WARRANT AGREEMENT
WARRANT AGREEMENT dated October 7, 1988, between COMMERCE
BANK/HARRISBURG, a Pennsylvania banking corporation (hereinafter called the
"Bank") as its own Warrant Agent, and COMMERCE BANCORP, INC., a New Jersey
business corporation (hereinafter called "Commerce").
WHEREAS, the Bank proposes to issue and sell to Commerce
40,000 shares of a new class of Bank non-cumulative preferred stock, par value
$10.00 per share (the "Preferred Stock") and warrants (the "Warrants") to
purchase in the aggregate 40,000 shares of the Bank's common stock, par value
$6.25 per share (the "Common Stock"); and
WHEREAS, the Preferred Stock will be issued as a certificate
for Preferred Stock ("Stock Certificate") legended as set forth in Section 4
hereof to indicate that as legended the Warrants will only be redeemable in
whole and not in part with the Preferred Stock and that until the Warrants
become exercisable they may only be transferred in tandem with the Preferred
Stock, and the Warrants will be represented by a Warrant Certificate ("Warrant
Certificate") issued hereunder which will also indicate that the Warrants will
only be redeemable in whole and in part with the Preferred Stock and that until
the Warrants become exercisable they may only be transferred in tandem with the
Preferred Stock; and
WHEREAS, the Bank desires to set forth the terms and
conditions of the issuance, registration, transfer, exchange, redemption and
exercise of Warrants.
NOW, THEREFORE, in consideration of the premises and the
agreements herein set forth, and intending to be legally bound hereby to
Commerce and any of the future holders of the Warrants, the Bank agrees:
1. Warrants and Form of Warrant Certificates.
A. The text of the Warrant Certificate and of the
form of election to exercise Warrants and purchase shares of Common Stock
thereunder shall be substantially in the form as set forth in Exhibit A attached
hereto which text is hereby incorporated in this Agreement by reference as
though fully set forth herein.
B. Each Warrant shall entitle the registered holder
of the Warrant Certificate representing such Warrant, subject to the provisions
of this Agreement, to purchase, upon the exercise thereof, one fully paid and
non-assessable share of Common Stock at the Warrant Price specified in Section
9. The per share Warrant Price and the number of shares issuable upon exercise
of a Warrant are subject to adjustment upon the occurrence of certain events,
all as hereinafter provided.
C. Each Warrant Certificate shall be executed on
behalf of the Bank by the manual signature of the present or any future Chairman
of the Board, President or Vice President of the Bank, and attested by the
manual signature of the present or any future Secretary or Assistant Secretary
of the Bank.
2. Countersignature and Registration.
A. The Bank shall maintain a book (the "Warrant
Register") for the transfer and registration of Warrants. The Warrant
Certificate shall be issued in registered form only. Until the Warrants become
exercisable as provided in this Agreement, the Bank shall initially issue and
register the Warrants in the name of the registered holder(s) of the Preferred
Stock in such denominations and otherwise in accordance with the written order
of the registered owner of the Preferred Stock, signed by the Chairman of the
Board, President or any Vice President and the Secretary or Assistant Secretary
of the Bank and deliver Warrant Certificates evidencing the same. If and when
the Warrants become exercisable as provided in this Agreement, the Bank shall at
all times issue and register the Warrants in the Warrant Registry in the name of
the registered holder(s) thereof in such denominations and otherwise in
accordance with the written order of the registered owner thereof, signed by the
Chairman of the Board, President or any Vice President and the Secretary or
Assistant Secretary of the Bank and deliver Warrant Certificates evidencing the
same. Each Warrant Certificate shall be dated the date of its signature.
B. Prior to due presentment for registration of
transfer of any Warrant Certificate, the Bank may deem and treat the person in
whose name such Warrant Certificate shall be registered upon the Warrant
Register (the "registered holder") as the absolute owner of such Warrant
Certificate and of each Warrant represented thereby (notwithstanding any
notation of ownership or other writing on the Warrant Certificate made by anyone
other than the Bank), for the purpose of any exercise thereof, or any
distribution to the holder thereof, and for all other purposes, the Bank shall
not be affected by any notice to the contrary.
3. Transfers and Exchanges.
A. Subject to the provisions of this Agreement
(including specifically, but not limited to, Section 19 hereof) and the
provisions of Section 9 of that certain Stock and Warrant Purchase Agreement
dated as of April 29, 1988 by and between the Bank and Commerce, the Bank shall
transfer, from time to time, any outstanding Warrants upon the Warrant Register,
upon presentation of the following: (1) the Warrant Certificate representing the
Warrants to be transferred, properly endorsed and accompanied by appropriate
instructions for transfer; and (2) payment, in cash or by check, bank draft or
postal or express money order payable to the order of the Bank, in United States
currency, of an amount equal to any stamp or other tax or government charge
required to be paid in connection with the transfer thereof. The proposed
transferee of the Warrants shall provide such information and shall execute such
other documents as the Bank shall reasonably request in connection with such
transfer. Upon any such
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transfer, a new Warrant Certificate or Certificates representing an equal
aggregate number of Warrants shall be issued to the transferee and the
surrendered Warrant Certificate shall be cancelled.
B. Warrant Certificates may be surrendered to the
Bank, together with a written, request for exchange, and thereupon the Bank
shall issue in exchange therefor one or more new Warrant Certificates as
requested by the registered holder of the Warrant Certificate or Certificates so
surrendered, representing an equal aggregate number of Warrants.
C. The Bank shall not be required to effect any
registration of an original issuance transfer or exchange which will result in
the issuance of a Warrant Certificate for a fraction of a Warrant.
D. No service charge shall be made by any exchange or
registration of transfer of Warrant Certificates.
4. Redemptions and Transfers with Preferred Stock.
A. The right to receive Preferred Stock and Warrants
shall be evidenced only by a legended Stock Certificate and Warrant Certificate
which, prior to a "change in control" of the Bank (as defined in Section 5
hereof) may be combined, exchanged, redeemed or transferred upon the records of
the Bank as transfer agent ("Transfer Agent"), only as a unit, and the right to
receive the Warrants may not be split up, combined, redeemed, exchanged or
transferred separately from the Preferred Stock. On and after a "change in
control" of the Bank shall have occurred, Warrants, subject to the provisions of
this Agreement and the provisions of Section 9 of that certain Stock and Warrant
Purchase Agreement dated as of April 29, 1988 by and between the Bank and
Commerce, may be combined, exchanged, or transferred upon the records of the
Bank as Transfer Agent separately from the Preferred Stock and the right to
receive the Warrants may be split up, combined, exchanged, or transferred
separately from the Preferred Stock; provided, however, that regardless of
whether or not a "change in control" of the Bank shall have occurred the
Preferred Stock and Warrants may not be redeemed separately. Each such Stock
Certificate shall bear a legend in the following form:
"Prior to a "change in control" of the Bank (as defined in
that certain Warrant Agreement dated October 7, 1988 by and
between the Bank and Commerce Bancorp, Inc.), each share of
Preferred Stock, par value $10.00 per share ("Preferred
Stock"), evidenced hereby may be combined, exchanged, redeemed
or transferred only with one Common Stock Purchase Warrant to
purchase one share of Common Stock and the right to receive
Preferred Stock and warrants may not be split up, combined,
exchanged, redeemed or transferred separately. On or after a
"change in control" of the Bank shall have occurred Common
Stock Purchase Warrants may
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be split up, combined, exchanged or transferred separately
from the Preferred Stock; provided, however, that regardless
of whether or not a "change in control" of the Bank shall have
occurred the Preferred Stock and Common Stock Purchase
Warrants may not be redeemed separately." The Bank will give
all Warrant holders prompt written notice of when a "change in
control" of the Bank has occurred.
5. Duration and Exercise of Warrants.
A. Subject to the provisions of this Agreement
(including specifically, but not limited to, Section 19 hereof), each registered
holder of one or more Warrants shall have the right to purchase from the Bank
(and the Bank shall issue and sell to such registered holder) after a "change in
control" of the Bank (as hereinafter defined) shall have occurred and prior to
the Expiration Date (as hereinafter defined) the number of shares of Common
Stock to which the Warrants represented by such Warrant Certificates are at the
time entitled hereunder.
B. For purposes of this Agreement, a "change in
control" of the Bank shall have been deemed to conclusively occur when any of
the following events shall have occurred without prior written consent of the
registered holders of Warrant Certificates representing no less than a majority
of the Warrants:
(1) a change in at least four members of the
Bank's Board of Directors or the addition of four or more new members to the
Bank's Board of Directors or any combination of the foregoing, within any two
calendar year period; or
(2) a person or group acting in concert as
described in section 13(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (other than a bank or bank holding company as defined in
the Federal Bank Holding Company Act of 1956, as amended) proposes to hold or
acquire beneficial ownership within the meaning of Rule 13(d)(3) promulgated
under the Exchange Act of a number of voting shares of the Bank which
constitutes either (i) more than twenty-five percent of the Bank's outstanding
voting shares or more than ten percent of the Bank's outstanding voting shares
if immediately after such acquisition no other person will own a greater
proportion of the Bank's outstanding voting shares or (ii) more than ten percent
of the Bank's outstanding voting shares, if any of the Bank's voting shares are
subject to the registration requirements of Section 12 of the Exchange Act.
(3) a bank or bank holding company (other than
the Acquirer and its subsidiaries) as defined in the Federal Bank Holding
Company Act of 1956, as amended, proposes, either directly or indirectly, (i) to
hold or acquire beneficial ownership within the meaning of Rule 13(d)(3)
promulgated under the Exchange Act of a number of voting shares of the Bank
which constitutes more than five percent of the Bank's outstanding voting
shares, (ii) to acquire all or substantially all of the assets of the Bank or
(iii) to merge or consolidate with the
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Bank, including a merger through the purchase of assets and assumption of
liabilities. For purposes of subparagraph (2) of this Section 5B. the term
"proposes to hold or acquire" and for purposes of subparagraph (3) of this
Section 5B., the term "proposes, either directly or indirectly, to hold or
acquire or to merge" shall mean when a person or group acting in concert has (A)
the right to acquire or merge (whether such right is exercisable immediately or
only after the passage of time or upon the receipt of such regulatory approvals
as is required by applicable law) pursuant to an agreement, arrangement or
understanding (whether or not in writing) or upon the exercise or conversion of
rights, exchange rights, warrants or options or otherwise; (B) commenced tender
or exchange offer with respect to the voting shares of the Bank or securities
convertible or exchangeable into voting shares of the Bank; or (C) the right to
vote pursuant to any agreement, arrangement or understanding (whether or not in
writing); provided, however, that such person or group acting in concert, shall
not be deemed to have acquired such shares if the agreement, arrangement or
understanding to vote such securities arises solely from a revocable proxy
either (i) given in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and regulations of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and is not also
then reportable on Schedule 13D under the Exchange Act or any comparable or
successor report or (ii) given in response to a proxy or consent solicitation
made in connection with the Bank's annual meeting of shareholders and in which
the only matter to be voted on is the election of the Bank's Board of Directors.
C. The Warrants may be exercised in accordance with
their terms at any time after a "change in control" of the Bank shall have
occurred and will expire unless sooner redeemed as provided in Section 9 hereof,
at 5:00 p.m. New York time on October 7, 2008 (the "Expiration Date"). Each
Warrant not exercised during said period shall become void and all rights
thereunder and all rights in respect thereof under this Agreement shall cease at
the end of such period.
D. Subject to the provisions of this Agreement
(including specifically, but not limited to, Section 19 hereof), each registered
holder of Warrants shall have the right to purchase from the Bank (and the Bank
shall issue and sell to such registered holder of Warrants) the whole number of
fully paid and non-assessable shares of Common Stock specified in such Warrants
(subject to adjustment as provided in this Agreement), free of all preemptive
rights of stockholders, upon surrender to the Bank at its principal office in
the Township of East Pennsboro, Pennsylvania of the certificate representing
such Warrant, with the form of election to purchase duly filed in and signed,
and upon payment to the Bank of the full Warrant Price, determined in accordance
with the provisions of Section 9 of this Agreement, for each share of Common
Stock as to which the Warrant is exercised. Payment of such Warrant Price shall
be made in either (i) cash, or by check, bank draft or postal or express money
order, payable in United States currency, to the order of the Bank or (ii)
certificates representing shares of Preferred Stock which will be valued at the
greater of $25 per share or such other price per share as is mutually agreed to
between the Bank and the registered holder of the Warrant which is being
exercised or (iii) any combination of cash and shares of Preferred Stock valued
as provided
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in clause (ii), at the principal office of the Bank. Upon such surrender of
Warrant Certificates and payment of the Warrant Price as aforesaid, the Bank
shall issue and cause to be delivered with all reasonable dispatch to or upon
the written order of the registered holder of such Warrants and in such name or
names as such registered holder may designate, a certificate or certificates for
the number of full shares of Common Stock so purchased upon the exercise of such
Warrants subject to Section 10 of this Agreement in respect to any fraction of a
share of Common Stock otherwise issuable upon the surrender.
E. Certificate or certificates representing shares of
Common Stock shall be deemed to have been issued and any person so designated to
be named therein shall be deemed to have become a holder of record of such
shares as of the date of the surrender of such Warrants and payment of the
Warrant Price; provided, however, that if, at the date of surrender of such
Warrants and payment of the Warrant Price, the transfer books for the Common
Stock or other class of stock purchasable upon the exercise of such Warrants
shall be closed, the certificates for the shares in respect of which such
Warrants are then exercised shall be issuable as of the date on which such books
shall next be opened and until such date the Bank shall be under no duty to
deliver any certificate for such shares and any person named in such certificate
shall not be deemed to have become a holder of record of such shares.
F. The rights of purchase represented by the Warrants
shall be exercisable, at the election of the registered holders thereof, either
as an entirety or from time to time for part only (in whole shares) of the
number of shares of Common Stock specified therein and, in the event that any
Warrant is exercised in respect of less than all the shares specified therein at
any time after a "change in control" of the Bank shall have occurred and prior
to the Expiration Date, a new Warrant Certificate or Certificates will be issued
to such registered holder for the remaining number of shares specified in the
Warrant Certificates so surrendered.
G. The required to be reserved require, in the
opinion state law or applicable Bank covenants that if any Common Stock for
purposes of exercise of Warrants of its counsel, under any Federal or governing
rule or regulation of any national securities exchange or automated quotation
system, registration with or approval of any governmental authority, or listing
on any such national securities exchange or automated quotation system before
such shares may be issued upon exercise, the Bank will in good faith and as
expeditiously as possible endeavor to cause such shares to be duly registered,
approved or listed on the relevant national securities exchange or automated
quotation system, as the case may be.
6. Payment of Taxes. The Bank will pay all documentary stamp
taxes attributable to the initial issuance of shares of Common Stock issuable
upon the exercise of Warrants.
7. Mutilated or Missing Warrants. In case any of the Warrant
Certificates shall be mutilated, lost, stolen or destroyed, the Bank shall issue
and deliver in exchange and substitution for and upon cancellation of the
mutilated Warrant Certificate, or in lieu of and
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substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent right or
interest; but only upon receipt of evidence satisfactory to the Bank of such
loss, theft or destruction of such Warrant Certificate.
8. Reservation of Common Stock, etc. There has been reserved,
and the Bank shall at all times keep reserved, out of the authorized and
unissued shares of Common Stock, a number of shares of Common Stock sufficient
to provide for the exercise of the rights of purchase represented by the
Warrants, and the Transfer Agent (if other than the Bank) for the Common Stock
and every subsequent Transfer Agent for any shares of the Bank's capital stock
issuable upon the exercise of any of the rights of purchase aforesaid are hereby
irrevocably authorized and directed at all times to reserve such number of
authorized and unissued shares as shall be requisite for such purpose. The Bank
will keep a copy of this Agreement on file with the Transfer Agent for the
Common Stock and with every subsequent Transfer Agent for any shares of the
Bank's capital stock issuable upon the exercise of the rights of purchase
represented by the Warrants. All Warrant Certificates surrendered in the
exercise of the rights thereby evidenced shall be cancelled and such cancelled
Warrant Certificates, with the forms of election to purchase on the reverse side
thereof duly filled in an signed, shall constitute sufficient evidence of the
number of shares of Common Stock which have been issued upon the exercise of
such warrants.
9. Warrant Price; Adjustments; Redemption.
A. The Warrant Price at which Common Stock shall be
purchasable upon exercise of warrants shall be, from the date a "change in
control" of the Bank shall have occurred until the Expiration Date, $25.00 per
share of Common Stock, or if adjusted or changed as provided in this Section,
shall be such price as so adjusted or changed ("Warrant Price").
B. The Warrant Price and the number of shares
issuable upon exercise or redemption of the Warrants shall be subject to
adjustments as follows:
(1) In case the Bank shall (i) pay a dividend in
Common Stock or make a distribution in Common Stock, (ii) subdivide its
outstanding Common Stock, (iii) combine its outstanding Common Stock into a
smaller number of Common Stock or (iv) issue, by reclassification of its Common
Stock, other securities of the Bank (including any such reclassification in
connection with a consolidation or merger in which the Bank is the surviving
corporation), the number of ,shares of Common Stock purchasable upon exercise of
each Warrant immediately prior thereto shall be adjusted so that the holder of
each Warrant shall be entitled to receive the kind and number of shares of
Common Stock or other securities of the Bank which it would have owned or have
been entitled to receive after the happening of any of the events described
above, had such Warrants been exercised immediately prior to the happening of
such event or any record date with respect thereto. An adjustment made pursuant
to this subparagraph (1) shall become effective immediately after the effective
date of such event retroactive to the record date, if any, for such event. Such
adjustment shall be made successively whenever any event listed above shall
occur.
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(2) In case the Bank shall issue rights, options
or warrants to all holders of its outstanding Common Stock, entitling them to
subscribe for or purchase Common Stock at a price per share which is lower at
the record date mentioned below than the then current market price per share of
Common Stock (as defined in subparagraph (7) below), the number of shares of
Common Stock thereafter purchasable upon the exercise of each Warrant shall be
determined by multiplying the number of shares of Common Stock theretofore
purchasable upon exercise of each Warrant by a fraction, of which the numerator
shall be the number of shares of Common Stock outstanding on the date of
issuance of such rights, options or warrants plus, the number of additional
shares of Common Stock offered for subscription or purchase, and of which the
denominator shall be the number of Shares of Common Stock outstanding on the
date of issuance of such rights, options or warrants plus the number of shares
which could be purchased at the current market price per share of Common Stock
at such record date with: (i) the aggregate purchase price of the total number
of shares of Common Stock so offered for subscription or purchase, plus (ii) any
consideration received by the Bank for such rights, options or warrants. Such
adjustment shall be made whenever such rights, options or warrants are issued,
and shall become effective immediately after the record date for the determi
nation of stockholders entitled to receive such rights, options or warrants.
(3) In case the Bank shall distribute to all
holders of its Common Stock (including any such distribution made in connection
with a consolidation or merger in which the Bank is the continuing corporation)
evidences of its indebtedness or assets (excluding cash dividends or
distributions payable out of consolidated earnings or earned surplus and
dividends or distributions referred to in subparagraph (1) above or in the
paragraph immediately following this paragraph) or rights, options or warrants,
or convertible or exchangeable securities containing the right to subscribe for
or purchase Common Stock (excluding those referred to in and subparagraph (2)
above), then in each case the number of shares of Common Stock thereafter
purchasable upon the exercise of each Warrant shall be determined by multiplying
the number of shares of Common Stock theretofore purchasable upon the exercise
of each Warrant by a fraction, of which the numerator shall be the then current
market price per share of Common Stock (as defined in subparagraph (7) below) on
the date of such distribution, and of which the denominator shall be the then
current market price per share of Common Stock, less the then fair market value
of the portion of the assets or evidences of indebtedness so distributed or of
such subscription rights, options or warrants, or of such convertible or
exchangeable securities applicable to one share of Common Stock. Such adjustment
shall be made whenever any such distribution is made, and shall become effective
on the date of distribution retroactive to the record date for the determination
of stockholders entitled to receive such distribution.
In the event of a distribution by the Bank to
all holders of its shares of Common Stock of a subsidiary or securities
convertible into or exercisable for such stock, then in lieu of an adjustment in
the number of shares of Common Stock purchasable upon the exercise of each
Warrant, the holder of each Warrant, upon the exercise thereof at any time after
such distribution, shall be entitled to receive from the Bank, such subsidiary
or both, as the Bank shall
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determine, the stock or other securities to which such holder would have been
entitled if such holder had exercised such Warrants immediately prior thereto,
all subject to further adjustment as provided in this section 9; provided,
however, that no adjustment in respect of cash dividends or interest on such
stock or other securities shall be made during the term of a Warrant or upon the
exercise of a Warrant.
(4) In case the Bank shall issue shares of
Common Stock (excluding shares issued (i) in any of the transactions described
in subparagraph (1) above, (ii) upon conversion or exchange of other securities
convertible into or exchangeable for shares of Common Stock, (iii) to the Bank's
employees under bona fide stock option or employee benefit plans or incentive
arrangements adopted or approved by the Bank's Board of Directors, if such
shares would otherwise be included in this subparagraph (4) (but only to the
extent that the aggregate number of shares excluded hereby and issued after the
date hereof, shall not exceed 10% of the Bank's shares of Common Stock
outstanding at the time of any issuance), (iv) upon exercise of the Warrants or
the warrants or options issued prior to the date hereof, or (v) as consideration
to shareholders of another corporation when any such corporation is acquired,
merged into or becomes part of the Bank or a subsidiary of the Bank in n arm's
length transaction between the Bank and an unaffiliated third party in
proportion to their stockholdings of such corporation immediately prior to such
transaction, upon such transaction), for a consideration per share less than the
current market price per share (as defined in subparagraph (7) below) on the
date the Bank fixes the offering price of such additional shares, then in each
case the number of shares of Common Stock thereafter purchasable upon the
exercise of each Warrant shall be determined by multiplying the number of shares
of Common Stock theretofore purchasable by a fraction, of which the numerator
shall be the number 'of shares of Common Stock outstanding immediately after the
issuance of such additional shares, and of which the denominator shall be the
total number of shares of Common Stock outstanding immediately prior to the
issuance of such additional shares plus the number of shares of Common Stock
which the aggregate consideration received (determined as provided in
subparagraph (6) below) for the issuance of such additional shares would
purchase at such then current market price per share of Common Stock. Such
adjustment shall be made successively whenever such an issuance is made.
(5) In case the Bank shall issue any securities
convertible into or exchangeable for its shares of Common Stock (excluding
securities; issued in transactions described above) for a consideration per
share of Common Stock initially deliverable upon conversion or exchange of such
securities (determined as provided in subparagraph (6) below) less than the
current market price per share (as defined in subparagraph (7) below) in effect
immediately prior to the issuance of such securities, then in each case the
number of shares of Common Stock thereafter purchasable upon the exercise of
each Warrant shall be determined by multiplying the number of shares of Common
Stock theretofore purchasable by a fraction, of which the numerator shall be the
number of shares of Common Stock outstanding immediately prior to such issuance
plus the maximum number of shares of Common Stock of the Bank deliverable upon
conversion of or in exchange for such securities at the initial conversion or
exchange price or rate, and of which the denominator shall be the number of
shares of Common
9
Stock outstanding immediately prior to the issuance of such securities plus the
number of shares of Common Stock which the aggregate consideration received or
to be received (determined as provided in subparagraph (6) below) for such
securities would purchase at such then current market price per share of Common
Stock. Such adjustment shall be made successively whenever such an issuance is
made.
(6) For purposes of any computation respecting
consideration received pursuant to subparagraphs (4) and (5) above, the
following shall apply:
(i) in the case of the issuance of shares of
Common Stock for cash, the consideration shall be the amount of such cash,
provided that in no case shall any deduction be made for any commissions,
discounts or other expenses incurred by the Bank for any underwriting of the
issue or otherwise in connection therewith;
(ii) in the case of the issuance of shares of
Common Stock for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair market value
thereof; and
(iii) in the case of the issuance of securities
convertible into or exchangeable for shares of Common Stock, the aggregate
consideration received therefor shall be deemed to be the consideration received
by the Bank for the issuance of such securities plus the additional minimum
consideration, if any, to be received by the Bank upon the conversion or
exchange thereof (the consideration in each case to be determined in the same
manner as provided in clauses (i) and (ii) of this subparagraph (6)).
(7) For the purpose of any computation under
subparagraphs (2), (3), (4) and (5) of this Section 9, the then current market
price per share of Common Stock at any date shall be the average of the daily
closing prices for twenty consecutive trading days commencing five trading days
before the date of such computation. The daily closing price shall be the last
such reported sales price regular way or, in case no such reported sale takes
place on such day, the average of the closing bid and asked prices regular way
for such day, in each case on the principal national securities exchange on
which the shares of Common Stock are listed or admitted to trading or, if not
listed or admitted to trading, the average of the closing bid and asked prices
of the shares of Common Stock in the over-the-counter market as reported by
NASDAQ or the last sale price of the shares of Common Stock as quoted in the
NASDAQ National Market System or any comparable system, or if not approved for
quotation on NASDAQ or any comparable system, the average of the closing bid and
asked prices as furnished by two members of the National Association of
Securities Dealers, Inc. selected from time to time by the Bank for that
purpose.
(8) Whenever the number of shares of Common Stock
purchasable upon the exercise of each Warrant is adjusted, as herein provided,
the Warrant Price payable upon exercise of each Warrant shall be adjusted by
multiplying such Warrant Price
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immediately prior to such adjustment by a fraction, of which the numerator shall
be the number of shares of Common Stock purchasable upon the exercise of each
Warrant immediately prior to such adjustment, and of which the denominator shall
be the number of shares of Common Stock purchasable immediately thereafter.
(9) No adjustment in the number of Shares of Common
Stock purchasable upon the exercise of each Warrant need be made under
subparagraphs (2) and (3) if the Bank issues or distributes to each holder of
Warrants the rights, options, warrants or convertible or exchangeable
securities, or evidences of indebtedness or assets referred to in those
subparagraphs which each holder of Warrants would have been entitled to receive
had the Warrants been exercised immediately prior to the happening of such event
or the record date with respect thereto. No adjustment need be made for a change
in the par value of the shares of Common Stock.
(10) No adjustment in the number of shares of Common
Stock purchasable hereunder shall be required unless such adjustment would
require an increase or decrease of at least one percent in the number of shares
of Common Stock purchasable upon the exercise of each Warrant; provided,
however, that any adjustments which by reason of this subparagraph (10) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations shall be made to the nearest
one-thousandth of a share.
(11) If any capital reorganization or
reclassification of the capital stock of the Bank, or consolidation or merger of
the Bank with or into another corporation, or the sale of all or substantially
all of its assets to another corporation shall be effected, then, as a condition
of such reorganization, reclassification, consolidation, merger or sale, lawful
and adequate provision shall be made whereby the holder of each Warrant then
outstanding shall thereafter have the right to purchase and receive on exercise
of such Warrant upon the basis and upon the terms and conditions specified in
this Agreement and in lieu of the shares of the Common fore purchasable and
Warrant, such shares Stock of the Bank immediately thereto receivable upon the
exercise of such of stock, securities or assets as may be issued or payable with
respect to or in exchange for a number of outstanding shares of such Common
Stock equal to the number of shares of such Common Stock immediately theretofore
purchasable and receivable upon the exercise of such Warrant had such
reorganization, reclassification, consolidation, merger or sale not taken place,
and in any such case appropriate provision shall be made with respect to the
rights and interests of the registered holders of the Warrants to the end that
the provisions of this Agreement (including, without limitation, provision for
adjustment of the Warrant Price or the Redemption Price (as hereinafter
defined), and of the number of shares issuable upon the exercise of Warrants)
shall thereafter be applicable as nearly as may be in relation to any shares of
stock, securities, or assets thereafter deliverable upon exercise of Warrants.
The Bank shall not effect any such consolidation, merger or sale, unless, prior
to or simultaneously with the consummation thereof, the successor corporation
(if other than the Bank) resulting from such consolidation or merger or the
corporation purchasing such assets
11
shall assume, by written instrument, the obligation to deliver to the holder of
each Warrant such shares of stock, securities or assets as, in accordance with
the foregoing provisions, such holders may be entitled to purchase.
C. The Bank shall have the option to redeem all but
not less than all of the Warrants at any time in accordance with the provisions
of this Paragraph C, on or after January 1, 1990 until the Expiration Date at a
redemption price equal to the positive difference, if any, between the "current
market price" of the Common Stock (as defined in subparagraph B.(7) hereof) and
the Warrant Price ("Redemption Price") or, if adjusted as provided in paragraph
D of this Section 9, such price as so adjusted. The Warrants may not be redeemed
by the Bank prior to January 1, 1990. The Warrants may not be redeemed except in
conjunction with the redemption of all of the Preferred Stock. For the purpose
of this paragraph C, the following provisions, inclusive, shall also be
applicable:
(1) The election of the Bank to redeem Warrants
shall be evidenced by a resolution of the Bank's Board of Directors, certified
by the Secretary or any Assistant Secretary of the Bank. Such resolution shall
specify that all of the Warrants are to be redeemed and the date on which the
Warrants are to be redeemed (such date being hereinafter called the "Redemption
Date"). The Bank may not elect to redeem less than all Warrants then
outstanding. The Redemption Date shall in all cases correspond to the redemption
date for the Preferred Stock.
(2) The Bank shall together with the redemption
notice for the Preferred Stock, not less than thirty days nor more than sixty
days prior to the Redemption Date, mail a copy of the Notice of Redemption by
first class mail, postage prepaid, to each registered holder of a Warrant. The
notice shall provide:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) that all then outstanding Warrants are to
be redeemed,
(iv) that on the Redemption Date the Redemption
Price will become due and payable upon presentation and surrender of the Warrant
Certificates evidencing such Warrants,
(v) the Warrant Price then in effect and the
date on which the right to exercise such Warrants will expire (assuming the
Warrants are then exercisable),the Redemption Date, the Redemption Price, that
all then outstanding Warrants,
(vi) assuming the Warrants are then exercisable,
that the Warrants called for redemption may nonetheless be exercised prior to
the close of business on the fifth business day prior to the Redemption Date and
that the Bank has the right, in its discretion,
12
to permit Warrants to be exercised after the close of business on that date but
before the close of business on the Redemption Date, and
(vii) the place where the Warrants are to be
surrendered against payment of the Redemption Price.
(3) On or prior to any Redemption Date, the Bank
shall deposit in a special account, an amount in legal tender of the United
States of America for public and private debts, sufficient to pay the Redemption
Price of all Warrants.
(4) Notice of Redemption having been mailed as
hereinbefore provided and the Bank having prior to the Redemption Date deposited
for that purpose an amount in cash sufficient to redeem all the Warrants, which
shall not have been exercised prior to the close of business on the fifth
business day prior to the Redemption Date, or such later date as the Bank, in
its discretion, permits, shall become null and void and the holders thereof
shall have no rights with respect thereto other than the right to receive the
Redemption Price.
(5) In the event any Warrant shall not be so paid
upon presentation and surrender thereof for redemption, such Warrant shall,
until paid, bear interest from the Redemption Date at the rate of 11% per annum
commencing 30 days after the Redemption Date or (if later) 30 days after the
presentation and surrender of the Warrant for redemption.
(6) In the event any Warrants called for redemption
are exercised prior to the close of business on the fifth business day prior to
the Redemption Date (assuming the Warrants are then exercisable), or such later
date as the Bank, in its discretion, permits, any monies which shall have been
deposited for redemption of Warrants and which are not required for that purpose
by reason of such exercise shall be promptly repaid to the Bank.
D. In the event of any adjustments (or readjustments) of
the Warrant Price pursuant to the provisions of paragraph B of this Section 9,
the Redemption Price shall be adjusted to a price (rounded to the nearest whole
cent) calculated by dividing the product of (1) the Redemption Price in effect
immediately prior to such adjustment of the Warrant Price and (2) the Warrant
Price in effect as a result of such adjustment, by the Warrant Price in effect
immediately prior to such adjustment.
E. Irrespective of any adjustments or changes of the
Warrant Price or adjustments in the Redemption Price or the number or kind of
securities issuable upon exercise of Warrants, Warrant Certificates theretofore
or thereafter issued may continue to express the same Warrant Price, Redemption
Price (if stated), and number of shares of Common Stock as are stated in the
similar Warrant Certificates previously issued.
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F. Whenever there is an adjustment in the Warrant Price
and the Redemption Price or in the number or kind of securities issuable upon
exercise of the Warrants, or both, as provided in this Section 9, the Bank shall
(a) issue a certificate signed by the Chairman of the Board, President or a Vice
President of the Bank and by, the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the Bank, showing in detail the facts
requiring such adjustment and the Warrant Price and the Redemption Price, and
number and kind of securities issuable upon exercise of each Warrant after such
adjustment; and (b) cause a notice stating that such adjustment has been
effected and stating the Warrant Price and the Redemption Price then in effect
and the number and kind of securities issuable upon exercise of each Warrant to
be sent by First Class mail, postage prepaid, to each registered holder of a
Warrant Certificate at his address as it appears on the Warrant Register.
G. The Warrant Price shall not be adjusted or changed and
the Redemption Price and the number of shares issuable upon exercise of a
Warrant shall not be adjusted except in the manner and only upon the occurrence
of the event heretofore specifically referred to in this Section 9.
10. Fractional Interests.
A. The Bank shall not be required to issue fractions of
shares of Common Stock on the exercise of Warrants as heretofore provided. If
any fraction of a share of Common Stock would, except for the provisions of this
Section, be issuable on the exercise of any Warrant, the Bank will (i) if the
fraction of a share otherwise issuable is equal to or less than one-half,
round-down and issue to the registered holder only the whole number of shares of
Common Stock to which the registered holder is entitled or (ii) if the fraction
of a share otherwise issuable is greater than one-half, round-up and issue to
the registered holder one additional shares of Common Stock in addition to the
largest whole number of shares of Common Stock to which the registered holder is
otherwise entitled.
B. If the Bank redeems any of the Warrants as heretofore
provided and the Warrants provide for the issuance of a fractional share of
Common Stock, the Bank shall pay to the registered holder only the product of
(i) the largest whole number of shares of Common Stock to which the registered
holder is otherwise entitled and (ii) the Redemption Price then in effect.
11. Rights of Warrant Holders as Stockholders.
Nothing contained in this Agreement or in any of the Warrants
shall be construed as conferring upon the registered holders thereof the-right
to vote or to consent or to receive notice as stockholders in respect of the
meetings of stockholders or the election of Directors of the Bank or any other
matter, or any rights whatsoever as stockholders of the Bank.
14
12. Inspection of this Agreement. The Bank shall keep copies
of this Agreement available for inspection by registered holders of Warrant
Certificates during normal business hours at its principal office in the
Township of Pennsboro, Pennsylvania.
13. Notices.
A. Any notice pursuant to this Agreement to be given by
the registered holder of any Warrant to the Bank shall be sufficiently given or
made if sent by first- class mail, postage prepaid, addressed (until another
address is designated in writing by the Bank) as follows:
Commerce Bank/Harrisburg
Erford Road and Senate Avenue
East Pennsboro Township
Camp Hill, PA 17011
Attn: President
14. Supplements and Amendments. The Bank may, from time to
time, by supplemental agreement or amendment make any changes or corrections in
this Agreement without the approval of any of the registered holders of Warrants
(i) that they shall deem appropriate to cure any ambiguity or to correct or
supplement any defective or inconsistent provision of manifest mistake or error
herein contained; or (ii) that they may deem necessary or desirable and which
shall not in either case adversely affect the rights, privileges or immunities
of the registered holders of Warrant Certificates; but this Agreement shall not
otherwise be modified, supplemented or altered in any respect (except to extend
the Expiration Date) except with the consent in writing of the registered
holders of Warrant Certificates representing not less than a majority of the
Warrants outstanding.
15. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Bank shall bind and inure to the benefit
of their respective successors and assigns hereunder.
16. Termination. This Agreement shall terminate as of the
close of business on October 7, 2008 or such earlier date upon which all
Warrants have been exercised.
15
17. Governing Law. This Agreement and each Warrant
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the Commonwealth of Pennsylvania and for all purposes shall be construed
in accordance with the laws of said Commonwealth.
18. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Bank, and
the registered holders of the Warrants, any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Bank and the registered holders of the Warrants.
19. Violation of Laws or Regulations: Conditions on
Exercise of Warrant.
A. Nothing contained herein shall be deemed to
require the Bank, or the registered holders of the Warrants to violate any
federal, state or local laws or regulations in the performance of this
Agreement.
B. A Warrant is not exercisable until all the
following events occur and during the following periods of time:
(1) Until such Warrant and the Common Stock to
be issued upon the exercise of such Warrant are approved and/or registered with
such federal, state and local regulatory bodies or agencies and securities
exchanges as the Bank may deem necessary or desirable;
(2) During any period of time in which the Bank
deems that the exercisability of a Warrant, the offer to sell the Common Stock
issued upon exercise of such Warrant, or the sale thereof, may violate a
federal, state, local or securities exchange rule, regulation or law, or require
the Bank or any class of its securities, or the transaction, to be
16
registered under any such rule, regulation or law, or may cause the Bank to be
legally obligated to issue or sell more shares than the Bank is legally entitled
to issue or sell.
20. Descriptive Headings. The descriptive headings of the
several sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, all as of the day and year first above written.
(SEAL) COMMERCE BANK/HARRISBURG
Attest: /s/ Howell C. Mette BY: /s/ James Gibson
----------------------- -----------------
Howell C. Mette, James Gibson,
Secretary President
(SEAL) COMMERCE BANCORP, INC.
Attest: /s/ Peter Musumeci BY: Vernon W. Hill, II
----------------------- -------------------
Peter Musumeci, Vernon W. Hill, II,
Asst. Secretary President
17
COMMONWEALTH OF PENNSYLVANIA :
: ss.
COUNTY OF :
On this day of , 1988, before me, the undersigned officer, personally
appeared James Gibson, who acknowledged himself to be the President of Commerce
Bank/Harrisburg, a Pennsylvania banking corporation, and that he as such, being
authorized to do so, executed the foregoing instrument for the purposes therein
contained by signing the name of the corporation by himself as President.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
------------------------
Notary Public
My Commission Expires:
18
Warrant Number 1 Shares Deliverable Upon Exercise
40,000
Registered Holder
Commerce Bancorp, Inc.
THIS WARRANT WILL BE VOID IF NOT EXERCISED ON OR PRIOR TO 5:00 P.M., NEW YORK
TIME, ON OCTOBER 7, 2008, OR, IF SOONER CALLED FOR REDEMPTION IF NOT EXERCISED
ON OR PRIOR TO THE CLOSE OF BUSINESS ON THE FIFTH BUSINESS DAY PRIOR TO THE DATE
FIXED FOR REDEMPTION, UNLESS BANK, IN ITS DISCRETION, PERMITS EXERCISE AT A
LATER DATE.
PRIOR TO A "CHANGE IN CONTROL" OF THE BANK, AS SUCH TERM IS DEFINED IN THE
WARRANT AGREEMENT REFERRED TO HEREIN, EACH COMMON STOCK PURCHASE WARRANT
EVIDENCED HEREBY MAY BE COMBINED, EXCHANGED, REDEEMED OR TRANSFERRED ONLY WITH
ONE SHARE OF BANK PREFERRED STOCK, PAR VALUE $10.00 PER SHARE, AND THE RIGHT TO
RECEIVE WARRANTS AND PREFERRED STOCK MAY NOT BE SPLIT UP, COMBINED, EXCHANGED,
REDEEMED OR TRANSFERRED SEPARATELY. ON OR AFTER A "CHANGE IN CONTROL" OF THE
BANK SHALL HAVE OCCURRED, COMMON STOCK PURCHASE WARRANTS EVIDENCED HEREBY MAY BE
SPLIT UP, COMBINED, EXCHANGED OR TRANSFERRED SEPARATELY FROM THE PREFERRED
STOCK; PROVIDED, HOWEVER, THAT REGARDLESS OF WHETHER OR NOT A "CHANGE IN
CONTROL" OF THE BANK SHALL HAVE OCCURRED THE PREFERRED STOCK AND COMMON STOCK
PURCHASE WARRANTS EVIDENCED HEREBY MAY NOT BE REDEEMED SEPARATELY.
THIS WARRANT MAY ONLY BE EXERCISED AFTER A "CHANGE IN CONTROL" OF THE BANK HAS
OCCURRED.
COMMERCE BANK/HARRISBURG
Common Stock Purchase Warrant
THIS CERTIFIES that, for value received, Commerce Bank/ Harrisburg, a
Pennsylvania banking corporation (hereinafter called the "Bank"), will, upon the
surrender of this Warrant to the Bank at its principal office in the Township of
East Pennsboro, Pennsylvania, provided, and only if, this Warrant shall be so
surrendered after a "change in control" of the Bank shall have occurred (as such
term is defined in the Warrant Agreement) and on or prior to 5:00 p.m., New York
time, on October 7, 2008, sell and deliver, or cause to be sold or delivered, to
the registered holder or registered assigns, the above number of fully paid and
nonassessable shares of the Bank's Common Stock, par value $6.25 per share
("Common Stock"), evidenced by a certificate therefor and upon payment of the
full warrant price for the number of whole shares of Common Stock issuable upon
exercise of this Warrant; provided, however, that as set forth in the Warrant
Agreement, the Bank has the right, at any time prior to the exercise hereof, to
redeem this
1
Warrant in whole only, and not in part, from January 1, 1990, until 5:00 p.m.,
New York time, on October 7, 2008, for the Redemption Price set forth in the
Warrant Agreement for each share of Common Stock then issuable, upon the
exercise of this Warrant. This Warrant may not be redeemed by the Bank prior to
January 1, 1990.
Under certain conditions set forth in paragraph B of Section 9 of said
Warrant Agreement, the number of shares of the Common Stock purchasable upon the
exercise of this Warrant may be increased or reduced and the warrant price and
the price at which this Warrant may be redeemed may be adjusted or securities
other than shares of said Common Stock may become purchasable in lieu thereof
upon the exercise of this Warrant.
Subject to adjustment and change as aforesaid, the warrant price at
which said Common Stock shall be purchasable upon the exercise of Warrants shall
be $25.00 per share of Common stock. As provided in the Warrant Agreement, the
warrant price is payable upon the exercise of this Warrant, either in (i) cash,
or by check, bank draft or postal or express money order, payable in United
States dollars, to the order of the Bank, or (ii) certificates representing
shares of Preferred Stock which will be valued at the greater of $25 per share
or such other price per share as is mutually agreed to between the Bank and the
registered holder of the Warrant which is being exercised or (iii) any
combination of cash and shares of Preferred Stock valued as provided in clause
(ii), at the principal office of the Bank.
The right of purchase represented by this Warrant is exercisable as an
entirety or from time to time in part only.
Upon the exercise of this Warrant the form of election to purchase must
be duly executed and the accompanying instructions for the registration and
delivery of Common Stock must be completed.
This Warrant is issued under and the rights represented hereby are
subject to the terms and provisions contained in the Warrant Agreement, dated
October 7, 1988, of the Bank all terms and provisions of which the registered
holder of this Warrant, by acceptance hereof, assents. Reference is hereby made
to said Warrant Agreement for a more complete statement of the rights and
limitations of rights of the registered holder hereof, and the rights and
obligations of the corporation thereunder. Copies of said Warrant Agreement are
on file at the principal office of the Bank in the Township of East Pennsboro,
Pennsylvania.
The Bank shall not be required upon the exercise of this Warrant to
issue fractions of shares, but shall, as provided in Section 10 of the Warrant
Agreement, (i) if the fraction of a share otherwise issuable is equal to or less
than one-half, round-down and issue only the largest whole number of shares of
Common stock to which the warrantholder is entitled of (ii) if the fraction of a
share otherwise issuable is greater than one-half, round-up and issue an
additional share of Common Stock in addition to the largest whole number of
shares of Common Stock to which the warrantholder is otherwise entitled.
2
In the event that this Warrant shall not be exercised on or prior to
5:00 p.m., New York time, on October 7, 2008, or if sooner called for
redemption, as provided in said Warrant Agree ment, before the close of business
on the fifth business day prior to the date fixed for redemption, unless the
Bank, in its discretion, permits exercise at a later date, this Warrant shall
become void and all the registered holder's rights hereunder shall cease.
This Warrant is transferable at the principal office of the Bank in the
Township of East Pennsboro, Pennsylvania by the registered holder hereof in
person or by attorney duly authorized in writing, but only in the manner and
subject to the limitations provided in said Warrant Agreement and upon surrender
of this Warrant with the form of assignment on the reverse side hereof duly
completed and executed. This Warrant is transferable from time to time in whole
or in part. Upon any such transfer, one or more new Warrant Certificates
representing the right to purchase an equal aggregate number of shares of Common
Stock will be issued to the transferee(s) in exchange for this Warrant.
If this Warrant shall be surrendered for exercise within any period
during which the transfer books for the Common Stock or other class of stock
purchasable upon the exercise of this Warrant are closed for any purpose, the
Bank shall not be required to make delivery of certificates for shares
purchasable upon such exercise until the date of the reopening of said transfer
books.
IN WITNESS WHEREOF, Commerce Bank/Harrisburg has caused this Warrant to
be signed manually by its President or one of its Vice Presidents and by its
Treasurer or its Secretary, and its corporate seal to be affixed hereunto or
imprinted hereon.
Dated: October 7, 1988
COMMERCE BANK/HARRISBURG
(SEAL) BY: /s/ James Gibson
James Gibson, President
ATTEST: /s/ Howell C. Mette
--------------------
Howell C. Mette, Secretary
3
[FORM OF ELECTION TO PURCHASE)
TO: COMMERCE BANK/HARRISBURG
c/o Erford Road and Senate Avenue
East Pennsboro Township
Camp Hill, PA 17011
The undersigned hereby irrevocably elects to exercise Warrants
represented by this Warrant Certificate, and to purchase the Common Stock
issuable upon the exercise of such Warrants, and requests that certificates for
such shares be issued in the name of
____________________________________________________________________
(Name)
____________________________________________________________________
(Address including Zip Code)
____________________________________________________________________
(Social Security or other identifying number)
and be delivered to ________________________________________________
(Name)
at__________________________________________________________________
(Address including Zip Code)
and, if said number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of and delivered to, the undersigned at the
address stated below.
The undersigned hereby delivers to the Bank an opinion of counsel, that
the proposed exercise of this Warrant does not violate applicable securities
laws or require registration under any such laws of the Bank, any class of its
securities or the transaction. The undersigned acknowledges that the counsel
rendering the opinion and the form and substance of the opinion must be
satisfactory to the Bank.
Dated: , 19
--------------
Name of Warrantholder:
Address (including Zip Code):
_________________________________
_________________________________
_________________________________
Signature:_______________________
4
ASSIGNMENT
For value received hereby sell, assign and transfer unto the Warrants
represented by this Warrant Certificate, together with all right, title and
interest therein, and do hereby irrevocably constitute and appoint attorney, to
transfer this Warrant Certificate on the books of the Bank, with full power of
substitution.
The undersigned hereby delivers to Bank an opinion of counsel,
reasonably acceptable to Bank, that the proposed assignment of these Warrants
does not violate applicable securities laws.
Dated: , 19
--------------
Signature:_______________________
5