WHEREAS, CBI owns all of the common stock of Commercial State Bank, a Texas state bank chartered in El Campo, Texas (the
Bank
);
WHEREAS, FFIN owns all of the common stock of First Financial Bank, National Association, a national
association with its principal offices in Abilene, Texas (
FFB
);
WHEREAS, on the terms and subject to the conditions set forth in this Agreement,
FFIN will acquire CBI for aggregate consideration of approximately $75,000,000 composed of a combination of approximately $15,600,000 in cash, in the form of a dividend payment from CBI to its shareholders prior to Closing, and approximately
$59,400,000 of common stock, par value $0.01 per share, of FFIN (the
FFIN Stock
), through the merger of Merger Sub with and into CBI, with CBI surviving the merger (the
Merger
) as a wholly-owned subsidiary of
FFIN;
WHEREAS, immediately following, and in connection with, the Merger, FFIN will cause CBI to be merged with and into FFIN, with FFIN
surviving the merger (the
Second Step Merger
and together with the Merger, the
Integrated Mergers
), and immediately following the Second Step Merger, or at such later time as FFIN may determine, FFIN will cause
the Bank to be merged with and into FFB, with FFB surviving the merger (the
Bank Merger
);
WHEREAS, it is intended that
the Merger be treated as a reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended (the
Code
); and
WHEREAS, the parties hereto desire to set forth certain representations, warranties and covenants made by each to the other as an inducement
to the execution and delivery of this Agreement and certain additional agreements related to the transactions contemplated hereby:
NOW,
THEREFORE, for and in consideration of the foregoing and of the mutual representations, warranties, covenants and agreements contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and subject to the conditions set forth below, the parties, intending to be legally bound, undertake, promise, covenant and agree with each other as follows:
Section 3.03
Capitalization
.
(a) The entire authorized capital stock of CBI consists solely of 10,000,000 shares of CBI Stock, of which 3,391,055
shares are issued and outstanding and 22,900 shares are held as treasury stock. Except as set forth on
Confidential Schedule 3.03
, there are no (i) outstanding equity securities of any kind or character or (ii) outstanding
subscriptions, options, convertible securities, rights, warrants, calls or other agreements or commitments of any kind issued or granted by, or binding upon, CBI to purchase or otherwise acquire any security of or equity interest in CBI, obligating
CBI to issue any shares of, restricting the transfer of or otherwise relating to shares of its capital stock of any class. All of the issued and outstanding shares of CBI Stock have been duly authorized, validly issued and are fully paid and
nonassessable, and have not been issued in violation of the preemptive rights of any Person. Such shares of CBI Stock have been issued in compliance with the securities Laws of the United States and the states in which such shares of CBI Stock were
issued. There are no restrictions applicable to the payment of dividends on the shares of CBI Stock except pursuant to applicable Laws, and all dividends declared before the date of this Agreement have been paid.
(b) The entire authorized capital stock of the Bank consists solely of 60,000 shares of common stock, par value $20.00 per
share, of the Bank (
Bank Stock
) of which 60,000 shares are issued and outstanding and no shares are held as treasury stock. There are no (i) outstanding equity securities of any kind or character or (ii) outstanding
subscriptions, options, convertible securities, rights, warrants, calls or other agreements or commitments of any kind issued or granted by, or binding upon, the Bank to purchase or otherwise acquire any security of or equity interest in the Bank,
obligating the Bank to issue any shares of, restricting the transfer of or otherwise relating to shares of its capital stock of any class. All of the issued and outstanding shares of Bank Stock have been duly authorized, validly issued and are fully
paid and nonassessable, and have not been issued in violation of the preemptive rights of any Person. Such shares of Bank Stock have been issued in compliance with the securities Laws of the United States and the State of Texas. There are no
restrictions applicable to the payment of dividends on the shares of Bank Stock except pursuant to applicable Laws, and all dividends declared before the date of this Agreement have been paid.
(c) CBI owns, directly or indirectly, all the issued and outstanding shares of capital stock or other equity ownership
interests of each of its Subsidiaries, free and clear of any Liens whatsoever, and all such shares or equity ownership interests are duly authorized and validly issued and are fully paid, nonassessable (except, with respect to any Subsidiary of CBI
that is an insured depository institutions, as provided under 12 U.S.C. § 55 or any comparable provision of applicable state Law) and free of preemptive rights, with no personal liability attaching to the ownership thereof. No Subsidiary of CBI
has or is bound by any outstanding subscriptions, options, warrants, calls, rights, commitments or agreements of any character calling for the purchase or issuance of any shares of capital stock or any other equity security of such Subsidiary or any
securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of such Subsidiary.
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Section 3.04
Compliance with Laws, Permits and
Instruments
.
(a) Except as set forth on
Confidential Schedule 3.04(a)
, CBI and each of its
Subsidiaries have in all material respects performed and abided by all obligations required to be performed by it to the date hereof,
and have complied with, and is in compliance with, and is not in default (and with the giving of notice or
the passage of time will not be in default) under, or in violation of, (i) any provision of the certificate of formation of CBI or any of its Subsidiaries, the bylaws or other governing documents of CBI or any of its Subsidiaries, as applicable
(collectively, the
CBI Constituent Documents
), (ii) any material provision of any mortgage, indenture, lease, contract, agreement or other instrument applicable to CBI, the Bank or their respective assets, operations,
properties or businesses, or (iii) any Law or Order of any Governmental Entity applicable to CBI or any of its Subsidiaries or their respective assets, operations, properties or businesses.
(b) Except as set forth on
Confidential Schedule 3.04(b)
, the execution, delivery and performance
(provided the required regulatory and shareholder approvals are obtained) of this Agreement and the other agreements contemplated hereby, and the completion of the transactions contemplated hereby and thereby will not conflict with, or result, by
itself or with the giving of notice or the passage of time, in any violation of or default or loss of a benefit under, (i) the CBI Constituent Documents, (ii) any material mortgage, indenture, lease, contract, agreement or other instrument
applicable to CBI or any of its Subsidiaries or their respective assets, operations, properties or businesses or (iii) any Law or Order of any Governmental Entity applicable to CBI or any of its Subsidiaries or their respective assets,
operations, properties or businesses.
Section 3.05
Financial Statements
.
(a) CBI has furnished to FFIN true and complete copies of (i) the audited consolidated balance sheets of CBI as of
December 31, 2014, 2015 and 2016, the audited consolidated statements of income, comprehensive income, changes in shareholders equity and cash flows of CBI for the years ended December 31, 2014, 2015 and 2016, and the unaudited
consolidated balance sheet of CBI as of June 30, 2017, the unaudited consolidated statements of income and changes in shareholders equity of CBI for the six-month period ended June 30, 2017, and (ii) the audited balance sheets
of the Bank as of December 31, 2014, 2015 and 2016, the audited statements of income, comprehensive income, changes in shareholders equity and cash flows of the Bank for the years ended December 31, 2014, 2015 and 2016, and the
unaudited balance sheet of the Bank as of June 30, 2017, and the unaudited statements of income and changes in shareholders equity of the Bank for the six-month period ended June 30, 2017 (collectively, such financial statements
listed in clause (i) and (ii) the
CBI Financial Statements
). The CBI Financial Statements (including the related notes) complied as to form, as of their respective dates, in all material respects with applicable
accounting requirements, have been prepared according to generally accepted accounting principles of the United States (
GAAP
) applied on a consistent basis during the periods and at the dates involved (except as may be indicated
in the notes thereto), fairly present, in all material respects, the consolidated financial condition of CBI and the Bank at the dates thereof and the consolidated results of operations and cash flows for the periods then ended (subject, in the case
of unaudited statements, to notes and normal year-end adjustments that were not material in amount or effect), and the accounting records underlying the CBI Financial Statements accurately and fairly reflect in all material respects the transactions
of CBI. Except as set forth on
Confidential Schedule 3.05(a)
, the CBI Financial Statements do not contain any items of extraordinary or nonrecurring income or any other income not earned in the ordinary course of business except as expressly
specified therein.
(b) CBI has furnished FFIN with true and complete copies of the Reports of Condition and Income as of
December 31, 2014, 2015 and 2016 and June 30, 2017 (the
Bank Call Reports
), for the Bank. The Bank Call Reports fairly present, in all material respects, the financial position of the Bank and the results of its
operations at the date and for the period indicated in that Bank Call Report in conformity with the instructions to the Bank Call Report. The Bank Call Reports do not contain any items of special or nonrecurring income or any other income not earned
in the ordinary course of business except as expressly specified therein. The Bank has calculated its allowance for loan losses in accordance with GAAP and regulatory accounting principles (
RAP
) as applied to banking institutions
and in accordance with all
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applicable rules and regulations. The allowance for loan losses account for the Bank is, and as of the Closing Date will be, adequate in all material respects to provide for all losses, net of
recoveries relating to loans previously charged off, on all outstanding loans of the Bank.
Section 3.06
Undisclosed Liabilities
. Except as set forth on
Confidential Schedule 3.06
, neither CBI nor any of its Subsidiaries have liability or obligation, accrued, absolute, contingent or otherwise and whether due or to become due (including,
without limitation, unfunded obligations under any employee benefit plan maintained by CBI or any of its Subsidiaries or liabilities for federal, state or local taxes or assessments), that are not reflected in or disclosed in the appropriate CBI
Financial Statements or Bank Call Reports, except (a) those liabilities and expenses incurred in the ordinary course of business and consistent with prudent business practices since the applicable dates of the CBI Financial Statements or the
Bank Call Reports, respectively, or (b)
that are not, individually or in the aggregate, material to CBI and its Subsidiaries.
Section 3.07
Litigation
.
(a) Except as set forth on
Confidential Schedule 3.07
, neither CBI nor any of its
Subsidiaries is a party to any, and there are no pending or, to the Knowledge of CBI, threatened, legal, administrative, arbitral or other proceedings, claims, actions or governmental or regulatory investigations of any nature against CBI or any of
its Subsidiaries, nor to the Knowledge of CBI, is there any basis for any proceeding, claim or any action against CBI or any of its Subsidiaries. Except as set forth in
Confidential Schedule 3.07
,
the amounts in controversy in each
matter described on
Confidential Schedule 3.07
,
and the costs and expenses of defense thereof (including attorneys fees) are fully covered by insurance, subject to the deductible set forth on
Confidential Schedule
3.07
with respect to each matter and subject to the policy limits set forth on
Confidential Schedule 3.07
. There is no Order imposed upon CBI or any of its Subsidiaries or the assets or Property of CBI or any of its
Subsidiaries that has resulted in, or is reasonably likely to result in, a Material Adverse Change as to CBI or any of its Subsidiaries.
(b) No legal action, suit or proceeding or judicial, administrative or governmental investigation is pending or, to the
Knowledge of CBI, threatened against CBI or any of its Subsidiaries that questions or might question the validity of this Agreement or the agreements contemplated hereby or any actions taken or to be taken by CBI or any of its Subsidiaries pursuant
hereto or thereto or seeks to enjoin or otherwise restrain the transactions contemplated hereby or thereby.
Section 3.08
Consents and Approvals
. Except for (a) the filing of applications, filings and
notices, as applicable, with the Federal Reserve under the BHCA and approval of such applications, filings and notices, (b) the filings of applications, filings and notices, as applicable, with the Federal Reserve, and approval of such
applications, filings and notices, (c) the filing of applications, filings and notices, as applicable, with the TDB and OCC in connection with the Bank Merger, and approval of such applications, filings and notices, (d) the filing with the
Securities and Exchange Commission (
SEC
) of (i) any filings under applicable requirements of the Exchange Act, including the filing of the Proxy Statement/Prospectus and (ii) the Form S-4 and declaration of effectiveness
of the Form S-4, (e) the filing of the certificates of merger with the Texas Secretary of State pursuant to the requirements of the TBOC, and (f) such filings and approvals as are required to be made or obtained under the securities or
Blue Sky Laws of various states in connection with the issuance of shares of FFIN Stock pursuant to this Agreement and the approval of the listing of such FFIN Stock on the NASDAQ, no consents, Orders or approvals of or filings or
registrations with any Governmental Entity are necessary in connection with (A) the execution and delivery by CBI of this Agreement or (B) the consummation by CBI of the transactions contemplated by this Agreement. As of the date of this
Agreement, CBI knows of no reason why all regulatory approvals from any Governmental Entity or Regulatory Agency required for the consummation of the transactions contemplated hereby should not be obtained on a timely basis and CBI has no Knowledge
of any fact or circumstance that would materially delay receipt of any such required regulatory approval.
Section 3.09
Title to Assets
.
Confidential Schedule 3.09
sets forth a list of all
existing deeds, leases and title insurance policies for all real property owned or leased by CBI or the Bank, including all other real estate, and all
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mortgages, deeds of trust, security agreements and other documents describing encumbrances to which such real property is subject, true and complete copies of which have been made available to
FFIN. Each of CBI and the Bank has good and marketable title to all of its assets and Properties, including all personal and intangible properties as reflected in the CBI Financial Statements or the Bank Call Reports or acquired subsequent thereto,
subject to no liens, mortgages, security interests, encumbrances or charges of any kind except (a) as described in
Confidential Schedule 3.09
, (b) as noted in the CBI Financial Statements or the Bank Call Reports,
(c) statutory liens not yet delinquent, (d) consensual landlord liens, (e) encumbrances that do not materially impair the use thereof for the purpose for which they are held, (f) pledges of assets in the ordinary course of
business to secure public funds deposits, and (g) those assets and properties disposed of for fair value in the ordinary course of business since the applicable dates of the CBI Financial Statements or the Bank Call Reports. At the time of
Closing, each Property shall have full, free and uninterrupted access to and from all streets and rights of way adjacent to any Property, and CBI has no Knowledge of any fact or condition which would result in the termination or impairment of such
access.
Section 3.10
Absence of Certain Changes or Events
. Except as set forth on
Confidential Schedule 3.10
, since June 30, 2017, each of CBI and each of its Subsidiaries has conducted its business only in the ordinary course and has not:
(a) incurred any obligation or liability, absolute, accrued, contingent or otherwise, whether due or to become due, except
deposits taken and federal funds purchased and current liabilities for trade or business obligations, other than in the ordinary course of business and consistent with past practices and safe and sound banking practices;
(b) discharged or satisfied any Lien or paid any obligation or liability, whether absolute or contingent, due or to become due,
other than in the ordinary course of business and consistent with past practices and safe and sound banking practices;
(c)
increased the shares of CBI Stock or Bank Stock outstanding (other than as the result of the exercise of any stock option award (a
CBI Option
) that is outstanding as of the date of this Agreement under the Commercial Bancshares,
Inc. 2011 Stock Option Plan and Commercial Bancshares, Inc. 2015 Stock Option Plan (collectively, the
CBI Stock Plans
)) or its surplus (as calculated in accordance with the Call Report Instructions), or declared or made any
payment of dividends or other distribution to its shareholders, or purchased, retired or redeemed, or obligated itself to purchase, retire or redeem, any of its shares of capital stock or other securities;
(d) issued, reserved for issuance, granted, sold or authorized the issuance of any shares of its capital stock or other
securities or subscriptions, options, warrants, calls, rights or commitments of any kind relating to the issuance thereto;
(e) acquired any capital stock or other equity securities or acquired any ownership interest in any bank, corporation,
partnership or other entity (except (i) through settlement of indebtedness, foreclosure, or the exercise of creditors remedies or (ii) in a fiduciary capacity, the ownership of which does not expose it to any liability from the
business, operations or liabilities of such Person);
(f) mortgaged, pledged or subjected to Lien any of its material
property, business or assets, tangible or intangible, except (i) Permitted Encumbrances, (ii) pledges of assets to secure public fund deposits, and (iii) those assets and properties disposed of for fair value since the applicable
dates of the CBI Financial Statements or the Call Reports;
(g) sold, transferred, leased to others or otherwise disposed
of any of its assets (except for assets disposed of for fair value) or canceled or compromised any debt or claim, or waived or released any right or claim, other than in the ordinary course of business and consistent with past business practices and
prudent banking practices;
(h) terminated, canceled or surrendered, or received any notice of or threat of termination or
cancellation of any contract, lease or other agreement or suffered any damage, destruction or loss which, individually or in the aggregate, may reasonably constitute a Material Adverse Change;
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(i) disposed of, permitted to lapse, transferred or granted any rights under, or
entered into any settlement regarding the breach or infringement of, any license or Proprietary Right or modified any existing rights with respect thereto;
(j) other than annual increases in compensation consistent with past practices, made any change in the rate of compensation,
commission, bonus, vesting or other direct or indirect remuneration payable, or paid or agreed or orally promised to pay any bonus, extra compensation, pension or severance or vacation pay, to or for the benefit of any of its shareholders,
directors, officers, employees or agents, or entered into any employment or consulting contract or other agreement with any director, officer or employee or adopted, amended in any material respect 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 or agreement maintained by it for the benefit of its directors, employees or former employees, except to the
extent required by applicable Law;
(k) except for improvements or betterments relating to Properties, made any capital
expenditures or capital additions or betterments in excess of an aggregate of $50,000;
(l) instituted, had instituted
against it, settled or agreed to settle any litigation, action or proceeding prior to any court or Governmental Entity relating to its property;
(m) suffered any change, event or condition that, in any case or in the aggregate, has caused or may result in a Material
Adverse Change;
(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 past business practices and prudent banking practices;
(o) entered into or given any promise, assurance or guarantee of the payment, discharge or fulfillment of any undertaking or
promise made by any Person, other than in the ordinary course of business and consistent with past business practices and prudent banking practices;
(p) sold, or disposed of, or otherwise divested itself of the ownership, possession, custody or control, of any corporate books
or records of any nature that, in accordance with sound business practice, normally are retained for a period of time after their use, creation or receipt, except at the end of the normal retention period;
(q) made any, or acquiesced with any, change in any accounting methods, principles or practices except as required by GAAP or
RAP;
(r) sold (
provided, however
, that payment at maturity is not deemed a sale) or purchased any investment
securities in an aggregate amount of $100,000 or more;
(s) made, renewed, extended the maturity of, or altered any of the
material terms of any loan to any single borrower and his related interests in excess of the principal amount of $500,000;
(t) renewed, extended the maturity of, or altered any of the terms of any loan classified by CBI as special
mention, substandard, or impaired or other words of similar import; or
(u) entered into any
agreement or made any commitment whether in writing or otherwise to take any of the types of action described in subsections (a) through (t) above.
Section 3.11
Leases, Contracts and Agreements
.
(a)
Confidential Schedule 3.11(a)
sets forth a complete listing, as of October 12, 2017, of all
contracts to which CBI or any of its Subsidiaries is a party (collectively, the
Listed Contracts
) that:
(i) relate to real property used by CBI or any of its Subsidiaries in its operations (such contracts being referred to herein
as the
Leases
);
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(ii) relate in any way to the assets or operations of CBI or any of its
Subsidiaries and involves payments to or by CBI or any of its Subsidiaries of $50,000 or more during the term thereof;
(iii) contain any right of first refusal or option to purchase in favor of a third party;
(iv) limits the ability of CBI or any of its Subsidiaries to compete in any line of business or with any Person or in any
geographic area or that upon consummation of the Merger will restrict the ability of FFIN or any of its Affiliates to engage in any line of business in which a bank holding company may lawfully engage;
(v) obligates CBI or its Subsidiaries (or, following the consummation of the transactions contemplated hereby, FFIN and its
Subsidiaries) to conduct business with any third party on an exclusive or preferential basis, or that grants any Person other than CBI or any of its Subsidiaries most favored nation status or similar rights;
(vi) relates to the formation, creation or operation, management or control of any partnership, limited liability company,
joint venture or other similar arrangement with any third parties;
(vii) relates to indebtedness of CBI or any of its
Subsidiaries;
(viii) provides for potential indemnification payments by CBI or any of its Subsidiaries or the potential
obligation of CBI or any of its Subsidiaries to repurchase loans;
(ix) is material to CBIs and its
Subsidiaries balance sheets or their financial conditions or results of operations;
(x) provides any rights to
investors in CBI, including registration, preemptive or antidilution rights or rights to designate members of or observers to CBIs or any of its Subsidiaries board of directors;
(xi) is a data processing/technology contract, software programming or licensing contract;
(xii) requires a consent to, waiver of or otherwise contains a provision relating to a change of control, or that
would or would reasonably be expected to prevent, delay or impair the consummation of the transactions contemplated by this Agreement;
(xiii) limits the payment of dividends by the Bank or any other Subsidiary of CBI; or
(xiv) was otherwise not entered into in the ordinary course of business or that is material to CBI or any of its Subsidiaries
or its financial condition or results of operations.
(b) For the purposes of this Agreement, the term
Listed
Contracts
does not include (i) loans made by, (ii) unfunded loan commitments made by, (iii) letters of credit issued by, (iv) loan participations of, (v) Federal funds sold or purchased by, (vi) repurchase
agreements made by, (vii) bankers acceptances of, or (viii) deposit liabilities of, CBI or the Bank.
(c) No
participations or loans have been sold that have buy back, recourse or guaranty provisions that create contingent or direct liability to CBI or any of its Subsidiaries. All of the Listed Contracts are legal, valid and binding obligations of the
parties to the contracts enforceable according to their terms, subject to the Bankruptcy Exception.
(d) True and correct
copies of all such Listed Contracts, and all amendments thereto, have been furnished to FFIN.
(e) Except as set forth on
Confidential Schedule 3.11(e)
, all rent and other payments by CBI and each of its Subsidiaries under the Listed Contracts are current, there are no existing defaults by CBI or any of its Subsidiaries under the Listed Contracts and no
termination, condition or other event has occurred that (whether with or without notice, lapse of time or the happening or occurrence of any other event) would constitute a default by CBI or any of its Subsidiaries thereunder.
(f) Except as set forth on
Confidential Schedule 3.11(f)
, since June 30, 2017, neither CBI nor any of its
Subsidiaries has entered into any contracts of the type described under
Sections 3.11(a)(i) (xiv)
.
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Section 3.12
Taxes
.
(a) CBI and each of its Subsidiaries have duly and timely filed all Tax Returns that they were required to file under
applicable Laws with the appropriate Governmental Entity. All such Tax Returns were correct and complete in all respects and have been prepared in compliance with all applicable Laws and all Taxes due and owing by CBI and each of its Subsidiaries
(whether or not shown on any Tax Return) have been timely and properly paid. Neither CBI nor any of its Subsidiaries is currently the beneficiary of any extension of time within which to file any Tax Return. No claim has been made by an authority in
a jurisdiction where CBI or any of its Subsidiaries does not file Tax Returns that it is subject to taxation by that jurisdiction. Other than Permitted Encumbrances, there are no Liens for Taxes upon any of the assets of CBI or any of its
Subsidiaries.
(b) CBI and each of its Subsidiaries have collected or withheld and duly paid to the appropriate
Governmental Entity all Taxes required to have been collected or withheld in connection with amounts paid or owing to any employee, independent contractor, creditor, shareholder or other third party.
(c) There is no action, suit, proceeding, audit, assessment, dispute or claim concerning any Tax liability of CBI or any of its
Subsidiaries either (i) claimed or raised by any Governmental Entity in writing or (ii) as to which CBI or any of its Subsidiaries has Knowledge based upon personal contact with any agent of such authority. To the Knowledge of CBI, no
taxing authority has threatened to assess additional Taxes for any period for which Tax Returns have been filed.
(d) True
and complete copies of the federal, state and local income Tax Returns of CBI and each of its Subsidiaries, as filed with the taxing authority for the years ended December 31, 2014, 2015, and 2016 have been furnished to FFIN. Neither CBI nor
any of its Subsidiaries have waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency, which waiver or extension remains in effect.
(e) Neither CBI nor any of its Subsidiaries have been a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(l)(A)(ii) of the Code.
(f) Neither CBI nor any of its Subsidiaries is a party to or bound by any tax allocation or sharing agreement, other than
(i) those to which only CBI and its Subsidiaries are parties, or (ii) commercial business agreements, the principal purpose of which is not the allocation of Taxes.
(g) Neither CBI nor any of its Subsidiaries have (i) been a member of any group filing a consolidated federal income tax
return (other than a group the common parent of which was CBI) nor (ii) any liability for the Taxes of any Person other than CBI and its Subsidiaries under Treasury Regulation § 1.1502-6 (or any similar provision of state, local, or
foreign Law), or as a transferee or successor, by contract or under Law.
(h) Neither CBI nor any of its Subsidiaries has
participated in any reportable transaction or a transaction that is substantially similar to a listed transaction as defined under Sections 6707A, 6011, 6111 and 6112 of the Code and the Treasury Regulations promulgated thereunder.
(i) Neither CBI nor any of its Subsidiaries has been required to disclose on its federal income Tax Returns any position that
could give rise to a substantial understatement of federal income tax within the meaning of Section 6662 of the Code.
(j) Neither CBI nor any of its Subsidiaries will be required to include any item of income in, nor will CBI or any of its
Subsidiaries be required to exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending on or after the Closing Date as a result of any: (i) change in CBIs or any of its Subsidiaries method
of accounting for a taxable period ending on or prior to the Closing Date under Section 481 of the Code (or any corresponding or similar provision of state, local or foreign income Tax law); (ii) closing agreement as described
in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date by CBI or any of its Subsidiaries; (iii) intercompany transaction or excess loss
account of CBI or any of its
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Subsidiaries described in the Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local or foreign Tax law); (iv) installment sale
or open transaction disposition made on or prior to the Closing Date by CBI or any of its Subsidiaries; (v) prepaid amount received on or prior to the Closing Date by CBI or any of its Subsidiaries; (vi) election under Section 108(i)
of the Code; or (vii) use of an improper method of accounting for a taxable period ending on or prior to the Closing Date.
(k) Neither CBI nor any of its Subsidiaries have distributed stock of another Person or had its stock distributed by another
Person, in a transaction that was purported or intended to be governed in whole or in part by Sections 355 or 361 of the Code.
(l)
Confidential Schedule 3.12(l)
lists and contains an accurate and complete description as to the United States
federal and each state net operating and capital loss carryforwards for CBI and each of its Subsidiaries, that exist as of June 30, 2017, and no such net operating or capital loss carryforwards are subject to limitation under Sections 382, 383
or 384 of the Code or the Treasury Regulations, as of the Closing Date.
(m) Within the past three (3) years, the
Internal Revenue Service (the
IRS
) has not challenged the interest deduction on any of CBIs or any of its Subsidiaries debt on the basis that such debt constitutes equity for federal income tax purposes.
(n) The unpaid Taxes of CBI and each of its Subsidiaries (i) did not, as of June 30, 2017, exceed the current
liability accruals for Taxes (excluding any reserves for deferred Taxes established to reflect timing differences between book and Tax income) set forth in the CBI Financial Statements and (ii) do not exceed such current liability accruals for
Taxes (excluding reserves for deferred Taxes established to reflect timing differences between book and Tax income) as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of CBI and its
Subsidiaries in filing their respective Tax Returns.
(o) CBI has no Knowledge of any facts or circumstances that could
reasonably be expected to prevent or impede the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code.
Section 3.13
Insurance
.
Confidential Schedule 3.13
sets forth an accurate and complete
list of all policies of insurance, including fidelity and bond insurance, relating to CBI and each of its Subsidiaries. All such policies (a) are valid, outstanding and enforceable according to their terms, subject to the Bankruptcy Exception,
and (b) are presently in full force and effect, no notice has been received of the cancellation, or threatened or proposed cancellation, of any such policy and there are no unpaid premiums due thereon. Neither CBI nor any of its Subsidiaries is
in default with respect to any such policy nor has CBI or any of its Subsidiaries failed to give any notice or present any claim thereunder in a due and timely fashion. Except as set forth on
Confidential Schedule 3.13
, neither CBI nor
any of its Subsidiaries have been refused any insurance with respect to its assets or operations, nor has its insurance been limited by any insurance carrier to which CBI or any of its Subsidiaries have applied for any such insurance within the last
two (2) years. Each property of CBI and each of its Subsidiaries is insured for an amount deemed adequate by CBIs management, as applicable, against risks customarily insured against. There have been no claims under any fidelity bonds of
CBI or any of its Subsidiaries within the last three (3) years, and CBI has no Knowledge of any facts that would form the basis of a claim under such bonds.
Section 3.14
No Material Adverse Change
. Except as set forth on
Confidential Schedule
3.14
, there has not been any Material Adverse Change with regard to or affecting CBI or any of its Subsidiaries since June 30, 2017, nor has any event or condition occurred that has resulted, or is reasonably likely to result, in a
Material Adverse Change on CBI or any of its Subsidiaries or that could materially affect CBIs or any of its Subsidiaries ability to perform the transactions contemplated by this Agreement or the other agreements contemplated hereby.
Section 3.15
Proprietary Rights
. Except as set forth on
Confidential Schedule 3.15
,
neither CBI nor any of its Subsidiaries owns or requires the use of any patent, patent application, patent right, invention, process,
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trademark (whether registered or unregistered), trademark application, trademark right, trade name, service name, service mark, copyright or any trade secret (
Proprietary
Rights
) for its business or operations. Neither CBI nor any of its Subsidiaries is infringing upon or otherwise acting adversely to, and have not infringed upon or otherwise acted adversely to, any Proprietary Right owned by any other
Person or Persons. There is no claim or action by any such Person pending, or to CBIs Knowledge, threatened, with respect thereto. No third party has ever gained unauthorized access to any information technology networks controlled by and
material to the operation of the business of CBI and its Subsidiaries.
Section 3.16
Transactions with
Certain Persons and Entities
. Except as set forth on
Confidential Schedule 3.16
and excluding deposit liabilities, there are no outstanding amounts payable to or receivable from, or advances by CBI or any of its Subsidiaries to,
and neither CBI nor any of its Subsidiaries is otherwise a creditor to, any director or executive officer of CBI or any of its Subsidiaries nor is CBI or any of its Subsidiaries a debtor to any such Person other than as part of the normal and
customary terms of such persons employment or service as a director of CBI or any of its Subsidiaries. Except as set forth on
Confidential Schedule 3.16
, neither CBI nor any of its Subsidiaries uses any asset owned by any
shareholder or any present or former director or officer of CBI or any of its Subsidiaries, or any Affiliate thereof, in its operations (other than personal belongings of such officers and directors located in CBIs or any of its
Subsidiaries premises and not used in the operations of CBI or any of its Subsidiaries), nor to the Knowledge of CBI do any of such Persons own or have the right to use real property that is adjacent to property on which CBIs or any of
its Subsidiaries facilities are located. Except as set forth on
Confidential Schedule 3.16
or
Confidential Schedule 3.28(a)
, and excluding deposit liabilities, neither CBI nor any of its Subsidiaries is a party to
any transaction or contract with any director or executive officer of CBI or any of its Subsidiaries.
Section 3.17
Evidences of Indebtedness
. All evidences of indebtedness and Leases included in the CBI
Financial Statements are the legal, valid and binding obligations of the respective obligors thereof, enforceable in accordance with their respective terms, subject to the Bankruptcy Exception, and are not subject to any known or threatened
defenses, offsets or counterclaims that may be asserted against CBI or any of its Subsidiaries or the present holder thereof. The credit files of CBI and the Bank contain all material information (excluding general, local or national industry,
economic or similar conditions) known to CBI that is reasonably required to evaluate in accordance with generally prevailing practices in the banking industry the collectability of the loan portfolio of CBI or the Bank (including loans that will be
outstanding if any of them advances funds they are obligated to advance). CBI and the Bank have disclosed all of the special mention, substandard, impaired, doubtful, loss, nonperforming or problem loans of CBI and the Bank on the internal watch
list of CBI or the Bank, a copy of which as of June 30, 2017, has been provided to FFIN. Neither CBI nor the Bank is aware of, nor has CBI or the Bank received notice of, any past or present conditions, events, activities, practices or incidents
that may result in a violation of any Environmental Law with respect to any real property securing any indebtedness reflected as an asset of CBI. With respect to any loan or other evidence of indebtedness all or a portion of which has been sold to
or guaranteed by any Governmental Entity, including the Small Business Administration, each of such loans was made in compliance and conformity with all relevant Laws such that such Governmental Entitys guaranty of such loan is effective
during the term of such loan in all material respects. Notwithstanding anything to the contrary contained in this
Section 3.17
, no representation or warranty is being made as to the sufficiency of collateral securing, or the
collectability of, the loans of the Bank;
provided
,
however
, that to Knowledge of CBI, except as disclosed in the CBI Financial Statements, no loan of the Bank is impaired and there is no impairment of the fair value of any collateral
securing any loan of the Bank.
Section 3.18
Condition of Assets
. All tangible assets used by CBI
and each of its Subsidiaries are in good operating condition, ordinary wear and tear excepted, and conform in all material respects with all applicable ordinances, regulations, zoning and other Laws, whether federal, state or local. None of
CBIs or any of its Subsidiaries premises or equipment is in need of maintenance or repairs other than ordinary routine maintenance and repairs that are not material in nature or cost.
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Section 3.19
Environmental Compliance
.
(a) CBI and each of its Subsidiaries, operations and Properties are in material compliance with all Environmental Laws. CBI is
not aware of, nor has CBI or any of its Subsidiaries received notice of, any past, present, or future conditions, events, activities, practices or incidents that may interfere with or prevent the material compliance of CBI or any of its Subsidiaries
with all Environmental Laws.
(b) CBI and each of its Subsidiaries have obtained all permits, licenses and authorizations
that are required by it under all Environmental Laws, all such permits are in full force and effect, there exists no basis for revocation or suspension of the permits, and the permits will not be affected by the transactions contemplated herein.
(c) No Hazardous Materials exist on, about or within any of the Properties, nor to the Knowledge of CBI has any Hazardous
Materials previously existed on, under, about or within or have been used, generated, stored, or transported from any of the Properties, except in normal quantities used in the normal course of business as office or cleaning supplies without release
to the environment. The use that CBI and each of its Subsidiaries makes and intends to make of the Properties will not result in the use, generation, storage, transportation or accumulation of any Hazardous Material on, in or from any of the
Properties, except in normal quantities used in the normal course of business as office or cleaning supplies without release to the environment.
(d) There is no action, suit, proceeding, investigation, or inquiry by any Governmental Entity pending, or to CBIs
Knowledge threatened, against CBI, any of its Subsidiaries or, to CBIs Knowledge, pending or threatened against any other Person in connection with any Property, arising in any way under any Environmental Law. Neither CBI nor any of its
Subsidiaries have any liability for remedial action under any Environmental Law. Neither CBI nor any of its Subsidiaries received any request for information by any Governmental Entity with respect to the condition, use or operation of any of the
Properties nor has CBI or any of its Subsidiaries received any notice of any kind from any Governmental Entity or other Person with respect to any violation of or claimed or potential liability of any kind under any Environmental Law.
(e) No Hazardous Materials have been disposed of on, or released to, or from, any of the Properties, and no Hazardous Materials
are present in or on the soil, sediments, surface water or ground water on, under, or migrating from any of the Properties in concentrations that would give rise to an obligation to conduct a remedial action pursuant to Environmental Laws.
(f) Except as listed on
Confidential Schedule 3.19
, none of the following exists at any property or facility
owned or operated by CBI or any of its Subsidiaries: (i) under or
above-ground
storage tanks, (ii) asbestos containing material in any form or condition, (iii) materials or equipment containing
polychlorinated biphenyls or urea formaldehyde, or (iv) landfills, surface impoundments, or disposal areas.
(g) None
of the properties currently owned or operated by CBI or any of its Subsidiaries is encumbered by a Lien arising or imposed under any Environmental Law.
(h) The transactions contemplated by this Agreement will not result in any liabilities for site investigation or cleanup, or
require the consent of any Person, pursuant to any of the
so-called
transaction-triggered
or responsible property transfer Environmental Laws.
(i) Neither CBI nor any of its Subsidiaries, either expressly or by operation of law, has assumed or undertaken any
obligation, including any obligation for remedial action, of any other Person under any Environmental Law.
(j) CBI has
provided FFIN with copies of reports in its possession discussing the environmental condition of any Property and any violations of Environmental Law relating to any Property.
Section 3.20
Regulatory Compliance
. All reports, records, registrations, statements, notices and other
documents or information required to be filed by CBI and any of its Subsidiaries with any Regulatory Agency, including, but not limited to, the Federal Reserve, FDIC and the TDB, have been duly and timely filed and all
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information and data contained in such reports, records or other documents are true, accurate, correct and complete in all material respects. Except as set forth on
Confidential Schedule
3.20
,
(a) none of CBI or any of its Subsidiaries is or has been within the last five (5) years subject to any commitment letter, memorandum of understanding, cease and desist Order, written agreement or other formal or informal
administrative action with any such regulatory bodies, and CBI and each of its Subsidiaries are in full compliance with the requirements of any such commitment letter, memorandum of understanding, cease and desist Order, written agreement or other
formal or informal administrative action, and (b) there are no actions or proceedings pending, or to CBIs Knowledge, threatened against CBI or any of its Subsidiaries by or before any such regulatory bodies or any other nation, state or
subdivision thereof, or any other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. Except for examinations conducted by bank regulatory agencies in the ordinary course of
business, no Regulatory Agency has initiated any proceeding or, to CBIs Knowledge, investigation into the business or operations of CBI or any of its Subsidiaries. There is no unresolved violation, criticism or exception by any Regulatory
Agency with respect to any report or statement relating to any examinations of CBI or the Bank. CBI is well-capitalized (as that term is defined in 12 C.F.R. § 225.2(r)) and well managed (as that term is defined is 12
C.F.R. § 225.2(s)). The Bank is an eligible depository institution (as that term is defined in 12 C.F.R. § 303.2(r)).
Section 3.21
Absence of Certain Business Practices
. Neither CBI nor any of its Subsidiaries or any
officer, employee or agent of CBI or any of its Subsidiaries, or any other Person acting on their behalf, has, directly or indirectly, within the past ten (10) years, given or agreed to give any gift or similar benefit to any customer,
supplier, governmental employee or other Person who is or may be in a position to help or hinder the business of CBI or any of its Subsidiaries (or assist CBI or any of its Subsidiaries in connection with any actual or proposed transaction) that
(a) could reasonably be expected to subject CBI or any of its Subsidiaries to any damage or penalty in any civil, criminal or governmental litigation or proceeding, (b) if not given in the past, could reasonably be expected to have
resulted in a Material Adverse Change, or (c) if not continued in the future could reasonably be expected to result in a Material Adverse Change or subject CBI or any of its Subsidiaries to suit or penalty in any private or governmental
litigation or proceeding.
Section 3.22
Books and Records
. The minute books, stock certificate
books and stock transfer ledgers of CBI and each of its Subsidiaries (a) have been kept accurately in the ordinary course of business, (b) are complete and correct in all material respects, (c) the transactions entered therein
represent bona fide transactions, and (d) do not fail to reflect transactions involving the business of CBI or any of its Subsidiaries that properly should have been set forth therein and that have not been accurately so set forth.
Section 3.23
Forms of Instruments, Etc
. CBI has made, and will make, available to FFIN copies of all
standard forms of notes, mortgages, deeds of trust and other routine documents of a like nature used on a regular and recurring basis by CBI and its Subsidiaries in the ordinary course of its business.
Section 3.24
Fiduciary Responsibilities
. CBI and each of its Subsidiaries have performed in all
material respects all of its duties as a trustee, custodian, guardian or as an escrow agent in a manner that complies in all material respects with all applicable Laws, regulations, Orders, agreements, instruments and common law standards.
Section 3.25
Guaranties
. Except as set forth on
Confidential Schedule 3.25
, according to
prudent business practices and in compliance with applicable Law, neither CBI nor any of its Subsidiaries have guaranteed the obligations or liabilities of any other Person.
Section 3.26
Voting Trust, Voting Agreements or Shareholders Agreements
. There is no existing
voting trust, voting agreement, shareholders agreement or similar arrangement relating to a right of first refusal with respect to the purchase, sale or voting of any shares of CBI Stock or Bank Stock.
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Section 3.27
Employee Relationships
.
(a) CBI and each of its Subsidiaries have complied in all material respects with all applicable Laws relating to its
relationships with their employees, and CBI believes that the relationships between CBIs and each of its Subsidiaries employees are good. To the Knowledge of CBI, no executive officer or manager of any of the operations of CBI or any of
its Subsidiaries or of any group of employees of CBI or any of its Subsidiaries have any present plans to terminate their employment with CBI or any of its Subsidiaries. Except as set forth on
Confidential Schedule 3.27(a)
, CBI is not
a party to any oral or written contracts or agreements granting benefits or rights to employees or any collective bargaining agreement or to any conciliation agreement with the Department of Labor, the Equal Employment Opportunity Commission or any
federal, state or local agency that requires equal employment opportunities or affirmative action in employment. There are no unfair labor practice complaints pending against CBI or any of its Subsidiaries before the National Labor Relations Board
and no similar claims pending before any similar state or local or foreign agency. There is no activity or proceeding of any labor organization (or representative thereof) or employee group to organize any employees of CBI or any of its
Subsidiaries, nor of any strikes, slowdowns, work stoppages, lockouts or threats thereof, by or with respect to any such employees. CBI and each of its Subsidiaries 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 neither CBI nor any of its Subsidiaries is engaged in any unfair labor practice.
(b) Set forth on
Confidential Schedules 3.27(b)
is a complete and correct list of all employment agreements
between CBI or any of its Subsidiaries and any employee of CBI or any of its Subsidiaries. True and correct copies of all employment agreements and all amendments thereto, have been furnished to FFIN.
Section 3.28
Employee Benefit Plans
.
(a) Set forth on
Confidential Schedules 3.27(a)
and
3.28(a)
is a complete and correct list of all
employee benefit plans (as defined in the Employee Retirement Income Security Act of 1974, as amended (
ERISA
)), all multiple employer and multiemployer plans (as defined in the Code or ERISA), all specified
fringe benefit plans as defined in Code § 6039D, and all other bonus, incentive, compensation, deferred compensation, profit sharing, stock option, phantom stock, stock appreciation right, stock bonus, stock purchase, employee stock ownership,
savings, severance, supplemental unemployment, layoff, salary continuation, retirement, pension, health, life insurance, disability, group insurance, vacation, holiday, sick leave, fringe benefit or welfare plan or any other similar plan, agreement,
policy or understanding (written or oral, qualified or nonqualified, currently effective or terminated), and any trust, escrow or other agreement related thereto, which (i) are sponsored, maintained, or contributed to, by CBI and any of its
Subsidiaries, or with respect to which CBI and any of its Subsidiaries has or could reasonably be expected to have any liability thereunder, and (ii) provide benefits, or describe policies or procedures applicable to, or for the welfare of, any
current of former officer, director, independent contractor, employee, or service provider of CBI or any of its Subsidiaries, or the dependents or spouses of any such Person, regardless of whether funded (the
Employee Plans
).
Except as set forth on
Confidential Schedule 3.28(a)
, true, accurate and complete copies of the documents comprising each Employee Plan, or, in the case of each unwritten Employee Plan, a written description thereof, including, to the
extent applicable each award agreement, trust, funding arrangements (including all annuity contracts, insurance contracts, and other funding instruments), the most current determination letter issued by the Internal Revenue Service, Form 5500 Annual
Reports (including all schedules and attachments) for the three most recent plan years, documents, records, policies, procedures or other materials related thereto, have been delivered to FFIN and are included and specifically identified in
Confidential Schedule 3.28(a)
. No unwritten amendment exists with respect to any written Employee Plan.
(b)
Except as set forth on
Confidential Schedule 3.28(b)
no Employee Plan is a defined benefit plan within the meaning of ERISA §3(35) or is otherwise subject to ERISA Title IV, and neither CBI nor any of its Subsidiaries has ever
sponsored or otherwise maintained such a plan.
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(c) Except as set forth on
Confidential Schedule 3.28(c)
, there
have been no prohibited transactions (as defined in Code §4975(c)(1)), breaches of fiduciary duty or any other breaches or violations of any Law applicable to the Employee Plans that would directly or indirectly subject CBI, any of its
Subsidiaries or any Employee Plan to any taxes, penalties, or other liabilities (any liability arising from any indemnification agreement or policy), except to the extent that CBI, any of its Subsidiaries or any Employee Plan sponsored by CBI or any
of its Subsidiaries is involved in such transaction or breach. Each Employee Plan that is intended to be qualified under Code §401(a) has a current favorable determination or opinion letter that covers all existing amendments up to and
including all changes required by the most recent IRS Cumulative List of Changes applicable to the Employee Plan and has no obligation to adopt any amendments for which the remedial amendment period under Code §401(b) has expired and CBI is not
aware of any circumstances likely to result in revocation of any such favorable determination or opinion letter. Each such Employee Plan is so qualified and has been operated in compliance with applicable Law and its terms, any related trust is
exempt from federal income tax under Code §501(a) and no event has occurred that will or reasonably could result in the loss of such tax exemption or to liability for any tax under Code §511. There are no pending claims, lawsuits or
actions relating to any Employee Plan (other than ordinary course claims for benefits) and, to CBIs Knowledge, none are threatened, except to the extent that CBI, any of its Subsidiaries, or any Employee Plan sponsored by CBI or any of its
Subsidiaries is involved in such transaction. Neither CBI nor any of its Subsidiaries provides benefits to any employee or dependent of such employee of CBI or any of its Subsidiaries after the employee terminates employment other than as disclosed
in this Agreement or any schedule hereto or as required by Law. No written or oral representations have been made by or on behalf of CBI or any of its Subsidiaries to any employee or former employee of CBI or any of its Subsidiaries promising or
guaranteeing any employer payment or funding for the continuation of medical, dental, life or disability coverage or any other welfare benefit (as defined in ERISA §3(1)) for any period of time beyond the end of the current plan year (except to
the extent of coverage required under Code §4980B). Compliance with FAS 106 would not create any material change to the CBI Financial Statements. The completion of the transactions contemplated by this Agreement will not cause a termination or
partial termination, or otherwise accelerate the time of payment, exercise, or vesting, or increase the amount of compensation due to any current or former employee, officer or director of CBI or any of its Subsidiaries except (i) as required
by the terms of any Employee Plan provided to FFIN or by applicable Law in connection with a qualified plan, (ii) as contemplated by this Agreement, or (iii) except as identified on
Confidential Schedule 3.28(c)
. There are no
surrender charges, penalties, or other costs or fees that would be imposed by any Person against CBI or any of its Subsidiaries, an Employee Plan, or any other Person, including an Employee Plan participant or beneficiary, as a result of the
hypothetical liquidation as of the Closing Date of any insurance, annuity, or investment contracts or any other similar investment held by any Employee Plan.
(d) The execution, delivery and performance by CBI of its obligations under the transactions contemplated by this Agreement
and/or the approval of CBIs shareholders of the Merger (whether alone or in connection with any subsequent event(s)), will not result in any payments or benefits which would not be deductible pursuant to Code §280G.
(e) All contributions to any Employee Plan (including, without limitation, all employer contributions, employee salary
reduction contributions and all premiums or other payments (other than claims)) that are due and payable by CBI or any of its Subsidiaries on or before the Closing Date have been timely paid to or made with respect to each Employee Plan and, to the
extent not presently payable, appropriate reserves have been established for the payment and properly accrued in accordance with GAAP.
(f) No participant, beneficiary or non-participating employee has been denied any benefit due or to become due under any
Employee Plan. Neither CBI nor any of its Subsidiaries has misled any person as to his or her rights under any Employee Plan. All obligations required to be performed by CBI and any of its Subsidiaries under any Employee Plan have been performed in
all material respects and neither CBI nor any of its Subsidiaries is in default under or in violation of any provision of any Employee Plan. No event has occurred that would constitute grounds for an enforcement action by any party against CBI, any
of its Subsidiaries or any fiduciary of any Employee Plan under part 5 of Title I of ERISA under any Employee Plan.
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(g) With respect to each employee benefit plan (as defined in ERISA)
maintained or contributed to or required to be contributed to, currently or within the last six years, by any corporation or trade or business, the employees of which, together with the employees of CBI and each of its Subsidiaries, are required to
be treated as employed by a single employer under any of the rules contained in ERISA or Code §414 (the
Controlled Group Plans
):
(i) All Controlled Group Plans that are group health plans (as defined in Code §5000(b)(1) and ERISA
§733(a)) have been operated up to the Closing in a manner so as to not subject CBI or any of its Subsidiaries to any liability under Code §4980B or §4980D;
(ii) Except as set forth on
Confidential Schedule 3.28(g)
, there is no Controlled Group Plan that is a
multiple employer plan or multiemployer plan (as either such term is defined in ERISA), nor has there been any such plan under which CBI or any of its Subsidiaries had any liability in the last 5 years (or would have had
liability if notice had been given); and
(iii) Except as set forth on
Confidential Schedule 3.27(a))
or
Confidential Schedule 3.28(g)
, each Employee Plan that provides (or has provided within the past 5 years) for health, dental, vision, life, disability or similar coverage is covered by one or more third-party insurance policies and
neither CBI nor any of its Subsidiaries is liable for self-insuring any such claims.
Each such Controlled Group Plan is included in the
listing of Employee Plans on
Confidential Schedule 3.28(a)
.
(h) Except as set forth on
Confidential
Schedule 3.28(h)
, all Employee Plan documents, annual reports or returns, audited, compiled or unaudited financial statements, actuarial valuations, summary annual reports, and summary plan descriptions issued with respect to the Employee
Plans are correct, complete, and current in all material respects, have been timely filed or distributed to the extent required by Law.
(i) Except as set forth on
Confidential Schedule 3.28(i)
, no Employee Plan holds any stock or other securities of
CBI or any of its Subsidiaries or provides the opportunity for the grant, purchase or contribution of any such security.
(j) Except as provided in
Confidential Schedule 3.28(j)
, CBI or any of its Subsidiaries may, at any time amend or
terminate any Employee Plan that it sponsors or maintains and may withdraw from any Employee Plan to which it contributes (but does not sponsor or maintain), without obtaining the consent of any third party, other than an insurance company in the
case of any benefit underwritten by an insurance company, and without incurring liability except for unpaid premiums or contributions due for the pay period that includes the effective date of such amendment, withdrawal or termination.
(k) Each Employee Plan that is a nonqualified deferred compensation plan within the meaning of Code
§409A(d)(1) (a
Nonqualified Deferred Compensation Plan
) subject to Code §409A has (i) been maintained and operated since January 1, 2005 (or, if later, from its inception) in good faith compliance with
Code §409A of the Code and all applicable IRS regulations promulgated thereunder and, as to any such plan in existence prior to January 1, 2005, has not been materially modified (within the meaning of IRS Notice 2005-1) at any
time after October 3, 2004, or has been amended in a manner that conforms with the requirements of Code §409A, and (ii) since January 1, 2011, been materially in documentary and operational compliance with Code §409A
and all applicable IRS guidance promulgated thereunder. No additional tax under Code §409A(a)(1)(B) has been or is reasonably expected to be incurred by a participant in any such Employee Plan or other contract, plan, program, agreement, or
arrangement. Neither CBI nor any of its Subsidiaries is a party to, or otherwise obligated under, any contract, agreement, plan or arrangement that provides for the gross-up of taxes imposed by Code §409A(a)(1)(B). No currently outstanding
stock option or other right to acquire CBI Stock or other equity security of CBI or any of its any of its Subsidiaries under any Employee Plan, or the payment of cash based on the value thereof, (A) has, as to any employee of CBI or any of its
Subsidiaries, an exercise price that was less than the fair market value of the underlying equity security as of the date such stock option or right was granted, as determined by CBI in good faith and in compliance with the relevant IRS guidance in
effect on the date of grant (including, IRS
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Notice 2005-1 and § 1.409A-1 (b)(5)(iv) of the Treasury regulations), (B) has any feature for the deferral of compensation other than the deferral of recognition of income until the
later of exercise or disposition of such option or right, or (C) has been granted after December 31, 2004, with respect to any class of stock of CBI or any of its Subsidiaries that is not service recipient stock (within the
meaning of applicable regulations under Code §409A).
Section 3.29
Obligations to Employees
.
All accrued obligations and liabilities of CBI, each of its Subsidiaries and all Employee Plans, for payments to trusts (including grantor trusts) or other funds, to any government agency or authority, or to any present or former director, officer,
employee or agent (or his or her heirs, legatees or legal representatives) with respect to any of the matters listed below have been timely paid to the extent required by applicable Law or the terms of such plan, contract program, policy, or other
governing instruments: (a) withholding Taxes, unemployment compensation or social security benefits; (b) all pension, profit-sharing, savings, stock purchase, stock bonus, stock ownership, stock option, phantom stock and stock appreciation
rights plans and agreements; (c) all employment, deferred compensation (whether funded or unfunded), salary continuation, consulting, retirement, early retirement, severance, reimbursement, bonus or collective bargaining plans and agreements;
(d) all executive and other incentive compensation plans, programs, or agreements; (e) all group insurance and health contracts, policies and plans; and (f) all other incentive, welfare (including vacation and sick pay), retirement or
employee benefit plans or agreements maintained or sponsored, participated in, or contributed to, by CBI or any of its Subsidiaries for its current or former directors, officers, employees and agents. To the extent that payment of any obligation or
liability under any of the foregoing is not currently required, adequate actuarial accruals and reserves for such payments have been and are being made by CBI or its Subsidiaries according to GAAP. All obligations and liabilities of CBI and each of
its Subsidiaries for all other forms of compensation that are or may be payable to their current or former directors, officers, employees or agents, or pursuant to any Employee Plan, have been and are being paid to the extent required by applicable
Law or by the plan or contract, and adequate actuarial accruals and reserves for payment therefor have been and are being made by CBI and each of its Subsidiaries according to GAAP. All accruals and reserves referred to in this Section are correctly
and accurately reflected and accounted for in the CBI Financial Statements and the books, statements and records of CBI and each of its Subsidiaries.
Section 3.30
Interest Rate Risk Management Instruments
. Except as set forth on
Confidential
Schedule 3.30
, neither CBI nor any of its Subsidiaries has any interest rate swaps, caps, floors and option agreements and other interest rate risk management arrangements, whether entered into for the account of CBI or any of its
Subsidiaries or for the account of a customer of CBI or any of its Subsidiaries.
Section 3.31
Internal Controls
. CBI and each of its Subsidiaries maintains accurate books and records reflecting its assets and liabilities and maintains adequate internal accounting controls that are designed to provide assurance that
(a) transactions are executed with managements authorization; (b) transactions are recorded as necessary to permit preparation of the consolidated financial statements of CBI and to maintain accountability for CBIs and its
Subsidiaries assets; (c) access to CBIs and its Subsidiaries assets is permitted only in accordance with managements authorization; (d) the reporting of CBIs and its Subsidiaries assets is compared with
existing assets at regular intervals; and (e) extensions of credit and other receivables are recorded accurately, and proper and adequate procedures are implemented to effect the collection thereof on a current and timely basis. Except as set
forth on
Confidential Schedule 3.31
, none of CBIs or any of its Subsidiaries systems, controls, data or information are recorded, stored, maintained, operated or otherwise wholly or partly dependent on or held by any means
(including any electronic, mechanical or photographic process, whether computerized or not) which (including all means of access thereto and therefrom) are not under the exclusive ownership and direct control of CBI, any of its Subsidiaries or their
accountants.
Section 3.32
Community Reinvestment Act
. The Bank is in compliance in all material
respects with the Community Reinvestment Act (the
CRA
) and all regulations issued thereunder, and CBI has supplied FFIN with copies of the Banks current CRA Statement, all support papers therefor, all letters and written
comments received by it since January 1, 2011, pertaining thereto and any responses by the Bank to those letters and
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comments. The Bank has a rating of not less than satisfactory as of its most recent CRA compliance examination and CBI has no Knowledge of any reason why the Bank would not receive a
rating of satisfactory or better in its next CRA compliance examination or why the FDIC or any other Governmental Entity may seek to restrain, delay or prohibit the transactions contemplated hereby as a result of any act or omission of
the Bank under the CRA.
Section 3.33
Fair Housing Act, Home Mortgage Disclosure Act, Real Estate
Settlement Procedures Act and Equal Credit Opportunity Act
. The Bank is in compliance in all material respects with the Fair Housing Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act and the Equal Credit
Opportunity Act and all regulations issued thereunder. The Bank has not received any notice of any violation of those acts or any of the regulations issued thereunder, and the Bank has not received any notice of, nor does CBI have any Knowledge of,
any threatened administrative inquiry, proceeding or investigation with respect to the Banks non-compliance with such acts.
Section 3.34
Usury Laws and Other Consumer Compliance Laws
. All loans of the Bank have been made in accordance with all applicable statutes and regulatory requirements at the time of such loan or any renewal thereof, including
without limitation, the Texas usury statutes as they are currently interpreted, Regulation Z issued by the Federal Reserve, the Federal Consumer Credit Protection Act and all statutes and regulations governing the operation of banks chartered under
the Laws of the State of Texas. Each loan on the books of the Bank was made in the ordinary course of business.
Section 3.35
Bank Secrecy Act, Foreign Corrupt Practices Act and U.S.A. Patriot Act
. CBI and the Bank
are in compliance with the Bank Secrecy Act, the United States Foreign Corrupt Practices Act and the International Money Laundering Abatement and Anti-Terrorist Financing Act, otherwise known as the U.S.A. Patriot Act, and all regulations issued
thereunder, and the Bank has properly certified all foreign deposit accounts and has made all necessary tax withholdings on all of its deposit accounts; furthermore, the Bank has timely and properly filed and maintained all requisite Currency
Transaction Reports and other related forms, including any requisite Custom Reports required by any agency of the United States Treasury Department, including the IRS. The Bank has timely filed all Suspicious Activity Reports with the Financial
Institutions - Financial Crimes Enforcement Network (U.S. Department of the Treasury) required to be filed by it under the Laws referenced in this Section.
Section 3.36
Unfair, Deceptive or Abusive Acts or Practices
. Neither CBI nor any of its Subsidiaries
has engaged in any unfair, deceptive or abusive acts or practices, as such terms are defined under §1031 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the
Dodd-Frank Act
). There are no allegations, claims
or disputes to which CBI or any of its Subsidiaries is a party that allege, or to the Knowledge of CBI, no Person has threatened to allege, that CBI or any of its Subsidiaries has engaged in any unfair, deceptive or abusive acts or practices.
Section 3.37
Proxy Statement/Prospectus
. None of the information supplied or to be supplied by CBI or
any of its Subsidiaries or any of its directors, officers, employees or agents for inclusion in the Proxy Statement/Prospectus shall, at the date the Proxy Statement/Prospectus is mailed to the shareholders of CBI and, as the Proxy
Statement/Prospectus may be amended or supplemented, at the time of the Shareholders Meeting, contain any untrue statement of a material fact or omit to state any material fact with respect to CBI or any of its Subsidiaries necessary in order
to make the statements therein with respect to CBI and any of its Subsidiaries, in light of the circumstances under which they are made, not misleading or necessary to correct any statement in any earlier communication with respect to the
solicitation of any proxy for the Shareholders Meeting. All documents that CBI is responsible for filing with any Regulatory Agency in connection with the Merger shall comply with respect to CBI and each of its Subsidiaries with the provisions
of applicable Law.
Section 3.38
Agreements Between CBI and its Subsidiaries; Claims
. Except as
set forth on
Confidential Schedule 3.38
, there are no written or oral agreements or understandings between CBI and any of its Subsidiaries. All past courses of dealings between CBI and each of its Subsidiaries have been conducted in
the
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ordinary course of business, on arms-length terms consistent with applicable Law and prudent business practices. CBI has no Knowledge of any claims that CBI has against any of its Subsidiaries or
of any facts or circumstances that would give rise to any such claim.
Section 3.39
Representations
Not Misleading
. No representation or warranty by CBI contained in this Agreement, nor any written statement, exhibit or schedule furnished to FFIN by CBI under and pursuant to this Agreement, contains or will contain on the Closing Date any
untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements contained herein or therein, in light of the circumstances under which it was or will be made, not misleading and such
representations and warranties would continue to be true and correct following disclosure to any Governmental Entity having jurisdiction over CBI or its properties of the facts and circumstances upon which they were based.
Section 3.40
State Takeover Laws
. The CBI Board has approved this Agreement and the transactions
contemplated hereby as required to render inapplicable to such agreements and transactions any applicable provisions of the takeover Laws of any state, including any moratorium, control share, fair price,
takeover or interested shareholder Law.
Section 3.41
Opinion of Financial
Advisor
. Prior to the execution of this Agreement, the CBI Board has received an opinion (which, if initially rendered verbally, has been or will be confirmed by a written opinion, dated the same date) from the advisor set forth on
Confidential Schedule 3.41
, to the effect that, as of the date thereof, and based upon and subject to the factors, assumptions and limitations set forth therein, the Merger Consideration, including the Dividend Payment, payable
pursuant to this Agreement is fair, from a financial point of view, to the holders of CBI Stock. Such opinion has not been amended or rescinded in any material respect as of the date of this Agreement.
Section 3.42
No Other Representations or Warranties
. Except as expressly set forth in this Agreement,
none of CBI, its Subsidiaries or any other Person is making or has made, and none of them shall have liability in respect of, any written or oral representation or warranty, express or implied, at Law, in equity or otherwise, with respect to CBI or
any of its Subsidiaries or otherwise, and whether express or implied, at Law, in equity or otherwise, in respect of this Agreement or the transactions contemplated thereby, or in respect of any other matter whatsoever.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FFIN
Except (i) as disclosed in the disclosure schedules delivered by FFIN to CBI prior to the execution hereof (the
FFIN
Confidential Schedules
); provided, that (a) no such item is required to be set forth as an exception to a representation or warranty if its absence would not result in the related representation or warranty being deemed untrue or
incorrect, (b) the mere inclusion of an item in the FFIN Confidential Schedule as an exception to a representation or warranty shall not be deemed an admission by FFIN that such item represents a material exception or fact, event or
circumstance or that such item is reasonably likely to result in a Material Adverse Change, and (c) any disclosures made with respect to a section of this
Article IV
shall be deemed to qualify (1) any other section of this
Article IV
specifically referenced or cross-referenced and (2) other sections of this
Article IV
to the extent it is reasonably apparent on its face (notwithstanding the absence of a specific cross reference) from a reading of the
disclosure that such disclosure applies to such other sections or (ii) as disclosed in any FFIN SEC Report filed prior to the date hereof (but disregarding risk factor disclosures contained under the heading Risk Factors, or
disclosures of risks set forth in any forward-looking statements disclaimer or any other statements that are similarly non-specific or cautionary, predictive or forward-looking in nature), FFIN hereby represents and warrants to CBI as
follows:
Section 4.01
Organization and Qualification
.
(a) FFIN is a corporation, duly organized, validly existing and in good standing under the Laws of the State of Texas and is a
bank holding company registered under the BHCA. FFIN has the corporate power and authority (including all licenses, franchises, permits and other governmental authorizations as are legally required) to carry on its business as now being 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. True and complete copies of the certificate of formation and bylaws of FFIN, as amended to
date, have been made available to CBI.
(b) FFB is a national banking association, duly organized and validly existing
under the Laws of the United States and in good standing under the Laws of the State of Texas. FFB has the corporate power and authority (including all licenses, franchises, permits and other governmental authorizations as are legally required) to
carry on its business as now being conducted, to own, lease and operate its properties and assets as now owned, leased or operated and to enter into and to carry on the business and activities now conducted by it. True and complete copies of the
articles of association and bylaws of FFB, as amended to date, have been made available to CBI. FFB is an insured depository institution as defined in the FDIA and is a member of the Federal Reserve.
(c) Merger Sub is a corporation, duly organized, validly existing and in good standing under the Laws of the State of Texas.
Merger Sub has the corporate power and authority (including all licenses, franchises, permits and other governmental authorizations as are legally required) to carry on its business as now being 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. True and complete copies of the certificate of formation and bylaws of Merger Sub, as amended to date, have been made available to CBI.
Section 4.02
Execution and Delivery
.
(a) FFIN has the corporate power and authority to execute and deliver this Agreement and to consummate the transactions
contemplated herein. FFIN has taken all action necessary to authorize the execution, delivery and (provided the required regulatory approvals are obtained) performance of this Agreement and the other agreements and documents contemplated hereby to
which it is a party. This Agreement has been, and the other agreements and documents contemplated hereby, have been or at Closing will be, duly executed by FFIN, and each constitutes the legal, valid and binding obligation of FFIN, enforceable in
accordance with its respective terms and conditions, except as enforceability may be limited by the Bankruptcy Exception.
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(b) Merger Sub has the corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated herein. Merger Sub has taken all action necessary to authorize the execution, delivery and (provided the required regulatory and shareholder approvals are obtained) performance of this
Agreement and the other agreements and documents contemplated hereby to which it is a party. This Agreement has been, and the other agreements and documents contemplated hereby, have been or at Closing will be, duly executed by Merger Sub, and each
constitutes the legal, valid and binding obligation of Merger Sub, enforceable in accordance with its respective terms and conditions, except as enforceability may be limited by the Bankruptcy Exception.
Section 4.03
Capitalization
.
(a) The entire authorized capital stock of FFIN consists solely of 120,000,000 shares of common stock, par value $0.01 per
share, of which 66,223,957 shares are issued and outstanding, as of September 30, 2017.
(b) At the Effective
Time, the shares of FFIN Stock issued pursuant to the Merger will be duly authorized, validly issued, fully paid and nonassessable, will not be issued in violation of any preemptive rights or any applicable federal or state securities Laws, and will
not be subject to any restrictions on transfer arising under the Securities Act of 1933, as amended (the
Securities Act
), except for shares issued to any shareholder of CBI who may be deemed to be an affiliate (under
the Securities Exchange Act of 1934, as amended (the
Exchange Act
)) of FFIN after completion of the Merger.
Section 4.04
SEC Filings; Financial Statements
.
(a) FFIN has filed and made available to CBI all forms,
reports, and documents required to be filed by FFIN with the SEC since December 31, 2013 (collectively, the
FFIN SEC Reports
). The FFIN SEC Reports (i) at the time filed, complied in all material respects with the
applicable requirements of the Securities Act and the Exchange Act, as the case may be, and (ii) did not at the time they were filed (or if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact required to be stated in such FFIN SEC Reports or necessary in order to make the statements in such FFIN SEC Reports, in light of the circumstances under which they
were made, not misleading. Except for any Subsidiaries of FFIN that are registered as a broker, dealer or investment advisor or filings required due to fiduciary holdings of such Subsidiaries of FFIN, no Subsidiary of FFIN is required to file any
forms, reports or other documents with the SEC.
(b) The financial statements of FFIN contained in the FFIN SEC Reports,
including any FFIN SEC Reports filed after the date of this Agreement until the Effective Time, complied or will comply as to form in all material respects with the applicable published rules and regulations of the SEC with respect thereto, was or
will be prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes to such financial statements or, in the case of unaudited statements, as permitted by Form 10-Q of the
SEC), and fairly presented or will fairly present the consolidated financial position of FFIN and its Subsidiaries as at the respective dates and the consolidated results of its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and recurring year-end adjustments which were not or are not expected to be material in amount or effect.
Section 4.05
Compliance with Laws, Permits and Instruments
.
(a) Except as set forth on
Confidential Schedule 4.05
, each of FFIN and FFB holds all material licenses,
registrations, franchises, permits and authorizations necessary for the lawful conduct of its business and is not in violation of any applicable Law or Order of any Governmental Entity, which is reasonably likely to result in a Material Adverse
Change as to FFIN, individually or in the aggregate, or to the Knowledge of FFIN is reasonably likely to materially and adversely affect, prevent or delay the obtaining of any regulatory approval for the consummation of the transactions contemplated
by this Agreement.
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(b) Except as set forth on
Confidential Schedule 4.05
, each of FFIN
and FFB has in all material respects performed and abided by all obligations required to be performed by it to the date hereof, and has complied with, and is in compliance with, and is not in default (or with the giving of notice or the passage of
time shall not be in default) under, or in violation of, (i) any provision of the certificate of formation or bylaws of FFIN, the articles of association or bylaws of FFB, or other governing documents of FFIN or FFB, as applicable
(collectively, the
FFIN Constituent Documents
), (ii) any material provision of any mortgage, indenture, lease, contract, agreement or other instrument applicable to FFIN or any Subsidiary of FFIN, or their respective assets,
operations, properties or businesses now conducted or heretofore conducted or (iii) any permit, concession, grant, franchise, license, authorization, judgment, writ, injunction, Order, decree or award of any Governmental Entity applicable in
any material respect to FFIN or any Subsidiary of FFIN or their respective assets, operations, properties or businesses now conducted or heretofore conducted.
(c) Except as set forth on
Confidential Schedule 4.05
, the execution, delivery and (provided the required
regulatory approvals are obtained) performance of this Agreement and the other agreements contemplated hereby, and the completion of the transactions contemplated hereby and thereby will not conflict with, or result, by itself or with the giving of
notice or the passage of time, in any violation of or default or loss of a benefit under, (i) the FFIN Constituent Documents, (ii) any material mortgage, indenture, lease, contract, agreement or other instrument applicable to FFIN or any
Subsidiary of FFIN, or their respective assets, operations, properties or businesses or (iii) any material permit, concession, grant, franchise, license, authorization, judgment, writ, injunction, Order, decree, statute, Law, ordinance, rule or
regulation applicable to FFIN or any Subsidiary of FFIN or their respective assets, operations, properties or businesses.
Section 4.06
Undisclosed Liabilities
. FFIN has no material liability or obligation, accrued, absolute, contingent or otherwise and whether due or to become due (including, without limitation, unfunded obligations under any employee
benefit plan maintained by FFIN or liabilities for federal, state or local taxes or assessments) that are not reflected in or disclosed in the FFIN SEC Reports, except (a) those liabilities and expenses incurred in the ordinary course of
business and consistent with past business practices since the date of the FFIN SEC Reports or (b) that are not, individually or in the aggregate, material to FFIN.
Section 4.07
Litigation
.
(a) Except as set forth on
Confidential Schedule 4.07
, neither FFIN nor FFB is a party to any, and there are no
pending or, to the Knowledge of FFIN, threatened, legal, administrative, arbitral or other proceedings, claims, actions or governmental or regulatory investigations of any nature against FFIN or FFB which are reasonably likely, individually or in
the aggregate, to result in a Material Adverse Change as to FFIN or FFB, nor, to the Knowledge of FFIN, is there any basis for any proceeding, claim or any action against FFIN or FFB that would be reasonably likely, individually or in the aggregate,
to result in a Material Adverse Change as to FFIN or FFB. There is no Order, imposed upon FFIN or FFB or the assets or property of FFIN or FFB that has resulted in, or is reasonably likely to result in, a Material Adverse Change as to FFIN or FFB.
(b) No legal action, suit or proceeding or judicial, administrative or governmental investigation is pending or, to the
best Knowledge of FFIN, threatened against FFIN or FFB that questions or might question the validity of this Agreement or the agreements contemplated hereby or any actions taken or to be taken by FFIN pursuant hereto or thereto or seeks to enjoin or
otherwise restrain the transactions contemplated hereby or thereby.
Section 4.08
Consents and
Approvals
. Except for (a) the filing of applications, filings and notices, as applicable, with the NASDAQ, (b) the filing of applications, filings and notices, as applicable, with the Federal Reserve under the BHCA and approval of such
applications, filings and notices, (c) the filing of applications, filings and notices, as applicable, with the TDB and OCC in connection with the Bank Merger, and approval of such applications, filings and notices, (d) the filing with the
SEC of (i) any filings under applicable requirements
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of the Exchange Act, including the filing of the Proxy Statement/Prospectus and (ii) the Form S-4 and declaration of effectiveness of the Form S-4, (e) the filing of the certificates of
merger with the Texas Secretary of State pursuant to the requirements of the TBOC, and (f) such filings and approvals as are required to be made or obtained under the securities or Blue Sky Laws of various states in connection with
the issuance of shares of FFIN Stock pursuant to this Agreement and the approval of the listing of such FFIN Stock on the NASDAQ, no consents, Orders or approvals of or filings or registrations with any Governmental Entity are necessary in
connection with (A) the execution and delivery by FFIN and Merger Sub of this Agreement or (B) the consummation by FFIN and Merger Sub of the transactions contemplated by this Agreement. As of the date of this Agreement, FFIN knows of no
reason why all regulatory approvals from any Governmental Entity or Regulatory Agency required for the consummation of the transactions contemplated hereby should not be obtained on a timely basis and FFIN has no Knowledge of any fact or
circumstance that would materially delay receipt of any such required regulatory approval.
Section 4.09
Regulatory Compliance
.
(a) Except as set forth on
Confidential Schedule 4.09
, FFIN is not subject to
any cease-and-desist or other Order or enforcement action issued by, or is a party to any written agreement, consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject to
any Order or directive by, or has been ordered to pay any civil penalty by, or is a recipient of a supervisory letter from, or has adopted any board resolutions at the request or suggestion of any Regulatory Agency or other Governmental Entity that
restricts the conduct of its business or that relates to its capital adequacy, its ability to pay dividends, its credit or risk management policies, its management or its business. Except as set forth on
Confidential Schedule 4.09
,
there is no unresolved violation, criticism or exception by any Regulatory Agency or other Governmental Entity with respect to any report or statement relating to any examinations of FFIN or FFB. FFIN is well-capitalized (as that term is
defined in 12 C.F.R. § 225.2(r)) and well managed (as that term is defined is 12 C.F.R. § 225.2(s)). FFB is an eligible bank (as that term is defined in 12 C.F.R. § 5.3(g)). Notwithstanding the foregoing,
neither party shall be required to take any action under this Agreement that would cause such party to violate 12 C.F.R. §309.6.
(b) All material reports, records, registrations, statements, notices and other documents or information required to be filed
by FFIN with any Regulatory Agency have been duly and timely filed and all information and data contained in such reports, records or other documents are substantially true, accurate, correct and complete.
Section 4.10
Proxy Statement/Prospectus
. None of the information supplied or to be supplied by FFIN or
any of its directors, officers, employees or agents for inclusion in the Proxy Statement/Prospectus shall, at the date the Proxy Statement/Prospectus is mailed to the shareholders of CBI and, as the Proxy Statement/Prospectus may be amended or
supplemented, at the time of the Shareholders Meeting, contain any untrue statement of a material fact or omit to state any material fact with respect to FFIN or any Subsidiary of FFIN necessary in order to make the statements therein with
respect to FFIN or any Subsidiary of FFIN, in light of the circumstances under which they are made, not misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of any proxy for the
Shareholders Meeting. All documents that FFIN is responsible for filing with any regulatory or governmental agency in connection with the Merger shall comply with respect to FFIN in all material respects with the provisions of applicable Law.
Section 4.11
Absence of Certain Changes
. Since June 30, 2017, (a) FFIN has conducted
its business in the ordinary course (excluding the incurrence of expenses related to this Agreement and the transactions contemplated hereby), and (b) no event has occurred or circumstance arisen that, individually or in the aggregate, has had
or is reasonably likely to have, a Material Adverse Change on FFIN.
Section 4.12
FFIN Disclosure
Controls and Procedures
. Except as set forth on
Confidential Schedule 4.12
, none of FFINs records, systems, controls, data or information, are recorded, stored, maintained and operated wholly or partly dependent on or held by
any means (including any electronic, mechanical or photographic
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process, whether computerized or not) which (including all means of access thereto and therefrom) are not under the exclusive ownership and direct control of FFIN or its accountants. FFIN has
devised, established and maintained a system of internal accounting controls sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with GAAP (except as otherwise required by RAP).
Section 4.13
Representations Not Misleading
. No
representation or warranty by FFIN contained in this Agreement, nor any written statement, exhibit or schedule furnished to CBI by FFIN under and pursuant to, or in anticipation of this Agreement, contains or will contain on the Closing Date any
untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements contained herein or therein, in light of the circumstances under which it was or will be made, not misleading and such
representations and warranties would continue to be true and correct following disclosure to any Governmental Entity having jurisdiction over FFIN or their properties of the facts and circumstances upon which they were based.
Section 4.14
No Other Representations or Warranties
. Except as expressly set forth in this Agreement,
none of FFIN, its Subsidiaries or any other Person is making or has made, and none of them shall have liability in respect of, any written or oral representation or warranty, express or implied, at Law, in equity or otherwise, with respect to FFIN
or any of its Subsidiaries or otherwise, and whether express or implied, at Law, in equity or otherwise, in respect of this Agreement or the transactions contemplated thereby, or in respect of any other matter whatsoever.
ARTICLE V
COVENANTS OF CBI
Section 5.01
Commercially Reasonable Efforts
. CBI will use commercially reasonable efforts to perform and fulfill all conditions and obligations on its part to be performed or fulfilled under this Agreement and to cause the
completion of the transactions contemplated hereby in accordance with this Agreement.
Section 5.02
Shareholders Meeting
. CBI, acting through the CBI Board, shall, in accordance with applicable Law:
(a) duly
call, give notice of, convene and hold a meeting of its shareholders (the
Shareholders Meeting
) as soon as practicable after the Registration Statement and the Proxy Statement/Prospectus (forming a part of the Registration
Statement) become effective with the SEC for the purpose of approving and adopting this Agreement, the Merger, and the transactions contemplated hereby;
(b) require no greater than the minimum vote of the capital stock of CBI, required by applicable Law in order to approve this
Agreement, the Merger and the transactions contemplated hereby;
(c) include in the Proxy Statement/Prospectus the
recommendation of the CBI Board that the shareholders of CBI vote in favor of the approval and adoption of this Agreement, the Merger and the transactions contemplated hereby; and
(d) cause the Proxy Statement/Prospectus to be mailed to the shareholders of CBI as soon as practicable after the Registration
Statement and the Proxy Statement/Prospectus (forming a part of the Registration Statement) become effective with the SEC, and use its commercially reasonable efforts to obtain the approval and adoption of this Agreement, the Merger and the
transactions contemplated hereby by shareholders holding at least the minimum number of shares of CBI Stock entitled to vote at the Shareholders Meeting necessary to approve the foregoing under applicable Law. The letter to shareholders,
notice of meeting, proxy statement of CBI and form of proxy to be distributed to shareholders in connection with this Agreement and the Merger shall be in form and substance reasonably satisfactory to FFIN and are collectively referred to herein as
the
Proxy Statement/Prospectus
.
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Section 5.03
Information Furnished by CBI
. CBI and the
Bank shall promptly following receipt of a written request from FFIN furnish or cause to be furnished to, all information concerning CBI, including but not limited to financial statements, required for inclusion in any statement or application made
or filed by FFIN to any Governmental Entity in connection with the transactions contemplated by this Agreement (including the Registration Statement and the Proxy Statement/Prospectus) or in connection with any unrelated transactions during the
pendency of this Agreement. CBI represents and warrants that all information so furnished shall be true and correct in all material respects and shall not omit any material fact required to be stated therein or necessary to make the statements made,
in light of the circumstances under which they were made, not misleading. CBI and the Bank shall otherwise fully cooperate with FFIN in the filing of any applications or other documents necessary to consummate the transactions contemplated by this
Agreement.
Section 5.04
Required Acts
. Between the date of this Agreement and the Closing, CBI
will, and will cause each of its Subsidiaries including the Bank to, unless otherwise permitted in writing by FFIN:
(a)
operate (including, without limitation, the making of, or agreeing to make, any loans or other extensions of credit) only in the ordinary course of business and consistent with past practices and safe and sound banking principles;
(b) except as required by prudent business practices, use commercially reasonable efforts to preserve its business organization
intact and to retain its present directors, officers, employees, key personnel and customers, depositors and goodwill and to maintain all assets owned, leased or used by it (whether under its control or the control of others), in good operating
condition and repair, ordinary wear and tear excepted;
(c) perform all of its obligations under any material contracts,
leases and documents relating to or affecting its assets, properties and business, except such obligations as CBI or any of its Subsidiaries may in good faith reasonably dispute;
(d) maintain in full force and effect all insurance policies now in effect or renewals thereof and give all notices and present
all claims under all insurance policies in due and timely fashion;
(e) timely file, subject to extensions, all reports
required to be filed with any Governmental Entity and observe and conform, in all material respects, to all applicable Laws, except those being contested in good faith by appropriate proceedings;
(f) timely file, subject to extensions, all Tax Returns required to be filed by it and timely pay all Taxes that become due and
payable, except those being contested in good faith by appropriate proceedings;
(g) promptly notify FFIN of any Tax
proceeding or claim pending or threatened against or with respect to CBI or any of its Subsidiaries;
(h) withhold from
each payment made to each of its employees, independent contractors, creditors and other third parties the amount of all Taxes required to be withheld therefrom and pay the same to the proper Governmental Entity when due;
(i) account for all transactions and prepare all financial statements in accordance with GAAP (unless otherwise instructed by
RAP in which instance account for such transaction in accordance with RAP);
(j) promptly classify and charge off loans and
make appropriate adjustments to loss reserves in accordance with GAAP, RAP and the instructions to the Call Report and the Uniform Retail Credit Classification and Account Management Policy;
(k) maintain the allowance for loan and lease losses account in an amount adequate in all material respects to provide for all
losses, net of recoveries relating to loans previously charged off, on all outstanding loans and in compliance with applicable regulatory requirements; provided, further, that such allowance for loan and lease losses as determined in accordance with
its GAAP, shall equal the greater of (A) $2,645,000 or (B) the amount required to comply with GAAP standards;
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(l) pay or accrue all costs, expenses and other charges to be incurred in
connection with the Merger, including, but not limited to, all legal fees, accounting fees, consulting fees and brokerage fees, prior to the Calculation Date; and
(m) ensure that all accruals for Taxes are accounted for in the ordinary course of business, consistent with past practices and
in accordance with its GAAP (unless otherwise instructed by RAP in which case such accrual will be accounted for in accordance with RAP).
Section 5.05
Prohibited Acts
. Except as set forth on
Confidential Schedule 5.05
,
CBI will not, and will not permit any of its Subsidiaries including the Bank to, without the prior written consent of FFIN; provided, that CBI is not required to obtain such consent with respect to
Section 5.05(j)
,
(m)
,
(s)
or
(t)
until FFINs receipt of the approvals contemplated by
Section 8.04
:
(a) take or fail to take any action that would cause the representations and warranties made in
Article III
to be
inaccurate at the time of the Closing or preclude CBI from making such representations and warranties at the time of the Closing;
(b) merge into, consolidate with or sell its assets to any other Person or entity, change or amend CBIs or any of its
Subsidiaries articles of incorporation or bylaws, increase the number of shares of CBI Stock or any of its Subsidiaries stock outstanding or increase the amount of the Banks surplus (as calculated in accordance with the
instructions to the Call Report);
(c) except as explicitly permitted hereunder or in accordance with applicable Law or
pursuant to a contract existing as of the date of this Agreement, engage in any transaction with any affiliated Person or allow such Persons to acquire any assets from CBI or any of its Subsidiaries, except (i) in the form of wages, salaries,
fees for services, reimbursement of expenses and benefits already granted or accrued under the Employee Plans currently in effect, or (ii) any deposit (in any amount) made by an officer, director or employee;
(d) except for the Dividend Payment, declare, set aside or pay any dividends or make any other distribution to its shareholders
(including any share dividend, dividends in kind or other distribution) whether in cash, shares or other property or purchase, retire or redeem, or obligate itself to purchase, retire or redeem, any of its capital shares or other securities;
(e) discharge or satisfy any Lien or pay any obligation or liability, whether absolute or contingent, due or to become due,
except in the ordinary course of business consistent with past practices and except for liabilities incurred in connection with the transactions contemplated hereby;
(f) issue, reserve for issuance, grant, sell or authorize the issuance of any shares of its capital stock or other securities
or subscriptions, options, warrants, calls, rights or commitments of any kind relating to the issuance thereto;
(g)
accelerate the vesting of pension or other benefits in favor of employees of CBI or any of its Subsidiaries except according to the Employee Plans or as otherwise contemplated by this Agreement or as required by applicable Law;
(h) acquire any capital stock or other equity securities or acquire any equity or ownership interest in any bank, corporation,
partnership or other entity (except (i) through settlement of indebtedness, foreclosure, or the exercise of creditors remedies or (ii) in a fiduciary capacity, the ownership of which does not expose it to any liability from the
business, operations or liabilities of such Person);
(i) mortgage, pledge or subject to Lien any of its property, business
or assets, tangible or intangible, except (i) Permitted Encumbrances and (ii) pledges of assets to secure public funds deposits;
(j) sell, transfer, lease to others or otherwise dispose of any of its assets, or cancel or compromise any debt or claim, or
waive or release any right or claim of a market value in excess of $10,000;
(k) make any change in the rate or timing of
payment of compensation, commission, bonus or other direct or indirect remuneration payable, or pay or agree or orally promise to pay, conditionally or otherwise,
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any bonus, extra compensation, pension or severance or vacation pay, to or for the benefit of any of its shareholders, directors, officers, employees or agents, other than annual increases in
compensation consistent with past practices, and bonuses, commissions, and incentives consistent with past and normal practices to its employees and officers;
(l) enter into any employment or consulting contract (other than as contemplated by the terms of the Employee Plans or this
Agreement) or other agreement with any current or proposed director, officer or employee or adopt, amend any employment agreement, amend in any material respect or terminate any pension, employee welfare, retirement, stock purchase, stock option,
phantom stock, 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 or agreement for the benefit of its directors, employees or former employees, except as required by applicable Law or by this Agreement;
(m) make any capital expenditures or capital additions or betterments except for such capital expenditures or capital additions
that are set forth in writing in the budget provided to FFIN or that are necessary to prevent substantial deterioration of the condition of a property;
(n) sell or dispose of, or otherwise divest itself of the ownership, possession, custody or control, of any corporate books or
records of any nature that, in accordance with sound business practice, normally are retained for a period of time after their use, creation or receipt, except at the end of the normal retention period;
(o) make any, or acquiesce with any, change in any (i) credit underwriting standards or practices, including loan loss
reserves, (ii) asset liability management techniques, (iii) accounting methods, principles or practices, except as required by changes in GAAP as concurred by CBIs independent auditors, or as required by any applicable Regulatory
Agency, (iv) tax election, change in taxable year, accounting methods for Tax purposes, amendment of a Tax Return, restriction on any assessment period relating to Taxes, settlement of any Tax claim or assessment relating to CBI or any of its
Subsidiaries, closing agreement within the meaning of Section 7121 of the Code (or any similar provision of state, local or foreign Law), or surrender any claim to a refund, or (v) any extension or waiver of the limitation
period applicable to any Tax claim or assessment relating to CBI or its Subsidiaries;
(p) reduce the amount of the
Banks allowance for loan losses except through charge offs;
(q) sell (but payment at maturity is not a sale) or
purchase any investment securities, other than purchases of obligations of the U.S. Treasury (or any agency thereof) with a duration of four (4) years or less and an AA rating by at least one nationally recognized ratings agency;
(r) renew, extend the maturity of, or alter any of the terms of any loan classified by CBI as special mention,
substandard, or impaired or other words of similar import;
(s) make, commit to make, renew, extend
the maturity of, or alter any of the material terms of any loan in excess of $1,000,000, but FFIN will be deemed to have given its consent under this
Section 5.05(s)
unless FFIN objects to such transaction no later than 48 hours
(weekends and bank holidays excluded) after actual receipt by FFIN of all material information relating to the making, renewal or alteration of that loan; or
(t) enter into any acquisitions or leases of real property, including new leases and lease extensions.
Section 5.06
Access; Pre-Closing Investigation
.
(a) Upon reasonable notice and subject to applicable Laws, CBI will afford the officers, directors, employees, attorneys,
accountants, investment bankers and authorized representatives of FFIN full access (excluding any information that is prohibited from being disclosed by applicable Law) during normal business hours to the properties, books, contracts and records of
CBI and each of its Subsidiaries, permit FFIN to make such inspections (including with regard to such properties physical inspection of the surface
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and subsurface thereof and any structure thereon pursuant to
Section 5.12
) as FFIN may reasonably require and furnish to FFIN during such period all such information concerning CBI,
each of its Subsidiaries and its affairs as FFIN may reasonably request, in order that FFIN may have full opportunity to make such reasonable investigation as it desires to make of the affairs of CBI and each of its Subsidiaries, including access
sufficient to verify the value of the assets and the liabilities of CBI and each of its Subsidiaries and the satisfaction of the conditions precedent to FFINs obligations described in
Article VIII
of this Agreement. FFIN will use
its commercially reasonable efforts not to disrupt the normal business operations of CBI or any of its Subsidiaries. CBI agrees at any time, and from time to time, to furnish to FFIN as soon as practicable, any additional information that FFIN may
reasonably request. Neither CBI nor any of its Subsidiaries shall be required to provide access to or to disclose information where such access or disclosure would violate or prejudice the rights of CBIs or any of its Subsidiaries
customers, jeopardize the attorney-client privilege of the institution in possession or control of such information (after giving due consideration to the existence of any common interest, joint defense or similar agreement between the parties) or
contravene any Law, rule, regulation, Order, judgment, decree, fiduciary duty or binding agreement entered into prior to the date of this Agreement.
(b) No investigation by either party of the business and affairs of the other shall affect or be deemed to modify or waive any
representation, warranty, covenant or agreement in this Agreement, or the conditions to either partys obligation to consummate the transactions contemplated by this Agreement.
Section 5.07
Additional Financial Statements and Tax Returns
. CBI will promptly furnish FFIN with true
and complete copies of (a) each Bank Call Report prepared after the date of this Agreement as soon as such reports are made available to the FDIC, (b) CBI will promptly furnish FFIN with true and complete copies of each Tax Return for
either CBI or the Bank prepared after the date of this Agreement as soon as such returns are made available to the IRS, (c) any the audited financial statements, as soon as each such audited financial statement is made available to CBI, and
(d) unaudited month-end financial statements of CBI.
Section 5.08
Untrue Representations
.
CBI will promptly notify FFIN in writing if CBI or the Bank becomes aware of any fact or condition that makes untrue, or shows to have been untrue, in any material respect, any schedule or any other information furnished to FFIN or any
representation or warranty made in or pursuant to this Agreement or that results in the failure of CBI or any of its Subsidiaries to comply with any covenant, condition or agreement contained in this Agreement.
Section 5.09
Litigation and Claims
. CBI will promptly notify FFIN in writing of any litigation, or of
any claim, controversy or contingent liability that might be expected to become the subject of litigation, against CBI or any of its Subsidiaries or affecting any of their properties, and CBI will promptly notify FFIN of any legal action, suit or
proceeding or judicial, administrative or governmental investigation, pending or, to the Knowledge of CBI, threatened against CBI or any of its Subsidiaries that questions or might question the validity of this Agreement or the agreements
contemplated hereby or any actions taken or to be taken by CBI or any of its Subsidiaries pursuant hereto or thereto or seeks to enjoin or otherwise restrain the transactions contemplated hereby or thereby.
Section 5.10
Material Adverse Changes
. CBI will promptly notify FFIN in writing if any change or
development has occurred or, to the Knowledge of CBI, been threatened (or any development has occurred or been threatened involving a prospective change) that (a) is reasonably likely to have, individually or in the aggregate, a Material
Adverse Change on CBI or any of its Subsidiaries, (b) would adversely affect, prevent or delay the obtaining of any regulatory approval for the completion of the transactions contemplated by this Agreement, or (c) would cause the
conditions in
Article VIII
not to be satisfied.
Section 5.11
Consents and
Approvals
. CBI will use its commercially reasonable efforts to obtain at the earliest practicable time all consents and approvals from third parties, including those listed on
Confidential Schedule 2.02(j)
.
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Section 5.12
Environmental Investigation; Right to Terminate
Agreement
.
(a) FFIN and its consultants, agents and representatives will have the right, to the same extent that CBI
has the right, if any, but not the obligation or responsibility, to inspect any Property, including conducting asbestos surveys and sampling, environmental assessments and investigations, and other environmental surveys and analyses including soil
and ground sampling (
Environmental Inspections
) at any time on or prior to the date that is forty-five (45) days after the date of this Agreement. FFIN will notify CBI prior to any physical inspections of the Property, and
CBI may place reasonable restrictions on the time of such inspections. If, as a result of any such Environmental Inspection, further investigation (
Secondary Investigation
) including, test borings, soil, water and other sampling
is deemed desirable by FFIN, FFIN will (i) notify CBI of any Property for which it intends to conduct such a Secondary Investigation and the reasons for such Secondary Investigation, and (ii) commence such Secondary Investigation, on or
prior to the date that is seventy-five (75) days after the date of this Agreement. FFIN will give reasonable notice to CBI of such Secondary Investigations, and CBI may place reasonable time and place restrictions on such Secondary
Investigations.
(b) FFIN will have the right to terminate this Agreement if (i) the factual substance of any warranty
or representation set forth in
Section 3.19
is not true and accurate in any material respect; (ii) the results of such Environmental Inspection, Secondary Investigation or other environmental survey are disapproved by FFIN because
the Environmental Inspection, Secondary Investigation or other environmental survey identifies material violations or potential material violations of Environmental Laws; (iii) CBI has refused to allow FFIN to conduct an Environmental
Inspection or Secondary Investigation in a manner that FFIN reasonably considers necessary; (iv) the Environmental Inspection, Secondary Investigation or other environmental survey identifies any past or present event, condition or circumstance
that would or potentially would require remedial or cleanup action by CBI; (v) the Environmental Inspection, Secondary Investigation or other environmental survey identifies the presence of any underground or above ground storage tank in, on or
under any Property that is not shown to be in compliance with all Environmental Laws applicable to the tank either now or at a future time certain, or that has had a release of petroleum or some other Hazardous Material that has not been cleaned up
to the satisfaction of the relevant Governmental Entity or any other party with a legal right to compel cleanup; or (vi) the Environmental Inspection, Secondary Investigation or other environmental survey identifies the presence of any
asbestos-containing material in, on or under any Property, the removal of which would result in a Material Adverse Change. On or prior to the date that is ninety (90) days after the date of this Agreement, FFIN will advise CBI in writing as to
whether FFIN intends to terminate this Agreement in accordance with
Section 9.01
because FFIN disapproves of the results of the Environmental Inspection, Secondary Investigation or other environmental survey. CBI will have the
opportunity to correct any objected to violations or conditions to FFINs reasonable satisfaction prior to the date that is one hundred five (105) days after the date of this Agreement. If CBI fails to demonstrate its satisfactory
correction of the violations or conditions to FFIN, FFIN may terminate this Agreement on or prior to the date that is one hundred five (105) days after the date of this Agreement.
(c) CBI agrees to make available to FFIN and its consultants, agents and representatives all documents and other material
relating to environmental conditions of any Property including the results of other Environmental Inspections and surveys. CBI also agrees that all engineers and consultants who prepared or furnished such reports may discuss such reports and
information with FFIN and will be entitled to certify the same in favor of FFIN and its consultants, agents and representatives and make all other data available to FFIN and its consultants, agents and representatives.
Section 5.13
Registration Statement and Proxy Statement/Prospectus
.
(a) CBI agrees to cooperate and assist FFIN in (i) preparing a Registration Statement on Form S-4 (the
Registration Statement
), relating to the shares of FFIN Stock to be issued as part of the Merger Consideration provided for herein, and the Proxy Statement/Prospectus, and (ii) filing the Registration Statement and the Proxy
Statement/Prospectus (forming a part of the Registration Statement) with the SEC,
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including furnishing to FFIN all information concerning CBI and each of its Subsidiaries that FFIN may reasonably request in connection with preparation of such Registration Statement and Proxy
Statement/Prospectus. None of the information supplied or to be supplied by CBI or any of its directors, officers, employees or agents for inclusion in the Registration Statement or the Proxy Statement/Prospectus shall, at the date the Proxy
Statement/Prospectus is mailed to the shareholders of CBI and, as the Registration Statement and the Proxy Statement/Prospectus may be amended or supplemented, at the time of the Shareholders Meeting, contain any untrue statement of a material
fact or omit to state any material fact with respect to CBI necessary in order to make the statements therein with respect to CBI, in light of the circumstances under which they are made, not misleading or necessary to correct any statement in any
earlier communication with respect to the solicitation of any proxy for the Shareholders Meeting. All documents that CBI is responsible for filing with any Regulatory Agency in connection with the Merger shall comply with respect to CBI in all
material respects with the provisions of applicable Law.
(b) The CBI Board has resolved to recommend to the CBI
shareholders that they approve this Agreement, the Merger and the transactions contemplated herein and shall submit to its shareholders this Agreement and any other matters required to be approved by its shareholders in order to carry out the
purposes of this Agreement. The CBI Board shall (i) include in the Proxy Statement/Prospectus the recommendation of the CBI Board that the shareholders of CBI vote in favor of this Agreement, the Merger and the transactions contemplated hereby,
(ii) use its commercially reasonable efforts to obtain such shareholder approval of this Agreement, the Merger and the transactions contemplated hereby, (iii) perform such other acts as may reasonably be requested by FFIN to ensure that
such shareholder approval of this Agreement, the Merger and the transactions contemplated hereby are obtained, and (iv) cause the Proxy Statement/Prospectus to be mailed to the shareholders of CBI as soon as practicable after the Registration
Statement becomes effective with the SEC.
(c) If CBI becomes aware prior to the Effective Time of any information that
would cause any of the statements in the Proxy Statement/Prospectus to be false or misleading with respect to any material fact, or to omit to state any material fact necessary to make the statements therein not false or misleading, CBI shall
promptly inform FFIN thereof and take the necessary steps to correct the Proxy Statement/Prospectus.
Section 5.14
Benefit Plans
.
(a) CBI will take, and will cause each of its Subsidiaries to take, all action necessary to terminate any Employee Plan that is
a Code section 401(a) qualified retirement plan (each a
Retirement Plan
) and related trust sponsored by CBI or any of its Subsidiaries, effective no later than the date immediately before the Closing Date. CBI will provide FFIN
evidence or such other confirmation from CBI which FFIN deems appropriate that (i) each such Retirement Plan has been terminated as set forth in this paragraph pursuant to duly authorized corporate action and (ii) if requested by FFIN, CBI
has submitted to the IRS an application for determination of the tax-qualified status of any qualified plan relating to its termination. Provided FFINs request to file an application for determination is given at least ninety (90) days
prior to the Closing, such application will be filed on or before the Closing. Any costs incurred prior to the Closing related to the termination of each Retirement Plan shall be paid (including all related legal, administrative and other costs and
expenses unless specifically set forth otherwise in this subsection) solely by CBI and reflected in the calculation of Adjusted Equity.
(b) At the direction of FFIN, CBI will take, and will cause each of its Subsidiaries to take, all action necessary to terminate
any Employee Plan that is an employee welfare benefit plan, as defined in ERISA § 3(1) (
Welfare Plan
), effective not later than immediately before the Closing. CBI will provide FFIN evidence or such other confirmation from
CBI which FFIN deems appropriate that each such Welfare Plan has been terminated as set forth in this paragraph pursuant to duly authorized corporate action. Notwithstanding the foregoing, without the consent of FFIN, CBI shall not take, or permit
any of its Subsidiaries to take, any action to terminate any Welfare Plan that is a group medical plan.
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Section 5.15
Termination Contracts
.
(a) Each of CBI and the Bank will use its commercially reasonable efforts, including, but not limited to, notifying
appropriate parties and negotiating in good faith a reasonable settlement, to ensure that its current data processing/technology contracts and other contracts listed on
Confidential Schedule 5.15(a)
will, if the Merger occurs, be
terminated after the consummation of the Merger on a date to be mutually agreed upon by FFIN and CBI;
provided, that,
all costs, fees, expenses and penalties necessary to be paid by CBI or the Bank in connection with the termination of such
contracts to which CBI or the Bank is a party shall be accrued or paid by CBI or the Bank on or prior to the Calculation Date in accordance with this
Section 5.15
and shall be reflected in the calculation of Adjusted Equity pursuant to
Section 1.07
. Such notice and actions by CBI and the Bank will be in accordance with the terms of such data processing or technology contracts.
(b) Each of CBI and the Bank will terminate the employment agreements and Executive Survivor Income Agreements set forth
on
Confidential Schedule 5.15(b)
and pay any amounts due in connection with the termination of such agreements prior to the Calculation Date.
Section 5.16
Conforming Accounting Adjustments
. CBI and each of its Subsidiaries shall, if requested
by FFIN, consistent with GAAP, immediately prior to Closing, make such accounting entries as FFIN may reasonably request in order to conform the accounting records of CBI and each of its Subsidiaries to the accounting policies and practices of FFIN;
provided, however
, that no such adjustment shall (a) constitute or be deemed to be a breach, violation or failure to satisfy any representation, warranty, covenant, condition or other provision or constitute grounds for termination of
this Agreement (except to the extent that a certain representation, warranty, covenant or other provision is breached and thus, requires the adjustment), (b) require any prior filing with any governmental agency or regulatory authority,
(c) violate any Law, rule or regulation applicable to CBI or any of its Subsidiaries, (d) adversely affect the calculation of Adjusted Equity, or (e) be an acknowledgment by CBI or any of its Subsidiaries (i) of any adverse
circumstances for purposes of determining whether the conditions to FFINs obligations under this Agreement have been satisfied, (ii) that such adjustment is required for purposes of determining satisfaction of the condition to FFINs
obligations under this Agreement set forth in
Section 8.07
or (iii) that such adjustment has any bearing on the Merger Consideration.
Section 5.17
Tail D&O Policy
. On or prior to the Closing Date, CBI will obtain an extended
reporting period (otherwise known as
Tail Coverage
) policy, with terms and coverage reasonable for such policies, covering directors and officers of CBI and the Bank for a period of not less than three (3) years from the
Closing Date, and the total premium for such policy shall be reflected in the calculation of Adjusted Equity pursuant to
Section 1.07
.
Section 5.18
Regulatory and Other Approvals
. CBI, at its own expense, will promptly file or cause to
be filed applications for all regulatory approvals required to be obtained by CBI in connection with this Agreement and the other agreements contemplated hereby. CBI will promptly furnish FFIN with copies of all such regulatory filings and all
correspondence for which confidential treatment has not been requested. CBI will use its commercially reasonable efforts to obtain all such regulatory approvals and any other approvals from third parties at the earliest practicable time.
Section 5.19
Tax Matters
.
(a) All transfer, documentary, sales, use, stamp, registration and other such Taxes and all conveyance fees, recording charges
and other fees and charges (including any penalties and interest) incurred in connection with the consummation of the transactions contemplated by this Agreement, if any, shall be paid by the party liable for such Tax under Law when due, and such
party will, at its own expense, file all necessary Tax Returns and other documentation with respect to all such Taxes, fees and charges, and, if required by applicable Law, the other party will, and will cause its Affiliates to, join in the
execution of any such Tax Returns and other documentation.
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(b) CBI shall comply with the recordkeeping and information reporting
requirements set forth in Treasury Regulation Section 1.368-3.
(c) CBI and FFIN further agree, upon request, to use
their commercially reasonable efforts to obtain any certificate or other document from any Governmental Entity or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to,
with respect to the transactions contemplated hereby).
(d) CBI and its Subsidiaries will not take any action or omit to
take any action that would prevent or impede the Merger from qualifying as a reorganization described in Section 368(a) of the Code or satisfying the continuity of business enterprise requirement for a reorganization as
provided in Treasury Regulation Section 1.368-1(d).
(e) In the event of any audit of CBIs federal or state Tax
Returns (i) prior to the consummation of the Merger, FFIN and CBI shall cooperate regarding any such audit and CBI shall not settle the same without the consent of FFIN, which consent will not be unreasonably withheld; and (ii) after the
Effective Time, FFIN may settle any such audit in any matter that it determines is appropriate and shall pay all amounts due with respect to any such settlement.
Section 5.20
Tax-free Reorganization
. Officers of CBI and FFIN shall execute and deliver to Norton
Rose Fulbright US LLP, respectively, certificates containing appropriate representations and covenants, reasonably satisfactory in form and substance to such counsel, at such time or times as may be reasonably requested by such counsel, including
prior to the effective date of the Proxy Statement/Prospectus and the Closing Date, in connection with such counsels deliveries of opinions with respect to the Tax treatment of the Integrated Mergers pursuant to
Section 8.16
.
Section 5.21
Disclosure Schedules
. At least ten (10) days prior to the Closing, CBI agrees to
provide FFIN with supplemental disclosure schedules to be delivered by CBI pursuant to this Agreement reflecting any material changes thereto between the date of this Agreement and the Closing Date. Delivery of such supplemental disclosure schedules
shall not cure a breach or modify a representation or warranty of this Agreement.
Section 5.22
Transition
.
(a) The senior officers of CBI and the Bank agree to meet with senior officers of FFIN as reasonably
requested by FFIN to review the financial and operational affairs of the Bank, and to the extent permitted by applicable Law, each of CBI and the Bank agrees to give due consideration to FFINs input on such matters, consistent with this
Section 5.22
, with the understanding that FFIN shall in no event be permitted to exercise control of CBI or the Bank prior to the Effective Time and, except as specifically provided under this Agreement, CBI and the Bank shall have no
obligation to act in accordance with FFINs input. Commencing after the date hereof and to the extent permitted by applicable Law, FFIN, CBI and the Bank shall use their commercially reasonable efforts to plan the integration of CBI and the
Bank with the businesses of FFIN and its Affiliates to be effective as much as practicable as of the Closing Date;
provided
,
however
, that in no event shall FFIN or its Affiliates be entitled to control CBI or the Bank prior to the
Effective Time. Without limiting the generality of the foregoing, from the date hereof through the Effective Time and consistent with the performance of their day-to-day operations and the continuous operation of CBI and the Bank in the ordinary
course of business, CBIs and the Banks employees and officers shall use their commercially reasonable efforts to provide support, including support from CBIs and the Banks outside contractors, and to assist FFIN in performing
all tasks, including, without limitation, equipment installation, reasonably required to result in a successful integration at the Closing. FFIN shall provide such assistance of its personnel as CBI and the Bank shall request to permit CBI and the
Bank to comply with their obligations under this
Section 5.22
.
(b) From and after the date hereof, each of CBI
and the Bank shall use its commercially reasonable efforts, and shall use its commercially reasonable efforts to cause its agents to, permit FFIN to take all
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reasonable actions that FFIN deems necessary or appropriate, and to cooperate and to use its commercially reasonable efforts to cause its agents to cooperate in the taking of such actions, to
enable FFIN, after the Closing, to satisfy the applicable obligations under §§302, 404 and 906 of the Sarbanes-Oxley Act of 2002 (the
SOA
) and the other requirements of the SOA with respect to CBI and the Bank, including
establishing and maintaining adequate disclosure controls and procedures and internal controls over financial reporting as such terms are defined in the SOA.
Section 5.23
Voting Agreement
. Simultaneously with the execution of this Agreement, each of the
executive officers and directors of CBI and the shareholders named on the signature pages thereto shall execute and deliver to FFIN the Voting Agreement in the form of
Exhibit B
attached hereto, and CBI acknowledges that pursuant
to such agreement the directors of CBI have agreed that they will vote the shares of CBI Stock owned by them in favor of this Agreement and the transactions contemplated hereby and thereby, subject to required regulatory approvals.
Section 5.24
Director Support Agreements
. Simultaneously with the execution of this Agreement, each
of the directors of CBI set forth on
Confidential Schedule 5.24
shall enter into a Director Support Agreement with FFIN (each a
Director Support Agreement
). The form of the Director Support Agreement is attached as
Exhibit C
hereto.
Section 5.25
Execution of Releases
. CBI shall take such
action as it is required to, and shall use commercially reasonable efforts to cause the other persons set forth on
Confidential Schedule 8.06
to take such action as they are required to, in order to execute the releases as described in
Section 8.06
.
Section 5.26
No Solicitation
. So long as this Agreement is in effect,
neither CBI, the Bank nor any of their respective directors or officers shall (i) initiate, solicit, encourage or otherwise facilitate any inquiries, provide any information to or negotiate with any other party any proposal or offer that
constitutes, or may reasonably be expected to lead to an Acquisition Proposal, or (ii) enter into or maintain or continue discussions or negotiate with any Person in furtherance of such inquiries or to obtain an Acquisition Proposal, or
(iii) agree to, approve, recommend, or endorse any Acquisition Proposal, or authorize or permit any of its or their directors or officers to take any such action and CBI or the Bank shall notify FFIN orally (within one (1) Business Day)
and in writing (as promptly as practicable) of any such inquiries and proposals received by CBI or the Bank or any of its respective directors or officers, relating to any of such matters.
Section 5.27
CBI Option Vesting, Exercise and Cancellation
. Notwithstanding anything to the contrary
in the CBI Stock Plans or in any individual CBI Option award agreement, (a)(i) no less than twenty (20) days prior to the Calculation Date, the CBI Board (or, if appropriate, any committee administering the CBI Stock Plans) shall take all
necessary actions to cause the vesting of any unvested CBI Options granted pursuant to the CBI Stock Plans, and CBI shall use its commercially reasonable efforts to cause all holders of CBI Options to exercise such CBI Options prior to the
Calculation Date, or (ii) prior to the Calculation Date, CBI shall pay cash to the holders of CBI Options for the termination and cancellation of such CBI Options, and (b) CBI shall terminate and cancel all CBI Options as of the
Calculation Date and the holders of such CBI Options shall have no further rights or entitlements with respect thereto.
Section 5.28
Repayment of Stock Loans
. Prior to Closing, CBI shall take all actions necessary to cause all loans made by CBI or the Bank that were used to acquire stock of CBI by directors or employees or to pay the exercise
price for options to acquire stock of CBI to be repaid, including the loans set forth on
Confidential Schedule 5.28
(the
Stock Loans
).
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ARTICLE VI
COVENANTS OF FFIN
Section 6.01
Commercially Reasonable Efforts
. FFIN shall use its commercially reasonable efforts to perform and fulfill all conditions and obligations on its part to be performed or fulfilled under this Agreement and to cause the
consummation of the transactions contemplated hereby in accordance with the terms and conditions of this Agreement.
Section 6.02
Regulatory Filings and Registration Statement
.
(a) FFIN and Merger Sub, at their own expense,
with the cooperation of CBI and the Bank, at their own expense, shall promptly file or cause to be filed applications for all regulatory approvals required to be obtained by FFIN or Merger Sub in connection with this Agreement and the transactions
contemplated hereby, including but not limited to the necessary applications for the prior approval of the Merger by the Federal Reserve and the OCC. FFIN will promptly provide CBI with copies of all such regulatory filings and all correspondence
with regulatory authorities in connection with the Merger for which confidential treatment has not been requested.
(b)
FFIN shall reserve and make available for issuance in connection with the Merger, and in accordance with the terms of this Agreement, the shares of FFIN Stock for the Stock Consideration and shall, with the cooperation of CBI and the Bank, file with
the SEC the Registration Statement, which Registration Statement will contain the Proxy Statement/Prospectus, and FFIN shall use its commercially reasonable efforts to cause the Registration Statement to become effective. At the time the
Registration Statement becomes effective, the Registration Statement shall comply in all material respects with the provisions of the Securities Act and the published rules and regulations thereunder, and shall not contain any untrue statement of
material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not false or misleading, and at the time of the mailing thereof to the CBI shareholders at the time of the Shareholders
Meeting and on the Effective Time, the Proxy Statement/Prospectus included as part of the Registration Statement, as amended or supplemented by any amendment or supplement, shall not contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not false or misleading.
(c) FFIN shall timely file all
documents required to obtain all necessary Blue Sky permits and approvals, if any, required to carry out the transactions contemplated by this Agreement, shall pay all expenses incident thereto and shall use its commercially reasonable efforts to
obtain such permits and approvals on a timely basis.
(d) FFIN shall promptly and properly prepare and file any filings
required under the Securities Act or Exchange Act, relating to the Merger and the transactions contemplated herein.
(e)
FFIN shall keep CBI reasonably informed as to the status of such applications and filings and shall notify it promptly of any developments that reasonably could significantly delay the completion of the Merger.
Section 6.03
Untrue Representations
. FFIN shall promptly notify CBI in writing if FFIN becomes aware
of any fact or condition that makes untrue, or shows to have been untrue, in any material respect, any schedule or any other information furnished to CBI or any representation or warranty made in or pursuant to this Agreement or that results in the
failure of FFIN to comply with any covenant, condition or agreement contained in this Agreement.
Section 6.04
Litigation and Claims
. FFIN shall promptly notify CBI of any legal action, suit or
proceeding or judicial, administrative or governmental investigation, pending or, to the Knowledge of FFIN, threatened against FFIN or any Subsidiary of FFIN that questions or might question the validity of this Agreement or the agreements
contemplated hereby, or any actions taken or to be taken by FFIN or any Subsidiary of FFIN pursuant hereto or thereto or seeks to enjoin or otherwise restrain the transactions contemplated hereby or thereby.
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Section 6.05
Material Adverse Changes
. FFIN shall
promptly notify CBI in writing if any change or development shall have occurred or, to the Knowledge of FFIN, been threatened (or any development shall have occurred or been threatened involving a prospective change) that (a) is reasonably
likely to have, individually or in the aggregate, a Material Adverse Change on FFIN, (b) would adversely affect, prevent or delay the obtaining of any regulatory approval for the consummation of the transactions contemplated by this Agreement
or (c) would cause the conditions in
Article VII
not to be satisfied.
Section 6.06
Consents and Approvals
. FFIN shall use its commercially reasonable efforts to obtain at the earliest practicable time all consents and approvals from third parties, including those listed on
Confidential Schedule 2.03(g)
necessary to consummate the transactions contemplated by this Agreement at the earliest practicable time.
Section 6.07
Employee Matters
. FFIN shall, with respect to each employee of CBI and the Bank at the Effective Time who continues in employment with FFIN or its Subsidiaries (each a
Continued Employee
), provide the
benefits described in this
Section 6.07
. Subject to the right of subsequent amendment, modification, replacement or termination in the sole discretion of FFIN, each Continued Employee shall be entitled, as an employee of FFIN or its
Subsidiaries, to participate in the employee benefit plans of FFIN as set forth in
Confidential Schedule 6.07
hereto in effect as of the date of this Agreement, if such Continued Employee shall be
eligible and, if required,
selected for participation therein under the terms thereof and makes any required contributions. All such participation shall be subject to such terms of such plans as may be in effect from time to time and this
Section 6.07
is not
intended to give any Continued Employee any rights or privileges superior to those of other similarly situated employees of FFIN or its Subsidiaries. The provisions of this
Section 6.07
shall not be deemed or construed so as to provide
duplication of similar benefits but, subject to that qualification, FFIN shall, for purposes of vesting and any age or period of service requirements for commencement of participation with respect to any employee benefit plans in which a Continued
Employee may participate (excluding any defined benefit pension plan), credit each Continued Employee with his or her term of service with CBI or the Bank to the extent such service was recognized under the analogous CBI Employee Plan.
Section 6.08
Conduct of Business in the Ordinary Course
. Except as specifically provided for in this
Agreement, FFIN shall conduct its business in the ordinary course as heretofore conducted. For purposes of this
Section 6.08
, the ordinary course of business shall consist of the banking and related business as presently conducted by
FFIN and its Subsidiaries, and engaging in acquisitions and assisting in the management of its Subsidiaries.
Section 6.09
Disclosure Schedules
. At least ten (10) days prior to the Closing, FFIN agrees to
provide CBI with supplemental disclosure schedules to be delivered by FFIN pursuant to this Agreement reflecting any material changes thereto between the date of this Agreement and the Closing Date. Delivery of such supplemental disclosure schedules
shall not cure a breach or modify a representation or warranty of this Agreement.
Section 6.10
No
Control of Other Partys Business
. Nothing contained in this Agreement (including
Sections 5.04
,
5.05
and
5.06
) shall give FFIN, directly or indirectly, the right to control or direct the operations of CBI prior to the
Effective Time or shall give CBI, directly or indirectly, the right to control or direct the operations of FFIN. Prior to the Effective Time, (a) each of CBI and FFIN shall exercise, consistent with the terms and conditions of this Agreement,
complete control and supervision over its and its Subsidiaries respective operations, (b) CBI shall not be under any obligation to act in a manner that could reasonably be deemed to constitute anti-competitive behavior under federal or
state antitrust Laws, and (c) CBI shall not be required to agree to any material obligation that is not contingent upon the consummation of the Merger.
Section 6.11
Nasdaq Listing
. FFIN shall file all documents required to be filed to have the shares of
FFIN Stock to be issued pursuant to this Agreement included for listing on the Nasdaq Global Select Market and use its commercially reasonable efforts to effect said listing.
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Section 6.12
Indemnification
.
(a) For a three (3) year period after the Effective Time, and subject to the limitations contained in applicable Federal
Reserve, OCC and FDIC regulations and to any limitations contained in the CBI Constituent Documents, FFIN will indemnify, defend and hold harmless each present director and officer of CBI or the Bank, determined as of the Effective Time (the
Indemnified Parties
), against any costs or expenses (including reasonable attorneys fees), judgments, fines, losses, claims, damages or liabilities incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising out of matters existing or occurring at or before the Effective Time, whether asserted or claimed before, at or after the Effective Time, arising in whole or in part
out of or pertaining to the fact that he or she was acting in his or her capacity as a director or officer of the CBI or the Bank to the fullest extent that the Indemnified Party would be entitled under the CBI Constituent Documents, as applicable,
in each case as in effect on the date hereof and to the extent permitted by applicable Law.
(b) Any Indemnified Party
wishing to claim indemnification under this
Section 6.12
, upon learning of any such claim, action, suit, proceeding or investigation, is to promptly notify FFIN, but the failure to so notify will not relieve FFIN of any liability it may
have to the Indemnified Party to the extent such failure does not prejudice FFIN. In any such claim, action, suit, proceeding or investigation (whether arising before or after the Effective Time), (i) FFIN will have the right to assume the
defense thereof and FFIN will not be liable to an Indemnified Party for any legal expenses of other counsel or any other expenses subsequently incurred by an Indemnified Party in connection with the defense thereof, except that if FFIN elects not to
assume such defense or counsel for the Indemnified Party is of the opinion that there are issues which raise conflicts of interest between FFIN and the Indemnified Party, the Indemnified Party may retain counsel reasonably satisfactory to FFIN, and
FFIN will pay the reasonable fees and expenses of such counsel for the Indemnified Party (which may not exceed one firm in any jurisdiction), (ii) the Indemnified Party will cooperate in the defense of any such matter, (iii) FFIN will not
be liable for any settlement effected without its prior written consent, and (iv) FFIN will have no obligation hereunder if indemnification of an Indemnified Party in the manner contemplated hereby is prohibited by applicable Laws and
regulations.
Section 6.13
Tax Matters
. Following the Closing:
(a) FFIN shall prepare, or cause to be prepared, and file, or caused to be filed, all Tax Returns for CBI that are to be filed
after the Closing and shall pay all Taxes with respect to such Tax Returns.
(b) FFIN and its counsel shall control any
audit of CBIs federal or state Tax Returns for any taxable period whether before or after the Closing Date, and FFIN may settle any such audit in any matter that it determines is appropriate and shall pay all amounts due with respect to any
such settlement.
(c) FFIN shall comply with the recordkeeping and information reporting requirements set forth in Treasury
Regulation Section 1.368-3.
(d) FFIN will not take any action or omit to take any action that would prevent or impede
the Merger from qualifying as a reorganization described in Section 368(a) of the Code or satisfying the continuity of business enterprise requirement for a reorganization as provided in Treasury Regulation
Section 1.368-1(d).
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF CBI
The obligations of CBI under this Agreement are subject to the satisfaction, prior to or at the Closing, of each of the following conditions,
which may be waived in whole or in part by CBI:
Section 7.01
Representations and Warranties
.
(i) Each of the representations and warranties of the FFIN set forth in
Sections 4.01
,
4.02
,
4.03
(other than inaccuracies that are de minimis in amount and effect) and
4.14
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shall be true and correct in all respects at and as of the date of this Agreement and at and as of the Closing Date as though made at and as of the Closing Date (unless any such representation or
warranty is made only as of a specific date, in which case as of such specific date) and (ii) each of the other representations and warranties made by FFIN in this Agreement or in any document or schedule delivered to CBI in connection with
this Agreement being true and correct in all material respects (except to the extent such representations and warranties are qualified by their terms by reference to material, materiality, in all material
respects, Material Adverse Change, or the like, in which case such representations and warranties as so qualified are true and correct in all respects) when made and being true and correct in all material respects as of the Closing
with the same force and effect as if such representations and warranties were made at and as of the Closing, except with respect to those representations and warranties specifically made as of an earlier date (in which case such representations and
warranties must have been true and correct as of such earlier date).
Section 7.02
Performance of
Obligations
. FFIN and Merger Sub have, or have caused to be, performed or observed, in all material respects, all obligations and agreements required to be performed or observed by FFIN and Merger Sub under this Agreement on or prior to the
Closing Date.
Section 7.03
Shareholder Approvals
. Each of this Agreement and the Merger having
been approved by the requisite vote of the holders of the outstanding shares of CBI Stock as and to the extent required by the TBOC and the CBI Constituent Documents (the
Requisite CBI Vote
).
Section 7.04
Government and Other Approvals
. CBI and FFIN having received approvals, acquiescences or
consents of the transactions contemplated by this Agreement from all necessary Governmental Entities and from the third parties listed on
Confidential Schedules 2.02(j)
and
2.03(g)
, respectively, and all applicable
waiting periods having expired. Further, the approvals and the transactions contemplated hereby not having been contested or threatened to be contested by any federal or state Governmental Entity or by any other third party by formal proceedings.
Section 7.05
No Litigation
. No action having been taken, and no statute, rule, regulation or
Order being promulgated, enacted, entered, enforced or deemed applicable to this Agreement or the transactions contemplated hereby by any federal, state or foreign government or Governmental Entity or by any court, including the entry of a
preliminary or permanent injunction, which, if successful, would (a) make this Agreement or any other agreement contemplated hereby, or the transactions contemplated hereby or thereby illegal, invalid or unenforceable, (b) impose material
limits on the ability of any party to this Agreement to complete this Agreement or any other agreement contemplated hereby, or the transactions contemplated hereby or thereby, or (c) if this Agreement or any other agreement contemplated hereby,
or the transactions contemplated hereby or thereby are completed, subject CBI or any officer, director, shareholder or employee of CBI to criminal or civil liability. Further, no action or proceeding before any court or Governmental Entity, by any
government or Governmental Entity or by any other Person is threatened, instituted or pending that would reasonably be expected to result in any of the consequences referred to in clauses (a) through (c) above.
Section 7.06
Delivery of Closing Documents
. CBI shall have received all documents required to be
received from FFIN on or prior to the Closing Date as set forth in
Section 2.03
hereof, all in form and substance reasonably satisfactory to CBI.
Section 7.07
No Material Adverse Change
. There having been no Material Adverse Change with respect to
FFIN since June 30, 2017.
Section 7.08
Registration Statement
. The Registration Statement,
including any amendments or supplements thereto, shall be effective under the Securities Act and no stop order suspending the effectiveness of the Registration Statement shall be in effect or proceedings for such purpose pending before or threatened
by the SEC. All state securities permits or approvals required by applicable state securities Laws to consummate the transactions contemplated by this Agreement shall have been received and remain in effect.
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Section 7.09
Nasdaq Listing
. The shares of FFIN Stock to
be issued pursuant to this Agreement shall have been approved for listing on the Nasdaq Global Select Market.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF FFIN AND MERGER SUB
All obligations of FFIN and Merger Sub under this Agreement are subject to the satisfaction, prior to or at the Closing, of each of the
following conditions, which may be waived in whole or in part by such parties.
Section 8.01
Representations and Warranties
. (i) Each of the representations and warranties of the CBI set forth in
Sections 3.01
,
3.02
,
3.03
(other than inaccuracies that are de minimis in amount and effect) and
3.14
and
3.41
shall be true and correct in all respects at and as of the date of this Agreement and at and as of the Closing Date as though made at and as of the Closing Date (unless any such representation or warranty is made only as of a specific
date, in which case as of such specific date) and (ii) each of the other representations and warranties made by CBI in this Agreement or in any document or schedule delivered to FFIN in connection with this Agreement being true and correct in
all material respects (except to the extent such representations and warranties are qualified by their terms by reference to material, materiality, in all material respects, Material Adverse Change, or
the like, in which case such representations and warranties as so qualified are true and correct in all respects) when made and being true and correct in all material respects as of the Closing with the same force and effect as if such
representations and warranties were made at and as of the Closing, except with respect to those representations and warranties specifically made as of an earlier date (in which case such representations and warranties must have been true and correct
as of such earlier date).
Section 8.02
Performance of Obligations
. CBI has, or has caused to be,
performed or observed, in all material respects, all obligations and agreements required to be performed or observed by CBI under this Agreement on or prior to the Closing Date.
Section 8.03
Shareholder Approval
. Each of this Agreement and the Merger having been approved by the
Requisite CBI Vote.
Section 8.04
Government and Other Approvals
. CBI and FFIN having received
approvals, acquiescences or consents of the transactions contemplated by this Agreement from all necessary Governmental Entities and from the third parties listed on
Confidential Schedules 2.02(j)
and
2.03(g)
,
respectively, and all applicable waiting periods having expired. Further, the approvals and the transactions contemplated hereby not having been contested or threatened to be contested by any federal or state Governmental Entity or by any other
third party by formal proceedings.
Section 8.05
No Litigation
. No action having been taken, and
no statute, rule, regulation or Order being promulgated, enacted, entered, enforced or deemed applicable to this Agreement or the transactions contemplated hereby by any federal, state or foreign government or Governmental Entity or by any court,
including the entry of a preliminary or permanent injunction, which, if successful, would (a) make this Agreement or any other agreement contemplated hereby, or the transactions contemplated hereby or thereby illegal, invalid or unenforceable,
(b) require the divestiture of a material portion of the assets of FFIN or its Subsidiaries, or (c) impose material limits on the ability of any party to this Agreement to complete this Agreement or any other agreement contemplated hereby,
or the transactions contemplated hereby or thereby, or (d) if this Agreement or any other agreement contemplated hereby, or the transactions contemplated hereby or thereby are completed, subject FFIN or any officer, director, shareholder or
employee of FFIN to criminal or civil liability. Further, no action or proceeding before any court or Governmental Entity, by any government or Governmental Entity or by any other Person is threatened, instituted or pending that would reasonably be
expected to result in any of the consequences referred to in clauses (a) through (d) above.
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Section 8.06
Releases
. FFIN having received from
each of the directors of CBI an instrument dated as of the Closing Date releasing CBI, its Subsidiaries and each of its Affiliates, successors and assigns, from any and all claims of such directors (except to certain matters described therein), the
form of which is attached as
Exhibit D
. Further, FFIN having received from each of the executive officers of CBI, as listed on
Confidential Schedule 8.06
, an instrument dated as of the Closing Date releasing
CBI, its Subsidiaries and each of its Affiliates, successors and assigns, from any and all claims of such executive officers (except as to certain matters described therein), the form of which is attached as
Exhibit E
.
Section 8.07
No Material Adverse Change
. There will have been no Material Adverse Change with respect
to CBI since June 30, 2017.
Section 8.08
Termination of Employee Plans
. FFIN having
received evidence reasonably satisfactory to FFIN that, as of the Effective Time, all Employee Plans of CBI (other than such plans FFIN elects not to terminate) have been terminated in accordance with the terms of such Employee Plans of CBI, the
Code, ERISA and all other applicable Laws on a basis satisfactory to FFIN in its reasonable discretion and that, to the extent required by the Employee Plans or applicable Law, affected participants have been notified of such terminations and/or
integrations.
Section 8.09
Employment Agreements
. FFIN having received from each of the
individuals set forth on
FFIN Confidential Schedule 8.09
a fully executed employment agreement dated as of the Closing Date substantially in the forms attached hereto as
Exhibit F
.
Section 8.10
Registration Statement
. The Registration Statement, including any amendments or
supplements thereto, shall be effective under the Securities Act and no stop order suspending the effectiveness of the Registration Statement shall be in effect or proceedings for such purpose pending before or threatened by the SEC. All state
securities permits or approvals required by applicable state securities Laws to consummate the transactions contemplated by this Agreement shall have been received and remain in effect.
Section 8.11
Dissenting Shareholders
. Holders of not more than 5% of the outstanding shares of CBI
Stock having demanded or be entitled to demand payment of the fair value of their shares as dissenting shareholders under applicable provisions of the OGCA.
Section 8.12
Delivery of Closing Documents
. FFIN shall have received all documents required to be
received from CBI on or prior to the Closing Date as set forth in
Section 2.02
hereof, all in form and substance reasonably satisfactory to FFIN.
Section 8.13
CBI Options
. Each holder of a CBI Option shall have exercised such CBI Option or CBI has
compensated in cash such holder of a CBI Option for the termination and cancellation of such CBI Option prior to the Calculation Date and CBI shall have terminated and cancelled all CBI Options as of the Calculation Date.
Section 8.14
Minimum Adjusted Equity
. CBIs Adjusted Equity shall be equal to or greater than
$38,070,000.
Section 8.15
FIRPTA Certificate
. CBI shall have delivered to FFIN (i) a notice
to the IRS conforming to the requirements of Treasury Regulation Section 1.897-2(h)(2), in form and substance satisfactory to FFIN, dated as of the Closing Date and executed by CBI, and (ii) a Statement of Non-U.S. Real Property Holding
Corporation Status Pursuant to Treasury Regulation Sections 1.1445-2(c)(3) and 1.897-2(h) and Certification of Non-Foreign Status, in form and substance satisfactory to FFIN, dated as of the Closing Date and executed by CBI.
Section 8.16
Federal Tax Opinion
. FFIN shall have received an opinion of Norton Rose Fulbright US
LLP, in form and substance reasonably satisfactory to FFIN, dated as of the Closing Date and based on facts, representations and assumptions described in such opinion, to the effect that the Merger should qualify as a
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reorganization within the meaning of Section 368(a) of the Code. In rendering such opinion, Norton Rose Fulbright US LLP may require and rely upon and may incorporate by
reference representations and covenants, including those contained in certificates of officers and/or directors of FFIN and CBI referred to in
Section 5.20
.
Section 8.17
Stock Loans
. All Stock Loans shall have been repaid.
ARTICLE IX
TERMINATION
Section 9.01
Right of Termination
. This Agreement and the transactions contemplated hereby may be terminated at any time, notwithstanding the approval thereof by the shareholders of CBI, prior to or at the Closing as follows, and in
no other manner:
(a) By the mutual written consent of FFIN and CBI, duly authorized by the board of directors of each of
FFIN and CBI.
(b) By either CBI or FFIN (as long as the terminating party is not in material breach of any representation,
warranty, covenant or other agreement contained herein) if the conditions precedent to such parties obligations to close specified in
Article VII
and
Article VIII
, respectively, hereof have not been met or waived by
May 15, 2018, or such later date as has been approved by the parties hereto.
(c) By either FFIN or CBI if any of the
transactions contemplated by this Agreement are disapproved by any Regulatory Agency whose approval is required to complete such transactions or if any court of competent jurisdiction in the United States or other federal or state Governmental
Entity has issued an Order, decree or ruling or taken any other action restraining, enjoining, invalidating or otherwise prohibiting this Agreement or the transactions contemplated hereby and such disapproval, Order, decree, ruling or other action
is final and nonappealable;
provided
,
however
, that the party seeking to terminate this Agreement pursuant to this
Section 9.01(c)
shall have used its commercially reasonable efforts to contest, appeal and remove such
Order, decree, ruling or other action.
(d) By either FFIN or CBI if it reasonably determines, in good faith and after
consulting with counsel, there is substantial likelihood that any necessary regulatory approval will not be obtained or will be obtained only upon a condition or conditions that could reasonably be expected to be materially burdensome on, or
materially impair the anticipated benefits of the Merger to, FFIN and its Subsidiaries and Affiliates, taken as a whole.
(e) by either FFIN or CBI if there has been any Material Adverse Change with respect to the other party;
(f) by FFIN, if there shall have been a breach of any of the covenants or agreements or any of the representations or
warranties (or any such representation or warranty shall cease to be true and correct) set forth in this Agreement on the part of CBI or any other agreement contemplated hereby, which breach or failure to be true and correct, either individually or
in the aggregate with all other breaches (or failures of such representations and warranties to be true and correct), would constitute, if occurring or continuing on the Closing Date, the failure of the conditions set forth in
Section 8.01
or
Section 8.02
, as the case may be; provided, that the right to terminate this Agreement under this
Section 9.01(f)
shall not be available to FFIN if it or Merger Sub is then in material breach of
any of its representations, warranties, covenants or agreements set forth in this Agreement. If FFIN desires to terminate this Agreement because of an alleged breach or failure to be true and correct as provided in this
Section 9.01(f)
,
then it must notify CBI in writing of its intent to terminate stating the reason therefor. CBI shall have thirty (30) days from the receipt of such notice to cure the alleged breach or failure to be true and correct, if the breach or failure to
be true and correct is capable of being cured;
(g) by CBI, if there shall have been a breach of any of the covenants or
agreements or any of the representations or warranties (or any such representation or warranty shall cease to be true and correct) set
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forth in this Agreement on the part of FFIN or Merger Sub or any other agreement contemplated hereby, which breach or failure to be true and correct, either individually or in the aggregate with
all other breaches (or failures of such representations and warranties to be true and correct), would constitute, if occurring or continuing on the Closing Date, the failure of the conditions set forth in
Section 7.01
or
Section 7.02
, as the case may be; provided, that the right to terminate this Agreement under this
Section 9.01(g)
shall not be available to CBI if it is then in material breach of any of its representations, warranties,
covenants or agreements set forth in this Agreement. If CBI desires to terminate this Agreement because of an alleged breach or failure to be true and correct as provided in this
Section 9.01(g)
, then it must notify FFIN in writing of
its intent to terminate stating the reason therefor. FFIN shall have thirty (30) days from the receipt of such notice to cure the alleged breach or failure to be true and correct, if the breach or failure to be true and correct is capable of
being cured;
(h) By FFIN or CBI, if this Agreement and the Merger are not approved by the required vote of shareholders of
CBI at the Shareholders Meeting; provided, that CBI may only terminate this Agreement pursuant to this
Section 9.01(h)
if the CBI Board recommended that the shareholders of CBI vote in favor of the approval and adoption of this
Agreement, the Merger and the transactions contemplated hereby.
(i) By FFIN in accordance with
Section 5.12
.
(j) By FFIN if CBI or the Bank enter into any formal or informal administrative action with a Governmental Entity or any
such action is threatened by a Governmental Entity.
(k) By FFIN, if (i) CBI has mailed the Proxy Statement/Prospectus
to its shareholders and CBI does not hold the Shareholders Meeting within 60 days thereafter, (ii) the CBI Board fails to recommend that the CBI shareholders vote in favor of approval of this Agreement, or (iv) the individuals that
executed a Voting Agreement or a Director Support Agreement pursuant to
Section 5.23
and
Section 5.24
hereto have violated the terms thereof.
Section 9.02
Notice of Termination
. The power of termination provided for
Section 9.01
hereof may be exercised only by a notice given in writing, as provided in
Section
10.08
of this Agreement.
Section 9.03
Effect of Termination
. Without limiting any other
relief to which either party hereto may be entitled for breach of this Agreement or fraud, if this Agreement is terminated pursuant to the provisions of
Section 9.01
hereof, no party to this Agreement will have any further liability or
obligation under this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.01
Survival of Representations, Warranties, Covenants and Agreements
. The representations, warranties, covenants and agreements of CBI, FFIN, and FFB contained in this Agreement shall terminate at the Closing, other than
the covenants that by their terms are to be performed after the Effective Time, which shall survive the Closing.
Section 10.02
Expenses
. Each of the parties to this Agreement is obligated to pay all of its expenses and costs (including all counsel fees and expenses) incurred by it in connection with this Agreement and the consummation of the
transactions contemplated hereby.
Section 10.03
Brokerage Fees and Commissions
.
(a) FFIN hereby represents to CBI that no agent, representative or broker has represented FFIN in connection with the
transactions described in this Agreement. CBI will not have any responsibility or liability for any fees, expenses or commissions payable to any agent, representative or broker of FFIN and FFIN hereby agrees to indemnify and hold CBI harmless for
any amounts owed to any agent, representative or broker of FFIN.
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(b) CBI hereby represents to FFIN that, except as set forth in
Confidential
Schedule 10.03(b)
, no agent, representative or broker has represented CBI in connection with the transactions described in this Agreement. FFIN will not have any responsibility or liability for any fees, expenses or commissions payable
to any agent, representative or broker of CBI or any shareholder of CBI, and CBI hereby agrees to indemnify and hold FFIN harmless for any amounts owed to any agent, representative or broker of CBI or any shareholder of CBI.
Section 10.04
Entire Agreement
. This Agreement, the Voting Agreement, the Director Support
Agreements, and the other agreements, documents, schedules and instruments signed and delivered by the parties to each other at the Closing are the full understanding of the parties, a complete allocation of risks between them and a complete and
exclusive statement of the terms and conditions of their agreement relating to the subject matter hereof and supersede any and all prior agreements, whether written or oral, that may exist between the parties with respect thereto. Except as
otherwise specifically provided in this Agreement, no conditions, usage of trade, course of dealing or performance, understanding or agreement purporting to modify, vary, explain or supplement the terms or conditions of this Agreement is binding
unless hereafter made in writing and signed by the party to be bound, and no modification will be effected by the acknowledgment or acceptance of documents containing terms or conditions at variance with or in addition to those set forth in this
Agreement.
Section 10.05
Binding Effect; Assignment
. All of the terms, covenants,
representations, warranties and conditions of this Agreement are binding upon, and inure to the benefit of and are enforceable by, the parties and their respective successors, representatives and permitted assigns. No party to this Agreement may
assign this Agreement, by operation of law or otherwise, in whole or in part, without the prior written consent of the other parties, and any assignment made or attempted in violation of this Section is void and of no effect.
Section 10.06
Further Cooperation
. The parties agree that they will, at any time and from time to
time after the Closing, upon request by the other and without further consideration, do, perform, execute, acknowledge and deliver all such further acts, deeds, assignments, assumptions, transfers, conveyances, powers of attorney, certificates and
assurances as may be reasonably required in order to complete the transactions contemplated by this Agreement or to carry out and perform any undertaking made by the parties hereunder.
Section 10.07
Severability
. Whenever possible, each provision or portion of any provision of this
Agreement shall be interpreted in such manner as to be effective and valid under applicable Law, but if any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future Laws, then the remaining provisions of
this Agreement will remain in full force and effect and will not be affected by such illegal, invalid or unenforceable provision or by its severance from this Agreement; and this Agreement shall be reformed, construed and enforced in such
jurisdiction such that the illegal, invalid or unenforceable provision or portion thereof shall be interpreted to be only so broad as is enforceable.
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Section 10.08
Notices
. Any and all payments (other than
payments at the Closing), notices, requests, instructions and other communications required or permitted to be given under this Agreement after the date of this Agreement by any party hereto to any other party may be delivered personally or by
nationally recognized overnight courier service or sent by U.S. mail or (except in the case of payments) by facsimile transmission or electronic mail (provided that the electronic mail is promptly confirmed by telephone and is followed up within one
Business Day by dispatch pursuant to one of the other methods described herein), at the respective addresses or transmission numbers set forth below and is deemed delivered (a) in the case of personal delivery, facsimile transmission or
electronic mail, when received; (b) in the case of mail, upon the earlier of actual receipt or five (5) Business Days after deposit in the United States Postal Service, first class certified or registered mail, postage prepaid, return
receipt requested; and (c) in the case of an overnight courier service, one (1) Business Day after delivery to such courier service with and instructions for overnight delivery. The parties may change their respective addresses,
transmission numbers and electronic mail address by written notice to all other parties, sent as provided in this Section. All communications must be in writing and addressed as follows:
IF TO CBI:
Harry J. Brooks
Chairman and Chief Executive Officer
Commercial Bancshares, Inc.
24080 Hwy 59 North, Suite 250
Kingwood, Texas 77339
Phone:
(281) 318-4555
Fax: (281) 312-4997
E-Mail: johnny.brooks@csbec.com
WITH A COPY TO:
Larry Temple,
Esq.
400 W 15th Street, Suite 705
Austin, TX 78701
Phone:
(512) 477-4467
Fax: (512) 477-4478
E-Mail:
larry@larrytemple.com
IF TO FFIN:
F. Scott Dueser
President and Chief Executive Officer
First Financial Bankshares, Inc.
400 Pine Street
Abilene, Texas
79601
Phone: (325) 627-7031
Fax: (325) 627-7393
E-Mail:
sdueser@ffin.com
WITH A COPY TO:
Michael G. Keeley, Esq.
Norton
Rose Fulbright US LLP
2200 Ross Avenue, Suite 3600
Dallas, Texas 75201
Phone:
(214) 855-3906
Fax: (214) 855-8200
E-Mail:
mike.keeley@nortonrosefulbright.com
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Section 10.09
GOVERNING LAW
. THIS AGREEMENT IS TO BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD FOR THE PROVISIONS THEREOF REGARDING CHOICE OF LAW. VENUE FOR ANY CAUSE OF ACTION BETWEEN THE PARTIES TO THIS AGREEMENT WILL LIE IN TAYLOR COUNTY, TEXAS.
Section 10.10
WAIVER OF JURY TRIAL
. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR OTHER PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT: (A) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SUIT OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH PARTY UNDERSTANDS AND
HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION
10.10
.
Section 10.11
Multiple Counterparts
. For the convenience of the parties hereto, this
Agreement may be signed in multiple counterparts, each of which will be deemed an original, and all counterparts hereof so signed by the parties hereto, whether or not such counterpart will bear the execution of each of the parties hereto, will be
deemed to be, and is to be construed as, one and the same Agreement. A facsimile or electronic scan in PDF format of a signed counterpart of this Agreement will be sufficient to bind the party or parties whose signature(s) appear
thereon.
Section 10.12
Definitions
. For purposes of this Agreement, the following terms have the
meanings specified or referred to in this section:
Acquisition Proposal
means any of the following:
(a) a merger, consolidation, or any similar transaction of any entity with CBI or any Subsidiary of CBI, (b) a purchase, lease or other acquisition of all or substantially all the assets of CBI or any Subsidiary of CBI, (c) a purchase
or other acquisition of beneficial ownership by any person or group (as such terms are defined in Section 13(d)(3) of Exchange Act) (including by way of merger, consolidation, share exchange, or otherwise)
that would cause such person or group to become the beneficial owner of any securities of CBI or any Subsidiary of CBI after the date of this Agreement, (d) a tender or exchange offer to acquire any securities of CBI or any Subsidiary of CBI,
(e) a public proxy or consent solicitation made to the shareholders of CBI or any Subsidiary of CBI seeking proxies in opposition to any proposal relating to any of the transactions contemplated by this Agreement, or (f) the making of a
bona fide offer or proposal to the board of directors or shareholders of CBI or any Subsidiary of CBI to engage in one or more of the transactions referenced in clauses (a) through (e) above.
Adjusted Equity
shall have the meaning set forth in
Section 1.07(b)
.
Affiliate
means, with respect to any Person or entity, any Person or entity that, directly or indirectly,
controls, is controlled by, or is under common control with, such Person or entity 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 or entity, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person or entity, whether through the ownership of
voting securities or by contract or otherwise.
Aggregate Stock Consideration
means the aggregate number
of shares of FFIN Stock to be issued under this Agreement.
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Agreement
has the meaning set forth in the preamble.
Bank
has the meaning set forth in the Recitals.
Bank Call Reports
shall have the meaning set forth in
Section 3.05(b)
.
Bank Merger
shall have the meaning set forth in Recitals.
Bank Merger Agreement
shall have the meaning set forth in the
Section 1.13
.
Bank Stock
shall have the meaning set forth in
Section 3.03(b)
.
Bankruptcy Exception
means, in respect of any agreement, contract, commitment or obligation, any limitation
thereon imposed by any bankruptcy, insolvency, fraudulent conveyance, reorganization, receivership, moratorium or similar Law affecting creditors rights and remedies generally and, with respect to the enforceability of any agreement, contract,
commitment or obligation, by general principles of equity, including principles of commercial reasonableness, good faith and fair dealing, regardless of whether enforcement is sought in a proceeding at Law or in equity.
BHCA
has the meaning set forth in the preamble.
Business Day
means a day that the Bank is open to the public for the conduct of banking business.
Calculation Date
shall have the meaning set forth in
Section 1.07(a)
.
Cancelled Shares
shall have the meaning set forth in
Section 1.05(e)
.
CBI
shall have the meaning set forth in the preamble.
CBI Board
shall have the meaning set forth in the Recitals.
CBI Constituent Documents
shall have the meaning set forth in
Section 3.04(a)
.
CBI Financial Statements
shall have the meaning set forth in Section
3.05(a)
.
CBI Merger Costs
shall have the meaning set forth in Section
1.07(b)
.
CBI Option
shall have the meaning set forth in
Section 3.10(c)
.
CBI Per Share Value
shall have the meaning set forth in
Section 1.05(b)
.
CBI Stock
shall have the meaning set forth in
Section 1.05(b)
.
CBI Stock Plans
shall have the meaning set forth in
Section 3.10(c)
.
Certificate
shall have the meaning set forth in
Section 1.06(c)
.
Certificate of Merger
shall have the meaning set forth in
Section 2.01(b)
.
Closing
shall have the meaning set forth in
Section 2.01(a)
.
Closing Date
shall have the meaning set forth in
Section 2.01(a)
.
Code
shall have the meaning set forth in the Recitals.
Continued Employee
shall have the meaning set forth in
Section 6.07
.
Controlled Group Plans
shall have the meaning set forth in
Section 3.28(g)
.
CRA
shall have the meaning set forth in
Section 3.32
.
Director Support Agreement
shall have the meaning set forth in
Section 5.24
.
Dissenting Shares
shall have the meaning set forth in
Section 1.11
.
Dividend Payment
shall have the meaning set forth in
Section 1.08
.
Dodd-Frank Act
shall have the meaning set forth in
Section 3.36
.
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Effective Time
shall have the meaning set forth in
Section 2.01(b)
.
Employee Plans
shall have the meaning set forth in
Section 3.28(a)
.
Environmental Inspections
shall have the meaning set forth in
Section 5.12(a)
.
Environmental Laws
means the common law and all federal, state, local and
foreign Laws or regulations, codes, orders, decrees, judgments or injunctions issued, promulgated, approved or entered thereunder, now or hereafter in effect, relating to pollution or protection of public or employee health or safety or the
environment, including Laws relating to (i) emissions, discharges, releases or threatened releases of Hazardous Materials, into the environment (including ambient air, indoor air, surface water, ground water, land surface or subsurface strata),
(ii) the manufacture, processing, distribution, use, generation, treatment, storage, disposal, transport or handling of Hazardous Materials, (iii) underground and above ground storage tanks, and related piping, and emissions, discharges,
releases or threatened releases therefrom, and (iv) the conservation of open space, ecosystems, wetlands or water of the United States or a state, and (v) the preservation of cultural or historic structures or artifacts.
ERISA
shall have the meaning set forth in
Section 3.28(a)
.
Exchange Act
shall have the meaning set forth in
Section 4.03(b)
.
Exchange Agent
shall have the meaning set forth in
Section 1.06(a)
.
Exchange Fund
shall have the meaning set forth in
Section 1.06(b)
.
FDIA
shall have the meaning set forth in
Section 2.02(e)
.
FDIC
shall have the meaning set forth in
Section 2.02(e)
.
Federal Reserve
shall have the meaning set forth in
Section 3.01(b)
.
FFB
shall have the meaning set forth in the Recitals.
FFIN
shall have the meaning set forth in the preamble.
FFIN Board
shall have the meaning set forth in the Recitals.
FFIN Constituent Documents
shall have the meaning set forth in
Section 4.05(b)
.
FFIN SEC Reports
shall have the meaning set forth in
Section 4.04(a)
.
FFIN Stock
shall have the meaning set forth in the Recitals.
FFIN Closing VWAP
shall have the meaning set forth in
Section 1.05(b)
.
GAAP
shall have the meaning set forth in
Section 3.05(a)
.
Governmental Entity
means any court, arbitrator, administrative agency or commission, board, bureau or other
governmental or Regulatory Agency or instrumentality.
Hazardous Material
means any pollutant,
contaminant, chemical, or toxic or hazardous substance, constituent, material or waste, or any other chemical, substances, constituent or waste including, among others, asbestos, lead-based paint, urea-formaldehyde, petroleum, crude oil or any
fraction thereof or any petroleum product.
Indemnified Parties
shall have the meaning set forth in
Section 6.12(a)
.
Integrated Mergers
shall have the meaning set forth in the Recitals.
IRS
shall have the meaning set forth in
Section 1.07(b)
.
A person has
Knowledge
of, or acts
Knowingly
with respect to, a particular fact or other
matter if any individual who is presently serving as a director or executive officer (as such term is defined of 12 C.F.R. Part 215 (Regulation O)) of that person, after reasonable inquiry, is actually aware of such fact or other matter.
A-53
Law
shall mean any federal or state constitution, statute,
regulation, rule, or common law applicable to a Person.
Leases
shall have the meaning set forth in
Section 3.11(a)(i)
.
Letter of Transmittal
shall have the meaning set forth in
Section 1.06(c)
.
Lien(s)
means any mortgage, security interest, pledge, charges,
encumbrance or lien (statutory or otherwise).
Listed Contracts
shall have the meaning set forth in
Section 3.11(a)
.
Material Adverse Change
with respect to any party means any material
adverse change in the business, results of operations, condition (financial or otherwise), assets, properties, liabilities (absolute, accrued, contingent or otherwise) or reserves, taken as a whole, of such party has occurred, including, by way of
example and without limitation, any litigation or regulatory developments that would cause the representations and warranties set forth in Section 3.07 or Section 4.07 or Section 3.20 or Section 4.05, respectively, to be untrue
or incorrect, but excluding any change with respect to, or effect on, such party resulting from: (i) any changes in Laws or interpretations thereof that are generally applicable to the banking or savings industries; (ii) changes in GAAP or
RAP that are generally applicable to the banking or savings industries; (iii) expenses incurred in connection with the transactions contemplated by this Agreement; (iv) changes in global, national or regional political conditions or
general economic or market conditions in the United States or the State of Texas, including changes in prevailing interest rates, credit availability and liquidity, currency exchange rates, and price levels or trading volumes in the United States or
foreign securities markets affecting other companies in the financial services industry; (v) general changes in the credit markets or general downgrades in the credit markets; (vi) actions or omissions of a party taken as required by this
Agreement or with the prior informed written consent of the other party or parties in contemplation of the transactions contemplated by this Agreement; or (vii) any outbreak or escalation of hostilities, declared or undeclared acts of war or
terrorism; provided, that with respect to clause (i) through (vii), such party is not affected to a greater extent than other Persons, bank holding companies or insured depository institutions in the industry in which such party operates.
Merger
shall have the meaning set forth in the Recitals.
Merger Consideration
shall have the meaning set forth in
Section 1.05(b)
.
Merger Sub
shall have the meaning set forth in the preamble.
Nonqualified Deferred Compensation Plan
shall have the meaning set forth in
Section 3.28(k)
.
Order
shall mean any award, decision, decree, injunction, judgment, order, ruling, or verdict entered,
issued, made or rendered by any court, administrative agency or any other Governmental Entity.
Person
means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, any other business entity, or a governmental entity (or any department,
agency, or political subdivision thereof).
Permitted Encumbrances
shall mean only (i) Liens for
taxes not yet due and payable and that do not constitute penalties , (ii) Liens for taxes being contested in good faith by appropriate proceedings, (iii) statutory Liens of landlords, (iv) Liens of carriers, warehousemen, mechanics,
materialmen and repairmen incurred in the ordinary course of business consistent with past practice and not yet delinquent, (v) zoning, building, or other restrictions, variances, covenants, rights of way, rights of subtenants, encumbrances,
easements and other minor irregularities in title, none of which, individually or in the aggregate, interfere in any material respect with the present use of or occupancy of the affected parcel by the Bank, or have a material detrimental effect on
the value thereof or its present use.
Property
or
Properties
shall include all real
property currently owned or leased by the Bank, including properties that the Bank has foreclosed on as well as the premises and all improvements and fixtures thereon of the Bank.
A-54
Proprietary Rights
shall have the meaning set forth in
Section 3.15
.
Proxy Statement/Prospectus
shall have the meaning set forth in
Section 5.02(d)
.
RAP
shall have the meaning set forth in
Section 3.05(b)
.
Registration Statement
shall have the meaning set forth in
Section 5.13(a)
.
Regulatory Agency
means any self-regulatory organization, the Federal Reserve, the FDIC, the OCC, the SEC,
or any other federal or state governmental or regulatory agency or authority having or claiming jurisdiction over a party to this Agreement or the transactions contemplated hereby.
Retirement Plan
shall have the meaning set forth in
Section 5.14(a)
.
SEC
shall have the meaning set forth in
Section 3.08
.
Second Effective Time
shall have the meaning set forth in
Section 1.12
.
Second Step Merger
shall have the meaning set forth in the Recitals.
Secondary Investigation
shall have the meaning set forth in
Section 5.12(a)
.
Securities Act
shall have the meaning set forth in
Section 4.03(b)
.
Shareholders Meeting
shall have the meaning set forth in
Section 5.02(a)
.
SOA
shall have the meaning set forth in
Section 5.22(b)
.
Stock Loans
shall have the meaning set forth in
Section 5.28
.
Subsidiary
means, 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, a majority equity interest.
Surviving Corporation
shall have the meaning set forth in
Section 1.01
.
Tail Coverage
shall have the meaning set forth in
Section 5.17
.
Tax
or
Taxes
means all (i) United States federal, state or local or non-United
States taxes, assessments, charges, duties, levies, interest or other similar governmental charges of any nature, including all income, franchise, profits, capital gains, capital stock, transfer, sales, use, occupation, property, excise, severance,
windfall profits, stamp, stamp duty reserve, license, payroll, withholding, ad valorem, value added, alternative minimum, environmental, customs, social security (or similar), unemployment, sick pay, disability, registration and other taxes,
assessments, charges, duties, interest, fees, levies or other similar governmental charges of any kind whatsoever, whether disputed or not, together with all estimated taxes, deficiency assessments, additions to tax, charges, duties, levies,
penalties and interest; (ii) any liability for the payment of any amount of a type described in clause (i) arising as a result of being or having been a member of any consolidated, combined, unitary or other group or being or having been
included or required to be included in any Tax Return related thereto; and (iii) any liability for the payment of any amount of a type described in clause (i) or clause (ii) as a result of any obligation to indemnify or otherwise
assume or succeed to the liability of any other Person.
Tax Return
means any return, declaration,
report, claim for refund, or information return or statement relating to Taxes required to be filed with an Governmental Entity, including any schedule or attachment thereto, and including any amendment thereof.
TBOC
shall have the meaning set forth in
Section 1.01
.
TCPA
shall have the meaning set forth in
Section 2.02(c)
.
TDB
shall have the meaning set forth in
Section 2.02(b)
.
Treasury Regulations
means the regulations promulgated by the United States Department of the Treasury
pursuant to and in respect of provisions of the Code. All references herein to sections of the
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Treasury Regulations shall include any corresponding provision or provisions of succeeding, similar, substitute proposed or final Treasury Regulations.
Section 10.13
Specific Performance
. Each of the parties hereto acknowledges that the other parties
would be irreparably damaged and would not have an adequate remedy at law for money damages if any of the covenants contained in this Agreement were not performed in accordance with its terms or otherwise were materially breached. Each of the
parties hereto therefore agrees that, without the necessity of proving actual damages or posting bond or other security, the other party will be entitled to temporary and/or permanent injunction or injunctions which a court of competent jurisdiction
concludes is justified to prevent breaches of such performance and to specific enforcement of such covenants in addition to any other remedy to which they may be entitled, at law or in equity.
Section 10.14
Attorneys Fees and Costs
. If attorneys fees or other costs are incurred to
secure performance of any of the obligations herein provided for, or to establish damages for the breach thereof, or to obtain any other appropriate relief, the prevailing party is entitled to recover reasonable attorneys fees and costs
incurred therein and determined by the court to be justified.
Section 10.15
Rules of
Construction
. Whenever the words include, includes or including are used in this Agreement, they are deemed to be followed by the words without limitation. The words hereof,
herein and hereunder and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision in this Agreement. Each use herein of the masculine, neuter or feminine
gender are deemed to include the other genders. Each use herein of the plural include the singular and vice versa, in each case as the context requires or as is otherwise appropriate. The word or is used in the inclusive sense. Any
agreement or instrument defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement or instrument as from time to time amended, modified or supplemented, including by waiver or consent. References
to a Person are also to its permitted successors or assigns.
Section 10.16
Articles, Sections,
Exhibits and Schedules
. All articles and sections referred to herein are articles and sections, respectively, of this Agreement and all exhibits and schedules referred to herein are exhibits and schedules, respectively, attached to this
Agreement. Descriptive headings as to the contents of particular sections are for convenience only and do not control or affect the meaning, construction or interpretation of this Agreement or any particular section. Any and all schedules, exhibits,
certificates or other documents or instruments referred to herein or attached hereto are and will be incorporated herein by reference hereto as though fully set forth herein.
Section 10.17
Public Disclosure
. Neither FFIN nor CBI, or Affiliate or Subsidiary of the same, will
make any announcement, statement, press release, acknowledgment or other public disclosure of the existence of, or reveal the terms, conditions or the status of, this Agreement or the transactions contemplated hereby without the prior written
consent of the other parties to this Agreement; but FFIN and CBI are permitted to make any public disclosures or governmental filings as legal counsel may deem necessary to maintain compliance with or to prevent violations of applicable Law, that
may be necessary to obtain regulatory approval for the transactions contemplated hereby, or that may be necessary to enforce the obligations under this Agreement.
Section 10.18
Extension; Waiver
. At any time prior to the Closing Date, the parties may
(a) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (b) waive any inaccuracies in the representations and warranties contained herein or in any document, certificate or writing
delivered pursuant hereto, or (c) waive compliance with any of the agreements, covenants or conditions contained herein. Such action will be evidenced by a signed written notice given in the manner provided in
Section 10.08
. No
party to this Agreement will by any act (except by a written instrument given pursuant to
Section 10.08
) be deemed to have waived any right or remedy hereunder or to have acquiesced in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising any right, power or privilege hereunder by any party hereto will operate as a waiver thereof. No single or partial exercise of any right, power or privilege
A-56
hereunder will preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver of any party of any right or remedy on any one occasion will not be
construed as a bar to any right or remedy that such party would otherwise have on any future occasion or to any right or remedy that any other party may have hereunder. Any party may unilaterally waive a right which is solely applicable to it.
Section 10.19
Amendment
. This Agreement may be amended, modified or supplemented only by an
instrument in writing executed by the party against which enforcement of the amendment, modification or supplement is sought.
Section 10.20
No Third Party Beneficiaries
. Nothing contained in this Agreement, express or implied, is intended to confer upon any Persons, other than the parties hereto or their respective successors, any rights, remedies,
obligations, or liabilities under or by reason of this Agreement.
[
Signature Page Follows
]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by their duly
authorized officers as of the date first above written.
|
|
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FIRST FINANCIAL BANKSHARES, INC.
|
|
|
By:
|
|
/s/ F. Scott Dueser
|
|
|
F. Scott Dueser, President and Chief
Executive Officer
|
|
KINGWOOD MERGER SUB, INC.
|
|
|
By:
|
|
/s/ F. Scott Dueser
|
|
|
F. Scott Dueser, President
|
|
COMMERCIAL BANCSHARES, INC.
|
|
|
By:
|
|
/s/ Harry J. Brooks
|
|
|
Harry J. Brooks, Chairman and Chief
Executive Officer
|
[Signature Page to Agreement and Plan of Reorganization]
Appendix B
FORM OF VOTING AGREEMENT
This
VOTING AGREEMENT
(this
Agreement
) dated as of October 12, 2017, is executed by and among First Financial
Bankshares, Inc. (
FFIN
), a Texas corporation and registered bank holding company under the Bank Holding Company Act of 1956, as amended (the
BHCA
), Commercial Bancshares, Inc., a Texas corporation and registered
bank holding company under the BHCA (
CBI
), F. Scott Dueser (
Proxy Holder
), as proxy, and the shareholders of CBI listed on the signature pages to this Agreement (referred to herein individually as a
Shareholder
and collectively as the
Shareholders
). Terms with their initial letters capitalized and not otherwise defined herein have the meanings given them in the Merger Agreement (as defined below).
RECITALS
WHEREAS,
concurrently with the execution of this Agreement, FFIN, Kingwood Merger Sub, Inc. (
Merger Sub
), a Texas corporation and wholly-owned subsidiary of FFIN, and CBI, have entered into that certain Agreement and Plan of
Reorganization, dated as of the date hereof (the
Merger Agreement
), providing for, among other things, FFINs acquisition of CBI through the merger of Merger Sub with and into CBI, with CBI surviving the merger as a
wholly-owned subsidiary of FFIN (the
Merger
);
WHEREAS, the Merger Agreement provides that all of the issued and
outstanding shares of common stock, par value $1.00 per share, of CBI (the
Common Stock
), other than Cancelled Shares and Dissenting Shares, will be exchanged for such consideration as set forth in the Merger Agreement;
WHEREAS, as a condition and inducement to FFINs willingness to enter into the Merger Agreement, each of the Shareholders have agreed to
vote their shares of Common Stock in favor of approval of the Merger Agreement and the transactions contemplated thereby; and
WHEREAS,
FFIN is relying on the agreements set forth herein in incurring expenses in reviewing the business of CBI and Commercial State Bank, a Texas state bank chartered in El Campo, Texas and a wholly-owned subsidiary of CBI (the
Bank
),
in proceeding with the filing of applications for regulatory approvals, and in undertaking other actions necessary for the consummation of the Merger, and the Shareholders are benefiting both from such expenditures by FFIN and by the terms of the
Merger Agreement.
NOW, THEREFORE, for and in consideration of the foregoing and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, CBI, FFIN, the Proxy Holder and the Shareholders undertake, promise, covenant and agree with each other as follows:
AGREEMENT
1. Each
Shareholder, being the registered owner of the number of shares of Common Stock set forth below the Shareholders name on the signature pages hereto (for each such Shareholder, the
Shares
), will vote, direct to vote, or act
by consent with respect to:
|
(b)
|
all Common Stock the Shareholder owns as of the record date of any meeting of the shareholders of CBI or otherwise as of the date of such vote or consent; and
|
|
(c)
|
all Common Stock the Shareholder owns beneficially and has the power and authority to direct the voting thereof as of the record date of any meeting of the shareholders of CBI or otherwise as of the date of such vote or
consent
|
B-1
(clauses (a), (b) and (c), collectively, the
Proxy Shares
), in favor of
approval of the Merger and any other transactions contemplated by the Merger Agreement.
2. If CBI conducts a meeting of or otherwise
seeks approval of its shareholders with respect to any Acquisition Proposal or any other matter that may contradict this Agreement or the Merger Agreement or may prevent FFIN or CBI from completing the Merger, then the Shareholders will vote the
Proxy Shares against the approval of the Acquisition Proposal or otherwise act in the manner most favorable to completing the Merger and the transactions contemplated by the Merger Agreement.
3. Each Shareholder shall not invite or seek any Acquisition Proposal, support (or publicly suggest that anyone else should support) any
Acquisition Proposal that may be made, or ask the CBI Board to consider, support or seek any Acquisition Proposal or otherwise take any action designed to make any Acquisition Proposal more likely. None of the Shareholders shall meet or otherwise
communicate with any Person that makes or is considering making an Acquisition Proposal or any representative of such Person after becoming aware that the Person has made or is considering making an Acquisition Proposal. Each Shareholder shall
promptly advise CBI of each contact the Shareholder or any of the Shareholders representatives may receive from any Person relating to any Acquisition Proposal or otherwise indicating that any Person may wish to participate or engage in any
transaction arising out of any Acquisition Proposal and will provide CBI with all information FFIN requests that is available to the Shareholder regarding any such Acquisition Proposal or possible Acquisition Proposal. Each Shareholder will not make
any claim or join in any litigation alleging that the CBI Board is required to consider, endorse or support any Acquisition Proposal or to invite or seek any Acquisition Proposal. Each Shareholder shall not take any other action that is reasonably
likely to make consummation of the Merger less likely or to impair FFINs ability to exercise any of the rights granted by the Merger Agreement.
4. Each Shareholder, severally, but not jointly, represents and warrants to FFIN that:
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(a)
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Shareholder (i) owns beneficially (as such term is defined in Rule
13d-3
under the Exchange Act) all of the Shares free and clear of all liens or encumbrances, and
(ii) except pursuant hereto, there are no options, warrants or other rights, agreements, arrangements or commitments of any character to which Shareholder is a party relating to the pledge, disposition or voting of any of the Shares and there
are no voting trusts or voting agreements with respect to the Shares.
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(b)
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Shareholder does not beneficially own any Common Stock other than (i) the Shares and (ii) any options, warrants or other rights to acquire any additional shares of Common Stock or any security exercisable for
or convertible into shares of Common Stock, set forth on the signature page of this Agreement.
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(c)
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Shareholder has full power and authority and legal capacity to enter into, execute and deliver this Agreement and to perform fully Shareholders obligations hereunder (including the proxy described in
Section
5
below). This Agreement has been duly and validly executed and delivered by Shareholder and constitutes the legal, valid and binding obligation of Shareholder, enforceable against Shareholder in accordance with its
terms.
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(d)
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None of the execution and delivery of this Agreement by Shareholder, the consummation by Shareholder of the transactions contemplated hereby or compliance by Shareholder with any of the provisions hereof will conflict
with or result in a breach, or constitute a default (with or without notice or lapse of time or both) under any provision of, any trust agreement, loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument or law
applicable to Shareholder or to Shareholders property or assets.
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(e)
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No consent, approval or authorization of, or designation, declaration or filing with, any Governmental Entity or other Person on the part of Shareholder is required in connection with the valid execution and delivery of
this Agreement. No consent of Shareholders spouse is necessary under any community property or other laws in order for Shareholder to enter into and perform its obligations under this Agreement.
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(f)
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Shareholder hereby (a) confirms his or her knowledge of the availability of the rights of dissenting shareholders under the Texas Business Organizations Code (the
TBOC
) with respect to the Merger
and (b) confirms receipt of a copy of the provisions of the TBOC related to the rights of dissenting shareholders. Each Shareholder hereby waives and agrees not to assert, and shall use its best efforts to cause any of its Affiliates who hold
of record any of the Shareholders Shares to waive and not to assert, any appraisal rights with respect to the Merger that the Shareholder or such Affiliate may now or hereafter have with respect to any Shares (or any other shares of capital
stock of CBI that the Shareholder shall hold of record at the time that the Shareholder may be entitled to assert appraisal rights with respect to the Merger) whether pursuant to the TBOC or otherwise.
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5. In order to better effect the provisions of
Sections 1
and
2
of this Agreement, each Shareholder hereby revokes any
previously executed proxies and hereby constitutes and appoints Proxy Holder with full power of substitution, his true and lawful proxy and
attorney-in-fact
to vote at
any meeting of the shareholders of CBI all of the Proxy Shares in favor of the approval of the Merger and any other transactions contemplated by the Merger Agreement, with such modifications to the Merger Agreement as the parties thereto may make;
but this proxy will not apply with respect to any vote on approval of the Merger contemplated by the Merger Agreement if the Merger Agreement is modified so as to (i) reduce the amount of consideration or the form of consideration to be
received by the Shareholder or (ii) materially alter the tax consequences of the receipt thereof under the Merger Agreement in its present form. This proxy shall be limited strictly and solely to the power and authority to vote the Proxy Shares
in the manner and for the purpose set forth in
Sections 1
and
2
of this Agreement and shall not extend to any other matters.
6. Each Shareholder hereby covenants and agrees that until this Agreement is terminated in accordance with its terms, such Shareholder will
not, and will not agree to, without the consent of FFIN, directly or indirectly, sell, transfer, assign, pledge, encumber, hypothecate, cause to be redeemed or otherwise dispose of (any such transaction, a
Transfer
) any of the
Shares or grant any proxy or interest in or with respect to any Shares or deposit any such Shares into a voting trust or enter into another voting agreement or arrangement with respect to such Shares except as contemplated by this Agreement. Any
attempted Transfer of Shares or any interest therein in violation of this Section shall be null and void. This Section shall not prohibit a Transfer of the Shares to any member of Shareholders immediate family, to another Shareholder, to a
trust for the benefit of Shareholder or any member of Shareholders immediate family, or upon the death of Shareholder; provided, that a Transfer referred to in this sentence shall be permitted only if, as a precondition to such Transfer, the
transferee agrees in a writing, reasonably satisfactory in form and substance to FFIN, to be bound by all of the terms of this Agreement.
7. Proxy Holder, by his execution below, agrees to (A) vote all of the Shareholders Proxy Shares at any meeting of the shareholders
of CBI, in favor of the approval of the Merger and any other transactions contemplated by the Merger Agreement, with such modifications to the Merger Agreement as the parties thereto may make; but this proxy will not apply with respect to any vote
on approval of the Merger contemplated by the Merger Agreement if the Merger Agreement is modified so as to (i) reduce the amount of consideration or the form of consideration to be received by the Shareholder or (ii) materially alter the
tax consequences of the receipt thereof under the Merger Agreement in its present form, and (B) in the event of an Acquisition Proposal, to vote all of the Shareholders Proxy Shares at any meeting of the shareholders of CBI, against the
approval of the Acquisition Proposal or otherwise act in the manner most favorable to completing the Merger and the transactions contemplated by the Merger Agreement.
8. Each Shareholder acknowledges that FFIN and CBI are relying on this Agreement in incurring expenses in connection with FFINs
reviewing CBI and the Banks business, in CBIs cooperation with FFINs preparation of a proxy statement and Registration Statement on Form
S-4,
in FFINs proceeding with the filing of
applications for regulatory approvals, and in their undertaking other actions necessary for completing the Merger and that
THE PROXY GRANTED HEREBY IS COUPLED WITH AN INTEREST AND IS
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IRREVOCABLE TO THE FULL EXTENT PERMITTED BY APPLICABLE LAW, INCLUDING TO THE EXTENT APPLICABLE, SECTION 21.369 OF THE TBOC.
The Shareholders and CBI acknowledge that the performance of
this Agreement is intended to benefit FFIN.
9. This Agreement shall remain in effect until the earlier to occur of (a) the
termination of the Merger Agreement, as it may be amended or extended from time to time, pursuant to the terms and conditions contained therein or (b) completion of the transactions contemplated by the Merger Agreement.
10. Proxy Holder may, in his sole discretion, appoint a substitute proxy to act as Proxy Holder under this Agreement; provided, that any
substitute proxy shall agree in writing to be bound by the terms and conditions of this Agreement. In the event of the death, disability or incapacity of Proxy Holder, FFIN, in its sole discretion, may appoint a substitute proxy to act as Proxy
Holder under this Agreement.
11. The vote of the Proxy Holder will control in any conflict between his vote of the Proxy Shares and a
vote by the substitute proxy holder or the Shareholders of the Proxy Shares, and CBI agrees to recognize the vote of the Proxy Holder instead of the vote of substitute proxy holder or the Shareholders if the substitute proxy holder or the
Shareholders do not vote in accordance with
Sections 1
and
2
of this Agreement.
12. This Agreement may not be modified,
amended, altered or supplemented with respect to a particular Shareholder except upon the execution and delivery of a written agreement executed by FFIN, CBI and that Shareholder. Any such modification, amendment, alteration or supplement shall only
apply to the Shareholder(s) executing such written agreement and this Agreement will remain in full force and effect with respect to Shareholders who do not execute such written agreement.
13. For the convenience of the parties hereto, this Agreement may be signed in multiple counterparts, each of which will be deemed an
original, and all counterparts hereof so signed by the parties hereto, whether or not such counterpart will bear the execution of each of the parties hereto, will be deemed to be, and is to be construed as, one and the same Agreement. An
e-mail
or electronic scan in PDF format of a signed counterpart of this Agreement will be sufficient to bind the party or parties whose signature(s) appear thereon.
14. This Agreement, the Merger Agreement and the other agreements, documents, schedules and instruments signed and delivered by the parties to
each other at the Closing are the full understanding of the parties, a complete allocation of risks between them and a complete and exclusive statement of the terms and conditions of their agreement relating to the subject matter hereof and
supersede any and all prior agreements, whether written or oral, that may exist between the parties with respect thereto. Except as otherwise specifically provided in this Agreement, no conditions, usage of trade, course of dealing or performance,
understanding or agreement purporting to modify, vary, explain or supplement the terms or conditions of this Agreement is binding unless hereafter made in writing and signed by the party to be bound, and no modification will be effected by the
acknowledgment or acceptance of documents containing terms or conditions at variance with or in addition to those set forth in this Agreement.
15. Any and all notices, requests, instructions and other communications required or permitted to be given under this Agreement after the date
of this Agreement by any party hereto to any other party may be delivered personally or by nationally recognized overnight courier service or sent by mail or (except in the case of payments) by facsimile transmission or
e-mail,
at the respective addresses or transmission numbers set forth below and is deemed delivered (a) in the case of personal delivery, facsimile transmission or
e-mail,
when received; (b) in the case of mail, upon the earlier of actual receipt or five (5) Business Days after deposit in the United States Postal Service, first class certified or registered
mail, postage prepaid, return receipt requested; and (c) in the case of an overnight courier service, one (1) Business Day after delivery to such courier service with
B-4
instructions for overnight delivery. The parties may change their respective addresses and transmission numbers by written notice to all other parties, sent as provided in this Section. All
communications must be in writing and addressed as follows:
IF TO CBI OR THE SHAREHOLDERS:
Harry J. Brooks
Chairman and
Chief Executive Officer
Commercial Bancshares, Inc.
24080 Hwy 59 North, Suite 250
Kingwood, Texas 77339
Phone:
(281)
318-4555
Fax: (281)
312-4997
E-Mail:
johnny.brooks@csbec.com
WITH A COPY TO (WHICH SHALL NOT CONSTITUTE NOTICE):
Larry Temple, Esq.
400 W 15th
Street, Suite 705
Austin, TX 78701
Phone: (512)
477-4467
Fax: (512)
477-4478
E-Mail:
larry@larrytemple.com
IF TO FFIN OR THE PROXY HOLDER:
F. Scott Dueser
President and
Chief Executive Officer
First Financial Bankshares, Inc.
400 Pine Street
Abilene, Texas
79601
Phone:
(325) 627-7031
Fax:
(325) 627-7393
E-Mail:
sdueser@ffin.com
WITH A COPY TO (WHICH SHALL NOT CONSTITUTE NOTICE):
Michael G. Keeley, Esq.
Norton
Rose Fulbright US LLP
2200 Ross Avenue, Suite 3600
Dallas, Texas 75201
Phone:
(214) 855-3906
Fax:
(214) 855-8200
E-Mail:
mike.keeley@nortonrosefulbright.com
16. THIS AGREEMENT IS TO BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD FOR THE PROVISIONS
THEREOF REGARDING CHOICE OF LAW. VENUE FOR ANY CAUSE OF ACTION BETWEEN THE PARTIES TO THIS AGREEMENT WILL LIE IN TAYLOR COUNTY, TEXAS. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION
OR OTHER
B-5
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT: (A) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SUIT OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH PARTY UNDERSTANDS AND
HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION
16
.
17. All of the terms, covenants, representations, warranties and conditions of this Agreement are binding upon, and inure to
the benefit of and are enforceable by, the parties and their respective successors, representatives and permitted assigns. Nothing contained in this Agreement, express or implied, is intended to confer upon any Persons, other than the parties hereto
or their respective successors, any rights, remedies, obligations, or liabilities under or by reason of this Agreement. No party to this Agreement may assign this Agreement, by operation of law or otherwise, in whole or in part, without the prior
written consent of the other parties, and any assignment made or attempted in violation of this Section is void and of no effect.
18. If
any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws, then (a) this Agreement is to be construed and enforced as if such illegal, invalid or unenforceable provision were not a part hereof;
(b) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by such illegal, invalid or unenforceable provision or by its severance from this Agreement; and (c) there will be added
automatically as a part of this Agreement a provision mutually agreed to which is similar in terms to such illegal, invalid or unenforceable provision as may be possible and still be legal, valid and enforceable.
19. Each of the parties hereto acknowledges that the other parties would be irreparably damaged and would not have an adequate remedy at law
for money damages if any of the covenants contained in this Agreement were not performed in accordance with its terms or otherwise were materially breached. Each of the parties hereto therefore agrees that, without the necessity of proving actual
damages or posting bond or other security, the other party will be entitled to temporary and/or permanent injunction or injunctions which a court of competent jurisdiction concludes is justified to prevent breaches of such performance and to
specific enforcement of such covenants in addition to any other remedy to which they may be entitled, at law or in equity.
[Signature
Page Follows]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date above written.
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FIRST FINANCIAL BANKSHARES, INC.
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By:
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F. Scott Dueser, President and Chief Executive Officer
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PROXY HOLDER:
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F. Scott Dueser
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COMMERCIAL BANCSHARES, INC.
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By:
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Harry J. Brooks, Chairman and Chief Executive Officer
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B-7
APPENDIX C
FORM OF CBI DIRECTOR SUPPORT AGREEMENT
This
DIRECTOR SUPPORT AGREEMENT
(the
Agreement
) is made and entered into as of October 12, 2017, by and between
First Financial Bankshares, Inc., a Texas corporation and registered bank holding company under the Bank Holding Company Act of 1956, as amended (the
BHCA
), with its principal offices in Abilene, Texas (
FFIN
),
and
, an individual resident of the State of Texas
(
Director
). Terms with their initial letters capitalized and not otherwise defined herein have the meanings given them in the Merger Agreement (as defined below).
RECITALS
WHEREAS,
FFIN, Kingwood Merger Sub, Inc., a Texas corporation and wholly-owned subsidiary of FFIN (
Merger Sub
), and Commercial Bancshares, Inc., a Texas corporation and registered bank holding company under the BHCA
(
CBI
), have entered into an Agreement and Plan of Reorganization, dated as of dated hereof (the
Merger Agreement
), providing for FFINs acquisition of CBI through the merger of Merger Sub with and into CBI,
with CBI surviving the merger as a wholly-owned subsidiary of FFIN (the
Merger
);
WHEREAS, as a condition and
inducement to FFINs willingness to enter into the Merger Agreement, FFIN and Director have agreed to enter into this Agreement.
NOW, THEREFORE, in consideration for receipt of such confidential information and trade secrets and in consideration of the premises and
mutual covenants contained herein and in the Merger Agreement intending to be legally bound hereby, FFIN and Director agree as follows;
AGREEMENT
20.
Director Support
. Director agrees to use his or her best efforts to refrain from harming the goodwill of CBI, any Subsidiary of CBI (
CBI Subsidiary
), FFIN or any Subsidiary of FFIN, and their respective customer, client and
vendor relationships. During the term of this Agreement, Director agrees also to consider First Financial Bank, National Association, a national association with its principal offices in Abilene, Texas and wholly-owned subsidiary of FFIN, when
obtaining banking products or services for his or her personal or business needs.
21.
Director Covenants
.
(a) Director acknowledges that he or she has received substantial, valuable consideration, including confidential trade secret
and proprietary information relating to the identity and special needs of current and prospective customers of CBI or any CBI Subsidiary, CBIs and any CBI Subsidiarys current and prospective services, CBIs and any CBI
Subsidiarys business projections and market studies, CBIs and any CBI Subsidiarys business plans and strategies, CBIs and any CBI Subsidiarys studies and information concerning special services unique to CBI or any CBI
Subsidiary. Director further acknowledges and agrees that this consideration constitutes fair and adequate consideration for the execution of the
non-solicitation
and
non-competition
restrictions set forth below. Accordingly, other than in any capacity for or on behalf of FFIN or any subsidiary of FFIN, Director agrees that Director will not, directly or indirectly,
individually or as an employee, partner, officer, director or shareholder or in any other capacity whatsoever:
i. solicit the business of
any Person or entity who is a customer of CBI or any CBI Subsidiary as of the date of this Agreement or as of the Closing Date on behalf of any other insured depository institution for the purpose of providing financial services to such Person or
entity;
C-1
ii. acquire any interest in (directly or indirectly), charter, operate or enter into any
franchise or other management agreement with any insured depository institution that has a location within a 35 mile radius of any location of CBI or any CBI Subsidiary (the
Noncompete Area
) (but notwithstanding the foregoing,
Director may (1) acquire an ownership interest in any publicly-traded depository institution, so long as that ownership interest does not exceed one (1%)
of the total number of shares outstanding of that depository institution,
(2) invest in an existing mutual fund that invests, directly or indirectly, in such insured depository institutions), and (3) retain any existing ownership interest in any insured depository institution as disclosed on
Schedule
1
attached hereto;
iii. serve as an officer, director, employee, agent or consultant to any insured
depository institution that has a location within the Noncompete Area; or
iv. establish or operate a branch or other office of an insured
depository institution within the Noncompete Area; or
v. recruit, hire, assist others in recruiting or hiring, discuss employment with, or
refer others concerning employment, any person who is, or within the 12 months preceding the Closing Date was, an employee of CBI or any CBI Subsidiary; but nothing in this
Section
2(a)(v)
applies to employment other than
in financial services.
Director may not avoid the purpose and intent of this
Section
2(a)
by engaging in conduct
within the Noncompete Area from a remote location through means such as telecommunications, written correspondence, computer generated or assisted communications, or other similar methods.
(b) If any court of competent jurisdiction should determine that the terms of this
Section
2
are too
broad in terms of time, geographic area, lines of commerce or otherwise, that court is to modify and revise any such terms so that they comply with applicable law.
(c) Director agrees that (i) this Agreement is entered into in connection with the sale to FFIN of CBI and Commercial
State Bank, a Texas state bank chartered in El Campo, Texas (the
Bank
), (ii) Director is receiving valuable consideration for this Agreement, (iii) the restrictions imposed upon Director by this Agreement are essential
and necessary to ensure FFIN acquires the goodwill of the CBI and the Bank, and (iv) all the restrictions (including particularly the time and geographical limitations) set forth in this Agreement are fair and reasonable.
22.
Early Resolution Conference
. This Agreement is understood to be clear and enforceable as written and is executed by both parties on
that basis. However, should Director later challenge any provision as unclear, unenforceable, or inapplicable to any competitive activity that Director intends to engage in, Director will first notify FFIN in writing and meet with a FFIN
representative and a neutral mediator (if FFIN elects to retain one at its expense) to discuss resolution of any disputes between the parties. Director will provide this notice at least
twenty-one
(21) days before Director engages in any activity on behalf of a competing business or engages in other activity that could foreseeably fall within a questioned restriction. If Director fails to comply with this requirement, Director waives his
right to challenge the reasonable scope, clarity, applicability or enforceability of this Agreement and its restrictions at a later time.
23.
Termination
. This Agreement and all obligations hereunder will terminate on the earlier of (a) the date the Merger Agreement
is terminated pursuant to Section 9.01 of the Merger Agreement or (b) the date that is
thirty-six
(36) months after the Closing Date.
24.
Waiver. Amendment and Modification
. Any party may unilaterally waive a right which is solely applicable to it. Such action will be
evidenced by a signed written notice. No failure to exercise nor any delay in exercising any right, power or privilege hereunder by any party hereto will operate as a waiver thereof. No single or partial exercise of any right, power or privilege
hereunder will preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver of any party of any right or remedy on any one occasion will not be construed as a bar to any right or remedy that such
party would otherwise have on any future
C-2
occasion or to any right or remedy that any other party may have hereunder. This Agreement may be amended, modified or supplemented only by an instrument in writing executed by each of the
parties hereto.
25.
Multiple Counterparts
. For the convenience of the parties hereto, this Agreement may be signed in multiple
counterparts, each of which will be deemed an original, and all counterparts hereof so signed by the parties hereto, whether or not such counterpart will bear the execution of each of the parties hereto, will be deemed to be, and is to be construed
as, one and the same Agreement. A telecopy, facsimile or electronic scan in PDF format of a signed counterpart of this Agreement will be sufficient to bind the party or parties whose signature(s) appear thereon.
26.
GOVERNING LAW
. THIS AGREEMENT IS TO BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD
FOR THE PROVISIONS THEREOF REGARDING CHOICE OF LAW. VENUE FOR ANY CAUSE OF ACTION BETWEEN THE PARTIES TO THIS AGREEMENT WILL LIE IN TAYLOR COUNTY, TEXAS. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS
LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
SUIT, ACTION OR OTHER PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT: (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SUIT OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS
WAIVER, (C) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 7
.
27.
Binding Effect; Assignment
. All of the terms, covenants, representations, warranties and conditions of this Agreement are binding
upon, and inure to the benefit of and are enforceable by, the parties and their respective successors, representatives and permitted assigns. No party to this Agreement may assign this Agreement, by operation of law or otherwise, in whole or in
part, without the prior written consent of the other parties, and any assignment made or attempted in violation of this Section is void and of no effect.
28.
No Third Party Beneficiaries
. Nothing contained in this Agreement, express or implied, is intended to confer upon any Persons,
other than the parties hereto or their respective successors, any rights, remedies, obligations, or liabilities under or by reason of this Agreement.
29.
Severability
. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws, then
(a) this Agreement is to be construed and enforced as if such illegal, invalid or unenforceable provision were not a part hereof; (b) the remaining provisions of this Agreement will remain in full force and effect and will not be affected
by such illegal, invalid or unenforceable provision or by its severance from this Agreement; and (c) there will be added automatically as a part of this Agreement a provision mutually agreed to which is similar in terms to such illegal, invalid
or unenforceable provision as may be possible and still be legal, valid and enforceable.
30.
Specific Performance
. Each of the
parties hereto acknowledges that the other parties would be irreparably damaged and would not have an adequate remedy at law for money damages if any of the covenants contained in this Agreement were not performed in accordance with its terms or
otherwise were materially breached. Each of the parties hereto therefore agrees that, without the necessity of proving actual damages or posting bond or other security, the other party will be entitled to temporary and/or permanent injunction or
C-3
injunctions which a court of competent jurisdiction concludes is justified to prevent breaches of such performance and to specific enforcement of such covenants in addition to any other remedy to
which they may be entitled, at law or in equity.
31.
Entire Agreement
. This Agreement, the Merger Agreement, the Voting Agreement
and the other agreements, documents, schedules and instruments signed and delivered by the parties to each other at the Closing are the full understanding of the parties, a complete allocation of risks between them and a complete and exclusive
statement of the terms and conditions of their agreement relating to the subject matter hereof and supersede any and all prior agreements, whether written or oral, that may exist between the parties with respect thereto. Except as otherwise
specifically provided in this Agreement, no conditions, usage of trade, course of dealing or performance, understanding or agreement purporting to modify, vary, explain or supplement the terms or conditions of this Agreement is binding unless
hereafter made in writing and signed by the party to be bound, and no modification will be effected by the acknowledgment or acceptance of documents containing terms or conditions at variance with or in addition to those set forth in this Agreement.
32.
Rules of Construction
. Whenever the words include, includes or including are used in this
Agreement, they are deemed to be followed by the words without limitation. The words hereof, herein and hereunder and words of similar import when used in this Agreement refer to this Agreement as a
whole and not to any particular provision in this Agreement. Each use herein of the masculine, neuter or feminine gender are deemed to include the other genders. Each use herein of the plural include the singular and vice versa, in each case as the
context requires or as is otherwise appropriate. The word or is used in the inclusive sense. Any agreement or instrument defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement or
instrument as from time to time amended, modified or supplemented, including by waiver or consent. References to a Person are also to its permitted successors or assigns.
33.
Notice
. Any notices, requests, instructions and other communications required or permitted to be given under this Agreement after
the date of this Agreement by any party hereto to any other party may be delivered personally or by nationally recognized overnight courier service or sent by mail or (except in the case of payments) by facsimile transmission or
e-mail,
at the respective addresses or transmission numbers set forth below and is deemed delivered (a) in the case of personal delivery, facsimile transmission or
e-mail,
when received; (b) in the case of mail, upon the earlier of actual receipt or five (5) Business Days after deposit in the United States Postal Service, first class certified or registered
mail, postage prepaid, return receipt requested; and (c) in the case of an overnight courier service, one (1) Business Day after delivery to such courier service with and instructions for overnight delivery. The parties may change their
respective addresses and transmission numbers by written notice to all other parties, sent as provided in this Section. All communications must be in writing and addressed as follows:
IF TO DIRECTOR:
IF TO FFIN:
F. Scott Dueser
President and
Chief Executive Officer
First Financial Bankshares, Inc.
400 Pine Street
Abilene, Texas
79601
Phone: (325)
627-7031
Fax:
(325) 627-7393
E-mail:
sdueser@ffin.com
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WITH COPY TO (WHICH SHALL NOT CONSTITUTE NOTICE):
Michael G. Keeley, Esq.
Norton
Rose Fulbright US LLP
2200 Ross Avenue, Suite 3600
Dallas, Texas 75201
Phone:
(214) 855-3906
Fax:
(214) 855-8200
E-Mail:
mike.keeley@nortonrosefulbright.com
34.
Articles, Sections, Exhibits and Schedules
. All articles and sections referred to herein are articles and sections, respectively,
of this Agreement and all exhibits and schedules referred to herein are exhibits and schedules, respectively, attached to this Agreement. Descriptive headings as to the contents of particular sections are for convenience only and do not control or
affect the meaning, construction or interpretation of this Agreement or any particular section. Any and all schedules, exhibits, certificates or other documents or instruments referred to herein or attached hereto are and will be incorporated herein
by reference hereto as though fully set forth herein.
[Signature Page Follows]
C-5
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above
written.
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DIRECTOR
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[NAME]
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FIRST FINANCIAL BANKSHARES, INC.
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By:
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Name:
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F. Scott Dueser
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Title:
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President and Chief Executive Officer
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C-6
SCHEDULE 1
Existing Ownership Interest in Depository Institutions
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Institution
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Ownership Interest
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C-7
APPENDIX D
September 26, 2017
Board of Directors
Commercial Bancshares, Inc.
24080 Highway 59 North, Suite 100
Kingwood, TX 77339
Ladies and Gentlemen:
Hovde Group, LLC
(
we
or
Hovde
) understand that First Financial Bankshares, Inc., a Texas corporation (
FFIN
), Kingwood Merger Sub, Inc., a Texas corporation and a wholly-owned subsidiary of FFIN
(
Merger Sub
), and Commercial Bancshares, Inc., a Texas corporation and registered bank holding company (
CBI
) are about to enter into an Agreement and Plan of Reorganization dated on or about September 26,
2017 (the
Agreement
). Pursuant to the Agreement, FFIN will acquire CBI through the merger of Merger Sub with and into CBI, with the CBI surviving the merger as a wholly-owned subsidiary of FFIN (the
Merger
).
Immediately following, and in connection with, the Merger, FFIN will cause CBI to be merged with and into FFIN, with FFIN surviving the merger (the
Second Step Merger
and together with the Merger, the
Integrated
Mergers
). Immediately following the Second Step Merger, or at such later time as FFIN may determine, FFIN will cause Commercial State Bank, a Texas state chartered bank (the
Bank
) to be merged with and into First
Financial Bank, National Association (
FFB
), a wholly-owned subsidiary of FFIN, with FFB surviving the merger (the
Bank Merger
). Capitalized terms used herein that are not otherwise defined shall have the same
meanings attributed to them in the Agreement.
Pursuant to the Agreement and subject to the terms and conditions set forth therein, at the
Effective Time, except for the Cancelled Shares and Dissenting Shares (as such terms are defined in the Agreement), each share of common stock, par value $1.00 per share, of CBI (the
CBI Stock
) that is issued and outstanding
immediately prior to the Effective Time shall cease to be outstanding and shall automatically be converted into and become the right to receive, without interest, a number of shares of FFIN Stock rounded to the nearest hundredth of a share equal to
the quotient of (i) the CBI Per Share Value, divided by (ii) the FFIN Closing VWAP (the
Merger Consideration
). For purposes of the Agreement, (i) the
CBI Per Share Value
shall be equal to the
quotient of (A) $59,400,000, divided by (B) the number of shares of CBI Stock issued and outstanding immediately prior to the Effective Time, and (ii)
FFIN Closing VWAP
means the volume-weighted average price per share of
FFIN Stock for a twenty (20) trading day period, starting with the opening of trading on the twenty-first (21st) trading day prior to the Calculation Date to the closing of trading on the trading day prior to the Calculation Date, rounded to
the nearest cent, as reported by Bloomberg Finance L.P.
We further note that, pursuant to the Agreement, on the Closing Date and prior to
the Effective Time, CBI shall pay a dividend to the holders of CBI Stock in an aggregate amount equal to (such amount, the
Dividend Payment
) the sum of (a) the amount by which the Adjusted Equity is greater than $42,300,000,
if any, plus (b) $15,600,000, (c) minus the amount by which the Adjusted Equity is less than $42,300,000, if any. You have instructed us to assume for purposes of our and analysis and opinion that the Adjusted Equity as of the applicable
determination date set forth in the Agreement will be at least $42,300,000, and that the Dividend Payment will not be less than $15,600,000.
Accordingly, based on the foregoing, we have assumed for purposes of our analysis and opinion, that the holders of CBI Stock will be entitled
to receive in connection with the Merger, aggregate consideration with a
D-1
value of approximately $75,000,000 (such consideration composed of approximately $15,600,000 in cash in the form of the Dividend Payment, and Merger Consideration with an aggregate value of
approximately $59,400,000) (the
Aggregate Consideration
).
You have requested our opinion as to the fairness, from a
financial point of view, of the Aggregate Consideration
to be paid in connection with the Merger, to the holders of CBI Stock. This opinion addresses only the fairness of the Aggregate Consideration to be paid in connection with the Merger,
and we are not opining on any individual stock, cash, dividend, or other components of consideration payable in connection with the Merger.
During the course of our engagement and for the purposes of the opinion set forth herein, we have:
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(i)
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reviewed a draft of the Agreement dated September 19, 2017, as provided to Hovde by CBI;
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(ii)
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reviewed unaudited financial statements for FFIN, FFB, CBI, and the Bank as of and for the
six-month
period ended June 30, 2017;
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(iii)
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reviewed certain historical annual reports of each of FFIN, FFB, CBI, and the Bank, including audited annual reports as of and for the year ended December 31, 2016;
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(iv)
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reviewed certain historical publicly available business and financial information concerning each of CBI and the Bank;
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(v)
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reviewed certain internal financial statements and other financial and operating data concerning CBI and the Bank;
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(vi)
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reviewed financial projections prepared by certain members of senior management of CBI and the Bank;
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(vii)
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discussed with certain members of senior management of CBI, the business, financial condition, results of operations and future prospects of CBI and the Bank; the history and past and current operations of CBI and the
Bank; CBIs and the Banks historical financial performance; and their assessment of the rationale for the Merger;
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(viii)
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reviewed and analyzed materials detailing the Merger prepared by CBI and by its respective legal and financial advisors including the estimated amount and timing of the cost savings and related expenses, purchase
accounting adjustments and synergies expected to result from the Merger (the
Synergies
);
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(ix)
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assessed general economic and market conditions;
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(x)
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analyzed the pro forma financial impact of the Merger on the combined companys earnings, tangible book value, financial ratios and other such metrics we deemed relevant, giving effect to the Merger based on
assumptions relating to the Synergies;
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(xi)
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evaluated the contribution of assets, deposits, equity and earnings of FFIN and CBI to the combined company;
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(xii)
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reviewed publicly available consensus mean analyst earnings per share estimates for FFIN for the years ending December 31, 2017, December 31, 2017, and December 31, 2019;
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(xiii)
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reviewed the terms of recent merger, acquisition and control investment transactions, to the extent publicly available, involving financial institutions and financial institution holding companies that we considered
relevant;
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(xiv)
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reviewed historical market prices and trading volumes of FFIN Stock;
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(xv)
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taken into consideration our experience in other similar transactions and securities valuations as well as our knowledge of the banking and financial services industry;
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D-2
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(xvi)
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reviewed certain publicly available financial and stock market data relating to selected public financial institutions/commercial banks that we deemed relevant to our analysis; and
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(xvii)
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performed such other analyses and considered such other factors as we have deemed appropriate.
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We have assumed, without investigation, that there have been, and from the date hereof through the Effective Date will be, no material changes
in the financial condition and results of operations of FFIN, FFB, CBI, and the Bank since the date of the latest financial information described above. We have relied, without independent verification or investigation, on the assessments of the
management of CBI and the Bank as to their existing and future relationships with key employees and partners, clients, products and services, and we have assumed, with your consent, that there will be no developments with respect to any such matters
that would affect our analyses or opinion. We have further assumed, without independent verification, that the representations and financial and other
information included in the Agreement and all other related documents and instruments that are referred to therein or otherwise available to us by FFIN, FFB, CBI, and the Bank are true and complete. We have relied upon the management of CBI and the
Bank as to the reasonableness and achievability of the financial forecasts, and projections, estimates and other forward-looking information (including the Synergies) provided to Hovde by CBI and the Bank, and we assumed such forecasts, projections,
estimates and other forward-looking information (including the Synergies) have been reasonably prepared by CBI and the Bank on a basis reflecting the best currently available information and CBIs and the Banks judgments and estimates. We
have assumed that such forecasts, projections, estimates and other forward-looking information (including the Synergies) would be realized in the amounts and at the times contemplated thereby, and we do not, in any respect, assume any responsibility
for the accuracy or reasonableness thereof. We have been authorized by CBI to rely upon such forecasts, projections, estimates and other information and data, and we express no view as to any such forecasts, projections, estimates or other
forward-looking information or data, or the bases or assumptions on which they were prepared.
In performing our review, we have assumed
the accuracy and completeness of all of the financial and other information that was available to us from public sources, that was provided to us by FFIN, FFB, CBI, and the Bank or their respective representatives or that was otherwise reviewed by
us, and we have relied on such accuracy and completeness for purposes of rendering this opinion. We have further relied on the assurances of the respective managements of CBI and the Bank that they are not aware of any facts or circumstances that
would make any of such information incomplete, inaccurate or misleading. We have not been asked to, and have not undertaken, an independent verification of any of such information, and we do not assume any responsibility or liability for the
accuracy or completeness thereof. We have assumed that each party to the Agreement would advise us promptly if any information previously provided to us became inaccurate or was required to be updated during the period of our review.
We are not experts in the evaluation of loan and lease portfolios for purposes of assessing the adequacy of the allowances for losses with
respect thereto. We have assumed that such allowances for FFIN, FFB, CBI, and the Bank are, in the aggregate, adequate to cover such losses, and will be adequate on a pro forma basis for the combined entity. We were not requested to make, and have
not made, an independent evaluation, physical inspection or appraisal of the assets, properties, facilities, or liabilities (fixed, contingent, derivative,
off-balance
sheet, or otherwise) of FFIN, FFB, CBI,
and the Bank, the collateral securing any such assets or liabilities, or the collectability of any such assets, and we were not furnished with any such evaluations or appraisals, nor did we review any loan or credit files of FFIN, FFB, CBI, and the
Bank. We also did not conduct a review of any credit mark which may be taken in connection with the Merger nor have we evaluated the adequacy of any contemplated credit mark to be so taken.
In arriving at our opinion, we have not evaluated the solvency of FFIN, FFB, CBI, and the Bank under any state or federal law relating to
bankruptcy, insolvency or similar matters. Accordingly, we express no opinion regarding the liquidation value of FFIN, FFB, CBI, and the Bank or any other entity. We have also assumed that each of FFIN, FFB, CBI, and the Bank would remain as a going
concern for all periods relevant to our analysis.
D-3
Accordingly, we express no opinion with respect to the foregoing. Further, without limiting the generality of the foregoing, we have undertaken no independent analysis of any pending or
threatened litigation, regulatory action, possible unasserted claims or other contingent liabilities to which FFIN, FFB, CBI, and the Bank is a party or may be subject, and with your consent, our opinion makes no assumption concerning, and therefore
does not consider, the possible assertion of claims, outcomes or damages arising out of any such matters. We have also assumed that neither FFIN, FFB, CBI, and the Bank is party to any material pending transaction, including without limitation any
financing, recapitalization, acquisition or merger, divestiture or
spin-off,
other than the Merger contemplated by the Agreement.
We have relied upon and assumed, with your consent and without independent verification, that the Merger will be consummated in accordance
with the terms set forth in the Agreement, without any amendments thereto or waiver of any terms or conditions by FFIN, CBI or any other party to the Agreement. We have assumed that the Merger will be consummated in compliance with all applicable
laws and regulations. The senior management of CBI has advised us that they are not aware of any factors that would impede any necessary regulatory or governmental approval of the Merger. We have assumed that the necessary regulatory and
governmental approvals, as granted, will not be subject to any conditions that would be unduly burdensome on FFIN or CBI or would have a material adverse effect on the contemplated benefits of the Merger.
Our opinion does not consider, include or address: (i) the legal, tax, accounting, or regulatory consequences of the Merger on FFIN or
CBI, or their shareholders; (ii) any advice or opinions provided by any other advisor to the Board; or (iii) any other strategic alternatives that might be available to CBI.
Our opinion does not constitute a recommendation to FFIN or CBI as to whether or not FFIN or CBI should enter into the Agreement or to any
FFIN or CBI shareholders as to how such shareholders should vote at any meetings of shareholders called to consider and vote upon the Merger. Our opinion does not address the underlying business decision to proceed with the Merger or the fairness of
the amount or nature of the compensation, if any, to be received by any of the officers, directors or employees of FFIN,
FFB, CBI, and the Bank relative
to the amount of consideration to be paid with respect to the Merger. Our opinion should not be construed as implying that the consideration to be paid in respect of the Merger is necessarily the highest or best price that could be obtained in the
Merger or in an acquisition, sale, merger, or combination transaction with a third party. We do not express any opinion as to the prices, trading range or volume at which FFIN Stock may trade following the announcement of the proposed Merger,
following the consummation of the Merger, or the prices at which shares of FFIN Stock may be purchased or sold at any time. Other than as specifically set forth herein, we are not expressing any opinion with respect to the terms and provisions of
the Agreement or the enforceability of any such terms or provisions. Our opinion is not a solvency opinion and does not in any way address the solvency or financial condition of FFIN or CBI.
This opinion was approved by Hovdes fairness opinion committee. This letter is directed solely to the Board of Directors of CBI and is
not to be used for any other purpose or quoted or referred to, in whole or in part, in any registration statement, prospectus, proxy statement, or any other document, except in each case in accordance with our prior written consent; provided,
however, that we hereby consent to the inclusion and reference to this letter in any registration statement, proxy statement or information statement to be delivered to the holders of CBI Stock in connection with the Merger if, and only if, this
letter is quoted in full or attached as an exhibit to such document, this letter has not been withdrawn prior to the date of such document, and any description of or reference to Hovde or the analyses performed by Hovde or any summary of this
opinion in such filing is in a form acceptable to Hovde and its counsel in the exercise of their reasonable judgment.
Our opinion is
based solely upon the information available to us and described above and the economic, market and other circumstances as they exist as of the date hereof. Events occurring and information that becomes available after the date hereof could
materially affect the assumptions and analyses used in preparing this opinion. We have not undertaken to update, revise, reaffirm or withdraw this opinion or otherwise comment upon events occurring or information that becomes available after the
date hereof.
D-4
In arriving at this opinion, Hovde did not attribute any particular weight to any analysis
or factor considered by it, but rather, made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, Hovde believes that its analyses must be considered as a whole and that selecting portions of its
analyses, without considering all analyses, would create an incomplete view of the process underlying this opinion.
Hovde, as part of its
investment banking business, regularly performs valuations of businesses and their securities in connection with mergers and acquisitions and other corporate transactions. In addition to being retained to render this opinion letter, we were retained
by CBI and the Bank to act as their financial advisor in connection with the Merger.
We will receive compensation from CBI and the Bank
in connection with our services, which will include, without limitation, a fairness opinion fee that is contingent upon the issuance of this opinion letter and a completion fee that is contingent upon the consummation of the Merger. Further, CBI and
the Bank have agreed to indemnify us and our affiliates for certain liabilities that may arise out of our engagement. In the past two years Hovde has provided investment banking and financial advisory services to the CBI and the Bank for which it
received compensation. In the two years preceding the date of its opinion, Hovde has not provided investment banking and financial advisory services to FFIN or FFB. Hovde may in the future provide investment banking and financial advisory services
to CBI, the Bank, FFIN or FFB and receive compensation for such services. In the ordinary course of its broker-dealer business and further to certain sales and trading relationships, Hovde may from time to time purchase securities from, and sell
securities to, CBI or FFIN or their subsidiaries or affiliates, and as a market maker in securities, Hovde may from time to time have a long or short position in, and buy or sell, debt or equity securities of CBI or FFIN for its own accounts and for
the accounts of customers. Hovde also issues periodic research reports regarding FFINs business activities and prospects, and our firm may provide securities brokerage services in the normal course to one or more subsidiaries or affiliates of
CBI and the FFIN. Except for the foregoing, during the past two years there have not been, and there are no mutual understandings contemplating in the future, any material relationships between Hovde and CBI and the Bank, or FFIN and FFB.
Based upon and subject to the foregoing, we are of the opinion, as of the date hereof, that the Aggregate Consideration to be paid in
connection with the Merger is fair to the holders of CBI Stock from a financial point of view.
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Sincerely,
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HOVDE GROUP, LLC
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/s/ Hovde Group, LLC
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D-5
APPENDIX E
TEXAS BUSINESS ORGANIZATIONS CODE
TITLE 1. GENERAL PROVISIONS
CHAPTER 10. MERGERS, INTEREST EXCHANGES,
CONVERSIONS, AND SALES OF ASSETS
SUBCHAPTER H. RIGHTS OF DISSENTING OWNERS
§ 10.351. APPLICABILITY OF SUBCHAPTER.
(a) This subchapter does not apply to a fundamental business transaction of a domestic entity if, immediately before the effective date of the
fundamental business transaction, all of the ownership interests of the entity otherwise entitled to rights to dissent and appraisal under this code are held by one owner or only by the owners who approved the fundamental business transaction.
(b) This subchapter applies only to a domestic entity subject to dissenters rights, as defined in Section 1.002. That
term includes a domestic
for-profit
corporation, professional corporation, professional association, and real estate investment trust. Except as provided in Subsection (c), that term does not include a
partnership or limited liability company.
(c) The governing documents of a partnership or a limited liability company may provide that
its owners are entitled to the rights of dissent and appraisal provided by this subchapter, subject to any modification to those rights as provided by the entitys governing documents.
§ 10.352. DEFINITIONS.
In this subchapter:
(1) Dissenting owner means an owner of an ownership interest in a domestic entity subject to dissenters rights who:
(A) provides notice under Section 10.356; and
(B) complies with the requirements for perfecting that owners right to dissent under this subchapter.
(2) Responsible organization means:
(A) the organization responsible for:
(i) the provision of notices under this subchapter; and
(ii) the primary obligation of paying the fair value for an ownership interest held by a dissenting owner;
(B) with respect to a merger or conversion:
(i) for matters occurring before the merger or conversion, the organization that is merging or converting; and
Appendix E-1
(ii) for matters occurring after the merger or conversion, the surviving or new
organization that is primarily obligated for the payment of the fair value of the dissenting owners ownership interest in the merger or conversion;
(C) with respect to an interest exchange, the organization the ownership interests of which are being acquired in the interest exchange;
(D) with respect to the sale of all or substantially all of the assets of an organization, the organization the assets of which are to be
transferred by sale or in another manner; and
(E) with respect to an amendment to a domestic for-profit corporations certificate of
formation described by Section 10.354(a)(1)(G), the corporation.
§ 10.353. FORM AND VALIDITY OF NOTICE.
(a) Notice required under this subchapter:
(1)
must be in writing; and
(2) may be mailed, hand-delivered, or delivered by courier or electronic transmission.
(b) Failure to provide notice as required by this subchapter does not invalidate any action taken.
§ 10.354. RIGHTS OF DISSENT AND APPRAISAL.
(a)
Subject to Subsection (b), an owner of an ownership interest in a domestic entity subject to dissenters rights is entitled to:
(1)
dissent from:
(A) a plan of merger to which the domestic entity is a party if owner approval is required by this code and the owner owns
in the domestic entity an ownership interest that was entitled to vote on the plan of merger;
(B) a sale of all or substantially all of
the assets of the domestic entity if owner approval is required by this code and the owner owns in the domestic entity an ownership interest that was entitled to vote on the sale;
(C) a plan of exchange in which the ownership interest of the owner is to be acquired;
(D) a plan of conversion in which the domestic entity is the converting entity if owner approval is required by this code and the owner owns
in the domestic entity an ownership interest that was entitled to vote on the plan of conversion;
(E) a merger effected under
Section 10.006 in which:
(i) the owner is entitled to vote on the merger; or
(ii) the ownership interest of the owner is converted or exchanged;
(F) a merger effected under Section 21.459(c) in which the shares of the shareholders are converted or exchanged; or
Appendix E-2
(G) if the owner owns shares that were entitled to vote on the amendment, an amendment to a
domestic for-profit corporations certificate of formation to:
(i) add the provisions required by Section 3.007(e) to elect to be a
public benefit corporation; or
(ii) delete the provisions required by Section 3.007(e), which in effect cancels the corporations
election to be a public benefit corporation; and
(2) subject to compliance with the procedures set forth in this subchapter, obtain the
fair value of that ownership interest through an appraisal.
(b) Notwithstanding Subsection (a), subject to Subsection (c), an owner may not dissent from
a plan of merger or conversion in which there is a single surviving or new domestic entity or
non-code
organization, or from a plan of exchange, if:
(1) the ownership interest, or a depository receipt in respect of the ownership interest, held by the owner is part of a class or series of
ownership interests, or depository receipts in respect of ownership interests, that are, on the record date set for purposes of determining which owners are entitled to vote on the plan of merger, conversion, or exchange, as appropriate:
(A) listed on a national securities exchange; or
(B) held of record by at least 2,000 owners;
(2) the owner is not required by the terms of the plan of merger, conversion, or exchange, as appropriate, to accept for the owners
ownership interest any consideration that is different from the consideration to be provided to any other holder of an ownership interest of the same class or series as the ownership interest held by the owner, other than cash instead of fractional
shares or interests the owner would otherwise be entitled to receive; and
(3) the owner is not required by the terms of the plan of
merger, conversion, or exchange, as appropriate, to accept for the owners ownership interest any consideration other than:
(A)
ownership interests, or depository receipts in respect of ownership interests, of a domestic entity or
non-code
organization of the same general organizational type that, immediately after the effective date
of the merger, conversion, or exchange, as appropriate, will be part of a class or series of ownership interests, or depository receipts in respect of ownership interests, that are:
(i) listed on a national securities exchange or authorized for listing on the exchange on official notice of issuance; or
(ii) held of record by at least 2,000 owners;
(B) cash instead of fractional ownership interests the owner would otherwise be entitled to receive; or
(C) any combination of the ownership interests and cash described by Paragraphs (A) and (B).
(c) Subsection (b) shall not apply either to a domestic entity that is a subsidiary with respect to a merger under Section 10.006 or to a corporation with
respect to a merger under Section 21.459(c).
(d) Notwithstanding Subsection (a), an owner of an ownership interest in a domestic for-profit corporation
subject to dissenters rights may not dissent from an amendment to the corporations certificate of formation described by Subsection (a)(1)(G) if the shares held by the owner are part of a class or series of shares, on the record date set
for purposes of determining which owners are entitled to vote on the amendment:
(1) listed on a national securities exchange; or
(2) held of record by at least 2,000 owners.
Appendix E-3
§ 10.355. NOTICE OF RIGHT OF DISSENT AND APPRAISAL.
(a) A domestic entity subject to dissenters rights that takes or proposes to take an action regarding which an owner has a right to dissent and obtain
an appraisal under Section 10.354 shall notify each affected owner of the owners rights under that section if:
(1) the action
or proposed action is submitted to a vote of the owners at a meeting; or
(2) approval of the action or proposed action is obtained by
written consent of the owners instead of being submitted to a vote of the owners.
(b) If a parent organization effects a merger under Section 10.006
and a subsidiary organization that is a party to the merger is a domestic entity subject to dissenters rights, the responsible organization shall notify the owners of that subsidiary organization who have a right to dissent to the merger under
Section 10.354 of their rights under this subchapter not later than the 10th day after the effective date of the merger. The notice must also include a copy of the certificate of merger and a statement that the merger has become effective.
(b-1) If a corporation effects a merger under Section 21.459(c), the responsible organization shall notify the shareholders of that corporation who have a
right to dissent to the plan of merger under Section 10.354 of their rights under this subchapter not later than the 10th day after the effective date of the merger. Notice required under this subsection that is given to shareholders before the
effective date of the merger may, but is not required to, contain a statement of the mergers effective date. If the notice is not given to the shareholders until on or after the effective date of the merger, the notice must contain a statement
of the mergers effective date.
(c) A notice required to be provided under Subsection (a), (b), or (b-1) must:
(1) be accompanied by a copy of this subchapter; and
(2) advise the owner of the location of the responsible organizations principal executive offices to which a notice required under
Section 10.356(b)(1) or a demand under Section 10.356(b)(3), or both, may be provided.
(d) In addition to the requirements prescribed by Subsection
(c), a notice required to be provided:
(1) under Subsection (a)(1) must accompany the notice of the meeting to consider the action;
(2) under Subsection (a)(2) must be provided to:
(A) each owner who consents in writing to the action before the owner delivers the written consent; and
(B) each owner who is entitled to vote on the action and does not consent in writing to the action before the 11th day after the date the
action takes effect; and
(3) under Subsection (b-1) must be provided:
(A) if given before the consummation of the tender or exchange offer described by Section 21.459(c)(2), to each shareholder to whom that offer
is made; or
(B) if given after the consummation of the tender or exchange offer described by Section 21.459(c)(2), to each shareholder who
did not tender the shareholders shares in that offer.
(e) Not later than the 10th day after the date an action described by Subsection (a)(1) takes
effect, the responsible organization shall give notice that the action has been effected to each owner who voted against the action and sent notice under Section 10.356(b)(1).
(f) If the notice given under Subsection (b-1) did not include a statement of the effective date of the merger, the responsible organization shall, not later
than the 10th day after the effective date, give a second notice to the
Appendix E-4
shareholders notifying them of the mergers effective date. If the second notice is given after the later of the date on which the tender or exchange offer described by Section 21.459(c)(2)
is consummated or the 20th day after the date notice under Subsection (b-1) is given, then the second notice is required to be given to only those shareholders who have made a demand under Section 10.356(b)(3).
§ 10.356. PROCEDURE FOR DISSENT BY OWNERS AS TO ACTIONS; PERFECTION OF RIGHT OF DISSENT AND APPRAISAL.
(a) An owner of an ownership interest of a domestic entity subject to dissenters rights who has the right to dissent and appraisal from any of the
actions referred to in Section 10.354 may exercise that right to dissent and appraisal only by complying with the procedures specified in this subchapter. An owners right of dissent and appraisal under Section 10.354 may be exercised
by an owner only with respect to an ownership interest that is not voted in favor of the action.
(b) To perfect the owners rights of dissent and
appraisal under Section 10.354, an owner:
(1) if the proposed action is to be submitted to a vote of the owners at a meeting, must
give to the domestic entity a written notice of objection to the action that:
(A) is addressed to the entitys president and
secretary;
(B) states that the owners right to dissent will be exercised if the action takes effect;
(C) provides an address to which notice of effectiveness of the action should be delivered or mailed; and
(D) is delivered to the entitys principal executive offices before the meeting;
(2) with respect to the ownership interest for which the rights of dissent and appraisal are sought:
(A) must vote against the action if the owner is entitled to vote on the action and the action is approved at a meeting of the owners; and
(B) may not consent to the action if the action is approved by written consent; and
(3) must give to the responsible organization a demand in writing that:
(A) is addressed to the president and secretary of the responsible organization;
(B) demands payment of the fair value of the ownership interests for which the rights of dissent and appraisal are sought;
(C) provides to the responsible organization an address to which a notice relating to the dissent and appraisal procedures under this
subchapter may be sent;
(D) states the number and class of the ownership interests of the domestic entity owned by the owner and the fair
value of the ownership interests as estimated by the owner; and
(E) is delivered to the responsible organization at its principal
executive offices at the following time:
(i) not later than the 20th day after the date the responsible organization sends to the owner
the notice required by Section 10.355(e) that the action has taken effect, if the action was approved by a vote of the owners at a meeting;
Appendix E-5
(ii) not later than the 20th day after the date the responsible organization sends to the
owner the notice required by Section 10.355(d)(2) that the action has taken effect, if the action was approved by the written consent of the owners; or
(iii) not later than the 20th day after the date the responsible organization sends to the owner a notice that the merger was effected, if
the action is a merger effected under Section 10.006.
(iv) not later than the 20th day after the date the responsible organization
gives to the shareholder the notice required by Section 10.355(b-1) or the date of the consummation of the tender or exchange offer described by Section 21.459(c)(2), whichever is later, if the action is a merger effected under Section 21.459(c).
(c) An owner who does not make a demand within the period required by Subsection (b)(3)(E) or, if Subsection (b)(1) is applicable, does not give the
notice of objection before the meeting of the owners is bound by the action and is not entitled to exercise the rights of dissent and appraisal under Section 10.354.
(d) Not later than the 20th day after the date an owner makes a demand under Subsection (b)(3), the owner must submit to the responsible organization any
certificates representing the ownership interest to which the demand relates for purposes of making a notation on the certificates that a demand for the payment of the fair value of an ownership interest has been made under this section. An
owners failure to submit the certificates within the required period has the effect of terminating, at the option of the responsible organization, the owners rights to dissent and appraisal under Section 10.354 unless a court, for
good cause shown, directs otherwise.
(e) If a domestic entity and responsible organization satisfy the requirements of this subchapter relating to the
rights of owners of ownership interests in the entity to dissent to an action and seek appraisal of those ownership interests, an owner of an ownership interest who fails to perfect that owners right of dissent in accordance with this
subchapter may not bring suit to recover the value of the ownership interest or money damages relating to the action.
§ 10.357. WITHDRAWAL OF
DEMAND FOR FAIR VALUE OF OWNERSHIP INTEREST.
(a) An owner may withdraw a demand for the payment of the fair value of an ownership interest made under
Section 10.356 before:
(1) payment for the ownership interest has been made under Sections 10.358 and 10.361; or
(2) a petition has been filed under Section 10.361.
(b) Unless the responsible organization consents to the withdrawal of the demand, an owner may not withdraw a demand for payment under Subsection
(a) after either of the events specified in Subsections (a)(1) and (2).
§
10.358. RESPONSE BY ORGANIZATION TO NOTICE OF DISSENT AND
DEMAND FOR FAIR VALUE BY DISSENTING OWNER
.
(a) Not later than the 20th day after the date a responsible organization receives a demand for payment
made by a dissenting owner in accordance with Section 10.356(b)(3), the responsible organization shall respond to the dissenting owner in writing by:
(1) accepting the amount claimed in the demand as the fair value of the ownership interests specified in the notice; or
(2) rejecting the demand and including in the response the requirements prescribed by Subsection (c).
Appendix E-6
(b) If the responsible organization accepts the amount claimed in the demand, the responsible organization
shall pay the amount not later than the 90th day after the date the action that is the subject of the demand was effected if the owner delivers to the responsible organization:
(1) endorsed certificates representing the ownership interests if the ownership interests are certificated; or
(2) signed assignments of the ownership interests if the ownership interests are uncertificated.
(c) If the responsible organization rejects the amount claimed in the demand, the responsible organization shall provide to the owner:
(1) an estimate by the responsible organization of the fair value of the ownership interests; and
(2) an offer to pay the amount of the estimate provided under Subdivision (1).
(d) If the dissenting owner decides to accept the offer made by the responsible organization under Subsection (c)(2), the owner must provide to the
responsible organization notice of the acceptance of the offer not later than the 90th day after the date the action that is the subject of the demand took effect.
(e) If, not later than the 90th day after the date the action that is the subject of the demand took effect, a dissenting owner accepts an offer made by a
responsible organization under Subsection (c)(2) or a dissenting owner and a responsible organization reach an agreement on the fair value of the ownership interests, the responsible organization shall pay the agreed amount not later than the 120th
day after the date the action that is the subject of the demand took effect, if the dissenting owner delivers to the responsible organization:
(1) endorsed certificates representing the ownership interests if the ownership interests are certificated; or
(2) signed assignments of the ownership interests if the ownership interests are uncertificated.
§ 10.359. RECORD OF DEMAND FOR FAIR VALUE OF OWNERSHIP INTEREST.
(a) A responsible organization shall note in the organizations ownership interest records maintained under Section 3.151 the receipt of a demand
for payment from any dissenting owner made under Section 10.356.
(b) If an ownership interest that is the subject of a demand for payment made under
Section 10.356 is transferred, a new certificate representing that ownership interest must contain:
(1) a reference to the demand;
and
(2) the name of the original dissenting owner of the ownership interest.
§ 10.360. RIGHTS OF TRANSFEREE OF CERTAIN OWNERSHIP INTEREST.
A transferee of an ownership interest that is the subject of a demand for payment made under Section 10.356 does not acquire additional rights with
respect to the responsible organization following the transfer. The transferee has only the rights the original dissenting owner had with respect to the responsible organization after making the demand.
§ 10.361. PROCEEDING TO DETERMINE FAIR VALUE OF OWNERSHIP INTEREST AND OWNERS ENTITLED TO PAYMENT; APPOINTMENT OF APPRAISERS.
(a) If a responsible organization rejects the amount demanded by a dissenting owner under Section 10.358 and the dissenting owner and responsible
organization are unable to reach an agreement relating to the fair value of
Appendix E-7
the ownership interests within the period prescribed by Section 10.358(d), the dissenting owner or responsible organization may file a petition requesting a finding and determination of the
fair value of the owners ownership interests in a court in:
(1) the county in which the organizations principal office is
located in this state; or
(2) the county in which the organizations registered office is located in this state, if the organization
does not have a business office in this state.
(b) A petition described by Subsection (a) must be filed not later than the 60th day after the
expiration of the period required by Section 10.358(d).
(c) On the filing of a petition by an owner under Subsection (a), service of a copy of the
petition shall be made to the responsible organization. Not later than the 10th day after the date a responsible organization receives service under this subsection, the responsible organization shall file with the clerk of the court in which the
petition was filed a list containing the names and addresses of each owner of the organization who has demanded payment for ownership interests under Section 10.356 and with whom agreement as to the value of the ownership interests has not been
reached with the responsible organization. If the responsible organization files a petition under Subsection (a), the petition must be accompanied by this list.
(d) The clerk of the court in which a petition is filed under this section shall provide by registered mail notice of the time and place set for the hearing
to:
(1) the responsible organization; and
(2) each owner named on the list described by Subsection (c) at the address shown for the owner on the list.
(e) The court shall:
(1) determine which
owners have:
(A) perfected their rights by complying with this subchapter; and
(B) become subsequently entitled to receive payment for the fair value of their ownership interests; and
(2) appoint one or more qualified appraisers to determine the fair value of the ownership interests of the owners described by Subdivision
(1).
(f) The court shall approve the form of a notice required to be provided under this section. The judgment of the court is final and binding on the
responsible organization, any other organization obligated to make payment under this subchapter for an ownership interest, and each owner who is notified as required by this section.
(g) The beneficial owner of an ownership interest subject to dissenters rights held in a voting trust or by a nominee on the beneficial owners
behalf may file a petition described by Subsection (a) if no agreement between the dissenting owner of the ownership interest and the responsible organization has been reached within the period prescribed by Section 10.358(d). When the
beneficial owner files a petition described by Subsection (a):
(1) the beneficial owner shall at that time be considered, for purposes of
this subchapter, the owner, the dissenting owner, and the holder of the ownership interest subject to the petition; and
Appendix E-8
(2) the dissenting owner who demanded payment under Section 10.356 has no further
rights regarding the ownership interest subject to the petition.
§ 10.362. COMPUTATION AND DETERMINATION OF FAIR VALUE OF OWNERSHIP INTEREST.
(a) For purposes of this subchapter, the fair value of an ownership interest of a domestic entity subject to dissenters rights is the value of
the ownership interest on the date preceding the date of the action that is the subject of the appraisal. Any appreciation or depreciation in the value of the ownership interest occurring in anticipation of the proposed action or as a result of the
action must be specifically excluded from the computation of the fair value of the ownership interest.
(b) In computing the fair value of an ownership
interest under this subchapter, consideration must be given to the value of the domestic entity as a going concern without including in the computation of value any control premium, any minority ownership discount, or any discount for lack of
marketability. If the domestic entity has different classes or series of ownership interests, the relative rights and preferences of and limitations placed on the class or series of ownership interests, other than relative voting rights, held by the
dissenting owner must be taken into account in the computation of value.
(c) The determination of the fair value of an ownership interest made for
purposes of this subchapter may not be used for purposes of making a determination of the fair value of that ownership interest for another purpose or of the fair value of another ownership interest, including for purposes of determining any
minority or liquidity discount that might apply to a sale of an ownership interest.
§ 10.363. POWERS AND DUTIES OF APPRAISER; APPRAISAL
PROCEDURES.
(a) An appraiser appointed under Section 10.361 has the power and authority that:
(1) is granted by the court in the order appointing the appraiser; and
(2) may be conferred by a court to a master in chancery as provided by Rule 171, Texas Rules of Civil Procedure.
(b) The appraiser shall:
(1) determine the
fair value of an ownership interest of an owner adjudged by the court to be entitled to payment for the ownership interest; and
(2) file
with the court a report of that determination.
(c) The appraiser is entitled to examine the books and records of a responsible organization and may
conduct investigations as the appraiser considers appropriate. A dissenting owner or responsible organization may submit to an appraiser evidence or other information relevant to the determination of the fair value of the ownership interest required
by Subsection (b)(1).
(d) The clerk of the court appointing the appraiser shall provide notice of the filing of the report under Subsection (b) to
each dissenting owner named in the list filed under Section 10.361 and the responsible organization.
§ 10.364. OBJECTION TO APPRAISAL;
HEARING.
(a) A dissenting owner or responsible organization may object, based on the law or the facts, to all or part of an appraisal report
containing the fair value of an ownership interest determined under Section 10.363(b).
Appendix E-9
(b) If an objection to a report is raised under Subsection (a), the court shall hold a hearing to determine
the fair value of the ownership interest that is the subject of the report. After the hearing, the court shall require the responsible organization to pay to the holders of the ownership interest the amount of the determined value with interest,
accruing from the 91st day after the date the applicable action for which the owner elected to dissent was effected until the date of the judgment.
(c)
Interest under Subsection (b) accrues at the same rate as is provided for the accrual of prejudgment interest in civil cases.
(d) The responsible
organization shall:
(1) immediately pay the amount of the judgment to a holder of an uncertificated ownership interest; and
(2) pay the amount of the judgment to a holder of a certificated ownership interest immediately after the certificate holder surrenders to the
responsible organization an endorsed certificate representing the ownership interest.
(e) On payment of the judgment, the dissenting owner does not have
an interest in the:
(1) ownership interest for which the payment is made; or
(2) responsible organization with respect to that ownership interest.
§ 10.365. COURT COSTS; COMPENSATION FOR APPRAISER.
(a) An appraiser appointed under Section 10.361 is entitled to a reasonable fee payable from court costs.
(b) All court costs shall be allocated between the responsible organization and the dissenting owners in the manner that the court determines to be fair and
equitable.
§ 10.366. STATUS OF OWNERSHIP INTEREST HELD OR FORMERLY HELD BY DISSENTING OWNER.
(a) An ownership interest of an organization acquired by a responsible organization under this subchapter:
(1) in the case of a merger, conversion, or interest exchange, shall be held or disposed of as provided in the plan of merger, conversion, or
interest exchange; and
(2) in any other case, may be held or disposed of by the responsible organization in the same manner as other
ownership interests acquired by the organization or held in its treasury.
(b) An owner who has demanded payment for the owners ownership interest
under Section 10.356 is not entitled to vote or exercise any other rights of an owner with respect to the ownership interest except the right to:
(1) receive payment for the ownership interest under this subchapter; and
(2) bring an appropriate action to obtain relief on the ground that the action to which the demand relates would be or was fraudulent.
(c) An ownership interest for which payment has been demanded under Section 10.356 may not be considered outstanding for purposes of any subsequent vote
or action.
Appendix E-10
§ 10.367. RIGHTS OF OWNERS FOLLOWING TERMINATION OF RIGHT OF DISSENT.
(a) The rights of a dissenting owner terminate if:
(1) the owner withdraws the demand under Section 10.356;
(2) the owners right of dissent is terminated under Section 10.356;
(3) a petition is not filed within the period required by Section 10.361; or
(4) after a hearing held under Section 10.361, the court adjudges that the owner is not entitled to elect to dissent from an action under
this subchapter.
(b) On termination of the right of dissent under this section:
(1) the dissenting owner and all persons claiming a right under the owner are conclusively presumed to have approved and ratified the action
to which the owner dissented and are bound by that action;
(2) the owners right to be paid the fair value of the owners
ownership interests ceases;
(3) the owners status as an owner of those ownership interests is restored, as if the owners
demand for payment of the fair value of the ownership interests had not been made under Section 10.356, if the owners ownership interests were not canceled, converted, or exchanged as a result of the action or a subsequent action;
(4) the dissenting owner is entitled to receive the same cash, property, rights, and other consideration received by owners of the same class
and series of ownership interests held by the owner, as if the owners demand for payment of the fair value of the ownership interests had not been made under Section 10.356, if the owners ownership interests were canceled,
converted, or exchanged as a result of the action or a subsequent action;
(5) any action of the domestic entity taken after the date of
the demand for payment by the owner under Section 10.356 will not be considered ineffective or invalid because of the restoration of the owners ownership interests or the other rights or entitlements of the owner under this subsection;
and
(6) the dissenting owner is entitled to receive dividends or other distributions made after the date of the owners payment
demand under Section 10.356, to owners of the same class and series of ownership interests held by the owner as if the demand had not been made, subject to any change in or adjustment to the ownership interests because of an action taken by the
domestic entity after the date of the demand.
§ 10.368. EXCLUSIVITY OF REMEDY OF DISSENT AND APPRAISAL.
In the absence of fraud in the transaction, any right of an owner of an ownership interest to dissent from an action and obtain the fair value of the ownership
interest under this subchapter is the exclusive remedy for recovery of:
(1) the value of the ownership interest; or
(2) money damages to the owner with respect to the action.
Appendix E-11
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers of First Financial.
The Amended and Restated Certificate of Formation, as amended, and the Amended and Restated Bylaws of First Financial Bankshares, Inc. (the
Registrant) require the Registrant to indemnify officers and directors of the Registrant to the fullest extent permitted by Texas law. Generally, Chapter 8 of the TBOC permits a corporation to indemnify a person who was, is, or is
threatened to be made a named defendant or respondent in a proceeding because the person was or is a director or officer if it is determined that such person (1) conducted himself in good faith, (2) reasonably believed (a) in the case
of conduct in his official capacity as a director or officer of the corporation, that his conduct was in the corporations best interest, or (b) in other cases, that his conduct was at least not opposed to the corporations best
interests, and (3) in the case of any criminal proceeding, had no reasonable cause to believe that his conduct was unlawful. In addition, the TBOC requires a corporation to indemnify a director or officer for any action that such director or
officer is wholly successful in defending on the merits.
The Registrants Amended and Restated Certificate of Formation, as amended,
provides that a director of the Registrant will not be liable to the corporation for monetary damages for an act or omission in the directors capacity as a director, except to the extent not permitted by law. Texas law does not permit
exculpation of liability in the case of (i) a breach of the directors duty of loyalty to the corporation or its shareholders; (ii) an act or omission not in good faith that constitutes a breach of duty of the director to the
corporation or that involves intentional misconduct or a knowing violation of the law; (iii) a transaction from which a director received an improper benefit, whether or not the benefit resulted from an action taken within the scope of the
directors office; or (iv) an act or omission for which the liability of the director is expressly provided by statute.
The
Registrants Amended and Restated Certificate of Formation, as amended, permits the Registrant to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, or agent of the Registrant or who is or was
serving at the request of the Registrant as a director, officer, employee or agent of another corporation or organization, against any liability asserted against such person and incurred by such person in such a capacity or arising out of such
persons status as such a person.
The Amended and Restated Certificate of Formation, as amended, and the Amended and Restated Bylaws
of the Registrant were previously filed with the Securities and Exchange Commission and are incorporated by reference into the registration statement.
Item 21. Exhibits and Financial Statement Schedules.
(a)
List of Exhibits
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Exhibit
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Description
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2.1
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Agreement and Plan of Reorganization, dated October
12, 2017, by and between First Financial Bankshares, Inc., Kingwood Merger Sub, Inc. and Commercial Bancshares, Inc. (Schedules have been omitted pursuant to Item 601(b)(2) of Regulation
S-K)
(included as Appendix
A to the proxy statement/prospectus contained in this Registration Statement).
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3.1
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Amended and Restated Certificate of Formation (incorporated by reference from Exhibit 3.1 of the Registrants Form
8-K
filed April 30, 2015).
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3.2
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Amended and Restated Bylaws of the Registrant (incorporated by reference from Exhibit 99.1 of the Registrants Form
8-K
filed January 24, 2012).
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4.1
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Specimen certificate of First Financial Common Stock (incorporated by reference from Exhibit 3 of the Registrants Amendment No. 1 to Form
8-A
filed on Form
8-A/A
No. 1 on January 7, 1994).
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II-1
(b)
Financial Statement Schedules
None. All other schedules for which provision is made in Regulation
S-X
of the Securities and Exchange
Commission are not required under the related restrictions or are inapplicable, and, therefore, have been omitted.
(c)
Opinion
of Financial Advisor
Furnished as
Appendix D
to the proxy statement/prospectus, which forms a part of this
Registration Statement on Form
S-4.
Item 22. Undertakings.
The undersigned registrant hereby undertakes:
(a) (1) To
file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with
the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the Calculation of Registration Fee table
in the effective Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the
termination of the offering.
II-2
(b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrants annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934, as amended (and, where applicable, each filing of an employee benefit plans annual
report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(g) (1) The undersigned registrant hereby undertakes
as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(2) The registrant undertakes that every prospectus (i) that is filed pursuant to
paragraph (1) immediately preceding, or (ii) that purports to meet the requirements of section 10(a)(3) of the Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the
registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus
pursuant to Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date of responding to the request.
The undersigned registrant
hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became
effective.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Abilene and State of Texas on November 17, 2017.
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FIRST FINANCIAL BANKSHARES, INC.
(Registrant)
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By:
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/s/ F. Scott Dueser
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F. Scott Dueser
Chairman of the Board,
President and
Chief Executive Officer
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Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the dates indicated.
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Signature
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Title
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Date
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/s/ F. Scott Dueser
F. Scott Dueser
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Chairman of the Board, President and
Chief Executive Officer, and Director
(Principal Executive Officer)
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November 17, 2017
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/s/ J. Bruce Hildebrand
J. Bruce Hildebrand
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Executive Vice President and Chief
Financial Officer
(Principal
Financial Officer and
Principal Accounting Officer)
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November 17, 2017
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*
April K.
Anthony
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Director
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November 17, 2017
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*
Steven L.
Beal
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Director
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November 17, 2017
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*
Tucker S.
Bridwell
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Director
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November 17, 2017
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*
David
Copeland
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Director
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November 17, 2017
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*
Murray
Edwards
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Director
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November 17, 2017
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*
Ron
Giddiens
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Director
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November 17, 2017
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*
Tim
Lancaster
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Director
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November 17, 2017
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*
Kade L.
Matthews
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Director
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November 17, 2017
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*
Ross H.
Smith, Jr.
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Director
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November 17, 2017
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*
Johnny E.
Trotter
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Director
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November 17, 2017
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*
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By:
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/s/ F. Scott Dueser
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Attorney-in-Fact
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November 17, 2017
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