses, claims, damages, expenses, liabilities or actions arise
out of or are based upon any untrue statement of a material fact contained in
any such application or arise out of or are based upon the omission or alleged
omission to state
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therein a material fact required to be stated therein, or necessary in order to
make the statements therein not misleading, but only insofar as any such
statement or omission was made in reliance upon and in conformity with
information furnished in writing by Sunbelt expressly for use therein. Sunbelt
agrees at any time, upon the request of Bancshares, to furnish to Bancshares a
written letter or statement confirming the accuracy of the information with
respect to Sunbelt contained in any report or other application or statement
referred to in Sections 4.1 or 4.4 of this Agreement, and confirming that the
information with respect to Sunbelt contained in such document or draft was
furnished by Sunbelt expressly for use therein or, if such is not the case,
indicating the inaccuracies contained in such document or indicating the
information not furnished by Sunbelt expressly for use therein. The indemnity
agreement contained in this Section 4.4 will terminate at the Closing Date.
Section 4.5. Attendance at Certain Sunbelt Meetings. In order to
facilitate the continuing interaction of Bancshares with Sunbelt, and in order
to keep Bancshares fully advised of all ongoing activities of Sunbelt, Sunbelt
agrees to allow Bancshares to designate one or more representatives, any one of
whom will be allowed to attend as an invited guest and fully monitor all
regular and called meetings of the board of directors and loan and investment
committees of Sunbelt. Such representative shall have no right to vote and may
be excluded from sessions of the board of directors or loan or investment
committee during which there is being discussed (a) matters involving this
Agreement, (b) information or material which Sunbelt is required or obligated
to maintain as confidential under applicable laws or regulations or policies or
procedures of Sunbelt, or (c) pending or threatened litigation or
investigations if, in the opinion of counsel to Sunbelt, the presence of such
representative would or might adversely affect the confidential nature of or
any privilege relating to any matters to be discussed. No attendance by
representatives of Bancshares at board meetings under this Section 4.5 or
knowledge gained or deemed to have been gained by virtue of such attendance
will affect any of the representations and warranties of Sunbelt made in this
Agreement. Bancshares agrees that, until the Closing, it and its
representatives will hold in strict confidence all information so obtained from
Sunbelt and, if the transactions provided for herein are not consummated,
Bancshares will, upon request of Sunbelt, return or cause to be returned to
Sunbelt all written information and documents obtained from Sunbelt concerning
Sunbelt then in its possession.
Section 4.6. Standstill Provision. So long as this Agreement is
in effect, neither Sunbelt nor any of its directors or officers shall
entertain, solicit or encourage any inquiries, or provide any information to or
negotiate with any other party any proposal which could reasonably be expected
to lead to the merger, consolidation, acquisition, or sale of all or
substantially all of the assets or any shares of capital stock of Sunbelt.
Sunbelt agrees to notify Bancshares immediately of any such unsolicited
acquisition proposals and provide reasonable detail as to the identity of the
proposed acquiror and the nature of the proposed transaction.
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Section 4.7. Proxies. Sunbelt acknowledges that the persons
listed in Schedule 4.7 have agreed to vote their shares of Sunbelt Common Stock
pursuant to the terms of the Sunbelt Voting Agreement in favor of this
Agreement and the transactions contemplated hereby, subject to required
regulatory approvals, and that such persons will retain the right to vote such
shares during the term of this Agreement, pursuant to a Voting Agreement
substantially in the form of Exhibit "D" to this Agreement which has been
executed as of the date of this Agreement.
Section 4.8. Accounting and Tax Treatment. Sunbelt agrees to use
its reasonable efforts to cause the Consolidations, and to take no action which
would cause the Consolidations not, to qualify as a pooling of interests for
accounting purposes or as a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code for federal income tax purposes.
Section 4.9. Pre-Closing Adjustments. Sunbelt agrees that prior
to December 31, 1997 it will (i) increase its reserve for loan losses by an
additional amount of $300,000 and (ii) adjust the retirement accrual fee for
Xx. X. X. Xxxxxxxx to an amount which is $100,000 less than the amount
provided in the minutes of the February 28, 1991 meeting of Sunbelt's Directors
Review and Advisory Guidance Committee
V. COVENANTS OF BANCSHARES, DELAWARE-COMPANY
AND PRIME
Bancshares, Delaware-Company and Prime covenant and agree with Sunbelt
as follows:
Section 5.1. Best Efforts. If required, Prime and New Bank will,
as soon as practicable, present for the approval of their respective
shareholders, this Agreement and the transactions contemplated thereby.
Bancshares, Delaware-Company and Prime will take all reasonable action to aid
and assist in the consummation of the Consolidations and the transactions
contemplated hereby, and will use their best efforts to take or cause to be
taken all other actions necessary, proper or advisable to consummate the
transactions contemplated by this Agreement, including such actions which are
necessary, proper or advisable in connection with filing applications with, or
obtaining approvals from, all regulatory authorities having jurisdiction over
the transactions contemplated by this Agreement.
Section 5.2. Information for Applications and Proxy Solicitation.
To the extent permitted by law, Bancshares will furnish Sunbelt with all
information concerning Bancshares, Delaware-Company and Prime required for
inclusion in (a) any application, statement or document to be made or filed by
Sunbelt with any federal or state regulatory or supervisory authority in
connection with the transactions contemplated by this Agreement
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during the pendency of this Agreement and (b) any proxy materials to be
furnished to the shareholders of Sunbelt in connection with their consideration
of the Consolidations. Bancshares, Delaware-Company and Prime represent and
warrant that all information so furnished for such statements and applications
shall, to the best of its knowledge, be true and correct in all material
respects without omission of any material fact required to be stated to make
the information not misleading. Bancshares will indemnify and hold harmless
Sunbelt from and against any and all losses, claims, damages, expenses or
liabilities to which Sunbelt may become subject under applicable laws, rules
and regulations and will reimburse Sunbelt for any legal or other expenses
reasonably incurred by Sunbelt in connection with investigating or defending
any actions whether or not resulting in liability, insofar as such losses,
claims, damages, expenses, liabilities or actions arise out of or are based on
any untrue statement or alleged untrue statement of a material fact contained
in any such application or proxy materials or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to
be stated therein, or necessary in order to make the statements therein not
misleading, but only insofar as such statement or omission was made in reliance
upon and in conformity with information expressly furnished by Bancshares
expressly for use therein. Bancshares agrees, upon the request of Sunbelt, to
furnish to Sunbelt a written letter or statement confirming to the best of its
knowledge the accuracy of the information with respect to Bancshares,
Delaware-Company and Prime contained in any report or other application or
statement referred to in Sections 5.1 or 5.2 of this Agreement, and confirming
that the information with respect to Bancshares and Prime contained in such
document or draft was furnished expressly for use therein or, if such is not
the case, indicating the inaccuracies contained in such document or indicating
the information not furnished by Bancshares expressly for use therein.
Section 5.3. Employee Benefit Plans. Bancshares agrees that the
employees of Sunbelt who are bona fide participants in any of Sunbelt's health
and welfare plans and who are not terminated by Prime will be entitled to
participate in all employee health and welfare plans maintained for employees
of Bancshares and Prime in accordance with the terms of such plans. All
employees of Sunbelt retained by Bancshares or Prime will receive credit for
their prior service with Sunbelt with respect to such plans.
Section 5.4. Confidentiality. Bancshares, Delaware-Company and
Prime shall not, before or after the consummation or termination of this
Agreement, directly or indirectly disclose any confidential information
acquired from Sunbelt to any person, firm, corporation, association or other
entity for any reason or purpose whatsoever, other than in connection with the
regulatory notice and application process or, after termination of this
Agreement pursuant to Section 7.1 hereof, use such information for its own
purposes or for the benefit of any person, firm, corporation, association, or
other entity under any circumstances.
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Section 5.5. Registration Statement. As promptly as practicable
after the execution of this Agreement, Bancshares will file with the SEC the
Registration Statement on Form S-4 under the Securities Act of 1933, as amended
("Securities Act") and any other applicable documents, relating to the shares
of Bancshares Common Stock to be delivered to the shareholders of Sunbelt
pursuant to this Agreement, and will use its best efforts to cause the
Registration Statement to become effective. At the time the Registration
Statement becomes effective, the Registration Statement will comply in all
material respects with the provisions of the Securities Act and the published
rules and regulations thereunder, and will not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not false or misleading, and at the
time of mailing thereof to Sunbelt's shareholders, at the time of the Sunbelt
shareholders' meeting held to approve the Consolidation and at the Effective
Date of the Consolidation, the prospectus included as part of the Registration
Statement, as amended or supplemented by any amendment or supplement filed by
Bancshares (the "Prospectus"), will not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not false or misleading; provided, however, that none of the
provisions of this subparagraph shall apply to statements in or omissions from
the Registration Statement or the Prospectus made in reliance upon and in
conformity with information furnished by Sunbelt for use in the Registration
Statement or the Prospectus.
Section 5.6. NASDAQ Listing. Bancshares will file all documents
required to be filed to list the Bancshares Common Stock to be issued pursuant
to the Agreement on the NASDAQ National Market and use its best efforts to
effect said listing.
Section 5.7. Issuance of Bancshares Common Stock. The shares of
Bancshares Common Stock to be issued by Bancshares to the shareholders of
Sunbelt pursuant to this Agreement will, on the issuance and delivery to such
shareholders pursuant to this Agreement, be duly authorized, validly issued,
fully paid and nonassessable. The shares of Bancshares Common Stock to be
delivered to the shareholders of Sunbelt pursuant to this Agreement are and
will be free of any preemptive rights of the shareholders of Bancshares.
Section 5.8. Delivery of Reports. From the date hereof to the
Effective Date, Bancshares shall deliver to Sunbelt, when reasonably available,
Bancshares' Quarterly Reports on Form 10-Q and Bancshares' Annual Reports on
Form 10-K as filed with the SEC under the Securities Exchange Act and at
Closing will provide written notice of any additional disclosure occurring
after the date of Bancshares' most recent Securities Exchange Act filing.
Section 5.9. Rule 144 Compliance. From and after the Effective
Date of the Merger, Bancshares shall file all reports with the SEC necessary to
permit the shareholders of Sunbelt who may be deemed "underwriters" (within the
meaning of the Rule 145 under
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the Securities Act) of Sunbelt Common Stock to sell Bancshares Common Stock
received by them in connection with the Consolidation pursuant to Rules 144 and
145(d) under the Securities Act if they would otherwise be so entitled;
provided, however, that Bancshares is otherwise obligated to file such reports
with the SEC.
Section 5.10. Publication of Financial Condition. Bancshares will
publish the results of thirty (30) days of combined operations of Bancshares
and Sunbelt as soon as practicable after the Effective Date.
Section 5.11. Employee Protection.
(a) To the extent that Bancshares, within the 180-day
period commencing on the Effective Date, shall terminate, for any reason other
than "good cause" as defined below, any of the employees set forth in Schedule
5.11 without providing at least four (4) months prior notice, Bancshares shall
be required to pay such employee a lump sum severance payment, based on such
employee's base monthly 1997 salary, equal to the difference between four (4)
months and the actual termination notice time period given.
(b) To the extent that Bancshares, within the 90-day
period commencing on the Effective Date, shall terminate, for any reason other
than "good cause" as defined below, any other employee of Sunbelt without
providing at least two (2) months prior notice, Bancshares shall be required to
pay such employee a lump sum severance payment, based on such employee's base
monthly 1997 salary, equal to the difference between two (2) months and the
actual termination notice time period given.
(c) For purposes of this section, good cause shall mean:
(i) a willful and repeated failure to perform duties as may be reasonably
assigned by Prime, (ii) willful and repeated violation of Prime's written
policies and procedures, (iii) habitual use of alcohol or drugs that prevents
the employee from performing duties reasonably assigned by Prime, (iv)
conviction of a felony, or conviction of a misdemeanor involving active and
willful fraud or moral turpitude, or (v) acts of gross disloyalty to Prime,
including but not limited to theft, embezzlement or intentional unauthorized
disclosure of confidential information. Any employee who voluntarily
terminates his or her employment shall not be entitled to any severance
payments.
VI. CLOSING
Section 6.1. Closing. Subject to the other provisions of this
Section VI, on a mutually acceptable date ("Closing Date") as soon as
practicable within a thirty-day period commencing with the latest of the
following dates:
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(a) the receipt of shareholder approval and the last
approval from any requisite regulatory or supervisory authority and the
expiration of any statutory or regulatory waiting period which is necessary to
effect the Consolidations; or
(b) if the transactions contemplated by this Agreement
are being contested in any legal proceeding and Bancshares or Sunbelt, pursuant
to Section 10.1 herein, have elected to contest the same, then the date that
such proceeding has been brought to a conclusion favorable, in the judgment of
each of Bancshares and Sunbelt, to the consummation of the transactions
contemplated herein, or such prior date as each of Bancshares and Sunbelt shall
elect whether or not such proceeding has been brought to a conclusion.
A meeting ("Closing") will take place at which the parties to this
Agreement will exchange certificates, opinions, letters and other documents in
order to determine whether any condition exists which would permit the parties
hereto to terminate this Agreement. If no such condition then exists or if no
party elects to exercise any right it may have to terminate this Agreement,
then and thereupon the appropriate parties shall execute such documents and
instruments as may be necessary or appropriate to effect the transactions
contemplated by this Agreement.
The Closing shall take place at the offices of Bracewell & Xxxxxxxxx,
L.L.P. in Houston, Texas, or at such other place to which the parties hereto
may mutually agree.
Section 6.2. Effective Date. Subject to the terms and upon
satisfaction of all requirements of law and the conditions specified in this
Agreement including, among other conditions, the receipt of any requisite
approvals of the shareholders of Sunbelt and the regulatory approvals of the
OCC, the Federal Reserve Board, FDIC, Banking Department and any other federal
or state regulatory agency whose approval must be received in order to
consummate the Consolidations, the Final Consolidation shall become effective,
and the effective date of the Final Consolidation shall occur, at the date and
time specified in the certificate approving the Final Consolidation to be
issued by the OCC ("Effective Date"). It is anticipated by Bancshares and
Sunbelt that the Closing and the Effective Date will occur on the same day.
VII. TERMINATION
Section 7.1. Termination.
(a) This Agreement may be terminated by action of the
Board of Directors of either Bancshares, Delaware-Company, Prime or Sunbelt at
any time prior to the Effective Date if:
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(i) any court of competent jurisdiction in the
United States or other United States (federal or state)
governmental body shall have issued an order, decree or ruling
or taken any other action restraining, enjoining or otherwise
prohibiting the Consolidations and such order, decree, ruling
or other action shall have been final and non-appealable;
(ii) any of the transactions contemplated by this
Agreement are disapproved by any regulatory authority or other
person whose approval is required to consummate any of such
transactions; or
(iii) the Consolidations shall not have become
effective on or before June 30, 1998 or such later date as
shall have been approved in writing by the Boards of Directors
of Bancshares, Prime and Sunbelt; provided, however, that the
right to terminate under this Section 7.1(a)(iii) shall not be
available to any party whose failure to fulfill any material
obligation under this Agreement has been the cause of, or has
resulted in, the failure of the Consolidations to become
effective on or before such date.
(b) This Agreement may be terminated at any time prior to
the Effective Date by the Board of Directors of Sunbelt if (i) Bancshares,
Delaware-Company or Prime shall fail to comply in any material respect with any
of its covenants or agreements contained in this Agreement, or if any of the
representations or warranties of Bancshares, Delaware-Company or Prime
contained herein shall be defective in any material respect or (ii) there shall
have been any change after September 30, 1997 in the assets, properties,
business or financial condition of Bancshares, Delaware-Company or Prime which
individually or in the aggregate have materially and adversely affected the
ability of Bancshares to pay the Consolidation Price set forth in Section 1.9
hereof. In the event the Board of Directors of Sunbelt desires to terminate
this Agreement as provided above, such Board of Directors must notify
Bancshares in writing of its intent to terminate stating the reason therefor.
Bancshares shall have fifteen days from the receipt of such notice to cure, or
cause Delaware-Company or Prime to cure, the alleged breach or inaccuracy,
subject to the approval of Sunbelt (which approval shall not be unreasonably
delayed or withheld).
(c) This Agreement may be terminated any time prior to
the Effective Date by action of the Board of Directors of Bancshares,
Delaware-Company or Prime if (i) Sunbelt shall fail to comply in any material
respect with any of its covenants or agreements contained in this Agreement, or
if any of the representations or warranties of Sunbelt contained herein shall
be defective in any material respect, (ii) there shall have been any change
after September 30, 1997, in the assets, properties, business or financial
condition of Sunbelt which individually or in the aggregate have materially and
adversely affected the financial condition, results of operation or business of
Sunbelt, or (iii) the Board
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of Directors of Bancshares reasonably concludes, in its sole discretion, that
either Bancshares, Delaware-Company, Prime or New Bank will be unable to obtain
any regulatory approval required in order to consummate the Consolidation or
any such approval is accompanied by terms or conditions unacceptable to
Bancshares or Prime. In the event the Board of Directors of Bancshares desires
to terminate this Agreement because of an alleged breach, inaccuracy or change
as provided in (i) or (ii) above, the Board of Directors must notify Sunbelt in
writing of its intent to terminate stating the cause therefor. Sunbelt shall
have fifteen days from the receipt of such notice to cure the alleged breach,
inaccuracy or change, subject to the approval of Bancshares (which approval
shall not be unreasonably delayed or withheld).
(d) This Agreement may be terminated at any time prior to
the Effective Date with the mutual written consent of Bancshares,
Delaware-Company, Prime and Sunbelt and the approval of such action by their
respective Boards of Directors.
(e) By the Board of Directors of Sunbelt, if the Average
Price (as set forth in Section 1.10 of this Agreement) is $17.50 or less,
provided that, if Sunbelt elects to exercise its termination right pursuant to
this Section 7.1(e), it shall give prompt written notice to Bancshares within
two (2) business days after the calculation of the Average Price, and within
the two (2) business day period commencing with the receipt of such notice,
Bancshares shall have the option of increasing the aggregate number of shares
of Bancshares Common Stock into which shares of Sunbelt Common Stock will be
converted into on the Effective Date by (i) subtracting the Average Price
multiplied by 920,000 from $16,100,000 and (ii) dividing the difference by the
Average Price.
(f) This Agreement may be terminated by Bancshares on or
before January 15, 1998 if the Schedules to be delivered by Sunbelt on or
before January 12, 1998 pursuant to Article II of this Agreement are not
acceptable to Bancshares.
Section 7.2. Effect of Termination. In the event of termination
of this Agreement and the abandonment of the Consolidation without breach by
any party hereto, this Agreement shall become void and have no effect, without
any liability on the part of any party or its directors, officers or
shareholders. Nothing contained in this Section 7.2 shall relieve any party
hereto of any liability for a breach of this Agreement.
VIII. CONDITIONS TO OBLIGATIONS OF BANCSHARES,
DELAWARE-COMPANY AND PRIME
The obligations of Bancshares, Delaware-Company and Prime under this
Agreement are subject to the satisfaction, at or prior to the Closing Date of
the following conditions, which may be waived by Bancshares, Delaware-Company
and Prime in their sole discretion:
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Section 8.1. Compliance with Representations and Covenants. The
representations and warranties made by Sunbelt in this Agreement must have been
true in all material respects when made and shall be true in all material
respects as of the Closing Date with the same force and effect as if such
representations and warranties were made at and as of the Closing Date, and
Sunbelt shall have performed or complied with all covenants and conditions
required by this Agreement to be performed and complied with prior to or at the
Closing. Bancshares shall have been furnished with a certificate, executed by
an appropriate representative of Sunbelt and dated as of the Closing Date, to
the foregoing effect.
Section 8.2. Material Adverse Change. Prior to the Closing Date,
there shall not have occurred any material adverse change in the financial
condition, business or operations of Sunbelt, nor shall any event have occurred
which, with the lapse of time, will cause or create any material adverse change
in the financial condition, business or operations of Sunbelt in the reasonable
judgment of the Board of Directors of Bancshares. Bancshares shall have
received a certificate to the foregoing effect executed by an appropriate
representative of Sunbelt and dated as of the Closing Date.
Section 8.3. Legal Opinion. Bancshares shall have received an
opinion of counsel to Sunbelt, dated as of the Closing Date, in form and
substance satisfactory to counsel for Bancshares, to the effect set forth in
Schedule 8.3 hereof.
Section 8.4. Releases. The directors and officers shall have
delivered to Bancshares an instrument in the form of Exhibit "E" attached
hereto dated the Effective Date releasing Bancshares, Delaware-Company and
Prime from any and all claims of such directors (except as to their deposits
and accounts and any rights of indemnification pursuant to Sunbelt's Articles
of Association), and the directors of Sunbelt shall have delivered to
Bancshares their resignations as directors of Sunbelt.
Section 8.5. Accounting Letters. Bancshares shall have received a
letter from Xxxxx Xxxxxxxx LLP, dated as of the Effective Date, to the effect
that the Consolidations will qualify for pooling of interests accounting
treatment if consummated in accordance with the Agreement, and shall have
received a letter from Sunbelt's accountants, Xxxxxx & Xxxxxxx, to the effect
that Xxxxxx & Xxxxxxx knows of no reason why the Consolidation will not qualify
for pooling of interests accounting treatment if consummated in accordance with
the Agreement.
Section 8.6. Dissenters' Rights. The holders of no more than 5%
of the issued and outstanding Sunbelt Common Stock shall have demanded or shall
be entitled to demand payment of the fair value of their shares as dissenting
shareholders.
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Section 8.7. Tax Opinion. Bancshares shall have received a copy
of the tax opinion described in Section 9.5 of this Agreement.
IX. CONDITIONS TO OBLIGATIONS OF SUNBELT
The obligations of Sunbelt under this Agreement are subject to the
satisfaction, at or prior to the Closing Date, of the following conditions,
which may be waived by Sunbelt in its sole discretion:
Section 9.1. Compliance with Representations and Covenants. The
representations and warranties made by Bancshares, Delaware-Company and Prime
in this Agreement must have been true in all materials respects when made and
shall be true in all material respects as of the Closing Date with the same
force and effect as if such representations and warranties were made at and as
of the Closing Date, and Bancshares, Delaware-Company and Prime shall have
performed and complied in all material respects with all covenants and
conditions required by this Agreement to be performed or complied with by
Bancshares, Delaware-Company and Prime prior to or at the Closing. Sunbelt
shall be furnished with a certificate, executed by appropriate representatives
of Bancshares, Delaware-Company and Prime and dated as of the Closing Date, to
the foregoing effect.
Section 9.2. Material Adverse Change. Prior to the Closing Date,
there shall not have occurred any material adverse change in the financial
condition, business or operations of Bancshares, Delaware-Company or Prime, nor
shall any event have occurred which, with the lapse of time, will cause or
create any material adverse change in the financial condition, business or
operations of Bancshares, Delaware-Company or Prime which would materially and
adversely affect the ability of Bancshares to pay the Consolidation Price set
forth in Section 1.9.
Section 9.3. Legal Opinion. Sunbelt shall have received an
opinion of counsel to Bancshares, dated as of the Closing Date and in form and
substance satisfactory to counsel for Sunbelt, to the effect set forth in
Schedule 9.3 hereof.
Section 9.4. Releases. Sunbelt shall have delivered to the
directors of Sunbelt an instrument in the form of Exhibit "F" attached hereto
dated the Effective Date releasing the directors from any and all claims of
Sunbelt (except as to indebtedness and other contractual liabilities);
provided, however, that such releases shall not release an action against such
directors by Bancshares or Prime in connection with the transactions
contemplated by this Agreement.
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Section 9.5. Tax Opinion. Sunbelt shall have received an opinion
of counsel satisfactory to Sunbelt that the Consolidations will result in a
tax-free exchange to Sunbelt shareholders under Section 368(a) of the Internal
Revenue Code.
X. CONDITIONS TO RESPECTIVE OBLIGATIONS OF BANCSHARES,
DELAWARE-COMPANY, PRIME AND SUNBELT
The respective obligations of Bancshares, Delaware-Company, Prime, and
Sunbelt under this Agreement are subject to the satisfaction of the following
conditions which may be waived by Bancshares, Delaware-Company, Prime, and
Sunbelt, respectively, in their sole discretion:
Section 10.1. Government Approvals. Bancshares and Sunbelt shall
have received the approval, or waiver of approval, of the transactions
contemplated by this Agreement from all necessary governmental agencies and
authorities, including the OCC and any other regulatory agency whose approval
must be received in order to consummate the Consolidations, which approvals
shall not impose any restrictions on the operations of the Continuing Bank
which are unacceptable to Bancshares, and such approvals and the transactions
contemplated hereby shall not have been contested by any federal or state
governmental authority or any third party (except shareholders asserting
dissenters' rights) by formal proceeding. It is understood that, if any such
contest is brought by formal proceeding, Bancshares or Sunbelt may, but shall
not be obligated to, answer and defend such contest or otherwise pursue the
Consolidations over such objection.
Section 10.2. Shareholder Approval. The shareholders of Sunbelt,
the shareholder of New Bank, and Delaware-Company as the sole shareholder of
Prime, shall have approved this Agreement and the transactions contemplated by
this Agreement and the holders of no more than 5% of the Sunbelt Common Stock
shall have exercised their dissenters' rights in accordance with the applicable
laws, rules and regulations as provided in Section 1.10 of this Agreement.
Section 10.3. Registration of Bancshares Common Stock. The
Registration Statement covering the Bancshares Common Stock to be issued in the
Consolidation shall be effective under the Securities Act and any applicable
state securities or "blue sky" acts and no stop orders suspending the
effectiveness of such registration statement shall be in effect.
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XI. MISCELLANEOUS
Section 11.1. Non-Survival of Representations and Warranties. The
representations and warranties of Bancshares, Delaware-Company, Prime and
Sunbelt contained in this Agreement shall terminate at the Closing Date.
Section 11.2. Amendments. This Agreement may be amended only by a
writing signed by Bancshares, Delaware-Company, Prime and Sunbelt at any time
prior to the Closing Date with respect to any of the terms contained herein;
provided, however, that the Consolidation Price to be received by the
shareholders of Sunbelt pursuant to this Agreement shall not be decreased
subsequent to the approval of the transactions contemplated by the Agreement
without the further approval by such shareholders.
Section 11.3. Expenses.
(a) Whether or not the transactions provided for herein
are consummated, each party to this Agreement will pay its respective expenses
incurred in connection with the preparation and performance of its obligations
under this Agreement. Similarly, each party agrees to indemnify the other
parties against any cost, expense or liability (including reasonable attorneys'
fees) in respect of any claim made by any party for a broker's or finder's fee
in connection with this transaction other than one based on communications
between the party and the claimant seeking indemnification. Bancshares and
Sunbelt represent and warrant to each other that neither of them, nor any of
their agents, employees or representatives, has incurred any liability for any
commissions or brokerage fees in connection with this transaction.
(b) Sunbelt shall pay Bancshares, and Bancshares shall be
entitled to payment of, a fee equal to the aggregate consideration paid or to
be paid to shareholders of Sunbelt which exceeds the aggregate Consolidation
Price set forth in Section 1.9 hereof plus all out of pocket expenses incurred
by Bancshares or Prime in connection with the transactions set forth in this
Agreement (the "Fee") upon the occurrence of a Purchase Event (as defined
herein) so long as the Purchase Event occurs prior to a Fee Termination Event
(as defined herein). Such payment shall be made to Bancshares in immediately
available funds within five business days after the occurrence of a Purchase
Event. In the event that the consideration to be paid from the transaction
giving rise to the Purchase Event is other than cash or publicly traded
securities, the Fee shall be paid as determined in Section 11.3(e) hereof. A
Fee Termination Event shall be the first to occur of the following: (i) the
Effective Date, (ii) 18 months following the first occurrence of a Purchase
Event (as defined herein), or (iii) termination of this Agreement in accordance
with the terms hereof prior to the occurrence of a Purchase Event (other than a
termination of this Agreement by Bancshares
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hereof as a result of a willful material breach of any representation,
warranty, covenant or agreement of Sunbelt).
(c) The term "Purchase Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Sunbelt, without having received Bancshares'
prior written consent, shall have entered into an agreement to
engage in an Acquisition Transaction (as defined below) with
any person (the term "person" for purposes of this Agreement
having the meaning assigned thereto in Section 3(a)(9) and
13(d)(3) of the Securities Exchange Act of 1934 (the "Exchange
Act") and the rules and regulations thereunder) other than
Bancshares or any affiliate of Bancshares (the term
"affiliate" for purposes of this Agreement having the meaning
assigned thereto in Rule 405 under the Securities Act) or the
Board of Directors of Sunbelt shall have recommended that the
shareholders of Sunbelt approve or accept any Acquisition
Transaction with any person other than Bancshares or any
affiliate of Bancshares. For purposes of this Agreement,
"Acquisition Transaction" shall mean (x) a merger or
consolidation, or any similar transaction, involving Sunbelt,
(y) a purchase, lease or other acquisition of all or
substantially all of the assets of Sunbelt, or (z) a sale of
authorized but unissued securities representing 15% or more of
the voting power of Sunbelt.
(ii) Any person other than Bancshares or any
affiliate of Bancshares, other than in connection with a
transaction to which Bancshares has given its prior written
consent, shall have consummated any proposed transaction or
series of transactions involving or affecting Sunbelt or any
securities or assets of Sunbelt that results in an acquisition
of control of Sunbelt within the meaning of 12 USCA Section
1817(j) or the regulations promulgated thereunder; or
(iii) After a bona fide proposal is made by any
person other than Bancshares or any affiliate of Bancshares to
Sunbelt or its shareholders to engage in an Acquisition
Transaction, Sunbelt shall have breached any covenant or
obligation contained in this Agreement and such breach would
entitle Bancshares to terminate this Agreement, a meeting of
the shareholders to vote on this Agreement shall not have been
held or shall have been canceled prior to termination of this
Agreement or the Board of Directors of Sunbelt shall have
withdrawn or modified in a manner adverse to Bancshares the
recommendation of the Board of Directors of Sunbelt with
respect to this Agreement.
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(d) Sunbelt shall promptly give written notice to
Bancshares of the occurrence of a Purchase Event known to Sunbelt; however, the
giving of such notice by Sunbelt shall not be a condition to the right of
Bancshares to obtain the Fee.
(e) If the consideration to be offered, paid or received
pursuant to a Purchase Event described in Section 11.3(b) hereof shall be other
than in cash or publicly traded securities, the value of such consideration
shall be determined in good faith by an independent nationally recognized
investment banking firm selected by Bancshares and reasonably acceptable to
Sunbelt, which determination shall be conclusive for all purposes of this
Agreement.
(f) The payment of the Fee shall be in lieu of
Bancshares, Delaware-Company or Prime seeking any other relief or damages to
which it is otherwise entitled pursuant to this Agreement.
Section 11.4. Notices. Any notice given hereunder shall be in
writing and shall be delivered in person or mailed by first class mail, postage
prepaid or sent by facsimile, courier or personal delivery to the parties at
the following addresses unless by such notice a different address shall have
been designated:
If to Bancshares, Delaware-Company or Prime:
Prime Bancshares, Inc.
00000 Xxxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxxxx
With a copy to:
Bracewell & Xxxxxxxxx, L.L.P.
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xx. Xxxxxxx X. Xxxxxx XX
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If to Sunbelt:
Sunbelt National Bank
0000 Xxxxx Xxxxxxx, Xxxxx 000
P.O. Box 55869
Xxxxxxx, Xxxxx 00000
Attention: Xx. X. X. Xxxxxxxx
With a copy to:
Liddell, Sapp, Zivley, Hill & XxXxxx, L.L.P.
0000 Xxxxx Xxxxxxxx Tower
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxxxx X. Xxxx
All notices sent by mail as provided above shall be deemed delivered five (5)
days after deposit in the mail. All notices sent by facsimile or courier as
provided above shall be deemed delivered one day after being sent. All other
notices shall be deemed delivered when actually received. Any party to this
Agreement may change its address for the giving of notice specified above by
giving notice as herein provided.
Section 11.5. Controlling Law. All questions concerning the
validity, operation and interpretation of this Agreement and the performance of
the obligations imposed upon the parties hereunder shall be governed by the
laws of the State of Texas and, to the extent applicable, by the laws of the
United States of America.
Section 11.6. Headings. The headings and titles to the sections of
this Agreement are inserted for convenience only and shall not be deemed a part
hereof or affect the construction or interpretation of any provision hereof.
Section 11.7. Modifications or Waiver. No termination,
cancellation, modification, amendment, deletion, addition or other change in
this Agreement, or any provision hereof, or waiver of any right or remedy
herein provided, shall be effective for any purpose unless specifically set
forth in a writing signed by the party or parties to be bound thereby. The
waiver of any right or remedy in respect to any occurrence or event on one
occasion shall not be deemed a waiver of such right or remedy in respect to
such occurrence or event on any other occasion.
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Section 11.8. Severability. Any provision hereof prohibited by or
unlawful or unenforceable under any applicable law or any jurisdiction shall as
to such jurisdiction be ineffective, without affecting any other provision of
this Agreement, or shall be deemed to be severed or modified to conform with
such law, and the remaining provisions of this Agreement shall remain in force,
provided that the purpose of the Agreement can be effected. To the fullest
extent, however, that the provisions of such applicable law may be waived, they
are hereby waived, to the end that this Agreement be deemed to be a valid and
binding agreement enforceable in accordance with its terms.
Section 11.9. Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, but shall not be assigned by any party without the prior written
consent of the other parties.
Section 11.10. Consolidation of Agreements. All understandings and
agreements heretofore made between the parties hereto are merged in this
Agreement which (together with any agreements executed by the parties hereto
contemporaneously with or subsequent to the execution of this Agreement) shall
be the sole expression of the agreement of the parties respecting the
Consolidations.
Section 11.11. Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original and all of
which shall be deemed to constitute one and the same instrument.
Section 11.12. Binding on Successors. Except as otherwise provided
herein, this Agreement shall be binding upon, and shall inure to the benefit
of, the parties and their respective heirs, executors, trustees,
administrators, guardians, successors and assigns.
Section 11.13. Gender. Any pronoun used herein shall refer to any
gender, either masculine, feminine or neuter, as the context requires.
Section 11.14. Disclosures. Any disclosure made in any document
delivered pursuant to this Agreement or referred to or described in writing in
any section of this Agreement or any schedule attached hereto shall be deemed
to be disclosure for purposes of any section herein or schedule hereto.
Section 11.15. Publicity. Subject to written advice of counsel with
respect to legal requirements relating to public disclosure of matters related
to the transactions contemplated by this Agreement, the timing and content of
any announcements, press releases or other public statements (whether written
or oral) concerning this Agreement or the Consolidation will occur upon, and be
determined by, the mutual consent of Bancshares and Sunbelt;
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provided, however, that this shall not include notices required to be published
pursuant to the regulatory application process.
Section 11.16. Entire Agreement. This Agreement contains the entire
agreement among Bancshares, Delaware-Company, Prime and Sunbelt with respect
to the Consolidation.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above written.
PRIME BANCSHARES, INC.
By:
--------------------------------
ATTEST:
By:
-------------------------------
IBID, INC.
By:
--------------------------------
ATTEST:
By:
-------------------------------
PRIME BANK
By:
--------------------------------
ATTEST:
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By:
-------------------------------
SUNBELT NATIONAL BANK
By:
--------------------------------
ATTEST:
By:
-------------------------------
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EXHIBIT "A"
PLAN OF CONSOLIDATION
BETWEEN NEW PRIME BANK
AND SUNBELT NATIONAL BANK
This PLAN OF CONSOLIDATION (the "Plan") is dated as of the ____ day of
_____________, 1997, by and between Sunbelt National Bank, a national banking
association located in Houston, Texas ("Sunbelt") and New Prime Bank ("New
Bank"), a Texas interim banking association formed as a wholly-owned subsidiary
of Prime Bancshares, Inc. ("Bancshares") solely to facilitate the transactions
contemplated by the Agreement and Plan of Reorganization, defined below.
Sunbelt and New Bank are hereinafter sometimes collectively referred to as the
"Consolidating Institutions."
This Plan of Consolidation is being entered into pursuant to the
Agreement and Plan of Reorganization dated as of November __, 1997 (the
"Agreement") by and among Bancshares, IBID, Inc., Prime Bank, and Sunbelt.
In consideration of the premises, and the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
ARTICLE 1.
DEFINITIONS
Except as otherwise provided herein, the capitalized terms set forth
below shall have the following meanings:
Section 1.1. "Effective Date" shall mean the date at which the
consolidation contemplated by this Plan of Consolidation becomes effective as
determined by the certificate approving the Consolidation to be issued by the
Office of the Comptroller of the Currency (the "OCC").
Section 1.2. "New Bank Common Stock" shall mean the common stock,
par value $1.00 per share, of New Bank owned by Bancshares.
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Section 1.3. "Sunbelt Common Stock" shall mean the common stock,
par value $10.00 per share, of Sunbelt.
Section 1.4. "Initial Consolidation" shall refer to the
consolidation of New Bank with and into Sunbelt as provided in Section 2.1 of
this Plan.
Section 1.5. "First Surviving Bank" shall refer to Sunbelt as the
institution surviving the Initial Consolidation.
ARTICLE 2.
TERMS OF THE CONSOLIDATION
Section 2.1. Initial Consolidation. Subject to the terms and
conditions set forth in the Agreement, on the Effective Date, New Bank shall
be consolidated with and into Sunbelt, with Sunbelt as the First Surviving
Bank, under the charter and Articles of Association of Sunbelt, as determined
by the OCC, and each of the outstanding shares of common stock of New Bank
shall and without any action on the part of Bancshares be canceled and be
converted into shares of common stock of the First Surviving Bank. The shares
of common stock of the First Surviving Bank into which such New Bank common
stock is converted shall represent ownership of 100% of the issued and
outstanding capital stock of the First Surviving Bank, all of which shall be
owned by Bancshares.
Section 2.2. Articles of Association, Bylaws and Facilities of
First Surviving Bank. On the Effective Date and until thereafter amended in
accordance with law, the Articles of Association of the First Surviving Bank
shall be the Articles of Association of Sunbelt as in effect on the Effective
Date. Until altered, amended or repealed as provided therein and in the
Articles of Association of the First Surviving Bank, the Bylaws of the First
Surviving Bank shall be the Bylaws of Sunbelt as in effect on the Effective
Date. The main office of the First Surviving Bank shall be the main office of
Sunbelt as of the Effective Date, and all corporate acts, plans, policies,
contracts, approvals and authorizations of Sunbelt and New Bank and their
respective shareholders, boards of directors, committees elected or appointed
thereby, officers and agents, which were valid and effective immediately prior
to the Effective Date, shall be taken for all purposes as the acts, plans,
policies, contracts, approvals and authorization of the First Surviving Bank
and shall be as effective and binding thereon
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as the same were with respect to Sunbelt and New Bank respectively, as of the
Effective Date.
Section 2.3. Effect of Initial Consolidation. On the Effective
Date of the Initial Consolidation, the corporate existence of Sunbelt and New
Bank shall be consolidated into and continued in the First Surviving Bank, and
the First Surviving Bank shall be deemed to be a continuation in entity and
identity of Sunbelt and New Bank. All rights, franchises and interests of
Sunbelt and New Bank, respectively, in and to any type of property and choses
in action shall be transferred to and vested in the First Surviving Bank by
virtue of the Initial Consolidation without any deed or other transfer. First
Surviving Bank, without any order or other action on the part of any court or
otherwise, shall hold and enjoy all rights of property, franchises and
interest, including appointments, designations and nominations, and all other
rights and interests as trustee, executor, administrator, transfer agent or
registrar of stocks and bonds, guardian of estates, assignee, receiver and
committee of estates and lunatics, and in every other fiduciary capacity, in
the same manner and to the same extent as such rights, franchises and interests
were held or enjoyed by Sunbelt and New Bank, respectively, as of the Effective
Date.
Section 2.4. Liabilities of the First Surviving Bank. On the
Effective Date, the First Surviving Bank shall be liable for all liabilities of
Sunbelt and New Bank. All deposits, debts, liabilities and obligations of
Sunbelt and of New Bank, respectively, accrued, absolute, contingent or
otherwise, and whether or not reflected or reserved against on balance sheets,
books of account or records of Sunbelt or New Bank, as the case may be, shall
be those of the First Surviving Bank and shall not be released or impaired by
the Initial Consolidation. All rights of creditors and other obligees and all
liens on property of either Sunbelt or New Bank shall be preserved unimpaired.
ARTICLE 3.
CONVERSION OF SHARES
Section 3.1. Conversion of Sunbelt Common Stock. On the Effective
Date, each share of Sunbelt Common Stock issued and outstanding immediately
prior to the Effective Date (other than Dissenting Shares as hereinafter
defined) shall, by virtue of the Consolidation and without any action on the
part of the holder thereof, be converted into the
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right to receive the Consolidation Consideration set forth in Section 1.9 of
the Agreement (the "Purchase Price").
Section 3.2. Exchange of Shares. The exchange of Sunbelt Common
Stock for the Consolidation Consideration shall take place as set forth in
Section 1.11 of the Agreement. Each shareholder of Sunbelt shall be entitled
to receive payment for his shares only upon surrender of the certificates
representing his shares of Sunbelt Common Stock or after providing an
appropriate Affidavit of Lost Certificate and Indemnity Agreement and/or a bond
as may be required in each case by Bancshares. Until so surrendered, each
Sunbelt Common Stock certificate will be deemed for all corporate purposes to
represent and evidence solely the right to receive the amount of the Purchase
Price to be paid therefor pursuant to the Agreement without interest thereon.
Section 3.3. Dissenting Shares. Each share of Sunbelt Common
Stock issued and outstanding immediately prior to the Effective Date, the
holder of which has not voted in favor of the Initial Consolidation and who has
properly perfected his dissenters' rights of appraisal by following the
procedures set forth in the National Bank Act, is referred to herein as a
"Dissenting Share." Dissenting Shares owned by each holder thereof who has not
failed to perfect his dissenter's rights, shall not be converted into or
represent the right to receive the Purchase Price pursuant to Section 3.3
hereof and shall be entitled only to such rights as are available to such
holder pursuant to the applicable provisions of the National Bank Act. Each
holder of Dissenting Shares shall be entitled to receive the value of such
Dissenting Shares held by him in accordance with the applicable provisions of
the National Bank Act, provided such holder complies with the procedures
contemplated by and set forth in the applicable provisions of the National Bank
Act.
Section 3.4. New Bank Common Stock. On the Effective Date, the
shares of New Bank Common Stock issued and outstanding immediately prior to the
Effective Date shall be converted automatically and without any action on the
part of the holder thereof into shares of common stock of the First Surviving
Bank. The shares of common stock of the First Surviving Bank into which such
New Bank Common Stock are converted shall represent ownership of 100% of the
issued and outstanding capital stock of the First Surviving Bank, all of which
shall be owned by Bancshares.
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ARTICLE 4.
MISCELLANEOUS
Section 4.1. Conditions Precedent. The respective obligations of
each party under this Plan shall be subject to the satisfaction, or waiver by
the party permitted to do so, of the conditions set forth in Articles VIII, IX
and X of the Agreement.
Section 4.2. Termination. This Plan shall be terminated upon the
termination of the Agreement in accordance with Article VII thereof; provided,
that any such termination of this Plan shall not relieve any party hereto from
liability on account of a breach by such party of any of the terms hereof or
thereof.
Section 4.3. Amendments. To the extent permitted by law, this
Plan may be amended by a subsequent writing signed by all of the parties hereto
upon the approval of the Board of Directors of each of the parties hereto.
Section 4.4. Successors. This Plan shall be binding on the
successors of New Bank and Sunbelt.
IN WITNESS WHEREOF, New Bank and Sunbelt have caused this Plan to be
executed by their duly authorized officers and their corporate seals to be
hereunto affixed as of the date first above written.
NEW PRIME BANK
Attest:
By:
-------------------------------- -----------------------------------------
SUNBELT NATIONAL BANK
Attest:
By:
-------------------------------- -----------------------------------------
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EXHIBIT "B"
PLAN OF CONSOLIDATION
BETWEEN
SUNBELT NATIONAL BANK
AND
PRIME BANK
THIS PLAN OF CONSOLIDATION (the "Plan) is dated as of the ____ day of
___________, 1997, by and between Sunbelt National Bank, a national banking
association ("Sunbelt") and Prime Bank ("Prime").
W I T N E S S E T H:
WHEREAS, pursuant to the Agreement and Plan of Reorganization (the
"Agreement") dated as of November __, 1997, by and among Prime Bancshares
("Bancshares"), IBID, Inc., Prime and Sunbelt and the Plan of Consolidation,
dated as of _______________, 1997, by and between Sunbelt and New Prime Bank
("New Bank"), New Bank will consolidate with and into Sunbelt (the "Initial
Consolidation"), with the result that Sunbelt will become a wholly-owned
subsidiary of Bancshares;
WHEREAS, the Agreement provides that simultaneously with or as soon as
practicable after the Initial Consolidation, Sunbelt will be consolidated with
and into Prime;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Sunbelt and Prime hereby agree
that, subject to the terms and conditions hereinafter set forth, and in
accordance with all applicable laws and regulations, Sunbelt shall be
consolidated with and into Prime on the Effective Date (as hereinafter defined)
(the "Final Consolidation"). The parties hereto do hereby agree and covenant
as follows:
1. Conditions of Approval. The Final Consolidation shall not
become effective unless and until all terms and conditions to such
effectiveness contained in the Agreement, which conditions are incorporated
herein by reference, shall have been satisfied or waived.
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2. Identity of Resulting Bank. The resulting bank as a result of
the Final Consolidation (the "Continuing Bank") shall be Prime.
3. Articles of Association, Bylaws and Facilities of Continuing
Bank. On the Effective Date and until thereafter amended in accordance with
law, the Articles of Association of Continuing Bank shall be the Articles of
Association of Prime as in effect on the Effective Date. Until altered,
amended or repealed as therein provided and in the Articles of Association of
Continuing Bank, the Bylaws of Continuing Bank shall be the Bylaws of Prime as
in effect on the Effective Date. Unless and until changed by the Board of
Directors of Continuing Bank, the main office of Continuing Bank shall be the
main office of Prime as of the Effective Date. The established offices and
facilities of Sunbelt immediately prior to the Final Consolidation shall become
established offices and facilities of the Continuing Bank. Until thereafter
changed in accordance with the law or the Articles of Association or Bylaws of
Continuing Bank, all corporate acts, plans, policies, contracts, approvals and
authorizations of Sunbelt and Prime and their respective shareholders, boards
of directors, committees elected or appointed thereby, officers and agents,
which were valid and effective immediately prior to the Effective Date, shall
be taken for all purposes as the acts, plans, policies, contracts, approvals
and authorizations of Continuing Bank and shall be as effective and binding
thereon as the same were with respect to Sunbelt and Prime, respectively, as of
the Effective Date.
4. Effect of Final Consolidation. On the Effective Date, the
corporate existence of the Sunbelt and Prime shall, as provided by law, be
consolidated into and continued in Continuing Bank, and Continuing Bank shall
be deemed to be a continuation in entity and identity of Sunbelt and Prime.
All rights, franchises and interests of Sunbelt and Prime, respectively, in and
to any type of property and choses in action shall be transferred to and vested
in Continuing Bank by virtue of such Final Consolidation without any deed or
other transfer. Continuing Bank, without any order or other action on the part
of any court or otherwise, shall hold and enjoy all rights of property,
franchises and interest, including appointments, designations and nominations,
and all other rights and interests as trustee, executor, administrator,
transfer agent or registrar of stocks and bonds, guardian of estates, assignee,
receiver and committee of estates and lunatics, and in every other fiduciary
capacity, in the same manner and to the same extent as such rights, franchises,
and interests were held or enjoyed by Sunbelt and Prime, respectively, as of
the Effective Date.
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5. Liabilities of Continuing Bank. On the Effective Date of the
Final Consolidation, Continuing Bank shall be liable for all liabilities of
Sunbelt and Prime. All deposits, debts, liabilities, obligations and contracts
of Sunbelt and of Prime, respectively, matured or unmatured, whether accrued,
absolute, contingent or otherwise, and whether or not reflected or reversed
against on balance sheets, books of account, or records of the Sunbelt or Prime
shall be those of Continuing Bank and shall not be released or impaired by the
Final Consolidation. All rights of creditors and other obligees and all liens
on property of either Sunbelt or Prime shall be preserved unimpaired subsequent
to the Final Consolidation.
6. Effective Date. The Consolidation shall become effective upon
the approval of the Articles of Consolidation regarding the Final Consolidation
by Texas Department of Banking. The term "Effective Date" shall mean the date
and time when the certificate approving the Consolidation is so issued. A
closing shall take place on or prior to the Effective Date following the
receipt of all necessary regulatory and governmental approvals and consents and
the expiration of all statutory waiting periods in respect thereof and the
satisfaction or waiver of the conditions to the consummation of the Final
Consolidation specified in Articles VIII, IX and X of the Agreement.
7. Cancellation of Stock. On the Effective Date, all of the
outstanding shares of capital stock of Sunbelt, all of which shares shall be
owned by Bancshares, shall be canceled and shall not be deemed to be
authorized, issued or outstanding for any purpose, and no cash, property,
rights or securities shall be delivered with respect to said shares.
8. Conditions Precedent. The respective obligations of each
party under this Plan shall be subject to the satisfaction, or waiver by the
party permitted to do so, of the conditions set forth in Articles VIII, IX and
X of the Agreement.
9. Termination. This Plan shall be terminated upon the
termination of the Agreement in accordance with Article VII thereof; provided,
that any such termination of this Plan shall not relieve any party hereto from
liability on account of a breach of such party of any of the terms hereof or
thereof.
10. Amendments. To the extent permitted by law, this Plan may be
amended by a subsequent writing signed by all of the parties hereto upon the
approval of the Board of Directors of each of the parties.
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11. Successors. This Plan shall be binding on the successors of
Sunbelt and Prime.
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IN WITNESS WHEREOF, Sunbelt and Prime have caused this Plan to be
executed by their duly authorized officers as of the date first above written.
SUNBELT NATIONAL BANK
ATTEST:
By:
------------------------------------------- -----------------------------
PRIME BANK
ATTEST:
By:
------------------------------------------ -----------------------------
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AFFILIATE AGREEMENT
This Affiliate Agreement (the "Agreement") is executed and delivered
this ____ day of January, 1998 by and between Prime Bancshares, Inc.
("Bancshares"), Sunbelt National Bank ("Sunbelt") and the undersigned
shareholder of Sunbelt (the "Shareholder").
WHEREAS, Bancshares and Sunbelt entered into an Agreement and Plan of
Reorganization dated December 30, 1997 ("Agreement") pursuant to which Sunbelt
will consolidate into an interim bank formed as a subsidiary of Bancshares
solely to facilitate the transactions contemplated by the Agreement, and
immediately thereafter, Sunbelt will consolidate into Prime Bank, a
wholly-owned subsidiary of Bancshares (collectively, the "Consolidations"); and
WHEREAS, Bancshares has required as a condition to entering into the
Agreement that Sunbelt and the Shareholder and each other affiliate of Sunbelt
(as defined under Rule 405 of the Rules and Regulations of the Securities and
Exchange Commission) deliver to Bancshares an agreement in substantially the
form hereof;
NOW, THEREFORE, in consideration of Bancshares' agreement to enter
into the Agreement and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned, intending to be
legally bound, hereby agree as follows:
1. The Shareholder agrees that he will not sell, pledge, transfer
or otherwise dispose of any shares of the Sunbelt common stock, par value
$10.00 per share ("Sunbelt Common Stock"), within 30 days prior to the
Effective Date (as defined in the Agreement). The Shareholder further agrees
that until the publication of financial results covering at least 30 days of
post-consolidation combined operations of Sunbelt and Bancshares, he will not
sell, pledge, transfer or otherwise dispose of any shares of common stock of
Bancshares (the "Bancshares Common Stock") to be acquired by him in the
Consolidation, except for pledges by the Shareholder of all or part of such
Shareholder's Bancshares Common Stock acquired in the Consolidation to secure
loans, provided the lender accepts any pledge of such Bancshares Common Stock
subject to the terms of this Agreement. The Shareholder further agrees that he
will not sell, pledge, transfer or otherwise dispose of any shares of the
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Bancshares Common Stock to be acquired by him in the Consolidation except in a
manner which is consistent with any additional requirements for Bancshares'
accounting for the Consolidation as a pooling of interest, including without
limitation any new requirements imposed by the applicable provisions of the
Securities Act of 1933, as amended ("Securities Act"), the Securities Exchange
Act of 1934 ("Exchange Act") and the respective rules and regulations
thereunder.
2. The Shareholder further acknowledges and agrees that any
distribution by the Shareholder of Bancshares Common Stock has not been
registered under the Securities Act and that shares of Bancshares Common Stock
received pursuant to the Consolidation can only be sold by the Shareholder (i)
following registration under the Securities Act, (ii) in conformity with the
requirements of Rule 145 promulgated by the Securities and Exchange Commission
under the Securities Act or (iii) to the extent some other exemption from
registration under the Securities Act might be available, and agrees not to
transfer any Bancshares Common Stock received by him in the Consolidation
except in compliance with the applicable provisions of the Securities Act, the
Exchange Act and the respective rules and regulations thereunder.
3. The Shareholder agrees that the shares of Bancshares Common
Stock to be issued to him in the Consolidation will bear a restrictive transfer
legend in substantially the following form:
The shares represented by this certificate are subject to an Affiliate
Agreement dated January __, 1998 which restricts any sale or other
transfer of such shares prior to the earlier to occur of (i) the
public release by Prime Bancshares, Inc. of 30 days of
post-consolidation combined operations of Sunbelt National Bank and
Prime Bancshares, Inc. or (ii) [insert due date of next Quarterly
Report on Form 10-Q or Annual Report on Form 10-K that will contain
required combined financial results]. The issuer will furnish to the
record holder of this certificate, without charge, upon written
request to the issuer at its principal place of business, a copy of
the Affiliate Agreement. In addition, the shares represented by this
certificate may not be sold, transferred or otherwise disposed of
except and unless (i) covered by an effective registration statement
under the Securities Act of 1933, as amended, (ii) in accordance with
Rule 145 of the Rules and Regulations under such Act, or (iii) in
accordance with a legal opinion satisfactory to counsel for
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Bancshares that such sale or transfer is exempt from the registration
requirements of such act.
Bancshares agrees to instruct its transfer agent to remove the restrictive
legend from any certificates evidencing shares subject hereto promptly
following the expirations of the transfer restrictions described in Section 1.
4. Sunbelt agrees and the Shareholder acknowledges and agrees
that Sunbelt will not permit the transfer of any shares of Sunbelt Common Stock
by the Shareholder or any other Sunbelt affiliate within 30 days prior to the
Effective Date.
5. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned set his hand effective as of the
day first written above.
PRIME BANCSHARES, INC.
By:
----------------------------------
Name:
-------------------------------
Title:
-------------------------------
SUNBELT NATIONAL BANK
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
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Signature of Shareholder
-------------------------------------
Printed Name of Shareholder
-------------------------------------
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VOTING AGREEMENT
AND IRREVOCABLE PROXY
This Voting Agreement and Irrevocable Proxy (the "Voting Agreement")
dated as of January __, 1998 is executed by and among Prime Bancshares, Inc., a
Texas corporation ("Bancshares"), Sunbelt National Bank, a national banking
association ("Sunbelt"), and the other persons who are signatories hereto
(referred to herein individually as a "Shareholder" and collectively as the
"Shareholders").
WHEREAS, Bancshares, IBID, Inc., Prime Bank and Sunbelt have executed
that certain Agreement and Plan of Reorganization dated as December 30, 1997
(the "Agreement") whereby Sunbelt will consolidate into an interim bank formed
as a subsidiary of Bancshares solely to facilitate the transactions
contemplated by the Agreement, and immediately thereafter, Sunbelt will
consolidate into Prime Bank, a wholly owned subsidiary of Bancshares
(collectively, the "Consolidations"); and
WHEREAS, the Agreement provides that all of issued and outstanding
stock of Sunbelt will be converted into shares of Bancshares Common Stock; and
WHEREAS, Section 4.7 of the Agreement requires that Sunbelt deliver to
Bancshares the irrevocable proxies of the Shareholders; and
WHEREAS, the undersigned Shareholders are the voting representatives
pursuant to the Sunbelt National Bank Voting and Stock Restriction Agreement
dated May 26, 1984 (the "Sunbelt Voting Agreement"); and
WHEREAS, Sunbelt and Bancshares are relying on the irrevocable proxies
in incurring expenses in reviewing Sunbelt's business, in preparing a proxy
statement, in proceeding with the filing of applications for regulatory
approvals, and in undertaking other actions necessary for the consummation of
the Consolidations;
NOW, THEREFORE, the parties hereto agree as follows:
12. The Shareholders hereby represent and warrant to Bancshares
and Sunbelt that they are the voting representatives under the Sunbelt Voting
Agreement and that they
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have the exclusive right to vote all 381,147 of the shares of common stock,
$10.00 par value, of Sunbelt subject to the Sunbelt Voting Agreement (the
"Shares"), which Shares constitute 83% of the total number of issued and
outstanding shares of Sunbelt common stock. The Shareholders hereby agree to
vote the Shares at the shareholders' meeting referred to in Section 1.13 of the
Agreement (the "Meeting") in favor of the authorization and approval of the
Agreement, and the other agreements and transactions contemplated thereby.
13. In order better to effect the provisions of Section 1, each
Shareholder individually and the Shareholders collectively hereby revoke any
previously executed proxies and hereby constitute and appoint Xxxxxxx X.
Xxxxxxxx (the "Proxy Holder"), with full power of substitution, his and their
true and lawful proxy and attorney-in-fact to vote at the Meeting all of the
Shares in favor of the authorization and approval of the Agreement and the
other agreements and transactions contemplated thereby, with such modifications
to the Agreement and the other agreements and transactions contemplated thereby
as the parties thereto may make, in the event the Shareholders do not vote in
favor of the authorization and approval of the Agreement and the other
agreements and transactions contemplated thereby.
14. The Shareholders hereby covenant and agree that until this
Voting Agreement is terminated in accordance with its terms, the Shareholders
will use their best efforts to ensure that in the event of any sale, transfer,
assignment, pledge, hypothecation, or other disposition of any of the Shares
subject to the Sunbelt Voting Agreement, any such transferee or other holder
will become bound by the terms of the Sunbelt Voting Agreement.
15. This proxy shall be limited strictly and solely to the power
to vote the Shares in the manner and for the purpose set forth in Section 2 and
shall not extend to any other matters.
16. Each Shareholder acknowledges that Bancshares and Sunbelt are
relying on this Voting Agreement in incurring expenses in reviewing Sunbelt's
business, in preparing a proxy statement, in proceeding with the filing of
applications for regulatory approvals, and in undertaking other actions
necessary for the consummation of the Consolidations and that the proxy granted
hereby is coupled with an interest and is irrevocable to the full extent
permitted by applicable law, including 12 U.S.C. 61 of the National Bank Act
and Article 2.29C of the Texas Business Corporation Act. Each Shareholder and
Sunbelt acknowledge that the performance of this Voting Agreement is intended
to benefit Bancshares.
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17. The irrevocable proxy granted pursuant hereto shall continue
in effect until the earlier to occur of (i) the termination of the Agreement,
as it may be amended or extended from time to time, or (ii) the consummation of
the Consolidations.
18. The vote of the Proxy Holder shall control in any conflict
between its vote of the Shares and a vote by the Shareholders of the Shares and
Sunbelt agrees to recognize the vote of the Proxy Holder instead of the vote of
the Shareholders in the event the Shareholders do not vote in favor of the
approval of the Agreement as set forth in Section 1 hereof.
19. This Voting Agreement may not be modified, amended, altered or
supplemented with respect to a particular Shareholder except upon the execution
and delivery of a written agreement executed by Sunbelt, Bancshares and the
Shareholders.
20. This Voting Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same instrument.
21. This Voting Agreement, together with the Agreement and the
agreements contemplated thereby, embody the entire agreement and understanding
of the parties hereto in respect to the subject matter contained herein. This
Voting Agreement supersedes all prior agreements and understandings among the
parties with respect to such subject matter contained herein.
22. All notices, requests, demands and other communications
required or permitted hereby shall be in writing and shall be deemed to have
been duly given if delivered by hand or mail, certified or registered mail
(return receipt requested) with postage prepaid to the addresses of the parties
hereto set forth below their signature on the signature pages hereof or to such
other address as any party may have furnished to the others in writing in
accordance herewith.
23. This Voting Agreement and the relations among the parties
hereto arising from this Voting Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date above written.
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PRIME BANCSHARES, INC.
By:
----------------------------------
X. X. Xxxxx
President
Address:
X.X. Xxx 00
000 Xxxxxxx
Xxxxxxxxxxx, Xxxxx 00000
Attention: X. X. Xxxxx
SUNBELT NATIONAL BANK
By:
----------------------------------
X. X. Xxxxxxxx
President
Address:
0000 Xxxxx Xxxxxxx, Xxxxx 000
P.O. Box 55869
Xxxxxxx, Xxxxx 00000
Attention: X. X. Xxxxxxxx
SHAREHOLDERS:
-------------------------------------
X. X. Xxxxxxx
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------------------------------------
Xxxxxx X. Xxxxxxxx
-------------------------------------
Xxxxxx X. Xxxxx
-------------------------------------
X. X. Xxxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxx
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EXHIBIT "E"
RELEASE OF CLAIMS
THIS RELEASE OF CLAIMS ("Release") dated the ______ day of
____________, 1997, is executed and delivered by the undersigned individual to
Sunbelt National Bank ("Sunbelt").
WHEREAS, Prime Bancshares, Inc. ("Bancshares") will acquire Sunbelt
pursuant to that certain Agreement and Plan of Reorganization dated as of
November __, 1997 by and between Bancshares, IBID, Inc., Prime Bank and Sunbelt
(the "Agreement"); and
WHEREAS, Bancshares has required as a condition of the acquisition
that the undersigned execute and deliver this Release to confirm the absence of
any claims by the undersigned against Sunbelt;
NOW THEREFORE, in consideration of the premises contained herein and
ten dollars and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned hereby agrees as
follows:
Section 1. Release. The undersigned hereby RELEASES and FOREVER
DISCHARGES Sunbelt and its successors, assigns, representatives and attorneys
from all manners of action, causes of action, suits, debts, sums of money,
accounts, reckonings, bonds, bills, specialties, covenants, contracts,
controversies, agreements, premises, variances, trespasses, damages, judgments,
executions, claims and demands whatsoever in law or in equity which the
undersigned ever had, now has, or hereafter can, shall or may have against
Sunbelt, in respect of any and all agreements and obligations incurred on or
prior to the date hereof, or in respect of any event occurring or circumstances
existing on or prior to the date hereof; provided, however, that Sunbelt shall
not be released from any of its obligations or liabilities to the undersigned
(i) pursuant to the provisions of the certificate or articles of incorporation
or association or bylaws of Sunbelt regarding the indemnification of directors
and officers; and (ii) in connection with any indebtedness or contractual
obligation or liability to the undersigned existing on the date hereof.
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Section 2. Successors. This Release shall be binding upon the
undersigned and his or her heirs, devisees, administrators, executors, personal
representatives, successors and assigns and shall inure to the benefit of
Sunbelt and its successors and assigns.
Section 3. Governing Law. This Release shall be governed by and
construed in accordance with the laws of the State of Texas, without giving
effect to Texas principles of conflicts of law.
Section 4. Modification. This Release may be modified only by a
written instrument executed by the undersigned and Sunbelt.
IN WITNESS WHEREOF, the undersigned has executed this Release
effective as of the date first above written.
---------------------------
Signature
---------------------------
Printed Name
STATE OF TEXAS )
)
COUNTY OF XXXXXX )
This instrument was acknowledged before me on _____________________,
1997 by ________________________________.
-------------------------------
Notary Public in and for the
State of Texas
-------------------------------
Notary's Name Typed or Printed
My Commission Expires:
--------
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EXHIBIT "F"
RELEASE OF CLAIMS
THIS RELEASE OF CLAIMS ("Release") dated the _____ day of ____________
1997, is executed and delivered by Sunbelt National Bank ("Sunbelt") to
______________________ ("Person").
WHEREAS, Prime Bancshares, Inc. will acquire Sunbelt National Bank
("Sunbelt") pursuant to that certain Agreement and Plan of Reorganization dated
as of November __, 1997 by and between Prime Bancshares, Inc., IBID, Inc.,
Prime Bank and Sunbelt (the "Agreement"); and
WHEREAS, Bancshares has required as a condition of the acquisition
that Sunbelt execute and deliver this Release to confirm the absence of any
claims by Sunbelt against Person;
NOW THEREFORE, in consideration of the premises contained herein and
ten dollars and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned hereby agrees as
follows:
Section 1. Release. The undersigned hereby RELEASES and FOREVER
DISCHARGES Person and his successors, assigns, representatives and attorneys
from all manners of action, causes of action, suits, debts, sums of money,
accounts, reckonings, bonds, bills, specialties, covenants, contracts,
controversies, agreements, premises, variances, trespasses, damages, judgments,
executions, claims and demands whatsoever in law or in equity which the
undersigned ever had, now has, or hereafter can, shall or may have against
Person in respect of any and all agreements and obligations incurred on or
prior to the date hereof, or in respect of any event occurring or circumstances
existing on or prior to the date hereof; provided, however, that Person shall
not be released from any of his obligations or liabilities to the undersigned
in connection with any indebtedness or contractual obligation or liability
related to deposits, accounts and loans which the undersigned may have with
Sunbelt existing on the date hereof.
Section 2. Successors. This Release shall be binding upon the
undersigned and his or her heirs, devisees, administrators, executors, personal
representatives, successors and assigns and shall inure to the benefit of the
Bancshares and Person and their successors and assigns.
Section 3. Governing Law. This Release shall be governed by and
construed in accordance with the laws of the State of Texas, without giving
effect to Texas principles of conflicts of law.
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Section 4. Modification. This Release may be modified only by a
written instrument executed by the Sunbelt and Person.
IN WITNESS WHEREOF, the undersigned has executed this Release
effective as of the date first above written.
SUNBELT NATIONAL BANK
---------------------------
Signature
---------------------------
Printed Name
PERSON
---------------------------
Signature
---------------------------
Printed Name
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STATE OF TEXAS )
)
COUNTY OF XXXXXX )
This instrument was acknowledged before me on _____________________,
1997 by __________________________, the ________________ of Prime Bancshares,
Inc.
---------------------------------
Notary Public in and for the
State of Texas
---------------------------------
Notary's Name Typed or Printed
My Commission Expires:
-----------
STATE OF TEXAS )
)
COUNTY OF XXXXXX )
This instrument was acknowledged before me on _____________________,
1997 by __________________________, the ________________ of Prime Bank.
---------------------------------
Notary Public in and for the
State of Texas
---------------------------------
Notary's Name Typed or Printed
My Commission Expires:
-----------
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