EXHIBIT 2
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Reorganization and Merger Agreement Dated August 15, 1995
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REORGANIZATION AND MERGER AGREEMENT
BY AND AMONG
COMMERCIAL FEDERAL CORPORATION
AND
COMMERCIAL FEDERAL BANK, A FEDERAL SAVINGS BANK
AND
CONSERVATIVE SAVINGS CORPORATION
AND
CONSERVATIVE SAVINGS BANK, FSB
DATED AS OF AUGUST 15, 1995
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TABLE OF CONTENTS
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ARTICLE I - THE MERGER AND RELATED MATTERS.................................. 2
1.1 Merger: Surviving Institution.................................... 2
1.2 Effective Time of the Merger..................................... 3
1.3 Conversion of Shares............................................. 3
1.4 Surviving Corporation in the Merger.............................. 5
1.5 Authorization for Issuance of Commercial Common Stock; Exchange
of Certificates................................................ 6
1.6 No Fractional Shares............................................. 9
1.7 Shareholders' Meeting............................................ 9
1.8 Company Stock Options............................................ 9
1.9 Registration Statement; Prospectus/Proxy Statement............... 9
1.10 Cooperation; Regulatory Approvals................................ 11
1.11 Closing.......................................................... 12
1.12 Closing of Transfer Books........................................ 12
1.13 Bank Merger...................................................... 12
1.14 Option Agreement................................................. 13
1.15 Rights Amendment................................................. 13
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF COMPANY AND SAVINGS.......... 13
2.1 Organization, Good Standing, Authority, Insurance, Etc........... 13
2.2 Capitalization................................................... 14
2.3 Ownership of Subsidiaries........................................ 15
2.4 Financial Statements and Reports................................. 15
2.5 Absence of Changes............................................... 17
2.6 Prospectus/Proxy Statement....................................... 17
2.7 No Broker's or Finder's Fees..................................... 18
2.8 Litigation and Other Proceedings................................. 18
2.9 Compliance with Law.............................................. 18
2.10 Corporate Actions................................................ 19
2.11 Authority........................................................ 19
2.12 Employment Arrangements.......................................... 20
2.13 Employee Benefits................................................ 20
2.14 Information Furnished............................................ 22
2.15 Property and Assets.............................................. 22
2.16 Agreements and Instruments....................................... 23
2.17 Material Contract Defaults....................................... 23
2.18 Tax Matters...................................................... 23
2.19 Environmental Matters............................................ 24
2.20 Loan Portfolio: Portfolio Management............................ 24
2.21 Real Estate Loans and Investments................................ 25
2.22 Derivatives Contracts............................................ 25
2.23 Insurance........................................................ 26
2.24 Preferred Stock.................................................. 26
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ARTICLE III - REPRESENTATIONS AND WARRANTIES OF COMMERCIAL AND THE BANK..... 27
3.1 Organization, Good Standing, Authority, Insurance, Etc............ 27
3.2 Capitalization.................................................... 27
3.3 Ownership of Subsidiaries......................................... 28
3.4 Financial Statements and Reports.................................. 28
3.5 Absence of Changes................................................ 29
3.6 Prospectus/Proxy Statement........................................ 29
3.7 No Broker's or Finder's Fees...................................... 30
3.8 Compliance With Law............................................... 30
3.9 Corporate Actions................................................. 31
3.10 Authority......................................................... 31
3.11 Information Furnished............................................. 31
3.12 Litigation and Other Proceedings.................................. 32
3.13 Agreements and Instruments........................................ 32
3.14 Cash Consideration................................................ 32
3.15 Tax Matters....................................................... 32
ARTICLE IV - COVENANTS...................................................... 32
4.1 Investigations; Access and Copies................................. 32
4.2 Conduct of Business of the Company and the Company Subsidiaries... 33
4.3 No Solicitation................................................... 35
4.4 Shareholder Approvals............................................. 35
4.5 Filing of Holding Company and Merger Applications................. 36
4.6 Consents.......................................................... 36
4.7 Resale Letter Agreements.......................................... 36
4.8 Publicity......................................................... 36
4.9 Cooperation Generally............................................. 36
4.10 Additional Financial Statements and Reports....................... 36
4.11 Stock Listing..................................................... 37
4.12 Allowance for Loan and Real Estate Owned Losses................... 37
4.13 D&O Indemnification and Insurance................................. 38
4.14 Tax Treatment..................................................... 38
4.15 Update Disclosure................................................. 38
ARTICLE V - CONDITIONS OF THE MERGER; TERMINATION OF AGREEMENT.............. 38
5.1 General Conditions................................................ 38
5.2 Conditions to Obligations of Commercial and Bank.................. 41
5.3 Conditions to Obligations of Company and Savings.................. 44
5.4 Termination of Agreement and Abandonment of Merger................ 45
ARTICLE VI - TERMINATION OF OBLIGATIONS; PAYMENT OF EXPENSES................ 47
6.1 Termination; Lack of Survival of Representations and Warranties... 47
6.2 Payment of Expenses............................................... 47
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ARTICLE VII - CERTAIN POST-MERGER AGREEMENTS................................ 48
7.1 Reports to the SEC................................................ 48
7.2 Employees......................................................... 48
ARTICLE VIII - GENERAL...................................................... 48
8.1 Amendments........................................................ 48
8.2 Confidentiality................................................... 48
8.3 Governing Law..................................................... 49
8.4 Notices........................................................... 49
8.5 No Assignment..................................................... 50
8.6 Headings.......................................................... 50
8.7 Counterparts...................................................... 50
8.8 Construction and Interpretation................................... 50
8.9 Entire Agreement.................................................. 50
8.10 Severability...................................................... 51
8.11 No Third Party Beneficiaries...................................... 51
Schedules:
Schedule I Disclosure Schedule for the Company and Savings...............
Schedule II Disclosure Schedule for Commercial and the Bank...............
Exhibits:
Exhibit 1.1(a) Acquisition Plan of Merger................................
Exhibit 1.1(c) Bank Plan of Merger.......................................
Exhibit 1.14 Option Agreement..........................................
Exhibit 1.15 Rights Amendment..........................................
Exhibit 5.2(a) Form of Opinion of Counsel for the Company................
Exhibit 5.3(a) Form of Opinion of Counsel for Commercial.................
Exhibit 7.3(b) Severance Payment Policy..................................
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REORGANIZATION AND MERGER AGREEMENT
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THIS REORGANIZATION AND MERGER AGREEMENT ("Agreement") is dated as of
August 15, 1995, by and among COMMERCIAL FEDERAL CORPORATION, a Nebraska
corporation ("Commercial"), and COMMERCIAL FEDERAL BANK, A FEDERAL SAVINGS BANK,
a Federally chartered savings bank and wholly-owned subsidiary of Commercial
("Bank"); and CONSERVATIVE SAVINGS CORPORATION, a Nebraska corporation
("Company"), and CONSERVATIVE SAVINGS BANK, FSB, a Federally chartered savings
bank and wholly-owned subsidiary of Company ("Savings").
WHEREAS, Commercial, a non-diversified, unitary savings and loan holding
company, with principal offices in Omaha, Nebraska, owns all of the issued and
outstanding capital stock of Bank, with its principal offices in Omaha,
Nebraska;
WHEREAS, Company, a non-diversified, unitary savings and loan holding
company, with principal offices in Omaha, Nebraska, owns all of the issued and
outstanding capital stock of Savings, with principal offices in Omaha, Nebraska;
WHEREAS, Commercial and Company desire to combine their respective holding
companies through a tax-free exchange so that the respective shareholders of
both Commercial and Company will have an equity ownership in the combined
holding company;
WHEREAS, following the combination of Commercial and Company, it is
intended that Bank and Savings will be merged such that the resulting holding
company will retain the advantage of a unitary savings and loan holding company
status and that the resulting savings institution will achieve certain economies
of scale and efficiencies as a result of such subsequent merger;
WHEREAS, it is intended that to accomplish this result, the Company will be
acquired by means of a merger (the "Acquisition Merger") of the Company with and
into Commercial, followed by the merger of Savings with and into the Bank (the
"Bank Merger"). The Acquisition Merger and the Bank Merger are collectively
referred to as the "Merger";
WHEREAS, it is intended that for federal income tax purposes, the Merger
shall qualify as a reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code") and this Agreement shall
constitute a plan of reorganization pursuant to Section 368 of the Code;
WHEREAS, as an inducement to and condition of Commercial's willingness to
enter into this Agreement, the Company will grant to
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Commercial an option pursuant to the Stock Option Agreement, the form of which
is attached hereto as Exhibit 1.14 (the "Option Agreement"; and
WHEREAS, the Boards of Directors of Commercial and the Company (at meetings
duly called and held) have determined that this Agreement and the transactions
contemplated hereby are in the best interests of Commercial and the Company,
respectively, and their respective stockholders and have approved this Agreement
and the Option Agreement. Consummation of the Merger is subject to the prior
approval of the Office of Thrift Supervision ("OTS") and the stockholders of the
Company, among other conditions specified herein.
NOW THEREFORE, in consideration of the premises and mutual promises
hereinafter set forth, and of other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
ARTICLE I
THE MERGER AND RELATED MATTERS
1.1 Merger: Surviving Institution. Subject to the terms and conditions
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of this Agreement, and pursuant to the provisions of the Nebraska Business
Corporation Act ("NBCA"), Home Owners Loan Act, as amended ("HOLA"), and the
rules and regulations promulgated thereunder (the "Thrift Regulations"), (a) at
the Acquisition Merger Effective Time (as hereinafter defined), the Company
shall be merged with and into Commercial pursuant to the terms and conditions
set forth herein and in the Plan of Merger to be set forth as Exhibit 1.1(a)
attached hereto (the "Acquisition Plan of Merger"), (b) the separate corporate
existence of the Company shall cease, and (c) thereafter, at the Bank Merger
Effective Time (as hereinafter defined) Savings shall be merged with and into
the Bank pursuant to the terms and conditions set forth herein and in a plan of
merger set forth in Exhibit 1.1(c) (the "Bank Plan of Merger"). The Acquisition
Merger shall have the effects specified in the NBCA, Section 1.4(e) hereof and
the Acquisition Plan of Merger. Upon the consummation of the Acquisition Merger,
the separate corporate existence of the Company shall cease and Commercial shall
continue as the surviving corporation (sometimes referred to herein as the
"Surviving Corporation"). Upon consummation of the Bank Merger, the separate
existence of Savings shall cease and the Bank shall continue as the surviving
institution of the Bank Merger. The name of the Bank, as the surviving
institution of the Bank Merger, shall remain "Commercial Federal Bank, a Federal
Savings Bank". From and after the Bank Merger Effective Time, the Bank, as the
surviving institution of the Bank Merger, shall possess all of the properties
and rights and be subject to all of the liabilities and obligations of the Bank
and Savings, all as more fully described in the Thrift Regulations, Section 1.13
hereof and the
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Bank Plan of Merger. Commercial may at any time change the method of effecting
the Merger if and to the extent it deems such change to be desirable, provided,
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however, that no such change shall (A) alter or change the amount or kind of
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consideration to be issued to holders of Company common stock and Company's
$1.52 Series A Cumulative Convertible Preferred Stock (the "Company Preferred
Stock") as provided for in this Agreement, (B) adversely affect the tax
treatment to Company shareholders as a result of receiving the consideration
described in Section 1.3 herein or (C) materially impede or delay the
consummation of the transactions contemplated by this Agreement.
1.2 Effective Time of the Merger. As soon as practicable after each of
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the conditions set forth in Article V hereof have been satisfied or waived,
Commercial and the Company will file, or cause to be filed, articles of merger
with appropriate authorities of Nebraska for the Acquisition Merger and articles
of combination with the OTS for the Bank Merger which articles of merger and
articles of combination shall in each case be in the form required by and
executed in accordance with applicable provisions of law and the Thrift
Regulations, respectively. The Acquisition Merger shall become effective at the
time and date that the Nebraska articles of merger are filed with the
appropriate authorities of Nebraska (the "Acquisition Merger Effective Time"),
which shall be immediately following the Closing (as defined in Section 1.11
herein) and on the same day as the Closing if practicable. The Bank Merger shall
become effective at the time the articles of combination for such merger are
endorsed by the OTS pursuant to Section 552.13(k) of the Thrift Regulations (the
"Bank Merger Effective Time"). The parties shall cause the Acquisition Merger to
become effective prior to the Bank Merger.
1.3 Conversion of Shares.
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(a)(i) At the Acquisition Merger Effective Time, by virtue of the
Merger and without any action on the part of Commercial or Company or the
holders of shares of Commercial or Company common stock or Company Preferred
Stock, each outstanding share of Company common stock issued and outstanding at
the Acquisition Merger Effective Time shall be converted into and exchanged for
(a) $6.34 in cash (the "Common Stock Cash Consideration") and (b) shares of
Commercial common stock (the "Common Stock Stock Consideration") (the Common
Stock Stock Consideration and the Common Stock Cash Consideration are also
individually or, together with the Preferred Stock Stock Consideration and the
Preferred Stock Cash Consideration, as defined below, collectively referred to
herein, as the context requires, as the "Merger Consideration"), according to
the following Exchange Ratios (which shall be subject to adjustment as provided
in clause (a)(vi) of this Section):
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(A) If the Average NYSE Closing Price, as defined below, is less
than $28.00, but equal to or greater than $26.00, the Exchange Ratio shall be
that number of shares of Commercial common stock equal to the quotient (carried
to four decimal places) that results by dividing $7.07 by the Average NYSE
Closing Price;
(B) If the Average NYSE Closing Price is equal to or greater
than $28.00 but equal to or less than $36.00, the Exchange Ratio shall be fixed
at .2525 shares of Commercial common stock;
(C) If the Average NYSE Closing Price is greater than $36.00,
the Exchange Ratio shall be that number of shares of Commercial common stock
equal to the quotient (carried to four decimal places) that results by dividing
$9.09 by the Average NYSE Closing Price; and
(D) In the event the Average NYSE Closing Price is less than
$26.00, the Exchange Ratio shall be fixed at .2719 shares of Commercial common
stock; provided, however, that in the event the Exchange Ratio is adjusted
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pursuant to the proviso contained in Section 5.4(e) hereof the Exchange Ratio
shall be the Exchange Ratio as so adjusted.
(ii) At the Acquisition Merger Effective Time, by virtue of the
Merger and without any action on the part of Commercial, Bank or Company or the
holders of shares of Commercial or Company common stock or Company Preferred
Stock, each outstanding share of Company Preferred Stock issued and outstanding
at the Acquisition Merger Effective Time shall be converted into and exchanged
for (a) an amount of cash equal to $14.33 (the "Preferred Stock Cash
Consideration") and (b) a number of shares of Commercial common stock (the
"Preferred Stock Stock Consideration") equal to the product of 2.26 and the
Exchange Ratio.
(iii) Any shares of Company common stock or Company Preferred Stock
which are owned or held by Company or any of its subsidiaries (except shares
held in any 401(k) plan of the Company or any of its subsidiaries, shares
subject to Restricted Stock Agreements with the Company or held in a fiduciary
capacity) or by Commercial or any of Commercial's subsidiaries (other than in a
fiduciary capacity) at the Acquisition Merger Effective Time shall cease to
exist, and the certificates for such shares shall as promptly as practicable be
cancelled and no shares of capital stock of Commercial shall be issued or
exchanged therefor.
(iv) Each share of common stock of Commercial issued and outstanding
immediately prior to the Acquisition Merger Effective Time shall remain an
outstanding share of common stock of Commercial.
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(v) At the Acquisition Merger Effective Time, the holders of
certificates representing shares of Company common stock and Company Preferred
Stock shall cease to have any rights as stockholders of the Company, except the
right to receive the Merger Consideration as provided herein.
(vi) If the holders of Commercial common stock shall have received or
shall have become entitled to receive, without payment therefor, during the
period commencing on the date hereof and ending with the Acquisition Merger
Effective Time, additional shares of common stock or other securities for their
stock by way of a stock split, stock dividend, reclassification, combination of
shares or similar corporate rearrangement ("Stock Adjustment"), then the amount
of Commercial common stock to be exchanged at the Acquisition Merger Effective
Time for Company common stock or Company Preferred Stock shall be
proportionately adjusted to take into account such Stock Adjustment. In
addition, the Average NYSE Closing Price, as defined below, shall be
proportionately adjusted to compensate for any such Stock Adjustment.
(b) The term "NYSE Closing Price" shall mean the closing price per
share (carried to four decimal places) of the Commercial common stock on the New
York Stock Exchange. The term "Average NYSE Closing Price" shall mean the
arithmetic mean of the NYSE Closing Prices of the Commercial common stock for
the twenty-fifth through the sixth trading day, inclusive, immediately preceding
the business day prior to the later of (A) the date on which all requisite
federal and state regulatory approvals required to consummate the transactions
contemplated by this Agreement are obtained (and Commercial shall notify the
Company of the date when all such approvals are obtained), including for this
purpose the period of any requisite waiting periods in respect thereof, or (B)
the date of the Company's meeting of shareholders to be held pursuant to Section
1.7 herein (the "Determination Period").
(c) Each share of Commercial common stock to be issued to the
Company's shareholders pursuant to this Section 1.3 shall include the
corresponding number of rights associated with the Commercial common stock
pursuant to the Rights Agreement dated as of December 19, 1988 by and between
Commercial and Manufacturers Hanover Trust Company, as Rights Agent ("Commercial
Rights Agreement").
1.4 Surviving Corporation in the Merger.
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(a) The name of the Surviving Corporation in the Acquisition Merger
shall be Commercial Federal Corporation.
(b) The Articles of Incorporation of Commercial as in effect on the
Acquisition Merger Effective Time shall be the Articles of Incorporation of the
Surviving Corporation as the Surviving Corporation.
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(c) The bylaws of Commercial, together with all amendments thereto,
if any, as in effect immediately prior to the Acquisition Merger Effective Time,
shall thereafter be the bylaws of the Surviving Corporation, until amended as
provided therein or by law.
(d) The directors and officers of Commercial in office immediately
prior to the Acquisition Merger Effective Time shall be the directors and
officers of the Surviving Corporation following the Acquisition Merger, until
their successors shall be duly elected and qualified.
(e) From and after the Acquisition Merger Effective Time:
(i) The Surviving Corporation shall possess all assets and
property of every description, and every interest in the assets and property,
wherever located, and the rights, privileges, immunities, powers, franchises,
and authority, of a public as well as of a private nature, of each of Commercial
and Company, and all obligations belonging or due to each of Commercial and
Company, all of which are vested in the Surviving Corporation without further
act or deed. Title to any real estate or any interest in the real estate vested
in Commercial or the Company shall not revert or in any way be impaired by
reason of the Acquisition Merger.
(ii) The Surviving Corporation is liable for all the obligations
of each of Commercial and Company. Any claim existing, or action or proceeding
pending, by or against the Company or Commercial, may be prosecuted to
judgement, with right of appeal, as if the Acquisition Merger had not taken
place, or the Surviving Corporation may be substituted in its place.
(iii) All the rights of creditors of each of Company and
Commercial are preserved unimpaired, and all liens upon the property of Company
and Commercial are preserved unimpaired, on only the property affected by such
liens immediately prior to the Acquisition Merger Effective Time.
1.5 Authorization for Issuance of Commercial Common Stock;
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Exchange of Certificates.
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(a) Commercial has reserved for issuance a sufficient number of
shares of its common stock for the purpose of issuing its shares to the
Company's shareholders in accordance with this Article I. Immediately prior to
the Acquisition Merger Effective Time, Commercial shall make available for
exchange or conversion, by transferring to an exchange agent appointed by
Commercial (the "Exchange Agent") for the benefit of the holders of Company
common stock and Company Preferred Stock: (i) such number of whole shares of
Company common stock as shall be issuable in connection with the payment of the
aggregate Common Stock Stock Consideration and
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Preferred Stock Stock Consideration, and (ii) such funds as may be payable in
connection with the aggregate Common Stock Cash Consideration and Preferred
Stock Cash Consideration and as may be payable in lieu of fractional shares of
Commercial common stock.
(b) After the Acquisition Merger Effective Time, holders of
certificates theretofore evidencing outstanding shares of Company common stock
or Company Preferred Stock (other than as provided in Section 1.3(a)(iii)), upon
surrender of such certificates to the Exchange Agent, shall be entitled to
receive certificates representing the number of whole shares of Commercial
common stock into which shares of Company common stock or Company Preferred
Stock theretofore represented by the certificates so surrendered shall have been
converted, as provided in Section 1.3 hereof, cash payable for the Common Stock
Cash Consideration and Preferred Stock Cash Consideration, and cash payments in
lieu of fractional shares as provided in Section 1.6 hereof. As soon as
practicable after the Acquisition Merger Effective Time, the Exchange Agent will
send a notice and transmittal form to each Company shareholder of record at the
Acquisition Merger Effective Time whose Company stock shall have been converted
into Commercial common stock advising such shareholder of the effectiveness of
the Acquisition Merger and the procedure for surrendering to the Exchange Agent
outstanding certificates formerly evidencing Company common stock or Company
Preferred Stock in exchange for new certificates for Commercial common stock and
for cash payable for the Common Stock Cash Consideration and the Preferred Stock
Cash Consideration and in lieu of any fractional interest. Upon surrender, each
certificate evidencing Company common stock and Company Preferred Stock shall be
cancelled.
(c) Until surrendered as provided in this Section 1.5 hereof, each
outstanding certificate which, prior to the Acquisition Merger Effective Time,
represented Company common stock or Company Preferred Stock (other than shares
cancelled at the Acquisition Merger Effective Time pursuant to Section
1.3(a)(iii) hereof) will be deemed for all corporate purposes to evidence
ownership of the number of whole shares of Commercial common stock into which
the shares of Company common stock or Company Preferred Stock formerly
represented thereby were converted and the right to receive cash payable for the
Common Stock Cash Consideration and the Preferred Stock Cash Consideration and
in lieu of any fractional interest. However, until such outstanding certificates
formerly representing Company common stock or Company Preferred Stock are so
surrendered, no dividend or distribution payable to holders of record of
Commercial common stock shall be paid to any holder of such outstanding
certificates, but upon surrender of such outstanding certificates by such holder
there shall be paid to such holder the amount of any dividends or distribution,
without interest, theretofore paid with respect to such whole shares of
Commercial common stock, but not paid to such holder, and which dividends or
distribution had a record date occurring on or
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subsequent to the Acquisition Merger Effective Time and the amount of any cash,
without interest, payable to such holder for the Common Stock Cash Consideration
and the Preferred Stock Cash Consideration and in lieu of fractional shares
pursuant to Section 1.6 hereof. After the Acquisition Merger Effective Time,
there shall be no further registration of transfers on the records of the
Company of outstanding certificates formerly representing shares of Company
common stock or Company Preferred Stock and, if a certificate formerly
representing such shares is presented to Commercial, it shall be forwarded to
the Exchange Agent for cancellation and exchange for certificates representing
shares of Commercial common stock as herein provided.
(d) All shares of Commercial common stock and cash for the Common
Stock Cash Consideration and the Preferred Stock Cash Consideration and in lieu
of any fractional share issued and paid upon the surrender for exchange of
Company common stock or Company Preferred Stock in accordance with the above
terms and conditions shall be deemed to have been issued in full satisfaction of
all rights pertaining to such shares of Company common stock or Company
Preferred Stock.
(e) If any new certificate for Commercial common stock is to be
issued in the name other than that in which the certificate surrendered in
exchange thereof is registered, it shall be a condition of the issuance therefor
that the certificate surrendered in exchange shall be properly endorsed and
otherwise in proper form for transfer and that the person requesting such
transfer pay to the Exchange Agent any transfer or other taxes required by
reason of the issuance of a new certificate for shares of Commercial common
stock in any name other than that of the registered holder of the certificate
surrendered, or establish to the satisfaction of the Exchange Agent that such
tax has been paid or is not payable.
(f) In the event any certificate for Company common stock or Company
Preferred Stock shall have been lost, stolen or destroyed, the Exchange Agent
shall issue in exchange for such lost, stolen or destroyed certificate, upon the
making of an affidavit of that fact by the holder thereof, such shares of
Commercial common stock and cash for the Common Stock Cash Consideration and the
Preferred Stock Cash Consideration and in lieu of fractional shares, if any, as
may be required pursuant hereto; provided, however, that Commercial may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate to deliver a bond in such
sum as it may direct as indemnity against any claim that may be made against
Commercial, the Company, the Exchange Agent or any other party with respect to
the certificate alleged to have been lost, stolen or destroyed.
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1.6 No Fractional Shares. Notwithstanding any term or provision hereof,
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no fractional shares of Commercial common stock, and no certificates or scrip
therefor, or other evidence of ownership thereof, will be issued in exchange for
any shares of Company common stock or Company Preferred Stock; no dividend or
distribution with respect to Commercial common stock shall be payable on or with
respect to any fractional share interests; and no such fractional share interest
shall entitle the owner thereof to vote or to any other rights of a shareholder
of Commercial. In lieu of such fractional share interest, any holder of Company
common stock or Company Preferred Stock who would otherwise be entitled to a
fractional share of Commercial common stock will, upon surrender of his
certificate or certificates representing Company common stock or Company
Preferred Stock outstanding immediately prior to the Acquisition Merger
Effective Time, be paid the applicable cash value of such fractional share
interest, which shall be equal to the product of the fraction multiplied by the
Average NYSE Closing Price. For the purposes of determining any such fractional
share interests, all shares of Commercial common stock received by the holders
of the Company common stock and the Company Preferred Stock shall be combined so
as to calculate the maximum number of whole shares of Commercial common stock
issuable to such Company shareholder in the Acquisition Merger.
1.7 Shareholders' Meeting. The Company shall, at the earliest
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practicable date, hold a meeting of its shareholders (the "Company Shareholders'
Meeting") to submit for shareholder approval this Agreement and the Acquisition
Merger. The affirmative vote of the holders of at least two-thirds of the issued
and outstanding shares of Company common stock and two-thirds of the issued and
outstanding Company Preferred Stock entitled to vote shall be required for such
approval.
1.8 Company Stock Options. Immediately prior to the Acquisition Merger
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Effective Time, each holder of an option outstanding under the Company's
Employee Stock Compensation Program as Amended and Restated May 12, 1994 (the
"Company Option Plan"), whether or not the option is then exercisable, shall
receive in cancellation of such option (such cancellation to be reflected in a
written agreement) per share of Company common stock subject to such option a
cash payment in an amount equal to the sum of (A) $6.34 and (B) the product of
the Exchange Ratio and the Average NYSE Closing Price (as determined pursuant to
Section 1.3(b) hereof) less (C) the exercise price of such option, net of any
cash which must be withheld under federal and state income tax requirements.
Immediately thereafter, Company shall cancel each such option.
1.9 Registration Statement; Prospectus/Proxy Statement.
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(a) For the purposes (i) of registering the Commercial common stock
to be issued to holders of Company common stock and
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Company Preferred Stock in connection with the Merger with the Securities and
Exchange Commission ("SEC") and with applicable state securities authorities,
and (ii) of holding the Company Shareholders' Meeting, the parties hereto shall
cooperate in the preparation of an appropriate registration statement (such
registration statement, together with all and any amendments and supplements
thereto, being herein referred to as the "Registration Statement"), including
the prospectus/proxy statement satisfying all applicable requirements of
applicable state laws, and of the Securities Act of 1933, as amended (the "1933
Act") and the Securities Exchange Act of 1934, as amended (the "1934 Act") and
the rules and regulations thereunder (such prospectus/proxy statement, together
with any and all amendments or supplements thereto, being herein referred to as
the "Prospectus/Proxy Statement").
(b) Commercial shall furnish such information concerning Commercial
and the Commercial Subsidiaries (as defined in Section 3.1 hereof) as is
necessary in order to cause the Prospectus/Proxy Statement, insofar as it
relates to such corporations, to comply with Section 1.9(a) hereof. Commercial
agrees promptly to advise the Company if at any time prior to the Company
Shareholders' Meeting any information provided by Commercial in the
Prospectus/Proxy Statement becomes incorrect or incomplete in any material
respect and to provide the information needed to correct such inaccuracy or
omission. Commercial shall promptly file such supplemental information as may be
necessary in order to cause such Prospectus/Proxy Statement, insofar as it
relates to Commercial and the Commercial Subsidiaries, to comply with Section
1.9(a).
(c) The Company shall furnish Commercial with such information
concerning the Company and the Company Subsidiaries (as defined in Section 2.1
hereof) as is necessary in order to cause the Prospectus/Proxy Statement,
insofar as it relates to such corporations, to comply with Section 1.9(a)
hereof. The Company agrees promptly to advise Commercial if at any time prior to
the Company Shareholders' Meeting any information provided by the Company in the
Prospectus/Proxy Statement becomes incorrect or incomplete in any material
respect and to provide Commercial with the information needed to correct such
inaccuracy or omission. The Company shall furnish Commercial with such
supplemental information as may be necessary in order to cause the
Prospectus/Proxy Statement, insofar as it relates to the Company and the Company
Subsidiaries, to comply with Section 1.9(a).
(d) Commercial shall promptly file the Registration Statement with
the SEC and applicable state securities agencies. Commercial shall use all
reasonable efforts to cause the Registration Statement to become effective under
the 1933 Act and applicable state securities laws at the earliest practicable
date. The Company authorizes Commercial to utilize in the Registration Statement
the information concerning the Company and the Company
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Subsidiaries provided to Commercial for the purpose of inclusion in the
Prospectus/Proxy Statement. The Company shall have the right to review and
comment on the form of proxy statement included in the Registration Statement.
Commercial shall advise Company promptly when the Registration Statement has
become effective and of any supplements or amendments thereto, and Commercial
shall furnish Company with copies of all such documents. Prior to the
Acquisition Merger Effective Time or the termination of this Agreement, each
party shall consult with the other with respect to any material (other than the
Prospectus/Proxy Statement) that might constitute a "prospectus" relating to the
Merger within the meaning of the 1933 Act.
(e) The Company shall consult with Commercial in order to determine
whether any directors, officers or shareholders of the Company may be deemed to
be "affiliates" of Company ("affiliated persons") within the meaning of Rule 145
of the SEC promulgated under the 1933 Act. All shares of Commercial common stock
issued to such Company affiliated persons in connection with the Merger shall
bear a legend upon the face thereof stating that transfer of the securities is
or may be restricted by the provisions of the 1933 Act, and notice shall be
given to Commercial's transfer agent of such restriction, provided that such
legend shall be removed by delivery of a substitute certificate without such
legend if such Company affiliated person shall have delivered to Commercial a
copy of a letter from the staff of the SEC or an opinion of counsel, in form and
substance satisfactory to Commercial, to the effect that such legend is not
required for purposes of the 1933 Act, and, in any event, at any time after the
expiration of three years from the Acquisition Merger Effective Time unless, in
the opinion of the counsel for Commercial, such person was an "affiliate" of
Commercial within the meaning of Rule 145 within three months prior to the
expiration of such three year period. So long as shares of such Commercial
common stock bear such legend, no transfer of such Commercial common stock shall
be allowed unless and until the transfer agent is provided with such information
as may reasonably be requested by counsel for Commercial to assure that such
transfer will not violate applicable provisions of the 1933 Act, or rules,
regulations or policies of the SEC.
1.10 Cooperation; Regulatory Approvals. The parties shall cooperate and
---------------------------------
use reasonable best efforts to complete the transactions contemplated hereunder
at the earliest practicable date. Each party shall cause each of their
affiliates and subsidiaries to cooperate, in the preparation and submission by
them, as promptly as reasonably practicable, of such applications, petitions,
and other documents and materials as any of them may reasonably deem necessary
or desirable to the OTS, Federal Trade Commission ("FTC"), Department of Justice
("DOJ"), SEC, applicable Secretary of State, other regulatory authorities,
holders of the voting shares of common stock of the Company, and any other
persons for the purpose of obtaining any approvals or consents necessary to
11
consummate the transactions contemplated by this Agreement. At the date hereof,
none of the parties is aware of any reason that the regulatory approvals
required to be obtained by it would not be obtained.
1.11 Closing. If (i) this Agreement has been duly approved by the
-------
shareholders of the Company, and (ii) all relevant conditions of this Agreement
have been satisfied or waived, a closing (the "Closing") shall take place as
promptly as practicable thereafter at the principal office of Commercial at
which the parties hereto will exchange certificates, opinions, letters and other
documents as required hereby and will make the filings described in Section 1.2
hereof. Such Closing will take place as soon as practicable as agreed by the
parties, provided, however, that the Closing shall be no more than thirty (30)
-------- -------
days after the satisfaction or waiver of all conditions and/or obligations
contained in Article V of this Agreement.
1.12 Closing of Transfer Books. At the Acquisition Merger Effective Time,
-------------------------
the transfer books for Company common stock and Company Preferred Stock shall be
closed, and no transfer of shares of Company common stock or Company Preferred
Stock shall thereafter be made on such books.
1.13 Bank Merger.
-----------
(a) At the Bank Merger Effective Time, each share of Savings Common
Stock issued and outstanding immediately prior thereto shall, by virtue of the
Bank Merger, be cancelled. No new shares of the capital stock or other
securities or obligations of the Bank shall be issued or be deemed issued with
respect to or in exchange for such cancelled shares, and such cancelled shares
of Savings Common Stock shall not be converted into any shares or other
securities or obligations of the Bank.
(b) The charter and bylaws of the Bank, as in effect immediately
prior to the Bank Merger Effective Time, shall be the charter and bylaws of the
Bank, as the surviving institution of the Bank Merger, and may thereafter be
amended in accordance with applicable law.
(c) The directors and officers of the Bank immediately prior to the
Bank Merger Effective Time shall be the directors and officers of the Bank, as
the surviving institution of the Bank Merger, and shall continue in office until
their successors are duly elected or otherwise duly selected.
(d) The liquidation account established by Savings pursuant to the
plan of conversion adopted in connection with its conversion from mutual to
stock form shall continue to be maintained by the Bank after the Bank Merger
Effective Time for the benefit of those persons and entities who were savings
account
12
holders of Savings on the eligibility record date for such conversion and who
continue from time to time to have rights therein. If required by the rules and
regulations of the OTS, the Bank shall amend its charter to specifically provide
for the continuation of the liquidation account established by Savings.
1.14 Option Agreement. In connection with the execution of this Agreement
----------------
by the parties, Commercial and the Company intend to execute the Stock Option
Agreement in the form of Exhibit 1.14.
1.15 Rights Amendment. The Board of Directors of the Company has approved
----------------
and has entered into, and shall keep in effect (including, to the extent
applicable, subsequent to termination of this Agreement), an Amendment No. 2
(the "Rights Amendment") to the Rights Agreement dated as of May 24, 1989 and
amended as of September 25, 1989 (the "Rights Agreement"), between the Company
(as successor to Savings under Amendment No. 1 to the Rights Agreement dated
September 25, 1989) and First National Bank of Omaha, as Rights Agent, pursuant
to which none of the execution or delivery of this Agreement, the Option
Agreement, the Acquisition Plan of Merger or the Bank Plan of Merger or any of
the transactions contemplated hereby or thereby (including without limitation
the purchase of shares pursuant to the Option Agreement), will cause (a) the
rights issued pursuant to the Rights Agreement (the "Rights") to become
exercisable under the Rights Agreement, (b) Commercial, Bank or any of their
affiliates to be deemed an "Acquiring Person" (as defined in the Rights
Agreement) or (c) a "Share Acquisition Date," a "Distribution Date" or a
"Triggering Event" (as defined in the Rights Agreement) to occur upon, as a
result of or in connection with any such event. The Company shall, upon the
request of Commercial, take such action, including without limitation, redeeming
all outstanding Rights immediately prior to the Acquisition Merger Effective
Time or thereafter at the applicable redemption price in order to render the
Rights inapplicable to the transactions contemplated hereby. The Rights
Amendment is attached hereto as Exhibit 1.15.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY AND SAVINGS
Company and Savings represent and warrant to Commercial and the Bank that,
except as disclosed in Schedule I attached hereto and except that Savings makes
no representations or warranties regarding Company:
2.1 Organization, Good Standing, Authority, Insurance, Etc. The Company
------------------------------------------------------
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Nebraska. Section 2.1 of Schedule I lists each "subsidiary"
of the Company and Savings within the meaning of Section 10(a)(1)(G) of HOLA,
(individually a "Company Subsidiary" and collectively the "Company
13
Subsidiaries") (unless otherwise noted herein all references to a "Company
Subsidiary" or to the "Company Subsidiaries" shall include Savings). Each of the
Company Subsidiaries is duly organized, validly existing, and in good standing
under the laws of the respective jurisdiction under which it is organized, as
set forth in Section 2.1 of Schedule I. The Company and each Company Subsidiary
has all requisite power and authority and is duly qualified and licensed to own,
lease and operate its properties and conduct its business as it is now being
conducted. The Company has delivered to Commercial a true, complete and correct
copy of the articles of incorporation, charter, or other organizing document and
of the bylaws, as in effect on the date of this Agreement, of Company and each
Company Subsidiary. The Company and each Company Subsidiary is qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which qualification is necessary under applicable law, except to the extent
that any failures to so qualify would not, in the aggregate, have a material
adverse effect on the business, financial condition or results of operations of
the Company and the Company Subsidiaries, taken as a whole. Savings is a member
in good standing of the Federal Home Loan Bank of Topeka and all eligible
accounts issued by Savings are insured by the Savings Association Insurance Fund
("SAIF") to the maximum extent permitted under applicable law. Savings is a
"domestic building and loan association" as defined in Section 7701(a)(19) of
the Code and is a "qualified thrift lender" as defined in Section 10(m) of the
HOLA and the Thrift Regulations. The Company is duly registered as a savings and
loan holding company under the HOLA.
The minute books of the Company and the Company's Subsidiaries contain
complete and accurate records of all meetings and other corporate actions held
or taken of their respective shareholders and Boards of Directors (including the
committees of such Boards).
2.2 Capitalization. The authorized capital stock of the Company consists
--------------
of (i) 50,000,000 shares of common stock, par value $.01 per share, of which
1,846,005 shares were issued and outstanding as of the date of this Agreement,
and (ii) 5,000,000 shares of Preferred Stock, par value $.01 per share, of which
460,000 shares were outstanding as of the date of this Agreement. All
outstanding shares of Company common stock and Company Preferred Stock are duly
authorized, validly issued, fully paid, nonassessable and free of preemptive
rights. Except for outstanding options to purchase 118,264 shares of Company
common stock under the Company Option Plan, 1,039,600 shares of Company common
stock authorized for issuance upon conversion of Company Preferred Stock and as
contemplated by the Option Agreement and the Rights Agreement, as of the date of
this Agreement, there are no options, convertible securities, warrants, or other
rights (preemptive or otherwise) to purchase or acquire any of the Company's
capital stock from the Company and no oral or written agreement, contract,
arrangement, understanding, plan or instrument
14
of any kind (collectively, "Stock Contract") to which the Company or any of its
affiliates is subject with respect to the issuance, voting or sale of issued or
unissued shares of the Company's capital stock. A true and complete copy of the
Company Option Plan, as in effect on the date of this Agreement, is attached as
Section 2.2 of Schedule I.
2.3 Ownership of Subsidiaries. All the outstanding shares of the capital
-------------------------
stock of the Company Subsidiaries are validly issued, fully paid, nonassessable
and owned beneficially and of record by the Company or a Company Subsidiary free
and clear of any lien, claim, charge, restriction or encumbrance (collectively,
"Encumbrance"). Except as set forth in Section 2.3 of Schedule I, all of the
outstanding capital stock or other ownership interests in all of the Company
Subsidiaries is owned either by the Company or Savings. There are no options,
convertible securities, warrants, or other rights (preemptive or otherwise) to
purchase or acquire any capital stock of any Company Subsidiary and no contracts
to which the Company or any of its affiliates is subject with respect to the
issuance, voting or sale of issued or unissued shares of the capital stock of
any of the Company Subsidiaries. Neither the Company nor any Company Subsidiary
owns any of the capital stock or other equity securities (including securities
convertible or exchangeable into such securities) of or profit participations in
any "company" (as defined in Section 10(a)(1)(C) of the HOLA) other than the
Federal Home Loan Bank of Topeka or except as set forth in Section 2.3 of
Schedule I.
2.4 Financial Statements and Reports.
--------------------------------
(a) No registration statement, proxy statement, schedule or report
filed by the Company or any Company Subsidiary with the SEC or the OTS under the
1933 Act or the 1934 Act ("SEC Reports"), on the date of effectiveness in the
case of such registration statements, or on the date of filing in the case of
such reports or schedules, or on the date of mailing in the case of such proxy
statements, contained any untrue statement of a material fact or omitted to
state a 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. For the past five years, the Company and the Company
Subsidiaries have timely filed all reports and documents required to be filed by
them with the SEC, the OTS, or the Federal Deposit Insurance Corporation (the
"FDIC") under various securities and financial institution laws and regulations
except to the extent that all failures to so file, in the aggregate, would not
have a material adverse effect on the business, financial condition or results
of operations of the Company and the Company Subsidiaries, taken as a whole; and
all such documents, as finally amended, complied in all material respects with
applicable requirements of law and, as of their respective date or the date as
amended, did not contain any untrue statement of a material fact or omit to
state a material fact
15
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Except to
the extent stated therein, all financial statements and schedules included in
the documents referred to in the preceding sentences (or to be included in
similar documents to be filed after the date hereof) (i) are or will be (with
respect to financial statements in respect of periods ending after December 31,
1994) in accordance with the Company's books and records and those of any of the
Company Subsidiaries, and (ii) present (and in the case of financial statements
in respect of periods ending after December 31, 1994, will present) fairly the
consolidated statement of financial condition and the consolidated statements of
income, changes in stockholders' equity and cash flows of the Company and the
Company Subsidiaries as of the dates and for the periods indicated in accordance
with generally accepted accounting principles applied on a basis consistent with
prior periods (except for the omission of notes to unaudited statements, year
end adjustments to interim results and changes to generally accepted accounting
principles). The consolidated financial statements of the Company at December
31, 1994 and for the three years then ended and the consolidated financial
statements for all periods thereafter up to the Closing reflect or will reflect,
as the case may be, all liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise, whether due or to become due and regardless of when
asserted), as of their respective dates, of the Company and the Company
Subsidiaries required to be reflected in such financial statements according to
generally accepted accounting principles and contain or will contain, in the
opinion of management, adequate reserves for losses on loans and properties
acquired in settlement of loans, taxes and all other material accrued
liabilities and for all reasonably anticipated material losses, if any as of
such date. There exists no set of circumstances that could reasonably be
expected to result in any liability or obligation material to the Company or the
Company Subsidiaries, taken as a whole, except as disclosed in such consolidated
financial statements at December 31, 1994 or for transactions effected or
actions occurring or omitted to be taken after December 31, 1994 (i) in the
ordinary course of business, or (ii) as permitted by this Agreement.
(b) The Company has delivered to Commercial each SEC Report filed,
used or circulated by it with respect to periods since January 1, 1992 through
the date of this Agreement and will promptly deliver each such SEC Report filed,
used or circulated after the date hereof, each in the form (including exhibits
and any amendments thereto) filed with the SEC or the OTS (or, if not so filed,
in the form used or circulated), including, without limitation, its Annual
Reports on Form 10-K and its Quarterly Reports on Form 10-Q.
16
2.5 Absence of Changes.
------------------
(a) Since December 31, 1994, there has been no material adverse
change in the business, properties, financial condition, results of operations
or assets of the Company and the Company Subsidiaries, taken as a whole, other
than any such change attributable to or resulting from any change in law,
regulation or generally accepted accounting principles which impairs both the
Company and Commercial in a substantially similar manner and other than any
change attributable to or resulting from changes in economic conditions
applicable to banking institutions generally or in general levels of interest
rates affecting both the Company and Commercial to a similar extent and in a
similar manner. There is no occurrence, event or development of any nature
existing or, to the best knowledge of the Company, threatened which may
reasonably be expected to have a material adverse effect upon the business,
properties, financial condition, operations or assets of Company or any Company
Subsidiary, other than the effects of any such change attributable to or
resulting from any change in law, regulation or generally accepted accounting
principles which impairs both the Company and Commercial in a substantially
similar manner and other than the effects of any change attributable to or
resulting from changes in economic conditions applicable to banking institutions
generally or in general levels of interest rates affecting both the Company and
Commercial to a similar extent and in a similar manner.
(b) Except as set forth in Section 2.5 of Schedule I, since December
31, 1994, each of the Company and the Company Subsidiaries has owned and
operated their respective assets, properties and businesses in the ordinary
course of business and consistent with past practice.
2.6 Prospectus/Proxy Statement. At the time the Prospectus/ Proxy
--------------------------
Statement is mailed to the shareholders of the Company for the solicitation of
proxies for the approvals referred to in Section 1.7(a) hereof and at all times
subsequent to such mailings up to and including the times of such approval, such
Prospectus/Proxy Statement (including any supplements thereto), with respect to
all information set forth therein relating to the Company (including the Company
Subsidiaries), its shareholders and representatives, Company common stock,
Company Preferred Stock and all other transactions contemplated hereby, will:
(a) Comply in all material respects with applicable provisions of the
1933 Act, the 1934 Act and the rules and regulations under such Acts; and
(b) Not 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 contained therein, in light of the circumstances under which
it is made, not misleading.
17
2.7 No Broker's or Finder's Fees. No agent, broker, investment banker,
----------------------------
person or firm acting on behalf or under authority of the Company or any of the
Company Subsidiaries is or will be entitled to any broker's or finder's fee or
any other commission or similar fee directly or indirectly in connection with
the Merger or any other transaction contemplated hereby, except the Company has
engaged Dain Bosworth Incorporated to provide financial advisory services and to
deliver a "fairness opinion" to the effect that the consideration to be received
by the Company shareholders in the Merger is fair to the Company shareholders
from a financial point of view, whose fees and reasonable out-of-pocket expenses
will be paid by Company. A copy of the engagement agreement with Dain Bosworth
Incorporated is attached to Section 2.7 of Schedule I.
2.8 Litigation and Other Proceedings.
--------------------------------
(a) Except as set forth in Section 2.8 of Schedule I and except for
matters which would not have a material adverse effect on the business,
financial condition or results of operations of the Company and the Company
Subsidiaries taken as a whole, neither the Company nor any Company Subsidiary is
a defendant in, nor is any of its property subject to, any pending, or, to the
best knowledge of the management of the Company, threatened, claim, action,
suit, investigation, or proceeding, or subject to any judicial order, judgment
or decree.
(b) Section 2.8(b) of Schedule I sets forth all other claims, actions,
suits, investigations and proceedings in which the Company or any Company
Subsidiary is a defendent, and all other judicial order, judgment or decree to
which the Company or any Company Subsidiary is subject.
2.9 Compliance with Law.
-------------------
(a) The Company and the Company Subsidiaries are in compliance in all
material respects with all material laws and regulations applicable to their
respective business or operations or with respect to which compliance is a
condition of engaging in the business thereof, and neither the Company nor any
Company Subsidiary has received notice from any federal, state or local
government or governmental agency of any material violation of, and does not
know of any material violations of, any of the above.
(b) The Company and each of its Subsidiaries have all material
permits, licenses, certificates of authority, orders and approvals of, and have
made all material filings, applications and registrations with, all federal,
state, local and foreign governmental or regulatory bodies that are required in
order to permit them to carry on their respective business as they are presently
conducted.
18
2.10 Corporate Actions.
-----------------
(a) The Boards of Directors of the Company and Savings have duly
authorized their respective officers to execute and deliver (as applicable) this
Agreement, the Acquisition Plan of Merger, the Bank Plan of Merger, the Option
Agreement and the Rights Amendment and to take all action necessary to
consummate the Merger and the other transactions contemplated hereby. The Board
of Directors of the Company has authorized and directed the submission for
shareholders' approval of this Agreement, together with the Merger and any other
action requiring such approval. All corporate authorization by the Board of
Directors of the Company required for the consummation of the Merger has been
obtained.
(b) The Company's Board of Directors has taken or will take all
necessary action to exempt this Agreement, the Acquisition Plan of Merger, the
Bank Plan of Merger and the Option Agreement and the transactions contemplated
hereby and thereby from, (i) any applicable state takeover laws, (ii) any
Nebraska laws limiting or restricting the voting rights of shareholders, (iii)
any Nebraska laws requiring a shareholder approval vote in excess of the vote
normally required in transactions of similar type not involving a "related
person," "interested shareholder" or person or entity of similar type, and (iv)
any provision in its or any of the Company Subsidiaries' articles/certificate of
incorporation, charter or bylaws, (A) restricting or limiting stock ownership or
the voting rights of shareholders, or (B) requiring a shareholder approval vote
in excess of the vote normally required in transactions of similar type not
involving a "related person," interested shareholder" or person or entity of
similar type.
2.11 Authority. Except as set forth in Section 2.11 of Schedule I, the
---------
execution, delivery and performance of its obligations under this Agreement, the
Option Agreement and the Rights Amendment by the Company and Savings does not
violate any of the provisions of, or constitute a default under or give any
person the right to terminate or accelerate payment or performance under (i) the
articles of incorporation or bylaws of the Company, the articles of
incorporation, charter or bylaws of any Company Subsidiary, (ii) any regulatory
restraint on the acquisition of the Company or Savings or control thereof, (iii)
any law, rule, ordinance, or regulation or judgment, decree, order, award or
governmental or non-governmental permit or license to which it or any of the
Company Subsidiaries is subject or (iv) any other material agreement, material
lease, material contract, note, mortgage, indenture, arrangement or other
obligation or instrument ("Contract") to which the Company or any of the Company
Subsidiaries is a party or is subject or by which any of their properties or
assets is bound. The parties acknowledge that the consummation of the Merger and
the other transactions contemplated hereby is subject to various regulatory
approvals. The Company and Savings, as applicable, have all requisite corporate
power and
19
authority to enter into this Agreement, the Option Agreement, the Acquisition
Plan of Merger and the Rights Amendment and to perform their respective
obligations hereunder and thereunder, except, with respect to this Agreement and
the Acquisition Merger, the approval of the Company's shareholders required
under applicable law. Other than the receipt of Governmental Approvals (as
defined in Section 5.1(c)), the approval of shareholders, the consent of the
Rights Agent under the Rights Agreement (which consent was received prior to the
date of this Agreement) and the consents specified in Schedule I with respect to
the Contracts, no consents or approvals are required on behalf of Company in
connection with the consummation of the transactions contemplated by this
Agreement, the Option Agreement, the Acquisition Plan of Merger, the Bank Plan
of Merger and the Rights Amendment. This Agreement, the Option Agreement, the
Acquisition Plan of Merger, the Bank Plan of Merger and the Rights Amendment
constitute the valid and binding obligation of the Company and Savings, as
applicable, and each is enforceable in accordance with its terms, except as
enforceability may be limited by applicable laws relating to bankruptcy,
insolvency or creditors rights generally and general principles of equity.
2.12 Employment Arrangements. Except as disclosed in Section 2.12 of
-----------------------
Schedule I, there are no employment, severance or other agreements, plans or
arrangements with any current or former directors, officers or employees of
Company or any Company Subsidiary which may not be terminated without penalty
(including any augmentation or acceleration of benefits) on 30 days or less
notice to such person. The Severance Pay Guidelines established at the April 11,
1995 Senior Management meeting, a copy of which was furnished to Commercial on
August 7, 1995, are not legally enforceable by any director, officer or employee
of Company or any Company Subsidiary against, or binding upon, Company or any
Company Subsidiary or, following the Acquisition Merger Effective Time, the
Surviving Corporation or any subsidiary thereof. No payments to directors,
officers or employees of the Company or the Company Subsidiaries resulting from
the transactions contemplated hereby will cause the imposition of excise taxes
under Section 4999 of the Code or the disallowance of a deduction to the Company
or any Company Subsidiary pursuant to Sections 162, 280G or any other section of
the Code.
2.13 Employee Benefits.
-----------------
(a) Neither the Company nor any of the Company Subsidiaries maintains
any funded deferred compensation plans (including profit sharing, pension,
savings or stock bonus plans), unfunded deferred compensation arrangements or
employee benefit plans as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), other than any plans
("Employee Plans") set forth in Section 2.13 of Schedule I (true and correct
copies of which have been delivered to Commercial).
20
None of Company or any of the Company Subsidiaries has incurred or reasonably
expects to incur any liability to the Pension Benefit Guaranty Corporation
except for required premium payments which, to the extent due and payable, have
been paid. The Employee Plans intended to be qualified under Section 401(a) of
the Code are so qualified, and Company is not aware of any fact which would
adversely affect the qualified status of such plans. Except as set forth in
Section 2.13 of Schedule I, neither the Company nor any of the Company
Subsidiaries (a) provides health, medical, death or survivor benefits to any
former employee or beneficiary thereof, or (b) maintains any form of current
(exclusive of base salary and base wages) or deferred compensation, bonus, stock
option, stock appreciation right, benefit, severance pay, retirement, incentive,
group or individual health insurance, welfare or similar plan or arrangement for
the benefit of any single or class of directors, officers or employees, whether
active or retired (collectively "Benefit Arrangements").
(b) Except as disclosed in Section 2.13 to Schedule I, all Employee
Plans and Benefit Arrangements which are in effect were in effect for
substantially all of calendar year 1994 and there has been no material amendment
thereof (other than amendments required to comply with applicable law) or no
material increase in the cost thereof or benefits payable thereunder on or after
January 1, 1994.
(c) To the best knowledge of the Company, with respect to all
Employee Plans and Benefit Arrangements, the Company and each Company Subsidiary
are in substantial compliance with the requirements prescribed by any and all
statutes, governmental or court orders, or rules or regulations currently in
effect, including but not limited to ERISA and the Code, applicable to such
Employee Plans or Benefit Arrangements. No condition exists that could
constitute grounds for the termination of any Employee Plan under Section 4042
of ERISA; no "prohibited transaction," as defined in Section 406 of ERISA and
Section 4975 of the Code, has occurred with respect to any Employee Plan, or any
other employee benefit plan maintained by Company or any Company Subsidiary
which is covered by Title I of ERISA, which could subject any person to
liability under Title I of ERISA or to the imposition of any tax under Section
4975 of the Code which could have an adverse effect on the business, assets,
financial condition, results of operations or prospects of Company or any
Company Subsidiary; nor to the best knowledge of Company has any Employee Plan
subject to Part III of Subtitle B of Title I of ERISA or Section 412 of the
Code, or both, incurred any "accumulated funding deficiency," as defined in
Section 412 of the Code, whether or not waived; nor has Company or any Company
Subsidiary failed to make any contribution or pay any amount due and owing as
required by the terms of any Employee Plan or Benefit Arrangement. To the best
of its knowledge, neither Company nor any Company Subsidiary has incurred or
expects to incur, directly or indirectly, any liability under Title IV
21
of ERISA arising in connection with the termination of, or a complete or partial
withdrawal from, any plan covered or previously covered by Title IV of ERISA
which could constitute a liability of Commercial, or any of its affiliates at or
after the Acquisition Merger Effective Time.
2.14 Information Furnished. No statement contained in any schedule,
---------------------
certificate or other document furnished (whether prior to or subsequent to the
date of this Agreement) or to be furnished in writing by or on behalf of Company
to Commercial pursuant to this Agreement contains or will contain any untrue
statement of a material fact or any material omission. No information material
to the Merger and which is necessary to make (i) the representations and
warranties or (ii) the information provided and to be provided to Commercial for
purposes of its due diligence examination pursuant to Section 4.11 hereof not
misleading, to the best knowledge of the Company, has been withheld from
Commercial.
2.15 Property and Assets. The Company and the Company Subsidiaries have
-------------------
good and marketable title to all of their real property reflected in the
financial statements at December 31, 1994, referred to in Section 2.4 hereof, or
acquired subsequent thereto, free and clear of all Encumbrances, except for (a)
such items shown in such financial statements or in the notes thereto, (b) liens
for current real estate taxes not yet delinquent, (c) customary title exceptions
that have no material adverse effect upon the value of such property, (d)
property sold or transferred in the ordinary course of business since the date
of such financial statements, (e) pledges or liens incurred in the ordinary
course of business and (f) as otherwise specifically indicated in Section 2.15
of Schedule I. Company and the Company Subsidiaries enjoy peaceful and
undisturbed possession under all material leases for the use of real property
under which they are the lessee; all of such leases are valid and binding and in
full force and effect and neither Company nor any Company Subsidiary is in
default in any material respect under any such lease. No consent of the lessor
of any material real property or material personal property lease is required
for consummation of the Merger except as set forth in Section 2.15 of Schedule
I. Except as set forth in Section 2.15 of Schedule I, there has been no material
physical loss, damage or destruction, whether or not covered by insurance,
affecting the real properties of Company and the Company Subsidiaries since
December 31, 1994, except such loss, damage or destruction which does not have a
material adverse effect on the Company and the Company Subsidiaries, taken as a
whole. All property and assets material to their business and currently used by
Company and the Company Subsidiaries are, in all material respects, in good
operating condition and repair, normal wear and tear excepted.
22
2.16 Agreements and Instruments. Except as set forth in Section 2.16 of
--------------------------
Schedule I, neither the Company nor any Company Subsidiary is a party to (a) any
material agreement, arrangement or commitment not made in the ordinary course of
business, (b) any agreement, indenture or other instrument relating to the
borrowing of money by the Company or any Company Subsidiary or the guarantee by
the Company or any Company Subsidiary of any such obligation (other than Federal
Home Loan Bank advances with a maturity of one year or less from the date
hereof), (c) any agreements to make loans or for the provision, purchase or sale
of goods, services or property between Company or any Company Subsidiary and any
director or officer of Company or Savings, or any member of the immediate family
or affiliate of any of the foregoing, (d) any agreements with or concerning any
labor or employee organization to which Company or any Company Subsidiary is a
party, (e) any agreements between Company or any Company Subsidiary and any five
percent or more shareholder of Company, and (f) any agreements, directives,
orders, or similar arrangements between or involving the Company or any Company
Subsidiary and any state or federal savings institution regulatory authority.
2.17 Material Contract Defaults. Neither the Company nor any Company
--------------------------
Subsidiary nor the other party thereto is in default in any respect under any
contract, agreement, commitment, arrangement, lease, insurance policy, or other
instrument to which the Company or a Company Subsidiary is a party or by which
its respective assets, business, or operations may be bound or affected or under
which it or its respective assets, business, or operations receives benefits,
and which default is reasonably expected to have either individually or in the
aggregate a material adverse effect on the Company and any Company Subsidiary,
taken as a whole, and there has not occurred any event that, with the lapse of
time or the giving of notice or both, would constitute such a default.
2.18 Tax Matters.
-----------
The Company and each of the Company Subsidiaries have duly and
properly filed all federal, state, local and other tax returns required to be
filed by them and have made timely payments of all taxes due and payable,
whether disputed or not; the current status of audits of such returns by the
Internal Revenue Service ("IRS") and other applicable agencies is as set forth
in Section 2.18 of Schedule I; and, except as set forth in Section 2.18 of
Schedule I, there is no agreement by the Company or any Company Subsidiary for
the extension of time or for the assessment or payment of any taxes payable.
Except as set forth in Section 2.18 of Schedule I, neither the IRS nor any other
taxing authority is now asserting or, to the best knowledge of Company,
threatening to assert any deficiency or claim for additional taxes (or interest
thereon or penalties in connection therewith), nor is Company aware of any basis
for any such assertion or claim. The Company and each of the Company
Subsidiaries have complied in all material
23
respects with applicable IRS backup withholding requirements and have filed all
appropriate information reporting returns for all tax years for which the
statute of limitations has not closed. The Company and each Company Subsidiary
have complied with all applicable state law sales and use tax collection and
reporting requirements.
(b) Adequate provision for any federal, state, local, or foreign
taxes due or to become due for the Company or any of the Company Subsidiaries
for any period or periods through and including December 31, 1994, has been made
and is reflected on the December 31, 1994 audited Company consolidated financial
statements and has been or will be made with respect to periods ending after
December 31, 1994.
2.19 Environmental Matters. Except as set forth in Section 2.19 of
---------------------
Schedule I, to the best knowledge of the Company, neither the Company nor any
Company Subsidiary owns or leases any properties affected by toxic waste, radon
gas or other hazardous conditions or constructed in part with the use of
asbestos. Except as set forth in Section 2.19 of Schedule I, neither the Company
nor any Company Subsidiary has knowledge of, nor has the Company or any Company
Subsidiary received written notice from any governmental or regulatory body of,
any conditions, activities, practices or incidents which is reasonably likely to
interfere with or prevent compliance or continued compliance with hazardous
substance laws or any regulation, order, decree, judgment or injunction, issued,
entered, promulgated or approved thereunder, or which may give rise to any
common law or legal liability, or otherwise form the basis of any claim, action,
suit, proceeding, hearing or investigation based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, release or threatened
release into the environment, of any pollutant, contaminant or chemical, or
industrial, toxic or hazardous substance or waste. There is no civil, criminal
or administrative claim, action, suit, proceeding, hearing or investigation
pending or, to Company's knowledge, threatened against Company or any Company
Subsidiary relating in any way to such hazardous substance laws or any
regulation, order, decree, judgment or injunction issued, entered, promulgated
or approved thereunder.
2.20 Loan Portfolio: Portfolio Management.
-------------------------------------
(a) All evidences of indebtedness reflected as assets in the
consolidated balance sheet of Company as of December 31, 1994, or acquired since
such date, are (except with respect to those assets which are no longer assets
of the Company or any Company Subsidiary) binding obligations of the respective
obligers named therein except as enforcement may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors rights
generally, and except that the availability of
24
equitable remedies, including specific performance, is subject to the discretion
of the court before which any proceeding may be brought, and the payment of no
material amount thereof (either individually or in the aggregate with other
evidences of indebtedness) is subject to any defenses which have been threatened
or asserted against the Company or any Company Subsidiary. All such indebtedness
which is secured by an interest in real property is secured by a valid and
perfected mortgage lien having the priority specified in the loan documents. All
loans originated or purchased by Savings were at the time entered into and at
all times since have been in compliance in all material respects with all
applicable laws (including, without limitation, all consumer protection laws)
and regulations. Savings administers its loan and investment portfolios
(including, but not limited to, adjustments to adjustable mortgage loans) in
accordance with all applicable laws and regulations and the terms of applicable
instruments. The records of Savings regarding all loans outstanding on its books
are accurate in all material respects and the risk classification system has
been established in accordance with the requirements of the OTS.
(b) Section 2.20 of Schedule I sets forth a list, accurate and
complete in all material respects, of the aggregate amounts of loans, extensions
of credit and other assets of Savings and its subsidiaries that have been
adversely designated, criticized or classified by it as of June 30, 1995,
separated by category of classification or criticism (the "Asset
Classification"); and no amounts of loans, extensions of credit or other assets
that have been adversely designated, classified or criticized as of the date
hereof by any representative of any government entity as "Special Mention,"
"Substandard," "Doubtful," "Loss" or words of similar import are excluded from
the amounts disclosed in the Asset Classification, other than amounts of loans,
extensions of credit or other assets that were charged off by it or any of its
Subsidiaries before the date hereof.
2.21 Real Estate Loans and Investments. Except for properties acquired in
---------------------------------
settlement of loans, there are no facts, circumstances or contingencies known to
the Company or any Company Subsidiary which exist which would require a material
reduction under generally accepted accounting principles in the present carrying
value of any of the real estate investments, joint ventures, construction loans,
other investments or other loans of the Company or any Company Subsidiary
(either individually or in the aggregate with other loans and investments).
2.22 Derivatives Contracts. Neither the Company nor any of its
---------------------
Subsidiaries is a party to or has agreed to enter into an exchange-traded or
over-the-counter swap, forward, future, option, cap, floor or collar financial
contract or any other contract not included on its Balance Sheet which is a
derivatives contract (including various combinations thereof) (each, a
"Derivatives
25
Contract") or owns securities that are identified in Thrift Bulletin No. 65 or
otherwise referred to as structured notes (each, a "Structured Note"), except
for those Derivatives Contracts and Structured Notes set forth in Section 2.22
of Schedule I, including a list, as applicable, of any of its or any of its
Subsidiaries' assets pledged as security for a Derivatives Contract.
2.23 Insurance. Except as set forth in Section 2.23 of Schedule I, the
---------
Company and the Company Subsidiaries have in effect insurance coverage with
reputable insurers which, in respect to amounts, types and risks insured, is
reasonably adequate for the business in which the Company and the Company
Subsidiaries are engaged. A schedule of all insurance policies in effect as to
the Company and the Company Subsidiaries (the "Insurance Policies") is as set
forth on Section 2.23 of Schedule I (other than policies pertaining to mortgage
loans made in the ordinary course of business). Except as set forth on Section
2.23 of Schedule I, all Insurance Policies are in full force and effect, all
premiums with respect thereto covering all periods up to and including the date
of this Agreement have been paid, such premiums covering all periods from the
date hereof up to and including the Acquisition Merger Effective Date shall have
been paid on or before the Acquisition Merger Effective Date, to the extent then
due and payable (other than retrospective premiums which may be payable with
respect to worker's compensation insurance policies, adequate reserves for which
are reflected in the Company's financial statements). The Insurance Policies are
valid, outstanding and enforceable in accordance with their respective terms and
will not in any way be affected by, or terminated or lapsed solely by reason of,
the transactions contemplated by this Agreement. Except as set forth on Section
2.23 of Schedule I, neither the Company nor any Company Subsidiary has been
refused any insurance with respect to any material properties, assets or
operations, nor has any coverage been limited or terminated by any insurance
carrier to which it has applied for any such insurance or with which it has
carried insurance during the last three years.
2.24 Preferred Stock.
---------------
(a) The Company is not in default or in arrears on dividends with
respect to the issued and outstanding shares of Company Preferred Stock, and
(ii) Company is not in default or in arrears with respect to the mandatory or
optional redemption, purchase or other acquisition, retirement or other
requirement of, or with respect to, any sinking or other similar fund or
agreement for the redemption, purchase or other acquisition, retirement or other
requirement of, or with respect to, any shares of Company Preferred Stock.
(b) The conversion price of the Company Preferred Stock, as adjusted
pursuant to Section 7(b) of Company's Statement Establishing Series of Preferred
Stock ($0.01 Par Value) $1.52
26
Series A Cumulative Convertible Preferred Stock of Conservative Savings
Corporation, dated June 23, 1993 is $11.06195 per share of Company common stock
(equivalent to a rate of 2.26 shares of Company common stock for each share of
Company Preferred Stock.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMMERCIAL AND THE BANK
Commercial and the Bank represent and warrant to Company and Savings that,
except as disclosed in Schedule II attached hereto, and except that Bank makes
no representations or warranties regarding Commercial:
3.1 Organization, Good Standing, Authority, Insurance, Etc. Commercial
------------------------------------------------------
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Nebraska. Each of the subsidiaries of Commercial within
the meaning of Section 10(a)(1)(G) of HOLA (individually a "Commercial
Subsidiary" and collectively the "Commercial Subsidiaries") is duly organized,
validly existing, and in good standing under the laws of the respective
jurisdiction under which it is organized. Commercial and each Commercial
Subsidiary has all requisite power and authority and is duly qualified and
licensed to own, lease and operate its properties and conduct its business as it
is now being conducted. Commercial and each Commercial Subsidiary is qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction in which qualification is necessary under applicable law, except to
the extent that any failures to so qualify would not, in the aggregate, have a
material adverse effect on the business, financial condition or results of
operations of Commercial and the Commercial Subsidiaries, taken as a whole. The
Bank is a member in good standing of the Federal Home Loan Bank of Topeka, and
all eligible accounts issued by the Bank are insured by the SAIF to the maximum
extent permitted under applicable law. The Bank is a "domestic building and loan
association" as defined in Section 7701(a)(19) of the Code, and is a "qualified
thrift lender" as defined in Section 10(m) of the HOLA and the Thrift
Regulations. Commercial is duly registered as a savings and loan holding company
under the HOLA.
3.2 Capitalization. The authorized capital stock of Commercial consists
--------------
of 25,000,000 shares of Commercial common stock, par value $.01 per share, of
which 12,910,957 shares were issued and outstanding as of the date of this
Agreement and 10,000,000 shares of serial preferred stock, par value of $.01 per
share, of which no shares were outstanding as of the date of this Agreement. All
outstanding shares of Commercial common stock are duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights.
27
3.3 Ownership of Subsidiaries. All the outstanding shares of the capital
-------------------------
stock of the Commercial Subsidiaries are validly issued, fully paid,
nonassessable and owned beneficially and of record by Commercial or a Commercial
Subsidiary free and clear of any Encumbrance. Except as disclosed in Section 3.3
of Schedule II, all of the outstanding capital stock or other ownership
interests in all of the Commercial Subsidiaries is owned either by Commercial or
the Bank. There are no options, convertible securities, warrants, or other
rights (preemptive or otherwise) to purchase or acquire any capital stock of any
Commercial Subsidiary and no contracts to which Commercial or any of its
affiliates is subject with respect to the issuance, voting or sale of issued or
unissued shares of the capital stock of any of the Commercial Subsidiaries.
3.4 Financial Statements and Reports. No registration statement, proxy
--------------------------------
statement, schedule or report filed by Commercial or any Commercial Subsidiary
with the SEC or the OTS under the 1933 Act, or the 1934 Act, on the date of
effectiveness in the case of such registration statements, or on the date of
filing in the case of such reports or schedules, or on the date of mailing in
the case of such proxy statements, contained any untrue statement of a material
fact or omitted to state a 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. For the past five years, Commercial and
the Commercial Subsidiaries have timely filed all documents required to be filed
by them with the SEC, the OTS, or the FDIC under various securities and
financial institution laws and regulations, except to the extent that all
failures to so file, in the aggregate, would not have a material adverse effect
on the business, financial condition or results of operations of Commercial and
the Commercial Subsidiaries, taken as a whole; and all such documents, as
finally amended, complied in all material respects with applicable requirements
of law and, as of their respective date or the date as amended, did 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 therein, in
light of the circumstances under which they were made, not misleading. Except to
the extent stated therein, all financial statements and schedules included in
the documents referred to in the preceding sentences (or to be included in
similar documents to be filed after the date hereof) (i) are or will be (with
respect to financial statements in respect of periods ending after June 30,
1994) in accordance with Commercial's books and records and those of any of its
Subsidiaries, and (ii) present (and in the case of financial statements in
respect of periods ending after June 30, 1994 will present) fairly the
consolidated statement of financial condition and the consolidated statements of
operations, stockholders' equity and cash flows of Commercial and its
Subsidiaries as of the dates and for the periods indicated in accordance with
generally accepted accounting principles (except for the omission of notes to
28
unaudited statements, year end adjustments to interim results and changes in
generally accepted accounting principles). The consolidated financial statements
of Commercial as of June 30, 1994 and for the three years then ended and the
consolidated financial statements for all periods thereafter up to the Closing
disclose or will disclose, as the case may be, all liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise, whether due or due to become
due and regardless of when asserted), as of their respective dates, of
Commercial and the Commercial Subsidiaries required to be reflected in such
financial statements according to generally accepted accounting principles,
other than liabilities which are not, in the aggregate, material to Commercial
and the Commercial Subsidiaries, taken as a whole, and contain or will contain
in the opinion of management adequate reserves for losses on loans and
properties acquired in settlement of loans, taxes and all other material accrued
liabilities and for all reasonably anticipated material losses, if any as of
such date. There exists no set of circumstances that could reasonably be
expected to result in any liability or obligation material to Commercial or the
Commercial Subsidiaries, taken as a whole, except as disclosed in such
consolidated financial statements at June 30, 1994, or for transactions effected
or actions occurring or omitted to be taken after June 30, 1994, (i) in the
ordinary course of business, or (ii) as permitted by this Agreement.
3.5 Absence of Changes. Since December 31, 1994, there has been no
------------------
material adverse change in the business, properties, financial condition,
results of operations or assets of Commercial and the Commercial Subsidiaries,
taken as a whole, other than any such change attributable to or resulting from
any change in law, regulation or generally accepted accounting principles which
impairs both the Company and Commercial in a substantially similar manner and
other than any change attributable to or resulting from changes in economic
conditions applicable to banking institutions generally or in general levels of
interest rates affecting both the Company and Commercial to a similar extent and
in a similar manner. There is no occurrence, event or development of any nature
existing or, to the best knowledge of Commercial, threatened which may
reasonably be expected to have a material adverse effect upon the business,
properties, financial condition, operations or assets of Commercial or any
Commercial Subsidiary, other than the effects of any such change attributable to
or resulting from any change in law, regulation or generally accepted accounting
principles which impairs both the Company and Commercial in a substantially
similar manner and other than the effects of any change attributable to or
resulting from changes in economic conditions applicable to banking institutions
generally or in general levels of interest rates affecting both the Company and
Commercial to a similar extent and in a similar manner.
3.6 Prospectus/Proxy Statement . At the time the Registration Statement
---------------------------
becomes effective and at the time the Prospectus/Proxy
29
Statement is mailed to the shareholders of the Company for the solicitation of
proxies for the approval referred to in Section 1.7 hereof and at all times
subsequent to such mailings up to and including the times of such approval, such
Registration Statement and Prospectus/Proxy Statement (including any amendments
or supplements thereto), with respect to all information set forth therein
relating to Commercial (including the Commercial Subsidiaries) and its
shareholders, Commercial common stock, this Agreement, the Merger and all other
transactions contemplated hereby, will:
(a) comply in all material respects with applicable provisions of the
1933 Act, the 1934 Act and the rules and regulations under such Acts; and
(b) not 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 contained therein, in light of the circumstances under which
it is made, not misleading.
3.7 No Broker's or Finder's Fees. No agent, broker, investment banker,
----------------------------
person or firm acting on behalf or under authority of Commercial or any of the
Commercial Subsidiaries is or will be entitled to any broker's or finder's fee
or any other commission or similar fee directly or indirectly in connection with
the Merger or any other transaction contemplated hereby, except Commercial has
engaged Merrill Lynch & Co., an investment banking firm, to provide financial
advisory services and to deliver a "fairness opinion" as to whether or not the
Exchange Ratio is fair to Commercial's shareholders from a financial point of
view, whose fees and reasonable out-of-pocket expenses will be paid by
Commercial.
3.8 Compliance With Law.
-------------------
(a) Commercial and the Commercial Subsidiaries are in compliance in
all material respects with all material laws and regulations applicable to their
respective business or operations or with respect to which compliance is a
condition of engaging in the business thereof, and neither Commercial nor any
Commercial Subsidiary has received notice from any federal, state or local
government or governmental agency of any material violation of, and does not
know of any material violations of, any of the above.
(b) Commercial and each of it Subsidiaries have all material permits,
licenses, certificates of authority, orders and approvals of, and have made all
material filings, applications and registrations with, all federal, state, local
and foreign governmental or regulatory bodies that are required in order to
permit it to carry on its respective business as it is presently conducted.
30
3.9 Corporate Actions. The Boards of Directors of Commercial and the
-----------------
Bank have duly authorized their respective officers to execute and deliver (as
applicable) this Agreement, the Acquisition Plan of Merger, the Bank Plan of
Merger and the Option Agreement and to take all action necessary to consummate
the Merger and the other transactions contemplated hereby. All corporate
authorizations by the Board of Directors of Commercial required for the
consummation of the Merger have been obtained.
3.10 Authority. The execution, delivery and performance of this Agreement
---------
by Commercial and the Bank does not violate any of the provisions of, or
constitute a default under or give any person the right to accelerate payment or
performance under (i) the articles of incorporation or bylaws of Commercial, the
charter or bylaws of the Bank, or the articles of incorporation or bylaws or of
any other Commercial Subsidiary, (ii) any regulatory restraint on the
acquisition of the Company or Savings or control thereof, (iii) any law, rule,
ordinance or regulation or judgment, decree, order, award or governmental or
non-governmental permit or license to which Commercial or any of the Commercial
Subsidiaries is subject or (iv) any other Contract to which Commercial or any of
the Commercial Subsidiaries is a party or is subject to or by which any of their
properties or assets is bound which default, termination or acceleration would
have a material adverse effect on the financial condition, business or results
of operations of Commercial and the Commercial Subsidiaries, taken as a whole.
The parties acknowledge that the consummation of the Merger and the other
transactions contemplated hereby is subject to various regulatory approvals.
Commercial and the Bank have all requisite corporate power and authority to
enter into this Agreement and the Option Agreement and to perform their
obligations hereunder and thereunder. Other than the receipt of Governmental
Approvals, no consents or approvals are required on behalf of Commercial or any
Commercial Subsidiary in connection with the consummation of the transactions
contemplated by this Agreement, the Option Agreement or the Acquisition Plan of
Merger. This Agreement, the Option Agreement, the Acquisition Plan of Merger and
the Bank Plan of Merger constitute the valid and binding obligations of
Commercial and the Bank, and are enforceable in accordance with their terms,
except as enforceability may be limited by applicable laws relating to
bankruptcy, insolvency or creditors' rights generally and general principles of
equity.
3.11 Information Furnished. No statement contained in any schedule,
---------------------
certificate or other document furnished (whether prior to or subsequent to the
date of this Agreement) or to be furnished in writing by or on behalf of
Commercial to Company pursuant to this Agreement contains or will contain any
untrue statement of a material fact or any material omission. No information
material to the Merger and which is necessary to make the representations and
warranties not misleading, to the best knowledge of Commercial, has been
withheld from the Company.
31
3.12 Litigation and Other Proceedings. Except for matters which would not
--------------------------------
have a material adverse effect on the business, financial condition or results
of operations of Commercial and the Commercial Subsidiaries taken as a whole,
neither Commercial nor any Commercial Subsidiary is a defendant in, nor is any
of its property subject to, any pending, or, to the best knowledge of the
management of Commercial, threatened, claim, action, suit, investigation, or
proceeding, or subject to any judicial order, judgment or decree.
3.13 Agreements and Instruments. As of the date of this Agreement, there
--------------------------
are no agreements, directives, orders or similar arrangements between or
involving Commercial or any Commercial Subsidiary and any state or federal
savings institution regulatory authority.
3.14 Cash Consideration. Commercial will have sufficient cash on hand to
------------------
pay the Common Stock Cash Consideration and the Preferred Stock Cash
Consideration as of the Acquisition Merger Effective Time.
3.15 Tax Matters. Commercial and each of the Commercial Subsidiaries
-----------
have duly and properly filed all federal, state, local and other tax returns
required to be filed by them and have made timely payments of all taxes due and
payable, whether disputed or not; except as set forth in Section 3.15 of
Schedule II, there is no agreement by Commercial or any Commercial Subsidiary
for the extension of time or for the assessment or payment of any taxes payable.
Except as set forth in Section 3.15 of Schedule II, neither the IRS nor any
other taxing authority is now asserting or, to the best knowledge of Commercial,
threatening to assert any deficiency or claim for additional taxes (or interest
thereon or penalties in connection therewith), nor is Commercial aware of any
basis for any such assertion or claim. Commercial and each of the Commercial
Subsidiaries have complied in all material respects with applicable IRS backup
withholding requirements and have filed all appropriate information reporting
returns for all tax years for which the statute of limitations has not closed.
Commercial and each Commercial Subsidiary have complied with all applicable
state law sales and use tax collection and reporting requirements.
ARTICLE IV
COVENANTS
4.1 Investigations; Access and Copies. Between the date of this
---------------------------------
Agreement and the Acquisition Merger Effective Time, each party agrees to give
to the other party and its respective representatives and agents full access (to
the extent lawful) to all of the premises, books, records and employees of it
and its subsidiaries at all reasonable times, and to furnish and cause its
subsidiaries to furnish to the other party and its respective
32
agents or representatives access to and true and complete copies of such
financial and operating data, all documents with respect to matters to which
reference is made in Articles II or III of this Agreement or on any list,
schedule or certificate delivered or to be delivered in connection herewith, and
such other documents, records, or information with respect to the business and
properties of it and its subsidiaries as the other party or its respective
agents or representative shall from time to time reasonably request; provided,
--------
however, that any such inspection (a) shall be conducted in such manner as not
-------
to interfere unreasonably with the operation of the business of the entity
inspected and (b) shall not affect any of the representations and warranties
hereunder. Each party will also give prompt written notice to the other party of
any event or development (x) which, had it existed or been known on the date of
this Agreement, would have been required to be disclosed under this Agreement,
(y) which would cause any of its representations and warranties contained herein
to be inaccurate or otherwise materially misleading, or (z) which materially
relate to the satisfaction of the conditions set forth in Article V of this
Agreement.
4.2 Conduct of Business of the Company and the Company Subsidiaries.
---------------------------------------------------------------
Between the date of this Agreement and the Acquisition Merger Effective Time,
the Company and Savings agree:
(a) That the Company and the Company Subsidiaries shall conduct their
business only in the ordinary course, and maintain their books and records in
accordance with past practices and not to take any action that would (i)
adversely affect the ability to obtain the Governmental Approvals or (ii)
adversely affect the Company's ability to perform its obligations under this
Agreement or the Option Agreement;
(b) That the Company shall not, without the prior written consent of
Commercial: (i) declare, set aside or pay any dividend or make any other
distribution with respect to Company's capital stock, except for (i) the regular
quarterly dividends on the Company's common stock in an amount not to exceed
$0.03 per share per quarter, and (ii) the regular quarterly dividends on the
Company Preferred Stock in an amount not to exceed $0.38 per share per quarter,
in each case to be paid on the dates customarily fixed by the Company for the
payment of dividends; (ii) reacquire any of Company's outstanding shares of
capital stock; (iii) issue or sell or buy any shares of capital stock of the
Company or any Company Subsidiary, except shares of Company common stock issued
pursuant to the Company Option Plan; (iv) effect any stock split, stock dividend
or other reclassification of Company's common stock; or (v) grant any options or
issue any warrants exercisable for or securities convertible or exchangeable
into capital stock of Company or any Company Subsidiary or grant any stock
appreciation or other rights with respect to shares of capital stock of Company
or of any Company Subsidiary;
33
(c) That Company and the Company Subsidiaries shall not, without the
prior written consent of Commercial: (i) sell or dispose of any significant
assets of the Company or of any Company Subsidiary other than in the ordinary
course of business consistent with past practices; (ii) merge or consolidate the
Company or any Company Subsidiary with or otherwise acquire any other entity, or
file any applications or make any contract with respect to branching by Savings
(whether de novo, purchase, sale or relocation) or acquire or construct, or
enter into any agreement to acquire or construct, any interest in real property
(other than with respect to security interests in properties securing loans and
properties acquired in settlement of loans in the ordinary course) or
improvements to real property; (iii) change the certificate of incorporation,
charter documents or other governing instruments of the Company or any Company
Subsidiary, except as provided in this Agreement; (iv) grant to any executive
officer, director or employee of the Company or any Company Subsidiary (A)
except as set forth in Section 4.2(c) of Schedule I, any increase in annual
compensation, or (B) except as set forth in Section 4.2(c) of Schedule I, any
bonus type payment; (v) adopt any new or amend or terminate any existing
Employee Plans or Benefit Arrangements of any type; (vi) authorize severance pay
or other benefits for any officer, director or employee of Company or any
Company Subsidiary; (vii) incur any material indebtedness or obligation or enter
into or extend any material agreement or lease, except in the ordinary course of
business consistent with past practices; (viii) engage in any lending activities
other than in the ordinary course of business consistent with past practices;
(ix) form any new subsidiary or cause or permit a material change in the
activities presently conducted by any Company Subsidiary or make additional
investments in subsidiaries; (x) purchase any debt securities or derivative
securities, including CMO or REMIC products, that are defined as "high risk
mortgage securities" under OTS Thrift Bulletin No. 52 dated January 10, 1992 as
revised or purchase any Derivatives Contracts or Structured Notes; (xi) purchase
any equity securities other than Federal Home Loan Bank stock; (xii) make any
investment which would cause Savings to not be a qualified thrift lender under
Section 10(m) of the HOLA, or not to be a "domestic building and loan
association" as defined in Section 7701(a)(19) of the Code; (xiii) make any loan
with a principal balance of $500,000 or more; (xiv) authorize capital
expenditures other than in the ordinary course of business; (xv) adopt or
implement any change in its accounting principles, practices or methods other
than as may be required by generally accepted accounting principles or adopt or
implement any change in its methods of accounting for Federal income tax
purposes; or (xvi) make any loan in which participation interests therein are to
be sold to other persons or entities or acquire a participation interest in a
loan originated by another person or entity. The limitations contained in this
Section 4.2(c) shall also be deemed to constitute limitations as to the making
of any commitment with respect to any of the matters set forth in this
34
Section 4.2(c). Notwithstanding the foregoing, Savings may engage in any of the
foregoing activities exclusively with the Bank.
4.3 No Solicitation. The Company will not authorize any officer,
---------------
director, employee, investment banker, financial consultant, attorney,
accountant or other representative of Company or any Company Subsidiary,
directly or indirectly, to initiate contact with any person or entity in an
effort to solicit, initiate or encourage any "Takeover Proposal" (as such term
is defined below). Except as the fiduciary duties of the Company Board of
Directors may otherwise require (as determined in consultation with legal
counsel), the Company will not authorize any officer, director, employee,
investment banker, financial consultant, attorney, accountant or other
representative of the Company or any Company Subsidiary, directly or indirectly,
(A) to cooperate with, or furnish or cause to be furnished any non-public
information concerning its business, properties or assets to, any person or
entity in connection with any Takeover Proposal; (B) to negotiate any Takeover
Proposal with any person or entity; or (C) to enter into any agreement, letter
of intent or agreement in principle as to any Takeover Proposal. The Company
will promptly give written notice to Commercial upon becoming aware of any
Takeover Proposal, such notice to contain, at a minimum, the identity of the
persons submitting the Takeover Proposal, a copy of any written inquiry or other
communication, the terms of any Takeover Proposal, any information requested or
discussions sought to be initiated and the status of any requests, negotiations
or expressions of interest. As used in this Agreement with respect to the
Company, "Takeover Proposal" shall mean any proposal, other than as contemplated
by this Agreement, for a merger or other business combination involving the
Company or Savings or for the acquisition of a ten percent (10%) or greater
equity interest in Company or Savings, or for the acquisition of a substantial
portion of the assets of Company or Savings (other than loans or securities sold
in the ordinary course).
4.4 Shareholder Approvals. The Company shall call the meeting of its
---------------------
shareholders to be held for the purpose of voting upon the Acquisition Merger
and related matters, as referred to in Section 1.7 hereof, as soon as
practicable, but in no event later than 45 days after the Registration Statement
becomes effective under the 1933 Act. In connection with such meeting, the
Company Board of Directors shall recommend approval of the Merger, except as the
fiduciary duties of the Company's Board of Directors may otherwise require. The
Company shall use its best efforts to solicit from its shareholders proxies in
favor of approval and to take all other action necessary or helpful to secure a
vote of the holders of the shares of Company common stock and Company Preferred
Stock in favor of the Merger, except as the fiduciary duties of the Boards of
Directors may otherwise require.
35
4.5 Filing of Holding Company and Merger Applications. Commercial shall
-------------------------------------------------
use its best efforts promptly to prepare, submit and file a holding company
application to the OTS pursuant to 12 C.F.R. (S)574.3 for acquisition of control
of Company and Savings and a merger application to the OTS pursuant to the Bank
Merger Act and 12 C.F.R. 563.22(a) for the Bank Merger and any other
applications required to be filed in connection with the transactions
contemplated hereby.
4.6 Consents. Company and Savings will use their best efforts to obtain
--------
the consent or approval of each person whose consent or approval shall be
required in order to permit Company or Savings, as the case may be, to
consummate the Acquisition Merger and the Bank Merger.
4.7 Resale Letter Agreements. After execution of this Agreement, (i)
------------------------
Company shall use its best efforts to cause to be delivered to Commercial from
each person who may be deemed to be an "affiliate" of Company within the meaning
of Rule 145 under the 1933 Act, a written letter agreement regarding
restrictions on resale of the shares of Commercial common stock received by such
persons in the Merger to ensure compliance with applicable resale restrictions
imposed under the federal securities laws and (ii) neither Commercial nor the
Company (including the Company Subsidiaries) shall take any action which would
materially impede or delay consummation of the Merger, or prevent the
transactions contemplated hereby from qualifying as a reorganization within the
meaning of Section 368 of the Code; provided that nothing hereunder shall limit
the ability of Commercial to exercise its rights under the Option Agreement.
4.8 Publicity. Between the date of this Agreement and the Acquisition
---------
Merger Effective Time, neither Commercial, Company or any of their subsidiaries
shall, without the prior approval of the other, issue or make, or permit any of
its directors, employees, officers or agents to issue or make, any press
release, disclosure or statement to the press or any third party with respect to
the Merger or the transactions contemplated hereto, except as required by law.
The parties shall cooperate when issuing or making any press release, disclosure
or statement with respect to Merger or the transactions contemplated hereby,
except as required by law.
4.9 Cooperation Generally. Between the date of this Agreement and the
---------------------
Acquisition Merger Effective Time, Commercial, Company and their subsidiaries
shall use their best efforts, and take all actions necessary or appropriate, to
consummate the Merger and the other transactions contemplated by this Agreement
at the earliest practicable date.
4.10 Additional Financial Statements and Reports. As soon as reasonably
-------------------------------------------
practicable after they become publicly available, the Company shall furnish to
Commercial and Commercial shall furnish to
36
the Company, respectively, its balance sheet and related statements of
operations, cash flows and stockholders' equity for all periods prior to the
Closing. Such financial statements will be prepared in conformity with generally
accepted accounting principles applied on a consistent basis and fairly present
the financial condition, results of operations and cash flows of the Company or
Commercial, as the case may be (subject, in the case of unaudited financial
statements, to (a) normal year-end audit adjustments, (b) any other adjustments
described therein and (c) the absence of notes which, if presented, would not
differ materially from those included in its most recent audited consolidated
balance sheet), and all of such financial statements will be prepared in
conformity with the requirements of Form 10-Q or Form 10-K, as the case may be,
under the 1934 Act.
4.11 Stock Listing. Commercial agrees to use all reasonable efforts to
-------------
cause to be listed on the New York Stock Exchange, subject to official notice of
issuance, the shares of Commercial common stock to be issued in the Merger.
4.12 Allowance for Loan and Real Estate Owned Losses. At the request of
-----------------------------------------------
Commercial and in an amount specified by Commercial, prior to the Acquisition
Merger Effective Time, the Company and Savings shall establish such additional
provisions for loan and real estate owned losses as may be necessary in the sole
determination of Commercial to conform the Company's and Savings' loan and real
estate owned allowance practices and methods to those of Commercial and the Bank
(as such practices and methods are to be applied to Company and Savings from and
after the Acquisition Merger Effective Time); provided, however, that Company
and Savings shall not be required to take such action until: (i) Company and
Savings provide to Commercial a written statement dated the date of Closing
certified by the Chairman of the Board, the President and the Chief Financial
Officer of the Company and Savings, that the conditions in Sections 5.1 and 5.2
to be satisfied by the Company or Savings or both of them have been satisfied by
either or both of them or, alternatively, setting forth in detail the
circumstances that have prevented such conditions from being satisfied (the
"Reliance Certificate"), and Commercial and Bank provide to Company and Savings
a Reliance Certificate relating to the satisfaction of the conditions in
Sections 5.1 and 5.3; and (ii) Commercial and the Bank, after reviewing the
Reliance Certificate, provide the Company and Savings a written waiver of any
right either entity may have to terminate the Agreement which waiver shall
contain an express condition precedent that Company and Savings have established
such additional provisions for loan and real estate losses as requested by
Commercial pursuant to this Section 4.12. No additional provision for loan and
real estate owned losses taken by Savings pursuant to this Section 4.12 shall be
deemed in and of itself to be a breach or violation of any representation,
warranty, covenant, condition or other provision of this Agreement.
37
4.13 D&O Indemnification and Insurance. For a period of three (3) years
---------------------------------
following the Acquisition Merger Effective Time, Commercial agrees that the
Merger shall not affect or diminish any of the Company's duties and obligations
of indemnification existing as of the Acquisition Merger Effective Time in favor
of employees, agents, directors or officers of the Company or the Company
Subsidiaries arising by virtue of its Articles of Incorporation or Bylaws in the
form in effect at the date of this Agreement, or the resolutions dated August
23, 1992 contained in Section 4.13 of Schedule I, or arising by operation of
law. Commercial shall cause the persons serving as officers and directors of the
Company immediately prior to the Acquisition Merger Effective Time to be covered
for a period of 18 months from the Acquisition Merger Effective Time by the
directors' and officers' liability insurance policy maintained by the Company
(provided that Commercial may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions which are not materially
less advantageous than such policy) with respect to acts or omissions occurring
prior to the Acquisition Merger Effective Time which were committed by such
officers and directors in their capacity as such; provided, however, that in no
event shall Commercial be required to expend more than 150% of the amount
currently expended by the Company on an annual basis to maintain or procure
insurance coverage for such 18 month period pursuant hereto.
4.14 Tax Treatment. Commercial and Company shall use their best efforts
-------------
to cause the Merger to qualify as a reorganization under Section 368(a)(1) of
the Code.
4.15 Update Disclosure. From and after the date hereof until the
-----------------
Acquisition Merger Effective Time, Company shall promptly, but not less
frequently than monthly, update Schedule I hereto by notice to Commercial to
reflect any matters which have occurred from and after the date hereof which, if
existing on the date hereof, would have been required to be described therein
and which, in the case of all such updates other than the last such update prior
to the Acquisition Merger Effective Time, reflect a material change from the
information provided in Schedule I as of the date hereof; provided, however,
that no such update shall affect the conditions to the obligation of Company and
Savings to consummate the transactions contemplated hereby, and any and all
changes reflected in any such update shall be considered in determining whether
such conditions have been satisfied.
ARTICLE V
CONDITIONS OF THE MERGER; TERMINATION OF AGREEMENT
5.1 General Conditions. The obligations of Commercial, the Bank, the
------------------
Company and Savings to effect the Acquisition Merger and the Bank Merger shall
be subject to the following conditions:
38
(a) Stockholder Approval. The holders of the outstanding shares of
--------------------
Company common stock and Company Preferred Stock shall have approved this
Agreement and the Acquisition Merger as specified in Section 1.7 hereof or as
otherwise required by applicable law.
(b) No Proceedings. No order shall have been entered and remain in
--------------
force restraining or prohibiting the Merger in any legal, administrative,
arbitration, investigatory or other proceedings (collectively, "Proceedings") by
any governmental or judicial or other authority.
(c) Government Approvals. To the extent required by applicable law
--------------------
or regulation, all approvals of or filings with any governmental authority
(collectively, "Governmental Approvals"), including without limitation those of
the OTS, the FDIC, the Federal Trade Commission, DOJ, the SEC, and any state
securities or Blue Sky authorities, shall have been obtained or made and any
waiting periods shall have expired in connection with the consummation of the
Merger. All other statutory or regulatory requirements for the valid
consummation of the Merger and related transactions shall have been satisfied.
(d) Registration Statement. The Registration Statement shall have
----------------------
been declared effective and shall not be subject to a stop order of the SEC and,
if the offer and sale of Commercial's common stock in the Merger pursuant to
this Agreement is subject to the Blue Sky laws of any state, shall not be
subject to a stop order of any state securities commissioner.
(e) Federal Tax Opinion. Receipt of either an opinion of Deloitte &
-------------------
Touche LLP, or other tax advisor reasonably acceptable to Commercial and the
Company, or a private letter ruling from the IRS, in form and content reasonably
satisfactory to Commercial and the Company, and upon which Company shareholders
may rely to the effect that for federal income tax purposes:
. The Acquisition Merger should qualify as a reorganization within the
meaning of Section 368(a)(1)(A) of the Code. Company and Commercial
should each be a "party to a reorganization" within the meaning of
Code Section 368(b).
. Company should recognize no gain or loss on the transfer of its assets
to Commercial in exchange for the Commercial common stock, cash and
the assumption of its liabilities by Commercial, by reason of the
application of Code Sections 361(a), 361(b) and 357(a).
. No gain or loss should be recognized by Company upon the distribution
of the Commercial common stock to the
39
Company shareholders, by reason of the application of Code Section
361(c)(1).
. No gain or loss should be recognized by Commercial on the receipt of
Company's assets in exchange for Commercial common stock, and the
assumption by Commercial of Company's liabilities, by reason of the
application of Code Section 1032(a).
. The basis of the assets of Company in the hands of Commercial should
be the same as the basis of such assets in the hands of Company
immediately prior to the Merger, by reason of the application of Code
Section 362(b).
. The holding period of the property acquired by Commercial from Company
should include the holding period of such property in the hands of
Company immediately prior to the Merger, by reason of the application
of Section 1223(2) of the Code.
. The gain, if any, to be realized by a Company shareholder who receives
Commercial stock and cash in exchange for Company stock will be
recognized, but not in excess of the amount of cash received. If the
exchange has the effect of the distribution of a dividend (determined
with application of Code Section 318(a)), then the amount of gain
recognized that is not in excess of each shareholder's ratable share
of undistributed earnings and profits will be treated as a dividend.
The determination of whether the exchange has the effect of the
distribution of a dividend will be made on a shareholder-by-
shareholder basis. No loss will be recognized on the exchange.
. The basis of the Commercial common stock (including fractional share
interests a Company shareholder would otherwise be entitled to
receive) received by a Company shareholder who exchanges Company
common stock for Commercial common stock and cash will be the same as
the basis of the Company common stock surrendered in the Merger,
decreased by the amount of cash received, and increased by the amount
of cash received that is treated as a dividend (if any), and by the
amount of gain recognized on the exchange (not including any portion
of that gain that was treated as a dividend).
. The holding period of the Commercial common stock (including
fractional share interests that they would otherwise be entitled to
receive) to be received by Company shareholders should, in each
instance, include the holding period of the Company shares surrendered
in the exchange, provided Company stock was held as a
40
capital asset on the date of the Merger, by reason of the application
of Code Section 1223(1).
. Commercial as the Surviving Corporation should succeed to and take
into account as of the close of the day of the distribution or
transfer the items of Company described in Code Section 381(c),
subject to the conditions and limitations specified in Code Sections
381(b) and 381(c), by reason of the application of Code Section
381(a)(2).
. As provided in Code Section 381(c)(2) and Regulation Section
1.381(c)(2)-1 of the IRS, Commercial as the Surviving Corporation
should succeed to and take into account the earnings and profits, or
deficit in earnings and profits, of Company as of the date or dates of
transfer. Any deficit in earnings and profits of either Commercial or
Company will be used only to offset earnings and profits accumulated
after the date or dates of transfer.
. Cash received by a shareholder of Company otherwise entitled to
receive a fractional share of Commercial common stock in exchange for
his Company stock should be treated as if the fractional shares were
distributed as part of the Merger and then were redeemed by
Commercial. These cash payments should be treated as having been
received as distributions in full payment in exchange for the stock
redeemed as provided in Code Section 302(a). This receipt of cash
should result in gain or loss measured by the difference between the
basis of such fractional share interest and the cash received. Such
gain or loss should be capital gain or loss to the former Company
shareholder, provided the Company stock was a capital asset in such
former shareholder's hands and as such, will be subject to the
provisions and limitations of Subchapter P of Chapter 1 (Rev. Rul. 66-
365 and Rev. Rul. 77-41).
5.2 Conditions to Obligations of Commercial and Bank. The obligations of
------------------------------------------------
Commercial and Bank to effect the Merger and the transactions contemplated
herein shall be subject to the following additional conditions:
(a) Opinion of Counsel for Company. Commercial shall have received
------------------------------
from Baird, Holm, McEachen, Pedersen, Hamann & Straushiem, counsel to Company,
an opinion dated as of the Closing covering the matters to be set forth in
Exhibit 5.2(a).
(b) Required Consents. In addition to Governmental Approvals,
-----------------
Company and Savings shall have obtained all necessary third party consents or
approvals in connection with the Merger,
41
the absence of which would materially and adversely affect Company and the
Company Subsidiaries, taken as a whole; in this connection, the Company and
Savings shall obtain consents from all lessors to their respective real estate
leases that may be required for consummation of the Merger.
(c) Company Accountants' Letter. Commercial shall have received
---------------------------
from Coopers & Lybrand LLP, letters dated the date of mailing the
Prospectus/Proxy Statement and the date of the Closing to the effect that: (i)
with respect to the Company they are independent accountants within the meaning
of the 1933 Act and 1934 Act and the applicable rules and regulations
thereunder, (ii) it is their opinion that the audited financial statements of
the Company included in the Prospectus/Proxy Statement comply as to form in all
material respects with the applicable accounting requirements of the 1933 Act
and 1934 Act and the applicable published accounting rules and regulations
thereunder, (iii) on the basis of such procedures as are set forth therein but
without performing an examination in accordance with generally accepted auditing
standards nothing has come to their attention which would cause them to believe
that (A) any unaudited interim financial statements appearing in the
Prospectus/Proxy Statement do not comply as to form in all material respects
with the applicable accounting requirements of the 1933 Act and 1934 Act and the
published rules and regulations thereunder; (B) said financial statements are
not stated on a basis substantially consistent with that of the audited
financial statements; (C) (1) at the date of the latest available consolidated
financial statements of the Company and at a specific date not more than five
business days prior to the date of each such letter there has been, except as
specified in such letter, any increase in the outstanding capital stock, or
indebtedness for borrowed money of the Company (other than deposits and Federal
Home Loan Bank advances with a maturity of one year or less) or any decrease in
the stockholders' equity thereof as compared with amounts shown in the latest
statement of financial condition included in the Prospectus/Proxy Statement, or
(2) for the period from the date of the latest audited financial statements of
the Company included in the Prospectus/Proxy Statement to a specific date not
more than five business days prior to the date of each such letter, there were,
except as specified in such letter, any decreases, as compared with the
corresponding period in the preceding year, in consolidated net income for
Company or any increase, as compared with the corresponding period in the
preceding year, in the provision for loan losses for Company, (iv) they have
performed certain specific procedures as a result of which they determined that
certain information of an accounting, financial or statistical nature included
in the Prospectus/Proxy Statement and requested by Commercial and agreed upon by
such accountants, which is expressed in dollars (or percentages obtained from
such dollar amounts) and obtained from accounting records which are subject to
the internal controls of the Company's accounting system or which has been
derived directly from such
42
accounting records by analysis or computation is in agreement with such records
or computations made therefrom (excluding any questions of legal
interpretation), and (v) on the basis of such procedures as are set forth in
such letter, nothing came to their attention with respect to the Company which
would cause them to believe that the pro forma financial statements had not been
properly compiled on the pro forma basis described therein.
(d) No Material Adverse Change. Between the date of this Agreement
--------------------------
and the date of Closing, there shall not have occurred any material adverse
change in the financial condition, business or results of operations of Company
and the Company Subsidiaries, taken as a whole, other than any such change
attributable to or resulting from any change in law, regulation or generally
accepted accounting principles which impair both the Company and Commercial in a
substantially similar manner, and other than any such change attributable to or
resulting from changes in economic conditions applicable to banking institutions
generally or in general levels of interest rates affecting both the Company and
Commercial to a similar extent and in a similar manner.
(e) Representations and Warranties to be True; Fulfillment of
---------------------------------------------------------
Covenants and Conditions. The representations and warranties of the Company and
------------------------
Savings shall be true in all material respects at the Acquisition Merger
Effective Time with the same effect as though made at the Acquisition Merger
Effective Time (or on the date when made in the case of any representation or
warranty which specifically relates to an earlier date); Company and Savings
shall have performed all obligations and complied with each covenant, in all
material respects, and all conditions under this Agreement on their parts to be
performed or complied with at or prior to the Acquisition Merger Effective Time;
and Company shall have delivered to Commercial a certificate, dated the
Acquisition Merger Effective Time and signed by its chief executive officer and
chief financial officer, to such effect.
(f) No Litigation. Neither the Company nor any Company Subsidiary
-------------
shall be a party to any pending litigation, reasonably probable of being
determined adversely to the Company or any Company Subsidiary, which would have
a material adverse effect on the business, financial condition or results of
operations of the Company and the Company Subsidiaries, taken as a whole.
(g) Regulatory Approval. All Governmental Approvals required
-------------------
hereunder to consummate the transactions contemplated hereby shall have been
obtained without the imposition of any conditions which Commercial and the Bank
reasonably and in good faith determine to be unduly burdensome upon the conduct
of the business of Commercial or the Bank.
(h) Acceptance of Legal Matters. The form and substance of all legal
---------------------------
matters contemplated hereby and all papers delivered
43
hereunder shall be reasonably acceptable to Housley Goldberg Kantarian &
Bronstein, P.C., special counsel to Commercial and the Bank.
(i) Affiliates Letters. Commercial shall have received the letter
------------------
agreements from all affiliates of the Company as contemplated in Section 4.7(i)
herein.
(j) Fairness Opinion. Prior to mailing the Prospectus/Proxy
----------------
Statement, Commercial shall have received an updated written opinion from
Merrill Lynch & Co. to the effect that the Merger Consideration is fair to
Commercial from a financial point of view.
(k) Environmental Reports. Commercial, at its expense, shall have
---------------------
received a Phase I Environmental Risk Report (as contemplated in OTS Thrift
Bulletin #16) on (i) all commercial real estate owned of, (ii) all offices and
premises used as facilities by, and (iii) all properties which serve as security
for any commercial real estate loan having an original principal balance of
$1,000,000 or more of, the Company and Savings, such Reports or other reports
derived therefrom or supplemental thereto to be satisfactory to Commercial.
Commercial's right to terminate this Agreement due to failure of the condition
set forth in this Section 5.2(k) shall only be applicable if the costs to
cleanup, remove, remediate, or take any other action to bring any such property
or properties into material compliance with environmental laws exceed $100,000
in the aggregate and shall expire unless exercised by Commercial on or prior to
November 13, 1995.
(l) Rights Amendment. Neither a "Distribution Date" nor a "Share
----------------
Acquisition Date" nor a "Triggering Event" (as such terms are defined in the
Rights Agreement) shall have occurred, and the Rights shall not have become
redeemable or exercisable for capital stock of Commercial upon consummation of
the Acquisition Merger or the Bank Merger and the Company shall have, if
requested by Commercial, redeemed the Rights under the Rights Agreement for the
applicable redemption price immediately prior to the Acquisition Merger
Effective Time.
5.3 Conditions to Obligations of Company and Savings. The obligations of
------------------------------------------------
Company and Savings to effect the Acquisition Merger and the transactions
contemplated herein shall be subject to the following additional conditions:
(a) Opinion of Counsel for Commercial. Company shall have received
---------------------------------
from Housley Goldberg Kantarian & Bronstein, P.C., special counsel to
Commercial, and Fitzgerald, Schorr, Barmettler & Brennan, an opinion dated as of
the Closing covering the matters to be set forth in Exhibit 5.3(a).
44
(b) Representations and Warranties to be True; Fulfillment of
---------------------------------------------------------
Covenants and Conditions. The representations and warranties of Commercial and
------------------------
the Bank shall be true in all material respects at the Acquisition Merger
Effective Time with the same effect as though made at the Acquisition Merger
Effective Time (or on the date when made in the case of any representation or
warranty which specifically relates to an earlier date); Commercial and the Bank
shall have performed all obligations and complied with each covenant, in all
material respects, and all conditions under this Agreement on their parts to be
performed or complied with at or prior to the Acquisition Merger Effective Time;
and Commercial shall have delivered to Company a certificate, dated the
Acquisition Merger Effective Time and signed by its chief executive officer and
chief financial officer, to such effect.
(c) Acceptance of Legal Matters. The form and substance of all legal
---------------------------
matters contemplated hereby and all papers delivered hereunder shall be
reasonably acceptable to Baird, Holm, McEachen, Pedersen, Hamann & Straushiem,
counsel to the Company.
(d) Fairness Opinion. Prior to mailing the Prospectus/Proxy
----------------
Statement, the Company shall have received an updated written opinion from Dain
Bosworth Incorporated to the effect that the consideration to be received by the
Company shareholders in the Acquisition Merger is fair from a financial point of
view to the stockholders of the Company.
(e) Commercial Common Stock. A certificate for the required number
-----------------------
of whole shares of Commercial common stock, as determined pursuant to Section
1.3 hereof, and cash for the Common Stock Cash Consideration and the Preferred
Stock Cash Consideration and for fractional share interests, as so determined,
shall have been delivered to the Exchange Agent.
(f) Required Consents. In addition to Governmental Approvals,
-----------------
Commercial and the Bank shall have obtained all necessary third party consents
or approvals in connection with the Merger, the absence of which would
materially and adversely affect Commercial and the Commercial Subsidiaries,
taken as a whole.
5.4 Termination of Agreement and Abandonment of Merger. This Agreement
--------------------------------------------------
and the Acquisition Plan of Merger may be terminated at any time before the
Acquisition Merger Effective Time, whether before or after approval thereof by
shareholders of Company, as provided below:
(a) Mutual Consent. By mutual consent of the parties, evidenced by
--------------
their written agreement.
(b) Closing Delay. At the election of either party, evidenced by
-------------
written notice, if the Closing shall not have occurred on or before June 30,
1996, or such later date as shall have been
45
agreed to in writing by the parties; provided, however, that the right to
-------- -------
terminate under this Section 5.4(b) shall not be available to any party whose
failure to perform an obligation hereunder has been the cause of, or has
resulted in, the failure of the Closing to occur on or before such date.
(c) Conditions to Commercial Performance Not Met. By Commercial upon
--------------------------------------------
delivery of written notice of termination to Company if any event occurs which
renders impossible of satisfaction in any material respect one or more of the
conditions to the obligations of Commercial and the Bank to effect the Merger
set forth in Sections 5.1 and 5.2 and noncompliance is not waived by Commercial,
provided, however, that (i) Commercial's right to terminate this Agreement due
-------- -------
to failure of the condition set forth in Section 5.2(k) shall expire unless
exercised by Commercial on or prior to November 13, 1995; and (ii) the right to
terminate under this Section 5.4(c) shall not be available to Commercial where
Commercial's or Bank's failure to perform an obligation hereunder has been the
cause of, or has resulted in, the failure of the Closing to occur on or before
such date.
(d) Conditions to Company Performance Not Met. By the Company upon
-----------------------------------------
delivery of written notice of termination to Commercial if any event occurs
which renders impossible of satisfaction in any material respect one or more of
the conditions to the obligations of Company and Savings to effect the Merger
set forth in Sections 5.1 and 5.3 and noncompliance is not waived by Company,
provided, however, that the right to terminate under this Section 5.4(d) shall
-------- -------
not be available to the Company where the Company's or Savings' failure to
perform an obligation hereunder has been the cause of, or has resulted in, the
failure of the Closing to occur on or before such date.
(e) Average NYSE Closing Price. (i) By the Company at any time
--------------------------
during the two business day period commencing on the business day immediately
after the end of the Determination Period, if the Average NYSE Closing Price
shall be less than $26.00 (adjusted as indicated in Section 1.3(a)(vi)),
subject, however, to the following three sentences. If the Company elects to
exercise its termination right pursuant to this Section 5.4(e), it shall give
written notice to Commercial no later than the end of the aforementioned two day
period. During the two business day period commencing with the business day
after its receipt of such notice, Commercial shall have the option to increase
the consideration to be received by the holders of Company common stock and
Company Preferred Stock hereunder, by adjusting the Exchange Ratio to equal the
number (calculated to four decimal places) obtained by dividing (A) $7.07 by (B)
the Average NYSE Closing Price. If Commercial so elects within such two day
period, it shall give written notice to the Company no later than the end of the
aforementioned two day period of such election and the revised Exchange Ratio,
whereupon no termination shall have occurred pursuant to this Section 5.4(e)
46
and this Agreement shall remain in effect in accordance with its terms (except
as the Exchange Ratio shall have been so modified).
(ii) By the Company if the Average NYSE Closing Price is less than $18.00,
in which event Commercial shall not have the option to increase the
consideration as provided in subparagraph (i) of this Section 5.4(e).
For purposes of this Section 5.4, "Average NYSE Closing Price" shall have
the meaning specified in Section 1.3(b) and "Determination Period" shall have
the meaning specified in Section 1.3(b).
ARTICLE VI
TERMINATION OF OBLIGATIONS; PAYMENT OF EXPENSES
6.1 Termination; Lack of Survival of Representations and Warranties. In
---------------------------------------------------------------
the event of the termination and abandonment of this Agreement pursuant to
Section 5.4 of this Agreement, this Agreement shall become void and have no
effect, except that (i) the provisions of Sections 2.7 and 3.7 (Brokers and
Finders), 4.8 (Publicity), 6.2 (Expenses) and 8.2 (Confidentiality) of this
Agreement shall survive any such termination and abandonment, and (ii) a
termination pursuant to Sections 5.4(c) or 5.4(d) of this Agreement shall not
relieve the breaching party from liability for an uncured intentional and
willful breach of a representation, warranty, covenant, or agreement giving rise
to such termination.
The representations, warranties and agreements of the parties set forth in
this Agreement shall not survive the Acquisition Merger Effective Time, and
shall be terminated and extinguished at the Acquisition Merger Effective Time,
and from and after the Acquisition Merger Effective Time none of the parties
hereto shall have any liability to the other on account of any breach or failure
of any of those representations, warranties and agreement; provided, however,
-------- -------
that the foregoing clause shall not (i) apply to agreements of the parties which
by their terms are intended to be performed after the Acquisition Merger
Effective Time, and (ii) shall not relieve any person for liability for fraud,
deception or intentional misrepresentation.
6.2 Payment of Expenses. Each of the parties hereto shall bear and pay
-------------------
all costs and expenses incurred by it or on its behalf in connection with the
transactions contemplated hereunder.
Notwithstanding the above, Company and Savings shall reimburse Commercial
for all reasonable out-of-pocket expenses, not to exceed $500,000, actually
incurred by Commercial or any Commercial Subsidiary in connection with entering
into this Agreement and the Option Agreement and carrying out any or all of the
acts contemplated hereby if this Agreement is terminated under circumstances in
which the Board of Directors of the Company does
47
not publicly recommend in the Prospectus/Proxy Statement that the Company's
stockholders approve and adopt this Agreement, or if after recommending in the
Prospectus/Proxy Statement that stockholders approve and adopt this Agreement,
the Board of Directors of the Company shall have withdrawn, modified or amended
such recommendation in any respect materially adverse to Commercial
ARTICLE VII
CERTAIN POST-MERGER AGREEMENTS
7.1 Reports to the SEC. Commercial shall continue to file all reports
------------------
and data with the SEC necessary to permit the shareholders of Company who may be
deemed "underwriters" (within the meaning of Rule 145 under the 1933 Act) of
Company common stock to sell the Company common stock received by them in
connection with the Merger pursuant to Rules 144 and 145(d) under such Act if
they would otherwise be so entitled.
7.2 Employees. Employees of the Company or Savings who become employees
---------
of Commercial or the Bank after the Acquisition Merger Effective Time shall be
eligible to participate in all benefit plans sponsored by Commercial or the Bank
to the same extent as other similarly situated Commercial or Bank employees.
Commercial shall honor all accrued vacation leave for the employees of Company
and the Company Subsidiaries following the Acquisition Merger Effective Time,
with full credit for prior service with Company or Savings for purposes of
vesting and eligibility for participation and co-payments and deductibles.
Commercial agrees that for a period of 90 days following the Acquisition Merger
Effective Time, any employee of the Company or Savings who is not, and has not
been, a party to an employment or severance agreement with Company or Savings
and whose employment terminates after the Acquisition Merger Effective Time
shall be entitled to receive payment for accrued vacation time, provided such
accrued vacation time does not exceed five weeks and a severance payment in
accordance with Exhibit 7.2 attached hereto.
ARTICLE VIII
GENERAL
8.1 Amendments. Subject to applicable law, this Agreement may be
----------
amended, whether before or after any relevant approval of shareholders, by an
agreement in writing executed in the same manner as this Agreement and
authorized or ratified by the Boards of Directors of the parties hereto,
provided that, after the adoption of the Agreement by the shareholders of the
-------------
Company, no such amendment without further shareholder approval may change the
amount or form of the consideration to be received by the Company shareholders
in the Merger.
8.2 Confidentiality. All information disclosed hereafter by any party to
---------------
this Agreement to any other party to this Agreement,
48
including, without limitation, any information obtained pursuant to Sections 4.1
or 4.11 hereof, shall be kept confidential by such other party and shall not be
used by such other party otherwise than as herein contemplated except to the
extent that (i) it was known by such other party when received, (ii) it is or
hereafter becomes lawfully obtainable from other sources, (iii) it is necessary
or appropriate to disclose to the OTS, the FDIC or any other regulatory
authority having jurisdiction over the parties or their subsidiaries or as may
otherwise be required by law, or (iv) to the extent such duty as to
confidentiality is waived by the other party. In the event of the termination of
this Agreement, each party shall use all reasonable efforts to return upon
request to the other parties all documents (and reproductions thereof) received
from such other parties (and, in the case of reproductions, all such
reproductions made by the receiving party) that include information not within
the exceptions contained in the first sentence of this Section 8.2.
8.3 Governing Law. This Agreement and the legal relations between the
-------------
parties shall be governed by and construed in accordance with the laws of the
State of Nebraska without taking into account a provision regarding choice of
law, except to the extent certain matters may be governed by federal law by
reason of preemption.
8.4 Notices. Any notices or other communications required or permitted
-------
hereunder shall be sufficiently given if sent by registered mail or certified
mail, postage prepaid, addressed, if to Commercial or Company, to
Commercial Federal Corporation
2120 South 72nd Street
Omaha, Nebraska 68124
Attention: William A. Fitzgerald, Chairman of
the Board and Chief Executive
Officer
with a copy to:
Housley Goldberg Kantarian & Bronstein, P.C.
Suite 700
1220 19th Street, N.W.
Washington, DC 20036
Attention: Gary R. Bronstein, Esq.
and
Conservative Savings Corporation
11207 West Dodge Road
Omaha, Nebraska 68154
Attention: Robert P. DeLay, President and Chief
Executive Officer
49
with a copy to:
Baird, Holm, McEachen, Pedersen, Hamann & Strashiem
1500 Woodmen Tower
Omaha, Nebraska 68102
Attention: John S. Zeilinger, Esquire
or such other address as shall be furnished in writing by any such party, and
any such notice or communication shall be deemed to have been given two business
days after the date of such mailing (except that the notice of change of address
shall not be deemed to have been given until received by the addressee). Notices
may also be sent by telegram, telex, facsimile transmission or hand delivery and
in such event shall be deemed to have been given as of the date received.
8.5 No Assignment. This Agreement may not be assigned by any of the
-------------
parties hereto, by operation of law or otherwise, except as contemplated hereby.
8.6 Headings. The description heading of the several Articles and
--------
Sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
8.7 Counterparts. This Agreement may be extended in one or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties hereto and delivered to each of the other parties hereto.
8.8 Construction and Interpretation. Except as the context otherwise
-------------------------------
requires, (a) all references herein to any state or federal regulatory agency
shall also be deemed to refer to any predecessor or successor agency, and (b)
all references to state and federal statutes or regulations shall also be deemed
to refer to any successor statute or regulation.
8.9 Entire Agreement. This Agreement, together with the schedules,
----------------
lists, exhibits and certificates required to be delivered hereunder, and any
amendment hereafter executed and delivered in accordance with Section 8.1,
constitutes the entire agreement of the parties, and supersedes any prior
written or oral agreement or understanding among any of the parties hereto
pertaining to the Merger, except for the Confidentiality and Non-Disclosure
Agreement between the Company and Commercial dated October 7, 1994, as
supplemented July 13, 1995, which shall remain in full force and effect. This
Agreement is not intended to confer upon any other persons any rights or
remedies hereunder except as expressly set forth herein.
50
8.10 Severability. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of the Agreement.
8.11 No Third Party Beneficiaries. Nothing in this Agreement shall
----------------------------
entitle any person (other than the Company, Savings, Commercial or the Bank and
their respective successors and assigns permitted hereby) to any claim, cause of
action, remedy or right of any kind, except as otherwise expressly provided
herein.
51
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunder duly authorized, all as of the
date set forth above.
COMMERCIAL FEDERAL CORPORATION CONSERVATIVE SAVINGS CORPORATION
By: ______________________________ By: ____________________
Name: Name: Robert P. DeLay
Title: Title: President and Chief
Chief Executive Officer
COMMERCIAL FEDERAL BANK, A CONSERVATIVE SAVINGS BANK, FSB
FEDERAL SAVINGS BANK
By: ______________________________ By: _____________________
Name: Name: Robert P. DeLay
Title: Title: President and Chief
Chief Executive Officer
52
Exhibit 1.1(a)
ACQUISITION PLAN OF MERGER
(ACQUISITION MERGER)
================================================================================
THIS ACQUISITION PLAN OF MERGER (the "Acquisition Plan of Merger") is
entered into as of August 15, 1995 by and between Commercial Federal
Corporation, a Nebraska corporation ("Commercial"), and Conservative Savings
Corporation, a Nebraska corporation (the "Company"), pursuant to a
Reorganization and Merger Agreement dated as of August 15, 1995 by and among
Commercial, Commercial Federal Bank, a Federal Savings Bank, a federally
chartered savings bank and a wholly owned subsidiary of Commercial (the "Bank"),
the Company and Conservative Savings Bank, FSB, a federally chartered savings
bank and a wholly owned subsidiary of the Company ("Savings") (the "Merger
Agreement"). Commercial and the Company are hereinafter sometimes collectively
referred to as the "Constituent Corporations."
In consideration of the representations, warranties and agreements
contained in the Merger Agreement, the Constituent Corporations agree as
follows:
ARTICLE 1.
ACQUISITION MERGER
In accordance with the provisions of this Agreement and the Nebraska
Business Corporation Act (the "NBCA") at the Effective Time (as hereinafter
defined), the Company shall be merged with and into Commercial (the "Acquisition
Merger"), and Commercial shall be the surviving corporation (the "Surviving
Corporation") and shall continue its corporate existence under the laws of the
State of Nebraska. At the Effective Time the separate existence of the Company
shall cease. All transactions after the Effective Time shall be deemed
transactions of and for the account of Commercial as the Surviving Corporation.
ARTICLE 2.
EFFECTIVE TIME AND MANNER AND
BASIS OF CONVERTING STOCK
2.1 Effective Time. The Acquisition Merger shall be effective at the date
--------------
and time at which the Nebraska articles of merger are filed with the Secretary
of State of Nebraska (such time being the "Effective Time"), which shall be
immediately following the closing and on the same day as the closing if
practicable. The Acquisition Merger shall precede the effective time of the
merger of Savings with and into the Bank pursuant to the terms and conditions
set forth in the plan of merger between the Bank and Savings.
2.2 Conversion of Shares.
--------------------
(a)(i) At the Effective Time, by virtue of the Acquisition Merger and
without any action on the part of Commercial or Company or the holders of shares
of Commercial or Company common stock or Company's $1.52 Series A Cumulative
Convertible Preferred Stock (the "Company Preferred Stock"), each outstanding
share of Company common stock issued and outstanding at the Effective Time shall
be converted into and exchanged for (a) $6.34 in cash (the "Common Stock Cash
Consideration") and (b) shares of Commercial common stock (the "Common Stock
Stock Consideration") (the Common Stock Stock Consideration and the Common Stock
Cash Consideration are also individually or, together with the Preferred Stock
Stock Consideration and the Preferred Stock Cash Consideration, as defined
below, collectively referred to herein, as the context requires, as the "Merger
Consideration"), according to the following Exchange Ratios (which shall be
subject to adjustment as provided in clause (a)(vi) of this Section):
(A) If the Average NYSE Closing Price, as defined below, is less
than $28.00, but equal to or greater than $26.00, the Exchange Ratio shall be
that number of shares of Commercial common stock equal to the quotient (carried
to four decimal places) that results by dividing $7.07 by the Average NYSE
Closing Price;
(B) If the Average NYSE Closing Price is equal to or greater than
$28.00 but equal to or less than $36.00, the Exchange Ratio shall be fixed at
.2525 shares of Commercial common stock;
(C) If the Average NYSE Closing Price is greater than $36.00, the
Exchange Ratio shall be that number of shares of Commercial common stock equal
to the quotient (carried to four decimal places) that results by dividing $9.09
by the Average NYSE Closing Price; and
(D) In the event the Average NYSE Closing Price is less than
$26.00, the Exchange Ratio shall be fixed at .2719 shares of Company common
stock; provided, however, that in the event the Exchange Ratio is adjusted
-------- -------
pursuant to the proviso contained in Section 5.4(e) of the Merger Agreement the
Exchange Ratio shall be the Exchange Ratio as so adjusted.
(ii) At the Effective Time, by virtue of the Acquisition Merger and
without any action on the part of Commercial, Bank or Company or the holders of
shares of Commercial or Company common stock or Company Preferred Stock, each
outstanding share of Company Preferred Stock issued and outstanding at the
Effective Time shall be converted into and exchanged for (a) an amount of cash
equal to $14.33 (the "Preferred Stock Cash Consideration") and (b) a number of
shares of Commercial common stock (the "Preferred Stock Stock Consideration")
equal to the product of 2.26 and the Exchange Ratio.
(iii) Any shares of Company common stock or Company Preferred Stock
which are owned or held by Company or any of its subsidiaries (except shares
held in any 401(k) plan of the Company or any of its subsidiaries, shares
subject to Restricted Stock Agreements with the Company or held in a fiduciary
capacity) or by Commercial or any of Commercial's subsidiaries (other than in a
fiduciary capacity) at the Effective Time shall cease to exist, and the
certificates for such shares shall as promptly as practicable be cancelled and
no shares of capital stock of Commercial shall be issued or exchanged therefor.
(iv) Each share of common stock of Commercial issued and outstanding
immediately prior to the Effective Time shall remain an outstanding share of
common stock of Commercial.
(v) At the Effective Time, the holders of certificates representing
shares of Company common stock and Company Preferred Stock shall cease to have
any rights as stockholders of the Company, except the right to receive the
Merger Consideration as provided herein.
(vi) If the holders of Commercial common stock shall have received or
shall have become entitled to receive, without payment therefor, during the
period commencing on the date hereof and ending with the Effective Time,
additional shares of common stock or other securities for their stock by way of
a stock split, stock dividend, reclassification, combination of shares or
similar corporate rearrangement ("Stock Adjustment"), then the amount of
Commercial common stock to be exchanged at the Effective Time for Company common
stock or Company Preferred Stock shall be proportionately adjusted to take into
account such Stock Adjustment. In addition, the Average NYSE Closing Price, as
defined below, shall be proportionately adjusted to compensate for any such
Stock Adjustment.
(b) The term "NYSE Closing Price" shall mean the closing price per share
(carried to four decimal places) of the Commercial common stock on the New York
Stock Exchange. The term "Average NYSE Closing Price" shall mean the arithmetic
mean of the NYSE Closing Prices of the Commercial common stock for the twenty-
fifth through the sixth trading day, inclusive, immediately preceding the
business day prior to the later of (A) the date on which
- 2 -
all requisite federal and state regulatory approvals required to consummate the
transactions contemplated by the Merger Agreement are obtained (and Commercial
shall notify the Company of the date when all such approvals are obtained),
including for this purpose the period of any requisite waiting periods in
respect thereof, or (B) the date of the Company's meeting of shareholders to be
held pursuant to Section 1.7 of the Merger Agreement (the "Determination
Period").
(c) Each share of Commercial common stock to be issued to the Company's
shareholders pursuant to this Section 2.2 shall include the corresponding number
of rights associated with the Commercial common stock pursuant to the Rights
Agreement dated as of December 19, 1988 by and between Commercial and
Manufacturers Hanover Trust Company, as Rights Agent ("Commercial Rights
Agreement").
2.3 Exchange of Company Common Stock.
--------------------------------
(a) Commercial has reserved for issuance a sufficient number of shares of
its common stock for the purpose of issuing its shares to the Company's
shareholders in accordance with this Article 2.
(b) After the Effective Time, holders of certificates theretofore
evidencing outstanding shares of Company common stock or Company Preferred Stock
(other than as provided in Section 2.2(a)(iii)), upon surrender of such
certificates to an exchange agent appointed by Commercial (the "Exchange
Agent"), shall be entitled to receive certificates representing the number of
whole shares of Commercial common stock into which shares of Company common
stock or Company Preferred Stock theretofore represented by the certificates so
surrendered shall have been converted, as provided in Section 2.2 hereof, cash
payable for the Common Stock Cash Consideration and Preferred Stock Cash
Consideration, and cash payments in lieu of fractional shares as provided in
Section 2.4 hereof. As soon as practicable after the Effective Time, the
Exchange Agent will send a notice and transmittal form to each Company
shareholder of record at the Effective Time whose Company stock shall have been
converted into Commercial common stock advising such shareholder of the
effectiveness of the Acquisition Merger and the procedure for surrendering to
the Exchange Agent outstanding certificates formerly evidencing Company common
stock or Company Preferred Stock in exchange for new certificates for Commercial
common stock and for cash payable for the Common Stock Cash Consideration and
the Preferred Stock Cash Consideration and in lieu of any fractional interest.
Upon surrender, each certificate evidencing Company common stock and Company
Preferred Stock shall be cancelled.
(c) Until surrendered as provided in this Section 2.3 hereof, each
outstanding certificate which, prior to the Effective Time, represented Company
common stock or Company Preferred Stock (other than shares cancelled at the
Effective Time pursuant to Section 2.2(a)(iii) hereof) will be deemed for all
corporate purposes to evidence ownership of the number of whole shares of
Commercial common stock into which the shares of Company common stock or Company
Preferred Stock formerly represented thereby were converted and the right to
receive cash payable for the Common Stock Cash Consideration and the Preferred
Stock Cash Consideration and in lieu of any fractional interest. However, until
such outstanding certificates formerly representing Company common stock or
Company Preferred Stock are so surrendered, no dividend or distribution payable
to holders of record of Commercial common stock shall be paid to any holder of
such outstanding certificates, but upon surrender of such outstanding
certificates by such holder there shall be paid to such holder the amount of any
dividends or distribution, without interest, theretofore paid with respect to
such whole shares of Commercial common stock, but not paid to such holder, and
which dividends or distribution had a record date occurring on or subsequent to
the Effective Time and the amount of any cash, without interest, payable to such
holder for the Common Stock Cash Consideration and the Preferred Stock Cash
Consideration and in lieu of fractional shares pursuant to Section 2.4 hereof.
After the Effective Time, there shall be no further registration of transfers on
the records of the Company of outstanding certificates formerly representing
shares of Company common stock or Company Preferred Stock and, if a certificate
formerly representing such shares is presented to Commercial, it shall be
forwarded to the Exchange Agent for cancellation and exchange for certificates
representing shares of Commercial common stock as herein provided.
- 3 -
(d) All shares of Commercial common stock and cash for the Common Stock
Cash Consideration and the Preferred Stock Cash Consideration and in lieu of any
fractional share issued and paid upon the surrender for exchange of Company
common stock or Company Preferred Stock in accordance with the above terms and
conditions shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Company common stock or Company Preferred
Stock.
(e) If any new certificate for Commercial common stock is to be issued in
the name other than that in which the certificate surrendered in exchange
thereof is registered, it shall be a condition of the issuance therefor that the
certificate surrendered in exchange shall be properly endorsed and otherwise in
proper form for transfer and that the person requesting such transfer pay to the
Exchange Agent any transfer or other taxes required by reason of the issuance of
a new certificate for shares of Commercial common stock in any name other than
that of the registered holder of the certificate surrendered, or establish to
the satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(f) In the event any certificate for Company common stock or Company
Preferred Stock shall have been lost, stolen or destroyed, the Exchange Agent
shall issue in exchange for such lost, stolen or destroyed certificate, upon the
making of an affidavit of that fact by the holder thereof, such shares of
Commercial common stock and cash for the Common Stock Cash Consideration and the
Preferred Stock Cash Consideration and in lieu of fractional shares, if any, as
may be required pursuant hereto; provided, however, that Commercial may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate to deliver a bond in such
sum as it may direct as indemnity against any claim that may be made against
Commercial, the Company, the Exchange Agent or any other party with respect to
the certificate alleged to have been lost, stolen or destroyed.
2.4 No Fractional Shares. Notwithstanding any term or provision hereof,
--------------------
no fractional shares of Commercial common stock, and no certificates or scrip
therefor, or other evidence of ownership thereof, will be issued in exchange for
any shares of Company common stock or Company Preferred Stock; no dividend or
distribution with respect to Commercial common stock shall be payable on or with
respect to any fractional share interests; and no such fractional share interest
shall entitle the owner thereof to vote or to any other rights of a shareholder
of Commercial. In lieu of such fractional share interest, any holder of Company
common stock or Company Preferred Stock who would otherwise be entitled to a
fractional share of Commercial common stock will, upon surrender of his
certificate or certificates representing Company common stock or Company
Preferred Stock outstanding immediately prior to the Effective Time, be paid the
applicable cash value of such fractional share interest, which shall be equal to
the product of the fraction multiplied by the Average NYSE Closing Price. For
the purposes of determining any such fractional share interests, all shares of
Commercial common stock received by the holders of the Company common stock and
the Company Preferred Stock shall be combined so as to calculate the maximum
number of whole shares of Commercial common stock issuable to such Company
shareholder in the Acquisition Merger.
ARTICLE 3.
ORGANIZATION OF THE SURVIVING CORPORATION
3.1 Articles of Incorporation and Bylaws of the Surviving Corporation of
--------------------------------------------------------------------
the Merger. The Articles of Incorporation and Bylaws of Commercial, as in
----------
effect on the Effective Time, shall be the Articles of Incorporation and Bylaws
of Commercial, as the surviving corporation.
3.2 Directors and Officers of the Surviving Corporation of the Merger.
-----------------------------------------------------------------
The directors and officers of Commercial in office immediately prior to the
Effective Time shall be the directors and officers, respectively, of Commercial,
as the surviving corporation of the Acquisition Merger, until their respective
successors shall be duly elected and qualified.
- 4 -
ARTICLE 4.
GENERAL PROVISIONS
(a) At the Effective Time, the separate existence of the Company shall
cease.
(b) The Surviving Corporation shall have all the rights, privileges,
immunities, and powers and shall be subject to all duties and liabilities of a
corporation organized under the Nebraska Business Corporation Act.
(c) The Surviving Corporation shall after the Effective Time possess all
the rights, privileges, immunities, and franchises, of a public as well as of a
private nature, of each of the merging corporations. All property, real,
personal, and mixed, all debts due on whatever account, all other things and
causes of action, and all and every other interest of or belonging to or due to
each of Commercial and the Company shall be taken and deemed to be transferred
to and vested in the Surviving Corporation without further act or deed and shall
thereafter be the property of the Surviving Corporation to the same extent as
they were of each of Commercial or the Company. The title to any real estate,
or any interest therein, vested in Commercial or the Company shall not revert or
be in any way impaired by reason of the Acquisition Merger.
(d) The Surviving Corporation shall be responsible and liable for all the
liabilities and obligations of each of Commercial and the Company; and any claim
existing or action or proceeding pending by or against any of such corporations,
may be prosecuted as if such merger or consolidation had not taken place or such
Surviving Corporation may be substituted in its place. Neither the rights of
creditors nor any liens upon the property of Commercial or the Company shall be
impaired by the Acquisition Merger.
(e) The net surplus of Commercial and the Company which was available for
the payment of dividends immediately prior to the Acquisition Merger, to the
extent that such surplus is not transferred to stated capital or capital surplus
by the issuance of shares or otherwise, shall continue to be available for the
payment of dividends by the Surviving Corporation.
ARTICLE 5.
COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be
deemed an original and all of which shall constitute one and the same
instrument.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunder duly authorized, all as of the
date set forth above.
COMMERCIAL FEDERAL CORPORATION CONSERVATIVE SAVINGS CORPORATION
By: ________________________ By: ___________________________
Name: Name:
Title: Title:
- 5 -
Exhibit 1.1(c)
PLAN OF MERGER
OF
CONSERVATIVE SAVINGS BANK, FSB
INTO
COMMERCIAL FEDERAL BANK, A FEDERAL SAVINGS BANK
PLAN OF MERGER, dated as of the 15th day of August, 1995 by and between
Commercial Federal Bank, a Federal Savings Bank, a savings bank chartered under
the laws of the United States of America (the "Bank" or the "Resulting Bank"),
and Conservative Savings Bank, FSB, a savings bank chartered under the laws of
the United States of America ("Conservative"), such institutions being sometimes
hereinafter called the "Constituent Banks" or, individually, "Constituent Bank".
WITNESSETH:
WHEREAS, all of the outstanding capital stock of the Bank is owned directly
or indirectly by Commercial Federal Corporation ("Commercial"); and
WHEREAS, Commercial, the Bank, Conservative and Conservative Savings
Corporation, parent corporation of Conservative (the "Company") have entered
into a Reorganization and Merger Agreement ("Reorganization Agreement") of even
date herewith pursuant to which, following the merger of the Company with and
into Commercial, Conservative shall be merged with and into the Bank.
WHEREAS, the Boards of Directors of the Bank and Conservative each believe
that it is in the best interests of the institutions and their stockholders to
merge the Bank and Conservative into a single federally chartered savings bank
in order that (i) the merged institution may operate with an improved
competitive position and operating efficiency and (ii) the parent company of the
Bank, Commercial, will retain the advantage of a unitary savings and loan
holding company status.
NOW, THEREFORE, in consideration of the mutual covenants, agreements and
provisions hereinafter contained, and for the purpose of prescribing the terms
and conditions of said merger and mode of carrying the same into effect, the
Bank and Conservative have agreed and do hereby agree and covenant as follows:
1. Plan of Merger: The merger provided for herein shall be effected as
--------------
follows:
(a) The execution and delivery of this Agreement by the Bank and
Conservative shall have been duly approved by at least a two-thirds (2/3) vote
of the Board of Directors of the Bank and Conservative, respectively.
(b) The Office of Thrift Supervision or any successor thereto ("OTS")
shall have approved the merger.
(c) The merger shall be approved by the shareholder of the Bank and by
the shareholder of Conservative.
(d) Thereupon Conservative shall be merged with and into the Bank.
2. Effect of Merger. When this Plan of Merger shall become effective in
----------------
accordance with the laws and regulations of the United States of America:
(a) The separate existence of Conservative shall cease and
Conservative shall be merged into the Bank, which shall be the savings bank
resulting from the merger and shall continue its existence under the name
"Commercial Federal Bank, a Federal Savings Bank". The date on which such merger
becomes effective is hereinafter called the "Effective Time".
(b) The Charter and Bylaws of the Bank as in effect on the Effective
Time shall be and remain the Charter and Bylaws of the Resulting Bank.
(c) The Directors of the Resulting Bank from and after the Effective
Time shall be nine (9) in number and shall be those persons whose name,
residence address and terms of office are identified in Exhibit 1 hereto.
(d) The officers of the Bank immediately prior to the Effective Time
shall be the officers of the Resulting Bank and shall continue in office until
their successors are duly elected or otherwise duly selected.
(e) All savings accounts of Conservative shall be and become savings
accounts in the Resulting Bank without change in their respective terms,
maturity, minimum required balances or withdrawal value. Each savings account of
Conservative shall, as of the Effective Time, be considered, for purpose of
interest declared by the Resulting Bank thereafter, as if it had been a savings
account of the Resulting Bank at the time said savings account was opened in
Conservative and at all times thereafter until such account ceases to be a
savings account of the Resulting Bank. Appropriate evidence of savings account
ownership interest in the Resulting Bank shall be provided, as necessary, after
consummation of the merger by the Resulting Bank to each savings account holder
of Conservative.
(f) All savings accounts of the Bank prior to consummation of the
merger shall continue to be savings accounts in the Resulting Bank after
consummation of the merger without any change whatsoever in any of the
provisions of such savings accounts, including, without limitation, their
respective terms, maturity, minimum required balances or withdrawal value.
(g) All of the assets, properties, obligations and liabilities of
every kind and character, real, personal and mixed, tangible and intangible,
choses in action, rights, and credits then owned by either the Bank or
Conservative, or which would inure or be subject to either of them, shall
immediately by operation of law and without any conveyance or transfer and
without any further act or deed, be vested in and become the property and
obligations of the Resulting Bank which shall have, hold and enjoy the same in
its own right as fully and to the same extent as the same were possessed, held
and enjoyed by the Bank and Conservative immediately prior to the consummation
of the merger. The Resulting Bank shall be deemed to be and shall be a
continuation of the entity and identity both of the Bank and of Conservative and
the rights and obligations of the Bank and of Conservative shall remain
unimpaired; and the Resulting Bank, upon the consummation of the merger, shall
succeed to all of such rights and obligations and the duties and liabilities
connected therewith.
(h) The main office of the Bank at 2120 South 72nd Street, Omaha,
Nebraska, shall be the main office of the Resulting Bank and branch offices
thereof will be located at the locations set forth in Exhibit 2 hereof.
(i) The liquidation account of Conservative as in effect as of the
Effective Time shall be assumed in full by the Resulting Bank.
- 2 -
3. Disposition of Shares:
---------------------
(a) All of the shares of Conservative capital stock issued and
outstanding on the Effective Time, and all rights in respect thereof, shall be
cancelled.
(b) The shares of capital stock of the Bank outstanding immediately
prior to consummation of the merger shall constitute the only outstanding shares
of capital stock of the Resulting Bank following consummation of the merger.
4. Effective Time of Merger. The merger provided for herein shall become
------------------------
effective on the date of endorsement of the Articles of Combination by the
Secretary of the OTS (the "Effective Time"). The merger shall not be effective
unless and until approved by the OTS. The merger shall also not be effective
until after the effective time of the merger of the Company with and into
Commercial as set forth in the Agreement of Merger by and between the Company
and Commercial.
5. Action by Shareholders: The shareholders of the Bank and Conservative,
----------------------
respectively, shall take appropriate action to vote to approve this Plan of
Merger.
6. Condition of Closing: The obligations of the parties hereto to
--------------------
consummate the transactions contemplated herein shall be subject to approval by
the OTS.
7. Amendment: This Agreement may be amended or modified at any time by a
---------
written instrument signed by the Bank and Conservative.
8. Paragraph Headings: The paragraph headings in this Plan of Merger are
------------------
for convenience only; they form no part of this Plan of Merger and shall not
affect its interpretation.
9. Governing Law: This Plan of Merger shall be governed by the laws of
-------------
the State of Nebraska, except to the extent federal law governs.
10. Termination. This Plan of Merger shall automatically terminate
-----------
without any further action of the parties hereto upon termination of the
Reorganization Agreement.
11. Miscellaneous: This Plan of Merger may be executed in counterparts,
-------------
each of which shall be deemed an original and all of which constitute one and
the same instrument.
- 3 -
IN WITNESS WHEREOF, the parties hereto have caused this Plan of Merger to
be executed on their behalf by their duly authorized representatives as of the
day and year first above written.
CONSERVATIVE SAVINGS BANK, FSB COMMERCIAL FEDERAL BANK, A
FEDERAL SAVINGS BANK
By:___________________________ By:__________________________
Name: Name:
Title: Title:
By:___________________________ By:__________________________
Name: Name:
Title: Secretary Title: Secretary
- 4 -
Exhibit 1.14
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT dated as of August 16, 1995 between Commercial
Federal Corporation, a Nebraska Corporation ("Commercial"), and Conservative
Savings Corporation, a Nebraska Corporation ("Company").
WITNESSETH:
WHEREAS, the Boards of Directors of Commercial and Company have approved a
Reorganization and Merger Agreement (the "Merger Agreement"), dated as of August
16, 1995, between Commercial and its wholly owned subsidiary, Commercial Federal
Bank, A Federal Savings Bank ("Bank"), and Company and its wholly owned
subsidiary, Conservative Savings Bank, FSB ("Savings"), providing, among other
things, for the acquisition of the Company by a wholly owned subsidiary of the
Bank (the "Acquisition Merger"). The Merger Agreement is being executed by the
parties simultaneously with this Agreement;
WHEREAS, as a condition to Commercial's entry into the Merger Agreement and
in consideration of such entry, the Company has agreed to grant to Commercial
the option set forth herein;
NOW THEREFORE, in consideration of the premises herein contained, the
parties agree as follows:
1. Capitalized terms defined in the Merger Agreement and used herein
shall have the same meaning as in the Merger Agreement.
2.(a) The Company hereby grants to Commercial an option (the "Option"), to
be exercised in whole or in part from time to time as provided herein, to
purchase 367,354 shares of authorized and unissued or treasury shares of
Company's common stock at a price of $10.375 per share payable in cash as
provided in Section 3(f) hereof; provided, however, in the event the Company
issues or agrees to issue any shares of common stock (other than as permitted
under the Merger Agreement, including the exercise of outstanding stock options)
at a price less than $10.375 per share (as adjusted pursuant to Section 6
herein) such price shall be equal to such lesser price (such price, as adjusted
if applicable, the "Option Price"); and provided further, that such number of
shares shall be reduced by the number of shares, if any, beneficially owned by
Commercial as of the date of exercise. The number of shares of Company common
stock subject to option hereunder shall also be subject to adjustment as
provided in Section 6 herein.
(b) In the event that any additional shares of Company common stock are
issued or otherwise become outstanding after the date of this Agreement (other
than pursuant to this Agreement), the number of shares of Company common stock
subject to the Option shall be increased so that, after such issuance, it equals
19.9% of the number of shares of common stock then issued and outstanding
without giving effect to any shares subject or issued pursuant to the
1
Option. Nothing contained in this Section 1(b) or elsewhere in this Agreement
shall be deemed to authorize Commercial or Company to breach any provision of
the Merger Agreement.
3.(a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, if, but only if, both an Initial Triggering Event (as hereinafter
defined) and a Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined), provided that the Holder shall have sent the written
notice of such exercise (as provided in subsection (e) of this Section 3) within
30 days following the first such Subsequent Triggering Event. Each of the
following shall be an Exercise Termination Event: (i) the Acquisition Merger
Effective Time (as defined in the Merger Agreement); (ii) termination of the
Merger Agreement in accordance with the provisions thereof if such termination
occurs prior to the occurrence of an Initial Triggering Event; or (iii) the
passage of twelve months after termination of the Merger Agreement if such
termination follows or occurs at the same time as the occurrence of an Initial
Triggering Event. The term "Holder" shall mean the holder or holders of the
Option (including Commercial or any subsequent transferee(s)).
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) Company or any of its Subsidiaries (each a "Company
Subsidiary"), without having received Commercial's prior written consent,
shall have entered into an agreement to engage in an Acquisition
Transaction (as hereinafter defined) with any person (the term "person" for
purposes of this Agreement having the meaning assigned thereto in Sections
3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, and the rules
and regulations thereunder (the "1934 Act") other than Commercial or any of
its Subsidiaries (each a "Commercial Subsidiary"). For purposes of this
Agreement, "Acquisition Transaction" shall mean (x) a merger or
consolidation, or any similar transaction, involving Company or any
Significant Subsidiary (as defined in Rule 1-02 of Regulation S-X
promulgated by the SEC) of Company, (y) a purchase, lease or other
acquisition of all or substantially all of the assets of Company or any
Significant Subsidiary of Company, or (z) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or otherwise) of
beneficial ownership of securities representing 10% or more of the Company
common stock or of any class of Company preferred stock or any Significant
Subsidiary of Company; provided that the term "Acquisition Transaction"
does not include any internal merger or consolidation involving only the
Company and/or Company Subsidiaries;
(ii)(A) Any person other than Commercial, or any Commercial
Subsidiary, or any Company Subsidiary acting in a fiduciary capacity
(collectively, "Excluded Persons"), alone or together with such person's
affiliates and associates (as such terms are defined in Rule 12b-2 under
the 1934 Act), shall have acquired beneficial ownership or the right to
acquire beneficial ownership of 15% or more of the outstanding shares of
Company common stock or any class of Company preferred stock (the term
"beneficial ownership" for purposes of this Option Agreement having the
meaning assigned thereto in Section
2
13(d) of the 1934 Act, and the rules and regulations thereunder) or (B) any
group (as such term is defined in Section 13(d)(3) of the 1934 Act), other
than a group of which any Excluded Person is a member, shall have been
formed that beneficially owns 15% or more of the shares of Company common
stock or any class of Company preferred stock then outstanding;
(iii) Any person other than Commercial or any Commercial Subsidiary
shall have made a bona fide proposal to Company or its shareholders by
public announcement or written communication that is or becomes the subject
of public disclosure to (A) engage in an Acquisition Transaction or (B)
commence a tender or exchange offer the consummation of which would result
in such person acquiring beneficial ownership of securities representing
15% or more of Company's common stock or of any class of Company preferred
stock;
(iv) The Board of Directors of Company shall have failed to
recommend to its stockholders the adoption of the Merger Agreement or shall
have withdrawn, modified or changed in a manner adverse to Commercial such
recommendation or the Company shall fail to obtain shareholder approval of
the transactions contemplated by the Merger Agreement;
(v) Company shall have intentionally and knowingly breached any
representation, warranty, covenant or agreement contained in the Merger
Agreement and such breach (x) would entitle Commercial to terminate the
Merger Agreement (without regard to any grace period provided for therein)
and (y) shall not have been cured prior to the Notice Date (as defined
below); or
(vi) Any person other than Commercial or any Commercial Subsidiary,
other than in connection with a transaction to which Commercial has given
its prior written consent, shall have filed an application or notice with
the Office of Thrift Supervision ("OTS") or other federal or state bank
regulatory authority, which application or notice has been accepted for
processing, for approval to engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person other than an Excluded Person of
beneficial ownership of 25% or more of the then outstanding Company common
stock or of any class of Company preferred stock; or
(ii) The occurrence of the Initial Triggering Event described in
subparagraph (i) of subsection (b) of this Section 3, except that the
percentage referred to in clause (z) shall be 25%.
3
(d) Company shall notify Commercial promptly in writing of the occurrence
of any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Company shall not be a condition to the right of the Holder to exercise the
Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option, it shall send to Company a written notice (the date of which is herein
referred to as the "Notice Date") specifying (i) the total number of shares it
will purchase pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 60 business days from the Notice Date
for the closing of such purchase (the "Closing Date"); provided that if prior
notification to or approval of the OTS or any other regulatory agency is
required in connection with such purchase, the Holder shall promptly file the
required notice or application for approval and shall expeditiously process the
same and the period of time that otherwise would run pursuant to this sentence
shall run instead from the date on which any required notification periods have
expired or been terminated or such approvals have been obtained and any
requisite waiting period or periods shall have passed. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.
(f) At each closing referred to in subsection (e) of this Section 3, the
Holder shall pay to Company the aggregate purchase price for the shares of
Company common stock purchased pursuant to the exercise of the Option in
immediately available funds by wire transfer to a bank account designated by
Company, provided that failure or refusal of Company to designate such a bank
account shall not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 3, Company shall
deliver to the Holder a certificate or certificates representing the number of
shares of Company common stock purchased by the Holder and, if the Option should
be exercised in part only, a new Option evidencing the rights of the Holder
thereof to purchase the balance of the shares purchasable hereunder.
(h) Certificates for Company common stock delivered at a closing
hereunder may be endorsed with a restrictive legend that shall read
substantially as follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the registered holder
hereof and Company and to resale restrictions arising under the Securities
Act of 1933, as amended. A copy of such agreement is on file at the
principal office of Company and will be provided to the holder hereof
without charge upon receipt by Company of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933 ("1933 Act") in the above legend shall be removed
by delivery of substitute certificate(s) without such reference if the Holder
shall have delivered to Company a copy of a letter from the staff of the SEC, or
an opinion of counsel, in form and substance satisfactory to Company, to the
effect that such legend is not required for purposes of the 1933 Act; (ii) the
reference to the
4
provisions of this Agreement in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference; and (iii) the
legend shall be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such certificates shall
bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Company of the written notice of
exercise of the Option provided for under subsection (e) of this Section 3 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares of Company
common stock issuable upon such exercise, notwithstanding that the stock
transfer books of Company shall then be closed or that certificates representing
such shares of Company common stock shall not then be actually delivered to the
Holder. Company shall pay all expenses, and any and all United States federal,
state and local taxes and other charges that may be payable in connection with
the preparation, issue and delivery of stock certificates under this Section 3
in the name of the Holder or its assignee, transferee or designee.
4. Company agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
common stock so that the Option may be exercised without additional
authorization of common stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase common stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Company;
(iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. (S)18a and regulations promulgated
thereunder and (y) in the event, under the Home Owners' Loan Act, as amended
("HOLA"), or the Change in Bank Control Act of 1978, as amended, or any state
banking law, prior approval of or notice to the OTS, or to any state regulatory
authority is necessary before the Option may be exercised, cooperating fully
with the Holder in preparing such applications or notices and providing such
information to the OTS or such state regulatory authority as they may require)
in order to permit the Holder to exercise the Option and Company duly and
effectively to issue shares of common stock pursuant hereto; and (iv) promptly
to take all action provided herein to protect the rights of the Holder against
dilution.
5. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Company, for other Agreements
providing for Options of different denominations entitling the holder thereof to
purchase, on the same terms and subject to the same conditions as are set forth
herein, in the aggregate the same number of shares of Company common stock
purchasable hereunder. The terms "Agreement" and "Option" as used herein include
any Stock Option Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Company of evidence
reasonably
5
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Company will execute and deliver a new Agreement of
like tenor and date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of Company, whether
or not the Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by anyone.
6. In addition to the adjustment in the number of shares of Company common
stock that are purchasable upon exercise of the Option pursuant to Section 2 of
this Agreement, in the event of any change in Company common stock by reason of
stock dividends, split-ups, mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares, distributions, or the like, the
type and number, and/or the price, of shares of Company common stock purchasable
upon exercise hereof shall be appropriately adjusted.
7. Upon the occurrence of a Subsequent Triggering Event that occurs prior
to an Exercise Termination Event, Company shall, at the request of the Holder
delivered at the time of and together with a written notice of exercise in
accordance with Section 3(e) hereof (whether on its own behalf or on behalf of
any subsequent holder of this Option (or part thereof) or any of the shares of
Company common stock issued pursuant hereto), promptly prepare, file and keep
current a shelf registration statement under the 1933 Act covering any shares
issued or issuable pursuant to this Option and shall use its best efforts to
cause such registration statement to become effective and remain current in
order to permit the sale or other disposition of any shares of common stock
issued upon total or partial exercise of this Option ("Option Shares") in
accordance with any plan of disposition requested by the Holder. Company will
use its best efforts to cause such registration statement first to become
effective and then to remain effective for such period not in excess of 180 days
from the day such registration statement first becomes effective or such shorter
time as may be reasonably necessary to effect such sales or other dispositions.
The Holder shall have the right to demand not more than two such registrations
under this Agreement and all other agreements for which this agreement may be
exchanged pursuant to Section 5 hereof; provided, however, that Company shall be
required to bear the expenses related only to the first such registration, and
the Holder shall bear such expenses to the extent related to the second. The
foregoing notwithstanding, if, at the time of any request by the Holder for
registration of Option Shares as provided above, Company is in registration with
respect to an underwritten public offering of shares of Company common stock,
and if in the good faith judgment of the managing underwriter or managing
underwriters, or, if none, the sole underwriter or underwriters, of such
offering the inclusion of the Holder's Option or Option Shares would interfere
with the successful marketing of the shares of Company common stock offered by
Company, the number of Option Shares otherwise to be covered in the registration
statement contemplated hereby may be reduced; and provided, however, that after
any such required reduction the number of Option Shares to be included in such
offering for the account of the Holder shall constitute at least 25% of the
total number of shares to be issued by the Holder and Company in the aggregate;
and provided further, however, that if such reduction occurs, then the Company
shall file a registration statement for the balance as promptly as practical and
no reduction shall thereafter occur. Each such Holder shall provide all
information
6
reasonably requested by Company for inclusion in any registration statement to
be filed hereunder. If requested by any such Holder in connection with such
registration, Company shall become a party to any underwriting agreement
relating to the sale of such shares, but only to the extent of obligating itself
in respect of representations, warranties, indemnities and other agreements
customarily included in such underwriting agreements for the Company. Upon
receiving any request under this Section 7 from any Holder, Company agrees to
send a copy thereof to any other person known to Company to be entitled to
registration rights under this Section 7, in each case by promptly mailing the
same, postage prepaid, to the address of record of the persons entitled to
receive such copies.
8.(a) Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, (i) at the request of the Holder,
delivered within 30 days of such occurrence (or such later period as provided in
Section 11), Company shall repurchase the Option from the Holder at a price (the
"Option Repurchase Price") equal to (x) the amount by which (A) the market/offer
price (as defined below) exceeds (B) the Option Price, multiplied by the number
of shares for which this Option may then be exercised plus (y) Commercial's Out-
of-Pocket Expenses (as defined below) (to the extent not previously reimbursed)
and (ii) at the request of the owner of Option Shares from time to time (the
"Owner"), delivered within 30 days of such occurrence (or such later period as
provided in Section 9), Company shall repurchase such number of the Option
Shares from the Owner as the Owner shall designate at a price (the "Option Share
Repurchase Price") equal to (x) the market/offer price multiplied by the number
of Option Shares so designated plus (y) Commercial's Out-of-Pocket Expenses (to
the extent not previously reimbursed). The term "Out-of-Pocket Expenses" shall
mean Commercial's reasonable out-of-pocket expenses, not to exceed $500,000,
incurred in connection with the transactions contemplated by the Merger
Agreement, including, without limitation, legal, accounting and investment
banking fees. The term "market/offer price" shall mean the highest of (i) the
price per share of Company common stock at which a tender offer or exchange
offer therefor has been made, (ii) the price per share of Company common stock
to be paid by any third party pursuant to an agreement with Company, (iii) the
highest closing price for shares of Company common stock within the six-month
period immediately preceding the date the Holder gives notice of the required
repurchase of this Option or the Owner gives notice of the required repurchase
of Option Shares, as the case may be, or (iv) in the event of a sale of all or
substantially all of Company's assets, the sum of the price paid in such sale
for such assets and the current market value of the remaining assets of Company
as determined by a nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be, reasonably acceptable to the Company,
divided by the number of shares of common stock of Company outstanding at the
time of such sale. In determining the market/offer price, the value of
consideration other than cash shall be determined by a nationally recognized
investment banking firm selected by the Holder or Owner, as the case may be,
reasonably acceptable to the Company.
(b) The Holder and the Owner, as the case may be, may exercise its right
to require Company to repurchase the Option and any Option Shares pursuant to
this Section 8 by surrendering for such purpose to Company, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating
7
that the Holder or the Owner, as the case may be, elects to require Company to
repurchase this Option and/or the Option Shares in accordance with the
provisions of this Section 8. As promptly as practicable, and in any event
within five business days after the surrender of the Option and/or certificates
representing Option Shares and the receipt of such notice or notices relating
thereto, Company shall deliver or cause to be delivered to the Holder the Option
Repurchase Price and/or to the Owner the Option Share Repurchase Price therefor
or the portion thereof that Company is not then prohibited under applicable law
and regulation from so delivering.
(c) To the extent that Company is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing the
Option and/or the Option Shares in full, Company shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be delivered, from
time to time, to the Holder and/or the Owner, as appropriate, the portion of the
Option Repurchase price and the Option Share Repurchase Price, respectively,
that it is no longer prohibited from delivering, within five business days after
the date on which Company is no longer so prohibited; provided, however, that if
Company at any time after delivery of a notice of repurchase pursuant to
paragraph (b) of this Section 8 is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering to the
Holder and/or the Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in full (and Company hereby
undertakes to use its best efforts to obtain all required regulatory and legal
approvals and to file any required notice of promptly as practicable in order to
accomplish such repurchase), the Holder or Owner may revoke its notice of
repurchase of the Option or the Option Shares either in whole or to the extent
of the prohibition, whereupon, in the latter case, Company shall promptly (i)
deliver to the Holder and/or the Owner, as appropriate, that portion of the
Option Purchase Price or the Option Share Repurchase Price that Company is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Holder, a new Stock Option Agreement evidencing the right of the Holder to
purchase that number of shares of common stock obtained by multiplying the
number of shares of common stock for which the surrendered Stock Option
Agreement was exercisable at the time of delivery of the notice of repurchase by
a fraction, the numerator of which is the Option Repurchase Price less the
portion thereof theretofore delivered to the Holder and the denominator of which
is the Option Repurchase Price, or (B) to the Owner, a certificate for the
Option Share it is then so prohibited from repurchasing.
9. The 30-day period for exercise of certain rights under Sections 3, 7
and 8 shall be extended: (i) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights, and for the expiration of all
statutory waiting periods; and (iii) to the extent necessary to avoid liability
under Section 16(b) of the 1934 Act by reason of such exercise.
10. Company hereby represents and warrants to Commercial as follows:
(a) Company has full corporation power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly
8
and validly authorized by the Board of Directors of Company and no other
corporate proceedings on the part of Company are necessary to authorize this
Agreement or to consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by Company. This Agreement is the
valid and legally binding obligation of Company.
(b) Company has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Company common stock equal to the maximum number of shares of Company common
stock at any time and from time to time issuable hereunder, and all such shares,
upon issuance pursuant hereto, will be duly authorized, validly issued, fully
paid, nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
(c) Company has taken all necessary action to exempt this Agreement, and
the transactions contemplated hereby and thereby from, and this Agreement and
the transactions contemplated hereby and thereby are exempt from, (i) any
applicable state takeover laws, (ii) any state laws limiting or restricting the
voting rights of stockholders and (iii) any provision in its or any of its
subsidiaries' articles of incorporation, certificate of incorporation, charter
or bylaws restricting or limiting stock ownership or the voting rights of
stockholders. The Rights Amendment, as defined in the Merger Agreement, has been
executed by the parties thereto, is in full force and effect and will not be
rescinded, amended or terminated without the prior written consent of
Commercial. No other amendments will be made to the Rights Agreement (as defined
in the Merger Agreement) without the prior written consent of Commercial.
(d) The execution, delivery and performance of this Agreement does not or
will not, and the consummation by Company of any of the transactions
contemplated hereby will not, constitute or result in (i) a breach or violation
of, or a default under, its articles of incorporation or bylaws, or the
comparable governing instruments of any of its subsidiaries, or (ii) a breach or
violation of, or a default under, any agreement, lease, contract, note,
mortgage, indenture, arrangement or other obligation of it or any of its
subsidiaries (with or without the giving of notice, the lapse of time or both)
or under any law, rule, ordinance or regulation or judgment, decree, order,
award or governmental or nongovernmental permit or license to which it or any of
its subsidiaries is subject, that would, in any case referred to in this clause
(ii), give any other person the ability to prevent or enjoin Company's
performance under this Agreement in any material respect.
11. Commercial hereby represents and warrants to Company that:
(a) Commercial has corporate power and authority to enter into this
Agreement and, subject to any approvals or consents referred to herein, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action
9
on the part of Commercial. This Agreement has been duly executed and delivered
by Commercial.
(b) This Option is not being acquired with a view to the public
distribution thereof and neither this Option nor any Option Shares will be
transferred or otherwise disposed of except in a transaction registered or
exempt from registration under applicable federal and state securities laws and
regulations.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Option Agreement or the Option created hereunder to any
other person, without the express written consent of the other party, except (i)
to any wholly-owned Subsidiary or (ii) that in the event a Subsequent Triggering
Event shall have occurred prior to an Exercise Termination Event, Commercial,
subject to the express provisions hereof, may assign in whole or in part its
rights and obligations hereunder to one or more transferees.
13. Each of Commercial and Company will use its best efforts to make all
filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement.
14. Notwithstanding anything to the contrary herein, in the event that
the Holder or Owner or any Related Person thereof is a person making an offer or
proposal to engage in an Acquisition Transaction (other than the transactions
contemplated by the Merger Agreement), then (i) in the case of a Holder or any
Related Person thereof, the Option held by it shall immediately terminate and be
of no further force or effect and (ii) in the case of an Owner or any Related
Person thereof, the Option Shares held by it shall be immediately repurchasable
by Company at the Option Price. A Related Person of a Holder or Owner means any
Affiliate (as defined in Rule 12b-2 of the rules and regulations under the 1934
Act) of the Holder or Owner and any person that is the beneficial owner of 20%
or more of the voting power of the Holder or Owner, as the case may be.
15. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
16. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire the full number of shares of common
stock provided in Section 2(a) hereof (as adjusted pursuant to Section 2(b) or 6
hereof), it is the express intention of Company to allow the Holder to acquire
such lesser number of shares as may be permissible, without any amendment or
modification hereof.
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17. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
cable, telegram, telecopy or telex, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
18. This Agreement shall be governed by and construed in accordance with
the laws of the State of Nebraska, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
19. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
20. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
21. Except as otherwise expressly provided herein, in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
COMMERCIAL FEDERAL CORPORATION
By: _________________________________
President
CONSERVATIVE SAVINGS CORPORATION
By: _________________________________
President
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Exhibit 5.2(a)
The opinion of counsel for the Company and Savings contemplated in Section
5.2(a) of the Agreement shall be to the following effect (all terms used herein
which are defined in the Agreement have the meanings set forth therein):
(a) Company is a corporation, duly incorporated, validly existing
and in good standing under the laws of the State of Nebraska and has the
corporate power to own or lease in all material respects its properties and
assets and to carry on its business as such properties, assets and business are
described in the Prospectus/Proxy Statement. Conservative is a savings and loan
holding company duly registered with the OTS under the HOLA.
(b) Savings is a savings bank, duly incorporated, validly existing
and in good standing under the laws of the United States, and has the corporate
power to own or lease in all material respects its properties and assets and to
carry on its business as such properties, assets and business are described in
the Prospectus/Proxy Statement. Savings is an "insured depository institution"
as defined in the Federal Deposit Insurance Act and applicable regulations
thereunder. The outstanding shares of capital stock of Savings are subject to no
preemptive rights. All of the outstanding shares of capital stock of Savings
have been duly authorized and are validly issued, fully paid, nonassessable and
beneficially owned by the Company free and clear of all liens, pledges, security
interests, claims or other encumbrances.
(c) The execution and delivery of the Agreement and the consummation
of the Acquisition Merger and the Bank Merger have been duly and validly
authorized by the Boards of Directors of the Company and Savings and the
shareholders of Company have approved this Agreement and the Acquisition Merger
by the vote required by law. No further corporate authorization is required of
either the Company or Savings to consummate the Acquisition Merger and the Bank
Merger. To the actual knowledge of such counsel, no consent or approval, which
has not already been obtained, from any regulatory authority is required for
execution and delivery by Company or Savings of the Agreement or any of the
documents to be executed and delivered by Company or Savings in connection
therewith and the consummation of the Acquisition Merger and the Bank Merger.
(d) The Agreement has been duly and validly executed and delivered
by the Company and Savings and (assuming that the Agreement is a binding
obligation of Commercial and the Bank) constitutes a valid and binding
obligation of Company and Savings enforceable in accordance with its terms,
subject as to enforceability to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and to the application of equitable principles and
judicial discretion.
(e) The authorized capital stock of Company consists of ____________
shares of common stock and ________ shares of preferred stock. All of the
issued and outstanding shares of Company common stock and preferred stock have
been duly authorized and are validly issued, fully paid, nonassessable and not
subject to preemptive rights.
(f) Neither the execution, delivery or performance of the Agreement
by Company or Savings nor the consummation of the Acquisition Merger and the
Bank Merger will (i) violate any provision of the respective charters, articles
of incorporation or bylaws of Company or Savings or (ii) to the actual knowledge
of such counsel, violate any order, judgment or decree to which Company or
Savings is a party or by which any of them or any of their properties or assets
is bound.
(g) The Prospectus/Proxy Statement, as of the mailing date thereof,
complied in all material respects as to form with the applicable provisions of
the Exchange Act. (Such opinion may state that such counsel does not express any
opinion or belief as to material in the Prospectus/Proxy Statement insofar as it
includes or reflects any information relating to or supplied by entities other
than Company or the Company Subsidiaries or as to any financial statements or
other financial data contained in the Prospectus/Proxy Statement).
(h) To the actual knowledge of such counsel, except as set forth in
Section 2.8 of Schedule I of the Agreement, there are no civil, criminal or
administrative actions, suits, claims, hearings, investigations or
proceedings before any court, governmental agency, tribunal or board or are
otherwise pending or threatened against the Company or Savings.
In a separate letter, such counsel shall state that nothing has come to
such counsel's attention that would lead such counsel to believe that, insofar
as it relates to Company and Savings, the Prospectus/Proxy Statement, on the
mailing date, contained any statement which, at the time and in the light of the
circumstances under it was made, was false or misleading with respect to any
material fact, or omitted to state any material fact necessary in order to make
the statements therein not false or misleading. (Such opinion may state that
such counsel does not express any opinion or belief as to material in the
Prospectus/Proxy Statement insofar as it includes or reflects any information
relating to or supplied by entities other than Company or the Company
Subsidiaries or as to any financial statements or other financial data contained
in the Prospectus/Proxy Statement).
In rendering such opinion, such counsel may rely as to matters of fact, to
the extent such counsel deems proper, on certificates of public officials and
responsible officers of Company or Savings. Such opinion may be subject to
normal and customary exceptions and qualifications that are reasonably
acceptable to Commercial.
Exhibit 5.3(a)
The opinion of counsel for Commercial and the Bank contemplated in Section
5.3(a) of the Agreement shall be to the following effect (all terms used herein
which are deferred in the Agreement have the meanings set forth therein):
(a) Commercial is a corporation, duly incorporated, validly existing
and in good standing under the laws of the State of Nebraska and has the
corporate power to own or lease its properties and assets and to carry on its
business as such properties, assets and business are described in
Prospectus/Proxy Statement. Commercial is a savings and loan holding company
duly registered with the OTS under the HOLA.
(b) The Bank is a savings bank, duly incorporated or organized,
validly existing and in good standing under the laws of the United States, and
has corporate power to own or lease its properties and assets and to carry on
its business as such properties, assets and business are described in the
Prospectus/Proxy Statement.
(c) The execution and delivery of the Agreement and the consummation
of the Acquisition Merger and the Bank Merger have been duly and validly
authorized by the Boards of Directors of Commercial and the Bank. No further
corporate authorization is required of either Commercial or the Bank to
consummate the Acquisition Merger and the Bank Merger. To the actual knowledge
of such counsel, no consent or approval, which has not already been obtained,
from any regulatory authority is required for execution and delivery by
Commercial or the Bank of the Agreement or any of the documents to be executed
and delivered by Commercial or the Bank in connection therewith and the
consummation of the Acquisition Merger and the Bank Merger.
(d) The Agreement has been duly and validly executed and delivered
by Commercial and the Bank and (assuming that the Agreement is a binding
obligation of Company and Savings) constitutes a valid and binding obligation of
Commercial and the Bank enforceable in accordance with its terms, subject as to
enforceability of applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors' rights generally and to
the application of equitable principles and judicial discretion.
(e) Neither the execution, delivery or performance of the Agreement
by Commercial or the Bank nor the consummation of the Acquisition Merger and the
Bank Merger will violate the Articles of Incorporation, Charter or Bylaws of
Commercial or the Bank.
(f) The shares of Commercial common stock to be issued pursuant to
the Agreement to the Company shareholders will be duly authorized, validly
issued, fully paid and non-assessable and not subject to preemptive rights.
(g) The Registration Statement, as of the date of its effectiveness,
complied in all material respects as to form with the applicable provisions of
the Securities Act. (Such opinion may state that such counsel does not express
any opinion or belief as to material in the Registration Statement insofar as it
includes or reflects any information relating to or supplied by entities other
than Commercial or the Commercial Subsidiaries or as to any financial statements
or other financial data contained in the Registration Statement).
In separate letter, such counsel shall state that nothing has come to such
counsel's attention that would lead such counsel to believe that, insofar as it
relates to Commercial and Bank, the Prospectus/Proxy Statement, on the mailing
date, contained any untrue statement, which, at the time and in the light of the
circumstances under it was made, was false or misleading with respect to any
material fact, or omitted to state any material fact necessary in order to make
the statements therein not false or misleading. (Such opinion may state that
such counsel does not express any opinion or belief as to material in the
Prospectus/Proxy Statement insofar as it includes or reflects any information
relating to or supplied by entities other than Commercial or the Commercial
Subsidiaries or as to any financial statements or other financial data contained
in the Prospectus/Proxy Statement).
In rendering such opinion, such counsel may rely as to matters of fact, to
the extent such counsel deems proper, on certificates of responsible officers of
Commercial and Bank and public officials. Such opinion may be subject to normal
and customary exceptions and qualifications that are reasonably acceptable to
Company.
EXHIBIT 7.2
ELIGIBILITY FOR SEVERANCE
. Have been outplaced because of the merger and not been offered a similar
position and compensation with Commercial Federal.
. Have worked through their assigned transition period and been officially
released by Commercial Federal.
SEVERANCE COMPUTATION
One (1) week per year of credited service. Maximum twelve (12) weeks. Rounded
to nearest quarter (three month period) of employment. Severance is based on
employee's annual base compensation. Commission employees' severance is based
on average salary over last 12 months.
SEVERANCE WILL NOT BE PAID FOR
. Employees who are offered a job at Commercial Federal and accept the
position.
. Employees who refuse a similar employment position with comparable pay and
job location at Commercial Federal.
. Employees who have been terminated for cause.
. Employees who voluntarily terminate before official release by Commercial
Federal at any time after the definitive agreement is signed.