AGREEMENT AND
PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION dated October 15, 1996 by and between
COMMERCE BANCORP, INC. ("CBI"), a New Jersey business corporation registered as
a bank holding company under the Bank Holding Company Act of 1956, as amended
("Holding Company Act"), and INDEPENDENCE BANCORP, INC. ("IBI"), a New Jersey
business corporation registered as a bank holding company under the Holding
Company Act.
BACKGROUND
The Board of Directors of CBI has determined to merge IBI with and into
CBI (hereinafter referred to as the "Merger") in accordance with the provisions
of the New Jersey Business Corporation Act, as amended ("BCA"), and the terms
and conditions of the Agreement and Plan of Merger of even date herewith between
IBI and CBI (the "Merger Agreement") in the form of Exhibit "A" attached hereto.
The Board of Directors of IBI has determined that IBI be merged with
and into CBI in accordance with the provisions of the BCA and the Merger
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, agreements
and provisions contained herein and subject to the satisfaction of the terms and
conditions set forth herein and the Merger Agreement, intending to be legally
bound hereby, CBI and IBI agree as follows:
1. THE MERGER
(a) Subject to the provisions of this Agreement and the Merger
Agreement, IBI will be merged with and into CBI. CBI agrees to issue shares of
CBI's common stock, par value $1.5625 per share, to the shareholders of IBI, on
the Effective Date (as hereinafter defined) of the Merger, in exchange for the
outstanding shares of IBI's common stock, par value $1.667 per share, as
provided in this Agreement and in the Merger Agreement and to abide and comply
with all of the other terms and conditions set forth in the Merger Agreement.
(b) Upon consummation of the Merger, CBI shall initially
maintain Independence Bank of New Jersey ("Independence Bank") as a separate
subsidiary operating under the name "Commerce Bank-North."
2. EFFECTIVE DATE
The "Effective Date" shall be the date and time at which an
executed Certificate of Merger is duly filed with the New Jersey Secretary of
State in accordance with Chapter 10 of the BCA.
3. REPRESENTATIONS AND WARRANTIES OF IBI
IBI represents and warrants to CBI and agrees as follows:
3.1 IBI is a corporation duly organized under the BCA and is
validly existing and in good standing under the laws of the State of New Jersey.
Independence Bank is a banking corporation duly organized under the New Jersey
Banking Act of 1948, as amended and is validly existing and in good standing
under the laws of the State of New Jersey. Except as set forth in the IBI Annual
Report on Form 10-K for the fiscal year ended December 31, 1995 ("IBI Form
10-K"), IBI has no material subsidiaries except Independence Bank and neither
Independence Bank nor any other subsidiary of IBI has any material subsidiaries.
All references to "IBI" hereinafter contained in Section 3 of this Agreement
shall be deemed to include IBI, Independence Bank and all of the subsidiaries of
either.
3.2 The authorized capital stock of IBI consists of (i)
1,000,000 shares of preferred stock, no par value per share (the "IBI Preferred
Stock") of which the following series and respective number of shares were
issued and outstanding; 217,500 shares of Series B Non-Convertible Preferred
Stock of which 30,000 shares have been validly issued and are outstanding, fully
paid and non-assessable as of the date hereof and (ii) 5,000,000 shares of
common stock, par value $1.667 per share ("IBI Common Stock") 2,838,748 shares
of which have been validly issued and are outstanding, fully paid and
non-assessable as of the date hereof and no shares are held in treasury. IBI
owns all of the shares of the issued and outstanding capital stock of
Independence Bank, free and clear of any lien or other encumbrance. As of the
date hereof, no shares of IBI Preferred Stock or IBI Common Stock were reserved
for issuance, except that (i) 138,549 shares of IBI Common Stock were reserved
for issuance upon the exercise of stock options heretofore granted pursuant to
IBI's stock option plans; (ii) 187,500 shares of IBI's Series B Non-Convertible
Preferred Stock were reserved for issuance upon exercise of a warrant held by
CBI; and (iii) 100,000 shares of IBI Common Stock were reserved for issuance
pursuant to IBI's dividend reinvestment and shareholder purchase plans (the "IBI
DRIP"). There are no outstanding subscriptions, Rights, options, warrants,
calls, commitments or agreements to which IBI or any of its subsidiaries is a
party or by which any of them may be bound, which relate to the issuance or sale
by any of them of shares of their capital stock except as set forth above. The
number of issued and outstanding shares of IBI's Common Stock and Preferred
Stock will be the same on the Effective Date as on the date hereof except for
additional shares of IBI Common Stock issued pursuant to the exercise of stock
options under IBI's stock option plans. None of the
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shares of IBI's capital stock has been issued in violation of the preemptive
rights of any person. IBI does not own, directly or indirectly, 5% or more of
the outstanding capital stock or other voting securities of any corporation,
bank or other organization except as set forth in the IBI Form 10-K.
3.3 There have been delivered to CBI (a) the audited
consolidated balance sheets of IBI and its subsidiaries as of December 31, 1995
and 1994 and the related consolidated statements of income, changes in
shareholders' equity and cash flows for the years ended December 31, 1995 and
1994 together with the notes related thereto and (b) the unaudited consolidated
balance sheet of IBI and its subsidiaries as of June 30, 1996, and the related
consolidated statement of income for the six month period ended June 30, 1996.
Such financial statements (i) are in accordance with the books and records of
IBI and its subsidiaries, (ii) are true and correct in all material respects and
present fairly IBI's and its subsidiaries' consolidated financial condition as
of December 31, 1995 and 1994 and the results of their operations for the years
then ended and as of June 30, 1996 and the result of their operations for the
six month period ended June 30, 1996, and (iii) have been prepared in accordance
with generally accepted accounting principles consistently applied. The audited
financial statements (with related notes) referred to in the first sentence of
this subsection have been examined and reported upon by Xxxxxx Xxxxxxxx LLP,
independent certified public accountants. Xxxxxx Xxxxxxxx LLP is "independent"
with respect to IBI under the criteria established and applied by the Securities
and Exchange Commission.
3.4 (a) IBI and its subsidiaries have filed all federal,
state, city, county and local tax returns which are required to be filed by them
except for such returns with regard to which the penalty for non-filing will not
have a material adverse effect upon the financial condition or results of
operation of IBI, and such returns are true and correct in all material
respects; (b) IBI and its subsidiaries have paid all taxes required to be paid
prior to the date of this Agreement or have established adequate reserves
therefor; (c) there are no deficiencies of tax, interest or penalties which have
been assessed against IBI or any of its subsidiaries; (d) no extensions of time
with respect to any date on which any tax return was or is to be filed by IBI or
any of its subsidiaries is in force and no waiver or agreement by IBI or any of
its subsidiaries is in force for the extension of time for the assessment or
payment of any tax; and (e) the statute of limitations with respect to any tax
year still open has not been waived. Neither the transactions contemplated
hereby nor the termination of the employment of any employees of IBI or any IBI
subsidiary prior to or following consummation of the transactions contemplated
hereby could result in IBI or any IBI subsidiary making or being required to
make any "excess parachute payment" as that term is defined in Section 280G of
the Code.
3.5 IBI and its subsidiaries have good and marketable title to
all their respective assets free and clear of all liens or other encumbrances
other than (a) the liens or other encumbrances described in Schedule 3.5 to this
Agreement, or (b) such
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liens or other encumbrances, as the case may be, shown in the financial
statements or the notes thereto, or (c) encumbrances and restrictions imposed by
law, ordinances or regulations incidental to the usual and normal conduct of
business or other imperfections of title, or restrictions or encumbrances, all
of which, in the aggregate, do not materially adversely interfere with the
present use of such property in IBI's and any of its subsidiaries' business and
with respect to any real estate which do not result in the inability to procure
title insurance thereon at regular rates. With the foregoing exceptions, no
person owns any interest in any of the assets of IBI or any of its subsidiaries
except as incidental to banking transactions entered into in the ordinary course
of business
3.6 Since June 30, 1996, there has been no change in the
consolidated condition, financial or otherwise, of IBI and its subsidiaries,
other than changes occurring in the ordinary course of business, which changes
have not materially adversely changed or affected their business or condition,
financial or otherwise. Except as set forth in the IBI Prospectus dated July 18,
1996, from June 30, 1996 to the date of this Agreement, neither IBI nor any of
its subsidiaries has (i) incurred any indebtedness, liabilities (whether
current, long term, fixed, contingent, liquidated, unliquidated, or otherwise)
or obligations other than in the ordinary course of business; (ii) excluding
transfers among IBI and its subsidiaries, declared or paid any dividends or made
any distribution of any of its assets in kind or redeemed or repurchased any
shares of its capital stock; (iii) sold or transferred any of its assets, except
in the ordinary course of business; or (iv) acquired the assets or capital stock
of any other entity other than in the ordinary course of business.
3.7 Since June 30, 1996, there has been no damage, destruction
or loss, whether covered by insurance or not materially adversely affecting the
assets or business of IBI or any of its subsidiaries, or any other event or
condition of any character materially adversely affecting the assets or business
of IBI or any of its subsidiaries (other than external market conditions
affecting banks generally).
3.8 IBI has delivered to CBI a list of all insurance policies
and binders maintained by IBI or any of its subsidiaries. Such policies and
binders are in full force and effect and will continue to be in full force and
effect to the Effective Date.
3.9 Except as set forth in Schedule 3.9 to this Agreement or
in IBI's 1996 Proxy Statement, neither IBI nor any of its subsidiaries is a
party to, nor have any obligation under, any written or oral (a) contracts and
other agreements with any current or former director, officer, employee,
shareholder, consultant or agent (except those terminable on ninety days' or
less notice without premium or penalty or which do not involve more than $10,000
per year), (b) contracts and other agreements with any labor union (whether in
effect or expired), (c) bonus, severance, hospitalization, vacation, deferred
compensation, pension or profit sharing, retirement, payroll savings, stock
option, group life or medical insurance, death benefit, welfare, or other
employee benefit
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plan as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended, ("ERISA") (hereinafter collectively the "Employee Benefit
Plans"), (d) material leases for real or personal property (other than leases
for branches disclosed in the IBI Form 10-K), or (e) other material contracts
and agreements of any other nature with any person other than contracts and
other agreements made in the ordinary course of business consistent with past
practices. A true and correct copy of each of such contracts and other
agreements and branch leases has been made available to CBI or, if oral, have
been described in Schedule 3.9. All of the material contracts and agreements
(whether or not set forth in Schedule 3.9) to which IBI or any of its
subsidiaries is a party are in full force and effect; IBI or any of its
subsidiaries is not in material default under any of them nor to the best of
IBI's knowledge is any other party to any such contract or other agreement in
material default thereunder. Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will result in any breach
or acceleration of, or constitute (or with notice or lapse of time or both would
constitute) a default under any such contract or other agreement or any branch
lease. To the best of IBI's knowledge, no employee of IBI or any of its
subsidiaries is represented by a labor union with respect to his or her
employment by IBI or any of its subsidiaries and no attempt has been or is
currently being made by any person to have the employees of IBI or any of its
subsidiaries represented by a labor union.
3.10 The Employee Benefit Plans of IBI and its subsidiaries
comply in all material respects with all applicable laws including, without
limitation, ERISA and the Internal Revenue Code of 1986, as amended ("Code"). In
respect of the Employee Benefit Plans identified on Schedule 3.9 or in IBI's
1996 Proxy Statement, IBI and its subsidiaries each have made all contributions
required to be made by them and have or will have accrued as of the Effective
Date all payments due and payable as of the Effective Date. The employee pension
benefit plans (as defined in Section 3(2) of ERISA) of IBI and its subsidiaries
have received determination letters from the Internal Revenue Service that such
plans are qualified plans pursuant to Section 401(a) of the Code. To the best of
IBI's knowledge, there has been no "reportable event" (as defined in the Code or
ERISA), no event described in Section 4062(e) of ERISA, no violation of Section
404 of ERISA, no "prohibited transaction" (as defined in the Code or ERISA) and,
except as contemplated by this Agreement, no termination or partial termination
of any Employee Benefit Plan maintained or established by IBI or any of its
subsidiaries or to which IBI or any of its subsidiaries contributes. There is no
material issue relating to Independence Bank's employee pension benefit plan, or
its related trust, currently pending before the Internal Revenue Service, the
Department of Labor or the Pension Benefit Guaranty Corporation and neither IBI
nor its subsidiaries have any knowledge of any fact or circumstances which
adversely affects the status of any Employee Benefit Plan listed in Schedule 3.9
or in IBI's 1996 Proxy Statement.
3.11 Schedule 3.11 to this Agreement sets forth a list of all
actions, suits, investigations (formal or informal) or proceedings pending
against IBI or any of its subsidiaries in any court or before any governmental
agency or arbitration tribunal other
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than those actions, suits, investigations or proceedings in which the liability
of IBI or any of its subsidiaries is reasonably anticipated to be less than
$10,000 per action, suit, investigation or proceeding provided that the
liability of IBI and its subsidiaries under all such omitted actions, suits,
investigations or proceedings is reasonably anticipated to be less than
$100,000. Schedule 3.11 may, at the option of IBI, list actions, suits,
investigations or proceedings in which the liability of IBI or any of its
subsidiaries is reasonably anticipated to be less than $10,000 and any listing
in such Schedule shall not be deemed an admission of liability. There are no
actions, suits, investigations (formal or informal) or proceedings pending or to
the knowledge of IBI or any of its subsidiaries, threatened against IBI or any
of its subsidiaries in any court or before any governmental agency or
arbitration tribunal which (either individually or in the aggregate) are
reasonably anticipated to have a material adverse effect on the consolidated net
worth of IBI. Neither IBI nor any of its subsidiaries is subject to or bound by
any judgment, order, writ, injunction or decree of any such court, agency or
tribunal, except in the ordinary course of Independence Bank's business.
3.12 Except as disclosed on Schedule 3.12, there are no
pending actions, suits or proceedings which have been brought by, or on behalf
of IBI or any of its subsidiaries in any court or before any governmental agency
or arbitration tribunal, except such actions, suits and proceedings in the
ordinary course of Independence Bank's business.
3.13 On and after the date hereof, to and including the
Effective Date, neither IBI nor any of its subsidiaries will, without the prior
written consent of CBI, do any of the following:
(a) except as specifically permitted herein, make any
changes in (and to the terms of) its authorized, issued or outstanding
capital stock or any security convertible into capital stock;
(b) declare or pay any dividends (in cash, stock or
in kind) on shares of its capital stock except (i) dividends paid by
Independence Bank or any other subsidiary of IBI to IBI, and (ii)
quarterly cash dividends by IBI to its shareholders (including a pro
rata cash dividend for the calendar quarter in which the Effective Date
occurs) not to exceed $.35 per share on an annualized basis;
(c) effect any recapitalization, reclassification,
stock dividend, stock split or like change in its capital or grant any
Rights (including any additional options under any existing IBI stock
option plan);
(d) make any other distribution of its assets or
properties to its shareholders except as permitted in clause (b) above;
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(e) acquire any shares of IBI's or any of its
subsidiaries' capital stock;
(f) enter into or commit to enter into any new
employment contract or amend any existing employment contract or grant
any salary increase, bonus, or other form of compensation payable to
any officer, employee or agent, except for salary increases and bonuses
consistent with the past practice of IBI and its subsidiaries,
provided, however, that nothing contained herein shall be deemed to
restrict IBI's ability to hire, as an employee at will, any person who
would not be deemed an executive officer of IBI;
(g) amend the Articles of Incorporation or the
By-Laws of IBI or any of its subsidiaries except where required by
applicable law;
(h) except in the ordinary course of business, incur
any indebtedness, liabilities (whether current, long term, fixed,
contingent, liquidated, unliquidated or otherwise) or obligations;
(i) except in the ordinary course of business,
purchase or otherwise acquire, or sell or otherwise dispose of, any
equity security, debt security or asset;
(j) change the criteria with respect to risk, or
overall quality, of Independence Bank's investment portfolio or loan
portfolio;
(k) make capital expenditures other than in the
ordinary course of Independence Bank's business;
(l) create any new Employee Benefit Plan or make any
contributions to any Employee Benefit Plan or other plan relating to
its officers, employees and agents except as may be required by the
terms of any existing Employee Benefit Plan or by applicable law; or
(m) file any application with any state or federal
agency having jurisdiction over the affairs of IBI and its subsidiaries
or conduct its business in any manner other than in accordance with
generally accepted methods and procedures for conducting a banking
business;
and neither IBI nor any of its subsidiaries has done any of the things described
in clauses (a) through (m) of this Section 3.13 since June 30, 1996 except as
set forth in Schedule 3.13.
3.14 IBI and each of its subsidiaries will (and have done so
since June 30, 1996) continue to conduct their businesses in the usual, regular
and ordinary manner
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consistent with past practices. CBI hereby consents to the incurring and
payment, prior to the Effective Date, of all reasonable expenses of IBI and its
subsidiaries in connection with the transactions contemplated by this Agreement
and the Merger Agreement, including the printing of IBI's proxy material and
reasonable legal, investment advisory and accounting fees.
3.15 IBI and its subsidiaries each have the corporate power
and authority to own, lease and operate their properties and to conduct their
businesses as now conducted. IBI and its subsidiaries each have complied and are
in compliance in all material respects with all federal, state and local laws,
regulations, ordinances, rules or orders affecting or regulating the conduct and
operations of their respective businesses except for such non-compliance as
would not have a material adverse effect upon the financial condition or results
of operations of IBI, and neither IBI nor any IBI subsidiary has received
notification from any agency or department of federal, state or local government
(i) asserting a material violation of any such statute or regulation, (ii)
threatening to revoke any license, franchise, permit or government authorization
or (iii) restricting or in any way limiting its operation. Neither IBI nor any
IBI subsidiary is subject to any regulatory or supervisory cease and desist
order, agreement, directive, memorandum of understanding or commitment and none
of them has received any communication requesting that they enter into any of
the foregoing. IBI and its subsidiaries have all federal, state, local and
foreign governmental authorizations necessary for it to own or lease its
properties and assets and to carry on its business as it is now being conducted.
Schedule 3.15 to this Agreement sets forth a list, brief description of the
purpose of and the current status of, any notice, application or similar filing
made by IBI or any of its subsidiaries within the last two years with any state
or federal agency having jurisdiction over the affairs of IBI and its
subsidiaries.
3.16 IBI has the legal power and authority to enter into this
Agreement, the Merger Agreement and the Option Agreement and to consummate the
transactions contemplated hereby and thereby, subject to the approval thereof by
the shareholders of IBI under applicable law and subject to the approval of the
Department of Banking of the State of New Jersey and the Federal Reserve Board.
This Agreement, the Merger Agreement and the Option Agreement constitute legal,
valid and binding obligations of IBI enforceable against it in accordance with
their respective terms. Except as may otherwise be required in order to comply
with their fiduciary duties, the Board of Directors of IBI will recommend to its
shareholders that they approve the Merger and all other acts and transactions
contemplated by the Merger and all other acts and transactions contemplated by
this Agreement and the Merger Agreement, and after the receipt of such
shareholder approval in the manner required by law, such shareholder approval
shall not be revokable. Approval of this Agreement and the Merger Agreement by
the IBI shareholders shall also be deemed to authorize the IBI Board of
Directors to amend, supplement or waive any of the provisions of this Agreement
and the Merger Agreement as provided in Section 6.16.
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3.17 The Board of Directors of IBI has authorized the
execution and delivery of this Agreement, the Merger Agreement and the Option
Agreement and the transactions contemplated hereby and thereby and neither the
execution and delivery of this Agreement, the Merger Agreement or the Option
Agreement, nor, subject to the approval of IBI's shareholders and subject to the
approval of the Department of Banking of the State of New Jersey and the Federal
Reserve Board, the consummation of the transactions contemplated hereby or the
fulfillment of, or the compliance with, the terms, conditions, and provisions of
this Agreement and the Merger Agreement will conflict with, or result in a
breach of, any of the terms, conditions or provisions of the Articles of
Incorporation or the By-Laws of IBI or any of its subsidiaries or of any
contract or other agreement to which IBI or any of its subsidiaries is a party
or by which any of them may be bound, or constitute (with or without the giving
of notice or the passage of time, or both) a default under any such contract or
other agreement or cause the acceleration of the maturity of any obligation of
IBI or of any of its subsidiaries other than with regard to such contracts or
other agreements a default under which would not have a material adverse effect
upon the financial condition or results of operations of IBI. Other than as set
forth herein, no consent, approval or authorization of, or declaration, notice,
filing or registration with, any governmental or regulatory authority, or any
other person, is required to be made or obtained by IBI on or prior to the
Effective Date in connection with the execution, delivery and performance of
this Agreement, the Merger Agreement or the Option Agreement or the consummation
of the transactions contemplated hereby or thereby.
3.18 All documents and other papers delivered by or on behalf
of IBI in connection with this Agreement, the Merger Agreement and the
transactions contemplated hereby are true and complete in all material respects.
The information furnished by or on behalf of IBI to CBI in connection with this
Agreement, the Merger Agreement and the transactions contemplated hereby do not
contain any untrue statement of a material fact and do not omit to state any
material fact necessary to make the statements made, in the context in which
made, not false or misleading. Except for facts affecting the banking industry
in general, there is no fact which IBI has not disclosed to CBI in writing which
materially adversely affects the business or condition (financial or other) of
IBI or any of its subsidiaries.
3.19 Each loan reflected as an asset on the books and records
of IBI (i) is evidenced by notes, agreements or other evidences of indebtedness
which are true, genuine and what they purport to be, (ii) to the extent secured,
has been secured by valid liens and security interests which have been
perfected, and (iii) is the legal, valid and binding obligation of the obligor
named therein, enforceable in accordance with its terms except as such
enforcement may be affected by bankruptcy or other statutes or regulatory
provisions effecting creditors rights generally.
3.20 Neither IBI nor any IBI subsidiary has received any
written notice of any legal, administrative, arbitral or other proceeding, claim
or action and, to the
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knowledge of IBI and the IBI subsidiaries, there is no governmental
investigation of any nature ongoing, in each case that could reasonably be
expected to result in the imposition, on IBI or any IBI subsidiary, of any
liability arising under any local, state or federal environmental statute,
regulation or ordinance including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, and
there are no facts or circumstances which could reasonably be expected to form
the basis for any such proceeding, claim, action or governmental investigation
that would impose any such liability; and neither IBI nor any IBI subsidiary is
subject to any agreement, order, judgment, decree or memorandum by or with any
court, governmental authority, regulatory agency or third party imposing any
such liability.
3.21 To the best of IBI's knowledge, Schedule 3.19 to this
Agreement is a true and correct list of the Affiliates of IBI as the term
"Affiliates" is used in Rule 145 promulgated under the Securities Act of 1933,
as amended.
3.22 To the extent not otherwise delivered to CBI on or prior
to the date hereof, IBI shall cause all Schedules referred to in this Section 3
to be delivered to CBI within ten business days of the date hereof.
3.23 As of the date of this Agreement, IBI knows of no reason
relating to it or any of its subsidiaries which would reasonably cause it to
believe that the Merger will not quality as a pooling of interests for financial
accounting purposes.
4. REPRESENTATIONS AND WARRANTIES OF CBI
CBI represents and warrants to IBI and agrees as follows:
4.1 CBI is a corporation duly organized under the BCA and is
validly existing and in good standing under the laws of the State of New Jersey.
CBI is registered as a bank holding company under the Holding Company Act.
Commerce Bank, N.A., Commerce Bank/Pennsylvania, N.A. and Commerce Bank/Shore,
N.A. are each banking organizations duly organized under the laws of the United
States and are each validly existing and in good standing under the laws of the
United States. Except as set forth in the CBI Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 ("CBI Form 10-K"), CBI has no active
subsidiaries except the Commerce Bank, N.A., Commerce Bank/Pennsylvania, N.A.
and Commerce Bank/Shore, N.A., and neither the Commerce Bank, N.A., Commerce
Bank/Pennsylvania, N.A. and Commerce Bank/Shore, N.A. nor any other subsidiary
of CBI has any active subsidiaries.
4.2 The authorized capital stock of CBI consists of (i)
5,000,000 shares of preferred stock, no par value per share (the "CBI Preferred
Stock") of which the following series and respective number of shares were
issued and outstanding: 417,000 shares of Series C ESOP Cumulative Convertible
Preferred Stock all of which shares have been validly issued and are
outstanding, fully paid and non-assessable as of the date
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hereof and (ii) 20,000,000 shares of common stock, par value $1.5625 per share
("CBI Common Stock") 11,425,834 shares of which have been validly issued and are
outstanding, fully paid and non-assessable as of the date hereof and 100,159
shares are held in treasury. CBI owns all of the shares of the issued and
outstanding capital stock of the Commerce Bank, N.A., Commerce
Bank/Pennsylvania, N.A. and Commerce Bank/Shore, N.A. free and clear of any lien
or other encumbrance. As of the date hereof, there are no outstanding
subscriptions, rights, options, warrants, calls, commitments or agreements to
which either CBI or any of its subsidiaries is a party or by which any of them
may be bound, which relate to the issuance or sale by any of them of shares of
their capital stock except as set forth below. As of the date hereof, no shares
of CBI Preferred Stock or CBI Common Stock were reserved for issuance, except
(i) those shares which relate to the issuance of CBI Common Stock in connection
with the acquisition of insurance agencies, (ii) those contemplated by the
Merger Agreement, (iii) 309,016 shares of CBI Common Stock were reserved for
issuance pursuant to CBI's dividend reinvestment and stock purchase plans, (iv)
1,897,867 shares of CBI Common Stock were reserved for issuance pursuant to CBI
stock option plans, and (v) 586,761 shares of CBI Common Stock were reserved for
issuance upon conversion of the shares of CBI Series C ESOP Cumulative
Convertible Preferred Stock, and provided however, that the foregoing shall not
be construed as preventing CBI or any of its subsidiaries from proceeding with
other mergers or acquisitions using CBI's capital stock as the consideration
whether or not such mergers or acquisitions are completed prior to the Effective
Date. The shares of CBI common stock to be issued and delivered to the
shareholders of IBI pursuant to the Merger Agreement are presently authorized
but unissued and will, upon issuance and delivery pursuant to the Merger
Agreement, be validly issued and outstanding, fully paid and nonassessable and
no shareholder of CBI will have any preemptive rights of subscription or
purchase in respect thereto.
4.3 There has been delivered to IBI (a) the audited
consolidated balance sheet of CBI and its subsidiaries as of December 31, 1995
and December 31, 1994 and the related consolidated statements of income, changes
in shareholders' equity and cash flows for the years ended December 31, 1995 and
December 31, 1994 together with the notes related thereto and (b) the unaudited
consolidated balance sheet of CBI and its subsidiaries as of June 30, 1996 and
the related consolidated statement of income for the six month period ended June
30, 1996. Such financial statements (i) are in accordance with the books and
records of CBI and its subsidiaries, (ii) are true and correct in all material
respects and present fairly CBI's and its subsidiaries' consolidated financial
condition as of December 31, 1995 and 1994 and the results of their operations
for the years then ended and as of June 30, 1996 and the results of their
operations for the six-month period ended June 30, 1996, and (iii) have been
prepared in accordance with generally accepted accounting principles
consistently applied. The audited financial statements (with related notes)
referred to in the first sentence of this subsection have been examined and
reported upon by Ernst & Young LLP, independent certified public accountants.
Ernst & Young LLP is "independent" with respect to CBI under the criteria
established and applied by the Securities and Exchange Commission.
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4.4 From June 30, 1996 to the date of this Agreement, there
has been no change in the consolidated condition, financial or otherwise, of CBI
and its subsidiaries, other than changes occurring in the ordinary course of
business, which changes have not materially adversely changed or affected their
business or condition, financial or otherwise. From June 30, 1996 to the date of
this Agreement, neither CBI nor any of its subsidiaries has (i) incurred any
indebtedness, liabilities (whether current, long term, fixed, contingent,
liquidated, unliquidated, or otherwise) or obligations other than in the
ordinary course of business; (ii) excluding transfers among CBI and its
subsidiaries, declared or paid any dividends (other than its regular quarterly
cash dividends and annual stock dividend) or made any distribution of any of its
assets in kind or redeemed or repurchased any shares of its capital stock; (iii)
sold or transferred any of its assets, except in the ordinary course of
business; or (iv) acquired the assets or capital stock of any other entity other
than in the ordinary course of business.
4.5 From June 30, 1996 to the date of this Agreement, there
has been no damage, destruction or loss, whether covered by insurance or not,
materially adversely affecting the assets or business of CBI or any of its
subsidiaries, or any other event or condition of any character materially
adversely affecting the assets or business of CBI or any of its subsidiaries
(other than external market conditions affecting banks generally).
4.6 CBI has the legal power and authority to enter into this
Agreement and the Merger Agreement, and to consummate the transactions
contemplated hereby and thereby subject to the approval of the Department of
Banking of the State of New Jersey and the Federal Reserve Board. This Agreement
and the Merger Agreement constitute the legal, valid and binding obligation of
CBI enforceable against CBI in accordance with their respective terms.
4.7 The execution and delivery of this Agreement, the Merger
Agreement and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by the Board of Directors of CBI; and subject
to the approval of the Department of Banking of the State of New Jersey and the
Federal Reserve Board, neither the execution and delivery of this Agreement or
the Merger Agreement nor the consummation of the transactions contemplated
hereby and thereby will conflict with or result in the breach of, the terms,
conditions or provisions of the Articles of Incorporation or the By-Laws of CBI
or any of its subsidiaries, or of any contract or other agreement to which CBI
or any of its subsidiaries is a party or by which any of them may be bound or
constitute (with or without the giving of notice or passage of time, or both) a
default under any such instrument or cause the acceleration of the maturity of
any obligation of CBI or any of its subsidiaries.
4.8 All documents and other papers delivered by or on behalf
of CBI in connection with this Agreement, the Merger Agreement and the
transactions contemplated hereby are true and complete in all material respects.
The information furnished by or on behalf of CBI to IBI in connection with this
Agreement, the Merger Agreement
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and the transactions contemplated hereby do not contain any untrue statement of
a material fact and do not omit to state any material fact necessary to make the
statements made, in the context in which made, not false or misleading. Except
for facts affecting the banking industry in general, there is no fact which CBI
has not disclosed to IBI in writing which materially adversely affects the
business or condition (financial or other) of CBI or any of its subsidiaries.
4.9 As of the date of this Agreement, CBI knows of no reason
relating to it or any of its subsidiaries which would reasonably cause it to
believe that the Merger will not qualify as a pooling of interests for financial
accounting purposes.
4.10 There are no actions, suits, investigations (formal or
informal) or proceedings pending or to the knowledge of CBI or any of its
subsidiaries, threatened against CBI or any of its subsidiaries in any court or
before any governmental agency or arbitration tribunal which (either
individually or in the aggregate) are reasonably anticipated to have a material
adverse effect on the consolidation net worth of CBI. Neither CBI nor any of its
subsidiaries is subject to or bound by any judgment, order, writ, injunction or
decree of any such court, agency or tribunal, except in the ordinary course of
CBI's and its subsidiaries business.
4.11 There are no pending actions, suits or proceedings which
have been brought by, or on behalf of CBI or any of its subsidiaries in any
court or before any governmental agency or arbitration tribunal, except such
actions, suits and proceeding in the ordinary course of CBI's and its
subsidiaries business.
4.12 CBI and its subsidiaries each have the corporate power
and authority to own, lease, operate their properties and to conduct their
businesses as now conducted. CBI and its subsidiaries each have complied and are
in compliance in all material respects with all federal, state and local laws,
regulations, ordinances, rules or orders affecting or regulating the conduct and
operations of their respective businesses except for such non-compliance as
would not have a material adverse effect upon the financial condition or results
of operations of CBI, and neither CBI nor any CBI subsidiary has received
notification from any agency or department of federal, state or local government
(i) asserting a material violation of any such statute or regulation, (ii)
restricting or in any way limiting its operation. Neither CBI nor any CBI
subsidiary is subject to any regulatory or supervisory cease and desist order,
agreement, directive, memorandum of understanding or commitment and none of them
has received any communication requesting that they enter into any of the
foregoing. CBI and its subsidiaries have all federal, state, local and foreign
governmental authorizations necessary for it to own or lease its properties and
assets and to carry on its business as it is now being conducted.
4.13 Neither CBI nor any CBI subsidiary has received any
written notice of any legal, administration, arbitral or other proceeding, claim
or action and, to the
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knowledge of CBI and the CBI subsidiaries, there is no governmental
investigation of any nature ongoing, in each case that could reasonably be
expected to result in the imposition, on CBI or any CBI subsidiary, of any
material liability arising under any local, state or federal environmental
statute, regulation or ordinance including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, and there are no facts or circumstances which could reasonably be
expected to form the basis for any such proceeding, claim, action or
governmental investigation that would impose any such material liability; and
neither CBI nor any CBI subsidiary is subject to any agreement, order, judgment,
decree or memorandum by or with any court, governmental authority, regulatory
agency or third party imposing any such material liability.
5. APPROVAL OF IBI'S SHAREHOLDERS AND SECURITIES ACT OF 1933
5.1 As promptly as practicable after the "Registration
Statement" referred to below becomes effective with the Securities and Exchange
Commission ("SEC" or "Commission"), IBI will duly hold a meeting of its
shareholders for the purpose of authorizing the transactions contemplated by
this Agreement and the Merger Agreement insofar as they relate to IBI. IBI will,
in accordance and full compliance with the Securities Exchange Act of 1934, as
amended ("1934 Act") and the rules and regulations promulgated thereunder, and
to the extent permitted consistent with the Board's exercise of its fiduciary
duty, solicit proxies from its shareholders, for use at the meeting of IBI
shareholders referred to above, in favor of the transactions contemplated by
this Agreement and the Merger Agreement. Except with the prior written consent
of CBI, IBI will not distribute any materials to its shareholders in connection
with such solicitation of proxies other than materials contained in the
Registration Statement (as defined in Section 5.2 hereof) after such
Registration Statement shall have become effective. To the extent necessary, CBI
shall similarly hold a meeting of its shareholders for the purpose of
authorizing the transactions contemplated by this Agreement and the Merger
Agreement.
5.2 CBI and IBI acknowledge that the transactions contemplated
hereby are subject to the provisions of the Securities Act of 1933, as amended
(the "1933 Act"), and Rule 145 promulgated thereunder. CBI agrees to prepare
promptly (with the assistance and cooperation of IBI) and file a "Registration
Statement" pursuant to the provisions of the 1933 Act for the purposes of
registering the shares of CBI common stock to be issued in connection with the
transactions contemplated hereby. IBI agrees to provide promptly to CBI
information concerning the business and financial condition and affairs of IBI
and its subsidiaries as may be required or appropriate for inclusion in the
Registration Statement and to cause its counsel and auditors to cooperate with
CBI's counsel and auditors in the preparation and filing of such Registration
Statement. CBI and IBI agree to use their respective best efforts to have such
Registration Statement declared effective under the 1933 Act as soon as may be
practicable and to distribute the
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prospectus contained in such Registration Statement ("Prospectus") to the
shareholders of IBI in accordance with applicable law. Except to the extent
permitted by Rule 145(b) or with the prior consent of the other, CBI and IBI
agree not to publish any communication, other than the Registration Statement or
notice and proxy material accompanied by the Prospectus, in respect of this
Agreement, the Merger Agreement, or the transactions contemplated hereby. CBI
shall not be required to maintain the effectiveness of the Registration
Statement or the Prospectus for the purpose of resale by the affiliates of IBI,
as such term is used in Rule 145. CBI shall take all actions necessary to
register or qualify the shares of CBI Common Stock to be issued in the Merger
pursuant to all applicable state "blue sky" or securities laws and shall
maintain such registrations or qualifications in effect for all purposes hereof.
CBI shall apply for approval to list the shares of CBI Common Stock to be issued
in the Merger on the NYSE, subject to official notice of issuance, prior to the
Effective Date.
5.3 Each party warrants, represents and covenants to the other
that when the Registration Statement shall become effective, and at all times
subsequent to effectiveness, up to and including the date of the IBI
shareholders meeting with respect to the transactions contemplated hereby, such
Registration Statement and all amendments or supplements thereto will, with
respect to the information furnished by each party or its representatives to the
other party or its representatives, (i) comply in all material respects with the
provisions of the 1933 Act and the 1934 Act and the rules and regulations
thereunder and (ii) not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements contained therein not misleading. Each party warrants, represents and
covenants to the other that all information furnished to each other for use in
the regulatory filings described in or contemplated by this Agreement and the
Merger Agreement shall not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements contained therein not misleading. Each party hereby agrees to
fully indemnify and hold harmless the other party, and its directors, officers
and representatives, from and against any and all losses, claims, liabilities,
damages and expenses (including reasonable attorneys fees and costs of
litigation) that arise out of or are based upon a breach of this warranty,
representation and covenant.
6. PRIOR TO CLOSING
6.1 From and after the date hereof, CBI or IBI, as the case
may be, will provide to the officers and accredited representatives of the
other, their (including subsidiaries') books and records at such times as either
shall reasonably request in order that CBI or IBI, as the case may be, may have
full opportunity to make such investigation as either shall desire to make of
the business and affairs of the other and its subsidiaries, provided that such
investigation shall not unduly interfere with the normal conduct by the other
and its subsidiaries of their business. CBI and IBI, as the case may be, shall
each furnish to the other such information about its business and affairs as the
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other may reasonably request in order to consummate the transactions herein
contemplated. All non-public materials and information furnished by the parties
hereto shall be held strictly confidential and may not be used by the receiving
party for their own benefit whatsoever if the closing contemplated hereunder
does not occur. In such event, any party receiving such non-public materials and
information shall return such materials and information to the party providing
such materials and information. The obligations of the parties pursuant to the
preceding sentence shall survive any termination of this Agreement for any
reason whatsoever.
6.2 CBI and IBI will use their respective best efforts and
cooperate with each other in promptly obtaining all government, regulatory and
shareholder consents and approvals necessary for the consummation of the
transactions contemplated by this Agreement and the Merger Agreement. CBI and
IBI shall cooperate with each other and shall promptly furnish and make
available to each other any and all information, data and facts which may be
required to obtain all government, regulatory and shareholder consents and
approvals and to comply with all rules in obtaining IBI's shareholders consent
to the Merger.
6.3 No party hereto shall take or fail to take, or cause or
permit its subsidiaries to take or fail to take, or to the best of its ability
permit to be taken or omitted to be taken by any third persons, any action that
would substantially impair the prospects of completing the Merger pursuant to
this Agreement and the Merger Agreement, that would materially delay such
completion, or that would adversely affect the qualification of the Merger for
pooling of interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Code; provided that nothing herein contained
shall preclude CBI from exercising its rights under the Option Agreement.
6.4 CBI and IBI shall agree with each other as to the form and
substance of any press release related to the Merger and shall consult each
other as to the form and substance of other public disclosures related thereto,
provided, however, that nothing contained herein shall prohibit any party,
following notification to the other, from making any disclosure which is
required by applicable law or the rules of the NYSE or NASDAQ.
6.5 IBI shall not authorize or permit any of its officers,
directors, employees or agents to directly or indirectly solicit, initiate or
encourage any inquiries relating to, or the making of any proposal which
constitutes, a "takeover proposal" (as defined below), or recommend or endorse
any takeover proposal, or participate in any discussions or negotiations, or
provide third parties with any non-public information, relating to any such
inquiry or proposal or otherwise facilitate any effort or attempt to make or
implement a takeover proposal except to the extent legally required for the
discharge of the fiduciary duties of its Board of Directors; provided, however,
that IBI may communicate information about any such takeover proposal to its
stockholders if, in
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the judgment of its Board of Directors, based upon the advice of outside
counsel, such communication is required under applicable law. IBI will take all
actions necessary or advisable to inform the appropriate individuals or entities
referred to in the first sentence hereof of the obligations undertaken herein.
IBI will notify CBI immediately if any such inquiries or takeover proposals are
received by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with, IBI, and IBI will
promptly inform CBI in writing of all of the relevant details with respect to
the foregoing. As used in this Agreement, "takeover proposal" shall mean any
tender or exchange offer, proposal for a merger, consolidation or other business
combination involving IBI or any of its subsidiaries or any proposal or offer to
acquire in any manner a substantial equity interest in, or a substantial portion
of the assets of, IBI or any of its subsidiaries other than the transactions
contemplated or permitted by this Agreement, the Merger Agreement and the Option
Agreement.
6.6 (a) CBI and IBI shall cooperate and use their best efforts
to identify those persons who may be deemed to be "affiliates" of CBI or IBI
within the meaning of Rule 145 promulgated by the Commission under the
Securities Act and for purposes of qualifying the "Merger" for "pooling of
interests" accounting treatment. IBI and CBI shall use its respective best
efforts to cause each person so identified to deliver to CBI, no later than 30
days prior to the Effective Date, a written agreement in form and substance
satisfactory to CBI with respect to the resale of CBI Common Stock. Shares of
CBI Common Stock issued to such IBI and CBI affiliates in exchange for IBI
Common Stock or previously owned by them shall not be transferable until such
time as financial results covering at least 30 days of combined operations of
CBI and IBI have been published within the meaning of Section 201.01 of the
Commission's Codification of Financial Reporting Policies, regardless of whether
each such affiliate has provided the written agreement referred to in this
section.
(b) CBI shall use its best efforts to publish no
later than ninety (90) days after the end of the first month after the Effective
Date in which there are at least thirty (30) days of post-Merger combined
operations (which month may be the month in which the Effective Date occurs),
combined sales and net income figures as contemplated by and in accordance with
the terms of SEC Accounting Series Release No. 135.
6.7 After the date of this Agreement, each of IBI and CBI
shall coordinate with the other the declaration of any dividends in respect of
IBI Common Stock and CBI Common Stock and the record dates and payment dates
relating thereto, it being the intention of the parties hereto that holders of
IBI Common Stock or CBI Common Stock shall not receive two dividends, or fail to
receive one dividend, for any single calendar quarter with respect to their
shares of IBI Common Stock and/or CBI Common Stock and any shares of CBI Common
Stock any such holder receives in exchange therefor in the Merger.
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6.8 (a) CBI agrees that all rights to indemnification or
exculpation now existing in favor of the directors, officers, employees and
agents of IBI and its subsidiaries as provided in their respective charters or
By-laws or otherwise in effect as of the date hereof with respect to matters
occurring prior to the Effective Date of the Merger shall survive the Merger and
shall continue in full force and effect. To the maximum extent permitted by the
BCA, such indemnification shall be mandatory rather than permissive and CBI
shall advance expenses in connection with such indemnification.
(b) In additional to the rights provided for in
Section (a) hereof, and not in limitation thereof, CBI shall indemnify, defend
and hold harmless each present and former director, officer, employee and agent
of IBI and its subsidiaries ("Indemnified Parties") to the fullest extent
permitted by law for all claims, losses, damages, liabilities, costs, judgments
and amounts paid in settlement, including advancement of expenses (including
attorneys' fees) as incurred in respect of any threatened, pending or
contemplated claim, action, suit or proceeding, whether criminal, civil,
administrative or investigative, including, without limitation, any action by or
on behalf of any or all securityholders of IBI or by or in the right of IBI or
CBI, or investigation relating to any action or omission by such party in its
capacity as such (including service to any other entity, plan, trust or the like
at IBI's request) occurring on or prior to the Effective Date of the Merger
which arise out of or related to the transactions contemplated by this
Agreement.
(c) In the event that CBI or any of its successors
or assigns (i) consolidates with or merges into any other person and shall not
be the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person, then and in each such case, proper provisions shall be made so
that the successors and assigns of CBI shall assume its obligations as set forth
in this Section 6.8.
(d) The provisions of this Section 6.8 are intended
to be for the benefit of, and shall be enforceable by, each Indemnified Party,
his heirs and his personal representatives.
6.9 The issuance of shares under and pursuant to the IBI DRIP
shall be immediately suspended.
7. CONDITIONS PRECEDENT TO CBI'S OBLIGATION
The obligation of CBI hereunder to close the transactions
contemplated by this Agreement and the Merger Agreement is subject to the
following conditions precedent (all or any of which may be waived by CBI in its
sole discretion):
7.1 Each of the representations and warranties herein made by
IBI shall be true in all material respects on the Effective Date as if made on,
as of, and with
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respect to the Effective Date, and the agreements to be performed by IBI and its
subsidiaries on or before the Effective Date shall have been so performed in all
material respects. On the Effective Date, IBI will furnish a certificate to CBI,
dated as of the Effective date, of its Chairman and Secretary to the effect set
forth in this Section 7.1.
7.2 On or before the Effective Date, CBI and IBI shall have
received all required permits, consents and approvals (which permits, consents
and approvals shall be unconditional and free of any restrictions or
requirements by reason of the acceptance of any such permit, consent or
approval) from all federal and state governmental agencies and boards
(including, without limitation, the Department of Banking of the State of New
Jersey and the Federal Reserve Board) and any application waiting period shall
have expired.
7.3 A ruling shall have been obtained from the Internal
Revenue Service or an opinion of counsel satisfactory to CBI shall have been
received, to the effect that the transactions contemplated by this Agreement and
the Merger Agreement will constitute a tax free reorganization so that no gain
or loss will be recognized to CBI or IBI by reason of the Merger or to the
shareholders of IBI who exchange their IBI common stock for CBI common stock
(other than with respect to cash received in lieu of fractional shares). CBI
agrees that it will not unreasonably withhold its approval with respect to the
form and/or content of any such ruling or opinion of counsel.
7.4 On or before the Effective Date, IBI shall have delivered
to CBI certified copies of the minutes of the meetings of the Board of Directors
and shareholders of IBI approving this Agreement, the Merger Agreement and the
transactions contemplated by this Agreement and the Merger Agreement.
7.5 On or before the Effective Date, there shall have been no
material adverse change in the business, consolidated earnings or consolidated
net worth of IBI and its subsidiaries. It is understood, however, that material
adverse changes caused by external market conditions affecting banks generally
(e.g. changes in banking legislation and changes in interest rates) will not
relieve CBI or its subsidiaries of their obligation to close.
7.6 The Registration Statement shall have been declared
effective by the SEC; no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceeding for that purpose
shall have been initiated, or to the knowledge of CBI or IBI, shall be
contemplated or threatened by the SEC.
7.7 On or before the Effective Date, IBI shall have delivered
to CBI all consents and authorizations of landlords or others necessary to
permit the Merger to be consummated without the violation of any lease or other
agreement to which IBI or any of its subsidiaries is a party.
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7.8 Each affiliate (as the term is defined in SEC Rule 144) of
IBI shall have delivered to CBI a letter in form and substance satisfactory to
counsel for CBI, stating that he will not resell shares of CBI common stock
acquired pursuant to this Agreement and the Merger Agreement, except as
permitted by SEC Rule 145 which permits regular trading transactions in limited
quantities.
7.9 No action, proceeding or material claim shall be pending
to prevent consummation or seek damages by reason of the transaction
contemplated by this Agreement and the Merger Agreement; no governmental
authority shall be claiming that the transaction shall constitute a violation of
law.
7.10 On or before the Effective Date, the shareholders of IBI
shall have duly approved the transactions contemplated by this Agreement and the
Merger Agreement insofar as they related to IBI and, if necessary, similarly the
shareholders of CBI shall have duly approved the transactions contemplated by
this Agreement and the Merger Agreement.
7.11 No event shall have occurred that shall preclude the
Merger from being accounted for as a pooling of interests and, if deemed
necessary by CBI, CBI shall have received a letter from its independent public
accountants to such effect.
7.12 CBI shall have received an opinion of XxXxxxxx & English
reasonably satisfactory to it, dated the Closing Date.
7.13 IBI shall have delivered to CBI the Schedules on or
before the date required by Section 3.22 hereof or the Schedules as so delivered
to CBI by IBI in accordance with Section 3.22 hereof do not disclose facts which
either individually or in the aggregate, in the reasonable opinion of CBI,
materially adversely affect or may materially adversely affect the assets,
properties, earnings or business of IBI or any of its subsidiaries.
7.14 On or before the date on which the CBI proxy materials
are mailed to CBI shareholders to vote on the Merger, CBI's financial advisor
shall have issued its written fairness opinion that the Exchange Ratio is fair
to the shareholders of CBI from a financial point of view.
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8. CONDITIONS PRECEDENT TO IBI'S OBLIGATION
The obligation of IBI hereunder to close the transactions
contemplated by this Agreement and the Merger Agreement is subject to the
following conditions precedent (all or any of which may be waived by IBI in its
sole discretion):
8.1 Each of the representations and warranties herein made by
CBI shall be true in all material respects on the Effective Date as if made on,
as of, and with respect to the Effective Date, and the agreements to be
performed by CBI on or before the Effective Date shall have been so performed in
all material respects. On the Effective Date, CBI shall furnish a certificate to
IBI dated the Effective Date, of its Chairman of the Board or President and its
Secretary, to the effect set forth in this Section 8.1.
8.2 On or before the Effective Date, IBI and CBI shall have
received all permits, consents and approvals from all federal and state
governmental agencies and boards (including, without limitation, the Department
of Banking of the State of New Jersey and the Federal Reserve Board) and any
applicable waiting period shall have expired.
8.3 A ruling shall have been obtained from the Internal
Revenue Service or an opinion of counsel satisfactory to IBI shall have been
received, to the effect that the transactions contemplated by this Agreement and
the Merger Agreement will constitute a tax free reorganization so that no gain
or loss will be recognized to CBI or IBI by reason of the Merger or to the
shareholders of IBI who exchange their IBI common stock for CBI common stock
(other than with respect to cash received in lieu of fractional shares). IBI
agrees that it will not unreasonably withhold its approval with respect to the
form and/or content of any such ruling or opinion of counsel.
8.4 On or before the Effective Date, CBI shall have delivered
to IBI certified copies of the minutes of the meetings of the Board of Directors
of CBI and, if required, the shareholders of CBI, approving this Agreement, the
Merger Agreement and the transactions contemplated by this Agreement and the
Merger Agreement.
8.5 On or before the Effective Date, there shall be no
material adverse change in the business, consolidated earnings or consolidated
net worth of CBI and its subsidiaries. It is understood, however, that material
adverse changes caused by external market conditions affecting banks generally
(e.g. changes in banking legislation and changes in interest rates) will not
relieve IBI or its subsidiaries of their obligations to close.
8.6 The Registration Statement shall have been declared
effective by the SEC; no stop order suspending the effectiveness of the
Registration Statement shall have
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been issued and no proceeding for that purpose shall have been initiated or, to
the knowledge of CBI or IBI, shall be contemplated or threatened by the SEC.
8.7 CBI shall have sufficient authorized but unissued shares
of CBI common stock and cash to meet all of CBI's obligations under this
Agreement and the Merger Agreement.
8.8 No action, proceeding or material claim shall be pending
to prevent consummation or seek damages by reason of the transaction
contemplated by this Agreement and the Merger Agreement; no governmental
authority shall be claiming that the transaction shall constitute a violation of
law. Notwithstanding the foregoing, if CBI provides full indemnification to IBI
and its directors and officers (in form and substance and amount reasonably
satisfactory to such directors and officers and specifically providing for the
advancement of expenses) with respect to an such action, proceeding or material
claim brought by a non-governmental party, such action, proceeding or material
claim shall not be deemed a condition precedent to IBI's obligation to close.
8.9 On or before the Effective Date, the shareholders of IBI
shall have duly approved the transactions contemplated by this Agreement and the
Merger Agreement.
8.10 The shares of CBI Common Stock that will be issued in the
Merger shall have been approved for listing on the NYSE, subject to official
notice of issuance.
8.11 No event shall have occurred that shall preclude the
Merger from being accounted for as a pooling of interests.
8.12 IBI shall have received an opinion of Blank Rome Xxxxxxx
& XxXxxxxx, reasonably acceptable to it, dated the Closing Date.
8.13 On or before the date on which the IBI proxy materials
are mailed to IBI shareholders to vote on the Merger, IBI's financial advisor
shall have issued its written fairness opinion that the Exchange Ratio is fair
to the shareholders of IBI from a financial point of view.
9. CLOSING AND POST-CLOSING
9.1 Closing shall take place at the office of CBI, 1701 Route
00 Xxxx, Xxxxxx Xxxx, Xxx Xxxxxx, commencing at 10:00 A.M. on the tenth business
day immediately following the later of (i) the approval of the Merger by IBI
shareholders or (ii) approval of the Merger by all regulatory authorities and
the expiration of all applicable waiting periods, or such other date as is
mutually agreed to by CBI and IBI provided that all conditions precedent to the
obligations of IBI and CBI to close have then been met or waived. Immediately
upon completion of the closing, CBI shall be
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telephone instruct its representative in Trenton, New Jersey to file, or shall
otherwise cause the filing of, an executed Certificate of Merger with the New
Jersey Secretary of State in accordance with Chapter 10 of the BCA.
9.2 At the close of business on the last business day
preceding the closing, the stock transfer books of IBI shall be closed.
10. EXPENSES
If the transactions contemplated by this Agreement and the
Merger Agreement are consummated, CBI and IBI each shall pay all expenses
incurred by it in connection with this Agreement, the Merger Agreement and such
consummation. If the transactions contemplated by this Agreement and the Merger
Agreement are not consummated each party shall pay its own expenses except that
the cost of printing the Registration Statement and related Prospectus
heretofore referred to shall be incurred equally by CBI and IBI and if this
Agreement is terminated because of the wilful or intentional breach of any term
or provision hereof, the non-breaching party shall be entitled to be reimbursed
from the breaching party for all of its out-of-pocket expenses incurred in
connection with this Agreement to the date of termination, including without
limitation, legal, accounting and financial advisor costs and expenses. If the
transactions contemplated hereby are not consummated for any reason whatsoever,
nothing contained in this Section shall be deemed to preclude either party from
seeking to recover damages which it incurs as a result of such non-consummation
or to obtain other legal or equitable relief (including specific performance),
if such non-consummation results from a wilful or intentional (but not a
negligent or unintentional) breach of any term or provision of this Agreement or
the Merger Agreement by the party from whom damages are or against whom such
other legal or equitable relief is sought.
11. BROKERS, FINDERS AND FINANCIAL ADVISORS
Each party to this Agreement represents and warrants that such
party has not dealt with any broker, finder or other person, firm or corporation
performing brokerage, finder or similar services, and does not know of any
person, firm or corporation asserting a brokerage, finder's or similar claim, in
connection with the making or negotiation of this Agreement, the Merger
Agreement or the transactions contemplated thereby. CBI acknowledges that it has
received a copy of that certain retainer agreement between IBI and XxXxxxxxx,
Xxxx & Xxxxx, Inc. ("MBD") pursuant to which MBD will act as financial advisor
to IBI in connection with the Merger.
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12. TERMINATION
(a) This Agreement may be terminated and the Merger abandoned
(either before or after approval by the shareholders of IBI contemplated hereby
and without seeking further shareholder approval) at any time prior to the
Effective Date:
(i) by mutual written consent of the parties authorized
by their respective Boards of Directors;
(ii) by written notice from IBI to CBI or CBI to IBI,
as the case may be, if the Effective Date shall not have
occurred by June 30, 1997;
(iii) by written notice from IBI to CBI, or CBI to IBI,
as the case may be, stating that the party giving such notice
elects to terminate this Agreement and abandon the Merger, as
of a stated date, which shall not be less than ten business
days after the date on which such notice is given, because (a)
the party receiving such notice will be unable, by June 30,
1997, to meet or satisfy one or more specified conditions
precedent to the obligation of the party sending such notice
to close under this Agreement and (b) the party sending such
notice does not intend to waive the satisfaction of such
conditions precedent;
(iv) in the event of termination of the Merger
Agreement pursuant to the terms thereof;
(v) By CBI, if the Board of Directors of IBI shall (i)
withdraw, modify or change its recommendation or approval in
respect of this Agreement in a manner adverse to CBI or (ii)
approve or recommend any proposal other than by CBI in respect
of a takeover proposal (as defined in Section 6.5 hereof);
(vi) Assuming IBI shall not have contravened Section
6.5 hereof, by IBI to allow IBI to enter into a takeover
proposal (as defined in Section 6.5 hereof);
(vii) By IBI if the "fair market value" of a share of
CBI common stock, as that term is defined in Section 6 of the
Merger Agreement, is not $20.00 or above; or
(viii) By CBI if the "fair market value" of a share of
CBI common stock, as that term is defined in Section 6 of the
Merger Agreement, is $33.50 or above.
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13. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
The respective representations, warranties and covenants of
the parties in this Agreement shall not survive the Effective Date and shall
terminate on the Effective Date, except for the covenants contained in Section
4.2 (last sentence only) and 16.3 hereof. However, such termination shall not be
deemed to deprive any of the parties hereto or their subsidiaries, or any of
their directors, officers or controlling persons, of any defense in law or
equity which otherwise would be available against the claims of any person,
including, but not limited to, any shareholder or former shareholder of the
parties hereto. Prior to the Effective Date, each party shall be deemed to have
relied upon each and every representation and warranty of the other party,
regardless of any investigation heretofore or hereafter made by or on behalf of
such party.
14. BENEFITS OF THIS AGREEMENT AND MERGER AGREEMENT
This Agreement and the Merger Agreement and the rights and
obligations of CBI and IBI hereunder shall not be assigned by any party to any
third party, except with the written consent of the other. This Agreement and
the Merger Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective permitted successors and assigns. Nothing in
this Agreement or the Merger Agreement, expressed or implied, is intended to
confer upon any person, other than the parties hereto and their respective
permitted successors and assigns, any rights or remedies under or by reason of
this Agreement and there are no third party beneficiaries of this Agreement or
the Merger Agreement. IBI agrees that to the extent necessary or appropriate to
facilitate the transaction contemplated hereby, IBI will agree and consent to
any change in the method of accomplishing such transaction requested by CBI so
long as such change does not result in a reduction in the Exchange Ratio (as
defined in the Merger Agreement) or result in a materially adverse tax or other
effect to IBI's shareholders.
15. NOTICES
Any notice, request, instruction, legal process, or other
instrument to be given or served hereunder by any party to another shall be
deemed given or served if in writing and delivered personally or sent by
facsimile or overnight express or registered or certified mail, postage prepaid,
to the respective party or parties at the following addresses:
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If to CBI:
Commerce Atrium
0000 Xxxxx 00 Xxxx
Xxxxxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxx, XX
With a copy to:
Blank Rome Xxxxxxx & XxXxxxxx
0000 Xxxx Xxxx Xxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxxx, Esquire
If to IBI:
0000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxxx
With copies to:
XxXxxxxx & English
Four Gateway Center
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxxxx, Esquire
and to such other address or addresses as either party may designate to the
other by like notice as set forth above.
16. MISCELLANEOUS
16.1 As used in this Agreement, the following terms have the
following meanings unless the context otherwise requires:
(i) "contracts and other agreements" means and includes
all contracts, agreements, indentures, leases, franchises,
licenses, commitments or legally binding arrangements, express
or implied, written or oral;
(ii) "lien or other encumbrance" means and includes any
lien, pledge, mortgage, security interest, claim, lease,
charge, option, right of first refusal, easement or any other
encumbrance whatsoever;
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(iii) "person' means a natural person, corporation,
partnership, sole proprietorship, joint venture, association,
joint-stock company, trust, estate, unincorporated
organization, government (and any branch or subdivision
thereof), government agency, cooperative or other entity.
(iv) "subsidiaries" means when used with respect to a
party to this Agreement any corporation 50% or more of whose
outstanding stock is either directly or indirectly (through
one or more other subsidiaries) owned by such party.
(v) "Rights" means any warrants, options, rights,
convertible securities or other arrangements or commitments
which obligates an entity to issue or dispose of its equity
securities.
(vi) "business day" means any day on which regular
trading of securities occurs on the "NYSE" and "NASDAQ".
(vii) "Option Agreement" means the Option Agreement
between CBI and IBI of even date herewith in the form attached
hereto as Exhibit "B".
16.2 IBI and CBI will each cause its respective subsidiaries
to abide by its respective obligations under this Agreement.
16.3 Subsequent to the Effective Date, the Board of Directors
of CBI shall reserve the right to withhold the payment of dividends on its
common stock from any former shareholder of IBI who fails to exchange
certificates representing the shares of IBI common stock for certificates
representing the shares of CBI common stock in accordance with the Merger
Agreement within a reasonable period of time after such shareholders have been
advised by the Board of Directors of CBI of its determination that the exchange
is in the best interests of CBI. Such shareholders shall retain the right to be
paid any such withheld dividends, without interest, upon presentation of their
IBI certificates for exchange or, in the event such IBI certificates are lost of
destroyed, an affidavit of lost certificate acceptable to CBI.
16.4 IBI and CBI shall use their best efforts to have all
publicity, press releases and other announcements relating to this Agreement,
the Merger Agreement or the transactions contemplated thereby reviewed in
advance by both CBI and IBI.
16.5 This Agreement and the Merger Agreement contains the
entire agreement between the parties hereto with respect to the transactions
contemplated hereby, supersedes all prior and contemporaneous agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties, and there are no
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warranties, representations, covenants or other agreements between the parties
in connection with the subject matter hereof except as specifically set forth
herein.
16.6 Any party to this Agreement may, at any time prior to the
Effective Date, by action taken by its Board of Directors or officers thereunto
duly authorized, waive any of the terms or conditions of this Agreement binding
on the other party or agree to an amendment or modification to this Agreement by
an agreement in writing executed in the same manner (but not necessarily by the
same persons) as this Agreement. No amendment, modification or waiver of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provisions hereof (whether or not
similar), nor shall any waiver constitute a continuing waiver unless otherwise
expressly provided. IBI's Board of Directors may authorize the amendment or
supplementation of this Agreement or the Merger Agreement or waiver of any
provision hereof or thereof, either before or after the approval of IBI's
shareholders provided in Section 5 hereof (and without seeking further
shareholder approval), so long as such amendment, supplement or waiver does not
result in the reduction of the Exchange Ratio (as defined in the Merger
Agreement) or result in a materially adverse tax or other effect to IBI's
shareholders.
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16.7 This Agreement has been executed in the State of New
Jersey and shall be construed in accordance with the laws of the State of New
Jersey. This Agreement may be executed in any number of copies, each of which
shall be deemed an original, and all of which together, shall be deemed one and
the same instrument.
IN WITNESS WHEREOF, pursuant to authority duly given by the respective
Boards of Directors of CBI and IBI, this Agreement has been signed on behalf of
said corporations by their respective Chairmen of the Boards, Presidents or Vice
Presidents, as the case may be, under their respective corporate seals, and
attested by their respective Secretaries or Assistant Secretaries, as the case
may be, all on the day, month and year first written above. The signature of a
Secretary or Assistant Secretary of a corporate entity is intended not only as
an execution hereof, but also is a certification that such corporation's board
of directors has duly authorized the execution and delivery of this Agreement.
COMMERCE BANCORP, INC.
By: /s/ Xxxxxx X. Xxxx, XX
---------------------------------
Xxxxxx X. Xxxx, XX, Chairman
INDEPENDENCE BANCORP, INC.
By: /s/ Xxxxx X. Xxxxxxxxxx
---------------------------------
Xxxxx X. Xxxxxxxxxx, Chairman
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