SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss. 240.14a-11(c) orss. 240.14a-12
CBES BANCORP, INC.
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
CBES Bancorp, Inc. common stock, par value $.01 per share
2) Aggregate number of securities to which transaction applies:
875,805 shares of common stock (plus outstanding options to acquire
19,300 shares of common stock).
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule
0-11 (set forth the amount on which the filing fee is calculated and
state how it was determined):
$17.50 per share of CBES Bancorp, Inc. common stock, and $17.50, less
the exercise price, for underlying options to purchase CBES Bancorp,
Inc. common stock
4) Proposed maximum aggregate value of transaction:
$15,415,947
5) Total fee paid:
$3,083
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
__________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
__________________________________________________________________________
3) Filing Party:
__________________________________________________________________________
4) Date Filed:
__________________________________________________________________________
CBES BANCORP, INC.
1001 N. Jesse James Road
Excelsior Springs, Missouri 64024
_______________, 2002
Dear Stockholder:
You are cordially invited to attend a special meeting of stockholders of
CBES Bancorp, Inc. ("CBES"), to be held at the primary location of Community
Bank of Excelsior Springs, a Savings Bank, located at 1001 North Jesse James
Road, Excelsior Springs, Missouri, on ____________________, 2002, commencing
at 9:00 a.m., local time.
At this important meeting, stockholders will be asked to consider and
vote upon a proposal to approve a merger agreement under which, among other
things, CBES would enter into a merger resulting in it becoming a
wholly-owned subsidiary of NASB Financial, Inc. ("NASB"). If this merger is
completed, you will receive a cash payment of $17.50 for each share of CBES
common stock that you own, subject to adjustment in certain circumstances
(unless you are a dissenting stockholder who properly demands and perfects
your appraisal rights). On September 5, 2002, the day prior to the date we
announced the merger, the closing price of CBES common stock on the NASDAQ
was $13.50 per share. During the 52-week period immediately preceding that
date, CBES common stock traded within a range having a low price of $12.00
per share and a high price of $15.00 per share.
If the merger becomes effective, you will no longer own any common stock
or have any ownership interest in CBES, nor will you receive as a result of
the merger any capital stock of NASB or its subsidiaries. In the merger, the
exchange of your shares of CBES common stock for cash generally will cause
you to recognize income for federal income tax purposes and, possibly, state
and local tax purposes. You should consult your personal tax advisor for a
full understanding of the tax consequences of the merger to you.
Your board of directors has carefully reviewed and considered the terms
and conditions of the proposed merger and has received an opinion of its
financial advisor, Hovde Financial LLC ("Hovde"), that the consideration to
be received by CBES stockholders in the merger is fair from a financial point
of view. THE BOARD OF DIRECTORS OF CBES HAS CONCLUDED THAT THE MERGER IS IN
THE BEST INTERESTS OF CBES AND ITS STOCKHOLDERS, HAS APPROVED THE MERGER
AGREEMENT AND RECOMMENDS THAT THE STOCKHOLDERS APPROVE AND ADOPT SUCH
AGREEMENT.
At the special meeting, you will be asked to approve and adopt the
merger agreement. A majority of the outstanding shares of common stock
entitled to vote thereon must vote for the approval and adoption of the
merger agreement for the merger agreement to be approved by stockholders. If
the merger agreement is so approved, and all other conditions described in
the merger agreement have been satisfied or waived, the merger is expected to
become effective in the fourth quarter of 2002.
This proxy statement provides you with detailed information about the
proposed merger and provides the complete merger agreement as Appendix A. A
copy of the opinion of Hovde, which sets forth the assumptions made, matters
considered and limitations on the review undertaken by Hovde, is provided as
Appendix B. Please read the enclosed materials carefully.
Your board of directors joins with me in inviting you to attend the
meeting. REGARDLESS OF THE NUMBER OF SHARES YOU OWN OR WHETHER YOU PLAN TO
ATTEND THE MEETING IN PERSON, WE URGE YOU TO COMPLETE, DATE, SIGN AND RETURN
THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE SO THAT YOUR SHARES WILL BE
REPRESENTED AND VOTED AT THE MEETING. A prepaid return envelope is provided
for this purpose. You may revoke your proxy at any time before it is
exercised and it will not be used if you attend the meeting and choose to
vote in person. If the merger is consummated, you will receive instructions
for
surrendering your common stock certificates and a letter of transmittal to be
used for this purpose. You should not submit your stock certificates until
then.
Sincerely,
Paul L. Thomas
Chief Executive Officer
CBES BANCORP, INC.
1001 North Jesse James Road
Excelsior Springs, Missouri 64024
(816) 630-6711
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON ___________________, 2002
A special meeting of stockholders of CBES Bancorp, Inc. ("CBES") will be
held at the primary location of Community Bank of Excelsior Springs, a
Savings Bank, located at 1001 North Jesse James Road, Excelsior Springs,
Missouri, at 9:00 a.m., local time, on _________________, 2002, and
thereafter as it may from time to time be adjourned, for the following
purposes:
1. To consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Merger dated as of September 5, 2002, by and
among NASB Financial, Inc., NASB Acquisition Subsidiary, Inc.
("Acquisition Sub") and CBES, pursuant to which Acquisition Sub will
merge with and into CBES and each of the outstanding shares of CBES
common stock (other than shares held by CBES as treasury stock and
shares held by dissenting stockholders who have properly demanded and
perfected their appraisal rights) will be converted into the right
to receive $17.50 in cash, subject to adjustment in certain
circumstances, as more fully described in the accompanying proxy
statement.
The above matter is more fully described in the accompanying proxy
statement, to which a copy of the Agreement and Plan of Merger is
attached as Appendix A.
2. To transact such other business as properly may come before the
meeting and any adjournment thereof.
You are entitled to notice of and to vote at the meeting if you owned
CBES common stock at the close of business on the _________________, 2002
record date.
Stockholders of CBES who dissent from the proposed merger and otherwise
comply with the requirements of the General Corporation Law of the State of
Delaware have the right to seek appraisal of their shares. See "Dissenters'
Appraisal Rights" in the proxy statement for a description of the procedures
required to be followed to seek appraisal.
By Order of the Board of Directors
Paul L. Thomas
Chairman
Excelsior Springs, Missouri
_____________, 2002
________________________________________________________________________________
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY
AND PROMPTLY MAIL IT IN THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU INTEND TO
BE PRESENT AT THE MEETING. SENDING IN YOUR PROXY NOW WILL NOT INTERFERE WITH
YOUR RIGHTS TO ATTEND THE MEETING OR TO VOTE YOUR SHARES PERSONALLY AT THE
MEETING IF YOU WISH TO DO SO.
________________________________________________________________________________
CBES BANCORP, INC.
Principal Executive Offices:
1001 North Jesse James Road
Excelsior Springs, Missouri 64024
(816) 630-6711
_________________________________________
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ____________, 2002
_________________________________________
PROXY STATEMENT
_________________________________________
TABLE OF CONTENTS
QUESTIONS AND ANSWERS ABOUT THE PROPOSED MERGER...................1
SUMMARY...........................................................4
THE COMPANIES...................................................4
THE MEETING.....................................................4
THE MERGER......................................................5
THE MERGER AGREEMENT............................................8
INTRODUCTION.....................................................10
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING................10
VOTING RIGHTS..................................................12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...12
BACKGROUND OF THE MERGER.........................................14
MARKET PRICE AND DIVIDEND DATA FOR CBES COMMON STOCK.............16
THE MERGER AGREEMENT.............................................17
GENERAL........................................................17
RECOMMENDATION OF THE BOARD OF DIRECTORS.......................17
REASONS FOR THE MERGER.........................................17
OPINION OF CBES'S FINANCIAL ADVISOR............................18
WHEN THE MERGER WILL BE COMPLETED..............................23
PAYMENT FOR CBES SHARES........................................23
SURRENDER OF STOCK CERTIFICATES................................24
REPRESENTATIONS AND WARRANTIES IN THE MERGER AGREEMENT.........24
CONDITIONS TO THE MERGER.......................................25
CONDUCT OF BUSINESS PENDING THE MERGER.........................25
COVENANTS OF THE PARTIES.......................................28
Agreement Not to Solicit Other Offers........................28
Employee Matters.............................................28
Indemnification of Directors and Officers....................29
Certain Other Covenants......................................29
TERMINATION OF THE MERGER AGREEMENT............................29
EXPENSES AND TERMINATION FEE...................................30
CHANGES IN TERMS OF THE MERGER AGREEMENT.......................31
REGULATORY APPROVALS...........................................31
ACCOUNTING TREATMENT...........................................31
FEDERAL INCOME TAX CONSEQUENCES................................31
INTERESTS OF CERTAIN PERSONS IN THE MERGER.......................32
STOCK OWNERSHIP................................................32
STOCK OPTION PLAN..............................................32
DIRECTOR EMERITUS AGREEMENTS...................................33
SALARY CONTINUATION AGREEMENTS.................................34
CHANGE OF CONTROL AGREEMENTS...................................34
SEVERANCE PLAN.................................................34
OFFICER RETENTION BONUS AGREEMENTS.............................35
INDEMNIFICATION OF DIRECTORS AND OFFICERS......................35
DISSENTERS' APPRAISAL RIGHTS.....................................35
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STOCKHOLDER PROPOSALS............................................38
WHERE YOU CAN FIND MORE INFORMATION..............................38
APPENDIX A--AGREEMENT AND PLAN OF MERGER.........................A-1
APPENDIX B--OPINION OF HOVDE FINANCIAL LLC.......................B-1
APPENDIX C--SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW..C-1
APPENDIX D--PROXY................................................D-1
APPENDIX E--LETTER TO ESOP PARTICIPANTS..........................E-1
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QUESTIONS AND ANSWERS ABOUT THE PROPOSED MERGER
Q: WHY IS CBES PROPOSING TO MERGE?
A: Your board of directors believes that the proposed merger would allow
stockholders of CBES to realize greater value for their shares of common
stock than they could obtain if CBES followed its existing business
plan, or pursued other alternative strategies to maximize stockholder
value. CBES and NASB share a commitment to community banking, which
emphasizes responsiveness to local markets and the delivery of
personalized services. We believe that the proposed merger will provide
customers and the local communities served by CBES and NASB access to a
wider variety of quality products and services while continuing to
receive the high level of personal service they have come to expect.
Q: WHEN AND WHERE IS THE MEETING?
A: The meeting is to be held at primary location of Community Bank of
Excelsior Springs, a Savings Bank, located at 1001 North Jesse James
Road, Excelsior Springs, Missouri on _________________, 2002, commencing
at 9:00 a.m. local time.
Q: WHAT WILL I RECEIVE FOR MY SHARES OF CBES COMMON STOCK?
A: You will receive $17.50 in cash for each share of CBES common stock that
you own at the time of the merger, which amount could be subject to
adjustment as explained below. See the discussion under the caption
"Payment For CBES Shares" beginning at page ____ for more information.
Q: IS THE AMOUNT OF CASH TO BE RECEIVED FOR EACH SHARE OF COMMON STOCK FAIR?
A: Hovde Financial LLC, the Financial Advisor to CBES in the merger, has
delivered a written opinion to CBES's board of directors that the merger
consideration to be paid to CBES stockholders is fair from a financial
point of view. See the discussion under the caption "Opinion of CBES's
Financial Advisor" beginning at page ____ for more information.
Q: CAN THE AMOUNT OF CASH THAT CBES STOCKHOLDERS RECEIVE IN THE MERGER
CHANGE ?
A: The per share cash consideration to be received by CBES stockholders in
the merger will be subject to adjustment if the adjusted stockholders'
equity of CBES as of the close of business on the last business day
immediately prior to the effective time of the merger is less than
$13,900,000, but equal to or greater than $13,500,000, in which event
the per share cash consideration will be reduced to $17.05 per share.
Moreover, if the adjusted stockholders' equity of CBES is less than
$13,500,000, NASB may elect to terminate the merger agreement or to
consummate the merger at $17.05 per share. See the discussion under the
caption "Payment for CBES Shares" beginning at page ____ for more
information.
Q: WHAT ARE THE TAX CONSEQUENCES OF THE MERGER TO CBES STOCKHOLDERS?
A: For United States federal income tax purposes, and perhaps for state and
local tax purposes, your exchange of shares of common stock for cash
generally will cause you to recognize a gain or loss measured by the
difference between the cash you receive in the merger and your tax basis
in the shares of common stock. See the discussion under the caption
"Federal Income Tax Consequences" beginning at page _____ for more
information.
The tax consequences of the merger to you will depend on your own
situation. You should consult with your tax advisors for a full
understanding of the tax consequences of the merger to you.
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Q: WHAT CAN I DO IF I AM NOT SATISFIED WITH THE PAYMENT I AM TO RECEIVE FOR
MY SHARES ?
A: Under Delaware law, if you are not satisfied with the amount you are to
receive in the merger, you are legally entitled to have the value of
your shares judicially determined and to receive payment based on that
valuation. To exercise your dissenters' appraisal rights, you must
deliver a written objection to the merger to CBES at or before the
meeting and must not vote in favor of the merger. Objections to the
merger should be addressed to CBES at 1001 North Jesse James Road,
Excelsior Springs, Missouri 64024, Attention: Corporate Secretary. If
you do not follow exactly the procedures specified under Delaware law,
you will lose your dissenters' appraisal rights. A copy of the
dissenters' appraisal rights provisions of Delaware law is provided as
Appendix C to this proxy statement. See the discussion under the
caption "Dissenters' Appraisal Rights" beginning at page ____ for more
information.
Q. WILL CBES BE ABLE TO PAY DIVIDENDS BEFORE THE COMPLETION OF THE MERGER?
A. No. Under the merger agreement, CBES is not permitted to pay normal
quarterly cash dividends during the period from the September 5, 2002
date of the merger agreement until the date that the merger becomes
effective.
Q. HOW WILL MANAGEMENT BENEFIT FROM THE MERGER?
A. Officers and directors of CBES who have stock options and restricted
stock awards under CBES's benefit plans will receive payments for their
awards based upon the merger price per share. Any unvested stock
options automatically will be deemed to be vested and exercisable at the
effective time of the merger. Under Community Bank's severance plan and
agreements, all full-time salaried and full-time hourly employees of
Community Bank will be entitled to the payment of severance benefits if
such persons are terminated without cause within a specified period
before and after the effective time of the merger or such persons
voluntarily leave during that period due to certain changes in their
employment conditions or compensation. In addition, Paul L. Thomas, the
Chairman of the Board and CEO of CBES, and certain key officers, have
entered into agreements with Community Bank wherein they shall receive a
bonus if they choose to continue their employment with Community Bank
through the effective time of the merger. Community Bank has entered
into salary continuation agreements with Dennis D. Hartman, the
President of Community Bank, Margaret E. Teegarden, the Savings
Department Manager of Community Bank and James V. Alderson, Loan Officer
of Community Bank, that entitles each individual to a lump sum payment
equal to the amount of benefits accrued if any such person is terminated
or resigns within 12 months of the effective time of a change in
control. Community Bank has also entered into change of control
agreements with Mr. Hartman and Ms. Teegarden which provide for a lump
sum payment if, within 12 months of the effective time of a change in
control, either is terminated without cause or resigns due to a material
change in his or her duties, compensation or certain other aspects of
his or her employment arrangement. Finally, NASB has agreed to
indemnify the officers and directors of CBES and Community Bank for a
period of six years from liability and expenses arising out of matters
existing or occurring at or prior to the consummation of the merger and
to pay up to $50,000 of the premium required to extend the director and
officer insurance coverage beyond the closing date of the merger. See
the discussion under the caption "Interests of Certain Persons in the
Merger" beginning at page ___ for more information.
Q. WHAT DO I NEED TO DO NOW?
A. After you have carefully read this proxy statement, indicate on your
proxy card how you want your shares of common stock to be voted. Then
sign, date and mail your proxy card in the enclosed prepaid return
envelope as soon as possible. This will enable your shares to be
represented and voted at the meeting.
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Q. WHAT IF I DON'T VOTE OR ABSTAIN FROM VOTING?
A. If you do not return your proxy card or vote in person at the meeting,
your failure to vote or abstention from voting will have the effect of a
vote against the merger. The merger agreement must be approved by a
majority of the outstanding shares of common stock entitled to vote at
the meeting. See the discussion under the caption "Voting Rights -
Required Vote" on page ____ for more information.
Q. IF MY SHARES ARE HELD IN STREET NAME BY MY BROKER, WILL MY BROKER
AUTOMATICALLY VOTE MY SHARES FOR ME?
A. No. Your broker will not be able to vote your shares of common stock
without instructions from you. You should instruct your broker how you
wish to vote your shares, following the directions your broker provides.
Q WHAT IF I FAIL TO INSTRUCT MY BROKER?
A. If you fail to instruct your broker to vote your shares held in street
name, your broker's inability to vote your shares will be the equivalent
of voting against the merger.
Q. AFTER SENDING IN MY PROXY, CAN I ATTEND THE MEETING AND VOTE MY SHARES
IN PERSON?
A. Yes. All stockholders are invited to attend the meeting. If you are a
stockholder of record you are entitled to revoke your proxy and vote in
person at the meeting if you wish to do so. If a broker holds your
shares in street name, then you are not the stockholder of record and
you must ask your broker how you can vote at the meeting.
Q. CAN I CHANGE MY VOTE AFTER SENDING IN MY PROXY?
A. Yes. If you have not voted through your broker, there are three ways
you can change your vote after you have sent in your proxy card.
* First, you may send a written notice to the Corporate Secretary of CBES
before your common stock has been voted at the meeting stating that
you are revoking your proxy.
* Second, you may complete a new proxy card and provide it to the
Corporate Secretary of CBES before your common stock has been voted at
the special meeting. Any earlier proxy will be revoked automatically.
* Third, you may attend the meeting, revoke your proxy at the meeting and
vote in person. Simply attending the meeting without voting will not
revoke your proxy. If you have instructed your broker to vote your
shares, you must follow the directions of your broker to change your
vote.
Q. SHOULD I SEND IN MY SHARE CERTIFICATES NOW?
A. No. You should not send in your common stock certificates at this
time. Instructions for exchanging common stock certificates will be
sent to you after the merger has been completed.
Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A: CBES hopes to complete the merger in the fourth quarter of 2002. The
merger cannot occur unless CBES stockholders approve the merger by a
majority of the outstanding shares of common stock and all federal
regulatory approvals are received. See the discussion under the caption
"Conditions to the Merger" beginning at page _____ for more information.
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Q: WHO CAN HELP ANSWER MY QUESTIONS?
A: If you have more questions about the merger, you should contact:
Attention: Paul L. Thomas, CEO, or Dennis D. Hartman, President
Telephone: (816) 630-6711
CBES Bancorp, Inc.
1001 North Jesse James Road
Excelsior Springs, Missouri 64024
SUMMARY
This summary highlights key aspects concerning the merger information in
this proxy statement. It does not contain all of the information that may be
important to you. To fully understand the merger, we urge you to carefully
read the entire proxy statement and the other documents we have referred you
to, including the merger agreement attached to the proxy statement as
Appendix A. We encourage you to read the merger agreement because it is the
legal document that governs the merger.
THE COMPANIES
NASB Financial, Inc. NASB, a Missouri corporation, is
12498 South 71 Highway headquartered in Grandview, Missouri and
Grandview, Missouri 64030 is the parent of North American Savings
Attention: Keith B. Cox, President Bank, F.S.B. At June 30, 2002 NASB had
(816) 765-2200 consolidated assets of $932 million and
stockholders' equity of $104 million.
NASB Acquisition Subsidiary, Inc. Acquisition Sub, a Missouri corporation,
12498 South 71 Highway was formed by NASB to consummate the
Grandview, Missouri 64030 transactions contemplated in the merger
Attention: Keith B. Cox, President agreement.
(816) 765-2200
CBES Bancorp, Inc. CBES, a Delaware corporation, is
1001 North Jesse James Road headquartered in Excelsior Springs,
Excelsior Springs, Missouri 64024 Missouri and is the parent of Community
Attention: Paul L. Thomas, CEO Bank of Excelsior Springs, a Savings
(816) 630-6711 Bank. CBES was organized in 1996 by
Community Bank for the purpose of
acquiring all of the outstanding
common stock of Community Bank in
connection with the conversion of
Community Bank from mutual to
stock form, which was completed on
September 27, 1996. At June 30,
2002, CBES had consolidated assets
of $113 million and stockholders'
equity of $14 million.
THE MEETING
Place, Date and Time (page ___) The meeting will be held on
______________, 2002, at the primary
location of Community Bank located at
1001 North Jesse James Road, Excelsior
Springs, Missouri, commencing at 9:00
a.m., local time.
4
Purpose of the Meeting (page ___) At the meeting, you will be asked to:
o approve and adopt the merger
agreement with NASB; and
o transact any other business that may
properly come before the meeting.
Who Can Vote At the Meeting You can vote at the meeting of
(page ___) stockholders if you owned CBES common
stock at the close of business on
______________, 2002. You will be able
to cast one vote for each share of CBES
common stock you owned at that time. As
of ______________, 2002, there were
875,805 shares of common stock
outstanding.
What Vote is Required for Approval The merger agreement will be approved
of the Merger Agreement (page ___) and adopted if the holders of at least a
majority of the outstanding shares
of CBES common stock vote for it.
You can vote your shares by
completing and mailing the
enclosed proxy card or by
attending the meeting and voting
in person. Your failure to vote,
either by not returning the
enclosed proxy or by checking the
"abstain" box, will have the same
effect as a vote against the
merger agreement.
THE MERGER
Overview of the Transaction We propose a merger in which Acquisition
(page ___) Sub will merge with and into CBES. As a
result of this transaction, Acquisition
Sub will cease to exist and CBES will
become a wholly-owned subsidiary of
NASB.
What You Will Receive for Your As a CBES stockholder at the effective
Shares of Common Stock (page ___) time of the merger, each of your shares
of CBES common stock will
automatically be converted into
the right to receive $17.50 in
cash, subject to adjustment under
certain circumstances. After the
merger is effective, you will have
to surrender your CBES stock
certificates to receive this cash
payment. NASB, or its exchange
agent, will send you written
instructions for surrendering your
certificates after the merger. Do
not send your stock certificates
at this time.
CBES common stock is quoted on the
NASDAQ National Market SM under
the symbol "CBES". On September 5,
2002, which is the day the last
trade occurred before we announced
the merger, CBES common stock
closed at $13.50 per share.
5
Taxable Transaction For CBES For federal income tax, and possibly
Stockholders (page ___) state and local tax, purposes, your
exchange of shares of common stock
for cash generally will cause you
to recognize a gain or loss
measured by the difference between
the cash you receive in the merger
and your tax basis in the shares
of common stock. The tax
consequences of the merger to you
will depend on your own situation.
You should consult with your tax
advisors for a full understanding
of the tax consequences of the
merger to you.
Our Financial Advisor Believes Hovde Financial LLC has delivered a
the Merger Consideration is Fair written opinion to the CBES board of
to Our Stockholders (page ___) directors that the merger consideration
is fair to CBES stockholders from
a financial point of view. We have
provided a summary of Hovde's
opinion on pages ___ through ___
and have attached the opinion
letter as Appendix B to the proxy
statement. You should read Hovde's
opinion completely, along with the
summary of the opinion set forth
in the proxy statement, to
understand the assumptions made,
procedures followed, matters
considered and limitations on the
review undertaken by Hovde in
providing its opinion.
Recommendation to Stockholders The CBES board of directors believes
(page ___) that the merger is in your best
interests and recommends that you
vote "FOR" the adoption of the
merger agreement.
For a discussion of the
circumstances leading up to the
merger and the factors considered
by CBES's board of directors in
approving the merger agreement,
please see the discussion under
the caption "Background of the
Merger" beginning on page ___.
You Have Dissenter's Rights of CBES stockholders have dissenters'
Appraisal in the Merger (page ___) rights of appraisal under Delaware law.
This means that if you are not
satisfied with the amount you are
to receive in the merger, you are
entitled to have the value of your
shares independently determined by
the Delaware Court of Chancery and
to receive payment based on that
valuation. If you want to exercise
your dissenter's rights, you must
carefully follow the procedures
described at pages ___ through ___
of this proxy statement and
Appendix C.
Interests of Directors and Some of our directors and officers
Officers in the have Merger that interests in the merger that are
May Differ From Yours (page ___) different from, or are in addition
to, their interests as stockholders
of CBES. Our board of directors knew
about these interests and considered
them when they approved the merger.
These include:
6
o the cancellation and conversion of
all outstanding options to purchase
CBES common stock, whether or not
vested or exercisable, into the
right to receive cash equal to the
value of the per share merger
consideration minus the exercise
price for each option;
o the payment of lump sum severance
benefits under (i) the Community
Bank Severance Plan and (or) (ii)
separate agreements between
Community Bank, Dennis Hartman and
Margaret Teegarden, if either of
them is terminated without cause
within a specified period after the
effective time of the merger or
voluntarily leaves during that
period due to certain changes in
employment conditions or
compensation;
o the acceleration of retirement
payments under Community Bank's
director emeritus agreements;
o the acceleration of payments under
Community Bank's salary continuation
agreements with Dennis D. Hartman,
President, Margaret E. Teegarden,
Savings Department Manager and James
V. Alderson, Loan Officer;
o the payment of bonuses to Paul
L. Thomas, CEO, and Ron Hill,
CFO, and to certain key
officers who voluntarily
continue their employment with
Community Bank through the
effective time of the merger;
and
o provisions in the merger
agreement relating to
indemnification of directors
and officers of CBES for
events occurring at or before
the merger.
Regulatory Approvals Needed to We cannot complete the merger unless
Complete the Merger (page ___). it is approved by the Office of Thrift
Supervision. [All of the required
applications or waiver requests
have been filed with this
regulatory authority.] As of the
date of this proxy statement, the
required OTS approval has not been
obtained. While we do not know of
any reason why we or NASB will not
be able to obtain the necessary
OTS approval in a timely manner,
we cannot be certain when or if it
will be obtained.
7
THE MERGER AGREEMENT
Conditions to Completing the The completion of the merger depends on
Merger (page___) a number of conditions being met. In
addition to the parties complying with
the merger agreement, these conditions
include:
o approval of the merger agreement by
CBES stockholders;
o approval of the merger by regulatory
authorities;
o the absence of any order,
decree, ruling, injunction or
legal restraint blocking the
merger or of government
proceedings trying to block
the merger; and
o the absence of any law or regulation
that makes the merger illegal.
Where the law permits, CBES or
NASB could decide to complete the
merger even though one or more of
these conditions has not been met.
We cannot be certain when or if
the conditions to the merger will
be satisfied or waived, or that
the merger will be completed.
Terminating the Merger Agreement We and NASB can agree at any time not to
(page ___) complete the merger, even if the
stockholders of CBES have approved it.
Also, CBES or NASB can decide, without
the consent of the other, to terminate
the merger agreement if:
o the stockholders of CBES do not
approve the merger agreement;
o a required regulatory approval is
denied or a governmental authority
blocks the merger;
o we do not complete the merger by
January 31, 2003; or
o the other party makes a
misrepresentation, breaches a
warranty or fails to fulfill a
covenant that would have a
material adverse effect on the
party seeking to terminate the
merger agreement.
CBES may terminate the merger
agreement if our board of
directors determines that it must
accept a superior offer from a
third party in the exercise of its
fiduciary duties. NASB may elect
to terminate the merger agreement
if the adjusted stockholders'
equity of CBES, at the close of
business on the last business day
prior to the effective time of the
merger is less
8
than $13,500,000, or to consummate
the merger at $17.05 per share. In
addition, NASB may terminate the
merger agreement if a Phase I and
Phase II environmental assessment
of the property on which Community
Bank's primary banking facility is
located in Excelsior Springs,
Missouri results in a
determination that environmental
clean-up costs on such property
would exceed $500,000.
Termination Fees (page ___) If CBES terminates the merger agreement
in order to accept a superior offer and,
within six months, CBES or Community
Bank enters into a definitive
acquisition agreement with a third
party, then CBES will be required to pay
to NASB a termination fee of $250,000.
We May Amend the Terms of the Merger We can agree with NASB to amend the
(page___) merger agreement. However, after CBES
stockholders approve the merger
agreement, no amendment may be
made that would violate applicable
law or would reduce or change the
consideration to be received by
the stockholders in the merger.
9
INTRODUCTION
This proxy statement is furnished to the stockholders of CBES Bancorp,
Inc., a Delaware corporation ("CBES"), in connection with the solicitation of
proxies by the board of directors of CBES (the "board") for use at the
special meeting of stockholders of CBES to be held on _____________, 2002,
commencing at 9:00 a.m., local time, at the primary location of Community
Bank of Excelsior Springs, a Savings Bank, located at 1001 North Jesse James
Road, Excelsior Springs, Missouri (the "special meeting"). This proxy
statement, the notice and the accompanying form of proxy were first mailed to
the stockholders of CBES on ______________, 2002.
Matters to be Considered at the Special Meeting
At the special meeting, stockholders will be asked to consider and vote
upon the approval and adoption of an agreement and plan of merger dated as of
September 5, 2002, by and among NASB Financial, Inc. ("NASB"), NASB
Acquisition Subsidiary, Inc. ("Acquisition Sub"), and CBES (the "merger
agreement"). A copy of the merger agreement is attached hereto as Appendix A.
The merger agreement provides for the merger of Acquisition Sub, a newly
formed wholly-owned subsidiary of NASB, with and into CBES (the "merger"),
and for CBES to continue as the surviving corporation in the merger under the
same name. As a result of the merger, each outstanding share of CBES common
stock, par value $.01 per share ("common stock") (other than shares held by
CBES as treasury stock and shares held by dissenting stockholders who perfect
their statutory appraisal rights), will be converted into the right to
receive $17.50 in cash per share, subject to adjustment in certain
circumstances.
The board knows of no other matters which will be presented for
consideration at the special meeting. If any other matters are properly
presented at the meeting, the accompanying proxies confer upon the persons
named in the proxies discretionary authority to vote upon such matters, to
the extent permitted under the applicable rules of the Securities and
Exchange Commission. This would include a motion to adjourn or postpone the
special meeting in order to solicit additional proxies. However, no proxy
voted against the proposal to approve the merger agreement will be voted in
favor of an adjournment or postponement to solicit additional votes in favor
of the merger agreement.
Voting Rights
General
Stockholders of record of common stock as of the close of business on
the record date, _____________, 2002, are entitled to notice of and to vote
at the special meeting. At the close of business on the record date, there
were issued and outstanding 875,805 shares of common stock. Each share of
common stock has one vote.
Voting By Proxy
When a proxy in the accompanying form is properly executed and returned,
the shares represented by the proxy will be voted at the special meeting in
the manner specified by the stockholder. If no instructions are specified,
authority will be granted to vote such shares FOR the approval and adoption
of the merger agreement. Unless otherwise indicated on the proxy,
discretionary authority will also be granted to the persons named in the
proxy to vote the shares represented by the proxy with respect to procedural
matters and other matters that may property come before the meeting.
If you are a beneficial owner of shares held by a broker, bank or other
nominee (commonly referred to as being held in "street name"), you will
receive instructions from your broker or bank that you must follow in order
to have your shares voted by your nominee. Your broker or bank may allow you
to deliver your voting instructions via the telephone or the Internet. If
you hold your shares in street name and
10
want to vote in person at the special meeting, you will have to get a proxy
from the broker, bank or other nominee holding your shares, which proxy
grants you the right to vote such shares.
Participants In The Employee Stock Ownership Plan
If you participate in the Community Bank Employee Stock Ownership Plan,
the enclosed proxy card represents a voting instruction to the trustee of the
plan as to the number of shares in your plan account. Each participant in
the plan may direct the trustee as to the manner in which shares of common
stock allocated to the participant's plan account are to be voted.
Unallocated shares of common stock held by the plan and allocated shares for
which no voting instructions are received will be voted by the trustee in the
same proportion as shares for which the trustee has received voting
instructions, subject to the trustee's exercise of his fiduciary obligations.
Quorum; Abstention/Broker Non-Votes
The presence in person or by proxy of the holders of one-third of the
outstanding shares of common stock will constitute a quorum for the
transaction of business at the special meeting. If a quorum is not present
at the special meeting, the meeting may be adjourned until such time as a
quorum is obtained. If you attend the meeting in person or by proxy, your
shares will be counted for purposes of determining whether there is a quorum,
even if you abstain from voting. Broker non-votes will also be counted for
purposes of determining the existence of a quorum. A broker non-vote occurs
when a broker, bank or other nominee holding shares for a beneficial owner
presents a valid proxy, but does not vote on a particular proposal because
the nominee has not received voting instructions from the beneficial owner
and does not have discretionary voting power with respect to the matter being
voted upon.
Required Vote
The approval and adoption of the merger agreement will require the
affirmative vote of the holders of at least a majority of the outstanding
shares of common stock entitled to vote thereon. Thus, failure to return a
properly executed proxy card or to vote in person will have the same effect
as a vote against the merger agreement. Abstentions from voting and broker
non-votes (failure to give your broker voting instructions if your shares are
held in street name) will also have the same effect as a vote against the
merger agreement.
The stockholders present at the special meeting in person or by proxy
may, by a majority vote, vote to adjourn the meeting in the absence of a
quorum, or to adjourn the meeting even if a quorum is present. If a quorum
is not present, or if less than a majority of the outstanding shares are
present and voting in favor of the approval and adoption of the merger
agreement, it is expected that the meeting with be adjourned to allow
additional time to solicit proxies.
Revocation of Proxies
A stockholder may revoke his or her proxy at any time before it is voted
by giving the Secretary of CBES written notice of revocation bearing a later
date than the proxy, by submitting a later-dated proxy, or by revoking the
proxy and voting in person at the special meeting. Attendance at the special
meeting will not in and of itself constitute a revocation of a proxy. Any
written notice revoking a proxy should be sent to the Corporate Secretary of
CBES at 1001 North Jesse James Road, Excelsior Springs, Missouri 64024.
Solicitation of Proxies
The costs of soliciting proxies will be borne by CBES. Proxies may be
solicited by certain of CBES's directors, officers and regular employees,
without additional compensation, in person or by telephone, email or
facsimile. CBES will request brokers and nominees who hold shares of common
stock in their names to furnish proxy materials to beneficial owners of
common stock and will reimburse such
11
brokers and nominees for their reasonable expenses incurred in forwarding
solicitation materials to such beneficial owners.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides information as of September 13, 2002, with
respect to persons known by CBES to be the beneficial owners of more than 5%
of the outstanding CBES common stock. A person may be considered to own any
shares of common stock over which he or she has, directly or indirectly, sole
or shared voting or investing power.
Number of Percent of Shares
Name and Address Shares Beneficially
Beneficial Owned
Owned(1) Outstanding(1)
- ---------------- -------- --------------
CBES Bancorp, Inc. Employee 65,649 7.50%
Stock Ownership Plan
1001 North Jesse James Road
Excelsior Springs, Missouri
64024 (2)
David H. Hancock 82,100 9.37%
12498 South 71 Highway
Grandview, Missouri 64030(3)
First Financial Fund, Inc. 86,600 9.89%
Gateway Center Three
100 Mulberry Street, 9th Floor
Newark, New Jersey
07102-7503(4)
Wellington Management LLP
75 State Street
Boston, Massachusetts 02109(4)
Keith E. Doss 45,242 5.17%
P.O. Box 137
Kearney, Missouri 64060(5)
Investors of America Limited 55,900 6.38%
Partnership
135 North Meramac
Clayton, Missouri 63017(6)
All directors and executive 166,014 17.57%
officers as a group
(10 persons) (7)
_____________________________
(1) Beneficial ownership is determined in accordance with the rules of the
SEC which generally attribute beneficial ownership of securities to
persons who possess sole or shared voting power and/or investment power
with respect to those securities. Unless otherwise indicated, the
persons identified in this table have sole voting and investment power
with respect to all shares shown as beneficially owned by them.
(2) The amount reported represents shares held by the Employee Stock
Ownership Plan, 42,539 of which have been allocated to accounts of
participants. Participants in the plan are entitled to instruct the
trustee as to the voting of shares allocated to their accounts under the
plan. Unallocated shares held in the plan's suspense account are voted
by the trustee in the same proportion as allocated shares voted by
participants.
(3) As reported on a Schedule 13D/A dated September 17, 2002 filed with the
SEC. As reported on a Schedule 13D/A dated February 18, 2000, Mr.
Hancock is also the beneficial owner of 4,104,025 shares of the
outstanding common stock of NASB.
12
(4) As reported on a Schedule 13G/A dated February 12, 2002 filed with the
SEC by First Financial Fund, Inc. As reported on a Schedule 13G/A dated
February 12, 2002, filed with the SEC by Wellington Management Company,
LLP ("Wellington"), Wellington also beneficially owns said 86,600 shares
of CBES common stock. This Schedule 13G/A discloses that First
Financial Fund, Inc., a client of Wellington, is also the beneficial
owner of said shares.
(5) As reported on a Schedule 13D dated January 8, 2001 filed with the SEC.
(6) As reported on a Schedule 13G/A dated February 8, 2002 filed with the
SEC.
(7) The amount reported includes shares held directly, as well as shares
held jointly with family members, shares held in retirement accounts,
and shares held in a fiduciary capacity or by certain family members,
with respect to which shares the group members may be deemed to have
sole or shared voting and/or investment power. The amount reported
includes options to purchase 69,011 shares of common stock granted to
directors and executive officers of CBES under CBES's 1997 Stock Option
and Incentive Plan, which options are exercisable within 60 days of
___________, 2002.
The following table provides information as of _______________, 2002
with respect to shares of CBES common stock beneficially owned by:
o each director of CBES,
o the chief executive officer of CBES and each executive officer or
who made in excess of $100,000 (salary and bonus), in each case,
during the fiscal year ended June 30, 2002, and
o all directors and executive officers of CBES as a group.
Percent of
Number of Common Stock
Name/Title Shares Owned(1) Outstanding(1)
- ---------- --------------- --------------
Robert L. Lalumondier, 7,355 *
Director(2)
Cecil E. Lamb, Director(3) 13,674 1.55%
Paul L. Thomas, Director 30,651 3.42%
Chairman of the Board and Chief
Executive Officer(4)
Dennis D. Hartman, Director and 20,152 2.28%
President of Community Bank of
Excelsior Springs(5)
Rodney G. Rounkles, Director(6) 14,420 1.64%
Richard N. Cox, Director (7) 21,960 2.49%
Robert E. McCrorey, Director(8) 32,563 3.70%
All directors and executive
officers as a group
(10 persons) (9) 166,014 17.57%
_____________________________
* Less than one percent.
(1) Unless otherwise indicated, the persons identified in this table have
sole voting and investment power with respect to all shares shown as
beneficially owned by them. Percentage ownership calculations are based
on 875,805 shares of common stock outstanding and the number of shares
issuable to such persons upon the exercise of stock options exercisable
within 60 days of __________, 2002.
13
(2) The amount includes 1,820 shares owned jointly by Mr. Lalumondier and
his wife and 5,125 shares issuable upon the exercise of options granted
under the CBES 1997 Stock Option and Incentive Plan.
(3) The amount includes 4,840 shares owned jointly by Mr. Lamb and his wife,
1,317 shares held in an IRA owned by Mr. Lamb's wife, as to which he
disclaims beneficial ownership, and 5,125 shares issuable upon the
exercise of options granted under the CBES 1997 Stock Option and
Incentive Plan.
(4) The amount includes 19,300 shares issuable upon the exercise of options
granted under the CBES 1997 Stock Option and Incentive Plan.
(5) The amount includes 3,890 shares owned by Mr. Hartman in the Community
Bank ESOP, as to which he has sole voting power only, 100 shares owned
by Mr. Hartman's parents, as to which he disclaims beneficial ownership,
and 9,737 shares issuable upon the exercise of options granted under the
CBES 1997 Stock Option and Incentive Plan.
(6) The amount includes 820 shares owned jointly by Mr. Rounkles and his
wife, 565 shares held in an IRA owned by Mr. Rounkles wife, as to which
he disclaims beneficial ownership, and 5,125 shares issuable upon the
exercise of options granted under the CBES 1997 Stock Option and
Incentive Plan.
(7) The amount includes 2,400 shares owned by a corporation controlled by
Mr. Cox and 5,125 shares issuable upon the exercise of options granted
under the CBES 1997 Stock Option and Incentive Plan.
(8) The amount includes 10,000 shares owned by a corporation controlled by
Mr. McCrorey, 1,980 shares held in an IRA owned by Mr. McCrorey, 10,000
shares owned directly by Mr. McCrorey's wife, as to which he disclaims
beneficial ownership, 2,630 shares owned jointly by Mr. McCrorey and his
wife and 5,125 shares issuable upon the exercise of options granted
under the CBES 1997 Stock Option and Incentive Plan.
(9) The amount reported includes shares held directly, as well as shares
held jointly with family members, shares held in retirement accounts,
and shares held in a fiduciary capacity or by certain family members,
with respect to which shares the group members may be deemed to have
sole or shared voting and/or investment power. The ten group members
consist of the seven persons identified in this table and three other
executive officers of CBES. The amount reported includes 69,011 shares
issuable to directors and executive officers of CBES upon the exercise
of options granted under our 1997 Stock Option and Incentive Plan. The
amount reported excludes options which do not vest within 60 days of
_______________, 2002.
BACKGROUND OF THE MERGER
CBES is the holding company for Community Bank of Excelsior Springs, a
savings bank ("Community Bank"). CBES was organized by Community Bank for
the purpose of acquiring all of the capital stock of Community Bank in
connection with the conversion of Community Bank from mutual to stock form,
which was completed on September 27, 1996. The only significant assets of
CBES are the capital stock of Community Bank and CBES's loan to the Community
Bank Employee Stock Ownership Plan. Community Bank is a community-oriented
financial institution offering selected financial services, through its main
office in Excelsior Springs, Missouri and its branch office in Liberty,
Missouri, to customers located in Clay and Ray Counties and to a lesser
extent in surrounding counties in Missouri. Community Bank attracts deposits
from the general public and has historically used such deposits primarily to
originate one-to-four family residential mortgage loans, construction and
land loans for single-family residential properties and consumer loans
consisting principally of loans secured by automobiles. Community Bank has
also been an active participant in the secondary market, originating
residential mortgage loans for sale. At June 30, 2002, CBES had consolidated
total assets of $112.9 million, deposits of $87.8 million, and total
stockholders' equity of $14.2 million.
Since the inception of CBES, the board has monitored the rapid pace of
consolidation in the financial services industry. An indication of interest
from NASB led the board to consider whether it would be in the best interests
of CBES and its stockholders to explore CBES's strategic alternatives,
including the possibility of a business combination with another financial
institution. On August 9, 2001, as part of its regular review of CBES's
strategic alternatives, the board charged management with the initial
14
responsibility of seeking the assistance of a financial advisor to CBES. At
four separate meetings of the board held during September and October 2001,
the board heard presentations from four financial advisory firms. On October
23, 2001, the board selected Hovde Financial LLC ("Hovde") to provide CBES
consulting and strategic planning advice.
On January 3, 2002, the board met with representatives of Hovde to
review and evaluate the strategic alternatives available to CBES. The board,
after careful review of the alternatives, determined that CBES's efforts
should be initially focused on either a business combination with an equal
size or larger financial institution or an acquisition of another financial
institution and authorized Hovde to pursue the possibility of a strategic
business combination for CBES. As part of this process, the board authorized
Hovde to prepare a list of appropriate financial institutions to be contacted
to obtain expressions of interest in a possible business combination with
CBES.
On March 12, 2002, the board reviewed forms of a confidentiality and
standstill agreement and confidential descriptive memorandum of CBES to be
provided to prospective strategic merger partners. The board also reviewed a
list of financial institutions to be contacted. On March 12, 2002, the board
approved the confidentiality and standstill agreement, the confidential
descriptive memorandum and the list of institutions to be contacted. The
board further authorized Hovde to proceed to contact and negotiate with
potential strategic merger partners on behalf of CBES.
Hovde approached 49 financial institutions that it and CBES considered
to be potential merger partners. Several of those companies, including NASB,
expressed an interest in a possible business combination with CBES. After
further discussions with Hovde and the providing of additional information
regarding CBES, five of the companies stated a price range at which they
would be interested in acquiring CBES, subject to their satisfactory
completion of due diligence reviews of CBES's operations. The board voted to
invite four of the companies to perform due diligence reviews of CBES.
Between June 17 and June 20, 2002, the remaining four financial institutions
completed such due diligence reviews of CBES. Two of the parties withdrew
after completing their reviews. On June 25, 2002, Hovde submitted final
proposal instructions to the two parties that had indicated their desire to
make final proposals. Hovde's representatives held discussions with each of
the interested institutions for the purpose of refining their offers and
ascertaining whether a transaction with CBES would be possible. Evidence of
the financial ability of one of the parties to complete a transaction with
CBES was also requested by Hovde.
At a meeting of the board on July 12, 2002, Hovde reviewed with the
board the process that had been conducted to identify and contact potential
merger partners and the results of the discussions with the interested
parties. Hovde reviewed with the board in detail the two offers which it had
received and the financial information which had been obtained from the
bidders. The board concluded that the offer of NASB was more attractive, as
the other party had not provided satisfactory evidence of financing and NASB
appeared to be in a financial position to complete the transaction. NASB is
headquartered in Grandview, Missouri and is the parent corporation of North
American Savings Bank, F.S.B., a federally chartered savings and loan
association ("North American"). At June 30, 2002, NASB had consolidated
assets of $932 million, net loans receivable of $850 million and
stockholders' equity of $104 million.
At the July 12 board meeting, Stinson Morrison Hecker LLP, as legal
counsel for CBES, reviewed with the board its fiduciary duties to
stockholders. Hovde also presented and discussed with the board its
financial analyses of the purchase price offered by NASB and stated it would
be prepared to deliver, upon the execution of a definitive merger agreement,
a written opinion to the board that the merger consideration offered by NASB
was fair, from a financial point of view, to the stockholders of CBES. After
considering the terms of the proposal and the presentation by Hovde, the
board determined that pursuing a transaction with NASB on the terms proposed
would be in the best interests of CBES and its stockholders. The board then
authorized its representatives to enter into discussions with NASB for the
purpose of negotiating a definitive merger agreement.
Following the July 12 board meeting, CBES's legal counsel and legal
counsel for NASB entered into discussions to negotiate the terms of the
merger agreement. Over the next few weeks, representatives of CBES also
conducted a limited due diligence review of NASB and North American. During
this period,
15
the parties worked to further refine the pricing of the transaction. The
progress of these negotiations was periodically reported to the members of
the CBES board by a negotiating committee.
A draft of the merger agreement that was substantially in the form of
the final agreement was provided to the board prior to a meeting on
September 3, 2002. At the meeting, the CBES negotiating committee reviewed in
detail with the board the contents of the proposed merger agreement.
Representatives of Hovde presented by conference telephone their detailed
financial analyses of the proposed transaction. Hovde reported that in its
opinion the merger consideration was fair, from a financial point of view, to
CBES stockholders and delivered to the board a letter to this effect, dated
September 3, 2002.
Upon conclusion of the foregoing review and discussions, a vote was
taken and the board, by a vote of five directors in favor and two directors
opposed, concluded that the merger agreement should be approved and
authorized Paul L. Thomas to execute the merger agreement and related
documents on behalf of CBES. Richard N. Cox and C.E. Lamb voted against the
approval of the merger agreement.
MARKET PRICE AND DIVIDEND DATA FOR CBES COMMON STOCK
CBES common stock is quoted on the National Market System of the NASDAQ
Stock Market under the symbol "CBES". The following table shows the high and
low sales prices per share for CBES common stock as reported on the NASDAQ
National Market SM and the cash dividends declared by CBES for the periods
indicated.
CBES Common Stock
High Low Dividends
-------------------------------------
Fiscal 2001
Quarter ended September 30, 2000 12.75 9.00 .08
Quarter ended December 31, 2000 10.88 8.08 .08
Quarter ended March 31, 2001 12.44 8.52 .08
Quarter ended June 30, 2001 13.10 10.91 .08
Fiscal 2002
Quarter ended September 30, 2001 14.75 12.50 .08
Quarter ended December 31, 2001 14.79 13.18 .08
Quarter ended March 31, 2002 13.80 12.00 .08
Quarter ended June 30, 2002 15.00 13.07 .08
Fiscal 2003
Quarter ending September 30, 18.78 13.40 None
2002
Quarter ending December 31, 2002 _____ _____ None
(through October ___, 2002)
On September 5, 2002, the last trading day prior to the public
announcement that NASB and CBES had entered into the merger agreement, the
closing price of CBES common stock was $13.50 per share. On _____________,
2002, the closing price of CBES common stock was $_____ per share.
As of September 20, 2002, there were approximately 200 holders of record
of CBES common stock. This number does not reflect the number of persons or
entities who may hold their common stock in nominee or "street name" through
brokerage firms.
16
THE MERGER AGREEMENT
General
All references to and summaries of the merger agreement contained herein
are qualified in their entirety by reference to the text of the merger
agreement, which is attached hereto as Appendix A.
The merger agreement provides that, subject to the approval thereof by
the stockholders of CBES and the satisfaction of certain other conditions,
Acquisition Sub, a wholly-owned subsidiary of NASB, will be merged with and
into CBES, with CBES being the surviving corporation and thereby becoming
wholly-owned by NASB. Acquisition Sub was formed by NASB solely for the
purposes of carrying out the merger and has no business or significant
assets. At the effective time of the merger, the separate existence of
Acquisition Sub will cease.
At the effective time of the merger, each outstanding share of common
stock of CBES (other than shares held by CBES as treasury stock and shares
held by dissenting stockholders who perfect their statutory appraisal rights)
will be converted into the right to receive $17.50 in cash per share, subject
to adjustment in certain circumstances. See "Payment For CBES Shares"
below. Notwithstanding the foregoing, appraisal rights will be available for
shares of any dissenting stockholder who complies with the provisions of the
General Corporation Law of the State of Delaware regarding appraisal rights.
See "Rights of Dissenting Stockholders below." Except for the foregoing
rights, after the merger present holders of common stock of CBES will possess
no interest in the stock or other rights as stockholders of CBES.
The merger agreement provides that the officers and directors of CBES
shall resign at the effective time of the merger and that NASB shall appoint
new officers and directors of CBES. The directors and certain designated
officers of Community Bank immediately prior to the merger are also required
to resign at the effective time of the merger.
Recommendation of the Board of Directors
THE CBES BOARD OF DIRECTORS HAS APPROVED THE MERGER AGREEMENT AND
RECOMMENDS THAT THE CBES STOCKHOLDERS APPROVE AND ADOPT SUCH AGREEMENT.
Reasons for the Merger
The board has determined that the merger and the merger agreement are
advisable and are fair to, and in the best interests of, CBES and its
stockholders. In reaching this determination, the board considered a number
of factors, including the following:
The board's knowledge of CBES's and Community Bank's consolidated
business operations, management, operating results, earnings,
financial condition and prospects.
Information concerning NASB's and North American's consolidated business
operations, management, operating results, earnings, financial
condition and prospects, as a separate group and as combined with CBES.
The oral and written financial analyses presented by Hovde, as the
financial advisor to CBES, and the opinion of Hovde that the merger
consideration is fair, from a financial point of view, to CBES
stockholders. (See "Opinion of CBES's Financial Advisor" below).
The fact that the proposed merger will provide CBES stockholders with
the opportunity to receive $17.50 in cash per share, as adjusted in
certain circumstances, which represents a premium over the prices at
which the CBES common stock has recently traded. On September 5,
2002, the last trading date prior to the public announcement that CBES
and NASB had entered into a merger agreement, the closing price of
CBES common stock was $13.50 per share.
The historical trading prices for CBES common stock. (See "Market Price
and Dividend Data for CBES Common Stock" below.)
17
The board's assessment that Hovde had made diligent efforts to solicit
prospective merger partners for CBES and the board's conclusion that
the merger transaction proposed by NASB was superior to the other
transactions available to CBES and its stockholders.
The results of CBES's due diligence investigations of NASB, including
the board's assessment of the financial ability of NASB to pay the
merger consideration and the likelihood of the merger with NASB being
approved by regulatory authorities.
The terms of the merger agreement, including the taxable nature of the
cash consideration to be paid to CBES stockholders.
The current and prospective economic, competitive and regulatory
environment facing CBES, NASB and the financial services industry.
CBES's strategic alternatives to the merger, including the alternative
of continuing to operate CBES as an independent financial institution.
The foregoing discussion of the information and factors considered by the
board is not intended to be exhaustive. In reaching its determination to
approve and recommend the merger to stockholders, the board did not quantify
or assign relative weights to any of the foregoing factors. In addition,
individual directors gave different weights to different factors, as
evidenced by the vote of two directors against approval of the merger
agreement.
Opinion of CBES's Financial Advisor
Hovde Financial LLC has acted as financial advisor to CBES in connection
with the proposed merger. CBES selected Hovde based on its experience and
expertise in the investment-banking business.
Hovde has delivered to the CBES board its opinion that, based upon and
subject to the various considerations set forth in its written opinion dated
September 3, 2002, the merger consideration is fair from a financial point of
view to the holders of CBES common stock as of such date. In requesting
Hovde's advice and opinion, no limitations were imposed by CBES upon Hovde
with respect to the investigations made or procedures to be followed by it in
rendering its opinion.
The full text of the opinion of Hovde, dated September 3, 2002, which
describes the procedures followed, assumptions made, matters considered and
limitations on the review undertaken, is attached hereto as Appendix B. CBES
shareholders should read this opinion in its entirety. Hovde's opinion is
directed only to the fairness, from a financial point of view, of the merger
consideration, and does not constitute a recommendation to any CBES
stockholder as to how the stockholder should vote at the special meeting.
The summary of the opinion of Hovde set forth in this proxy statement is
qualified in its entirety by reference to the full text of the opinion.
Hovde, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection
with mergers and acquisitions, negotiated underwritings, competitive bidding,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. Hovde is familiar
with CBES, having acted as its financial advisor in connection with, and
having participated in the negotiations leading to, the merger agreement. In
the course of its daily trading activities, investment funds controlled by an
affiliate (as such term is defined in Regulation 12G-2 promulgated under the
Securities Exchange Act of 1934, as amended) of Hovde and their affiliates
may from time to time effect transactions and hold securities of CBES and
NASB. As of the date of its opinion, Hovde-affiliated entities owned no
shares of either company.
Hovde will receive a fee contingent upon the completion of the merger
for services rendered in connection with advising CBES regarding the merger,
including the fairness opinion and financial advisory services provided to
CBES. As of the date of this proxy statement, such fee would have been
approximately $200,000 and Hovde has received $50,000 of such fee to date.
The following is a summary of the analyses performed by Hovde in
connection with its fairness opinion. Certain of these analyses were
presented to the CBES board by Hovde on September 3, 2002. The summary set
forth below does not purport to be a complete description of either the
analyses performed by
18
Hovde in rendering its opinion or the presentation made by Hovde to the
board, but it does summarize all of the material analyses performed and
presented by Hovde.
The preparation of a fairness opinion involves various determinations as
to the most appropriate and relevant methods of financial analyses and the
application of those methods to the particular circumstances. In arriving at
its opinion, Hovde did not attribute any particular weight to any analysis
and factor considered by it, but rather made qualitative judgments as to the
significance and relevance of each analysis and factor. Hovde may have given
various analyses more or less weight than other analyses. Accordingly, Hovde
believes that its analyses and the following summary must be considered as a
whole and that selecting portions of its analyses, without considering all
factors and analyses, could create an incomplete view of the process
underlying the analyses set forth in its report to the CBES board and its
fairness opinion.
In performing its analyses, Hovde made numerous assumptions with respect
to industry performance, general business and economic conditions and other
matters, many of which are beyond the control of CBES and NASB. The analyses
performed by Hovde are not necessarily indicative of actual value or actual
future results, which may be significantly more or less favorable than
suggested by such analyses. Such analyses were prepared solely as part of
Hovde's analysis of the fairness of the merger consideration, from a
financial point of view, to the CBES stockholders. The analyses do not
purport to be an appraisal or to reflect the prices at which a company might
actually be sold or the prices at which any securities may trade at the
present time or at any time in the future. Hovde's opinion does not address
the relative merits of the merger as compared to any other business
combination in which CBES might engage. In addition, as described above,
Hovde's opinion to the board was one of many factors taken into consideration
by the board in making its determination to approve the merger agreement.
During the course of Hovde's engagement and for the purposes of the
opinion set forth herein, Hovde:
o reviewed the merger agreement;
o reviewed certain historical publicly available business and
financial information concerning NASB and CBES;
o reviewed certain internal financial statements and other financial
and operating data concerning NASB and CBES;
o analyzed certain financial projections prepared by the management
of CBES;
o reviewed historical market prices and trading volumes for CBES
common stock;
o reviewed the terms of recent merger and acquisition transactions,
to the extent publicly available, involving thrift and thrift holding
companies that Hovde considered relevant;
o analyzed the pro forma impact of the merger on the combined company's
earnings per share, consolidated capitalization and financial
ratios; and
o performed such other analyses and considered such other factors as
Hovde deemed appropriate.
In rendering its opinion, Hovde assumed, without independent
verification, the accuracy and completeness of the financial and other
information and representations contained in the materials provided to it by
NASB and CBES and in the discussions with NASB's and CBES's management. In
that regard, Hovde assumed that the financial forecasts, including without
limitation the projections regarding under-performing and non-performing
assets and net charge-offs, have been reasonably prepared on a basis
reflecting the best currently available information and judgments and
estimates of NASB and CBES, and that such forecasts will be realized in the
amounts and at the times contemplated thereby. Hovde is not an expert in the
evaluation of loan and lease portfolios for purposes of assessing the
adequacy of the allowances for losses with respect thereto and assumed that
such allowances for NASB and CBES are in the aggregate adequate to cover such
losses. Hovde was not retained to and did not conduct a physical inspection
of any of the properties or facilities of NASB or CBES. In addition, it did
not review individual credit files and did not make an independent evaluation
or appraisal of the assets and liabilities of NASB, and CBES and was not
furnished with any such evaluation or appraisal.
19
Transaction Multiple Analysis. Hovde compared merger consideration to
the book value of CBES common stock, tangible book value, adjusted core 6.5%
capital, 2003 and 2004 estimated GAAP earnings per share (EPS), assets,
deposits, and tangible book value to core deposits premium. Assuming merger
consideration per share of $17.50, Hovde observed that the implied
transaction multiples to CBES were as follows:
Merger consideration to book value 108.8%
Merger consideration to tangible book value 108.8%
Merger consideration to adjusted 6.5% core capital 115.7%
Merger consideration to 2003 FY estimated GAAP EPS 65.7x
Merger consideration to 2004 FY estimated GAAP EPS 38.0x
Merger consideration to assets 13.7%
Merger consideration to deposits 17.6%
Premium over tangible book value to core deposits 1.6%
Premium to Market Analysis Based on CBES Historical Trading Values.
Hovde reviewed the merger consideration premium to CBES common stock prices
at different intervals during the period commencing August 14, 2002 (the last
day actual trades took place in CBES common stock prior to September 3, 2002)
using the 5-day, 10-day, 20-day, 30-day, 45-day, 60-day and 90-day average
closing price of CBES common stock on days where trades were executed. Hovde
observed that the merger consideration premium to CBES common stock average
closing prices over these periods were as follows:
CBES merger
average consideration
closing premium to average
price closing price
------------- ---------------------
Last trading day $13.75 27.27%
Last 5 Trading Days $13.77 27.09%
Last 10 Trading Days $13.81 26.70%
Last 20 Trading Days $14.01 24.89%
Last 30 Trading Days $13.94 25.57%
Last 45 Trading Days $13.75 27.31%
Last 60 Trading Days $13.65 28.25%
Last 90 Trading Days $13.43 30.33%
Stock Trading History Analysis. Hovde reviewed the history of the
reported trading prices and volume of CBES common stock and the relationship
between the movements in the prices of CBES common stock to movements in
certain stock indices, including the Standard & Poor 500 Index, the Russell
2000 Financial Services Index, and the NASDAQ Bank and Thrift Index. Hovde
noted that during the one year period ended September 3, 2002, CBES common
stock underperformed the Russell 2000 Financial Services Index and the NASDAQ
Bank and Thrift Index, and outperformed the Standard & Poor 500 Index, as
reflected below:
Beginning Ending Index
Index Value on Value on
September 3, September 3,
2001 2002
---------------- ----------------
CBES 100.00% 91.53%
NASDAQ Bank and Thrift Index 100.00% 110.38%
Russell 2000 Financial Services Index 100.00% 103.21%
S&P 500 Index 100.00% 77.46%
Hovde also noted that during the three year period ended September 3,
2002, CBES common stock underperformed the Russell 2000 Financial Services
Index and the NASDAQ Bank and Thrift Index, and outperformed the Standard &
Poor 500 Index, as reflected below.
20
Beginning Ending Index
Index Value on Value on
September 3, September 3,
1999 2002
---------------- ----------------
CBES 100.00% 84.38%
NASDAQ Bank and Thrift Index 100.00% 131.99%
Russell 2000 Financial Services 100.00% 120.97%
Index
S&P 500 Index 100.00% 64.69%
Analysis of Selected Mergers. Hovde reviewed comparable mergers
involving thrifts and thrift holding companies headquartered in Missouri
announced since January 1, 1999, in which the seller's assets were between
$100 million and $300 million. This Missouri merger group consisted of the
following four transactions:
- ------------------------------------- -------------------------------------
Buyer Seller
- ------------------------------------- -------------------------------------
DFC Acquisition Corp., MO Hardin Bancorp, Inc., MO
- ------------------------------------- -------------------------------------
DFC Acquisition Corp., MO Cameron Financial Corp., MO
- ------------------------------------- -------------------------------------
Central Bancompany, MO Fulton Bancorp, Inc., MO
- ------------------------------------- -------------------------------------
Citizens Bancshares Co., MO MBLA Financial Corp., MO
- ------------------------------------- -------------------------------------
Hovde also reviewed comparable mergers involving thrifts and thrift
holding companies headquartered in the Midwest announced since January 1,
1998, in which the seller's assets were between $50 million and $500 million
and seller's non-performing assets-to-assets were in excess of 50 basis
points. This Midwest Non-Performer merger group consisted of the following
seven transactions:
- --------------------------------------- ---------------------------------------
Buyer Seller
- --------------------------------------- ---------------------------------------
Robertson Holding Co., TN Cumberland Mountain Bancshares, KY
- --------------------------------------- ---------------------------------------
CKF Bancorp Inc., KY First Lancaster Bancshares, KY
- --------------------------------------- ---------------------------------------
First Busey Corp., IL Eagle BancGroup Inc., IL
- --------------------------------------- ---------------------------------------
Central Bancompany, MO Fulton Bancorp, Inc., MO
- --------------------------------------- ---------------------------------------
Citizens Bancshares Co., MO MBLA Financial Corp., MO
- --------------------------------------- ---------------------------------------
FBOP Corp., IL Calumet Bancorp Inc., IL
- --------------------------------------- ---------------------------------------
Blue River Bancshares Inc., IN Shelby County Bancorp, IN
- --------------------------------------- ---------------------------------------
Hovde calculated the medians, averages, high and lows for the following
relevant transaction ratios in the Missouri merger group and the Midwest
Non-Performer merger group; the multiple of the offer value to the acquired
company's earnings per share for the twelve months preceding the announcement
date of the transaction; the multiple of the offer value to the acquired
company's book value per share and tangible book value per share; and the
tangible book value premium to core deposits, each as of the announcement
date of the transaction. Hovde compared these multiples with the
corresponding multiples for the merger, based on merger consideration per
share of $17.50. The results of this analysis are as follows:
21
Offer Value to
---------------------------------------
12 months Ratio of
Preceding Tangible
Tangible Earnings Book Value
Book Value Book Value Per Share Premium to Core
Per Share Per Share (x) Deposits
(x) (x) (x) (%)
------------ ------------ ---------- ----------------
CBES 1.09 1.09 Negative 1.6
EPS
Missouri merger group median 1.15 1.15 17.6 4.0
Missouri merger group average 1.14 1.14 19.1 4.7
Missouri merger group low 1.00 1.00 12.1 0.8
Missouri merger group high 1.25 1.25 29.0 9.9
Midwest Non-Performer merger group median 1.15 1.15 23.5 5.3
Midwest Non-Performer merger group average 1.20 1.20 22.4 5.2
Midwest Non-Performer merger group low 1.06 1.06 11.5 1.1
Midwest Non-Performer merger group high 1.41 1.41 30.3 9.9
Hovde noted that because CBES had a negative earnings stream for the
twelve months ended June 30, 2002, the multiple of the offer value to CBES's
earnings per share for the twelve months preceding June 30, 2002, would be
not be meaningful. Of the four transactions in the Missouri merger group and
the seven transactions in the Midwest Non-Performer merger group, only
Cumberland Mountain Bancshares in Kentucky had a negative earnings stream for
the twelve months preceding announcement of its merger and therefore was
similarly not meaningful.
Discounted Cash Flow Analysis. Hovde estimated the discounted present
value of the CBES common stock by using estimated 2003-2007 cash earnings of
$234.5 thousand, $405.3 thousand, $552.8 thousand, $718.3 thousand and $862.6
thousand, respectively, and 2003-2005 dividends per share of $0.32, 2006
dividends per share of $0.36 and 2007 dividends per share of $0.40. In
arriving at the terminal value of CBES's earnings stream at the end of 2007,
Hovde assumed a terminal value multiple at a range of 12.5, 15.0, 17.5, 20.0
and 22.5. The terminal value was then discounted, along with yearly cash
flows for 2003 through 2007, using a range of discount rates of 10.0%, 11.0%,
12.0%, 13.0% and 14.0% to arrive at the present value for CBES common stock.
These rates and values were chosen to reflect different assumptions regarding
the required rates of return of holders or prospective buyers of CBES common
stock. This analysis and its underlying assumptions yielded a range of
values for CBES common stock of approximately $7.67 to $15.00 per share.
Hovde noted that the merger consideration per share of $17.50 is in excess of
all values generated in this analysis.
Mark-to-Market Analysis. Hovde calculated a liquidation value of CBES
based on estimated value of its component assets and liabilities. For
purposes of this analysis, Hovde assumed an aggregate value equal to common
stockholders' equity of CBES at June 30, 2002, as adjusted to reflect an
estimated range of values for transaction costs, premiums paid to retire
existing borrowings, deposit premiums, marked-to-market adjustments on the
loan and investment portfolios, appraisals of fixed assets, intangibles
writedowns and contingent liabilities. This analysis imputed a per share
value of $14.30, which was lower than the merger consideration per share of
$17.50.
Based upon the foregoing analyses and other investigations and
assumptions set forth in its opinion, without giving specific weightings to
any one factor or comparison, Hovde determined that the merger consideration
was fair from a financial point of view to the CBES stockholders.
No material relationship has previously existed between Hovde and CBES
or NASB, or between Hovde and the affiliates of either CBES or NASB, and no
future material relationship is presently contemplated.
22
When The Merger Will Be Completed
If the merger agreement is approved by the stockholders of CBES, the
closing of the merger will take place not more than 15 days after the
satisfaction or waiver of all of the conditions to the merger contained in
the merger agreement, unless NASB and CBES agree to another date. On the
date of the closing, a Certificate of Merger will be filed with the Secretary
of State of Delaware and Articles of Merger will be filed with the Secretary
of State of Missouri. The merger will become effective at the time stated in
the Certificate and Articles of Merger (the "effective time" of the merger).
CBES expects to complete the merger in the fourth quarter of 2002.
However, CBES cannot guarantee when or if the required approvals will be
obtained. Furthermore, either party may terminate the merger agreement if
the merger has not been completed on or before January 31, 2003, unless
failure to complete the merger by that time is due to the breach of any
representation, warranty or covenant by the party seeking to terminate the
merger agreement.
Payment For CBES Shares
Unless you are a dissenting stockholder who properly demands and
perfects your appraisal rights, upon the effective time of the merger your
shares of CBES common stock will be converted into the right to receive a
cash payment of $17.50 per share. Upon the effective time of the merger, you
will no longer own any common stock or have any interest in CBES, nor will
you receive any stock of NASB as a result of the merger.
The $17.50 per share cash payment that you are to receive in the merger
is subject to adjustment based upon the level of CBES's adjusted
stockholders' equity as of the close of business on the last day immediately
prior to the effective time of the merger. If CBES's adjusted stockholders'
equity immediately prior to the effective time is more than $13,900,000,
there will be no adjustment in the $17.50 per share cash merger
consideration. If CBES's adjusted stockholders' equity immediately prior to
the effective time is less than $13,900,000 but equal to or greater than
$13,500,000, the cash merger consideration will be reduced to $17.05 per
share. If CBES's adjusted stockholders' equity is less than $13,500,000
immediately prior to the effective time, NASB has the right to terminate the
merger agreement or to close the merger for cash merger consideration of
$17.05 per share. CBES's stockholders' equity at June 30, 2002 was
$14,172,000.
"Adjusted stockholders' equity" for purposes of the foregoing
adjustments to the merger consideration is defined in the merger agreement to
exclude (i) all professional fees related to the merger, including but not
limited to legal, investment banking and accounting fees, (ii) all severance
payments from CBES or Community Bank to employees terminated prior to the
effective time, including but not limited to cash severance payments and
reimbursements for welfare benefits pursuant to the Community Bank Severance
Plan, payments of bonuses and welfare benefits pursuant to the terms of
Employee Bonus Agreements between Community Bank and certain of its officers,
and payment of accrued paid time off and extended leave as required by the
Community Bank Employee Manual, (iii) all fair market value accounting
adjustments required by Statement of Financial Accounting Standards No. 115
after June 30, 2002, (iv) if Community Bank's allowance for loan and lease
losses ("ALLL") exceeds the amount required by applicable statutes and
regulations, any subsequent writedowns of loans and other real estate owned
treated by Community Bank as a reduction to its ALLL instead of as a
reduction to its income or stockholders' equity, to the extent allowed by
GAAP and the Office of Thrift Supervision ("OTS"), (v) all reductions in the
value of Community Bank loans requested by NASB, and (vi) the value of all
assets, leasehold improvements and expenses relating to the closing of
Community Bank's Liberty, Missouri branch.
23
Surrender of Stock Certificates
CBES STOCKHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES REPRESENTING
CBES COMMON STOCK AT THIS TIME.
Within five business days after the effective time of the merger, NASB
or an exchange agent designated by it will mail to each stockholder a form of
transmittal letter with instructions on how to surrender certificates
previously representing shares of CBES common stock for the cash merger
consideration.
When you mail your completed letter of transmittal and your CBES stock
certificates in accordance with the accompanying instructions, you may elect
either to have the amount of cash that you are entitled to receive (i)
deposited in a specified account at a financial institution of your choice or
(ii) paid by a check mailed to you. The stock certificates which you
surrender will be cancelled. You will not be entitled to receive interest on
any cash to be paid as merger consideration.
In the event of a transfer of ownership of shares of common stock that
has not been registered on the stock transfer records of CBES, NASB may
deposit the cash merger consideration for such shares in an account at a
financial institution of a stockholder's choice, or may issue a check for the
cash merger consideration to the stockholder who holds such shares of common
stock, if the certificate representing such shares is presented with
documents that are sufficient in the reasonable discretion of NASB or its
exchange agent:
o to evidence and effect such transfer, and
o to evidence that all applicable stock transfer taxes have been paid.
If your CBES stock certificates have been lost, stolen or destroyed, you
will have to prove that you owned these certificates, and that they were
lost, stolen or destroyed, before you will be entitled to receive payment of
any merger consideration for such certificates. NASB or the exchange agent
will send you instructions on how to provide proof of ownership. You may be
required to make an affidavit and to post a bond in an amount sufficient to
protect NASB against claims related to your lost stock certificates.
After the effective time of the merger, there will be no further
transfers of CBES common stock. Stock certificates presented for transfer
after the effective time of the merger will be canceled and exchanged for the
cash merger consideration.
If NASB retains an exchange agent, any cash merger consideration and the
proceeds of any investments thereon that remain unclaimed by stockholders 12
months after the effective time of the merger will be repaid by the exchange
agent to NASB. Stockholders who have not complied with the exchange
procedures prior to 12 months after the merger may only look to NASB for
payment of the cash merger consideration they are entitled to receive in
exchange for their shares of common stock and such payments will not include
any interest.
Each outstanding and unexercised option for the purchase of common stock
held by officers and employees under the CBES 1997 Stock Option and Incentive
Plan, whether or not it is vested, will be converted to a right to receive a
cash payment equal to the number of shares of common stock subject to the
option multiplied by the difference between $17.50 per share of common stock
(as adjusted) and the exercise price per share of the option. See "Stock
Option Plan" below.
Representations and Warranties in the Merger Agreement
Each of NASB, Acquisition Sub and CBES have made certain customary
representations and warranties to each other relating to their businesses in
the merger agreement. For information on these representations and
warranties, please refer to Article III of the merger agreement attached as
Appendix A. The representations and warranties must be true as of the date
of the merger agreement and as of the closing date of the merger. No
representation or warranty will be deemed to be untrue or incorrect and no
party will be deemed to have breached a representation or warranty unless
there would likely exist a
24
material adverse effect. "Material adverse effect" is defined in the merger
agreement to mean an effect which is material and adverse to the business,
financial condition or results of operations of either party. The following,
however, are not considered in determining if there has been a material
adverse effect: (i) changes in laws, rules or regulations in GAAP or
regulatory accounting requirements or interpretations thereof; (ii) changes
to economic conditions affecting financial institutions generally; (iii) fees
associated with the merger; or (iv) changes to the merger agreement requested
by NASB. See "Conditions to the Merger" below.
Conditions to the Merger
The obligations of NASB and CBES to complete the merger are conditioned
on the following:
o approval of the merger agreement by CBES stockholders;
o receipt of all required regulatory approvals, consents and waivers
without any materially adverse conditions;
o no party to the merger being subject to any order, decree, ruling or
injunction that prohibits consummating the merger, no governmental
entity having instituted any proceeding for the purpose of blocking
the merger, and the absence of any statute, rule or regulation that
prohibits or restricts completion of the merger;
o no litigation, claim, action, suit or other legal or administrative
proceeding challenging the merger shall be pending against any party
or any subsidiaries, directors or officers of any party which NASB's
counsel believes would result in NASB paying damages and litigation
costs that would not be reimbursed by insurance or if NASB will have
to indemnify a person or persons in excess of $250,000 as a result of
such litigation, claim, action, suit or other legal or administrative
proceeding; and
o the other party having performed in all material respects its
obligations under the merger agreement, the other party's
representations and warranties being true and correct as of the date
of the merger agreement and as of the closing date.
The obligations of NASB to complete the merger are conditioned on CBES
having adjusted stockholders' equity of not less than $13,500,000. The
obligations of CBES to complete the merger also are conditioned on NASB
having sufficient cash to pay the aggregate merger consideration. NASB has
advised that the cash needed for the payment of the aggregate merger
consideration will be obtained from available cash on hand and from cash
dividends provided by its savings banking subsidiary. As a part of its due
diligence investigations of NASB, CBES reviewed the audited financial
statements of NASB and, based on the amount and nature of NASB's consolidated
assets and stockholders' equity and NASB's historical annual earnings, CBES
made a favorable assessment as to NASB's ability to pay the aggregate merger
consideration.
We cannot guarantee that all of the conditions to the merger will be
satisfied or waived by the party permitted to do so. If the merger is not
completed on or before January 31, 2002, either party may terminate the
merger agreement by a vote of a majority of its board of directors.
Conduct of Business Pending the Merger
NASB and CBES have each agreed that, until the completion of the merger,
each of them will, and will cause its subsidiaries to, use its commercially
reasonable efforts to:
o conduct its business in the regular, ordinary and usual course
consistent with past practice;
o maintain and preserve intact its business organization, properties,
leases, employees and advantageous business relationships and retain
the services of its officers and key employees;
25
o take no action which would adversely affect or delay the ability of
NASB or CBES to perform their respective covenants and agreements on a
timely basis under the merger agreement; and
o take no action which would adversely affect or delay any party's
ability to obtain any necessary approval, consent or waiver of any
governmental authority required for the transactions contemplated by
the merger agreement or which would reasonably be expected to result
in those approvals, consents or waivers containing any material
condition or restriction.
Further, except as otherwise provided in the merger agreement or as permitted
by NASB, until the completion of the merger CBES has agreed that neither it
nor its subsidiaries will:
o change its certificate of incorporation or bylaws;
o authorize, issue, deliver or sell any shares of its capital stock, or
securities or obligations convertible or exercisable for any shares of
its capital stock, other than shares issued upon the exercise of
outstanding stock options;
o issue, grant or sell any option, warrant, call, commitment, stock
appreciation right, right to purchase or agreement relating to its
authorized or issued capital stock, or change the terms of any of its
outstanding stock options or warrants;
o split, combine, reclassify or adjust any shares of its capital stock
or otherwise change its capitalization;
o make, declare or pay any cash or stock dividend or other distribution
on its capital stock;
o acquire or sell, transfer, assign, mortgage, encumber or otherwise
dispose of any of its material assets or cancel, release or assign any
indebtedness, other than in the ordinary course of business consistent
with past practice;
o increase the compensation or fringe benefits of any of its employees
or directors;
o pay bonuses to its employees or directors;
o pay any pension or retirement allowance not required by any existing
plan or agreement to any employees or directors;
o become a party to, amend or commit to fund or otherwise establish any
trust or account related to any employee benefit plan with or for the
benefit of any employee or director;
o voluntarily accelerate the vesting of any stock option or other
compensation or benefit;
o grant or award any stock option, or make any discretionary
contribution to any employee benefit plan;
o hire any employee with annual total compensation in excess of $30,000
or enter into any employment contract with any employee;
o change its method of accounting, except as required by changes in
generally accepted accounting principles or as contemplated by the
merger agreement;
o commence any litigation other than in the ordinary course of business;
o settle any claim against it for money damages in excess of $25,000 or
agree to material restrictions on its operations;
o acquire or agree to acquire any business or assets of another business
that would be material to it, except in satisfaction of debts
previously contracted;
o extend or renew loans, or advance additional sums to a borrower whose
loans, in whole or in part, have been classified or listed as special
mention by any regulatory authority or included on Community Bank's
watch list;
26
o make, renegotiate, renew, increase, extend, modify or purchase any
loan, lease, advance, credit enhancement or other extension of credit,
or make any such commitment, except in conformance with existing
lending practice in amounts not to exceed $100,000 if secured by real
estate or certificates of deposit held by Community Bank, $25,000 if
secured by collateral other than real estate or certificates of
deposit held by Community Bank, or $0 unsecured, with respect to any
individual borrower or loans as to which CBES has a binding obligation
to make such loans as of the date of the merger agreement;
o establish or commit to establish any new branch or other office
facilities or file any application to relocate or terminate the
operations of any banking office other than the Liberty, Missouri
branch, provided, however, that if Community Bank is unable to obtain
a six month extension of its lease for its Liberty, Missouri branch
office, it shall provide notice to its landlord that it intends to
terminate the lease and notify the OTS of its intent to close the
branch.
o make any investment either by purchase of securities, contributions to
capital, property transfers, or purchase of any property or assets of
any other individual or entity, other than investments for its
portfolio made in accordance with the merger agreement;
o make any investment in any debt security (including mortgage-backed
and mortgage-related securities) except for short- to
intermediate-term U.S. government and U.S. government agency
securities, securities of the Federal Home Loan Bank or insured jumbo
certificates of deposit, or materially restructure or change its
investment securities portfolio, through purchases, sales or
otherwise;
o enter into, renew, amend or terminate any contract or agreement, or
make any change in any of its leases or contracts;
o incur any additional borrowings other than short-term (six months or
less) Federal Home Loan Bank borrowings and reverse repurchase
agreements consistent with past practice, or pledge any of its assets
to secure any borrowings other than in connection with such borrowings
and reverse repurchase agreement or as required pursuant to the terms
of borrowings of CBES or its subsidiaries in effect as of the date of
the merger agreement;
o make any capital expenditures in excess of $5,000 per expenditure,
other than pursuant to prior binding commitments and other than
expenditures necessary to maintain existing assets in good repair or
to make payment of necessary taxes;
o elect any new executive officer or director;
o accept any deposit from any person on terms materially more favorable
in any respect than those available to the general public in CBES's
market area, unless such deposit is accepted in accordance with a safe
and sound program or practice in existence at Community Bank prior to
the date of the merger agreement;
o establish or impose a schedule of service charges or fees which
applies charges substantially more or substantially less than similar
service charges and fees charged by other banks in CBES's market
areas;
o organize, capitalize, lend to or otherwise invest in any subsidiary;
o engage in any transaction that is not in the usual and ordinary course
of business and consistent with past practice;
o enter into any new line of business;
o take or omit to take any action that is intended or may reasonably be
expected to result in any of CBES's representations and warranties set
forth in the merger agreement being or becoming untrue in any material
respect or which would make any if such representations and warranties
untrue and incorrect in any material respect if made anew after taking
such action;
27
o make any equity investment or commitment to make such an investment in
real estate or in any real estate development project, other than in
connection with foreclosures, settlement in lieu of foreclosure or
troubled loan or debt restructuring in the ordinary course of business
consistent with prudent banking practices;
o make, increase or renew any loan or other extension of credit, or
commit to make, increase or renew any such loan or extension of
credit, to any director or officer of CBES or any of its subsidiaries,
or any entity controlled, directly or indirectly, by any of the
foregoing; or
o agree to take or make any commitment to take any of the actions listed
above.
Covenants of the Parties
Agreement Not to Solicit Other Offers
The merger agreement prohibits CBES and Community Bank and their officers,
directors, employees, representatives, agents and affiliates from directly or
indirectly initiating, soliciting, knowingly encouraging or facilitating any
acquisition proposal with a third party, or entering into discussions with
any party in furtherance of such inquiries. An acquisition proposal includes
the following:
o any merger, consolidation, share exchange, business combination or
other similar transaction;
o any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of 25% or more of the assets of CBES or Community Bank,
taken as a whole, in a single transaction or series of transactions;
o any tender offer or exchange offer for 25% or more of the outstanding
shares of capital stock of CBES or the filing with the SEC of a
registration statement for that purpose; and
o any public announcement of a proposal, plan or intention to do any of
the foregoing or any agreement to engage in any of the foregoing.
Despite the foregoing agreement not to solicit other acquisition
proposals, the board of directors of CBES may under certain circumstances
furnish information to or enter into discussions or negotiations with anyone
who makes an unsolicited, written, bona fide acquisition proposal that is a
financially superior proposal to the NASB merger. A proposal of this nature
is one upon which CBES's board has concluded, after consulting with its
financial advisors and legal counsel, that action is necessary for the board
to comply within its fiduciary duties to stockholders. Before CBES enters
into negotiations with a third party regarding a superior proposal, it has to
give reasonable notice to NASB and must obtain from the third party an
executed confidentiality agreement.
The merger agreement requires the board to recommend that stockholders
approve and adopt the merger agreement, except to the extent legally required
for the discharge by the board of its fiduciary duties as advised by its
counsel. The merger agreement permits the board to withdraw or modify its
recommendation if an acquisition proposal is made and the board (i) has
received a written opinion from its financial advisor that such proposal may
be superior from a financial point-of-view to CBES stockholders and (ii)
determines after consultation with independent legal counsel that such action
is necessary to comply with its fiduciary duties to stockholders.
Employee Matters
Each person who is an employee of CBES or its subsidiaries as of the
effective time of the merger and whose employment is not specifically
terminated at or prior to closing will become an employee of the combined
company or its subsidiaries. Each of these continuing employees will be an
employee at will.
All employees who continue as employees of the combined company after
the merger will be eligible to participate in NASB's benefit plans on the
same basis as a new employee of NASB. Service with CBES or its subsidiaries
will be treated as service with NASB for purposes of satisfying any waiting
28
periods, evidence of insurability requirements or the application of any
preexisting condition limitation with respect to any NASB welfare benefit
plan. Each continuing employee shall receive credit for service with CBES or
its subsidiaries for purposes of any employee benefit plans or computing
vacation pay benefits.
Prior to September 30, 2002, Community Bank will make a contribution of
approximately $24,695 to Community Bank's employee stock ownership plan for
the fiscal year ended December 31, 2002 to provide the ESOP funds to meet the
ESOP's obligations on its loan from CBES, the proceeds of which were used by
the ESOP to purchase CBES stock at the inception of the ESOP. Community Bank
will make no other contributions to the ESOP. Any merger consideration
received by the plan that remains after this loan is repaid will be allocated
to the accounts of the plan participants as investment earnings. The plan
then will be terminated and distributions of benefits under the plan will be
made to participants in accordance with the provisions of the plan.
At its September 3, 2002 meeting, Community Bank's board adopted a
change-in-control severance plan. The plan entitles all salaried and hourly
employees, other than part-time employees or employees paid on a commission
basis, to a severance payment if the employee is terminated involuntarily,
other than for cause, (i) within six months after a change in control of
Community Bank or (ii) during the period of time commencing upon the date
when the board of directors authorizes management to negotiate the terms and
conditions of a definitive agreement with the intent of effecting a change in
control and ending on the date when a change of control occurs or the
negotiations for a change in control are terminated. An employee is also
eligible to receive the severance payment if he or she voluntarily leaves
during either of the above periods due to certain changes in his or her
employment conditions or compensation. The plan is not applicable to
salaried employees who are covered by an agreement that explicitly addresses
compensation and benefits payable to them upon termination of their
employment. The amount of the payment under the plan would be equal to (i)
two weeks of base salary or hourly wages for employees who have been employed
by Community Bank for less than one year, (ii) one month of base salary or
four weeks of hourly wages for employees who have been employed by Community
Bank for more than one year but less than 11 years or (iii) two months of
base salary or eight weeks of hourly wages for employees who have been
employed by Community Bank for 11 or more years. The transactions
contemplated by the merger agreement would constitute a change in control
under the plan.
Indemnification of Directors and Officers
NASB has agreed to indemnify and hold harmless each director and officer
of CBES and Community Bank against liability and expenses arising out of
matters existing or occurring at or before the consummation of the merger to
the extent allowed under applicable law.
Certain Other Covenants
The merger agreement also contains other agreements relating to the
conduct of the parties before consummation of the merger, including the
following:
o After all required regulatory and stockholder approvals have been
received, and at the request of NASB, CBES will cause Community
Bank to revise its loan, litigation and real estate valuation
policies and practices, and investment and asset/liability
management policies and practices, to conform to those of North
American. NASB must first confirm that it is not aware of any fact
that would prevent the completion of the merger.
o CBES and Community Bank will give NASB reasonable access during
normal business hours to their properties, books, records and
personnel and furnish all information which NASB may reasonably
request.
o NASB or Acquisition Sub, with the cooperation of CBES and Community
Bank, will submit all necessary filings and applications with any
governmental entity, the approval of which is required to complete
the merger and related transactions, and will obtain any approval,
consent or waiver of any third party that is required in connection
with the merger.
29
o NASB, Acquisition Sub and CBES will use all reasonable efforts to
take promptly all actions necessary, proper or advisable to
consummate the merger.
o NASB and CBES will consult with each other regarding any public
statement about the merger and any filing with any governmental
entity or with any national securities exchange.
o CBES will take all actions necessary to convene a meeting of its
stockholders to vote on the merger agreement. The CBES board will
recommend at the stockholders' meeting that the stockholders vote
to approve the merger and will use its reasonable best efforts to
solicit stockholder approval, subject to the exceptions discussed
under "Covenants of the Parties - Agreement Not to Solicit Other
Officers" above.
o NASB and CBES each will notify the other of any contract defaults
or other events which would reasonably be likely to result in a
material adverse effect on it.
Termination of the Merger Agreement
The merger agreement may be terminated at or prior to the completion of
the merger, either before or after any requisite stockholder approval, by:
o the mutual consent of NASB and CBES in writing, if a majority of
the board of directors of each so determines;
o either party, if a majority of its board of directors so
determines, in the event of a failure of the stockholders of CBES
to approve the merger agreement;
o either party, if a required regulatory approval, consent or waiver
is denied or any governmental entity prohibits the merger or the
other transactions;
o either party, if a majority of its board of directors so
determines, in the event the merger is not consummated by January
31, 2003, unless the failure to consummate by such time is due to a
breach caused by the party seeking to terminate;
o either party, if the other party makes a misrepresentation,
breaches a warranty or fails to fulfill a covenant that is not
cured within a specified time that would have a material adverse
effect on the party seeking to terminate;
o CBES, if its board of directors determines that it must accept a
superior offer from a third party in the exercise of its fiduciary
duties;
o NASB, if there shall have been a material adverse change in the
condition of CBES or Community Bank between the date of execution
of the merger agreement and the closing date and CBES fails to cure
such change within a specified time;
o NASB, if the adjusted stockholders' equity of CBES at the close of
business on the last day prior to the effective date of the merger
is less than $13,500,000; or
o NASB, if Phase I and Phase II environmental assessments of the
property on which the primary banking facility of Community Bank in
Excelsior Springs, Missouri is located determine that environmental
clean-up costs would exceed $500,000.
Expenses and Termination Fee
Each party will pay its own costs and expenses incurred in connection
with the merger.
30
If CBES terminates the merger agreement in order to accept a superior
offer from a third party and within six months CBES or Community Bank enters
into an agreement with that party to effect a merger, consolidation, share
exchange or similar transaction, CBES will be required to pay to NASB a
termination fee of $250,000.
Changes in Terms of the Merger Agreement
Before the completion of the merger, CBES may agree in writing to amend
or modify any provision of the merger agreement and any provision of the
merger agreement may be waived by the party benefited by the provision.
However, after the vote by the stockholders of CBES, no amendment or
modification may be made that would reduce the amount or change the kind of
consideration to be received by CBES stockholders under the terms of the
merger, or contravene any provision of applicable law or federal banking
laws, rules and regulations.
Regulatory Approvals
Completion of the merger is subject to prior regulatory approval. The
merger of Acquisition Sub with and into CBES is subject to the approval of
the OTS. NASB filed a merger application with the OTS on ______________,
2002. The application is now pending and action on the application is
expected to be forthcoming at or about the time of the meeting to vote on the
merger. We are not aware of any other regulatory approvals that are required
for completion of the merger. Should any other approvals be required, we
presently contemplate that we or NASB would seek those approvals. There can
be no assurance that approval of the OTS or any other approval, if required,
will be obtained.
The approval of any application merely implies the satisfaction of
regulatory criteria for approval, which does not include review of the merger
from the standpoint of the adequacy of the cash merger consideration to be
paid to CBES stockholders in exchange for their shares of CBES common stock.
Furthermore, regulatory approvals do not constitute an endorsement or
recommendation of the merger.
Accounting Treatment
NASB will account for the merger under the purchase method of
accounting. This means that NASB and CBES will be treated as one company as
of the date of the merger and that NASB will record the fair value of CBES's
assets and liabilities on its financial statements. NASB will record the
excess of its purchase price over the fair value of CBES's identifiable net
assets as goodwill.
Federal Income Tax Consequences
The following is a discussion of the material federal income tax
consequences of the merger to certain holders of CBES common stock. The
discussion is based upon the Internal Revenue Code (the "Code"), Treasury
Regulations, Internal Revenue Service rulings and judicial and administrative
decisions in effect as of the date of this proxy statement. This discussion
assumes that the common stock is generally held for investment. In addition,
this discussion does not address all of the tax consequences that may be
relevant to you in light of your particular circumstances or to CBES
stockholders subject to special rules, such as foreign persons, financial
institutions, tax-exempt organizations, dealers in securities or foreign
currencies, insurance companies or employees who acquired the stock pursuant
to the exercise of employee stock options or other compensation arrangements.
The receipt of cash for CBES common stock in connection with the merger
will be a taxable transaction for federal income tax purposes to stockholders
receiving such cash. You will recognize a gain or loss measured by the
difference between your tax basis for the common stock owned by you at the
time of the merger and the amount of cash you receive for your CBES shares.
Your gain or loss will be a capital gain or loss if the common stock is a
capital asset to you. Under present law, long-term capital gain recognized
by an individual (gain from the sale of a capital asset held for more than
one year) generally will be taxed at a maximum federal income tax rate of 20%.
31
The cash payments the holders of common stock will receive upon their
exchange of their common stock pursuant to the merger generally will be
subject to "backup withholding" for federal income tax purposes unless
certain requirements are met. Under federal law, the paying agent must
withhold 31% of the cash payments to holders of common stock to whom backup
withholding applies. The federal income tax withheld may be used by these
persons to reduce their federal income tax liability by the amount that is
withheld. To avoid backup withholding, a holder of common stock must provide
the paying agent with his or her taxpayer identification number and complete
a form in which he or she certifies that he or she has not been notified by
the Internal Revenue Service that he or she is subject to backup withholding
as a result of a failure to report interest and dividends. The taxpayer
identification number of an individual is his or her social security number.
Neither NASB nor CBES has requested or will request a ruling from the
Internal Revenue Service as to any of the tax effects to CBES stockholders of
the transactions discussed in this proxy statement and no opinion of counsel
has been or will be rendered to CBES stockholders with respect to any of the
tax effects of the merger to holders of common stock
The above summary of the material federal income tax consequences of the
merger is not intended as a substitute for careful tax planning on an
individual basis. In addition to the federal income tax consequences
discussed above, consummation of the merger may have significant state and
local income tax consequences that are not discussed in this proxy
statement. Accordingly, persons considering the merger are urged to consult
their tax advisors with specific reference to the effect of their own
particular facts and circumstances on the matters discussed in this proxy
statement.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Some of CBES's directors and officers may have interests in the merger
that are in addition to, or different from, the interests of stockholders.
The CBES board was aware of these interests and considered them in approving
the merger agreement.
Stock Ownership
The directors and executive officers of CBES, together with their
affiliates, beneficially owned a total of 166,014 shares of common stock
(representing 17.57% of all outstanding shares of the common stock) as of
____________, 2002. The directors and executive officers will receive the
same consideration in the merger for their shares as the other CBES
stockholders.
As reported on Schedule 13 G/A dated September 17, 2002, filed with the
SEC, David H. Hancock is a beneficial owner of 82,100 shares of common stock
of CBES, which constitutes 9.37% of the outstanding shares of CBES as of
____________, 2002. As reported on a Schedule 13 G/A dated February 12,
2000, Mr. Hancock is also the beneficial owner of 4,104,025 shares of the
common stock of NASB, which constitutes ______% of the outstanding shares of
NASB as of _____________, 2002.
Stock Option Plan
The merger agreement provides that each option to purchase shares of
common stock pursuant to CBES's 1997 Stock Option and Incentive Plan that is
outstanding and unexercised on the effective time of the merger, whether or
not such option is then vested or exercisable, will automatically be deemed
vested and exercisable. Each such option will be converted on that date into
the right to receive in cash an amount equal to the difference between the
per share merger consideration (as adjusted) and the exercise price per share
of the option, multiplied by the number of shares of common stock subject to
the option. If the exercise price of any option is greater than the per share
merger consideration, such option will be cancelled without any payment being
made for it. As of _____________, 2002, the directors, the Chief Executive
Officer and the executive officers of CBES held options to purchase a total
of 69,011 shares of common stock. The following table reflects the number of
vested and unvested options, the weighted average exercise price of the
options, and the amounts payable to each director and named officer upon
cancellation of their vested and unvested options, based on the $17.50 per
share merger consideration.
32
Amount
Weighted Amount Payable
Number of Number of Average Payable For
Vested Unvested Exercise For Vested Unvested
Name Options Options Price Options Options
---- --------- --------- -------- ---------- --------
Robert E. McCrorey, Director 5,125 None $19.25 None None
Richard N. Cox, Director 5,125 None $19.25 None None
Rodney G. Rounkles, Director 5,125 None $19.25 None None
Robert L. Lalumondier, Director 5,125 None $19.25 None None
Cecil E. Lamb, Director 5,125 None $19.25 None None
Dennis D. Hartman, Director
and President 9,737 None $19.25 None None
Paul L. Thomas, Director
and Chief Executive Officer 19,300 None $12.87 $89,359 None
All directors and executive
officers as a group
(10 persons) 69,011 None $17.47 $89,359 None
Director Emeritus Agreements
In 1997 Community Bank established a policy of entering into director
emeritus agreements with its directors pursuant to which each director
serving at that time would be entitled upon retirement to an annual
retirement benefit based on the director's years of service on the Community
Bank board of directors, payable over a 120 month period. Upon termination
following a change in control of Community Bank, each director is entitled to
a lump sum payment equal to the amount of benefits accrued as of the last day
of the calendar month preceding the effective time. The agreements also
provide for a death benefit equal to the amount that would be paid to the
director if he served continuously until age 75 and retired on that date.
The obligations are funded with life insurance having a cash value of
approximately $451,000, which is in excess of the amount of the anticipated
total liability to all active and retired directors. The merger with NASB
will constitute a change in control under the director emeritus agreements.
The following table sets forth the total payments to be made to each current
director under his director emeritus agreement, assuming consummation of the
merger occurs on December 13, 2002:
Total Director
Name Emeritus Payment
---- ----------------
Richard N. Cox $7,169
Robert L. Lalumondier $10,829
Cecil E. Lamb $34,417
Robert E. McCrorey $18,653
Rodney G. Rounkles $17,034
33
Salary Continuation Agreements
On February 21, 1995, Community Bank entered into salary continuation
agreements with Dennis D. Hartman, President, Margaret E. Teegarden, Savings
Department Manager and James V. Alderson, Loan Officer of Community Bank.
Each of these agreements entitles the executive to an annual retirement
benefit based on the position in which the executive is employed and the
executive's years of service to Community Bank, payable over a 180 month
period. In the event the executive is terminated or resigns following a
change in control of Community Bank, the executive is entitled to a lump sum
payment equal to the amount of benefits accrued at the time of termination or
resignation. The agreements also provide for a death benefit equal to the
amount that would be paid to the executive if he or she served continuously
until age 65 and retired on that date. The obligations are funded with life
insurance having a cash value of approximately $1.5 million, which is in
excess of the amount of the anticipated total liability to all of these
executives. The merger with NASB will constitute a change in control under
the salary continuation agreements. The following table sets forth the total
payments to be made to each of these executives under his or her salary
continuation agreement if he or she is terminated or resigns following the
consummation of the merger assuming such consummation occurs on December 13,
2002:
Total Salary
Name Continuation Payment
---- --------------------
Dennis D. Hartman $13,581
Margaret E. Teegarden $19,953
James V. Alderson $23,295
Change of Control Agreements
On March 28, 1998, Community Bank entered into change in control
severance agreements with Dennis D. Hartman, President and Margaret E.
Teegarden, Savings Department Manager. Each of these agreements provides
that in the event of a change in control of Community Bank, the executive
would be entitled to receive a severance payment if, within 12 months after
the closing date of change of control of Community Bank, the executive is
terminated without cause or there is a material change in the executive's
duties, compensation or certain other aspects of the executive's employment
arrangement resulting in his or her resignation. The severance payment under
both Mr. Hartman's and Ms. Teegarden's agreements would be equal to 150% of
their respective annual salaries during the preceding calendar year,
including bonuses and any other cash compensation paid during that year.
Following the consummation of the merger, assuming such consummation occurs
on December 13, 2002, if Mr. Hartman or Ms. Teegarden becomes entitled to a
severance payment under his or her severance agreement, the total amount that
the executive could receive under the agreement would be approximately
$132,072 and $77,660, respectively. To the extent that any such payment
would result in a "parachute payment" for purposes of Section 280G of the
Internal Revenue Code, the payment would be reduced by the amount necessary
to cause it not to be considered a parachute payment. The transactions
contemplated by the merger agreement would constitute a change in control of
Community Bank for purposes of these severance agreements.
Severance Plan
At its September 3, 2002 meeting, Community Bank's board adopted a
change-in-control severance plan. The plan entitles all salaried and hourly
employees, other than part-time employees or employees paid on a commission
basis, to a severance payment if the employee is terminated involuntarily,
other than for cause, (i) within six months after a change in control of
Community Bank or (ii) during the period of time commencing upon the date
when the board of directors authorized management to negotiate the terms and
conditions of a definitive agreement with the intent of effecting a change in
control and ending on the date when a change of control occurs or the
negotiations for a change in control are terminated. An employee is also
eligible to receive the severance payment if he or she voluntarily leaves
34
during either of the above periods due to certain changes in his or her
employment conditions or compensation. The plan is not applicable to
salaried employees who are covered by an agreement that explicitly addresses
compensation and benefits payable to them upon termination of their
employment. The amount of the payment under the plan would be equal to (i)
two weeks of base salary or hourly wages for employees who have been employed
by Community Bank for less than one year, (ii) one month of base salary or
four weeks of hourly wages for employees who have been employed by Community
Bank for more than one year but less than 11 years or (iii) two months of
base salary or eight weeks of hourly wages for employees who have been
employed by Community Bank for 11 or more years. If a terminated employee
elects COBRA benefits pursuant to Section 4980B of the Code, Community Bank
will reimburse the employee for payments made for such benefits to the extent
Community Bank would have paid to provide the same coverage to the employee
had he or she not been terminated. Such reimbursement shall be made for the
same period of time as that for which the employee is eligible to receive
severance payments. In consideration of receiving such severance payments
and reimbursement for COBRA benefit expenses, terminated employees must agree
not to solicit other employees to leave the employment of Community Bank and
to maintain the confidentiality of all confidential information learned
during the course of employment. The transactions contemplated by the merger
agreement would constitute a change in control under the plan.
Officer Retention Bonus Agreements
In September 2002, Community Bank entered into a bonus agreements with
Paul L. Thomas, Chief Executive Officer, Ron Hill, Chief Financial Officer,
and certain other officers of Community Bank. Each agreement provides that
if the officer continues employment with Community Bank through the effective
time of the merger, the officer would be entitled to receive a bonus
payment. If the officer is terminated for cause prior to the effective time
of the merger, the officer would not be entitled to receive any portion of
the bonus payment. If Mr. Thomas and Mr. Hill continue their employment
through the effective time of the merger, they would be entitled to a bonus
payment of $30,000 and $42,000, respectively.
Indemnification of Directors and Officers
NASB has agreed to indemnify and hold harmless each director and officer
of CBES and Community Bank for a period of six years after the merger from
liability and expenses arising out of matters existing or occurring at or
prior to the effective time of the merger, to the extent allowed under
applicable law. This indemnification would extend to liability arising out of
the transactions contemplated by the merger agreement. This includes
advancing reasonable indemnifiable expenses as they are incurred, provided
the person receiving such advances agrees to repay NASB if it is ultimately
determined that such person is not entitled to indemnification. In addition,
NASB has agreed to pay up to $50,000 of the premium required to extend CBES's
director and officer liability insurance coverage beyond the effective time
of the merger for an additional three years. This insurance policy
reimburses the officers and directors of CBS for liability and expenses
arising out of matters existing or occurring at or prior to the effective
time of the merger if they are not indemnified by CBES. In addition, the
policy reimburses CBES for any money it pays to indemnify its officers and
directors, to the extent allowed under applicable law.
DISSENTERS' APPRAISAL RIGHTS
Under Delaware law, if you do not wish to accept the cash consideration
provided for in the merger agreement, you have the right to dissent from the
merger and to have an appraisal of the fair value of your shares conducted by
the Delaware Court of Chancery. CBES stockholders electing to exercise
dissenters' appraisal rights must comply with the provisions of Section 262
of the Delaware General Corporation Law in order to perfect their rights.
Strict compliance with the statutory procedures is required. A copy of
Section 262 is attached to this proxy statement as Appendix C.
The following discussion is intended as a summary of the material
provisions of the Delaware statutory procedures required to be followed by a
CBES stockholder in order to dissent from the merger and perfect dissenters'
appraisal rights. This summary is not a complete statement of all applicable
35
requirements and is qualified in its entirety by reference to Section 262 of
the Delaware General Corporation Law, the full text of which appears in
Appendix C.
Section 262 requires that stockholders be notified at least 20 days
before the date of the meeting to vote on the merger for which dissenters'
appraisal rights will be available. A copy of Section 262 must be included
with that notice. This proxy statement constitutes CBES's notice to its
stockholders of the availability of dissenters' appraisal rights in
connection with the merger in compliance with the requirements of Section
262. If you wish to consider exercising your dissenters' appraisal rights,
you should carefully review the text of Section 262 contained in Appendix C.
If you do not timely and properly comply with the requirements of Section
262, you will lose your rights under Delaware law.
If you elect to demand appraisal of your shares of CBES common stock,
you must satisfy both of the following conditions:
1. You must deliver to CBES a written demand for appraisal of your
shares of common stock before the vote with respect to the merger
is taken. This written demand for appraisal must be in addition to
and separate from any proxy given by you or vote by you abstaining
from or voting against the merger. Voting against or failing to
vote for the merger by itself does not constitute a demand for
appraisal within the meaning of Section 262.
2. You must not vote in favor of the merger. An abstention or failure
to vote will satisfy this requirement, but a vote in favor of the
merger, by proxy or in person, will constitute a waiver of your
dissenters' appraisal rights in respect of the shares of common
stock so voted and will nullify any previously filed written demand
for appraisal.
If you fail to comply with either of these conditions and the merger
becomes effective, you will be entitled to receive the cash consideration for
your shares of common stock as provided for in the merger agreement and will
have no dissenters' appraisal rights with respect to your shares of CBES
common stock.
All demands for appraisal must reasonably inform CBES of the identity of
the stockholder and the intention of the stockholder to demand appraisal of
his or her shares of common stock. The demand should be executed by or on
behalf of the record holder of the shares of common stock and must be
delivered to the following address prior to the time that the vote on the
merger is taken at the special meeting:
Corporate Secretary
CBES Bancorp, Inc.
1001 North Jesse James Road
Excelsior Springs, Missouri 64024
To be effective, a demand for appraisal by a holder of common stock must
be made by or in the name of such registered stockholder, fully and
correctly, as the stockholder's name appears on his or her stock
certificate(s) and cannot be made by the beneficial owner if he or she does
not also hold the shares of record. In such cases, the beneficial holder must
have the registered owner submit the required demand in respect of his or her
shares.
If shares of common stock are owned of record in a fiduciary capacity,
such as by a trustee, guardian or custodian, execution of a demand for
appraisal should be made in that capacity. If the shares of common stock are
owned of record by more than one person, as in a joint tenancy or tenancy in
common, the demand should be executed by or for all joint owners. An
authorized agent, including one for two or more joint owners, may execute the
demand for appraisal for a stockholder of record; however, the agent must
identify the record owner or owners and expressly disclose the fact that, in
executing the demand, he or she is acting as agent for the record owner. A
record owner, such as a broker, who holds shares of common stock as a nominee
for others, may exercise his or her right of appraisal with respect to the
shares of common stock held for one or more beneficial owners, while not
exercising this right for other beneficial owners. In that case, the written
demand should state the number of shares of common stock as to which
36
appraisal is sought. Where no number of shares of common stock is expressly
mentioned, the demand will be presumed to cover all shares of common stock
held in the name of such record owner.
If you hold your shares of common stock in a brokerage account or in
other nominee form and you wish to exercise appraisal rights, you should
consult with your broker or other nominee to determine the appropriate
procedures for the making of a demand for appraisal by such nominee.
Similarly, if you participate in the Community Bank Employee Stock Ownership
Plan and you wish to exercise appraisal rights, you should consult with the
trustee of the Stock Ownership Plan to determine the appropriate procedures
for the making of a demand for appraisal.
Section 262 provides that within 10 days after the effective time of the
merger, NASB must give written notice that the merger has become effective to
each CBES stockholder who has properly filed a written demand for appraisal
and who did not vote in favor of the merger. Within 120 days after the
effective time of the merger, either NASB or any stockholder who has complied
with the requirements of Section 262 may file a petition in the Delaware
Court of Chancery demanding a determination of the fair value of the shares
held by all stockholders entitled to appraisal. NASB has advised us that it
does not presently intend to file such a petition in the event there are
dissenting stockholders and that it has no obligation to do so. Accordingly,
your failure to file such a petition within the period specified could
nullify your previous written demand for appraisal.
At any time within 60 days after the effective time of the merger, any
stockholder who has demanded an appraisal has the right to withdraw the
demand and to accept the cash payment specified by the merger agreement for
his or her shares of CBES common stock. If a petition for appraisal is duly
filed by a stockholder and a copy of the petition is delivered to NASB, NASB
will be obligated within 20 days after receiving service of a copy of the
petition to provide the Chancery Court with a duly verified list containing
the names and addresses of all stockholders who have demanded an appraisal of
their shares of common stock. After notice to dissenting stockholders, the
Chancery Court is empowered to conduct a hearing upon the petition, to
determine those stockholders who have complied with Section 262 and who have
become entitled to appraisal rights. The Chancery Court may require
stockholders who have demanded payment for their shares to submit their stock
certificates to the Register in Chancery for notation on the certificates of
the pendency of the appraisal proceedings. If any stockholder fails to
comply such a direction, the Court may dismiss the proceedings as to such
stockholder.
After determination of the stockholders entitled to appraisal of their
shares of CBES common stock, the Chancery Court will appraise the shares,
determining their fair value exclusive of any element of value arising from
the accomplishment or expectation of the merger, together with a fair rate of
interest. When the value is determined, the Chancery Court will direct the
payment of this fair value, with interest accrued during the pendency of the
proceeding if the Chancery Court so determines, to the stockholders entitled
to receive the same, upon surrender by such holders of the certificates
representing such shares.
In determining fair value, the Chancery Court is required to take into
account all relevant factors. You should be aware that the fair value of the
shares of common stock as determined under Section 262 could be more, the
same, or less than the value that you are entitled to receive pursuant to the
merger agreement.
Costs of the appraisal proceeding may be imposed upon NASB and the
stockholders participating in the appraisal proceeding by the Chancery Court,
as the Chancery Court deems equitable in the circumstances. Upon the
application of a stockholder, the Chancery Court may order all or a portion
of the expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorneys' fees and the
fees and expenses of experts, to be charged pro rata against the value of all
shares of common stock entitled to appraisal.
After the effective time of the merger, any stockholder who demands
appraisal rights will not be entitled to vote shares of common stock subject
to such demand for any purpose or to receive payments of dividends or any
other distribution with respect to such shares of common stock, other than
with respect to payment as of a record date prior to the effective time of
the merger; however, if no petition for appraisal is filed within 120 days
after the effective time of the merger, or if such stockholder delivers a
written
37
withdrawal of his or her demand for appraisal and an acceptance of the merger
within 60 days after the effective time of the merger, then the right of such
stockholder to appraisal will cease and such stockholder will be entitled to
receive the cash payment for shares of his or her common stock pursuant to
the merger agreement. Any withdrawal of a demand for appraisal made more than
60 days after the effective time of the merger may only be made with the
written approval of NASB and must, to be effective, be made within 120 days
after the effective time of the merger.
The requirements of Section 262 are technical and complex. CBES
stockholders who may wish to dissent from the merger and pursue appraisal
rights should consult their legal advisers.
STOCKHOLDER PROPOSALS
CBES will hold an annual meeting of stockholders only if the merger is
not approved at the special meeting to which this proxy statement pertains.
If an annual meeting is held, any CBES stockholder who intends to present a
proposal at the annual meeting must deliver the proposal to CBES at 1001
North Jesse James Road, Excelsior Springs, Missouri 64024, Attention:
Corporate Secretary, by the applicable deadline below:
o If the stockholder proposal is intended for inclusion in CBES's
proxy materials for that meeting pursuant to Rule 14a-8 under the
Securities Exchange Act of 1934, CBES must receive the proposal a
reasonable period of time before CBES begins to print and mail its
proxy materials. Such proposal must also comply with the other
requirements of the proxy solicitation rules of the SEC.
o CBES's bylaws provide that in order for a stockholder to make
nominations for the election of directors or proposals for business
to be brought before the annual meeting, a stockholder generally
must deliver notice of such nominations and/or proposals to the
Secretary not less than 90 days prior to the date of the annual
meeting, subject to specified exceptions. The notice also must
include the information specified in the bylaws.
WHERE YOU CAN FIND MORE INFORMATION
CBES is subject to the informational requirements of the Securities
Exchange Act of 1934 and files annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and copy any
reports, statements or other information that CBES files, including CBES's
Form 10-KSB for the fiscal year ended June 30, 2002, at the SEC's public
reference room located at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the regional offices of the Commission located at 175 W.
Jackson Boulevard, Suite 1800, Chicago, Illinois 60604; and The Woolworth
Building, 2333 Broadway, New York, New York 10279. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the public
reference rooms. The public filings of CBES also are available to the public
from commercial document retrieval services and at the internet website
maintained by the SEC at "http://www.sec.gov."
CBES common stock is traded on the NASDAQ National Market SM under the
symbol "CBES." Documents filed by CBES can be inspected at the office of the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
- -------------------------------------------------------------------------------
You should rely only on the information contained in this document to
vote your shares at the meeting. We have not authorized anyone to provide
you with information that is different from what is contained in this
document. This document is dated ______________, 2002. You should not assume
that the information contained in this document is accurate as of any date
other than that date.
- -------------------------------------------------------------------------------
38
APPENDIX A--AGREEMENT AND PLAN OF MERGER
A-1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
----------------------------
DATED AS OF SEPTEMBER 5, 2002
BY AND AMONG
NASB FINANCIAL, INC.,
NASB ACQUISITION SUBSIDIARY, INC.,
AND
CBES BANCORP, INC.
A-2
Table of Contents
-----------------
ARTICLE I - The Merger.....................................................A-6
Section 1.1. Structure of the Merger...................................A-6
Section 1.2. Effect on Shares of CBES Common Stock.....................A-6
Section 1.3. Exchange Procedures.......................................A-7
Section 1.4. Stock Options; Restricted Stock.......................... A-9
Section 1.5. Directors and Officers of CBES and Community Bank at
Effective Date............................................A-10
Section 1.6. Articles of Incorporation and Bylaws of the Surviving
Corporation...............................................A-10
Section 1.7. Dissenters' Rights.......................................A-10
ARTICLE II - Representations and Warranties...............................A-10
Section 2.1. Disclosure Letters.......................................A-10
Section 2.2. Standards................................................A-11
Section 2.3. Representations and Warranties of CBES...................A-11
Section 2.4. Representations and Warranties of NASB Holding and
Acquisition Sub...........................................A-26
ARTICLE III - Actions and Conduct Pending the Merger......................A-31
Section 3.1. Regulatory Application...................................A-31
Section 3.2. Conduct of CBES's Business Prior to the Effective Date...A-31
Section 3.3. Forbearance by CBES......................................A-34
Section 3.4. Conduct of NASB Holding's and Acquisition Sub's
Businesses Prior to the Effective Date....................A-38
ARTICLE IV - Covenants....................................................A-38
Section 4.1. Acquisition Proposals....................................A-38
Section 4.2. Certain Policies and Actions of CBES.....................A-40
Section 4.3. Access and Information...................................A-40
Section 4.4. Certain Filings, Consents and Arrangements...............A-41
Section 4.5. Anti-takeover Provisions.................................A-41
Section 4.6. Additional Actions.......................................A-42
Section 4.7. Publicity................................................A-42
Section 4.8. Stockholders Meeting.....................................A-42
Section 4.9. Proxy Statement..........................................A-42
Section 4.10.Notification of Certain Matters..........................A-43
Section 4.11.Employees................................................A-43
Section 4.12.Indemnification..........................................A-45
Section 4.13.Phase I and Phase II Environmental Assessments of
Community Bank's Primary Banking Facility................A-47
A-3
ARTICLE V - Conditions to Consummation....................................A-47
Section 5.1. Conditions to Each Party's Obligations...................A-47
Section 5.2. Conditions to the Obligations of NASB Holding............A-48
Section 5.3. Conditions to the Obligations of CBES....................A-48
ARTICLE VI - Data Processing..............................................A-49
Section 6.1. Sample Data..............................................A-49
Section 6.2. Information for Check Ordering...........................A-49
Section 6.3. Installation of Data Circuits............................A-50
ARTICLE VII - Termination.................................................A-50
Section 7.1. Termination..............................................A-50
Section 7.2. Termination Fee..........................................A-51
Section 7.3. Effect of Termination....................................A-51
ARTICLE VIII - Closing and Effective Date.................................A-52
Section 8.1. Effective Date...........................................A-52
Section 8.2. Deliveries at Closing....................................A-52
ARTICLE IX - Certain Other Matters........................................A-52
Section 9.1. Certain Definitions; Interpretation......................A-52
Section 9.2. Survival.................................................A-53
Section 9.3. Waiver; Amendment........................................A-53
Section 9.4. Counterparts.............................................A-53
Section 9.5. Governing Law............................................A-53
Section 9.6. Expenses.................................................A-54
Section 9.7. Notices..................................................A-54
Section 9.8. Entire Agreement; etc....................................A-54
Section 9.9. Specific Performance.....................................A-55
Section 9.10.Successors and Assigns; Assignment.......................A-55
Exhibit A Acquisition Sub Articles of Incorporation
A-4
Agreement and Plan of Merger
----------------------------
This is an Agreement and Plan of Merger, dated as of the 5th day of
September, 2002 ("Agreement"), by and among NASB Financial, Inc., a Missouri
corporation ("NASB Holding"), NASB Acquisition Subsidiary, Inc., a Missouri
corporation ("Acquisition Sub"), and CBES Bancorp, Inc., a Delaware
corporation ("CBES")
Recitals
--------
A. The Board of Directors of each of CBES, NASB Holding, and Acquisition
Sub (i) has determined that this Agreement and the business combination and
related transactions contemplated hereby are in the best interests of NASB
Holding and CBES, respectively, and in the best interests of their respective
stockholders and (ii) has approved, at meetings of each of such Boards of
Directors, this Agreement.
B. CBES is the beneficial owner of 100 shares of the outstanding capital
stock of Community Bank of Excelsior Springs, a Savings Bank, a federally
chartered savings bank with its principal office in Excelsior Springs,
Missouri ("Community Bank") which shares represent 100% of the outstanding
shares of capital stock of Community Bank.
C. Community Bank is the beneficial owner of 1,000 shares of the
outstanding capital stock of CBES Service Corporation ("Service
Corporation"), a Missouri corporation, which shares represent 100% of the
outstanding shares of capital stock of Service Corporation.
D. NASB Holding is the beneficial owner of 2,375,112 shares of the
outstanding common stock of North American Savings Bank, F.S.B., a federally
chartered savings bank with its principal office in Grandview, Missouri
("NASB Bank"), which shares represent 100% of the outstanding shares of
capital stock of NASB Bank.
E. NASB Holding is the beneficial owner of 1,000 shares of the
outstanding common stock of Acquisition Sub, which shares represent 100% of the
outstanding shares of capital stock of Acquisition Sub.
F. NASB Holding, CBES and Acquisition Sub desire to make certain
representations, warranties and agreements in connection with the business
combination and related transactions provided for herein and to prescribe
various conditions to such transactions.
ACCORDINGLY, in consideration of the promises, the mutual covenants
and agreements set forth herein and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
A-5
Agreement
---------
ARTICLE I
The Merger
----------
Section 1.1. Structure of the Merger. On the Effective Date (as defined in
Section 8.1 below), Acquisition Sub shall merge with and into CBES (the
"Merger"), the separate corporate existence of Acquisition Sub shall cease and
CBES shall survive and continue to as a corporation, pursuant to the provisions
of, and with the effect provided in the Delaware General Corporate Law (the
"DGCL") and The General and Business Corporation Law of Missouri (the "GBCLM").
The name of CBES, as the surviving corporation in the Merger, shall be CBES
Bancorp, Inc. From and after the Effective Date, CBES shall possess all of the
properties and rights and be subject to all of the liabilities and obligations
of CBES, all as more fully described in the DGCL and the GBCLM. NASB Holding may
at any time prior to the Effective Date change the method of effecting the
combination with CBES (including the provisions of this Article I) if and to the
extent it deems such change necessary, appropriate or desirable; provided,
however, that no such change shall (i) alter or change the amount or kind of
consideration to be issued pursuant to the Merger to holders of CBES Common
Stock (as defined in Section 1.2(a) hereof) as provided for in this Agreement or
(ii) materially impede or delay consummation of the transactions contemplated by
this Agreement.
Section 1.2. Effect on Shares of CBES Common Stock.
(a) On the Effective Date of the Merger, by virtue of the Merger,
automatically and without any action on the part of the holder thereof, each
share of common stock, par value .01 per share of CBES ("CBES Common Stock"),
that is issued and outstanding at the Effective Date, other than Excluded
Shares (as defined below) and including CBES Restricted Stock held pursuant
to the CBES Restricted Stock Plan (as defined in Section 1.4(b)), shall be
cancelled and cease to be outstanding and shall be converted into and become
the right to receive a cash payment equal to $17.50; provided, however, that
such per share amount shall be reduced if the Adjusted Stockholders' Equity
(as defined in Section 3.2(g) hereof) of CBES as of the close of business on
the last business day next prior to the Effective Date shall be equal or
greater than $13,500,000 and less than $13,900,000, then the cash payment
shall be equal to $17.05 per share; and provided, further that if the
Adjusted Stockholders' Equity is less than $13,500,000, NASB Holding shall
have the right to either (i) terminate this Agreement pursuant to Section
7.1(g) hereof or (ii) consummate the Merger and provide the holders of CBES
Common Stock with a cash payment of $17.05 per share (the "Merger
Consideration"). After the Effective Date, no dividends or other
distributions made or payable by CBES shall accrued for the benefit of or be
payable with respect to, any CBES Common Stock.
(b) "Excluded Shares" shall consist of (i) shares of CBES Common Stock as
to which the respective holders thereof have properly demanded appraisal rights
and have not failed to perfect, have not effectively withdrawn and have not
lost their
A-6
rights to appraisal and payment pursuant to any applicable law providing for
dissenters' or appraisal rights (the "Dissenters' Shares") and (ii) shares
held by CBES as treasury stock. After the Effective Date, no dividends or
other distributions made or payable by CBES shall accrue for the benefit of
or be payable with respect to, any Dissenters' Shares, and no interest shall
accrue with respect to payments due to holders of Dissenters' Shares, unless
such accruals are required by the DGCL or the GBCLM.
(c) On the Effective Date, each Excluded Share, other than Dissenters'
Shares, shall be canceled and retired and shall cease to exist, and no
exchange or payment shall be made with respect thereto. In addition, no
Dissenters' Shares shall be converted into the Merger Consideration pursuant
to this Section 1.2, but instead shall be treated in accordance with the
procedures set forth in Section 1.7 of this Agreement.
Section 1.3. Exchange Procedures.
(a) NASB Holding shall mail appropriate transmittal materials ("Letter of
Transmittal") as soon as reasonably practicable after the Effective Date, and
in no event later than five (5) business days thereafter, to each holder of
record of CBES Common Stock as of the Effective Date. A Letter of
Transmittal will be deemed properly completed only if accompanied by
certificates representing all shares of CBES Common Stock to be converted
thereby, except as provided in Section 1.3(h) below.
(b) At and after the Effective Date, each certificate ("CBES Certificate")
representing shares of CBES Common Stock immediately prior to the Effective
Date (except as specifically set forth in Section 1.2) shall represent only
the right to receive cash in an amount equal to the product of the Merger
Consideration multiplied by the number of shares of CBES Common Stock
previously represented by the CBES Certificate.
(c) Prior to the Effective Date, NASB Holding may select a bank or trust
company acceptable to CBES, which shall act as exchange agent (the "Exchange
Agent") for the benefit of the holders of shares of CBES Common Stock, for
exchange in accordance with this Section 1.3. If NASB Holding elects not to
select such a bank or trust company as the Exchange Agent, then NASB Bank
shall be deemed to be the Exchange Agent for all purposes under this
Agreement. At the Effective Date, NASB Holding shall transfer to the
Exchange Agent, or set aside and hold in trust for the benefit of the
stockholders of CBES if NASB Bank is the Exchange Agent, sufficient funds to
pay the Merger Consideration to all the stockholders of CBES.
(d) The Letter of Transmittal (which shall be subject to the reasonable
approval of CBES and NASB Holding) shall (i) specify that delivery shall be
effected, and risk of loss and title to the CBES Certificates shall pass,
only upon delivery of the CBES Certificates to the Exchange Agent, (ii)
specify that the shares of CBES Common Stock have been canceled, that the
consideration to be paid for such shares shall be paid only upon delivery and
surrender of such CBES Certificates (except as provided in Section 1.3(h)
below), and that neither dividends nor interest shall accrue on the cash
consideration payable after the Effective Date of the Merger, (iii) be in a
form and
A-7
contain any other provisions as NASB Holding may reasonably determine and
(iv) include instructions for use in effecting the surrender of the CBES
Certificates in exchange for the Merger Consideration. Upon the proper
surrender of the CBES Certificates to the Exchange Agent, together with a
properly completed and duly executed Letter of Transmittal, the holder of
such CBES Certificates shall be entitled to receive in exchange therefor, by
transfer of immediately available funds to such account at such financial
institution as the holder shall direct, or, at the holder's option, by check
drawn on a commercial bank or a savings bank having an office in the Kansas
City metropolitan area, the amount of cash that such CBES Certificates
represent the right to receive pursuant to Section 1.3(b). CBES Certificates
so surrendered shall forthwith be canceled. As soon as practicable, but no
later than the business day next following receipt of the properly completed
Letter of Transmittal and any necessary accompanying documentation, the
Exchange Agent shall distribute cash as provided herein. The Exchange Agent
shall not be entitled to vote or exercise any rights of ownership with
respect to the shares of CBES Common Stock held by it from time to time
hereunder, except that it shall receive and hold all dividends or other
distributions paid or distributed with respect to such shares for the account
of the persons entitled thereto. If there is a transfer of ownership of any
shares of CBES Common Stock not registered in the transfer records of CBES,
the Merger Consideration shall be issued to the transferee thereof if the
CBES Certificates representing such CBES Common Stock are presented to the
Exchange Agent, accompanied by all documents required, in the reasonable
judgment of NASB Holding and the Exchange Agent, (x) to evidence and effect
such transfer and (y) to evidence that any applicable stock transfer taxes
have been paid.
(e) From and after the Effective Date, there shall be no transfers on the
stock transfer records of CBES of any shares of CBES Common Stock. If, after
the Effective Date, CBES Certificates are presented to NASB Holding, they
shall be exchanged for the Merger Consideration deliverable in respect
thereof pursuant to this Agreement in accordance with the procedures set
forth in this Section 1.3.
(f) If NASB Bank is not acting as the Exchange Agent, any portion of the
aggregate amount of cash for the Merger Consideration, to be paid pursuant to
Section 1.2, or any proceeds from any investments thereof that remain
unclaimed by the stockholders of CBES for twelve months after the Effective
Date shall be repaid by the Exchange Agent to NASB Holding upon the written
request of NASB Holding. After such request is made, any stockholders of
CBES who have not theretofore complied with this Section 1.3 shall look only
to NASB Holding for the Merger Consideration deliverable in respect of each
share of CBES Common Stock such stockholder holds, as determined pursuant to
Section 1.2 of this Agreement, without any interest thereon. If outstanding
CBES Certificates are not surrendered prior to the date on which such
payments would otherwise escheat to or become the property of any
governmental unit or agency, the unclaimed items shall, to the extent
permitted by any abandoned property, escheat or other applicable laws, become
the property of NASB Holding (and, to the extent not in its possession, shall
be paid over to it), free and clear of all claims or interest of any person
previously entitled to such claims. Notwithstanding the foregoing, neither
the Exchange Agent nor any party to this Agreement (or any affiliate thereof)
shall be
A-8
liable to any former holder of CBES Common Stock for any amount delivered to
a public official pursuant to applicable abandoned property, escheat or
similar laws.
(g) NASB Holding and the Exchange Agent shall be entitled to rely upon
CBES's stock transfer books to establish the identity of those persons
entitled to receive the Merger Consideration, which books shall be conclusive
with respect thereto. In the event of a dispute with respect to ownership of
stock represented by any CBES Certificate, NASB Holding and the Exchange
Agent shall be entitled (i) deposit any Merger Consideration, represented
thereby in escrow with an independent third party and thereafter be relieved
with respect to any claims thereto, or (ii) to file a suit in interpleader
against the competing parties, deposit the Merger Consideration due with
respect to the disputed CBES Certificate with a court of competent
jurisdiction, and thereafter be discharged from any responsibility to the
competing parties.
(h) If any CBES Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such CBES
Certificate to be lost, stolen or destroyed and, if required by the Exchange
Agent, the posting by such person of a bond in such amount as the Exchange
Agent may direct as indemnity against any claim that may be made against it
with respect to such CBES Certificate, the Exchange Agent shall pay in
exchange for such lost, stolen or destroyed CBES Certificate the Merger
Consideration deliverable in respect thereof pursuant to Section 1.2.
Section 1.4. Stock Options; Restricted Stock.
(a) At the Effective Date, each option to acquire shares of CBES Common
Stock (a "CBES Option"), whether or not then vested, granted pursuant to the
CBES's 1997 Stock Option and Incentive Plan (the "CBES Option Plan") that is
then outstanding and unexercised shall be deemed vested and exercisable,
whether or not then exercisable, and shall be canceled and terminated and in
lieu thereof the holders of such options shall be paid by CBES in cash (from
funds provided by NASB Holding) in an amount equal to the product of (i) the
number of shares of CBES Common Stock subject to such unexercised option at
the Effective Date and (ii) the amount by which the Merger Consideration per
share exceeds the exercise price per share of such option net of any cash
which must be withheld under federal and state income and employment tax
requirements. In the event that the exercise price of a CBES Option is
greater than the Merger Consideration, then at the Effective Date such CBES
Option shall be canceled without any payment made in exchange therefore. At
the Effective Date, the CBES Option Plan shall be deemed terminated.
(b) Inasmuch as at the Effective Date, all shares of restricted CBES
Common Stock (the "CBES Restricted Stock"), held under the CBES Recognition and
Retention Plan (the "CBES Restricted Stock Plan") are to be canceled, and in
respect of such shares to be paid the Merger Consideration in respect of such
shares to be paid to the holders thereof. At the Effective Date, the CBES
Restricted Stock Plan shall be deemed terminated.
A-9
Section 1.5. Directors and Officers of CBES and Community Bank at Effective
Date. The directors and officers of CBES, the directors of Community Bank and
designated officers of Community Bank shall resign effective as of the Effective
Date. Immediately thereafter, NASB Holding shall appoint new officers and
directors to CBES, each to hold office in accordance with the articles of
incorporation and bylaws of CBES until their respective successors are duly
elected or appointed and qualified. The new officers and directors of CBES shall
then appoint new officers and directors of Community Bank, each to hold office
in accordance with the articles of incorporation and bylaws of Community Bank
until their respective successors are duly elected or appointed and qualified.
Section 1.6. Articles of Incorporation and Bylaws of the Surviving
Corporation. The articles of incorporation (attached hereto as Exhibit A)
and bylaws of Acquisition Sub in effect immediately prior to the Effective
Date shall be the articles of incorporation and bylaws of the surviving
corporation from and after the Effective Date until amended as provided by
law.
Section 1.7. Dissenters' Rights.
(a) NASB Holding shall pay for any Dissenters' Shares in accordance with
applicable law providing for dissenters' or appraisal rights, and the holders
thereof shall not be entitled to receive any Merger Consideration; provided,
that if appraisal rights under applicable law with respect to any Dissenters'
Shares shall have been effectively withdrawn or lost, such shares will
thereupon cease to be treated as Dissenters' Shares and shall be converted
into the right to receive cash in an amount equal to the Merger Consideration
multiplied by the number of shares of CBES Common Stock previously
represented thereby.
(b) CBES shall (i) give NASB Holding prompt written notice of the receipt
of any notice from a stockholder purporting to exercise any dissenters' rights,
(ii) not settle nor offer to settle any demand for payment without the prior
written consent of NASB Holding and (iii) not waive any failure to comply
strictly with any procedural requirements of applicable corporate statutes.
ARTICLE II
Representations and Warranties
------------------------------
Section 2.1. Disclosure Letters. Prior to the execution and delivery of
this Agreement, CBES and NASB Holding each shall have delivered to the other
a letter (each, its "Disclosure Letter") setting forth, among other things,
facts, circumstances and events the disclosure of which is required or
appropriate in relation to any or all of their respective representations and
warranties (and making specific reference to the section or subsection, as
the case may be, of this Agreement to which they relate); provided, that (a)
no such fact, circumstance or event is required to be set forth in the
Disclosure Letter as an exception to a representation or warranty if its
absence is not reasonably likely to result in the related representation or
warranty being deemed untrue or incorrect under
A-10
the standards established by Section 2.2 and (b) the mere inclusion of a
fact, circumstance or event in a Disclosure Letter shall not be deemed an
admission by a party that such item represents a material exception or that
such item is reasonably likely to result in a Material Adverse Effect (as
defined in Section 2.2(b)).
Section 2.2. Standards.
(a) No representation or warranty of CBES Bank contained in Section 2.3,
and no representation or warranty of NASB Holding or Acquisition Sub contained
in Section 2.4, shall be deemed untrue or incorrect, and no party hereto shall
be deemed to have breached a representation or warranty, on account of the
existence of any fact, circumstance or event unless, as a direct or indirect
consequence of such fact, circumstance or event, individually or taken
together with all other facts, circumstances or events inconsistent with any
paragraph of Sections 2.3 or 2.4, as applicable, there is reasonably likely
to exist a Material Adverse Effect. CBES's representations, warranties and
covenants contained in this Agreement shall not be deemed to be untrue or
breached as a result of effects arising solely from actions taken pursuant to
this Agreement or in compliance with a written request of NASB Holding.
(b) As used in this Agreement, the term "Material Adverse Effect" means
an effect which is material and adverse to the business, financial condition or
results of operations of NASB Holding, Acquisition Sub, CBES, as the context
may dictate, and its Subsidiaries (as defined herein) taken as a whole;
provided, however, that any such effect resulting from any (i) changes in
laws, rules or regulations or GAAP or regulatory accounting requirements or
interpretations thereof that apply to either NASB Holding, Acquisition Sub,
and CBES, as the case may be, or to similarly situated financial and/or
depository institutions, (ii) changes in economic conditions affecting
financial institutions generally, including but not limited to, changes in
the general level of market interest rates, (iii) fees associated with the
transactions contemplated by this Agreement or (iv) changes to this Agreement
requested by NASB Holding shall not be considered in determining if a
Material Adverse Effect has occurred.
(c) For purposes of this Agreement, "knowledge" shall mean, with respect
to a party hereto, best knowledge after a due inquiry of any of the CEO,
Chairman, Vice Chairman, President or CFO of that party.
Section 2.3. Representations and Warranties of CBES. Subject to Sections
2.1 and 2.2, CBES represents and warrants to NASB Holding and Acquisition Sub
that, except as disclosed in CBES's Disclosure Letter:
(a) Organization.
(i) CBES is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and is registered as a
savings and loan holding company under the HOLA. Community Bank is a stock
savings association duly organized, validly existing and in good standing
under the laws of the United States of America and is a wholly-owned
Subsidiary (as defined below) of CBES.
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Each Subsidiary of CBES other than Community Bank is a corporation, limited
liability company or partnership duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or
organization. Each of CBES and its Subsidiaries has all requisite corporate
power and authority to own, lease and operate its properties and to carry on
its business as now being conducted. As used in this Agreement, unless the
context requires otherwise, the term "Subsidiary" when used with respect to
any party means any corporation or other legal entity, which is consolidated
with such party for financial reporting purposes or which is controlled,
directly or indirectly, by such party through a sufficient number of shares
or other evidence of ownership of such corporation or other organization to
have the power to elect a majority of the board of directors or otherwise to
control such corporation or other organization.
(ii) CBES and each of its Subsidiaries has the requisite corporate
power and authority and is duly qualified to do business and is in good standing
in each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary.
(iii) CBES's Disclosure Letter sets forth all of CBES's Subsidiaries
and all entities (whether corporations, partnerships or similar organizations),
including the corresponding percentage ownership, in which CBES owns,
directly or indirectly, 5% or more of the ownership interests as of the date
of this Agreement and indicates for each of CBES's Subsidiaries, as of such
date, its jurisdiction of organization and the jurisdiction(s) wherein it is
qualified to do business. All such Subsidiaries and ownership interests are
in compliance with all applicable laws, rules and regulations relating to
direct investments in equity ownership interests. CBES owns, either directly
or indirectly, all of the outstanding capital stock of each of its
Subsidiaries. No Subsidiary of CBES other than Community Bank is an "insured
depository institution" as defined in the Federal Deposit Insurance Act, as
amended ("FDIA"), and the applicable regulations thereunder. All of the
shares of capital stock of CBES's Subsidiaries are fully paid, nonassessable
and not subject to any preemptive rights and are owned by CBES or a
Subsidiary of CBES free and clear of any claims, liens, encumbrances or
restrictions (other than those imposed by applicable federal and state
securities laws), and there are no agreements or understandings with respect
to the voting or disposition of any such shares.
(iv) The deposits of Community Bank are insured by the Savings
Association Insurance Fund of the Federal Deposit Insurance Corporation ("FDIC")
to the extent provided in the FDIA.
(b) Capital Structure.
(i) The authorized capital stock of CBES consists of 4,000,000
shares of CBES Common Stock, par value $.01 per share, and 500,000 shares of
preferred stock, par value $.01 per share. As of the date of this Agreement (A)
1,031,851 shares of CBES Common Stock had been issued, of which 875,805
shares of CBES Common Stock were issued and outstanding, (B) no shares of
CBES preferred stock were issued and outstanding, (C) no shares of CBES
Common Stock were reserved for
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issuance, except that 102,495 shares of CBES Common Stock were reserved for
issuance pursuant to the CBES Option Plan and 40,998 shares of CBES Common
Stock were reserved for issuance pursuant to the CBES Restricted Stock Plan,
(D) no shares of CBES preferred stock were held by CBES and (E) 156,046
shares of CBES Common Stock were held by CBES in its treasury or by its
Subsidiaries. The authorized capital stock of Community Bank consists of
4,000,000 shares of common stock, par value $.01 per share (the "Community
Bank Common Stock"), and 500,000 shares of preferred stock. As of the date
of this Agreement, 100 shares of such common stock were outstanding, no
shares of such preferred stock were outstanding and all outstanding shares of
such common stock were, and as of the Effective Date will be, owned both
legally and beneficially by CBES. The authorized capital stock of Service
Corporation consists of 30,000 shares of common stock, par value $1.00 per
share and no shares of preferred stock. As of the date of this Agreement,
1,000 shares of such common stock were outstanding and all outstanding shares
of such common stock were, and as of the Effective Date will be, owned both
legally and beneficially by Community Bank. All outstanding shares of
capital stock of CBES, Community Bank and Service Corporation are duly
authorized and validly issued, fully paid and nonassessable and not subject
to any preemptive rights and, with respect to shares of CBES held by CBES in
its treasury or by its Subsidiaries and shares of Community Bank and Service
Corporation, are free and clear of all liens, claims, encumbrances or
restrictions (other than those imposed by applicable federal and state
securities laws) and there are no agreements or understandings with respect
to the voting or disposition of any such shares. CBES's Disclosure Letter
sets forth a complete and accurate list of all outstanding options to
purchase CBES Common Stock that have been granted pursuant to the CBES Option
Plan, including the names of the optionees, dates of grant, exercise prices,
dates of vesting, dates of termination and shares subject to each grant.
(ii) No bonds, debentures, notes or other indebtedness of CBES having
the right to vote on any matters on which stockholders may vote are issued or
outstanding.
(iii) As of the date of this Agreement, except for options granted
pursuant to the CBES Option Plan, neither CBES nor any of its Subsidiaries has
or is bound by any outstanding subscriptions, options, warrants, calls, rights,
convertible securities, commitments or agreements of any character obligating
CBES or any of its Subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, any additional shares of capital stock of CBES or
any of its Subsidiaries or obligating CBES or any of its Subsidiaries to
grant, extend or enter into any such option, warrant, call, right,
convertible security, commitment or agreement. As of the date hereof, there
are no outstanding contractual obligations of CBES or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any shares of capital stock of
CBES or any of its Subsidiaries.
(c) Authority. CBES has all requisite corporate power and authority to
enter into this Agreement, and, subject to approval of this Agreement by the
requisite vote of CBES's stockholders and receipt of all required regulatory
or governmental approvals, to consummate the transactions contemplated
hereby. The execution and
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delivery of this Agreement and, subject to the approval of this Agreement by
CBES's stockholders, the consummation of the transactions contemplated
hereby, have been duly authorized by all necessary corporate actions on the
part of CBES. This Agreement has been duly and validly executed and
delivered by CBES and constitutes a valid and binding obligation of CBES,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies
generally and subject, as to enforceability, to general principles of equity,
whether applied in a court of law or a court of equity.
(d) Stockholder Approval; Fairness Opinion. The affirmative vote of a
majority of the outstanding shares of CBES Common Stock entitled to vote on
this Agreement is the only vote of the stockholders of CBES required for
approval of this Agreement and the consummation of the Merger and the related
transactions contemplated hereby (the "Stockholders Approvals"). CBES has
received the written opinion of Hovde Financial LLC to the effect that, as of
the date hereof, the Merger Consideration to be received by CBES's
stockholders is fair, from a financial point of view, to such stockholders.
(e) No Violations; Consents. The execution, delivery and performance of
this Agreement by CBES does not, and the consummation of the transactions
contemplated hereby will not, constitute (i) assuming receipt of all
Requisite Regulatory Approvals (as defined in Section 2.4(d)) and requisite
stockholder approvals, a breach or violation of, or a default under, any law,
rule or regulation or any judgment, decree, order, governmental permit or
license to which CBES or any of its Subsidiaries (or any of their respective
properties) is subject, (ii) a breach or violation of, or a default under,
the certificate of incorporation or bylaws of CBES or the similar
organizational documents of any of its Subsidiaries or (iii) a breach or
violation of, or a default under (or an event which, with due notice or lapse
of time or both, would constitute a default under), or result in the
termination of, accelerate the performance required by, or result in the
creation of any lien, pledge, security interest, charge or other encumbrance
upon any of the properties or assets of CBES or any of its Subsidiaries
under, any of the terms, conditions or provisions of any note, bond,
indenture, deed of trust, loan agreement or other agreement, instrument or
obligation to which CBES or any of its Subsidiaries is a party, or to which
any of their respective properties or assets may be subject. The
consummation by CBES of the transactions contemplated hereby will not require
any approval, consent or waiver under any such law, rule, regulation,
judgment, decree, order, governmental permit or license or the approval,
consent or waiver of any other party to any such agreement, or instrument,
other than (x) the approval of the holders of a majority of the outstanding
shares of CBES Common Stock entitled to vote thereon, (y) the consent of the
Office of Thrift Supervision ("OTS") and (z) such other required regulatory
consents. As of the date hereof, the executive officers of CBES know of no
reason pertaining to CBES why any of the approvals referred to in this
Section 2.3(e) should not be obtained without the imposition of any material
condition or restriction described in the last sentence of Section 5.1(b).
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(f) Reports and Financial Statements.
(i) CBES and each of its Subsidiaries have each timely filed all
material reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file with
(a) the FDIC, (b) the OTS, (c) the National Association of Securities Dealers,
Inc. ("NASD"), (d) the Missouri Department of Insurance and (e) the Securities
and Exchange Commission ("SEC") (collectively, "CBES's Reports") and, to CBES's
knowledge have paid all fees and assessments due and payable in connection
therewith. As of their respective dates, none of CBES's Reports contained
any untrue statement of material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. All of CBES's Reports filed with the SEC complied in all
material respects with the applicable requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the rules and regulations
of the SEC promulgated thereunder.
(ii) Each of the financial statements of CBES included in CBES's
Reports complied as to form, as of their respective dates of filing with the
SEC, in all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto and have
been prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto or, in the
case of the unaudited financial statements, as permitted by the SEC). Each
of the consolidated statements of condition contained or incorporated by
reference in CBES's Reports (including in each case any related notes and
schedules) and each of the consolidated statements of operations,
consolidated statements of cash flows and consolidated statements of changes
in stockholders' equity, contained or incorporated by reference in CBES's
Reports (including in each case any related notes and schedules) fairly
presented (a) the financial position of the entity or entities to which it
relates as of its date and (b) the results of operations, stockholders'
equity and cash flows, as the case may be, of the entity or entities to which
it relates for the periods set forth therein (subject, in the case of
unaudited interim statements, to normal year-end adjustments that are not
material in amount or effect).
(g) Absence of Certain Changes or Events. Except as disclosed in CBES's
Reports filed on or prior to the date of this Agreement, since June 30, 2001,
(i) CBES and its Subsidiaries have not incurred any liability, except in the
ordinary course of their business consistent with past practice and except
for the engagement letter agreements with Hovde Financial LLC set forth in
CBES's Disclosure Letter, (ii) CBES and its Subsidiaries have conducted their
respective businesses only in the ordinary and usual course of such
businesses consistent with their past practices and (iii) there has not been
any other event, change or occurrence or continuance of any circumstance
which has had, or is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect with respect to CBES and its
Subsidiaries. To the knowledge of CBES, there are no impending termination,
expiration, or loss of contracts, franchises, licenses, permits or other
assets that, individually or in the aggregate, are reasonably likely to have
Material Adverse Effect on CBES.
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(h) Absence of Claims. No litigation, controversy, claim, action,
suit or other legal administrative or arbitration proceeding before any
court, governmental agency or arbitrator is pending against CBES or any of
its Subsidiaries and to the knowledge of CBES no such litigation,
controversy, claim, action, suit or proceeding has been threatened or
asserted in either case which is reasonably likely to have a Material Adverse
Effect with respect to CBES or its Subsidiaries, or the transactions
contemplated by this Agreement, or upon the ability of CBES to perform its
obligations under this Agreement. To the knowledge of CBES, there are no
investigations, reviews or inquiries by any court or governmental agency
pending or threatened against CBES or any of its Subsidiaries.
(i) Absence of Regulatory Actions. Except as set forth in CBES's
Disclosure Letter, neither CBES nor any of its Subsidiaries has been a party to
any cease and desist order, written agreement or memorandum of understanding
with, or any commitment letter or similar undertaking to, or has been subject
to any action, proceeding, order or directive by, or has been a recipient of
any extraordinary supervisory letter from any federal or state governmental
authority charged with the supervision or regulation of depository
institutions or depository institution holding companies or engaged in the
insurance of bank and/or savings and loan deposits (singularly a "Government
Regulatory Agency;" collectively "Government Regulatory Agencies"), or has
adopted any board resolutions at the request of any Government Regulatory
Agency, or has been advised by any Government Regulatory Agency that it is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such action, proceeding, order, directive, written
agreement, memorandum of understanding, extraordinary supervisory letter,
commitment letter, board resolutions or similar undertaking.
(j) Taxes. All federal, state, local and foreign tax returns required to
be filed by or on behalf of CBES or any of its Subsidiaries have been timely
filed or requests for extensions have been timely filed and any such
extension has been a permitted automatic extension or has been granted and
(in either case) has not have expired, and all such filed returns are
complete and accurate in all material respects. All taxes shown on such
returns, all taxes required to be shown on returns for which extensions have
been granted and all other taxes required to be paid by CBES or any of its
Subsidiaries have been paid in full or adequate provision has been made for
any such taxes, both current and deferred, on CBES's balance sheet in
accordance with GAAP. For purposes of this Section 2.3(j) and Section
2.4(i), the term "taxes" shall include all income, franchise, gross receipts,
real and personal property, real property transfer and gains, wage and
employment taxes. As of the date of this Agreement, to the knowledge of
CBES, there is no audit examination, deficiency assessment, tax investigation
or refund litigation, or any threat of the foregoing, with respect to any
taxes of CBES or any of its Subsidiaries, and, to the knowledge of CBES, no
claim or threat of claim has been made by any authority in a jurisdiction
where CBES or any of its Subsidiaries do not file tax returns that CBES or
any such Subsidiary is subject to taxation in that jurisdiction. All taxes,
interest, additions and penalties due with respect to completed and settled
examinations or concluded litigation relating to CBES or any of its
Subsidiaries have been paid in full or adequate provision has been made for
any such taxes on CBES 's
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balance sheet in accordance with GAAP. CBES and its Subsidiaries have not
executed an extension or waiver of any statute of limitations on the
assessment or collection of any material tax due that is currently in
effect. CBES and each of its Subsidiaries has withheld and paid all taxes
required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder or other
third party, and CBES and each of its Subsidiaries has timely complied, in
all material respects, with all applicable information reporting requirements
under Part III, Subchapter A of Chapter 61 of the IRC and similar applicable
state and local information reporting requirements. Adequate provision for
any taxes due or to become due for CBES or any of its Subsidiaries for the
period or periods reflected on CBES's most recent financial statements has
been made and is reflected on such CBES financial statements. Deferred Taxes
of CBES and its Subsidiaries have been provided for in accordance with GAAP.
To the knowledge of CBES, there is no item of deferred taxable income which
will become taxable due to the consummation of the Merger that is reasonably
likely to have a Material Adverse Effect on CBES or its Subsidiaries, other
than as disclosed in CBES's Disclosure Letter.
(k) Agreements.
(i) Except (w) for arrangements made in the ordinary course of
business, (x) as set forth in CBES's Disclosure Letter, (y) as disclosed in
CBES's Reports filed on or prior to the date of this Agreement or (z) as
contemplated by this Agreement, CBES and its Subsidiaries are not bound by any
material contract (as defined in Item 601(b)(10) of Regulation S-K promulgated
by the SEC) to be performed after the date hereof that has not been filed with
or incorporated by reference to CBES's Reports. Except (1) as disclosed in
CBES's Disclosure Letter, (2) as disclosed in CBES's Reports filed on or
prior to the date of this Agreement or (3) as contemplated by this Agreement,
neither CBES nor any of its Subsidiaries is a party to an oral or written (A)
consulting agreement (including data processing and software programming
contracts) not terminable on 60 days' or less notice, (B) agreement with any
present or former director, officer or employee of CBES or any of its
Subsidiaries the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving CBES or
any of its Subsidiaries of the nature contemplated by this Agreement, (C)
agreement with respect to any employee or director of CBES or any of its
Subsidiaries providing any term of employment or compensation guarantee
extending for a period longer than 60 days, (D) agreement or plan, including
any stock option plan, phantom stock or stock appreciation rights plan,
restricted stock plan or stock purchase plan, any of the benefits of which
will be increased, or the vesting or payment of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by
this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement or (E) agreement containing covenants that limit the ability of
CBES or any of its Subsidiaries to compete in any line of business or with
any person, or that involve any restriction on the geographic area in which,
or method by which, CBES (including any successor thereof) or any of its
Subsidiaries may carry on its business (other than as may be required by law
or any regulatory agency). To the knowledge of CBES, each of the agreements
and other documents referenced in CBES's Disclosure Letter with respect to
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this Section 2.3(k)(i) is a valid, binding and enforceable obligation of the
parties sought to be bound thereby, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies
generally and subject, as to enforceability to general principles of equity,
whether applied in a court of law or a court of equity.
(ii) Neither CBES nor any of its Subsidiaries is in default under
(and no event has occurred which, with due notice or lapse of time or both,
would constitute a default under) or is in violation of any provision of any
note, bond, indenture, mortgage, deed of trust, loan agreement, lease or other
agreement to which it is a party or by which it is bound or to which any of
its respective properties or assets is subject and, to the knowledge of CBES,
no other party to any such agreement (excluding any loan or extension of
credit made by CBES or any of its Subsidiaries) is in default in any respect
thereunder.
(iii) CBES and each of its Subsidiaries owns or possesses valid and
binding licenses and other rights to use without payment all patents,
copyrights, trade secrets, trade names, service marks and trademarks used in its
businesses, and neither CBES nor any of its Subsidiaries has received any
notice of conflict with respect thereto that asserts the right of others.
Each of CBES and its Subsidiaries has performed all the obligations required
to be performed by it and are not in default under any contract, agreement,
arrangement or commitment relating to any of the foregoing.
(iv) CBES's Disclosure Letter contains a summary description of all
leases, commitments, contracts, licenses, maintenance agreements and other
agreements of CBES and its Subsidiaries involving a liability or obligation of
CBES in excess of $10,000 per annum, and a true and complete list of all letters
of credit, guarantees, indemnity agreements and all commitments to loan or
discount or issue a letter of credit which would aggregate in excess of
$10,000 to any person, firm or corporation.
(l) Labor Matters. CBES and its Subsidiaries are in material compliance
with all applicable laws respecting employment and employment practices,
terms and conditions of employment and wages and hours, and are not engaged
in any unfair labor practice. Neither CBES nor any of its Subsidiaries is or
has ever been a party to, or is or has ever been bound by, any collective
bargaining agreement, contract or other agreement or understanding with a
labor union or labor organization with respect to its employees, nor is CBES
or any of its Subsidiaries the subject of any proceeding asserting that it
has committed an unfair labor practice or seeking to compel it or any such
Subsidiary to bargain with any labor organization as to wages and conditions
of employment nor has any such proceeding been threatened, nor is there any
strike, other labor dispute or organizational effort involving CBES or any of
its Subsidiaries pending or threatened.
(m) Employee Benefit Plans. CBES's Disclosure Letter contains a complete
and accurate list of all pension, retirement, stock option, stock purchase,
stock ownership, savings, stock appreciation right, profit sharing, deferred
compensation, consulting, bonus, group insurance, severance and other benefit
plans, funds, contracts,
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agreements and arrangements, including, but not limited to, "employee benefit
plans," as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), incentive and welfare policies, contracts,
plans and arrangements and all trust agreements related thereto with respect
to any present or former directors, officers or other employees of CBES or
any of its Subsidiaries (hereinafter collectively referred to as the "CBES
Employee Plans"). All of the CBES Employee Plans comply in all material
respects with all applicable requirements of ERISA, the IRC and other
applicable laws; with respect to the CBES Employee Plans, no event has
occurred that would subject CBES or any of its Subsidiaries to a material
liability under ERISA, the IRC or any other applicable law; there has
occurred no "prohibited transaction" (as defined in Section 406 of ERISA or
Section 4975 of the IRC) which is likely to result in the imposition of any
material penalties or taxes under Section 502(i) of ERISA or Section 4975 of
the IRC upon CBES or any of its Subsidiaries; and all required contributions
to the CBES Employee Plans through the date hereof have been made. Neither
CBES nor any of its Subsidiaries has provided, or is required to provide,
security to any CBES pension plan or to any single-employer plan of an ERISA
Affiliate (as defined under Section 4001(b)(1) of ERISA or Section 414 of the
IRC) pursuant to Section 401(a)(29) of the IRC. Neither CBES, its
Subsidiaries, nor any ERISA Affiliate has contributed to any "multiemployer
plan," as defined in Section 3(37) of ERISA, on or after September 26, 1980.
Each CBES Employee Plan that is an "employee pension benefit plan" (as
defined in Section 3(2) of ERISA) and which is intended to be qualified under
Section 401(a) of the IRC (a "CBES Qualified Plan") has received a favorable
determination letter from the Internal Revenue Service ("IRS"), and CBES and
its Subsidiaries are not aware of any circumstances likely to result in
revocation of any such favorable determination letter. There is no pending
or threatened litigation, administrative action or proceeding relating to any
CBES Employee Plan. There has been no announcement or commitment by CBES or
any of its Subsidiaries to amend any CBES Employee Plan, except for
amendments required by applicable law which do not materially increase the
cost of such CBES Employee Plan; and, except as specifically identified in
CBES's Disclosure Letter, CBES and its Subsidiaries do not have any
obligations for post-retirement or post-employment benefits under any CBES
Employee Plan that cannot be amended or terminated upon 60 days' notice or
less without incurring any liability thereunder, except for coverage required
by Part 6 of Title I of ERISA or Section 4980B of the IRC, or similar state
laws, the cost of which is borne by the insured individuals. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby will not result in any payment or series of payments by
CBES or any of its Subsidiaries to any person which is an "excess parachute
payment" (as defined in Section 280G of the IRC). To the best knowledge of
CBES, no breach of a fiduciary duty under ERISA Section 404 or Section 405
has occurred and with respect to which any outstanding liability to any
participant or any material excise tax or liability exists or will exist as
of the Effective Date with respect to any of the CBES Employee Plans. Each
of the CBES Employee Plans which is a group health plan within the meaning of
IRC Section 5000(b)(1) is in compliance with the continuation of health care
coverage requirements contained in IRC Section 4980B and ERISA Section 601 et
seq. A list of participants or beneficiaries who have elected continuation
coverage in accordance with such laws is provided in CBES's Disclosure
Letter. With respect to each
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CBES Employee Plan, CBES will supply to NASB Bank a true and correct copy of
(A) the annual report on the applicable form of the Form 5500 series filed
with the IRS for the three most recent plan years, if required to be filed,
(B) such CBES Employee Plan, including amendments thereto, (C) each trust
agreement, insurance contract or other funding arrangement relating to such
CBES Employee Plan, including amendments thereto, (D) the most recent summary
plan description and summary of material modifications thereto for such CBES
Employee Plan, if the CBES Employee Plan is subject to Title I of ERISA, (E)
the most recent actuarial report or valuation if such CBES Employee Plan is a
CBES pension plan and any subsequent changes to the actuarial assumptions
contained therein, and (F) the most recent determination letter issued by the
IRS if such CBES Employee Plan is a CBES Qualified Plan. With respect to
Community Bank's ESOP, CBES will supply NASB Bank a true and correct copy of
(A) the latest financial statement of the ESOP including a list of assets,
(B) a schedule of stock purchases by the ESOP, including seller, valuation
and number of shares, (C) a schedule of participant name and amount, and (E)
a schedule of the most recent contribution allocation including participant
name, compensation and share of contribution.
(n) Title to Assets. CBES's Disclosure Letter contains a complete and
accurate list of all real property owned or leased by CBES or any of its
Subsidiaries, including all properties of CBES or any of its Subsidiaries
classified as "Real Estate Owned" or words of similar import (the "Real
Property"). To the knowledge of CBES, none of the buildings, structures or
other improvements located on the Real Property encroaches upon or over any
adjoining parcel or real estate or any easement or right-of-way. CBES and
each of its Subsidiaries have good and marketable title to their respective
properties and assets (including any intellectual property asset such as any
trademark, service mark, trade name or copyright) and property acquired in a
judicial foreclosure proceeding or by way of a deed in lieu of foreclosure or
similar transfer whether real or personal, tangible or intangible, reflected
on the consolidated financial statements of CBES as of June 30, 2001 or
acquired after such date, other than such items of personal property as have
been disposed of in the ordinary course of business since June 30, 2001, in
each case free and clear of any liens, security interests, encumbrances,
mortgages, pledges, restrictions, charges or rights or interests of others,
except pledges to secure deposits and other liens incurred in the ordinary
course of business. Each lease pursuant to which CBES or any of its
Subsidiaries is lessee or lessor is valid and in full force and effect and
neither CBES nor any of its Subsidiaries, nor any other party to any such
lease is in default or in violation of any provisions of any such lease. All
material tangible properties of CBES and each of its Subsidiaries are in a
good state of maintenance and repair, conform with all applicable ordinances,
regulations and zoning laws and are considered by CBES to be adequate for the
current business of CBES and its Subsidiaries and improvements on real
property owned or leased by CBES are located wholly within the boundaries of
the property owned or leased by CBES or its Subsidiaries. There are no
unpaid charges, debts, liabilities, claims or obligations arising from the
construction, ownership or operation of the banking premises of Community
Bank which would give rise to any mechanics' liens against any such real
estate or any part thereof, or for which CBES or Community Bank would be
responsible, except for (i) liens imposed by law and incurred in the ordinary
course of business for obligations not
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yet due to carriers, warehousemen, laborers, materialmen and the like, but
only to the extent the obligation giving rise to the lien is included as a
liability on CBES's books and records and (ii) such minor encumbrances, if
any, as do not materially detract from the value of, or materially interfere
with the present use of, such properties, and which minor encumbrances do not
render the title to such property unmarketable.
(o) Compliance with Laws. CBES and each of its Subsidiaries has all
permits, licenses, certificates of authority, orders and approvals of, and
has made all filings, applications and registrations with, all federal,
state, local and foreign governmental or regulatory bodies (each, a
"Governmental Entity") that are required in order to permit it to carry on its
business as it is presently conducted; all such permits, licenses,
certificates of authority, orders and approvals are in full force and effect,
and, to the knowledge of CBES, no suspension or cancellation of any of them
is threatened. Since the date of its incorporation, the corporate affairs of
CBES have not been conducted in violation in any material respect of any law,
ordinance, regulation, order, writ, rule, decree or approval of any
Governmental Entity. Neither CBES nor any of its Subsidiaries is in material
violation of, is, to the knowledge of CBES, under investigation with respect
to any material violation of, or has been given notice or been charged with
any material violation of, any law, ordinance, regulation, order, writ, rule,
decree or condition to approval of any Governmental Entity.
(p) Fees. Other than financial advisory services performed for CBES by
Hovde Financial LLC, neither CBES nor any of its Subsidiaries, nor any of
their respective officers, directors, employees or agents, has employed any
broker or finder or incurred any liability for any financial advisory fees,
brokerage fees, commissions or finder's fees, and no broker or finder has
acted directly or indirectly for CBES or any of its Subsidiaries in
connection with this Agreement or the transactions contemplated hereby. CBES
has provided NASB Bank with a true and correct copy of the contract between
CBES and Hovde Financial LLC.
(q) Environmental Matters. There is no suit, claim, action, demand,
executive or administrative order, directive, investigation or proceeding
pending or, to the knowledge of CBES, threatened before any court,
Governmental Entity or board or other forum against CBES or any of its
Subsidiaries for alleged noncompliance (including by any predecessor) with,
or liability under, any Environmental Law (as defined below) or relating to
the presence of or release into the environment of any Hazardous Material (as
defined below), whether or not occurring at or on a site owned, leased or
operated by it or any of its Subsidiaries. To CBES's knowledge, the
properties currently owned or operated by CBES or any of its Subsidiaries
(including, without limitation, soil, groundwater or surface water on, under
or adjacent to the properties, and buildings thereon) are not contaminated
with and do not otherwise contain any Hazardous Material other than as
permitted under applicable Environmental Law. Neither CBES nor any of its
Subsidiaries has received any notice, demand letter, executive or
administrative order, directive, request for information or other
communication (written or oral) from any federal, state, local or foreign
Governmental Entity or any third party indicating that it may be in violation
of, or liable under, any Environmental Law. To CBES's knowledge, there are
no underground storage tanks on, in or under any properties currently owned
or
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operated by CBES or any of its Subsidiaries and no underground storage tanks
have been closed or removed from any properties currently owned or operated
by CBES or any of its Subsidiaries. To CBES's knowledge, during the period
of CBES's or any of its Subsidiaries' ownership or operation of any of their
respective current properties, there has been no contamination by or release
of Hazardous Materials in, on, under or affecting such properties. To CBES's
knowledge, prior to the period of CBES's or any of its Subsidiaries'
ownership or operation of any of their respective current properties, there
was no contamination by or release of Hazardous Material in, on, under or
affecting such properties.
"Environmental Law" means (i) any federal, state or local law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, directive, executive or administrative order,
judgment, decree, injunction, legal requirement or agreement with any
Governmental Entity relating to (A) the protection, preservation or
restoration of the environment (which includes, without limitation, air,
water vapor, surface water, groundwater, drinking water supply, structures,
soil, surface land, subsurface land, plant and animal life or any other
natural resource), or to human health or safety as it relates to Hazardous
Materials, or (B) the exposure to, or the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production,
release or disposal of, Hazardous Materials, in each case as amended and as
now in effect. The term Environmental Law includes all federal, state and
local laws, rules, regulations or requirements relating to the protection of
the environment or health and safety, including, without limitation, (i) the
Federal Comprehensive Environmental Response, Compensation and Liability Act
of 1980, the Superfund Amendments and Reauthorization Act of 1986, the
Federal Water Pollution Control Act of 1972, the Federal Clean Air Act, the
Federal Clean Water Act, the Federal Resource Conservation and Recovery Act
of 1976 (including, but not limited to, the Hazardous and Solid Waste
Amendments thereto and Subtitle I relating to underground storage tanks), the
Federal Solid Waste Disposal and the Federal Toxic Substances Control Act,
the Federal Insecticide, Fungicide and Rodenticide Act, the Federal
Occupational Safety and Health Act of 1970 as it relates to Hazardous
Materials, the Federal Hazardous Substances Transportation Act, the Emergency
Planning and Community Right-To-Know Act, the Safe Drinking Water Act, the
Endangered Species Act, the National Environmental Policy Act, the Rivers and
Harbors Appropriation Act or any so-called "Superfund" or "Superlien" law,
each as amended and as now or hereafter in effect, and (ii) any common law or
equitable doctrine (including, without limitation, injunctive relief and tort
doctrines such as negligence, nuisance, trespass and strict liability) that
may impose liability or obligations for injuries or damages due to, or
threatened as a result of, the presence of or exposure to any Hazardous
Material.
"Hazardous Material" means any substance (whether solid, liquid or
gas) which is or could be detrimental to human health or safety or to the
environment, currently or hereafter listed, defined, designated or classified
as hazardous, toxic, radioactive or dangerous, or otherwise regulated, under
any Environmental Law, whether by type or by quantity, including any
substance containing any such substance as a component. Hazardous Material
includes, without limitation, any toxic waste, pollutant, contaminant,
hazardous substance, toxic substance, hazardous waste, special waste,
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industrial substance, oil or petroleum, or any derivative or by-product
thereof, radon, radioactive material, asbestos, asbestos-containing material,
urea formaldehyde foam insulation, lead and polychlorinated biphenyl.
(r) Loan Portfolio; Allowance; Asset Quality.
(i) With respect to each loan (including advances made pursuant to
letters of credit) owned by CBES or its Subsidiaries in whole or in part, to
CBES's knowledge (A) the note and the related security documents are each legal,
valid and binding obligations of the maker or obligor thereof, enforceable
against such maker or obligor in accordance with their terms, (B) the note
and the related security documents, copies of which are included in the loan
files, are true and correct copies of the documents they purport to be and
have not been suspended, amended, modified, canceled or otherwise changed
except as otherwise disclosed by documents in the applicable loan file and
(C) CBES or one of its Subsidiaries is the sole holder of legal and
beneficial title to each loan reflected in the consolidated financial
statements of CBES except as otherwise disclosed in the applicable loan file
or on the books and records of CBES and its Subsidiaries. To the knowledge
of CBES (x) all notes, evidences of indebtedness and agreements for the
payment of money and all related documents, instruments, papers and other
agreements for the payment of money and all related documents, instruments,
papers and other security agreements of Community Bank, applicable thereto,
are bona fide, are genuine as to signatures of all makers, endorsers, and
guarantors, and were given for valid consideration; (y) all collateral
securing such indebtedness existed at the disbursement of the funds which
created the indebtedness; and (z) except as may be disclosed in the books and
records of Community Bank relating to its loans, Community Bank has made no
affirmative or negative oral or written commitments which would materially
impair the enforcement of any of Community Bank's loans.
(ii) The allowance for loan losses reflected in CBES's statement of
financial condition at June 30, 2002 (unaudited) was, and the allowance for loan
losses shown on the balance sheets in CBES's Reports for periods ending after
June 30, 2002 (unaudited) will be, in the opinion of management, adequate to
provide for losses inherent in CBES's loan portfolio.
(iii) CBES's Disclosure Letter sets forth a true and complete listing,
as of June 30, 2002, of (A) all loans, leases, advances, credit enhancements,
guarantees, other extensions of credit, commitments and interest-bearing
assets of CBES and its Subsidiaries (collectively, "Loans") that have been
classified (whether regulatory or internal) as "Special Mention,"
"Substandard," "Doubtful," "Loss" or words of similar import, listed by
category, including the amounts thereof; (B) Loans (1) that are contractually
past due 90 days or more in the payment of principal and/or interest, (2)
that are on a non-accrual status, (3) where the interest rate terms have been
reduced and/or the maturity dates have been extended subsequent to the
agreement under which the Loan was originally created due to concerns
regarding the borrower's ability to pay in accordance with such initial
terms, or (4) where a specific reserve allocation exists in connection
therewith, listed by category, including the amounts thereof; and (C) Loans
with any director, executive officer or five percent or greater stockholder
of CBES or any
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of its Subsidiaries or any person, corporation or enterprise controlling,
controlled by or under common control with any of the foregoing, including
the amounts thereof. To the knowledge of CBES, neither CBES nor any of its
Subsidiaries is a party to any Loan that is in violation of any law,
regulation or rule of any Governmental Entity. Any asset of CBES or any of
its Subsidiaries that is classified as "Real Estate Owned" or words of
similar import that is included in any non-performing assets of CBES or any
of its Subsidiaries is listed in CBES's Disclosure Letter and is carried net
of reserves at the lower of cost or fair value, less estimated selling costs,
based on current independent appraisals or evaluations or current management
appraisals or evaluations; provided, however, that "current" shall mean
within the past 12 months.
(s) Anti-takeover Provisions Inapplicable. CBES and its Subsidiaries have
taken all actions required to exempt CBES, NASB Holding, NASB Bank,
Acquisition Sub, the Agreement and the Merger from any provisions of an
anti-takeover nature contained in their organizational documents, and the
provisions of any federal or state "anti-takeover," "fair price,"
"moratorium," "control share acquisition" or similar laws or regulations.
(t) Charter Provisions. CBES and its Subsidiaries have taken all action
so that the entering into of this Agreement and the consummation of the Merger
and the other transactions contemplated by this Agreement do not and will not
result in the grant of any rights to any person under the certificate of
incorporation, bylaws, or other governing instruments of CBES or any of its
Subsidiaries or restrict or impair the ability of NASB Bank or any of its
Subsidiaries or Affiliates to vote, or otherwise to exercise the rights of a
stockholder with respect to, shares of CBES or any of its Subsidaries that
may be directly or indirectly acquired or controlled by it.
(u) Material Interests of Certain Persons. No officer or director or 5%
stockholder of CBES, or any "associate" (as such term is defined in Rule
12b-2 promulgated under the Exchange Act) of any such officer or director or
stockholder, has any material interest in any material contract or property
(real or personal), tangible or intangible, used in or pertaining to the
business of CBES or any of its Subsidiaries. CBES's Disclosure Letter
describes all transactions in which any current officer, or director, or
Affiliate or Subsidiary thereof, directly or indirectly, has borrowed from,
loaned to, supplied or provided goods or services to, purchased assets from,
sold assets to, or done business in any manner with CBES or Community Bank or
is a party to any agreement with CBES or Community Bank, and all transactions
known to management in which any current 5% stockholder or employee of CBES
or Community Bank, or any Affiliate or Subsidiary thereof, directly of
indirectly, has borrowed from, loaned to, supplied or provided goods or
services to, purchased assets from, sold assets to, or done business in any
manner with CBES or Community Bank or is a party to any agreement with CBES
or Community Bank.
(v) Insurance. CBES's Disclosure Letter contains a complete list of all
insurance policies of CBES and its Subsidiaries presently in effect. In the
opinion of management, CBES and its Subsidiaries are presently insured for
amounts deemed reasonable by management against such risks as companies
engaged in a similar business
A-24
would, in accordance with good business practice, customarily be insured.
All of the insurance policies and bonds maintained by CBES and its
Subsidiaries are in full force and effect, CBES and its Subsidiaries are not
in default thereunder and all material claims thereunder have been filed in
due and timely fashion. CBES and its Subsidiaries have received no notice
from any insurance carrier that (i) any insurance will be canceled or that
coverage thereunder will be reduced or eliminated, or (ii) premium costs with
respect to any policies of insurance will be substantially increased.
(w) Investment Securities; Derivatives.
(i) Except for investments in Federal Home Loan Bank ("FHLB") Stock,
pledges to secure FHLB borrowings, pledges to secure deposits and reverse
repurchase agreements entered into in arms-length transactions pursuant to
normal commercial terms and conditions and entered into in the ordinary course
of business, and restrictions that exist for securities to be classified as
"held to maturity," none of the investments held by CBES or any of its
Subsidiaries as of the date of this Agreement is, or will be at Closing,
subject to any restriction (contractual or statutory) that would materially
impair the ability of the entity holding such investment freely to dispose of
such investment at any time.
(ii) Except (x) as set forth in CBES's Disclosure Letter, (y) as
disclosed in CBES's Reports filed on or prior to the date of this Agreement, or
(z) for adjustable-rate mortgage loans and adjustable-rate advances, neither
CBES nor any of its Subsidiaries is a party to or has agreed to enter into an
exchange-traded or over-the-counter equity, interest rate, foreign exchange
or other swap, forward, future, option, cap, floor or collar or any other
contract that is a derivative contract (including various combinations
thereof) or owns securities that (a) are referred to generically as
"structured notes," "high risk mortgage derivatives," "capped floating rate
notes" or "capped floating rate mortgage derivatives" or (b) are likely to
have changes in value as a result of interest or exchange rate changes that
significantly exceed normal changes in value attributable to interest or
exchange rate changes.
(x) Credit Card Issuing Agreement. Neither CBES nor Community bank has
any credit card agreement which would prevent NASB Bank from soliciting
Community Bank's customers to accept a credit card issued by or on behalf of
NASB Bank or an Affiliate of NASB Bank.
(y) Indemnification. Except (i) as provided in the certificate of
incorporation or bylaws of CBES and the similar governing documents of its
Subsidiaries, or (ii) as set forth in CBES's Disclosure Letter, neither CBES
nor any Subsidiary is a party to any indemnification agreement with any of
its present or former directors, officers, employees, agents or other persons
who serve or served in any other capacity with any other enterprise at the
request of CBES and, to the best knowledge of CBES, there are no claims for
which any such person would be entitled to indemnification under the articles
of incorporation or bylaws of CBES or the similar governing documents of any
of its Subsidiaries, under any applicable law or regulation or under any
indemnification agreement.
A-25
(z) Books and Records. The books and records of CBES and its
Subsidiaries on a consolidated basis have been, and are being, maintained in
accordance with applicable legal and accounting requirements and reflect in
all material respects the substance of events and transactions that should be
included therein.
(aa) Corporate Documents. Complete and correct copies of the certificate
of incorporation, bylaws and similar governing documents of CBES and each of
CBES's Subsidiaries, as in effect as of the date of this Agreement, have
previously been delivered to NASB Bank. The minute books of CBES and each of
CBES's Subsidiaries constitute a complete and correct record of all actions
taken by their respective boards of directors (and each committee thereof)
and their stockholders.
(bb) Community Reinvestment Act Compliance. Community Bank is in material
compliance with the applicable provisions of the Community Reinvestment Act,
as amended ("CRA"), and the regulations promulgated thereunder, and, as of
its most recent CRA examination, Community Bank has a CRA rating of
"Satisfactory" or better. To CBES's knowledge, there is no fact or
circumstance or set of facts or circumstances that would cause Community Bank
to fail to comply with such provisions or cause the CRA rating of Community
Bank to fall below "Satisfactory."
(cc) Undisclosed Liabilities. As of the date hereof, CBES and its
Subsidiaries have not incurred any debt, liability or obligation of any
nature whatsoever (whether accrued, contingent, absolute or otherwise and
whether due or to become due) except for (i) liabilities reflected on or
reserved against in the consolidated financial statements of CBES as of March
31, 2002, (ii) liabilities incurred since June 30, 2002 in the ordinary
course of business consistent with past practice that, either alone or when
combined with all similar liabilities, have not had, and would not reasonably
be expected to have, a Material Adverse Effect on CBES and its Subsidiaries,
taken as a whole, and (iii) liabilities incurred for legal, accounting,
financial advising fees and out-of-pocket expenses in connection with a
proposed sale or merger of CBES.
Section 2.4. Representations and Warranties of NASB Holding and
Acquisition Sub. Subject to Sections 2.1 and 2.2, NASB Holding and Acquisition
Sub represent and warrant to CBES that:
(a) Organization.
(i) NASB Holding is a corporation duly organized, validly existing
and in good standing under the laws of the State of Missouri and is registered
as a savings and loan holding company under the HOLA. NASB Bank is a stock
savings association duly organized, validly existing and in good standing
under the laws of the United States of America and is a wholly-owned
Subsidiary of NASB Holding. Acquisition Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Missouri. Each Subsidiary of NASB Holding is a corporation, limited
liability company or partnership duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or
organization. Each
A-26
of NASB Holding and its Subsidiaries has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted.
(ii) NASB Holding, NASB Bank, Acquisition Sub and each of their
Subsidiaries have the requisite corporate power and authority and are duly
qualified to do business and are in good standing in each jurisdiction in which
the nature of their business or the ownership or leasing of their properties
makes such qualification necessary.
(b) Authority. NASB Holding and Acquisition Sub have all requisite
corporate power and authority to enter into this Agreement and, subject to
approval of this Agreement by the requisite vote of the sole shareholder of
Acquisition Sub and the receipt of all required regulatory or governmental
approvals, to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and, subject to the approval of this Agreement
by Acquisition Sub's sole shareholder, the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
actions on the part of NASB Holding, and Acquisition Sub. This Agreement has
been duly and validly executed and delivered by NASB Holding and Acquisition
Sub and constitutes a valid and binding obligation of NASB Holding and
Acquisition Sub, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors'
rights and remedies generally and subject, as to enforceability, to general
principles of equity, whether applied in a court of law or a court of equity.
(c) Shareholder Approval. No approval of this Agreement by the
shareholders of NASB Holding is required for the consummation of the Merger and
the related transactions contemplated hereby. The affirmative vote of the sole
shareholder of Acquisition Sub is the only vote of the sole shareholder of
Acquisition Sub required for approval of this Agreement and the consummation
of the Merger and the related transactions contemplated hereby.
(d) No Violations; Consents. The execution, delivery and performance of
this Agreement by NASB Holding and Acquisition Sub do not, and the
consummation of the transactions contemplated hereby will not, constitute (i)
assuming receipt of all Requisite Regulatory Approvals, a breach or violation
of, or a default under, any law, rule or regulation or any judgment, decree,
order, governmental permit or license to which NASB Holding, Acquisition Sub
or any of their respective Subsidiaries (or any of their respective
properties) is subject, (ii) a breach or violation of, or a default under,
the articles of incorporation or bylaws of NASB Holding or Acquisition Sub or
the similar organizational documents of any of their respective Subsidiaries
or (iii) a breach or violation of, or a default under (or an event which,
with due notice or lapse of time or both, would constitute a default under),
or result in the termination of, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or
other encumbrance upon any of the properties or assets of NASB Holding or
Acquisition Sub or any of their respective Subsidiaries under, any of the
terms, conditions or provisions of any note, bond, indenture, deed of trust,
loan agreement or other agreement, instrument or obligation to which NASB
Holding or Acquisition Sub or
A-27
any of their respective Subsidiaries is a party, or to which any of their
respective properties or assets may be subject. The consummation by NASB
Holding and Acquisition Sub of the transactions contemplated hereby will not
require any approval, consent or waiver under any such law, rule, regulation,
judgment, decree, order, governmental permit or license or the approval,
consent or waiver of any other party to any such agreement, or instrument,
other than (w) the approval of NASB Holding as the sole shareholder of
Acquisition Sub, (x) the approval of the OTS under the HOLA, (the "Requisite
Regulatory Approvals"), and (y) such approvals, consents or waivers as are
required under the federal and state securities or "blue sky" laws in
connection with the transactions contemplated by this Agreement. As of the
date hereof, the executive officers of NASB Holding and Acquisition Sub know
of no reason pertaining to NASB Holding or Acquisition Sub why any of the
approvals referred to in this Section 2.4(d) should not be obtained without
undue delay or the imposition of any material condition or restriction
described in the last sentence of Section 5.1(b).
(e) Reports and Financial Statements.
(i) NASB Holding and NASB Bank has timely filed all material reports
and financial statements, together, with any amendments required to be made with
respect thereto, that they were required to file with (a) the FDIC and (b)
the OTS (collectively, the "NASB's Reports") and, to NASB Holding's
knowledge, NASB Holding and NASB Bank have paid all taxes and assignments due
and payable in connection therewith. As of their respective dates, none of
NASB's Reports 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 made therein, in light of the circumstances under which they
were made, not misleading.
(ii) Each of the financial statements of NASB Bank included in NASB's
Reports has been prepared in all material respects in accordance with GAAP
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of the unaudited financial
statements, as permitted by appropriate regulatory authorities). Each of the
consolidated statements of condition contained or incorporated by reference in
NASB's Reports (including in each case any related notes and schedules) fairly
presented (A) the financial position of the entity or entities to which it
relates as of its date and (B) the results of operations, shareholders'
equity and cash flows, as the case may be, of the entity or entities to which
it relates for the periods set forth therein (subject in the case of
unaudited interim statements, to normal year-end adjustments that are not
material in amount or effect), in each case in accordance with GAAP, except
as may be noted therein.
(f) Absence of Certain Changes or Events. Except as disclosed in NASB's
Reports filed on or prior to the date of this Agreement, no event has
occurred or circumstances arisen which has had or might reasonably be
expected to have a Material Adverse Effect with respect to NASB Holding.
(g) Absence of Claims. No litigation, proceeding, controversy, claim,
action or suit or other legal, administrative or arbitration proceeding
before any court,
A-28
Governmental Entities or arbitrator is pending or has been threatened against
NASB Holding, NASB Bank, Acquisition Sub or any of their respective
Subsidiaries that would reasonably be expected to prevent or adversely affect
or which seeks to prohibit the consummation of the transactions contemplated
by this Agreement or which would have a Material Adverse Effect with respect
to NASB Holding, NASB Bank, Acquisition Sub or their respective Subsidiaries
taken as a whole.
(h) Absence of Regulatory Actions. Neither NASB Holding, NASB Bank,
Acquisition Sub nor any of their respective Subsidiaries is a party to any
cease and desist order, written agreement or memorandum of understanding
with, or any commitment letter or similar written undertaking to, or is
subject to any action, proceeding, order or directive by, or is a recipient
of any extraordinary supervisory letter from any Government Regulatory
Agency, or has adopted any board resolutions at the request of any Government
Regulatory Agency, nor has it been advised by any Governmental Regulator that
it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such action, proceeding, order,
directive, written agreement, memorandum of understanding, extraordinary
supervisory letter, commitment letter, board resolutions or similar written
undertaking.
(i) Compliance with Laws. NASB Holding, NASB Bank, Acquisition Sub and
their respective Subsidiaries each have all permits, licenses, certificates
of authority, orders and approvals of, and have made all filings,
applications and registrations with, all Governmental Entities that are
required in order to permit them to carry on their business as it is
presently conducted; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect, and to the best knowledge
of NASB Holding, NASB Bank and Acquisition Sub, no suspension or cancellation
of any of them is threatened. Since the date of its incorporation, the
corporate affairs of NASB Holding, NASB Bank and Acquisition Sub have not
been conducted in violation in any material respect of any law, ordinance,
regulation, order, writ, rule, decree or approval of any Governmental
Entity. Neither NASB Holding, NASB Bank, Acquisition Sub nor any of their
respective Subsidiaries is in material violation of, is, to the knowledge of
NASB Holding or Acquisition Sub, under investigation with respect to any
material violation of, or has been given notice or been charged with any
material violation of, any law, ordinance, regulation, order, writ, rule,
decree or condition to approval of any Governmental Entity.
(j) Community Reinvestment Act Compliance. NASB Bank, and each Subsidiary
of NASB Holding that is an insured depository institution, is in material
compliance with the applicable provisions of CRA, and the regulations
promulgated thereunder, and, as of its most recent CRA examination, NASB
Bank, and each Subsidiary of NASB Holding that is an insured depository
institution, has a CRA rating of "Satisfactory" or better. To the knowledge
of NASB Holding, there is no fact or circumstance or set of facts or
circumstances that would cause NASB Bank, or any Subsidiary of NASB Holding
that is an insured depository institution, to fail to comply with such
provisions or cause the CRA rating of NASB Bank, or any Subsidiary of NASB
Holding that is an insured depository institution to fall below
"Satisfactory." Neither NASB Holding, NASB Bank nor Acquisition Sub has
received notice of or has
A-29
knowledge of any planned or threatened objection by any community group to
the transactions contemplated hereby.
(k) Fees. Neither NASB Holding, NASB Bank, Acquisition Sub nor any of
their respective Subsidiaries, nor any of their respective officers, directors,
employees or agents, has employed any broker or finder or incurred any
liability for any financial advisory fees, brokerage fees, commissions or
finder's fees, and no broker or finder has acted directly or indirectly for
NASB Holding, NASB Bank or any of their respective Subsidiaries in connection
with this Agreement or the transactions contemplated hereby.
(l) Availability of Funds. No later than the Closing Date, NASB Holding
will have available sufficient cash or other liquid assets or financing
pursuant to binding arrangements or commitments which may be used to fund
this transaction. NASB Holding's ability to consummate the transactions
contemplated by this Agreement is not contingent on raising any equity
capital, obtaining specific financing thereof, consent of any lender or any
other matter.
(m) Pro Forma Capital Requirements. NASB Bank is, and on a pro forma
basis giving effect for the transactions contemplated by this Agreement and any
financing/capital injection contemplated by NASB Bank will be (i) at least
"Adequately Capitalized," as defined for purposes of the FDIA and (ii) in
compliance with all capital requirements, standards and ratios required by
each state or federal regulator with jurisdiction over NASB Bank, including
without limitation, any such higher requirement, standard or ratio as shall
apply to institutions engaging in the acquisition of insured institution
deposits, assets or branches, and no such regulator is likely to, or has
indicated that it will, condition any of the regulatory approvals upon an
additional increase in NASB Bank's capital or compliance with any capital
requirement
(n) Anti-Trust. NASB Holding has no knowledge that it will be required to
divest deposit liabilities, branches, loans or any business or line of
business as a condition to the receipt of any of the Regulatory Approvals.
ARTICLE III
Actions and Conduct Pending the Merger
--------------------------------------
Section 3.1. Regulatory Application. Within thirty (30) days of the date
of this Agreement, NASB Holding or Acquisition Sub will file applications
with OTS to merge Acquisition Sub with and into CBES.
Section 3.2. Conduct of CBES's Business Prior to the Effective Date.
Except as expressly provided in this Agreement, during the period from the
date of this Agreement to the Effective Date, CBES shall, and shall cause its
Subsidiaries to, use all reasonable efforts to (i) conduct its business in
the regular, ordinary and usual course consistent with past practice, (ii)
maintain and preserve intact its business organization, properties, leases,
employees and advantageous business relationships and retain the
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services of its officers and key employees, (iii) take no action which would
adversely affect or delay the ability of CBES or NASB Holding, NASB Bank or
Acquisition Sub to perform their respective covenants and agreements on a
timely basis under this Agreement, (iv) take no action which would adversely
affect or delay the ability of CBES, Community Bank, NASB Holding or
Acquisition Sub to obtain any necessary approvals, consents or waivers of any
governmental authority required for the transactions contemplated hereby or
which would reasonably be expected to result in any such approvals, consents
or waivers containing any material condition or restriction, (v) take no
action that results in or is reasonably likely to have a Material Adverse
Effect on CBES or Community Bank, (vi) maintain insurance in such amounts and
against such risks and losses as are customary for companies engaged in a
similar business, (vii) confer on a regular and frequent basis with one or
more representatives of NASB Holding to discuss, subject to applicable law,
material operational matters and the general status of the ongoing operations
of CBES and its Subsidiaries, (viii) promptly notify NASB Holding of any
material change in its business, properties, assets, condition (financial or
otherwise) or results of operations, and (ix) promptly provide NASB Holding
with copies of all filings made by CBES or any of its Subsidiaries with any
state or federal court, administrative agency, commission or other
Governmental Entity in connection with this Agreement and the transactions
contemplated hereby. Without limiting the foregoing covenants, unless the
prior written consent of NASB Holding shall have been obtained, and except as
otherwise expressly contemplated in this Agreement, CBES shall, and shall
cause each of its Subsidiaries to:
(a) Board Observers. Permit, at any time after the execution of this
Agreement, two representatives of NASB Bank to attend CBES's and Community
Bank's board of directors' meetings and all Board committee meetings as
observers only and shall give NASB Bank notice of all such meetings
concurrently with the giving of notice to other directors and committee
members; provided, however, that such observers will not be entitled to
attend the portions of any meetings that relate to any deliberation of the
transactions contemplated by this Agreement or meetings with attorneys on
other matters who recommend that such observers not be present in order to
preserve the attorney-client privilege.
(b) Loan Policies. Reserve against, place on non-accrual, and charge off
loans and other assets as losses are recognized or future losses become
apparent, in accordance with Community Bank's past practices, which Community
Bank warrants and represents are in compliance in all material respects with
all applicable laws and regulations and have not been criticized in any past
examinations or audits, while maintaining a loan loss reserve of at least
..75% of total loans outstanding;
(c) Tax Returns. Prepare, execute and file, on or before the due date
thereof if prior to the Effective Date, all federal, state and local tax
returns required of CBES or Community Bank with respect to its operations for
any period ending before the Effective Date and will pay the appropriate
tax. In addition, prior to the Effective Date, CBES shall file, and shall
cause each of its Subsidiaries to file, all amended federal, state and local
tax returns necessary to carry back any tax losses incurred by CBES or any of
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its Subsidiaries to the extent permitted by law for the purpose of obtaining
all available tax refunds.
(d) Customer Notice. Assist NASB Holding in drafting and preparing for
mailing a notice, the form and content of which shall be established by
mutual agreement of NASB Holding and CBES, to all Community Bank's deposit
and loan customers, notifying them of the sale of CBES to NASB Holding. The
notice shall be mailed by NASB Holding after all Requisite Regulatory
Approvals and Stockholders Approvals have been obtained but no later than
thirtieth day prior to the date agreed upon by NASB Holding and CBES pursuant
to Section 6.1 for the data processing conversion.
(e) Copies of Reports. Furnish to NASB Holding, until the Effective Date,
true and complete copies of the following information within five days after
preparation or receipt:
(i) Monthly financial statements prepared with respect to CBES and
Community Bank;
(ii) Daily statements of Community Bank beginning on the date of the
final regulatory approval of the transactions contemplated by this Agreement and
continuing through the Effective Date;
(iii) Community Bank's Reports of Condition and Income to regulatory
authorities at the close of business of each calendar quarter;
(iv) Community Bank's internal watch and problem loan reports;
(v) Any and all board reports prepared for the use of Community
Bank's board of directors or any board committee (other than those portions of
any report which pertain to this Agreement or is privileged information);
(vi) Any reports submitted to Community Bank by independent certified
public accountants in connection with an examination of Community Bank's
financial statements;
(vii) Notice of all actions, suits, and proceedings before any court
or Governmental Entity, commission, board, bureau, agency, or instrumentality
affecting CBES or Community Bank;
(viii) Any notices or communications received from any savings and
loan regulatory body with respect to the affairs or operations of CBES or
Community Bank; and
(ix) Any additional information reasonably requested by NASB Holding
for completion of any applications for regulatory approval of the transactions
contemplated by this Agreement.
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(f) Liquidation Account. Cause Community Bank to establish and
maintain on its books a true and complete record of those deposit accounts,
including names of depositors, which would have liquidation rights by reason
of the conversion of Community Bank from mutual to stock form of organization.
(g) Adjusted Stockholders' Equity. Take all efforts necessary to reduce
expenses and maintain the Stockholders' Equity of CBES, consolidated with all
of its Subsidiaries, at the close of business on the day prior to the
Effective Date, at an amount equal to or greater than $13,900,000 after
taking into account the adjustments described below ("Adjusted Stockholders'
Equity"). If the Adjusted Stockholders' Equity is less than $13,900,000 but
greater than or equal to $13,500,000, the Merger Consideration shall be
adjusted as provided for in Section 1.2(a) hereof. If the Adjusted
Stockholders' Equity is less than $13,500,000, NASB Holding shall have the
right to either (i) terminate the Agreement pursuant to Section 7.1(g) hereof
or (ii) consummate the Merger and provide the holders of CBES Common Stock
with a cash payment of $17.05 per share. Such Adjusted Stockholders' Equity
shall be determined according to GAAP as it is applied to savings and loan
associations and savings and loan association holding companies and in a
manner consistent with CBES's past practices with the following adjustments:
(i) All professional fees related to the Merger, including but not
limited to legal fees, investment banking fees and accounting fees, shall not be
treated as a reduction to Stockholders' Equity;
(ii) All severance payments from CBES or Community Bank to employees
terminated prior to the Effective Date, including but not limited to cash
severance payments pursuant to the Community Bank Severance Plan,
reimbursement for Welfare Benefits (as defined in the Community Bank
Severance Plan), payment of bonuses and Welfare Benefits pursuant to the
terms of Employee Bonus Agreements entered into by Community Bank and certain
key officers of Community Bank, payment of accrued paid time off and extended
leave as required by the Community Bank Employee Manual dated January 2001,
shall not be treated as a reduction to Stockholders' Equity;
(iii) All market value adjustments required by Statement of Financial
Accounting Standards Number 115 after June 30, 2002, shall not be treated as
an adjustment to Stockholders' Equity;
(iv) If (y) Community Bank's ALLL exceeds the amount required by
applicable statutes and regulations and (z) any of Community Bank's loan(s) or
other real estate owned require subsequent write-down(s), Community Bank shall
be allowed to treat such write-down(s) as a reduction of Community Bank's ALLL
instead of a reduction to income or Stockholders' Equity, to the extent
allowed by GAAP and the OTS.
(v) All reductions in the value of loans of Community Bank requested
by NASB Holding shall not be treated as a reduction to Stockholder's Equity.
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(vi) The value of all assets and leasehold improvements of the
Liberty, Missouri branch of Community Bank written off of the books of
Community Bank and all expenses related to the closing of the Liberty,
Missouri branch of Community Bank shall not be treated as a reduction to
Stockholders' Equity.
Section 3.3. Forbearance by CBES. Without limiting the covenants set
forth in Section 3.2 hereof, except as otherwise provided in this Agreement and
except to the extent required by law or regulation or any Governmental
Entity, during the period from the date of this Agreement to the Effective
Date, CBES shall not, and shall not permit any of its Subsidiaries to,
without the prior consent of NASB Holding:
(a) unless required by applicable law or regulation or regulatory
directive, change any provisions of the articles of incorporation or bylaws of
CBES or the similar governing documents of its Subsidiaries;
(b) authorize, issue, deliver or sell any shares of its capital stock or
any securities or obligations convertible or exercisable for any shares of its
capital stock or change the terms of any of its outstanding stock options or
warrants or issue, grant or sell any option, warrant, call, commitment, stock
appreciation right, right to purchase or agreement of any character relating
to the authorized or issued capital stock of CBES except pursuant to the
exercise of stock options or warrants outstanding as of the date of this
Agreement, or split, combine, reclassify or adjust any shares of its capital
stock or otherwise change its capitalization;
(c) make, declare or pay any cash or stock dividend or make any other
distribution on, or directly or indirectly redeem, purchase or otherwise
acquire, any shares of its capital stock or any securities or obligations
convertible into or exchangeable for any shares of its capital stock;
(d) other than for fair value in the ordinary course of business
consistent with past practice, (i) acquire or sell, transfer, assign, mortgage,
encumber or otherwise dispose of any of its material properties, leases, assets
or other rights or agreements to any individual, corporation or other entity
other than a direct or indirect wholly owned Subsidiary of CBES or (ii)
cancel, release or assign any indebtedness of any such individual,
corporation or other entity or (iii) permit Community Bank to waive any
material right or cancel any material contract, lease, license, obligation or
commitment, or permit any lien, encumbrance or charge of any material effect
to attach to any of CBES's or Community Bank's assets;
(e) except to the extent required by law or as specifically provided for
in Section 4.11(i) or elsewhere herein, increase in any manner the compensation
or fringe benefits of any of its employees or directors; pay bonuses to its
employees or directors; pay any pension or retirement allowance not required
by any existing plan or agreement to any employees or directors, or become a
party to, amend or commit itself to fund or otherwise establish any trust or
account related to any CBES Employee Plan (as defined in Section 2.3(m)) with
or for the benefit of any employee or director; voluntarily accelerate the
vesting of any stock options or other compensation or benefit; grant or
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award any stock options; make any discretionary contribution to any CBES
Employee Plan; hire any employee with an annual total compensation payment in
excess of $30,000; or enter into any employment contract or other agreement
or arrangement with any director, officer or other employee;
(f) except as contemplated by Section 4.2, change its method of
accounting as in effect at June 30, 2001, except as required by changes in GAAP
as concurred in by CBES's independent auditors;
(g) commence any litigation other than in the ordinary course of
business, settle any claim, action or proceeding involving any liability of CBES
or any of its Subsidiaries for money damages in excess of $25,000 or impose
material restrictions upon the operations of CBES or any of its Subsidiaries;
(h) acquire or agree to acquire, by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof
or otherwise acquire or agree to acquire any assets, in each case which are
material, individually or in the aggregate, to CBES, except in satisfaction
of debts previously contracted or by way of foreclosure on collateral
security for any such debts;
(i) establish or commit to the establishment of any new branch or other
office facilities or file any application to relocate or terminate the
operation of any banking office, provided, however, that if prior to
September 25, 2002, CBES is unable to obtain a six (6) month extension of the
lease of the Liberty, Missouri branch of Community Bank, CBES shall (i)
provide notice to the landlord of the Liberty, Missouri branch of Community
Bank of its intent not to renew the lease and (ii) notify the OTS of its
intent to close the Liberty, Missouri branch of Community Bank. Moreover,
Community Bank may proceed to attempt to sell the deposits of the Liberty,
Missouri branch of Community Bank to another bank or savings association at a
price as agreed to by NASB Holding;
(j) other than investments for CBES's portfolio made in accordance with
Section 3.3(k), make any investment either by purchase of stock or
securities, contributions to capital, property transfers, or purchase of any
property or assets of any other individual, corporation or other entity;
(k) make any investment in any debt security, including mortgage-backed
and mortgage-related securities, or materially restructure or change its
investment securities portfolio, through purchases, sales or otherwise;
provided, however, that CBES shall be permitted to invest in the following
securities with final maturities no later than November 30, 2002: U.S.
government and U.S. government agency securities, securities of the FHLB, or
insured jumbo certificates of deposit;
(l) enter into, renew, amend or terminate any contract or agreement, or
make any change in any of its leases or contracts, provided, however, that if
prior to
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September 25, 2002, CBES is unable to obtain a six (6) month extension of the
lease of the Liberty, Missouri branch of Community Bank, CBES shall (i)
provide notice to the landlord of the Liberty, Missouri branch of Community
Bank of its intent not to renew the lease and (ii) notify the OTS of its
intent to close the Liberty, Missouri branch of Community Bank. Moreover,
Community Bank may proceed to attempt to sell the deposits of the Liberty,
Missouri branch of Community Bank to another bank or savings association at a
price as agreed to by NASB Holding;
(m) make, renegotiate, renew, increase, extend, modify or purchase any
loan, lease (credit equivalent), advance, credit enhancement or other extension
of credit, or make any commitment in respect of any of the foregoing, except (i)
in conformity with existing safe and sound lending and pricing practices;
(ii) loans or advances as to which CBES has a binding obligation to make such
loan or advances as of the date hereof; and (iii) with respect to any loan or
additional advance resulting in an aggregate indebtedness to any individual
borrower of $100,000 or more for loans or advances secured by real estate or
certificates of deposit held by Community Bank, $25,000 or more for loans
secured by collateral other than real estate or certificates of deposit held
by Community Bank or $0 or more unsecured, unless such loan has been approved
in a loan committee or Board meeting of which an authorized representative of
NASB Holding was given at least 24 hours written notice or oral notification
and at which such representative did not object, provided, however, that
renewals (or extensions) of loans of no more than six months, or one year in
the case of construction loans that have been outstanding one year or less,
may be made at the time such loans are due for renewal, if consistent with
past practices, notwithstanding such objection if the Board of Directors or
Loan and Discount Committee determines after taking into account such
objection that such renewal is necessary to protect Community Bank's interest
and such loan is current, is not a classified asset and is not on Community
Bank's watch list;
(n) except as provided in Section 3.3(m), extend or renew loans, or
advance additional sums to a borrower whose loans, in whole or in part, have
been classified or listed as special mention by any regulatory authority or
included on Community Bank's watch list unless such extension, renewal or
advance shall have been approved in advance by the Board of Directors of
Community Bank or Community Bank's Loan and Discount Committee, and only if
such extension, renewal or advance was found by such Board or Committee to be
necessary in order to protect Community Bank's interests and in accordance
with sound banking practices at a loan committee or Board meeting of which
NASB Bank was given at least 24 hours written notice or oral notification and
at which such representative did not object;
(o) incur any additional borrowings other than short-term (six months or
less) FHLB borrowings and reverse repurchase agreements at reasonable market
interest rates consistent with past practice, or pledge any of its assets to
secure any borrowings other than as required pursuant to the terms of
borrowings of CBES or any Subsidiary in effect at the date hereof or in
connection with borrowings or reverse repurchase agreements permitted
hereunder;
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(p) accept any deposits from any person on terms materially more
favorable in any respect than those available to the general public in CBES's
market area, unless such deposits are accepted in accordance with a safe and
sound program or practice in existence at Community Bank prior to the date of
this Agreement;
(q) establish or impose a schedule of service charges or fees which
applies charges either substantially more or substantially less than similar
service charges and fees charged by other banks in CBES's market areas;
(r) make any capital expenditures in excess of $5,000 per expenditure
other than pursuant to binding commitments existing on the date hereof disclosed
in the CBES Disclosure Letter and other than expenditures necessary to maintain
existing assets in good repair or to make payment of necessary taxes;
(s) organize, capitalize, lend to or otherwise invest in any Subsidiary;
(t) elect to any senior executive office any person who is not a member
of the senior executive officer team of CBES as of the date of this Agreement or
elect to the Board of Directors of CBES any person who is not a member of the
Board of Directors of CBES as of the date of this Agreement;
(u) engage in any transaction that is not in the usual and ordinary
course of business and consistent with past practices;
(v) enter into any new line of business;
(w) take or omit to take any action that is intended or may reasonably be
expected to result in any of CBES's representations and warranties set forth
in this Agreement being or becoming untrue in any material respect, or which
would make any of such representations and warranties untrue or incorrect in
any material respect if made anew after taking such action;
(x) make any equity investment or commitment to make such an investment
in real estate or in any real estate development project, other than in
connection with foreclosures, settlements in lieu of foreclosure or troubled
loan or debt restructuring in the ordinary course of business consistent with
prudent banking practices;
(y) make, renew or increase any loan or other extension of credit, or
commit to make, renew or increase any such loan or extension of credit, to any
director or officer of CBES or any of its Subsidiaries, or any entity
controlled, directly or indirectly, by any of the foregoing; or
(z) agree or make any commitment to take any action that is prohibited by
this Section 3.3.
In the event that NASB Holding does not respond in writing to CBES within
two (2) business days of receipt by NASB Holding of a written request for CBES
to engage in any of the actions for which NASB Holding's prior written consent
is
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required pursuant to this Section 3.3, NASB Holding shall be deemed to have
consented to such action. Any request by CBES or response thereto by NASB
Holding shall be made in accordance with the notice provisions of Section 9.7
and shall note that it is a request pursuant to this Section 3.3 and shall
state that a failure to respond within two (2) business days shall constitute
consent.
Section 3.4. Conduct of NASB Holding's and Acquisition Sub's Businesses
Prior to the Effective Date. Except as expressly provided in this Agreement,
during the period from the date of this Agreement to the Effective Date, NASB
Holding and Acquisition Sub shall, and shall cause their respective
Subsidiaries to, use their commercially reasonable efforts to (i) conduct
their business in the regular, ordinary and usual course consistent with past
practice; (ii) maintain and preserve intact their business organization,
properties, leases, employees and advantageous business relationships; (iii)
take no action which would materially adversely affect or delay the ability
of CBES, NASB Holding, or Acquisition Sub to perform their respective
covenants and agreements on a timely basis under this Agreement and (iv) take
no action which would adversely affect or delay the ability of CBES, NASB
Holding or Acquisition Sub to obtain any necessary approvals, consents or
waivers of any Governmental Entity required for the transactions contemplated
hereby or which would reasonably be expected to result in any such approvals,
consents or waivers containing any material condition or restriction.
ARTICLE IV
Covenants
---------
Section 4.1. Acquisition Proposals. From and after the date hereof until
the termination of this Agreement, neither CBES nor Community Bank, nor any
of their respective officers, directors, employees, representatives, agents
or affiliates (including, without limitation, any investment banker, attorney
or accountant retained by CBES or any of its Subsidiaries), will, directly or
indirectly, initiate, solicit or knowingly encourage (including by way of
furnishing non-public information or assistance), or facilitate knowingly,
any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal (as defined
below), or enter into or maintain or continue discussions or negotiate with
any person or entity in furtherance of such inquiries or to obtain an
Acquisition Proposal or agree to or endorse any Acquisition Proposal, or
authorize or permit any of its officers, directors or employees or any of its
subsidiaries or any investment banker, financial advisor, attorney,
accountant or other representative retained by any of its Subsidiaries to
take any such action; provided, however, that nothing contained in this
Section 4.1 shall prohibit the Board of Directors of CBES from (i) furnishing
information to, or entering into discussions or negotiations with, any person
or entity that makes an unsolicited, written, bona fide proposal to acquire
CBES pursuant to a merger, consolidation, share exchange, business
combination, tender or exchange offer or other similar transaction, if, and
only to the extent that (A) the Board of Directors of CBES, after
consultation with and based upon the advice of independent legal counsel,
determines in good faith that such action is necessary for the Board of
Directors of CBES to comply with its fiduciary duties to stockholders under
applicable law, and (B) prior to furnishing such information to, or
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entering into discussions or negotiations with, such person or entity, CBES
(x) provides reasonable notice to NASB Holding to the effect that it is
furnishing information to, or entering into discussions or negotiations with,
such person or entity and (y) receives from such person or entity an executed
confidentiality agreement in substantially the same form as the one
heretofore executed by NASB Holding (except that disclosure of the person's
identity will be permitted); (ii) complying with Rule 14e-2 promulgated under
the Exchange Act with regard to a tender or exchange offer; or (iii) failing
to make or withdrawing or modifying its recommendation if there exists an
Acquisition Proposal as to which the Board of Directors of CBES has received
a written opinion from its independent financial adviser that such Proposal
may be superior to the Merger from a financial point-of-view to CBES's
stockholders and, after consultation with independent legal counsel, the
Board of Directors of CBES determines in good faith that such action is
necessary for the Board of Directors of CBES to comply with its fiduciary
duties to stockholders under applicable law (any such Acquisition Proposal as
to which the Board of Directors has received the opinion and made the
determination described in this clause (iii) being referred to herein as a
"Superior Proposal"). CBES shall notify NASB Holding orally and in writing of
any Acquisition Proposal (including, without limitation, the terms and
conditions of any such Acquisition Proposal and the identity of the person
making such Acquisition Proposal) as promptly as practicable (but, in any
event, no later than 24 hours) after the receipt thereof and shall keep NASB
Holding informed of the status and details of any such Acquisition Proposal.
For purposes of this Agreement, "Acquisition Proposal" shall mean a proposal
to enter into or make any of the following (other than the transactions
contemplated hereunder) involving CBES or any of its Subsidiaries: (i) any
merger, consolidation, share exchange, business combination, or other similar
transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition of 25% or more of the assets of CBES or Community Bank,
taken as a whole, in a single transaction or series of transactions; (iii)
any tender offer or exchange offer for 25% or more of the outstanding shares
of capital stock of CBES or the filing of a registration statement under the
Securities Act of 1933 in connection therewith; or (iv) any public
announcement of a proposal, plan or intention to do any of the foregoing or
any agreement to engage in any of the foregoing.
Section 4.2. Certain Policies and Actions of CBES.
(a) At the request of NASB Bank, CBES shall use reasonable efforts to
cause Community Bank to modify and change its loan, litigation and real estate
valuation policies and practices (including loan classifications and levels
of reserves) and investment and asset/liability management policies and
practices after the date on which all Requisite Regulatory Approvals and
stockholder approvals are received, and after receipt of written confirmation
from NASB Holding that it is not aware of any fact or circumstance that would
prevent completion of the Merger, and prior to the Effective Date; provided,
however, that CBES shall not be required to take such action more than 30
days prior to the Effective Date; and provided, further, that such policies
and procedures are not prohibited by GAAP or any applicable laws and
regulations or, in the view of the Board of Directors of Community Bank not
in the best interests of Community Bank.
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(b) CBES's representations, warranties and covenants contained in this
Agreement shall not be deemed to be untrue or breached in any respect for any
purpose as a consequence of any modifications or changes undertaken solely on
account of Section 4.2(a). NASB Bank agrees to hold harmless, indemnify and
defend CBES and its Subsidiaries, and their respective directors, officers
and employees, for any loss, claim, liability or other damage caused by or
resulting from compliance with Section 4.2(a).
Section 4.3. Access and Information. Upon reasonable notice, CBES shall
(and shall cause its Subsidiaries to) afford NASB Holding and its
representatives (including, without limitation, directors, officers and
employees of NASB Holding and its affiliates and counsel, accountants and
other professionals retained by NASB Holding) such reasonable access during
normal business hours throughout the period prior to the Effective Date to
the books, records (including, without limitation, tax returns and work
papers of independent auditors), contracts, properties, personnel and to such
other information relating to CBES and its Subsidiaries as NASB Holding may
reasonably request; provided, however, that no investigation pursuant to this
Section 4.3 shall affect or be deemed to modify any representation or
warranty made herein. CBES shall provide NASB Holding with true and complete
copies of all financial and other information relating to the business or
operations of CBES and its Subsidiaries that is provided to directors of CBES
and Community Bank in connection with meetings of their Board of Directors or
committees thereof. In furtherance, and not in limitation of the foregoing,
CBES shall make available to NASB Holding all information necessary or
appropriate for the preparation and filing of all real property and real
estate transfer tax returns and reports required by reason of the Merger.
NASB Holding will not, and will cause its representatives not to, remove any
original documents from the Premises of CBES or Community Bank or use any
information obtained pursuant to this Section 4.3 for any purpose unrelated
to the consummation of the transactions contemplated by this Agreement.
Subject to the requirements of applicable law, NASB Holding will keep
confidential, and will cause its representatives to keep confidential, all
information and documents obtained pursuant to this Section 4.3 unless such
information (i) was already known to NASB Holding or an affiliate of NASB
Holding, other than pursuant to a confidentiality agreement or other
confidential relationship, (ii) becomes available to NASB Holding or an
affiliate of NASB Holding from other sources not known by such party to be
bound by a confidentiality agreement or other obligation of secrecy, (iii) is
disclosed with the prior written approval of CBES or (iv) is or becomes
readily ascertainable from published information or trade sources. In the
event that this Agreement is terminated or the transactions contemplated by
this Agreement shall otherwise fail to be consummated, each party shall
promptly cause all copies and abstracts of documents received from any other
party, and all extracts of or from and materials containing information or
data taken from any such document to be returned to the party that furnished
the same.
Section 4.4. Certain Filings, Consents and Arrangements. NASB Holding or
Acquisition Sub shall as soon as practicable and in cooperation with CBES
(and in any event within 30 days after the date hereof) make, or cause to be
made, any filings and applications and provide any notices required to be
filed or provided in order to obtain all approvals, consents and waivers of
Governmental Entities and third parties
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necessary or appropriate for the consummation of the transactions
contemplated hereby, including approvals needed for the payment of any
special dividends required to fund the Merger Consideration. NASB Holding or
Acquisition Sub and CBES each shall provide the other and its counsel with an
opportunity to review all filings, applications and notices and related
correspondence and other documents and information prior to their being
submitted to, and all correspondence and other documents and information
received from, any governmental authority and shall provide the other with
copies of all filings, applications and notices submitted to any Governmental
Entity, in each case within two (2) business days after the submission or
receipt thereof. NASB Holding, Acquisition Sub, CBES and Community Bank
shall promptly provide all information and documents requested by any
Governmental Entity in connection with any filing, application or notice
filed or provided under this Section 4.4 and shall otherwise use its best
efforts to obtain the requisite approvals, consents and waivers as promptly
as is reasonably possible.
Section 4.5. Anti-takeover Provisions. CBES and its Subsidiaries shall
take all steps required by any relevant federal or state law or regulation or
under any relevant agreement or other document to exempt or continue to
exempt NASB Holding, Acquisition Sub, the Agreement and the Merger from any
provisions of an anti-takeover nature contained in CBES's or its
Subsidiaries', certificates of incorporation and bylaws and the provisions of
any federal or state anti-takeover laws.
Section 4.6. Additional Actions. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all commercially
reasonable efforts to take promptly, or cause to be taken promptly, all
actions and to do promptly, or cause to be done promptly, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this
Agreement, including the Merger, as expeditiously as possible, including
using efforts to obtain all necessary actions or non-actions, extensions,
waivers, consents and approvals from all applicable Governmental Entities,
effecting all necessary registrations, applications and filings (including,
without limitation, filings under any applicable state securities laws) and
obtaining any required contractual consents and regulatory approvals.
Section 4.7. Publicity. CBES and NASB Holding shall jointly develop a
plan regarding press releases and other public statements with respect to the
Merger and any other transaction contemplated hereby and in making any
filings with any Governmental Entity or with any national securities exchange
with respect thereto.
Section 4.8. Stockholders Meeting. CBES shall take all action necessary,
in accordance with applicable law and its certificate of incorporation and
bylaws, to convene a meeting of its stockholders ("Stockholder Meeting") as
promptly as practicable for the purpose of considering and voting on approval
and adoption of this Agreement, the Merger and the other transactions
provided for in this Agreement. CBES shall file its preliminary proxy
statement with the SEC within 15 days of the receipt of its audited financial
statements for the fiscal year ended June 30,
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2002, provided, however, that if CBES receives its audited financial
statements for the fiscal year ended June 30, 2002 prior to the date of
execution of this Agreement, CBES shall file its preliminary proxy statement
with the SEC within 15 days of the date of execution of this Agreement.
Except to the extent legally required for the discharge by the Board of
Directors of its fiduciary duties as advised by CBES's counsel, the Board of
Directors of CBES shall (a) recommend at its Stockholder Meeting that the
stockholders vote in favor of and approve the transactions provided for in
this Agreement and (b) use all reasonable efforts to solicit such approvals.
CBES may employ professional proxy solicitors to assist in contacting
stockholders in connection with soliciting favorable votes on the Merger.
Section 4.9. Proxy Statement. For the purposes of holding the
Stockholders' Meeting of CBES, CBES shall prepare a proxy statement
satisfying in all material respects all applicable requirements of the
Exchange Act, and the rules and regulations thereunder. NASB Holding agrees
to provide for inclusion in such proxy statement all information reasonably
necessary to satisfy the requirements of the Exchange Act and the rules and
regulations thereunder and such information shall not contain any untrue
statements of a material fact or omit to state any material fact required to
be stated in such proxy statement with respect to NASB Holding or its
Subsidiaries or to make the statements therein with respect to NASB Holding
or its Subsidiaries not misleading.
Section 4.10. Notification of Certain Matters. Each party shall give
prompt notice to the other of: (a) any event or notice of, or other
communication relating to, a default or event that, with notice or lapse of time
or both, would become a default, received by it or any of its Subsidiaries
subsequent to the date of this Agreement and prior to the Effective Date, under
any contract material to the financial condition, properties, businesses or
results of operations of each party and its Subsidiaries taken as a whole to
which each party or any Subsidiary is a party or is subject; and (b) any
event, condition, change or occurrence which individually or in the aggregate
has, or which, so far as reasonably can be foreseen at the time of its
occurrence, is reasonably likely to result in a Material Adverse Effect with
respect to such party and its Subsidiaries taken as a whole. Each of CBES
and NASB Holding shall give prompt notice to the other party of any (i)
notice or other communication from any third party alleging that the consent
of such third party is or may be required in connection with any of the
transactions contemplated by this Agreement and (ii) the occurrence or
non-occurrence of any fact or event which would be reasonably likely to cause
any representation or warranty contained in this Agreement to be untrue or
inaccurate in any respect at any time from the date hereof to the Effective
Date or to cause any covenant, condition or agreement under this Agreement
not to be complied with or satisfied in all material respects.
Section 4.11. Employees.
(a) All persons who are employees of Community Bank immediately prior to
the Effective Date and whose employment is not specifically terminated at or
prior to the Effective Date (a "Continuing Employee") shall, at the Effective
Date, remain employees of Community Bank. All of the Continuing Employees
shall be employed at the will of Community Bank and no contractual right to
employment shall inure to such employees because of this Agreement. NASB
Holding will use its best
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efforts to retain all of the employees of Community Bank, subject to the
qualifications of such employees and the needs of NASB Holding. At any time
after the receipt of the Requisite Regulatory Approvals and Stockholder
approval for the transactions contemplated by this Agreement, or by mutual
consent prior thereto, CBES shall (i) allow NASB Holding to conduct
interviews with the existing employees of CBES and Community Bank and to
communicate with the employees regarding the terms of their employment which
will be in effect on or after the Effective Date and (ii) allow NASB Bank to
conduct training sessions for employees of CBES and its Subsidiaries at NASB
Bank's or Community Bank's facilities. All such training sessions shall be
scheduled so as to have minimal impact upon the employees' performance of
their normal daily duties.
(b) Immediately following the Effective Date, each Continuing Employee
shall be eligible to participate in NASB Holding's or NASB Bank's benefit plans
on the same basis as a new employee of NASB Holding's or NASB Bank's (it being
understood that inclusion of Continuing Employees in NASB Holding's or NASB
Bank's benefit plans may occur at different times with respect to different
plans). Service with CBES or its Subsidiaries shall be treated as service
with NASB Holding or NASB Bank for purposes of satisfying any waiting
periods, evidence of insurability requirements, or the application of any
preexisting condition limitation with respect to any NASB Holding or NASB
Bank "welfare benefit plan", as defined in Section 3(1) of ERISA. Each
Continuing Employee shall receive credit for service with CBES or its
Subsidiaries for purposes of any employee benefit plans or computing vacation
pay benefits.
(c) CBES shall retain all existing life insurance policies owned by CBES.
(d) CBES shall not encourage the further exercise of any CBES Options and
shall advise optionees as to the payments to which they will be entitled
hereunder.
(e) Prior to September 30, 2002, Community Bank shall fund the CBES
Employee Stock Ownership Plan (the "ESOP") with the scheduled contribution of
Twenty Four Thousand Nine Hundred Sixty Five and 80/100 Dollars ($24,965.80) to
provide the ESOP funds to pay the principal and interest due on the CBES loan
to the ESOP from CBES; provided, however, that the amount of such payment
from Community Bank to the ESOP may be adjusted if the total amount of
scheduled interest due on the loan to CBES changes due to a variation in the
adjustable interest rate of the loan; and provided, further, that if the
Effective Date of the Merger occurs after December 31, 2002, Community Bank
shall fund the CBES ESOP with the scheduled contribution payment necessary to
provide the ESOP funds to pay the principal and interest due on the CBES loan
to the ESOP from CBES.
(f) Prior to the Effective Date, the ESOP shall be amended to state that
any Merger Consideration remaining after repayment of the loan between CBES and
the ESOP shall be allocated as investment earnings of the ESOP to the ESOP
accounts of employees of Community Bank or any of its Subsidiaries who are
ESOP participants and beneficiaries ("ESOP Participants") in accordance with
the terms of the ESOP as
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amended with respect to such termination and as in effect on the Effective
Date. All ESOP Participants shall fully vest and have a nonforfeitable
interest in their accounts under the ESOP determined as of the Effective
Date. As soon as practicable after the Effective Date, any loan between CBES
and the ESOP shall be repaid in full from the Merger Consideration received
by the ESOP for unallocated shares of CBES Common Stock held by the ESOP upon
the conversion of such shares into cash pursuant to this Agreement. As soon
as reasonably practicable after the ESOP loan has been repaid, NASB Holding
shall terminate the ESOP and shall file an application for determination with
the Internal Revenue Service ("IRS") as to the tax qualified status of the
ESOP upon its termination under Section 401(a) and 4975(e)(7) of the IRC (the
"Determination Letter"). As soon as reasonably practicable after the receipt
of a favorable Determination Letter from the IRS, NASB Holding shall instruct
the ESOP Trustee to make distributions of the benefits under the ESOP to the
ESOP Participants in accordance with the provisions of the ESOP.
(g) NASB Holding agrees to honor the terms and conditions of all Director
Emeritus Agreements by and between Community Bank and certain directors of
Community Bank, a copy of each of which is attached to CBES's Disclosure
Letter, and NASB Holding agrees that the benefits to be paid to each affected
director shall be the amount accrued on the books and records of Community
Bank as of the last day of the calendar month preceding the Closing Date,
which amount shall not be less than the amount shown in CBES's Disclosure
Letter.
(h) NASB Holding agrees to honor the terms and conditions of all Salary
Continuation Agreements by and between Community Bank and certain employees
of Community Bank, a copy of each of which is attached to CBES's Disclosure
Letter, and NASB Holding agrees that the benefits to be paid to each affected
employee shall be the amount accrued on the books and records of Community
Bank as of the last day of the calendar month preceding the Closing Date,
which amount shall not be less than the amount shown in CBES's Disclosure
Letter.
(i) NASB Holding agrees to honor the terms and conditions of (i) the
Community Bank Severance Plan, which Severance Plan shall not be revoked,
terminated, modified or amended by NASB Holding or its Subsidiaries or its
successors and assigns, (ii) the Employee Bonus Agreements by and between
Community Bank and certain employees of Community Bank, (iii) the Severance
Agreement, as amended, by and between Dennis D. Hartman and Community Bank
and (iv) the Severance Agreement , as amended, by and between Margaret E.
Teegarden and Community Bank; a copy of each of which is attached to CBES's
Disclosure Letter.
Section 4.12. Indemnification. Unless prohibited by law or regulation in
effect at the time a Claim (as defined below) is pending and except as
provided in Section 4.12(b) below, from the Effective Date through six (6)
years after the Effective Date, NASB Holding (and any successor) agrees to
indemnify each director, officer and employee of CBES and Community Bank
serving in such capacities as of the date of this Agreement (each, an
"Indemnified Party"), from and against Indemnified Payments and Indemnified
Expenses (as both terms are defined below) incurred in connection with
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Claims brought against any Indemnified Party, arising out of matters existing
or occurring at or prior to the Effective Date (including the transactions
contemplated by this Agreement), whether asserted or claimed prior to, at or
after the Effective Date, provided that in the case of any Claims asserted
prior to the Effective Date NASB Holding has been notified of such Claims
prior to Closing. NASB Holding further agrees, subject to applicable
regulatory restrictions, to advance any reasonable Indemnified Expenses to
such Indemnified Party as they are from time to time incurred provided that
the Indemnified Party to whom expenses are being advanced provides a written
undertaking to repay such expenses if it is ultimately determined that such
person is not entitled to Indemnification.
(a) As used herein, the foregoing terms have the following meanings:
(i) A "Claim" is any threatened, pending or completed action, suit,
investigation or proceeding (whether civil, criminal, administrative or
investigative) which relates to services rendered prior to the Effective Date
by an Indemnified Party on behalf of CBES or its Subsidiaries.
(ii) "Indemnified payments" shall mean judgments, fines and amounts
paid in settlement of Claims.
(iii) "Indemnified expenses" shall mean all costs and expenses
(including but not limited to attorneys' fees) actually and reasonably incurred
by an Indemnified Party in connection with defending against such Claims.
(b) NASB Holding shall not be required to indemnify any Indemnified Party
from and against Indemnified expenses and/or Indemnified payments if (i) a
final non-appealable order is entered by a court or administrative tribunal
having jurisdiction pursuant to a Claim brought by a person other than the
OTS that such Indemnified Party's conduct was knowingly fraudulent,
deliberately dishonest, or willful misconduct and the Claim giving rise to
the entry of such order was brought by a third party; or (ii) a final
non-appealable order is issued by an administrative tribunal or court having
jurisdiction pursuant to a Claim brought by the OTS or a settlement agreement
is entered into between the Indemnified Party and the OTS: (x) imposing a
civil money penalty against the Indemnified Party; (y) removing the
Indemnified Party from office or prohibiting such person from participating
in the conduct of NASB Holding; or (z) directing the Indemnified Party to
cease and desist taking any of the actions set forth in Section 8(b) of the
FDIA (12 U.S.C. ss. 1818(b)).
(c) Any Indemnified Party wishing to claim indemnification under Section
4.12, must (i) upon learning of any such Claim, promptly notify NASB Holding
thereof and provide to NASB Holding copies of all written materials related
to the Claim and any other information related to such Claim; (ii) consent to
the defense of any such Claim by competent counsel chosen by NASB Holding;
and (iii) cooperate in the defense of any such matter by offering testimony
and by complying with all reasonable requests made by NASB Holding or by
counsel hired by NASB Holding. NASB Holding shall not be liable for any
settlement effected by an Indemnified Party without its prior
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written consent, which consent may not be withheld unless such settlement is
unreasonable in light of such Claims against, or defenses available to, such
Indemnified Party. If NASB Holding assumes the defense of any such Claim
pursuant to this Section 4.12(c), NASB Holding shall not be liable to such
Indemnified Party for any legal expenses of additional counsel subsequently
incurred by such Indemnified Party in connection with the defense thereof.
If NASB Holding does not elect to assume such defense within thirty days from
the date NASB Holding receives notice of the Claim, the Indemnified Party may
retain counsel satisfactory to such Indemnified Party, and NASB Holding shall
remain responsible for the reasonable fees and expenses of such counsel as
set forth above.
(d) NASB Holding shall pay all reasonable costs, including attorneys'
fees and expenses, that may be incurred by any Indemnified Party in successfully
enforcing the indemnity and other obligations provided for in this Section
4.12 to the fullest extent permitted by law. The rights of each Indemnified
Party under this paragraph (d) shall be in addition to any other right of
indemnification under this Section 4.12.
(e) If NASB Holding or any of its successors or assigns (i) consolidates
with or merges into any other person or entity and shall not be the
continuing or surviving corporation or entity of such consolidation or merger
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person or entity, then, and in each such case, to the extent
necessary, proper provision shall be made so that the successors and assigns
of NASB Holding assume the obligations set forth in this Section 4.12.
(f) NASB Holding shall pay up to $50,000 for premiums to provide reporting
endorsement coverage under CBES's and Community Bank's current director and
officer insurance policies for each director, officer and employee of CBES
and Community Bank for a period of three (3) years.
(g) The provisions of this Section 4.12 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and the heirs,
executors, and administrators of such Indemnified Party.
Section 4.13. Phase I and Phase II Environmental Assessments of Community
Bank's Primary Banking Facility. CBES hereby agrees that NASB Holding may
cause to be performed a Phase I and Phase II environmental assessment of the
real property on which Community Bank's primary banking facility is located
(1001 North Jesse James Road, Excelsior Springs, Missouri 64024). If as a
result of such assessment it is determined that environmental clean-up costs
would exceed $500,000, then NASB Holding may elect to terminate this
Agreement pursuant to Section 7.1(h).
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ARTICLE V
Conditions to Consummation
--------------------------
Section 5.1. Conditions to Each Party's Obligations. The respective
obligations of each party to effect the Merger and any other transactions
contemplated by this Agreement shall be subject to the satisfaction of the
following conditions:
(a) This Agreement shall have been approved by the requisite vote of
CBES's stockholders in accordance with applicable laws and regulations.
(b) The Requisite Regulatory Approvals, the consent of the OTS and any
other waivers with respect to this Agreement and the transactions contemplated
hereby shall have been obtained and shall remain in full force and effect,
and all statutory waiting periods shall have expired; and all other consents,
waivers and approvals of any third parties which are necessary to permit the
consummation of the Merger and the other transactions contemplated hereby
shall have been obtained or made except for those the failure to obtain which
would not have a Material Adverse Effect (i) on CBES and its Subsidiaries
taken as a whole or (ii) on NASB Holding and its Subsidiaries taken as a
whole. No such approval or consent shall have imposed any condition or
requirement that would so materially and adversely impact the economic or
business benefits to NASB Holding or CBES of the transactions contemplated
hereby that, had such condition or requirement been known, such party would
not, in its reasonable judgment, have entered into this Agreement.
(c) No party hereto shall be subject to any order, decree, ruling or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits the consummation of the Merger or any other transactions
contemplated by this Agreement and no Governmental Entity shall have
instituted any proceeding for the purpose of enjoining or prohibiting the
consummation of the Merger or any transactions contemplated by this Agreement.
(d) No statute, rule or regulation shall have been enacted, entered,
promulgated, interpreted, applied or enforced by any Governmental Entity
which prohibits, restricts or makes illegal consummation of the Merger or any
other transactions contemplated by this Agreement.
(e) No litigation, claim, action, suit or other legal or administrative
proceeding challenging the Merger shall be pending against any party hereto
or any of their Subsidiaries, directors or officers, which in the opinion of
counsel for NASB Holding is likely to result in the incurring of damages and
defense costs not covered by insurance by NASB Holding or any of its
Subsidiaries or by any person or persons whom NASB Holding would be required
to indemnify in an aggregate amount exceeding $250,000.
Section 5.2. Conditions to the Obligations of NASB Holding. Each of the
obligations of CBES required to be performed by it at or prior to the Closing
pursuant
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to the terms of this Agreement shall have been duly performed and complied
with in all material respects and the representations and warranties of CBES
contained in this Agreement shall be true and correct, subject to Sections
2.1 and 2.2, as of the date of this Agreement and as of the Effective Date as
though made at and as of the Effective Date (except as to any representation
or warranty which specifically relates to an earlier date), and NASB Holding
shall have received a certificate to the foregoing effect signed by the chief
executive officer and the president of CBES.
Section 5.3. Conditions to the Obligations of CBES. The obligations of
CBES to effect the Merger and any other transactions contemplated by this
Agreement shall be further subject to the satisfaction of the following
additional conditions:
(a) Each of the obligations of NASB Holding or Acquisition Sub required to
be performed by it at or prior to the Closing pursuant to the terms of this
Agreement shall have been duly performed and complied with in all material
respects and the representations and warranties of NASB Holding or
Acquisition Sub contained in this Agreement shall be true and correct,
subject to Sections 2.1 and 2.2, as of the date of this Agreement and as of
the Effective Date as though made at and as of the Effective Date (except as
to any representation or warranty which specifically relates to an earlier
date), and CBES shall have received a certificate to the foregoing effect
signed by the chief executive officer and the chief financial or principal
accounting officer of NASB Holding and Acquisition Sub.
(b) NASB Holding shall have provided to the Exchange Agent sufficient cash
to pay the aggregate Merger Consideration and CBES shall have received a
certificate from the Exchange Agent to such effect.
ARTICLE VI
Data Processing
---------------
Section 6.1. Sample Data. CBES shall cause Community Bank to provide to
NASB Bank, a machine-readable data tape of all of Community Bank's loan and
deposit accounts, together with a written description of the file, record,
and field data types and formats, to allow NASB Bank to prepare for a data
processing conversion, at a date prior to Closing agreed upon between NASB
Bank and CBES. Representatives of NASB Bank shall have reasonable access to
Community Bank's IT staff or other pertinent personnel during normal business
hours to facilitate the accurate and proper mapping or conversion of all
customer accounts to NASB Bank's data processing system. If this Agreement
is terminated for any reason, customer information will either be promptly
returned to Community Bank or destroyed by NASB Bank at the option of
Community Bank. At the request of Community Bank, NASB Holding shall cause
NASB Bank to enter into an agreement with Community Bank to ensure compliance
with Section 502(b)(2) of the Gramm-Leach-Bliley Act (15 U.S.C. ss. 6802(b)(2))
and to ensure the confidentiality and security of nonpublic personal
information of Community Bank's consumer customers. In addition, at the
request of Community Bank, NASB Holding shall cause NASB Bank to enter into
an agreement with Community Bank required to
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ensure that, if this Agreement is terminated, NASB Bank will not use the
customer data provided to it for competitive purposes and to ensure that NASB
Bank will not directly and purposefully solicit business with any of the
customers included in the customer data provided by Community Bank.
Section 6.2. Information for Check Ordering. After receipt of the
Requisite Regulatory Approvals of the transactions contemplated by this
Agreement, CBES shall provide to NASB Bank a machine-readable data tape of
all of Community Bank's deposits, including all customer name and address
information, to enable NASB Bank to begin ordering checks, deposit slips, and
other transaction items for use by its customers.
Section 6.3. Installation of Data Circuits. After the Effective Date of
this Agreement, CBES shall cause Community Bank to give NASB Bank reasonable
access to Community Bank's locations during normal business hours for the
purposes of installing and testing data circuits and data processing
equipment, provided that the location, installation, and testing of said
circuits and equipment shall not be permitted to disrupt Community Bank's
normal daily functions and operation. In the event that this Agreement is
terminated without consummation of the planned transactions, NASB Holding
shall cause NASB Bank to remove its data processing equipment and circuits
within 30 days after the termination and shall repair promptly any damage
done to Community Bank's property during the installation or removal, all at
NASB Bank's sole expense.
ARTICLE VII
Termination
-----------
Section 7.1. Termination. This Agreement may be terminated, and the
Merger abandoned, at or prior to the Effective Date, either before or after any
requisite stockholder approval:
(a) by the mutual consent of NASB Holding and CBES in a written
instrument, if the Board of Directors of each so determines by vote of a
majority of the members of its entire Board; or
(b) by NASB Holding or CBES, if its Board of Directors so determines by
vote of a majority of the members of its entire Board, in the event of the
failure of the stockholders of CBES to approve the Agreement at the Stockholder
Meeting; or
(c) by NASB Holding or CBES, by written notice to the other party, if
either (i) any approval, consent or waiver of a Government Regulatory Agency
required to permit consummation of the transactions contemplated hereby shall
have been denied or (ii) any Governmental Entity of competent jurisdiction
shall have issued a final, unappealable order enjoining or otherwise
prohibiting consummation of the transactions contemplated by this Agreement;
or
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(d) by NASB Holding or CBES, if its Board of Directors so determines by
vote of a majority of the members of its entire Board, in the event that the
Merger is not consummated by January 31, 2003, unless the failure to so
consummate by such time is due to the breach of any representation, warranty
or covenant contained in this Agreement by the party seeking to terminate; or
(e) by NASB Holding or CBES (provided that the party seeking termination
is not then in material breach of any representation, warranty, covenant or
other agreement contained herein), in the event of (i) a failure to perform
or comply by the other party with any covenant or agreement of such other
party contained in this Agreement, which failure or non-compliance is
material in the context of the transactions contemplated by this Agreement,
or (ii) subject to Section 2.2(a), any inaccuracies, omissions or breach in
the representations, warranties, covenants or agreements of the other party
contained in this Agreement the circumstances as to which either individually
or in the aggregate have, or reasonably could be expected to have, a Material
Adverse Effect on such other party; in either case which has not been or
cannot be cured within 30 calendar days after written notice thereof is given
by the party seeking to terminate to such other party; or
(f) by CBES, if the Board of Directors of CBES reasonably determines by
vote of a majority of the members of its entire Board that a proposal made by a
third party to acquire, directly or indirectly, including pursuant to a
tender offer, exchange offer, merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction, for
consideration consisting of cash and/or securities, more than 50% of the
combined voting power of the shares of CBES Common Stock then outstanding or
all or substantially all of the assets of CBES constitutes a Superior
Proposal and that such proposal must be accepted in order to comply with the
Board of Directors' fiduciary duties to stockholders under applicable law;
provided, however, that prior to any such termination, CBES shall use its
reasonable efforts to negotiate in good faith with NASB Holding to make such
adjustments in the terms and conditions of this Agreement that would enable
CBES to proceed with the transactions contemplated herein; or
(g) by NASB Holding, if the Adjusted Stockholders' Equity of CBES, as
defined in Section 3.2(g) hereof, is less than $13,500,000.
(h) by NASB Holding, if the Phase I and Phase II environmental
assessments permitted by Section 4.13 hereof determine that environmental
clean-up costs would exceed $500,000.
Section 7.2. Termination Fee. In the event that CBES terminates this
Agreement pursuant to Section 7.1(f) and, within six (6) months after the
termination of this Agreement, CBES or Community Bank enters into a
definitive agreement with the person that made the Superior Proposal then
CBES shall, within 10 business days following written demand by NASB Holding
pay to NASB Holding $250,000 in cash.
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Section 7.3. Effect of Termination. In the event of termination of this
Agreement by either NASB Holding or CBES prior to the consummation of the
Merger as provided in Section 7.2, this Agreement shall forthwith become void
and have no effect except (i) the obligations of the parties under Sections
4.3 (with respect to confidentiality and the return of information), 7.2 and
9.6 shall survive any termination of this Agreement and (ii) that
notwithstanding anything to the contrary contained in this Agreement, no
party shall be relieved or released from any liabilities or damages arising
out of its willful breach of any provision of this Agreement.
ARTICLE VIII
Closing and Effective Date
--------------------------
Section 8.1. Effective Date. The closing of the transactions
contemplated hereby ("Closing") shall take place at the offices of Stinson
Morrison Hecker LLP, 1201 Walnut Street, Suite 2800, Kansas City, Missouri,
unless another place is agreed to by NASB Bank and CBES, on a date designated by
NASB Holding and CBES ("Closing Date") that is no later than fifteen (15) days
following the date on which the expiration of the last applicable waiting
period in connection with the notices to and the approvals of Governmental
Entities shall occur and all conditions to the consummation of this Agreement
are satisfied or waived or on such other date as may be agreed to by the
parties. Prior to the Closing Date, CBES and Community Bank shall each
execute a Certificate of Merger in accordance with all appropriate legal
requirements, which shall be filed as required by law on the Closing Date,
and the Merger provided for therein shall become effective upon such filing
or on such date as may be specified in such Certificate of Merger. The date
of such filing or such later effective date as specified in the Certificate
of Merger is herein referred to as the "Effective Date."
Section 8.2. Deliveries at Closing. Subject to the provisions of
Article V and Article VII, on the Closing Date there shall be delivered to NASB
Holding and CBES the documents and instruments required to be delivered under
Article V.
ARTICLE IX
Certain Other Matters
---------------------
Section 9.1. Certain Definitions; Interpretation. As used in this
Agreement, the following terms shall have the meanings indicated:
"Affiliate" means any person (a) which directly or indirectly
controls, or is controlled by, or is under common control with any other
person or any Subsidiary of that other person; (b) which directly or
beneficially owns or controls 5% or more of any class of voting stock of
another person or any Subsidiary of that other person; or (c) of which
5% or more of any class of voting stock is owned directly or
beneficially by any other person or any Subsidiary of that other person.
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"Material" means material to NASB Holding or CBES (as the case may
be) and its respective Subsidiaries, taken as a whole.
"Person" includes an individual, corporation, limited liability
company, partnership, association, trust or unincorporated organization.
When a reference is made in this Agreement to Sections, Exhibits or
Schedules, such reference shall be to a Section of, Exhibit or Schedule to,
this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for ease of reference only and shall
not affect the meaning or interpretation of this Agreement. Whenever the
words "include," "includes" or "including" are used in this Agreement, they
shall be deemed followed by the words "without limitation." Any singular
term in this Agreement shall be deemed to include the plural, and any plural
term the singular. Any reference to gender in this Agreement shall be deemed
to include any other gender.
Section 9.2. Survival. Only those agreements and covenants of the
parties that are by their terms applicable in whole or in part after the
Effective Date, including Section 4.3, Section 4.11 and Section 4.12 of this
Agreement, shall survive the Effective Date. All other representations,
warranties, agreements and covenants shall be deemed to be conditions of the
Agreement and shall not survive the Effective Date.
Section 9.3. Waiver; Amendment. Prior to the Effective Date, any
provision of this Agreement may be (i) waived in writing by the party benefited
by the provision or (ii) amended or modified at any time (including the
structure of the transaction) by an agreement in writing between the parties
hereto except that, after the vote by the stockholders of CBES, no amendment or
modification may be made that would reduce the amount or alter or change the
kind of consideration to be received by holders of CBES Common Stock or
contravene any provision of the DGCL or the federal banking laws, rules and
regulations.
Section 9.4. Counterparts. This Agreement may be executed in counterparts
each of which shall be deemed to constitute an original, but all of which
together shall constitute one and the same instrument.
Section 9.5. Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Missouri, without
regard to conflicts of laws principles.
Section 9.6. Expenses. Each party hereto will bear all expenses
incurred by it in connection with this Agreement and the transactions
contemplated hereby.
Section 9.7. Notices. All notices, requests, acknowledgments and other
communications hereunder to a party shall be in writing and shall be deemed
to have been duly given when delivered by hand, overnight courier or
facsimile transmission (confirmed in writing) to such party at its address or
facsimile number set forth below or
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such other address or facsimile transmission as such party may specify by
notice (in accordance with this provision) to the other party hereto.
If to CBES, to:
CBES Bancorp, Inc.
913 West Liberty Drive
Liberty, Missouri 64068
Facsimile: (816) 415-2002
Attention: Mr. Paul L. Thomas
With copies to:
C. Robert Monroe, Esq.
Stinson Morrison Hecker LLP
1201 Walnut Street, Suit 2800
Kansas City, Missouri 64106-2150
Facsimile: (816) 292-2001
If to NASB Holding or Acquisition Sub, to:
NASB Financial, Inc.
12498 South 71 Highway
Grandview, Missouri 64030
Facsimile: (816) 316-4504
Attention: Mr. Keith B. Cox
With copies to:
Joseph T. Porter, Jr., Esq.
Polsinelli Shalton & Welte, P.C.
Suite 1100
100 South 4th Street
St. Louis, Missouri 63102
Facsimile: (314) 231-1776
Section 9.8. Entire Agreement; etc. This Agreement, together with the
Disclosure Letters, represents the entire understanding of the parties hereto
with reference to the transactions contemplated hereby and supersedes any and
all other oral or written agreements heretofore made. All terms and
provisions of this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
Except for Sections 4.11 and 4.12 which confer rights on the parties
described therein, nothing in this Agreement is intended to confer upon any
other person any rights or remedies of any nature whatsoever under or by
reason of this Agreement.
Section 9.9. Specific Performance. NASB Holding and CBES agree that the
franchise value of Community Bank represents a unique asset and that the
failure
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of either party to perform the terms of this Agreement would cause
irreparable harm for which monetary damages would be totally inadequate.
Therefore, either party shall be entitled to specific performance of the
terms of this Agreement. Nothing contained in this Agreement, however, shall
be deemed as granting to NASB Holding control over CBES or Community Bank
prior to the Effective Date. Until the Requisite Regulatory Approvals and
CBES's Stockholders Approvals have been received, a breach of this Agreement
by either party may be remedied only by an action for money damages.
Section 9.10. Successors and Assigns; Assignment. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that this Agreement may
not be assigned by either party hereto without the written consent of the
other party.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized officers as of the date first above
written.
NASB FINANCIAL, INC.
By: /s/ Keith B. Cox
-------------------------------------
Name: Keith B. Cox
Title: President
NASB ACQUISITION SUBSIDIARY, INC.
By: /s/ Keith B. Cox
-------------------------------------
Name: Keith B. Cox
Title: President
CBES BANCORP, INC.
By: /s/ Paul L. Thomas
-------------------------------------
Name: Paul L. Thomas
Title: CEO
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EXHIBIT A
ACQUISITION SUB ARTICLES OF INCORPORATION
ARTICLES OF INCORPORATION
OF
NASB ACQUISITION SUBSIDIARY, INC.
The undersigned, being a natural person of the age of eighteen (18)
years or more and for the purpose of forming a corporation under The General
and Business Corporation Law of Missouri, as amended, hereby adopts the
following Articles of Incorporation:
ARTICLE I - NAME
----------------
The name of the corporation (the "Corporation") is: NASB Acquisition
Subsidiary, Inc.
ARTICLE II - REGISTERED OFFICE AND REGISTERED AGENT
---------------------------------------------------
The address of its initial registered office in the State of Missouri
is: 12498 S. Highway 71, Grandview, Missouri 64030. The name of its initial
registered agent at such address is: Keith B. Cox.
ARTICLE III - CAPITAL STOCK
---------------------------
(a) The total number of shares of stock which the Corporation shall
have authority to issue is thirty thousand (30,000) shares of common stock,
of the par value of $1.00 per share.
(b) No holder of any of the shares of stock of the Corporation of any
class shall be entitled, as a matter of right, to subscribe for, purchase,
or otherwise acquire any shares of stock of the Corporation of any class
which the Corporation proposes to issue or any rights or options which the
Corporation proposes to grant for the purchase of shares of stock of the
Corporation of any class or for the purchase of any bonds, notes,
debentures, securities, or obligations of the Corporation which are
convertible into or exchangeable for, or which carry any rights to
subscribe for, purchase, or otherwise acquire shares of stock of the
Corporation of any class; and any and all of such shares, bonds, notes,
debentures, securities or obligations of the Corporation, whether now or
hereafter authorized or created, may be issued, or may be reissued or
transferred if the same have been re-acquired and have treasury status, and
any and all of such rights and options may be granted by the Board of
Directors, to such persons and other entities, and for such lawful
consideration, and on such terms, as the Board of Directors, in its
discretion, may determine, without first offering the same, or any part
thereof, to any said holder of stock.
ARTICLE IV - INCORPORATOR
-------------------------
The name and place of residence of the incorporator are: Joseph T.
Porter, Jr., 1531 Country Bend Drive, St. Charles, Missouri 63303.
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ARTICLE V - DIRECTORS
---------------------
(a) The number of directors to constitute the Board of Directors of
the Corporation is one (1). Directors need not be shareholders unless the
Bylaws require them to be shareholders.
(b) At all elections of directors of the Corporation and for the
purposes of all other matters upon which shareholders are entitled to vote,
each shareholder shall be entitled to as many votes as shall equal the
number of shams of stock held by that shareholder. No cumulative voting
shall be permitted.
ARTICLE VI - EXISTENCE
----------------------
The Corporation is to have perpetual existence.
ARTICLE VII - PURPOSE
---------------------
The nature of the business or purposes to be conducted, transacted,
promoted or carried on by the Corporation is:
(a) To acquire, own, operate and manage a bank holding company,
including all aspects thereof and all acts and actions incidental thereto;
(b) To engage in any lawful act, activity or business for which
corporations maybe organized under The General and Business Corporation Law
of Missouri.
In addition to the powers and privileges conferred upon the Corporation
by law and those incidental thereto, the Corporation shall possess and may
exercise all the powers and privileges which are necessary or convenient to
the conduct, promotion or attainment of the business purposes of the
Corporation.
ARTICLE VIII - BYLAWS
---------------------
The original Bylaws of the Corporation shall be adopted in any manner
provided by law. Thereafter, the Bylaws of the Corporation may from time to
time be amended or repealed, or new Bylaws may be adopted, in any of the
following ways: (i) by the holders of a majority of the outstanding shares of
stock of the Corporation entitled to vote thereon (or, if applicable, such
larger percentage of the outstanding shares of stock entitled to vote thereon
as may be specified in the Bylaws), or (ii) by a majority of the full Board
of Directors. Any change so made by the shareholders may thereafter be
further changed by a majority of the full Board of Directors; provided,
however, that the power of the Board of Directors to amend or repeal the
Bylaws, or to adopt new Bylaws, (A) may be denied as to any Bylaws or portion
thereof by the shareholders if, at the time of enactment, the shareholders
shall so expressly provide, and (B) shall not divest the shareholders of
their power, nor limit their power, to amend or repeal the Bylaws, or to
adopt new Bylaws.
ARTICLE IX - NO SHARE HOLDER LIABILITY
--------------------------------------
The shareholders of the Corporation shall not be personally liable for
the payment or performance of the debts or other obligations of the
Corporation.
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ARTICLE X - INDEMNIFICATION
---------------------------
(a) The Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding whether civil, criminal, administrative or
investigative, other than an action by or in the right of the Corporation,
by reason of the fact that he is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the
Corporation as a Director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses, including attorneys' fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment order, settlement, conviction or
upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) The Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right or the Corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request
of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses, including attorney's fees and amounts paid in settlement,
actually and reasonably incurred by him in connection with the defense or
settlement of the action or suit if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Corporation; except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to
be liable for negligence or misconduct in the performance of his duty to
the Corporation unless and only to the extent that the court in which the
action or suit was brought determines upon application that, despite the
adjudication of liability and in view of all the circumstances of the case,
the person is fairly and reasonably entitled to indemnity for such expenses
which the court shall deem proper.
(c) To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in Sections (a) and (b) of this
Article, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses, including attorneys' fees, actually and
reasonably incurred by him in connection with the action, suit or
proceeding.
(d) Any indemnification under Sections (a) and (b) of this Article,
unless ordered by a court, shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification
of the director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in this
Article. The determination shall be made by the Baud of Directors of the
Corporation by a majority vote of a quorum consisting of directors who were
not parties to the action, suit or proceeding, or if such a quorum is not
obtainable, or even if
A-59
obtainable a quorum of disinterested Directors so directs, by
independent legal counsel in a written opinion, or by the shareholders
of the Corporation.
(e) Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the Corporation in advance of the final
disposition of the action, suit or Proceeding as authorized by the Board of
Directors in the specific case upon receipt of an undertaking by or an
behalf of the director, officer, employee or agent to repay such amount
unless it shall ultimately be determined that he is entitled to be
indemnified by the Corporation as authorized in this Article.
(f) The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any bylaw, agreement, vote of shareholders, or disinterested
directors or otherwise, both as to action in his official capacity and as
to action in another capacity while holding such office, and shall continue
as to a person who has ceased to be a director, officer, employee or agent
and shall inure to the benefit of the heirs, executors and administrators
of such person.
(g) The Corporation may give any further indemnity, in addition to the
indemnity authorized or contemplated under this Article, including Section
(f), to any person who is or was a director, officer, employee or agent, or
to any person who is or was serving at the request of the Corporation as a
director, officer, employee or agent or another corporation, partnership,
joint venture, trust or other enterprise, provided such further indemnity
is either (i) authorized, directed, or provided for in these Articles of
Incorporation or any duly adopted amendment thereof or (ii) is authorized,
directed, or provided for in any bylaw or agreement of the Corporation
which has been adopted by a vote of the shareholders of the Corporation,
and provided further than no such indemnity shall indemnify any person from
or on account of such persons conduct which was finally adjudged to have
been knowingly fraudulent deliberately dishonest or willful misconduct.
Nothing in this Section (g) shall be deemed to limit the power of the
Corporation under Section (f) of this Article to enact bylaws or to enter
into agreements without shareholder adoption of the same.
(h) The Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article.
(i) For the purpose of this Article, references to "the Corporation"
include all constituent corporations absorbed in a consolidation or merger
as well as the resulting or surviving corporation so that any person who is
or was a director, officer, employee or agent of such a constituent
corporation or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise shall
stand in the same position under the provisions of this Article with
respect to the resulting or surviving corporation as he would if he had
served the resulting or surviving corporation in the same capacity.
A-60
(j) For purposes of this Article, the term "other enterprise" shall
include employee benefit plans; the term "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
the term "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such director, officer,
employee, or agent with respect to an employee benefit plan, its
participants, or beneficiaries; and a person who acted in good faith and in
a manner he reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted
in a manner "not opposed to the best interests of the Corporation" as
referred to in this section.
ARTICLE XI - AMENDMENTS
-----------------------
From time to time any of the provisions of these Articles of
Incorporation may be amended, altered, changed or repealed, and other
provisions authorized or permitted by The General and Business Corporation
Law of Missouri at the time in force may be added or inserted in the manner
and at the time prescribed by such law, and all rights at any time conferred
upon the shareholders of the Corporation by these Articles of Incorporation
are granted subject to the provisions of this Article.
Any person, upon becoming the owner or holder of any shares of stock or
other securities issued by the Corporation, does thereby consent and agree
that (i) all rights, powers, privileges, obligations or restrictions
pertaining to such person or such shares or securities in any way may be
altered, amended, restricted, enlarged or repealed by legislative enactments
of the State of Missouri or of the United States hereinafter adopted which
have reference to or affect corporations, such shares, securities, or persons
and (ii) the Corporation reserves the right to transact any business of the
Corporation, to alter, amend or repeal these Articles of Incorporation, or to
do any other acts or things as authorized, permitted or allowed by such
legislative enactments.
IN WITNESS WHEREOF, these Articles of Incorporation have been signed
this 3rd day of September, 2002.
/s/ Joseph T. Porter, Jr.
---------------------------------------
Joseph T. Porter, Jr., Incorporator
A-61
STATE OF MISSOURI )
) ss.
CITY OF ST. LOUIS )
I, J. Dow, a notary public, do hereby certify that on the 3rd
day of September, 2002, personally appeared before me, Joseph T. Porter, Jr.,
who being by me first duly sworn, declared that he is the person who signed
the foregoing document as incorporator, and that the statements therein
contained are true.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my
notarial seal, the day and year last above mentioned.
/s/ Kathleen J. Dow
-------------------------------------
NOTARY PUBLIC
My Commission Expires:
Kathleen J. Dow
Notary Public - Notary Seal
STATE OF MISSOURI
St. Louis County
My Commission Expires: March 9, 2005
_____________________
[SEAL]
A-62
APPENDIX B--OPINION OF HOVDE FINANCIAL LLC
B-1
Hovde Financial LLC
INVESTMENT BANKERS & FINANCIAL ADVISORS
September 3, 2002
Board of Directors
CBES Bancorp, Inc.
1001 North Jesse James Road
Excelsior Springs, MO 64024
Dear Members of the Board:
We understand that NASB Financial, Inc. ("NASB Holding"), a Missouri
corporation, and CBES Bancorp, Inc. ("CBES"), a Delaware corporation, have
entered into an Agreement and Plan of Merger (the "Agreement") dated
September 3, 2002 pursuant to which CBES will merge with and into NASB Holding
(the "Merger"). As set forth in Section 1.1 of the Agreement, at the
Effective Time of the Merger (as defined in the Agreement) each of the
outstanding shares of CBES common stock ("CBES Common Stock"), par value
$0.01 per share, shall be converted into the right to receive a cash amount
equal to seventeen dollars and fifty cents ($17.50) (the "Merger
Consideration"). In connection therewith, you have requested our opinion as
to the fairness, from a financial point of view, of the Merger Consideration
to the shareholders of CBES.
Hovde Financial LLC ("Hovde"), as part of its investment banking
business, is continually engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive bidding, secondary distributions of listed and
unlisted securities, private placements and valuations for estate, corporate
and other purposes. We are familiar with CBES, having acted as its financial
advisor in connection with, and having participated in the negotiations
leading to, the Agreement. As you are aware, in the course of its daily
trading activities, investment funds controlled by an affiliate (as such term
is defined in Rule 12b-2 promulgated under the Securities Exchange Act of
1934, as amended) of Hovde and their affiliates may from time to time effect
transactions and hold securities of NASB Holding and CBES. As of the date
hereof, no shares of either NASB Holding common stock or CBES Common Stock
are owned.
We were retained by CBES to act as its financial advisor in connection
with the Merger. We will receive compensation from CBES in connection with
our services, a significant portion of which is contingent upon the
consummation of the Merger. CBES has agreed to indemnify us for certain
liabilities arising out of our engagement.
During the course of our engagement and for the purposes of the opinion
set forth herein, we have:
B-2
(i) reviewed the Agreement;
(ii) reviewed certain historical publicly available business and
financial information concerning NASB Holding and CBES;
(iii) reviewed certain internal financial statements and other financial
and operating data concerning NASB Holding and CBES;
(iv) analyzed certain financial projections prepared by the managements
of CBES;
(v) reviewed historical market prices and trading volumes for CBES
Common Stock,
(vi) reviewed the terms of recent merger and acquisition transactions, to
the extent publicly available, involving thrift and thrift holding
companies that we considered relevant;
(vii) analyzed the pro forma impact of the Merger on the combined
company's earnings per share, consolidated capitalization and
financial ratios;
(viii)performed such other analyses and considered such other factors as
we have deemed appropriate.
We also took into account our assessment of general economic, market and
financial conditions and our experience in other transactions, as well as our
knowledge of the banking industry and our general experience in securities
valuations.
In rendering this opinion, we have assumed, without independent
verification, the accuracy and completeness of the financial and other
information and representations contained in the materials provided to us by
NASB Holding and CBES and in the discussions with NASB Holding and CBES
management. In that regard, we have assumed that the financial forecasts,
including, without limitation, the projections regarding under-performing and
non-performing assets and net charge-offs have been reasonably prepared on a
basis reflecting the best currently available information and judgments and
estimates of NASB Holding and CBES and that such forecasts will be realized
in the amounts and at the times contemplated thereby. We are not experts in
the evaluation of loan and lease portfolios for purposes of assessing the
adequacy of the allowances for losses with respect thereto and have assumed
that such allowances for NASB Holding and CBES are in the aggregate adequate
to cover such losses. We were not retained to and did not conduct a physical
inspection of any of the properties or facilities of NASB Holding or CBES. In
addition, we have not reviewed individual credit files nor have we made an
independent evaluation or appraisal of the assets and liabilities of NASB
Holding and CBES and we were not furnished with any such evaluations or
appraisals.
We have assumed that the Merger will be consummated substantially in
accordance with the terms set forth in the Agreement. We have further assumed
that the Merger will be accounted for as a purchase under generally accepted
accounting
B-3
principles and that it will not qualify as a tax-free reorganization for
United States federal income tax purposes. We have assumed that the Merger
is, and will be, in compliance with all laws and regulations that are
applicable to NASB Holding and CBES. In rendering this opinion, we have been
advised by NASB Holding and CBES and we have assumed that there are no
factors that would impede any necessary regulatory or governmental approval
of the Merger and we have further assumed that, in the course of obtaining
the necessary regulatory and governmental approvals, no restriction will be
imposed on NASB Holding or the surviving corporation that would have a
material adverse effect on NASB Holding or the contemplated benefits of the
Merger. We have also assumed that there would not occur any change in
applicable law or regulation that would cause a material adverse change in
the prospects or operations of NASB Holding or the surviving corporation
after the Merger.
Our opinion is based solely upon the information available to us, and
the economic, market and other circumstances, as they exist as of the date
hereof. Events occurring and information that becomes available after the
date hereof could materially affect the assumptions and analyses used in
preparing this opinion. We have not undertaken to reaffirm or revise this
opinion or otherwise comment upon any events occurring or information that
becomes available after the date hereof, except as otherwise agreed in our
engagement letter.
We are not expressing any opinion herein as to constitute a
recommendation to any holder of CBES Common Stock as to how such holder
should vote with respect to the Agreement at any meeting of holders of CBES
Common Stock.
This letter is solely for the information of the Board of Directors of
CBES and is not to be used, circulated, quoted or otherwise referred to for
any other purpose, nor is it to be filed with, included in or referred to in
whole or in part in any registration statement, proxy statement or any other
document, except in each case in accordance with our prior written consent
which shall not be unreasonably withheld; provided, however, that we hereby
consent to the inclusion and reference to this letter in any registration
statement, proxy statement, information statement or tender offer document to
be delivered to the holders of CBES Common Stock in connection with the
Merger if and only if this letter is quoted in full or attached as an exhibit
to such document and this letter has not been withdrawn prior to the date of
such document.
Subject to the foregoing and based on our experience as investment
bankers, our activities and assumptions as described above, and other factors
we have deemed relevant, we are of the opinion as of the date hereof that the
Merger Consideration pursuant to the Agreement is fair, from a financial
point of view, to the shareholders of CBES.
Sincerely,
/s/ Hovde Financial LLC
HOVDE FINANCIAL LLC
B-4
APPENDIX C-- SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
TEXT OF SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
APPRAISAL RIGHTS. - (a) Any stockholder of a corporation of this State
who holds shares of stock on the date of the making of a demand pursuant to
subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation,
who has otherwise complied with subsection (d) of this section and who has
neither voted in favor of the merger or consolidation nor consented thereto
in writing pursuant to ss. 228 of this title shall be entitled to an appraisal
by the Court of Chancery of the fair value of the stockholder's shares of
stock under the circumstances described in subsections (b) and (c) of this
section. As used in this section, the word "stockholder" means a holder of
record of stock in a stock corporation and also a member of record of a
nonstock corporation; the words "stock" and "share" mean and include what is
ordinarily meant by those words and also membership or membership interest of
a member of a nonstock corporation; and the words "depository receipt" mean a
receipt or other instrument issued by a depository representing an interest
in one or more shares, or fractions thereof, solely of stock of a
corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to
be effected pursuant to ss. 251 (other than a merger effected pursuant to ss.
251(g) of this title), ss. 252, ss. 254, ss. 257, ss. 258, ss. 263 or ss. 264
of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation, were
either (i) listed on a national securities exchange or designated as a
national market system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc. or (ii) held of record by
more than 2,000 holders; and further provided that no appraisal rights shall
be available for any shares of stock of the constituent corporation surviving
a merger if the merger did not require for its approval the vote of the
stockholders of the surviving corporation as provided in subsection (f) of ss.
251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required by
the terms of an agreement of merger or consolidation pursuant to ss.ss. 251,
252, 254, 257, 258, 263 and 264 of this title to accept for such stock anything
except:
a. Shares of stock of the corporation surviving or resulting from such
merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts in
respect thereof, which shares of stock (or depository receipts in respect
thereof) or depository receipts at the effective date of the merger or
consolidation will be either listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or held of
record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a. and b. of this paragraph; or
d. Any combination of the shares of stock, depository receipts and cash
in lieu of fractional shares or fractional depository receipts described in
the foregoing subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation party
to a merger effected underss.253 of this title is not owned by the parent
corporation immediately prior to the merger, appraisal rights shall be
available for the shares of the subsidiary Delaware corporation.
C-1
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate
of incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal rights are available
pursuant to subsection (b) or (c) hereof that appraisal rights are available
for any or all of the shares of the constituent corporations, and shall
include in such notice a copy of this section. Each stockholder electing to
demand the appraisal of such stockholder's shares shall deliver to the
corporation, before the taking of the vote on the merger or consolidation, a
written demand for appraisal of such stockholder's shares. Such demand will
be sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal
of such stockholder's shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein provided.
Within 10 days after the effective date of such merger or consolidation, the
surviving or resulting corporation shall notify each stockholder of each
constituent corporation who has complied with this subsection and has not
voted in favor of or consented to the merger or consolidation of the date
that the merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to ss. 228 or ss.
253 of this title, then either a constituent corporation before the effective
date of the merger or consolidation or the surviving or resulting corporation
within 10 days thereafter shall notify each of the holders of any class or
series of stock of such constituent corporation who are entitled to appraisal
rights of the approval of the merger or consolidation and that appraisal
rights are available for any or all shares of such class or series of stock
of such constituent corporation, and shall include in such notice a copy of
this section. Such notice may, and, if given on or after the effective date
of the merger or consolidation, shall, also notify such stockholders of the
effective date of the merger or consolidation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing of such
notice, demand in writing from the surviving or resulting corporation the
appraisal of such holder's shares. Such demand will be sufficient if it
reasonably informs the corporation of the identity of the stockholder and
that the stockholder intends thereby to demand the appraisal of such holder's
shares. If such notice did not notify stockholders of the effective date of
the merger or consolidation, either (i) each such constituent corporation
shall send a second notice before the effective date of the merger or
consolidation notifying each of the holders of any class or series of stock
of such constituent corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the surviving or
resulting corporation shall send such a second notice to all such holders on
or within 10 days after such effective date; provided, however, that if such
second notice is sent more than 20 days following the sending of the first
notice, such second notice need only be sent to each stockholder who is
entitled to appraisal rights and who has demanded appraisal of such holder's
shares in accordance with this subsection. An affidavit of the secretary or
assistant secretary or of the transfer agent of the corporation that is
required to give either notice that such notice has been given shall, in the
absence of fraud, be prima facie evidence of the facts stated therein. For
purposes of determining the stockholders entitled to receive either notice,
each constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given, provided, that
if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the record
date shall be the close of business on the day next preceding the day on
which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who
has complied with subsections (a) and (d) hereof and who is otherwise
entitled to appraisal rights, may file a petition in the Court of Chancery
demanding a
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determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms
offered upon the merger or consolidation. Within 120 days after the effective
date of the merger or consolidation, any stockholder who has complied with
the requirements of subsections (a) and (d) hereof, upon written request,
shall be entitled to receive from the corporation surviving the merger or
resulting from the consolidation a statement setting forth the aggregate
number of shares not voted in favor of the merger or consolidation and with
respect to which demands for appraisal have been received and the aggregate
number of holders of such shares. Such written statement shall be mailed to
the stockholder within 10 days after such stockholder's written request for
such a statement is received by the surviving or resulting corporation or
within 10 days after expiration of the period for delivery of demands for
appraisal under subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail
and by publication shall be approved by the Court, and the costs thereof
shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates
to submit their certificates of stock to the Register in Chancery for
notation thereon of the pendency of the appraisal proceedings; and if any
stockholder fails to comply with such direction, the Court may dismiss the
proceedings as to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the
Court shall appraise the shares, determining their fair value exclusive of
any element of value arising from the accomplishment or expectation of the
merger or consolidation, together with a fair rate of interest, if any, to be
paid upon the amount determined to be the fair value. In determining such
fair value, the Court shall take into account all relevant factors. In
determining the fair rate of interest, the Court may consider all relevant
factors, including the rate of interest which the surviving or resulting
corporation would have had to pay to borrow money during the pendency of the
proceeding. Upon application by the surviving or resulting corporation or by
any stockholder entitled to participate in the appraisal proceeding, the
Court may, in its discretion, permit discovery or other pretrial proceedings
and may proceed to trial upon the appraisal prior to the final determination
of the stockholder entitled to an appraisal. Any stockholder whose name
appears on the list filed by the surviving or resulting corporation pursuant
to subsection (f) of this section and who has submitted such stockholder's
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that such
stockholder is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound, as
the Court may direct. Payment shall be so made to each such stockholder, in
the case of holders of uncertificated stock forthwith, and the case of
holders of shares represented by certificates upon the surrender to the
corporation of the certificates representing such stock. The Court's decree
may be enforced as other decrees in the Court of Chancery may be enforced,
whether such surviving or resulting corporation be a corporation of this
State or of any state.
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(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be filed within
the time provided in subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a written withdrawal
of such stockholder's demand for an appraisal and an acceptance of the merger
or consolidation, either within 60 days after the effective date of the
merger or consolidation as provided in subsection (e) of this section or
thereafter with the written approval of the corporation, then the right of
such stockholder to an appraisal shall cease. Notwithstanding the foregoing,
no appraisal proceeding in the Court of Chancery shall be dismissed as to any
stockholder without the approval of the Court, and such approval may be
conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized
and unissued shares of the surviving or resulting corporation.
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APPENDIX D -- PROXY
D-1
PROXY
CBES BANCORP, INC.
SPECIAL MEETING OF STOCKHOLDERS
________________________________________________________________________________
________________, 2002
________________________________________________________________________________
The undersigned hereby appoints Paul L. Thomas and Dennis D. Hartman, with
full powers of substitution, as attorneys and proxies for the undersigned, to
vote all shares of common stock of CBES Bancorp, Inc., which the undersigned
is entitled to vote at a special meeting of stockholders, to be held at the
primary location of Community Bank of Excelsior Springs, a Savings Bank,
located at 1001 North Jesse James Road, Excelsior Springs, Missouri, on
_____________, 2002, commencing at 9:00 a.m., local time, and at any and all
adjournments thereof, as follows:
FOR AGAINST ABSTAIN
1. Proposal to approve and adoption of the Agreement [ ] [ ] [ ]
and Plan of Merger dated September 5,
2002 between NASB Financial, Inc., NASB
Acquisition Subsidiary, Inc. and CBES
Bancorp, Inc.
2. In their discretion, upon such other [ ] [ ] [ ]
matters as may properly come before the
meeting, including a proposal to adjourn
or postpone the meeting for the purpose
of soliciting additional proxies in favor
of Proposal 1.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL AND ADOPTION OF
THE MERGER AGREEMENT.
________________________________________________________________________________
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE ABOVE PROPOSALS. THIS PROXY CARD WILL ALSO
BE USED TO PROVIDE VOTING INSTRUCTIONS TO THE TRUSTEE FOR ANY SHARES OF
COMMON STOCK OF CBES BANCORP, INC. ALLOCATED TO PARTICIPANTS UNDER THE
COMMUNITY BANK OF EXCELSIOR SPRINGS, A SAVINGS BANK, EMPLOYEE STOCK OWNERSHIP
PLAN. IF ANY OTHER BUSINESS IS PRESENTED AT THE SPECIAL MEETING, THIS PROXY
WILL BE VOTED AS DIRECTED BY A MAJORITY OF THE BOARD OF DIRECTORS.
________________________________________________________________________________
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THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the special meeting of
stockholders or at any adjournment thereof, after notification to the
Secretary of CBES Bancorp, Inc. at the meeting of the stockholder's decision
to terminate this proxy, then the power of said attorneys and proxies shall
be deemed terminated and of no further force and effect.
The undersigned acknowledges receipt from CBES Bancorp, Inc. prior to the
execution of this proxy of the notice of the meeting and proxy statement
dated _______________, 2002.
Dated: ______________, 2002.
_________________________________
_________________________________
SIGNATURE(S) OF STOCKHOLDER(S)
Please sign exactly as your name appears on this proxy card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.
________________________________________________________________________________
PLEASE DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
________________________________________________________________________________
D-3
APPENDIX E--LETTER TO ESOP PARTICIPANTS
E-1
_______________, 2002
TO: COMMUNITY BANK OF EXCELSIOR SPRINGS, a Savings Bank
EMPLOYEE STOCK OWNERSHIP PLAN
RE: CBES BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
As a participant in the Employee Stock Ownership Plan, you are entitled to
instruct First Bankers Trust Company how to vote the shares allocated to you
in this plan.
Enclosed please find a PROXY CARD, which we ask that you vote, sign, date and
return to us by _______________, 2002 in the envelope provided. Your vote
will remain confidential.
If you have questions, please feel free to contact me. My direct phone line
is 217-228-8063.
Sincerely,
Linda Shultz
Trust Officer
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