EXHIBIT 2
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
FIRST VICTORIA NATIONAL BANK,
FVNB CORP.
AND
MID-COAST SAVINGS BANK, S.S.B.
Dated as of January 27, 2000
TABLE OF CONTENTS
PAGE
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ARTICLE I........................................................ 1
THE MERGER..................................................... 1
SECTION 1.1 The Merger...................................... 1
SECTION 1.2 Effective Time.................................. 2
SECTION 1.3 Certain Effects of the Merger................... 2
SECTION 1.4 Articles of Incorporation and ByLaws............ 2
SECTION 1.5 Directors and Officers.......................... 2
SECTION 1.6 Conversion of Shares............................ 2
SECTION 1.7 Payment of Consideration........................ 2
SECTION 1.8 Approval by Shareholders........................ 3
SECTION 1.9 Closing...........................................4
ARTICLE II....................................................... 4
DISSENTING SHARES.............................................. 4
SECTION 2.1 Dissenting Shares............................... 4
ARTICLE III...................................................... 4
REPRESENTATIONS AND WARRANTIES OF MID-COAST.................... 4
SECTION 3.1 Organization and Qualification.................. 4
SECTION 3.2 MID-COAST Capitalization........................ 5
SECTION 3.3 Authority Relative to the Agreement............. 5
SECTION 3.4 No Violation.................................... 5
SECTION 3.5 Consents and Approvals.......................... 6
SECTION 3.6 Regulatory Reports.............................. 6
SECTION 3.7 Securities Issuances............................ 6
SECTION 3.8 Financial Statements............................ 6
SECTION 3.9 Absence of Certain Changes...................... 7
SECTION 3.10 Litigation...................................... 8
SECTION 3.11 Tax Matters..................................... 9
SECTION 3.12 Employee Benefit Plans.......................... 9
SECTION 3.13 Employment Matters.............................. 12
SECTION 3.14 Leases, Contracts and Agreements................ 12
SECTION 3.15 Related Company Transactions.................... 12
SECTION 3.16 Compliance with Laws............................ 13
SECTION 3.17 Insurance....................................... 13
SECTION 3.18 Loans........................................... 13
SECTION 3.19 Fiduciary Responsibilities...................... 13
SECTION 3.20 Patents, Trademarks and Copyrights.............. 13
SECTION 3.21 Environmental Compliance........................ 14
SECTION 3.22 Regulatory Actions.............................. 15
SECTION 3.23 Title to Properties; Encumbrances............... 15
SECTION 3.24 Fairness Opinion and Broker's or Finder's Fees...15
SECTION 3.25 Year 2000 Compliance.............................15
SECTION 3.26 Representations Not Misleading.................. 16
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TABLE OF CONTENTS
PAGE
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ARTICLE IV....................................................... 16
REPRESENTATIONS AND WARRANTIES OF FVNB AND FVNB CORP........... 16
SECTION 4.1 Organization and Authority...................... 17
SECTION 4.2 Authority Relative to Agreement................. 17
SECTION 4.3 Consents and Approvals.......................... 17
SECTION 4.4 Representations Not Misleading.................. 18
SECTION 4.5 Organization of FVNB Corp........................18
SECTION 4.6 Interim Bank Representation by FVNB Corp.........18
ARTICLE V........................................................ 18
COVENANTS OF MID-COAST......................................... 18
SECTION 5.1 Affirmative Covenants of MID-COAST.............. 18
SECTION 5.2 Negative Covenants of MID-COAST................. 20
ARTICLE VI....................................................... 22
ADDITIONAL AGREEMENTS.......................................... 22
SECTION 6.1 Access To, and Information Concerning,
Properties and Records ......................... 22
SECTION 6.2 Filing of Regulatory Approvals.................. 23
SECTION 6.3 Miscellaneous Agreements and Consents........... 23
SECTION 6.4 MID-COAST Indebtedness.......................... 23
SECTION 6.5 Good Faith Efforts.............................. 23
SECTION 6.6 Exclusivity..................................... 23
SECTION 6.7 Public Announcement............................. 24
SECTION 6.8 Treatment of Employee Benefit Plans............. 24
SECTION 6.9 Environmental Investigation; Right to Terminate
Agreement....................................... 24
SECTION 6.10 Proxy Statement..................................25
SECTION 6.11 Reserves.........................................25
SECTION 6.12 Title Insurance..................................25
SECTION 6.13 Year 2000........................................26
SECTION 6.14 Notification.....................................26
SECTION 6.15 Director and Officer Indemnification.............26
ARTICLE VII...................................................... 26
CONDITIONS TO CONSUMMATION OF THE MERGER....................... 26
SECTION 7.1 Conditions to Each Party's Obligation to Effect
the Merger...................................... 26
SECTION 7.2 Conditions to the Obligations of FVNB and
Interim Bank to Effect the Merger............... 27
SECTION 7.3 Conditions to the Obligations of MID-COAST
to Effect the Merger............................ 27
ARTICLE VIII..................................................... 28
TERMINATION; AMENDMENT; WAIVER; NON-COMPETITION................ 28
SECTION 8.1 Termination..................................... 28
SECTION 8.2 Effect of Termination........................... 28
SECTION 8.3 Amendment....................................... 29
SECTION 8.4 Extension; Waiver............................... 29
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TABLE OF CONTENTS
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ARTICLE IX....................................................... 29
SURVIVAL....................................................... 29
SECTION 9.1 Nonsurvival of Representations and Warranties... 29
ARTICLE X........................................................ 29
MISCELLANEOUS.................................................. 29
SECTION 10.1 Expenses........................................ 29
SECTION 10.2 Brokers and Finders............................. 30
SECTION 10.3 Entire Agreement; Assignment.................... 30
SECTION 10.4 Further Assurances.............................. 30
SECTION 10.5 Enforcement of the Agreement.................... 30
SECTION 10.6 Severability.................................... 30
SECTION 10.7 Notices......................................... 30
SECTION 10.8 Governing Law................................... 31
SECTION 10.9 Descriptive Headings............................ 31
SECTION 10.10 Parties in Interest............................. 31
SECTION 10.11 Counterparts.................................... 32
SECTION 10.12 Incorporation by Reference...................... 32
SECTION 10.13 Disclosure...................................... 32
SECTION 10.14 Certain Definitions............................. 32
SECTION 10.15 Arbitration......................................33
ATTACHMENTS
EXHIBITS
A Form of Shareholder Agreement
B Form of Agreement and Plan of Merger
C Form of Letter of Transmittal
D Form of Opinion of Counsel for MID-COAST
E Form of Opinion of Counsel for FVNB
LIST OF SCHEDULES
Schedule 3.2 MID-COAST Capitalization
Schedule 3.4 No Violations
Schedule 3.5 Consents and Approvals
Schedule 3.6 Regulatory Reports
Schedule 3.8 Financial Statements
Schedule 3.9 Absence of Certain Changes
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Schedule 3.10 Litigation
Schedule 3.11 Tax Matters
Schedule 3.12(a) Employee Welfare Benefit Plans
Schedule 3.12(b) Employee Pension Benefit Plans
Schedule 3.12(c) Deferred Compensation, Bonus and Other Plans, Programs, Etc.
Schedule 3.12(d) Governmental Approvals Relating to Pension Benefit Plans
Schedule 3.12(e) Compliance with Code, ERISA, Etc.
Schedule 3.12(f) ERISA Compliance
Schedule 3.12(g) Title IV of ERISA
Schedule 3.12(i) Further Commitments; Amendment; Etc.
Schedule 3.12(j) Claims, Disputes, Etc.
Schedule 3.12(k) Taxes, Penalties, Etc.
Schedule 3.12(l) Additional Payments Due Under Deferred Compensation, Bonus,
Employee Welfare Benefit Plans and Employee Pension Benefit
Plans
Schedule 3.13 Employment Matters
Schedule 3.14 Leases, Contracts and Agreements
Schedule 3.15 Related Company Transactions
Schedule 3.16 Compliance with Laws
Schedule 3.17 Insurance Policies
Schedule 3.18 Loans
Schedule 3.20 Patents, Trademarks and Copyrights
Schedule 3.21 Environmental Compliance
Schedule 3.22 Regulatory Actions
Schedule 3.23 Title to Properties; Encumbrances
Schedule 3.24 Year 2000 Compliance
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Schedule 4.2 Authority Relative to Agreement
Schedule 5.1(j) List of Accounts and Safe Deposit Boxes
Schedule 5.1(k) List of Liabilities and Obligations of MID-COAST and its
subsidiaries
Schedule 6.4 MID-COAST Indebtedness
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") dated as of January 27,
2000, by and between FIRST VICTORIA NATIONAL BANK, a national banking
association ("FVNB"), Mid-Coast Savings Bank, S.S.B., a Texas savings bank,
▇▇▇▇, Texas ("MID-COAST") and FVNB Corp., a Texas corporation and the parent
bank holding company of FVNB.
WHEREAS, FVNB and MID-COAST believe that the Merger (as defined herein in
ss. 1.1) of MID-COAST with a to-be-formed interim bank ("Interim Bank")
wholly-owned by FVNB Corp. all in the manner provided by, and subject to the
terms and conditions set forth in, this Agreement and all exhibits, schedules
and supplements hereto, is desirable and in the best interests of their
respective institutions and shareholders; and
WHEREAS, FVNB is unwilling to enter into this Agreement unless,
contemporaneously with the execution and delivery of this Agreement, the
beneficial and record shareholders of MID-COAST holding at least a majority of
the issued and outstanding common stock of MID-COAST enter into agreements in
the form attached hereto as Exhibit A (collectively, the "SHAREHOLDERS
AGREEMENT") generally providing for the approval of the Agreement by such
shareholders and in order to induce FVNB to enter into this Agreement, MID-COAST
has approved the entering into by FVNB and such shareholders of the Shareholders
Agreement and such shareholders have agreed to enter into, execute and deliver
the Shareholders Agreement; and
WHEREAS, immediately after the Merger, FVNB Corp. will cause MID-COAST,
as the surviving bank in the Merger, to be merged with and into FVNB; and
WHEREAS, the respective boards of directors of MID-COAST and FVNB have
approved this Agreement and the proposed transactions substantially on the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER. Upon the terms and subject to the conditions set
forth herein and in the Agreement and Plan of Merger in the form attached hereto
as Exhibit B, with such changes thereto as may be appropriate to satisfy the
requirements of the Office of the Comptroller of the Currency ("OCC") or the
Texas Savings and Loan Department ("TSLD") (the "Merger Agreement"), and in
accordance with the provisions of the Texas Finance Code (the "TFC"), Interim
Bank shall be merged with and into MID-COAST (the "Merger") as soon as
practicable following the satisfaction or waiver, if permissible, of the
conditions set forth in Article VII hereof. Following the Merger, MID-COAST, as
the surviving bank (the "Surviving
Bank"), will be merged with and into FVNB and the separate existence of
MID-COAST shall cease (the merger and the subsequent merger of MID-COAST with
and into FVNB being herein referred to as the "Mergers").
SECTION 1.2 EFFECTIVE TIME. The Merger shall be effective when deemed
effective by the TSLD (the "Effective Time").
SECTION 1.3 CERTAIN EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in the TFC.
SECTION 1.4 ARTICLES OF INCORPORATION AND BYLAWS. The Articles of
Incorporation and the Bylaws of MID-COAST, in each case as in effect at the
Effective Time, shall be the Articles of Incorporation and Bylaws of the
Surviving Bank; however, upon the consummation of the subsequent merger of
Surviving Bank with and into FVNB, the Articles of Incorporation and the By-laws
of FVNB in each case as in effect at the effective time of such merger, shall be
the Articles of Incorporation and By-laws of FVNB as the Surviving Bank.
SECTION 1.5 DIRECTORS AND OFFICERS. The directors and officers of
MID-COAST at the Effective Time shall be the directors and officers of the
Surviving Bank; however, upon the consummation of the subsequent merger of
Surviving Bank with and into FVNB, the directors and officers of FVNB shall be
the directors and officers of FVNB as the Surviving Bank.
SECTION 1.6 CONVERSION OF SHARES. (a) Each share of MID-COAST's common
stock ("MID-COAST Common Stock" or "Shares"), issued and outstanding immediately
prior to the Effective Time ("Common Shares Outstanding"), other than Dissenting
Shares (as defined in Section 2.1), shall, by virtue of the Merger and without
any action on the part of the holder thereof, be converted into and represent
the right to receive the consideration payable as set forth below (the "Merger
Consideration") to the holder of record thereof, without interest thereon, upon
surrender of the certificate representing such Shares. At the Closing (as
hereinafter defined in Section 1.9), MID-COAST shall calculate and certify to
FVNB and Interim Bank the number of Common Shares Outstanding.
(b) Each holder of MID-COAST Common Stock shall receive, for each share of
MID-COAST Common Stock so held, Merger Consideration equal to the quotient of
(i) $6,722,000 DIVIDED BY (ii) the number of Common Shares Outstanding.
(c) Each share of capital stock of Interim Bank issued and outstanding
immediately before the Effective Time shall be converted into and become, by
virtue of the Merger, one share of capital stock of the Surviving Bank.
SECTION 1.7 PAYMENT OF CONSIDERATION.
(a) Interim Bank shall deposit or cause to be deposited in trust
with FVNB (the "Exchange Agent") prior to the Effective Time cash in an
aggregate amount sufficient to make the cash payments pursuant to Section
1.6 hereof and to make the appropriate cash payments, if any, to holders
of Dissenting Shares pursuant to Section 2.1 hereof (such amounts being
hereinafter referred to as the "Exchange Fund"). The Exchange Agent shall
make the payments of the Merger Consideration out of the Exchange Fund in
accordance with Section 1.7(b). Payments to holders of Dissenting
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Shares shall be made as required by the Texas Business Corporation Act
(the "TBCA"). The Exchange Fund shall not be used for any other purpose,
except as provided in this Agreement.
(b) Ten days prior to the Closing, MID-COAST shall provide the
Exchange Agent with a then current list of record shareholders of
MID-COAST, including the name, address, amount of shares held and the
certificate numbers of each shareholder (the "Shareholder List"). Within
two business days after the Closing, MID-COAST shall provide Exchange
Agent with any changes to the Shareholder List which occurred prior to the
Closing. Following the Closing, the former officers of MID-COAST shall use
their best efforts to assist the Exchange Agent in locating any
shareholder of MID-COAST who the Exchange Agent is not able to locate
based on the information included in the Shareholder List. Within five
days after receipt of the Shareholder List from MID-COAST, the Exchange
Agent shall mail to each record holder of an outstanding certificate or
certificates which represent shares of MID-COAST Common Stock (the
"Certificates"), a form letter of transmittal (attached hereto as Exhibit
C) which will specify that delivery shall be effected, and risk of loss
and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent and contain instructions for use in
effecting the surrender of the Certificates for payment therefor. The
letter of transmittal shall provide that each holder of MID-COAST Common
Stock shall receive the consideration due to him pursuant to the Agreement
by check sent by first class mail. At and after the Closing (as defined
herein) and upon surrender to the Exchange Agent of a Certificate,
together with such letter of transmittal duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor the amount
of cash provided in Section 1.6 hereof in the manner described herein, and
such Certificate shall forthwith be canceled. Payment will be made for the
shares of MID-COAST Common Stock within three business days after the
later of (i) the Exchange Agent's receipt of the related Certificates and
a properly completed letter of transmittal and (ii) the Closing. No
interest will be paid or accrued on the cash payable upon surrender of the
Certificates. If payment of cash is to be made to a person other than the
person in whose name the Certificate surrendered is registered, it shall
be a condition of payment that the Certificate so surrendered shall be
properly endorsed or otherwise in proper form for transfer and that the
person requesting such payment shall pay any transfer or other taxes
required by reason of the payment to a person other than the registered
holder of the Certificate surrendered or established to the satisfaction
of FVNB that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 1.7, each
Certificate (other than Certificates representing Dissenting Shares) shall
represent for all purposes only the right to receive the Merger
Consideration payable with respect thereto without any interest thereon.
(c) Any portion of the Exchange Fund (including the proceeds of any
investments thereof) that remains unclaimed by the shareholders of
MID-COAST for six months after the Effective Time shall be paid to FVNB
Corp., and the holders of shares of MID-COAST Common Stock not theretofore
presented to the Exchange Agent shall look to FVNB Corp. only, and not the
Exchange Agent, for the payment of any Merger Consideration in respect of
such shares.
SECTION 1.8 APPROVAL BY SHAREHOLDERS. This Agreement shall be submitted to
the shareholders of MID-COAST in accordance with applicable provisions of law
and the respective
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Articles of Incorporation and Bylaws of MID-COAST. MID-COAST and FVNB shall use
their best efforts to obtain all requisite shareholder approvals related to the
Mergers within sixty (60) days from the date of this Agreement. MID-COAST and
FVNB shall proceed expeditiously and cooperate fully in the procurement of any
other consents and approvals and the taking of any other actions in satisfaction
of all other requirements prescribed by law or otherwise necessary for
consummation of the Mergers on the terms herein provided, including, without
limitation, the preparation and submission of all necessary filings, requests
for waivers and certificates with the Board of Governors of the Federal Reserve
System ("FRB"), the OCC, the TSLD, and the Federal Deposit Insurance Corporation
("FDIC").
SECTION 1.9 CLOSING. Upon the terms and subject to the conditions hereof,
as soon as practicable after the receipt of all required regulatory approvals in
connection with the Mergers and the expiration of all applicable waiting periods
and the satisfaction or waiver, if permissible, of each of the other conditions
set forth in Article VII hereof, the parties hereto shall take all actions as
may be required by law to make the Mergers effective. Prior to the Effective
Time, a closing (the "Closing") will be held at the main office of FVNB in
Victoria, Texas (or such other place as the parties may agree) for the purpose
of confirming all of the foregoing. In no event, however, shall the Closing
occur prior to April 1, 2000 or later than one hundred eighty (180) days
following the date of this Agreement, unless otherwise agreed to by FVNB and
MID-COAST.
ARTICLE II
DISSENTING SHARES
SECTION 2.1 DISSENTING SHARES. Each share of MID-COAST Common Stock issued
and outstanding immediately prior to the Effective Time, the holder of which has
not voted in favor of the Merger and who has delivered a written demand for
payment of the fair value of such shares within the time and in the manner
provided in Article 5.12 of the TBCA, is referred to herein as a "Dissenting
Share." Dissenting Shares shall not be converted into or represent the right to
receive the Merger Consideration pursuant to Section 1.6 of this Agreement
unless and until such holder shall have failed to perfect or shall have
effectively withdrawn or lost his right to appraisal and payment under the TBCA.
If any such holder shall have so failed to perfect or shall have effectively
withdrawn or lost such right, such holder's Dissenting Shares shall thereupon be
deemed to have been converted into and to have become exchangeable for, at the
Effective Time, the right to receive the Merger Consideration without any
interest thereon. As set forth in Section 8.1 of this Agreement, if the holders
of more than 5% of the MID-COAST Common Stock shall have exercised their
dissenters' rights, FVNB shall have no obligation to consummate the Mergers.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
MID-COAST
MID-COAST hereby makes the representations and warranties set forth in
this Article III to FVNB. MID-COAST has delivered to FVNB the Schedules to this
Agreement referred to in this Article III prior to the date hereof.
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SECTION 3.1 ORGANIZATION AND QUALIFICATION. MID-COAST is a Texas savings
bank and is duly organized, validly existing and in good standing under the laws
of the State of Texas and all laws, rules, and regulations applicable to Texas
state savings banks. MID-COAST does not own or control any Affiliate (as defined
in Section 10.14(g)) or any subsidiary (as defined in Section 10.14(a)). True
and correct copies of the Articles of Incorporation and Bylaws of MID-COAST,
with all amendments thereto through the date of this Agreement, have been
delivered by MID-COAST to FVNB.
SECTION 3.2 MID-COAST CAPITALIZATION. As of the date hereof, the
authorized capital stock of MID-COAST consists of 100,000 shares of MID-COAST
Common Stock, $10.00 par value per share, and 400,000 shares of Preferred Stock
with $1.00 par value per share, of which 23,147 shares of Common Stock and no
shares of Preferred Stock are issued and outstanding, and none of which are held
in treasury. The shareholders of MID-COAST set forth on Schedule 3.2 are the
record and beneficial owners of all of the issued and outstanding shares of
capital stock of MID-COAST, each owning the respective numbers of shares of
Common Stock set forth on Schedule 3.2. There are no outstanding subscriptions,
options, convertible securities, rights, warrants, calls, or other agreements or
commitments of any kind issued or granted by, or binding upon, MID-COAST to
purchase or otherwise acquire any security of or equity interest in MID-COAST.
Except as set forth on Schedule 3.2, to the knowledge of MID-COAST, there are no
irrevocable proxies or any agreements restricting the transfer of or otherwise
relating to shares of its capital stock of any class. All of the Shares that
have been issued have been duly authorized, validly issued and are fully paid
and non-assessable, and are free of preemptive rights. Except as disclosed in
Schedule 3.2, there are no restrictions applicable to the payment of dividends
on the Shares except pursuant to the applicable banking laws and regulations,
and, except as set forth on Schedule 3.2, all dividends declared prior to the
date hereof have been paid.
SECTION 3.3 AUTHORITY RELATIVE TO THE AGREEMENT. MID-COAST has full
corporate power and authority, and except for the approvals of the shareholders
and the appropriate regulatory authorities, no further proceedings on the part
of MID-COAST are necessary, to execute and deliver this Agreement and to
consummate the transactions contemplated hereby, all of which have been duly and
validly authorized by its Board of Directors. This Agreement has been duly
executed and delivered by MID-COAST and is a duly authorized, valid, legally
binding and enforceable obligation of MID-COAST, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium, or other similar laws
relating to creditors' rights generally and general equitable principles and
subject to such shareholder approvals and such approval of regulatory agencies
and other governmental authorities having authority over MID-COAST as may be
required by statute or regulation. The execution, delivery and performance of
this Agreement by MID-COAST and the consummation of the transactions
contemplated hereby will not conflict with, or result in any violation or breach
of or default under the Articles of Incorporation or Bylaws of MID-COAST.
SECTION 3.4 NO VIOLATION. Except as set forth on Schedule 3.4, neither the
execution, delivery nor performance by MID-COAST of this Agreement in its
entirety, nor the consummation by MID-COAST of all of the transactions
contemplated hereby, following the receipt of such approvals, including any
applicable waiting periods, as may be required from the OCC, FDIC, FRB and the
TSLD, will (i) violate (with or without the giving of notice or the passage of
time), any law, order, writ, judgment, injunction, award, decree, rule, statute,
ordinance or regulation applicable to MID-COAST or (ii) be in conflict with,
result in a breach
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or termination of any provision of, cause the acceleration of the maturity of
any debt or obligation pursuant to, constitute a default (or give rise to any
right of termination, cancellation or acceleration) under, or result in the
creation of any security interest, lien, charge or other encumbrance upon any
property or assets of MID-COAST or pursuant to, any terms, conditions or
provisions of any note, license, instrument, indenture, mortgage, deed of trust
or other agreement or understanding or any other restriction of any kind or
character, to which MID-COAST is a party or by which any of its assets or
properties are subject or bound. Except as set forth in Schedule 3.4, or as
contemplated hereby, the corporate existence, business organization, assets,
licenses, permits, authorizations and contracts of MID-COAST will not be
terminated or impaired by reason of the execution, delivery or performance by
MID-COAST of this Agreement or the consummation by MID-COAST of the transactions
contemplated hereby, assuming the receipt of required bank regulatory approvals.
SECTION 3.5 CONSENTS AND APPROVALS. MID-COAST's Board of Directors has
approved the Agreement and recommended approval and adoption of this Agreement
by MID-COAST's shareholders. Except as described in Schedule 3.5 hereto, no
prior consent, approval or authorization of, or declaration, filing or
registration with any person, domestic or foreign, is required of MID-COAST in
connection with the execution, delivery and performance by MID-COAST of this
Agreement and the transactions contemplated hereby or the resulting change of
control of MID-COAST, except the approval of the shareholders of MID-COAST, and
such approvals as may be required from the FRB, FDIC, OCC and TSLD.
SECTION 3.6 REGULATORY REPORTS. Except as set forth on Schedule 3.6,
during the last five years MID-COAST has timely filed (including within any
authorized extension period) all reports, registrations and statements, together
with any amendments required to be made thereto, that are required to be filed
with the TSLD and FDIC, as well as all material reports, registrations and
statements, together with any amendments required to be made thereto, that are
required to be filed with any other regulatory authority having jurisdiction
over MID-COAST.
SECTION 3.7 SECURITIES ISSUANCES. MID-COAST is not subject to the
registration provisions of Section 12 of the Exchange Act nor the rules and
regulations of the Securities and Exchange Commission ("SEC") promulgated under
Section 12 of the Exchange Act. All issuances of securities by MID-COAST have
been registered under the Securities Act, the Securities Act of the State of
Texas, and all other applicable laws or were exempt from any such registration
requirements.
SECTION 3.8 FINANCIAL STATEMENTS. MID-COAST has provided FVNB with a true
and complete copy of (i) the audited balance sheet of MID-COAST as of December
31, 1998, and the related statements of income, shareholders' equity and
statements of cash flows for the years ended December 31, 1998 and 1997; and
(ii) Reports of Condition and Statements of Income ("Call Reports") of MID-COAST
as of June 30, 1999, and September 30, 1999 (such statements of financial
position and the related statements of income, shareholders' equity and changes
in cash flows are collectively referred to herein as the "Audited Financial
Statements") (collectively, with the Audited Financial Statements and the notes
and schedules thereto, and the Call Reports referred to as the "Financial
Statements"). Except as described in the notes to the Audited Financial
Statements, the Financial Statements fairly present the financial position of
MID-COAST, as of the dates thereof and the results of operations and changes in
financial position of MID-COAST for the periods then ended, in conformity with
Generally Accepted Accounting Principles applied on a basis consistent with
prior periods ("GAAP") (subject, in the
6
case of the unaudited interim financial statements, to normal year-end
adjustments and the fact that they do not contain all of the footnote
disclosures required by GAAP), except as otherwise noted therein, and the
accounting records underlying the Audited Financial Statements accurately and
fairly reflect in all material respects the transactions of MID-COAST. As of
their dates, the Audited Financial Statements conformed in all material respects
with all applicable rules and regulations promulgated by the TSLD. MID-COAST
does not have any liabilities or obligations of a type which should be included
in or reflected on the Financial Statements if prepared in accordance with GAAP,
whether related to tax or non-tax matters, accrued or contingent, due or not yet
due, liquidated or unliquidated, or otherwise, except as and to the extent
disclosed or reflected in the Financial Statements or as set forth on Schedule
3.8. MID-COAST will provide FVNB with the unaudited statements of financial
position of MID-COAST as of the end of each month hereafter, prepared on a basis
consistent with prior periods and promptly following their availability, and
MID-COAST will provide FVNB with the Call Reports of MID-COAST for all periods
ending after September 30, 1999. MID-COAST will provide FVNB as soon as it is
completed with a true and complete copy of (i) the audited balance sheet of
MID-COAST as of December 31, 1999 and the related statements of income,
shareholders' equity and statements of cash flow for the years ended December
31, 1998 and 1999. MID-COAST does not have any off balance sheet liabilities
associated with financial derivative products or potential liabilities
associated with financial derivative products.
SECTION 3.9 ABSENCE OF CERTAIN CHANGES. Except as set forth on Schedule
3.9, since December 31, 1998 (the "Balance Sheet Date"), MID-COAST has operated
and conducted its business in the ordinary course of business, consistent with
past practices, and, without limiting the generality of the foregoing, has not
taken any actions intended to alter in any material respect the size or
composition of the deposit base, securities portfolio, loan portfolio or asset
mix of MID-COAST, including, without limitation, engaging in the practice of
offering above- or below-market rates to attract or maintain deposits or loans.
Additionally, except as and to the extent set forth on Schedule 3.9, since the
Balance Sheet Date MID-COAST has not:
(a) made any amendment to its Articles of Incorporation or Bylaws or
changed the character of its business in any material manner;
(b) suffered any Material Adverse Effect (as defined in Section 10.14(b));
(c) entered into any agreement, commitment or transaction except in the
ordinary course of business and consistent with prudent banking practices;
(d) except in the ordinary course of business and consistent with prudent
banking practices, incurred, assumed or become subject to, whether directly or
by way of any guarantee or otherwise, any obligations or liabilities (absolute,
accrued, contingent or otherwise);
(e) permitted or allowed any of its material property or assets to be
subject to any mortgage, pledge, lien, security interest, encumbrance,
restriction or charge of any kind (other than statutory liens not yet
delinquent) except in the ordinary course of business and consistent with
prudent banking practices;
(f) except in the ordinary course of business and consistent with prudent
banking practices, canceled any debts, waived any claims or rights, or sold,
transferred, or otherwise disposed of any of its properties or assets;
7
(g) disposed of or permitted to lapse any rights to the use of any
trademark, service ▇▇▇▇, trade name or copyright, or disposed of or disclosed to
any person other than its employees or agents, any trade secret not theretofore
a matter of public knowledge;
(h) granted any increase in compensation or paid or agreed to pay or
accrue any bonus, percentage compensation, service award, severance payment or
like benefit to or for the credit of any director, officer, employee or agent
(other than customary annual compensation and established incentive compensation
payments adjustments in accordance with past practices to employees), or entered
into any employment or consulting contract or other agreement with any director,
officer or employee or adopted, amended or terminated any pension, employee
welfare, retirement, stock purchase, stock option, stock appreciation rights,
termination, severance, income protection, golden parachute, savings or
profit-sharing plan (including trust agreements and insurance contracts
embodying such plans), any deferred compensation, or collective bargaining
agreement, any group insurance contract or any other incentive, welfare or
employee benefit plan, program or agreement maintained by MID-COAST for the
directors, employees or former employees of MID-COAST ("Employee Benefit Plan");
(i) other than regular quarterly dividends, directly or indirectly
declared, set aside or paid any dividend or made any distribution in respect to
its capital stock or redeemed, purchased or otherwise acquired, or arranged for
the redemption, purchase or acquisition of, any shares of its capital stock or
other of its securities;
(j) organized or acquired any capital stock or other equity securities or
acquired any equity or ownership interest in any person (except through
settlement of indebtedness, foreclosure, acquisition in lieu of foreclosure, the
exercise of creditors' remedies or in a fiduciary capacity, the ownership of
which does not expose MID-COAST to any liability from the business, operations
or liabilities of such person);
(k) issued, reserved for issuance, granted, sold or authorized the
issuance of any shares of its capital stock or subscriptions, options, warrants,
calls, rights or commitments of any kind relating to the issuance or sale of or
conversion into shares of its capital stock;
(l) made any or acquiesced with any change in any accounting methods,
principles or practices, except changes required by changes in GAAP or
regulatory requirements;
(m) experienced any material adverse change in relations with customers or
clients of MID-COAST;
(n) except for the transactions contemplated by this Agreement or as
otherwise permitted hereunder, entered into any transaction, or entered into,
modified or amended any contract or commitment, other than in the ordinary
course of business and consistent with prudent banking practices; or
(o) agreed, whether in writing or otherwise, to take any action the
performance of which would change the representations contained in this Section
3.9 in the future so that any such representation would not be true in all
material respects as of the Closing.
8
SECTION 3.10 LITIGATION. Except as set forth on Schedule 3.10, there are
no actions, suits, claims, investigations, reviews or other proceedings pending
or, to the knowledge of MID-COAST, threatened against MID-COAST or involving any
of its properties or assets, at law or in equity or before or by any foreign,
federal, state, municipal, or other governmental court, department, commission,
board, bureau, agency, or other instrumentality or person or any board of
arbitration or similar entity ("Proceeding"). MID-COAST will notify FVNB
immediately in writing of any Proceedings of the nature described in the
foregoing sentence against MID-COAST.
SECTION 3.11 TAX MATTERS. MID-COAST has duly and timely filed (including
within any authorized extension period) all tax returns required to be filed by
it involving a tax liability or other potential detriment for failure to file
(the "Filed Returns"). MID-COAST has paid, or has established adequate reserves
for the payment of, all federal income taxes and all material state and local
income taxes and all franchise, property, sales, employment, withholding,
foreign or other taxes required to be paid by it with respect to the periods
covered by the Filed Returns. With respect to the periods for which returns have
not yet been filed, MID-COAST has established adequate reserves determined in
accordance with GAAP for the payment of all federal income taxes and all state
and local income taxes and all franchise, property, sales, employment, foreign
or other taxes. Except as described in Schedule 3.11, MID-COAST does not have
any direct or indirect liability for the payment of federal income taxes, state
and local income taxes, or franchise, property, sales, employment, withholding
or other taxes in excess of amounts paid or reserves established. Except as set
forth on Schedule 3.11, MID-COAST has not entered into any tax sharing agreement
or other agreement regarding the allocation of the tax liability of MID-COAST.
MID-COAST has not filed any Internal Revenue Service ("IRS") Forms 1139
(Application for Tentative Refund). Except as set forth on Schedule 3.11, there
are no pending or threatened audits, investigations, reviews or other similar
proceedings as to which MID-COAST has been notified in writing by the IRS or
other taxing authority for taxes or assessments of MID-COAST, nor are there any
outstanding agreements or waivers extending the statutory period of limitation
applicable to any tax return of MID-COAST for any period. MID-COAST has withheld
from employee wages and paid over to the proper governmental authorities all
amounts required to be so withheld and paid over. For the purposes of this
Agreement, the term "tax" shall include all federal, state and local taxes and
related governmental charges and any interest or penalties payable in connection
with the payment of taxes.
SECTION 3.12 EMPLOYEE BENEFIT PLANS. (a) Schedule 3.12(a) lists each
"Employee Welfare Benefit Plan" (as defined in Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) maintained by
MID-COAST or to which MID-COAST contributes or is required to contribute,
including any multiemployer welfare plan (such employee welfare benefit plans
being hereinafter collectively referred to as the "Welfare Benefit Plans") and
sets forth (i) the amount of any liability of MID-COAST for contributions more
than thirty days past due with respect to each Welfare Benefit Plan as of the
date hereof and as of the end of any subsequent month ending prior to the
Closing and (ii) the annual cost attributable to each of the Welfare Benefit
Plans; except as set forth on Schedule 3.12(a), no Welfare Benefit Plan provides
for continuing benefits or coverage for any participant, beneficiary or former
employee after such participant's or former employee's termination of employment
except as may be required by Section 4980B of the Code and Sections 601-608 of
ERISA;
(b) Schedule 3.12(b) lists each "Employee Pension Benefit Plan" (as
defined in Section 3(2) of ERISA and not exempted under Section 4(b) or 201 of
ERISA) maintained by
9
MID-COAST or to which MID-COAST contributes or is required to contribute,
including any multiemployer plan (as defined in Section 3(37) of ERISA) (such
employee pension benefit plans being hereinafter collectively referred to as the
"Pension Benefit Plans");
(c) Except as set forth on Schedule 3.12(c), MID-COAST does not maintain,
nor is it a party to any plan, program, agreement, arrangement or commitment for
the benefit of any of its employees, directors or officers relating to any of
the following: severance pay, deferred compensation, bonuses, stock options,
employee stock purchases, restricted stock, excess benefits, incentive
compensation, stock bonuses, cash bonuses, golden parachutes, life insurance,
rabbi trusts, cafeteria plans, dependent care, unfunded plans or any other
employee-related plans, programs, agreements, arrangements or commitments (other
than normal policies concerning holidays, vacations and salary continuation
during short absences for illness or other reasons), or any program, plan,
commitments, or practice of purchasing or otherwise compensating employees,
including officers, for accrued vacation or sick leave upon termination of
employment (collectively referred to as "Other Programs");
(d) All of the Pension Benefit Plans and Welfare Benefit Plans and any
related trust agreements or insurance or annuity contracts (or any other funding
instruments) and all Other Programs to the extent required are in material
compliance, both as to form and operation, with the provisions of ERISA, the
Code and with all other applicable laws, rules and regulations governing the
establishment and operation of the Pension Benefit Plans, Welfare Benefit Plans
and all Other Programs; except as set forth on Schedule 3.12(d), all necessary
governmental approvals relating to the establishment of the Pension Benefit
Plans have been obtained; and with respect to each Pension Benefit Plan that is
intended to be tax-qualified under Section 401(a) or 403(a) of the Code, a
favorable determination letter as to the qualification under the Code of each
such Pension Benefit Plan and each material amendment thereto has been issued by
the Internal Revenue Service (and nothing has occurred since the date of the
last such determination letter which resulted in, or is likely to result in the
revocation of such determination);
(e) Except as set forth on Schedule 3.12(e), all reports and disclosures
required by ERISA, the Code and any other applicable laws with respect to each
Welfare Benefit Plan, each Pension Benefit Plan and each Other Program have been
timely filed;
(f) Except as set forth on Schedule 3.12(f), on and after January 1, 1997,
neither MID-COAST nor any of its subsidiaries nor any plan fiduciary of any
Welfare Benefit Plan or Pension Benefit Plan has engaged in any transaction in
violation of Section 406 of ERISA (for which transaction no exemption exists
under Section 408 of ERISA) or in any "prohibited transaction" as defined in
Section 4975(c)(1) of the Code (for which no exemption exists under Section
4975(c)(2) or 4975(d) of the Code);
(g) Except as set forth on Schedule 3.12(g), neither MID-COAST nor any
corporation or other trade or business controlled by or under common control
with MID-COAST (as determined under Sections 414(b) and 414(c) of the Code)
("Common Control Entity") is, or has been within the past three years, a
contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Pension
Benefit Plan subject to the provisions of Title IV of ERISA, nor has MID-COAST
or any of its subsidiaries or a Common Control Entity maintained or participated
in any employee pension benefit plan (defined in Section 3(2) of ERISA) subject
to the provision of Title IV of ERISA. In addition, except as set forth on
Schedule 3.12(g), neither MID-COAST
10
nor any Common Control Entity (i) is a party to a collective bargaining
agreement, (ii) has maintained or contributed to, or has participated in or
agreed to participate in, a multiemployer plan (as defined in Section 3(37) of
ERISA), or (iii) has made a complete or partial withdrawal from a multiemployer
plan (as defined in Section 3(37) of ERISA) so as to incur withdrawal liability
as defined in Section 4201 of ERISA (without regard to subsequent reduction or
waiver of such liability under Section 4207 or 4208 of ERISA);
(h) True and complete copies of each Welfare Benefit Plan, each Pension
Benefit Plan and each Other Program, related trust agreements or insurance or
annuity contracts (or any other funding instruments), summary plan descriptions,
the most recent determination letter issued by the Internal Revenue Service with
respect to each Pension Benefit Plan, the most recent application for a
determination letter from the Internal Revenue Service with respect to each
Pension Benefit Plan, the Annual Reports on Form 5500 Series filed with any
governmental agency for each Welfare Benefit Plan, Pension Benefit Plan and
Other Program for the three most recent plan years, the Summary Annual Report
provided to participants with respect to each Welfare Benefit Plan, Pension
Benefit Plan, and Other Program for the three most recent plan years, and any
correspondence to or from the IRS, Department of Labor, or bank examiner with
respect to any Welfare Benefit Plan, Pension Benefit Plan, or Other Program
during the three most recent plan years, have been furnished or made available
to FVNB;
(i) All Welfare Benefit Plans, Pension Benefit Plans, and Other Programs
related trust agreements or insurance or annuity contracts (or any other funding
instruments), are legally valid and binding and in full force and effect and,
except as set forth on Schedule 3.12(i), there are no promised increases in
benefits (whether expressed, implied, oral or written) under any of these plans
nor any obligations, commitments or understandings to continue any of these
plans, (whether expressed, implied, oral or written) except as required by
Section 4980B of the Code and Sections 601-608 of ERISA or under the terms of
such plans; except as set forth on Schedule 3.12(i), MID-COAST or a Common
Control Entity has the right to modify, amend, or terminate each Welfare Benefit
Plan, Pension Benefit Plan, and Other Program at any time; except with respect
to full vesting under any Pension Benefit Plan, the termination of any Welfare
Benefit Plan, Pension Benefit Plan, or Other Program would not accelerate or
increase any benefits payable under such plan; and except as set forth on
Schedule 3.12(i), in the event of termination of any Welfare Benefit Plan,
Pension Benefit Plan, or Other Program, MID-COAST would not have any liability
with respect to such plan, other than the payment of benefits pursuant to such
plan;
(j) Except as set forth on Schedule 3.12(j), there are no claims pending
with respect to, or under, any Pension Benefit Plan, Welfare Benefit Plan or any
Other Program, other than routine claims for plan benefits, and there are no
disputes or litigation pending or, to the knowledge of MID-COAST, threatened
with respect to any such plans; neither MID-COAST nor any Common Control Entity
has any liability with respect to any Pension Benefit Plan under Section 412 of
the Code; and all contributions, premiums, or other payments due from MID-COAST
have been fully paid or adequately provided for and disclosed on the books and
financial statements of MID-COAST;
(k) Except as set forth on Schedule 3.12(k), no action has been taken, nor
has there been a failure to take any action that would subject any person or
entity to any liability for any income, excise or other tax or penalty in
connection with any Pension Benefit Plan, Welfare
11
Benefit Plan or any Other Program, other than for income taxes due with respect
to benefits paid; and
(l) Except as otherwise set forth in Schedule 3.12(l), or as a consequence
of Section 6.8 hereof, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) result in any
payment to be made by MID-COAST (including, without limitation, severance,
unemployment compensation, golden parachute (defined in Section 280G of the
Code), or otherwise) becoming due to any employee, director or consultant, or
(ii) increase any benefits otherwise payable under any Welfare Benefit Plan,
Pension Benefit Plan, or any Other Program.
SECTION 3.13 EMPLOYMENT MATTERS. Except as disclosed on Schedules 3.12(a),
3.12(b), 3.12(c) and 3.13, MID-COAST is not a party to (i) any oral or written
contracts, agreements, understandings or commitments, express or implied,
granting any material benefits or rights to any employee(s), (ii) any collective
bargaining agreement, or (iii) any conciliation agreement with the Department of
Labor, the Equal Employment Opportunity Commission or any federal, state or
local agency which requires equal employment opportunities or affirmative action
in employment. There are no unfair labor practice complaints pending against
MID-COAST (as to which MID-COAST has been notified in writing) before the
National Labor Relations Board and no similar claims pending before any similar
state, local or foreign agency as to which MID-COAST has been notified in
writing. To the knowledge of MID-COAST, there is no activity or proceeding of
any labor organization (or representative thereof) or employee group to organize
any employees of MID-COAST, nor of any strikes, slowdowns, work stoppages,
lockouts, or threats thereof, by or with respect to any such employees.
MID-COAST is in compliance in all material respects with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and MID-COAST is not engaged in any unfair labor
practice.
SECTION 3.14 LEASES, CONTRACTS AND AGREEMENTS. Schedules 3.12(a), 3.12(b),
3.12(c), 3.13 and 3.14 set forth an accurate and complete list of all leases,
subleases, licenses, contracts and agreements to which MID-COAST is a party or
by which MID-COAST is bound which obligate or may obligate MID-COAST for an
amount in excess of $25,000 over the entire term of any such agreement or
related contracts of a similar nature which in the aggregate obligate or may
obligate MID-COAST in the aggregate for an amount in excess of $25,000 over the
entire term of such related contracts (the "Contracts"). MID-COAST has delivered
or made available to FVNB true and correct copies of all Contracts. For the
purposes of this Agreement, the Contracts shall be deemed not to include loans
made by, repurchase agreements made by, spot foreign exchange transactions of,
bankers acceptances of, agreements with customers for trust services, or
deposits by MID-COAST, but does include unfunded loan commitments and letters of
credit issued by MID-COAST where the borrowers' potential total direct and
indirect indebtedness to MID-COAST is in excess of $50,000. Except as set forth
in Schedule 3.14, no participations or loans have been sold which have buy back,
recourse or guaranty provisions which create contingent or direct liabilities of
MID-COAST. All of the Contracts are legal, valid and binding obligations of the
parties to the Contracts enforceable in accordance with their terms, subject to
the effect of bankruptcy, insolvency, reorganization, moratorium, or other
similar laws relating to creditors' rights generally and to general equitable
principles, and are in full force and effect. Except as described in Schedule
3.14, all rent and other payments by MID-COAST under the Contracts are current,
there are no existing defaults by MID-COAST under the Contracts and no
termination, condition or other event has occurred which (whether with or
12
without notice, lapse of time or the happening or occurrence of any other event)
would constitute a default. MID-COAST has a good and valid leasehold interest in
each parcel of real property leased by it free and clear of all mortgages,
pledges, liens, encumbrances and security interests. Except for loan and deposit
accounts entered into with MID-COAST in the ordinary course of business or as
set forth on Schedule 3.14, MID-COAST is not a party to or bound by any
contract, agreement, commitment or understanding with any shareholder of
MID-COAST or any Affiliate of any such shareholder.
SECTION 3.15 RELATED COMPANY TRANSACTIONS. Except as set forth on
Schedules 3.11, 3.12(a), 3.12(b), 3.12(c), 3.13, 3.14 and 3.15, there are no
agreements, instruments, commitments, extensions of credit, tax sharing or
allocation agreements or other contractual agreements of any kind between or
among MID-COAST, whether on its own behalf or in its capacity as trustee or
custodian for the funds of any employee benefit plan (as defined in ERISA), and
any of its Affiliates (including, without limitation, any of its subsidiaries).
SECTION 3.16 COMPLIANCE WITH LAWS. Except as set forth on Schedule 3.16,
MID-COAST is not in material default in respect to nor is in material violation
of (i) any judgment, order, writ, injunction or decree of any court or (ii) any
statute, law, ordinance, rule, order or regulation of any governmental
department, commission, board, bureau, agency or instrumentality, federal, state
or local, including (for purposes of illustration and not limitation) the Bank
Secrecy Act, capital and FRB reserve requirements, capital ratios and loan
limitations of the TSLD. MID-COAST and each of its subsidiaries have all
permits, licenses, and franchises from governmental agencies required to conduct
their businesses as they are now being conducted.
SECTION 3.17 INSURANCE. MID-COAST has in effect the insurance coverage
(including fidelity bonds) described in Schedule 3.17 and has had similar
insurance in force for the last 5 years. Except as set forth on Schedule 3.17,
there have been no claims under such fidelity bonds within the last 5 years and
to the knowledge of MID-COAST no facts exist which would form the basis of a
claim under such bonds. MID-COAST has no reason to believe that the existing
fidelity coverage would not be renewed by its carrier on substantially the same
terms unless such failure to renew is based upon any pending claim.
SECTION 3.18 LOANS. Each loan, including, without limitation, each loan in
which MID-COAST holds a participation interest, reflected as an asset in the
Financial Statements or the books of MID-COAST (collectively, "Loans") is the
legal, valid and binding obligation of the obligor of each Loan, enforceable in
accordance with its terms, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium, or other similar laws relating to creditors' rights
generally and to general equitable principles; provided, however, that no
representation or warranty is made as to the collectability of such Loans. All
such Loans were made or purchased in the ordinary course of MID-COAST's
business, have been made in accordance with reasonable and prudent banking
practices, and priced similarly to all other similar Loans of MID-COAST.
MID-COAST owns each such Loan free and clear of all liens, claims and
encumbrances, except a Federal Home Loan Bank of ▇▇▇▇▇▇ ▇▇▇▇ on 1-4 family
residential mortgages. MID-COAST does not have in its portfolio any Loan
exceeding its legal lending limit. Schedule 3.18 sets forth, as of September 30,
1999, a list of all of the outstanding Loans of MID-COAST that were classified
as delinquent, substandard, doubtful, loss, nonperforming or problem Loans in
connection with the most recent examination of MID-COAST or were
13
considered to be so classified at September 30, 1999 under the policies and
procedures of MID-COAST.
SECTION 3.19 FIDUCIARY RESPONSIBILITIES. MID-COAST has performed in all
material respects all of its respective duties as a trustee, custodian, guardian
or as an escrow agent in a manner which complies in all material respects with
all applicable laws, regulations, orders, agreements, instruments and common law
standards.
SECTION 3.20 PATENTS, TRADEMARKS AND COPYRIGHTS. Except as set forth in
Schedule 3.20, MID-COAST does not require the use of any material patent, patent
application, invention, process, trademark (whether registered or unregistered),
trademark application, trade name, service ▇▇▇▇, copyright, or any material
trade secret for the business or operations of MID-COAST. MID-COAST owns or is
licensed or otherwise has the right to use the items listed in Schedule 3.20.
SECTION 3.21 ENVIRONMENTAL COMPLIANCE. To the knowledge of MID-COAST and
except as set forth in Schedule 3.21:
(a) MID-COAST and any property owned or operated by it is in material
compliance in all material respects with all applicable Environmental Laws (as
defined in Section 10.14(c)) and has obtained and is in compliance with all
permits, licenses and other authorizations (individually a "Permit," and
collectively, "Permits") required under any Environmental Law. There is no past
or present event, condition or circumstance that could reasonably be expected to
(1) interfere with the conduct of the business of MID-COAST in the manner now
conducted relating to such entity's material compliance with Environmental Laws,
(2) constitute a material violation of any Environmental Law or (3) have a
Material Adverse Effect upon MID-COAST;
(b) MID-COAST does not currently lease, operate, own, or exercise
managerial functions at nor has it formerly leased, operated, owned, or
exercised managerial functions at any facility or real property that is subject
to any actual or threatened proceeding under any Environmental Law;
(c) There are no proceedings pending or threatened against MID-COAST or
relating to any property owned by MID-COAST under any Environmental Law, or
relating to the release, threatened release, management, treatment, storage or
disposal of, or exposure to Polluting Substances (as defined in Section
10.14(d)), and MID-COAST has not received any notice (whether from any
regulatory body or private person) of any claim under, or violation, or
potential or threatened violation of, any Environmental Law;
(d) There is no Property for which MID-COAST is or was required to obtain
any Permit under an Environmental Law to construct, demolish, renovate, occupy,
operate, or use such Property or any portion of it;
(e) MID-COAST has not generated any Polluting Substances for which it was
required under an Environmental Law to execute any waste disposal manifest or
receipt;
14
(f) There has been no Release of Polluting Substances at or under any
Property in violation of any Environmental Laws or which would require any
remediation or report or notification to any governmental or regulatory
authority;
(g) There are no underground or above ground storage tanks on or under any
Property which are not in compliance with Environmental Laws and any Property
previously containing such tanks has been remediated for any releases in
compliance with all Environmental Laws;
(h) There is no asbestos containing material ("ACM") present in any
Controlled Property (as defined below) or any Collateral Property (as defined
below), except non-friable ACM which can be managed in place in compliance with
Environmental Laws without air monitoring, removal or incapacitation in which is
managed under and in compliance with an operations and maintenance program nor
has MID-COAST received any written notice with respect to the existence of
asbestos containing material in any property (real or personal) previously
owned, operated, leased or managed by it;
(i) For purposes of this Section 3.21 and Section 6.9, "Property" includes
(1) any property (whether real or personal) which MID-COAST leases, operates,
owns or manages in any manner including without limitation any property acquired
by foreclosure or deed in lieu thereof ("Controlled Property") and (2) property
now held as security for a loan or other indebtedness by MID-COAST ("Collateral
Property"). With respect to any Collateral Property, the representations of this
Section 3.21 shall be limited to the knowledge of MID-COAST.
SECTION 3.22 REGULATORY ACTIONS. Except as set forth on Schedule 3.22,
there are no actions or proceedings pending or, to the knowledge of MID-COAST,
threatened against MID-COAST by or before the TSLD, the Environmental Protection
Agency, the Texas Natural Resource Conservation Commission, or any other nation
or government, any state or political subdivision thereof, or any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government. Except as set forth on Schedule 3.22,
MID-COAST is not subject to a formal or informal agreement, memorandum of
understanding, enforcement action with or any type of financial assistance by
any regulatory authority having jurisdiction over such entity. MID-COAST has not
taken or agreed to take any action nor has knowledge of any fact or circumstance
that would materially impede or delay receipt of any required regulatory
approval. Except as set forth in Schedule 3.22, MID-COAST has not received or
been made aware of any complaints or inquiries under the Community Reinvestment
Act, the Fair Housing Act, the Equal Credit Opportunity Act or any other state
or federal anti-discrimination fair lending law and, to the knowledge of
MID-COAST, there is no fact or circumstance that would form the basis of any
such complaint or inquiry.
SECTION 3.23 TITLE TO PROPERTIES; ENCUMBRANCES. Except as set forth on
Schedule 3.23, MID-COAST has unencumbered, good, legal, and indefeasible title
to all its respective properties and assets, real and personal, including,
without limitation, all the properties and assets reflected in the Financial
Statements except for those properties and assets disposed of for fair market
value in the ordinary course of business and consistent with prudent banking
practice since the date of the Financial Statements. Except as set forth on
Schedule 3.23, MID-COAST has a title policy in full force and effect from a
title insurance company which, to the knowledge of MID-COAST, is solvent,
insuring good and indefeasible title (subject to the exceptions identified in
such title policies) to all real property owned by MID-COAST in favor of
MID-
15
COAST, whichever is applicable. MID-COAST has made available to FVNB all of the
files and information in the possession of MID-COAST concerning such properties,
including any title exceptions which might affect indefeasible title or value of
such property. MID-COAST holds good and legal title or good and valid leasehold
rights to all assets that are necessary for it to conduct its business as it is
currently being conducted. Except as set forth on Schedule 3.23, MID-COAST owns
all furniture, equipment, art and other property used to transact business
presently located on its premises except for items of personal property owned by
employees.
SECTION 3.24 FAIRNESS OPINION AND BROKER'S OR FINDER'S FEES. MID-COAST has
received an opinion from an investment banker or bank consulting firm to the
effect that the Merger Consideration is fair to the shareholders of MID-COAST
from a financial point of view. No agent, broker, person or firm acting on
behalf of MID-COAST or any of its shareholders is, or will be, entitled to any
commission or broker's or finder's fees from any of the parties hereto, or from
any Affiliate of any of the parties hereto, in connection with any of the
transactions contemplated by this Agreement.
SECTION 3.25 YEAR 2000 COMPLIANCE. Except as set forth on Schedule 3.25,
each material item of software, hardware, firmware, third-party software, goods
with computer chips and services (a) provided by MID-COAST during the last four
(4) years to any customer or any other party or (b) used by MID-COAST in its
business, is and shall remain in compliance with the regulations of the TSLD and
FDIC regarding Year 2000 Compliance, as applicable, and will be Year 2000
Compliant, as that term is hereinafter defined, prior to and through the year
2000. For purposes of this Agreement, "Year 2000 Compliant" means that the item:
(a) functions without interruption or human intervention with four-digit
year processing on all data, input, or output which includes an indication of
date (collectively, "Date Data"), including errors or interruptions from
functions which may involve Date Data from more than one century, leap years, or
the date September 9, 1999, regardless of the date of processing or date of Date
Data;
(b) provides results from any operation accurately reflecting any Date
Data used in the operation performed, with output in any form, except graphics,
having four digit years; and
(c) accepts two digit year Date Data in a manner that resolves any
ambiguities as to century in a defined manner.
Except as set forth on Schedule 3.25, each of MID-COAST's vendors has ensured
that each material item of software, hardware, firmware, third-party software,
goods with computer chips, and services (a) provided by such vendor during the
last four (4) years to MID-COAST or by any such vendor on behalf of MID-COAST to
any of its respective customers or any other party or (b) used by such vendor in
its business, will be Year 2000 Compliant prior to and through the year 2000.
MID-COAST has followed the procedures set forth in, and has taken and will
continue to take all actions required by FFIEC Safety and Soundness Guidelines
Concerning the Year 2000 Business Risk (the "Year 2000 Guidelines") to ensure
that all computer software owned by or licensed to MID-COAST is fully compliant
with the Year 2000 Guidelines. MID-COAST has not received a regulatory rating of
less than satisfactory from any regulatory authority with respect to any review
of its compliance with the Year 2000 Guidelines or the adequacy of its Year 2000
planning efforts.
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SECTION 3.26 REPRESENTATIONS NOT MISLEADING. No representation or warranty
by MID-COAST in this Agreement, nor any certificate or schedule furnished to
FVNB or Interim Bank by MID-COAST under or pursuant to this Agreement, contains
or will contain, when taken as a whole, any untrue statement of a material fact
or omit to state a material fact necessary to make the statements contained
herein or therein, in light of the circumstances in which they were made, not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FVNB
AND FVNB CORP.
FVNB and FVNB Corp., respectively, hereby make the representations and
warranties set forth in this Article IV to MID-COAST.
SECTION 4.1 ORGANIZATION AND AUTHORITY. FVNB is a national banking
association duly organized, validly existing, and in good standing under the
laws of the United States, and has all requisite corporate power and authority
to conduct its business as now conducted, to own, lease and operate its
properties and assets as now owned, leased or operated and to enter into and
carry out its obligations under this Agreement.
SECTION 4.2 AUTHORITY RELATIVE TO AGREEMENT. FVNB has full corporate power
and authority, and, except for the approvals of the appropriate regulatory
authorities, no further proceedings on the part of FVNB are necessary to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby, all of which have been duly and validly authorized by FVNB's Board of
Directors. This Agreement has been duly executed and delivered by FVNB and is a
duly authorized, valid, legally binding and enforceable obligation of FVNB,
subject to the effect of bankruptcy, insolvency, reorganization, moratorium, or
other similar laws relating to creditors' rights generally and general equitable
principles, and such approval of regulatory agencies and other governmental
authorities having authority over FVNB as may be required by statute or
regulation. FVNB is not in violation of or default under its Articles of
Association or Bylaws or any agreement, document or instrument under which FVNB
is obligated or bound, or any law, order, judgment, injunction, award, decree,
statute, rule, ordinance or regulation applicable to FVNB or any of its
subsidiaries, the violation or breach of which could have a Material Adverse
Effect on FVNB and its subsidiaries taken as a whole. Except as set forth on
Schedule 4.2, neither the execution, delivery nor performance of this Agreement
in its entirety, nor the consummation of all the transactions contemplated
hereby, following the receipt of such approvals as may be required from the
TSLD, FDIC, the FRB, and the OCC, will (i) violate (with or without the giving
of notice or passage of time), any law, order, writ, judgment, injunction,
award, decree, rule, statute, ordinance or regulation applicable to FVNB or (ii)
be in conflict with, result in a breach or termination of any provision of,
cause the acceleration of the maturity of any debt or obligation pursuant to,
constitute a default (or give rise to any right of termination, cancellation or
acceleration) under, or result in the creation of any security interest, lien,
charge or other encumbrance upon any property or assets of FVNB or any of its
subsidiaries pursuant to, any terms, conditions or provisions of any note,
license, instrument, indenture, mortgage, deed of trust or other agreement or
understanding or any other restriction of any kind or character, to which FVNB
or any of its subsidiaries is a party or by which any of their assets or
properties are subject or bound. Except as set forth on Schedule 4.2, there are
no proceedings pending or, to the knowledge of FVNB, threatened, against FVNB,
at
17
law or in equity or before any foreign, federal, state, municipal or other
governmental court, department, commission, board, bureau, agency,
instrumentality or other person which would prevent or delay the consummation of
the transaction contemplated hereby. Except as set forth in Schedule 4.2, or as
contemplated hereby, the corporate existence, business, organization, assets,
licenses, permits, authorizations and contracts of FVNB will not be terminated
or impaired by reason of the execution, delivery or performance by FVNB of this
Agreement or consummation by FVNB of the transactions contemplated hereby,
assuming receipt of the required regulatory approvals.
SECTION 4.3 CONSENTS AND APPROVALS. FVNB's Board of Directors (at a
meeting called and duly held or by unanimous written consent) has approved this
Agreement. No prior consent, approval or authorization of, or declaration,
filing or registration with any person, domestic or foreign, is required of or
by FVNB in connection with the execution, delivery and performance by FVNB of
this Agreement and the transactions contemplated hereby or the resulting change
in control of MID-COAST, except such approvals as may be required from the sole
shareholder of FVNB, the FRB, the TSLD, the FDIC, and the OCC.
SECTION 4.4 REPRESENTATIONS NOT MISLEADING. No representation or warranty
by FVNB in this Agreement, nor any certificate, schedule or other information
furnished to MID-COAST by FVNB or any of its subsidiaries under or pursuant to
this Agreement, contains or will contain, when taken as a whole, any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements contained herein or therein, in light of the circumstances in
which they were made, not misleading.
SECTION 4.5 ORGANIZATION OF FVNB CORP. FVNB Corp. is a corporation duly
organized and validly existing under the laws of the State of Texas.
SECTION 4.6 INTERIM BANK REPRESENTATION BY FVNB CORP. Immediately prior to
the Closing, Interim Bank will be a bank duly organized, validly existing, duly
qualified to do business and in good standing under the laws of its jurisdiction
of incorporation and will have corporate power and authority to carry on its
business. As of the Effective Time, the execution, delivery and performance by
Interim Bank of the Agreement and Plan of Merger will have been duly authorized
by the Board of Directors and shareholders of Interim Bank and the Agreement and
Plan of Merger will be a valid and binding obligation of Interim Bank
enforceable against Interim Bank in accordance with its terms.
ARTICLE V
COVENANTS OF MID-COAST
SECTION 5.1 AFFIRMATIVE COVENANTS OF MID-COAST. For so long as this
Agreement is in effect, MID-COAST shall use its commercially reasonable efforts
to, from the date of this Agreement to the Closing, except as specifically
contemplated by this Agreement:
(a) operate and conduct the businesses of MID-COAST in the ordinary course
of business and consistent with prudent banking practices;
(b) preserve intact the corporate existence, business organization,
assets, licenses, permits, authorizations, and business opportunities of
MID-COAST;
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(c) comply with all material contractual obligations applicable to the
operations of MID-COAST;
(d) maintain in a manner consistent with past practices all of the
properties of MID-COAST in good repair, order and condition, reasonable wear and
tear excepted, and maintain the insurance coverages described in Schedule 3.17
(which shall list all Property insured by such coverages) or obtain comparable
insurance coverages from reputable insurers which, in respect to amounts, types
and risks insured, are adequate for the business conducted by MID-COAST and
consistent with the existing insurance coverages;
(e) in good faith and in a timely manner (i) cooperate with FVNB and
Interim Bank in satisfying the conditions in this Agreement, (ii) assist FVNB
and Interim Bank in obtaining as promptly as possible all consents, approvals,
authorizations and rulings, whether regulatory, corporate or otherwise, as are
necessary for FVNB and Interim Bank and MID-COAST (or any of them) to carry out
and consummate the transactions contemplated by this Agreement, including all
consents, approvals and authorizations required by any agreement or
understanding existing at the Closing between MID-COAST and any governmental
agency or other third party, (iii) furnish information concerning MID-COAST not
previously provided to FVNB required for inclusion in any filings or
applications that may be necessary in that regard and (iv) perform all acts and
execute and deliver all documents reasonably necessary to cause the transactions
contemplated by this Agreement to be consummated in the manner contemplated
hereby;
(f) timely file with the TSLD, the FDIC and all other appropriate
regulatory authorities, all financial statements and other reports required to
be so filed by MID-COAST and to the extent permitted by applicable law, promptly
thereafter deliver to FVNB copies of all financial statements and other reports
required to be so filed;
(g) comply in all material respects with all applicable laws and
regulations, domestic and foreign;
(h) promptly notify FVNB upon gaining knowledge, of any material default,
material event of default or condition which with the passage of time or giving
of notice would constitute a material default or a material event of default
under any MID-COAST document evidencing a Loan (a "MID-COAST Loan Document") and
promptly notify and provide copies to FVNB of any material written
communications concerning any MID-COAST Loan Document and for the purpose of
this section a material default or a material event of default shall mean any
default or event of default which either with or without the passage of time
would adversely affect (i) the quality of collateral of any Loan, (ii) the
ability of any borrower to repay any sums due and owing in connection with Loan
and/or (iii) the ability of any party to a Loan Document to perform and/or
achieve any financial, state and/or federal law compliance covenant under said
Loan Document.
(i) between the date of this Agreement and Closing, promptly give written
notice to FVNB upon gaining knowledge of any event or fact that would cause any
of the representations or warranties of MID-COAST contained in or referred to in
this Agreement to be untrue or misleading in any material respect;
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(j) deliver to FVNB a list (Schedule 5.1(j)), dated as of the Effective
Time, showing (i) the name of each bank or institution where MID-COAST has
accounts or safe deposit boxes, (ii) the name(s) in which such accounts or boxes
are held and (iii) the name of each person authorized to draw thereon or have
access thereto;
(k) deliver to FVNB a list (Schedule 5.1(k)), dated as of the Effective
Time, showing all liabilities and obligations of MID-COAST in excess of $25,000,
except those arising in the ordinary course of its business, incurred since the
Balance Sheet Date, certified by an officer of MID-COAST;
(l) promptly notify FVNB upon gaining knowledge of any material change or
inaccuracies in any data previously given or made available to FVNB or Interim
Bank pursuant to this Agreement;
(m) provide access, to the extent that MID-COAST has the right to provide
access, to any or all Property (as defined in Section 3.21) so as to enable FVNB
to physically inspect any structure or components of any structure on such
Property, including without limitation surface and subsurface testing and
analyses provided that FVNB shall be obligated to provide MID-COAST copies of
any reports of such inspections; and
(n) sell substantially all of the portfolio of subprime mortgage loans of
MID-COAST for cash in an amount equal to or exceeding the value of the subprime
mortgage loans on the books of MID-COAST as of December 31, 1999; and
Notwithstanding the foregoing, nothing contained in this Section 5.1 shall
be deemed to require MID-COAST to pay any amounts to any of their respective
employees, other than such employees' usual and ordinary compensation, to induce
such employees to remain employees of MID-COAST, as the case may be, pending the
Closing; provided, further, however, that MID-COAST shall cooperate with FVNB in
determining and making any such special payments to such employees as FVNB may
consent in writing.
SECTION 5.2 NEGATIVE COVENANTS OF MID-COAST. Except with the prior written
consent of FVNB or as otherwise specifically permitted by this Agreement,
MID-COAST shall not from the date of this Agreement to the Closing:
(a) make any amendment to its articles of incorporation or bylaws;
(b) make any change in the methods used in allocating and charging costs,
except as may be required by applicable law, regulation or GAAP and after notice
to FVNB;
(c) make any change in the number of shares of the capital stock issued
and outstanding, or issue, reserve for issuance, grant, sell or authorize the
issuance of any shares of its capital stock or subscriptions, options, warrants,
calls, rights or commitments of any kind relating to the issuance or sale of or
conversion into shares of its capital stock;
(d) contract to create any obligation or liability (absolute, accrued,
contingent or otherwise) except in the ordinary course of business and
consistent with prudent banking practices;
20
(e) contract to create any mortgage, pledge, lien, security interest or
encumbrances, restrictions, or charge of any kind upon the assets of MID-COAST
(other than statutory liens for which the obligations secured thereby shall not
become delinquent), except in the ordinary course of business and consistent
with prudent banking practices;
(f) cancel any debts, waive any claims or rights of value or sell,
transfer, or otherwise dispose of any of its material properties or assets,
except in the ordinary course of business and consistent with prudent banking
practices;
(g) sell any real estate owned as of the date of this Agreement or
acquired thereafter, which real estate qualifies as "other real estate owned"
under accounting principles applicable to it, except in the ordinary course of
business and consistent with prudent banking practices and applicable banking
laws and regulations;
(h) dispose of or permit to lapse any rights to the use of any material
trademark, service ▇▇▇▇, trade name or copyright, or dispose of or disclose to
any person other than its employees any material trade secret not theretofore a
matter of public knowledge;
(i) grant any increase in compensation or directors' fees, or pay or agree
to pay or accrue any bonus or like benefit to or for the credit of any director,
officer, employee or other person (other than customary annual compensation
adjustments and established incentive compensation payments in accordance with
past practices, and immaterial customary severance payments not to exceed
$25,000 in the aggregate, to employees) or enter into any employment, consulting
or severance agreement or other agreement with any director, officer or
employee, or adopt, amend or terminate any Employee Benefit Plan, Welfare
Benefit Plan, Pension Benefit Plan or other Program or change or modify the
period of vesting or retirement age for any participant of such a plan;
(j) declare, pay or set aside for payment any dividend or other
distribution or payment in respect of shares of its capital stock, except for
the regular quarterly cash dividend of MID-COAST of one dollar per share;
(k) except through settlement of indebtedness, foreclosure, acquisition in
lieu of foreclosure, the exercise of creditors' remedies or in a fiduciary
capacity, acquire the capital stock or other equity securities or interest of
any person;
(l) make any capital expenditure or a series of expenditures of a similar
nature in excess of $25,000 in the aggregate;
(m) except with the consent of FVNB, make any income tax or franchise tax
election or settle or compromise any federal, state, local or foreign income tax
or franchise tax liability, or, except in the ordinary course of business
consistent with prudent banking practices, make any other tax election or settle
or compromise any other federal, state, local or foreign tax liability;
(n) except for negotiations and discussions between the parties hereto
relating to the transactions contemplated by this Agreement or as otherwise
permitted hereunder, enter into any transaction, or enter into, modify or amend
any contract or commitment by which any such transaction, contract, or
commitment would obligate MID-COAST in an amount which would
21
exceed $50,000 alone or in the aggregate other than in the ordinary course of
business and consistent with prudent banking practices;
(o) except as contemplated by this Agreement, adopt a plan of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization, or other reorganization or business combination of MID-COAST;
(p) issue any certificates of deposit except in the ordinary course of
business and in accordance with prudent banking practices;
(q) make any investments except in the ordinary course of business and in
accordance with prudent banking practices;
(r) modify, amend, waive or extend any MID-COAST Loan Documents or any
rights under such agreements, except in the ordinary course of business and in
accordance with prudent banking practices;
(s) modify any outstanding loan, make any new loan, or acquire any loan
participation, unless such modification, new loan, or participation is made in
the ordinary course of business and in accordance with prudent banking
practices;
(t) sell or contract to sell any part of the premises or other material
assets of MID-COAST;
(u) change any fiscal year or the length thereof;
(v) prepay in whole or in part any MID-COAST indebtedness, except as
otherwise specifically contemplated hereby;
(w) enter into any agreement, understanding or commitment, written or
oral, with any other person which is in any manner inconsistent with the
obligations of MID-COAST under this Agreement or any related written agreement;
or
(x) materially alter the size or composition of the deposit base,
securities portfolio, loan portfolio or asset mix of MID-COAST, except in the
ordinary course of business or as contemplated herein, without the prior written
consent of FVNB.
Nothing contained in this Section 5.2 or in Section 5.1 is intended to influence
the general management or overall operations of MID-COAST in a manner not
permitted by applicable law and the provisions thereof shall automatically be
reduced in compliance therewith.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 ACCESS TO, AND INFORMATION CONCERNING, PROPERTIES AND RECORDS.
(a) During the pendency of the transactions contemplated hereby, MID-COAST
shall, to the extent permitted by law, give FVNB, its legal counsel, accountants
and other representatives full access, during normal business hours, throughout
the period prior to the Closing, to all of MID-
22
COAST's properties, books, contracts, commitments and records, permit FVNB to
make such inspections (including without limitation physical inspection of the
surface and subsurface of any property thereof and any structure thereon) as
FVNB may require and furnish to FVNB during such period all such information
concerning MID-COAST and its affairs as FVNB may reasonably request. FVNB and
its respective affiliates, subsidiaries, officers, employees, directors and
agents shall not disclose, or make available, to any third party or use for any
purpose other than the transactions contemplated hereby any confidential
information provided, or made available, pursuant to the terms of this Agreement
relating to the financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of MID-COAST; PROVIDED,
HOWEVER, that the restrictions of this sentence shall not apply (i) as may
otherwise be required by law, or (ii) to the extent such information is
generally available to the public other than as a result of a disclosure by or
through the receiving party. In the event this Agreement is terminated pursuant
to the provisions of Article VIII, upon the written request of MID-COAST, FVNB
agrees to destroy or return to MID-COAST all copies of such confidential
information.
(b) FVNB acknowledges to MID-COAST that MID-COAST has, prior to the date
hereof, cooperated in providing FVNB access to the books and records of
MID-COAST and its subsidiaries and has been afforded by MID-COAST the
opportunity to conduct due diligence; however, the foregoing acknowledgment does
not negate, void or modify the representations, warranties, or obligations of
MID-COAST under this Agreement, including without limitation the obligation to
continue to provide access as provided by subsection (a) above.
SECTION 6.2 FILING OF REGULATORY APPROVALS. As soon as practicable after
execution of this Agreement, MID-COAST shall file all notices and applications
to the TSLD and FVNB shall file all notices and applications to the FRB, the
TSLD, the FDIC and the OCC which MID-COAST and FVNB, respectively, deem
necessary or appropriate to complete the transactions contemplated herein,
including, without limitation, each of the Mergers. FVNB will deliver to
MID-COAST, and MID-COAST will deliver to FVNB, copies of all non-confidential
portions of any such applications. MID-COAST shall cooperate, and shall cause
each subsidiary of MID-COAST and their respective directors, officers, employees
and representatives to cooperate with FVNB in connection with such notices and
applications.
SECTION 6.3 MISCELLANEOUS AGREEMENTS AND CONSENTS. Subject to the terms
and conditions of this Agreement, FVNB and MID-COAST agree to use all reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper, or advisable under applicable laws and
regulations to consummate and make effective, as soon as practicable after the
date hereof, the transactions contemplated by this Agreement. Subject to the
terms and conditions of this Agreement, FVNB and MID-COAST shall use their
respective commercially reasonable efforts to obtain or cause to be obtained
consents of all third parties and governmental and regulatory authorities
necessary or desirable for the consummation of the transactions contemplated
herein.
SECTION 6.4 MID-COAST INDEBTEDNESS. Prior to the Effective Time, MID-COAST
shall pay all regularly scheduled payments on all MID-COAST indebtedness,
including all amounts owed by MID-COAST other than amounts owed in connection
with deposit arrangements of MID-COAST which constitute "deposits" for purposes
of the Federal Deposit Insurance Act, 12 U.S.C. ss.1813 ("MID-COAST
Indebtedness") and shall cooperate with FVNB in taking such actions as are
reasonably appropriate or necessary in connection with the redemption,
prepayment, modification, satisfaction or elimination of any outstanding
23
indebtedness of MID-COAST with respect to which a consent is required to be
obtained to effectuate the Merger and the transactions contemplated by this
Agreement and has not been so obtained. MID-COAST represents, warrants and
agrees that Schedule 6.4 sets forth an accurate and complete listing of all
MID-COAST Indebtedness.
SECTION 6.5 GOOD FAITH EFFORTS. All parties hereto agree that the parties
will use their good faith efforts to secure all regulatory approvals necessary
to consummate the Mergers and other transactions provided herein and to satisfy
the other conditions to Closing contained herein.
SECTION 6.6 EXCLUSIVITY. Prior to the termination of this Agreement in
accordance with the provisions hereof, neither MID-COAST nor any of its
shareholders, directors, officers, employees, agents or representatives shall
solicit, entertain or negotiate with respect to any offer to acquire MID-COAST,
or any of the material assets thereof, from any other person. During the term of
this Agreement, none of MID-COAST, or any of its respective shareholders,
directors, officers, employees, agents or representatives shall provide
information to any other person in connection with a possible acquisition of
MID-COAST, or any of the material assets thereof (an "Acquisition Proposal").
Immediately upon receipt of any such unsolicited offer, MID-COAST shall
communicate to FVNB the terms of any proposal or request for information and the
identity of parties involved.
SECTION 6.7 PUBLIC ANNOUNCEMENT. Subject to written advice of counsel with
respect to legal requirements relating to public disclosure of matters related
to the subject matter of this Agreement, the timing and content of any
announcements, press releases or other public statements concerning the proposal
contained herein will occur upon, and be determined by, the mutual consent of
MID-COAST and FVNB.
SECTION 6.8 TREATMENT OF EMPLOYEE BENEFIT PLANS. All benefit plans of
MID-COAST shall be terminated by MID-COAST prior to the consummation of the
Merger. FVNB agrees that the employees of MID-COAST will be entitled to
participate in all the employee benefit plans maintained by FVNB for its
employees, in accordance with their respective terms; provided, however,
employees of MID-COAST will receive credit for the term of their employment with
MID-COAST with respect to eligibility and vesting matters only but not with
respect to contribution or allocation of benefits or any other matters.
Notwithstanding the foregoing, nothing herein shall be construed to limit or
prohibit the ability of FVNB or any of its affiliates or subsidiaries to amend,
modify or terminate any of such employee benefit plans after the Effective Time.
SECTION 6.9 ENVIRONMENTAL INVESTIGATION; RIGHT TO TERMINATE AGREEMENT. (a)
MID-COAST shall obtain Phase I environmental assessments for each owned bank
facility and each non-residential OREO property as soon as reasonably possible
after the execution of this Agreement. MID-COAST shall provide FVNB a copy of
the Phase I written report upon receipt of the written report by MID-COAST.
MID-COAST shall obtain as soon as reasonably possible Phase II environmental
assessments for properties identified by FVNB on the basis of the results of
Phase I environmental assessments. MID-COAST shall provide FVNB a copy of the
Phase II written report upon receipt of the written report by MID-COAST. As soon
as possible after the execution of this Agreement, MID-COAST shall obtain a
survey and assessment of all potential asbestos containing material in owned or
leased properties (other than OREO property) and the
24
written report of the results shall be delivered to FVNB upon receipt of the
written report by MID-COAST.
(b) FVNB shall have the right to terminate this Agreement if the
Environmental Inspection, secondary investigation or other environmental survey
identifies any past or present violations or potential violations of
Environmental Laws or any event, condition or circumstance that, based on the
estimates of the environmental professionals referred to in this Section 6.9,
may currently or in the future require or result in expenditures in connection
with (1) fines, penalties or other damages, (2) investigation, remediation or
monitoring of any Controlled Property (including without limitation eventual
removal of asbestos-containing material), (3) preparing and obtaining approval
by the appropriate Environmental Regulatory Authority of remediation plans with
respect to Controlled Properties, or (4) any violations of applicable
Environmental Laws, which expenditures individually or in the aggregate may
exceed $25,000; provided, however, that to the extent such expenditures are
expected to be in excess of $25,000, MID-COAST may elect to pay or agree to pay
such excess expenditures, in which event (a) FVNB shall not have the right to
terminate this Agreement pursuant to this paragraph (b) as a result of such
expected expenditures being in excess of $25,000, and (b) the Merger
Consideration to be paid to the holders of the Shares pursuant to Article I
hereof shall be reduced by the amount by which such expected expenditures exceed
$25,000;
(c) MID-COAST agrees to make available to FVNB and its consultants, agents
and representatives all documents and other material relating to environmental
conditions of the Property including, without limitation, the results of all
other environmental inspections and surveys. MID-COAST also agrees that all
engineers and consultants who prepared or furnished such reports may discuss
such reports and information with FVNB and shall be entitled to certify the same
in favor of FVNB and its consultants, agents and representatives in such a
manner which will entitle FVNB to rely upon such reports and make all other data
available to FVNB and its consultants, agents and representatives. FVNB shall
keep confidential the reports, surveys and results relating to and of the
Environmental Inspections, unless otherwise required by law. In the event this
Agreement is terminated for any reason, FVNB shall repair and restore any and
all damage to any Property, and shall indemnify, defend and hold harmless
MID-COAST and its officers, directors, employees, shareholders, agents and
representatives from any and all claims, losses, or liabilities for any damage
to property or injury to persons, arising from or in connection with any
inspection conducted pursuant to Sections 5.1(m) or 6.9(a) hereof.
SECTION 6.10 PROXY STATEMENT. As soon as practicable after the execution
of this Agreement, MID-COAST shall prepare and mail to its shareholders a proxy
or information statement (the "Proxy Statement") relating to a meeting of the
shareholders of MID-COAST called for the purpose of approving the Merger. FVNB
shall furnish all information concerning FVNB as MID-COAST may reasonably
request in connection with the preparation of the Proxy Statement. MID-COAST
shall give FVNB and its counsel the opportunity to review and comment on the
Proxy Statement and each document to be incorporated by reference therein prior
to its dissemination.
(b) Unless otherwise required pursuant to the applicable fiduciary duties
of MID-COAST's Board (as determined in good faith by MID-COAST's Board based
upon the advice of its outside counsel), no material amendment or supplement to
the Proxy Statement will be made by MID-COAST without the approval of FVNB,
which approval shall not be unreasonably withheld.
25
(c) The information supplied by MID-COAST for inclusion in the Proxy
Statement shall not, at (i) the time the Proxy Statement (or any amendment
thereof or supplement thereto) is first mailed to the shareholders of MID-COAST
and (ii) the time of the meeting of the shareholders of MID-COAST contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein not
misleading.
(d) The information supplied or to be supplied by FVNB for inclusion in
the Proxy Statement will not, at the time it is supplied to MID-COAST, contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein not misleading.
SECTION 6.11 RESERVES. Immediately prior to the Closing, MID-COAST shall
establish such additional accruals and reserves as may be necessary to conform
MID-COAST's accounting and loan loss reserve practices and methods of those of
FVNB.
SECTION 6.12 TITLE INSURANCE. MID-COAST shall obtain, at its sole expense,
commitments for title insurance and boundary surveys for each owned bank
facility which shall be delivered to FVNB no later than four (4) weeks from the
date of this Agreement.
SECTION 6.13 YEAR 2000. MID-COAST will cooperate with FVNB to assess the
impact of the transactions contemplated by this Agreement on MID-COAST's
continued compliance with the regulatory requirements regarding Year 2000
preparedness applicable to MID-COAST and MID-COAST will take such action, on
consultation with FVNB, as may be necessary to amend the MID-COAST Year 2000
project assessment and remediation plan.
SECTION 6.14 NOTIFICATION. MID-COAST shall give prompt notice to FVNB, and
FVNB shall give prompt notice to MID-COAST, of (i) any representation or
warranty made by it in this Agreement becoming untrue or inaccurate in any
material respect or (ii) the failure by it to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
SECTION 6.15 DIRECTOR AND OFFICER INDEMNIFICATION. (a) FVNB agrees that
all rights to indemnification that the directors and officers of MID-COAST have
pursuant to the Articles of Incorporation and Bylaws of MID-COAST as of the date
of this Agreement shall survive the Merger and shall continue in full force and
effect. Nothing contained in this Section 6.15 shall require FVNB to indemnify
any person who was a director or officer of MID-COAST to a greater extent then
MID-COAST is as of the date of this Agreement, required to indemnify any such
person. The indemnification provisions contained in the Amended and Restated
Articles of Incorporation dated April 27, 1995 and the Amended and Restated
Bylaws dated June 22, 1995 of MID-COAST are in effect as of the date of this
Agreement and shall not be amended by MID-COAST after the date hereof.
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ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of MID-COAST, FVNB and Interim Bank to effect the
Merger are subject to the satisfaction or waiver of the following conditions
prior to the Effective Time:
(a) the receipt of all required regulatory approvals in connection with
each of the Mergers, which approvals shall not have imposed any condition or
requirement which in the reasonable judgment of the party or parties affected by
such condition or requirement would adversely impact in a material respect the
economic or business benefits to such party of the transactions contemplated by
this Agreement or otherwise would in the reasonable judgment of such party be so
burdensome as to render reasonably inadvisable the consummation of the Mergers,
or any of them, and the expiration of any applicable waiting periods with
respect thereto;
(b) the Closing will not violate any injunction, order or decree of any
court or governmental body having competent jurisdiction; and
(c) the holders of at least a majority of the shares of issued and
outstanding capital stock of MID-COAST shall have authorized and approved the
Merger and this Agreement and MID-COAST shall have delivered evidence of same to
FVNB in form and substance reasonably satisfactory to FVNB.
SECTION 7.2 CONDITIONS TO THE OBLIGATIONS OF FVNB AND INTERIM BANK TO
EFFECT THE MERGER. The obligations of FVNB and Interim Bank to effect the Merger
are subject to the satisfaction or waiver in writing of the following conditions
prior to the Effective Time:
(a) all representations and warranties of MID-COAST shall be true and
correct in all material respects (except for representations and warranties
qualified by materiality or "Material Adverse Effect", which shall be true and
correct in all respects) as of the date hereof and at and as of the Closing,
except for representations and warranties made as of a specific date which shall
be true and correct as of such date, with the same force and effect as though
made on and as of the Closing;
(b) MID-COAST shall have performed in all material respects all
obligations and agreements and in all material respects complied with all
covenants and conditions, contained in this Agreement to be performed or
complied with by it prior to the Effective Time;
(c) there shall not have occurred a Material Adverse Effect with respect
to MID-COAST;
(d) FVNB shall have received the opinions of counsel to MID-COAST
reasonably acceptable to FVNB as to the matters set forth on Exhibit B attached
hereto;
(e) the number of shareholders of MID-COAST exercising their dissenters
rights shall not have exceeded five percent (5%) of the total issued and
outstanding shares (as of the Effective Time) of MID-COAST Common Stock; and
27
(f) FVNB shall have received certificates dated the date of the Closing
executed by the President of MID-COAST, certifying in such reasonable detail as
FVNB may reasonably request, to the effect described in Sections 7.2(a), (b),
(c) and (e) and Section 7.1(c).
SECTION 7.3 CONDITIONS TO THE OBLIGATIONS OF MID-COAST TO EFFECT THE
MERGER. The obligations of MID-COAST to effect the Merger are subject to the
satisfaction or waiver of the following conditions prior to the Effective Time:
(a) all representations and warranties of FVNB shall be true and correct
in all material respects as of the date hereof and at and as of the Closing,
with the same force and effect as though made on and as of the Closing;
(b) FVNB and Interim Bank shall have performed in all material respects
all obligations and agreements and in all material respects complied with all
covenants and conditions contained in this Agreement to be performed or complied
with by either of them prior to the Effective Time;
(c) there shall not have occurred a Material Adverse Effect with respect
to FVNB or any of its subsidiaries which prevents the payment of the Merger
Consideration.
(d) MID-COAST shall have received the opinions of counsel to FVNB
reasonably acceptable to MID-COAST as to the matters set forth on Exhibit D
attached hereto; and
(e) MID-COAST shall have received certificates dated the date of the
Closing, executed by appropriate officers of FVNB and Interim Bank,
respectively, certifying, in such detail as MID-COAST may reasonably request, to
the effect described in Sections 7.3(a) and (b).
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER; NON-COMPETITION
SECTION 8.1 TERMINATION. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time notwithstanding approval
thereof by the shareholders of MID-COAST, but prior to the Effective Time:
(a) by mutual written consent duly authorized by the Boards of Directors
of FVNB and MID-COAST;
(b) by FVNB (i) if FVNB learns or becomes aware of a state of facts or
breach or inaccuracy of any representation or warranty of MID-COAST contained in
Article III which constitutes a Material Adverse Effect, (ii) pursuant to
Section 6.9, (iii) if any of the conditions to Closing contained in Section 7.1
or 7.2 are not satisfied or waived in writing by FVNB, (iv) if the Board of
Directors of MID-COAST shall have withdrawn or modified in any manner its
approval or recommendation of this Agreement, or shall have resolved to do the
same (including without limitation, the execution of an agreement for the
disposition or merger, or sale of any of the material assets, of MID-COAST); (v)
if there shall have been a breach of Section 6.6; or (vi) if the holders of more
than 5% of the issued and outstanding Common Stock of MID-COAST exercise their
dissenters' rights of appraisal;
28
(c) by MID-COAST (i) if MID-COAST learns or becomes aware of a state of
facts or breach or inaccuracy of any representation or warranty of FVNB
contained in Article IV which constitutes a Material Adverse Effect, (ii) if the
conditions to Closing contained in Section 7.1 or 7.3 are not satisfied or
waived in writing by MID-COAST; or (iii) if the Board of Directors of FVNB shall
have withdrawn or modified in any manner its approval or recommendation of this
Agreement, or shall have resolved to do the same;
(d) by FVNB or MID-COAST if the Effective Time shall not have occurred on
or before June 25, 2000, or such later date agreed to in writing by FVNB and
MID-COAST;
(e) by FVNB or MID-COAST if any court of competent jurisdiction in the
United States or other United States (federal or state) governmental body shall
have issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger and such order, decree, ruling or
other action shall have been final and nonappealable;
(f) by FVNB or MID-COAST if any regulatory authority whose consent is
required to consummate the Merger denies an application filed in connection with
the Merger, which denial is final and binding without any rights of appeal with
respect thereto.
SECTION 8.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 8.1 hereof, this Agreement
shall forthwith become void and have no effect, without any liability on the
part of any party or its directors, officers or shareholders, other than the
provisions of Sections 6.9, 5.1(m), 8.2, 10.1, 10.8 10.14, and 10.15, except
that if such termination shall result (i) from the willful failure of a party to
fulfill a condition to the performance of the obligations of any other party or
to perform a covenant of this Agreement or (ii) from a breach by any party of
any provision of this Agreement (including, without limitation, any breach of or
inaccuracy in any representation or warranty contained in this Agreement), such
party shall be fully liable for any and all damages, costs and expenses
(including, but not limited to, reasonable counsel fees) sustained or incurred
by the other party or parties as a result of such failure or breach.
SECTION 8.3 AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed by all the parties hereto.
SECTION 8.4 EXTENSION; WAIVER. At any time prior to the Effective Time,
the parties may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document, certificate or writing delivered pursuant hereto, or (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE IX
SURVIVAL
SECTION 9.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective
representations and warranties contained in this Agreement or in any Schedule
delivered
29
pursuant hereto shall not survive after the Effective Time. This Section 9.1
shall not limit any covenant or agreement of the parties contained in Sections
1.6 or 2.1 of this Agreement which by its terms contemplates performance after
the Effective Time.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 EXPENSES. All costs and expenses incurred in connection with
the transactions contemplated by this Agreement, including without limitation,
attorneys' fees, accountants' fees, advisor's fees, investment banker, bank
consulting firm and other professional fees and costs related to expenses of
officers and directors of MID-COAST and its subsidiaries, shall be paid by the
party incurring such costs and expenses; provided, however, without the consent
of FVNB, which consent may be withheld in FVNB's sole discretion, all such costs
and expenses incurred by MID-COAST and its subsidiaries (including expenses
incurred for or on behalf MID-COAST's shareholders) shall not exceed $100,000.
In the event such costs and expenses of MID-COAST exceed $100,000 in the
aggregate, the amount of such excess shall reduce the amount payable to
MID-COAST's shareholders pursuant to Article I. In the event this Agreement is
terminated by MID-COAST due to a breach of the Agreement by FVNB, FVNB shall pay
the out-of-pocket costs and expenses incurred by MID-COAST including costs
related to the opinion required by Section 3.24 hereof and the environmental
inspections, investigations and surveys required by Section 6.9 hereof or on its
behalf in connection with the Merger up to a maximum amount of $100,000,
provided however, that should this Agreement be terminated for any reason, the
costs of the opinion required by Section 3.24 hereof and the environmental
inspections, investigations and surveys required by Section 6.9 hereof shall be
reimbursed to MID-COAST by FVNB.
SECTION 10.2 BROKERS AND FINDERS. All negotiations on behalf of FVNB and
MID-COAST relating to this Agreement and the transactions contemplated by this
Agreement have been carried on by the parties hereto and their respective agents
directly without the intervention of any other person in such manner as to give
rise to any claim against FVNB, FVNB Corp., Interim Bank, or MID-COAST for
financial advisory fees, brokerage or commission fees, finder's fees or other
like payment in connection with the consummation of the transactions
contemplated hereby.
SECTION 10.3 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement, including the
Exhibits and Schedules hereto, (a) constitutes the entire agreement among the
parties with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, among the parties or any
of them with respect to the subject matter hereof, and (b) shall not be assigned
by operation of law or otherwise, provided that FVNB may assign its rights and
obligations or those of Interim Bank to any direct or indirect, wholly-owned,
subsidiary of FVNB or FVNB Corp., but no such assignment shall relieve FVNB of
its obligations hereunder.
SECTION 10.4 FURTHER ASSURANCES. From time to time as and when requested
by FVNB or its successors or assigns, MID-COAST, and its officers and directors
shall execute and deliver such further agreements, documents, deeds,
certificates and other instruments and shall take or cause to be taken such
other actions, including those as shall be necessary to vest or perfect in or to
confirm of record or otherwise MID-COAST's title to and possession of, all of
their respective property, interests, assets, rights, privileges, immunities,
powers, franchises and authority, as
30
shall be reasonably necessary or advisable to carry out the purposes of and
effect the transactions contemplated by this Agreement.
SECTION 10.5 ENFORCEMENT OF THE AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof, this being in addition to
any other remedy to which they are entitled at law or in equity.
SECTION 10.6 SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
SECTION 10.7 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered if in person, by cable, telegram or telex or by
telecopy, or five business days after mailing if delivered by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties as follows:
if to FVNB:
First Victoria National Bank
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇ Kavy
Telephone #: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
if to MID-COAST:
▇▇. ▇. ▇. ▇▇▇▇▇▇▇▇
President and Chief Executive Officer
Mid-Coast Savings Bank, S.S.B.
P. ▇. ▇▇▇ ▇▇▇
▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy #: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇
31
▇▇▇▇▇ Liddell & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone #: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION 10.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 10.9 DESCRIPTIVE HEADINGS. The descriptive headings are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
SECTION 10.10 PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
SECTION 10.11 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 10.12 INCORPORATION BY REFERENCE. Any and all schedules, exhibits,
annexes, statements, reports, certificates or other documents or instruments
referred to herein or attached hereto are incorporated herein by reference
hereto as though fully set forth at the point referred to in the Agreement.
SECTION 10.13 DISCLOSURE. For purposes of disclosure in the schedules
attached hereto, disclosure under one schedule shall be deemed to be disclosure
under all other appropriate schedules.
SECTION 10.14 CERTAIN DEFINITIONS. (a) "Subsidiary" or "subsidiaries"
shall mean, when used with reference to an entity, any corporation, a majority
of the outstanding voting securities of which are owned directly or indirectly
by such entity or any partnership, joint venture or other enterprise in which
any entity has, directly or indirectly, any equity interest.
(b) "Material Adverse Effect" shall mean any circumstance, event or series
of events which has a material adverse effect on the financial condition,
assets, liabilities (absolute, accrued, contingent or otherwise), reserves,
business or results of operations of MID-COAST (or when the reference is to
FVNB, to FVNB and its Affiliates, taken as a whole).
(c) "Environmental Laws" shall mean all federal, state and local laws,
ordinances, rules, regulations, guidance documents, directives, and decisions,
interpretations and orders of
32
courts or administrative agencies or authorities, relating to the release,
threatened release, recycling, processing, use, handling, transportation
treatment, storage, disposal, remediation, removal, inspection or monitoring of
Polluting Substances or protection of human health or safety or the environment
(including, without limitation, wildlife, air, surface water, ground water, land
surface, and subsurface strata), including, without limitation, the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, as
amended ("▇▇▇▇"), the Resource Conservation and Recovery Act of 1976, as amended
("RCRA"), Hazardous and Solid Waste Amendments of 1984, as amended ("HSWA"), the
Hazardous Materials Transportation Act, as amended ("HMTA"), the Toxic
Substances Control Act ("TSCA"), Occupational Safety and Health Act ("OSHA"),
Federal Water Pollution Control Act, Clean Air Act, and any and all regulations
promulgated pursuant to any of the foregoing.
(d) "Polluting Substances" shall mean those substances included within the
statutory or regulatory definitions, listings or descriptions of "pollutant,"
"contaminant," "toxic waste," "hazardous substance," "hazardous waste," "solid
waste," or "regulated substance" pursuant to CERCLA, ▇▇▇▇, RCRA, HSWA, HMTA,
TSCA, OSHA, and/or any other Environmental Laws, as amended, and shall include,
without limitation, any material, waste or substance which is or contains
explosives, radioactive materials, oil or any fraction thereof, asbestos, or
formaldehyde. To the extent that the laws or regulations of the State of Texas
establish a meaning for "hazardous substance," "hazardous waste," "hazardous
materials," "solid waste," or "toxic waste," which is broader than that
specified in any of CERCLA, ▇▇▇▇, RCRA, HSWA, HMTA, TSCA, OSHA or other
Environmental Laws such broader meaning shall apply.
(e) "Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing, discarding or abandoning.
(f) "Knowledge" or "known" - An individual shall be deemed to have
"knowledge" of or to have "known" a particular fact or other matter if (i) such
individual is actually aware of such fact or other matter, or (ii) such
individual could be expected to have discovered or otherwise become aware of
such fact or other matter had such individual exercised reasonable diligence
concerning the truth or existence of such fact or other matter. MID-COAST shall
be deemed to have "knowledge" of or to have "known" a particular fact or other
matter if ▇. ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or B. ▇▇▇▇▇ ▇▇▇▇ has knowledge of
such fact or other matter. FVNB shall be deemed to have "knowledge" of or to
have "known" a particular fact or other matter if ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or C. ▇▇▇
▇▇▇▇▇▇ has knowledge of such fact or other matter.
(g) The term "Affiliate" as used in this Agreement means, with respect to
any person, any person that, directly or indirectly, controls, is controlled by,
or is under common control with, such person in question. For the purposes of
this definition, "control" (including, with correlative meaning, the terms
"controlled by" and "under common control with") as used with respect to any
person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such person,
whether through the ownership of voting securities or by contract or otherwise.
SECTION 10.15 ARBITRATION. The parties shall submit to binding arbitration
by a panel of three arbitrators any disputed question or controversy arising
under this Agreement or arising out of or relating to the transactions
contemplated by the Agreement (whether based on contract,
33
tort or any other basis). Any such arbitration shall be conducted in San
Antonio, Texas. Either party may initiate the arbitration, by notice in writing
to the other party, setting forth the nature of the dispute, the amount
involved, if any, and the remedy sought. Any party desiring to initiate
arbitration shall serve a written notice of intention to arbitrate to the other
party and to the American Arbitration Association office in San Antonio, Texas
(or the city located in Texas that is closest to San Antonio) within 180 days
after dispute has arisen. A dispute is deemed to have arisen upon receipt of
written demand or service of judicial process. Failure to serve a notice of
intention to arbitrate within the time specified above shall be deemed a waiver
of the notifying party's right to compel arbitration of such claim. Such notice
of intention to arbitrate may be informal and need not comply with Rule 6 of the
American Arbitration Association. Legal action regarding this Agreement and any
liabilities hereunder shall either be brought by arbitration, as described
herein, or by judicial proceedings-but shall not be pursued in different or
alternative forums. The issue of waiver pursuant to this paragraph is an
arbitrable issue.
The panel of three arbitrators shall be appointed promptly upon filing of
the complaint in arbitration by the initiating party, and shall be selected from
the Commercial Arbitration Panel in accordance with the Commercial Arbitration
Rules of the American Arbitration Association. All of the arbitrators shall be
members of the American Arbitration Association, and, if commercially
reasonable, at least two of the arbitrators shall be experienced in the banking
industry. Depositions may be taken and other discovery obtained in any
arbitration under this Agreement. The panel of arbitrators appointed hereunder
shall conduct the arbitration pursuant to the Commercial Arbitration Rules of
the American Arbitration Association then in effect, except as such rules may be
modified for the purpose of the arbitration proceeding by mutual written
agreement of the parties to this Agreement.
In the arbitration proceeding subject to these provisions, the
arbitrators, or a majority of them, are specifically empowered to decide (by
documents only, or with a hearing, at the arbitrators sole discretion)
pre-hearing motions which are substantially similar to prehearing motions to
dismiss and motions for summary adjudication.
The award of the arbitrators shall be final and binding upon the parties
and judgment thereon may be entered in any court having jurisdiction.
All statutes of limitations which would otherwise be applicable shall
apply to any arbitration proceeding hereunder, provided, however, that the
filing of a complaint in arbitration shall serve to toll such statutes of
limitation to the same extent as they would be tolled if an action had been
filed in a court of competent jurisdiction.
The provisions of this Section 10.15 shall survive any termination,
amendment, or expiration of the Agreement in which this section is contained,
unless all the parties hereto otherwise expressly agree in writing.
The parties acknowledge that this Agreement evidences a transaction
involving interstate commerce. The Federal Arbitration Act shall govern the
interpretation, enforcement, and proceedings pursuant to the arbitration clause
in this Agreement.
The arbitrators, or a majority of them, shall award attorney's fees and
costs to the prevailing party pursuant to the terms of this Agreement.
34
Venue of any arbitration proceeding hereunder will be in Bexar County,
Texas.
Except as set forth above concerning awards to the prevailing party, each
party shall bear its own expenses in connection with preparation for the
presentation of its case at the arbitration proceedings and the fees and
expenses of the arbitrators and all other expenses of the arbitration (except
those referred to in the preceding sentence) shall be borne equally by the
parties to such arbitration.
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IN WITNESS WHEREOF, each of the parties has executed or caused this
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the day and year first above written.
FIRST VICTORIA NATIONAL BANK
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and
Chief Executive Officer
MID-COAST SAVINGS BANK, S.S.B.
By: /S/ B. ▇▇▇▇▇ ▇▇▇▇
--------------------------------------------
B. ▇▇▇▇▇ ▇▇▇▇,
Chairman of the Board
FVNB CORP.
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and
Chief Executive Officer
36
