Exhibit 2
STOCK EXCHANGE AGREEMENT
AND PLAN OF REORGANIZATION
THIS AGREEMENT is made and effective as of this 7th day of December, 1993,
between (1) FIRST FINANCIAL BANKSHARES, INC. (hereinafter referred to as "FIRST
FINANCIAL"), a Texas corporation with its principal office in the City of
Abilene, Taylor County, Texas; (2) CONCHO BANCSHARES, INC. (hereinafter referred
to as "CONCHO"), a Texas corporation and bank holding company with its principal
office in the City of San Angelo, Tom Green County, Texas; and (3) SOUTHWEST
BANK OF SAN ANGELO (hereinafter referred to as "SOUTHWEST BANK"), a Texas state
bank having its principal office in the City of San Angelo, Tom Green County,
Texas.
First Financial is a registered bank holding company. First Financial owns
all of the issued and outstanding capital stock of First Abilene Bankshares of
Delaware, Inc. ("FAB DELAWARE") which, in turn, owns all of the issued and
outstanding capital stock of First National Bank of Abilene; First National
Bank, Sweetwater, Texas; Eastland National Bank; Hereford State Bank; First
National Bank in Cleburne; and Stephenville Bank & Trust Company.
The issued and outstanding stock of Concho, as of the date of this
Agreement, consists of 201,653 shares of common stock (the "CONCHO STOCK")
having a par value of Fifty Cents ($0.50) each. According to the records of
Concho, the Concho Stock is presently held by those individuals, trusts,
estates, corporations and other entities identified in the Shareholders' List
attached hereto as EXHIBIT A. This Agreement contemplates the issuance by
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Concho of an additional 564 shares of Concho Stock prior to consummation of the
transaction described in this Agreement. As used herein, the term "SHAREHOLDERS"
shall mean not only the individuals, trusts, estates, corporations and other
entities set forth in EXHIBIT A, but also those persons to whom such additional
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shares of Concho Stock shall be issued subsequent to the date of this Agreement,
as contemplated hereby.
Concho owns 119,629 shares (99.7%) of the issued and outstanding capital
stock of Southwest Bank. It is contemplated by this Agreement that, should the
transaction described herein be consummated, Concho shall own all of the issued
and outstanding capital stock of Southwest Bank. Southwest Bank is the only
subsidiary of Concho. Southwest Bank owns all of the issued and outstanding
capital stock of SWB Investment Centre, Inc., a Texas corporation (hereinafter
referred to as "SWB"). There are no other corporations or other business
entities which are considered affiliates of Concho or Southwest Bank.
Pursuant to, and subject to, the provisions hereinafter set forth, First
Financial agrees to acquire from the Shareholders all of the issued and
outstanding shares of Concho Stock in exchange for shares of the voting common
stock of First Financial ("FIRST FINANCIAL STOCK") which shall be issued and
registered by First Financial under the Securities Act of 1933 (the "ACT").
THEREFORE, in consideration of the premises, and in further consideration
of the mutual covenants and on the basis of the representations and warranties
set forth herein, First Financial, Concho and Southwest Bank have agreed, and by
these presents do hereby agree, as follows:
ARTICLE 1
EXCHANGE OF STOCK
1.1 MEANS OF EXCHANGE. The offer to acquire all of the shares of Concho
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Stock for shares of First Financial Stock shall be made by means of a Prospectus
delivered to each of the Shareholders upon or following the effective date of a
Registration Statement to be filed by First Financial under the Act covering all
of the shares of First Financial Stock to be issued in exchange for the shares
of Concho Stock.
1.2 RATIO OF EXCHANGE. Subject to all terms and conditions of this
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Agreement, First Financial shall be obligated to issue and exchange 1.15 shares
of First Financial Stock for each share of Concho Stock tendered by the
Shareholders who accept the exchange offer during the time period the exchange
offer is in effect; PROVIDED, HOWEVER, that if First Financial, prior to
consummation of the proposed exchange offer, shall issue any additional shares
of First Financial Stock pursuant to any stock dividend or stock split approved
by the Board of Directors of First Financial, the ratio of exchange shall be
adjusted so as to prevent dilution of the interest in First Financial to be
received by the Shareholders of Concho; FURTHER PROVIDED, the exchange ratio of
1.15 shares of First Financial Stock for each share of Concho Stock shall be
adjusted if, as of December 31, 1993, the Book Value of Concho Stock (as herein
defined) shall be less than $31.25 or if the Market Value of First Financial
Stock (as herein defined) shall be less than $40.00 per share as of the date
which is ten (10) days prior to the later of (i) the date First Financial
receives written notice that the Board of Governors of the Federal Reserve
System has given final approval of the application filed by First Financial to
acquire all of the Concho Stock or (ii) the date upon which the registration
with the Securities and Exchange Commission of the First Financial Stock to be
issued hereunder becomes effective, or if such date be a Saturday, Sunday or
holiday, the next succeeding business day.
If, as of the date specified in the preceding paragraph of this Section
1.2, the Market Value of First Financial Stock shall be less than $40.00 per
share, then the exchange ratio shall be adjusted by multiplying the exchange
ratio by a fraction, the numerator of which is $40.00 and the denominator of
which is the Market Value of First Financial Stock. If, as of December 31,
1993, the Book Value of Concho Stock shall be less than $31.25 per share, then
the exchange ratio shall be adjusted by multiplying the exchange ratio by a
fraction, the denominator of which is $31.25 and the numerator of which is the
Book Value of Concho Stock. If, as of December 31, 1993, the Book Value of
Concho Stock is less than $31.25 and if, as of
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the date specified in the preceding paragraph of this Section 1.2, the Market
Value of First Financial Stock shall be less than $40.00, the exchange ratio
shall be adjusted by multiplying the exchange ratio of 1.15 by each of the
fractions defined above.
As used herein, the "MARKET VALUE" of First Financial Stock shall mean the
per share closing bid price of the First Financial Stock in the over-the-counter
market in accordance with quotations supplied by The Principal - Eppler Guerin &
Turner or other authoritative source. As used herein, the "BOOK VALUE" of
Concho Stock shall mean the consolidated shareholders' equity of Concho
determined in accordance with generally-accepted accounting principles ("GAAP")
divided by the number of issued and outstanding shares of common stock of
Concho; provided, that for purposes of determining the Book Value of Concho
Stock as of December 31, 1993, as required above, the number of issued and
outstanding shares of common stock of Concho shall be deemed to include the 564
new shares of Concho Stock to be issued subsequent to the date of this
Agreement, and also the consideration paid or to be paid for such shares,
irrespective of whether such shares are, in fact, issued and the consideration
therefor paid prior to December 31, 1993.
1.3 MEANS OF ACCEPTANCE OF EXCHANGE OFFER. A form of certificate and
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acceptance of the exchange offer (the "EXCHANGE FORM") shall accompany the
Prospectus delivered to each Shareholder of Concho. Once the Exchange Form has
been signed by a Shareholder (which shall certify that such Shareholder's stock
is fully paid and non-assessable and is being assigned to First Financial free
and clear of all liens, options and encumbrances), and delivered to the Transfer
Agent named below, the same shall be deemed to constitute an acceptance of the
exchange offer to the extent of the number of shares of Concho Stock
accompanying such Exchange Form. Shares of Concho Stock delivered by the
Shareholders to the Transfer Agent pursuant to the exchange offer may not be
withdrawn. If, for any reason, the exchange offer is terminated and the
exchange of Concho Stock for First Financial Stock is not consummated, then all
shares tendered by the Shareholders for exchange shall be promptly returned by
the Transfer Agent.
1.4 MEANS OF CONSUMMATING THE EXCHANGE. The Transfer Agent, during the
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pendency of the exchange offer, shall notify First Financial and Concho daily of
the number of shares of Concho Stock tendered for exchange under properly
executed Exchange Forms. If First Financial receives written notice from the
Transfer Agent that the Required Amount of Concho Stock (as herein defined) has
been tendered and assigned to First Financial, then, within ten (10) days after
the Closing Date, First Financial shall issue and mail to those Shareholders who
have tendered their shares of Concho Stock, by registered mail, certificates for
the First Financial Stock representing 1.15 shares of First Financial's stock
for each share of Concho Stock received by the Transfer Agent, or such other
number of shares as may be required under Section 1.2 above. For purposes of
this Agreement, the "CLOSING DATE" shall be the later of (i) the date First
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Financial receives notice from the Transfer Agent that the Required Amount of
Concho Stock (as herein defined) has been tendered, (ii) the expiration date of
the exchange
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offer, or (iii) the date when all conditions precedent to consummation of the
exchange have been satisfied (or, if not satisfied, have been waived in writing
by First Financial).
Notwithstanding the foregoing provisions of this Section and of Section
1.3, First Financial shall not issue any fractional shares of its common stock.
Shareholders of Concho who would otherwise be entitled to receive fractional
shares of First Financial Stock shall be paid in cash for such fractional shares
based upon the Market Value of First Financial Stock (as defined in Section 1.2)
as of the date specified in the first paragraph of Section 1.2 for determining
such Market Value. Any cash payment to which a Shareholder of Concho may be
entitled shall be included with such Shareholder's certificate for First
Financial Stock when such certificate is mailed to such Shareholder.
1.5 TRANSFER AGENT. The Transfer Agent for purposes of this transaction
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shall be First National Bank of Abilene - Trust Department, Third Floor, 400
Pine Street, Abilene, Texas 79601.
1.6 EFFECTIVE DATE OF EXCHANGE OFFER. The effective date for commencement
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of the exchange offer (the "EFFECTIVE DATE") contemplated by this Agreement
shall be the later of:
(A) The date upon which the Prospectus is mailed by First Financial
to the Shareholders of Concho pursuant to the Registration Statement (but
on or following the effective date thereof) filed by First Financial with
the Securities and Exchange Commission with respect to the First Financial
Stock to be issued hereunder; or
(B) Such other date as may be mutually agreed upon by First Financial
and Concho.
1.7 OFFER TERMINATION DATE. Unless otherwise extended by First Financial,
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the offer by First Financial to exchange its stock for the Concho Stock shall
terminate twenty-one (21) business days after the Effective Date.
1.8 MERGER. If the Required Amount of Concho Stock (as herein defined) is
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tendered in exchange for First Financial Stock, and if all other conditions
precedent to consummation of the exchange are satisfied (or, if not satisfied,
are waived by First Financial) and First Financial shall consummate the exchange
by delivering to the tendering Shareholders the shares of First Financial Stock
(and, with regard to any fractional shares, the cash payments) to which such
Shareholders are entitled hereunder, it is the intent of First Financial to
immediately thereafter merge Concho with and into FAB Delaware pursuant to
applicable law. If the exchange offer is consummated, but less than all of the
Concho Stock is tendered in exchange for First Financial Stock, then as part of
the proposed merger of Concho into FAB Delaware, those Shareholders of Concho
who did not tender their shares pursuant to the exchange offer made under this
Agreement will be required to accept First Financial Stock (and
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cash for any fractional shares of First Financial Stock) upon the same basis
(exchange rate and cash) as the exchange of Concho Stock for First Financial
Stock (and cash for fractional shares) will be made under this Agreement,
subject only to the rights, if any, afforded by Delaware or Texas law (whichever
shall apply) to any Shareholders of Concho who dissent from the merger and
refuse to accept First Financial Stock (and cash for fractional shares) in
return for their Concho Stock.
ARTICLE 2
CONDITIONS PRECEDENT TO EXCHANGE OFFER
AND CONSUMMATION OF TRANSACTION
Unless otherwise agreed in writing by First Financial and Concho, the
obligations of First Financial to offer First Financial Stock to the
Shareholders pursuant to this Agreement and, thereafter, the obligations of
First Financial and Concho to consummate the exchange of stock contemplated by
this Agreement shall be expressly subject to the satisfaction of the following
conditions:
2.1 REGULATORY APPROVALS. (1) The Board of Governors of the Federal
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Reserve System shall have approved, in writing, the acquisition by First
Financial of all of the issued and outstanding capital stock of Concho; (2) all
other approvals and authorizations of, filings and registrations with, and
notifications to, all federal, state and local authorities required for the
consummation of the transaction contemplated hereby shall have been obtained or
made and shall be in full force and effect; and (3) all mandatory waiting
periods shall have elapsed.
2.2 TAX RULINGS. (1) Concho shall have received a written opinion from
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its independent accountants and/or tax counsel stating that the exchange of
their Concho Stock by the Shareholders will not be considered a taxable event
for federal income tax purposes; and (2) First Financial shall have received a
written opinion from its independent accountants, Arthur Andersen & Company, in
form and substance satisfactory to First Financial, stating that the acquisition
by First Financial of the Concho Stock will be treated for accounting purposes
as a "pooling-of-interests". For purposes of this Agreement, the term "REQUIRED
AMOUNT OF CONCHO STOCK" shall mean that number of shares of Concho Stock (as
determined by First Financial's independent accountants) which must be tendered
by the Shareholders in exchange for First Financial Stock in order for the
acquisition by First Financial to be treated for accounting purposes as a
"pooling-of-interests", and which number of shares, for this purpose of this
transaction, shall be at least 90% of the issued and outstanding shares of
Concho Stock.
2.3 ACCURACY OF REPRESENTATIONS AND WARRANTIES. Except as otherwise
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expressly provided herein, all of the representations and warranties of First
Financial, Concho and Southwest Bank contained in this Agreement shall be true
on and as of both the Effective Date
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and the Closing Date, with the same force and effect as though made on the
Effective Date and Closing Date, respectively, and there shall be delivered on
the Effective Date and the Closing Date appropriate certificates of authorized
officers of First Financial, Concho and Southwest Bank to such effect.
2.4 PERFORMANCE OF AGREEMENTS. First Financial, Concho and Southwest Bank
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shall have performed all obligations and agreements, and shall have complied
with all covenants and conditions, contained in this Agreement to be performed
and complied with by it or them on or prior to the effective date of the
exchange offer contemplated hereby.
2.5 NO GOVERNMENTAL PROCEEDING OR LITIGATION. No order, judgment or
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decree of any competent court, governmental body or regulatory authority shall
be outstanding which declares or seeks a declaration that this Agreement is
invalid or which restrains, or seeks to restrain, the consummation of the
exchange offer contemplated hereby; and no action or proceeding shall be pending
which questions the validity or legality of, or seeks to restrain the
consummation of, the exchange offer contemplated by this Agreement.
2.6 INDEPENDENT AUDIT. Concho's delivery to First Financial of its
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consolidated reports audited by its independent accountants covering the length
of time and prepared in such manner as will satisfy the requirements and
regulations governing the preparation and furnishing of financial statements in
connection with an effective registration with the Securities and Exchange
Commission under the Act of the shares of First Financial Stock to be issued and
exchanged for the Concho Stock.
2.7 SECURITIES LAWS. (1) The declaration by the Securities and Exchange
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Commission that the Registration Statement filed by First Financial pursuant to
the Act covering the shares of First Financial stock to be issued pursuant to
this Agreement is effective and the furnishing of a Prospectus to the
Shareholders of Concho; (2) all approvals and authorization of, filings and
registrations with, and notifications to, all regulatory authorities under state
securities or Blue Sky laws required for the offer, sale, exchange or
qualification of the First Financial Stock in connection with the exchange offer
shall have been obtained or made and shall be in full force and effect; (3)
except as reflected in Disclosure Schedule D, First Financial, Concho and
Southwest shall have complied with all federal and state securities laws,
statutes, rules and regulations applicable to the exchange offer contemplated by
this Agreement; and (4) no stop order has been issued or threatened by the SEC
or any state securities authority with respect to the offer, sale, issuance or
exchange of stock contemplated hereby.
2.8 TENDER OF SHARES. The delivery by Shareholders owning the Required
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Amount of Concho Stock of duly and properly executed Exchange Forms effectively
transferring and assigning their shares of Concho Stock to First Financial free
and clear of all liens, options and encumbrances and with all of such stock
being fully paid and non-assessable at the time of transfer.
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2.9 NO MATERIAL CHANGES. Except as reflected in Disclosure Schedule C,
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the absence of any material adverse change in the financial conditions of First
Financial, Concho, Southwest Bank or SWB between July 31, 1993 and the Closing
Date.
2.10 OPINION OF CONCHO'S COUNSEL. First Financial shall have received the
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written opinion of counsel for Concho and Southwest Bank, dated at or as of the
Closing Date and in form and substance satisfactory to First Financial and its
counsel, that Concho, Southwest Bank and SWB have good and merchantable title to
all of their assets and properties; that all shares of Concho Stock, the capital
stock of Southwest Bank and the capital stock of SWB have been validly issued
and are non-assessable and fully paid; that, except as reflected in Disclosure
Schedules B and D, there are no known material liabilities, claims or lawsuits
pending against Concho, Southwest Bank or SWB or any of their respective
properties or assets; that there has been no increase in the number of shares of
Concho Stock issued and outstanding; and that Concho owns all of the issued and
outstanding shares of Southwest Bank capital stock free and clear of all liens,
security interests, transfer restrictions and other encumbrances.
2.11 OPINION OF FIRST FINANCIAL'S COUNSEL. Concho shall have received the
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written opinion of counsel for First Financial, dated at or as of the Closing
Date and in form and substance satisfactory to Concho and its counsel, that
First Financial is duly organized, validly existing and in good standing under
the laws of the State of Texas; that First Financial has all requisite power and
authority to execute and deliver the Agreement and to consummate the transaction
contemplated thereby; that the execution and delivery by First Financial of the
Agreement does not and the consummation of the transaction contemplated thereby
will not contravene or violate any provision of or constitute a default under
the (a) articles of incorporation or bylaws of First Financial, or (b) any law,
regulation, rule, decree, order or judgment of any court, governmental agency or
public body applicable to First Financial or its assets or properties; and that
all consents, approvals, authorizations, actions or filings with any court,
governmental agency or public body required in connection with the execution,
delivery and performance by First Financial of the Agreement have been obtained.
2.12 BUILDING/PREMISES. Concho shall have obtained a written agreement
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signed by the holders of the thirteen (13) individual promissory notes given by
Concho in connection with the purchase by Concho of the third, fourth and fifth
floors (the "CONCHO PROPERTY") of the office tower building in the City of San
Angelo, Tom Green County, Texas, wherein the banking premises of Southwest Bank
are located (Southwest Bank owning the remaining two (2) floors and basement of
the office tower and the land upon which the office tower is located), and
payment of which promissory notes is secured by a deed of trust covering the
Concho Property and further secured by a security interest in, and pledge of,
119,504 shares of Southwest Bank common stock owned by Concho, that the holders
of the notes, immediately following (but subject to) consummation of the stock
exchange offer to be made by First Financial to the Shareholders under this
Agreement, will:
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(1) consent to the transfer and conveyance of the Concho Property by
Concho to Southwest Bank;
(2) consent to assumption by Southwest Bank of the obligation to pay,
in accordance with the terms thereof, the outstanding principal balance,
plus accrued unpaid interest, due and owing under each and all of the
thirteen (13) promissory notes;
(3) release Concho from any further obligations under or by reason of
said notes, deed of trust and any other documents or instruments executed
in connection therewith; and
(4) release all liens, security interests and pledges of the
Southwest Bank common stock held by the holders of said notes to secure
payment thereof.
ARTICLE 3
WARRANTIES AND REPRESENTATIONS OF CONCHO AND SOUTHWEST BANK
Concho and Southwest Bank hereby jointly and severally make the following
warranties and representations to First Financial:
3.1 ORGANIZATION AND STANDING OF CONCHO. Concho is a Texas corporation
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duly organized, validly existing and in good standing under the laws of the
State of Texas, with corporate power to own property and carry on its business
as it is now being conducted. Concho is also a registered bank holding company
under the Bank Holding Company Act of 1956, as amended. The copies of the
Articles of Incorporation and Bylaws of Concho, including all amendments
thereto, delivered, or to be delivered, to First Financial are, or will be,
complete and accurate in all respects.
3.2 ORGANIZATION AND STANDING OF SOUTHWEST BANK. Southwest Bank is a
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state bank duly organized, validly existing and in good standing under the laws
of the State of Texas, with corporate power to own property and carry on its
business as it is now being conducted. Southwest Bank is an insured bank under
the Federal Deposit Insurance Act. All of the banking business and all of the
banking offices and facilities of Southwest Bank are located within the State of
Texas. The copies of the Articles of Association and Bylaws of Southwest Bank,
including all amendments thereto, delivered, or to be delivered, to First
Financial are, or will be, complete and accurate in all respects.
3.3 SUBSIDIARIES AND AFFILIATES. Concho does not have any subsidiaries
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other than Southwest Bank. Southwest Bank does not have any subsidiary other
than SWB. Neither
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Concho, Southwest Bank nor SWB holds any interest in any other corporation,
firm, joint venture or partnership, except (1) as security for repayment of
loans to customers of Southwest Bank, (2) as acquired by Southwest Bank through
foreclosure or otherwise by reason of debt previously contracted, or (3) for
authorized investment securities purchased by Concho or Southwest Bank for its
own account (but, as a result of which investments, neither Concho nor Southwest
Bank is considered to be an affiliate of the issuer of such securities or
otherwise controls, is controlled by or is under common control with, the issuer
of any such investment securities).
3.4 CAPITALIZATION. As of the date of this Agreement and the Closing
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Date, the authorized capital stock of Concho consists of 500,000 shares of
common stock of a par value of $0.50 each, of which 201,653 are presently issued
and outstanding. Concho also holds 8,478 shares as treasury stock, having
acquired the same in October 1991 in satisfaction of a loan previously
contracted by Southwest Bank. The authorized capital stock of Southwest Bank
consists of 119,937 shares of common stock of a par value of $10.00, of which
119,937 are presently issued and outstanding; and the authorized capital stock
of SWB consists of 5,000 shares of common stock of a par value of $100.00, of
which 10 are presently issued and outstanding. Concho now owns all but 308
shares of the issued and outstanding common stock of Southwest Bank, but as of
the Closing Date shall own all of the issued and outstanding common stock of
Southwest Bank. Southwest Bank owns all of the issued and outstanding common
stock of SWB. All rights, privileges, restrictions (if any), terms and
provisions governing the shares of common stock of Concho, Southwest Bank and
SWB are described in the Articles of Association and Bylaws (as amended) of
Concho, Southwest Bank and SWB, respectively; and, except for shares of
Southwest Bank pledged to secure the debt of Concho (as described in Section
2.12) or as otherwise reflected in Disclosure Schedule F, there are not (nor
shall be on the Closing Date) any outstanding or authorized subscriptions,
options, warrants, calls, rights or commitments of any kind restricting the
transfer of, requiring the issuance or sale of, or otherwise relating to, any of
the capital stock of Concho, Southwest Bank or SWB.
3.5 AUTHORITY OF CONCHO AND SOUTHWEST BANK. This Agreement has been duly
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executed and delivered by, and has been duly authorized by all necessary
corporate action on the part of, Concho and Southwest Bank, respectively, and,
subject to the conditions precedent to closing of this transaction set forth
herein, is a valid, legally binding and enforceable obligation of Concho and
Southwest Bank. Subject to First Financial's obtaining the approval of the Board
of Governors of the Federal Reserve System, neither the execution, delivery or
performance of this Agreement in its entirety, nor the consummation of all of
the transactions contemplated hereby, will violate (with or without the giving
of notice or the passage of time), be in conflict with, result in a breach of
any provision of, or constitute a default under, any provision in the Articles
of Incorporation, Articles of Association or Bylaws of, or any provision of law
applicable to, Concho, Southwest Bank or SWB, or any agreement or understanding,
order, judgment, award, decree, statute, ordinance, regulation or other
restriction of any kind
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or character to which Concho, Southwest Bank or SWB is a party or by which any
of the respective assets or properties of Concho, Southwest Bank or SWB are
subject or bound.
3.6 LICENSES, PERMITS AND CONTRACTS. To their knowledge, none of the
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assets, licenses, permits, authorizations and contracts of Concho, Southwest
Bank or SWB will be terminated or impaired by reason of execution, delivery or
performance by Concho or Southwest Bank of this Agreement or consummation of the
transactions contemplated hereby.
3.7 CLAIMS, SUITS AND PROCEEDINGS. Except as reflected in Disclosure
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Schedule D, there are no actions, suits, proceedings or claims pending or, to
their knowledge, threatened against Concho, Southwest Bank or SWB, at law or in
equity, or before any federal, state, municipal or other governmental court,
department, commission, board, bureau, agency, instrumentality or other person
which would result in liability to Concho, Southwest Bank or SWB upon
consummation of the transaction contemplated hereby or which would prevent or
delay such consummation. In particular, and without in any way limiting the
foregoing, neither Concho, Southwest Bank nor SWB is subject to, or a party to,
any cease-and-desist, supervisory or other agreement with any banking or other
regulatory authority which requires the consent or approval of such authority or
which is otherwise applicable to the transaction contemplated by this Agreement.
3.8 CONSENTS AND APPROVALS. No consent, approval or authorization of, or
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declaration, filing or registration with, any person or governmental authority
is required in connection with the execution and delivery of this Agreement by
Concho or Southwest Bank, and consummation of the transactions contemplated
hereby, except for (1) such approvals as may be required for First Financial to
acquire the Concho Stock and for such approvals by the Boards of Directors of
Concho and Southwest Bank as have been given prior to execution of this
Agreement and (2) such approvals and consents as may be required in order to
obtain and carry out the agreement described in Section 2.12 relative to the
Concho Property and the indebtedness secured thereby.
3.9 REGULATORY REPORTS. To their knowledge, Concho, Southwest Bank and
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SWB have filed all reports, registrations and statements, together with any
amendments required to be made thereto, that are required to be filed with the
Federal Reserve Board (the "FRB"), Texas Department of Banking (the "TDB"), the
Federal Deposit Insurance Corporation (the "FDIC"), the Securities and Exchange
Commission (the "SEC") and any other applicable authorities, and all of such
reports, registrations and statements are true, complete and correct in all
material respects.
3.10 FINANCIAL STATEMENTS. Concho and Southwest Bank have provided,or
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caused to be provided, to First Financial the Financial Statements and Reports
described in Disclosure Schedule A attached hereto and the notes thereto
(collectively, the "FINANCIAL STATEMENTS"), all of which have been prepared in
accordance with generally accepted accounting principles
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("GAAP") or regulatory accounting principles ("RAP"); and the Financial
Statements, as of their respective dates, conformed in all material respects
with all applicable material rules and regulations promulgated by the FRB, the
TDB and the FDIC.
3.11 UNDISCLOSED LIABILITIES. To their knowledge, and except to the extent
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reflected in the Financial Statements or as reflected in Disclosure Schedule B,
Concho, Southwest Bank and SWB have no material liabilities or obligations
(absolute, accrued, contingent or otherwise).
3.12 ABSENCE OF CERTAIN CHANGES. Except as and to the extent reflected in
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Disclosure Schedule C, neither Concho, Southwest Bank nor SWB has, from July 31,
1993, until the date of this Agreement:
(A) made any amendment to its articles of association or by-laws or
changed the character of its business in any material manner;
(B) suffered any material adverse change in its financial condition,
assets, liabilities (absolute, accrued, contingent or otherwise) or
business;
(C) 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) except in the ordinary course
of business;
(D) permitted or allowed any of its property or assets to be subject
to any mortgage, pledge, lien, security interest, encumbrance, restriction
or change of any kind;
(E) cancelled any debts in excess of $25,000, waived any claims or
rights of material value, or sold, transferred, or otherwise disposed of
any of its properties or assets, except in the ordinary course of business;
(F) other than in the ordinary course of business, disposed of or
permitted to lapse any rights to the use of any material trademark, trade
name or copyright, or disposed of or disclosed to any person other than its
employees any material trade secret not theretofore a matter of public
knowledge;
(G) granted any increase in compensation, or paid or agreed to pay or
accrue any bonus or like benefit, to or for the credit of any director,
officer or employee except in the ordinary course of business, or entered
into any employment or consulting contract or other agreement for personal
services with any director, officer or employee, or adopted, amended or
terminated any Employee Benefit Plan, except as authorized by Section 4.3;
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(H) declared, paid or set aside for payment any dividend or other
distribution or payment in respect of its capital stock [other than (i)
normal, regular dividends or distributions of SWB to Southwest Bank and
Southwest Bank to Concho, and (ii) Concho's regular annual cash dividend of
$0.25 per share payable to its Shareholders], or directly or indirectly
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;
(I) organized or acquired, except through foreclosure, the exercise
of creditors remedies or in a fiduciary capacity, any capital stock or
other equity securities of any corporation or acquired any equity or
ownership interest in any partnership or business enterprise;
(J) issued, reserved for issuance, granted, 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
of or conversion into shares of its capital stock, except for the 564 new
shares of Concho Stock to be issued by Concho in order to acquire the
remaining shares of Southwest Bank stock not previously owned by Concho;
(K) made any change in any method of accounting or accounting
practice, except as required by applicable law, regulation or GAAP;
(L) 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; or
(M) agreed, whether in writing or otherwise, to take any action the
performance of which would be prohibited by this Section 3.12.
3.13 TITLE TO PROPERTIES; ENCUMBRANCES. Except for the deed of trust,
---------------------------------
mortgage, liens and security interests described in Section 2.12 securing the
indebtedness described therein, Concho, Southwest Bank and SWB have, or will
have upon the Closing Date, unencumbered, good and merchantable title to all
their properties and assets, real and personal, including, without limitation,
all properties and assets reflected in the Financial Statements, except for (i)
easements, reservations, restrictions, rights-of-way, and other encumbrances of
record, other than liens and conveyances, and (ii) those properties and assets
disposed of in the ordinary course of business consistent with safe and sound
banking practices; and, to their knowledge, all uses made of, and activities
conducted upon, any real property owned, leased or used by Concho, Southwest
Bank and/or SWB comply in all respects with applicable state, local or municipal
zoning laws and other laws, rules, regulations and ordinances.
- 12 -
3.14 LITIGATION. Except as reflected in Disclosure Schedule D, there are
----------
no actions, suits, proceedings or claims pending or, to their knowledge,
threatened against Concho, Southwest Bank or SWB, or involving any of their
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, instrumentality or other person, which may, in the reasonable
judgment of Concho, Southwest Bank or SWB, result in any material liability to
Concho, Southwest Bank or SWB.
3.15 TAX MATTERS. Concho, Southwest Bank and SWB have each:
-----------
(A) duly filed all tax returns (the "FILED RETURNS") required to be
filed by it involving a tax liability or other material potential detriment
for failure to file, and all of such Filed Returns are true, complete and
correct in all material respects;
(B) paid, or established reasonable reserves for the payment of, all
federal income taxes and all state and local income taxes and all
franchise, property, sales, employment or other taxes required to be paid
in respect to the periods covered by the Filed Returns;
(C) with respect to the periods prior to the date of this Agreement
and subsequent to the last Filed Return, established reasonable reserves
for the payment of all federal income taxes and all material state and
local income taxes and all material franchise, property, sales, employment
or other taxes; and
(D) properly and timely withheld, remitted and/or paid all
withholding taxes, social security taxes, unemployment taxes and other
employment-related taxes which Concho, Southwest Bank and SWB are, by law,
required to withhold, remit or pay.
In addition to the foregoing, neither Concho, Southwest Bank nor SWB (1) is
the subject of, nor is there pending or threatened, any audit with respect to or
arising out of any Filed Return; (2) has previously requested, or has filed a
request for, any extension of time to file any return or pay any tax; and (3)
has agreed or consented to the extension of any statute of limitations
respecting the assessment of taxes, additional taxes, penalty or interest in
connection with any tax liability or Filed Return. No tax liens have been filed
or threatened against Concho, Southwest Bank or SWB or any of their properties.
For the purpose 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.
3.16 EMPLOYMENT BENEFIT PLANS. Except as reflected in Disclosure Schedule
------------------------
E, neither Concho, Southwest Bank nor SWB maintains or contributes to, nor is
Concho, Southwest
- 13 -
Bank or SWB required to maintain or contribute to, (1) any "employee welfare
benefit plan" [as defined in Section 3(1) of the Employee Retirement Income
Security Act ("ERISA")] or (2) any "employee pension benefit plan" [as defined
in Section 3(2) of ERISA]. Except as reflected in Disclosure Schedule E,
neither Concho, Southwest Bank nor SWB maintains or contributes to, nor has
Concho, Southwest Bank or SWB adopted or entered into, any deferred compensation
plan, bonus plan, stock option plan, employee stock option plan or any other
employee benefit plan, agreement, arrangement or commitment (other than normal
policies concerning holidays, vacations, accumulated sick leave, and annual
budgeted incentive bonuses previously disclosed to First Financial.)
3.17 LEASES, CONTRACTS AND AGREEMENTS. Disclosure Schedule F reflects all
--------------------------------
leases, contracts and agreements to which Concho, Southwest Bank or SWB is a
party and which obligate or may obligate Concho, Southwest Bank or SWB to pay
any amount in excess of $25,000 over the entire term of any such lease, contract
or agreement (the "CONTRACTS"), true and correct copies of which have been or
shall be made available to First Financial. For the purposes of this Agreement,
the Contracts shall not be deemed to include loan commitments of, loans made by,
repurchase agreements made by, bankers acceptances of, or deposits taken by
Southwest Bank in the ordinary course of its banking business. Each and all of
the Contracts are legal, valid, binding and enforceable in accordance with their
terms and are in full force and effect. To their knowledge, there are no
existing material defaults by any party to the Contracts and no event has
occurred which (whether with or without notice, lapse of time or the happening
or occurrence of any other event) would constitute such default.
3.18 RELATED COMPANY TRANSACTIONS. Except for transactions described in
----------------------------
Disclosure Schedule G, there are no agreements, instruments, commitments,
extensions of credit, tax sharing or allocation agreements or other contractual
agreements of any kind between Concho, Southwest Bank and/or SWB.
3.19 TRANSACTIONS WITH AFFILIATES. Except as reflected in Disclosure
----------------------------
Schedule H, neither Concho, Southwest Bank nor SWB (1) has any loans outstanding
to any of its affiliates, executive officers, or directors, or to any
shareholder owning ten percent (10%) or more of its outstanding shares or (2) is
a party to, or otherwise bound by, any contractual agreement with any of its
affiliates, executive officers, or directors, or with any shareholder owning ten
percent (10%) or more of its outstanding shares.
3.20 COMPLIANCE WITH LAWS. To their knowledge, and except as otherwise
--------------------
disclosed in Disclosure Schedule I, Concho, Southwest Bank and SWB are in
compliance in all material respects with all applicable laws and regulations and
no action is pending or threatened against Concho, Southwest Bank or SWB by any
federal, state or other regulatory authority.
3.21 ACCURACY OF INFORMATION. The factual information relating to Concho,
-----------------------
Southwest Bank and SWB contained in this Agreement and the Disclosure Statements
hereto is, to their
- 14 -
knowledge, true, correct and complete in all material respects. The information
relating to Concho, Southwest Bank and SWB supplied for inclusion in the
application of First Financial to the FRB, the Registration Statement filed by
First Financial with the SEC and the Prospectus to be delivered by First
Financial to each of the Shareholders of Concho, as of the date supplied by
Concho and Southwest Bank, will be true, correct and complete in all material
respects.
3.22 INSURANCE. Concho, Southwest Bank and SWB have in effect the
---------
insurance coverage described in Disclosure Schedule J. All insurance policies
described in Disclosure Schedule J are in full force and effect; no breach or
default exists under any such policy; and Concho, Southwest Bank and SWB have
timely filed all claims, if any, under any such insurance policy.
3.23 LOANS. To their knowledge, each loan reflected as an asset in the
-----
Financial Statements, as well as all other extensions of credit, guarantees,
security agreements, deeds of trust and other documents and instruments executed
in connection therewith (whether intended as security or otherwise) is the
legal, valid and binding obligation of the obligor named therein and is
enforceable in accordance with its terms. Concho and Southwest Bank have made
available to First Financial all material information in possession of Concho
and Southwest Bank concerning all outstanding loans of Concho and Southwest
Bank.
3.24 FIDUCIARY RESPONSIBILITIES. To their knowledge, Concho, Southwest
--------------------------
Bank and SWB have each performed in all material respects all of its duties as a
trustee, executor, grantor, escrow agent or other fiduciary in a manner which
complies in all material respects with all applicable laws, regulations, orders,
agreements, instruments and common law standards.
3.25 REGULATORY ACTIONS. Except as disclosed in Disclosure Schedule K,
------------------
there are no actions or proceedings pending or, to their knowledge, threatened
against Concho, Southwest Bank or SWB by or before the FRB, the TDB, the FDIC,
the SEC or any other governmental agency or authority.
3.26 BROKER'S FEES. No person or entity acting on behalf of Concho,
-------------
Southwest Bank or SWB is or shall be entitled, directly or indirectly, to any
brokerage fee, commission, finder's fee or financial advisory fee in connection
with the transaction contemplated by this Agreement.
3.27 ENVIRONMENTAL MATTERS. To their knowledge, and except as disclosed in
---------------------
Disclosure Schedule L, there are no material adverse environmental problems or
conditions affecting any of the properties of Concho, Southwest Bank or SWB. In
particular, and without in any way limiting the foregoing, Concho, Southwest
Bank and SWB, after due inquiry, warrant and represent that all hazardous and
toxic chemicals, substances and materials located or used upon any of their
respective properties have been and are being stored, used, transported and
disposed of in compliance with applicable state and federal environmental laws;
that there are no underground storage tanks located upon any of their
properties; and that no action or
- 15 -
investigation is pending or threatened by any governmental or regulatory
authority, or by any person, firm or corporation, arising out of any failure, or
alleged failure, to comply with applicable environmental laws, statutes, rules
or regulations.
ARTICLE 4
CONDUCT OF BUSINESS OF CONCHO, SOUTHWEST BANK
AND SWB PENDING CLOSING DATE
4.1 AFFIRMATIVE COVENANTS. From and after the date of this Agreement
---------------------
and until the Closing Date, Concho and Southwest Bank shall each, and each of
them shall cause SWB to:
(A) operate and conduct its business in the ordinary course and
consistent with its prior practices;
(B) preserve intact its corporate existence, business organization,
assets, licenses, permits, authorizations, and business opportunities;
(C) maintain its books, accounts and records in accordance with
generally accepted accounting principles and/or banking practices, as
applicable, and comply with all of its contractual obligations;
(D) maintain all of its properties in good repair, order and
condition, reasonable wear and tear excepted, and maintain insurance
coverage upon all such properties with reputable insurers which are
adequate, in its reasonable judgment, for the business conducted by it;
(E) in good faith and in a timely manner (i) cooperate with First
Financial in satisfying the conditions in this Agreement; (ii) diligently
assist First Financial, to the extent it may reasonably require, in
obtaining as promptly as possible all consents, approvals, authorizations
and rulings, whether regulatory or corporate, as are necessary for First
Financial to carry out and consummate the transaction contemplated by this
Agreement; (iii) furnish, or cause to be furnished, to First Financial such
information as First Financial may reasonably require 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 transaction contemplated by this Agreement to be consummated
at the earliest possible date;
(F) timely file with the FRB, TDB, FDIC, SEC and other regulatory
authorities all financial statements and other reports to be filed by it
and promptly
- 16 -
thereafter deliver to First Financial copies of all financial statements
and other reports required to be so filed;
(G) comply with all applicable laws and regulations, noncompliance
with which would have a material adverse effect upon its financial
condition, assets, liabilities (absolute, accrued, contingent or otherwise)
or business; and
(H) promptly give written notice to First Financial upon obtaining
knowledge of any event or fact that would cause any of the representations
or warranties of Concho or Southwest Bank contained in or referred to in
this Agreement to be untrue in any material respect, and use its best
efforts to prevent or promptly remedy the same.
4.2 NEGATIVE COVENANTS. Except with the written consent of First
------------------
Financial, neither Concho nor Southwest Bank shall, and neither of them shall
permit SWB to, from the date of this Agreement and until the Closing Date,
(A) make or permit any amendment to its Articles of Association or
By-laws;
(B) make or permit any changes in allocating or charging costs which
in the aggregate would cause a material detriment, except as may be
required by applicable regulation or GAAP, and after notice to First
Financial;
(C) except for negotiations and discussions between the parties
hereto relating to the transactions contemplated by this Agreement, (i)
directly or indirectly initiate contact with any person or entity in an
effort to solicit an acquisition, merger or consolidation proposal relating
to Concho, Southwest Bank or SWB, (ii) enter into negotiation of the terms
of an agreement relating to the acquisition, merger or consolidation of
Concho, Southwest Bank or SWB, (iii) permit access to the premises of
Concho, Southwest Bank or SWB for the review of its business or operations
(except as required by law), (iv) except in the ordinary course of
business, enter into any oral or written agreement to sell the assets of
Concho, Southwest Bank or SWB or to merge, consolidate, liquidate or
dissolve Concho, Southwest Bank or SWB, or (v) authorize or engage any
officer, employee, agent or representative of Concho, Southwest Bank or SWB
(including but not limited to investment bankers and financial advisers) to
enter into any such solicitation, negotiation or any such oral or written
agreement;
(D) make any change in the number of shares of its capital stock
issued and outstanding, or issue, reserve for issuance, grant, or authorize
the issuance of any shares of their capital stock or subscriptions,
options, warrants, calls, rights or commitments of any kind relating to the
issuance or conversion into shares of their capital stock, other than the
564 new shares of Concho Stock to be issued by Concho to acquire the
remaining stock of Southwest Bank;
- 17 -
(E) incur, assume or become subject to, whether directly or by way of
any guarantee or otherwise, any obligation or liability (absolute, accrued,
contingent or otherwise) except in the ordinary course of business;
(F) permit or allow any of its property or assets to become subject
to any mortgage, pledge, lien, security interest or encumbrance,
restrictions or change of any kind;
(G) cancel any debts in excess of $25,000.00, waive any claims or
rights of material value or sell, transfer, or otherwise dispose of any of
its properties or assets, except in the ordinary course of business;
(H) other than in the ordinary course of business, dispose of or
permit to lapse any of its rights to the use of any material trademark,
trade name or copyright, or dispose of or disclose to any person any
material trade secret not theretofore a matter of public knowledge;
(I) except in the ordinary course of business, grant or permit any
increase in compensation, or pay or agree to pay or accrue any bonus or
like benefit, to or for the credit of any its directors, officers or
employees, or enter into, or permit, of any employment or consulting
agreement or other agreement for personal services with any of its
directors, officers or employees, or adopt, amend or terminate any Employee
Benefit Plan or change or modify the period of vesting or retirement age
for any participant of any such plan (except as required by or to comply
with any law or regulation);
(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 (i) normal, regular dividends or other distributions of SWB to
Southwest Bank and Southwest Bank to Concho, and (ii) Concho's regular
annual cash dividend of $0.25 per share payable to its Shareholders;
(K) acquire the capital stock or other equity securities of any
corporation or any equity or ownership interest in any partnership or other
business enterprise, except through foreclosure, the exercise of creditors'
remedies or in a fiduciary capacity;
(L) make aggregate capital expenditures and commitments in excess of
$50,000 for additions to its premises or equipment;
(M) except as disclosed in Disclosure Schedule M, modify any
outstanding loans, make any new loans or acquire any loan participations,
unless such modifications, new loans, or participations are made in the
ordinary course of business; or
- 18 -
(N) knowingly do, or cause or permit to be done, or knowingly take,
or cause or permit to be taken, any action that would disqualify the
acquisition by First Financial of the Concho Stock to be treated for
accounting purposes on a pooling-of-interests basis.
4.3 CERTAIN ACTIVITIES IN ORDINARY COURSE. For the purposes of Section
-------------------------------------
4.2(i), it shall be considered to be in the ordinary course of business for
Southwest Bank and SWB to award reasonable bonuses for 1993, to grant reasonable
salary increases to officers and employees for 1994, and make its usual and
customary matching contribution to contributions made by employees of Concho,
Southwest Bank or SWB under its or their 401(k) Plan, but First Financial shall
be notified in writing of any such increases, bonuses or contributions to be
paid after the date of this Agreement.
4.4 COVENANTS. From and after the date of this Agreement and until
---------
consummation or termination of the transaction contemplated by this Agreement,
neither Concho nor Southwest Bank shall, nor shall Concho or Southwest Bank
cause or permit SWB to, take any action which would cause Concho or Southwest
Bank to be in breach of any of the covenants contained in this Article 4; and
Concho and Southwest Bank shall, within their ability to do so, cause Concho,
Southwest Bank and SWB to keep and perform all of the covenants contained in
this Article 4.
ARTICLE 5
WARRANTIES, REPRESENTATIONS
AND COVENANTS OF FIRST FINANCIAL
First Financial warrants and represents to, and covenants and agrees with,
Concho and Southwest Bank as follows:
5.1 ORGANIZATION AND STANDING OF FIRST FINANCIAL. First Financial is a
--------------------------------------------
corporation duly organized, validly existing, and in good standing under the
laws of the State of Texas, with corporate power to own property and carry on
its business as it is now being conducted.
5.2 CAPITALIZATION. First Financial has an authorized capitalization of
--------------
5,000,000 shares of common stock of the par value of $10.00 per share, of which
3,741,802 shares are issued, outstanding, and fully paid as of the date of this
Agreement.
5.3 AUTHORITY OF FIRST FINANCIAL. This Agreement has been duly executed
----------------------------
and delivered by First Financial and, subject to the conditions precedent to
Closing of the transactions set forth herein, is a valid, legally binding and
enforceable obligations of First Financial. Neither the execution, delivery or
performance of this Agreement in its entirety, nor the consummation of all of
the transactions contemplated hereby, will violate (with or without the giving
of notice or the passage of time), be in conflict with, result in a breach of
any
- 19 -
provision of, or constitute a default under, any provision of law applicable to
First Financial, or any agreement or understanding, order, judgement, award,
decree, statute, ordinance, regulation or other restriction of any kind or
character to which First Financial is a party or by which any of its or their
assets or properties is subject or bound. There are no actions, suits,
proceedings or claims pending or, to its knowledge, threatened against First
Financial, at law or in equity, or before or by any foreign, federal, state,
municipal or other government court, department, commission, board, bureau,
agency, instrumentality or other person which may result in liability to or of
First Financial upon the consummation of the transactions contemplated hereby or
which would prevent or delay such consummation.
5.4 NO ADVERSE CHANGE. From the date of this Agreement until the Closing
-----------------
Date, First Financial shall not have suffered any material adverse change in its
financial condition, assets, liabilities (absolute, accrued, contingent or
otherwise) or business.
5.5 DUE DILIGENCE. The officers, employees or other representatives of
-------------
First Financial have reviewed and examined the assets, property (real and
personal), leases and all other contractual arrangements to which Concho,
Southwest Bank or SWB is a party and all business records of Concho, Southwest
Bank and SWB, including, but not limited to, committee and directors' minutes,
reports of condition, reports of income, tax returns, deposit agreements, loan
portfolios, documents pertaining to legal matters, and financial statements, all
of which review and examination was conducted upon the premises of Concho,
Southwest Bank or SWB and First Financial hereby confirms the acceptability of
such due diligence review.
5.6 COVENANTS. First Financial covenants and agrees that it shall:
---------
(A) use its best efforts in good faith and in a timely manner to (i)
cooperate with Concho and Southwest Bank in satisfying the conditions in
this Agreement, (ii) obtain as promptly as possible all consents,
approvals, authorizations and rulings, whether regulatory or corporate, as
are necessary for First Financial to carry out and consummate the
transactions contemplated by this Agreement, including specifically (but
without limitation) the approval called for by Section 5.5, and (iii)
furnish information concerning First Financial and its subsidiaries not
previously provided to Concho and Southwest Bank required for inclusion in
any filing or applications that may be necessary in that regard;
(B) perform all acts and execute and deliver all documents necessary
to cause the transactions contemplated by this Agreement to be consummated
at the earliest possible date;
(C) promptly give written notice to Concho upon obtaining knowledge
of any event or fact that would cause any of the representations or
warranties of First Financial
- 20 -
contained in or referred to in this Agreement to be untrue in any material
respect, and use its best efforts to prevent or promptly remedy the same;
and
(D) cause its officers, directors and representatives to treat as
confidential any and all information concerning Concho, Southwest Bank or
SWB which is furnished to First Financial, its directors, officers,
employees, shareholders, agents, representatives or advisors, in connection
with this Agreement, or which was furnished prior to the execution of this
Agreement for the purpose of First Financial reviewing and evaluating the
transaction contemplated by this Agreement, except insofar as disclosure to
certain parties is necessary to meet the conditions of this Agreement. In
the event this Agreement is terminated pursuant to Section 7.1 prior to the
consummation of the transaction, First Financial shall promptly return to
Concho, Southwest Bank or SWB all written material containing or reflecting
such confidential information, and in such event, the covenants of First
Financial with respect to such confidential information contained in this
Section 5.4(d) shall survive such termination.
5.7 FEDERAL RESERVE APPROVAL. Specifically, but without limiting the
------------------------
effect of Section 5.6, promptly upon execution of this Agreement, First
Financial shall make application to the Board of Governors of the Federal
Reserve System (the "FRB") for prior approval to acquire the Concho Stock in
accordance with this Agreement as required by the Bank Holding Company Act of
1956, as amended, and applicable regulations. Promptly upon receipt, First
Financial shall furnish Concho and Southwest Bank with a copy of the notice of
approval or disapproval of the application made by it to the FRB.
5.8 SEC REGISTRATION. Without limiting the effect of Section 5.6, upon
----------------
execution of this Agreement, First Financial shall proceed to file a
Registration Statement with the Securities and Exchange Commission pursuant to
the Act covering the shares of First Financial Stock to be issued pursuant to
this Agreement. Promptly upon receipt of such declaration of the effectiveness
of such Registration Statement from the Securities and Exchange Commission,
First Financial shall furnish Concho and Southwest Bank with a copy of the
approval or disapproval of the effectiveness of such Registration Statement.
ARTICLE 6
SURVIVAL OF WARRANTIES, INDEMNIFICATION AND LIABILITY
6.1 NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The covenants,
-----------------------------------------------------
representations and warranties of the parties hereto shall survive the Closing
Date.
- 21 -
ARTICLE 7
TERMINATION
7.1 CIRCUMSTANCES AUTHORIZING TERMINATION. Notwithstanding anything
-------------------------------------
herein to the contrary, this Agreement may be terminated and the Exchange Offer
contemplated hereby may be abandoned at any time, but prior to the Closing Date:
(A) by mutual written consent duly authorized by the Boards of
Directors of First Financial and Concho;
(B) by First Financial (i) if First Financial learns or becomes aware
of a state of facts or breach or inaccuracy of any representation or
warranty or covenant of Concho contained in Articles 3 or 4 which
constitute a material adverse change from that represented in this
Agreement, or (ii) if any of the conditions to Closing contained in Article
2 are not satisfied or waived in writing by First Financial;
(C) by Concho (i) if Concho learns or becomes aware of a state of
facts or breach or inaccuracy of any representation or warranty or covenant
of First Financial contained in Article 5 which constitutes a material
adverse change from that represented in this Agreement, or (ii) if any of
the conditions to Closing contained in Article 2 are not satisfied or
waived in writing by Concho;
(D) by First Financial or Concho if the Effective Date shall not have
occurred on or before April 30, 1994 or such later date agreed to in
writing by First Financial or Concho; or
(E) by First Financial or Concho if any court of competent
jurisdiction in the United States (federal or state) or other governmental
body shall have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the exchange of shares or
the merger, and such order, decree, ruling or other action shall have been
final and nonappealable.
ARTICLE 8
MISCELLANEOUS PROVISIONS
8.1 PUBLIC ANNOUNCEMENTS. Prior to the Closing Date, neither Concho,
--------------------
Southwest Bank nor First Financial, nor any person affiliated with any of them,
shall, without the prior approval of the other parties, make any written public
announcement, make any written statement or release to the press, or make any
written statement to a competitor, customer or
- 22 -
other third party (except to their respective counsel or to regulatory
authorities in connection with applications for governmental approvals) with
respect to this Agreement or the transactions contemplated hereby.
8.2 APPLICABLE LAW. This Agreement and the legal relations between the
--------------
parties hereto shall be governed by and construed in accordance with the laws of
the State of Texas and of the United States of America.
8.3 PARAGRAPH AND OTHER HEADINGS. Article and section headings contained
----------------------------
in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
8.4 WAIVERS AND AMENDMENTS. This Agreement may be amended, modified or
----------------------
supplemented only by a written instrument executed by the parties hereto. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach.
8.5 EXPENSES.
--------
(A) Whether or not the transactions contemplated by this Agreement
are consummated, each of the parties shall be responsible for their
respective fees and expenses incident to the negotiation, preparation,
execution and consummation of the transactions contemplated by this
Agreement, including attorneys' and accountants' fees and expenses.
(B) First Financial consents to payment by Concho, Southwest Bank and
SWB of attorneys' and accountants' fees incurred by them incident to the
negotiation, preparation and execution of this Agreement and consummation
of the transaction contemplated by this Agreement.
8.6 ENTIRE AGREEMENT. This Agreement, including the Exhibits and
----------------
Disclosure Schedules, embodies the entire agreement and understanding of the
parties with respect to the subject matter contained herein. There are no
restrictions, promises, representations, warranties, covenants or undertaking
other than those expressly set forth or referred to herein.
8.7 NOTICES. All notices, requests, demands or other communications which
-------
are required or may be given under this Agreement shall be in writing and shall
be deemed to have been duly given if delivered personally or sent by registered
or certified mail, return receipt requested, postage prepaid:
- 23 -
(A) In the case of First Financial, to:
Mr. Kenneth T. Murphy
Chairman of the Board, President and Chief Executive Officer
First Financial Bankshares, Inc.
P. O. Box 701
Abilene, Texas 79604
with a copy to:
Mr. David L. Buhrmann
McMahon, Surovik, Suttle, Buhrmann,
Cobb & Hicks
P. O. Box 3679
Abilene, Texas 79604
(B) In the case of Concho and/or Southwest Bank, to:
Mr. David B. Drake
Chairman and Chief Executive Officer
Concho Bancshares, Inc.
P. O. Box 60410
San Angelo, Texas 76906
with a copy to:
Patrick J. Kennedy, Jr.
Kennedy & Baris, L.L.P.
1775 NBC Plaza
112 East Pecan Street
San Antonio, Texas 78205
or to such other addresses as any party shall specify by notice to the
others.
8.8 COUNTERPARTS. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same.
8.9 ATTACHMENT OF DISCLOSURE SCHEDULES. Southwest Bank, Concho and First
----------------------------------
Financial acknowledge that the Disclosure Schedules referenced herein may not be
attached hereto at the time of execution of this Agreement. It is the intent of
all parties hereto that the form and content of all such Disclosure Schedules
will be prepared in a form acceptable to First
- 24 -
Financial and that such Disclosure Schedules shall then be attached to this
Agreement and that such Disclosure Schedules shall then become a part of this
Agreement for all purposes. In the event that such Disclosure Schedules are not
prepared in a form acceptable to First Financial, this Agreement may be
terminated by First Financial by written notice and be of no further force and
effect. Notwithstanding the fact that any such Disclosure Schedule may be
attached hereto at the time of execution, the date of this Agreement or date of
execution of this Agreement shall for all purposes be the date first written
above.
8.10 BINDING EFFECT - ASSIGNMENT. This Agreement is binding upon the
---------------------------
undersigned parties, their heirs, personal representatives, successors and
assigns; however, the rights of First Financial under this Agreement may not be
assigned without the prior written consent of Southwest Bank and Concho except
that, at closing, the Subsidiary may acquire the Shares so long as First
Financial remains liable for its obligations under this Agreement.
8.11 DEFINITIONS. In addition to other definitions contained elsewhere in
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this Agreement, as used in this Agreement:
(A) an "AFFILIATE" means any bank, corporation, partnership or other
entity which, directly or indirectly, controls, is controlled by, or is
under common control with, Concho or Southwest Bank;
(B) "BANKING DAY" means any day, other than a Saturday or Sunday, on
which Southwest Bank is open to the public for carrying substantially all
of its banking functions;
(C) "KNOWLEDGE" means a current actual awareness of a fact or other
information, and "KNOWINGLY" means possessing a current actual awareness of
a fact or other information;
(D) references to a particular "ARTICLE" or "SECTION" are to the
given article or section of this Agreement; and
(E) unless context otherwise requires, words of the singular number
include the plural and of the plural include the singular and words of the
masculine gender include the feminine and neuter.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement, in
multiple originals, as of the day and year first above written.
FIRST FINANCIAL BANKSHARES, INC.
ATTEST:
By: /s/ Curtis R. Harvey By: /s/ Kenneth T. Murphy
----------------------------- -----------------------------
Curtis R. Harvey, Kenneth T. Murphy,
Executive Vice President Chairman of the Board, President
and Chief Financial Officer and Chief Executive Officer
CONCHO BANCSHARES, INC.
ATTEST:
By: /s/ Michael L. Boyd By: /s/ David B. Drake
----------------------------- -----------------------------
Name: Michael L. Boyd David B. Drake,
---------------------- Chairman of the Board and
Title: Asst. Sec.-Treas. Chief Executive Officer
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SOUTHWEST BANK OF SAN ANGELO
ATTEST:
By: /s/ Katherine M. Reeves By: /s/ Michael L. Boyd
----------------------------- -----------------------------
Name: Katherine M. Reeves Michael L. Boyd
---------------------- ---------------------------
Title: Sr. VP & Cashier President
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