2,200,000 Shares
TEXAS REGIONAL BANCSHARES, INC.
Class A Voting Common Stock
($1.00 Par Value)
UNDERWRITING AGREEMENT
______________________, 1996
Alex. Xxxxx & Sons Incorporated
First Southwest Company
As Representatives of the
Several Underwriters
c/o Alex. Xxxxx & Sons Incorporated
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Gentlemen:
Texas Regional Bancshares, Inc., a Texas corporation (the "Company") and the
shareholder of the Company identified on Schedule II hereto (the "Selling
Shareholder"), propose to sell to the several underwriters (the "Underwriters")
named in Schedule I hereto for whom you are acting as representatives (the
"Representatives") an aggregate of 2,200,000 shares of the Company's Class A
Voting Common Stock, $1.00 par value (the "Firm Shares"), of which 2,180,000
shares will be sold by the Company and 20,000 shares will be sold by the Selling
Shareholder. The respective amounts of the Firm Shares to be so purchased by
the several Underwriters are set forth opposite their names in Schedule I
hereto. The Company and the Selling Shareholder are sometimes referred to
herein collectively as the "Sellers." The Company also proposes to sell at the
Underwriters' option an aggregate of up to 330,000 additional shares of the
Company's Class A Voting Common Stock (the "Option Shares") as set forth below.
As the Representatives, you have advised the Company and the Selling
Shareholder (a) that you are authorized to enter into this Agreement on behalf
of the several Underwriters, and (b) that the several Underwriters are willing,
acting severally and not jointly, to purchase the numbers of Firm Shares set
forth opposite their respective names in Schedule I, plus their pro rata portion
of the Option Shares if you elect to exercise the over-allotment option in whole
or in part for the accounts of the several Underwriters. The Firm Shares and
the Option Shares (to the extent the aforementioned
option is exercised) are herein collectively called the "Shares."
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
SHAREHOLDER.
(a) The Company represents and warrants to each of the Underwriters as
follows:
(i) A registration statement on Form S-1 (File No. 33-_______) with
respect to the Shares has been carefully prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as amended
(the "Act"), and the Rules and Regulations (the "Rules and Regulations") of
the Securities and Exchange Commission (the "Commission") thereunder and has
been filed with the Commission. Copies of such registration statement,
including any amendments thereto, the preliminary prospectuses (meeting the
requirements of the Rules and Regulations) contained therein and the
exhibits, financial statements and schedules, as finally amended and
revised, have heretofore been delivered by the Company to you. Such
registration statement, together with any registration statement filed by
the Company pursuant to Rule 462(b) of the Act, herein referred to as the
"Registration Statement," which shall be deemed to include all information
omitted therefrom in reliance upon Rule 430A and contained in the Prospectus
referred to below, has become effective under the Act and no post-effective
amendment to the Registration Statement has been filed as of the date of
this Agreement. "Prospectus" means (a) the form of prospectus first filed
with the Commission pursuant to Rule 424(b) or (b) the last preliminary
prospectus included in the Registration Statement filed prior to the time it
becomes effective or filed pursuant to Rule 424(a) under the Act that is
delivered by the Company to the Underwriters for delivery to purchasers of
the Shares, together with the term sheet or abbreviated term sheet filed
with the Commission pursuant to Rule 424(b)(7) under the Act. Each
preliminary prospectus included in the Registration Statement prior to the
time it becomes effective is herein referred to as a "Preliminary
Prospectus."
(ii) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Texas, with
corporate power and authority to own or lease its properties and conduct its
business as described in the Registration Statement. Texas State Bank (the
"Bank") is the only subsidiary, direct or indirect, of the Company. The
Bank has been duly organized and is validly existing either as a banking
corporation under the laws of the State of Texas or as a corporation in good
standing under the laws of the
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jurisdiction of its incorporation, with corporate power and authority to
own or lease its properties and conduct its business as described in the
Registration Statement. The Company and the Bank are duly qualified to
transact business in all jurisdictions in which the conduct of their
business requires such qualification. The outstanding shares of capital
stock of the Bank have been duly authorized and validly issued, are
fully paid and non-assessable and to the extent shown in Exhibit 21 to
the Registration Statement, are owned by the Company free and clear of
all liens, encumbrances and equities and claims; and no options,
warrants or other rights to purchase, agreements or other obligations to
issue or other rights to convert any obligations into shares of capital
stock or ownership interests in the Bank are outstanding.
(iii) The outstanding shares of Class A Voting Common Stock of the
Company, including all shares to be sold by the Selling Shareholder, have
been duly authorized and validly issued and are fully paid and non-
assessable; the portion of the Shares to be issued and sold by the Company
has been duly authorized and when issued and paid for as contemplated herein
will be validly issued, fully paid and non-assessable; and no preemptive
rights of shareholders exist with respect to any of the Shares or the issue
and sale thereof. Neither the filing of the Registration Statement nor the
offering or sale of the Shares as contemplated by this Agreement gives rise
to any rights, other than those which have been waived or satisfied, for or
relating to the registration of any shares of Class A Voting Common Stock.
Neither the filing of the Registration Statement nor the offering or sale of
the Shares as contemplated by this Agreement gives rise to any rights, other
than those that have been waived or satisfied, for or relating to the
registration of any shares of Class A Voting Common Stock. Except as
described in the Registration Statement, there are no contracts, agreements
or understandings between the Company and any person granting such person
the right to require the Company to file a registration statement under the
Act with respect to any securities of the Company owned or to be owned by
such person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement
filed by the Company under the Act.
(iv) The information set forth under the caption "Capitalization" in
the Prospectus is true and correct. All of the Shares conform to the
description thereof contained in the Registration Statement. The form of
certificates for the Shares conforms to the corporate law of the
jurisdiction of the Company's incorporation.
(v) The Commission has not issued an order preventing or suspending
the use of any Preliminary Prospectus or Prospectus relating to the proposed
offering of the Shares nor instituted proceedings for that purpose. The
Registration Statement
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contains, and the Prospectus and any amendments or supplements thereto
will contain, all statements which are required to be stated therein by,
and will conform to, the requirements of the Act and the Rules and
Regulations. No contract or document of a character required to be
described in the Registration Statement or the Prospectus or to be filed
as an exhibit to the Registration Statement is not so described or filed
as required. The Registration Statement and any amendment thereto do not
contain, and will not contain, any untrue statement of a material fact,
and do not omit, and will not omit, to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading. The Prospectus and any amendments and supplements thereto do
not contain, and will not contain, any untrue statement of a material
fact, and do not omit, and will not omit, to state any material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided, however, that the Company makes no
representations or warranties as to information contained in or omitted
from the Registration Statement or the Prospectus, or any such amendment
or supplement, in reliance upon, and in conformity with, written
information furnished to the Company by or on behalf of any Underwriter
through the Representatives, specifically for use in the preparation
thereof.
(vi) The consolidated financial statements of the Company and the Bank,
together with related notes and schedules as set forth or incorporated by
reference in the Registration Statement, present fairly the consolidated
financial position and the results of operations and cash flows of the
Company and the Bank, at the indicated dates and for the indicated periods.
Such financial statements and related schedules have been prepared in
accordance with generally accepted principles of accounting, consistently
applied throughout the periods involved, except as disclosed herein, and all
adjustments necessary for a fair presentation of results for such periods
have been made. The pro forma financial statements and other pro forma
financial information included in the Registration Statement and the
Prospectus present fairly the information shown therein, have been prepared
in accordance with the Commission's rules and guidelines with respect to pro
forma financial statements, have been properly compiled on the pro forma
bases described therein, and, in the opinion of the Company, the assumptions
used in the preparation thereof are reasonable and the adjustments used
therein are appropriate to give effect to the transactions or circumstances
referred to therein.
(vii) KPMG Peat Marwick LLP, who have certified certain of the financial
statements filed with the Commission as part of the Registration Statement,
are independent public accountants as required by the Act and the Rules and
Regulations.
(viii) Except as disclosed in the Prospectus, neither the
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Company nor the Bank is in violation in any material respect of any
directive or order from or agreement or understanding with the Banking
Department of Texas (the "Department"), the Federal Deposit Insurance
Corporation (the "FDIC"), the Board of Governors of the Federal Reserve
System (the "FRB") or any other governmental authority to make any
material change in the method of conducting or that restricts their
respective businesses.
(ix) Neither the Company nor the Bank is or with the giving of notice
or lapse of time or both, will be, in violation of or in default under its
charter or by-laws or under any agreement, lease, contract, indenture or
other instrument or obligation to which it is a party or by which it, or any
of its properties, is bound and which violation or default is of material
significance in respect of the business, management, properties, assets,
rights, operations, condition (financial or otherwise) or prospects of the
Company and the Bank taken as a whole. The execution and delivery of this
Agreement and the Agreements and Plans of Reorganization, dated January 9,
1996, as amended, among the Company, the Bank and each of First State Bank &
Trust Co., Mission, Texas ("First State Bank") and The Border Bank, Hidalgo,
Texas ("Border Bank") (the "Merger Agreements") and the consummation of the
transactions herein and therein contemplated and the fulfillment of the
terms hereof and thereof will not conflict with or result in a breach of any
of the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust or other agreement or instrument to which the
Company or the Bank or, to the best knowledge of the Company, First State
Bank or Border Bank is a party, or of the charter or by-laws of the Company
or the Bank or, to the best knowledge of the Company, First State Bank or
Border Bank, or any order, rule or regulation applicable to the Company or
the Bank or, to the best knowledge of the Company, First State Bank or
Border Bank of any court or of any regulatory body or administrative agency
or other governmental body having jurisdiction.
(x) There is no action or proceeding pending or, to the best knowledge
of the Company, threatened against the Company, the Bank, First State Bank
or Border Bank including but not limited to actions or proceedings related
to environmental, discrimination or bank regulatory matters, before any
court or administrative agency which might, individually or in the
aggregate, prevent or adversely affect the transactions contemplated by this
Agreement or the Merger Agreements or result in any material adverse change
in the business, condition or prospects of the Company and the Bank taken as
a whole, except as set forth in the Registration Statement.
(xi) The Company and the Bank and, to the best knowledge of the
Company, First State Bank and Border Bank have good and indefeasible title
to all of the properties and assets reflected in their respective financial
statements (or as described in the Registration Statement) hereinabove
described, subject to no
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lien, mortgage, pledge, charge or encumbrance of any kind except those
reflected in such financial statements (or as described in the
Registration Statement) or which are not material in amount. The Bank
occupies its leased properties under valid and binding leases and, to the
best knowledge of the Company, no default has occurred or is continuing
thereunder that might result in any material adverse change in the
earnings, business, management, properties, assets, rights, operations,
condition or prospects of the Company and the Bank taken as a whole.
(xii) The Company and the Bank and, to the best knowledge of the
Company, First State Bank and Border Bank have filed all Federal, State and
foreign income tax returns which have been required to be filed and have
paid all taxes indicated by said returns and all assessments received by
them or any of them to the extent that such taxes have become due and are
not being contested in good faith. All tax liabilities of the Company have
been adequately provided for in the financial statements of the Company that
have been included in the Registration Statement. To the best knowledge of
the Company, all tax liabilities of First State Bank or Border Bank have
been adequately provided for in the financial statements of First State Bank
or Border Bank, as the case may be, that have been included in the
Registration Statement.
(xiii) Since the respective dates as of which information is given in the
Registration Statement, as it may be amended or supplemented, there has not
been any material adverse change in or affecting the earnings, business,
management, properties, assets, rights, operations, condition (financial or
otherwise) or prospects of the Company and the Bank taken as a whole or, to
the best knowledge of the Company, First State Bank or Border Bank, whether
or not occurring in the ordinary course of business, and there has not been
any material transaction entered into or any material transaction that is
probable of being entered into by the Company or the Bank or, to the best
knowledge of the Company, First State Bank or Border Bank, other than
transactions in the ordinary course of business and changes and transactions
described in the Registration Statement, as it may be amended or
supplemented. The Company and the Bank and, to the best knowledge of the
Company, First State Bank and Border Bank have no material contingent
obligations which are not disclosed in their respective financial statements
that have been included in the Registration Statement.
(xiv) This Agreement has been duly authorized, executed and delivered by
the Company. The Merger Agreements have been duly authorized, executed and
delivered by the Company and, to the best knowledge of the Company, First
State Bank and Border Bank.
(xv) All material conditions precedent to the closing of the
transactions contemplated in the Merger Agreements have been satisfied or
waived by the Company as of the date of this Agreement, except for the
consummation of the offering
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contemplated hereby and the delivery by the Company of the purchase price
to the shareholders of First State Bank and Border Bank.
(xvi) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery by
the Company of this Agreement, the execution and delivery by the Company
and, to the best knowledge of the Company, First State Bank and Border Bank
of the Merger Agreements and the consummation of the transactions herein and
therein contemplated (including but not limited to the Department, the FDIC
or the FRB but excluding such additional steps as may be required by the
Commission, the National Association of Securities Dealers, Inc. (the
"NASD") or such additional steps as may be necessary to qualify the Shares
for public offering by the Underwriters under state securities or Blue Sky
laws) has been obtained or made and is in full force and effect.
(xvii) The Company and the Bank and, to the best knowledge of the
Company, First State Bank and Border Bank hold all material licenses,
certificates and permits from governmental authorities which are necessary
to the conduct of their businesses; and none of the Company, the Bank or, to
the best knowledge of the Company, First State Bank or Border Bank has
infringed any patents, patent rights, trade names, trademarks or copyrights,
which infringement is material to the business of the Company and the Bank
taken as a whole, First State Bank or Border Bank, respectively.
(xviii) Neither the Company, nor to the Company's best knowledge, any of
its affiliates (as defined in Rule 405 under the Act), has taken or may
take, directly or indirectly, any action designed to cause or result in, or
which has constituted or which might reasonably be expected to constitute,
the stabilization or manipulation of the price of the shares of Class A
Voting Common Stock to facilitate the sale or resale of the Shares. The
Company acknowledges that the Underwriters may engage in passive market
making transactions in the Shares on The Nasdaq Stock Market in accordance
with Rule 10b-6A under the Exchange Act.
(xix) The Company is duly registered as a bank holding company under the
Bank Holding Company Act of 1956, as amended (the "BHCA"). The deposit
accounts of the Bank are insured by the FDIC up to the maximum amount
permitted by law; the Bank has not received notice of any proceeding to be
brought by the FDIC or any other regulatory agency for the purpose of
terminating such deposit insurance, and the Bank is not the subject of any
proceeding in which it is proposed that there be imposed any regulatory
sanction or restriction on the Bank nor has the Company received any such
notice in respect of such purpose. To the best knowledge of the Company,
the deposit accounts of
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First State Bank and Border Bank are insured by the FDIC up to the
maximum amount permitted by law; neither First State Bank nor Border Bank
has received notice of any proceeding to be brought by the FDIC or any
other regulatory agency for the purpose of terminating such deposit
insurance and neither First State Bank nor Border Bank is the subject of
any proceeding in which it is proposed that there be imposed any
regulatory sanction or restriction on First State Bank or Border Bank,
nor has the Company received any such notice in respect of such purpose.
(xx) The Company has not been advised, and has no reason to believe,
that any of the Company, the Bank, First State Bank or Border Bank is not
conducting business in compliance with all applicable laws, rules and
regulations of the jurisdictions in which it is conducting business,
including but not limited to all applicable local, State and Federal
environmental laws and regulations and all regulations, decisions,
directives, orders and policies of the Department, the FDIC and the FRB;
except where failure to be so in compliance would not materially adversely
affect the condition (financial or otherwise) business, results of
operations or prospects of the Company and the Bank taken as a whole, First
State Bank or Border Bank.
(xxi) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (A) transactions are
executed in accordance with management's general or specific authorization;
(B) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (C) access to assets
is permitted only in accordance with management's general or specific
authorization; and (D) the recorded accountability for assets is compared
with existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(xxii) The Company and the Bank and, to the best knowledge of the
Company, First State Bank and Border Bank carry, or are covered by,
insurance in such amounts and covering such risks as is adequate for the
conduct of their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar industries.
(xxiii) The Company and, to the best knowledge of the Company, First State
Bank and Border Bank are in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in ERISA)
for which the Company would have any liability; the Company has not incurred
and does not expect to incur liability under (A) Title IV of ERISA with
respect to termination of, or withdrawal from, any "pension plan" or
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(B) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder (the
"Code"); and each "pension plan" for which the Company would have any
liability that is intended to be qualified under Section 401(a) of the Code
is so qualified in all material respects and nothing has occurred, whether
by action or by failure to act, which would cause the loss of such
qualification.
(b) The Selling Shareholder represents and warrants as follows:
(i) Such Selling Shareholder now has and at the Closing Date (as such
date is hereinafter defined) will have good and indefeasible title to the
Firm Shares to be sold by such Selling Shareholder, free and clear of any
liens, encumbrances, equities and claims, and full right, power and
authority to effect the sale and delivery of such Firm Shares; and upon the
delivery of, against payment for, such Firm Shares pursuant to this
Agreement, the Underwriters will acquire good and indefeasible title
thereto, free and clear of any liens, encumbrances, equities and claims.
(ii) Such Selling Shareholder has full right, power and authority to
execute and deliver this Agreement, the Power of Attorney, and the Custodian
Agreement referred to below and to perform its obligations under such
agreements. The execution and delivery of this Agreement and the
consummation by such Selling Shareholder of the transactions herein
contemplated and the fulfillment by such Selling Shareholder of the terms
hereof will not require any consent, approval, authorization, or other order
of any court, regulatory body, administrative agency or other governmental
body (except as may be required under the Act, state securities laws or Blue
Sky laws) and will not result in a breach of any of the terms and provisions
of, or constitute a default under, organizational documents of such Selling
Shareholder, if not an individual, or any indenture, mortgage, deed of trust
or other agreement or instrument to which such Selling Shareholder is a
party, or of any order, rule or regulation applicable to such Selling
Shareholder of any court or of any regulatory body or administrative agency
or other governmental body having jurisdiction.
(iii) Such Selling Shareholder has not taken and will not take, directly
or indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the Class A Voting Common
Stock of the Company to facilitate the sale or resale of the Shares and,
other than as permitted by the Act, the Selling Shareholder will not
distribute any prospectus or other offering material in connection with the
offering of the Shares.
(iv) Without having undertaken to determine independently
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the accuracy or completeness of either the representations and warranties
of the Company contained herein or the information contained in the
Registration Statement, such Selling Shareholder has no reason to believe
that the representations and warranties of the Company contained in this
Section 1 are not true and correct, is familiar with the Registration
Statement and has no knowledge of any material fact, condition or
information not disclosed in the Registration Statement which has
adversely affected or may adversely affect the business of the Company or
the Bank; and the sale of the Firm Shares by such Selling Shareholder
pursuant hereto is not prompted by any information concerning the Company
or the Bank which is not set forth in the Registration Statement or the
documents incorporated by reference therein. The information pertaining
to such Selling Shareholder under the caption "Selling Shareholder" in
the Prospectus is complete and accurate in all material respects.
2. PURCHASE, SALE AND DELIVERY OF THE FIRM SHARES.
(a) On the basis of the representations, warranties and covenants herein
contained, and subject to the conditions herein set forth, the Sellers agree
to sell to the Underwriters and each Underwriter agrees, severally and not
jointly, to purchase, at a price of $______ per share, the number of Firm
Shares set forth opposite the name of each Underwriter in Schedule I hereto,
subject to adjustments in accordance with Section 9 hereof. The number of
Firm Shares to be purchased by each Underwriter from each Seller shall be as
nearly as practicable in the same proportion to the total number of Firm
Shares being sold by each Seller as the number of Firm Shares being
purchased by each Underwriter bears to the total number of Firm Shares to be
sold hereunder. The obligations of the Company and of the Selling
Shareholder shall be several and not joint.
(b) Certificates in negotiable form for the total number of the Shares to
be sold hereunder by the Selling Shareholder have been placed in custody
with ___________ as custodian (the "Custodian") pursuant to the Custodian
Agreement executed by the Selling Shareholder for delivery of all Firm
Shares to be sold hereunder by the Selling Shareholder for delivery of all
Firm Shares to be sold hereunder by the Selling Shareholder. The Selling
Shareholder specifically agrees that the Firm Shares represented by the
certificates held in custody for the Selling Shareholder under the Custodian
Agreement are subject to the interests of the Underwriters hereunder, that
the arrangements made by the Selling Shareholder for such custody are to
that extent irrevocable, and that the obligations of the Selling Shareholder
hereunder shall not be terminated by any act or deed of the Selling
Shareholder (or by any other person, firm or corporation including the
Company, the Custodian or the Underwriters) or by operation of law
(including the death of an individual Selling Shareholder or the dissolution
of a corporate Selling Shareholder) or by the occurrence of any other event
or
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events, except as set forth in the Custodian Agreement. If any such
event should occur prior to the delivery to the Underwriters of the Firm
Shares hereunder, certificates for the Firm Shares shall be delivered by the
Custodian in accordance with the terms and conditions of this Agreement as
if such event had not occurred. The Custodian is authorized to receive and
acknowledge receipt of the proceeds of sale of the Shares held by it against
delivery of such Shares.
(c) Payment for the Firm Shares to be sold hereunder is to be made by wire
transfer to the account of the Bank at the Federal Reserve Bank of Dallas
(account number 000000000) for further credit to the Company for the shares
to be sold by it and for further credit to _____________, as Custodian, for
the shares to be sold by the Selling Shareholder, in each case against
delivery of certificates therefor to the Representatives for the several
accounts of the Underwriters. Such payment and delivery are to be made at
the offices of Alex. Xxxxx & Sons Incorporated, 000 Xxxx Xxxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxx, at 10:00 a.m., Baltimore time, on the third business
day after the date of this Agreement or at such other time and date not
later than five business days thereafter as you and the Company shall agree
upon, such time and date being herein referred to as the "Closing Date."
(As used herein, "business day" means a day on which the New York Stock
Exchange is open for trading and on which banks in New York are open for
business and not permitted by law or executive order to be closed.) The
certificates for the Firm Shares will be delivered in such denominations and
in such registrations as the Representatives request in writing not later
than the second full business day prior to the Closing Date, and will be
made available for inspection by the Representatives at least one business
day prior to the Closing Date.
(d) In addition, on the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the
Company hereby grants an option to the several Underwriters to purchase the
Option Shares at the price per share as set forth in the first paragraph of
this Section 2. The option granted hereby may be exercised in whole or in
part by giving written notice (i) at any time before the Closing Date and
(ii) only once thereafter within 30 days after the date of this Agreement,
by you, as Representatives of the several Underwriters, to the Company,
setting forth the number of Option Shares as to which the several
Underwriters are exercising the option, the names and denominations in which
the Option Shares are to be registered and the time and date at which such
certificates are to be delivered. The time and date at which certificates
for Option Shares are to be delivered shall be determined by the
Representatives but shall not be earlier than three nor later than 10 full
business days after the exercise of such option, nor in any event prior to
the Closing Date (such time and date being herein referred to as the "Option
Closing Date"). If the date of exercise of the option
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is three or more days before the Closing Date, the notice of exercise
shall set the Closing Date as the Option Closing Date. The number of
Option Shares to be purchased by each Underwriter shall be in the same
proportion to the total number of Option Shares being purchased as the
number of Firm Shares being purchased by such Underwriter bears to the
total number of Firm Shares, adjusted by you in such manner as to avoid
fractional shares. The option with respect to the Option Shares granted
hereunder may be exercised only to cover over- allotments in the sale of
the Firm Shares by the Underwriters. You, as Representatives of the
several Underwriters, may cancel such option at any time prior to its
expiration by giving written notice of such cancellation to the Company.
To the extent, if any, that the option is exercised, payment for the
Option Shares shall be made on the Option Closing Date in New York
Clearing House funds by certified or bank cashier's check drawn to the
order of the Company for the Option Shares to be sold by it against
delivery of certificates therefor at the offices of Alex. Xxxxx & Sons
Incorporated, 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx.
(e) If on the Closing Date, the Selling Shareholder fails to sell the Firm
Shares which the Selling Shareholder has agreed to sell on such date as set
forth in SCHEDULE II hereto, the Company agrees that it will sell or arrange
for the sale of that number of shares of Class A Voting Common Stock to the
Underwriters which represents the Firm Shares which the Selling Shareholder
has failed to so sell, as set forth in SCHEDULE II hereto, or such lesser
number as may be requested by the Representatives.
3. OFFERING BY THE UNDERWRITERS.
It is understood that the several Underwriters are to make a public
offering of the Firm Shares as soon as the Representatives deem it advisable
to do so. The Firm Shares are to be initially offered to the public at the
initial public offering price set forth in the Prospectus. The
Representatives may from time to time thereafter change the public offering
price and other selling terms. To the extent, if at all, that any Option
Shares are purchased pursuant to Section 2 hereof, the Underwriters will
offer them to the public on the foregoing terms.
It is further understood that you will act as the Representatives for the
Underwriters in the offering and sale of the Shares in accordance with a
Master Agreement Among Underwriters entered into by you and the several
other Underwriters.
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4. COVENANTS OF THE COMPANY AND THE SELLING SHAREHOLDER.
(a) The Company covenants and agrees with the several Underwriters that:
(i) The Company will (A) use its best efforts to cause the
Registration Statement to become effective or, if the procedure in Rule 430A
of the Rules and Regulations is followed, to prepare and timely file with
the Commission under Rule 424(b) of the Rules and Regulations a Prospectus
in a form approved by the Representatives containing information previously
omitted at the time of effectiveness of the Registration Statement in
reliance on Rule 430A of the Rules and Regulations, and (B) not file any
amendment to the Registration Statement or supplement to the Prospectus of
which the Representatives shall not previously have been advised and
furnished with a copy or to which the Representatives shall have reasonably
objected in writing or which is not in compliance with the Rules and
Regulations.
(ii) The Company will advise the Representatives promptly (A) when the
Registration Statement or any post-effective amendment thereto shall have
become effective, (B) of receipt of any comments from the Commission, (C) of
any request of the Commission for amendment of the Registration Statement or
for supplement to the Prospectus or for any additional information, and
(D) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the use of the Prospectus or
of the institution of any proceedings for that purpose. The Company will
use its best efforts to prevent the issuance of any such stop order
preventing or suspending the use of the Prospectus and to obtain as soon as
possible the lifting thereof, if issued.
(iii) The Company will cooperate with the Representatives in endeavoring
to qualify the Shares for sale under the securities laws of such
jurisdictions as the Representatives may reasonably have designated in
writing and will make such applications, file such documents, and furnish
such information as may be reasonably required for that purpose, provided
the Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction where it is
not now so qualified or required to file such a consent. The Company will,
from time to time, prepare and file such statements, reports, and other
documents, as are or may be required to continue such qualifications in
effect for so long a period as the Representatives may reasonably request
for distribution of the Shares.
(iv) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary
Prospectus as the Representatives may reasonably request. The Company will
deliver to, or upon the order of, the Representatives during the period when
delivery of a Prospectus
-13-
is required under the Act, as many copies of the Prospectus in final
form, or as thereafter amended or supplemented, as the Representatives
may reasonably request. The Company will deliver to the Representatives
at or before the Closing Date four signed copies of the Registration
Statement and all amendments thereto including all exhibits filed
therewith, and will deliver to the Representatives such number of copies
of the Registration Statement (including such number of copies of the
exhibits filed therewith that may reasonably be requested), and of all
amendments thereto, as the Representatives may reasonably request.
(v) The Company will comply with the Act and the Rules and
Regulations, and the Securities Exchange Act of 1934 (the "Exchange Act"),
and the rules and regulations of the Commission thereunder, so as to permit
the completion of the distribution of the Shares as contemplated in this
Agreement and the Prospectus. If during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer, any event shall
occur as a result of which, in the judgment of the Company or in the
reasonable opinion of the Underwriters, it becomes necessary to amend or
supplement the Prospectus in order to make the statements therein, in the
light of the circumstances existing at the time the Prospectus is delivered
to a purchaser, not misleading, or, if it is necessary at any time to amend
or supplement the Prospectus to comply with any law, the Company promptly
will prepare and file with the Commission an appropriate amendment to the
Registration Statement or supplement to the Prospectus so that the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when it is so delivered, be misleading, or so that the
Prospectus will comply with the law.
(vi) The Company will make generally available to its security holders,
as soon as it is practicable to do so, but in any event not later than 15
months after the effective date of the Registration Statement, an earnings
statement (which need not be audited) in reasonable detail, covering a
period of at least 12 consecutive months beginning after the effective date
of the Registration Statement, which earnings statement shall satisfy the
requirements of Section 11(a) of the Act and Rule 158 of the Rules and
Regulations and will advise you in writing when such statement has been so
made available.
(vii) The Company will, for a period of five years from the Closing
Date, deliver to the Representatives copies of annual reports and copies of
all other documents, reports and information furnished by the Company to its
shareholders or filed with any securities exchange pursuant to the
requirements of such exchange or with the Commission pursuant to the Act or
the Exchange Act. The Company will deliver to the Representatives similar
reports with respect to significant subsidiaries, as that term is defined in
the Rules and Regulations, which are not consolidated in the Company's
-14-
financial statements.
(viii) No offering, sale, short sale or other disposition of any shares
of Class A Voting Common Stock of the Company or other securities
convertible into or exchangeable or exercisable for shares of Class A Voting
Common Stock or derivative of Class A Voting Common Stock (or agreement for
such) will be made for a period of 120 days after the date of this
Agreement, directly or indirectly, by the Company otherwise than hereunder
or with the prior written consent of Alex. Xxxxx & Sons Incorporated (except
that the Company may, without such consent, offer Class A Voting Common
Stock to the Texas Regional Bancshares, Inc. Employee Stock Ownership Plan
(including 401(k) provisions) (the "KSOP"), existing employee stock
option plans or other employee benefit plans).
(ix) The Company will use its best efforts to list, subject to notice
of issuance, the Shares on the National Association of Securities Dealers
Automated Quotation National Market System ("NASD-NMS").
(x) The Company has caused each officer and director of the Company
and the Selling Shareholder to furnish to you, on or prior to the date of
this agreement, a letter or letters, in form and substance satisfactory to
the Underwriters, pursuant to which each such person shall agree not to
offer, sell, sell short or otherwise dispose of any shares of Class A Voting
Common Stock of the Company or other capital stock of the Company, or any
other securities convertible, exchangeable or exercisable for Class A Voting
Common Stock or derivative of Class A Voting Common Stock owned by such
person or request the registration for the offer or sale of any of the
foregoing (or as to which such person has the right to direct the
disposition of) for a period of 120 days after the date of this Agreement,
directly or indirectly, except with the prior written consent of Alex.
Xxxxx & Sons Incorporated ("Lockup Agreements").
(xi) The Company shall apply the net proceeds of its sale of the Shares
as set forth in the Prospectus.
(xii) The Company shall not invest, or otherwise use the proceeds
received by the Company from its sale of the Shares in such a manner as
would require the Company or the Bank to register as an investment company
under the Investment Company Act of 1940, as amended.
(xiii) The Company will maintain a transfer agent and, if necessary under
the jurisdiction of incorporation of the Company, a registrar for the Class
A Voting Common Stock.
(xiv) The Company will not take, directly or indirectly, any action
designed to cause or result in, or that has constituted or might reasonably
be expected to constitute, the stabilization or manipulation of the price of
any securities of the Company.
-15-
(b) The Selling Shareholder covenants and agrees with the several
Underwriters that:
(i) No offering, sale, short sale or other disposition of any shares
of Class A Voting Common Stock of the Company or other capital stock of the
Company or other securities convertible, exchangeable or exercisable for
Class A Voting Common Stock of the Company or derivative of Class A Voting
Common Stock of the Company owned by the Selling Shareholder or request for
the registration for the offer or sale of any of the foregoing (or as to
which the Selling Shareholder has the right to direct the disposition of)
will be made for a period of 120 days after the date of this Agreement,
directly or indirectly, by such Selling Shareholder otherwise than hereunder
or with the prior written consent of Alex. Xxxxx & Sons Incorporated.
(ii) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 and the Interest and Dividend Tax Compliance Act
of 1983 with respect to the transactions herein contemplated, the Selling
Shareholder agrees to deliver to you prior to or at the Closing Date a
properly completed and executed United States Treasury Department Form W-9
(or other applicable form or statement specified by Treasury Department
regulations in lieu thereof).
(iii) Such Selling Shareholder will not take, directly or indirectly,
any action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of
the price of any securities of the Company.
5. COSTS AND EXPENSES.
The Company will pay all costs, expenses and fees incident to the
performance of the obligations of the Sellers under this Agreement,
including, without limiting the generality of the foregoing, the following:
accounting fees of the Company; the fees and disbursements of counsel for
the Company and the Selling Shareholder; the cost of printing and delivering
to, or as requested by, the Underwriters copies of the Registration
Statement, Preliminary Prospectuses, the Prospectus, this Agreement, the
Agreement Among Underwriters, the Underwriters' Selling Memorandum, the
Underwriters' Questionnaire, the Underwriters' Invitation Letter, the
Listing Application, the Blue Sky Survey and any supplements or amendments
thereto; the filing fees of the Commission; the filing fees and expenses
incident to securing any required review by the NASD of the terms of the
sale of the Shares; the Listing Fee of the NASD-NMS; and the expenses,
including but not limited to the fees and disbursements of counsel for the
Underwriters, incurred in connection with the qualification of the Shares
under State securities or Blue Sky laws. The Selling Shareholder also shall
bear his pro rata portion of the Underwriters' discounts and
-16-
commissions. Any transfer taxes imposed on the sale of the Shares to the
several Underwriters will be paid by the Sellers pro rata. The Sellers
shall not, however, be required to pay for the any of the Underwriters'
expenses (other than those related to State securities or Blue Sky laws)
except that, if this Agreement shall not be consummated because the
conditions in Section 6 hereof are not satisfied, or because this
Agreement is terminated by the Representatives pursuant to Section 11
hereof, or by reason of any failure, refusal or inability on the part of
the Company or the Selling Shareholder to perform any undertaking or
satisfy any condition of this Agreement or to comply with any of the
terms hereof on their part to be performed, unless such failure to
satisfy said condition or to comply with said terms be due to the default
or omission of any Underwriter, then the Company shall reimburse the
several Underwriters for reasonable out-of-pocket expenses, including but
not limited to fees and disbursements of counsel, reasonably incurred in
connection with investigating, marketing and proposing to market the
Shares or in contemplation of performing their obligations hereunder; but
the Company and the Selling Shareholder shall not in any event be liable
to any of the several Underwriters for damages on account of loss of
anticipated profits from the sale by them of the Shares.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the Firm Shares
on the Closing Date and the Option Shares, if any, on the Option Closing
Date are subject to the accuracy, to of the Closing Date or the Option
Closing Date, as the case may be, of the representations and warranties of
the Company and the Selling Shareholder contained herein, and to the
performance by the Company and the Selling Shareholder of their covenants
and obligations hereunder and to the following additional conditions:
(a) The Registration Statement and all post-effective amendments thereto
shall have become effective and any and all filings required by Rule 424 and
Rule 430A of the Rules and Regulations shall have been made, and any request
of the Commission for additional information (to be included in the
Registration Statement or otherwise) shall have been disclosed to the
Representatives and complied with to their reasonable satisfaction. No stop
order suspending the effectiveness of the Registration Statement, as amended
from time to time, shall have been issued and no proceedings for that
purpose shall have been taken or, to the best knowledge of the Company or
the Selling Shareholder, shall be contemplated by the Commission and no
injunction, restraining order, or order of any nature by a Federal or state
court of competent jurisdiction shall have been issued as of the Closing
Date which would prevent the issuance of the Shares.
-17-
(b) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, the opinions of XxXxxxxx Xxxxxxxxx
& Xxxxxxx, L.L.P., counsel for the Company, dated the Closing Date or the
Option Closing Date, as the case may be, addressed to the Underwriters (and
stating that it may be relied upon by counsel to the Underwriters) to the
effect that:
(i) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Texas, with
corporate power and authority to own or lease its properties and conduct its
business as described in the Registration Statement; the Bank has been duly
organized and is validly existing as a banking association in good standing
under the laws of the jurisdiction of its incorporation, with corporate power
and authority to own or lease its properties and conduct its business as
described in the Registration Statement; the Company and the Bank are duly
qualified to transact business in all jurisdictions in which the conduct of
their business requires such qualification, or in which the failure to
qualify would have a materially adverse effect upon the business of the
Company and the Bank taken as a whole; and the outstanding shares of capital
stock of the Bank have been duly authorized and validly issued and are fully
paid and non-assessable and, to the best knowledge of such counsel, are
owned by the Company free and clear of all liens, encumbrances and equities
and claims, and no options, warrants or other rights to purchase, agreements
or other obligations to issue or other rights to convert any obligations
into any shares of capital stock or of ownership interests in the Bank are
outstanding.
(ii) The Company has authorized and outstanding capital stock as set
forth under the caption "Capitalization" in the Prospectus; the
authorized shares of the Company's Class A Voting Common Stock have been
duly authorized; the outstanding shares of the Company's Class A Voting
Common Stock, including the Shares to be sold by the Selling Shareholder,
have been duly authorized and validly issued and are fully paid and
non-assessable; all of the Shares conform to the description thereof
contained in the Prospectus; the certificates for the Shares are in due
and proper form; the Shares, including the Option Shares, if any, to be
sold by the Company pursuant to this Agreement have been duly authorized
and will be validly issued, fully paid and non-assessable when issued and
paid for as contemplated by this Agreement; and no preemptive rights of
stockholders exist with respect to any of the Shares or the issue or sale
thereof.
(iii) Except as described in or contemplated by the Prospectus, to the
best knowledge of such counsel, there are no outstanding securities of the
Company convertible or exchangeable into or evidencing the right to purchase
or subscribe for any shares of capital stock of the Company and there are no
outstanding or authorized options, warrants or
-18-
rights of any character obligating the Company to issue any shares of its
capital stock or any securities convertible or exchangeable into or
evidencing the right to purchase or subscribe for any shares of such
stock; and except as described in the Prospectus, to the best knowledge
of such counsel, no holder of any securities of the Company or any other
person has the right, contractual or otherwise, which has not been
satisfied or effectively waived, to cause the Company to sell or
otherwise issue to them, or to permit them to underwrite the sale of, any
of the Shares or the right to have any Common Shares or other securities
of the Company included in the Registration Statement or the right, as a
result of the filing of the Registration Statement, to require
registration under the Act of any shares of Class A Voting Common Stock
or other securities of the Company.
(iv) The Registration Statement has become effective under the Act and,
to the best knowledge of such counsel, no stop order proceedings with
respect thereto have been instituted or are pending or threatened under the
Act.
(v) The Registration Statement, all Preliminary Prospectuses, the
Prospectus and each amendment or supplement thereto comply as to form in all
material respects with the requirements of the Act and the applicable rules
and regulations thereunder (except that such counsel need express no opinion
as to the financial statements and related schedules included therein).
(vi) The statements under the captions "Proposed Mergers," "Business --
Supervision and Regulation," "Business -- Capital Resources," "Description
of Capital Stock" and "Shares Eligible for Future Sale" in the Prospectus,
insofar as such statements constitute a summary of documents referred to
therein or matters of law, fairly summarize in all material respects the
information called for with respect to such documents and matters.
(vii) Such counsel does not know of any contracts or documents required
to be filed as exhibits to the Registration Statement or described in the
Registration Statement or the Prospectus, including without limitation the
Merger Agreements, which are not so filed or described as required, and such
contracts and documents as are summarized in the Registration Statement or
the Prospectus are fairly summarized in all material respects.
(viii) To such counsel's best knowledge, except as disclosed in the
Prospectus or as disclosed in writing delivered to the Underwriters prior to
the Closing Date, none of the Company, the Bank, First State Bank or Border
Bank are in violation of any directive or order from or agreement or
understanding with the Department, the FDIC, the FRB or any other
governmental authority to make any material change in the method of
-19-
conducting or that restricts their respective businesses. Such counsel
knows of no material legal proceedings pending or threatened against the
Company, the Bank, First State Bank or Border Bank, including but not
limited to actions or proceedings related to environmental, discrimination
or bank regulatory matters, except as set forth in the Prospectus.
(ix) The execution and delivery of this Agreement and the Merger
Agreements and the consummation of the transactions herein and therein
contemplated do not and will not conflict with or result in a breach of any
of the terms or provisions of, or constitute a default under, the charter or
by-laws of the Company or the Bank, or any agreement or instrument known to
such counsel to which the Company or the Bank is a party or by which the
Company or the Bank may be bound or, so far as is known to such counsel,
violate any statute, judgment, decree, order, rule or regulation of any
court or governmental body having jurisdiction over the Company or the Bank,
or any of its or their property; there is no regulatory cease and desist
order or other order, memorandum or understanding or agreement between the
Company, the Bank and the Department, the FDIC or the FRB that would govern,
limit, or prohibit the Company from entering into and performing its
obligations under this Agreement or the Merger Agreements.
(x) This Agreement has been duly authorized, executed and delivered by
the Company. The Merger Agreements have been duly authorized, executed and
delivered by the Company.
(xi) All material conditions precedent to the closing of the
transactions contemplated by the Merger Agreements with respect to the
obligations of the Company have been satisfied or waived by the Company as
of the date of this Agreement, except for the consummation of the offering
contemplated hereby and the delivery by the Company of the purchase price to
the shareholders of First State Bank and Border Bank.
(xii) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body is necessary in connection with the execution and delivery
of this Agreement or the Merger Agreements and the consummation of the
transactions herein and therein contemplated (other than as may be required
by the NASD or as required by State securities and Blue Sky laws as to which
such counsel need express no opinion) except such as have been obtained or
made, specifying the same.
(xiii) The Company is duly registered as a bank holding company under the
BHCA. The deposit accounts of the Bank are insured by the FDIC up to the
maximum amount permitted by law; to counsel's best knowledge, the Bank has
not received notice of any proceeding to be brought by the FDIC or any other
regulatory agency for the purpose of terminating such deposit insurance or
imposing any regulatory sanction or restriction on
-20-
the Bank, nor has the Company received any such notice in respect of such
purpose.
(xiv) To counsel's best knowledge, the Company has not been advised, and
has no reason to believe, that either it or the Bank is not conducting
business in compliance with all applicable laws, rules and regulations of
the jurisdictions in which it is conducting business, including, without
limitation, all applicable local, State and Federal environmental laws and
regulations and all regulations, decisions, directives, orders and policies
of the FDIC, the Department and the FRB; except where failure to be so in
compliance would not materially adversely affect the condition (financial or
otherwise), business, results of operations or prospects of the Company and
the Bank taken as a whole.
In rendering such opinion XxXxxxxx, Xxxxxxxxx & Xxxxxxx, L.L.P. may rely
as to matters governed by the laws of states other than Texas or Federal
laws on local counsel in such jurisdictions, provided that XxXxxxxx
Xxxxxxxxx & Xxxxxxx, L.L.P. shall state that they believe that they and the
Underwriters are justified in relying on such other counsel. In addition to
the matters set forth above, such opinion shall also include a statement to
the effect that nothing has come to the attention of such counsel which
leads them to believe that (i) the Registration Statement, at the time it
became effective under the Act (but after giving effect to any modifications
incorporated therein pursuant to Rule 430A under the Act) and as of the
Closing Date or the Option Closing Date, as the case may be, contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading (except that such counsel need express no view as to
financial statements, schedules and statistical information therein), and
(ii) the Prospectus, or any amendment or supplement thereto, on the date it
was filed pursuant to Rule 424(b) under the Act and as of the Closing Date
or the Option Closing Date, as the case may be, contained an untrue
statement of a material fact or omitted to state a material fact necessary
in order to make the statements, in the light of the circumstances under
which they are made, not misleading (except that such counsel need express
no view as to financial statements, schedules and statistical information
therein). Such opinion shall also include a statement to the effect that
such counsel has participated in the preparation of the Merger Agreements
and, nothing has come to the attention of such counsel which leads them to
believe that the representations and warranties of First State Bank and
Border Bank contained in the Merger Agreements were not true, in all
material respects, as of the date of the Merger Agreements and are not true,
in all material respects, as of the date of this Agreement. With respect to
such statements, XxXxxxxx, Xxxxxxxxx & Xxxxxxx, L.L.P. may state that their
belief is based upon the procedures set forth therein, but is without
independent check and verification.
-21-
(c) The Representatives shall have received from counsel for the Selling
Shareholder, an opinion dated the Closing Date, addressed to the
Underwriters (and stating that it may be relied upon by counsel to the
Underwriters) to the effect that:
(i) This Agreement has been duly authorized, executed and delivered
on behalf of the Selling Shareholder.
(ii) The Selling Shareholder has full legal right, power and
authority, and any approval required by law (other than as required by State
securities and Blue Sky laws as to which such counsel need express no
opinion), to sell, assign, transfer and deliver the portion of the Shares to
be sold by the Selling Shareholder.
(iii) The Custodian Agreement and the Power of Attorney executed and
delivered by the Selling Shareholder are valid and binding.
(iv) The Underwriters (assuming that they are bona fide purchasers
within the meaning of the Uniform Commercial Code) have acquired good and
indefeasible title to the Shares being sold by the Selling Shareholder on
the Closing Date, free and clear of all liens, encumbrances, equities and
claims.
(d) The Representatives shall have received from Xxxxx, Day, Xxxxxx &
Xxxxx, counsel for the Underwriters, an opinion dated the Closing Date or
the Option Closing Date, as the case may be, substantially to the effect
specified in subparagraphs (ii), (iii), (iv) and (ix) of Paragraph (b) of
this Section 6 (except that such counsel need express no view as to matters
relating to First State Bank and Border Bank in subparagraph (ix) of
Paragraph (b) of this Section 6), and that the Company is a duly organized
and validly existing corporation under the laws of the State of Texas. In
rendering such opinion, Xxxxx, Day, Xxxxxx & Xxxxx may rely as to all
matters governed other than by the laws of the State of Texas or Federal
laws on the opinion of counsel referred to in Paragraph (b) of this Section
6. In addition to the matters set forth above, such opinion shall also
include a statement to the effect that nothing has come to the attention of
such counsel which leads them to believe that (i) the Registration
Statement, or any amendment thereto, as of the time it became effective
under the Act (but after giving effect to any modifications incorporated
therein pursuant to Rule 430A under the Act) as of the Closing Date or the
Option Closing Date, as the case may be, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading (except
that such counsel need express no view as to financial statements, schedules
and statistical information therein), and (ii) the Prospectus, or any
supplement thereto, on the date it was filed pursuant to the Rules and
-22-
Regulations and as of the Closing Date or the Option Closing Date, as the
case may be, contained an untrue statement of a material fact or omitted to
state a material fact, necessary in order to make the statements, in the
light of the circumstances under which they are made, not misleading (except
that such counsel need express no view as to financial statements, schedules
and statistical information therein). With respect to such statement,
Xxxxx, Day, Xxxxxx & Xxxxx may state that their belief is based upon the
procedures set forth therein, but is without independent check and
verification.
(e) The Representatives shall have received at or prior to the Closing
Date from Xxxxx, Day, Xxxxxx & Xxxxx a memorandum or summary, in form and
substance satisfactory to the Representatives, with respect to the
qualification for offering and sale by the Underwriters of the Shares under
the State securities or Blue Sky laws of such jurisdictions as the
Representatives may reasonably have designated to the Company.
(f) The Representatives shall have received, on the Closing Date and the
Option Closing Date, as the case may be, a letter dated the Closing Date or
the Option Closing Date, as the case may be, in form and substance
satisfactory to the Representatives of KPMG Peat Marwick LLP confirming that
they are independent public accountants within the meaning of the Act and
the applicable published Rules and Regulations thereunder and stating that
in their opinion the financial statements and schedules of the Company,
First State Bank and Border Bank examined by them and included in the
Registration Statement comply in form in all material respects with the
applicable accounting requirements of the Act and the related published
Rules and Regulations; and containing such other statements and information
as is ordinarily included in accountants' "comfort letters" to Underwriters
with respect to the financial statements and certain financial and
statistical information of the Company, First State Bank and Border Bank
contained in the Registration Statement and Prospectus.
(g) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, a certificate or certificates of
the Chief Executive Officer and the Chief Financial Officer of the Company
to the effect that, as of the Closing Date or the Option Closing Date, as
the case may be, each of them severally represents as follows:
(i) The Registration Statement has become effective under the Act and
no stop order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for such purpose have been taken or are, to
his best knowledge, contemplated by the Commission;
(ii) He does not know of any litigation instituted or threatened
against the Company, First State Bank or Border Bank of a character required
to be disclosed in the Registration
-23-
Statement which is not so disclosed; he does not know of any material
contract required to be filed as an exhibit to the Registration Statement
which is not so filed;
(iii) The representations and warranties of the Company contained in
Section 1 hereof (including without limitation those with respect to First
State Bank and Border Bank) are true and correct as of the Closing Date or
the Option Closing Date, as the case may be;
(iv) All filings required to have been made pursuant to Rule 424 or
430A under the Act have been made;
(v) He has carefully examined the Registration Statement and the
Prospectus and, in his opinion, as of the effective date of the Registration
Statement, the statements contained in the Registration Statement were true
and correct, and such Registration Statement and Prospectus did not omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading, and since the effective date of
the Registration Statement, no event has occurred with respect to the
Company, the Bank or, to the best of his knowledge, First State Bank or
Border Bank which should have been set forth in a supplement to or an
amendment of the Prospectus which has not been so set forth in such
supplement or amendment; and
(vi) Since the respective dates as of which information is given in the
Registration Statement and Prospectus, there has not been any material
adverse change or any development involving a prospective material adverse
change in or affecting the condition, financial or otherwise, of the Company
and the Bank taken as a whole or, to the best of his knowledge, First State
Bank or Border Bank, or the earnings, business, management, properties,
assets, rights, operations, condition (financial or otherwise) or prospects
of the Company and the Bank taken as a whole or, to the best of his
knowledge, First State Bank or Border Bank, whether or not arising in the
ordinary course of business.
(h) The Company and the Selling Shareholder shall have furnished to the
Representatives such further certificates and documents confirming the
representations and warranties, covenants and conditions contained herein
and related matters as the Representatives may reasonably have requested.
(i) The Firm Shares and Option Shares, if any, have been approved for
designation upon notice of issuance on the Nasdaq Stock Market.
(j) The Lockup Agreements described in Section 4(a)(x) are in full force
and effect.
(k) All material conditions precedent to the closing of the
-24-
transactions contemplated by the Merger Agreements have been satisfied as
of the Closing Date, except for the consummation of the offering
contemplated hereby and the delivery by the Company of the purchase price
to the shareholders of First State Bank and Border Bank.
(l) The Representatives shall have received a letter addressed to the
Underwriters and dated the date hereof from the Company or each of First
State Bank and Border Bank, as determined by the Representatives, with
respect to certain information supplied by First State Bank or Border Bank,
as applicable, for use in the Registration Statement, and the
Representatives shall have received a certificate, dated the Closing Date,
or the Option Closing Date, as applicable, and signed by an authorized
representative of the entity that delivered such letters, as to the accuracy
of such information as of the Closing Date or Option Closing Date. Each
such letter and certificate shall be in form and substance acceptable to the
Representatives.
The opinions and certificates mentioned in this Agreement shall be deemed
to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to the Representatives and to Xxxxx, Day,
Xxxxxx & Xxxxx, counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 6 shall
not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated
by the Representatives by notifying the Company and the Selling Shareholder
of such termination in writing or by telegram at or prior to the Closing
Date or the Option Closing Date, as the case may be.
In such event, the Company, the Selling Shareholder and the Underwriters
shall not be under any obligation to each other (except to the extent
provided in Sections 5 and 8 hereof).
7. CONDITIONS OF THE OBLIGATIONS OF THE SELLERS.
The obligations of the Sellers to sell and deliver the portion of the
Shares required to be delivered as and when specified in this Agreement are
subject to the conditions that at the Closing Date or the Option Closing
Date, as the case may be, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and in effect or proceedings
therefor initiated or threatened.
8. INDEMNIFICATION.
(a) Subject to the limitations in paragraph 8(d), the Company and the
Selling Shareholder, jointly and severally, agree to indemnify and hold
harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of
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the Act, against any losses, claims, damages or liabilities to which such
Underwriter or any such controlling person may become subject under the
Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any Preliminary Prospectus,
the Prospectus or any amendment or supplement thereto, or (ii) the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading; and will reimburse each Underwriter and each such controlling
person upon demand for any legal or other expenses reasonably incurred by
such Underwriter or such controlling person in connection with
investigating or defending any such loss, claim, damage or liability,
action or proceeding or in responding to a subpoena or governmental
inquiry related to the offering of the Shares, whether or not such
Underwriter or controlling person is a party to any action or proceeding;
provided, however, that the Company and the Selling Shareholder will not
be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement, or omission or alleged omission made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or
such amendment or supplement, in reliance upon and in conformity with
written information furnished to the Company by or through the
Representatives specifically for use in the preparation thereof. In no
event, however, shall the liability of the Selling Shareholder for
indemnification under this Section 8(a) exceed the proceeds received by
the Selling Shareholder from the Underwriters in the offering. This
indemnity agreement will be in addition to any liability which the
Company or the Selling Shareholder may otherwise have.
(b) Each Underwriter severally and not jointly will indemnify and hold
harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement, the Selling Shareholder and each person,
if any, who controls the Company or the Selling Shareholder within the
meaning of the Act, against any losses, claims, damages or liabilities to
which the Company or any such director, officer, Selling Shareholder or
controlling person may become subject under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto, or (ii) the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
under which they were made; and will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer, Selling
Shareholder or controlling
-26-
person in connection with investigating or defending any such loss,
claim, damage, liability, action or proceeding; provided, however, that
each Underwriter will be liable in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission has been made in the Registration Statement,
any Preliminary Prospectus, the Prospectus or such amendment or
supplement, in reliance upon and in conformity with written information
furnished to the Company by or through the Representatives specifically
for use in the preparation thereof. This indemnity agreement will be in
addition to any liability which such Underwriter may otherwise have.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may
be sought pursuant to this Section 8, such person (the "indemnified party")
shall promptly notify the person against whom such indemnity may be sought
(the "indemnifying party") in writing. No indemnification provided for in
Section 8(a) or (b) shall be available to any party who shall fail to give
notice as provided in this Section 8(c) if the party to whom notice was not
given was unaware of the proceeding to which such notice would have related
and was materially prejudiced by the failure to give such notice, but the
failure to give such notice shall not relieve the indemnifying party or
parties from any liability which it or they may have to the indemnified
party for contribution or otherwise than on account of the provisions of
Section 8(a) or (b). In case any such proceeding shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party and shall pay as
incurred the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel at its own expense. Notwithstanding the
foregoing, the indemnifying party shall pay as incurred (or within 30 days
of presentation) the fees and expenses of the counsel retained by the
indemnified party in the event (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such
counsel, (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them or
(iii) the indemnifying party shall have failed to assume the defense and
employ counsel acceptable to the indemnified party within a reasonable
period of time after notice of commencement of the action. It is understood
that the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable
fees and expenses of more than one
-27-
separate firm for all such indemnified parties. Such firm shall be
designated in writing by you in the case of parties indemnified pursuant
to Section 8(a) and by the Company and the Selling Shareholder in the
case of parties indemnified pursuant to Section 8(b). The indemnifying
party shall not be liable for any settlement of any proceeding effected
without its written consent but if settled with such consent or if there
be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment. In addition, the indemnifying
party will not, without the prior written consent of the indemnified
party, settle or compromise or consent to the entry of any judgment in
any pending or threatened claim, action or proceeding of which
indemnification may be sought hereunder (whether or not any indemnified
party is an actual or potential party to such claim, action or
proceeding) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability
arising out of such claim, action or proceeding.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under Section 8(a)
or (b) above in respect of any losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Selling Shareholder on the one hand and the Underwriters on the other from
the offering of the Shares. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company and the
Selling Shareholder on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions or proceedings in respect
thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Selling Shareholder on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company and the Selling Shareholder bear to the
total underwriting discounts and commissions received by the Underwriters,
in each case as set forth in the table on the cover page of the Prospectus.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Selling Shareholder on the one hand or the
Underwriters on
-28-
the other and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company, the Selling Shareholder and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this Section
8(d) were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to
above in this Section 8(d). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions
or proceedings in respect thereof) referred to above in this Section 8(d)
shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this subsection
(d), (i) no Underwriter shall be required to contribute any amount in excess
of the underwriting discounts and commissions applicable to the Shares
purchased by such Underwriter, (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation, and (iii) the Selling Shareholder shall not be
required to contribute any amount in excess of the lesser of (A) that
proportion of the total of such losses, claims, damages or liabilities
indemnified or contributed against equal to the proportion of the total
Shares sold hereunder which is being sold by such Selling Shareholder, or
(B) the proceeds received by such Selling Shareholder from the Underwriters
in the offering. The Underwriters' obligations in this Section 8(d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment
thereto, each party against whom contribution may be sought under this
Section 8 hereby consents to the jurisdiction of any court having
jurisdiction over any other contributing party, agrees that process issuing
from such court may be served upon him or it by any other contributing party
and consents to the service of such process and agrees that any other
contributing party may join him or it as an additional defendant in any such
proceeding in which such other contributing party is a party.
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 8 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Company set
-29-
forth in this Agreement shall remain operative and in full force and
effect, regardless of (i) any investigation made by or on behalf of any
Underwriter or any person controlling any Underwriter, the Company, its
directors or officers or any persons controlling the Company, (ii)
acceptance of any Shares and payment therefor hereunder, and (iii) any
termination of this Agreement. A successor to any Underwriter, or to the
Company, its directors or officers or any person controlling the Company
shall be entitled to the benefits of the indemnity, contribution and
reimbursement agreements contained in this Section 8.
9. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, as the case may be,
any Underwriter shall fail to purchase and pay for the portion of the Shares
which such Underwriter has agreed to purchase and pay for on such date
(otherwise than by reason of any default on the part of the Company or the
Selling Shareholder, you, as Representatives of the Underwriters, shall use
your reasonable efforts to procure within 36 hours thereafter one or more of
the other Underwriters, or any others, to purchase from the Company and the
Selling Shareholder such amounts as may be agreed upon and upon the terms
set forth herein, the Firm Shares or Option Shares, as the case may be,
which the defaulting Underwriter or Underwriters failed to purchase. If
during such 36 hours you, as such Representatives, shall not have procured
such other Underwriters, or any others, to purchase the Firm Shares or
Option Shares, as the case may be, agreed to be purchased by the defaulting
Underwriter or Underwriters, then (a) if the aggregate number of shares with
respect to which such default shall occur does not exceed 10% of the Firm
Shares or Option Shares, as the case may be, covered hereby, the other
Underwriters shall be obligated, severally, in proportion to the respective
numbers of Firm Shares or Option Shares, as the case may be, which they are
obligated to purchase hereunder, to purchase the Firm Shares or Option
Shares, as the case may be, which such defaulting Underwriter or
Underwriters failed to purchase, or (b) if the aggregate number of shares of
Firm Shares or Option Shares, as the case may be, with respect to which such
default shall occur exceeds 10% of the Firm Shares or Option Shares, as the
case may be, covered hereby, the Company and the Selling Shareholder or you,
as the Representatives of the Underwriters, will have the right, by written
notice given within the next 36-hour period to the parties to this
Agreement, to terminate this Agreement without liability on the part of the
non-defaulting Underwriters or of the Company or of the Selling Shareholder
except to the extent provided in Section 8 hereof. In the event of a
default by any Underwriter or Underwriters, as set forth in this Section 9,
the Closing Date or Option Closing Date, as the case may be, may be
postponed for such period, not exceeding seven days, as you, as
Representatives, may determine in order that the required changes in the
Registration Statement or in the Prospectus or
-30-
in any other documents or arrangements may be effected. The term
"Underwriter" includes any person substituted for a defaulting
Underwriter. Any action taken under this Section 9 shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
10. NOTICES.
All communications hereunder shall be in writing and, except as otherwise
provided herein, will be mailed, delivered, telecopied or telegraphed and
confirmed as follows: if to the Underwriters, to Alex. Xxxxx & Sons
Incorporated, 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000,
Attention:_________________; with a copy to Alex. Xxxxx & Sons Incorporated,
000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attention: General
Counsel; if to the Company or the Selling Shareholder, to Texas Regional
Bancshares, Inc., Xxxxxx Xxxxx, Xxxxx 000, 0000 Xxxxx 00xx Xxxxxx, XxXxxxx,
Xxxxx 00000, Attention: Xxxx X. Xxxxx, Chief Executive Officer.
11. TERMINATION.
This Agreement may be terminated by you by notice to the Sellers as
follows:
(a) at any time prior to the earlier of (i) the time the Shares are
released by you for sale by notice to the Underwriters, or (ii) 11:30 a.m.
on the first business day following the date of this Agreement;
(b) at any time prior to the Closing Date if any of the following has
occurred: (i) since the respective dates as of which information is given in
the Registration Statement and the Prospectus, any material adverse change
or any development involving a prospective material adverse change in or
affecting the condition, financial or otherwise, of the Company and the Bank
taken as a whole, First State Bank or Border Bank or the earnings, business,
management, properties, assets, rights, operations, condition (financial or
otherwise) or prospects of the Company and the Bank taken as a whole, First
State Bank or Border Bank, whether or not arising in the ordinary course of
business, (ii) any outbreak or escalation of hostilities or declaration of
war or national emergency or other national or international calamity or
crisis or change in economic or political conditions if the effect of such
outbreak, escalation, declaration, emergency, calamity, crisis or change on
the financial markets of the United States would, in your reasonable
judgment, make it impracticable to market the Shares or to enforce contracts
for the sale of the Shares, or (iii) suspension of trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or
limitation on prices (other than limitations on hours or numbers of days of
trading) for securities on either such exchange, (iv) the enactment,
publication, decree or other promulgation of any
-31-
statute, regulation, rule or order of any court or other governmental
authority which in your opinion materially and adversely affects or may
materially and adversely affect the business or operations of the
Company, (v) declaration of a banking moratorium by United States or New
York State authorities, (vi) the suspension of trading of the Company's
common stock by the Commission on the NASD-NMS or (vii) the taking of any
action by any governmental body or agency in respect of its monetary or
fiscal affairs which in your reasonable opinion has a material adverse
effect on the securities markets in the United States; or
(c) as provided in Sections 6 and 9 of this Agreement.
12. SUCCESSORS.
This Agreement has been and is made solely for the benefit of the
Underwriters, the Company and the Selling Shareholder and their respective
successors, executors, administrators, heirs and assigns, and the officers,
directors and controlling persons referred to herein, and no other person
will have any right or obligation hereunder. No purchaser of any of the
Shares from any Underwriter shall be deemed a successor or assign merely
because of such purchase.
13. INFORMATION PROVIDED BY UNDERWRITERS.
The Company, the Selling Shareholder and the Underwriters acknowledge and
agree that the only information furnished or to be furnished by any
Underwriter to the Company for inclusion in any Prospectus or the
Registration Statement consists of the information set forth in the last
paragraph on the front cover page (insofar as such information relates to
the Underwriters), legends required by Item 502(d) of Regulation S-K under
the Act, the information under the caption "Underwriting" in the Prospectus
and [insert other relevant sections].
14. MISCELLANEOUS.
The reimbursement, indemnification and contribution agreements contained
in this Agreement and the representations, warranties and covenants in this
Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of
any Underwriter or controlling person thereof, or by or on behalf of the
Company or its directors or officers and (c) delivery of and payment for the
Shares under this Agreement.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
and the same instrument.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Maryland.
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If the foregoing letter is in accordance with you understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Selling Shareholder, the
Company and the several Underwriters in accordance with its terms.
Any person executing and delivering this Agreement as Attorney-in-Fact for
the Selling Shareholder represents by so doing that he has been duly appointed
as Attorney-in-Fact by the Selling Shareholder pursuant to a validly existing
and binding Power of Attorney which authorizes such Attorney-in-Fact to take
such action.
Very truly yours,
TEXAS REGIONAL BANCSHARES, INC.
By ___________________________________
Xxxx X. Xxxxx
Chairman of the Board
SELLING SHAREHOLDER
By ___________________________________
___________________________________
Attorney-in-Fact
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
ALEX. XXXXX & SONS INCORPORATED
FIRST SOUTHWEST COMPANY
As Representatives of the several
Underwriters listed on Schedule I
By: Alex. Xxxxx & Sons Incorporated
By: _______________________________
Authorized Officer
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SCHEDULE I
SCHEDULE OF UNDERWRITERS
Number of Firm Shares
Underwriter to be Purchased
----------- ---------------------
Alex. Xxxxx & Sons Incorporated
First Southwest Company
---------
Total 2,200,000
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SCHEDULE II
SCHEDULE OF SELLING SHAREHOLDER
Number of Firm Shares
Selling Shareholder to be Sold
------------------- ---------------------
------
Total 20,000
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