Exhibit 10.1
AGREEMENT AND PLAN OF MERGER
AMONG
COMMERCE BANCSHARES, INC.,
WEST POINTE BANCORP, INC.
AND
CBI-KANSAS, INC.
DATED APRIL 13, 2006
TABLE OF CONTENTS
PAGE
----
ARTICLE I THE MERGER..................................................... 2
1.1 Effective Time of the Merger..................................... 2
1.2 Closing.......................................................... 2
1.3 Effects of the Merger............................................ 3
1.4 Absence of Control............................................... 3
1.5 Further Assurances............................................... 3
1.6 The Bank Merger.................................................. 4
1.7 Tax Consequences................................................. 4
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF COMPANY AND SUB;
EXCHANGE OF CERTIFICATES.............................................. 4
2.1 Merger Consideration............................................. 4
2.2 Conversion of Company Shares in the Merger....................... 4
2.3 Cash Election.................................................... 5
2.4 Adjustments...................................................... 6
2.5 Effect of Merger on Sub Stock.................................... 7
2.6 No Further Ownership Rights in Company Common Stock.............. 7
2.7 Fractional Shares................................................ 7
2.8 Surrender of Shares of Company Common Stock...................... 8
2.9 Dissenters' Rights............................................... 8
2.10 Stockholder Approval............................................. 8
ARTICLE III REPRESENTATIONS AND WARRANTIES............................... 9
3.1 Representations and Warranties of Company........................ 9
(a) Organization, Standing and Power............................. 9
(b) Capital Structure; Ownership of Company Common Stock......... 10
(c) Authority; No Violation...................................... 11
(d) Financial Statements......................................... 13
(e) Company Information Supplied................................. 13
(f) Compliance with Applicable Laws.............................. 14
(g) Litigation................................................... 14
(h) Taxes........................................................ 14
(i) Certain Agreements........................................... 16
(j) Benefit Plans................................................ 17
(k) Subsidiaries................................................. 19
(l) Agreements with Bank or Other Regulators..................... 19
(m) Absence of Certain Changes or Events......................... 19
(n) Undisclosed Liabilities...................................... 20
(o) Governmental Reports......................................... 20
(p) Environmental Liability...................................... 20
(q) Properties................................................... 22
(r) Brokers or Finders........................................... 23
(s) Intellectual Property........................................ 23
(t) Insurance.................................................... 23
(u) Loans and Other Assets....................................... 24
(v) Labor Matters................................................ 25
i
(w) Internal Controls and Records................................ 25
(x) SEC Reports.................................................. 25
3.2 Representations and Warranties of Commerce....................... 25
(a) Organization and Authority................................... 25
(b) Valid and Binding Agreement; No Violation.................... 26
(c) Capital Stock of Commerce.................................... 26
(d) Financial Statements......................................... 27
(e) SEC Reports.................................................. 27
(f) Status of Commerce Common Stock to be Issued................. 27
(g) Governmental Regulation...................................... 27
(h) Litigation................................................... 27
(i) Taxes........................................................ 28
(j) Defaults..................................................... 28
(k) Information Supplied......................................... 28
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS..................... 28
4.1 Covenants of Company............................................. 28
4.2 Cooperation With Commerce........................................ 32
4.3 Covenants of Commerce and Sub.................................... 33
(a) Regulatory Approvals......................................... 33
(b) Information.................................................. 33
(c) Employee Benefits............................................ 33
4.4 Tax-Free Reorganization Treatment................................ 33
ARTICLE V ADDITIONAL AGREEMENTS.......................................... 34
5.1 Regulatory Matters............................................... 34
(a) Registration Statement and Proxy Statement................... 34
(b) State Securities Laws........................................ 34
(c) Indemnification.............................................. 35
(d) Governmental Entity Communications........................... 35
5.2 Stockholders' Meetings........................................... 35
5.3 Legal Conditions................................................. 35
5.4 Plan Termination................................................. 36
5.5 Additional Agreements............................................ 36
5.6 Fees and Expenses................................................ 36
5.7 Cooperation...................................................... 36
5.8 Advice of Changes................................................ 36
5.9 Dissenters' Rights............................................... 37
5.10 Acquisition Transactions......................................... 37
5.11 Indemnification; Directors' and Officers' Insurance.............. 37
5.12 Retention of Earnings............................................ 38
5.13 Certain Financial Statement Adjustments.......................... 38
5.14 Form S-3 Registration Statement.................................. 38
ARTICLE VI CONDITIONS PRECEDENT.......................................... 38
6.1 Conditions to Each Party's Obligation............................ 38
(a) Stockholder Approval......................................... 38
(b) Other Approvals.............................................. 38
(c) No Injunctions or Restraints................................. 39
ii
(d) Registration Statement....................................... 39
6.2 Conditions to Obligations of Commerce and Sub.................... 39
(a) Representations and Warranties............................... 39
(b) Performance of Obligations................................... 39
(c) Corporate Action............................................. 39
(d) Material Adverse Effect...................................... 39
(e) Closing Documents............................................ 40
(f) Financial Measures........................................... 40
(g) Tax Representations.......................................... 40
(h) Dissenting Stockholders...................................... 40
(i) Tax Opinion.................................................. 40
(j) Cancellation of Unexercised Options.......................... 40
(k) Opinion of Counsel........................................... 40
(l) Non-Competition Agreements................................... 40
(m) 409A Compliance.............................................. 40
(n) Insurable Interest Opinion................................... 41
(o) Consents of Insured Employees................................ 41
6.3 Conditions to Obligations of Company............................. 41
(a) Representations and Warranties............................... 41
(b) Performance of Obligations................................... 41
(c) Corporate Action............................................. 41
(d) Tax Opinion.................................................. 41
(e) Material Adverse Effect...................................... 41
(f) Closing Documents............................................ 42
(g) Fairness Opinion............................................. 42
(h) Opinion of Counsel........................................... 42
ARTICLE VII TERMINATION AND AMENDMENT.................................... 42
7.1 Termination...................................................... 42
7.2 Effect of Termination............................................ 44
7.3 Amendment........................................................ 44
7.4 Extension; Waiver................................................ 44
ARTICLE VIII GENERAL PROVISIONS.......................................... 44
8.1 Survival of Representations, Warranties and Covenants............ 44
8.2 Notices.......................................................... 45
8.3 Interpretation................................................... 46
8.4 Counterparts..................................................... 46
8.5 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership..................................................... 46
8.6 Governing Law.................................................... 47
8.7 Severability..................................................... 47
8.8 Assignment....................................................... 47
8.9 Publicity........................................................ 47
EXHIBIT 5.14 AFFILIATES OF WEST POINTE BANCORP, INC.
EXHIBIT 6.2(k) OPINION OF COUNSEL - WEST POINTE BANCORP, INC.
EXHIBIT 6.3(h) OPINION OF COUNSEL - FOR COMMERCE
iii
INDEX OF DEFINED TERMS
TERM PAGE SECTION
---- ---- -------
Acquisition Transactions............................... 36, 5.10
Affiliate.............................................. 9, 3.1(a)(vi)
affiliates............................................. 37, 5.14
Agreement.............................................. 1, Intro Paragraph
Articles of Merger..................................... 1, 1.1
ASTM................................................... 20, 3.1(p)(D)(v)
Bank................................................... 3, 1.6
Bank Commerce Stock.................................... 10, 3.1(b)(ii)
Bank Merger............................................ 3, 1.6
Bank Regulators........................................ 13, 3.1(f)
BHC Act................................................ 8, 3.1(a)
Business Day........................................... 2, 1.2
Certificate of Merger.................................. 1, 1.1
Closing................................................ 1, 1.2
Closing Date........................................... 1, 1.2
Commerce............................................... 1, Intro Paragraph
Commerce Common Stock.................................. 4, 2.2(b)(i)
Commerce Stock Price................................... 3, 2.1(d)
Company................................................ 1, Intro Paragraph
Company Common Stock................................... 4, 2.1(c)
Company Consolidated Financial Statements.............. 12, 3.1(d)
Company Disclosure Schedule............................ 10, 3.1(b)(iii)
Company Dissenting Shares.............................. 7, 2.9
Company Intellectual Property.......................... 22, 3.1(s)
Company Permits........................................ 13, 3.1(f)
Company Stockholder Approval........................... 11, 3.1(c)
Company Stockholders' Meeting.......................... 13, 3.1(e)
Confidentiality Agreement.............................. 31, 4.2(a)
control................................................ 32, 4.4(b)
Effective Time......................................... 1, 1.1
Election Date.......................................... 4, 2.3(c)
Employee Plans......................................... 16, 3.1(j)
Environmental Audit.................................... 20, 3.1(p)(D)(v)
Environmental Law...................................... 21, 3.1(p)(D)(vi)
Environmental Liability................................ 20, 3.1(p)(D)(v)
ERISA.................................................. 16, 3.1(j)
Exchange Agent......................................... 7, 2.8
FDIC................................................... 8, 3.1(a)
Federal Reserve........................................ 12, 3.2(b)(i)
Form of Election....................................... 4, 2.3(b)
GAAP................................................... 12, 3.1(d)
Governmental Entity.................................... 11, 3.2(b)(i)
Hazardous Substances................................... 21, 3.1(p)(D)(vi)
IBCA................................................... 1, 1.1
iv
include................................................ 45, 8.3
includes............................................... 45, 8.3
including.............................................. 45, 8.3
KGCC................................................... 1, 1.1
knowledge.............................................. 9, 3.1(a)(v)
Litigation............................................. 13, 3.1(g)
Loss................................................... 23, 3.1(v)(i)
made available......................................... 45, 8.3
material............................................... 8, 3.1(a)(ii)
Material Adverse Effect................................ 9, 3.1(a)(iii)
Maximum Premium Amount................................. 37, 5.11(b)
Merger................................................. 1, Intro Paragraph
OREO................................................... 23, 3.1(v)(i)
person................................................. 9, 3.1(a)(vii)
plan of reorganization................................. 3, 1.7
Primary Commerce Stock Consideration................... 3, 2.1(c)
Properties............................................. 20, 3.1(p)(D)(v)
Proxy Statement........................................ 33, 5.1(a)
Real Property.......................................... 21, 3.1(p)(D)(vi)
Registration Statement................................. 33, 5.1(a)
Requested Adjustments.................................. 37, 5.13
Requisite Regulatory Approvals......................... 38, 6.1(b)
SEC.................................................... 12, 3.2(b)(i)
Securities Act......................................... 12, 3.1(e)
Signing Shares......................................... 9, 3.1(b)(i)
Sub.................................................... 1, Intro Paragraph
Subsidiary............................................. 8, 3.1(a)(i)
Surviving Corporation.................................. 2, 1.3(c)
Tax.................................................... 14, 3.1(h)
Tax Returns............................................ 14, 3.1(h)
Taxes.................................................. 14, 3.1(h)
to the best knowledge of............................... 9, 3.1(a)(v)
Transaction Agreements................................. 9, 3.1(a)(iv)
v
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of April 13, 2006 among COMMERCE BANCSHARES, INC., a Missouri
corporation ("Commerce"), CBI-KANSAS, INC., a Kansas corporation ("Sub") and
WEST POINTE BANCORP, INC., an Illinois corporation ("Company").
WHEREAS, the Executive Committee of the Board of Directors of Commerce and
the Board of Directors of Sub have approved this Agreement, declared it
advisable and deem it advisable and in the best interests of their respective
stockholders to consummate the transactions provided for herein in which, inter
alia, Commerce and Company become affiliated through the merger of Company with
and into Sub (the "Merger");
WHEREAS, the Board of Directors of Company has approved this Agreement and
declared it advisable and deems it advisable and in the best interests of the
stockholders of Company to consummate the Merger;
WHEREAS, the Boards of Directors of Commerce, Sub and Company have each
determined that the Merger and the other transactions contemplated by this
Agreement are consistent with, and will contribute to the furtherance of, their
respective business strategies and goals.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 EFFECTIVE TIME OF THE MERGER. Subject to the terms and conditions of
this Agreement, on the Closing Date (as hereinafter defined), the proper
officers of Company and Sub shall execute and acknowledge the appropriate
certificates of merger that shall be filed with the Kansas Secretary of State
(the "Certificate of Merger") and the Articles of Merger that shall be filed
with the Illinois Secretary of State (the "Articles of Merger") on the first
Business Day following the Closing Date, all in accordance with the Kansas
General Corporation Code ("KGCC") and the Illinois Business Corporation Law of
1983 ("IBCA"), respectively. The Merger shall become effective on the first day
of the first calendar month following the Closing Date (the "Effective Time").
1.2 CLOSING. The closing of the Merger (the "Closing") will take place at
10:00 a.m., Kansas City time, on a day occurring not less than two (2) and not
more than four (4) Business Days before the Effective Time and not later than
thirty (30) days after the date on which the last of any condition precedent
contained herein is waived or fulfilled, as specified in a notice delivered by
Commerce to Company not less than three (3) Business Days prior to such Closing
Date or on such other date as Company, Commerce and Sub shall mutually agree
(the "Closing Date"). It is expected that the Closing will be held by exchange
of facsimile closing documents. In the event either Commerce or Company
determines in its sole judgment that a closing should be held with the parties
physically in each other's presence, such Closing shall be held at the offices
of Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx LLP, 000 Xxxxx Xxxxxx, Xx. Xxxxx, Xxxxxxxx or
at such
2
other location as is agreed to in writing by the parties hereto. As used in this
Agreement, "Business Day" shall mean any day that is not a Saturday, Sunday or
other day on which banks are required or authorized by law to be closed in
Missouri.
1.3 EFFECTS OF THE MERGER.
(a) At the Effective Time (i) Company shall be merged with and into
Sub and the separate corporate existence of Company shall cease, (ii) the
Articles of Incorporation of Sub as in effect immediately prior to the Effective
Time shall be the Articles of Incorporation of the Surviving Corporation, (iii)
the By-laws of Sub as in effect immediately prior to the Effective Time shall be
the By-laws of the Surviving Corporation, (iv) the directors of Sub at the
Effective Time shall be the directors of the Surviving Corporation and (v) the
officers of Sub immediately prior to the Effective Time shall be the officers of
the Surviving Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be.
(b) Subject to Illinois law, at the Effective Time, (i) Sub shall
possess all assets and property of every description, and every interest
therein, wherever located, and the rights, privileges, immunities, powers,
franchises, and authority, of a public as well as of a private nature, of
Company and all obligations belonging to or due each of Company and Sub shall be
vested in Sub without further act or deed; (ii) title to any real estate or any
interest therein vested in Company shall not revert or in any way be impaired by
reason of the Merger; (iii) all rights of creditors and all liens on any
property of Company shall be preserved unimpaired; (iv) Sub shall be liable for
all the obligations of Company, and any claim existing, or action or proceeding
pending, by or against either of Company or Sub, may be prosecuted to judgment
with the right of appeal, as if the Merger had not taken place.
(c) As used in this Agreement, "Surviving Corporation" shall mean Sub,
at and after the Effective Time, as the surviving corporation in the Merger.
(d) At and after the Effective Time, the Merger will have the effects
set forth in the IBCA and the KGCC.
1.4 ABSENCE OF CONTROL. Subject to any specific provisions of this
Agreement, it is the intent of the parties hereto that neither Sub nor Company
by reason of this Agreement shall be deemed (until consummation of the
transactions contemplated hereby) to control, directly or indirectly, the other
party and shall not exercise, or be deemed to exercise, directly or indirectly,
a controlling influence over the management or policies of such other party.
1.5 FURTHER ASSURANCES. If at any time after the Effective Time, Sub shall
consider it advisable that any further conveyances, agreements, documents,
instruments or assurances of law or any other actions or things are necessary or
desirable to vest, perfect, confirm, or record in Sub the title to any property,
rights, privileges, powers, or franchises of Company, the Board of Directors and
officers of Sub shall, and will be authorized to, execute and deliver in the
name and on behalf of Company or otherwise, any and all proper conveyances,
agreements, documents, instruments, and assurances of law and do all things
necessary or proper to vest,
3
perfect, or confirm title to such property, rights, privileges, powers and
franchises in Sub, and otherwise to carry out the provisions of this Agreement.
1.6 THE BANK MERGER. The parties understand and agree that it is the
intention of Commerce and Sub, simultaneously with the Merger, to merge
Company's Subsidiary, West Pointe Bank And Trust Company ("Bank") with Commerce
Bank, N.A., a direct wholly owned subsidiary of Sub (the "Bank Merger"). Company
agrees to cooperate with Commerce and Sub and take all reasonable steps in order
to effectuate the Bank Merger. All out of pocket expenses incurred by Company
and Bank in consummating the Bank Merger, shall be paid by Sub.
1.7 TAX CONSEQUENCES. It is intended that the Merger shall constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986 (the "Code") and that this Agreement shall constitute a "plan of
reorganization" for the purposes of Section 368(a) of the Code.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF COMPANY AND SUB;
EXCHANGE OF CERTIFICATES
2.1 MERGER CONSIDERATION. Subject to the provisions of this Agreement, the
consideration for the Merger shall be:
(a) Up to One Million Six Hundred Seventy-Eight Thousand Seven Hundred
Seventy-Two (1,678,772) and no fewer than One Million Ninety-Nine Thousand Three
Hundred Eighty-Four (1,099,384) shares of Commerce Common Stock (as defined in
Section 2.2(b)(i)), as determined pursuant to Section 2.1(c); and
(b) Up to Twenty Million Two Hundred Twenty-Five Thousand Dollars
($20,225,000).
(c) "Primary Commerce Stock Consideration" shall be the smallest
number of whole shares of Commerce Common Stock such that the product of the
Commerce Common Stock Price (rounded to four decimal places) and the Primary
Commerce Stock Consideration is no less than Eighty Million Nine Hundred
Thousand Dollars ($80,900,000), provided that the Commerce Stock Consideration
shall in no event exceed One Million Six Hundred Seventy-Eight Thousand Seven
Hundred Seventy-Two (1,678,772) shares of Commerce Common Stock.
(d) "Commerce Stock Price" of Commerce Common Stock shall be the
average of the daily closing price per share of Commerce Common Stock on The
Nasdaq Stock Market, Inc. National Market System (as reported in The Wall Street
Journal or, if not reported thereby, another alternative source as chosen by
Commerce) for the ten (10) consecutive trading days ending on and including the
fifth trading day prior to the Closing Date. The Commerce Stock Price shall be
equitably adjusted to account for any intervening stock splits, stock dividends,
combinations or exchanges pertaining to or effecting the Commerce Stock.
2.2 CONVERSION OF COMPANY SHARES IN THE MERGER. At the Effective Time, by
virtue of the Merger and without any action on the part of any holder thereof,
shares of common
4
stock, $1.00 par value per share, of the Company ("Company Common Stock") shall
be converted as follows:
(a) Each share of Company Common Stock that is either authorized but
unissued or held in the treasury of Company, if any, or owned by Commerce, Sub
or any subsidiary of the Company or Commerce (other than as a trustee,
fiduciary, nominee or in a similar capacity), shall be canceled and retired and
shall cease to exist from and after the Effective Time, and no cash, securities
or other consideration shall be delivered in exchange therefor.
(b) Subject to Section 2.9, the remaining issued and outstanding
shares of Company Common Stock shall be converted as follows:
(i) Except where a stockholder has made an election pursuant to
Section 2.3 or exercises dissenters' rights pursuant to Section 2.9, each
outstanding share of Company Common Stock will be converted into that number of
shares of common stock, $5.00 par value per share ("Commerce Common Stock"), of
Commerce Common Stock equal to the quotient of the Primary Commerce Stock
Consideration and the total number of outstanding shares of Company Common Stock
subject to conversion pursuant to Section 2.2(b).
(ii) Each outstanding share of Company Common Stock which under
the terms of Section 2.3 is to be converted into a right to receive cash shall
be converted into the right to receive cash equal to the quotient of the amount
specified in Section 2.1(b) and twenty-five percent (25%) of the total number of
outstanding shares of Company Common Stock subject to conversion pursuant to
this Section 2.2(b).
2.3 CASH ELECTION. Each holder of Company Common Stock (other than holders
of Company Common Stock to be canceled as set forth in Section 2.2(a)) shall
have the right to submit a request specifying the number of shares of Company
Common Stock which such holder desires to have converted into the right to
receive cash in the Merger in accordance with the following procedure:
(a) Commerce shall authorize the Exchange Agent appointed pursuant to
Section 2.8 to receive Elections hereunder pursuant to an agreement or
agreements reasonably satisfactory to Commerce.
(b) Commerce and Company shall jointly prepare a form (the "Form of
Election") pursuant to which each holder of Company Common Stock may make an
Election. If a shareholder fails to specify on his Form of Election the number
of shares to be converted to cash, he shall be deemed to have made no election.
(c) At least thirty-five days prior to the "Election Date," Commerce
shall mail the Form of Election to all Company stockholders of record on the
record date for the meeting of holders of Company Common Stock referred to in
Section 5.2. As used herein, "Election Date" means a date announced by Commerce,
in a mailing by Commerce to Company stockholders (which mailing may be, but need
not be, the same mailing that contains the Form of Election), as the last day on
which Forms of Election will be accepted, provided, however, that such day shall
be a business day no earlier than five days prior to the Effective Time and no
later than the date
5
on which the Effective Time occurs and shall be at least thirty-five days
following the date of such mailing. Commerce shall have the right to set a later
date as the Election Date from time to time so long as such later date complies
with the requirements set out in the preceding sentence.
Company will use its best efforts to make the Form of Election (accompanied
by the Proxy Statement provided for in Section 5.2) and the prospectus contained
in the Registration Statement (as defined in Section 5.1(a)) available to all
persons who become Company stockholders of record during the period between the
record date for the meeting of holders of Company Common Stock referred to in
Section 5.2 and the business date immediately prior to the Election Date (as
hereinafter defined).
(d) Any Election shall have been properly made only if the Exchange
Agent at its office designated in the Form of Election shall have received by
5:00 p.m., local time in the city in which such office is located, on the
Election Date, a Form of Election properly completed and signed and accompanied
by certificates for the shares of Company Common Stock to which such Form of
Election relates (or by an appropriate guarantee of delivery of such
certificates as set forth in such Form of Election from a member of any
registered national securities exchange or of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company having an office
or correspondent in the United States, provided such certificates are in fact
delivered by the time set forth in such guarantee of delivery). Any Election
relating to shares of Company Common Stock with respect to which the holder
thereof has filed and not withdrawn as of the Effective Time a written demand
for payment of the value of his Company Common Stock in accordance with the
provisions of Section 2.9 shall be deemed to have been automatically revoked as
of the Election Date.
(e) Any holder of Company Common Stock may at any time prior to the
Election Date change his Election by written notice received by the Exchange
Agent at or prior to the Election Date accompanied by a properly completed,
revised Form of Election.
(f) Any holder of Company Common Stock may at any time prior to the
Election Date revoke his Election by written notice received by the Exchange
Agent at or prior to the Election Date.
(g) Commerce shall have the right to make reasonable administrative
decisions not inconsistent with the terms of this Agreement governing the
validity of the Forms of Election, the manner and extent to which Elections are
to be taken into account in making the determinations prescribed by this Section
2.3, the issuance and delivery of certificates of Commerce Common Stock into
which Company Common Stock is converted in the Merger, the payment for shares of
Company Common Stock converted into the right to receive cash in the Merger and
the handling of cases of lost, stolen or destroyed certificates of Company
Common Stock. All such rules and determinations thereunder shall be final and
binding on all holders of shares of Company Common Stock.
2.4 ADJUSTMENTS.
(a) Cash payable pursuant to elections under Section 2.3 shall in no
way exceed the amount specified in Section 2.1(b). If elections pursuant to
Section 2.3 would
6
otherwise require the payment of more than the amount specified in Section
2.1(b), each share of Company Common Stock for which such an election is made
shall be entitled to receive cash and Commerce Common Stock as follows:
(i) Each share of Company Common Stock covered by an election
governed by this Section 2.4(a) shall be converted into an amount of cash equal
to the quotient of the amount specified in Section 2.1(b) and the total number
of shares governed by this Section 2.4(a), plus the number of Company Dissenting
Shares (as defined in Section 2.9).
(ii) Each share of Company Common Stock covered by an election
governed by this Section 2.4(a) shall also be converted into a number of shares
of Commerce Common Stock equal to the number specified in Section 2.2(b)(i)
multiplied by the fraction described in the following sentence. The fraction
applicable to this Section 2.4(a)(ii) shall equal the excess of one (1) over a
fraction of which the numerator is the number of shares of Company Common Stock
covered by cash elections pursuant to Section 2.3(a) plus the number of Company
Dissenting Shares and the denominator of which is the total number of
outstanding shares of Company Common Stock subject to conversion pursuant to
Section 2.1(b).
(b) The total number of shares of Commerce Common Stock to be used as
Merger consideration under Section 2.1 shall be equal to the Primary Commerce
Stock Consideration reduced by the quotient of (i) the sum of the cash payable
pursuant to elections under Section 2.3 and with respect to the number of
Company Dissenting Shares, and (ii) the Commerce Stock Price, determined
pursuant to Section 2.1(d).
2.5 EFFECT OF MERGER ON SUB STOCK. At the Effective Time of the Merger,
each share of common stock, $1.00 par value per share, of Sub issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding at the Effective Time and shall be unaffected by the Merger.
2.6 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All shares of
Commerce Common Stock issued upon conversion of shares of Company Common Stock
in accordance with the terms hereof shall be deemed to represent all rights
pertaining to such shares of Company Common Stock, and, after the Effective
Time, there shall be no further registration of transfers on the stock transfer
books of Company of the shares of Company Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
certificates formerly representing shares of Company Common Stock are presented
to Commerce for any reason, they shall be canceled and, if applicable, exchanged
as provided in this ARTICLE II.
2.7 FRACTIONAL SHARES. Notwithstanding any other provision hereof, no
fractional shares of Commerce Common Stock and no certificates or scrip therefor
or other evidence of ownership thereof shall be issued to holders of shares of
Company Common Stock. In lieu thereof, each such holder entitled to a fraction
of a share of Commerce Common Stock (after taking into account all shares of
Company Common Stock held at the Effective Time by such holder) shall receive
from the Exchange Agent (as defined below), at the time of surrender of the
certificates representing such holder's Company Common Stock, an amount in cash
equal to the product of such fraction and the average of ten (10) closing sale
prices of Commerce Common
7
Stock as reported by the Nasdaq Stock Market on each of the ten (10) consecutive
trading days preceding the fifth trading day prior to the Closing Date. No such
holder shall be entitled to dividends, voting rights, interest on the value of,
or any other rights in respect of a fractional share. Commerce, on behalf of
Sub, shall make available to the Exchange Agent, as required from time to time,
any cash necessary for this purpose.
2.8 SURRENDER OF SHARES OF COMPANY COMMON STOCK. Prior to the Effective
Time, Commerce and Sub shall appoint Commerce Bank, N.A. or its successor, as
exchange agent (the "Exchange Agent") for the purpose of exchanging certificates
representing Commerce Common Stock which are to be issued pursuant to Section
2.1. Commerce, on behalf of Sub, shall make available to Exchange Agent, at and
after the Effective Time such number of shares of Commerce Common Stock as shall
be issuable to the holders of Company Common Stock in accordance with Section
2.1 hereof. As soon as practicable after the Closing Date, Commerce on behalf of
Exchange Agent shall mail to each holder of record of a certificate that
immediately prior to the Closing Date represented outstanding shares of Company
Common Stock (i) a form letter of transmittal and (ii) instructions for
effecting the surrender of certificates of Company Common Stock for exchange
into certificates of Commerce Common Stock.
2.9 DISSENTERS' RIGHTS. Notwithstanding anything in this Agreement to the
contrary, shares of Company Common Stock which are issued and outstanding
immediately prior to the Effective Time and which are held by stockholders that
have not voted such shares in favor of the Merger and have delivered a written
demand for the payment of such shares in the manner provided in the laws of the
State of Illinois (such shares, the "Company Dissenting Shares") shall not be
converted into or represent the right to receive Commerce Common Stock as
provided in Section 2.1 and the holders thereof shall only be entitled to such
rights as are granted by Section 11.70 of the IBCA. Each holder of Company
Dissenting Shares that becomes entitled to payment for such shares pursuant to
Section 11.70 of the IBCA shall receive payment therefor from the Surviving
Corporation in accordance with the IBCA; provided, however, that if any such
holder of Company Dissenting Shares shall fail to perfect or shall have
effectively withdrawn or lost the right to dissent, such holder's or holders'
(as the case may be) shares of Company Common Stock shall thereupon be deemed to
have been converted, as of the Effective Time, into and represent the right to
receive from the Surviving Corporation the shares of Commerce Common Stock and
cash as provided in Section 2.1 hereof. The Company shall give Commerce prompt
written notice of any demands received by the Company for appraisal of shares of
Company Common Stock, and Commerce shall have the right to participate in all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Commerce, make any payment with
respect to, or settle or offer to settle, any such demands.
2.10 STOCKHOLDER APPROVAL. Company agrees to submit this Agreement and the
transactions contemplated hereby to its stockholders for approval to the extent
required and as provided by law and the Articles of Incorporation and By-laws of
Company and in accordance with Section 5.2 hereof. A stockholders' meeting of
the Company shall be held and Company shall use its reasonable best efforts to
take all steps as shall be required for said meeting to be held as soon as
reasonably practicable after the effective date of the Registration Statement
(as defined in Section 5.1(a) hereof). Company and its Board of Directors shall
recommend, subject to the exercise of their fiduciary responsibilities and
Section 5.2, that the stockholders of the
8
Company approve this Agreement and the transactions contemplated hereby and
shall use their reasonable best efforts to secure such approval.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF COMPANY. Company hereby represents
and warrants to Commerce and Sub as follows:
(a) ORGANIZATION, STANDING AND POWER. Company is a bank holding
company registered under the Bank Holding Company Act of 1956, as amended (the
"BHC Act") and the Illinois Bank Holding Company Act of 1957. Company has one
bank subsidiary, Bank; Bank is a wholly owned Subsidiary of Company and is a
bank organized under the laws of the State of Illinois. The deposit accounts of
Bank are insured by the Bank Insurance Fund of the Federal Deposit Insurance
Corporation ("FDIC") to the fullest extent permitted by law, and all premiums
and assessments required in connection therewith have been paid when due.
Company and each of its Subsidiaries is a bank or corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has all requisite power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification necessary, other than in such
jurisdictions where the failure so to qualify would not, either individually or
in the aggregate, have a Material Adverse Effect on Company. The Articles of
Incorporation and By-laws of each of Company, and each Subsidiary of Company,
copies of which were previously made available to Commerce, are true, complete
and correct. The minute books of Company and its Subsidiaries which have been
made available to Commerce contain a complete (except for certain portions
thereof relating to the Merger and the transactions contemplated hereby) and
accurate record of all meetings of the respective Boards of Directors (and
committees thereof) and stockholders.
As used in this Agreement,
(i) the term "Subsidiary" when used with respect to any party
means any corporation or other organization, whether incorporated or
unincorporated, (x) of which such party or any other Subsidiary of such party is
a general partner (excluding partnerships, the general partnership interests of
which held by such party or any Subsidiary of such party do not have a majority
of the voting interests in such partnership), or (y) at least a majority of the
securities or other interests of which having by their terms ordinary voting
power to elect a majority of the board of directors or others performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned or controlled by such party or by any one or more of its
Subsidiaries, or by such party and one or more of its Subsidiaries,
(ii) any reference to any event, change or effect being
"material" with respect to any entity means an event, change or effect which is
material in relation to the condition (financial or otherwise), properties,
assets, liabilities, businesses, results of operations or, to the knowledge of
such entity, any prospects of such entity and its Subsidiaries taken as a whole,
9
(iii) the term "Material Adverse Effect" means, with respect to
any entity, a material adverse effect (whether or not required to be accrued or
disclosed under Statement of Financial Accounting Standards No. 5) (A) on the
condition (financial or otherwise), properties, assets, liabilities, businesses,
results of operations or, to the knowledge of such entity, any prospects of such
entity and its Subsidiaries taken as a whole (but does not include any such
effect resulting from or attributable to any action or omission by Company,
Commerce, Sub or any Subsidiary of any of them taken with the prior written
consent of the other parties hereto, in contemplation of the transactions
contemplated hereby), or (B) on the ability of such entity to perform its
obligations under the Transaction Agreements (as defined below) on a timely
basis, but does not include (t) any action or omission by Company, Commerce, Sub
or any Subsidiary of any of them taken with the prior written consent of the
other parties hereto, in contemplation of the transactions contemplated hereby,
(u) general economic, regulatory or political conditions (including the outbreak
or continuation of war, armed conflict or other hostilities), (v) changes in
interest rates and foreign currency exchange rates, (w) circumstances that
affect the industries in which the Company operates generally, (x) changes in
law, in GAAP or in any interpretation thereof, (y) the announcement or pendency
of the transactions provided for in this Agreement, or (z) the disclosure of the
fact that Commerce or Sub is the prospective acquirer of Company.
(iv) the term "Transaction Agreements" shall mean this Agreement,
the Stock Option Agreement, the Certificate of Merger to be filed pursuant to
the KGCC and the Articles of Merger to be filed pursuant to the IBCA,
(v) the term "knowledge" or "to the best knowledge of" a party
hereto means the actual knowledge of a director or executive officer of a party
and, as it relates to an executive officer, after reasonable inquiry,
(vi) the term "Affiliate" means, as to any person, a person which
controls, is controlled by or is under common control with such person, and
(vii) the term "person" shall mean an individual, corporation,
partnership, limited liability company, joint venture, association, trust,
unincorporated organization or other entity.
(b) CAPITAL STRUCTURE; OWNERSHIP OF COMPANY COMMON STOCK.
(i) The authorized capital stock of Company consists of (a)
10,000,000 shares of Company Common Stock, par value $1.00 per share, of which
as of the date of this Agreement, 1,029,808 shares of Company Common Stock (the
"Signing Shares) are outstanding, and (b) 50,000 shares of preferred stock, par
value $1.00 per share, of which no shares are issued and outstanding. As of the
Closing Date, no more than an amount equal to the Signing Shares, plus the
number of shares of the Company Common Stock issuable upon exercise of the
Company's options as of the date hereof, plus the number of shares issued by the
Company under the Company's Amended and Restated Dividend Reinvestment Plan,
plus the number of shares issued by the Company under the Company's 401(k) plan
will be outstanding. All outstanding shares of Company Common Stock have been
duly authorized and validly issued and are fully paid and non-assessable and not
subject to preemptive rights. As of the Closing
10
Date, all outstanding shares of Company Common Stock will be duly authorized and
validly issued and will be fully paid and non-assessable and not subject to
preemptive rights.
(ii) The authorized capital stock of Bank consists of 350,000
shares of Bank common stock, $8.00 par value per share, of which 350,000 shares
are outstanding (the "Bank Common Stock"). All outstanding shares of Bank Common
Stock have been duly authorized and validly issued and are fully paid and
non-assessable and not subject to preemptive rights. The Company owns all of the
issued and outstanding shares of its Subsidiaries free and clear of all liens,
encumbrances, equities or claims.
(iii) Except for this Agreement and except as set forth in
Section 3.1(b)(iii) of the disclosure schedule of Company delivered to Commerce
and Sub on the date hereof (the "Company Disclosure Schedule"), (A) there are no
outstanding options, warrants, calls, rights, commitments or agreements of any
character to which Company or any of its Subsidiaries or Affiliates (as defined
herein) is a party or by which any of the foregoing are bound obligating Company
or any of its Subsidiaries, including Bank, or Affiliates to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock of Company or any of its Subsidiaries or obligating Company or any of its
Subsidiaries or Affiliates to grant, extend or enter into any such option,
warrant, call, right, commitment or agreement, (B) there are no outstanding
contractual obligations of Company or any of its Subsidiaries or Affiliates to
repurchase, redeem or otherwise acquire any shares of capital stock of Company
or any of its Subsidiaries and (C) there are no outstanding securities of any
kind convertible into or exchangeable for the capital stock of Company or any of
its Subsidiaries (or any interest therein). Except as set forth in Section
3.1(b)(iii) of the Company Disclosure Schedule, there is no agreement of any
kind to which Company or Bank is a party and, to the knowledge of Company, no
other agreement of any kind, in each case that gives any person any right to
participate in the equity, value or income of, or to vote (x) in the election of
directors or officers of, or (y) otherwise with respect to the affairs of,
Company or any of its Subsidiaries.
(iv) Neither Company nor any of its Subsidiaries or, to the best
knowledge of Company, its Affiliates, beneficially owns, directly or indirectly,
any shares of capital stock of Commerce or Sub, securities of Commerce or Sub
convertible into, or exchangeable for, such shares, or options, warrants or
other rights to acquire such shares (regardless of whether such securities,
options, warrants or other rights are then exercisable or convertible), nor is
Company or any of such Subsidiaries or Affiliates a party to any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of shares of capital stock of Commerce or Sub or any such other
securities, options, warrants or other rights.
(v) No shares of Company Common Stock are held directly or
indirectly by Company or its Subsidiaries in trust accounts, managed accounts
and the like or otherwise held in a fiduciary or nominee capacity and, to the
knowledge of the Company, no shares of Company Common Stock are held by Company
or its Subsidiaries in respect of a debt previously contracted.
(c) AUTHORITY; NO VIOLATION. Company has all requisite corporate power
and authority to enter into this Agreement and the other Transaction Agreements
and to consummate
11
the transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the other Transaction Agreements and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Company, other than the approval of
this Agreement and the Merger by the holders of two thirds of the outstanding
shares of Company Common Stock entitled to vote (the "Company Stockholder
Approval"). This Agreement and the other Transaction Agreements have been duly
executed and delivered by Company, and (assuming due authorization, execution
and delivery by Commerce and Sub) constitute the valid and binding obligations
of Company, enforceable against Company in accordance with their terms, subject,
as to enforceability, to bankruptcy, insolvency and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
(i) The Company Stockholder Approval is the only vote of any
class or series of Company capital stock necessary to approve this Agreement and
the other Transaction Agreements and the consummation of the transactions
contemplated hereby and thereby.
(ii) Except as set forth in Section 3.1(c)(ii) of the Company
Disclosure Schedule, subject to approval by the appropriate regulatory agencies,
the execution, delivery and performance of this Agreement and the other
Transaction Agreements by Company do not, and the consummation of the
transactions contemplated hereby will not, constitute (x) a breach or violation
of, or a default under, any law, rule or regulation or any judgment, decree,
order, governmental permit or license, or agreement, indenture or instrument of
Company or any of its Subsidiaries or to which Company or any of its
Subsidiaries (or any of their respective properties) is subject, except where
any such breach, violation or default would not have a Material Adverse Effect,
(y) a breach or violation of, or a default under, the articles of incorporation,
charter or bylaws of Company or any Subsidiary of Company, or (z) a breach or
violation of, or a default under (or an event which with due notice or lapse of
time or both would constitute a default under), or result in the termination of,
accelerate the performance required by, or result in the creation of any lien,
pledge, security interest, charge or other encumbrance upon any of the
properties or assets of Company under any of the terms, conditions or provisions
of any note, bond, indenture, deed of trust, loan agreement or other agreement,
instrument or obligation to which Company is a party, or to which any of its
respective properties or assets may be bound or affected, except where any such
breach, violation or default would not have a Material Adverse Effect.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign (a "Governmental Entity"), is required by or with respect to Company or
any of its Subsidiaries in connection with the execution and delivery of this
Agreement or the other Transaction Agreements or the consummation by Company of
the transactions contemplated hereby or thereby, which, if not made or obtained,
would have a Material Adverse Effect on Company or on the ability of Company to
perform its obligations hereunder or thereunder on a timely basis, or on
Commerce's or Sub's ability to own, possess or exercise the rights of an owner
with respect to the business and assets of Company and its Subsidiaries, except
for (A) the filing of applications and notices with the Board of Governors of
the Federal Reserve System (the "Federal Reserve") under the BHC Act and
approval of same,
12
(B) the filing by Commerce with the Securities and Exchange Commission (the
"SEC") of a Registration Statement (as defined in Section 5.1(a) hereof)) to
register the Commerce Common Stock to be issued, (C) such applications, filings,
authorizations, orders and approvals as may be required by the FDIC and the
Illinois Department of Financial and Professional Regulation, (D) the filing
with the Secretary of State of Kansas of the Certificate of Merger and (E) the
filing with the Secretary of State of Illinois of the Articles of Merger.
(d) FINANCIAL STATEMENTS. Company has previously delivered to Commerce
and Sub copies of the consolidated statements of financial condition of Company
and its Subsidiaries, as of December 31, 2005 for the fiscal years 2004 and
2005, and the related consolidated statements of operations, comprehensive
income (loss), stockholders' equity and cash flows for the fiscal years 2004
through 2005, inclusive, in each case accompanied by the report of Xxxxx Xxxxxx
and Company LLC, independent auditors with respect to Company (the consolidated
financial statements of Company and its Subsidiaries referred to in this clause
being hereinafter sometimes referred to as the "Company Consolidated Financial
Statements"). The Company Consolidated Financial Statements fairly present, in
all material respects, the results of the consolidated operations and changes in
stockholders' equity and consolidated financial condition of Company and its
Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth. Except as set forth in Section 3.1(d) of the Company
Disclosure Schedule, the Company Consolidated Financial Statements have been
prepared, in accordance with United States generally accepted accounting
principles ("GAAP") consistently applied during the periods involved, except in
each case as indicated in such statements or in the notes thereto. Except as set
forth in Section 3.1(d) of the Company Disclosure Schedule, the books and
records of Company and its Subsidiaries have been, and are being, maintained
where required in accordance with GAAP and any other applicable legal and
accounting requirements and, where such books and records purport to reflect any
transactions, the transactions so reflected are actual transactions. To the
knowledge of the Company, Company has no material liabilities or obligations of
a type which would be included in a balance sheet prepared in accordance with
GAAP whether related to tax or non-tax matters, accrued or contingent, due or
not yet due, liquidated or unliquidated, or otherwise, except as and to the
extent disclosed or reflected in the balance sheet of Company as of December 31,
2005, or incurred since December 31, 2005, in the ordinary course of business.
From December 31, 2005 until the date hereof, there has been no material adverse
change in the financial condition, properties, assets, liabilities, rights or
business of Company or Company's Subsidiaries, or in the relationship of Company
and its Subsidiaries, or to the knowledge of the Company, with respect to its
employees, creditors, suppliers, customers or others with whom it has business
relationships to the extent such change would result in a Material Adverse
Effect.
(e) COMPANY INFORMATION SUPPLIED. None of the information supplied by
Company for inclusion or incorporation by reference in the (i) Registration
Statement will, at the time the Registration Statement is filed with the SEC and
at the time it becomes effective under the Securities Act of 1933, as amended,
or any successor federal statute and the rules and regulations promulgated
thereunder (the "Securities Act"), contain any untrue statement of material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and (ii) the Proxy Statement (as
defined in Section 5.1(a)) relating to the meeting of the stockholders of
Company (the "Company Stockholders' Meeting") at which the Company Stockholder
Approval will be sought) will not, at the date of mailing to
13
stockholders of Company and at the time of the Company Stockholders' Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, other than information supplied by Commerce or Sub.
(f) COMPLIANCE WITH APPLICABLE LAWS. Company and its Subsidiaries hold
all material permits, licenses, variances, exemptions, orders, approvals,
franchises and rights of all Governmental Entities necessary for the lawful
operation of the businesses of Company and its Subsidiaries (the "Company
Permits"). Company and its Subsidiaries are in compliance and have complied with
the terms of the Company Permits, except where the failure so to comply,
individually or in the aggregate, would not have a Material Adverse Effect on
Company. The businesses of Company and its Subsidiaries are not being conducted
in violation of any law, ordinance or regulation of any Governmental Entity,
except for possible violations which, individually or in the aggregate, do not,
and, insofar as reasonably can be foreseen, in the future will not, have a
Material Adverse Effect on Company. Except for routine examinations by Federal
or state Governmental Entities charged with the supervision or regulation of
banks or bank holding companies or engaged in the insurance of bank deposits
("Bank Regulators"), no investigation by any Governmental Entity with respect to
Company or any of its Subsidiaries is, to the knowledge of Company, pending or
threatened, and no proceedings by any Bank Regulator are, to the knowledge of
Company, pending or threatened which seek to revoke or materially limit any of
the Company Permits. Except as set forth in Section 3.1(f) of the Company
Disclosure Schedule, Company and its Subsidiaries do not offer or sell insurance
and/or securities products, including but not limited to annuity products, for
their own account or the account of others.
(g) LITIGATION. Except as set forth in Section 3.1(g) of the Company
Disclosure Schedule, to the knowledge of Company, there is no suit, action,
proceeding, arbitration or investigation ("Litigation") pending to which Company
or any Subsidiary of Company is a party or by which any of such persons or their
respective assets may be bound or, to the knowledge of Company, threatened
against or affecting Company or any Subsidiary of Company, or challenging the
validity or propriety of the transactions contemplated hereby which, if
adversely determined, would, individually or in the aggregate, have or
reasonably be expected to have a Material Adverse Effect on Company or on the
ability of Company to perform its obligations under this Agreement in a timely
manner, nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against Company or any Subsidiary
of Company.
(h) TAXES. Except as set forth in Section 3.1(h) of the Company
Disclosure Schedule, each of the Company and its Subsidiaries has timely filed
all Tax Returns (as defined below) required to be filed by them, and the Company
and each of its Subsidiaries has timely paid and discharged all Taxes (as
defined below) due in connection with or with respect to the filing of such Tax
Returns and have timely paid all other Taxes as are due, except such as are
being contested in good faith by appropriate proceedings and with respect to
which the Company is maintaining reserves adequate for their payment. To the
best knowledge of the Company, the liability for Taxes set forth on each such
Tax Return adequately reflects the Taxes required to be reflected on such Tax
Return. For purposes of this Agreement, "Tax" or "Taxes" shall mean taxes,
charges, fees, levies, and other governmental assessments and impositions of any
kind,
14
payable to any federal, state, local or foreign governmental entity or taxing
authority or agency, including, without limitation, (a) income, franchise,
profits, gross receipts, estimated, ad valorem, value added, sales, use,
service, real or personal property, capital stock, license, payroll,
withholding, disability, employment, social security, workers compensation,
unemployment compensation, utility, severance, production, excise, stamp,
occupation, premiums, windfall profits, transfer and gains taxes, (b) custom
duties, imposts, charges, levies or other similar assessments of any kind, and
(c) interest, penalties and additions to tax imposed with respect thereto, and
"Tax Returns" shall mean returns, reports, and information statements with
respect to Taxes required to be filed with the United States Internal Revenue
Service or any other governmental entity or taxing authority or agency, domestic
or foreign, including, without limitation, consolidated, combined and unitary
tax returns. Except as set forth in Section 3.1(h) of the Company Disclosure
Schedule, to the knowledge of Company: (i) there are no liens with respect to
Taxes (other than current Taxes not yet due and payable) upon any of the assets
or properties of Company and its Subsidiaries, (ii) no material issue relating
to Taxes of Company and its Subsidiaries has been raised in writing by any
taxing authority in any audit or examination which can result in a proposed
adjustment or assessment by a governmental authority applicable to a taxable
period (or portion thereof) ending on or before the Closing Date, (iii) to the
knowledge of Company, Company and its Subsidiaries have duly and timely withheld
from all payments (including employee salaries, wages and other compensation
paid to independent contractors, creditors, stockholders or other third parties)
and paid over to the appropriate taxing authorities all amounts required to be
so withheld and paid over for all periods for which the statute of limitations
has not expired under all applicable laws and regulations and have complied with
the applicable information reporting requirements under Part III, Subchapter A
of Chapter 61 of the Code and similar state and local information reporting
requirements, (iv) as of the Closing Date, none of Company nor any of its
Subsidiaries shall be a party to, be bound by or have any obligation under, any
tax sharing agreement or similar contract or arrangement or any agreement that
obligates any of them to make any payment computed by reference to the income
taxes, taxable income or taxable losses of any other person, (v) there is no
contract or agreement, plan or arrangement by Company or any of its Subsidiaries
covering any person that, individually, collectively, or together with this
Agreement, could give rise to the payment of any material amount that would not
be deductible by Company or any of its Subsidiaries by reason of section 280G of
the Code, (vi) neither Company nor any of its Subsidiaries has been a United
States real property holding corporation within the meaning of section 897(c)(2)
of the Code during the applicable period specified in section 897(c)(1)(A)(ii)
of the Code, (vii) none of Company nor any of its Subsidiaries (A) has been a
member of an affiliated group (other than the group to which they are currently
members) filing a consolidated federal income tax return or (B) to the knowledge
of Company, has any liability for the income taxes of any person (other than the
members of such current group) under Treasury Regulation section 1.1502-6(a) (or
any similar provision of state, local or foreign law), as a transferee or
successor, by contract, or otherwise, (viii) neither Company nor any of its
Subsidiaries has waived any statute of limitations or agreed to any extension of
time for assessment in respect of Taxes, (ix) neither Company nor any of its
Subsidiaries has entered into any closing or other agreement with any taxing
authority which affects any taxable year of Company or its Subsidiaries, (x)
neither Company nor any of its Subsidiaries has applied for, been granted, or
agreed to any accounting method change since December 31, 2004, and (xi) neither
the Company nor any of its Subsidiaries has a consent in effect under Section
341(f) of the Code.
15
(i) CERTAIN AGREEMENTS. Section 3.1(i) of the Company Disclosure
Schedule sets forth a listing of all of the following material contracts and
other agreements, oral or written (which are currently in force or which may in
the future be operative in any respect) to which Company or any of its
Subsidiaries is a party or by or to which Company or any of its Subsidiaries or
any of their respective assets or properties are bound or subject: (i)
consulting agreements not terminable on six months or less notice involving the
payment of more than $50,000 per annum, or union, guild or collective bargaining
agreements covering any employees in the United States, (ii) agreements with any
officer or other key employee of Company or any of its Subsidiaries (x)
providing any term of employment or (y) the benefits of which are contingent, or
the terms of which are materially altered, upon the occurrence of a transaction
involving Company of the nature contemplated by this Agreement, (iii) any
agreement or plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement, (iv) contracts and other agreements for the sale
or lease (other than where Company or any of its Subsidiaries is a lessor) of
any assets or properties in excess of $50,000 individually or $100,000 in the
aggregate (other than in the ordinary course of business) or for the grant to
any person (other than to Company or any of its Subsidiaries) of any
preferential rights to purchase any assets or properties, (v) contracts and
other agreements relating to the acquisition by Company or any of its
Subsidiaries of any operating business or entity or any interest therein, (vi)
contracts or other agreements under which Company or any of its-Subsidiaries
agrees to indemnify any party, other than in the ordinary course of business,
consistent with past practice, or to share a tax liability of any party, (vii)
contracts and other agreements containing covenants restricting Company or any
of its Subsidiaries from competing in any line of business or with any person in
any geographical area or requiring Company or any of its Subsidiaries to engage
in any line of business, (viii) contracts or other agreements (other than
contracts in the ordinary course of their banking business) relating to the
borrowing of money by Company or any of its Subsidiaries, or the direct or
indirect guaranty by Company or any of its Subsidiaries of any obligation for,
or an agreement by Company or any of its Subsidiaries to service, the repayment
of borrowed money, or any other contingent obligations of Company or any of its
Subsidiaries in respect of indebtedness of any other person (other than in the
ordinary course), and (ix) any other material contract or other agreement
whether or not made in the ordinary course of business. There have been
delivered or made available to Commerce true and complete copies of all of the
written contracts and other agreements set forth in Section 3.1(i) of the
Company Disclosure Schedule and in any other Section of the Company Disclosure
Schedule. Except as set forth in Section 3.1(i) of the Company Disclosure
Schedule, each such contract and other agreement is in full force and effect and
constitutes a legal, valid and binding obligation of Company or its
Subsidiaries, as the case may be, and to the best knowledge of Company, each
other party thereto, enforceable in accordance with its terms subject, as to
enforceability, to bankruptcy, insolvency, and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles. Neither Company nor any Subsidiary of Company has received any
written, or, to the knowledge of the Company, any oral, notice of termination or
intention to terminate from any other party to such contract or agreement. None
of Company or any of its Subsidiaries or (to the best knowledge of Company) any
other party to any such contract or agreement is in violation or breach of or
default under any such contract or agreement (or with or without notice or lapse
of time or both, would be in
16
violation or breach of or default under any such contract or agreement), which
violation, breach or default has had or would have, individually or in the
aggregate, a Material Adverse Effect on Company.
(j) BENEFIT PLANS. Section 3.1(j) of the Company Disclosure Schedule
lists all the employee benefit plans (as defined in Sections (3)(3) of the
Employee Retirement Income Security Act of 1974 ("ERISA"), health, welfare,
supplemental unemployment benefit, bonus, pension, profit sharing, 401(k),
deferred compensation, stock compensation, stock purchase, retirement, medical,
dental, post-termination benefits (including, but not limited to, medical or
dental or life insurance), legal, disability and similar plans or arrangements
or practices relating to employees of the Company ("Employees") or former
Employees which Company or its Subsidiaries has established or maintained, or to
which Company or its Subsidiaries have contributed or have had any obligation to
contribute at any time during the five-year period ending on the date hereof
(the "Employee Plans"). Copies of (i) each Employee Plan, (ii) the most recent
summary plan description for each Employee Plan if any such description was
required, (iii) the most recent Form 5500s, (iv) the most recent audited
financial reports, (v) any related trust agreements and all amendments thereto,
(vi) the most recent Internal Revenue Service determination letter for each Plan
intended to be qualified under Section 401(a) of the Code, and (vii) all other
required reports and supporting schedules filed with any governmental agency in
respect of the Employee Plans for the most recent three years have been
delivered and/or made available to Commerce.
Except as set out in Schedule 3.1 (j):
(i) All of the Employee Plans are and have been established,
registered, qualified, invested and administered, in all material respects, in
accordance with their terms and all Laws applicable to the Employee Plans,
including without limitation, ERISA, and each Employee Plan which is intended to
be qualified under Section 401 (a) of the Code satisfies the requirements for
such qualification.
(ii) All obligations due prior to Closing regarding the Employee
Plans have been satisfied and there are no outstanding defaults or violation of
any requirement by any party to any Employee Plan and no Taxes, penalties or
fees due prior to Closing are owing under or with respect to any of the Employee
Plans. Company and its Subsidiaries (each with respect to the Employee Plans),
as well as the Employee Plans, have no material current or threatened liability
of any kind to any person, including but not limited to any government agency,
as of the date hereof, other than for payment of benefits in the ordinary
course.
(iii) All contributions or premiums required to be made by the
Company or its Subsidiaries under the terms of each Employee Plan have been made
in a timely fashion in accordance with ERISA and the terms of the Employee
Plans.
(iv) Neither the Company nor any of its agents has been in breach
of any fiduciary obligation with respect to the administration of the Employee
Plans or the trusts or other funding media relating thereto.
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(v) No prohibited transaction within the meaning of Section 406
of ERISA or Section 4975 of the Code has occurred with respect to an Employee
Plan or any trust created thereunder for which an exemption does not exist.
(vi) No Employee Plan, nor any related trust or other funding
medium thereunder, is subject to any pending investigation, examination or other
proceeding, action or claim initiated by any governmental agency or
instrumentality, or by any other party (other than routine claims for benefits),
and there exists no state of facts which after notice or lapse of time or both
could reasonably be expected to give rise to any such investigation, examination
or other proceeding, action or claim.
(vii) All filings required by ERISA and the Code as to each
Employee Plan have been timely filed, and all notices and disclosures to
participants in the Employee Plans required by ERISA or the Code have been
timely provided.
(viii) Neither the Company nor any other Person that, together
with the Company, would be treated as a single employer under Section 414 of the
Code, has ever established, maintained or contributed to, or otherwise
participated in, any multiemployer plan as defined in Section 3(37)(A) of Title
I of ERISA and/or any pension plan as described in Section 3(2) of Title I of
ERISA which is subject to Title IV of ERISA.
(ix) None of the Employee Plans provides medical or other welfare
benefits not determinable in advance to Employees who have terminated employment
with the Company or to the beneficiaries or dependents of such Employees, other
than benefits required to be furnished under Part 6 of Title I of ERISA and/or
Section 4980B of the Code.
(x) No changes to any Employee Plan have been promised and no
amendments or changes to an Employee Plan will be made or promised before the
Effective Time, except as otherwise permitted by this Agreement.
(xi) To Company's knowledge as sponsor of the Employee Plans, the
Employee Plans and each fiduciary (as defined in Section 3(21) of ERISA) of the
Employee Plans are in compliance in all material respects with all applicable
requirements (including nondiscrimination requirements in effect as of the date
hereof) of the Code, including, but not limited to, Sections 79, 105, 106, 125,
401,501, and 4975 of the Code. For purposes of this Section 3.1(j),
noncompliance with the Code or ERISA is material if such noncompliance could
have a Material Adverse Effect on the condition of one or more of the Employee
Plans or of Company or its Subsidiaries, either as of the Effective Time or upon
discovery of the noncompliance.
(xii) All assets of any trust related to a Company retirement
plan may be readily liquidated within the trust five (5) business days without
incurring any penalty or cost in excess of $20,000, other than ordinary sales
commission expenses.
(xiii) Each Employee Plan may be terminated by action of the
Company or its designee.
18
(k) SUBSIDIARIES. Section 3.1(k) of the Company Disclosure Schedule
lists all the Subsidiaries of Company. Except as listed on Section 3.1(k) of the
Company Disclosure Schedule, Company owns, directly or indirectly, beneficially
and of record 100% of the issued and outstanding voting securities of each such
Subsidiary. All of the shares of capital stock of each of the Subsidiaries held
by Company or by another of its Subsidiaries are fully paid and nonassessable
and are owned by Company or one of its Subsidiaries free and clear of any lien,
claim or other encumbrance. Neither Company nor any of its Subsidiaries owns any
shares of capital stock or other equity securities of any person (other than, in
the case of Company, the capital stock of its Subsidiaries and, in the case of
such Subsidiaries, shares or equity securities acquired in satisfaction of debts
previously contracted in good faith in the ordinary course of their banking
business).
(l) AGREEMENTS WITH BANK OR OTHER REGULATORS. Except as set forth in
Section 3.1(1) of the Company Disclosure Schedule, neither Company nor any
Subsidiary of Company is a party to any written agreement or memorandum of
understanding with, or a party to any commitment letter or similar undertaking
to, or is subject to any order or directive by, or is a recipient of any
extraordinary supervisory letter from, or has adopted any board resolutions at
the request of, any Bank Regulator which restricts materially the conduct by
Company or its Subsidiaries of their businesses, or in any manner relates to
their capital adequacy, credit policies, community reinvestment, loan
underwriting or documentation or management, nor has Company or any such
Subsidiary been advised in writing, or to the knowledge of the Company, orally,
by any Bank Regulator that it is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such order,
decree, agreement, memorandum of understanding, extraordinary supervisory
letter, commitment letter or similar submission, or any such board resolutions.
(m) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
Section 3.1(m) of the Company Disclosure Schedule, since December 31, 2005 (i)
there has not been any change, or, to the knowledge of Company, any event
involving a prospective change, in the business, financial condition or results
of operations or, to the knowledge of Company, prospects of Company or any of
its Subsidiaries or in the relationship of Company or its Subsidiaries with
respect to their employees, creditors, suppliers, distributors, customers or
others with whom they have business relationships, which has had, or would be
reasonably likely to have, a Material Adverse Effect on Company, (ii) Company
and each of its Subsidiaries have conducted their respective businesses in the
ordinary course consistent with their past practices and neither Company nor any
of its Subsidiaries has taken any action or entered into any transaction, and,
to the knowledge of Company, no event has occurred, that would have required
Commerce or Sub's consent pursuant to Section 4.1 of this Agreement if such
action had been taken, transaction entered into or event had occurred, in each
case, after the date of this Agreement, nor has Company or any of its
Subsidiaries entered into any agreement, plan or arrangement to do any of the
foregoing, (iii) there have been no dividends or other distributions declared,
set aside or paid in respect of Company Common Stock, nor has any action with
respect to Company Common Stock proscribed by Section 4.1 of this Agreement
occurred or been taken, and (iv) Company and its Subsidiaries have not entered
into any employment contract with any director, officer or salaried employee,
paid any or made any accrual or arrangement for payment of bonuses or special
compensation of any kind or any severance or termination pay to any of their
officers, employees or directors, increased the rate of
19
compensation, if any, or instituted or made any material increases in any
officer's, employee's or director's welfare, retirement or similar plan or
arrangement, other than annual and merit increases made in accordance with past
practices and procedures.
(n) UNDISCLOSED LIABILITIES. Except as set forth in Section 3.1(n) of
the Company Disclosure Schedule, and except (i) for those liabilities or
obligations that are fully reflected or reserved against in the condensed
consolidated statement of financial condition at December 31, 2005 of Company
referred to in Section 3.1(d) or (ii) for liabilities or obligations incurred in
the ordinary course of business consistent with past practice since December 31,
2005 and which are not material to Company and its Subsidiaries taken as a
whole, neither Company nor any of its Subsidiaries has incurred any debt,
liability or obligation of any nature whatsoever (whether absolute, accrued or
contingent or otherwise and whether due or to become due). No agreement pursuant
to which any loans or other assets have been or will be sold by Company or any
Subsidiary entitle the buyer of such loans or other assets, unless there is
material breach of a representation or covenant by Company or its Subsidiaries
not relating to the payment or other performance by an obligor of such loan or
other asset of its obligations thereunder, to cause Company or its Subsidiaries
to repurchase such loan or other asset or the buyer to pursue any other form of
recourse against Company or its Subsidiaries.
(o) GOVERNMENTAL REPORTS. Company and each of its Subsidiaries have
timely filed all material reports, registrations and statements, together with
any amendments required to be made with respect thereto with any Governmental
Entity and have paid all fees and assessments due and payable in connection
therewith. Except as set forth in Section 3.1(o) of the Company Disclosure
Schedule and except for normal examinations conducted by a Governmental Entity
in the regular course of business of Company and its Subsidiaries, to the
knowledge of Company no Governmental Entity has initiated any proceeding or
investigation into the business or operations of Company or any of its
Subsidiaries. Except as set forth in Section 3.1(o) of the Company Disclosure
Schedule, to the knowledge of Company there is no material unresolved violation,
criticism or exception by any Governmental Entity with respect to any report or
statement relating to any examinations of Company or any of its Subsidiaries.
(p) ENVIRONMENTAL LIABILITY.
(i) Except as set forth in Section 3.1(p) of the Company
Disclosure Schedule and except as would have a Material Adverse Effect, to the
knowledge of Company, there are no pending or threatened claims, actions or
proceedings against Company or Bank relating to:
(A) any asserted liability of Company or any of its
Affiliates regarding any Real Property (as defined herein) under any
Environmental Law (as defined herein), including without limitation, the terms
and conditions of any permit, license, authority, settlement or other obligation
arising under any Environmental Law;
(B) any handling, storage, use or disposal of Hazardous
Substances (as defined herein) on, under or within any Real Property or any
transportation or removal of Hazardous Substances to or from any Real Property;
20
(C) any actual or threatened discharge, release or emission
of Hazardous Substances from, on, under or within any Real Property into the
air, water, surface water, groundwater, land surface or subsurface strata; or
(D) any actual or asserted claims for personal injuries,
illness or damage to real or personal property related to or arising out of
exposure to Hazardous Substances discharged, released or emitted from, on,
under, within or into, or transported from or to, any Real Property.
(ii) Except as set forth in Section 3.1(p) of the Company
Disclosure Schedule and except as would have a Material Adverse Effect, to the
knowledge of Company, no Hazardous Substances are present on, under or within
any Real Property. Except as set forth in Section 3.1(p) of the Company
Disclosure Schedule, to the knowledge of Company, no storage tanks used to store
any Hazardous Substance have ever been present on or under any Real Property.
(iii) To the knowledge of Company, except as set forth in Section
3.1(p) of the Company Disclosure Schedule and except as would have a Material
Adverse Effect, Company and its Affiliates have been and continue to be in
compliance, in all material respects, with all Environmental Laws related to the
ownership, operation, use and occupation of the Real Property.
(iv) To the knowledge of Company and except as would have a
Material Adverse Effect, except as set forth in Section 3.1(p) of the Company
Disclosure Schedule, no part of any Real Property has been or is now listed on
CERCLIS or the National Priorities List created pursuant to the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended, as a
site containing Hazardous Substances.
(v) Commerce may obtain at its option and expense on or prior to
90 days following the date hereof an environmental audit ("Environmental Audit")
of all the properties and assets of Company and its Subsidiaries classified as
other real estate owned or real property owned or leased by Company or its
Subsidiaries (the "Properties"). A copy of any report or audit generated shall
be provided to Company at the time such report or audit is received by Commerce.
The consultant who will perform the Environmental Audit shall be selected by
Commerce and shall be reasonably satisfactory to Company. Commerce may undertake
any investigatory activity to insure the Environmental Audit conforms to the
standards for Phase I environmental assessments issued by the American Society
for Testing and Materials ("ASTM") or the Standards and Practices for All
Appropriate Inquiries published by U.S. EPA at 70 Fed. Reg. 66069. Should an
environmental condition be discovered in the Phase I process that Commerce
decides, in its discretion, to investigate, then Commerce shall, on or prior to
60 days following completion of the Phase I process, perform, or have performed
an ASTM Phase II environmental assessment to determine whether Hazardous
Substances exist (A) on or under any of the Properties; (B) on or under any
other property or in any natural resources which originated on, under or from
the Properties either prior to or during Company's or any of its Subsidiaries'
ownership thereof. The Environmental Audit must be performed to the reasonable
satisfaction of Commerce. In the event the Environmental Audit discloses the
existence of any liability that would have a Material Adverse Effect
("Environmental Liability") for damages,
21
penalties, fines, charges, interest, judgments, remedial action, public or
private, arising directly or indirectly in whole or in part out of (w)
noncompliance with any environmental law that would have a Material Adverse
Effect, (x) the presence of Hazardous Substances on, under or from the
Properties, or (y) any activity carried on or undertaken on or off the
Properties either prior to or after the date hereof whether by Company or its
Subsidiaries or any predecessor in title to any of the Properties or any
employees, agents, affiliates, contractors or subcontractors of Company, its
Subsidiaries or of any such predecessors in title, or any third person in
connection with the use, handling, treatment, removal, storage, decontamination,
clean-up, transport or disposal of any Hazardous Substance at any time located
or present on, under or from the Properties, which liability would have a
Material Adverse Effect and which liability exists against Company or any of its
Subsidiaries or affects in any way that would have a Material Adverse Effect on
the Properties or Company's or any of its Subsidiaries' rights or business or
the right to carry on or conduct their respective businesses, Commerce shall
notify Company of such Environmental Liability. If Company does not choose to
remediate the condition leading to such Environmental Liability and to otherwise
fully protect Commerce from a Material Adverse Effect of such Environmental
Liability on terms and conditions and at a cost acceptable to Commerce within
thirty (30) days after receipt by Company of a copy of any report or audit as
provided, Commerce shall have the right to terminate this Agreement under
Article VII hereof, thereby relieving Company, Commerce and Sub of all their
obligations hereunder, including the obligation to cause or engage in the
Merger.
(vi) The following terms shall have the indicated meaning:
"Environmental Law" means any and all applicable federal, state and local
laws (whether under common law, statute, rule, regulation or otherwise),
requirements under permits issued with respect thereto, and other orders,
decrees, judgments, directives or other requirements of any governmental
authority relating to the environment, or to any Hazardous Substances.
"Hazardous Substances" means any chemical, compound, material, mixture,
living organism or substance that is now defined or listed in, or otherwise
classified or regulated in any way pursuant to, any Environmental Law as a
"hazardous waste," "hazardous substance," "hazardous material," "extremely
hazardous waste," "infectious waste," "toxic substance," or "toxic pollutants,"
including without limitation, waste oil, any petroleum product, waste petroleum
products, polychlorinated biphenyls ("PCBs"), asbestos, radon, natural gas,
natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel (or
mixtures of natural gas and such synthetic gas).
"Real Property" means all interests in real property of Company or its
Subsidiaries, including without limitation, interests in fee, leasehold,
interest as mortgagee or secured party, or option or contract to purchase or
acquire.
(q) PROPERTIES. Except as set forth in Section 3.1(q) of the Company
Disclosure Schedule, Company or its Subsidiaries (i) has good and marketable
title to all Real Property owned in fee, and good title to all other properties
and assets reflected in the Company Consolidated Financial Statements as being
owned by Company or its Subsidiaries or acquired after the date thereof which
are material to the business of Company on a consolidated basis (except
properties sold or otherwise disposed of since the date thereof in the ordinary
course of
22
business), free and clear of all claims, liens, charges, security interests or
encumbrances of any nature whatsoever except (A) statutory liens securing
payments not yet delinquent, (B) liens on assets of Bank securing deposits
incurred in the ordinary course of its banking business and (C) such
imperfections or irregularities of title, claims, liens, charges, security
interests or encumbrances as do not materially affect the use of the properties
or assets subject thereto or affected thereby or otherwise materially impair
business operations at such properties and (ii) is the lessee of all leasehold
estates reflected in the Company Consolidated Financial Statements or acquired
after the date thereof which are material to its business on a consolidated
basis (except for leases that have expired by their terms since the date
thereof) and is in possession of the properties purported to be leased
thereunder, and each such lease is valid without material default thereunder by
the lessee or, to the knowledge of Company, the lessor. Except as set forth in
Section 3.1(q) of the Company Disclosure Schedule, all Real Property owned by
Company or its Subsidiaries are owned in accordance in all material respects
with all requirements of applicable rules, regulations and policies of the Bank
Regulators.
(r) BROKERS OR FINDERS. No agent, broker, investment banker, financial
advisor or other firm or person is or will be entitled to any broker's or
finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by the Agreement, except for the fee to be paid to
Xxxxxx, Xxxxxxxx & Company, Incorporated.
(s) INTELLECTUAL PROPERTY. Except as set forth in Section 3.1(s) of
the Company Disclosure Schedule, Company and its Subsidiaries own or have a
valid license to use all trademarks, service marks and trade names (including
any registrations or applications for registration of any of the foregoing)
(collectively, the "Company Intellectual Property") necessary to carry on their
business substantially as currently conducted, except for such Company
Intellectual Property the failure of which to own or validly license,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on Company. Neither Company nor any such Subsidiary has
received any written, or to the Company's knowledge, oral, notice of
infringement of or conflict with, and, to the best knowledge of Company, there
are no infringements of or conflicts with, the rights of others with respect to
the use of any Company Intellectual Property that, individually or in the
aggregate, in either such case, would reasonably be expected to have a Material
Adverse Effect on Company.
(t) INSURANCE. Company has previously delivered to Commerce a list
identifying all insurance policies maintained on behalf of Company and its
Subsidiaries (other than mortgage, title and other similar policies for the
benefit of Company or its Subsidiaries as mortgagees under residential mortgage
loans). All of the material insurance policies and bonds maintained by or for
the benefit of Company and its Subsidiaries are in full force and effect, to the
knowledge of Company, Company and its Subsidiaries are not in default
thereunder, and all material claims thereunder have been filed in due and timely
fashion, and neither Company nor any of its Subsidiaries has received written
notice, or to the Company's knowledge, oral notice that any of such material
claims have been or will be denied. The insurance policies and bonds maintained
by Company and its Subsidiaries are written by reputable insurers and are in
such amounts, cover such risks and have such other terms as is customary for
banks and bank holding companies comparable in size and operations to Company
and its Subsidiaries. Since December 31, 2005, there has not been any damage to,
destruction of, or loss of any assets of Company and its Subsidiaries (whether
or not covered by insurance) that could have a material
23
adverse effect on Company. Neither Company nor any of its Subsidiaries has
received any notice of a premium increase or cancellation with respect to any of
its insurance policies or bonds, and within the last three years, neither
Company nor any of its Subsidiaries has been refused any insurance coverage
sought or applied for, and Company has no reason to believe that existing
insurance coverage cannot be renewed as and when the same shall expire, upon
terms and conditions as favorable as those presently in effect, other than
possible increases in premiums or unavailability in coverage that have not
resulted from an extraordinary loss experience of Company or any Company
Subsidiary.
(u) LOANS AND OTHER ASSETS.
(i) Company has disclosed to Commerce prior to the date hereof
the amounts of all loans, leases, other extensions of credit, commitments or
other interest-bearing assets presently owned by Company or any of its
Subsidiaries that have been classified by any Bank Regulator, Company's
independent auditors, or the management of Company or any Subsidiary of Company
as "Other Loans Especially Mentioned," "Substandard," "Doubtful," or "Loss", or
classified using categories with similar import, and will have disclosed
promptly to Commerce and Sub prior to the Closing Date all such items which will
be so classified hereafter and prior to the Closing Date. All such assets or
portions thereof classified "Loss", or which are subsequently so classified,
have been (or will be) charged off on a timely basis in full, collected or
otherwise placed in a bankable condition. Company regularly reviews and
appropriately classifies its and its Subsidiaries' loans and other assets in
accordance in all material respects with all applicable legal and regulatory
requirements and GAAP. Company has disclosed to Commerce and Sub the amounts and
identities of all other real estate owned ("OREO") that has been classified as
such as of the date hereof by Company's independent auditors, management of
Company or any Bank Regulator and will have promptly disclosed to Commerce and
Sub prior to the Closing Date all such assets which will be so classified
hereafter and prior to the Closing Date. As of the date hereof and the Closing
Date, the recorded values of all OREO on the books of Company and its
Subsidiaries accurately reflect and will reflect the net realizable values of
each OREO parcel thereof in compliance with GAAP. Company and its Subsidiaries
have recorded on a timely basis all expenses associated with or incidental to
its OREO, including but not limited to taxes, maintenance and repairs as
required by GAAP.
(ii) All loans, leases, other extensions of credit, commitments
or other interest-bearing assets and investments of Company and its Subsidiaries
are legal, valid and binding obligations enforceable in accordance with their
respective terms and are not subject to any setoffs, counterclaims or disputes
known to Company (subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and subject, as to enforceability, to
equitable principles of general applicability), except as reserved for in the
consolidated statement of financial condition of Company as of December 31, 2005
referred to in Section 3.1(d) in accordance with GAAP, and were duly authorized
under and made in compliance with applicable federal and state laws and
regulations. Company and its Subsidiaries do not have any extensions or letters
of credit, investments, guarantees, indemnification agreements or commitments
for the same (including without limitation commitments to issue letters of
credit, to create acceptances, or to repurchase securities, federal funds or
other assets) other than those documented on the books and records of Company
and its Subsidiaries.
24
(v) LABOR MATTERS. Neither Company nor any of its Subsidiaries is a
party to, or is bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is it
or any of its Subsidiaries the subject of a proceeding asserting that it or any
such Subsidiary has committed an unfair labor practice (within the meaning of
the National Labor Relations Act) or seeking to compel it or such Subsidiary to
bargain with any labor organization as to wages and conditions of employment,
nor is there any strike or other labor dispute involving it or any of its
Subsidiaries pending or, to the best of its knowledge, threatened, nor is it
aware of any activity involving it or any of its Subsidiaries' employees seeking
to certify a collective bargaining unit or engaging in any other organization
activity.
(w) INTERNAL CONTROLS AND RECORDS. Company and its Subsidiaries
maintain books of account which accurately and validly reflect, in all material
respects, all loans, mortgages, collateral and other business transactions and
maintain accounting controls sufficient to ensure that all such transactions are
(a) in all material respects, executed in accordance with its management's
general or specific authorization, and (b) recorded in conformity with GAAP.
Company has made available to Commerce all of Company's and each of its
Subsidiaries' written internal policies and procedures which are identified on
Section 3.1(w) of the Company Disclosure Schedule.
(x) SEC REPORTS. Company's Report on Form 10-K for the year ended
December 31, 2005, filed with the SEC does not contain a misstatement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading as of the time the
document was filed. Since the filing of such Report on Form 10-K, no other
report, proxy statement, or other document has been required to be filed by
Company pursuant to Section 13(a) or 14(a) of the Securities Exchange Act of
1934 which has not been filed with the SEC. Company has delivered to Commerce
the following documents: Form 10-K for Fiscal Year Ended December 31, 2005; the
Annual Report to Stockholders for such year; and a copy of the Proxy Statement
for the 2006 Annual Meeting of Stockholders of Company. Company is in compliance
in all material respects, with all rules, regulations, and requirements of the
Xxxxxxxx-Xxxxx Act of 2002 and the SEC.
3.2 REPRESENTATIONS AND WARRANTIES OF COMMERCE. Commerce and Sub, jointly
and severally, represent and warrant to Company as follows:
(a) ORGANIZATION AND AUTHORITY.
(i) Commerce is a corporation duly organized, validly existing
and in good standing under the laws of the State of Missouri and is a duly
registered bank holding company under the provisions of the Bank Holding Company
Act of 1956, as amended, and has all requisite power and authority to own, lease
and operate its properties and to carry on its business as now being conducted
and is duly qualified and in good standing to do business in each jurisdiction
in which the nature of its business or the ownership or leasing of its
properties makes such qualification necessary, other than in such jurisdictions
where the failure so to qualify would not, either individually or in the
aggregate, have a Material Adverse Effect on Commerce. Commerce has the
requisite corporate power and authority to enter into and perform this Agreement
and the Transaction Agreements and the transactions contemplated hereby and
25
thereby and the execution, delivery and performance of this Agreement and the
other Transaction Agreements by Commerce and the consummation by Commerce of the
transactions contemplated hereby and thereby have been duly authorized by the
Board of Directors of Commerce with no approval thereof by the stockholders of
Commerce being required to approve this Agreement.
(ii) Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of Kansas. Sub has the requisite
corporate power and authority to enter into and perform this Agreement and the
Transaction Agreements and the transactions contemplated hereby and thereby and
the execution, delivery and performance of this Agreement and the other
Transaction Agreements by Sub and the consummation by Sub of the transactions
contemplated hereby and thereby have been duly authorized by its Board of
Directors and by Commerce as the sole stockholder of Sub.
(b) VALID AND BINDING AGREEMENT; NO VIOLATION. This Agreement
constitutes a valid and binding agreement of Commerce and Sub enforceable in
accordance with its terms and neither the execution and delivery of this
Agreement nor the consummation by Commerce or Sub of the transactions
contemplated hereby violates or conflicts with the Articles of Incorporation or
By-Laws of Commerce or Sub or any agreement, law, regulation, order, judgment or
other restriction of any kind to which Commerce or Sub is a party or by which
either of them is bound.
(i) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign (a "Governmental Entity"), is required by or with respect to Commerce or
any of its Sub in connection with the execution and delivery of this Agreement
or the other Transaction Agreements or the consummation by Commerce of the
transactions contemplated hereby or thereby, which, if not made or obtained,
would have a Material Adverse Effect on Commerce or on the ability of Commerce
to perform its obligations hereunder or thereunder on a timely basis, or on
Commerce's or Sub's ability to own, possess or exercise the rights of an owner
with respect to the business and assets of Commerce and its Sub, except for (A)
the filing of applications and notices with the Board of Governors of the
Federal Reserve System (the "Federal Reserve") under the BHC Act and approval of
same, (B) the filing by Commerce with the Securities and Exchange Commission
(the "SEC") of a Registration Statement (as defined in Section 5.1(a) hereof))
to register the Commerce Common Stock to be issued, (C) such applications,
filings, authorizations, orders and approvals as may be required by the FDIC and
the Illinois Department of Financial and Professional Regulation, (D) the filing
with the Secretary of State of Kansas of the Certificate of Merger and (E) the
filing with the Secretary of State of Illinois of the Articles of Merger.
(c) CAPITAL STOCK OF COMMERCE. As of December 31, 2005, the authorized
capital stock of Commerce consisted of (a) 100,000,000 shares of common stock,
$5.00 par value, of which 67,608,906 shares were issued and outstanding, and (b)
2,000,000 shares of preferred stock, $1.00 par value, of which no shares were
issued and outstanding. Holders of Commerce Common Stock do not have any
preemptive rights with respect to the issuance of additional authorized shares
of Commerce Common Stock.
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(d) FINANCIAL STATEMENTS. The consolidated balance sheets of Commerce
as of December 31, 2005 and December 31, 2004, the consolidated statements of
earnings for the years ended December 31, 2005 and December 31, 2004, and all
related schedules and notes to the foregoing, all of which have been delivered
to Company, have been audited by KPMG LLP, independent certified public
accountants. All of the foregoing financial statements have been prepared in
accordance with GAAP, are correct and complete and fairly and accurately present
the financial position, results of operation and changes of financial position
of Commerce as of their respective dates and for the periods indicated. Commerce
has no material liabilities or obligations of a type which would be included in
a balance sheet prepared in accordance with GAAP whether related to tax or
non-tax matters, accrued or contingent, due or not yet due, liquidated or
unliquidated, or otherwise, except as and to the extent disclosed or reflected
in the balance sheet of Commerce as of December 31, 2005, or incurred since
December 31, 2005, in the ordinary course of business. From December 31, 2005
until the date hereof, there has been no Material Adverse Effect in the
financial condition, properties, assets, liabilities, rights or business of
Commerce, or in the relationship of Commerce with respect to its employees,
creditors, suppliers, distributors, customers or others with whom it has
business relationships.
(e) SEC REPORTS. Commerce's Report on Form 10-K for year ended
December 31, 2005, filed with the SEC does not contain a misstatement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading as of the time the
document was filed. Since the filing of such Report on Form 10-K, no other
report, proxy statement, or other document has been required to be filed by
Commerce pursuant to Section 13(a) or 14(a) of the Securities Exchange Act of
1934 which has not been filed with the SEC and delivered to Company. Commerce
has delivered to Company the following documents: Form 10-K for Fiscal Year
Ended December 31, 2005; the Annual Report to Stockholders for such year; and a
copy of the Proxy Statement for the 2005 Annual Meeting of Stockholders of
Commerce. Commerce is in compliance in all material respects, with all rules,
regulations, and requirements of the Xxxxxxxx-Xxxxx Act of 2002 and the SEC.
(f) STATUS OF COMMERCE COMMON STOCK TO BE ISSUED. The shares of
Commerce Common Stock into which the Company Common Stock is to be exchanged or
converted pursuant to this Agreement will be, when delivered as specified in
this Agreement, validly authorized and issued, fully paid and non-assessable,
and registered pursuant to an effective registration statement under the
Securities Act.
(g) GOVERNMENTAL REGULATION. Commerce and its subsidiaries hold all
material licenses, certificates, permits, franchises and rights from all
appropriate federal, state or other public authorities necessary for the lawful
conduct of their respective businesses and ownership of their respective
properties. Commerce and its subsidiaries have complied in all material respects
with all federal, state and local statutes, regulations, ordinances or rules
applicable to the ownership of their respective properties or for the conduct of
their respective businesses.
(h) LITIGATION. There are no actions, suits, claims, demands or other
proceedings or investigations (either judicial or administrative) pending or, to
the knowledge of Commerce, threatened against or affecting the properties,
assets, rights or business of Commerce or its subsidiaries or the right to carry
on or conduct their respective businesses, nor are there any
27
grounds therefor, which would in the aggregate materially and adversely affect
the business, operations, properties or financial condition of Commerce and its
subsidiaries or which will or could prevent or materially impair the
transactions contemplated by this Agreement.
(i) TAXES. Commerce and its subsidiaries have filed with the
appropriate governmental agencies all federal, state and local Tax and
information returns and Tax Returns due in respect of any of their business or
properties in a timely fashion and have paid all amounts due shown on such
returns, except where the failure to make such filing or make such payment,
individually or in the aggregate, would not materially and adversely affect the
business, operations, properties or financial condition of Commerce and its
subsidiaries.
(j) DEFAULTS. Neither Commerce nor any of its subsidiaries is in
material breach or material default under any agreement or commitment to which
Commerce or any of its subsidiaries is a party, or under any loan agreement,
note, security agreement, guarantee or other document pursuant to or in
connection with Commerce's or any of its subsidiaries' extension of credit; and
there has not occurred any event which, after the giving of notice, the lapse of
time or otherwise, would constitute any such default under, or result in any
such breach of, any such agreement, commitment or extension of credit.
(k) INFORMATION SUPPLIED. None of the information supplied by Commerce
and Sub for inclusion or incorporation by reference in (a) the Registration
Statement (as defined in Section 5.1(a)) will, at the time the Registration
Statement is filed with the SEC and at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, or (b) the Proxy Statement (as defined in
Section 5.1(a) will, at the date of mailing to stockholders and at the times of
the meetings of stockholders to be held in connection with the Merger, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, other than information supplied by Company.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 COVENANTS OF COMPANY. During the period from the date of this Agreement
and continuing until the Effective Time (except as expressly contemplated or
permitted by this Agreement or to the extent that Commerce or Sub shall
otherwise consent in writing, which consent shall not be unreasonably withheld)
Company agrees that it will and will cause each of its Subsidiaries to carry on
the business of Company and each of its Subsidiaries in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted and use
all reasonable efforts to preserve intact the present business organizations of
Company and each of its Subsidiaries, maintain the rights and franchises of, and
preserve the relationships with customers, suppliers and others having business
dealings with, Company and each of its Subsidiaries. Without limiting the
generality of the foregoing, except as set forth in Section 4.1 of the Company
Disclosure Schedule, during the period from the date of this Agreement to the
Effective Time, Company shall not, and shall not permit any of its Subsidiaries
to, without the prior consent of Commerce and Sub in writing:
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(a) (i) declare or pay any dividends on or make other distributions in
respect of any of its capital stock, except for cash dividends in an amount per
share not greater than, and consistent with the manner and frequency of,
dividends paid by Company in the past 12 months and dividends by a wholly owned
Subsidiary of Company to Company, (ii) set any record or payment dates for the
payment of any dividends or distribution on its capital stock except in the
ordinary course of business consistent with past practice, (iii) split, combine
or reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for, shares of its capital stock or (iv) repurchase, redeem or otherwise
acquire, or permit any Subsidiary to purchase or otherwise acquire, any shares
of its capital stock or the capital stock of any other Subsidiary of Company or
any securities convertible into or exercisable for any shares of such capital
stock;
(b) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock of any class, any
securities convertible into or exercisable for, or any rights, warrants or
options to acquire, any such shares, or enter into any agreement with respect to
any of the foregoing, other than issuances of Company Common Stock, including a
cashless exercise, pursuant to the exercise of stock options pursuant to the
Company's stock option plan;
(c) except as required to perform its obligations under this
Agreement, amend or propose to amend its Articles of Incorporation or its
By-laws or other organizational documents or that of any Subsidiary;
(d) (i) enter into any new material line of business, (ii) change its
lending, investment, liability management and other material banking policies in
any respect which is material to Company, except as required by law or by
policies imposed by a Bank Regulator, or (iii) except as set forth in Section
4.1(d) of the Company Disclosure Schedule, incur or commit to any capital
expenditures or any obligations or liabilities in connection therewith other
than capital expenditures and obligations or liabilities incurred or committed
to in the ordinary course of business consistent with past practice but in no
event for more than $25,000 as to any one such item or $50,000 as to all such
items in the aggregate;
(e) acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other means, any business or any corporation, partnership,
association or other business organization or division thereof; provided,
however, that the foregoing shall not prohibit foreclosures and other debt-
previously-contracted acquisitions in the ordinary course of business consistent
with past practice;
(f) sell, lease, encumber or otherwise dispose of, or agree to sell,
lease, encumber or otherwise dispose of, any of its assets (including capital
stock of Subsidiaries of Company), which are material, individually or in the
aggregate, to Company, other than in the ordinary course of business consistent
with past practice;
(g) incur any long-term indebtedness for borrowed money or guarantee
any such long-term indebtedness or issue or sell any long-term debt securities
or warrants or rights to acquire any long-term debt securities of Company or any
of its Subsidiaries or guarantee any
29
long-term debt securities of others other than (i) indebtedness of any
Subsidiary of Company to Company or to another Subsidiary of Company, (ii)
deposits taken in the ordinary course of business consistent with past practice,
or (iii) renewals or extensions of existing long-term indebtedness without any
change in the material terms thereof;
(h) intentionally take or fail to take any action with the intent to
cause or create any of the representations and warranties set forth in this
Agreement from being or becoming untrue in any material respect, or any of the
conditions to the Closing set forth in ARTICLE VI (including without limitation
the conditions set forth in Section 6.3(d)) not being satisfied, or (unless such
action is required by applicable law or sound banking practice) which would
adversely affect the ability of Commerce, Sub or Company to obtain any of the
Requisite Regulatory Approvals;
(i) change the methods of accounting of Company or any of its
Subsidiaries, except as required by changes in GAAP as concurred in by such
party's independent auditors;
(j) (i) enter into, adopt, amend (except for technical amendments and
such amendments as may be required by law) or terminate any Company Benefit Plan
or any other Benefit Plan or any agreement, arrangement, plan or policy between
Company or any of its Subsidiaries and one or more of its directors or officers,
increase in any manner the compensation or fringe benefits of any director,
officer or employee of Company or any of its Subsidiaries without obtaining the
prior written consent of Commerce and Sub (which consent shall not be
unreasonably withheld)) or pay or grant any benefit not required by any plan and
arrangement as in effect as of the date hereof (including, without limitation,
the granting of stock options, stock appreciation rights, restricted stock,
restricted stock units or performance units or shares or any similar awards) or
enter into any contract, agreement, commitment or arrangement to do any of the
foregoing, (ii) enter into or renew any contract, agreement, commitment or
arrangement providing for the payment to any director, officer or employee of
Company or any of its Subsidiaries of compensation or benefits contingent, or
the terms of which are materially altered, upon the occurrence of any of the
transactions contemplated by this Agreement, or (iii) with respect to any
Company Benefit Plan which is a defined benefit or defined contribution pension
plan, permit or cause (A) a consolidation or merger of any such Company Benefit
Plan, (B) a spin-off involving any such Company Benefit Plan, (C) a transfer of
assets and/or liabilities from or to any such Company Benefit Plan, or (D) any
similar transaction involving any such Company Benefit Plan;
(k) enter into any contract that would be required to be disclosed on
Section 3.1(i) of the Company Disclosure Schedule or renew or terminate any
contract listed in Section 3.1(i) of the Company Disclosure Schedule through any
volitional conduct, other than renewals of contracts or leases for a term of one
year or less without material adverse changes to the terms thereof;
(l) issue or agree to issue any letters of credit or otherwise
guarantee the obligations of any other persons except in the ordinary course of
business consistent with past practice;
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(m) engage or participate in any material transaction or incur or
sustain any material obligation in excess of $50,000 individually or $100,000 in
the aggregate, not in the ordinary course of business consistent with past
practice;
(n) settle any claim, action or proceeding involving money damages
involving a payment by Company or Bank (other than claims paid by an insurance
company) in excess of $150,000 in the aggregate for all such matters, or settle
any other matter not involving money damages which is material to Company, or
settle or waive any individual litigation claim of Company or Bank against a
third party in excess of $500,000;
(o) except as required by GAAP or applicable law or regulation, change
or make any tax elections, change any method of accounting with respect to
taxes, file any amended tax return, or settle or compromise any federal, state,
local or foreign material tax liability;
(p) relocate or close any branch or loan production office;
(q) enter into any securitization or similar transactions with respect
to any loans, leases or other assets of Company or any of its Subsidiaries;
(r) take any action which would materially adversely affect the
ability of any party to obtain any consents required for the transactions
contemplated hereby or to perform its covenants and agreements under this
Agreement;
(s) make any single loan (or series of loans to the same or related
entities or persons) or any commitment to loan (or series of commitments to the
same or related entities or persons) which would be graded "OAEM" under Bank's
rating system or in an amount greater than $250,000 other than renewals of
existing loans or commitments to loan;
(t) purchase or invest in any securities other than U.S. government
obligations or other securities backed by the full faith and credit of the
United States having a maturity of not more than three (3) years from the date
of purchase;
(u) acquire or purchase any assets of or make any investment in any
financial institution other than the purchase of loans, assets or participations
therein in the ordinary course of business,
(v) make any equity investment or commitment to make such an
investment in real estate or in any real estate development project, other than
in connection with foreclosures, settlements in lieu of foreclosure or troubled
loan or debt restructuring in the ordinary course of business consistent with
prudent banking practices;
(w) make any loan or other extension of credit, or commit to make any
such loan or extension of credit, to any director or officer of Company or its
Subsidiaries, other than renewals of existing loans or commitments to loan,
without giving Commerce five days' notice in advance of Company's or its
Subsidiary's approval of such loan or extension of credit or commitment relating
thereto;
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(x) make any adjustments to Bank's loan loss reserve account except
for increases to such account and appropriate charge-offs and recoveries
following its normal historical practices; or
(y) agree to, or make any commitment to, take any of the actions
prohibited by this Section 4.1.
(z) take or cause to be taken any action which would disqualify the
Merger as a tax-free "reorganization" within the meaning of Section 368(a) of
the Code.
4.2 COOPERATION WITH COMMERCE.
(a) Between the date hereof and the Closing Date and upon reasonable
notice, Commerce and its authorized representatives shall be permitted
reasonable access during regular business hours to all properties, books,
records, contracts and documents of Company and its Subsidiaries, reasonably
requested by Commerce. Company shall furnish to Commerce and its authorized
representatives all information with respect to the affairs of Company and its
Subsidiaries as Commerce may reasonably request. During such period, Company
shall (and shall cause each of its Subsidiaries to) make available to Commerce
and Sub and their representatives and advisors, as reasonably requested, a copy
of each report, schedule, registration statement and other document filed or
received by Company during such period pursuant to the requirements of Federal
securities laws or Federal or state banking laws (other than reports or
documents which such party is not permitted to disclose under applicable law or
reports or documents which are subject to an attorney-client privilege or which
constitute attorney work product). Commerce and Sub will hold any such
information with respect to Company and its Subsidiaries which is nonpublic in
confidence to the extent required by, and in accordance with, the provisions of
the letter dated September 26, 2005 between Company and Commerce (the
"Confidentiality Agreement"). No investigation by Commerce or Sub shall affect
the representations and warranties of Company. In addition, Commerce shall be
permitted to conduct a reasonable verification of trust assets.
(b) Company and its Subsidiaries shall, unless the Board of Directors
of Company determines, in good faith, that the exercise of its fiduciary duties
to Company's stockholders under applicable law, as advised by outside counsel,
prohibits the taking of such action (i) Company and its Subsidiaries shall give
reasonable notice to Commerce of any meeting of the Board of Directors of the
Company, together with a copy of the agenda for each such meeting and, following
such meeting, a copy of the minutes from such meeting; and (ii) Company and its
Subsidiaries shall provide to Commerce all information provided to the directors
on all such boards and committees in connection with all such meetings or
otherwise provided to the directors and shall provide any other financial
reports or other analyses prepared for senior management of the Company or its
Subsidiaries. Upon the written consent of the Company (which consent cannot be
unreasonably withheld), Commerce may request in writing to attend as an observer
any meetings of the Board of Directors of Company. Notwithstanding the
foregoing, Company has the right to withhold its consent if the Board of
Directors of Company determines, in good faith, that the exercise of its
fiduciary duties to Company's stockholders under applicable law, as advised by
outside counsel, prohibits the taking of such action.
32
(c) Company shall reasonably cooperate, subject to applicable laws,
with Commerce in taking those planning actions necessary for a smooth the
transition to procedures and formats used by Commerce as of the Effective Time,
including, but not limited to, lending, accounting, compliance, human resources,
systems and training processes. Commerce shall provide such assistance and
consultation as Company may reasonably require in such planning process.
4.3 COVENANTS OF COMMERCE AND SUB.
(a) REGULATORY APPROVALS. Subject to the terms and conditions of this
Agreement, Commerce and Sub agree to use their reasonable best efforts to secure
as expeditiously as practicable all the necessary approvals, regulatory or
otherwise, needed to consummate the transactions contemplated herein. Commerce
and Sub shall provide to Company's counsel a copy of all applications for such
approvals and shall keep such counsel or the Company advised of the status of
the regulatory review process.
(b) INFORMATION. Commerce and Sub shall provide such information and
answer such inquiries as Company may reasonably request or make concerning the
subject matter of the representations and warranties of Commerce and Sub herein.
(c) EMPLOYEE BENEFITS. Employees of Company and its Subsidiaries shall
be eligible to participate in all Commerce welfare benefit plans in accordance
with their terms, and for such purpose all service of such employees with
Company and its Subsidiaries shall be counted as service with Commerce.
Continuous coverage under Company or Subsidiary health plan through the
Effective Time shall count as coverage under the Commerce health plan. With
respect to Employees of Company and its Subsidiaries, Commerce shall, in
connection with administering its welfare benefit plans, waive waiting periods
to the extent waived or otherwise satisfied under any similar Employee Plan
maintained or contributed to by the Company prior to the Effective Time. For
purposes of Commerce's Participating Investment Plan, Commerce will recognize
all service with the Company for purposes of eligibility, and all Company
participants in Commerce's Participating Investment Plan shall be 100% vested.
4.4 TAX-FREE REORGANIZATION TREATMENT.
(a) Pursuant to the terms of this Agreement, Commerce and Sub shall
cause the Merger to qualify, and will not take any action either prior to or
after Closing which could reasonably be expected to prevent the Merger from
qualifying, as a reorganization under Section 368 of the Code.
(b) Commerce represents and covenants, solely for tax purposes, now,
and as of the Closing Date, the following: (i) prior to the Merger, it will be
in "control" of Sub within the meaning of Section 368(c) of the Code; (ii) it
has no present plan or intention to and will not for a period of 24 months
following the Closing liquidate Sub or merge Sub into another corporation, or
sell, distribute or otherwise dispose of the Sub stock, except for transfers of
stock described in Section 368(a)(2)(C) of the Code or Treasury Regulation
Section 1.368-2(k), or cause Sub to sell or otherwise dispose of any of its
assets except for dispositions made in the ordinary course of business or
transfers described in Section 368(a)(2)(C) or Treasury Regulation
33
Section 1.368-2(k); and (iii) that it presently intends to and will for a period
of at least 24 months following the Closing continue the Company's historic
business or use a significant portion of Company's business assets in business
in a manner that satisfies the continuity of business enterprise requirement set
forth in Treasury Regulation Section 1.368-1(d), provided, however, that Sub may
engage in a transaction otherwise prohibited under this Section 4.4(b) if
Commerce receives an opinion of competent counsel that the transaction will not
adversely affect the treatment of the Merger as a reorganization under section
368 of the Code.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 REGULATORY MATTERS.
(a) REGISTRATION STATEMENT AND PROXY STATEMENT. Commerce shall
promptly and as soon as practicable prepare and file a registration statement on
Form S-4 to be filed with the SEC pursuant to the Securities Act for the purpose
of registering the shares of Commerce Common Stock to be issued in the Merger
(the "Registration Statement"). Company, Commerce and Sub shall each provide
promptly to the other such information concerning their respective businesses,
financial conditions, and affairs as may be required or appropriate for
inclusion in the Registration Statement or the proxy statement for the special
stockholders' meeting of Company to be called for the purpose of considering and
voting on the Merger (the "Proxy Statement"). Company, Commerce and Sub shall
each cause their counsel and auditors to cooperate with the other's counsel and
auditors in the preparation and filing of the Registration Statement and the
Proxy Statement. Commerce shall not include in the Registration Statement any
information concerning Company to which Company shall reasonably and timely
object in writing. Commerce, Sub and Company shall use their reasonable best
efforts to have the Registration Statement declared effective under the
Securities Act as soon as may be practicable and thereafter Company shall
distribute the Proxy Statement to its stockholders in accordance with applicable
laws. If necessary, in light of developments occurring subsequent to the filing
of the Registration Statement, Company shall mail or otherwise furnish to its
stockholders such amendments or supplements to the Registration Statement
materials as may, in the reasonable opinion of Commerce, Sub, or Company, be
necessary so that the Registration Statement materials, as so amended or
supplemented, will contain no untrue statement of any material fact and will not
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, or as may be necessary to comply with applicable law.
Commerce and Sub shall not be required to maintain the effectiveness of the
Registration Statement after delivery of the Commerce Common Stock issued
pursuant hereto for the purpose of resale of Commerce Common Stock by any
person. For a period of at least two years from the date of the conversion of
shares described in Section 2.2 hereof, Commerce shall make available "adequate
current public information" within the meaning of and as required by paragraph
(c) of Rule 144 adopted pursuant to the Securities Act.
(b) STATE SECURITIES LAWS. The parties hereto shall cooperate in
making any filings required under the securities laws of any state in order
either to qualify or register the Commerce Common Stock so it may be offered and
sold lawfully in such state in connection with the Merger or to obtain an
exemption from such qualification or registration.
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(c) INDEMNIFICATION. Commerce agrees to indemnify and hold harmless
Company and its directors, officers, employees, representatives and agents from
and against any and all claims, liabilities, damages and expenses (including
reasonable attorneys' fees), whether arising under federal or state securities
or Blue Sky laws or otherwise, which may be asserted against any of them and
which arise as a result of any alleged act or failure to act, or any alleged
statement or omission, of Commerce done or made in connection with the Merger,
Registration Statement, (including the Proxy Statement), or any other statement
or form filed or required to be filed with the SEC or any state securities
department or delivered or required to be delivered to the holders of Company
Common Stock.
(d) GOVERNMENTAL ENTITY COMMUNICATIONS. Commerce, Sub and Company
shall promptly advise each other upon receiving any communication from any
Governmental Entity whose consent or approval is required for consummation of
the transactions contemplated by this Agreement which causes such party to
believe that there is a reasonable likelihood that any Requisite Regulatory
Approval (as defined in Section 6.1(b)) will not be obtained or that the receipt
of any such approval will be materially delayed.
5.2 STOCKHOLDERS' XXXXXXXX.Xxxxxxx shall call a meeting of its stockholders
as soon as is reasonably practicable after the Registration Statement is
declared effective by the SEC for the purpose of voting upon the adoption of
this Agreement. Company will, through its Board of Directors, recommend to its
stockholders adoption of this Agreement unless the Board of Directors of Company
determines in good faith, based upon the written advice of outside counsel, that
making such recommendation, or failing to withdraw, modify or amend any
previously made recommendation, would constitute a breach of fiduciary duty by
Company's Board of Directors under applicable law. In addition, nothing in this
Section 5.2 or elsewhere in this Agreement shall prohibit accurate disclosure by
Company of information that is required to be disclosed in the Proxy Statement,
or otherwise required to be disclosed by applicable law or regulation or the
rules of any securities exchange or automated quotation system on which the
securities of Company may then be traded.
5.3 LEGAL CONDITIONS.
(a) Each of Company, Commerce and Sub shall, and shall cause its
respective Subsidiaries to, use all reasonable efforts (i) to take, or cause to
be taken, all actions necessary to comply promptly with all legal requirements
which may be imposed on such party or its Subsidiaries with respect to the
transactions contemplated by this Agreement and as promptly as practicable, and
(ii) to obtain (and to cooperate with the other party to obtain) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity and/or any other public or private third party which is required to be
obtained or made by such party or any of its Subsidiaries in connection with the
Merger and the other transactions contemplated by this Agreement. Each of
Company, Commerce and Sub will promptly cooperate with and furnish information
to the other in connection with any such burden suffered by, or requirement
imposed upon, any of them or any of their Subsidiaries in connection with the
foregoing.
(b) Subject to applicable law, each of Company, Commerce and Sub
agrees to use all reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, all things necessary and proper or advisable to
consummate, as soon as practicable after the date
35
of this Agreement, the transactions contemplated hereby, including, without
limitation, using all reasonable efforts to (i) lift or rescind any injunction
or restraining order or other order adversely affecting the ability of the
parties to consummate the transactions contemplated hereby, (ii) defend any
Litigation seeking to enjoin, prevent or delay the consummation of the
transactions contemplated hereby or seeking material damages, (iii) provide to
counsel to the other party hereto representations and certifications as to such
matters as such counsel may reasonably request in order to render the opinion
referred to in Section 6.2(i).
5.4 PLAN TERMINATION. Company's 401(k) Plan shall be terminated by Company
pursuant to the appropriate corporate action undertaken prior to the Closing
Date, which termination shall be effective immediately prior to the Closing Date
and shall be contingent upon receipt of a determination from the Internal
Revenue Service that such termination does not adversely affect the qualified
status of the Plan. If a favorable Internal Revenue Service determination letter
is received, then the 401(k) Plan accounts shall be distributed pursuant to the
Plan.
5.5 ADDITIONAL AGREEMENTS. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
shall take all such necessary action.
5.6 FEES AND EXPENSES. Unless otherwise agreed by the parties in writing or
as otherwise provided herein, each party hereto shall bear and pay all costs and
expenses incurred by it incident to preparing, entering into and carrying out
this Agreement and to consummating the Merger, including fees and expenses of
its own financial advisors, accountants and counsel, all printing, filing,
mailing and other incidental fees. Commerce will bear and pay all costs and
expenses related thereto associated with the Registration Statement and the
Proxy Statement.
5.7 COOPERATION. During the period from the date of this Agreement to the
Effective Time, subject to applicable law, each of Company, Commerce and Sub
shall, (i) confer on a regular and frequent basis with the other, report on
operational matters, policies and banking practices and promptly advise the
other orally and in writing of any change or event having, or which, insofar as
can reasonably be foreseen, could have, a Material Adverse Effect on Company or
Commerce or Sub, as the case may be, or which would cause or constitute a
material breach of any of the representations, warranties or covenants of such
party contained herein, (ii) cause each Subsidiary of Company and Commerce and
Sub that is a bank to file all call reports with the appropriate Bank Regulators
and all other reports, applications and other documents required to be filed
with the applicable Governmental Entities between the date hereof and the
Effective Time and (iii) coordinate with the other the declaration of any
dividends in respect of Commerce Common Stock and Company Common Stock and the
record dates and payment dates relating thereto, it being the intention of the
parties hereto that holders of Commerce Common Stock or Company Common Stock
shall not receive two dividends, or fail to receive one dividend, for any single
calendar quarter with respect to their shares of Commerce Common Stock and/or
Company Common Stock and any shares of Commerce Common Stock any such holder
receives in exchange therefor in the Merger.
5.8 ADVICE OF CHANGES. Commerce, Sub and Company shall promptly advise the
other party of any change or event which, individually or in the aggregate with
other such
36
changes or events, has a material adverse effect on it or which it believes
would or would be reasonably likely to cause or constitute a Material Adverse
Effect on it or constitutes a material breach of any of its representations,
warranties or covenants contained herein.
5.9 DISSENTERS' RIGHTS. Company shall include in the notice of
stockholder's meeting required by Section 5.2 hereof a description of appraisal
rights as contained in Section 11.70 of the IBCA.
5.10 ACQUISITION TRANSACTIONS. Company and each Subsidiary shall not,
directly or indirectly, and shall instruct and otherwise use its best efforts to
cause their respective officers, directors, employees, agents or advisors or
other representatives or consultants not to directly or indirectly, (i) solicit
or initiate any proposals or offers relating to any acquisition or purchase of
all or a material amount of the assets of, or all or any material amount of the
securities, of, or any merger, consolidation or business combination with,
Company or any Subsidiary (such transactions are referred to herein as
"Acquisition Transactions") or (ii) participate in any discussions or
negotiation regarding, or furnish to any other Person any information with
respect to, an Acquisition Transaction. Notwithstanding the foregoing, nothing
in this Section 5.10 shall restrict or prohibit (x) any disclosure by Company
that is required in any document to be filed with the SEC after the date of this
Agreement, (y) any disclosure that, in the written opinion of counsel to the
Board of Directors of Company, is otherwise required by applicable law, or (z)
prior to the meeting at which Company Stockholder Approval is sought,
consideration and participation in discussions and negotiations regarding, and
furnishing to any other Person any information with respect to, a bona fide
proposal for an Acquisition Transaction received by Company if the Board of
Directors of Company determines in good faith (after consultation with outside
legal counsel) that failure to do so would cause it to violate its fiduciary
duties. Company shall, and shall cause each Company Subsidiary to, immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing. Company shall notify Commerce promptly if any such inquiries or
proposals are received by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or continued with Company
or any Subsidiary.
5.11 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) The Surviving Corporation shall indemnify, defend, and hold
harmless the present directors, officers, employees, and agents of Company and
its Subsidiaries after the Effective Time against all damages in connection with
any action arising out of actions or omissions occurring at or prior to the
Effective Time (including the transactions contemplated by this Agreement) to
the full extent permitted under Missouri Law.
(b) With respect to all persons who are currently covered by Company's
directors' and officers' liability insurance, or will become covered by such
insurance prior to the Effective Time, the Surviving Corporation shall maintain
in effect for a period of not less than three years following the Effective Time
directors' and officers' liability insurance in an amount not less than the
current coverage with respect to matters occurring prior to the Effective Time;
provided, that in no event shall the Surviving Corporation be required to expend
under this Section 5.11(b) more than an aggregate of 120% of the current annual
premium expended by
37
Company to provide such coverage (the "Maximum Premium Amount"). In the event
the Surviving Corporation would be required to expend more than the Maximum
Premium Amount to provide such coverage, it shall maintain under this Section
5.11(b) the greatest amount of such insurance which it can obtain for the
Maximum Premium Amount.
5.12 RETENTION OF EARNINGS. Between the date of this Agreement and the
Closing, Company agrees that all Bank earnings shall be retained by Bank, except
for dividends permitted by Section 4.1(c) and expenses relating to the
transaction contemplated by this Agreement, such as legal and advisory fees.
5.13 CERTAIN FINANCIAL STATEMENT ADJUSTMENTS. Prior to Closing, Company
agrees to make such pre-closing adjustments to its stub financial statements as
shall be reasonably requested by Commerce to implement consistent accounting
policies as between Company and Commerce (the "Requested Adjustments") provided
that such Requested Adjustments should not be taken into account in the
calculation of the Company's stockholders' equity or the Company's loan loss
reserve referenced in Section 6.2(f). In the event that this Agreement is
terminated pursuant to Section 7.1 and Company is not able to reverse such
Requested Adjustments, Commerce agrees to reimburse Company for any loss or
expense incurred as a result of such Requested Adjustments.
5.14 FORM S-3 REGISTRATION STATEMENT. Prior to or at the Closing Date,
Commerce shall prepare and file a registration statement on Form S-3 with
respect to the Commerce Common Stock issued to the "affiliates" (as defined in
Rule 145 and Rule 405 adopted under the Securities Act and as set forth in
Exhibit 5.14) of the Company covering the resale of the Commerce Common Stock by
such affiliates of the Company. Commerce shall use its reasonable efforts to
cause such registration statement on Form S-3 to be declared effective, and to
keep such registration statement effective until one year following the
Effective Time. To the extent any affiliate of the Company shall have requested
in writing to Commerce not to be included in such registration statement, the
Common Commerce Stock certificates received by such affiliate shall contain
applicable legends regarding compliance with Rule 145 of the Securities Act.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION. The respective obligations of
each party to consummate the transactions contemplated by this Agreement shall
be subject to the satisfaction on or prior to the Closing Date of the following
conditions:
(a) STOCKHOLDER APPROVAL. The Company Stockholder Approval shall have
been obtained.
(b) OTHER APPROVALS. All authorizations, consents, orders or approvals
of, or declarations or filings with, and all expirations of waiting periods
imposed by, any Governmental Entity which are set forth in Section 6.1(b) of the
Company Disclosure Schedule (all such permits, approvals, filings and consents
and the lapse of all such waiting periods being referred
38
to as the "Requisite Regulatory Approvals") and all such Requisite Regulatory
Approvals shall be in full force and effect.
(c) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated by this Agreement or the
Transaction Agreements shall be in effect. There shall not be any action taken,
or any statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the transactions contemplated by this Agreement or the Transaction
Agreements, by any Federal, state or foreign Governmental Entity of competent
jurisdiction which makes the consummation of the transactions contemplated by
this Agreement or the Transaction Agreements illegal.
(d) REGISTRATION STATEMENT. The Registration Statement shall become
effective under the Securities Act, no stop orders suspending the effectiveness
of the Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC.
6.2 CONDITIONS TO OBLIGATIONS OF COMMERCE AND SUB. The obligation of
Commerce and Sub to consummate the transactions contemplated by this Agreement
is subject to the satisfaction of the following conditions unless waived by
Commerce and Sub:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Company set forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date, and Commerce and Sub shall
have received a certificate signed on behalf of Company by its President and
Chief Executive Officer to such effect.
(b) PERFORMANCE OF OBLIGATIONS. Company shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and Commerce and Sub shall have
received a certificate signed on behalf of Company by its any executive officer
to such effect.
(c) CORPORATE ACTION. Commerce and Sub shall have received a copy of
the resolution or resolutions duly adopted by the Board of Directors (or a duly
authorized committee thereof) of Company and of the holders of the Company
Common Stock authorizing the execution, delivery and performance by Company of
this Agreement and the other Transaction Agreements, certified by the Secretary
or an Assistant Secretary of Company.
(d) MATERIAL ADVERSE EFFECT. Except as disclosed to Commerce and Sub
in writing prior to the date hereof, no Material Adverse Effect upon Company
shall have occurred since December 31, 2005 and Company shall not be a party to,
or to the Company's knowledge, threatened with, and to Company's knowledge there
is no factual basis for, any legal action or other proceeding before any court,
any arbitrator of any kind or any government agency, which in the reasonable
judgment of Commerce and Sub, could have a Material Adverse Effect upon
39
Company, and Commerce and Sub shall have received a certificate signed on behalf
of Company by its President and Chief Executive Officer to such effect.
(e) CLOSING DOCUMENTS. Commerce and Sub shall have received from
Company such certificates and other customary closing documents as counsel for
Commerce shall reasonably request.
(f) FINANCIAL MEASURES. On the Closing Date, Company's stockholders'
equity shall not be less than $35,616,000 (excluding adjustments for (i) the
effect of FASB 115, including the effect of fluctuations in Bank's securities
portfolio, (ii) the effect of FASB 123R, including any effects of expensing
stock options and (iii) any effects due to all existing non-qualified
retirement, split dollar life insurance deferred compensation and salary
continuation agreements) and the Company's loan loss reserve shall not be less
than $2,002,000, all as determined on the basis of GAAP.
(g) TAX REPRESENTATIONS. The Chief Executive Officer and Chief
Financial Officer of the Company shall have made those representations
reasonably requested by counsel and necessary to enable them to render the
opinion described in paragraph (i) below.
(h) DISSENTING STOCKHOLDERS. Company Dissenting Shares shall not
constitute more than 25% of the outstanding shares of Company Common Stock on
the Closing Date. Notwithstanding anything in this Agreement to the contrary,
Commerce shall not be entitled to waive the condition contained in this
subsection unless it commits to provide the Surviving Corporation with funds
necessary to pay the aggregate appraisal amount for such Company Dissenting
Shares.
(i) TAX OPINION. Commerce shall have received the opinion of Xxxxxxxxx
Xxxxxxx Xxxxx Xxxxxx LLP, dated the Closing Date, in form and substance
reasonably satisfactory to Commerce, to the effect that the Merger will be a
reorganization within the meaning of section 368(a) of the Code.
(j) CANCELLATION OF UNEXERCISED OPTIONS. Company will have taken all
necessary corporate action to cause the cancellation, effective as of the
Closing Date, of all outstanding options under the Company's stock option plans
which remain unexercised at the Closing Date.
(k) OPINION OF COUNSEL. Commerce shall have received an opinion of
Xxxxx Xxxx LLP dated the Closing Date in form and substance reasonably
satisfactory to Commerce covering the matters set out in Exhibit 6.2(k) hereto.
(l) NON-COMPETITION AGREEMENTS. Commerce shall have entered into
non-competition agreements with each of Xxxxx X. Xxxxxxxxxx and Xxxxx X.
Xxxxxxxx substantially in the form attached hereto as Exhibit 6.2(l).
(m) 409A COMPLIANCE. Company shall have amended all contracts or
agreements, plans or arrangements by Company or any of its Subsidiaries covering
any person to comply with the proposed regulations under Code Section 409A.
40
(n) INSURABLE INTEREST OPINION. Commerce shall have received the
opinion of counsel selected by Commerce, dated the Closing Date, in form and
substance reasonably satisfactory to Commerce, to the effect that all split
dollar agreements maintained by Company and/or the Bank, and the life insurance
contracts maintained thereunder, comply with the insurable interest rules under
Illinois law.
(o) CONSENTS OF INSURED EMPLOYEES. Company and Bank shall have
obtained all necessary executed consent agreements from all employees for life
insurance which has been obtained for the benefit of Company or Bank and shall
have furnished Commerce with copies of the same.
6.3 CONDITIONS TO OBLIGATIONS OF COMPANY. The obligation of Company to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions unless waived by Company:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Commerce and Sub set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date, and Company shall
have received a certificate signed on behalf of Commerce and Sub by an executive
officer to such effect.
(b) PERFORMANCE OF OBLIGATIONS. Commerce and Sub shall have performed
in all material respects all obligations required to be performed by them under
this Agreement at or prior to the Closing Date, and Company shall have received
a certificate signed on behalf of Commerce and Sub by an executive officer to
such effect.
(c) CORPORATE ACTION. Company shall have received a copy of the
resolution or resolutions duly adopted by the Board of Directors (or a duly
authorized committee thereof) of Commerce and Sub authorizing the execution,
delivery and performance by Commerce and Sub of this Agreement and the other
Transaction Agreements, certified by the Secretary or an Assistant Secretary of
Commerce and Sub.
(d) TAX OPINION. Company shall have received, at Commerce's expense,
an opinion of Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx LLP, addressed to Company and its
stockholders and in form and substance reasonably satisfactory to Company and
Company counsel, dated the Closing Date, to the effect that the Merger will be a
tax-free reorganization within the meaning of Section 368(a) of the Code and no
gain or loss will be recognized by the stockholders of Company to the extent
they receive Commerce Common Stock solely in exchange for shares of Company
Common Stock.
(e) MATERIAL ADVERSE EFFECT. Except as disclosed to Company in writing
prior to the date hereof, no Material Adverse Effect upon Commerce or Sub shall
have occurred since December 31, 2005 and Commerce or Sub shall not be a party
to, or to Commerce's and Sub's knowledge, threatened with, and to Commerce's and
Sub's knowledge there is no reasonable basis for, any legal action or other
proceeding before any court, any arbitrator of any kind or any governmental
agency, which in the reasonable judgment of Company, could have a
41
Material Adverse Effect upon Commerce or Sub, and Company shall have received a
certificate signed on behalf of Commerce and Sub by an executive officer to such
effect.
(f) CLOSING DOCUMENTS. Company shall have received from Commerce and
Sub such certificates and other customary closing documents as counsel for
Company shall reasonably request.
(g) FAIRNESS OPINION. Company shall have received a written opinion of
Xxxxxx, Xxxxxxxx & Company, Incorporated, dated as of a date which is reasonably
proximate to the date hereof, to the effect that, as of such date, the
consideration to be received by the holders of the Company Common Stock in the
Merger is fair to the holders of the Company Common Stock from a financial point
of view.
(h) OPINION OF COUNSEL. Company shall have received an opinion of
Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx LLP dated the Closing Date, in form and substance
reasonably satisfactory to Company covering the matters set forth in Exhibit
6.3(h) hereto.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 TERMINATION. This Agreement may be terminated at any time prior to the
Closing Date, by action taken or authorized by the Board of Directors of the
terminating party or parties, whether before or after adoption of the Agreement
by the stockholders of Company:
(a) by mutual consent of Commerce, Sub and Company in a written
instrument;
(b) by either Commerce, Sub or Company (i) upon written notice to the
other party if any Bank Regulator shall have issued an order denying approval of
the Merger and the other material aspects of the transactions contemplated by
this Agreement or if any Governmental Entity of competent jurisdiction shall
have issued a final permanent order enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement or (ii) if any
Governmental Entity of competent jurisdiction shall have issued an order in
connection with the transactions contemplated hereby imposing a condition of
restriction that would reasonably be expected to have a Material Adverse Effect
on Commerce, Sub or the Surviving Corporation, and in any such case the time for
appeal or petition for reconsideration of any such order referred to in clauses
(i) or (ii) shall have expired without such appeal or petition being granted;
(c) by either Commerce, Sub or Company if the Merger shall not have
been consummated on or before December 31, 2006; provided that if the Merger
shall not have been consummated on or before such date, such termination date
may be extended by up to 60 days thereafter (i) at the election of the
non-breaching party, if the Merger shall not have been consummated due to the
volitional breach of any material representation, warranty or covenant in this
Agreement by Commerce, Sub or Company, or (ii) at the election of the party who
has requested any Requisite Regulatory Approval, in the event that the Merger
shall not have been consummated due to the fact that any such Requisite
Regulatory Approvals shall not yet have been received;
42
(d) by Commerce or Sub in the event of a breach by Company of any
representation, warranty or covenant contained in this Agreement, which breach
(i) either is not cured within 45 days after the giving of written notice to
Company, or is of a nature which cannot be cured prior to the Closing and (ii)
would entitle the non-breaching party to elect not to consummate the
transactions contemplated hereby pursuant to ARTICLE VI;
(e) by Company in the event of a breach by Commerce or Sub of any
representation, warranty or covenant contained in this Agreement, which breach
(1) either is not cured within 45 days after the giving of written notice to
Commerce and Sub or is of a nature which cannot be cured prior to the Closing
and (2) would entitle the non-breaching party to elect not to consummate the
transactions contemplated hereby pursuant to ARTICLE VI;
(f) (i) by Company, Commerce or Sub if, in accordance with Section
5.2, the Board of Directors of Company fails to recommend adoption of this
Agreement by the stockholders of Company, or amends or modifies such
recommendation in a manner materially adverse to Commerce or Sub or withdraws
such recommendation to the stockholders of Company;
(ii) by Company if the condition set forth in Section 6.3(g) is
not satisfied;
(g) by Commerce, Sub or Company, if the Company Stockholder Approval
shall not have been obtained at a duly held meeting of stockholders of Company
held for such purpose or at any adjournment, postponement or continuation
thereof;
(h) (i) by Commerce or Sub in the event there has been a change, or,
to the knowledge of Company and its Subsidiaries, any event involving a
prospective change, in the business, financial condition, results of operations
or prospects of Company or any of its Subsidiaries which has had, or would be
reasonably likely to have, a Material Adverse Effect on Company; provided,
however, that termination pursuant to this subsection (i) shall be effective 45
days after the giving of written notice to Company if the change or event
described in said notice has not been cured; and provided, further that
termination under this subsection (i) shall be effective immediately after the
giving of written notice if said change or event cannot be cured prior to the
Closing; and
(ii) by Company in the event there has been a change, or, to the
knowledge of Commerce and its Subsidiaries, any event involving a prospective
change, in the business, financial condition, results of operations or prospects
of Commerce, Sub or any of its Subsidiaries which has had, or would be
reasonably likely to have, a Material Adverse Effect on Commerce or Sub;
provided, however, that termination pursuant to this subsection (ii) shall be
effective 45 days after the giving of written notice to Commerce and Sub if the
change or event described in said notice has not been cured; and provided,
further that termination under this subsection (ii) shall be effective
immediately after the giving of written notice if said change or event cannot be
cured prior to Closing;
(i) by Commerce or Sub if the Commerce Stock Price is greater than
$61.69; and
43
(j) by Company if the Commerce Stock Price is less than $41.69.
In each case of (i) and (j) above, such Common Stock Price shall be adjusted for
any stock split, stock dividends, recapitalization or other adjustment
pertaining to or affecting the Common Stock prior to the Effective Time.
7.2 EFFECT OF TERMINATION. Termination of this Agreement shall not
terminate or affect the obligations of the parties under Section 5.6 or
otherwise to pay expenses as provided elsewhere herein, to maintain the
confidentiality of the other party's information pursuant to Section 4.1 or the
provisions of this Section 7.2 or of Section 8.2 or 8.6, and shall not affect
any agreement after such termination. The parties agree that any termination of
this Agreement shall not in any manner release or be construed as so releasing
the nonterminating party or parties or their respective officers or directors
from any liability or damage to the other party or parties arising out of, in
connection with or otherwise relating to, directly or indirectly, such parties
willful breach of its covenants, agreements, representations or warranties
hereunder, except to the extent expressly provided herein.
7.3 AMENDMENT. This Agreement may be amended by the parties hereto at any
time before or after approval of this Agreement by the stockholders of Company,
but after any such approval, no amendment shall be made which by law requires
further approval by such stockholders without such further approval. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
7.4 EXTENSION; WAIVER. At any time prior to the Closing Date, the parties
hereto, by action taken or authorized by their respective Board of Directors,
may, to the extent legally allowed, (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party.
ARTICLE VIII
GENERAL PROVISIONS
8.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. No investigation
by Commerce, Sub or Company made before or after the date hereof shall affect
the representations and warranties which are contained in this Agreement;
provided that all representations, warranties, covenants and agreements in this
Agreement or in any instrument delivered pursuant hereto or thereto shall expire
on, and be terminated and extinguished at, the Effective Time other than
covenants and agreements that by their terms are to survive or be performed, in
whole or in part, after the Effective Time; provided that no such
representations, warranties or covenants shall be deemed to be terminated or
extinguished so as to deprive Commerce, Sub or Company (or any director or
officer thereof) of any defense in law or equity which otherwise would be
available against the claims of any person, including, without limitation, any
stockholder or former stockholder of either Commerce, Sub or Company, the
aforesaid representations,
44
warranties, covenants and agreements being material inducements to the
consummation by Commerce, Sub and Company of the transactions contemplated
herein.
8.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed duly given (a) on the date of delivery if delivered
personally, or (b) on the first Business Day following the date of dispatch if
delivered by a recognized next-day courier service, or (c) on the fifth Business
Day following the date of mailing if delivered by registered or certified mail,
return receipt requested, postage prepaid. All notices hereunder shall be
delivered as set forth below, or pursuant to such other instructions as may be
designated in writing by the party to receive such notice.
(a) if to Company, to:
West Pointe Bancorp, Inc.
0000 Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Fax: (000) 000-0000
with a copy to:
Xxxxx Xxxx LLP
Xxx Xxxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
and
Xxxxx Xxxx LLP
Xxx Xxxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
(b) if to Commerce or Sub, to:
Commerce Bancshares, Inc.
0000 Xxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: A. Xxxxxx Xxxxx
Fax: (000) 000-0000
45
with a copy to:
Commerce Bancshares, Inc.
0000 Xxxxxx - 00xx Xxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: J. Xxxxxx Xxxxxxxx, Esq.
Fax: (000) 000-0000
and
Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
8.3 INTERPRETATION. When a reference is made in this Agreement to Sections,
Exhibits or Schedules, such reference shall be to a Section of or Exhibit or
Schedule to this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." The phrase
"made available" in this Agreement shall mean that the information referred to
has been made available if requested by the party to whom such information is to
be made available.
8.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
8.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES; RIGHTS OF OWNERSHIP.
This Agreement (including the documents and the instruments referred to herein)
(a) constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, other than the Confidentiality Agreement, which shall
survive the execution and delivery of this Agreement, and (b) is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder. The parties hereby acknowledge that, except as hereinafter agreed to
in writing, no party shall have the right to acquire or shall be deemed to have
acquired shares of common stock of the other party pursuant to the Merger until
consummation thereof. No current or former employee of Company, Commerce, Sub,
or any of their respective Subsidiaries, shall be construed as a third party
beneficiary under this Agreement, and no provision in this Agreement shall
create any right in any such employee (or his or her beneficiary or dependent)
for any reason, including, without limitation, in respect of employment,
continued employment, or resumed employment with the Surviving Corporation,
Company, Commerce or Sub (or any of their respective Affiliates) or in respect
of any benefits that may be provided, directly or indirectly, under any Benefit
Plan maintained by the Surviving Corporation, Company, Commerce or Sub (or any
of their respective Affiliates).
46
8.6 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Missouri without giving effect to the
principles of conflicts of law.
8.7 SEVERABILITY. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability and, unless the
effect of such invalidity or unenforceability would prevent the parties from
realizing the major portion of the economic benefits of the Merger that they
currently anticipate obtaining therefrom, shall not render invalid or
unenforceable the remaining terms and provisions of this Agreement or affect the
validity or enforceability of any of the terms or provisions of this Agreement
in any other jurisdiction. If any provision of this Agreement is so broad as to
be unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
8.8 ASSIGNMENT. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties, and any attempt to make any such assignment without such consent shall
be null and void. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and permitted assigns.
8.9 PUBLICITY. Commerce, Sub, Bank, and Company shall consult with each
other before issuing any press release with respect to the Merger or this
Agreement and shall not issue any such press release or make any such public
statement without the prior consent of the other parties, which shall not be
unreasonably withheld; provided, however, that a party may, without the prior
consent of the other parties (but after prior consultation, to the extent
practicable in the circumstances) issue such press release or make such public
statement as may upon the advice of outside counsel be required by law. Without
limiting the reach of the preceding sentence, Commerce, Sub and Company shall
cooperate to develop all public announcement materials and make appropriate
management available at presentations related to the transactions contemplated
by this Agreement as reasonably requested by the other party. In addition,
Company and its Subsidiaries shall (a) consult with Commerce and Sub regarding
communications related to the transactions contemplated hereby, including to
customers, stockholders and employees, (b) provide Commerce and Sub with
stockholders lists of Company and (c) allow and facilitate certain contact as
determined in Company's sole discretion by Commerce and Sub with stockholders of
Company and other prospective investors.
[Remainder of page left intentionally blank; signature page follows]
47
IN WITNESS WHEREOF, Commerce, Sub and Company have caused this Agreement to
be executed by their respective officers thereunto duly authorized, all as of
date first above written.
COMMERCE BANCSHARES, INC.
By: /s/ A. Xxxxxx Xxxxx
------------------------------------
Name: A. Xxxxxx Xxxxx
Title: Executive Vice President and
Chief Financial Officer
CBI-KANSAS, INC.
By: /s/ A. Xxxxxx Xxxxx
------------------------------------
Name: A. Xxxxxx Xxxxx
Title: Vice President
WEST POINTE BANCORP, INC.
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President and Chief Executive
Officer
By: /s/ Xxxxx X. Xxxxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Chairman of the Board
48
