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Exhibit 10.8    
    

 
 

REGISTRATION RIGHTS AGREEMENT    
    

        THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made as of January 19, 2004, by and among Treaty
Oak Holdings, Inc., a Texas corporation ("Shareholder"), and Treaty Oak Bancorp, Inc., a Texas corporation (the
"Company"). 

 
 

R E C I T A L S    
    

        WHEREAS, the Company and Shareholder are parties to a Stock Issuance Agreement dated December 8, 2003 (the
"Issuance Agreement"), under which the Company sold 1,000,000 shares of its common stock, $0.01 par value per share ("Common
Stock"), to Shareholder in connection with the Company's initial capitalization and organization; and 

        WHEREAS, in furtherance of the Company's organization and in order to induce the Company to enter into the Issuance Agreement and to
induce Shareholder to invest funds in the Company under the Issuance Agreement, the Company and Shareholder determined that this Agreement shall govern the rights of Shareholder to cause the Company
to register shares of Common Stock held by Shareholder as set forth herein. 

        NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the parties hereto agree as follows: 

        1.    Registration Rights.    The Company covenants and agrees as follows: 

        1.1    Definitions.    For purposes of this Section 1: 

        (a)   The
term "Act" means the Securities Act of 1933, as amended. 

        (b)   The
terms "Form S-2" and "Form S-3"
mean such forms, respectively, under the Act as in effect on the date hereof or any registration forms(s) under the Act subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company with the SEC. 

        (c)   The
term "Holder" means any person owning or having the right to acquire Registrable Securities, or any assignee thereof
in accordance with Section 1.13 hereof. 

        (d)   The
term "1934 Act" shall mean the Securities Exchange Act of 1934, as amended. 

        (e)   The
terms "register", "registered," and
"registration" refer to a registration effected by preparing and filing a registration statement or similar document in compliance with 

 

the
Act, and the declaration or ordering of effectiveness of such registration statement or document. 

        (f)    The
term "Registrable Securities" means the Common Stock issuable or issued. 

        (g)   The
number of shares of "Registrable Securities then outstanding" shall be determined by the number of shares of Common
Stock outstanding which are Registrable Securities, plus the number of shares of Common Stock issuable pursuant to then exercisable or convertible securities which are Registrable Securities. 

        (h)   The
term "SEC" shall mean the Securities and Exchange Commission. 

        (i)    The
term "Common Stock" means the common stock $.01 par value per share of the Company. 

        1.2    Request for Registration.    

        (a)   If
the Company shall receive, at any time after January 1, 2005, a written request from the Holders of at least a majority of the Registrable Securities then
outstanding that the Company file a registration statement under the Act covering the registration of at least fifty percent (50%) of the then outstanding Registrable Securities, then the
Company shall: 

          (i)  Within
10 days of the receipt thereof, give written notice of such request to all Holders; and 

         (ii)  Effect
as soon as practicable, and in any event within 60 days of the receipt of such request, the registration under the Act of all Registrable Securities which
the Holders request to be registered, subject to the limitations of subsection 1.2(b), within 20 days of the mailing of such notice by the Company in accordance with Section 2.5. 

        (b)   If
the Holders initiating the registration request hereunder ("Initiating Holders") intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to subsection 1.2(a) and the Company shall include
such information in the written notice referred to in subsection 1.2(a). The underwriter will be selected by the Company and shall be reasonably acceptable to a majority in interest of the Initiating
Holders. In such event, the right of any Holder to include such Holder's Registrable Securities in such registration shall be conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest of the Initiating Holders and such Holder) to the extent provided
herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company as provided in subsection 1.4(e)) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such underwriting. Notwithstanding any other provision of this Section 1.2, if the underwriter advises the Initiating Holders in
writing 

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that
marketing factors require a limitation of the number of shares to be underwritten, then the Initiating Holders shall so advise all Holders of Registrable Securities which would otherwise be
underwritten pursuant hereto, and the number of share of Registrable Securities that may be included in the underwriting shall be allocated among all Holders thereof, including the Initiating Holders,
in proportion (as nearly as practicable) to the amount of Registrable Securities of the Company owned by each Holder; provided, however that the number of shares of Registrable Securities to be
included in such underwriting shall not be reduced unless all other securities are first entirely excluded from the underwriting. 

        (c)   Notwithstanding
the foregoing, if the Company shall furnish to Holders requesting a registration statement pursuant to this Section 1.2, a certificate signed by
the President of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its stockholders for such
registration statement to be filed and it is therefore essential to defer the filing of such registration statement, the Company shall have the right to defer taking action with respect to such filing
for a period of not more than 90 days after receipt of the request of the Initiating Holders; provided, however, that the Company may not utilize this right more than once in any twelve-month
period. 

        (d)   In
addition, the Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to this Section 1.2: 

          (i)  After
the Company has effected two registrations initiated by any Holders, and each such registration has been declared or ordered effective; 

         (ii)  Within
twelve months after the effective date of the first registration of securities of the Company or registration initiated under this Section 1.2; 

        (iii)  During
the period starting with the date 60 days prior to the Company's good faith estimate of the date of filing of, and ending on a date 180 days after
the effective date of, a registration subject to Section 1.3 or Section 1.12 hereof; provided, that the Company is actively employing in good faith all reasonable efforts to cause such
registration statement to become effective; or 

        (iv)  If
the Initiating Holders propose to dispose of shares of Registrable Securities that may be immediately registered on Form S-2 or
Form S-3 pursuant to a request made pursuant to Section 1.12 below. 

        1.3    Company Registration.    If (but without any obligation to do so) the Company proposes to register (including
for this purpose a registration effected by the Company for stockholders other than the Holders) any of its stock or other securities under the Act in connection with the public offering of such
securities solely for cash (other than a registration relating solely to the sale of securities to participants in a Company stock plan, a registration on any form which does not include substantially
the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities or a 

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registration
in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities which are also being registered), the Company shall, at such time, promptly
give each Holder written notice of such registration. Upon the written request of each Holder given within 20 days after mailing of such notice by the Company in accordance with
Section 2.5, the Company shall, subject to the provisions of Section 1.8, cause to be registered under the Act all of the Registrable Securities that each such Holder has requested to be
registered. 

        1.4    Obligations of the Company.    Whenever required under this Section 1 to effect the registration of any
Registrable Securities or Prior Holder Registrable Securities, the Company shall, as expeditiously as reasonably possible: 

        (a)   Prepare
and file with the SEC a registration statement with respect to such Registrable Securities and Prior Holder Registrable Securities and use its best efforts to
cause such registration statement to become effective, and, upon the request of the holders of a majority of the Registrable Securities registered thereunder; keep such registration statement
effective for a period of up to 120 days or, if earlier, until the distribution contemplated in the Registration Statement has been completed; provided, however, that (i) such
120-day period shall be extended for a period of time equal to the period the Holder refrains from selling any securities included in such registration at the request of an underwriter of
Common Stock (or other securities) of the Company; and (ii) in the case of any registration of Registrable Securities and on Form S-2 or Form S-3 which are
intended to be offered on a continuous or delayed basis, such 120-day period shall be extended, if necessary to keep the registration statement effective until all such Registrable
Securities are sold, provided that Rule 415, or any successor rule under the Act, permits an offering on a continuous or delayed basis, and provided further that applicable
rules under the Act governing the obligation to file a post-effective amendment permit, in lieu of filing a post-effective amendment which (I) includes any
prospectus required by Section 10(a)(3) of the Act or (II) reflects facts or events representing a material or fundamental change in the information set forth in the registration
statement, the incorporation by reference of information required to be included in (I) and (II) above to be contained in periodic reports filed pursuant to Section 13 or
15(d) of the 1934 Act in the registration statement. 

        (b)   Prepare
and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as
may be necessary to comply with the provisions of the Act with respect to the disposition of all securities covered by such registration statement. 

        (c)   Furnish
to the Holders such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Act, and such other
documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them. 

        (d)   Use
its best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as
shall be reasonably requested by the Holders; provided that the Company shall not be required in 

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connection
therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions. 

        (e)   In
the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing
underwriter of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement. 

        (f)    Notify
each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the
Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, or otherwise fails to comply with the
requirements of the Act and the rules and regulations thereunder. The Company shall promptly upon the happening of such event, provide each Holder with revised prospectuses correcting any such
untrue statement, omission, or failure to comply. 

        (g)   Cause
all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange on which similar securities issued by the Company are then
listed. 

        (h)   To
the extent the Company has a transfer agent and registrar, provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder, and a
CUSIP number for all such Registrable Securities, not later than the effective date of such registration. 

        (i)    Use
its best efforts to furnish, at the request of any Holder requesting registration of Registrable Securities pursuant to this Section 1, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection with a registration pursuant to this Section 1, if such securities are being sold through underwriters, or, if
such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (i) an opinion, dated such date, of the
counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, address to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities, and (ii) a letter dated such date, from the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to underwriters in an
underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities. 

        1.5    Furnish Information.    It shall be a condition precedent to the obligations of the Company to take any action
pursuant to this Section 1 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities as shall be required to effect the registration of such Holder's Registrable Securities. 

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        1.6    Expenses of Demand Registration.    All expenses other than underwriting discounts and commissions incurred in
connection with registrations, filings or qualifications pursuant to Section 1.2, including (without limitation) all registration, filing and qualification fees, printers' and accounting fees,
fees and disbursements of counsel for the Company (including fees and disbursements of counsel for the Company in its capacity as counsel to the selling Holders; if Company counsel does not make
itself available for this purpose, the Company will pay the reasonable fees and disbursements of one counsel for the selling Holders) shall be borne by the Company; provided, however, that the Company
shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 1.2 if the registration request is subsequently withdrawn at the request of the Holders of
a majority of the Registrable Securities to be registered (in which case all participating Holders shall bear such expenses); provided further, however, that if at the time of such withdrawal, the
Holders have learned of a material adverse change in the condition, business, or prospects of the Company from that known to the Holders at the time of their request and have withdrawn the request
with reasonable promptness following disclosure by the Company of such material adverse change, then the Holders shall not be required to pay any of such expenses and shall retain their rights
pursuant to Section 1.2. 

        1.7.    Expenses of Company Registration.    The Company shall bear and pay all expenses incurred in connection with
any registration, filing or qualification of Registrable Securities with respect to the registrations pursuant to Section 1.3 for each Holder (which right may be assigned as provided in
Section 1.13), including (without limitation) all registration, filing, and qualification fees, printers' and accounting fees relating or apportionable thereto and the fees and disbursements of
counsel for the Company in its capacity as counsel to the selling Holders hereunder; if Company counsel does not make itself available for this purpose, the Company will pay the reasonable fees and
disbursements of one counsel for the selling Holders selected by them, but excluding underwriting discounts and commissions relating to Registrable Securities. 

        1.8    Underwriting Requirements.    In connection with any offering involving an underwriting of shares of the
Company's capital stock, the Company shall not be required under Section 1.3 to include any of the Holders' securities in such underwriting unless they accept the terms of the underwriting as
agreed upon between the Company and the underwriters selected by it (or by other persons entitled to select the underwriters), and then only in such quantity as the underwriters determine in their
sole discretion
will not jeopardize the success of the offering by the Company. If the total amount of securities, including Registrable Securities requested by stockholders to be included in such offering exceeds
the amount of securities sold other than by the Company that the underwriters determine in their sole discretion is compatible with the success of the offering, then the Company shall be required to
include in the offering only that number of such securities which the underwriters determine in their sole discretion will not jeopardize the success of the offering (the securities so included to be
apportioned pro rata among the selling stockholders according to the total amount of securities entitled to be included therein owned by each selling stockholder, with the Holders entitled to
inclusion of their Registrable Securities prior to and in preference over other selling stockholders who do not hold Registrable Securities, or in such other proportions as shall mutually be agreed to
by such selling 

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stockholders).
For purposes of the preceding parenthetical concerning apportionment, for any selling stockholder which is a holder of Registrable Securities and which is a partnership or corporation,
the affiliated partnerships, partners, retired partners and stockholders of such holder, or the estates and family members of any such partners and retired partners and any trusts for the benefit of
any of the foregoing persons shall be deemed to be a single "selling stockholder", and any pro-rata reduction with respect to such "selling stockholder" shall be based upon the aggregate
amount of shares carrying registration rights owned by all entities and individuals included in such "selling stockholder", as defined in this sentence. 

        1.9    Delay of Registration.    No Holder shall have any right to obtain or seek an injunction restraining or
otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 1. 

        1.10    Indemnification.    In the event any Registrable Securities are included in a registration statement under
this Section l: 

        (a)   To
the extent permitted by law, the Company will indemnify and hold harmless each Holder, any underwriter (as defined in the Act) for such Holder and each person, if
any, who controls such Holder or underwriter within the meaning of the Act or the 1934 Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject
under the Act, the 1934 Act, or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following
statements, omissions, or violations (collectively a "Violation"): (i) any untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company
of the Act, the 1934 Act, any state securities law or any rule or regulation promulgated under the Act, the 1934 Act or any state securities law; and the Company will pay to each such Holder,
underwriter, or controlling person any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this subsection 1.10(a) shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such
loss, claim, damage. liability, or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly
for use in connection with such registration by any such Holder, underwriter, or controlling person. 

        (b)   To
the extent permitted by law, each selling Holder will indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the
registration statement, each person, if any, who controls the Company within the meaning of the Act, any underwriter, any other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any losses, claims, damages, or liabilities joint or several) to which any of the foregoing persons may become subject, under 

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the
Act, the 1934 Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case
to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such
registration; and each such Holder will pay any legal or other expenses reasonably incurred by any person intended to be indemnified pursuant to this subsection 1.10(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this subsection 1.10(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder which consent shall not be unreasonably withheld; provided,
that, in no event shall any indemnity under this subsection 1.10(b) exceed the gross proceeds from the offering received by such Holder. 

        (c)   Promptly
after receipt by an indemnified party under this Section 1.10 of notice of the commencement of any action (including any governmental action), such
indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 1.10, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly
noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties which may be
represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend
such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 1.10, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 1.10. 

        (d)   If
the indemnification provided for in this Section 1.10 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to
any loss, liability, claim, damage, or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or
payable by such indemnified party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement or omission. 

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        (e)   Notwithstanding
the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection
with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control. 

        (f)    The
obligations of the Company and Holders under this Section 1.10 shall survive the completion of any offering of Registrable Securities in a registration
statement under this Section 1, and otherwise. 

        1.11    Reports Under Securities Exchange Act of 1934.    With a view to making available to the Holders the benefits
of Rule 144 promulgated under the Act and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-2 or Form S-3, the Company agrees to: 

        (a)   make
and keep public information available, as those terms are understood and defined in SEC Rule 144, at all times after 90 days after the effective date
of the first registration statement filed by the Company for the offering of its securities to the general public; 

        (b)   take
such action as is necessary to enable the Holders to utilize Form S-2 or Form S-3 for the sale of their Registrable
Securities, such action to be taken as soon as practicable after the end of the fiscal year in which the first registration statement filed by the Company for the offering of its securities to the
general public is declared effective; 

        (c)   file
with the SEC in a timely manner all reports and other documents required of the Company under the Act and the 1934 Act; and 

        (d)   furnish
to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (i) a written statement by the Company that it has complied
with the reporting requirements of SEC Rule 144 (at any time after 90 days after the effective date of the first registration statement filed by the Company), the Act, and the 1934 Act
(at any time after it has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after
it so qualifies), (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information
as may be reasonably requested in availing any Holder of any rule or regulation of the SEC which permits the selling of any such securities without registration or pursuant to such form. 

        1.12    Form S-2 or Form S-3 Registration.    In case the Company shall receive
a Written request from the Holder or Holders of at least fifteen percent (15%) of the Registrable Securities then outstanding that the Company effect a registration on Form 8-2 or
Form S-3, whichever is then applicable and with preference given to a registration on Form S-3 when both such forms are then available for use, and any related
qualification or compliance with respect to all or a part of the Registrable Securities owned by such Holder or Holders, the Company will: 

9

 

        (a)   promptly
give written notice of the proposed registration, and any related qualification or compliance, to all other Holders; and 

        (b)   as
soon as practicable, effect such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Holder's, or Holders' Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other
Holder or Holders joining in such request as are specified in a written request given within 15 days after receipt of such written notice from the Company; provided, however, that the Company
shall not be obligated to effect any such registration, qualification or compliance, pursuant to this Section 1.12: (i) if either Form S-2 or
Form S-3 is not available for such offering by the Holders; (ii) if the Holders, together with the holders of any other securities of the Company entitled to inclusion in
such registration, propose to sell Registrable Securities at an aggregate price to the public (net of any underwriters' discounts or commissions) of less than $250,000; (iii) if the Company
shall furnish to the Holders a certificate signed by the President of the Company stating that in the good faith judgment the Board of Directors of the Company, it would be seriously detrimental to
the Company and its stockholders for such Form S-2 or Form S-3 registration to be effected at such time which
event the Company shall have the right to defer the filing of the Form S-2 or F registration statement for a period of not more than 90 days after receipt of the request of
the Holder or Holders under this Section 1.12; provided. however, that the Company shall not utilize this right more than once in any twelve month period; (iv) in any particular
jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance; or
(v) after the Company has effected five registrations pursuant to this Section 1.12 and such registrations have been declared or ordered effective; provided, however, that the Holders of
Registrable Securities may demand an additional registration pursuant to this Section 1.12 each demand registration pursuant to Section 1.2 which has not been utilized on behalf of such
Holders. 

        (c)   Subject
to the foregoing, the Company shall file a registration statement covering the Registrable Securities and other securities so requested to be registered
as soon as practicable after receipt of the request or requests of the Holders. All expenses incurred in connection with registrations requested pursuant to this Section 1.12, including
(without limitation) all registration, filing, qualification, printer's and accounting fees and the reasonable fees and disbursements of counsel for the selling Holder or Holders and counsel for the
Company, but excluding any underwriters' discounts or commissions associated with Registrable Securities, shall be borne by the Company. Registrations effected pursuant to this Section 1.12
shall not be counted as demands for registration or registrations effected pursuant to Sections 1.2 or 1.3, respectively. 

        1.13    Assignment of Registration Rights.    The rights to cause the Company to register Registrable Securities
pursuant to this Section 1 may be assigned (but only with all related obligations) by a Holder or Prior Holder to a transferee or assignee of such securities who (a) after such
assignment or transfer, holds at least 600,000 shares of Registrable Securities, (b) is a partnership that is affiliated with the transferring Holder, (c) is a majority-owned subsidiary
of the Holder (subject to appropriate adjustment for stock splits, stock dividends, combinations and 

10

 

other
recapitalizations), or (d) acquire the Registrable Securities in connection with a corporate distribution from Treaty Oak Holdings, Inc. or its successor or parent corporation,
provided: (a) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee or assignee and the securities with respect
to which such registration rights are being assigned; (b) such transferee or assignee agrees in writing to be bound by and subject to the terms and conditions of this Agreement, including
(without limitation) the provisions of Section 1.15 below; and (c) such assignment shall be effective only if immediately following such transfer the further disposition of such
securities by the transferee or assignee is restricted under the Act. For the purposes of determining the number of shares of Registrable Securities held by a transferee or assignee, the holdings of
transferees and assignees of a partnership who are partners or retired partners of such partnership (including spouses and ancestors, lineal descendants and siblings of such partners or spouses who
acquire Registrable Securities by gift, will or intestate succession) shall be aggregated together and with the partnership; provided that all assignees and transferees who would not qualify
individually for assignment of registration rights shall have a single attorney-in-fact for the purpose of exercising any rights, receiving notices or taking any action under
this Section 1. 

        1.14    Limitations on Subsequent Registration Rights.    From and after the date of this Agreement, the Company shall
not, without the prior written consent of the Holders of a majority of the then outstanding Registrable Securities enter into any agreement with any holder or prospective holder of any securities of
the Company which would allow such holder or prospective holder (a) to include such securities in any registration filed under Section 1.2 hereof, unless under the terms of such
agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of such holder's securities will not reduce the amount of the
Registrable Securities of the Holders which is included or (b) to make a demand registration which could result in such registration statement being declared effective prior to the earlier of
either of the dates set forth in subsection 1.2(a) or within 120 days of the effective date of any registration effected pursuant to Section 1.2. 

        1.15    "Market Stand-Off" Agreement.    Each Holder hereby agrees that during the period of
180 days (or a shorter period as may be requested by any underwriters) following the date of the first sale to the public pursuant to a registration statement of the Company filed under the
Act, it shall not, to the extent requested by the Company and such underwriter, directly or indirectly sell, offer to sell, contract to sell (including, without limitation, any short sale), grant any
option to purchase or otherwise transfer or dispose of (other than to donees who agree to be similarly bound), any securities of the Company held by it at any time during such period except Common
Stock included in such registration; provided, however, that: 

        (a)   such
agreement shall be applicable only for two (2) years after the date of the first such registration statement of the Company which covers Common Stock (or
other securities) to be sold on its behalf to the public; and 

        (b)   all
officers and directors of the Company and Holders of Registrable Securities enter into similar agreements. 

11

 

        In
order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to the Registrable Securities of each Holder (and the shares or
securities of every other person subject to the foregoing restriction) until the end of such period. 

        Notwithstanding
the foregoing, the obligations described in this Section 1.15 shall not apply to a registration relating solely to employee benefit plans on
Form S-l or Form S-8 or similar forms which may be promulgated in the future, or a registration relating solely to a Commission Rule 145 transaction on
Form S-4 or similar forms which may be promulgated in the future. 

        1.16    Termination of Registration Rights.    No Holder shall be entitled to exercise any right provided for in this
Section 1 after ten (10) years following the consummation of the sale of securities pursuant to a registration statement filed by the Company under the Act in connection with the initial
registered public offering of its securities to the general public under the Act. 

        2.    Miscellaneous.    

        2.1    Successors and Assigns.    Except as otherwise provided herein, the terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of any shares of Registrable Securities). Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason
of this Agreement, except as expressly provided in this Agreement. 

        2.2    Governing Law.    This Agreement shall be governed by and construed under the laws of the State of Texas
without recourse to its conflicts-of-laws provisions. 

        2.3    Counterparts.    This Agreement may be executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument. 

        2.4    Titles and Subtitles.    The titles and subtitles used in this Agreement are used for convenience only and are
not to be considered in construing or interpreting this Agreement. 

        2.5    Notices.    Unless otherwise provided any notice required or permitted under this Agreement shall be given in
writing and shall be deemed effectively given upon personal delivery to the party to be notified or upon deposit with the United States Post Office, by registered or certified mail, postage prepaid
and addressed to the party to be notified at the address indicated for such party on the signature page hereof, or at such other address as such party may designate by 10 days' advance
written notice to the other parties. 

        2.6    Expenses.    If any action at law or in equity is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorneys' fees, costs, and necessary disbursements in addition to any other relief to which such party may be entitled. 

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        2.7    Amendments and Waivers.    Except as expressly provided elsewhere herein, any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the
Company and the holders of at least a majority of the Registrable Securities then outstanding. In the event that an underwriting agreement is entered into between the Company and any Holder, and such
underwriting agreement contains terms differing from this Agreement, as to such Holder, the terms of such underwriting agreement shall govern. Any amendment or waiver effected in accordance with this
Section shall be binding upon each holder of any Registrable Securities then outstanding, each future holder of all such Registrable Securities, and the Company. 

        2.8    Severability.    If one or more provisions of this Agreement are held to be unenforceable under applicable law,
such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. 

        2.9    Aggregation of Stock.    All shares of Registrable Securities held or acquired by affiliated entities or
persons shall be aggregated together for the purpose of determining the availability of any rights under this Agreement. 

        2.10    Entire Agreement; Amendment; Waiver.    This agreement (including the Exhibits hereto, if any) constitutes the
full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof. 

[Signature Page Follows]

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        IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first above written. 

	

 	
 	
TREATY OAK BANCORP, INC., a Texas corporation
	

 	
 	

By:	
 	

/s/  TERRY W. HAMANN      
 Terry W. Hamann, President and CEO
	

 	
 	
TREATY OAK HOLDINGS, INC., a Texas corporation
	

 	
 	

By:	
 	

/s/  JEFFREY L. NASH      
 Jeffrey L. Nash, Executive Vice President

[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT  

14

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Exhibit 10.8

REGISTRATION RIGHTS AGREEMENT

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Exhibit 10.9    
    

 
 

STOCK PURCHASE AGREEMENT  
  

BY AND AMONG  

 TEXLINE STATE BANK, TEXLINE, TEXAS  

 (the "BANK");  

 CHARLES T. MEEKS;  

 CERTAIN OTHER SHAREHOLDERS OF THE BANK  

 (the "SELLER or SELLERS")  

 AND  

 TREATY OAK BANCORP, INC.  

 (as assignee, the "BUYER")  

 June 20, 2003  

 
  
 

  STOCK PURCHASE AGREEMENT    
    

        THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and
entered into as of the 20th day of June 2003 (the "Effective Date" and subsequently amended on November 26, 2003), by and
among Texline State Bank, a Texas state-chartered bank (the "Bank"); Charles T. Meeks ("Meeks"); certain
shareholders of the Bank listed on Schedule 1.2 attached hereto (hereinafter referred to individually as "Shareholder" and collectively with
Meeks, the "Sellers"); and Treaty Oak Bancorp, Inc., a Texas corporation ("Buyer" as assignee of
Treaty Oak Holdings, Inc., a Texas corporation). 

RECITALS:  

        WHEREAS, the Sellers own at least 49,600 shares representing 80% of the outstanding capital stock of the Bank and
anticipate that they will be joined by other shareholders owning sufficient shares to cause the total number of shares to be transferred in the transactions contemplated by this Agreement to be no
less than 55,800 shares representing no less than 90% of the outstanding capital stock of the Bank; and 

        WHEREAS, Buyer desires to acquire all of the issued and outstanding capital stock of the Bank; and 

        WHEREAS, Buyer intends to acquire all the issued and outstanding capital stock of the Bank owned by Sellers (the
"Stock") upon the terms and conditions hereinafter set forth; and 

        WHEREAS, Sellers desire to sell all of the Stock to Buyer upon the terms and conditions hereinafter set forth: 

        NOW, THEREFORE, for and in consideration of the mutual covenants and agreements contained herein, and other good and valuable
consideration, the receipt and adequacy of which the parties hereby acknowledge, the parties do hereby represent, warrant, covenant and agree as follows: 

 
 

DEFINITIONS    
    

        Aggregate Purchase Price:    as explained and calculated in Section 3. 

        Agreement:    as defined above in the preamble. 

        Bank:    as defined above in the preamble. 

        Bank Regulators:    means any governmental authority or agency and its respective authorized agents, including, but not limited
to, the FDIC, the Federal Reserve Board and the Texas Department of Banking. 

        Best Knowledge:    means, or any similar phrase means, (i) with respect to an individual, the personal knowledge of the
individual of a particular fact or other matter after reasonable inquiry or investigation, and, if the individual does not conduct a reasonable inquiry or investigation, the personal knowledge the
individual would have had if he had conducted a reasonable inquiry or investigation, and (ii) with respect to an entity, the personal knowledge of an individual who is serving as an officer of
such entity or a fact or other matter after reasonable inquiry or investigation, and, if such individual does not conduct a reasonable inquiry or investigation, the personal knowledge such individual
would have had if he had conducted a reasonable inquiry or investigation. 

        Buyer:    as defined in the preamble. 

        Closing:    as defined in Section 6.1. 

        Closing Date:    as defined in Section 6.1. 

        Code:    means the Internal Revenue Code of 1986, as amended. 

        Collection Fund:    as defined in Section 10.1. 

        CRA:    means the Community Reinvestment Act of 1977, as amended. 

        Deferred Federal Net Operating Benefit:    means such asset as listed and provided for in the Financial Statements. 

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        Effective Date:    as defined above in the preamble. 

        Environmental Laws:    means any and all laws, statutes, ordinances, rules, regulations, order, judicial or arbitral decisions
or determinations of any governmental authority or court pertaining to the environment in effect in any jurisdictions in which the Bank is conducting business or where any of the properties or
facilities of the Bank is located, including without limitation, the Clean Air Act, as amended, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, the
Federal Water Pollution Control Act, as amended, the Occupational Safety and Health Act of 1970, as amended, the Hazardous Materials Transportation Act, as amended the Resource Conservation and
Recovery Act of 1976, as amended the Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as amended, the Superfund Amendments and Reauthorization Act of 1986, as amended, the Texas
Solid Waste Disposal Act, The Texas Water Code and other comparable federal, state, and local laws. 

        Escrow:    as defined in Section 5.6. 

        Escrow Agent:    as defined in Section 5.6. 

        FDIC:    means the Federal Deposit Insurance Corporation. 

        Financial Statements:    as defined in Section 1.1.6. 

        GAAP:    means generally accepted accounting principles set forth in the Opinions of the Accounting Principles Board of the
American Institute of Certified Public Accountants and in statements by the Financial Accounting Standards Board that are applicable to the circumstances as of the date of determination; and the
requisite that such principles be applied on a constant basis shall mean that the accounting principles observed in a current period are comparable in all respects to those applied in a preceding
period. 

        Governmental Authority:    means any court, federal, state, local or foreign government or any administrative agency or
commission or any other entity thereof. 

        Hazardous Substance:    means any "hazardous substance," "pollutant," "contaminant," or "oil" as such terms are defined in any
Environmental Law. 

        Loan Property:    means any property in which the Bank holds a security interest, and, where required by the context (as a
result of foreclosure), said term means the owner or operator of such property. 

        Material Adverse Effect:    means, with respect to the Bank, any adverse effect of the business, financial condition, results of
operation or prospects of the Bank, taken as a whole, if the dollar amount of such adverse effect exceeds or could reasonably be expected to exceed 5% of the Purchase Price. 

        Owned Property:    as defined in Section 1.1.21 

        Permitted Encumbrances:    means (i) liens, claims or encumbrances specifically described in the Financial Statements,
(ii) liens, claims or encumbrances securing taxes, assessments, governmental charge or levies, all of which are not yet due and payable, or are being contested in good faith in the ordinary
course of business based upon a dispute as to the appropriate tax appraisal of a particular property, so long as such contest does not involve any substantial danger of the sale, forfeiture or loss of
such property, (iii) liens, claims or encumbrances securing the claims of materialmen, carriers, landlords and like persons, all of which are not yet due and payable; or, (iv) customary
restrictive covenants, customary zoning restrictions and customary utility easements on or affecting commercial real property. 

        Person:    means any individual, firm, corporation, partnership, joint venture, association, trust, unincorporated organization,
government or agency or subdivision thereof or any other entity. 

        Plans:    as defined in Section 1.1.11 

        Purchase Price:    as defined in Section 3. 

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        Reasonable Best Efforts:    means a person's best efforts in accordance with reasonable commercial practice and without
incurrence of unreasonable expenses. 

        Reports:    as defined in Section 1.1.7. 

        Returns:    as defined in Section 1.1.9. 

        Stock:    as defined above in the recitals. 

        Total Equity Capital:    means as listed and provided for in the Financial Statements. 

        USA PATRIOT Act:    means the USA PATRIOT Act of 2001, Public Law 107-56. 

1.     Representations and Warranties of the Bank, Meeks and Shareholders.  

        Except as otherwise disclosed in a document dated the Effective Date attached as an exhibit to this Agreement and delivered to Buyer prior to the execution and
delivery of this Agreement and referring to the representations and warranties in this Agreement, the Bank, Meeks, and Shareholders hereby represent and warrant to Buyer as follows: 

1.1   Representations and Warranties of the Bank.  

        The Bank and Meeks (jointly and severally) represent and warrant to Buyer that, each of the following statements is true, correct and complete in all respects as
of the date of this Agreement and will be true, correct and complete in all respects as of the Closing Date: 

1.1.1 Organization and Authority of the Bank.  

        The Bank is a state bank duly organized, validly existing and in good standing under the laws of the State of Texas and has the power and authority to own its
properties and assets and to carry on its business as it is now being conducted. The bank's deposit accounts are insured by the FDIC for the amounts and to the extent covered by customary FDIC
insurance of accounts. The Bank's Articles of Association and Bylaws, as amended, copies of which have previously been provided to Buyer, are true, complete and correct copies of such documents in
effect, and the Bank is not in violation of any provision of such charter documents. The minute books of the Bank contain in all material respects true and complete records of all meetings held and
actions taken since January 1, 2000 of the Bank's board of directors (including committees thereof) and of the Bank's shareholders. These minute books have been made available to Buyer. 

1.1.2 Capitalization of the Bank.  

        The authorized capital stock of the Bank consists of 62,000 shares of common stock, $4.00 par value, of which 62,000 shares are outstanding, and no shares are
held in the treasury. Sellers own at least 49,600 shares or 80% of the outstanding capital stock of the Bank, and the remaining shares of the outstanding capital stock of the Bank are owned by the
shareholders listed and in the amounts set forth on Schedule 1.1.2 attached hereto. All of the outstanding shares of capital stock of the Bank have been duly authorized, validly issued and are
fully paid and nonassessable. There are no outstanding subscriptions, contracts, conversion privileges, options, warrants, calls, preemptive rights or other rights or agreements obligating the Bank to
issue, sell or otherwise dispose of, or to purchase, redeem or otherwise acquire, any shares of the capital stock of the Bank. No shareholder has any rights of dissent with respect to the consummation
of the transactions contemplated under the Agreement. Since January 1, 1997, no shares of the capital stock of the Bank have been purchased, redeemed or otherwise acquired, directly or
indirectly, by the Bank. The Bank does not own beneficially, directly or indirectly, more than 5% of any class of equity securities or similar interests of any corporation, bank, business trust,
association or similar organization, and is not, directly or indirectly, a partner in any partnership or party to any joint venture, nor does the Bank have any subsidiaries. 

4

 

1.1.3 Authorization.  

        The Bank has full corporate power and authority to execute and deliver the Agreement, to perform its obligations thereunder and to consummate the transactions
contemplated thereby. The execution and delivery of the Agreement, the performance of its obligations thereunder and the consummation of the transactions contemplated thereby have been duly and
validly authorized by the Bank's board of directors. No other corporate action and no other corporate proceedings on the part of the Bank are necessary to authorize the Agreement or the performance of
the Bank's obligations thereunder or to consummate the transactions contemplated thereby. The execution and delivery of this Agreement by the Bank does not require any consent, approval, authorization
or permit of, or filing with or notification to, any third party. The Agreement, upon execution and delivery by the Bank, will be duly and validly executed and delivered by the Bank and will
constitute a legal, valid and binding obligation of the Bank, enforceable against the Bank in accordance with its terms. 

1.1.4 No Violation.  

        Neither the execution, delivery and performance of this Agreement, nor the consummation of the transactions contemplated herein, nor compliance by the Bank with
any of the provisions hereof, will (i) violate, conflict with, require the consent of any third party under, or result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or
acceleration of, or result in the creation of, any lien, security interest, charge or encumbrance upon any of the of the properties or assets of the Bank under any of the terms, conditions or
provisions of (x) the Articles of Association or Bylaws of the Bank, or (y) any note, bond, mortgage, indenture, deed of trust, license, lease agreement or other agreement or obligation
to which the Bank is a party or by which the Bank may be bound, or to which the Bank, or any of the properties or assets of the Bank may be subject, or (ii) to the Best Knowledge of the Bank,
violate any judgment, ruling, order, writ, injunction, decree, statute, rule or regulation applicable to the Bank or any of the properties or assets of the Bank. 

1.1.5 Required Regulatory Approvals and Authorizations.  

        Other than the filings, consents, reviews, authorizations or approval required to effect the sale under Texas law, the Federal Reserve Bank and FDIC Rules and
Regulations, no consents, waivers or approvals of or filings or registrations with, or notifications to, exemptions or reviews by, or authorizations of, any public body or authority are necessary for
the consummation by the Bank of the transaction contemplated by this Agreement. 

1.1.6 Financial Statements.  

        The (i) balance sheets of the Bank as of December 31, 2000, 2001, and 2002 and the related statement of income and shareholders' equity for the
years then ended, including the notes relating thereto, (ii) unaudited balance sheets of the Bank as of March 31, 2003, and the related statements of income and shareholders' equity for
the three months then ended, including the notes relating thereto (collectively, the "Financial Statements"), have been prepared in accordance with GAAP
applied on a consistent basis and present fairly (subject, in the case of the interim financial statements, to normal recurring adjustments) the financial position of the Bank at the dates and the
results of operations and cash flows of the Bank for the periods stated therein. Complete copies of the Financial Statements have been provided to Buyer. 

5

 

1.1.7 Reports.  

        Since January 1, 1997, the Bank has filed all reports, registrations, applications, permits and statements, together with any required amendments thereto,
that they were required to file with (i) the Texas Department of Banking, (ii) the FDIC, and (iii) any other applicable state securities or banking authorities (collectively, the
"Reports"). As of their respective dates, the Reports complied in all material respects with all the rules and regulations promulgated by the Texas
Department of Banking, the FDIC and other applicable state securities or banking authorities, as the case may be, and did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the statement therein, in light of the circumstances under which it was made, not misleading. Copies of all the Reports have
been made available to Buyer. Except for normal periodic examinations conducted by Bank Regulators in the regular course of the business of the Bank, since January 1, 2001, no Bank Regulator
has initiated any proceeding or investigation into the business or operations of the Bank. The Bank has resolved all material violations, criticisms or exceptions by any Bank Regulator with respect to
any such normal periodic examination. 

1.1.8 Properties and Leases.  

        Except for Permitted Encumbrances, the Bank has good title free and clear of any material liens, claims, charges, options, encumbrances or similar restriction to
all real and personal property reflected in Financial Statements and all real and personal property acquired since January 1, 1977, except such real and personal property as has been disposed
of in the ordinary course of business. All leases or real property and all other leases material to the Bank pursuant to which the Bank, as lessee or lessor, leases real or personal property are
described on Schedule 1.1.8, and are valid and effective in accordance with their respective terms. There is not, under any such lease, any material existing default by the Bank or any event
which, with notice or lapse of time or both, would constitute such a material default. Substantially all of the buildings and equipment of the Bank have been well maintained and are in good and
serviceable condition, reasonable wear and tear excepted. 

1.1.9 Taxes.  

        The Bank has filed all federal, state, county local and foreign tax returns, including information returns, required to be filed by it (collectively, the
"Returns"), and has paid in full all taxes owed by it, including those with respect to income, withholding, social security, unemployment, workers'
compensation, franchise, ad valorem, premium, excise and sales taxes, and no taxes shown on the Returns to be owed by it or assessments received by it are delinquent. The Returns, when filed, were
correct in all material aspects and, if applicable, properly included all income and deductions of the Bank allocable to the periods for which the Returns were filed. The Bank is not a party to any
pending action or proceeding, nor, to the Bank's Best Knowledge, is any such action or proceeding threatened by any governmental authority, for the assessment or collection of taxes, interest,
penalties, assessments or deficiencies, and no issue has been raised by any federal, state, local or foreign taxing authority in connection with an audit or examination of the Returns, business or
properties of the Bank which has not been settled, resolved and fully satisfied. The Bank has paid all taxes owed or which it is required to withhold from amounts owing to employees, creditors or
other third parties. The Financial Statements include adequate provision for all accrued but unpaid federal, state, county, local and foreign taxes, interest, penalties, assessments or deficiencies of
the Bank with respect to all periods through the date hereof. 

        The
Bank is not a party to or bound by any tax indemnification, tax allocation or tax sharing agreement with any person or entity nor does it have any current or potential contractual
obligation to indemnify any other person or entity with respect to tax obligations. 

        The
Bank has not made any payment, is not obligated to make any payment, or is a party to any agreement that could obligate it to make any payment, whether under this Agreement or
otherwise, which payment would not be deductible under Sections 162(m) or 280G of the Code. 

6

 

1.1.10 Absence of Certain Changes or Events.  

        Since December 31, 2002, there has been no change in the business, financial condition, results of operation or prospects of the Bank, which has had, or
may reasonably be expected to have, a Material Adverse Effect on the Bank, nor has there been (i) any change in its accounting methods, principles or practices, other than changes required by
applicable law or GAAP; (ii) any entry by the Bank into any contract or commitment of more than $5,000 or with a term of more than 6 months other than loans and loan commitments and
borrowings in the ordinary course of business; (iii) any declaration, setting aside or payment of any dividend or distribution in respect of any capital stock of the Bank or any redemption,
purchase or other acquisition of any of its securities; (iv) any increase in or establishment of any bonus, insurance, severance, deferred compensation, pension, retirement, profit sharing,
stock option (including, without limitation, the granting of stock options, stock appreciation rights, performance awards, or restricted stock awards), stock purchase or other employee benefit plan,
or any other increase in the compensation payable or to become payable to any directors, officers or employees of the Bank, or any grant of severance or termination pay, or any contract or arrangement
entered into to make or grant any severance or termination pay, any payment of any bonus, or the taking of any action not in the ordinary course of business with respect to the compensation or
employment of directors, officers or employees of the Bank; (v) any material election made by the Bank for federal or state income tax purposes; (vi) any material change in the credit
policies or procedures of the Bank, (vii) any material acquisition or disposition of any assets or properties, or any contract for any such acquisition or disposition entered into other than
loans and loan commitments, or (viii) any material lease of real or personal property entered into, other than in connection with foreclosed property or in the ordinary course of business
consistent with past practice. 

1.1.11 Commitments and Contracts.  

        The Bank is not a party or subject to any of the following (whether written or oral, express or, to the Bank's Best Knowledge, implied): 

	(i)
	any
employment contract or understanding (including any understandings or obligations with respect to severance or termination pay or fringe benefits) with any present
or former officer, director, employee or consultant (other than those which are terminable at will by the Bank);

	(ii)
	any
plan, contract or understanding providing for any bonus, pension, option, deferred compensation, retirement payment, profit sharing or similar arrangement with
respect to any present or former officer, director, employee or consultant (collectively, the "Plans");

	(iii)
	any
labor contract or agreement with any labor union;

	(iv)
	any
contract containing covenants which limit the ability of the Bank to compete in any line of business or with any person or which involve any restriction of the
geographical area in which, or method by which, the Bank may carry on its business (other than as may be required by law or applicable regulatory authorities);

	(v)
	any
agreement or commitment with respect to the Community Reinvestment Act with any state or federal bank regulatory authority or any other party;

	(vi)
	any
current or past agreement, contract or understanding with any current or former director, officer, employee, consultant, financial advisor, broker, dealer, or agent
providing for any rights of indemnification in favor of such person or entity; or

	(vii)
	any
other contract or agreement to which the Bank is a party that provides for annual payments aggregating $3,000.00 or more (other than contracts or agreements
evidencing loans or investments, data processing agreements, and/or real estate leases made by the Bank in its ordinary course of business.) 

7

 

1.1.12 Litigation and Other Proceedings.  

        There is no claim, suit, action, proceeding or investigation of any nature pending or, to the Bank's Best Knowledge, threatened against the Bank or challenging
the validity or propriety of the transaction contemplated by this Agreement, which, if adversely determined would, individually or in the aggregate, have a Material Adverse Effect on the Bank or
otherwise materially adversely affect the Bank's ability to perform its obligations under this Agreement, nor is there any judgment, decree, injunction, rule, award or order of any legal or
administrative body or arbitrator outstanding against the Bank having, or which insofar as reasonably can be foreseen, in the future could have, any such effect. Schedule 1.1.12 sets forth all
claims, suits, actions, proceedings or investigations pending or, to the Bank's Best Knowledge, threatened against the Bank. 

1.1.13 Insurance.  

        The Bank is presently insured, and during each of the past five calendar years has been insured, for reasonable amounts with financially sound and reputable
insurance companies against such risks as companies engaged in a similar business would, in accordance with good business practice, customarily be insured and has maintained all insurance required by
applicable law and regulation. All policies of insurance owned or held by or on behalf of the Bank have been made available to Buyer and are listed on Schedule 1.1.13 in summary format. All
such insurance policies are in full force and effect and, no notice of cancellation has been received with respect thereto. 

1.1.14 Compliance with Laws.  

        The Bank has all permits, licenses, authorizations, orders and approvals necessary for the lawful conduct of its business, and has made all filings, applications
and registrations with, federal, state, local or foreign governmental or regulatory bodies that are required in order to permit it to own or lease its properties and assets and to carry on its
business as presently conducted and that are material to the business of the Bank; all such permits, licenses, certificates of authority, orders and approvals are in full force and effect and, to the
Bank's Best Knowledge, no suspension or cancellation of any of them is threatened; and all such filings, applications and registrations are current. The conduct by the Bank of its business and the
condition and use of its properties does not violate or infringe, in any respect material to any such business, any applicable domestic (federal, state or local) or foreign law, statute, ordinance,
license or regulation, and to the Bank's Best Knowledge, the Bank has complied with and is not in violation of or default in any material respect under any, applicable law, statute, order, rule,
regulation or policy of, or agreement with, any federal, state or local governmental agency or authority relating to the Bank. The Bank has not received any notice of any violation of any such law,
statute, order, rule, regulation, policy or agreement or commencement of any proceeding in connection with any such violation, and does not know of any violation of, any such law, statute, order,
rule, regulation, policy or agreement. 

1.1.15 Labor.  

        No work stoppage involving the Bank is pending or threatened. The Bank is not involved in, or, to its Best Knowledge, threatened with or affected by, any labor
dispute, arbitration, lawsuit or administrative proceeding which reasonably could be expected to have a Material Adverse Effect on the Bank. Employees of the Bank are not represented by any labor
union nor are any collective bargaining agreements otherwise in effect with respect to such employees. The Bank is in compliance with all federal and state laws respecting employment, wages and hours
and is not engaged in any discriminatory hiring or employment practices or any unfair labor practices nor have any employment discrimination or unfair labor practice complaints against the Bank been
filed or threatened to be filed with any federal or state agency having jurisdiction over their labor matters. The Bank's management reasonably believes that the relationship of the Bank with its
employees is satisfactory, and no employee has asserted or, to the Best Knowledge of the Bank, threatened to assert that the Bank is liable for any arrears of wages, benefits, damages or any taxes or
penalties for failure to comply with any of the foregoing. 

8

 

1.1.16 Material Interests of Certain Persons.  

        No officer or director of the Bank, or any "associate" (as such term is defined in Rule 14a-1 under the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder) of any such officer or director, has any interest in any material contract or property (real or personal), tangible or intangible, used in or
pertaining to the business of the Bank. Schedule 1.1.16 sets forth a correct and complete list of (i) any loan from the Bank to any shareholder, present officer or director of the Bank,
or related interest of any such person which was required under banking authority regulations to be approved by or reported to the Bank's Board of Directors or which is otherwise subject to the
restrictions of the Bank Regulators. The Bank is not in violation of any regulations pertaining to this subject. 

1.1.17 The Plans.  

        Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby and thereby will (i) result in any
material payment (including, without limitation, severance, unemployment compensation, golden parachute or otherwise) becoming due to any director or employee or former employee of the Bank under any
Plan or otherwise, (ii) materially increase any benefits otherwise payable under any Plans, or (iii) result in the acceleration of the time of payment or vesting of any such benefits to
any material extent. 

1.1.18 Consultants/Brokers.  

        The Bank has not contracted with any independent consulting individual or firm to provide assistance in the sale of the Stock, nor has any broker, finder or
financial advisor been employed in connection with the transaction contemplated by this Agreement. 

1.1.19 Fiduciary Activities.  

        The Bank has no accounts for which it acts as a fiduciary, including, but not limited to, accounts for which it serves as trustee, agent, custodian, personal
representative, guardian, conservator or investment advisor. 

1.1.20 No Defaults.  

        The Bank is not in default, nor has any event occurred which, with the passage of time or the giving of notice, or both, would constitute a default, under any
material agreement, indenture, loan agreement or other instrument (including, without limitation, any contract or agreement listed on Schedules 1.1.8 and 1.1.11 to which it is a party or by which it
or any of its assets is bound or to which any of its assets are subject, the result of which has had or could reasonably be expected to have a Material Adverse Effect upon the Bank. All parties with
whom the Bank has material leases, agreements or contracts or who owe to the Bank material obligations other than with respect to those arising in the ordinary course of the banking business of the
Bank are in compliance therewith in all material respects. 

1.1.21 Environmental Matters.  

        The Bank and each property owned by the Bank (the "Owned Property") and, to the Bank's Best Knowledge, each Loan
Property, is, and has been, in material compliance with all applicable Environmental Laws, except in each case as have not been or would not be material. There is no suit, claim, action or proceeding
pending or to the Bank's Best Knowledge, threatened, before any governmental authority or other forum in which the Bank or any Owned Property has been or, with respect to threatened proceedings, may
be, named as a defendant, responsible party or potentially responsible party (i) for alleged noncompliance (including by any predecessor), with any Environmental Law or (ii) relating to
the release into or presence in the environment of any Hazardous Substance occurring at or on a site owned, leased or operated by the Bank, except in each case as have not been or would not be
material. 

9

 

        To
the Bank's Best Knowledge, there is no suit, claim, action or proceeding pending or threatened, before any governmental authority or other forum in which any Loan Property has been
or, with respect to threatened proceedings, may be, named as a defendant, responsible party or potentially responsible party (i) for alleged noncompliance (including by any predecessor), with
any Environmental Law or (ii) relating to the release into or presence in the environment of any Hazardous Substance occurring at or on a site owned, leased or operated by the Bank, except in
each case as have not been or would not be material. 

        Neither
the Bank, nor to its Best Knowledge any Loan Property, has received any written notice regarding a matter on which a suit, claim, action or proceeding as described in this
Section 1.1.21 could reasonably be based, except in each case as have not been or would not be material. No facts or circumstances have come to the Bank's attention that would cause it or them
to believe that a material suit, claim, action, or proceeding could reasonably be expected to occur. 

        During
the period of the Bank's ownership or operation of any of its respective properties or the Bank's holding of a security interest in a Loan Property, there has been no release or
presence of Hazardous Substances in, on, under, or affecting such properties or Loan Property, except where such release or presence is not or would not, either individually or in the aggregate, be
material. To its Best Knowledge, prior to the period of ownership or operation or the holding of such security interest in a Loan Property, there was no release or presence of Hazardous Substances in,
on, under or affecting any such property or Loan Property, except where such release or presence is not or would not, either individually or in the aggregate, be material. 

        The
Bank is not an owner or operator of any Loan Property, and there are no facilities in which the Bank participates or has participated in the management, and to the extent applicable
as the owner or operator of such property. 

1.1.22 Intellectual Property.  

        The Bank owns or possesses valid and binding licenses and other rights to use without payment all material patents, copyrights, trade secrets, trade names,
service marks and trademarks necessary for the conduct of its business, and the Bank has not received any notice of conflict with respect thereto. 

1.1.23 Loans and Investments.  

        All documents and instruments that evidence loans and investments of the Bank and any other loans purchased by the Bank were solicited, originated and exist in
material compliance with all applicable loan policies and procedures of the Bank and are in all material respects legal and enforceable in accordance with the terms thereof. For purposes of the
foregoing sentence, it is not meant that the borrower necessarily has the financial ability to pay a loan or that the collateral is sufficient in value to result in payment of the loan secured
thereby. No loans or investments held by the Bank are (i) more than forty-five (45) days past due with respect to any scheduled payment of principal or interest;
(ii) classified as "loss", "doubtful", "substandard" or "special mention" by any Bank Regulator or by the Bank's internal credit review system; or, (iv) subject to any loan participation
agreement not fully reflected in the Bank's records and loan files. 

1.1.24 Well Capitalized.  

        The Bank is "well capitalized" as such term is defined in the rules and regulations promulgated by the FDIC and the State of Texas as a state-chartered, member
bank. 

10

 

1.1.25 Agreements with Governmental Authorities.  

        The Bank is not a party to any commitment, letter (other than letters addressed to regulated depository institutions generally), written agreement, memorandum of
understanding, order to cease and desist with, is not subject to any order or directive specifically naming or referring to the Bank by, has not been required to adopt any board resolution by, any
Governmental Authority, that is currently in effect and restricts materially the conduct of its business, or in any manner relates to its capital adequacy, loan loss allowances or reserves, credit
policies, management or overall safety and soundness of such entity's ability to perform its obligations hereunder, and the Bank has not received written notification from any such Governmental
Authority that the Bank or any of its agents may be requested to enter into, or otherwise be subject to, any such commitment, letter, written agreement, memorandum of understanding or cease and desist
order. The Bank has not been informed by any Governmental Authority that it is contemplating issuing or requesting any such order, directive, agreement, memorandum of understanding, commitment letter
or similar submission. The Bank is not a party to any agreement or arrangement entered into in connection with the consummation of a federally assisted acquisition of a depository institution pursuant
to which the Bank is entitled to receive financial assistance from any Governmental Authority. 

1.1.26 Undisclosed Liabilities.  

        Except for those liabilities that are fully reflected or reserved against in the Financial Statements and for liabilities incurred in the ordinary course of
business consistent with past practice or in connection with this Agreement, since December 31, 2001, the Bank has not incurred any obligation or liability (contingent or otherwise) that,
either alone or when combined with all similar liabilities, has had, or could reasonably be expected to have, a Material Adverse Effect on the Bank. 

1.1.27 CRA, Anti-Money Laundering and Customer Information Security.  

        The Bank is not aware of, nor has it been advised of, nor has reason to believe that any facts or circumstances exist that would cause the Bank: (i) to be
deemed not to be in satisfactory compliance in any material respect with the CRA, and the regulations promulgated thereunder, or to be assigned a rating for CRA purposes by federal or state bank
regulators of lower than "satisfactory;" or (ii) to be deemed to be operating in violation in any material respect of the federal Bank Secrecy Act, as amended, and its implementing regulations
(31 C.F.R. Part 103), the USA PATRIOT Act, and the regulations promulgated thereunder, any order issued with respect to anti-money laundering by the U.S. Treasury's Office of
Foreign Assets Control, or any other applicable anti-money laundering statute, rule or regulation; or (iii) to be deemed not to be in satisfactory compliance in any material respect
with the privacy of customer information requirements contained in any federal and state privacy laws and regulations, including without limitation, in Title V of the Gramm-Leach-Bliley Act of 1999
and regulations promulgated thereunder, as well as the provisions of the information security program adopted by the Bank pursuant to 12 C.F.R. Part 364. Furthermore, the Bank's board of
directors has adopted, and the Bank has implemented an anti-money laundering program that meets the requirements in all material respects of Sections 352 and 326 of the USA PATRIOT
Act and the regulations thereunder. 

1.1.28 Deposit/Loan Agreements  

        The deposit and loan agreements of the Bank comply in all material respects with all applicable laws, rules and regulations. 

1.1.29 Disciplinary Proceedings.  

        Neither the Bank nor any of its current or, to the Bank's Best Knowledge, former, directors, officers or employees has been the subject of any disciplinary
proceedings or orders of any Governmental Authority arising under applicable laws or regulations that would be required to be disclosed in any regulatory report, schedule, form, registration or other
document, together with any amendments required to be made with respect thereto, that it or any of them were required to file since January 1, 2000 with any Governmental Authority except as
disclosed therein, and no such disciplinary proceeding or order is pending, nor to the Bank's Best Knowledge, threatened. 

11

 

1.1.30 Forms of Instruments.  

        The Bank has made available to Buyer copies of all standard forms of notes, mortgages, deeds of trust and other routine documents of a like nature utilized on a
regular basis by the Bank. 

1.1.31 Full Disclosure.  

        No representation or warranty made by the Bank in the Agreement or a Schedule to this Agreement, and no certification furnished or to be furnished to the Buyer
pursuant to this Agreement, contains or will contain 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 not misleading. 

1.2   Representations and Warranties of Sellers.  

        Meeks and each Shareholder, severally and not jointly, represents and warrants to Buyer that, each of the following statements is true, correct and complete in
all respects as of the date of this Agreement and will be true, correct and complete in all respects as of the Closing Date: 

1.2.1 Authority.  

        Such Shareholder has all the power to execute and deliver this Agreement and to carry out and perform such Shareholder's respective obligations under the terms of
this Agreement; such Shareholder has the sole power to dispose of his or her shares of Stock, either as his or her sole and separate property or as community property, as may be applicable to each
Shareholder; and this Agreement, when executed and delivered by such Shareholder, will constitute such Shareholder's valid and binding obligation, enforceable against such Shareholder in accordance
with the terms of this Agreement. 

1.2.2 Ownership of Stock.  

        Such Shareholder owns of record and beneficially, that number of Bank shares set forth in Schedule 1.1.2 hereto. As of the Closing Date, such Shareholder
will deliver such shares free and clear of any security interests, liens, encumbrances, restrictions, or rights to the benefit of any third party. Other than as provided in or contemplated by this
Agreement, such Shareholder has not, or prior to the Closing Date will have not, become a party to or subject to any contract or obligation wherein any person has a right or option to purchase or
acquire from such Shareholder any rights in any of such Shareholder's capital stock or securities of the Bank. 

1.2.3 No Conflicts.  

        Neither the execution and delivery nor the performance of this Agreement by such Shareholder will result in any of the following: (i) a default or an event
that, with notice or lapse of time or both, could be a default, breach, violation or termination of any material contract to which the Bank and such Shareholder are parties or by which the Bank and
such Shareholder are bound; or (ii) the creation or imposition of any lien, security interest, encumbrance or rights to acquire by any person (other than Buyer) with respect to such
Shareholder's Stock or other securities of the Bank owned by such Shareholder. 

1.2.4 Litigation.  

        There is no claim, suit, action, proceeding or investigation of any nature pending or, to such Shareholder's Best Knowledge, threatened against or with respect to
such Shareholder relating to or affecting such Shareholder's Stock or other securities of the Bank owned by such Shareholder, which question the validity of this Agreement or any action taken or to be
taken in connection herewith, or which individually or in the aggregate, might result in a Material Adverse Effect on the Bank or otherwise materially adversely affect such Shareholder's ability to
perform his or her obligations under this Agreement. 

12

 

1.2.5 Certain Transactions.  

        Other than depository transactions or loan indebtedness recorded on or reflected in the books and records of the Bank, in the ordinary course of business, there
are no existing or pending transactions, nor are there any agreements or understandings, between the Bank, on the one hand, and such Shareholder, on the other hand, including, without limitation, any
transactions, arrangements or understandings relating to the purchase or sale of goods or services or the sale, lease or use of any of the assets or property of or by the Bank, with or without
adequate compensation, or to any indebtedness owed to or by the Bank, in any amount whatsoever. 

1.2.6 Absence of Claims Against the Bank.  

        Other than depository transactions or loan indebtedness recorded on or reflected in the books and records of the Bank, in the ordinary course of business, such
Shareholder has no claims of any nature against the Bank or any of the Bank's assets or property. 

1.2.7 Consultants/Brokers.  

        Such Shareholder has not contracted with any independent consulting individual or firm to provide assistance in the sale of the Stock, nor has any broker, finder
or financial advisor been employed in connection with the transaction contemplated by this Agreement. 

1.2.8 Full Disclosure.  

        No representation or warranty made by such Shareholder in the Agreement or a Schedule to this Agreement, and no certification furnished or to be furnished to the
Buyer pursuant to this Agreement, contains or will contain 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 not misleading. 

1.3   No Implied Warranties.  

        The express representations and warranties of the Bank, Meeks and Shareholders contained in this Agreement are exclusive and are in lieu of all other
representation and warranties, express, implied or statutory. Except as and to the extent expressly set forth in this Agreement, and subject to the limitation placed on such representations and
warranties in this Agreement, the Bank, Meeks and Shareholders make no representations or warranties whatsoever, and expressly disclaim all liability and responsibility for any representations,
warranties, statements or information made or communicated (orally or in writing) to the Buyer (including any opinion, information or advice that may have been provided to Buyer by any officer,
director, shareholder, employee, agent, consultant or representative of the Bank, Sellers or their respective counsel). Without limiting the generality of the foregoing, the Bank, Meeks or
Shareholders make no representation or warranty as to any interpretation or economic evaluation relative to the Stock. 

2.     Representations and Warranties of the Buyer.  

        The Buyer represents and warrants, to the Bank and Sellers that, each of the following statements is true, correct and complete in all respects as of the date of
this Agreement and will be true, correct and complete in all respects as of the Closing Date. 

2.1   Authority.  

        The Buyer through its representative is acting on behalf of itself and has the proper authority to enter into this Agreement. This Agreement constitutes a legal,
valid and binding obligation of the Buyer enforceable against the Buyer in accordance with its terms. 

13

 

2.2   Required Approvals  

        Other than the filings, consents, reviews, authorizations, or approvals required under Texas banking law, the rules and regulations of the FDIC and the Federal
Reserve Bank of Dallas required to effect the acquisition, no notice to, filing with, exemption or review by, or authorization, consent or approval of, any public body or authority is necessary for
the consummation by the Buyer of the transactions contemplated by this Agreement. 

3.     Transaction Price and Sale.  

        Subject to a maximum aggregate consideration of $2,225,000, the purchase price to be paid for each share of the Stock received by the Buyer and to be received for
each share of the Stock tendered by the Sellers is to be two (2) times the "Book Value" per share. The purchase price per share times the number
of shares delivered by Sellers shall constitute the "Aggregate Purchase Price." 

3.1   Book Value.  

        Book Value per share shall be determined as follows: 

	(i)
	Using
the accounts so labeled "Total Equity Capital" on the books and/or financial statements of the bank as of the last
day of the last previous month, should the transaction occur between the 1st and 15th day of the month, or as of the 15th day of the month of closing, should
the transaction occur between the 16th and last day of the month of closing), divide Total Equity Capital (as adjusted below) by the number of shares of common stock outstanding (62,000
shares).

	(ii)
	Total
Equity Capital shall be adjusted as follows:

	(A)
	Reduced
by an amount equal to the remaining leasehold improvements from the Bank's closed branch operation in Houston, Texas, which are to be charged off at or before Closing;

	(B)
	Reduced
by the amount of the Deferred Federal Net Operating Benefit should it be determined that such asset shall not survive following Closing;

	(C)
	Increased
by the amount of any excess amount in Reserve for Loan Losses as determined by the Bank's ordinary course formula for computing reserve adequacy; and

	(D)
	Such
other adjustments as agreed upon by the parties at or prior to Closing. 

3.2   Condition to the Sale.  

        Buyer is obligated to finalize the transactions contemplated by this Agreement only so long as the Sellers are joined by the holders and rightful owners of such
other Stock so that at least 55,000 shares (90% of the outstanding Stock) are sold to the Buyer upon the same terms and conditions as stated elsewhere herein. 

14

 

4.     Additional Covenants of Sellers and the Bank.  

        Sellers, jointly and severally, covenant and agree with Buyer that they will exercise their Reasonable Best Efforts to ensure the following: 

4.1   Operation of Business—Affirmative Covenants.  

        Except as otherwise permitted or required by this Agreement, from the date hereof until the Closing, the Bank will (i) maintain its corporate existence in
good standing; (ii) maintain the general character of its business and conduct its business in its ordinary and usual manner; (iii) extend credit in accordance with existing lending
policies, except that it shall not, without prior written consent of the Buyer, make any new loan or modify, restructure or renew any existing loan (except pursuant to commitments made prior to the
date of this Agreement) to any borrower if the amount of the resulting loan, when aggregated with all other loans or extensions of credit to such person, would be in excess of $50,000.00;
(iv) maintain proper business and accounting records in accordance with generally accepted accounting principles; (v) maintain its properties in good repair and condition, ordinary wear
and tear excepted; (vi) maintain in all material respects presently existing insurance coverage; (vii) use its Reasonable Best Efforts to preserve its business organization intact, to
keep the services of its present principal employees and to preserve their good will and the good will of its suppliers, customers and other having business relationships with it; (viii) use
its Reasonable Best Efforts to obtain any approvals or consents required to maintain existing leases and other contracts in effect following the Closing; (ix) comply in all material respects
with all laws, regulations, ordinances, codes, orders, licenses and permits applicable to the properties and operations of the Bank; and (x) permit Buyer and his representatives (including his
accountants and lawyers) to examine its books, records, and properties and to interview officers, employees and agents at all reasonable times when it is open for business. In addition, the Bank will
supply (and update prior to Closing) a Schedule 4.1, which schedule shall identify all transactions in excess of $50,000 that the Bank deems in the ordinary course of business. 

4.2   Operation of Business—Negative Covenants.  

        Except as otherwise permitted or required by this Agreement, from the date hereof until the Closing, the Bank will not (without prior written consent of the
Buyer), (i) amend or otherwise change its Articles of Incorporation or Association or Bylaws; (ii) issue or sell or authorize for issuance or sale any other of its securities;
(iii) authorize or incur any long-term debt (other than deposit liabilities) or amend or modify or increase the principal amount of any debt described on Schedule 1.11;
(iv) mortgage, pledge or subject to lien or other encumbrance any of its properties, except with respect to transactions with an aggregate value not exceeding $100,000 in the ordinary course of
business; (v) enter into any material agreement, contract or commitment in excess of $3,000.00, except banking transactions in the ordinary course of business and in accordance with policies
and procedures in effect on the date hereof; (vi) make any investments except investments made by the Bank in the ordinary course of business for terms of up to one year and in amounts of
$50,000.00 or less; (vii) amend or terminate any Plan except as required by law; (viii) declare, set aside, make or pay any dividend or other distribution with respect to its capital
stock; (ix) redeem, purchase or otherwise acquire, directly or indirectly, any of the capital stock of the Bank; (x) increase the compensation of any officers, directors or employees,
except pursuant to existing compensation plans and practices; (xi) sell or otherwise dispose of any of its assets or properties other than in the ordinary course of business, or
(xii) agree to do any of the foregoing. 

4.3   Furnish Information.  

        The Sellers will furnish or cause the Bank to furnish to Buyer all the information concerning the Bank required for inclusion in any statement or application made
by Buyer to any Bank Regulator in connection with the transactions contemplated by this Agreement. 

15

 

4.4   Obtain Regulatory Approval.  

        The Sellers will and will make their Reasonable Best Efforts to cause the Bank to take all necessary corporate and other action and use their Reasonable Best
Efforts to obtain all approvals of all Bank Regulators, consents and other approvals required of the Bank to carry out the transactions contemplated by this Agreement and will cooperate with the Buyer
to obtain all such approvals and consents required of the Buyer. Any filings required to be filed by the Sellers or the Bank to obtain such approvals shall be filed by the Sellers or the Bank with the
Bank Regulators by June 30, 2003 concerning applications with the FDIC and the State of Texas and within an additional 30 days with respect to subsequent applications to the Federal
Reserve Board. 

4.5   Consent to Transfer of Material Contracts.  

        To the extent that any material contract, agreement or commitment listed or that should have been listed on any of the Schedules to this Agreement should require
the consent of the other party thereto as a result of the change of ownership or control of the Bank contemplated by this Agreement, the Sellers will use and will cause the Bank to use their
Reasonable Best Efforts to obtain such consent. If the consent can not be obtained, Sellers and the Bank shall cooperate with the Buyer in any reasonable arrangement designed to preserve for the Buyer
the benefit under such contract or commitment; provided, however, that obtaining such consent shall be a condition of the Buyer's obligation to close under Section 8.4 below, unless waived in
writing by the Buyer. 

4.6   Attendance at Certain Bank Meetings.  

        The Bank shall allow, and the Sellers shall cause the Bank to allow, the Buyer to designate one (1) representative who will be allowed to attend and fully
monitor all regular and special meetings of the board of directors and any loan, discount, and asset and liability management committee of the Bank (except and unless prohibited by regulators). Such
representative shall have no right to vote and shall keep all information learned in attendance at such meetings confidential in accordance with Section 5.1. 

4.7   Certificates.  

        The Sellers will use and will cause the Bank to use their Reasonable Best Efforts to deliver at the Closing all opinions, certificates and other documents
required to be delivered by them at Closing and to obtain the satisfaction of the conditions to Closing set forth in Section 7 hereof. 

4.8   Press Release.  

        The Sellers shall consult with and will cause the Bank to consult with the Buyer as to the form and substance of any proposed press release or other proposed
public disclosure of matters related to this Agreement or any of the transactions contemplated hereby. 

4.9   Notices of Certain Events.  

        Prior to the Closing Date, the Sellers shall promptly notify the Buyer of: (a) any notice or other communication from any person alleging that the consent
of such person is or may be required in connection with the transactions contemplated by this Agreement; (b) any notice or other communication from any governmental or regulatory agency or
authority in connection with the transactions contemplated by this Agreement; and (c) any actions, suits, claims, investigations or proceedings commenced or, to the Best Knowledge of the
Sellers, threatened against, relating to or involving or otherwise affecting the Bank that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to
Sections 1.4, 1.12 and 1.14 above or that relate to the consummation of the transactions contemplated by this Agreement. 

        In
addition, Sellers shall notify Buyer as soon as practicable following the issuance of any final report of examination relating to examinations underway as of and following the
Effective Date. To the extent permitted by applicable law, Seller shall cause the Bank to release to Buyer, a copy of any such report and otherwise notify Buyer of all matters and issues undertaken
during such examination. 

16

 

5.     Additional Covenants of the Buyer.  

        The Buyer covenants and agrees with the Sellers as follows: 

5.1   Confidentiality.  

        For a period of two (2) calendar years from the Effective Date, the Buyer will hold in confidence all documents and information concerning the Bank
furnished to him and his representatives in connection with the transactions contemplated by this Agreement and will not release or disclose such information to any other person, except as required by
law and except to his outside professional advisers in connection with this Agreement, with the same undertaking from such professional advisers. If the transaction contemplated by this Agreement
shall not be consummated, such confidence shall be maintained and such information shall not be used in competition with the Bank (except to the extent that such information can be shown to be
previously known to buyer, in the public domain, or later acquired by Buyer from other legitimate source) and, upon request, all such documents, copies thereof or extracts therefrom shall immediately
thereafter be returned to the Bank. 

5.2   Certificates.  

        The Buyer will use its Reasonable Best Efforts to deliver at the Closing all opinions, certificates and other documents required to be delivered by him at the
Closing and to obtain the satisfaction of the conditions to Closing set forth in Section 8. 

5.3   Press Releases.  

        The Buyer shall consult with the Sellers as to the form and substance of any proposed press release or other proposed public disclosure of matters related to this
Agreement or any of the transactions contemplated hereby. 

5.4   Obtain Regulatory Approvals.  

        The Buyer will take all necessary action and use its Reasonable Best Efforts to obtain all approvals of all Bank Regulators, consents and other approvals required
of the Buyer to carry out the transactions contemplated by this Agreement and will cooperate with Sellers to obtain all such approvals and consents required of Sellers. Any filings required to be
filed by the Buyer to obtain such approvals shall be filed by the Buyer with the Bank Regulators by July 15, 2003 concerning applications with the FDIC and the State of Texas and within an
additional 30 days with respect to subsequent applications to the Federal Reserve Board. Buyer shall provide the Sellers with a copy of all non-confidential portions of any such
filings. 

5.5   Notices of Certain Events.  

        Prior to the Closing Date, the Buyer shall promptly notify the Sellers of: (a) any notice or other communication from any person alleging that the consent
of such person is or may be required in connection with the transactions contemplated by this Agreement; (b) any notice or other communication from any governmental or regulatory agency or
authority in connection with the transactions contemplated by this Agreement; and (c) any actions, suits, claims, investigations or proceedings commenced or, to the Best Knowledge of the Buyer,
threatened against, relating to or involving or otherwise affecting the Buyer that relate to the consummation of the transactions contemplated by this Agreement. 

5.6   Escrow  

        Within five (5) business days following the Effective Date, Buyer shall deposit funds in the amount of $50,000 (the
"Escrow") with a federally insured deposit institution mutually acceptable to Buyer and Sellers (the "Escrow
Agent"). Release of the Escrow shall be in accordance with the terms of Section 6 below. 

17

 

6.     Closing and Closing Date.  

6.1   Closing.  

        Subject to Sections 7 and 8 below, the closing of the transaction contemplated by this Agreement (the
"Closing") shall, unless another date or place is agreed to in writing by the parties hereto, take place at the offices of Buyer fifteen
(15) calendar days from the date on which all required approvals and consents have been obtained (the "Closing Date"). At Closing, the following
deliveries shall be made: 

	(i)
	Sellers
shall deliver the certificates representing the Stock, duly endorsed for transfer thereon or complete with stock power authorizing transfer to Buyer; and Closing
certificate provided in Section 8.2;

	(ii)
	Buyer
shall deliver the Aggregate Purchase Price to Sellers less (A) the Escrow (together with any interest accrued thereon) and (B) the Collection Fund
provided in Section 10 below, in the form of cashier's checks to each of the Sellers in the amounts specified next to each Seller's name on Schedule 1.1.2 (to be completed in connection
with the Closing), together with Closing certificate provided in Section 7.2; and

	(iii)
	Escrow
Agent shall deliver the Escrow (together with any interest accrued thereon) to Meeks. 

6.2   Grounds for Termination.  

        This Agreement may be terminated at any time prior to the Closing Date: 

	(i)
	By
the mutual written agreement of the Sellers and the Buyer; or

	(ii)
	By
the Bank, Meeks or Buyer by written notice to the others if the purchase and sale of the Stock contemplated hereby shall not have been consummated on or before
February 15, 2004, or such other date, if any, as the Bank, Meeks and Buyer shall agree upon in writing; 

provided,
however, that a party shall not be allowed to exercise any right of termination pursuant to this Section if the event giving rise to such termination right shall be due to the willful
failure of such party to perform or observe in any material respect any of the covenants or agreements set forth herein to be performed or observed by such party. 

6.3   Effect of Termination.  

        The following provisions shall apply in the event of a termination of this Agreement: 

	(i)
	If
this Agreement is terminated as a result of the willful failure of the Buyer to perform his obligations hereunder, the Buyer shall be fully liable for any and all
damages sustained or incurred by the Sellers; however, in no case shall the willful failure of the Buyer to perform his obligations hereunder cause the Buyer's liability for damages sustained or
incurred by the Sellers to exceed $50,000.00;

	(ii)
	If
this Agreement is terminated as a result of the willful failure of any of the Sellers to perform his/her obligations hereunder, each such Seller shall be fully
liable for any and all damages sustained or incurred by the Buyer; however, in no case shall the willful failure of any of the Sellers to perform his/her obligations hereunder cause the Sellers'
liability for damages sustained or incurred by the Buyer to exceed the cumulative total of $50,000.00;

	(iii)
	The
Escrow (and any interest accrued thereon) shall be released to Buyer unless Buyer is in material default of this Agreement, in which case the Escrow shall be
released to Sellers as liquidated damages on a pro-rata basis in accordance with each Seller's percentage of the Stock; and

	(iv)
	The
Sellers and the Buyer hereby agree that the provisions of Sections 4.8, 5.1, 5.3, 6.3, and 9.2 shall survive any termination of this Agreement. 

18

 

7.     Conditions Precedent to Obligation of the Sellers.  

        The obligation of the Sellers to effect the sale of the Stock shall be subject to the satisfaction at or before the Closing Date of the following further
conditions, which may be waived in writing by the Sellers: 

7.1   Compliance.  

        The Buyer shall have complied in all material respects with each of the covenants and agreements contained herein, including, without limitation, the payment of
the Adjusted Purchase Price in cash as provided for in Section 3 above, and each of his representations and warranties contained in Section 2 hereof shall have been true in all material
respects when made and shall be true in all material respects on and as of the Closing Date as if made on and as of such date. 

7.2   Buyer's Certificate.  

        The Sellers shall have received a certificate, dated the Closing Date, from the Buyer certifying as to the matters specified in Section 7.1 hereof. 

7.3   Regulatory Approvals.  

        The Buyer shall have received approval by the governmental agencies as may be required by law of the transactions contemplated by this Agreement and all waiting
and appeal periods prescribed by applicable law or regulation shall have expired. 

7.4   No Orders.  

        No court or governmental authority of competent jurisdiction shall have issued an order restraining, enjoining or otherwise prohibiting the consummation of the
transaction contemplated by this Agreement. 

8.     Conditions Precedent to Obligation of the Buyer.  

        The obligation of the Buyer to effect the acquisition of the Stock shall be subject to the satisfaction at or before the Closing Date of the following conditions,
which may be waived in writing by the Buyer: 

8.1   Compliance.  

        The Sellers shall have complied in all material respects with each of its covenants and agreements contained herein and each of their representations and
warranties contained in Section 1 hereof shall have been true in all material respects when made and shall be true in all material respects on and as of the Closing Date as if made on and as of
such date. 

8.2   Certificates.  

        The Buyer shall have received a certificate, dated the Closing Date, from the Sellers certifying as to the matters specified in Section 8.1 hereof with
respect to the Sellers. 

8.3   Regulatory Approvals.  

        The Buyer shall have received approval by all governmental agencies as may be required by law of the transactions contemplated by this Agreement and all waiting
and appeal periods prescribed by applicable law or regulations shall have expired. No approvals, licenses or consents granted by any regulatory authority shall contain any condition or requirement
relating to the Buyer or the Bank that, in the good faith judgment of the Buyer, is unreasonably burdensome to the Buyer. 

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8.4   Consents.  

        The Bank shall have obtained any and all material consents or waivers from other parties to loan agreements, leases or other contracts material to the Bank's
business required for the consummation of the transactions contemplated in this Agreement, and the Bank shall have obtained any and all material permits, authorizations, consents, waivers and
approvals required for the lawful consummation by them of the transactions contemplated in this Agreement. 

8.5   No Orders.  

        No court or governmental authority of competent jurisdiction shall have issued an order restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement. 

8.6   No Changes.  

        Except for those specifically authorized in Section 4 of this Agreement, since May 31, 1996, no change shall have occurred and no circumstances
shall exist which have had or might reasonably be expected to have a Material Adverse Effect on the Bank (other than changes in banking laws and regulations or interpretations thereof, that affect the
banking industry generally or changes in the general level of interest rates). 

8.7   Employment Agreement.  

        At or prior to Closing, Buyer will have entered into an employment agreement with Tony White, which agreement shall have a term for not less than eighteen
(18) months. 

8.8   Shareholder Approval.  

        This Agreement shall have been approved by the holders of at least 90% of the outstanding capital stock of the Bank. 

8.9   Litigation Matters.  

        With respect to Cause No. 4072H in the 69th Judicial District Court of Hartley County, Texas; Cattleman's Livestock Commission
Company, Ltd. V. Texline State Bank, John Gard, and Federal Reserve Bank of Dallas, the Bank shall have settled the case with no further liability or shall have been dismissed from the cause of
action, or appropriate arrangements for reserve against such liability that are satisfactory to Buyer shall have been taken. 

9.     Additional Covenants.  

9.1   Further Action.  

        After the Closing, the Sellers shall take such action and deliver such documents as the Buyer may reasonably request from time to time to perfect the Buyer's
title to the Stock to be acquired pursuant to this Agreement, free and clear of any and all liens, claims and encumbrances. 

9.2   Consultants.  

        Each party to this Agreement agrees to indemnify and save the other parties harmless from any claim or demand for commission or other compensation by any broker,
finder, financial consultant or similar agent claiming to have been employed by or on behalf of such party and to bear the cost of legal expenses incurred in defending against any such claim. 

9.3   Shareholder Deposits.  

        Sellers agree to use their best efforts to ensure that substantially all deposits of Walter Manning, Jr. that are on deposit with the Bank as of the Effective
Date remain on deposit for a period of at least six (6) months following Closing. 

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9.4   Additional Shareholders as Parties.  

        Meeks agrees to use his best efforts (at Meeks and or Sellers' sole expense) to ensure that the condition to sale contained in Section 3.2 is satisfied. 

10.   Loan Collection Fund.  

10.1 Collection Fund.  

        In connection with the Closing, Buyer shall deposit funds in the amount of $62,000 with the Escrow Agent (the "Collection
Fund") to be governed by the terms set forth herein. The Collection Fund shall be available to compensate Buyer for certain obligations of the Bank and Sellers concerning
uncollectible loans. 

10.2 Uncollectible Loan Obligations.  

        Buyer, at its sole discretion, shall have the right to compel a release of all or any part of the Collection Fund corresponding to the principal amount of any
Bank loans that become uncollectible within the first six months following Closing and that are not identified on Schedule 10.2, which schedule shall be updated at Closing. 

10.3 Collection Fund Release.  

        Buyer shall provide written notice to Bank and Sellers of any such applicable loans under 10.2 above, and within five (5) days of such notice, Sellers
shall make such appropriate arrangements with the Escrow Agent for release of the Collection Fund. 

10.4 Termination of Collection Fund.  

        Upon the expiration of the 6-month period following Closing, any remaining Collection fund shall be distributed to Sellers on a pro-rata
basis. 

10.5 Refund for Collected Loans.  

        Buyer shall refund to Sellers any amounts received from the Collection Fund (less collection expenses) for loans that become collected by the Bank. 

11.   Miscellaneous.  

11.1 Expenses.  

        Except as otherwise provided in this Agreement, all expenses in connection with this Agreement and the transactions contemplated hereby, including, without
limitation, legal and accounting fees, incurred by the Sellers shall be borne by the Sellers, and all such expenses incurred by the Buyer shall be borne by the Buyer. 

11.2 Successors and Assigns.  

        Buyer may assign this Agreement to any Person without prior written consent to the extent that such assignment is in connection with the approval process of Bank
Regulators. Except as otherwise provided in the foregoing sentence, this Agreement shall not be assignable by Buyer without the prior written consent of Meeks and shall not be assignable by the Bank,
Meeks or the Shareholders without the prior written consent of Buyer. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. 

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11.3 Notices.  

        Any notice or other communication provided for herein or given hereunder to a party hereto shall be in writing and shall be delivered in person or shall be mailed
by first class registered or certified mail, postage prepaid, or delivered by a next-day guaranteed delivery service such as FedEx, addressed as follows: 

        If
to the Bank: 

Texline
State Bank

111 North Second Street

Texline, Texas 79087

Attn: Tony White

(806) 362-4292 [fax] 

        If
to Meeks or Sellers: 

Charles
T. Meeks

2308 Quail Run Cove

Lago Vista, Texas 78645

(512) 267-2262[fax] 

With
a copy to: 

Larry
Temple

Temple & Temple

Suite 1510

400 West 15th Street

Austin, Texas 78701

(512) 477-4478 [fax] 

        If
to the Buyer: 

Terry
W. Hamann, Chairman and CEO

Treaty Oak Holdings, Inc.

3811 Bee Cave Road, Suite 201

Austin, Texas 78746

(512) 347-0980 [fax] 

With
a copy to: 

Mark
J. Pietrantone

Ernstmeyer & Associates, P.C.

3811 Bee Cave Road, Suite 200

Austin, Texas 78746

(512) 347-0980 [fax] 

or
to such other address with respect to a party as such party shall notify the other in writing as above provided. 

11.4 Complete Agreement.  

        This Agreement contains the complete agreement between the parties hereto with respect to the acquisition and sale of the Stock and the other transactions
contemplated herein and supersedes all prior agreements and understandings between the parties hereto with respect hereto, including, without limitation, any letter of intent previously executed by
any or all of the parties hereto. 

11.5 Schedules and Exhibits.  

        Schedules and Exhibits to this Agreement are an integral part of this Agreement. All of the facts recited in the Schedules shall be deemed to be representations
of fact as though recited in Section 1. 

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11.6 Construction.  

        The Buyer and each of the Sellers acknowledge that each has had the opportunity to benefit from legal counsel of his own choice and has been afforded an
opportunity to review this Agreement with his legal counsel and that this Agreement shall be construed as if jointly drafted by the parties hereto. 

11.7 Amendment and Waiver.  

        Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Bank, Meeks and Buyer, and in the case of amendments or waivers that would adversely affect their rights hereunder, the written
consent of the Shareholders constituting holders of at least 2/3 of the Stock. 

11.8 Survival of Representations, Warranties and Covenants.  

11.8.1 Non-Survival of Representations of the Bank and Meeks.  

        The representations, warranties, covenants and agreements of the Bank and Meeks set forth in this Agreement and in any certificate or instrument delivered in
connection herewith, shall terminate immediately following the Closing, and Buyer may not bring any action or present any claim for a breach of any such terminated representation or warranty following
the Closing. 

11.8.2 Partial Survival of Representations and Warranties and Covenants of Sellers.  

        Except for Sections 1.2.2, 4.8, 9.1, 9.2 and 9.3 (which shall survive in accordance with their terms until the expiration of the applicable statute of
limitations), the representations, warranties, covenants and agreements of Sellers (including Meeks in his capacity as a Seller) set forth in this Agreement and in any certificate or instrument
delivered in connection herewith, shall terminate immediately following the Closing, and Buyer may not bring any action or present any claim for a breach of any such terminated representation,
warranty or covenant, following the Closing. 

11.8.4 Buyer.  

        Only the covenants set forth in Sections 5.1, 5.3, 9.1 and 9.2 shall survive following the Closing in accordance with their respective terms until the
expiration of the applicable statute of limitations. 

11.9 Legal Expenses.  

        In any legal proceeding brought to enforce the provisions of this Agreement, a party that substantially prevails in such proceeding shall be entitled to recover
reasonable attorneys' fees and expenses from the party or parties that do not substantially prevail. 

11.10 Counterparts.  

        This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which shall constitute but one instrument. 

11.11 Governing Law.  

        This Agreement shall be construed and enforced in accordance with the laws of the State of Texas, without reference to conflict-of-law
principles. 

[Signature Pages follow]  

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        IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above. 

	
 THE BANK:	
 	

 
	
 TEXLINE STATE BANK	
 	

 
	

By:	
 	

 Tony White, President	
 	

 
	
 BUYER:	
 	

 
	
 TREATY OAK HOLDINGS, INC., a Texas corporation	
 	

 
	

By:	
 	

 Terry W. Hamann

President and Chief Executive	
 	

 
	

CHARLES T. MEEKS	
 	

 
	
 SHAREHOLDERS:	
 	

 
	

 	
 	

	
 	

 
	

 	
 	

	
 	

 
	

 	
 	

	
 	

 

[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]  

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    SCHEDULES    
    

25

QuickLinks

Exhibit 10.9

STOCK PURCHASE AGREEMENT

STOCK PURCHASE AGREEMENT

DEFINITIONS

SCHEDULES

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